DIRECTORS' REPORT The Directors have pleasure in presenting their 52nd Annual Report along with the audited accounts of the Company for the year ended 31st March, 2016. Net sales of the Company increased by 12% during the year from Rs. 12444 Million to Rs.13930 Million. Gross Profit for the year, after all interest charges but before depreciation and taxes, increased by 29% over the last year from Rs. 1753 Million to Rs. 2259 Million. Profit after tax for the year is Rs. 927 Million against Rs. 573 Million last year. The Directors, in their meeting of 07.05.2016, have recommended that equity shareholders be paid dividend of Rs. 4.00 per share for the year, inclusive of Rs. 2.00 per share already paid; the equity dividend alongwith dividend tax would absorb Rs. 107.72 Million against Rs. 94.14 Million last year and an amount of Rs. 819.57 Million be transferred to General Reserve Account. While prices of Raw Materials reduced over last year, the company witnessed continuous demand from customers for price reduction and significant increase in competition from global players. Special efforts are being made by the Company to improve productivity and reduce cost, particularly for next generation Pistons, Pins, Rings and Engine Valves, and stay ahead of competition. As part of this effort, the Company has decided to implement TPM at the Plant in Pathredi and renew the TPM initiative with a new thrust at its Plant in Ghaziabad. The Government plans to implement BS-VI emission norms for Commercial Vehicles and Passenger Vehicles from 2020. Emission norms for 2/3-Wheelers and Industrial Engines are also under review. This would require significant investment in the development of new technologies. The Company is fully geared to meet this challenge with a well-equipped Tech Centre, which was set up in 2014 with strong support from our Technology Partners and is being constantly upgraded. The Company is also taking proactive steps to obtain most modern design and manufacturing know-how for next generation Pistons, Pins, Rings and Engine Valves and retain its leadership in the market by offering latest technology products at competitive prices. The Company achieved exports of Rs. 2382 Million, which was 10% higher than last year. Exports remain an important cornerstone in company's strategy for sustainable growth and to pro-actively acquire deeper understanding of the technology, quality and service expectations of global OEMs operating in advanced automobile markets. Our efforts to win business with OEMs in export markets, along with our Collaborators, have intensified and we successfully started mass production of latest generation Pistons for a premium global vehicle manufacturer in the year. There was no operation in subsidiary company, M/s SPR International Auto Exports Limited, during the year. Annual accounts of subsidiary company are available on company's website and shall also be kept for inspection by any member in the Head Office and Registered Office. Hard copy of Annual Accounts of subsidiary company would also be made available to members seeking such information. In accordance with the Accounting Standard (AS - 21) on consolidated financial statements, the consolidated financial statements are attached, which form part of the Annual Report. The Directors confirm that: - 1. in the preparation of the annual accounts, the applicable Accounting Standards issued by The Institute of Chartered Accountants of India and requirements of Companies Act have been followed and there are no material departures from the same. 2. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the same year. 3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. 4. the annual accounts have been prepared on a going concern basis. 5. internal financial controls are followed by the company and are adequate and operating effectively. 6. proper and adequate systems have been devised to ensure compliance with provisions of all applicable laws and such systems are adequate and operating effectively. There are no disqualifications, reservations or adverse remarks or disclaimers in the Auditors' and Secretarial Auditor's Report. No orders were passed by the Regulators or Courts or Tribunals which could impact going concern status and company's operations in future. The Company appointed M/s Price Waterhouse Coopers as its Internal Auditors, in addition to in house team. The Internal Control System is commensurate with the size, scale and complexity of company's operations. The Internal Auditors report to the Chairman of Audit Committee. The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on their reports, the corrective actions in respective areas are taken to strengthen the controls and significant audit observations and corrective actions thereon are presented to the Audit Committee. Company's equity shares were listed on 'Delhi Stock Exchange'. SEBI, vide its order dated 19.11.2014 has withdrawn recognition of 'Delhi Stock Exchange'. Accordingly, Company's shares cease to be listed and have been moved to Dissemination Board of Bombay Stock Exchange (BSE) for facilitating dealing in Company's shares. Company is committed to good corporate governance practice and corporate social responsibility. In line with the Company's principles/ commitment, the following policies/ programmes are in place and are available on Company's website viz. www.shrirampistons.com under the link "Investors": 1. Corporate Social Responsibility (CSR) Policy, 2. Vigil Mechanism/ Whistle Blower policy, 3. Company's policy on dealing with Related party transactions and 4. Familiarization programmes for Independent Directors. Fixed deposits amounting to Rs. 299.88 Million were accepted during the year and deposits amounting to Rs. 5.1 Million pertaining to 62 depositors remained unclaimed/ unpaid at the close of the year. During the year, there was no default in repayment of deposits and interest thereon. Deposits accepted by the company are in compliance with requirements of Chapter V of the Companies Act, 2013. Company has not given any loans, guarantees or made investments under section 186 of the Companies Act, 2013. The Company has entered into contract/arrangements with the related parties in the ordinary course of business and on arm's length basis. Thus, provisions of Section 188(1) of the Companies Act, 2013 are not applicable. Following reports which form an integral part of Directors' report are enclosed: - 1. Report on "CORPORATE GOVERNANCE" - as per Annexure - I. 2. Report on "MANAGEMENT DISCUSSION AND ANALYSIS" - as per annexure - II. 3. Report on "CONSERVATION OF ENERGY", "TECHNOLOGY ABSORPTION" and "FOREIGN EXCHANGE EARNING & OUTGO" - as per annexure - III. 4. Data of "EMPLOYEES" - as per annexure - IV. 5. Extract of "ANNUAL RETURN" - as per Annexure - V. 6. "DETAILS AND ANNUAL REPORT ON CSR" - as per Annexure - VI. 7. "SECRETARIAL AUDIT REPORT" - as per Annexure - VII. 8. "NOMINATION AND REMUNERATION POLICY" - as per Annexure-VIII. 9. "SALIENT FEATURES OF SUBSIDIARY COMPANY" - as per Annexure-IX. Shri O.P. Khaitan, Independent Director and Chairman of Audit Committee of the Company, passed away on 06.12.2015. He made considerable contribution to the Company being a member of the Board since 1989 and on various committees, from time to time. Shri Toru Suzuki was appointed as Independent Director w.e.f. 30.04.2015 in casual vacancy caused due to resignation of Shri Tokuo Washio. Shri C.Y. Pal, Shri Ravinder Narain, Shri Inderdeep Singh and Shri Toru Suzuki are Independent Directors of the Company and have given the declarations to the Board that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013. Shri Luv D. Shriram and Smt. Meenakshi Dass, Directors, retire by rotation and being eligible, offer themselves for re-appointment. Dr. Alexander Sagel was appointed as "Director in Casual vacancy" and his term is expiring in the forthcoming Annual General Meeting. The resolution seeking appointment of Dr. Alexander Sagel has been incorporated in the 'Notice of Annual General Meeting' along with brief details about him. The company has received a notice under section 160 of the Companies Act, 2013 along with requisite deposit proposing his appointment. Brief resume and other details of Shri Luv D. Shriram, Smt. Meenakshi Dass and Dr. Alexander Sagel are given in the 'Notice of the Annual General Meeting'. Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. The Directors affirm that remuneration paid to all Directors, Key Managerial Personnel and Senior Management Personnel is as per the remuneration policy framed by Nomination and Remuneration Committee of the Company. The Directors place on record their appreciation of the support extended to the Company by the Collaborators, the Bankers, its business associates and their appreciation of the work of all ranks of Company's personnel during the year. On behalf of the Board (PRADEEP DINODIA) CHAIRMAN May 07, 2016 New Delhi May 07, 2016 |