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Directors Report of I P Rings Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Twenty Third Annual Report together with the Accounts for the year ended March 31, 2014 and the Auditor''s Report thereon

FINANCIAL RESULTS (Rs in Lakhs) 2013-2014 2012-2013 Profit before Finance charges, 976.90 554.73 Depreciation and Tax

Finance charges 647.43 550.61

Depreciation 691.10 645.75

Profit / (Loss) before Tax (361.63) (641.63)

Provision for Taxation (Net) (86.07) (223.99)

Profit / (Loss) after Tax (275.56) (417.64)

Add : Balance brought forward from previous year (367.72) 49.92

Profit available for appropriation (643.28) (367.72)

Balance carried forward (643.28) (367.72)

DIVIDEND

In view of the loss during the year under review, your Directors do not recommend any Dividend for the year ended March 31,2014.

OPERATIONS

During the year 2013-14, the Indian Automobile and Auto Component industry suffered as a result of global economic down turn and degrowth in the domestic vehicle sector, particularly in the commercial vehicle and passenger car segments.

As a result of these developments, the demand for products from many component companies suffered leading to low utilisation of capacities, under absorption of fixed costs and consequential drop in profitability.

For your Company in particular, the adverse factors in the Automobile Industry impacted its performance considerably. However, the Company initiated a number of cost cutting and productivity improvement measures which reduced the losses considerably as compared to the previous year.

Specific mention needs to be made of the savings achieved in power cost on account of installation of a dedicated power line and the sacrifice made by the senior executives in voluntarily accepting a salary cut.

The Company has registered a loss of Rs. 361.63 Lakhs for the year.

OUTLOOK

Despite the slowdown in the industry during the last two years, the outlook for the future appears to be promising. It is hoped and expected that the new Government will provide impetus to the manufacturing sector particularly the Automobile and the Auto Component Industry. While the present negative trend is likely to continue for the first half of the current year, it is expected that the demand will start improving from the 2nd half of the year.

The Company is well positioned to take advantage of the future growth in the Auto Industry having invested in key facilities for meeting the stringent quality requirements of contemporary vehicles in all segments of the market including 2 wheelers.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013, Dr N Gowrishankar & Mr Masaaki Otani, retire by rotation and are eligible for reappointment. By virtue of Section 149 of the Companies Act, 2013, your Directors are seeking appointment of all Independent Directors , viz., Mr P M Venkatasubramanian, Mr S R Srinivasan, Mr S Ramachandra and Dr R Natarajan, as Independent Directors for a term upto March 31, 2019.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed;

- that the Directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year ended March 31,2014 and of the loss of the Company for that year;

- that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- that the accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A Certificate from the Auditors of the Company regarding compliance of conditions of ''Corporate Governance'' as stipulated under Clause 49 of the Listing Agreement is attached to this report.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is included in the Annual Report. A Management Discussion and Analysis Report forms part of this Directors'' Report. All the mandatory requirements under the Code of Corporate Governance have been complied with.

AUDITORS

Messrs. R.G.N Price & Co., Chartered Accountants retire at this Annual General Meeting and are eligible for reappointment.

COST AUDITORS

M/s. Raman & Associates, Cost Auditors, Chennai are the Cost Auditors of the Company. The Cost Audit Report for the year 2013-14 will be submitted to the Central Government before the due date.

PARTICULARS OF EMPLOYEES

There were no employees in receipt of remuneration of Rs.5,00,000/- p.m. during the year ended 31.03.2014 coming within the purview of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended.

DISCLOSURE OF PARTICULARS

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the Technical Assistance and Marketing Services extended by M/s Nippon Piston Ring Co. Ltd., Japan and M/s. India Pistons Limited, Chennai, respectively.

Your Directors also wish to place on record their appreciation of the contribution made by the employees at all levels.

For and on behalf of the Board

N Venkataramani Chairman

Chennai May 30, 2014


Mar 31, 2013

The Directors have pleasure in presenting the Twenty Second Annual Report together with the Accounts for the year ended March 31, 2013 and the Auditor''s Report thereon

FINANCIAL RESULTS

2012-2013 2011-2012

(Rs. in Lakhs)

Profit before Finance charges, Depreciation and Tax 554.73 935.72

Finance charges 550.61 360.92

Depreciation 645.75 545.79

Profit/(Loss) before Tax (641.63) 29.01

Provision for Taxation (Net) (223.99) (29.14)

Profit/(Loss) after Tax (417.64) 58.15

Add : Balance brought forward from previous year 49.92 73.61

Profit available for appropriation (367.72) 131.76

Less : Dividend - 70.42

Dividend Tax thereon - 11.42

Transfer to General Reserve - -

Balance carried forward (367.72) 49.92

DIVIDEND

In view of the loss during the year under review, your Directors do not recommend any Dividend for the year ended March 31, 2013.

OPERATIONS

The Indian auto and auto components industry is currently facing its most formidable challenge - the slowing down of demand in all segments of the industry. The overall earnings growth of the auto component industry during 2012-13 remained subdued in the wake of weak demand, inflation in overheads, acute power shortage and adverse-currency volatility. The revenue growth of the auto components industry is typically a close reflection of the blended growth of individual automotive segments viz., passenger vehicles (PV), commercial vehicles (CV) and two-wheelers (2W). The revenue growth of these select entities has been consistently declining over the last six quarters with growth being the slowest in Q1, 2012-13.

For your Company in particular, the sluggish growth of new business in Rings and OCF Divisions and the resultant unutilized high capex and a steep increase in power costs have been the major causes for the middling performance. On a positive note, your Company has been able to achieve much of its cost reduction efforts and price increase targets for the year 2012-13.

Your Company, though it achieved a Turnover of Rs. 95.18 Crores compared to t 91.26 Crores of Turnover achieved in previous year incurred a loss of Rs. 4.18 crores.

OUTLOOK

The revenue growth prospects of the auto components industry over the near term remain somber as ail three automotive segments are likely to grow at a low-to-mid single digit rate in 2013-14. That said, the performance of individual auto component manufacturers may continue to vary depending on the entities'' revenue mix (OEMs/Replacement Market/ Non-Automotive Segment), segment bias (PV/CV/2W) and geographical diversification (domestic/exports).

For your company, though the current trend is likely to prevail during the first half of the financial year, it is expected that in the second half of the financial year there would be significant improvement. The company has been developing a number of new products, both Rings and forged components, and with a breakthrough in these areas significant improvement in revenue performance is expected next year. However, looking ahead the various technology improvements and upgrades implemented in product design and development, process engineering, manufacturing, quality and other related areas have strengthened the company''s manufacturing base and this is expected to bear fruit irr the coming years.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Mr Masaaki Otani, Mr N Venkataramani and Dr R Mahadevan, Directors, retire by rotation and are eligible for reappointment.

Mr A Venkataramani, Managing Director is being re-appointed for a further period of 3 years effective 01.11.2013. Witan effect from 1st June 2013, Dr N Gowrishankar will be a Non Executive Director.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed;

- that the Directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year ended March 31, 2013 and other loss of the Company for that year;

- that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- that the accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A Certificate from the Auditors of the Company regarding compliance of conditions of ''Corporate Governance'' as stipulated under Clause 49 of the Listing Agreement is attached to this repbrt.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is included in the Annual Report. A Management Discussion and Analysis Report forms part of this Directors'' Report. All the mandatory requirements under the Code of Corporate Governance have been complied with.

AUDITORS

Messrs. R.G.N Price & Co., Chartered Accountants retire at this Annual General Meeting and are eligible for reappointment.

PARTICULARS OF EMPLOYEES

There were no employees in receipt of remuneration of Rs. 5,00,000/- p.m. during the year ended 31.03.2013 coming within the purview of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended.

DISCLOSURE OF PARTICULARS

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the Technical Assistance and Marketing Services extended by M/s Nippon Piston Ring Co. Ltd., Japan and M/s. India Pistons Limited, Chennai, respectively. Your Directors also wish to place on record their appreciation of the contribution made by the employees at all levels.

For and on behalf of the Board

N Venkataramani

Chairman Chennai

May 29, 2013


Mar 31, 2012

The Directors have pleasure in presenting the Twenty First Annual Report together with the Accounts for the year ended March 31, 2012 and the Auditor's Report thereon

FINANCIAL RESULTS

2011-2012 2010-2011 (Rs. in Lakhs)

Profit before Finance charges, Depreciation and Tax 935.72 1269.35

Finance charges 360.92 120.32

Depreciation 545.79 473.93

Profit before Tax 29.01 675.10

Provision for Taxation (Net) (29.14) 205.66

Profit after Tax 58.15 469.44

Add : Balance brought forward from previous year 73.61 49.71

Profit available for appropriation 131.76 519.15

Less : Dividend @ 10% (Rs 1/- per Share) 70.42 211.26

Dividend Tax thereon 11.42 34.28

Transfer to General Reserve 0.00 200.00

Balance carried forward 49.92 73.61

DIVIDEND

Your Directors recommend a dividend of 10% (Rs 1/- per Share) for the year ended March 31, 2012.

OPERATIONS

After having recorded strong double digit volume growth over the last two years, the Auto and Auto Component Industry faced moderation in growth in 2011-12 contributed by rising fuel cost, increase in interest rates and firming up of Commodity prices.

During the year under review, your Company had also to face sudden drop in demand from customers, high cost of borrowing and abnormal fluctuation in Japanese Yen, resulting in lower capacity utilization, higher interest outflow and higher material cost. These factors have adversely affected the sales volume and profitability of your Company.

The Power Scenario for the Company during the year under review was characterized by the power cut imposed by the TNEB (on both maximum demand and energy consumption), frequent interruptions and poor quality power within the available MD and Consumption limits and the steep hike in the tariff for HT consumers. This extremely adverse situation had a very serious impact on the Company's performance lowering activity levels and pushing up the manufacturing cost.

Your Company achieved a Turnover of Rs 91.26 Crores and a Profit Before Tax of Rs 29.01 Lakhs compared to Rs 87.63 Crores of Turnover and Profit Before Tax of Rs 675.10 Lakhs achieved in previous year.

OUTLOOK

The Indian Automotive Industry is still estimated to grow at 10 - 15 %. This demand is likely to be driven by growth across categories, but primarily by the growing four stroke motor cycle and passenger car segment, tractor sales and a growing new generation, high technology commercial vehicles sector. These trends are expected to continue in the coming years.

For your Company, these trends augur well. In addition, newer Products, higher volumes in existing product lines, higher productivity and cost reduction efforts are likely to contribute to higher sales and better profitability in the coming years.

The Transmission Components Division is poised for higher growth with introduction of newer products and broad basing of customer base.

The project to manufacture PVD Rings has been commericalised and supplies started. New customers will be added during this year for supply of PVD rings and capacity utilization in PVD facility is expected to be much higher.

With this your Company is expected to do better in the coming years.

DIRECTORS

Mr K V Shetty, Director, passed away on August 18, 2011. He was the first Managing Director of the Company who occupied that position till March 31, 2010. He contributed immensely to the growth of your Company and also instrumental in identifying new projects to your Company. Your Directors wish to place on record their appreciation of the valuable contribution made by Mr K V Shetty, during his tenure. Mr T K Ramasubramanyan, Director vacated his office on July 28, 2011.

In accordance with the provisions of the Companies Act, 1956, Mr S R Srinivasan, Mr S Ramachandra and Dr R Natarajan, Directors, retire by rotation and are eligible for reappointment. Dr N Gowrishankar, has been re-appointed as the Whole Time Director for a further period of three years effective from 29.01.2012.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed;

- that the Directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year ended March 31, 2012 and of the profit of the Company for that year;

- that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- that the accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A Certificate from the Auditors of the Company regarding compliance of conditions of 'Corporate Governance' as stipulated under Clause 49 of the Listing Agreement is attached to this report.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is included in the Annual Report. A Management Discussion and Analysis Report forms part of this Directors' Report. All the mandatory requirements under the Code of Corporate Governance have been complied with.

AUDITORS

Messrs. R.G.N Price & Co., Chartered Accountants retire at the Annual General Meeting and are eligible for reappointment. PARTICULARS OF EMPLOYEES

There were no employees in receipt of remuneration of Rs 5,00,000/- p.m. during the year ended 31.03.2012 coming within the purview of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended.

DISCLOSURE OF PARTICULARS

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the Technical Assistance and Marketing Services extended by M/s Nippon Piston Ring Co. Ltd., Japan and M/s. India Pistons Limited, Chennai, respectively.

Your Directors also wish to place on record their appreciation of the contribution made by the employees at all levels.

For and on behalf of the Board

N Venkataramani

Chairman

Chennai

May 18, 2012


Mar 31, 2011

The Directors have pleasure in presenting the Twentieth Annual Report together with the Accounts for the year ended March 31, 2011 and the Auditors Report thereon.

FINANCIAL RESULTS

2010-2011 2009-2010 (Rs. in Lakhs)

Profit before Finance charges, Depreciation and Tax 1269.35 1366.79

Finance charges 120.32 98.82

Depreciation 473.93 451.65

Profit before Tax 675.10 816.32

Provision for Taxation (Net) 205.66 259.79

Profit after Tax 469.44 556.53

Add : Balance brought forward from previous year 49.71 39.53

Profit available for appropriation 519.15 596.06

Less : Dividend @ 30% ( Rs. 3/- per Share ) 211.26 211.26

Dividend Tax thereon 34.28 35.09

Transfer to General Reserve 200.00 300.00

Balance carried forward 73.61 49.71

DIVIDEND

Your Directors recommend a dividend of 30% (Rs. 3/- per Share) for the year ended March 31, 2011.

OPERATIONS

During the year under review the Automotive Industry responded well to the sustained improvement in the economy and recorded a performance significantly better than that in the previous year. Domestic sales of vehicles was up by 26.17% and vehicles exports by 29.64%.

However during the second half of the year adverse factors like rising input prices, higher borrowing costs and power shortage have pushed up the operating costs causing a serious dent in the margins of the manufacturers. It is expected that the trend would continue in the current year too.

Notwithstanding this cost pressure the long term prospect for the Industry is expected to be good and it is widely believed that the Industry would continue to be on a very satisfactory growth trajectory over the entire decade.

Component manufacturers naturally benefited from the growth in the Automotive Industry and generally had a good year though they too had to feel the impact of the same adverse factors as the Automotive Industry during the second half year.

Your company performed well during the year achieving a turnover of 7 87.63 crores as against Rs. 73.51 crores in the previous year, with both the Rings Division and the Transmission Components Division contributing significantly to the increase in the turnover. However the increase in input and finance costs combined with power shortages eroded the margins and added to the overheads and consequently the profit before tax for the year under review was Rs. 6.75 crores as against Rs. 8.16 crores in the previous year.

OUTLOOK

As said earlier, long term prospect for the Indian Automotive Industry is very promising and it is expanding at a rate that could well make it the fastest growing market in the world. Existing Vehicle Manufacturers are investing heavily for expansion of capacity and product range as well as for technology upgrade and R&D. There has also been the entry of additional global majors whose production facilities are already on stream and whose vehicles have begun reaching the market. A large number of new makes models and variants with performance features of very high sophistication, including compliance with very strict emission norms like Euro IV and above are now on the market. The changing scene in the Automotive Industry augurs well for the Components Manufacturers.

Your company is fully geared up to take advantage of the growing demand and expects a good year ahead.

The project for the PVD Ring is almost completed and production trials and market trials are under way. The project will be completed in all respects shortly and the company expects a significant contribution to Sales and Profits from this product. With the acquisition of the capability for PVD Rings the company will become one of the few who can provide rings for meeting the requirement of the new generation vehicles.

However increasing prices of inputs, higher borrowing cost, power shortage and customer resistance to price corrections which can erode margins and add to overheads are a matter of concern. The company is stepping up its efforts on the value engineering and cost reduction fronts in order to contain the impact of the adverse factors on profits.

The expected increase in production volumes, the addition of a high technology high value product, along with productivity improvements and cost reduction initiatives, the company expects, will enable it to attain higher levels of performance not only in the current year but in the years to come too.

DIRECTORS

Mr A Sivasailam, Chairman passed away on January 12, 2011 and his demise is a sad loss for the company.

He was deeply committed to placing the company in the forefront of component manufacturers and provided guidance and direction to the Company for nearly two decades right from the stage of project implementation. His vision and foresight ensured for the Company safe steerage through the many large scale changes that took place in the Automotive Industry and their impact on components manufacture.

The Directors wish to place on record their appreciation of the valuable contribution made by Mr A Sivasailam during his stewardship of the Company.

In accordance with the provisions of the Companies Act, 1956, Mr N Venkataramani, Dr R Mahadevan and Mr P M Venkatasubramanian, Directors, retire by rotation and are eligible for reappointment.

During the year under review, Mr A Venkataramani and Mr T K Ramasubramanyan were co-opted as Additional Directors, who will hold office up to the date of the ensuing Annual General Meeting. Mr A Venkataramani was subsequently appointed as the Managing Director of the Company with effect from November 01, 2010. The Company has received notice under Section 257 of the Companies Act, 1956, proposing the candidature of Mr A Venkataramani as a Director of the Company. Your Directors wish to place on record the valuable services rendered by Mr T K Ramasubramanyan during his tenure as a Director.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed;

- that the Directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year ended March 31, 2011 and of the profit of the Company for that year;

- that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- that the accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

A Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is included in the Annual Report. A Management Discussion and Analysis Report forms part of this Directors Report. All the mandatory requirements under the Code of Corporate Governance have been complied with.

AUDITORS

Messrs. R.G.N Price & Co., Chartered Accountants retire at the Annual General Meeting and are eligible for reappointment.

PARTICULARS OF EMPLOYEES

There were no employees in receipt of remuneration of Rs. 5,00,000/- p.m. during the year ended 31.03.2011 coming within the purview of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended.

DISCLOSURE OF PARTICULARS

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the Technical Assistance and Marketing Services extended by M/s Nippon Piston Ring Co. Ltd., Japan and M/s. India Pistons Limited, Chennai, respectively.

Your Directors also wish to place on record their appreciation of the contribution made by the employees at all levels.

For and on behalf of the Board

N Venkataramani Chairman

Chennai May 30, 2011

 
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