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Directors Report of Rane Holdings Ltd.

Mar 31, 2013

The Directors take the pleasure in presenting the Seventy Seventh Annual Report together with the accounts for the year ended March 31, 2013.

1. Financial performance:

Your Company''s investment profile is as given below:-

Sl. Ownership of No. Name of investee company Products your Company

Subsidiary companies

1 Rane (Madras) Ltd. Manual steering and suspension systems 53.8%

2 Rane Engine Valve Ltd. Valves, valve guides, tappets 53.6%

3 Rane Diecast Ltd. Machined die cast products 78.7%

4 Rane Brake Lining Ltd. Brake linings, disc pads, composite brake blocs 42.5%

5 Rane Holdings America Inc. Providing business development services in North 100% American region for Rane Group Companies

Joint Venture companies

6 Rane TRW Steering Systems Ltd. Power steering systems and occupant safety systems 50.0%

7 Rane NSK Steering Systems Ltd. Solid and energy absorbing steering columns, 49.0% intermediary shafts, electric power assisted steering systems

8 JMA Rane Marketing Ltd. Distribution company for auto components (Rane 49.0% and others)

Associate companies

9 Kar Mobiles Ltd. Engine valves, collets and guides for internal 39.5% combustion engines

10 SasMos HET Technologies Ltd. Designing, prototyping and manufacturing electrical 26.0% inter-connection solutions, electronic design and integration for defense and aerospace applications

The Company''s income stream comprises of (i) dividend from the above investments, (ii) trademark fee for use of ''RANE'' trademark and (iii) service fee from the group companies for providing services in the areas of management, information technology, business development and infrastructure.

The financial highlights of the year under review are as follows:

(Rs. in Crore)

Particulars 2012-13 2011-12

Income 57.73 63.91

Profit before tax 32.53 38.11

Provision for tax 6.58 3.86

Profit after tax 25.95 34.25

Surplus brought forward 62.58 47.23

Amount available for appropriation 88.53 81.48

During the year, income of your Company had reduced by 11% over that of the previous year. The earnings per share for the year 2012-13 was Rs.18.17 compared to last year Rs.23.99.

2. Appropriation

Taking into account Rs.62.58 crore being surplus of profit brought forward from previous year and the Profit after tax of Rs.25.95 crore, a sum of Rs.88.53 crore is available for appropriation as dividend. During the year, your directors have declared and paid an interim dividend at the rate of 35% (i.e., Rs.3.50 per equity share) on the equity capital for the year and have recommended a further 45% (i.e., Rs.4.50 per equity share) as final dividend, making for a total dividend of 80% for the year ended March 31, 2013. The amount on this account inclusive of tax on distributed profits and surcharge thereon, works out to Rs.12.67 crore. After transfer of Rs.2.59 crore to the General Reserve, Rs.73.27 crore has been retained as surplus in the Profit and Loss Account.

3. Management Discussion & Analysis

Your Company holds strategic investment in subsidiaries, joint ventures and associates (collectively called ''Rane Group'') engaged in the manufacturing and marketing of components for transportation industry and also provides management and other services to Rane Group. A detailed analysis of the automotive industry, group companies'' performance, etc. are discussed in a separate section in this Annual Report under the heading ''Management Discussion & Analysis''.

4. Consolidated financial statements

The following methodology as specified under applicable accounting standards have been applied in consolidating the financial results of the group companies in the consolidated financial results attached in the annual report:-

(a) Subsidiary companies - each line item of income, expenditure, assets and liabilities have been consolidated one hundred percent. Minority interests have been appropriately considered.

(b) Joint Venture companies - each line item of income, expenditure, assets and liabilities have been consolidated based on the percentage of share held in these companies.

(c) Associate companies - share in the profit after tax based on the percentage of share held has been consolidated.

The consolidated financial statements of the Company are prepared based on the audited financial statement of the subsidiary companies, joint-venture companies and associate companies, except in the case of JMA Rane Marketing Limited where the provisional accounts have been considered.

In accordance with the general exemption granted by Ministry of Corporate Affairs (MCA), New Delhi vide circular no.2/2011 dated February 8, 2011, the Company has not attached the financial statements of the subsidiary companies. However, the financial information of the subsidiary companies, duly audited by the auditors, are disclosed in this annual report.

As directed in the said circular, the Company undertakes to make available a soft or hard copy of the annual report and annual accounts of the subsidiary companies and the related detailed information to investors, as may be required by them, seeking such information at any point of time, on demand. The annual accounts of the subsidiary companies has been posted in the website of the Company viz. http://rane.in and also kept open for inspection by any investor at the registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company, which form part of this annual report, include financial results of its subsidiary companies.

5. Fixed deposits

Your Company does not accept any deposit from public in terms of Section 58A of the Companies Act, 1956 and the rules framed thereunder.

6. Board of Directors

Mr. L Ganesh, director, retires from the Board by rotation and being eligible, has offered himself for re-appointment.

The notice convening the ensuing Annual General Meeting (AGM) includes the proposal for his re-appointment as director.

Mr. Krishnan S Waran, director, retires by rotation and does not seek re-election at the ensuing AGM. The Board records its appreciation for the valuable services rendered by Mr. Krishnan S Waran during his tenure as Director. The Board has decided not to fill-up the vacancy caused by the retirement of Mr. Krishnan S Waran at the ensuing AGM.

Mr Anil Kumar Nehru was co-opted to the Board during the year and would hold office up to the ensuing AGM of the Company. The Company has received notice signifying the intention to propose the appointment of Mr Anil Kumar Nehru as director of the Company, at the ensuing AGM.

During the year, Mr V Narayanan and Mr. Ravi Vira Gupta retired from the Board on attaining the age of 75 years, as per the retirement policy of the Company. The Board places on record its appreciation for the services rendered by them during the tenure, as Directors of the Company.

7. Conservation of Energy and Natural resources

The Company is conscious of the imperative to protect environment and the natural resources for achieving sustainable economic growth and have started several initiatives in this regard such as conservation of energy and water and eco-friendly waste management systems.

8. Research and Development Activities

In view of the nature of activities of the Company, provisions of Section 217(1)(e) of the Companies Act, 1956 are not applicable.

9. Foreign exchange earnings and outgo

There was no foreign exchange earned during 2012-13.The foreign exchange outgo was Rs.1.09 crore on account of professional / consultancy charges and foreign travel.

10. Employees

The particulars of employees, as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in Annexure ''A''.

11. Auditors

The Auditors, M/s Deloitte Haskins & Sells (DHS) hold office until the conclusion of the ensuing AGM and have expressed their willingness to continue as statutory auditors of the Company. The Company has received letter from DHS to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. DHS has submitted the Peer Review Certificate issued to them by The Institute of Chartered Accountants of India.

The notice of the ensuing AGM contains necessary resolution in this regard. Members may consider appointing DHS as Statutory Auditors of the Company for the financial year 2013-14.

12. Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956 and based on representations received from the operating management, the directors hereby confirm that they have:

i. Followed the applicable accounting standards in the preparation of the annual accounts for the financial year 2012-13 and there are no material departures;

ii. Selected such accounting policies and applied them consistently and made judgments and estimates that were 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 and of the profit of the Company for the year under review;

iii. 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 detecting fraud and other irregularities;

iv. Prepared the accounts for the financial year on a ''going concern'' basis.

13. Corporate Social Responsibility

The vision of Rane Group on Corporate Social Responsibility (CSR) is "To be a socially and environmentally responsive organization committed to improve quality of life within and outside." CSR activities of Rane Group are channelized through Rane Foundation, a public charitable and educational trust, in the social and environmental spectrum.

Some of the CSR initiatives undertaken by your Company are as follows:

- Rane Polytechnic Technical Campus (RPTC)

- We have invested about Rs.10 crore over the last three years in establishing RPTC. For the academic year 2012-13, RPTC had 205 students in two disciplines viz. Mechanical and Civil Engineering.

- RPTC has also been approved by AICTE for offering an additional course of Mechatronics Engineering and increased intake for Mechanical Engineering. This takes the total intake capacity to 240 students per year.

- RPTC has been approved as one of the polytechnic colleges for the implementation of Canada India Institutional Cooperation Project (CIICP) by the State Project Coordination Unit established under DOTE.

- Under the CIICP umbrella, RPTC aims at offering a wide range of programs that meet the specific skill needs of the industry and community.

- Along with financial support, through collaborative efforts, specific and customized programs such as Student Psychology Management, Communication and Team building skills and IT utilization were organized for the teachers of Ganapathy Iyer Girls High School to enhance teaching effectiveness.

- We have delivered 100 man-hours to The Banyan helping with process improvement as well as lending expertise in competency enhancement to increase administrative efficiency.

- Provided financial and technical support to Kuppusamy Sastri Research Institute in digitizing their collection of rare manuscripts to preserve our rich literature and cultural heritage.

- Around 50 employees of the Rane Group along with their family members participated in The WIPRO Chennai Marathon TWCM 2012. TWCM partnered with United Way Chennai to support their efforts in the areas of education, health and livelihoods. Rane Group contributed towards this cause.

14. Corporate Governance Report

Your Company has complied with the Corporate Governance requirements as stipulated under clause 49 of the Listing Agreement. Detailed report on the compliance and a certificate by the Statutory Auditors forms part of this report as Annexure ''B''.

For and on behalf of the Board

Chennai L Lakshman L Ganesh

May 27, 2013 Executive Chairman Vice-Chairman


Mar 31, 2012

The Directors take the pleasure in presenting the 76th Annual Report together with the accounts for the year ended March 31, 2012.

1. Financial performance:

Your Company's investment profile is as given below:

Sl. Name of investee Products Ownership of No. company your Company

Subsidiary companies

1 Rane (Madras) Ltd. Manual steering and suspension systems 53.8%

2 Rane Engine Valve Ltd. Valves, valve guides, tappets 53.6%

3 Rane Diecast Ltd. Machined die cast products 78.7%

4 Rane Brake Lining Ltd. Brake linings, disc pads, composite brake blocs 41.6%

5 Rane Holdings America Inc. Providing business development services in North 100% American region for Rane Group Companies

Joint Venture companies

6 Rane TRW Steering Power steering systems and seat belt systems 50.0% Systems Ltd.

7 Rane NSK Steering Solid and energy absorbing steering columns, 49.0% Systems Ltd. intermediary shafts, electric power assisted steering systems

8 JMA Rane Marketing Ltd. Distribution company for auto component (Rane 49.0% and others)

Associate company

9 Kar Mobiles Ltd. Engine valves, collets and guides for internal 39.5% combustion engine.

10 Sas Mos HET Technologies Designing, prototyping and manufacturing 26.0% Pvt. Ltd. electrical inter-connection solutions, electronic design and integration for defense and aerospace applications.

The Company's income stream comprises of (i) dividend from the above investments, (ii) trademark fee for use of 'RANE' trademark and (iii) service fee from the group companies for providing services in the areas of management, information technology, business development and infrastructure.

The financial highlights of the year under review are as follows:

(Rs.In Crores)

Particulars 2011 - 2012 2010 - 2011

Income 63.91 48.42

Profit on sale of Agricultural Land - 18.47

Profit before tax 38.11 43.14

Provision for tax 3.86 3.11

Profit after tax 34.25 40.03

Surplus brought forward 47.23 31.19

Amount available for appropriation 81.48 71.22

During the year, income of your Company increased by 32% over that of the previous year. The profit on sale of agricultural land of Rs18.47 crores contributed to higher profits in the previous year. The earnings per share for the year 2011-12 was Rs23.99 compared to last year Rs28.04.

2. Appropriation of Profit

Taking into account Rs47.23 crores being surplus of profit brought forward from previous year and the Profit after tax of Rs34.25 crores, a sum of Rs81.48 crores is available for appropriation as dividend. During the year, your directors have declared and paid an interim dividend at the rate of 60% (i.e., Rs6/- per equity share) on the equity capital for the year and have recommended a further 40% (i.e., Rs4/- per equity share) as final dividend, making for a total dividend of 100% for the year ended March 31, 2012. The amount on this account inclusive of tax on distributed profits and surcharge thereon, works out to Rs15.47 crores leaving the Company with retained profits of Rs66.01 crores. Out of the retained profits, a sum of Rs3.43 crores would be transferred to General Reserve account and the balance Rs62.58 crores would be retained as surplus profit in the Profit and Loss account.

3. Management Discussion & Analysis

Your Company holds strategic investment in subsidiaries, joint ventures and associates (collectively called 'Rane Group') engaged in the manufacturing and marketing of components for transportation industry and also provides management and other services to Rane Group. A detailed analysis of the automotive industry, group companies' performance etc. are discussed in a separate section in this Annual Report under the heading 'Management Discussion & Analysis'.

4. Investments

(a) SasMos HET Technologies Private Limited (SasMos)

During the year, your Company has acquired 26% shareholding in the equity capital of SasMos, a Bangalore based company engaged in designing, prototyping and manufacturing of electrical interconnection solutions, electronic design and integration for defense and aerospace applications. Mr L Ganesh and Mr Harish Lakshman, directors have been nominated by your Company to the board of SasMos.

(b) Rane Holdings America Inc., (RHAI)

Rane Holdings America Inc., (RHAI), was incorporated as a wholly owned subsidiary in Unites States of America, to anchor business development in North American region, for the Rane group companies. Your Company has invested USD 20,000 towards subscription of the entire equity capital of RHAI comprised in 20,000 shares of USD 1 each.

(c) Further Investments in Rane Diecast Limited (RDL)

To augment financial resources for operations and new projects, RDL raised further equity capital of Rs3.42 crores by way of rights issue. Your Company invested Rs2.70 crores by subscribing to the rights issue.

5. Consolidated financial statements

The following methodology as specified under applicable accounting standards have been applied in consolidating the financial results of the group companies in the consolidated financial results attached in the annual report:-

(a) Subsidiary companies - each line item of income, expenditure, assets and liabilities have been consolidated one hundred percent. Minority interests have been appropriately considered.

(b) Joint Venture companies - each line item of income, expenditure, assets and liabilities have been consolidated based on the percentage of share held in these companies.

(c) Associate companies - share in the profit after tax based on the percentage of share held has been consolidated.

The consolidated financial statements of the Company are prepared based on the audited financial statement of the subsidiary companies, joint-venture companies and associate companies, except in the case of JMA Rane Marketing Limited where the provisional accounts have been considered.

In accordance with the general exemption granted by Ministry of Corporate Affairs (MCA), New Delhi vide circular no.2/2011 dated February 8, 2011 the Company has not attached the financial statements of the subsidiary companies. However, the financial information of the subsidiary companies duly audited by the auditors are disclosed in this annual report.

As directed in the said circular, the Company undertakes to make available a soft or hard copy of the annual report and annual accounts of the subsidiary companies and the related detailed information to investors, as may be required by them, seeking such information at any point of time on demand. The annual accounts of the subsidiary companies has been posted in the website of the Company viz. http://rane.in and also be kept open for inspection by any investor at the registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company, which form part of this annual report, include financial results of its subsidiary companies.

6. Fixed deposits

Your Company does not accept any deposit from public in terms of Section 58A of the Companies Act, 1956 and the rules framed there under.

7. Board of Directors

Mr. Harish Lakshman and Mr. Ravi Vira Gupta, directors, retire from the Board by rotation and being eligible, offer themselves for reappointment. The notice convening the ensuing Annual General Meeting includes the proposal for their re-appointment as directors.

8. Conservation of Energy and Natural resources

Rane is conscious of the imperative to protect environment and the natural resources for achieving sustainable economic growth and have started several initiatives in this regard such as conservation of energy and water and eco-friendly waste management systems.

9. Research and development activities

In view of the nature of activities of the Company, provisions of Section 217(1)(e) of the Companies Act, 1956 are not applicable.

10. Foreign exchange earnings and outgo

There was no foreign exchange earned during 2011-12.The foreign exchange outgo was Rs1.11 crores on account of investment in wholly owned subsidiary, professional / consultancy charges and foreign travel.

11. Employees

The particulars of employees, as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in Annexure 'A'.

12. Auditors

The Auditors, M/s Deloitte Haskins & Sells (DHS) hold office until the conclusion of the ensuing Annual General Meeting and have expressed their willingness to continue as statutory auditors of the Company. The Company has received letter from DHS to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. DHS has submitted the Peer Review Certificate issued to them by The Institute of Chartered Accountants of India.

13. Corporate social responsibility

The vision of Rane Group on Corporate Social Responsibility (CSR) is 'To be a socially and environmentally responsible corporate citizen.

The focus of Rane Group's social development initiatives has been in the three specific areas viz. (a) Education (b) Healthcare and (c) Community development.

CSR activities of Rane Group are channelized through Rane Foundation, a public charitable and educational trust. One of the major initiatives undertaken by Rane Foundation in the last two years was establishment of a self financed Polytechnic College named Rane Polytechnic Technical Campus in Sethurapatti Village, Tiruchirapalli, Tamil Nadu. Your Company extended financial support in the form of donation and interest free loans to this cause. Three of Rane's manufacturing units are located around this Village. The Polytechnic received approval from the All India Council of Technical Education (AICTE) and the Directorate of Technical Education, Tamilnadu, to start two courses, viz. Civil Engineering and Mechanical Engineering in the academic year 2011-12. The Vision of the Polytechnic is to turn out students with technical knowledge and industry specific skills at the end of their three year study and training so that they are readily employable by the industry.

14. Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that they have:

i. Followed the applicable accounting standards in the preparation of the annual accounts;

ii. Selected such accounting policies and applied them consistently and made judgments and estimates that were 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 and of the profit of the Company for the year under review;

iii. 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 detecting fraud and other irregularities;

iv. Prepared the accounts for the financial year on a 'going concern' basis.

15. Corporate Governance Report

The Company has complied with the Corporate Governance requirements as stipulated under Clause 49 of the listing agreement. Detailed report on the compliance and a certificate by the Statutory Auditors forms part of this report as Annexure 'B'.

For and on behalf of the Board

Chennai L Lakshman L Ganesh

May 30, 2012 Executive Chairman Vice Chairman

 
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