DIRECTORS' REPORT To The Shareholders, Your Directors have pleasure in presenting their Twenty Fourth Annual Report of your Company, together with the Audited Accounts for the year ended 31st March 2016. OPERATIONS Your Company achieved a Revenue of Rs. 45,928.67 Lakhs an increase of about 14% over the previous year, Operating Profit Before Depreciation & Amortization amounted to Rs. 1,1632.13 Lakhs. Profit Before Tax amounted to Rs. 9,735.85 Lakhs an increase of about 36% over the previous year. DIVIDEND Your Directors are pleased to recommend a final dividend of Rs.1.50/- per Equity Share on Face value of Rs. 10/-each for the year ended March 31, 2016. This is in addition to the interim dividend of Rs. 4/- per equity share paid on March 28, 2016. The total dividend for the year under review aggregates to Rs.5.50 /- per equity share. The Board has not recommended any transfer to general reserve from the profits of the year under review. RESERVES The Reserves at the end of the year 31st March, 2016 is at Rs. 26,380.58 Lakhs as against the Total Reserves of Rs. 22,034.41 Lakhs as at 31st March 2015. PROMOTERS & OPEN OFFER On July 30,2015, Igarashi Electric Works Limited, Japan ('IEWL') acquired majority stake in Agile Electric Sub Assembly Private Limited [AESPL] (Holding Company). Consequently, IEWL and Mape Securities Private Limited became New Promoters of the Company from July 30,2015 and also AESPL and Igarashi Electric Works (H.K) Limited, Hong Kong ('Wholly owned subsidiary of IEWL') became part of Promoter Group. On December 16, 2015, IEWL along with Persons Acting in Concert viz., AESPL and investors issued Open Offer for acquiring 7,960,538 equity shares (26.01%) at a price of Rs. 324.60/- per share. AESPL acquired 600 equity shares tendered in open offer for a consideration of Rs. 194,760/-. Mr. P Mukund considered as continuing Promoter of the Company pursuant to SEBI observation letter on draft Letter of Offer issued on December 12,2015. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES Your Company is holding 10.82% stake in Joint Venture Company viz., Bosch Electrical Drives India Private Limited as on March 31,2016. Disclosure in Form AOC - 1 annexed to this report. Your Company has no subsidiary Companies as on March 31,2016. DEPOSITS During the year under review, your Company has not invited or accepted any deposits from the public under Section 76 of the Companies Act, 2013 and Rules made there under. EMPLOYEE STOCK OPTION SCHEME Presently, the Company does not have a scheme for grant of stock options to its employees. SHARE CAPITAL Your Company's Paid-Up equity share capital is Rs. 3,060.84 Lakhs as on March 31, 2016. There is no change in Share Capital during the year under review. DIRECTORS During the year, Mr. Amit Dixit resigned from Directorship from July 30, 2015. During his tenure, your Board has from time to time benefited from the experience of Mr. Amit Dixit. Your Directors wish to place on record their sincere appreciation of the valuable contribution of Mr. Amit Dixit. Based on Nomination & Remuneration Committee recommendation, the Board approved, at its meeting held on July 22,2015, Mr. K K Nohria appointment as Additional Director w.e.f. July 23, 2015. The shareholders approved, by way of Postal Ballot on March 26,2016, appointment of Mr. K K Nohria as Independent Director for 3 years period from July 23,2015 and also re-appointment of Mr. P Mukund as Managing Director for 3 years effective from April 01,2016. Mr. Keiichi Igarashi, Director retires by rotation at forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The brief resume and other details as required under the Listing Regulations are provided in the Notice of the 24th Annual General Meeting of the Company. On January 28, 2016, your Board approved appointment of Mr. Akhil Awasthi and Mrs. Eva Maria Rosa Schork as Additional Directors to and hold office only upto the date of ensuing Annual General Meeting. The Notices under Section 160 of the Companies Act, 2013 has been received from a member signifying the intention to propose Mr. Akhil Awasthi and Mrs. Eva Maria Rosa Schork as candidates for the office of Director and accordingly two resolutions are proposed at the ensuing Annual General Meeting. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'). The details of familiarization programmes to Independent Directors is put up on the website of the Company at the link : <http://www.igarashimotors.com/investor-list.php?invescatid=23>. Your Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors. Pursuant to the provisions of Companies Act,2013 and Regulation 25 of the Listing Regulations, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder Committee. NUMBER OF MEETINGS OF THE BOARD During the year, seven Board Meetings were held on April 02, 2015, May 25, 2015, July 22, 2015 (Two Meetings), November 05, 2015, January 28, 2016 and March 14, 2016. The Company's last Annual General Meeting was held on July 22,2015. The particulars of Directors, their attendance during the financial year 2015-2016 has been disclosed in the Corporate Governance Report forming part of this Annual Report. For details of the Committees of the Board, please refer to the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT In compliance of Section 134 (5) of the Companies Act, 2013 your directors, on the basis of information made available to them, confirm the following: a) In the preparation of the annual accounts for the financial year ended March 31,2016, the applicable Accounting Standards have been followed with explanation relating to material departures, if any; b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for that period; c) Proper care has been taken for maintenance of adequate accounting for safe guarding the assets of the Company and detecting fraud and other irregularities; d) They have laid down Internal Financial Controls to be followed by the Company and the Audit Committee of the Board of Directors shall ensure that the internal control is adequate and robust; e) The annual accounts are prepared on a going concern basis; f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DEMATERIALISATION OF SHARES 99.20 % of the Company's paid up Equity Share Capital is in dematerialized form as on March 31, 2016 and balance 0.80% is in physical form. The Company's Registrars are Cameo Corporate Services Limited, No.1, Subramaniam Building, Club House Road, Chennai 600 002. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION The information required to be furnished pursuant to Section 134(3) (m) of the Companies Act, 2013, is appended hereto and forms part of this Report. FOREIGN EXCHANGE EARNINGS AND OUTGO The details of expenditure and earnings in foreign currency are given as an annexure to this Report. PARTICULARS OF LOANS & INVESTMENTS BY COMPANY Details of loans and investments by the Company, to other body corporate or persons are given in notes to the financial statements. RELATED PARTY TRANSACTIONS All the related party transactions entered during the year were in ordinary course of business and on arm's length basis. Your Company obtained shareholders' approval for material related party transactions though such transactions being entered during ordinary course of business and on arm's length basis as required under Listing Regulations. Your Company presents a statement of all related party transactions before the Audit Committee. Details of such transactions are given in the accompanying financial statements. Disclosure of Related Party transaction is annexed with the report as per the format prescribed. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Your Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. An Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at work place. During the year ended March 31,2016, the ICC has received no complaints pertaining to sexual harassment / discrimination at work place. AUDITORS M/s. Sharp & Tannan, Chartered Accountants, Chennai, who are the Statutory Auditors of the Company, hold office till the conclusion of the forthcoming AGM and are eligible for re-appointment for financial year 2016-17 (until March 31, 2017). Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. Sharp & Tannan, Chartered Accountants, Chennai as Statutory Auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the next AGM. As required under the provisions of Section 141 of the Companies Act, 2013, the Company has obtained a written Certificate from the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made, is in accordance with the conditions specified in the said Section. AUDITOR'S REPORT No qualification, adverse remarks or disclaimer made by the Statutory Auditors with regard to the financial statements for the financial year 2015-16. MANDATORY AUDITOR ROTATION The Statutory Auditors of the company since inception M/s. Sharp &Tannan, (Firm Registration Number 003792S) have already completed more than ten years as Statutory Auditors of the Company. In accordance with provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, they can continue as Auditors for a further period of one year i.e up to March 31, 2017. From April 01, 2017, your Company being a Listed Company have to appoint new Auditor for the purpose complying with Mandatory Rotation of Auditor. In view of the Mandatory Rotation of Auditor requirement and to ensure smooth transition, and also to comply with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ['Listing Regulations'], it is proposed to appoint M/s. B S R & Co. LLP, Chartered Accountants (ICAI Firm Regn. No. 101248W/W-100022) as StatutoryAuditors for a period of 5 continuous years, from April 01, 2017 to March 31, 2022. The tenure of their office will commence from the conclusion of the 25th Annual General Meeting till the conclusion of the 30th Annual General Meeting of the Company subject to, however, their appointment in 25th Annual General Meeting as per the process laid down under the Companies Act, 2013 and rules made thereunder and subsequent ratification at every Annual General Meeting. If appointed in 25th Annual General Meeting, B S R & Co. LLP, Chartered Accountants shall be responsible for Audit during the five financial years 2017-18, 2018-19, 2019-20, 2020-21 and 2021-22 as Statutory Auditors of the Company. As per Regulation 33 of Listing Regulations, Limited Review Report has to be issued by Statutory Auditors and hence Statutory Auditors to be appointed in 25th Annual General Meeting for the financial year 2017-2018 is authorised to do the Limited Review for the quarterly or half yearly or such period as may be prescribed from time to time. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S Bhaskar, Partner, BP & Associates, Company Secretaries (CP No.:8315, ACS: 10798) to undertake the secretarial audit of the Company. The Secretarial Audit Report is given in Annexure to this Report. The Secretarial Audit report contains qualification regarding non-compliance of the requirement of maintaining minimum public shareholding of 25% under Securities Contract (Regulation) Act, 1956 and the rules made thereunder. The public shareholding has fallen below 25% due to continuance of Mr. P Mukund as Promoter along with new Promoter & Promoter group IEWL post SEBI observation letter on draft Letter of Offer dated December 12,2015. Your Company's Promoters would be increasing public shareholding to 25% in the Company by selling such number of shares held by Promoter & Promoter Group as permitted under SEBI Regulations before December 11, 2016. COST AUDITOR As your Company has been operating from MEPZ-Special Economic Zone, appointment of Cost Auditor is exempted under Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audits) Rules, 2014. EXTRACT OF THE ANNUAL RETURN Relevant extract of annual return to be filed with the Registrar of Companies for financial year 2015 -16 is given in Annexure to this Report. INTERNAL CONTROL SYSTEMS The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. Internal Audit is carried out in a programmed way and follow up actions were taken for all audit observations. Your Company's Statutory Auditors have, in their report, confirmed the adequacy of the internal control procedures. CORPORATE SOCIAL RESPONSIBILITY (CSR) In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee. CSR Committee of the Board has developed a CSR Policy which is given in Annexure to this Report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report of the Company for year under review as required under Regulation 17 of Listing Regulations is given as a separate Statement in the Annual Report. DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY Your Company has adopted a Risk Management Policy and constituted a Risk Management Committee for monitoring the same. The Company has been addressing various risks impacting the Company which is provided elsewhere in this Annual Report in Management Discussion and Analysis Report. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is given as a separate Statement in the Annual Report. The remuneration paid to all Key Management Personnel was in accordance with remuneration policy adopted by the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations. ADOPTION OF NEW SET OF ARTICLES OF ASSOCIATION On March 26,2016, your Company's Shareholders approved by way of Postal Ballot, adoption of new set of Articles of Association in the place of existing Articles of Association in line with the provisions of the Companies Act, 2013. HUMAN RESOURCES Your Company has 600 number of permanent employees on the rolls of the Company as on March 31, 2016. The Board of Directors wishes to place on record their sincere appreciation to all the employees of the Company for their dedication, commitment and loyalty to the Company. CORPORATE GOVERNANCE A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance of the requirements of Corporate Governance pursuant to Listing Regulations is annexed hereto. VIGIL MECHANISM / WHISTLE BLOWER POLICY Your Company has a vigil mechanism established Whistle Blower Policy, as per the requirement of the Companies Act, 2013 and the Listing Regulations, to enable all employees and the directors to report in good faith any violation of the Policy. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. Your Company has disclosed the details of Whistle Blower policy on its website : www.igarashimotors.com . LISTING The shares of your Company continued to be listed at National Stock Exchange Limited and Bombay Stock Exchange Limited. Listing fee has already been paid for the financial year 2016-17. ACKNOWLEDGEMENT The Board places on record its sincere appreciation for the continued support from the relevant Government Authorities, Promoters, Shareholders, Suppliers, Customers, and other business associates, for their strong support. For and on behalf of the Board of Directors K K Nohria Chairman Place : Chennai Date : May 19, 2016 |