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Amara raja delux Amara raja delux Presentation Transcript

  • GOTTA BE A BETTER WAY AMARA RAJA BATTERIES LIMITED I 2010-11 ANNUAL REPORT
  • Our new baselineBetter is the most important word in OUR NEWthe history of the world.It never allows us to rest on our CORPORATE IDENTITYlaurels. Amara Raja Batteries Limited unveiled aIt gently reminds us to do betterthan yesterday. new corporate identity in 2010-11, theIt prods us to think better thanyesterday. 25th year of its existence.It pushes us to create better This new identity, recognised as theexperiences for people working andinteracting with us. Amara Raja Way, showcases theIt urges us to be better humanbeings than we are. Company’s five core values - experiences,Better. It’s not a word. innovation, excellence, entrepreneurshipIt is a higher calling. and responsibility.Gotta be a Better Way The new logo identifies these values through separate colours on the one hand and the five natural elements on the other - integrating them through a sense of harmony. 04 25 years of AMARA RAJA 54 Corporate social responsibility 74 General shareholder information 06 2010-11 in retrospect 56 10-year financials 81 Financial section CONTENTS 08 Chairman statement 58 Directors’ report 10 Managing Director’s statement 65 Corporate governance report 22 Management discussion and analysis 73 CEO and CFO certification
  • Blue signifies indelible Experiences created which, like the serene and deep Water, engulfs all our stakeholders. Burgundy symbolises Innovation which, like the vastness of Space, provides us with limitless scope to transcend boundaries. Magenta denotes Excellence which, like the strength of Wind, lifts and drives our ceaseless pursuits. Orange stands for Entrepreneurship which, like the energy of Fire, fuels our creativity. Green indicates our sense of Responsibility which, like the nurturing Earth, guides us in all we do. The new logo is the symphony of diverse elements coming together and moving forward in perfect harmony. THE AMARA RAJA WAY. AMARA RAJA BATTERIES LIMITED GOTTA BE A02 ANNUAL REPORT 2010-11 BETTER WAY 03 View slide
  • A DOMINANT PLAYER IN THE INDIANBATTERY SPACE Amara Raja has a lasting recall Amara Raja is a pioneer Pro Bike RiderTM’ battery with VRLA Amara Raja is a leader technology for the two-wheeler  Altered the image of a battery from a  Pioneered the use of VRLA technology  Sole supplier to Ford India segment mundane black box to a youthful, sleek in India  Largest supplier of industrial standby green power pack  Pioneered the PowerSleekTM FrontDuring an eventful 25-year journey, Amara Raja Batteries Limited  Only battery with the patented storage power in India Access Terminal (FAT) battery, a neataltered the dynamics of the Indian battery industry, established  Transformed the perception of lead-acid Silver X Alloy that protects the insides stylish 12V mono-block power source  Largest single location fully integrateditself around innovation and consolidated its brand as a ‘green standby batteries from a product that from corrosion for telecom networks manufacturing facility in Asiabattery’ manufacturer. leaked acid and corroded surroundings  Introduced expanded metal technology to a safe energy box  Provided a memorable urban (Amaron® successfully for the first time in India Pitstop) and rural (PowerZoneTM)  Redefined the job of battery dealers  Pioneered the zero maintenance customer purchase experience from selling, filling acid and charging to battery with a 60-month warranty (formatted, air-conditioned outlets ) only selling as Amaron batteries emerged as fully charged, ‘fit and  Introduced the innovative ‘Amaron® forget’ when they were dispatched  Launched PowerZoneTM branded  Doubled both LVRLA and MVRLA batteries – part of rural retail battery capacities initiative  Awarded the Best Telecom Supplied the first ever VRLA battery Inaugurated greenfield automotive  Launched new look Amaron® Equipment Manufacturer by BSNL used by Indian Railways – 1100Ah battery plant with a 1 million unit product range (PRO, FLO, GO,  Awarded Quality Excellence Award for coach air-conditioning capacity Black and Fresh) by INDUS Towers 1996 2001 2007 2009MILESTONES1992 1997 2002 2004 2008 2010 Commenced production in India’s Signed JV with Johnson Controls  Received ISO 14001 certification  Received the Ford World Launched the Amaron® Pro Bike  Featured in the Forbes’ ‘Best under a USD first and most advanced VRLA Inc (JCI), USA  Launched QuantaTM UPS, Excellence award RiderTM – first VRLA two-wheeler billion’ Asia list battery plant Amaron Hi-way® and Amaron  OE agreement with Maruti batteries in India  Received the Supply Chain Leader 2011 Harvest® batteries Udyog Limited Award under the category ‘Dry cells and storage batteries’ by Industry 2.0 India SCM Conclave  Received the award for ‘Best HR Strategy in line with Business’ at the National Round AMARA RAJA BATTERIES LIMITED GOTTA BE A04 ANNUAL REPORT 2010-11 BETTER WAY 05 View slide
  • 2010-11IN RETROSPECT  Declared a special dividend of ` 2 per share on the occasion of the silver jubilee Our growth Revenue growth Book value growth  Achieved a 20% growth in sales volume of automotive and industrial batteries  Received OHSAS-2007 certification  Featured in Forbes ‘Best under a USD in numbers 20% Over 2009-10 19% Over 2009-10 billion’ Asia list  Achieved a 20% growth in net sales  Received the first prize under the  Doubled two-wheeler/small VRLA ‘discrete manufacturing category’ in CII – battery capacity from 1.80 million units 4th National conference and to 3.60 million units per annum competitions for Six Sigma  Touched one billion Ah sales in industrial battery business  Received the Supply Chain Leader 2011 Volume growth Export growth Dividend payout Award under the category ‘Dry cells and  Introduced Amaron batteries in the 2V high integrity series, a specialised storage battery used in the VoltTM Hi-Life storage batteries’ by Industry 2.0 India SCM Conclave 20% Over 2009-10 60% Over 2009-10 58% Over 2009-10  Won the commendation (Foundation Indian telecom industry Award) ‘Strong commitment to HR  Achieved market leadership in the Excellence’ award at the National HR telecom and UPS segments Conclave of CII 13,132 14,645 17,611 2,056 2,965 2,588 1,670 1,481 15.66 20.24 14.69 47.49 63.65 75.63 19.56 17.34 30.62 44.51 34.62 21.80 35.18 24.90 0.70 0.17 0.15 9.42 0.80 2.90 4.60 805 POST TAX PROFIT (` Million) DIVIDEND PER SHARE (`) EARNING PER SHARE (`) REVENUE (` Million) DEBT-EQUITY (times) EBIDTA MARGIN (%) EBIDTA (` Million) BOOK VALUE (`) RONW (%) ROCE (%) 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11 AMARA RAJA BATTERIES LIMITED GOTTA BE A06 ANNUAL REPORT 2010-11 BETTER WAY 07
  • This yearCHAIRMAN’S STATEMENT Amara Raja celebrates its Silver Jubilee. We started our entrepreneurial journey 25 years ago, and we stand today at a significant milestone. THE GLOBAL ECONOMY SHOWED A new journey…. a new excellent practices. In appreciation of our to drive business over the future.“OUR CORE VALUES STRONG INDICATIONS OF A identity Company’s HR practices, the ‘Employer In recent years, emerging economies led Branding Institute’, conferred variousTHAT PAVED OUR PATH TURNAROUND AT THE BEGINNING OF 2010-11 AND EXPECTATIONS This year Amara Raja celebrates its Silver Jubilee. We started our entrepreneurial awards to our Company like ‘Best HR by China and India have confidently proven that they are not only capable ofTO SUCCESS OVER THE WERE GENERALLY OPTIMISTIC. While journey 25 years ago, and we stand Strategy in line with Business’, managing their own but can also ‘Continuous Innovation in HR Strategy atLAST 25 YEARS WILL the state of affairs is recovering from the global meltdown two years ago, today at a significant milestone. We look back with satisfaction, achievement and Work’ and ‘Excellence in HR through influence the global economy. These countries are currently in a position toCONTINUE TO GUIDE US the global economy is still not back to responsibility. We look forward to Technology’. The Company bagged the assert themselves as superior in economic Supply Chain Leader 2011 award underTO REACH AND PASS desired health. While developed nations are growing slowly, emerging continuing this journey with greater achievements and bigger goals. We are the category ‘Dry cells and storage management and crisis control than many advanced nations. Amara RajaMANY MORE SUCH economies are standing out as real commemorating this milestone with a batteries’ by Industry 2.0. CII awarded Group is committed to play a significant the first prize under the ‘discreteMILESTONES”. drivers of the global economic activity, India and China the prime movers new corporate identity. The identity rests on five strong pillars that define our core manufacturing category’ at CII- 4th role in this momentum of growth and prosperity through the ‘Amara Raja with India’s GDP growth at 8.6 per values that we call the ‘Amara Raja Way’. National Conference and competition on Way’. cent in 2010-11. The new logo articulates our five core Six Sigma. The 25 year journey would not have values of Experiences, Innovation, The Indian manufacturing sector grew Way forward been the same without our JV partner, Excellence, Entrepreneurship and 8.8% in 2010-11. India is ranked The Indian economy is set to expand customers, employees, vendors and Responsibility, symbolising harmony and second in terms of manufacturing faster with a projected growth being other stakeholders. I take this how they address the challenges of a competence and is currently rated as 8.5% in 2012. opportunity to thank them for making dynamic business environment. one of the most attractive global Amara Raja a force to reckon within the Automotive battery business: The investment destinations. As per the An ever-changing business environment storage battery business in India and look ongoing capacity additions, both in the super-cycle report by Standard warranted this change even as our core forward to their continued support. I am four-wheeler and two-wheeler plants, Chartereds global research team, enduring values will continue to guide us confident that we will replicate what we will help the Company capitalise on China is likely to grow at 6.9% rate to pass more milestones. have achieved in 25 years by doubling opportunities. The automotive sector will over the next two decades while India them in the next five years. Performance… propel our growth over the next few is likely to grow on an average of In this special year, our Company crossed years, with India expected to become the 9.3% over the same period and trail the ` 2000 cr mark turnover, a sixth largest passenger vehicle producer the US as the third-largest economy noteworthy milestone. We achieved in the world with annual car sales by 2030. The said report also sees the market leadership in our telecom and projected to increase to over 9 million by world economy reaching USD308 UPS businesses in the industrial battery 2020. trillion by 2030. Based on the growth and inflation forecasts, China will be business and improved our aftermarket Industrial battery business: With growing a USD73 trillion economy and India presence in the automotive battery avenues, including replacement will be a USD30 trillion economy by space. opportunities in the telecom sector, 2030. Currently, India is slightly over a surging demand in the UPS and power trillion dollar economy. Recognitions sectors, exports to new geographies and During the year, our Company won the government’s thrust to connect vast several accolades for its innovative andDr. Ramchandra N Galla, Chairman rural areas, there is a growing potential AMARA RAJA BATTERIES LIMITED GOTTA BE A08 ANNUAL REPORT 2010-11 BETTER WAY 09
  • MANAGING DIRECTOR’S STATEMENT“OUR CORE PURPOSE The financial year 2010-11 was a year of memories and achievements for our In the Industrial Battery business, the year 2010-11 witnessed sharp reduction in in two-wheeler battery organized Aftermarket segment has reached 25% and replacement requirement are expected to push the demand in the nearOF CREATING INCLUSIVE Company. This year we completed 25 demand in the Telecom sector, resulting within three years from launch. future. UPS battery market will continueAND SUSTAINABLE years of our existence; crossed the milestone revenue of ` 20 billion; in unsustainable aggression in pricing by competition, which impacted the During the year, two-wheeler and to show a healthy annual growth of about 14%, which coupled with emergingGROWTH WHILE launched new products; emerged revenue and margins. Despite the small-VRLA battery combined installed capacity has been doubled to 3.60 applications like Solar and Motive PowerDELIVERING WORLD- market leader in Telecom and UPS (Medium VRLA) battery business; adverse market conditions, we gained market share in Telecom business, owing million units per annum to support the will propel the growth in the Industrial battery business. We anticipate increasingCLASS PRODUCTS AND featured in Forbes “Best under a USD to our “preferred supplier” status with growing demand for our Company’s products. business opportunity from the AfricanSERVICES CONTINUES billion” Asia list; and unveiled our new corporate identity. Our Company’s our customers. The thrust on volume coupled with cost efficiency initiatives Ongoing capacity additions in both the continent and intend to establish a strong presence there.TO REMAIN performance was supported by the moderated the impact on our margins. Customer’s preference for our products four-wheeler battery plant (4.20 million In spite of some slowdown in OEMUNWAVERING.” stability in the Indian economy and stupendous growth in the Automobile was reinforced by the fact that Bharti units to 5.60 million units per annum) and the two-wheeler battery plant (3.60 production in the short-term, the Indian Automobile Industry is expected to sustain Airtel (the leading telecom operator) million units to 5 million units per sector. Despite lower demand in the double-digit growth for the next five years preferred us for their battery annum) will be completed by the 2nd Telecom sector, which created volume on the back of a growing economy, rising requirements in Africa. quarter of 2011-12. This will enable our and margin pressure, our Company incomes and favorable demographics. The weathered the storm with a more diverse The overall sales volume touched one Company to benefit from the growth Aftermarket will continue to present an business mix backed by portfolio of billion Ampere hour (Ah) with 20% growth opportunities available in the attractive opportunity aided by customer over the previous year, backed by strong Aftermarket and new geographies preference for branded batteries and products and expansion into new demand for UPS QuantaTM batteries. We outside of India, simultaneously helping sustained growth in Automobile geographies. emerged as the market leader in Telecom our Company to garner higher market production. Our Company achieved gross sales and UPS battery business with 42% and share from OEMs. of ` 20,765 million in FY 2010-11 We will continue to judiciously create 32% market share respectively, backed by Our Company continues to enjoy capacity ahead of demand and continue compared to ` 16,904 million in customers’ preferences for Company’s comfortable liquidity and is confident of to lead the market with innovative FY 2009-10. Net revenues for the year quality products. meeting the funding requirements products. were at ` 17,611 million compared to Amaron VoltTM, a specialized Hi-Life planned for the financial year 2011-12, ` 14,645 million in FY2009-10 recording We will strive to reach our stated goal of battery in the 2V high-integrity series, was through internal accruals and we expect a topline growth of 20%. The profit after USD1billion revenues by 2015-16. It will launched during the year for critical to continue to be near debt-free. tax in FY2010-11 stood at ` 1,481 be our endeavour to explore and excel in applications in the Telecom, Renewable million against ` 1,670 million in all business initiatives and reward all Energy and Power Control sectors, which Outlook FY2009-10. Our Company has been stakeholders even better in times to come. received very good market response. As we celebrate the Silver Jubilee year, achieving aggressive growth targets, we are geared up with renewed vigor for On behalf of the Company, I take this with 37% CAGR in revenues and 44% In the Automotive Battery business, sales a brighter future, despite near-term opportunity to convey my sincere thanks CAGR in profits over the past five years. volume grew by 20% and 58% in the challenges in Telecom and possible lower to all shareholders and place on record four-wheeler battery and two-wheeler growth rates in Automobile production. our gratitude to our employees, The Board of Directors have proposed a battery applications respectively. The We are optimistic about continuing our customers, channel partners, bankers, dividend of ` 2.60 per share, which is in growth was realized through channel growth story, aided by robust long-term suppliers and our joint-venture partner line with the dividend policy of distributing expansion in the Aftermarket business, fundamentals of the Indian economy. Johnson Controls Inc. upto 15% of the net profits after tax to the robust demand from OEMs and addition Our core purpose of creating inclusive shareholders. This is over and above the of new geographies in international Let’s all believe there’s ‘Gotta be a better and sustainable growth while delivering “One time special dividend” of ` 2.00 per markets. In the four-wheeler battery way’ and lets work together towards world-class products and services share declared and paid in February 2011, business, our Company enjoys a achieving it. continues to remain unwavering. to commemorate the silver jubilee of our market share of 25% in OEM and Company. 30% in Aftermarket segment in In Telecom, Value Added Services (VAS)Jayadev Galla, Managing Director organized market, while market share enabled by 3G and Wi-MAX, rural rollout AMARA RAJA BATTERIES LIMITED GOTTA BE A10 ANNUAL REPORT 2010-11 BETTER WAY 11 Annual Report 2010-11 11
  • We strengthened our customer experience through the following initiatives:  We were the first to offer a 60- month warranty on batteries in India, providing consumers with peace of mind.  We enhanced the retail purchase experience through unique, urban (Amaron® Pitstop) and rural (PowerZoneTM) formatted outlets.  We emerged as the preferred partner for major vehicle launch programmes of leading automobile OEMs in India.  We created a collaborative working culture and empowered teams to undertake strategic initiatives, thereby providing an invigorating working experience. A NUMBER OF OUR INDUSTRY PLAYERS WOULD PROBABLY GIVE INITIATIVES LIKE THESE ACRONYMS LIKE CRM AND TQM. WE CONSIDER THEM TO BE THE INTRINSIC AMARA RAJA WAY!  We were the battery supplier for India’s first micro hybrid vehicle of Mahindra & Mahindra.  We are the single source of batteries for the entire fleet of Comfort Delgro taxis in Singapore.  We were the first to introduceEXPERIENCESAT AMARA RAJA, WE ARE ENGAGED IN MANUFACTURING AND MARKETING BATTERIES. VRLA technology for railway rolling stock application, enabling Indian Railways to roll out III tier AC coaches.WHAT WE RELISH IS EXCEEDING CUSTOMER EXPECTATIONS AND ENHANCINGCUSTOMER DELIGHT. AMARA RAJA BATTERIES LIMITED GOTTA BE A12 ANNUAL REPORT 2010-11 BETTER WAY 13
  • We facilitated the transformation through painstaking innovations:  We were the first to introduce VRLA technology in India for industrial standby applications.  We pioneered VRLA batteries for motorcycle applications in India.  We were the first to introduce Zero Maintenance batteries for automotive applications in India.  We transformed India’s automotive battery market with the launch of Amaron®, backed by a unique sales and service model. In doing so, we grew faster than the industry average in each of the last five years leading to 2010-11. A NUMBER OF INDUSTRY OBSERVERS WOULD CONSIDER THIS TO BE UNIQUE. WE CONSIDER IT TO BE THE TYPICAL AMARA RAJA WAY!  We launched Amaron Volt® Hi-Life batteries, a high-integrity series battery to provide robust back-upINNOVATIONAT AMARA RAJA, WE EMBEDDED ‘INNOVATION’ INTO OUR ORGANISATIONAL DNA. power solutions.  We launched ‘PowerZoneTM’, the first formatted rural distribution initiative in the Indian battery industry.THE RESULT IS THAT WE WENT ON TO SHAPE OUR COMPANY’S FORTUNES ANDALTER THE DYNAMICS OF THE INDIAN BATTERY INDUSTRY. AMARA RAJA BATTERIES LIMITED GOTTA BE A14 ANNUAL REPORT 2010-11 BETTER WAY 15
  • EXCELLENCEAT AMARA RAJA, WE MANUFACTURE BATTERIES AT A SINGLE LOCATION; WE DELIVERDEPENDABILITY ACROSS THOUSANDS OF POINTS OF USE. We achieved this through some  We grew net sales, EBIDTA and profit  In 2010-11, we received the 1st prize in diligent investments: after tax by 4.84 times, 4.97 times and TPM Best Practices in AOTS (South 6.22 times respectively over the last five Chapter) and received the Supply Chain  We created Asia’s largest, single- years leading to 2010-11. Leader 2011 Award under the category location, vertically-integrated battery manufacturing facility accredited for ISO  There are more than 1,90,000 live ‘Dry cells and storage batteries’ by Industry 9001:2000, ISO/TS 16949 (certified by battery banks, providing uninterrupted 2.0 India SCM Conclave. TUV NORD), ISO 14001 and OHSAS backup power to GSM & CDMA Base  Two teams from the Company 18001- 2007 Trans-receiver Stations (BTS), Base participated in National level QCC Switching Centers (BSC) and Main convention; one featured in the “Excellence  We received the Ford World Excellence Switching Centers (MSC) in telecom. category”, the other stood in the award, the award for the Best Telecom Equipment Manufacturer from BSNL and A NUMBER OF INDUSTRY PLAYERS “Distinguished Category”. the Quality Excellence Award from Indus WOULD CONSIDER THIS TO BE GOING  Won the first prize under the discrete Towers BEYOND THE USUAL CALL OF BUSINESS. manufacturing category at the CII- 4th WE CONSIDER IT TO BE THE NATURAL National conference and competitions on  We enjoy the preferred supplier status AMARA RAJA WAY! Six Sigma. with major telecom, UPS and automotive OEM customers; we are market leaders in supplying batteries to the telecom and UPS segments AMARA RAJA BATTERIES LIMITED GOTTA BE A16 ANNUAL REPORT 2010-11 BETTER WAY 17
  • ENTREPRENEURSHIPAT AMARA RAJA, OUR BUSINESS IS TO MAKE BATTERIES BUT OUR PASSION IS TO BUILD ENTREPRENEURS. We demonstrated this through a number of initiatives:  We built successful and progressive partnerships especially our joint venture with Johnson Controls Inc., USA (JCI), a global leader in automotive batteries.  We created a team of 70 ‘freshers’ (average age 27 years) to independently manage exciting segments like the two- wheeler and the small VRLA battery facility.  We created entrepreneurs by developing business partners through our Amaron® Pitstop, PowerZoneTM outlets and AQuA channel on a pan-India basis.  We nurtured ‘intra-preneurship’ among the employee community through Continuous Improvement programmes – enhancing value for the individual and the organisation. A NUMBER OF PEERS WOULD CONSIDER THIS TO BE A BUSINESS STRATEGY. WE CONSIDER IT TO BE THE FUNDAMENTAL AMARA RAJA WAY!  We strengthened our entrepreneur- channel partners (Amaron® Pitstop, PowerZoneTM outlets and AQuA network) from 147 as on March 31, 2006 to 1,112 as on March 31, 2011.  We ranked 22nd among the Best Employers in India, as per ‘Employer Branding Institute of India’.  We were featured in Forbes ‘Best under a US$ billion’ Asia list. AMARA RAJA BATTERIES LIMITED GOTTA BE A18 ANNUAL REPORT 2010-11 BETTER WAY 19
  • We have done so for the last number of years through the following initiatives:  We created non-migratory job opportunities in rural communities.  We dedicated 2% of profits or 0.2% of revenue (whichever is higher) towards corporate social responsibility initiatives, creating social infrastructure (schools, hospitals, public centers, sanitation infrastructure and community facilities).  We transformed barren, dry land into one of the greenest battery facilities; more than 70% of the area is green. A NUMBER OF CORPORATES WOULD PROBABLY DESCRIBE SUCH INITIATIVES AS COMMUNITY BUILDING. WE CONSIDER THEM TO BE THE CORE AMARA RAJA WAY!  Our manufacturing units employ over 85% of people from surrounding villages.RESPONSIBILITYAT AMARA RAJA, WE DO NOT MERELY PROVIDE POWER SOLUTIONS; WE EMPOWER THE  We contributed Rs.126 million towards social development initiatives over the last five years leading to 2010-11.WORLD AROUND US. AMARA RAJA BATTERIES LIMITED GOTTA BE A20 ANNUAL REPORT 2010-11 BETTER WAY 21
  • financial condition improved, it remained of the global output in 2025, compared MANAGEMENT unusually fragile. with about 37% in 2011 and 30% in 2004. DISCUSSION A report by the Asian Development Bank (ADB) suggested a slowdown in the US, 2. The Indian economy AND ANALYSIS Europe zone and Japan in 2011 which could lead to a lower growth in global merchandise trade. India’s GDP grew 8.5% in 2010-11 (8.0% during 2009-10), primarily driven by a significant growth in its agricultural ECONOMIC OVERVIEW sustainability – triggered by the situation sector. This resulted in record FII inflows in Ireland and Greece – led to an Emerging markets will redefine global 1. The global economy and a revival in domestic investor unprecedented widening of spreads in economy: According to the World Bank The global economy grew at a robust confidence. Net capital inflows increased these countries. Funding pressures report ‘Global Development Horizons 5.1% in 2010 against (0.5)% in 2009. USD 13.7 billion to reach USD 36.7 reappeared (to a lesser extent) -- the key 2011-Multi polarity: The New Global Advanced and emerging economies billion as on March 31, 2010; foreign difference being that their spillover to Economy’, Brazil, China, India, Indonesia, contributed to this recovery. exchange reserves grew USD 20 billion to other countries was limited. South Korea and Russia are expected to Advanced economies sustained their USD 305.49 billion. drive growth in lower-income countries moderate growth, owing to stronger- Natural disasters – floods, earthquakes through cross-border commercial and The index for six core industries (crude oil, than-expected consumption in the US and droughts, among others – took a financial transactions. As a Group, petroleum refinery products, coal, and Japan. Private consumption, which massive toll on human life, resulting in emerging economies are expected to electricity, cement and finished carbon fell sharply during the crisis, revived in wealth erosion. grow at an average of 4.7% a year steel) with a weight of 26.68% in the advanced economies. Growth in Going forward, global GDP is projected between 2011 and 2025; advanced Index of Industrial Production (IIP) grew emerging and developing economies was to grow more than 4.3% in 2011 with economies, in contrast, are slated to by 5.6% during April-January 2010-11, buoyed by private demand, developing economies expanding more grow by 2.3% over the same period, but compared with a growth of 5.5% accommodative policy stances and than 6.6%, about three times 2.2% will retain their global dominance. The achieved during the corresponding resurgent capital inflows. growth expected for advanced combined real output of six major period in 2009-10. However, pockets of vulnerability economies. emerging economies is expected to Even as macroeconomic numbers were persisted; real estate markets and match that of the Euro area by 2025. The International Monetary Fund (IMF) strong, significant volatility was evident - household incomes remained weak in They will (in real terms) account for 45% suggests that Asia’s economic growth some advanced economies. Financial will outpace other regions on the back of Snapshot turbulence re-emerged in Europe in the strong export performance, buoyant 2010-11 2009-10 last quarter of 2010. Concerns about private domestic demand and rapid credit Agriculture, forestry and fishing 5.4% 0.4% banking sector losses and fiscal growth. It indicated that while the global Mining and quarrying 6.2% 6.9% AS A GROUP, EMERGING Manufacturing 8.8% 8.8% ECONOMIES ARE GDP growth Electricity, gas and water supply 5.1% 6.4% EXPECTED TO GROW AT 2009 2010 Construction 8.0% 7.0% Global (0.5)% 5.1% Trade, hotels, transport and communication 11.0% 9.7% AN AVERAGE OF 4.7% A Advanced economies (3.4)% 3.0% Financing, insurance, realty and business services 10.6% 9.2% YEAR BETWEEN 2011 AND Emerging economies 2.8% 7.4% Community, social and personal services 5.7% 11.8% 2025 Source: IMF (Source: Prime Minister’s Economic Advisory Council, PMEAC) AMARA RAJA BATTERIES LIMITED GOTTA BE A22 ANNUAL REPORT 2010-11 BETTER WAY 23
  • - not only in the numbers but also in segment registered a 26.7% growth in spectrum auction for which the estimated to be about `130 billion, sentiments, primarily driven by global vehicle sales in 2010-11, owing to robust Government of India received `1,062 comprising the industrial batteries cues and policy responses addressing economic growth, increased rural focus billion as license fee. (`48 billion) and automotive batteries M&HCV Tractors inflation. and launch of new models. A total of 24 (`82 billion). The overall size of the 3-wheelers LCV However, the subscriber base growth did new launches were recorded in the unorganised sector is estimated at about Cars Utility vehicles Headline inflation witnessed a relentless not translate into network expansion, as passenger vehicle segment and 16 in the `35 billion. The automotive battery rise during the first half of 2010 and service providers and tower infrastructure 2-wheeler segment. business accounts for nearly 63%, while 0.52 remained in double digits for almost five companies focused on maximising the the industrial segment accounts for the months in 2010. An uneven monsoon in Production in the automobile industry asset utilisation efficiency of existing rest. 0.34 2009, domestic supply-side constraints, grew consistently in the last five years as networks through tower-sharing model. coupled with rising food grain and oil shown below, which augurs well for the Consequently, capital expenditure The automotive SLI (Starting, Lighting 0.42 prices, fuelled inflation in the automobile battery replacement market. declined, impacting the revenues of and Ignition) battery segment can be 0.34 manufacturing goods and services telecom equipment manufacturers. divided into the OEM (~25%) and 0.80 sectors. Telecom: Indian telecom sector emerged aftermarket segments (~75%). Demand 0.22 0.19 IT and ITeS: The Indian IT-BPO industry as an economic success story, registering for automotive batteries is divided among Economic growth estimates witnessed robust recovery in 2010-11. a consistent growth of about 35% over 0.35 different segments, with cars and utility 0.34 Given the underlying momentum, the The IT-BPO industry’s revenues are 0.36 0.50 the past decade in terms of subscribers. 0.53 vehicles constituting the largest share of Indian economic outlook became expected to grow by 19.2% to USD 88.1 0.29 0.50 0.22 0.19 According to a World Bank study, a 10% 36%, followed by commercial vehicles at conducive for a sustained increase in billion in 2010-11 compared with USD 0.29 increase in teledensity is known to 0.50 0.25 about 28%, 2-wheelers at about 21% 0.31 2.45 services sector growth, normalisation in 73.9 billion in 2009-10. 0.56 0.23 0.32 improve GDP growth by 0.6%. In other and tractors at 15%. Demand for 0.43 0.17 0.22 agricultural output and strengthening words, a 1% increase in mobile The Indian software and services exports automotive batteries largely relies on the Moped private consumption. Substantial 1.52 subscribers is estimated to increase per (including ITeS-BPO) are estimated at 0.32 growth of the automobile OEMs and the 0.35 government thrust on infrastructure Scooter Production in million units capita GDP by about USD 200. According USD 59 billion in 2010-11, compared 0.31 aftermarket. Growth in the industrial 1.52 development will propel industrial sector Motor cycle 1.42 to a study by the Indian Council for with USD 50 billion in 2009-10, an 1.05 0.26 batteries segment is driven by growth. As a result, India’s GDP is 1.24 Production in million units Research on International Economic increase of 18%. The emerging market infrastructure and technology-related expected to grow 8-8.5% in 2011 as 0.70 Relations (ICRIER), higher tele-density share in total exports increased from industries such as power, UPS and 2.14 private demand gathers momentum and 0.67 regions have grown faster than those 9.4% in 2009-10 to 9.7% in 2010-11. telecommunications. 1.49 10.63 supports the overall growth process. 0.39 0.43 0.44 with lower teledensity. The IT-BPO industry played a key role in 0.38 0.98 1.08 1.16 8.44 However, the two perceived road blocks Automotive batteries: Growth in the 0.99 7.10 6.66 6.80 putting India on the world map. The are inflation and rising global oil prices. The total wireless and broadband automotive battery segment is driven by 6.20 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 industry attracted more than 10% of the In view of this, the International subscriber base was at 811.59 million vehicle rollout and replacement demand. total FDI flowing into India. Monetary Fund scaled down India’s and 11.87 million respectively by March The OEM business is driven by fresh 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 growth projection for 2011 to 8.2%. 2011. The overall telecom penetration,CAGR for the last five years (2005-06 Indian battery market vehicle (4-wheelers and 2-wheelers) including wireline connectivity, reachedto 2010-11): Car – 18.6%, UV 15.2%, The size of the Indian lead acid storage demand. Aftermarket sales are influenced How the user sectors 157.32% in urban markets, and 33.79% battery industry (including inverter and3W – 13%, LCV – 18.9%, M&HCV – by the number of vehicles in use, average9.4% and Tractor – 10.8% performed in rural markets. Indian telecom sector motive power batteries) as on March Two-wheelers CAGR for the last five battery life, average vehicle age and years (2005-06 to 2010-11): 12 % Automotive: The Indian automotive witnessed the much-awaited 3G & BWA 2011, at a lead base of USD 2,500/MT, is population growth. In the aftermarket, AMARA RAJA BATTERIES LIMITED GOTTA BE A24 ANNUAL REPORT 2010-11 BETTER WAY 25
  • STRATEGIC BUSINESS UNIT 1 AUTOMOTIVE BATTERY small unorganised manufacturers, who Industrial batteries: Industrial batteries Snapshot sell low-cost unbranded products, have a wide range of use across Market share capture sizeable market share, especially infrastructure and other sectors – 4-wheeler capacity 2-wheeler capacity 4-wheeler replacement when catering to commercial vehicles railways, telecom, power, uninterrupted (organised) and tractors. However, the share of power supply (UPS), inverters, electric unorganised manufacturers declined in fork lifts, among others. Valve Regulated 4.20 3.60 30% recent years owing to product Lead Acid (VRLA) batteries, being million units / annum million units / annum unreliability, rising disposable incomes, completely sealed, maintenance-free and March 31, 2011 March 31, 2011 2010-11 increasing quality consciousness, reliable, are the most widely used in environmental restrictions, technology critical, remote and unmanned Market Share OEM Sales volume growth Revenue growth advancements in the automotive industry applications (telecom and UPS systems). (4-wheeler) and organised players increasing their presence outside major cities. The Indian telecom sector remained the largest customer of industrial batteries 25% 20% 29% The replacement cycle of an automotive even as competitive pressures and change March 31, 2011 2010-11 2010-11 battery is determined by battery usage in business dynamics forced telecom and other factors like charge balance, service providers to reduce capital Overview in India within a short span of 10 years. cumulative distance clocked by expenditure. On the other hand, The automotive batteries business unit 4-wheeler segment: About 60% of automobile, among others. On an extensive computerisation of banking and commenced operations in 2001 with automotive battery business sales volume average, a 4-wheeler battery life government departments and persistent technology from Johnson Controls Inc., - is derived from the aftermarket segment expectancy is about three years, while for power shortage resulted in robust joint venture partner and the world’s in various formats, while the balance the 2-wheeler battery life expectancy is demand for UPS batteries with a growth largest manufacturer of automotive 40% is from sales to OEMs and exports. around two years. of about 15% CAGR across five years. batteries. It pioneered the introduction of AMARON® is a preferred supplier to Zero maintenance technology in India’s major automobile OEMs in India for automotive battery segment, the key diverse platforms with a 25% market Domestic lead acid storage battery market differentiator in an otherwise cluttered share. The Company has a market shareON AN AVERAGE, A (` 130 billion) Indian automotive battery market. of 30% in the organised aftermarket4-WHEELER BATTERY LIFE AMARON® also launched batteries with sector, where multiple brands are sold in a 60-month warranty (pro-rata), for the India. The AMARON® brand is wellEXPECTANCY IS ABOUT Automotive Industrial battery battery first time in India’s automotive battery accepted in various countries across theTHREE YEARS, WHILE FOR business – business – market. Besides product features, path- Indian Ocean Rim, spanning South East 63% 37%THE 2-WHEELER BATTERY breaking initiatives around distribution, Asia, Middle-East Asia and East Africa. Branded battery– 58% branding and people propelledLIFE EXPECTANCY IS AMARON® to become the fastest- 2-wheeler segment: Amara Raja ventured into the 2-wheeler batteryAROUND TWO YEARS. growing battery brand and the second Unbranded battery– 42% space in May 2008 through its largest automotive battery manufacturer AMARA RAJA BATTERIES LIMITED GOTTA BE A26 ANNUAL REPORT 2010-11 BETTER WAY 27
  • commenced supplies to Cummins in resulted in substantial power Amaron Pro Bike Rider™ brand, the first AMARON® format, 800 exclusive retail the private label segment for DG starter consumption savings VRLA motorcycle battery in India. The JCI partners in PowerZoneTM format spread application • Optimised grid casting operations for technology was customised/adapted by across semi-urban and rural locations and • Received product approval from Ford improved productivity Amara Raja for the Indian conditions. This around 2,000 service hubs) in the for Figo supplies to Gulf countries • Commissioned several kaizen product offers a 30% higher cranking automobile battery segment in India. power over the nearest competitor and • Received the first prize in TPM Best improvements, reducing scrap and comes with warranties ranging between Highlights, 2010-11 Practices at AOTS (South Chapter) wastage 36 and 60 months. Within two years of • 20% volume growth in 4-wheeler Key initiatives • De-bottlenecked the formation area of launch, the brand carved out a 25% batteries and 58% volume growth in At the shop floor the automotive battery plant market share of the 2-wheeler 2-wheeler batteries over 2009-10 The batteries are manufactured in the ISO • Introduced innovative ‘skylights’, for replacement battery segment in the • Sales revenue grew 29% over 2009-10. 9000, ISO 14001 and TS 16949-certified better shop floor lighting, using solar organised market. • Expanded the network to 240 plant, using world-class technology and energy, simultaneously reducing the franchisees and over 18,000 retailers in stringent quality parameters. The plant power consumption Products range AMARON® format also received the OHSAS certification • Optimised procurement costs and The Company manufactures batteries for during the year. • Enhanced the presence of activities through vendor consolidation all vehicle segments (passenger cars, PowerZone TM to over 800 outlets in During 2010-11, several expansion multi-utility vehicles, tractors, commercial In the product semi-urban and rural locations across activities were initiated in the automotive vehicles, motorcycles and scooters) The following are the major quality the country batteries business unit manufacturing supported by 12 to 60 month warranties. improvements achieved during 2010-11: • Developed and commenced supplies to facility in Tirupati. Two new assembly • Automated real-time process data Distribution network TATA’s prestigious SUV ‘Aria’ lines are planned in the 4-wheeler battery logging of the paste mixer for Over the years, Amara Raja created a plant for which, the equipment already • Revitalised our presence in Kuwait, improved quality, product and process THE BATTERIES ARE dominant network (240 franchised started arriving in March 2011. A new Oman and Dubai traceability distributors, about 18,000 retailers in assembly line was commissioned in the MANUFACTURED IN THE ISO • Received product approval and • Automated SPC data computation in 2-wheeler battery plant in January 2011. the pasting area in both plants to 9000, ISO 14001 AND TS The TPM activities in the 4-wheeler Brand User segment Warranty period reduce human errors and process AMARON PRO Passenger cars 60 months battery plant received recognition from 16949-CERTIFIED PLANT, variations ABK-AOTS, southern chapter, which was AMARON FLO Passenger cars 48 months • Introduced Di-electric testing for USING WORLD-CLASS awarded the “1st prize in TPM best AMARON GO Passenger cars 36 months practices”. batteries at end of the line to check the TECHNOLOGY AND AMARON BLACK Passenger cars 18 months integrity of sealing between the battery AMARON FRESH Passenger/MUV 12 months The following initiatives helped optimise jar and the cover STRINGENT QUALITY AMARON HI-WAY Commercial vehicles 24 months effectiveness in manufacturing AMARON HARVEST Tractors 24 months operations during 2010-11: • Designed and installed ‘Visual Check’ PARAMETERS. THE PLANT (machine equipped with three AMARON PRO BIKE RIDER 2-wheelers 60 months • Reduced dross from lead melting pots ALSO RECEIVED THE OHSAS cameras) at the end of the finishing line POWERZONE Passenger Cars 12 months and 18 months by almost half through the POWERZONE Tractors 12 months and 18 months introduction of additives to eliminate any non-conformance in CERTIFICATION DURING THE physical features of the battery being POWERZONE Commercial Vehicles 12 months and 18 months • Installed energy saving lead melting YEAR. delivered to the customer POWERZONE 2-wheelers 18 months pots in the grid casting area, which AMARA RAJA BATTERIES LIMITED GOTTA BE A28 ANNUAL REPORT 2010-11 BETTER WAY 29
  • Number of 2-wheeler and • Established a separate electrical testing enhance brand visibility across major was about 15 per 1,000 people as New products: The ‘electric start-based 4-wheeler on road (in mn) and tear down lab inside the plant to Tier I and II cities against 300 in Europe, 600 in the US and 2-wheeler’ volumes took off about two 19 61 21 68 23 75 25 83 28 92 30 103 33 prioritise the identification of defects • Conducted the first-ever national 30 in China. Going forward, we expect years ago. Owing to increased cranking and analysis channel partner meet of Amaron in ® the 4-wheeler sector to witness a CAGR frequency for an electric-start version, the • Commissioned a study for capturing Bangkok, involving partners and sales of about 20% between 2009-10 and average life of 2- wheeler batteries is 55 cost of quality; established baseline people 2011-12 on the back of rising incomes, expected to reduce from about five years data for metrics improving penetration and favourable to about three years, widening the • Amaron Karting ChallengeTM Season 3 demographics. About 50 new car models replacement market. • Developed an E-Audit Management was conducted across 10 centres are expected to hit the Indian roads in System for improving ISO/TS systems culminating in finals at Hyderabad 2011-12, shoring up demand for Road ahead, 2011-12 In the market place • Product launch in Dubai executed with Amara Raja, buoyed by the overall automotive batteries. The following are some of the initiatives fanfare through a channel partner positive momentum in the last two years meet Investments accelerating volume: The to expand reach and strengthen brand and also owing to generally robust Indian automobile industry expects to 2007-08 2008-09 2009-10 2010-11 2011-12 2006-07 recall during 2010-11: • Re-aligned the product portfolio to market conditions, laid out aggressive invest up to `800,000 million in fresh • Increased business share with suit market needs; eliminated slower plans. capacity in four years; car manufacturing longstanding OEM customers moving variants, created • Increase the 4-wheeler battery capacity is set to rise to 57 lac units by Two wheeler • Implemented the cash-and-carry high-demand products in keeping manufacturing capacity to 5.6 million 2015, according to Ernst & Young, as the Four wheeler model with full vigour in the with new automotive platforms units by September 2011 industry sustains a 10-15% CAGR. India aftermarket, helping improve liquidity • Increase OEM customers to leverage Optimism expects to add one million car and working capital new product variants entering India OEM Battery demand (in mn) The thrust on overall infrastructure manufacturing capacity in 2011-12, 5.0 13.3 6.1 14.4 • Incentivised distributors for delivering accelerating automotive batteries • Increase 2-wheeler battery 3.1 8.0 4.0 9.9 Low passenger vehicle penetration development with specific focus on road committed performance in the demand. manufacturing capacity to 5 million (No of passenger vehicle per 1000) building will catalyse industry growth. aftermarket units by September 2011 Factors like low vehicle penetration, 215 779 271 458 Replacement market: The replacement 15 29 ® • Launched the new AMARON brand increasing GDP growth and growing • Forge alliances to increase presence in cycle for a 4-wheeler battery on an logo with a contemporary look and competition will enhance the price-value the 2-wheeler OEM market average is three years. 4-wheeler OEM feel proposition for customers, widening the • Focus on 10 large export destinations sales grew about 13% CAGR between • Launched a pan-India TV commercial market. 2005-06 and 2009-10, which is expected in the next 18 months across eight television channels to to convert into strong replacement Low vehicle penetration: India’s low celebrate 10 years of the launch of battery demand. passenger vehicle and 2-wheeler AMARON® brand penetration per 1,000 people at 12 and • Conducted the Amaron® Champ 2-wheeler segment 2008-09 2009-10 2010-11 2011-12(E) 71 represent an opportunity. Talent Hunt programme across seven Replacement demand: The 2-wheeler The automobile sector saw a 9% volume market witnessed a CAGR of about 8% metros contacting 4000 mechanics India China Russia US Malaysia UK CAGR over five years (2005-06 to 2009- over 2004-05 to 2009-10, which is • Initiated free auto electrical diagnostic Four wheeler 10). The car penetration rate in India’s expected to create attractive replacement camps and deployed branded vans to Twowheeler passenger vehicles in November 2010 market demand. AMARA RAJA BATTERIES LIMITED GOTTA BE A30 ANNUAL REPORT 2010-11 BETTER WAY 31
  • STRATEGIC BUSINESS UNIT 2 among others in the telecom segment. In Products and applications INDUSTRIAL BATTERY Indian Railways, Amara Raja’s products Amara Raja’s products comprise large, are used in more than 40% of II and III medium and small VRLA batteries. The Snapshot tier air-conditioned coaches; they also industrial battery product portfolio offers support train lighting, and signalling and capacities ranging from 4.5 Ah to 5,000 Large VRLA capacity Medium VRLA capacity Market share (Telecom) telecom (S&T) power supply solutions. Ah. During 2010-11, Amara Raja Amara Raja has emerged as a market introduced AMARON VOLT TM Hi-Life 900 450 42% leader in the medium VRLA product segment for commercial UPS applications batteries – 2V high integrity series, million Ah / annum million Ah / annum designed to be robust, enduring and and enjoys long-term supplier reliable. March 31, 2011 March 31, 2011 2010-11 relationship with national OEMs such as In the telecom sector, the batteries Emerson, Numeric, Delta, DB Power, support switches and transmission Market share (UPS) Sales volume growth Revenue growth Tritronics and Uniline, among others. The (wireline and wireless) networks; the AQuA channel partners helped Amara Indian Railways uses these batteries in 32% 20% 11% Raja to expand its reach in critical user segments in the UPS business such as coach air-conditioning; the batteries also support the transmission and distribution BIFS (banking, insurance, finance and March 31, 2011 2010-11 2010-11 networks of power stations. The UPS services) sector, government sector, batteries support IT and ITeS operations a preferred vendor IT/ITES, manufacturing industry, among Highlights, 2010-11 as part of UPS systems that regulate others. • Sales volume increased 20%, driven Overview power supply to critical equipment largely by strong offtake in UPS Amara Raja ventured into business with Long-term strategic relationships with during voltage fluctuations. Small VRLA batteries the introduction of industrial batteries in customers enabled Amara Raja to achieve batteries, launched in 2009-10, find 1991. It pioneered the Maintenance Free- 32% CAGR in the five years leading to application in small UPS and emergency • Strengthened market share to emerge Valve Regulated Lead Acid battery (VRLA) 2010-11. lamps. as the largest supplier of batteries in the telecom segment technology in India and since then transformed the face of the industrial Product portfolio • Achieved more than 95% capacity battery business in various user segments. Brand Rating Applications utilisation for Medium VRLA batteries Amara Raja’s industrial battery business Amaron VoltTM 2V/300 – 5500 Ah Telecom network power for tropical • Emerged as the largest player in the is engaged in manufacture of high quality installations, power stations, data centres, oil LONG-TERM STRATEGIC UPS batteries segment in India VRLA batteries through unmatched and gas, and other industrial applications performance and reliability. Power Stack® 2V/100 – 6000 Ah Telecom exchanges, power stations, oil and RELATIONSHIPS WITH • Touched one billion Ah in sales The product range of Amara Raja caters gas, Indian Railways and other industrial CUSTOMERS ENABLED • Launched ‘Amaron Volt™ Hi-Life’ high applications to the growing needs of the telecom, UPS AMARA RAJA TO ACHIEVE integrity series batteries to provide QuantaTM 12V/4.5 – 200 Ah UPS segment, IT and ITeS industry, corporate back-up systems, railways, solar power robust back up power solutions and hotels, among others 32% CAGR IN THE FIVE and power utility sectors. Some key • Partnered with Bharti Airtel for its Power SleekTM 12V/100-150 Ah Wireless telecom networks, UPS application customers include Indus towers, Bharti YEARS LEADING TO 2010-11. Africa network expansion programs as (Front Terminal and other niche applications Airtel, GTL, VIOM networks, Tower vision Access) AMARA RAJA BATTERIES LIMITED GOTTA BE A32 ANNUAL REPORT 2010-11 BETTER WAY 33
  • Manufacturing facilities • Adequately responded to the business operations beyond shop floor important element. The industry Amara Raja’s industrial battery fluctuating quarterly demand for line quality control systems continued to be largely dependent on manufacturing facility in Tirupati houses LVRLA products through optimal Telecom and UPS segment demand In the market place technologically advanced infrastructure resource deployment and flexible whereas growth potential in power • Introduced AMARON VoltTM Hi-Life for producing the large and medium operational strategy generation, transmission and batteries to address the specific needs VRLA batteries. The plant is ISO 9001, ISO • Aggressively pursued cost distribution, coupled with emerging of the energy demands of the telecom 14001 and OHSAS-accredited and is management strategies and achieved sectors such as renewable energy and sector as well as critical application periodically audited by customers. The significant cost reduction through motive power, will be demand drivers. demands in the solar power, data manufacturing facilities are established waste elimination, lower power centre power, power generation, oil Telecom: According to TRAI, the total with best-in-class equipment backed by consumption and improved and gas industries, among others subscriber base grew from 1999-2000 best practices in quality assurance productivity through 2010-11, at a compound annual • Partnered with Bharti Airtel for their systems along with lean manufacturing • Launched specific programs under growth rate (CAGR) of 36% to reach 846 African telecom network expansion principles. In 2009-10, Amara Raja TPM and QCC initiatives to facilitate million subscribers. India is the second programme and was selected as the consolidated manufacturing lines for enhanced “Total Employee largest country in terms of subscribers. preferred vendor for battery banks; Large VRLA and Medium VRLA products Involvement” (TEI) Urban subscribers account for more than supplied more than 90% of Bharti under one roof and consequently derived 66% of the overall subscriber base. – Won the ‘Best Organisation Award Airtel’s Africa requirements operational efficiencies and resource supporting QC Movement’ for • Strengthened the distribution channel From 2005-06 through 2010-11, the utilisation benefits. 2010 from QCFI, Hyderabad for UPS batteries and expanded number of internet and broadband Key initiatives Chapter (September 2010) channel business portfolio by tapping subscribers increased at a CAGR of 24% INTRODUCED AMARON The industrial battery business unit – Two QCC teams participated in solar power sector requirements and 90% to reach 18 million and 12 VOLTTM HI-LIFE BATTERIES TO embarked on a number of initiatives state level convention and won the • Achieved substantial growth in the million respectively in 2010-11. This falls during the year to maintain the Gold and Silver award (September UPS segment, which helped maintain short of the broadband policy’s goal of ADDRESS THE SPECIFIC leadership position in the served markets 2010) overall volume growth of 20%, 40 million internet subscribers and 20 NEEDS OF THE ENERGY and respond to the challenges posed by – Two teams participated in national despite demand contraction in the million broadband subscribers by 2010. the unfavourable supply-demand level convention and one team telecom segment With the rollout of 3G technology, DEMANDS OF THE TELECOM situation in the telecom sector where stood in the “Excellence category” 3G- enabled hand held device sales are SECTOR AS WELL AS • Rolled out specific customer supply is far out numbering the shrinking and the second team secured the expected to increase the use of engagement programs and service demand. These initiatives span “distinguished category” value- added services. CRITICAL APPLICATION campaigns to enhance customer marketing/sales functions, manufacturing (December 2010) loyalty The high level of growth in the Indian DEMANDS IN THE SOLAR operations, product development efforts, • Established state-of-the-art facilities wireless telecommunications market will quality systems and procurement Optimism POWER, DATA CENTRE for employee amenities to enhance continue to drive huge investment in practices. occupational health, safety and The Indian battery industry continues to infrastructure as well as a speedy rollout POWER, POWER environmental standards experience healthy growth propelled by of networks into new areas. As of March At the shop floor GENERATION, OIL AND GAS the country’s economic growth drivers. 2011, there were 400,000+ telecom • Debottlenecked the Medium VRLA • Initiated Cost of Poor Quality product lines to support aggressive measurement system under the Total Continued power deficit is a compelling towers in the country. Initially, operators INDUSTRIES, AMONG reason for back-up power equipment used their tower infrastructure, however, sales growth in UPS segment and Cost Management approach to OTHERS. demand of which the battery forms an over the past few years, all operators achieved 90%-plus capacity utilisation strengthen quality metrics across AMARA RAJA BATTERIES LIMITED GOTTA BE A34 ANNUAL REPORT 2010-11 BETTER WAY 35
  • opted to share infrastructure, which opportunities. IT sector: The estimates for the growth delivery system. significantly enhanced asset utilisation in the IT sector provide a sizeable Power/uninterrupted Power Supply (UPS): Batteries constitute a significant part of efficiency but slowed network expansion opportunity for UPS battery Indias power generation capacity - UPS system in value terms and also have despite aggressive subscriber growth. The manufacturers. According to NASSCOM, including state, central and private a replacement cycle that will keep the current tenancy ratio for the industry e-governance is a USD 9 billion business utilities - is around 1,73,000 MW while demand for UPS batteries at a healthy stands at 1.60 times, estimated to rise to opportunity. According to McKinsey, IT grid-connected captive capacities add growth rate of 14-15% CAGR over the 2–2.5 times. exports are expected to reach USD 175 another 20,000 MW. The average power next five year period. The Company is well billion in revenue by 2020 and the Battery banks continue to be a critical shortage is around 8-9% and peak poised to participate in this market domestic component could touch USD element of the telecom network energy shortages hit about 12-15%. Over the aggressively and continue its leadership 50 billion by then (McKinsey). Gartner infrastructure and will be in demand 11th Plan (ending 2011-12), India hopes position that it currently enjoys, both in predicts that the domestic BPO market despite slower network expansion, owing to add 52,000 MW against the original terms of market share (32%) and could reach USD 1.69 billion in 2012 and to replacement cycle. As per E&Y report, target of 78,000 MW while the 12th Plan customer preference. increase to USD 2.47 billion by 2014 on average, 27 million units of electricity (2012-17) targets addition of another from USD 1.1 billion in 2010. Internet During 2010-11, the Company achieved are consumed per day by the wireless 1,00,000 -1,10,000 MW. Between penetration rate in India is expected to over 50% growth in UPS battery sales tower infrastructure. About 2 billion litres 2007-08 and 2010-11, about 34,000 grow from 7% to 19% by 2015. volume assuming the leadership position of diesel per year are consumed for cell MW was added and another 20,000 MW among suppliers of Medium VRLA sites, which is subsidised by the is in various stages of implementation. ATMs: The ATM network in India is set to product range. The QUANTATM brand Government of India. Deployment of expand owing to the ‘brown label’ Amidst all these developments in the UPS batteries emerged as a preferred renewable energy technologies in cell concept (where hardware and the space power sector, the back-up power brand to many OE customers and end sites would bring in corresponding is owned by a service provider, but cash industry played a vital role to bridge the users; the 75+ strong channel partners opportunities and challenges for energy management and connectivity to banking gap between power demand and supply. (AQuA) continue to play a key role in storage devices such as batteries. networks is provided by a sponsor bank Power backup market in India is growing maintaining growth. The fact that more Additionally, focus on network operating whose brand is used on the ATM), which at an annual rate of 15-20% varying than 30% of the current market efficiencies, cost management and captured the focus of large banks as it within the four different segments requirement is met by imports from uptime reliability is forcing customers to enables them to install hundreds of namely generators, UPS, inverters and China and South East Asian countries opt for dependable and high quality batteries. This industry size is estimated machines in weeks. The model is indicates a huge opportunity for Indian DURING 2010-11, THE products and supplier partners. expected to grow the number of between USD 3-3.5 billion. With an battery manufacturers. COMPANY ACHIEVED OVER machines from 75,000 to 1,50,000 by The Telecom Regulatory Authority of increasing power deficit, the power 2015, a sizeable opportunity for UPS Renewable energy: India is the worlds 50% GROWTH IN UPS India (TRAI) recently released its backup sector is crucial to sustain the battery manufacturers. sixth largest energy consumer, recommendations on “Approach economic momentum of the nation. accounting for 3.4% of global energy BATTERY SALES VOLUME Towards Green Telecommunications”. Government IT plans: The Government’s The growth of manufacturing, telecom consumption. India is the twelfth largest ASSUMING THE LEADERSHIP These recommendations hold significant e-governance initiative represents a USD and IT sectors along with an increasing economy, with a GDP (Gross Domestic promise for the advancement of new need for individual households to have 9 billion IT opportunity. The World Bank Product) of USD 1 trillion+. Consistent POSITION AMONG SUPPLIERS technologies and new business models. approved a USD 150 million loan for power backup solutions owing to an GDP growth of about 8 to 9% makes it OF MEDIUM VRLA PRODUCT The Company is geared to meet India to accelerate implementation of its unreliable grid supply, will continue to be the second-fastest emerging economy challenges arising out of these the primary driver for the growth of National e-Governance Plan (NeGP), after China. There is a high demand for RANGE. developments and capitalise on which aims to transform the service UPS/Inverter industry. energy, which is currently met by coal, AMARA RAJA BATTERIES LIMITED GOTTA BE A36 ANNUAL REPORT 2010-11 BETTER WAY 37
  • BUSINESS DRIVERS 1 SUPPLY CHAIN MANAGEMENT Supply chain management enhances low cost procurement process; operational sustainability. It comprises explored procurement synergies with procurement of key inputs – lead and its JV partner separator from global sources for • Ensured that junk batteries collected expanded operations, procurement of were processed through Ministry of other materials and consumables from Environment and Forests (MoEF)- multiple vendors, reaching products to certified smelters and converted into hydro, oil and gas. Road ahead, 2011-12 OEM and institutional customers’ usable resources • Enhance the product portfolio to facilities just-in-time, ensuring adequate India has a vast potential for renewable supplies to more than 18,000 AMARON® • Enhanced lead procurement from energy sources, especially in areas such as address untapped business segments and 800 PowerZone TM retailers across the local recycling smelters at predefined solar power, biomass and wind power. with tubular battery technology country while optimising logistic and specifications The current installed capacity of • Expand geographic access by warehousing costs. • Improved junk battery collection renewable energy is around 18,000 MW, leveraging access to African and South constituting about 10.5% of India’s total East Asian markets Raw material sourcing: Lead and its considerably installed power generation capacity. • Reinforce AMARON Volt™ product alloys are key inputs in battery Logistics: This function comprised Technological breakthroughs for cost- through enhanced installation manufacture. Around 55% of Amara inbound and outbound logistics effective photovoltaic technology could Raja’s lead requirement is imported with managed through appointed agents. • Establish additional manufacturing generate a quantum leap in the prices linked to LME average monthly Amara Raja optimised logistic costs capacities for the Medium VRLA renewable energy sector. Indias solar prices. Amara Raja procures a majority of through the following initiatives: product line energy potential is among the best in the its lead requirement from Korea and • Ensured quality trucks are used in • Improve operational efficiencies and world with around 300 sunny days a Australia; it also sources the non-ferrous outbound and inbound logistics to cost management through year. To tap this abundant source of metal from Hindustan Zinc Limited and reduce accidents and transit damages ‘Continuous Improvement Programs’ clean energy, the government set up the local recycling smelters (secondary lead). (CIPs) • Utilised vehicle space effectively by AMARA RAJA ENSURES THAT Jawaharlal Nehru National Solar Mission During 2010-11, lead prices (JNNSM), under which it intends to increasing loading factor JUNK BATTERIES COLLECTED strengthened from USD 2,265/MT in commission 20,000 MW in grid- April 2010 to USD 2,605/MT in March • Scanned freight trends in the markets WERE PROCESSED THROUGH connected solar power by 2022. 2011. periodically to optimise logistics cost, The accelerated progress in adopting matching industry standards MINISTRY OF ENVIRONMENT To secure uniform supplies of key renewable energy sources, technological materials at optimal costs, Amara Raja • Entered into annual contracts with all AND FORESTS (MOEF)- breakthroughs in improving the cost- implemented the following initiatives: service providers with a risk purchase value equation and success of JNNSM can CERTIFIED SMELTERS AND • Entered into supply agreements for clause, leading to service dependability throw up significant opportunities for almost 100% of the estimated • Conducted safe driving campaigns; CONVERTED INTO USABLE battery products. The Company has lined quantity as per its business plan up strategic initiatives to tap this promoted fuel efficiency measures to RESOURCES • Sourced materials through a defined boost logistic efficiency potential. AMARA RAJA BATTERIES LIMITED GOTTA BE A38 ANNUAL REPORT 2010-11 BETTER WAY 39
  • BUSINESS DRIVERS 2 QUALITY MANAGEMENT Health, safety and environmental quality methodology, TPM, QCC, Visual are given utmost importance in all Management, 5S and Work study were operations of the organisation. Amara deployed to develop processes lean, Raja is committed to conduct operations improve productivity, optimise conversion in a diligent and responsible manner to costs, and make the plants safer. protect human health, personal safety Deployment of Best Business Practices and environment. Amara Raja is certified (BBP) - comparing with JV partners’ for Environmental Management System plants across the world and (EMS) - ISO 14001:2004. benchmarking with best-in-class practices To bring more focus to Occupational helped Amara Raja improve metrics Health & Safety (OH&S) practices, Amara related to productivity at every stages of Raja implemented the OH&S manufacture. To compensate increasing IT IS GREEN! • Created a periodic reward mechanism • Provided training to warehouse staff management system and received input costs, special Continuous AMARA RAJA ADOPTED A for the best logistic service providers to improve service quality and OHSAS:2007 certification during this Improvement program called “TURBO covering speed, quality and safety optimise costs FUEL EFFICIENT LOGISTICS financial year. savings” was deployed to eliminate MECHANISM PROPOSED BY • Tracked export and import • Reduced secondary freight costs unwanted costs. Through an active Being an automotive battery supplier to consignment timings to reduce port through logistic innovation involvement of all employees, hard ITS LOGISTICS PARTNER. IT OE customers, Amara Raja is certified for handling charges savings of `145 million were achieved UPGRADED FROM A MULTI- • Identified the hub-and-spoke model of ISO/TS 16949:2009 and ISO 9001:2008. Distribution and warehouse: Of the 29 product distribution to conform to the during 2010-11. Amara Raja also won AXLE VEHICLE (32 FT It constantly focused on process and warehouses, four are managed by Amara GST regime proposed by the the following awards during the year product performance improvements, TRAILER) TO A VOLVO Raja and the rest by Clearing and government under review: providing superior value to esteemed AMARA RAJA WON THE VEHICLE (40 FT TRAILER) Forwarding Agents (CFAs). The following customers. 1. First prize under ‘Discrete • 5S practices helped control storage FIRST PRIZE FOR TPM BEST WHERE TRANSPORTATION are some of the initiatives undertaken by Manufacturing Category’ in fourth costs and maintain product quality till Amara Raja continues to place a special Amara Raja to improve service levels: national competitions on Six Sigma PRACTICES BY AOTS, JAPAN - COST WAS 4% HIGHER BUT the merchandise reaches the emphasis on Continuous Improvement • Created a CFA performance consumption point organised by CII (two time winner in LOAD CARRYING CAPACITY (CI) and Lean implementation across the SOUTHERN CHAPTER AND monitoring and rewarding system to all four editions) WAS 15% HIGHER, • Centralised the POP warehouse to organisation through a dedicated apex improve customer service THE BEST ORGANISATION improve customer awareness and level team. 2. First prize for TPM Best practices by ACCOMPANIED BY A • Monitored inventories across the deliver products with speed During the year under review, the AOTS, Japan - southern chapter AWARD SUPPORTING QC DECLINE IN TRANSIT TIME country to ensure adherence to FIFO FROM SEVEN DAYS TO FIVE strategic business units focused on 3. Best organisation award supporting MOVEMENT FROM QCFI, method of stock movement, continuous deployment of Six Sigma QC movement from QCFI, Hyderabad DAYS. facilitating the identification of slow- methodology to optimise processes and chapter HYDERABAD CHAPTER moving material , if any drive cost efficiency. Under Lean AMARA RAJA BATTERIES LIMITED GOTTA BE A40 ANNUAL REPORT 2010-11 BETTER WAY 41
  • BUSINESS DRIVERS 4 PEOPLE STRATEGY AND ALIGNMENT “Facilitating achievement of business objectives in an invigorating work environment through continual enhancement of employee engagement, employee development and employee performance.” Overview Institute of India through the following Amara Raja’s success is derived from awards: inspiring relationships between its people • 22nd place as one of the Best around a culture that is knowledge- Employers in India focused, people-sensitive and • ‘Continuous Innovation in HR Strategy performance-oriented. at Work’ in the national round Amara Raja’s human resources approach • ‘Best HR Strategy in line with Business’ focuses on the following: in the national round BUSINESS DRIVERS 3 • ‘Best HR Strategy in line with Business’ INFORMATION TECHNOLOGY • Recruitment and talent acquisition • Training and career development in the southern regional round • ‘Continuous Innovation in HR Strategy • Performance and compensation at Work’ in the southern regional Amara Raja’s contemporary IT During the year, Amara Raja embarked management round infrastructure accelerated organisational on the implementation of Business speed, integrated various processes Intelligence software – SAP Business • Operations and statutory compliance • ‘Excellence in HR Through Technology’ across the organisation and optimised Objects - to provide real-time data to all in the southern regional round Amara Raja attracts talent and provides costs. business heads. Amara Raja is developing career growth. Amara Raja’s human Talent acquisition software for its AMARON® franchisees to development modules enhance team Amara Raja implemented SAP (ECC 6.0) The exclusive talent acquisition cell help run their business efficiently. This will spirit; the Company provides in February 2010 covering all locations. continued to focus on acquiring and automate real-time information about performance-based incentives and During the year under review, IT team inducting talent. The SBU leadership secondary sales, which can be utilised for grooms leaders through rigorous training stabilised the performance of SAP and teams held the primary responsibility forDURING THE YEAR, AMARA accurate business analysis, production (employee-engagement model). All worked on functionality enhancements to building their respective business teams.RAJA EMBARKED ON THE planning and warranty management. people initiatives and programmes are provide accurate business information in Through ‘Nava Prathibha’ programme, real-time. Tight integration of various Implementation of Advanced Planning aligned with the business needs. TheIMPLEMENTATION OF organisation remained young with the 507 fresh talents were inducted in a modules of SAP ensures data integrity (AP) and Customer Relationship structured way in 2010-11, coveringBUSINESS INTELLIGENCE average age of employees at 31 years as and provides on-line view of the Management (CRM) modules of SAP, in workmen, staff and management levels. on March 31, 2011 (across 2,999 operations to top management. IT team the near future, will further enhance The customised programmes under ‘NavaSOFTWARE – SAP BUSINESS members). developed several reports customised for efficiency and improve costs. Amara Raja Prathibha’ comprised Amara RajaOBJECTS - TO PROVIDE REAL- specific user requirements and process periodically reviews and validates overall Training Scheme (ARTS), Amara Raja Awards and recognition owners to streamline operations and security architecture and continues to Graduate and Technician TrainingTIME DATA TO ALL BUSINESS In 2010-11, Amara Raja was recognised decision-making. The performance of invest to further strengthen the overall for its Human Resources strategy and Programme (ARGTP) and Amara RajaHEADS. attendance and leave management security framework. processes by the Employer Branding Graduate Engineer Trainee (GET), system was enhanced. AMARA RAJA BATTERIES LIMITED GOTTA BE A42 ANNUAL REPORT 2010-11 BETTER WAY 43
  • ANALYSIS OF THE FINANCIAL Management Trainee (MT) Programme (ARGMP). The introduction of e-Learning made it possible for participants to choose STATEMENTS content and tools appropriate to their AR e-Induction differing interests, needs and skill levels Accounting policy Derivatives Amara Raja’s intranet-based e-induction with 24x7 accessibility. • EBIDTA margin declined 555 bps from The financial statements were prepared for new recruits enabled on-board 20.24% in 2009-10 to 14.69% in to comply, in all material respects, with processes, which the employee was Employee engagement 2010-11 the requirements of the Companies Act, required to complete within 72 hours of Amara Raja launched the AR-Speak 1956, guidelines issued by the Securities • PBT margin declined 484 bps from joining. The process was designed survey, comprising 19 dimensions in and Exchange Board of India (SEBI) and 17.38% in 2009-10 to 12.54% in around quizzes and interactive content to 2007-08. A similar employee Generally Accepted Accounting Principles 2010-11 facilitate faster alignment of the recruit engagement survey was anchored in into the organisation. August 2010, drawing full employee (GAAP) in India. The financial statements • PAT margin declined 300 bps from participation. Based on survey inputs, were prepared under the historical cost 11.40% in 2009-10 to 8.40% in The programme comprised modules on convention on an accrual basis. The change action plans were drawn at 2010-11 the facets of Amara Raja, its corporate various levels followed by relevant accounting policies were consistently social responsibility and people • ROCE declined from 44.51% in 2009- actions. applied by Amara Raja and were in line development to familiarise the recruit 10 to 34.62% in 2010-11 with those used in the previous years. The with different products, processes, HR portal estimates and judgements used in the Analysis milestones and culture. • Every rupee invested in the fixed assets ARG-HR portal, the employee’s intranet preparation of financial statements have portal, served as an HR window of the been made on prudent and reasonable yielded higher revenue – fixed assets Learning and Development organisation. The portal’s interactive basis to reflect in a true and fair manner turnover ratio improved from 4.79 Amara Raja Learning and Development learning forum provided feedback. the substance of transactions, and times in 2009-10 to 5.59 times in Calendar (ARLDC) captured reasonably present the state of affairs, 2010-11 developmental needs arising out of CII-HR Excellence Recognition profits and cash flow for the year. performance appraisals, TQM, TPM and • Decline in profit margins reflect the Amara Raja adopted the Confederation several other initiatives. During the year challenges, in terms of demand and of Indian Industry-Human resources (CII- Key highlights, 2010-11 under review, in-house programmes were price, prevalent in the telecom HR) Excellence Model. For the first time anchored to build technical and soft Absolutes segment and higher input costs in March 2010, the organisation skills. Employees were nominated for • Net sales increased 20% from `14,645 participated in an external on-site • Income from investment (interest andAMARA RAJA WON THE specialised learning and development million in 2009-10 to `17,611million assessment by external assessors dividend) was significantly higher than workshops/seminars organised by in 2010-11 EVERY RUPEE INVESTED IN (appointed by CII) on HR strategy, the interest liability, making AmaraCOMMENDATION external learning institutions/agencies. processes and practices based on the HR • EBIDTA declined 13% from `2,965 Raja a net interest earner THE FIXED ASSETS YIELDED(FOUNDATION AWARD) Respective SBU teams anchored their excellence model. This assessment will million in 2009-10 to `2,588 million • Even as Amara Raja invested about HIGHER REVENUE – FIXED specific team building workshops to help enable Amara Raja to excel in human in 2010-11‘STRONG COMMITMENT TO `625 million in its gross block in align their customer needs with overall resources as well as performance • PBT declined 13% from `2,546 million 2010-11, the Debt-Equity ratio ASSETS TURNOVER RATIOHR EXCELLENCE’ AWARD AT business needs. The team workshops processes, practices and capabilities. in 2009-10 to `2,210 million in strengthened to 0.15:1 (0.17:1 as on IMPROVED FROM 4.79 TIMESTHE NATIONAL HR were also anchored to generate Amara Raja won the commendation 2010-11 March 31, 2010) togetherness and harmony in achieving IN 2009-10 TO 5.59 TIMES INCONCLAVE OF CII IN JULY (Foundation Award) ‘Strong commitment • PAT dropped 11% from `1,670 business objectives as an SBU and Revenue and Price 2010-11 to HR Excellence’ award at the National million in 2009-10 to `1,481 million2010. company. HR Conclave of CII in July 2010. in 2010-11 Gross sales grew 23% from `16,904 AMARA RAJA BATTERIES LIMITED GOTTA BE A44 ANNUAL REPORT 2010-11 BETTER WAY 45
  • telecom sector realisation and increase in provision for doubtful debts and bad million 2009-10 to `20,765 million in 2010-11 largely owing to reduction in non-lead input costs. debt write off, came down significantly 2010-11, while net sales stood at foreign exchange gain by `116 million from `39 million in 2009-10 to 16 million `17,611 million against `14,645 million compared with the previous year. Interest Employee cost: People costs increased in 2010-11, resultant of substantial during the same period reflecting a 20% and dividend income increased 24% from `624 million in 2009-10 improvement in quality of receivables. growth. About 53% of revenue was from significantly to `54 million, a result of (4.26% of net sales) to `775 million automotive battery business and the rest short-term investments and fixed (4.39% of net sales) in 2010-11. The Financial expenses: This dropped from industrial battery business. deposits. Non-operating income increase was driven by a higher employee considerably from `68 million in 2009-10 comprised 2.44% of profit before tax in base, necessitated by an enhanced to `15 million in 2010-11 backed by The increase in revenue was the result of 2010-11, signifying Amara Raja’s focus volume of operations, annual pay improved liquidity. Amara Raja did not volume and value growth. While the on core operations. revisions and a higher provision for leave utilise fund-based working capital former was owing to improved market encashment. facilities during 2010-11. share and growth in demand (except in Cost analysis the telecom segment), the latter was Manufacturing expenses: Manufacturing Purchase of trading goods: This Taxation largely on account of an increase in lead expenses increased 39% from `613 represents purchase of home UPS, private The provision for current income tax prices. Sales volume increased 20% in the million in 2009-10 to labelled under the PowerZoneTM and declined from `840 million in 2009-10 to automotive and industrial battery `850 million in 2010-11 on account of AMARON ® brand, for sale through `738 million in line with a decline in businesses. The average LME lead price increased power and fuel costs and the PowerZoneTM and AMARON® retail profits. The average tax rate stood at increased 13% from USD 1985/MT in increase in stores and spares outlets along with inverter batteries. 32%. An amount of `2.89 million was 2009-10 to USD 2245/MT in 2010-11. consumption. Reason for this increase During the year, the Company imported provided for income tax for 2009-10 to Exports grew 60% from `522 million in was enhanced production volumes, both small VRLA batteries under the brand cover the short fall. 2009-10 to `834 million in 2010-11. in the industrial and automotive name of QuantaTM which were traded Exports grew both in the automotive and businesses – more importantly, the Profitability through the UPS battery channel (AQuA) industrial businesses. additional capacity in the 2-wheeler The operating profit (earnings before to bridge the gap in product portfolio. segment. Higher power cost was owing interest, tax, depreciation and The price in telecom business declined This resulted in a sizeable increase in to an increase in tariff and power amortisation - EBIDTA) for 2010-11 stood sharply for a given lead base by about the purchase of trading goods from THE FINANCIAL EXPENSES outages, forcing the use of DG sets. at `2,588 million (previous year `2,965 17%, which impacted the revenue `35 million in 2009-10 to `74 million in million) representing 14.69% of net sales DROPPED CONSIDERABLY growth and profitability considerably. 2010-11. Selling expenses: This increased 13% Amara Raja mitigated cost impacts from `1,112 million (7.59% of net sales) against 20.24% for 2009-10. Fall in FROM `68 MILLION IN Material costs: Material consumption in 2009-10 to `1,254 million (7.12% of operating profit, despite commendableEXPORTS GREW 60% through pricing actions in the automotive increased 32% from `8,796 million in 2009-10 TO `15 MILLION IN aftermarket business. Amara Raja was net sales) in 2010-11. The increase was volume growth, was primarily on accountFROM `522 MILLION IN 2009-10 to `11,599 million in successful in increasing the base price in owing to higher freight outward of significant drop in price realisation 2010-11 BACKED BY 2010-11 largely owing to increased in telecom sector. The Profit Before2009-10 TO `834 MILLION OEM to offset the non-lead input cost production and increased input prices. expenses warranted by improved sales IMPROVED LIQUIDITY. and conversion cost inflation. In the UPS volume coupled with an increase in Tax (PBT) and Profit After Tax (PAT) forIN 2010-11. EXPORTS GREW Lead prices (consumption base) increased sector, it managed to moderate the cost freight cost and higher warranty 2010-11 was at `2,210 million (12.55% AMARA RAJA DID NOT from an average USD 1,700 per tonne provision. of net sales) and `1,481 million (8.41%BOTH IN THE AUTOMOTIVE impact to a major extent. in 2009-10 to USD 2,150 per tonne in UTILISE FUND-BASED of net sales) as against `2,546 million 2010-11. Material consumption as a Administrative expenses: This declinedAND INDUSTRIAL Other income (17.38% of net sales) and `1,670 million WORKING CAPITAL percentage of net sales increased from 3% from `566 million (3.86% of net Other income declined 44% from `170 (11.40% of net sales) for 2009-10BUSINESSES. 60% in 2009-10 to 66% in 2010-11, key sales) in 2009-10 to `547 million (3.11% FACILITIES DURING 2010-11. million in 2009-10 to `96 million in respectively. reason for such an increase is drop in of net sales). Other expenses, including AMARA RAJA BATTERIES LIMITED GOTTA BE A46 ANNUAL REPORT 2010-11 BETTER WAY 47
  • Dividend significant fall in telecom sector demand Working capital requirements were million as on March 31, 2011 due to the Amara Raja maintained a prudent and price. managed completely out of internal following: balance between rewarding shareholders accruals. Amara Raja did not avail fund- a) Capacity augmentation in motor cycle and retaining operational surpluses for Sources of funds based working capital facilities during the plant from 1.80 million units per Networth: Shareholders’ funds increased year except for limited utilisation during capitalising on growth initiatives. Since 19% from `5,436 million as on March annum to 3.60 million units per 2009-10, Amara Raja adopted a dividend the last week of the financial year. The 31, 2010 to `6,459 million as on March annum policy of distributing upto 15% of net debt-equity ratio (without adjusting for 31, 2011 owing to a retention of sizeable b) Capitalisation of land purchased at profit after tax as dividend to surplus cash) declined to 0.15 as on profits. Return on average net worth Uttarakhand shareholders. March 31, 2011 against 0.17 as on declined from 35% in 2009-10 to 25% in In 2010-11, Amara Raja declared a March 31, 2010. c) Development of various infrastructure 2010-11 owing to decline in profits. special dividend of 100% (`2 for every The interest-free sales tax deferment loan facilities at the plant Equity capital: The equity capital equity share of `2 each) to represents a financial incentive by the comprised 85,406,250 equity shares of d) Capital expenditure to improve commemorate the silver jubilee year. The state of Andhra Pradesh for setting up `2 each. The promoter(s) and joint productivity and new product Board also proposed 130% dividend for industry in a backward area. The sales tax venture partner held 26% each in the development. 2010-11 to be approved by the collected by the Company in a particular equity as of March 31, 2011. The share shareholders at the ensuing Annual Depreciation was provided under the price as on March 31, 2011 was at `190 year needs to be paid to the government General Meeting. If approved, the total Straight Line Method (SLM) in as against `164 as on March 31, 2010. after 14 years. This balance increased dividend payout, including special accordance with Schedule XIV of the The market capitalisation as of March 31, from `639 million as on March 31, 2010 dividend, would be `393 million Companies Act, 1956. Despite an 2011 was about `16,200 million. to `710 million as on March 31, 2011. for 2010-11 against `248 million for increase in the gross block, the provision 2009-10 – a 58% increase. The total Reserves and surplus: Reserves and Credit rating agency CRISIL reaffirmed for depreciation declined from `429IN 2010-11, AMARA RAJA surplus increased 19% from `5,265 ‘AA/Stable’ for fund-based borrowing dividend payout would be 26.5% of the million in 2009-10 to `417 million inDECLARED A SPECIAL profit after tax for 2010-11 as against million as on March 31, 2010 to `6,288 and P1+ for non-fund based limits based 2010-11 – owing to the ageing of the 14.8% for 2009-10. million as on March 31, 2011 – owing to on the financial strength and growth plant. Accumulated depreciation as a CREDIT RATING AGENCYDIVIDEND OF 100% (`2 FOR a `1,023 million plough back of prospects of Amara Raja despite percentage of gross block was 41.5% asEVERY EQUITY SHARE OF `2 Capital employed operational surplus in 2010-11 as against significant challenges in the telecom CRISIL REAFFIRMED on March 31, 2011. Fixed assets turnover Capital employed increased 20% from `1,380 million in 2009-10. The book sector.EACH) TO COMMEMORATE ratio increased from 4.79 times in 2009- ‘AA/STABLE’ FOR FUND- `5,709 million as on March 31, 2010 to value per share stood at `76 as on March Interest: Consequent to a huge reduction 10 to 5.59 times in 2010-11.THE SILVER JUBILEE YEAR. `6,833 million as on March 31, 2011 31, 2011 against `64 as on March 31, BASED BORROWING AND 2010. in external funding, interest cost declined Capital work-in-progress: CWIP increased largely owing to investments in capacityTHE BOARD ALSO PROPOSED 78.58% from `68 million in 2009-10 to significantly from `227 million as on P1+ FOR NON-FUND BASED augmentation, facility and equipment additions and increase in working capital. Borrowings `15 million in 2010-11. March 31, 2010 to `375 million as on LIMITS BASED ON THE130% DIVIDEND FOR 2010- The interest-bearing debt portfolio stood The working capital facilities from banks March 31, 2011. The increase was owing11 TO BE APPROVED BY THE were completely unutilised during the at `240 million as on March 31, 2011 as Application of funds to the ongoing capacity expansion in the FINANCIAL STRENGTH AND against `273 million as on March 31, Fixed assetsSHAREHOLDERS AT THE entire year under review; the limits were automotive business (2-wheeler and 4- GROWTH PROSPECTS OF 2010. In 2010-11 Amara Raja repaid USD Gross block increased 10% from `4,911 marginally utilised only towards the end wheeler battery).ENSUING ANNUAL GENERAL of the financial year. Return on average 4 million out of a USD 6 million million as on March 31, 2010 to `5,388 AMARA RAJA DESPITE capital employed declined from 44.51% outstanding foreign currency loan, while SIGNIFICANT CHALLENGES INMEETING. in 2009-10 to 34.62% in 2010-11, the balance USD 2 million will be repaid 2008-09 2009-10 2010-11 owing to decline in profits induced by in September 2011. Debt equity ratio 0.70 0.17 0.15 THE TELECOM SECTOR. AMARA RAJA BATTERIES LIMITED GOTTA BE A48 ANNUAL REPORT 2010-11 BETTER WAY 49
  • Investments `3,057 million as on March 31, 2011. a considerable increase in provision for mid-term course corrections The investment portfolio remained at the This increase was on account of increased warranty to take care of future probable • Incorporating critical operational and previous year level – `161 million as on business volumes. DSO (Days Sales liabilities. security controls into the Enterprise March 31, 2011. The portfolio primarily Outstanding) marginally increased to 43 Liquidity Resource Planning platform to enforce comprised investment in equity shares of days as on March 2011 as against 41 Liquidity continued to be at comfortable their implementation with minimal Andhra Pradesh Gas Power Corporation days as on March 2010. levels during the entire financial year intervention Limited, which entitles 4.50 MW power Loans and advances: This section aided by ‘Cash and Carry’ system of sales at an attractive tariff. Other investments • Detailed manuals defining internal comprised advances to vendors of in automotive aftermarket coupled with comprised investments in the equity control, their objectives, scope and equipment and material (predominantly a concerted effort to manage the overall shares of listed companies. The market implementation for different lead imports) as well as to various working capital at optimal levels, though value of listed investments stood at `53 operations government authorities against duties the volume of operation has increased million as on March 31, 2011 against • Multi-layered checks for and taxes. The balance under this considerably. During the year, Amara Raja their cost of `3.55 million. authentication, approval and account increased about 2% from `1,087 repaid USD 4 million against USD 6 Net current assets million as on March 31, 2010 to `1,113 million (External Commercial Borrowing) accounting of all material transactions Net current assets increased 26% from million as on March 31, 2011 primarily foreign exchange loan outstanding as of • Applying accounting policies and `3,120 million as on March 31, 2010 to owing to an increase in advances to March 31, 2010. The investments in fixed practices consistently `3,927 million as on March 31, 2011 in suppliers for the ongoing expansion assets were met out of internal accruals • Compliance with prescribed line with growing business volumes and projects and lead imports. and the surplus cash was parked in liquid Accounting Standards to the extent input cost inflation. Amara Raja funded funds and in bank deposits. Current liabilities: An increase in sundry applicable entire working capital through internal creditors for material was largely Internal control accruals. • Continuing endeavour to meet various responsible for 16% increase in current Amara Raja believes that internal control statutory requirements Inventories: Inventories increased 31% liabilities from `1,656 million as on is a critical tool to ensure effectiveness of from `2,176 million as on March 31, March 31, 2010 to `1,919 million as on management and efficiency of business. • Monitoring by in-house internal 2010 to `2,847 million as on March 31, March 31, 2011. This increase was When understood and appreciated in control function 2011. This increase was on account of attributed to growing scale, necessitating their right perspective, internal control • Audits and reviews by independent increased business volumes, which an increase in the purchase of materials enables objective functioning and hard professionals, as required by the lawTHE INVESTMENTS IN FIXED increased inventory from shop floor to and consumables. focus on results by standardising and otherwise, and the market place, and owing to higher processes and optimising efforts inASSETS WERE MET OUT OF Provisions: The balance under this lead price during February and March implementing and monitoring them. This Interactions between the independent account marginally increased fromINTERNAL ACCRUALS AND 2011, which increased the value of raw cuts down uncertainties and avoidable auditors, management and audit `1,534 million as on March 31, 2010 to material inventory. The DOH (Days On risks in achieving Amara Raja’s goals committee on scope, observations andTHE SURPLUS CASH WAS `1,572 million as on March 31, 2011. Hand) for 2010-11 stood at 60 days, outcomes of the audits and reviews. This was owing to a decline in the Internal controls in Amara Raja arePARKED IN LIQUID FUNDS same as the previous year. provision for taxation and an increase in exercised through:AND IN BANK DEPOSITS. Debtors: Receivables increased 26% from the provision for leave encashment • Planning and control reviews for `2,423 million as on March 31, 2010 to arrived at on an actuarial basis. There was long-term plans, annual budgets with AMARA RAJA BATTERIES LIMITED GOTTA BE A50 ANNUAL REPORT 2010-11 BETTER WAY 51
  • 02 RISKS RELATED TO SHOP-FLOOR OPERATIONSDE-RISKING THE NON-AVAILABILITY smelters, a trend that is expected to assure control parameters. It undertook TPMTHE BUSINESS OF LEAD COULD AFFECT supplies and optimise cost. projects, reducing downtime. It created quality circles involving shop-floor PRODUCTION.Risk represents the face of business comprises a clear understanding of organisation-wide risk mitigation. Mitigation measures: Amara Raja entered members, leading to higher productivity. It OPERATIONALuncertainty, affecting corporate strategies, policies, initiatives, norms, into long-term supply contracts for 100% undertook various de-bottlenecking Amara Raja undertook only those business INEFFICIENCIES COULDperformance and prospects. The objective structured reporting and control. It ensures of its lead requirement with vendors in exercises to enhance throughput. These decisions that balanced risk and reward, AFFECT PRODUCTION ANDis to identify risks as early as possible and that the risk management discipline is Korea, Australia and India. Amara Raja also initiatives enabled the plants to operate at ensuring that its revenue-generating PROFITABILITY.initiate suitable measures to limit business centrally initiated by the senior leveraged its relationship with its global JV more than 90% capacity utilisation in initiatives are consistent with the risks taken, Mitigation measures: Amara Raja batterieslosses. management and progressively 2010-11 (the UPS and the automotive so that shareholders earned their desired partner to source additional lead volumes are manufactured in QS 9000, ISO 14001 decentralised across hierarchies, facilitating battery units), a benchmark that is expectedAmara Raja’s risk management framework total return. at competitive prices. Over the years, Amara and TS 16949-certified plants using world- Raja increased lead sourcing from local to be raised in the current year. class technology and stringent quality01 RISKS RELATED TO THE CORPORATE INADEQUATE FUNDING automotive and industrial batteries, each Amara Raja ominously strengthened its OFTEN THE DIFFERENCE BETWEEN A SUCCESSFUL MAN ANDCOULD AFFECT GROWTH contributing close to 50% of volumes. presence in the UPS battery market, A FAILURE IS NOT ONES BETTER ABILITIES OR IDEAS, BUT THE Multiple user sectors in each business act as emerging as a leader in this space,Mitigation measures: Amara Raja’s robust COURAGE THAT ONE HAS TO BET ON HIS IDEAS, TO TAKE Aliquidity position is reflected in an important shock absorbers in the event of any accelerating industrial battery business CALCULATED RISK, AND TO ACT. - MAXWELL MALTZreality - it will fund its entire capex of about unexpected slowdown. growth.`900 million planned for 2011-12 through In the automotive battery business, theaccruals. It will also fund its debt repayment INABILITY TO MANAGE growth in OEM business is dependent onof USD 2 million through internal accruals. BUSINESS GROWTH COULD macro- economic conditions, whereas after- AFFECT SHAREHOLDER market business is more stable with possibleAmara Raja has tied-up sufficient working VALUE ENHANCEMENT. variance in growth rates - dependent oncapital limits to manage its escalatingoperations - `1,000 million (fund-based) OEM performance (historic sales to OEMs Mitigation measures: Amara restructured its business under two strategic Raja 03 RISKS RELATED TO MARKET SHAREand `2,550 million (non-fund based) as on come up for replacement in about 2-3 business units (SBU) - automotive and Besides, the export of telecom batteries to trucks and tractors. This competition is years). The Company’s new capacities (to INABILITY TO PASS LEADMarch 31, 2011. The working capital limits industrial. These SBUs function as Indian telecom players operating in overseas declining, though at a slow pace, owing to come on stream in 2011-12) will make it PRICE HIKES TOremained largely unutilised during 2010-11, independent business units but share destinations generated sizeable volumes. the following reasons: possible to grow business with OEMs (for CUSTOMERS.as working capital requirements were synergies. Amara Raja, over the years, With a larger proportion of volumes • Unreliable performance Mitigation measures: The key input cost hikefunded through accruals. 4-wheelers and 2-wheelers) and invested significantly in infrastructure, can be managed through price corrections generated from multiple user sectors, • Low warranty tenure compared with the aftermarket market share.Amara Raja’s strong credit rating facilitates technology, product, brand, channel, in the automotive after-market with a exposure to the telecom sector may decline organised sector In the industrial battery space, a slowdown people and processes. It streamlined people time-lag. Pricing mechanism with OEMs (even as it could continue to be the major • Concern for environment and stiffeningaccess to adequate low-cost borrowing in the domestic telecom segment allowed policies to find a place in the top 25 best include price variance clause to cover lead focus area of the industrial battery normsoptions. Amara Raja also has an attractive Amara Raja to explore export opportunities employers in India. Its fast-track star price volatility with a quarter lag. Current business). In addition, the increasingoption of raising funds from stock markets • Growing penetration of the organised to different nations where its customers performers are ready to assume greater prices in telecom are posing a greater proportion of recycled lead (available at a 4as and when required. sector in rural areas established their presence. Besides, its responsibility. It invested in Information challenge and have touched the bottom in to 5% discount to LME prices) in the total lead consumption is expected to optimise Amara Raja launched over 800 2010-11; however prices are expected to GROWTH COULD BE preferred supplier status and new product Technology to enable real-time, accurate the cost of operations. PowerZoneTM exclusive battery retail outlets show some respite. Amara Raja wasAFFECTED OWING TO A launch (AMARON VOLTTM) positioned it to information flow for informed and successful in managing the input cost hike in Tier II and Tier III towns and plans toSLOWDOWN IN KEY USER capitalise on replacement demand expected intelligent decision making. through price changes in the UPS sector COMPETITION FROM THE expand these to 1,200 by 2012-13, toSECTORS to set in from 2011-12 and significantly backed by its product quality and reach. UNORGANISED SECTOR address rural demand through theMitigation measures: Amara Raja created a improved its market share in the telecom COULD DENT GROWTH. PowerZoneTM brand of batteries, competing Amara Raja is the preferred vendor to mostbalanced business model between segment. Mitigation measures: The unorganised effectively with unorganised sector. telecom companies operating in India. sector is active in rural areas catering to AMARA RAJA BATTERIES LIMITED GOTTA BE A52 ANNUAL REPORT 2010-11 BETTER WAY 53
  • fledged vocational training centre by 2012- the Group constructed a number of This boosted ground water levels,CORPORATE 13, when the first batch commences. This centre will impart skills to unskilled youth community facilities – banks, telephone exchange buildings, bus shelters, toilet enhancing irrigation water availability, in a region where rainfall is erratic and waterSOCIAL RESPONSIBILITY and create employability. Amara Raja Group manages two schools, one in Petamitta blocks, visitors’ rooms and roads in the communities around the manufacturing scarce. Around 50 villages in the Chittoor district benefited from this programme. village and another in Karakambadi, in the facilities. It also embarked on major Work on similar projects was initiated and vicinity of the manufacturing facility of initiatives – encapsulated under a continued during the year.Corporate Social Responsibility (CSR) is one through the following four vehicles: employees, who are the active contributors Amara Raja Batteries Limited. The school at programme named ‘Grameena Vikasam’of the most talked about subjects across to all major initiatives of this voluntary Environment RAJANNA TRUST Petamitta village achieved unprecedented for the development of surrounding villagescorporate India, in the last one year. The organisation. The major thrust area for results, this year, in its tenth class A 222-acre hillock area in Pemmagutta in The major thrust areas for Rajanna – such as the construction, rainwatergovernment issued recommendatory KECA is to promote education through examination and is being upgraded Chittoor district is being developed by the Trust include: storage tanks and supply channels, amongguidelines, encouraging voluntary CSR scholarships, sponsorship of needy through the addition of a junior college Group through the planting of medicinal • Farmers and agriculture others.focused activity and reporting by students, special talent identification and from this academic year. herbs. This social forestry initiative provides • Rural infrastructurecompanies. support of arts and culture. The Amara Raja Group was one of the first livelihood to 40 tribal families. It plans to • Ecology and environment Employee volunteering is a part of the Health to respond to the flood crisis in September plant about 50,000 saplings in five years,At Amara Raja ‘Group’, ‘Responsibility’ is a • Women and family The Group runs a veterinary hospital and a 2009, along the Krishna River in some parts with over 30,000 already having beencore value and CSR has always been a core • Health and sanitation Amara Raja culture and the Group Public Health Centre (PHC) with requisite of Rayalaseema and Telangana in Andhra planted. The Group involves the localconsideration in all its activities. Delivering • Youth and employability encourages all its employees to actively infrastructure. It applied to the government Pradesh. Apart from the contribution of community in its CSR activities, to create ahigh social impact on the communities • Children and education contribute in their individual capacity, along to establish a primary health centre under `50 lacs made by the Group companies and sense of belonging. During the year, thearound, through all its businesses, is a belief • Arts and culture with group CSR activities. Commitment to corporate citizenship is an expected the PPP agreement. The Group responded its employees during the previous financial Blue Sky Programme organised by thethat has always driven the Group; and it Mangamma and Gangulu Naidu behaviour for employees at Amara Raja enthusiastically to the Joy of Giving year, the Group, as part of a consortium, Group attracted participation from overcontinues to be so. Locating its plants in Memorial Trust (Mangal Trust): The Group. programme organised across the country embarked upon a plan to rehabilitate the 1,000 villagers and school children.rural areas and enabling their development major thrust areas include education, this year by Goonj, a not-for-profit affected weavers in some of the identifiedthrough employment generation, Amara Raja Batteries Limited supports CSR Employment training, health and sanitation. The Mangal organisation. Around 14 metric tons of villages. Relentless follow-ups with variousinfrastructure development, social activities through the aforesaid Trusts by The Group is committed to enhance rural Trust is predominantly engaged in village clothes and other useful material were authorities resulted in the construction ofenlightenment and transformation, the extending financial support in the form of living conditions around its manufacturing transformation with a specific focus on collected from employees and others and community weaving sheds in the saidGroup made a significant impact on the donations. The Company adopted a policy units through economic opportunities. This Petamitta and surrounding villages. This contributed to the programme. Many village with significant inputs and effortslives of the people in those areas. of contributing the higher of 0.2% of its Trust works in co-ordination with the camps were conducted during the year to from the Group. includes providing industrial training to turnover or 2% of its profits before tax eachThe Group also adopts a Direct Delivery government, Rajanna Trust and other create awareness on health and hygiene eligible villagers and the recruitment of year to public charitable causes. Agriculture and irrigationmodel by which it ensures that the benefits agencies. related issues, and to provide primary health qualified trainees. Amara Raja Batteries The Group had, in the past, constructed 22 Limited opened over 800 PowerZoneTM ruralfrom its contributions and efforts reach the Education scanning in rural areas.intended beneficiaries directly, speedily and Krishnadevaraya Educational and check dams and supply channels; it retail outlets till 2010-11, creating Mangal Trust is in the process of Cultural Association (KECA): It is a Rural infrastructure deepened existing ones to help farmers additional employment.effectively. The Amara Raja Group delivers establishing an Industrial Training Institute voluntary organisation based in Tirupati, As part of its CSR activities over the years, increase the cultivable area in this region.its corporate social activities predominantly in Petamitta village, expected to be a full- supported by Amara Raja Group and its Donations Financial year Total (in `) 2006-07 59,48,000 2007-08 1,08,73,000 2008-09 1,36,69,200 2009-10 5,13,52,935 2010-11 4,42,02,980 AMARA RAJA BATTERIES LIMITED GOTTA BE A54 ANNUAL REPORT 2010-11 BETTER WAY 55
  • 10 - Years Financials CORPORATE Parameters / Year 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 (` Million) INFORMATION OPERATING RESULTS Gross sales 20,765 16,904 15,794 13,500 7,451 4,458 2,685 1,999 1,987 1,882 BOARD OF DIRECTORS Auditors Registered Office & Works Net sales 17,611 14,645 13,132 10,833 5,958 3,637 2,199 1,636 1,607 1,518 Dr. Ramachandra N Galla M/s. E. Phalguna Kumar & Co. Renigunta – Cuddapah Road, Profit before depreciation, interest Non Executive Chairman Chartered Accountants, Karakambadi – 517 520 and tax (PBDIT) ** 2,588 2,965 2,056 1,795 905 521 262 118 227 292 Jayadev Galla Tirupati Tirupati, Andhra Pradesh, India Profit before interest & tax (PBIT) ** 2,171 2,536 1,711 1,551 735 374 125 (4) 110 208 Profit before tax (PBT) 2,210 2,546 1,227 1,459 712 373 136 12 117 247 Managing Director M/s. Chevuturi Associates Profit after tax (PAT) 1,481 1,670 805 944 470 238 87 14 74 182 Corporate Operations Office Shu Qing Yang Chartered Accountants, Dividends 393 248 68 40 40 28 23 17 17 40 5th Floor, Astra Towers, Jorge A Gonzalez Vijayawada Dividend Tax 65 42 12 7 7 4 3 2 2 - 12P, Kondapur, Hitech City, Retained profits 1,023 1,380 725 897 423 206 61 (5) 55 142 P. Lakshmana Rao Hyderabad – 500 038 Cost Auditor SOURCES AND APPLICATION OF FUNDS Nagarjun Valluripalli A.V.N.S. Nageswara Rao SOURCES OF FUNDS Registrar and Share Transfer N. Sri Vishnu Raju Hyderabad Share capital 171 171 171 114 114 114 114 114 114 114 Agent Reserves and surplus 6,288 5,266 3,885 3,217 2,323 1,899 1,693 1,632 1,637 1,583 T. R. Narayanaswamy M/s. Cameo Corporate Services Limited Net worth 6,459 5,436 4,056 3,331 2,437 2,013 1,807 1,746 1,751 1,697 Bankers “Subramanian Building”, Debt 950 912 2,859 3,163 1,407 405 233 149 97 134 Chief Financial Officer State Bank of India, Settipalle, Tirupati Deferred tax liability 205 216 182 169 136 120 131 145 176 160 No. 1, Club House Road, K. Suresh Andhra Bank, Main Branch, Tirupati Funds employed 7,614 6,565 7,097 6,663 3,980 2,538 2,171 2,040 2,024 1,991 Chennai – 600 002 State Bank of Hyderabad, Main Branch, APPLICATION OF FUNDS Company Secretary Tirupati Gross fixed assets 5,388 4,911 4,271 3,106 2,577 1,907 1,672 1,584 1,514 1,411 N. Ramanathan BNP Paribas, Chennai Accumulated depreciation 2,237 1,854 1,458 1,217 1,009 863 724 592 469 359 Net fixed assets 3,151 3,057 2,813 1,889 1,568 1,044 948 992 1,045 1,052 Bank of Nova Scotia, Coimbatore Capital work-in-progress 375 227 396 657 62 48 13 10 42 43 Investments 161 161 471 162 162 320 236 209 132 130 Gross current assets 7,419 6,311 5,260 5,749 3,500 2,280 1,613 1,190 1,227 1,204 Current liabilities and provisions 3,492 3,191 1,843 1,794 1,312 1,154 639 361 524 547 Net current assets 3,927 3,120 3,417 3,955 2,188 1,126 974 829 703 657 Deferred revenue expenditure - - - - - - - - 102 109 Net assets 7,614 6,565 7,097 6,663 3,980 2,538 2,171 2,040 2,024 1,991 RATIOS PBT to sales (%) 12.55 17.38 9.34 13.47 11.95 10.26 6.18 0.73 7.28 16.27 PAT to sales (%) 8.41 11.40 6.13 8.71 7.89 6.54 3.96 0.86 4.60 11.99 Return on capital employed (ROCE) - (%) ++ 34.62 44.51 30.62 33.91 25.44 18.55 6.81 (0.23) 6.25 12.97 Return on net worth (%) @@ 24.90 35.18 21.80 32.73 21.12 12.46 4.90 0.82 4.57 11.40 Debt : Equity (times) 0.15 0.17 0.70 0.95 0.58 0.20 0.13 0.09 0.06 0.08 Fixed assets turnover (times) && 5.59 4.79 4.67 5.73 3.80 3.48 2.32 1.65 1.54 1.44 Earnings per share (`) 17.34 19.56 9.42 16.57 41.31 20.94 7.63 1.22 6.50 16.00 Dividend (%) 230 145 40 35 35 25 20 15 15 35 Dividend per share (`) 4.60 2.90 0.80 0.70 3.50 2.50 2.00 1.50 1.50 3.50 Book value per share (`) 75.63 63.65 47.49 58.50 213.98 176.76 158.66 153.32 144.82 139.41 The senior management Share Price (as of 31st March) - (`) 189.75 164.20 36.65 195.65 340.40 234.25 91.65 57.15 47.90 81.00 team Left to right – Ramana ** PBDIT and PBIT are net of non operating income and expenditure Prasad Alam (Head SBU – ++ ROCE is PBIT divided by average capital employed. Capital employed excludes CWIP, Cash and Non-Trade Investments Automotive Batteries), K. Suresh (Chief Financial @@ Return on networth is computed based on average networth Officer) and S.Vijayanand && Year end net fixed assets are considered for computing fixed assets turnover (Head SBU – Industrial Batteries).56 Amara Raja Batteries Limited Annual Report 2010-11 57
  • DIRECTORS’ REPORT Your Directors have pleasure in presenting their report together against 20.24% in financial year 2009-10. The lower profit was During the year, the Company introduced Amaron VoltTM Hi-Life Commercial Borrowing’, `710 million ‘Interest free sales tax with the audited accounts for the financial year ended March primarily on account of significant drop in price realisations in range of premium batteries for critical application requirements deferment’ and `151 million short-term working capital 31, 2011. the telecom sector, despite good volume growth. in telecom networks, renewable energy sector and power borrowing. The debt to equity ratio as at March 31, 2011 was control business. The Company expanded its footprint in African at 0.15 times, without adjusting for cash and bank balances of The Profit Before Tax (PBT) and Profit After Tax (PAT) for the Financial highlights countries by partnering with Bharti Airtel, Africa for supplying its `402 million. During the year under review, CRISIL reaffirmed financial year ended March 31, 2011 was at `2,210 million and (` million) products to power their African telecom network. the rating for term loan and cash credit at “AA/Stable” and for `1,481 million as against `2,546 million and `1,670 million of Parameters / Year 2010-11 2009-10 letter of credit and bank guarantee at P1+. the previous financial year respectively. Gross sales 20,765 16,904 Automotive battery business The gross fixed assets (including capital work in progress) Net sales 17,611 14,645 The average LME lead price was at USD 2,245/MT for the year The Company’s automotive battery unit sales volume grew by increased by `625 million during the year to be at `5,763 million Profit before depreciation, 2010-11 as compared with USD 1,985/MT for the year 2009-10. 20% and 58% in four- wheeler and two-wheeler batteries (previous year – `5,138 million). During the year, the Company interest and tax (PBDIT) 2,588 2,965 respectively, over the previous financial year. Consequent to the Industrial battery business embarked on a capacity expansion programme, both in Profit before interest and tax (PBIT) 2,171 2,536 significant increase in sales volume, the Company’s market share The Company’s industrial battery unit registered a 20% volume four-wheeler and two-wheeler battery plants, with a capital Profit before tax (PBT) 2,210 2,546 improved to 30% in the organised automotive aftermarket. The growth during the year, amidst highly competitive market outlay of about `850 million to be completed by September Profit after tax (PAT) 1,481 1,670 overall growth in sales volume was achieved due to various conditions. The Company touched the first ever one billion 2011. The entire capital expenditure will be funded through Surplus brought forward 3,786 2,573 initiatives around channel expansion in the Indian aftermarket, ampere hour (Ah) volume mark in 2010-11 and emerged as the internal accruals. Amount available for appropriation 5,267 4,243 robust demand from OEMs and the addition of new Appropriations: market leader in both telecom and UPS businesses with 42% geographies in international markets. The improved operational During the year under review, despite an increase in lead price Transfer to General Reserve 148 167 and 32% market share respectively. performance of the automotive battery unit was due to and significant volume growth, the Company maintained its Dividend on equity capital: Slowdown in network expansion and sharing of tower increased volumes and efficiency thereof. working capital well within the targeted limits to improve the Special dividend 171 - infrastructure reduced the market potential in telecom. This overall working capital ratio and optimise costs. During the year, the Company doubled its two-wheeler battery Proposed dividend 222 248 presented significant challenges both in volume and in price capacity from 1.80 million units to 3.60 million units per annum The earnings per share for the year was at `17.34 as against Dividend tax 65 42 realisations. The Company was able to partially minimise this in line with market potential. The Company also placed orders `19.56 in financial year 2010, while the book value per share Surplus carried to balance sheet 4,661 3,786 impact by continuing to increase its market share in the telecom for manufacturing equipment to enhance the capacity of both was at `76 compared with `64 as at March 31, 2010. sector by virtue of its ‘preferred supplier status’ with all the major four-wheeler and two-wheeler batteries during 2011-12. The Performance overview telecom customers, backed by product performance of its Dividend four-wheeler battery capacity will be enhanced from 4.20 million The Company recorded gross sales of `20,765 million in ® leading brand PowerStack and service. The Company benefited units to 5.60 million units per annum and two-wheeler battery During the year, the Company paid a special dividend (100%) of 2010-11, a 23% growth over the previous fiscal year. The net from the growing demand for its QuantaTM batteries in the UPS capacity from 3.60 million units to 5.00 million units per annum `2 per equity share of `2 each to commemorate the silver jubilee sales for the year ended March 31, 2011 was at `17,611 million sector, resulting in substantial growth in sales volume during by end September 2011. occasion. Further, your Directors are pleased to recommend a as against `14,645 million for the financial year 2010, an the financial year 2010-11. While the price erosion in telecom final dividend (130%) of `2.60 per equity share of `2 each for increase of 20%. The export sales improved from `522 million to segment impacted revenues and margins significantly, Financial position the financial year ended March 31, 2011. With this, the total `834 million – 60% growth. favourable overall business mix aided by higher share of UPS The Company’s net worth as at March 31, 2011 was at `6,459 dividend declared for the year is `4.60 per equity share – 230% The operating profit (earnings before interest, depreciation, tax battery volume and aggressive cost management million. During the year under review, `1,023 million was added dividend. and amortisation - EBIDTA) for the year stood at `2,588 million strategies helped the Company achieve better than planned to the reserves. The debt of `950 million, as at the date of The final dividend, if approved, would involve a cash outflow of (previous year `2,965 million) representing 14.69% of net sales margins. balance sheet, comprises `89.44 million (USD 2 million) ‘External `222.06 million towards dividend and `36.88 million towards58 Amara Raja Batteries Limited Annual Report 2010-11 59
  • dividend tax, resulting in a total additional cash outflow of General Meeting and being eligible offer themselves for Mr. A. V. N. S. Nageswara Rao, Hyderabad, was appointed as Fixed deposits `258.94 million. re-appointment. Cost Auditor of the Company to conduct the cost audit for the The Company has not accepted any deposits from the public in financial year 2010-11. terms of Section 58A of the Companies Act, 1956, during the A brief resume, expertise and details of other directorship(s) etc., Transfer to reserves year under review and hence there were no outstanding deposits relating to re-appointment of Directors is provided in the notice The Company re-appointed Mr. A. V. N. S. Nageswara Rao as In accordance with the provisions of the Companies Act, 1956 of the ensuing Annual General Meeting. Cost Auditor for the year 2011-12. The Company received the as on March 31, 2011. read with Companies (Transfer to Reserves) Rules, 1975, your approval of the Central Government for re-appointment of Directors have proposed to transfer a sum of `148.10 million to Mr. Rohit Kochhar who acted as an alternate Director to Mr. Shu Health, safety and environmental protection Mr. A. V. N. S. Nageswara Rao as the Cost Auditor of the the general reserve out of the profits earned by the Company. A Qing Yang, Director, vacated his office in terms of Section 313 Your Company complied with all the applicable environmental Company for auditing the cost records for the financial year sum of `4,661.08 million is proposed to be retained in the profit of the Companies Act, 1956 with effect from July 29, 2010. and labour laws. The Company continues to be certified under 2011-12. and loss account. ISO–14001 for its environment management system. During the Mr. Anthony Wu Huang who acted as an alternate Director to Mr. Jorge A Gonzalez, Director, vacated his office in terms of Corporate governance year under review, the Company established occupational health Awards & recognitions The Company’s Corporate Governance practices have been and safety management systems and secured certification from Section 313 of the Companies Act, 1956 with effect from Your Directors have pleasure in reporting the following awards detailed in a separate section and are annexed to and forms part January 24, 2011. TUV Nord for OHSAS 18001-2007. The Company has been and recognitions that your Company received during the year of this annual report. The certificate from a Practising Company complying with the relevant laws and taking all necessary under review: The Board wishes to place on record its grateful appreciation Secretary on the compliance of Corporate Governance Code measures to protect the environment and maximise employee and acknowledgement for the valuable contributions rendered embodied in Clause 49 of the Listing Agreement is also attached • First prize under the discrete manufacturing category at the health and safety. by Mr. Rohit Kochhar and Mr. Anthony Wu Huang during their as annexure and forms part of this report. CII- 4th National conference and competitions on Six Sigma. tenure as alternate Directors of the Company. Industrial relations • Employer Branding Institute a premier industry body on Management discussion and analysis During the year under review, the industrial relations remained assessment of best people practices awarded Amara Raja the Auditors Management discussion and analysis report, highlighting the cordial and stable. The Directors wish to place on record their following awards: M/s. E. Phalguna Kumar & Co, Chartered Accountants, Tirupati performance and prospects of the Company’s business, forms appreciation for the excellent co-operation received from all and M/s. Chevuturi Associates, Chartered Accountants, part of this annual report. Regional round (Southern region): employees at all levels. Vijayawada, the joint auditors of the Company retire at the • Award for ‘Best HR Strategy in line with Business’ conclusion of the forthcoming Annual General Meeting and are CEO/CFO certification • Award for ‘Continuous Innovation in HR Strategy at Work’ Particulars of employees eligible for re-appointment. As required under Clause 49 (V) of the Listing Agreement, the The statement giving particulars of employees who were in • Award for ‘Excellence in HR Through Technology’ CEO/CFO certification on the accounts of the Company as given The Board, on the recommendation of the Audit Committee, receipt of remuneration in excess of the limits prescribed under by Mr. Jayadev Galla, Managing Director and Mr. K. Suresh, National rounds: proposed that M/s. E.Phalguna Kumar & Co, Chartered Section 217 (2A) of the Companies Act, 1956 read with the Chief Financial Officer, forms part of this annual report. • Award for ‘Best HR Strategy in line with Business’ Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Companies (Particulars of Employees) Rules, 1975, as amended, Accountants, Vijayawada, be re-appointed as the joint auditors is given in the Annexure to the Directors’ Report. • Award for ‘Continuous Innovation in HR Strategy at Work’ Transfer to the investor education and of the Company. Necessary resolution is being placed before the protection fund However, in terms of the provisions of section 219 (1)(b)(iv) of • The Supply Chain Leader 2011 award under the category dry shareholders for their re-appointment at the ensuing Annual In terms of Section 205A read with Section 205C of the the Companies Act, 1956, the Directors’ Report is being sent to cells and storage batteries by Industry 2.0 India SCM General Meeting. The Company also received from the auditors, Companies Act, 1956, an amount of `2,60,321 being all the members of the Company, excluding the aforesaid Conclave. certificates to the effect that their re-appointment, if made, unclaimed/unpaid dividend pertaining to the financial year information. The said information would be filed with the would be in accordance with the limits as prescribed in Section 2002-03 was transferred to the Investor Education and Registrar of Companies and also would be available for Directors 224 (1B) of the Companies Act, 1956. Protection Fund (IEPF) on September 17, 2010. inspection by the members at the registered office of the In accordance with the provisions of Section 256(1) of the Companies Act, 1956 and Article 105(a) of the Articles of Cost auditor Further, the unclaimed/unpaid dividend relating to the financial Company. Any member interested in obtaining such particulars Association of the Company, Mr. Shu Qing Yang and Mr. Jorge In terms of Section 233B of the Companies Act, 1956 and as year 2003-04 is due for remittance on September 16, 2011 to may write to the Company Secretary at the corporate operations A Gonzalez, are liable to retire by rotation at the ensuing Annual per the directives of the Central Government, IEPF, during the financial year 2011-12. office of the Company.60 Amara Raja Batteries Limited Annual Report 2010-11 61
  • Conservation of energy, technology and the Company established internal control systems, consistent ANNEXURE TO foreign exchange with its size and nature of operations. In weighing the DIRECTORS’ REPORT The particulars of conservation of energy, technology assurance provided by any such system of internal controls absorption, foreign exchange earnings and outgo required to its inherent limitations should be recognised. These systems Particulars as per the Companies (Disclosure of Particulars in B. Technology absorption be disclosed under the Companies (Disclosure of Particulars in are reviewed and updated on an ongoing basis. Periodic the Report of the Board of Directors) Rules, 1988 and 1. Specific Areas in which R&D is carried out by the the Report of the Board of Directors) Rules, 1988 are annexed internal audits are conducted to provide reasonable assurance forming part of the Directors’ Report: Company hereto and forms part of this report. of compliance with these systems. The Audit Committee A. Particulars of conservation of energy The R&D activities of the Organisation are categorised under meets at regular intervals to review the internal audit The Company continues its ongoing efforts on energy three broad areas of focus: Directors’ responsibility statement function; conservation through upgradation of process technology, • Fundamental development projects Pursuant to Section 217(2AA) of the Companies Act, 1956, the effective production scheduling and installation of efficient • Material development projects • The financial statements have been prepared on a going Directors confirm that, to the best of their knowledge and belief: equipment, resulting in energy savings. concern basis. • Product and process improvement projects • In the preparation of the profit and loss account for the Form A The R&D projects are identified to address the following financial year ended March 31, 2011 and the balance sheet Acknowledgement Form for disclosure of particulars with respect to specific objectives: as at that date (“financial statements”), applicable accounting The Board wishes to place on record its sincere appreciation for conservation of energy. • Technology up-gradation to make the batteries robust standards have been followed; the continued assistance and support extended to the Company A. Power and fuel consumption 2010-11 2009-10 and high end performer by its customers, vendors, investors, business associates, banks, • Appropriate accounting policies have been selected and • Evaluation and benchmarking of alternate technologies government authorities and employees. 1. Electricity applied consistently and such judgements and estimates that • New product development for emerging application a) Purchased are reasonable and prudent have been made so as to give a Your Directors acknowledge with gratitude the encouragement needs and support extended by the joint venture partner and the Unit (KWH) 113,245,786 98,562,983 true and fair view of the state of affairs of the Company as at • Development of import substitutions in materials and shareholders. Total cost (`) 373,433,692 249,370,519 the end of the financial year and of the profit of the Company products Rate/Unit (`) 3.30 2.53 for that period; • Exploration of environmental friendly operations/ On behalf of the Board b) Own generation • Proper and sufficient care has been taken for the materials i) Through diesel generator maintenance of adequate accounting records in accordance Unit (KWH) 703,429 2,539,973 • Material development activity for enhanced battery with the provisions of the Companies Act, 1956, for performance and cost efficiency KWH per unit of fuel 38.30 37.98 safeguarding the assets of the Company and for preventing Place: Milwaukee, USA Dr. Ramachandra N Galla • Value engineering efforts for product improvements Cost/Unit (`) 15.51 13.85 and detecting fraud and other irregularities. To ensure this, Date: May 16, 2011 Chairman ii) Through steam turbine/generator – – 2. Benefits derived as a result of the above R&D 2. Coal - - • Successful launch of premium VRLA product – Amaron 3. Furnace oil - - VoltTM for telecom application 4. Others • Deployment of long life product with redundancy option a) LPG for railway rolling stock application Units (Kgs) 190,842 224,367 • Development of customised VRLA battery pack for DG Amount (`) 9,902,065 9,978,644 starter application b) Acetylene - Commercial units • Improved productivity in automotive grid casting by (Cubic Mtrs) 18,287 21,053 process improvements Amount (`) 3,085,026 3,664,095 • Design optimisation enhancing the endurance of c) Oxygen units (cubic mtrs) 41,412 39,746 Amaron Harvest® and Amaron Hi-way® automotive Amount (`) 897,533 853,637 batteries B Electricity consumed in KWH • Custom made products to meet specific OEM platform per lakh of Ampere hour produced 4,452 4,631 requirements62 Amara Raja Batteries Limited Annual Report 2010-11 63
  • CORPORATE GOVERNANCE • Improved terminal design to enhance battery 2. Benefits derived as a result of the above efforts performance in Amaron Hi-way® applications • Cost reduction (As required under Clause 49 of the Listing Agreement entered into with stock exchanges) • Introduction of new part numbers to Private Label • Environmental protection Company’s Philosophy on Corporate • None of the Directors on the Board is a member of more customers • Energy conservation Governance than 10 committees or Chairman of more than five • Enhanced performance and reliability of the product 3. Future Plan of Action committees across all listed and unlisted public Corporate Governance is a blend of law, regulations and • Development of two wheeler AGM battery for OE • Enhanced market share appropriate voluntary private sector practices which enable companies in which he is a Director. Necessary application • Foreign exchange earnings disclosures regarding Committee positions and companies to attract financial and human capital, perform • Advanced product range for inverter application • Penetration into newer markets directorships held in other public companies as on efficiently and perpetuate itself by generating long-term • Resource saving March 31, 2011 have been disclosed and taken on • Development of advanced batteries for Idle Stop Start economic value for its shareholders, while respecting the (ISS) application record by the Board of Directors. Information regarding Imported technology interests of stakeholders and society as a whole. • Design and Develop Deep Cycle Motive Power battery a) Technology Imported The Company has imported • The Independent Directors have confirmed that they Amara Raja Batteries Limited is committed to the adoption of range technology for the manufacture satisfy the “criteria of independence’ as stipulated in best governance practices and its adherence in the true spirit, • Custom made 2V-VRLA range for industrial applications of automotive (SLI) batteries Clause 49 of the Listing Agreement. at all times. Our governance practices are a product of • Bring in unique product range for solar application from Johnson Controls 2. Information made available to the Board self-desire, reflecting the culture of the trusteeship i.e. deeply Inc. USA The Board has complete access to all information of the ingrained in our value system and reflected in our strategic 4. Expenditure on R&D (Revenue and Capital) during b) Year of Import 1998 thought process. At a macro level, our governance philosophy Company. The following is provided to the Board and the 2010-11 c) Has the technology Yes. Further, latest rests on five basic tenets viz., the Board’s accountability to the agenda papers for the meetings are circulated in advance of (` million) been fully absorbed? developments in the technology Company and shareholders, strategic guidance and effective each meeting: Sl.No Particulars 2010-11 2009-10 are absorbed and implemented monitoring by the Board, protection of minority interests and • Annual operating plans and budgets, capital budgets 1 Capital 3.46 5.06 from time to time with the rights, equitable treatment of all shareholders as well as superior and updates; 2 Recurring 19.55 12.23 help of Johnson Controls Inc., transparency and timely disclosure. In line with this philosophy, • Quarterly, half yearly and annual financial results Total 23.01 17.29 USA when and where required. Amara Raja Batteries Limited continuously strives for excellence (audited/unaudited) of the Company; Total R&D expenditure as a d) If not fully absorbed, through adoption of best governance and disclosure practices. • Minutes of Board meetings, Audit Committee and other percentage of total turnover 0.11% 0.10% areas where this has committee meetings of the Board; not taken place, reasons Not Applicable Board of Directors • General notice of interest; C. Technology absorption, adaptation and therefore and future 1. Composition of Board • Materially important litigations, show cause, demand, innovation plan of action • As on March 31, 2011, the Company’s Board of prosecution and penalty notices, if any; 1. Efforts in brief, made towards technology absorption, Directors comprises eight members. The Chairman of the adaptation and innovation • Investment strategy and expansion plans; D. Total foreign exchange used and earned Board is a Non-Executive Director. The Company has an • Successful launch of premium VRLA product- Amaron- • Acquisitions/amalgamation, etc, if any; (` million) optimum combination of Executive and Non-Executive VoltTM for telecom application • Details of quarterly foreign exchange exposures and the Sl. Particulars 2010-11 2009-10 Directors in accordance with the provisions of Clause 49 • Foray into DG starter application with suitable product No steps taken by the management to limit the risks of I (A) of the Listing Agreement. The Board comprises one range adverse exchange rate movement; 1 Foreign exchange used 5,462.72 5,316.51 Executive Director and seven Non-Executive Directors, of • Continuous upgradation process efficiency and quality whom four are Independent Directors. All Independent • Compliance reports; 2 Foreign exchange earned - sales 834.15 521.57 improvements Directors are persons of eminence and bring a wide • Status of legal cases; range of expertise and experience to the Board, thereby • Related party transactions; ensuring best interest of stakeholders and the Company. • All other information which is relevant for decision All the Directors except one Executive Director are liable making by the Board. to retire by rotation and are eligible for re-election.64 Amara Raja Batteries Limited Annual Report 2010-11 65
  • 3. The names and categories of the Directors on the Board, their attendance at Board meetings held during the 6. Details of directors seeking appointment/ provisions of Clause 49 of the Listing Agreement. year and the number of directorships and committee chairmanships/memberships held by them in other re-appointment 1.1 Overall purpose/objective companies as on March 31, 2011 are given herein below. Mr. Jorge A. Gonzalez and Mr. Shu Qing Yang, Directors, retire The role of the Audit Committee (the "committee") is to assist Sl. Name of Director Category Number of Board Whether Number of Number of committee by rotation at this annual general meeting and are seeking the Board of Directors (the "Board") in reviewing the financial No. Meetings during attended last Directorships positions held re-appointment. The retiring Directors have given their consent information which will be provided to the stakeholders and the year 2010-11 AGM held on in other in other public for re-appointment. others, reviewing the systems of internal controls which the July 29, 2010 public companies ## The brief details of the Directors seeking re-appointment are management and the Board established, appointing, companies# retaining and reviewing the performance of statutory Held Attended Chairman Member appended to the notice convening the 26th Annual General auditors and overseeing the Companys accounting and 1 Dr. Ramachandra N Galla Promoter/Non Executive Meeting. financial reporting processes and the audit of the Companys Chairman 4 4 Yes 5 Nil Nil 7. Details of Board meetings held during the financial financial statements. 2 Mr. Jayadev Galla Promoter/ Managing 4 4 Yes 4 Nil 3 Director year 2010-11: 1.2 Terms of reference 3 Mr. Jorge A. Gonzalez * Non Executive Director 4 1** No Nil Nil Nil During the financial year 2010-11, the Board met four times. The terms of reference of the Audit Committee are in 4 Mr. Shu Qing Yang * Non Executive Director 4 3** Yes Nil Nil Nil The gap between any two Board meetings was less than four conformity with the provisions of sub-Clause II of Clause 49 5 Mr. P. Lakshmana Rao Independent 4 4 Yes Nil Nil Nil months. The dates on which the meetings of the Board were of the Listing Agreement which, inter-alia, includes the Non Executive Director held during the year are as follows. following: 6 Mr. Nagarjun Valluripalli Independent 4 4 Yes 1 Nil Nil Sl. No. Date Day Venue a) To hold periodic discussions with the statutory auditors Non Executive Director and internal auditors of the Company concerning the 7 Mr. N. Sri Vishnu Raju Independent 4 4 Yes 3 Nil Nil 1 May 19, 2010 Wednesday Hyderabad financial reports of the Company, internal control Non Executive Director 2 July 29, 2010 Thursday Tirupati systems, scope of audit and observations of the 8. Mr.T. R.Narayanaswamy Independent 4 3 Yes 1 Nil Nil 3 October 25, 2010 Monday Hyderabad auditors/internal auditors; Non Executive Director 4 January 24, 2011 Monday Hyderabad b) Discussion with internal auditors on significant audit # Directorships held by Directors in other companies does not include any directorship in foreign companies, directorship in any Section findings and follow up thereon; 25 companies and private limited companies. Board Committees The Company’s Board of Directors set up five committees to c) To review compliance with internal control systems; ## As per Clause 49 of the Listing Agreement, chairmanship/membership of Board committee includes only Audit Committee and Shareholders/Investors Grievance committee of public limited companies. carry out various functions as entrusted and to give suitable d) To review the quarterly, half-yearly and annual financial recommendations to the Board on significant matters, from time results of the Company before submission to the Board; * Sl. Nos. 3 and 4 are nominee directors of Johnson Controls Inc., (Person acting in concert) to time. The details of the said committees are given hereunder: ** Mr. Anthony Wu Huang, who acted as alternate Director to Mr. Jorge A. Gonzalez attended two Board meetings on his behalf held e) To make recommendations to the Board on any matters on May 19, 2010 and October 25, 2010. Mr. Rohit Kochhar, who acted as alternate Director to Mr. Shu Qing Yang attended one Board Mandatory Committee relating to the financial management of the Company, meeting on his behalf held on May 19, 2010. • Audit Committee including the audit report; • Shareholders’/Investors’ Grievance Committee. f) Recommending the appointment/re-appointment of Optional Committee statutory auditors and fixation of their remuneration; 4. Changes in the composition of the Board during the related provision of the Companies Act, 1956. • Remuneration Committee g) To review the annual plan and budget before submission year 2010-11: # Mr. Anthony Wu Huang (who acted as alternate Director to The Board has also constituted a Loan and Investment to the Board; During the year, the composition of Board under went certain Mr. Jorge A. Gonzalez, Director) ceased to be an alternate changes, particulars of which are set out hereunder: Director with effect from January 24, 2011 in terms of Section Committee, which looks into the borrowings and investment h) To approve the appointment of the chief financial officer; Sl. Name Date of Date of 313 and its related provision of the Companies Act, 1956. decisions of the Company and the Share Transfer Committee. i) Reviewing any other matter which may be specified as No. Appointment Cessation These committees meet as and when required to take up the role of the Audit Committee under the amendments, if 5. Details of shareholding of Directors as on March 31, requisite agenda as per their charter or scope of review. 1. Mr. Rohit Kochhar* 19.05.2010 29.07.2010 any, from time to time, to the Listing Agreement, 2011: The composition, scope, changes and details of the committees Companies Act, 1956 and other applicable statutes. 2. Mr. Anthony Wu Huang# 19.05.2010 24.01.2011 Sl. No. Name No. of shares held are given as under: 1.3 Composition of committee * Mr. Rohit Kochhar (who acted as alternate director to Mr. Shu 1. Dr. Ramachandra N Galla 6,397,537 The Audit Committee comprises of Independent Directors who Qing Yang, Director) ceased to be an alternate Director with 2. Mr. Jayadev Galla 6,410,992 1. Audit Committee are financially literate and have experience in the areas of finance effect from July 29, 2010 in terms of Section 313 and its 3. Mr. Nagarjun Valluripalli 1,500 The Audit Committee was constituted in accordance with and accounts. The composition of the Committee is given below: Section 292A of the Companies Act, 1956 and as per the66 Amara Raja Batteries Limited Annual Report 2010-11 67
  • Sl. Name Designation Category Company’s shares. The Committee also reviews the redressal • Recommending remuneration including periodic revision, The Company has a service contract with Mr. Jayadev Galla for No. of investors’ grievance and performance of the RTA of the performance bonus, incentives, commission, stock options, a period of five years with effect from September 1, 2010 to 1. Mr. P. Lakshmana Rao Chairman Independent, Company in this regard. other services, perquisites and benefits payable to the August 31, 2015. The notice period is three months and no Non-Executive Company’s Managing Director (MD)/Executive Director (ED). severance compensation is payable. 2.2 Composition of Committee 2. Mr. Nagarjun Valluripalli Vice Chairman Independent, 3.3 Composition and meetings ii. Remuneration by way of sitting fees to non-executive Non-Executive The composition of the Shareholders’/Investors’ Grievance The Committee at present comprises of the following members. directors 3. Mr. N. Sri Vishnu Raju Member Independent, Committee is given below: All the members of the Committee are Non-Executive and The Non-Executive Directors (other than Galla Family members Non-Executive Sl. Name Designation Category Independent Directors. and nominees of Johnson Control Inc.) are paid remuneration by No. 4. Mr. T.R. Narayanaswamy Member Independent, Sl. No. Name Designation way of sitting fees of `10,000 for attending the Board meeting Non-Executive 1. Mr. P. Lakshmana Rao Chairman Independent, and ` 5,000 for the other committees viz. Audit Committee, 1. Mr. P. Lakshmana Rao Chairman Non-Executive Shareholders’/ Investors’ Grievances Committee, Remuneration 2. Mr. Nagarjun Valluripalli Member 1.4 Meeting and attendance during the year 2010-11: 2. Dr. Ramachandra N Galla Member Non- 3. Mr. T. R. Narayanaswamy* Member Committee and Loan and Investment Committee. The Non- During the financial year 2010-11, four meetings of the Independent, Executive Directors of the Galla Family and Johnson Controls Inc. * Mr. T. R. Narayanaswamy, Independent Director, was Audit Committee were held on May 19, 2010, July 29, 2010, Non-Executive have agreed for waiver of sitting fees for Board and Committee appointed as the member of the Remuneration Committee with October 25, 2010 and January 24, 2011 and the attendance 3. Mr. Jayadev Galla Member Non- meetings thereof as attended by them, till further advice. effect from May 19, 2010. of the members are given hereunder: Independent, One meeting on May 19, 2010 of the Remuneration Sitting fees paid to Non-Executive Directors during the financial Executive Committee was held during the financial year 2010-11. year 2010-11 are as follows: Sl. Name Number of meetings 2.3 Meeting and attendance during the year 2010-11: Mr. P. Lakshmana Rao and Mr. Nagarjun Valluripalli attended Name Sitting Fees paid (`) No. Held Attended During the financial year 2010-11, four meetings of the the said meeting. Mr. P. Lakshmana Rao 85,000 1 Mr. P.Lakshmana Rao 4 4 Committee were held on May 19, 2010, July 29, 2010, October 3.4 Remuneration Policy Mr. Nagarjun Valluripalli 65,000 2 Mr. Nagarjun Valluripalli 4 4 25, 2010 and January 24, 2011. i. Remuneration paid to Managing Director Mr. N. Sri Vishnu Raju 60,000 3 Mr. N. Sri Vishnu Raju 4 4 Sl. Name Number of meetings The remuneration paid to an Executive Director is recommended 4 Mr. T.R.Narayanaswamy 4 3 No. Held Attended Mr. T.R. Narayanaswamy 45,000 by the Remuneration Committee and approved by the Board of The chief financial officer, statutory auditors, internal auditor 1. Mr. P. Lakshmana Rao 4 4 Directors in the Board meeting, subject to the subsequent iii. Remuneration by way of commission to non-executive and cost auditor are invited to attend the audit committee 2. Dr. Ramachandra N Galla 4 4 approval by the shareholders at the general meeting and such directors meetings. The Company Secretary is the secretary of the other authorities, as the case may be. 3. Mr. Jayadev Galla 4 4 The remuneration by way of commission payable to Committee. At the Board meeting, only Non-Executive and Independent Non-Executive Directors is approved by the Board of Directors The Shareholders’/Investors’ Grievance Committee prescribed Directors participate in approving the remuneration being paid 2. Shareholders’ / Investors’ Grievance Committee in the Board meeting, subject to the subsequent approval of the norms for attending to the shareholders requests and these to the Managing Director. The remuneration is determined shareholders at the 25th Annual General Meeting and Central 2.1 Terms of reference norms have been complied with. considering the various factors such as qualification, experience, Government, Ministry of Corporate Affairs (MCA), New Delhi A Shareholders’/Investors’ Grievance Committee of the Board The Company Secretary who is also the compliance officer of expertise, prevailing remuneration in the industry and the vide their letter No. SRN A94887429/1/2010-CL-VII dated of Directors was constituted to specifically look after the the Company acts as secretary to the Committee. financial position of the Company. The remuneration structure January 31, 2011 (valid till August 31, 2015). The approval redressal of complaints of shareholders’/investors’ viz., of Managing Director comprises basic salary, commission, includes 3% per annum commission on net profits payable to transfer/transmission of shares, issue of duplicate share 3. Remuneration Committee perquisites and allowances, contribution to provident fund and Dr. Ramachandra N Galla, Non-Executive Chairman and payment certificates, change of name, change of status, transposition 3.1 Objective other funds. Mr. Jayadev Galla, was re-appointed as Managing to all other Non-Executive Directors put together at a rate not of shares, sub division and consolidation of shares, request The Committee reviews and determines the Companys policy Director for a period of five years effective from September 01, exceeding 1% of the net profits of the Company and in such for dematerialisation/rematerialisation of shares, non receipt on managerial remuneration and recommends to the Board on 2010 to August 31, 2015 and the following remuneration was proportion as the Board may decide from time to time. of dividend/annual report/notices, complaints relating to the specific remuneration of Executive/Managing Director (s), so paid for the financial year ended March 31, 2011: bonus shares etc. as to ensure that they are fairly rewarded for their individual In terms of the above approval, during the year 2010-11, (` million) contributions to the Companys overall performance. commission at 3% amounting to ` 72.08 million will be payable Name Salary Contribution Value of Commission The Company has appointed Cameo Corporate Services upon approval of the accounts at the 26th Annual General to provident perquisites Limited as its Registrar and Share Transfer Agent (RTA). The Meeting, to Dr. Ramachandra N Galla, Non-Executive Chairman. 3.2 Terms of reference fund RTA takes care of all activities relating to share transfers and • Determining the remuneration policy of the Company, from dematerialisation of shares and all other related works in Mr. Jayadev Galla, time to time. Stock options consultation/directions of the Company with respect to the Managing Director 15.00 0.01 - 135.99 The Company currently does not have stock options scheme.68 Amara Raja Batteries Limited Annual Report 2010-11 69
  • General body meeting (s) 7. Details of compliance with mandatory and officers and designated employees) are prevented from dealing 1. The venue, day, date and time of the last three annual general meetings held are given below: non-mandatory requirements of Clause 49 of Listing in the Company’s shares during the closure of Trading Window. For the year ended Venue Day and date Time Special resolution Agreement. The trading window is closed before 15 days from the close of March 31, was passed The Company complied with all the mandatory requirements of the quarter/financial year and remain closed until the day after 2010 Registered office Thursday, 29th 3.00 P.M. Payment of commission to Non- Executive Clause 49 of the Listing Agreement. The Company has set up a the date of the board meeting wherein the unaudited/audited of the Company July, 2010 Chairman and Non-Executive Independent Directors. Remuneration Committee. The details of this Committee was results/dividend or any other price sensitive matters are 2009 Registered office Thursday, 30th 2.30 P.M. Nil enumerated earlier in this report. The other non-mandatory considered and approved by the board of directors. All directors, of the Company July 2009 requirements have not been adopted by the Company till date. officers and designated employees are required to obtain 2008 Registered Office Thursday, 14th 3.00 P.M. Alteration of the capital clause of the articles pre-clearance of trade from the managing director/compliance of the Company August, 2008 of association Code of conduct officer in case they wish to trade (purchase/sell) in Company’s 2. Postal Ballot filed within stipulated time with the stock exchanges/other The Code of Conduct as required by Clause 49 of the Listing shares during the period the trading window is open. All The Company has not passed any resolution through postal statutory authorities. Agreement and adopted by the Board is a comprehensive code directors/ officers/ designated employees are required to disclose ballot during the financial year 2010-11. to ensure good governance and to provide for ethical standards related information periodically/annually as defined in the Code. 3. Disclosure of accounting treatment of conduct on matters including conflict of interest, acceptance The Company Secretary has been designated as Compliance There is no resolution proposed to be passed by means of postal In the preparation of financial statements, the Company of positions of responsibility, treatment of business opportunities Officer for this code. ballot in this Annual General Meeting. followed the accounting standards issued by the Institute of and the like. The Code is applicable to all the Directors and the Chartered Accountants of India. The significant accounting senior management personnel of the Company. A copy of the Means of communication Disclosures policies, which are consistently applied, have been set out in the Code of Conduct is posted on the Company’s website. An The Company regularly intimates its unaudited financial results 1. Disclosure of related party transactions note to the accounts of the audited financial statements for the annual affirmation has been obtained from all the Board (provisional) as well as audited financial results to the stock There are no materially significant related party transactions, with financial year ended March 31, 2011. members and the senior management personnel of the exchanges, as soon as the same are taken on record/approved. Directors/promoters/ management which had potential conflict Company as on March 31, 2011. These financial results are published in leading newspapers in with the interests of the Company at large. The disclosures with 4. Whistle blower policy India which include Business Standard and Business Line in regard to transactions with related parties are given in the notes The Company has not adopted the Whistle Blower Policy. In terms of Clause 49 of the Listing Agreement, a declaration English and Andhra Jyothi in Telugu. The notices to shareholders to the accounts of the audited financial statements for the However, the Company has an environment where any signed by the Managing Director is given hereunder: viz. book closure, issue of duplicate share certificate etc. are financial year ended March 31, 2011. All related party employee can raise any issue with the management if required. normally published in Business Line (English) and Andhra Jyothi transactions are negotiated at arm’s length basis and are only Declaration on Code of Conduct (Telugu). The financial results and press releases are posted on intended to further the interest of the Company. 5. Board disclosures I, Jayadev Galla, Managing Director, hereby confirm that the the Company’s website www.amararaja.co.in. The Board received disclosures from senior management 5.1 Risk management Board members and senior management personnel have personnel relating to material, financial and commercial The Company laid down procedures to inform Board members affirmed compliance with Amara Raja’s “Code of Conduct” for Management discussion and analysis report transactions stating that neither they nor their relatives have any about the risk assessment and minimisation procedures. The the financial year 2010-11. The management discussion and analysis report forms part of personal interest. Board periodically discusses the significant business risks the Company’s annual report. identified by the management and the mitigation process being Place: Milwaukee, USA Jayadev Galla During the year, the Company obtained approval of the Regional taken up. General shareholder information Director, Ministry of Corporate Affairs (MCA), Southern Region, Date: May 16, 2011 Managing Director A separate section has been included in the annual report Chennai vide their letter dated October 07, 2010 for having A broad framework for minimising the risks faced by the furnishing various details viz. AGM date, time and venue, share business transactions with M/s Amara Raja Infra Private Limited Company by adopting a risk management policy for commodity Policy for prevention of insider trading price movement, distribution of shareholding etc. (for a period of three years effective from April 1, 2010 to March and currency has been formed by the Company. In pursuance of the Securities and Exchange Board of India 31, 2013), wherein Dr. Ramachandra N Galla and Mr. Jayadev (Prohibition of Insider Trading) Regulations, 1992 the board has 5.2 Internal control system On behalf of the Board Galla are Directors and shareholders. laid down “code of conduct for prevention of insider trading” The Company has in place adequate system of internal controls with the objective of preventing purchase and/or sale of shares The Company also places before the Board at every meeting the commensurate with its size and the nature of its operations. The Place: Milwaukee, USA Dr. Ramachandra N Galla of the Company by an insider on the basis of unpublished price details of all transactions with related parties/companies Company’s internal control system covers the following aspects: sensitive information. Under this code, Insiders (Directors, Date: May 16, 2011 Chairman promoted by the Galla family, for its approval/ratification. • Financial propriety of business transactions. • Safeguarding the assets of the Company. 2. Details of non compliance by the Company • Compliance with prevalent statutes, Listing Agreement, During the preceding three financial years there were no management authorisation, policies and procedures. penalties, strictures imposed on the Company by Stock Exchanges or SEBI or any other statutory authority, on any 6. CEO/CFO certification matter related to capital market. All returns and reports were The CEO/CFO certification on the financial statements and internal control is separately annexed.70 Amara Raja Batteries Limited Annual Report 2010-11 71
  • Certificate of CEO and CFO Corporate Governance Certification May 16, 2011 caused such internal control over financial reporting to The Board of Directors be designed under our supervision, to provide reasonable Amara Raja Batteries Limited assurance regarding the reliability of financial reporting Renigunta – Cuddapah Road, and the preparation of financial statements for external Certificate on Compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement Karakambadi – 517 520 purposes in accordance with generally accepted Tirupati, Andhra Pradesh accounting principles; To b. evaluated the effectiveness of the Company’s disclosure, The Members Dear Sirs, controls and procedures; M/s. Amara Raja Batteries Limited Sub: CEO and CFO certification c. disclosed in this report any change in the Company’s I have examined the compliance of the conditions of Corporate Governance by Amara Raja Batteries Limited, for the year We, Jayadev Galla, Managing Director and K. Suresh, Chief internal control over financial reporting that occurred ended March 31, 2011 as stipulated in clause 49 of the listing agreement of the said Company with the stock exchanges. Financial Officer, of Amara Raja Batteries Limited, to the best of during the Company’s most recent fiscal year that has The compliance of the conditions of Corporate Governance is the responsibility of the management; my examination has our knowledge and belief, certify that: materially affected, or is reasonably likely to materially been limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance 1. We have reviewed the balance sheet and profit and loss affect, the Company’s internal control over financial with the condition of Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements account for the year ended March 31, 2011, and all its reporting. of the Company. schedules and notes on accounts, as well as the cash flow 6. We have disclosed based on our most recent evaluation, statements and the Directors’ Report; wherever applicable, to the Company’s auditors and the In my opinion and to the best of my information and according to the explanations given to me, I certify that the Company 2. Based on our knowledge and information, these statements audit committee of the Company’s Board of Directors (and has complied with the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement. do not contain any untrue statement of a material fact or persons performing the equivalent functions) I further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or omit to state a material fact necessary to make the a. all deficiencies in the design or operation of internal effectiveness with which the management has conducted the affairs of the Company. statements made, in the light of the circumstances under controls, which could adversely affect the Company’s which such statements were made, not misleading with ability to record, process, summarise and report financial respect to the statements made; data, and have identified for the Company’s auditors, Place: Chennai V. Suresh any material weaknesses in internal controls over 3. Based on our knowledge and information, the financial Date: May 12, 2011 Practising Company Secretary financial reporting including any corrective actions with statements, and other financial information included in this CP No. 6032 regard to deficiencies; report present, in all material respects, a true and fair view of the Company’s affairs, the financial condition, results of b. significant changes in internal controls during the year operations and cash flows of the Company as of, and for covered by this report; the periods presented in this report, and are in compliance c. all significant changes in accounting policies during the with the existing accounting standards and / or applicable year, if any, and that the same have been disclosed in laws and regulations; the notes to the financial statements; 4. No transactions entered into by the Company during the d. instances of significant fraud of which we are aware, that year are fraudulent, illegal or violative of the Company’s code involve management or other employees who have a of conduct; significant role in the Company’s internal control system. 5. We are responsible for establishing and maintaining disclosure controls and procedures and internal controls over financial reporting for the Company, and we have: Jayadev Galla K. Suresh a. designed such internal control over financial reporting, or Managing Director Chief Financial Officer72 Amara Raja Batteries Limited Annual Report 2010-11 73
  • GENERAL SHAREHOLDER INFORMATION 11. Market price data High, Low prices and number of shares traded during each month in the last financial year on BSE and NSE are given herein below: 1. Annual General Meeting Bombay Stock Exchange (BSE) National Stock Exchange (NSE) • Date August 13, 2011 Period High Low Volume High Low Volume • Time 3.00 P.M. (`) (`) (in nos.) (`) (`) (in nos.) • Venue At the Registered office of the Company April 2010 185.45 139.65 2,499,416 185.45 165.00 6,042,867 Renigunta – Cuddapah Road, Karakambadi – 517 520, May 2010 185.00 150.00 924,640 185.00 151.70 2,887,572 Tirupati, Andhra Pradesh. June 2010 185.35 144.00 1,270,668 185.70 158.25 4,066,274 2. Financial year April 1 to March 31 July 2010 209.50 179.00 2,186,045 209.20 178.90 6,551,752 3. Financial calendar August 2010 196.50 184.35 608,004 196.90 185.70 1,990,074 • Financial reporting for the quarter ending June 30, 2011 August 2011 September 2010 225.50 189.00 2,406,799 225.90 189.00 6,415,928 • Financial reporting for the quarter ending September 30, 2011 November 2011 October 2010 228.05 186.10 1,584,561 228.50 185.05 3,664,525 • Financial reporting for the quarter ending December 31, 2011 January 2012 November 2010 201.50 171.30 970,968 200.65 172.00 2,615,947 • Financial results for the year ending March 31, 2012 May/June 2012 December 2010 195.00 169.00 631,145 195.40 170.00 1,213,444 • Annual general meeting July/August 2012 January 2011 201.60 163.05 985,181 198.65 161.00 1,888,478 * The above dates are indicative. February 2011 176.00 157.90 212,032 175.45 150.05 598,807 March 2011 201.80 162.35 685,810 201.85 161.60 1,655,346 4. Date of book closure August 04, 2011 to August 13, 2011 (both days inclusive) Source: BSE & NSE websites 5. Proposed dividend (Final) ` 2.60 (130%) per equity share of ` 2/- each 6. Dividend payment date On or before September 05, 2011 7. E-Mail ID for investor grievances investorservices@amararaja.co.in 12. Performance of share price of the Company in 13. Performance of the Company’s share price as at the 8. Listing on stock exchanges Equity shares comparison with BSE Sensex beginning and end of the financial year 2010-11. • National Stock Exchange of India Limited, A comparative chart showing Amara Raja Batteries Limited (ARBL Performance of the Company’s share price on BSE and NSE Exchange Plaza, 5th Floor, stock price high) versus Bombay Stock Exchange Limited (Sensex (In `) Plot No.C/1, G. Block, Bandra Kurla Complex, high). Particulars BSE NSE Bandra (E), Mumbai –400 051. Close Price Close Price ARBL High v/s Sensex High • Bombay Stock Exchange Limited, April 1, 2010 168.60 168.85 Phiroze Jeejeebhoy Towers, Dalal Street, March 31, 2011 189.15 189.75 250.00 22000 ARBL Stock Prices Fort, Mumbai – 400 001. 200.00 20000 Change in value 20.55 20.90 150.00 18000 16000 % change 12.18 12.37 9. Listing fee Listing fees to both the stock exchanges have been paid 100.00 14000 50.00 12000 for the financial year 2011-12 0.00 10000 During the year, the Company’s market capitalisation increased from ` 1,418 crore to ` 1,620 crore. ,2 0 ay 10 1 ne 10 g 10 ov 0 p, 10 ly 10 b, 1 ar 11 n, 0 ct 0 10. Stock Code ec 1 01 N 01 Fe 01 Ja 01 O 01 D 20 M 20 Ju 20 Au 2 0 Ju 20 Se 20 20 ,2 ,2 2 2 , ril , , Ap M Name of the stock exchanges /depository AR B L S tock P rice S ens ex • National Stock Exchange of India Limited (NSE) AMARAJABAT • Bombay Stock Exchange Limited (BSE) 500008 • NSDL & CDSL INE885A0102474 Amara Raja Batteries Limited Annual Report 2010-11 75
  • 14. Registrar and share transfer agent (RTA) 16. Investor complaints received and redressed Status of dematerialisation and physical shares as on March 31, 2011 M/s Cameo Corporate Services Limited is the registrar and share Nature of 2010-11 2009-10 complaints Received Disposed Received Disposed Particulars of Shares Equity shares of ` 2/- each Shareholders transfer agent of the Company. Any request pertaining to investor relations may be sent to the following address: Non-receipt Number % of total Number % of total of shares sent M/s. Cameo Corporate Services Limited A. Demat form for transfer, “Subramanian Building”, sub-division and NSDL 35,396,820 41.44 14,761 66.75 No.1, Club House Road, dematerialisation. 15 15 07 07 CDSL 2,720,744 3.19 5,910 26.72 Non-receipt of Chennai – 600002 dividend warrants Sub total 38,117,564 44.63 20,671 93.47 Tel: +91 044 28460390 and annual report 19 19 23 23 Fax:+91 044 28460129 Miscellaneous B. Physical form 47,288,686 55.37 1,443 6.53 Email: investor@cameoindia.com complaints 3 2 – – Total A + B 85,406,250 100.00 22,114 100.00 There was one investor complaint pending as on March 31, 2011. 15. Share transfer system Entire share transfers under physical segment are processed by 17. Dematerialisation of shares and liquidity 18. Shareholding pattern and distribution schedule Shareholding pattern as on March 31, 2011 the registrar and share transfer agents and approved by a The Company’s shares are compulsorily traded in dematerialised as on March 31, 2011 committee of Directors called as “Share Transfer Committee”. form and are available for trading on both the depositories in Mutual Funds & UTI Shareholding Pattern Promoters India viz. National Securities Depository Ltd. (NSDL) and Central 21.91% The share transfer system consists of activities like receipt of 52.06% Depository Services (India) Ltd. (CDSL). Category No. of % of share certificates along with transfer deed from transferee, its shares shareholding Under the dematerialised system, the shareholder can approach verification, preparation of memorandum of transfer etc. any Depository Participant for getting his/her shares converted Promoters 44,463,726 52.06 Presently, the share transfers received in physical form are from physical mode to electronic mode. Upon submission of the Mutual Funds & UTI 18,709,861 21.91 processed and the share certificates returned within a period of original share certificate along with a duly signed demat request Banks/Financial Institutions 9,000 0.01 15 days from the date of receipt, subject to the documents FII/NRI’s form, the DP will generate an electronic request and send it to being valid and complete in all respect. For this purpose, the Foreign Institutional 8.36% the Company’s RTA. The physical share certificate(s) will also be Share Transfer Committee meets as often as required. Investors/NRI’s 7,139,208 8.36 Banks/FI’s/Trusts/ sent to the RTA. The RTA will verify the electronic and physical Others As required under Clause 47(c) of the Listing Agreement entered demat request and if found in order will convert the shares held Corporate Bodies 2,462,365 2.88 Corporate Bodies 14.79% into by the Company with the stock exchanges, a certificate is in physical mode to electronic mode. Trusts 153,441 0.18 2.88% obtained every six months from a Practicing Company Secretary As on March 31, 2011, 44.63% shares of the Company were Others 12,468,649 14.60 # Out of 52.06% of the promoters shareholding, 26.06% is held by the Galla Family and 26% is held by Johnson controls Mauritius Private Limited. (Person with regard to, inter-alia, effecting transfer, transmission, sub- held in the dematerialised form and 55.37% shares were held in Total 85,406,250 100.00 acting in concert) division, consolidation, renewal and exchange of equity share physical form which is depicted in the chart hereinbelow: certificate within one month of their lodgment. The certificate is Shares held in Demat / Physical form as on March 31, 2011 also forwarded to BSE and NSE, where the shares are listed. 3.31% Distribution schedule 41.44% Details of shares transferred in physical form CDSL NSDL No. of equity shares held No. of shareholders Percentage No. of shares Percentage Time taken 2010-11 2009-10 Upto 100 11,209 50.69 522,267 0.61 Number Number Number of Number 101-500 5,536 25.03 1,435,164 1.68 of requests of shares requests of shares 501-1000 3,191 14.43 2,399,256 2.81 received and received and 55.37 % 1001-2000 1,157 5.23 1,738,199 2.04 processed processed Physical 2001-3000 371 1.68 942,619 1.10 # Out of 55.37% shares held in physical mode, the promoters (Galla 3001-4000 187 0.85 687,201 0.80 1-10 days 8 7,000 2 1,500 family) and person acting in concert (JCI) jointly hold 52.06% and the rest 4001-5000 75 0.34 346,569 0.41 11-20 days 7 9,000 61 50,750 3.31% are public shareholders. 5001-10000 168 0.76 1,211,019 1.42 21-30 days 8 6,500 3 2,250 During the year, 355,846 shares of the Company, constituting Above 10000 220 0.99 76,123,956 89.13 Total 23 22,500 66 54,500 0.42% of the issued and subscribed share capital, were Total 22,114 100.00 85,406,250 100.00 dematerialised.76 Amara Raja Batteries Limited Annual Report 2010-11 77
  • 19. Top ten shareholders other than promoters Given below are the dates when the unclaimed dividend is due for transfer to IEPF by the Company: The top ten shareholders of the Company other than promoters as on March 31, 2011 were as follows: Financial Year Dividend type Dividend percentage Date of declaration Due date of Sl. No. Name of the shareholders No. of shares % of shareholding (% ) transfer to IEPF 1 ICICI Prudential Discovery Fund 2,603,500 3.04 2003-04 Final 15 11.08.2004 16.09.2011 2 Franklin Templeton Mutual Fund A/C Franklin India Flexi Cap Fund 1,881,161 2.20 2004-05 Final 20 13.08.2005 18.09.2012 3 HDFC Trustee Company Limited –A/C HDFC Mid-Cap Opportunities Fund 1,704,000 1.99 2005-06 Final 25 14.08.2006 19.09.2013 4 Dr. N. Upendranath 1,286,127 1.50 2006-07 Final 35 14.08.2007 19.09.2014 5 Sundaram Mutual Fund A/C Sundaram Select Mid-Cap 1,144,185 1.33 2007-08 Final 35 14.08.2008 19.09.2015 6 Franklin Templeton Mutual Fund A/C Franklin India Prima Fund 1,124,529 1.31 7 SBI Mutual Fund A/C Magnum Global Fund 1,100,000 1.28 2008-09 Final 40 30.07.2009 04.09.2016 8 Franklin Templeton Mutual Fund 1,047,231 1.22 2009-10 Final 145 29.07.2010 03.09.2017 A/C Franklin India High Growth Companies Fund 2010-11 Special dividend 100 24.01.2011 24.02.2018 9 HDFC Trustee Company Limited A/C HDFC Growth Fund 972,454 1.13 10 Franklin Templeton Mutual Fund A/C Franklin India Prima Plus 900,000 1.05 c) Electronic Clearing Services (ECS) as given hereunder: Total 1,376,187 16.05 Under ECS facility, shareholders get an option to receive • Immediate transfer of securities; dividend directly into their bank account rather than • No stamp duty on transfer of securities; receiving the same through dividend warrants. Shareholders • Elimination of risks associated with physical certificates 20. Outstanding GDR/ The Company has not issued any the profit after tax (PAT). Accordingly, every year the company holding shares in physical form, who wish to avail ECS such as bad delivery, fake securities, loss or theft of share warrants and GDR/ warrants and convertible would pay the dividend amount upto 15% of the profit after facility, are requested to send their ECS mandate in the certificates etc.; convertible bonds bonds. tax (PAT) to all the eligible shareholders. prescribed form to Cameo Corporate Services Limited, in the 21. Plant location and Renigunta – Cuddapah Road, event they have not done so earlier. Shareholders holding • Reduction in paperwork involved in transfer of securities; b) Transfer of unclaimed dividend registered office Karakambadi – 517 520 shares in electronic form are requested to give the ECS During the year under review, an amount of ` 2,60,321 • Reduction in transaction cost; Tirupati, Andhra Pradesh, India mandate to their respective DP’s directly. pertaining to unpaid/unclaimed dividend for the financial year • Nomination facility; Tel: +91 877 2265000 d) Nomination facility 2002-03 has been transferred to Investor Education and Fax: +91 877 2285600 • Change in address recorded with DP gets registered Protection Fund (IEPF) on September 20, 2010. Section 109A of the Companies Act, 1956 provides, E-mail: amararaja@amararaja.co.in electronically with all companies in which investor holds inter-alia, the facility of nomination to shareholders. This Website: www.amararaja.co.in As per provisions of Section 205A read with Section 205C of securities eliminating the need to correspond with each facility is mainly useful for shareholders holding shares in 22. Corporate 5th Floor, Astra Towers, Hitech City, the Companies Act, 1956, the Company is required to of them separately; sole name. In case where the shares are held in joint names, operations office 12P, Kondapur, Hyderabad-500 038 transfer unpaid dividend remaining unclaimed and unpaid the nomination will be effective only in the event of the • Transmission of securities is done by DP; Tel: +91 40 23683000 for a period of seven years to the Investor Education and death of all the holders. Investors are advised to avail of this Fax: +91 40 23118219 Protection Fund (IEPF) set up by the Central Government. • Holding investments in equity, debt instruments and facility, especially investors holding shares in single name, to 23. Investor contacts Mr. N Ramanathan The Company has sent a circular letter dated March 26, 2011 government securities in a single account; avoid the process of transmission by law. Company Secretary to the eligible shareholders who have not claimed their • Automatic credit into demat account, of shares, arising e) Benefits of dematerialisation & Compliance Officer dividend for the previous years informing them to return the out of split/consolidation/merger etc. 5th Floor, Astra Towers, Hitech City, 55.37% of the shares are still in physical form (out of which unencashed dividend warrant for issuing the revalidated 12P Kondapur, Hyderabad-500 038 52.06% is held by the promoters and person acting in • Pledge/hypothecation of shares is simple. warrants or for obtaining duplicate warrants. Tel: +91 40 23683000 concert). Those shareholders who are still holding shares in The Company has sent a circular letter dated March 10, 2011 Fax: +91 40 23118219 All shareholders, whose dividend is unpaid/unclaimed, are physical form are advised to convert their holdings into to such of those shareholders holding their shares in physical e-mail: ram@amararaja.co.in requested to lodge their claim to RTA/Company by submitting demat form; since the Company’s equity shares are available form to opt for electronic form and avail of the above said an application supported by an indemnity immediately. Kindly for trading only in demat mode. For more information and 24. Investors’ Information benefits. note that no claim shall lie against the Company or the IEPF clarification in this regard, the shareholders may contact the a) The Board of Directors at its meeting held on May 19, 2010 once the dividend amount is deposited in IEPF. Company or its Registrar and Share Transfer Agent. Holding f) Disclosure of pledged shares by promoters had adopted a dividend policy for distributing upto 15% of shares in dematerialised form has certain distinct advantage The SEBI (Substantial Acquisition of Shares and Takeovers)78 Amara Raja Batteries Limited Annual Report 2010-11 79
  • Auditors’’ Report Regulation, 1997 was amended vide SEBI (Substantial the total number of dematerialised shares held with NSDL To Acquisition of Shares and Takeovers) Regulations, 2009 on and CDSL. The Members of January 28, 2009 that it shall be mandatory for promoter Amara Raja Batteries Limited The said audit report is being submitted to the stock and promoter group to disclose regarding pledge of shares We have audited the attached Balance Sheet of Amara Raja Account, and the Cash Flow Statement dealt with by this exchanges on a quarterly basis. to the Company as and when they are pledged and by the Batteries Limited as on March 31, 2011, its Profit and Loss report comply with the Accounting Standards referred to in Company to stock exchange(s), where shares of the i) E-mail-id registration Account for the year ended on that date and its Cash Flow sub-section (3C) of Section 211 of the Companies Act, 1956; Company are listed. As part of Green initiative in the Corporate Governance, Statement for the year ended on that date annexed thereto. Ministry of Corporate Affairs issued a circular dated April 21, 5. On the basis of written representations received from the As on March 31, 2011 promoters and person acting in These financial statements are the responsibility of the 2011 permitting the Companies to serve the directors, as on March 31, 2011 and taken on record by the concert have not pledged or otherwise encumbered their Company’s management. Our responsibility is to express an notice(s)/document(s) through electronic mode to the Board of Directors, we report that none of the directors is shares. opinion on these financial statements based on our audit. members. disqualified as on March 31, 2011 from being appointed as g) Permanent Account Number (PAN) requirement for We conducted our audit in accordance with the auditing a director in terms of clause (g) of sub-section (1) of Section Keeping in view of the above, members are requested to transfer, transmission and transposition of shares in standards generally accepted in India. Those standards require 274 of the Companies Act, 1956; register their e-mail-id’s with the Company or Registrar and physical form that we plan and perform the audit to obtain reasonable Share Transfer Agents of the Company by sending their 6. In our opinion and to the best of our information and The Securities & Exchange Board of India (SEBI) in assurance about whether the financial statements are free of e-mail id’s to investorservices@amararaja.co.in or according to the explanations given to us, the said accounts continuation to its circular vide ref. no. MRD/DoP/Cir- material misstatement. An audit includes, examining on a test investor@cameoindia.com read with the statement of Accounting Policies and Notes 05/2007 dated April 27, 2007 and MRD/DoP/Cir-05/2009 basis, evidence supporting the amounts and disclosures in the forming part of the accounts, give the information required dated May 20, 2009 with respect to transfer of shares and Members who register their names with the Company or the financial statements. An audit also includes assessing the by the Companies Act, 1956, in the manner so required and the circular dated January 07, 2010, has mandated the Registrar and Share Transfer Agent would receive the accounting principles used and significant estimates made by give a true and fair view in conformity with the Accounting submission of Permanent Account Number (PAN) by every notice(s)/documents through e-mail instead of physical copy. management, as well as evaluating the overall financial Principles generally accepted in India; participant in securities market transaction and off- statement presentation. We believe that our audit provides a List of the Company’s promoters belonging to the promoters reasonable basis for our opinion. a) in the case of the Balance Sheet, of the state of affairs of market/private transaction including the following cases: and person acting in concert pursuant to Regulation 3(e) (i) the Company as at March 31, 2011; • Transfer of shares held in physical form. of SEBI (Substantial Acquisition of Shares & Takeovers) As required by the Companies (Auditor’s Report) Order, 2003 Regulations, 1997. (CARO), (“Order”) issued by the Central Government of India in b) in the case of the Profit and Loss Account, of the profit • Deletion of name of the deceased shareholder(s), where terms of sub-section (4A) of Section 227 of the Companies Act, of the Company for the year ended on that date; and the shares are held in the name of two or more Sl. No. Name shareholders. 1 Dr. Ramachandra N Galla 1956, we enclose in the Annexure a statement on the matters c) in the case of the Cash Flow Statement, of the cash flows 2 Mrs. Amara Kumari Galla specified in paragraphs 4 and 5 of the said Order. of the Company for the year ended on that date. • Transmission of shares to the legal heir(s), where 3 Mr. Jayadev Galla Further to our comments in the Annexure referred to above, we deceased shareholder was the sole holder of shares. 4 Mrs. G. Padmavathi report that: • Transposition of shares – when there is a change in the 5 Dr. G. Ramadevi order of names in which physical shares are held jointly 1. We have obtained all the information and explanations For E. Phalguna Kumar & Co., For Chevuturi Associates 6 Mangal Precision Products Limited in the names of two or more shareholders. which, to the best of our knowledge and belief were Chartered Accountants Chartered Accountants 7 Dr. Prasad V. Gourineni necessary for the purposes of our audit; The members are requested to note that to open a demat 8 Mr. Harshavardhana account or to hold a demat account, submission of PAN card 9 Mr. Vikramadithya 2. In our opinion, proper books of account as required by law is mandatory. 10 Mr. Ashok Galla have been kept by the Company, so far as appears from our E. Phalguna Kumar Raghunadha Rao Balineni 11 Master Siddharth Galla examination of those books; Partner Partner h) Secretarial audit for reconciliation of capital 12 Johnson Controls Mauritius Private Limited (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) A qualified practicing Company Secretary has carried out 3. The Balance Sheet, the Profit and Loss Account, and the Cash (Person acting in concert) Firm Registration No. 002644S Firm Registration No. 000632S secretarial audit every quarter to reconcile the total admitted Flow Statement dealt with by this report are in agreement capital with National Securities Depository Limited (NSDL) with the books of account; Place : Tirupati Compliance and Central Depository Services (India) Limited (CDSL) and The certificate dated May 12, 2011 obtained from Mr. V. Suresh, Date : May 19, 2011 4. In our opinion, the Balance Sheet, the Profit and Loss the total issued and listed capital. The audit confirms that Practicing Company Secretary, is annexed with the Corporate the total issued/paid up share capital is in agreement with Governance report. the aggregate total number of shares in physical form and80 Amara Raja Batteries Limited Annual Report 2010-11 81
  • Annexure to the Auditors’’ Report The Annexure referred to in the Auditors’ Report to the members of Amara Raja Batteries Limited for the year ended March remitted to the authorities concerned at the date of the Balance Sheet under report. 31, 2011. We report that: Name of the Statute Nature of the dues Amount Period to which the Forum where the 1. a) The Company has maintained proper records showing full opinion, require correction. (in ` Millions) amount relates dispute is pending particulars including quantitative details and situation of Central Sales Tax Act, 1956 Sales tax 0.93 2004-05 Dy. Commissioner, CT, Kolkata 5. a) Based on the information and explanations given to us, we Central Sales Tax Act, 1956 Sales tax 3.03 2007-08 Dy. Commissioner, Kurnool fixed assets. are of the opinion that the transactions that are required to Central Sales Tax Act, 1956 Sales tax 0.72 2004-05 Dy Commissioner, CT, Delhi b) According to the information and explanations furnished to be entered in the register maintained under Section 301 of Central Sales Tax Act, 1956 Sales tax 70.84 2006-07 and 2007-08 Special Commissioner, New Delhi us, the Company has physically verified part of its fixed Companies Act, 1956 have been so entered. Delhi Value Added Sales tax 0.29 2004-05 Dy Commissioner, ST, Delhi assets during the year. However, the Company has adopted Tax Act, 2004 b) In our opinion and according to the information and Central Sales Tax Act, 1956 Sales tax 5.48 2004-05 Joint Commissioner, Trade tax, Ghaziabad a phased programme of verification which, in our opinion, explanations given to us, the transactions which have been Bihar Value Added Sales tax 0.02 2002-03 Joint Commissioner, CT, Patna is reasonable having regard to the size of the Company and Tax Act, 2005 entered into, pursuant to contracts that have been entered the nature of its assets. The discrepancies noticed on such Bihar Value Added Sales tax 1.38 2007-08 Joint Commissioner (Appeals), CT, Patna in the register maintained under Section 301 of the verification, which were not material, have been properly Tax Act, 2005 Companies Act, 1956, have been made at prices which are dealt with in the books of account. Central Sales Tax Act, 1956 Sales tax 4.38 2005-06 Additional Commissioner (Appeals), reasonable having regard to prevailing market prices at the Ghaziabad c) According to the information and explanations furnished to relevant time. Punjab Value Added Sales tax 0.10 2009-10 Dy. Commissioner (Appeals), Patiyala us, the Company has not disposed of a substantial part of Tax Act, 2005 6. The Company has not accepted any deposits from the public its fixed assets during the year. Chapter V of Finance Act, 1994 Service tax 6.06 2005-06 & 2006-07 CESTAT, Bangalore and consequently, the directives issued by Reserve Bank of India Chapter V of Finance Act, 1994 Service tax 0.82 2006-07 to 2008-09 Commissioner (Appeals), Guntur 2. a) According to the information and explanations furnished to and the provisions of Sections 58A and 58AA or any other Chapter V of Finance Act, 1994 Service tax 0.81 2002-03 to 2006-07 CESTAT, Bangalore us, the Company has physically verified its inventories during relevant provisions of the Act and the rules framed there under Central Excise Act, 1944 Excise duty 6.97 2003-04 to 2007-08 CESTAT, Bangalore the year. In our opinion, the frequency of verification is are not applicable. According to the information furnished to Central Excise Act, 1944 Excise duty 0.16 June 2007 to Commissioner (Appeals), Guntur reasonable. us, no order has been passed on the Company by the Company December 2008 Law Board or National Company Law Tribunal or Reserve Bank 10. According to the information and explanations furnished to us, 17. According to the information and explanations given to us and b) In our opinion, the procedures of physical verification of of India or any Court or any other Tribunal for non compliance the Company has no accumulated losses at the end of the on an overall examination of the Balance Sheet of the Company, inventories followed by the management are reasonable and with the provisions of Sections 58A and 58AA of the Companies financial year and it has not incurred cash losses either during we report that funds raised on short-term basis have not been adequate in relation to the size of the Company and the Act, 1956. the financial year covered by our audit or in the immediately used for long-term investment or other investments during the nature of its business. preceding financial year. year under report. 7. In our opinion, the Company has an internal audit system c) According to the information furnished to us, the Company 11. In our opinion and according to the information and 18. According to the information and explanations given to us, the commensurate with its size and nature of its business. is maintaining proper records of inventory. The discrepancies explanations furnished to us by the Company, there were no Company has not made any preferential allotment of shares noticed on verification between the physical stocks and the 8. We have broadly reviewed the books of account and records defaults in repayment of its dues to financial institutions and during the year to parties and companies covered in the register book records, which were not material, have been properly maintained by the Company pursuant to the rules made by the banks at the date of the Balance Sheet. The Company has not maintained under Section 301 of the Act. dealt with in the books of account. Central Government for the maintenance of cost records under issued any debentures. 19. According to the information and explanations given to us, the Section 209(1)(d) of the Companies Act, 1956 and we are of 12. According to the information and explanations given to us, the Company has not issued any debentures during the year under 3. a) According to the information and explanations furnished to the opinion that prima facie the prescribed accounts and records Company has not granted any loans or advances on the basis of report. us, the Company has not granted any loans, secured or have been made and maintained. However, we have not carried security by way of pledge of shares, debentures and other unsecured to companies, firms or other parties covered in 20. The Company has not raised any money through public issues out a detailed audit of the same. securities. the register maintained under Section 301 of the Companies during the year. Accordingly, the provisions of clause 4(xx) of 13. In our opinion and according to the information and the Companies (Auditor’s Report) Order, 2003 are not Act, 1956. Accordingly the provisions of clauses 4(iii)(b), 9. a) According to the information furnished to us, the Company explanations furnished to us, the Company is not a chit fund or applicable to the Company during the year under report. 4(iii)(c) and 4(iii)(d) of the Order are not applicable. is regular in depositing with appropriate authorities, the a nidhi/mutual benefit fund/society and hence the requirements undisputed statutory dues including Provident Fund, 21. According to the information and explanations given to us, and b) According to the information and explanations furnished to of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 Investor Education and Protection Fund, Employees’ State based on the audit procedures generally adopted by us, we us, the Company has not taken any loans, secured or are not applicable to the Company during the year under report. report that, during the year, no fraud on or by the Company, has Insurance, Income tax, Sales tax, Wealth tax, Service tax, unsecured from companies, firms or other parties covered in 14. According to the information furnished to us, the Company is been noticed or reported that is either significant or could have Customs duty, Excise duty, Cess and any other statutory the register maintained under Section 301 of the Companies not dealing in or trading in shares, securities, debentures and caused a material misstatement in the financial statements. dues applicable to it. There were no undisputed statutory other investments. Accordingly, the requirements of clause 4(xiv) Act, 1956. Accordingly the provisions of clauses 4(iii)(f) and dues in arrears as at the date of the Balance Sheet under of the Companies (Auditor’s Report) Order, 2003 are not 4(iii)(g) of the Order are not applicable. For E. Phalguna Kumar & Co., For Chevuturi Associates report, for a period of more than six months from the date applicable to the Company. Chartered Accountants Chartered Accountants 4. In our opinion and according to the information and they became payable except an amount of `3.72 Million 15. According to the information and explanations given to us, the explanations given to us, there are adequate internal control being sales tax for the year 2006-07 pending remittance as Company has not given any guarantees for loans taken by others E. Phalguna Kumar Raghunadha Rao Balineni systems commensurate with the size of the Company and the on the date of balance sheet. from banks or financial institutions. Partner Partner nature of its business with regard to purchases of inventory, (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) b) According to the information furnished to us, the following 16. According to the information and explanations given to us, no fixed assets and for the sale of goods and services. Further Firm Registration No. 002644S Firm Registration No. 000632S amounts of Sales tax, Entry tax, Excise duty and Service tax term loans were obtained by the Company during the year. during the course of our audit, we have not come across any Hence the provisions of clause 4(xvi) of the Companies (Auditor’s Place : Tirupati have been disputed by the Company, and hence were not instances of major weaknesses in internal control that in our Report) Order, 2003 are not applicable. Date : May 19, 201182 Amara Raja Batteries Limited Annual Report 2010-11 83
  • Balance Sheet As at March 31, 2011 Profit and Loss Account For the year ended March 31, 2011 (in `) (in `) Particulars Schedule As at 31.03.2011 As at 31.03.2010 Particulars Schedule Year ended 31.03.2011 Year ended 31.03.2010 SOURCES OF FUNDS INCOME Shareholders Funds Gross sales 20,764,827,109 16,903,556,389 Share capital 1 170,812,500 170,812,500 Less: Excise duty and sales tax 3,153,620,358 2,258,740,728 Reserves and surplus 2 6,288,459,327 5,265,614,690 Net sales 17,611,206,751 14,644,815,661 6,459,271,827 5,436,427,190 Other income 14 96,043,027 170,174,501 Loan Funds Increase in stocks 15 283,144,751 364,593,316 Secured 3 240,443,810 272,946,770 Total 17,990,394,529 15,179,583,478 Unsecured 4 710,016,482 638,947,690 EXPENDITURE 950,460,292 911,894,460 Purchase of trading goods 74,140,812 35,328,540 Deferred tax liability 5 204,933,707 216,352,878 Materials consumed 16 11,807,643,547 9,125,690,889 Total 7,614,665,826 6,564,674,528 Payments and benefits to employees 17 774,871,890 623,704,132 APPLICATION OF FUNDS Fixed Assets Manufacturing, selling, administrative and other expenses 18 2,668,248,313 2,330,754,171 Gross block 6 5,387,556,902 4,911,067,266 Duties and taxes 19 23,720,297 20,590,181 Less: Depreciation 2,236,687,284 1,853,812,004 Interest 20 14,520,441 67,715,572 Net block 3,150,869,618 3,057,255,262 Depreciation 417,120,633 429,451,244 Capital work-in-progress 375,410,973 226,891,489 Total 15,780,265,933 12,633,234,729 3,526,280,591 3,284,146,751 Profit before taxation 2,210,128,596 2,546,348,749 Investments 7 160,756,064 160,756,064 Less: Provision for taxation 21 729,164,621 876,014,881 Current Assets, Loans and Advances Profit after taxation 1,480,963,975 1,670,333,868 Inventories 8 2,846,966,302 2,175,723,575 Profit brought forward from previous year 3,786,332,193 2,572,802,734 Sundry debtors 9 3,056,623,935 2,422,954,714 Profit available for appropriation 5,267,296,168 4,243,136,602 Cash and bank balances 10 402,084,121 624,672,429 Less: Appropriations Loans, advances and deposits 11 1,112,996,116 1,087,277,467 Transfer to general reserve 148,096,397 167,033,387 7,418,670,474 6,310,628,185 Interim dividend 170,812,500 - Less: Current Liabilities and Provisions 12 Dividend tax on interim dividend 28,369,821 - Liabilities 1,918,887,158 1,656,390,120 Proposed final dividend 222,056,250 247,678,125 Provisions 1,572,154,145 1,534,466,352 Dividend tax on proposed final dividend 36,880,767 42,092,897 3,491,041,303 3,190,856,472 Net current assets 3,927,629,171 3,119,771,713 Balance carried to balance sheet 4,661,080,433 3,786,332,193 Total 7,614,665,826 6,564,674,528 Basic and Diluted Earnings per equity share 17.34 19.56 Note: The Schedules, Accounting Policies and Notes on Accounts form an integral part of the Balance Sheet - Schedule 13 Note: The Schedules, Accounting Policies and Notes on Accounts form an integral part of the Profit and Loss Account - Schedule 13 As per our report of even date attached As per our report of even date attached For E. PHALGUNA KUMAR & CO. For CHEVUTURI ASSOCIATES For and on behalf of the Board For E. PHALGUNA KUMAR & CO. For CHEVUTURI ASSOCIATES For and on behalf of the Board Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants E. Phalguna Kumar Raghunadha Rao Balineni Dr. Ramachandra N Galla Jayadev Galla E. Phalguna Kumar Raghunadha Rao Balineni Dr. Ramachandra N Galla Jayadev Galla Partner Partner Chairman Managing Director Partner Partner Chairman Managing Director (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) Firm Registration No. 002644S Firm Registration No. 000632S Firm Registration No. 002644S Firm Registration No. 000632S K. Suresh N. Ramanathan K. Suresh N. Ramanathan Chief Financial Officer Company Secretary Chief Financial Officer Company Secretary Place : Tirupati Place : Milwaukee, USA Place : Tirupati Place : Milwaukee, USA Date : May 19, 2011 Date : May 16, 2011 Date : May 19, 2011 Date : May 16, 201184 Amara Raja Batteries Limited Annual Report 2010-11 85
  • Schedules to the Balance Sheet Schedules to the Balance Sheet (in `) (in `) Particulars As at 31.03.2011 As at 31.03.2010 Particulars As at 31.03.2011 As at 31.03.2010 1 SHARE CAPITAL 5 DEFERRED TAX LIABILITY Authorised As per previous year balance sheet 216,352,878 182,508,323 100,000,000 Equity shares of `2/- each 200,000,000 200,000,000 Add: Liability / (Assets) for the year (11,419,171) 33,844,555 Issued Total 204,933,707 216,352,878 87,514,250 Equity shares of `2/- each 175,028,500 175,028,500 Subscribed and Paid up 85,406,250 Equity shares of `2/- each 170,812,500 170,812,500 (Out of the above 28,468,750 shares were allotted as bonus shares fully paid up by capitalising part of General Reserve) 6 FIXED ASSETS AND DEPRECIATION GROSS BLOCK DEPRECIATION BLOCK NET BLOCK Sl. Cost as on Total as on Upto Current Total as on As on As on No. Particulars 01.04.2010 Additions Deletions 31.03.2011 31.03.2010 Period Deletions 31.03.2011 31.03.2011 31.03.2010 2 RESERVES AND SURPLUS 1 Land and land development 12,405,579 155,878,645 – 168,284,224 – – – – 168,284,224 12,405,579 2 Buildings 735,509,442 59,409,712 5,904,321 789,014,833 111,096,562 21,577,177 2,433,879 130,239,860 658,774,973 624,412,880 a. Capital Reserve 3 R&D buildings 9,896,346 – – 9,896,346 3,659,364 314,011 – 3,973,375 5,922,971 6,236,982 As per previous year balance sheet 11,500 11,500 4 Plant and machinery 3,379,705,278 242,469,175 29,466,168 3,592,708,285 1,463,083,026 340,898,341 26,003,938 1,777,977,429 1,814,730,856 1,916,622,252 b. Securities Premium 5 R&D plant and machinery 97,810,718 3,462,119 – 101,272,837 66,434,807 5,360,253 – 71,795,060 29,477,777 31,375,911 As per previous year balance sheet 311,862,600 311,862,600 6 Electrical installations 399,265,309 18,178,462 5,722,986 411,720,785 76,672,487 17,725,749 5,329,948 89,068,288 322,652,497 322,592,822 c. General Reserve 7 Furniture 58,178,539 584,132 10,600 58,752,071 33,141,681 3,540,598 7,687 36,674,592 22,077,479 25,036,857 8 Office equipment 146,465,296 28,149,698 19,500 174,595,494 74,242,587 19,243,971 7,762 93,478,796 81,116,698 72,222,710 As per previous year balance sheet 1,167,408,397 1,000,375,010 9 Intangible assets 22,059,697 1,500,000 – 23,559,697 914,629 4,588,665 – 5,503,294 18,056,403 21,145,068 Add: Additions during the year 148,096,397 167,033,387 10 Vehicles 49,771,062 8,931,668 950,400 57,752,330 24,566,861 3,871,868 462,139 27,976,590 29,775,740 25,204,201 1,315,504,794 1,167,408,397 Total 4,911,067,266 518,563,611 42,073,975 5,387,556,902 1,853,812,004 417,120,633 34,245,353 2,236,687,284 3,150,869,618 3,057,255,262 d. Surplus in Profit and Loss Account 4,661,080,433 3,786,332,193 Previous year 4,270,935,970 684,711,844 44,580,548 4,911,067,266 1,457,693,630 429,451,244 33,332,870 1,853,812,004 3,057,255,262 2,813,242,340 Total 6,288,459,327 5,265,614,690 3 SECURED LOANS A. Term Loans Particulars As at 31.03.2011 As at 31.03.2010 Foreign currency loan 7 INVESTMENTS a. BNP Paribas 89,440,000 270,660,000 A. Government Securities - Non-trade B. Working Capital Facilities a. 6 years National Savings Certificates 65,000 65,000 Cash Credit (Lodged as security with Government a. State Bank of India 3,767,687 - departments `12,000/- held in the name b. State Bank of Hyderabad 137,092,704 - of Dr. Ramachandra N Galla Chairman) c. Andhra Bank 10,143,419 - B. Quoted - Non trade 151,003,810 - Shares in companies C. Hypothecation Loan from HDFC Bank Limited i) 25 Fully paid up equity shares of `2/- each (Secured against hypothecation of specific assets) - 2,286,770 in Nicco Corporation Ltd 1,735 1,735 Total 240,443,810 272,946,770 ii) 125 Fully paid up equity shares of `1/- each in Standard Batteries Ltd. (Provision for diminution in value `7,750/- PY: `7,750/-) 7,750 7,750 iii) 10,000 Fully paid up equity shares of `1/- each in Exide Industries Ltd 44,069 44,069 4 UNSECURED LOANS iv) 5,500 Fully paid up equity shares of `1/- each Interest free sales tax deferment 710,016,482 638,947,690 in HBL Power Systems Ltd 9,850 9,850 Total 710,016,482 638,947,690 v) 1,60,000 Fully paid up equity shares of `2/- each in IVRCL Ltd 204,800 204,800 vi) 23,749 Fully paid up equity shares of `10/- each in IDBI Bank Ltd 1,008,000 1,008,000 vii) 2,27,900 Fully paid up equity shares of `10/- each in Andhra Bank Ltd 2,279,000 2,279,00086 Amara Raja Batteries Limited Annual Report 2010-11 87
  • Schedules to the Balance Sheet Schedules to the Balance Sheet (in `) (in `) Particulars As at 31.03.2011 As at 31.03.2010 Particulars As at 31.03.2011 As at 31.03.2010 7 INVESTMENTS (Contd...) 11 LOANS, ADVANCES AND DEPOSITS C. Unquoted - Non-trade a. Advances recoverable in cash or Shares in companies kind for value to be received 1,128 Fully paid up equity shares of `10/- each in Considered good 89,151,788 73,118,339 Indian Lead Ltd. (Provision for diminution in value Considered doubtful 1,274,150 1,274,150 `30,000/- PY: `30,000/-) 30,000 30,000 90,425,938 74,392,489 D. Unquoted - Trade Less: Provision for doubtful advances 1,274,150 1,274,150 Shares in companies 89,151,788 73,118,339 12,06,000 Fully paid up equity shares of `10/- each in b. Advance for purchases Andhra Pradesh Gas Power Corporation Ltd 157,143,610 157,143,610 i) Capital 42,145,065 14,313,230 ii) Materials and others 82,205,599 31,814,827 Sub-Total 160,793,814 160,793,814 124,350,664 46,128,057 Less: Provision for diminution in value of investments 37,750 37,750 c. Deposits recoverable 69,576,561 65,931,580 Total 160,756,064 160,756,064 d. Excise duty, Service tax and VAT paid in advance 72,394,966 110,945,167 Aggregate of quoted investments e. Income tax paid in advance and TDS 712,841,450 774,564,004 At cost 3,555,204 3,555,204 f. Excise duty and sales tax paid under protest 5,645,888 7,307,312 At market value 52,375,742 55,372,515 g. Low voltage surcharge paid under protest - (APSPDCL) 13,569,600 - Aggregate of unquoted investments - at cost 157,238,610 157,238,610 h. Interest accrued 10,052,851 2,854,198 Note: All investments are long term in nature unless otherwise stated. i. Prepaid expenses 15,412,348 6,428,810 Total 1,112,996,116 1,087,277,467 12 CURRENT LIABILITIES AND PROVISIONS 8 INVENTORIES (As certified by the Management) A. Current Liabilities a. Stores and spares 231,862,510 189,428,308 a. Sundry creditors b. Material in transit 438,881,130 278,670,432 i) Dues to Micro Small and Medium enterprises 2,842,463 4,418,074 c. Stocks in trade ii) Others 1,497,676,888 1,371,243,952 i) Raw materials 634,932,928 449,479,851 1,500,519,351 1,375,662,026 ii) Work in process 792,316,859 734,115,283 b. Advances from customers 9,119,761 14,360,508 iii) Finished goods 748,972,875 524,029,701 c. Outstanding liabilities 293,423,849 173,235,052 2,176,222,662 1,707,624,835 d. Sales tax payable 108,130,288 89,884,258 Total 2,846,966,302 2,175,723,575 e. Unclaimed dividend 7,693,909 3,248,276 Total 1,918,887,158 1,656,390,120 B. Provisions 9 SUNDRY DEBTORS (Unsecured) a. Income tax and Wealth tax a. Debts outstanding for a period exceeding 6 months i) Current Year 737,695,000 841,256,220 Considered good 106,718,089 44,543,129 737,695,000 841,256,220 Considered doubtful 11,075,356 25,086,959 b. Employee benefits 117,793,445 69,630,088 i) Leave encashment 47,127,120 29,515,140 Less: Provision for doubtful debts 11,075,355 25,086,959 ii) Gratuity 49,603,762 40,428,170 106,718,090 44,543,129 Less: Fund with Life Insurance Corporation b. Other debts 2,949,905,845 2,378,411,585 of India Ltd 38,222,722 26,273,982 Total 3,056,623,935 2,422,954,714 11,381,040 14,154,188 c. Proposed dividend 222,056,250 247,678,125 d. Dividend tax 36,880,767 42,092,897 10 CASH AND BANK BALANCES e. Warranty 517,013,968 359,769,782 A. Cash on hand 443,810 653,719 Total 1,572,154,145 1,534,466,352 B. At Scheduled banks: a. Current accounts 73,551,805 453,153,002 b. Fixed deposits 320,394,597 167,617,432 c. Current accounts - Towards unclaimed dividends 7,693,909 3,248,276 401,640,311 624,018,710 Total 402,084,121 624,672,42988 Amara Raja Batteries Limited Annual Report 2010-11 89
  • Schedules to the Profit and Loss Account Schedules to the Profit and Loss Account (in `) (in `) Particulars Year ended 31.03.2011 Year ended 31.03.2010 Particulars Year ended 31.03.2011 Year ended 31.03.2010 14 OTHER INCOME 18 MANUFACTURING, SELLING, a. Interest received (TDS `955,176/-, PY - `1,163,794/-) 11,244,700 6,936,422 ADMINISTRATIVE AND OTHER EXPENSES b. Dividend received 43,185,413 21,036,037 A. Manufacturing expenses c. Claims received 9,140,917 10,241,635 a. Stores and spares consumed (including packing material) 302,750,516 223,363,434 d. Scrap sales 7,223,704 6,613,591 b. Power and fuel 483,412,747 320,779,257 e. Gain on foreign exchange (net) 4,841,612 120,634,504 c. Insurance 582,247 4,539,237 f. Profit on sale of assets - 15,976 d. Repairs and maintenance to: g. Profit on sale of investment - 47,538 i) Machinery 38,863,348 48,599,539 h. Excess provision/credit balances written back 18,308,088 2,682,847 ii) Buildings 16,643,716 6,940,082 i. Bad debts recovered 1,997,627 1,628,037 iii) Other assets 8,456,018 8,731,814 j. Sundry income 100,966 337,914 63,963,082 64,271,435 Total 96,043,027 170,174,501 Total (A) 850,708,592 612,953,363 B. Selling expenses a. Advertisement and promotion 102,944,184 135,471,598 b. Freight outward 419,329,086 350,736,841 15 INCREASE/(DECREASE) IN STOCKS c. Commission on sales 26,452,232 36,605,062 Closing stock d. Other sales expenses 200,648,381 168,360,503 a. Work-in-process 792,316,860 734,115,283 e. Royalty on sales - 7,500,000 b. Finished goods 748,972,875 524,029,701 f. Warranty 505,492,556 413,826,243 1,541,289,735 1,258,144,984 Total (B) 1,254,866,439 1,112,500,247 Less: Opening stock C. Administrative expenses a. Work-in-process 734,115,283 518,444,978 a. Rent 52,411,948 47,688,725 b. Finished goods 524,029,701 375,106,690 b. Operating lease rentals 2,089,644 5,134,976 1,258,144,984 893,551,668 c. Managerial remuneration 192,207,269 221,442,499 Increase/(Decrease) in stocks 283,144,751 364,593,316 d. Payments to auditors 1,774,065 1,363,233 e. Research and development expenses 2,136,254 2,452,781 f. Donations 45,060,980 54,183,602 g. Political donation /advertisement 1,000,000 2,315,943 16 MATERIALS CONSUMED h. Travel and conveyance 83,668,913 81,944,854 Opening stock 449,479,851 320,164,778 i. Communication 13,580,422 12,620,808 Add: Purchases 12,001,297,191 9,325,935,623 j. Bank charges 9,439,433 11,453,384 12,450,777,042 9,646,100,401 k. Consultancy charges 17,203,418 7,888,244 Less: Closing stock 634,932,928 449,479,851 l. Information technology expenses 27,252,444 25,244,560 Gross Consumption 11,815,844,114 9,196,620,550 m. Office maintenance expenses 37,751,696 27,466,335 Less: Scrap realisation 8,200,567 70,929,661 n. Sundry expenses 61,365,509 64,852,987 Net material consumption 11,807,643,547 9,125,690,889 Total (C) 546,941,995 566,052,931 D. Other expenses a. Provision for doubtful debts 4,837,907 15,215,787 b. Provision for doubtful deposits/advances - 1,274,150 c. Bad debts and irrecoverable advances written off 22,387,828 15,673,809 17 EMPLOYEES’ BENEFITS Less: Opening provision reversed 18,849,521 8,229,625 a. Salaries, wages and bonus 622,697,594 519,061,889 3,538,307 7,444,184 b. Contribution to PF, Gratuity and other funds 57,430,578 45,656,308 d. Assets written off 7,337,448 10,713,458 c. Workmen and staff welfare expenses 94,743,718 58,985,935 e. Premium on forward contracts 17,625 4,600,051 Total 774,871,890 623,704,132 Total (D) 15,731,287 39,247,630 Grand Total (A+B+C+D) 2,668,248,313 2,330,754,171 19 DUTIES AND TAXES (Excluding Income Tax) a. Rates, taxes and licenses 4,319,122 2,511,123 b. Duties and taxes (Excise, ST and Octroi) 19,401,175 18,079,058 Total 23,720,297 20,590,18190 Amara Raja Batteries Limited Annual Report 2010-11 91
  • Schedules to the Profit and Loss Account Schedules to the Accounts (in `) 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) Particulars Year ended 31.03.2011 Year ended 31.03.2010 II) Defined Benefit Plans 20 INTEREST a) Company’s liability to Gratuity on retirement of its eligible employees is funded and is being administrated by the Life Insurance a. On term loans 13,925,443 60,901,540 Corporation of India Limited. The incremental expense thereon for each year is arrived at as per actuarial valuation and is b. On working capital facilities 594,998 6,814,032 recognised and charged to Profit and Loss Account in the year in which the employee has rendered service. Total 14,520,441 67,715,572 b) Expenses on account of unutilised leave which is unfunded is arrived at as per actuarial valuation and is recognised and charged to Profit and Loss Account in the year in which the employee has rendered service in lieu of such leave. c) Gains / Losses arrived at in the above actuarial valuations are charged to Profit and Loss Account. 21 PROVISION FOR TAXATION a. Current income tax 737,500,000 840,000,000 9. Research and Development Expenses b. Deferred tax (11,419,171) 33,844,555 Research and Development costs of revenue nature are charged to revenue as and when incurred, and of capital nature is capitalised c. Earlier years income tax 2,888,792 2,039,673 and depreciation thereon is provided as per the rates prescribed in schedule XIV to the Companies Act, 1956. d. Wealth tax 195,000 130,653 10. Foreign Currency Transactions Total 729,164,621 876,014,881 a) Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and charged to revenue with the difference in the rate of exchange arising on actual receipt/payment during the year. b) At each Balance Sheet date Schedules to the Accounts • Foreign currency monetary items are reported using the rate of exchange on that date. • Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognised. 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS STATEMENT ON ACCOUNTING POLICIES c) In respect of forward exchange contracts in the nature of hedges 1. General • Premium or discount on the contract is amortised over the term of the contract. Financial statements are prepared under historical cost convention and in accordance with generally accepted accounting practices. • Exchange differences on the contract are recognised as profit or loss in the period in which they arise. 2. Fixed assets 11. Warranty Claims and Provisions Fixed assets are stated at cost net of CENVAT and VAT credit less accumulated depreciation. Cost of acquisition of fixed assets is inclusive The company makes provision for the probable future liability on account of warranty as at the end of the financial year, in addition to of freight, duties and taxes, interest, if any, on specific borrowings utilised for financing the assets upto the date of commissioning, the meeting the actual warranty claimed. cost of installation/erection, and other incidental expenses. 12. Late Delivery Charges 3. Intangible assets The liability on account of late delivery charges, due to delay in delivery of finished products is accounted for on accrual basis as per the Intangible assets are stated at cost of acquisition less accumulated amortisation. Intangible assets, which are in the nature of computer terms of the contracts after adjusting for the claims which are no longer required. software are amortised over a period of 4 years on straight line method. 13. Taxation 4. Depreciation Provision is made for Income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Depreciation is provided on straight line basis in accordance with the rates and rules prescribed under Schedule - XIV to the Companies Income tax Act, 1961. Act, 1956, except in respect of the following, where the depreciation is provided based on their estimated useful life • Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the rate Computers - 4 Years ; Office Equipment – 8 Years; Moulds – 3 Years of tax enacted or substantively enacted by the balance sheet date. 5. Investments • Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation are recognised only when there is Long-term investments are stated at cost less provision required, if any, for the permanent diminution in value thereof. Dividends thereon virtual certainty supported by convincing evidence that such assets will be realised. Deferred tax assets arising on other temporary are accounted as and when received. timing differences are recognised only if there is a reasonable certainty of realisation. 6. Inventories 14. Dividends a. Finished goods are valued at lower of cost or market value. Provision is made in the accounts for the dividends payable by the Company, as recommended by the Board of Directors, pending b. Raw Materials, Work in Process, Stores and Spares, Materials in transit etc., are valued at cost. approval of the shareholders at the Annual General Meeting. Income Tax on dividends payable is provided for in the year to which such c. Scrap is valued at an estimated net realisable value. dividends relate. 7. Sales 15. Impairment of Assets Gross Sales are inclusive of Excise Duty, Sales tax/VAT, Service tax, Insurance, Octroi, Service charges etc., recovered thereon and net of At the date of each Balance Sheet, the company evaluates indications of the impairment internally, if any, to the carrying amount of its trade discounts / trade incentives. fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realisable value and value in use, as considered appropriate. If the estimated realisable value is less than the carrying amount, an impairment loss is recognised. 8. Employee Benefits Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised I) Defined Contribution Plans for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment a) Company’s contribution to Employees Provident Fund and Employees State Insurance are made under a defined contribution loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no plan, and are accounted for at actual cost in the year of accrual. impairment loss been recognised for the asset in prior years. b) Company’s contribution to Superannuation Fund in respect of employees who are members are made under a defined contribution plan, being administrated by the Life Insurance Corporation of India Limited, and are charged to Profit and Loss 16. Contingent Liabilities Account at predetermined rates in the year in which the employees have rendered service. Contingent liabilities are not recognised in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.92 Amara Raja Batteries Limited Annual Report 2010-11 93
  • Schedules to the Accounts Schedules to the Accounts 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 17. Borrowing Costs 5. Purchase of trading goods (` Million) Borrowing costs directly attributable for acquisition of qualifying assets are capitalised as part of the asset. Other borrowing costs are Particulars Year ended 31.03.2011 Year ended 31.03.2010 charged to revenue as and when incurred. Qty (Nos.) Amount Qty (Nos.) Amount 18. Commodity Hedging Storage Batteries 36,864 11.73 290 1.90 The realised gain or loss in respect of commodity hedging contracts, the price period of which has expired during the year, is recognised Home UPS 21,220 62.41 10,189 33.43 in the Profit & Loss account. In respect of contracts, which are outstanding as on date of Balance Sheet are valued at prevailing market Total 58,084 74.14 10,479 35.33 price and the resultant loss, if any, is provided. 6. Turnover (` Million) NOTES FORMING PART OF THE ACCOUNTS Particulars Year ended 31.03.2011 Year ended 31.03.2010 1. a) The company’s fixed assets both movable and immovable, both present and future have been placed as security under first charge Qty (Nos.) Amount Qty (Nos.) Amount for the term loan obtained in foreign Currency from BNP Paribas. Storage batteries and others 8,077,061 20,764.83 6,475,396 16,903.55 b) The working capital facilities from State Bank of India, State Bank of Hyderabad, Andhra Bank and The Bank of Nova Scotia are secured Note: The above includes 370,044 (298,406) batteries issued as replacements, samples, etc. by hypothecation of stock of raw materials, work-in-process, finished goods, stores and spares, bills receivable and book debts. The fixed assets of the Company are provided as collateral security by way of second charge for the working capital facilities availed from 7. Opening and closing stock of finished goods (` Million) State Bank of India. Particulars Year ended 31.03.2011 Year ended 31.03.2010 c) Consequent to an order passed by Vidyut Ombudsman in March 2010, Andhra Pradesh Southern Power Distribution Company Ltd., Qty (Nos.) Amount Qty (Nos.) Amount (APSPDCL) has demanded ` 27.06 million as low voltage surcharge (including interest) for the period from June, 2005 to November, Opening stock 2007. The company has created a liability in the accounts for ` 25.80 million during the financial year ended March 31, 2009, as Storage Batteries 327,943 521.53 367,929 371.62 per APSPDCL’S original demand. The Company has paid `13.57 million under protest. The Company has not provided the balance Home UPS 689 2.50 1,060 3.49 of `1.26 million in the books and has preferred an appeal against the order of Vidyut Ombudsman. Closing Stock 2. The company is availing the sales tax deferment benefit since 1997-98 on its expanded capacity. Such deferment claimed, as on March Storage Batteries 490,988 727.29 327,943 521.53 31, 2011 is ` 710.02 million (PY ` 638.95 million). This amount is subject to revision by the assessment authorities, on completion of Home UPS 7,200 21.68 689 2.50 assessments. 8. Consumption of raw material (` Million) 3. Contingent Liabilities (` Million) Particulars Year ended 31.03.2011 Year ended 31.03.2010 Particulars 31.03.2011 31.03.2010 UOM Qty. Amount Qty. Amount a. Claims against the company not admitted towards Lead Kgs. 49,269,960 5,519.08 42,376,377 4,236.87 Excise Duty/ Service Tax 18.62 10.83 Lead alloys Kgs. 38,785,456 4,696.91 32,588,309 3,492.14 Sales Tax 88.21 28.43 Separator Kgs. 1,191,307 191.52 1,020,793 180.55 Electricity 205.44 145.93 Separator Sq. Mtrs. 7,577,874 247.73 6,441,553 221.51 Dues to Supplier 0.75 – Others 1,160.60 1,065.55 [Against all the above, ` 5.64 million (PY ` 7.30 million) was paid under protest] Total 11,815.84 9,196.62 b. Counter guarantees given to banks in respect of bank guarantees issued in favour of various constituents 284.05 466.89 9. Comparison between consumption of imported and indigenous raw materials, stores and spares during the year c. Letters of credit opened with banks 169.46 246.42 i. Raw materials (` Million) d. Bills discounted with scheduled banks 69.13 43.81 Particulars Year ended 31.03.2011 Year ended 31.03.2010 e. Estimated amount of contracts remaining to be executed Value % Value % on capital accounts, not provided for 236.94 74.99 Imported 5,157.55 43.65 5,364.10 58.33 f. Bank Guarantees provided to APGPCL for differential wheeling charges Indigenous 6,658.29 56.35 3,832.52 41.67 pending disposal of the case by Supreme Court, not provided for 4.32 4.32 Total 11,815.84 100.00 9,196.62 100.00 4. Capacity and production ii. Stores and spares consumed (` Million) Particulars UOM 31.03.2011 31.03.2010 Particulars Year ended 31.03.2011 Year ended 31.03.2010 Storage batteries Value % Value % Installed capacity Nos. 10,070,000 9,300,000 Average installed capacity Nos. 9,505,873 8,162,000 Imported 47.95 15.84 46.59 20.86 Actual production Nos. 8,188,533 6,424,560 Indigenous 254.80 84.16 176.77 79.14 Total 302.75 100.00 223.36 100.00 Note: The installed capacity represents the capacity as at March 31, 2011 and average installed capacity represents year weighted average capacity based on expansions carried out during the year. The capacities are as certified by the management94 Amara Raja Batteries Limited Annual Report 2010-11 95
  • Schedules to the Accounts Schedules to the Accounts 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 10. Value of imports made during the year by the Company calculated on CIF basis (` Million) Reconciliation for fair value of plan assets (` Million) Particulars Year ended Year ended Particulars Year ended 31.03.2011 Year ended 31.03.2010 31.03.2011 31.03.2010 Gratuity Leave salary Gratuity Leave salary Capital goods 206.09 151.44 Fair value of plan assets at period beginning 26.27 - 20.46 - Finished goods 9.63 1.39 Actual return 2.47 - 1.88 - Raw material and components 5,052.39 5,057.59 Contribution by employer 11.57 - 5.34 - Stores and spares 62.85 45.52 Benefits paid (2.09) - (1.41) - Total 5,330.96 5,255.94 Fair value of plan assets at period end 38.22 - 26.27 - Present Value of unfunded obligations 11.38 47.13 14.15 29.52 11. Expenditure incurred in foreign currency during the year (` Million) Net liability recognised in the Balance Sheet 11.38 47.13 14.15 29.52 Particulars Year ended Year ended 31.03.2011 31.03.2010 Actuarial Assumptions Foreign travel expenses (exclusive of tickets purchased in Rupees) 3.80 5.19 a) Discount rate 8.00% Sales commission 0.26 1.77 b) Attrition rate (for gratuity qualifiers) 4.00% Interest 13.83 30.93 c) Salary escalation rate per unit 7.00% Others 2.55 4.20 d) Mortality rate LIC 1994-96 mortality rates. Total 20.44 42.09 e) Expected return 9.40% The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other 12. Remittance in foreign currency on account of dividends (` Million) relevant factors such as supply and demand factors in the employment market. Year No. of non-resident No. of Amount of 15. Remuneration to Non-Executive Chairman and Managing Director shareholders shares dividend i. Computation of net profits in accordance with Section 349 of the Companies Act 1956. (` Million) 2010-11 6 22,719,111 111.32 2009-10 8 23,098,361 18.48 Particulars Year ended 31.03.2011 Profit for the year as per the Profit and Loss Account 2,210.13 13. FOB value of exports made during the year (` Million) Add: Directors’ sitting fee 0.25 Particulars Year ended Year ended Remuneration to Chairman and Managing Director 192.21 192.46 31.03.2011 31.03.2010 Net Profit as per Section 349 2,402.59 Sales 834.15 521.57 Remuneration by way of commission to Chairman @ 3% 72.08 Remuneration to Managing Director @ 5% 120.13 14. Disclosure required by the AS – 15 (revised) – Employee benefits Reconciliation of present value of defined benefits obligations (` Million) ii. Details of remuneration to Non-Executive Chairman and Managing Director (` Million) Particulars Year ended 31.03.2011 Year ended 31.03.2010 Particulars Year ended 31.03.2011 Year ended 31.03.2010 Gratuity Leave salary Gratuity Leave salary Chairman Managing Director Chairman Managing Director Present value of obligations at period beginning 40.43 29.52 35.79 18.38 Salary -- 15.00 -- 2.40 Interest cost 3.23 2.23 2.86 1.25 Contribution to PF -- 0.01 -- 0.01 Service cost 5.35 21.32 4.44 12.90 Commission 72.08 105.12 83.04 135.99 Benefits paid (2.09) (3.38) (1.41) (0.95) Total 72.08 120.13 83.04 138.40 Actuarial (gain)/Loss 2.68 (2.56) (1.25) (2.06) Present value obligations at period end 49.60 47.13 40.43 29.52 16. Payment to Auditors (` Million) Expenses recognised in the statement of Profit and Loss Account (` Million) Particulars Year ended Year ended Particulars Year ended 31.03.2011 Year ended 31.03.2010 31.03.2011 31.03.2010 Gratuity Leave salary Gratuity Leave salary Statutory audit 1.40 1.10 Interest cost 3.23 2.23 2.86 1.25 Taxation matters (including tax audit) 0.10 0.10 Service cost 5.35 21.32 4.44 12.90 Reimbursement of out of pocket expenses 0.14 0.03 Actual return (2.47) -- (1.88) -- Cost audit 0.09 0.09 Actuarial (gain)/Loss 2.68 (2.56) (1.26) (2.06) Certification fee for cost auditor 0.04 0.04 Total Cost 8.79 20.99 4.16 12.09 Total 1.77 1.3696 Amara Raja Batteries Limited Annual Report 2010-11 97
  • Schedules to the Accounts Schedules to the Accounts 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) 17. Fixed deposits under cash and bank balances include (` Million) 4. Enterprise with significant influence Particulars Year ended Year ended Johnson Controls Mauritius Private Limited, Mauritius 31.03.2011 31.03.2010 B) Transactions with the Related Parties (` Million) Lodged as security with various authorities 0.31 0.31 Towards margin money -- 7.31 Particulars Key Relatives Enterprises in Enterprise with management of key which key significant 18. A. Sundry debtors include debts due from companies in which the directors are interested (` Million) personnel management management influence Particulars Year ended Year ended personnel personnel and / 31.03.2011 31.03.2010 or their relatives a. Amara Raja Power Systems Limited 124.12 101.86 have significant Maximum balance 124.12 101.86 influence b. Mangal Precision Products Limited - - I. Transactions during the year: Maximum balance 0.99 5.11 a. Remuneration paid 120.13 72.08 - - c. Amara Raja Electronics Limited 211.98 97.25 b. Sitting fee paid - - - - Maximum balance 211.98 97.25 c. Dividend paid 31.41 66.66 7.63 108.81 d. Galla Foods Limited - 0.20 d. Rents paid - 6.18 0.75 - Maximum balance - 0.20 e. Sale of goods - - 435.65 - f. Reimbursement/Sharing of expenses - - 46.95 - B. Sundry Creditors include payables to companies in which the directors are interested (` Million) g. Purchase of goods - - 1,541.11 - Particulars Year ended Year ended h. Purchase of capital items - - 146.31 - 31.03.2011 31.03.2010 II. Balances as at 31.03.2011 a. Amara Raja Power Systems Limited - 0.23 a. Share capital held by 12.82 27.21 3.12 44.41 b. Mangal Precision Products Limited 101.36 80.20 b. Remuneration payable 105.12 72.08 - - c. Amara Raja Electronics Limited - 12.07 c. Payables – trade dues - - 103.97 - d. Amara Raja Infra Private Limited - 1.11 d. Receivables – trade dues - - 336.09 - e. Amara Raja Industrial Services Private Limited 2.61 - e. Advance for purchases - - 10.87 - f. Deposits receivable - 1.76 - - C. Advance for purchases (capital) include advance to companies in which the directors are interested (` Million) Particulars Year ended Year ended 21. Note forming part of accounts in relation to Micro, Small and Medium Enterprises 31.03.2011 31.03.2010 Based on, and to the extent of information received from the suppliers with regard to their status under Micro, Small and Medium Amara Raja Infra Private Limited 10.87 1.00 Enterprises Development Act, 2006 (MSMED Act), on which the auditors have relied, the disclosure requirements of Schedule VI to the Companies Act, 1956 with regard to the payments made/due to Micro, Small and Medium Enterprises are given below: 19. The Company is engaged in the manufacture of lead acid storage batteries. In the perception of the management, identifying the Company’s business into further segments as per Accounting Standard – 17, does not arise. (` Million) 20. Related party transactions Sl. Particulars Year ended 31.03.2011 Year ended 31.03.2010 Related parties particulars pursuant to “Accounting Standard –18” No. Principal Interest Principal Interest A) List of related parties I. Amounts due as at the date of Balance Sheet. Nil Nil Nil Nil 1. Key management personnel II. Amounts paid beyond the appointed date Sri Jayadev Galla during the year. Nil Nil Nil Nil 2. Relatives of key management personnel III. Amount of interest due and payable for the period Dr. Ramachandra N Galla Father of Sri. Jayadev Galla of delay in making payments of principal during Smt. G. Amara Kumari Mother of Sri. Jayadev Galla the year beyond the appointed date Nil Nil Nil Nil Smt. G. Padmavathi Wife of Sri. Jayadev Galla IV. The amount of interest accrued and remaining Dr. G. Ramadevi Sister of Sri. Jayadev Galla unpaid as at the date of Balance Sheet Nil Nil Nil Nil Sri Ashok Galla Son of Sri. Jayadev Galla Master Siddharth Galla Son of Sri. Jayadev Galla 22. The Company has entered into three years lease agreements for office equipment, which are in the nature of operating leases. The lease 3. Enterprises in which key management personnel and / or their relatives have significant influence rent is charged to the Profit and Loss Account on accrual basis. Amara Raja Power Systems Limited Amara Raja Electronics Limited Future minimum lease rentals payable as at balance sheet date (` Million) Mangal Precision Products Limited Up to one year Nil Galla Foods Limited (PY: 2.22) Amara Raja Infra Private Limited Amara Raja Industrial Services Private Limited98 Amara Raja Batteries Limited Annual Report 2010-11 99
  • Schedules to the Accounts Cash Flow Statement For the year ended March 31, 2011 13 STATEMENT ON ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd...) (in `) 23. Major components of Deferred Tax Assets and Liabilities as at 31.03.2011 arising on account of timing differences are: Particulars Year ended 31.03.2011 Year ended 31.03.2010 I. CASH FLOW FROM OPERATING ACTIVITIES (` Million) Net Profit Before Tax 2,210,128,596 2,546,348,749 Particulars Assets Liabilities Depreciation - 235.57 Add/Less : Adjustments for : Amounts disallowed under Section 43B of the IT Act and Others 30.64 - a. Depreciation 417,120,633 429,451,244 Total 30.64 235.57 b. Profit on sale of assets - (15,976) Net Deferred Tax Liability as on March 31, 2011 ` 204.93 Million. c. Profit on sale of investments - (47,538) 24. A. Details of provision for warranty expenses (` Million) d. Loss on sale of assets 135,798 74,475 Provision as on 31.03.2010 359.76 e. Assets written off 7,337,448 10,713,458 Provision made during 2010-11 489.33 Withdrawn/reversed during the year (332.08) f. Interest paid 14,520,441 67,715,572 Provision as on 31.03.2011 517.01 g. Bad debts written off 3,538,307 15,673,809 B. Movement of provision for doubtful debts h. Provision for bad debts 4,837,907 6,986,162 (` Million) Provision as on 31.03.2010 25.09 i. Provision for doubtful advances - 1,274,150 Provision made during 2010-11 4.84 j. Exchange (gain)/loss on restatement (loans) 509,625 (50,575,704) Reversed and Written off as bad debts (18.85) k. Provision for leave encashment 17,611,980 11,131,559 Provision as on 31.03.2011 11.08 l. Provision for gratuity (2,773,148) (1,177,057) 25. Particulars of revenue expenditure capitalised during the year (` Million) m. Provision for warranty 157,244,186 177,124,956 Particulars Year ended Year ended n. Dividend received (43,185,413) (21,036,037) 31.03.2011 31.03.2010 o. Interest received (11,244,700) 565,653,064 (6,936,422) 640,356,651 Salaries – 9.81 Operating profit before working capital changes 2,775,781,660 3,186,705,400 Power and fuel - 0.14 Foreign travel expenses 0.41 - Add/Less : Adjustments for working capital changes Total 0.41 9.95 a. Decrease/(Increase) in inventories (671,242,728) (567,454,902) b. Decrease/(Increase) in sundry debtors (642,045,435) (367,121,645) 26. The balances in various personal accounts are subject to confirmation by and reconciliation with the concerned parties. c. Decrease/(Increase) in loans and advances (87,441,205) 156,505,690 27. In the opinion of Board of Directors the current assets, loans and advances are expected to realise the value stated in the accounts, in d. Increase/(Decrease) in trade payables and liabilities 262,497,036 (1,138,232,332) 518,422,037 (259,648,820) the ordinary course of business. Cash generated from operations 1,637,549,328 2,927,056,580 28. Donations include ` 1.00 Million donated to the Communist Party of India (Marxist), Chittoor District Committee. Less: 1. Income tax paid 782,291,806 784,383,186 2. Wealth tax paid 130,653 782,422,459 128,074 784,511,260 29. Previous year figures have been regrouped wherever necessary to confirm to the current year’s classification. Net cash from operating activities - A 855,126,869 2,142,545,320 30. Figures have been rounded off to the nearest thousands and rupees wherever it is mentioned in million and rupees respectively. II. CASH FLOW FROM INVESTING ACTIVITIES a. Purchase of fixed assets (518,563,610) (684,711,844) As per our report of even date attached b. (Increase)/Decrease in capital work in progress (148,519,484) 169,153,480 For E. PHALGUNA KUMAR & CO. For CHEVUTURI ASSOCIATES For and on behalf of the Board c. Sale of fixed Assets 355,376 475,721 Chartered Accountants Chartered Accountants d. Sale of Investments - 310,277,662 e. Interest received 11,244,700 6,936,422 E. Phalguna Kumar Raghunadha Rao Balineni Dr. Ramachandra N Galla Jayadev Galla Partner Partner Chairman Managing Director f. Dividend received 43,185,413 21,036,037 (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) Net Cash from investing activities - B (612,297,605) (176,832,522) Firm Registration No. 002644S Firm Registration No. 000632S K. Suresh N. Ramanathan Chief Financial Officer Company Secretary Place : Tirupati Place : Milwaukee, USA Date : May 19, 2011 Date : May 16, 2011100 Amara Raja Batteries Limited Annual Report 2010-11 101
  • Cash Flow Statement (Contd...) Balance Sheet Abstract (in `) Particulars Year ended 31.03.2011 Year ended 31.03.2010 Balance Sheet Abstract and Company’s General Business Profile III. CASH FLOW FROM FINANCING ACTIVITIES a. Increase/(decrease) in borrowings 38,056,212 (1,896,239,770) I. Registration Details b. Interest paid (14,520,441) (67,715,572) Registration no. 0 5 3 0 5 State code 0 1 c. Dividend paid (418,490,625) (68,325,000) d. Dividend tax paid (70,462,718) (11,611,833) 3 1 0 3 2 0 1 1 Net cash from financing activities - C (465,417,572) (2,043,892,175) Date Month Year Net cash flow from all activities (A+B+C) (222,588,308) (78,179,377) II. Capital raised during the year (Amount in ` Thousand) Opening cash and bank balances 624,672,429 702,851,806 Public issue N I L Rights issue N I L Add : Net increase/(decrease) in cash & cash equivalents (222,588,308) (78,179,377) Closing cash and bank balances 402,084,121 624,672,429 Bonus issue N I L Private placement N I L As per our report of even date attached III. Position of mobilisation and deployment of funds (Amount in ` Thousand) For E. PHALGUNA KUMAR & CO. For CHEVUTURI ASSOCIATES For and on behalf of the Board Total liabilities 1 1 1 0 5 7 0 7 Total assets 1 1 1 0 5 7 0 7 Chartered Accountants Chartered Accountants Sources of funds Paid-up capital 1 7 0 8 1 3 Reserves and surplus 6 2 8 8 4 5 9 E. Phalguna Kumar Raghunadha Rao Balineni Dr. Ramachandra N Galla Jayadev Galla Partner Partner Chairman Managing Director Secured loans 2 4 0 4 4 4 Unsecured loans 7 1 0 0 1 6 (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) Firm Registration No. 002644S Firm Registration No. 000632S Deferred tax liability 2 0 4 9 3 4 Total 7 6 1 4 6 6 6 K. Suresh N. Ramanathan Application of funds Chief Financial Officer Company Secretary Net fixed assets 3 5 2 6 2 8 1 Investments 1 6 0 7 5 6 Place : Tirupati Place : Milwaukee, USA Net current assets 3 9 2 7 6 2 9 Total 7 6 1 4 6 6 6 Date : May 19, 2011 Date : May 16, 2011 IV. Performance of Company (Amount in ` Thousand) Turnover including other income 2 0 8 6 0 8 7 0 Total expenditure 1 8 6 5 0 7 4 1 Auditors Certificate Profit before tax 2 2 1 0 1 2 9 Profit after tax 1 4 8 0 9 6 4 To The Board of Directors Earning per share (`) 1 7 . 3 4 Dividend Rate (%) 2 3 0 Amara Raja Batteries Limited V. Generic names of two principal products / services of the Company (as per monetary terms) We have examined the attached Cash Flow Statement of Amara Raja Batteries Limited, Tirupati, for the year ended March 31, 2011. The Item code no. (ITC code) Product description Statement has been prepared by the Company in accordance with the requirements of Clause 32 of listing agreement with stock exchanges and is based on and in agreement with the corresponding Profit and Loss Account and Balance Sheet of the Company covered by our report 8 5 0 7 2 0 . 0 0 Storage Batteries - Maintenance Free Valve Regulated Lead Acid (MF-VRLA) Batteries dated May 19, 2011 to the members of the Company. 8 5 0 7 1 0 . 0 0 Lead Acid Batteries used for Starting Piston Engines For E. PHALGUNA KUMAR & CO. For CHEVUTURI ASSOCIATES For and on behalf of the Board Chartered Accountants Chartered Accountants E. Phalguna Kumar Raghunadha Rao Balineni Dr. Ramachandra N Galla Jayadev Galla Partner Partner Chairman Managing Director (ICAI Memb. No: 20278) (ICAI Memb. No: 28105) Firm Registration No. 002644S Firm Registration No. 000632S Place: Tirupati Place : Milwaukee, USA K. Suresh N. Ramanathan Date: May 19, 2011 Date : May 16, 2011 Chief Financial Officer Company Secretary102 Amara Raja Batteries Limited Annual Report 2010-11 103
  • GOTTA BE A BETTER WAY AMARA RAJA BATTERIES LIMITED I 2010-11 ANNUAL REPORT