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Rane Brake Lining Limited

1

Board of Directors Listing of Shares withL GANESH The Madras Stock Exchange Limited, ChennaiChairman Bombay Stock Exchange Limited, MumbaiL LAKSHMAN National Stock Exchange of India Limited, MumbaiS A MURALI PRASADANIL KUMAR V EPUR BankersS SANDILYA IDBI Bank LimitedHARISH LAKSHMAN Standard Chartered BankSURESH CHANDRA GUPTA HDFC Bank LimitedKOJI NISHIHARA State Bank of India(Nominee of Nisshinbo Holdings Inc., Japan) Indian Overseas Bank

ICICI Bank Limited

Audit CommitteeS SANDILYA “MAITHRI”, 132, Cathedral Road,S A MURALI PRASAD Chennai 600 086L GANESH Phone : 28112472SURESH CHANDRA GUPTA Fax : 28112449

Email : [email protected]

Investors’ Service Committee PlantsHARISH LAKSHMAN 1) Plot No.30, Industrial Estate,Chairman Ambattur, Chennai 600 058.ANIL KUMAR V EPUR Tamil NaduL GANESH

2) Pregnapur Village, Gajwel Mandal, Siddipet Highway, Medak District 502 311.

President Andhra PradeshP S RAO

3) RS No. 48, 49 & 50, Sanyasikuppam VillageDeputy General Manager - Finance Mannadipet Commune, Thirubhuvanai Post,M A P SRIDHAR KUMAR Puducherry 605 107.

Secretary 4) Sethurapatti Village, Fathima Nagar Post,G KARTHIKEYAN Srirangam Taluk, Trichy 620 012.

Tamil Nadu

Auditors Registrar and Transfer AgentsPRICE WATERHOUSE & CO., Integrated Enterprises (India) Limited,Chartered Accountants, II Floor, “Kences Towers”, No.1 Ramakrishna Street,NO.32, Khader Nawaz Khan Road, North Usman Road, T.Nagar, Chennai 600 017.Nungambakkam, Chennai - 600 006. Ph : 28140801-03

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CONTENTS PAGE NO.

Notice to Shareholders 3

Report of the Directors 6

Auditors’ Report 19

Balance Sheet 22

23

Cash Flow Statement 24

Schedules to Accounts 25

Notes on Accounts 32


3

NOTICE is hereby given that the Fifth Annual General Meeting of the Equity Shareholders of the Company will be held at 10.30 a.m. on Wednesday,the July 21, 2010, at The Music Academy (Mini Hall), New No. 168, TTK Road, Royapettah, Chennai 600 014, to transact the following: -

ORDINARY BUSINESS:

1. To receive, consider and adopt the Directors’ Report, the audited accounts of the Company for the year ended March 31, 2010 and the Auditors’ report thereon.

To consider adoption of the following resolution, as an ordinary resolution:

“Resolved that the Audited Balance Sheet as at

the year ended March 31, 2010 together with the Reports of the Directors and the Auditors of the Company thereon, as presented to the meeting be and the same are hereby approved and adopted.”

2. To declare dividend on equity shares.

To consider adoption of the following resolution, ordinary

resolution :

“Resolved that the interim dividend of Rs.3/- per equity share declared by the board of directors of the company on January 21, 2010 on 7,914,980equity shares of Rs.10/- each fully paid, absorbing a sum of Rs. 27.78 million (includingRs. 27.78 million (including (including dividend distribution tax and cess thereon), paid to the shareholders in February 2010 for the year ended March 31, 2010 be and is hereby approved.”

per equity share of Rs. 10/- each on 7,914,980equity shares be and is hereby declared out of the

31, 2010, absorbing an amount of Rs.13.89million (including dividend distribution tax and cess thereon) and that the dividend be paid to those shareholders, whose names appears on the Company’s Register of Members as on July

21, 2010 and in respect of shares in electronic

at the end of business hours on July 13, 2010 asper the details furnished by the Depositories for this purpose.”

3. To appoint a Director in the place of Mr. S A Murali Prasad, who retires by rotation under Article 113of the Articles of Association of the company and being eligible offers himself for re-election.


resolution:

“Resolved that Mr. S A Murali Prasad, who retires by rotation and being eligible for re-appointment, be and is hereby reappointed as a Director of the Company.”

4. To appoint a Director in the place of Mr. Anil Kumar V Epur, who retires by rotation under Article 113 of the Articles of Association of the company and being eligible offers himself for re-election.


resolution:

“Resolved that Mr. Anil Kumar V Epur, who retires by rotation and being eligible for re-appointment, be and is hereby reappointed as a Director of the Company.”

5. To appoint auditors of the Company and to determine their remuneration. The retiring auditors M/s. Price Waterhouse & Co, Chartered Accountants, are eligible for re-appointment. The declaration under Section 224(1B) of the Companies Act, 1956 has been received.


resolution:

“Resolved that M/s. Price Waterhouse & Co, Chartered Accountants (Registration No. 007567S with the Institute of Chartered Accountants of India),

NOTICE TO SHAREHOLDERS


4

be and are hereby re-appointed as the auditors of

this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company on such remuneration as may be determined by the Board of Directors of the Company, in addition to reimbursement of travelling and other out-of-pocket expenses actually incurred by them in connection with the audit.”

SPECIAL BUSINESS:

6. To consider adoption of the following resolution, special

resolution

“Resolved that pursuant to the provisions of section 309(4)(b) and other applicable provisions, if any, of the Companies Act, 1956 and subject to such other approvals as may be required, the payment and distribution by way of commission to Mr. L Ganesh, Chairman, not exceeding one

calculated in accordance with the provisions of sections 198, 349 and 350 of the Companies Act, 1956 with effect from April 1, 2009 for a period of three years be and is hereby approved.”

“Resolved further that subject to the limits as aforesaid, the payment and distribution of the commission to Mr. L Ganesh, Chairman be determined by the Board of Directors from time to time in such proportion and in such manner as the Board may determine.”

(By Order of the Board)For Rane Brake Lining Limited

Chennai G KarthikeyanMay 19, 2010 Secretary

NOTES:

1. Any member entitled to attend and vote at the meeting may appoint a proxy to attend and vote instead of himself. The proxy need not be a member of the Company. The proxies should however be deposited at the registered

before the commencement of the meeting.

2. The Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of the Special Business as given in the notice is annexed.

3. The Register of Members of the Company will remain closed from 2010 to Wednesday, July 21, 2010 (both days inclusive).

4. Pursuant to the provisions of Section 205A of the

year ended March 31, 2003 and thereafter which remain unclaimed for a period of seven years (including the dividends declared by erstwhile Rane Brake Linings Limited) will be transferred to the Investor Education and Protection Fund (IEPF) of the Central Government.

Members are requested to contact the Company’s Registrars and Transfer Agents, for payment in respect of the unclaimed dividend for the

by the erstwhile Rane Brake Linings Limited.

5. Members holding shares in physical form are requested to notify to the Company immediately of any change in the residential address to the following address:

M/s. Integrated Enterprises (India) Ltd.II Floor, “Kences Towers”, No.1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai 600 017.

Members holding shares in Dematerialized form may inform the change in address to their Depository Participants.

6. Members who are holding shares in identical order of names in more than one account are requested to intimate to the Company, the ledger folio of such accounts together with the

consolidate all the holdings into one account.

members after necessary endorsements.

7. Members / Proxies should bring the attendance


5

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956Resolution No.6After Mr. L Ganesh took over as Chairman of the Company with effect from April 1, 2008, he is committing more

results. In order to remunerate Mr. L Ganesh, Chairman appropriately for the services rendered by him, the Board recommended to make payment of remuneration by way of commission not exceeding 1% of the net

Mr. L Ganesh is concerned or interested in the resolution. Mr. L Lakshman being relative of Mr. L Ganesh, may be deemed to be interested in the resolution. No other directors are interested in the resolution.

Your directors commend the resolution for adoption.



Information about director seeking re-appointment in this Annual General Meeting in respect of item

Name of the Director Mr. S A Murali Prasad Mr. Anil Kumar V EpurFather’s Name Mr. S A Venkatarama Iyer Mr. E V Ram ReddyDate of Birth September 27, 1941 November 17, 1948Educational ACA, AICWA B.S. MEE and MBA – Cornell University,

USAExperience Mr. Murali Prasad provides consultancy

services for large and medium-sized corporate. He has over 40 years of experience.

Mr. Anil Kumar has over 34 years of industrial experience.

Date of Appointment February 6, 2008 February 6, 2008Other Directorships 1. Sakthi Finance Limited

2. Sam Consultancy Services Pvt. Limited

1. Rane Diecast Limited2. B2B Software Technologies Limited

Committee Memberships Chairman – AuditSakthi Finance Limited

Chairman - Audit1. Rane Diecast Limited2. B2B Software Technologies Limited

Member – AuditRane Brake Lining Limited

Member – Investors’ ServiceRane Brake Lining Limited

Chairman – Remuneration 1. Sakthi Finance Limited2. Rane Brake Lining Limited

Member - Remuneration B2B Software Technologies Limited

Number of shares held NIL NIL




6

annual report together with the accounts for the year ended March 31, 2010.1. Financial Performance:

review are as follows:- (Rs. Million)2009-10 2008-09

Sales and Operating Revenues

2,363.00 1,913.48

Other Income 13.77 17.9843.24

Provision for tax 14.3028.94

Surplus brought forward 112.20 104.69Amount available for appropriation 213.07 133.62

2. Appropriation

million. The Directors have declared and paid interim dividend of 30% on the equity capital of the company for the year ended March 31, 2010and are pleased to recommend a further 15%

45% for the year. The amount on this account

surcharge thereon, works out to Rs. 41.67 million

Rs. 171.40 million. Out of this, Rs. 10.09 million is being transferred to the General Reserve and Rs. 161.31 million being retained as surplus in

3. Management Discussion and Analysisa. Industry Structure and Developments

Growth in %

Segments 2009-10 2008-09

Passenger Cars 5

Utility Vehicles -11Small Commercial Vehicles (One Ton & below) 12

Light Commercial Vehicles 77 -24Medium and Heavy Commercial Vehicles 30 -35

Three Wheelers 25 -1

Two Wheelers 25 4

Farm Tractors 27 -7

Source: Society of Indian Automobile Manufacturers.

The domestic market continues its strong recovery which started in January 2009. Heavy and Light Commercial Vehicle segments recovered strongly in the second half of the year. The Passenger Cars continued to do extremely well and had a record year. The Farm Tractors achieved its highest ever production in the

The aftermarket continued to be very robust during the year.

effects of slowdown in the US and European markets. Besides lower consumption, there were inventory corrections by customers. There were some signs of improvement from December 2009.

b. Operational and Financial Performance

Sales and Operating Revenue grew by 23% compared to 6% in the previous year. This was lead by a very strong growth OEM (57%) and Aftermarket (10%). Your Company has successfully established new distribution arrangements in North Africa as a measure to offset economic recession impact in European market. Your Company also secured new business in Taiwan for passenger car brake linings during the year. However exports had a marginal growth of around 4%.

The PBT for the year under review was Rs. 149.33 Million against Rs. 43.24 Million in the previous year. This was achieved not only due to a robust growth in sales but also effective cost reduction initiatives and a reasonably stable raw material cost trend. Compared to the previous year the foreign exchange volatility was also far less which helped the performance.

c. Outlook

Domestic market is expected to continue its strong growth. Passenger Car and Two wheelers

with new products launches. Light and Heavy commercial vehicles and tractors are expected to continue its growth momentum although at a lower rate. The Aftermarket demand continues to be strong.

Export market, which has also shown positive signs, is likely to improve further in the current

REPORT OF THE DIRECTORS


7

year and your company is well placed to further grow in this segment.

Raw material prices have started hardening but the general expectation is that the increases will be moderate. The recent trend of strengthening of the Indian currency is causing concern. The continuance of subsidised exports from China

currency could adversely affect Indian exports in the medium term.

Your Company will continue to focus on improving productivity and quality besides cost reduction initiatives to sustain the improved performance.

d. Opportunities, Threats and Risk

India has averted the effects of the global slump and continues to grow at a healthy 7-8%. More and more multinational companies are now targeting India as the hub for manufacturing and exporting. Many global Automobile manufacturers have set up bases in India and are actively pursuing sourcing from here. This provides good opportunity to component manufacturers for accelerated growth.The main threats are as follows ;- Dumping from China and cheaper imports

from other low cost countries.- Strengthening of Rupee affecting exports.- More competition since there are no growth

opportunities for multinational companies elsewhere.

- Increased trend of Material cost.

e. Internal Control Systems and Risk Management

Your Company continues to engage the services of an independent agency to carry out internal audit of all the Company locations across the country. The Audit Committee of the Board approves the audit plan in the beginning of the

auditors, the statutory auditors and the operating

are placed before the Audit Committee for review. The response of the operating management and counter measures proposed are discussed at the Audit Committee meetings. The process not only seeks to ensure the reliability of control systems

and compliance with laws and regulations but also covers resources utilization and system

Risk Management is an integral part of the business process. The Company has mapped the risks at the business processes and enterprise levels and has evolved a risk management framework. Mitigative measures have been put in place in respect of these risks. These would be periodically reviewed by the Board of Directors.

f. Human Resource Development and Industrial Relations

to Human Resource Development (HRD) and harmonious industrial relations. The management is continuously working on the development of human capital which is very vital for achieving the goals and realising the Vision of the Company in an ever-changing and challenging business environment. “Rane Institute for Employee Development” is a group resource that imparts training for enhancing leadership and managerial skills. On an average each employee across all segments and divisions is trained for 5.18 days per annum.

Total Employee Involvement is a key element of Total Quality Management (TQM) that enables continuous improvement to all business processes. The Company conducts regular Employee Opinion Surveys, the outcome of which is shared with the employees, deliberated and

enhance employee engagement. New strategies like multi skilling, competency enhancement programs and enhancing managerial depth arebeing progressively implemented to optimise employee costs and improve productivity.

As at the end of March 31, 2010, the total number of employees stood at 850.

g. Cautionary Statement

The information and opinion expressed in this report may contain certain forward-looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.

REPORT OF THE DIRECTORS (Contd.)


8

Deposits outstanding as on March 31, 2010amounted to Rs. 120.38 million. All deposits that matured during the year were repaid / renewed except for a sum of Rs. 0.25 million for which claims have not been lodged with the Company.

5. Board of DirectorsMr. S A Murali Prasad and Mr. Anil Kumar V Epur retire by rotation. Mr. S A Murali Prasad and Mr. Anil Kumar V Epur being eligible, have offered themselves for reappointment.

6. Conservation of Energy Your Company has been continuously engaged in energy saving initiatives to offset the power shortage and the resultant cost impact. Energy savings were achieved through special projects

employee involvement to reduce consumption of power.

7. Research and Development Activities The details of Disclosure of particulars with respect to Research & Development, technology absorption, adaptation and innovation, as required under the Companies Act (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 in Form B are furnished in Annexure A.

Foreign exchange earned during 2009-10 was Rs. 149.73 million and foreign exchange outgo was Rs. 421.13 million.

9. EmployeesThe particulars of employees, as per section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules 1975, are given in Annexure B, which forms part of this report.

10. AuditorsM/s Price Waterhouse & Co., Chartered Accountants, Chennai, the auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. The declaration under Section 224(1B) of the Companies Act, 1956 has been received from them.

11. Directors’ Responsibility Statement Pursuant to Section 217(2AA) of the Companies

have:

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

ii. Selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the

for the year under review;

maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956, for safeguarding the assets of the Company and detecting fraud and other irregularities;

on a ‘going concern’ basis. 12. Corporate Social Responsibility

Your company has contributed to the society in the form of –• Contribution of funds towards establishment

of Polytechnic College by Rane Foundation. Contributions are also made through Rane Foundation, PSG Foundation and JACOB Memorial Trust towards providing basic and higher education to the deserving. Your company has instituted a merit award for school children and distributed uniforms to the girl school students.

Your company has also taken other initiatives such as organising –• Blood donation and eye care camp • AIDS awareness program and donation to

AIDS infected children• Road safety campaign• Contribution to cancer auspice• Food and clothing for orphanages• Reading for blind

13. Corporate Governance ReportA detailed report on Corporate Governance is attached in Annexure C.

For and on behalf of the Board L GANESH

Chairman

Chennai L LAKSHMAN May 19, 2010 Director

REPORT OF THE DIRECTORS (Contd.)


9

FORM B

Disclosure of particulars with respect to Research & Development, technology absorption, adaptation and innovation, as required under the Companies Act (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Report of the Board of Directors for the year ended March 31, 2010.

Research and Development (R & D)

Company

Your company has been actively engaged in developing new friction materials to meet emerging OEM customer requirements.

‘product library’ in order to enhance competitiveness and offer under product solutions.

The Company’s emphasis is also on development of asbestos free friction products for domestic aftermarket besides continuous efforts are being made to enhance product quality and process technology.

The Company has been successful in offering localisation solutions to major international customers for their new product launches.

requirements in passenger cars segment helped the Company to add new product platforms of the customers.

Company also developed asbestos free friction materials for domestic commercial vehicle customers resulting in increased market share in the segment.

3. Future plan of action

Your Company intends to strengthen formulation development and testing capabilities. Towards this the Company intends to improve the testing equipments and infrastructure.

New friction materials for commercial vehicle brake pads developed and tested to support company’s strategic efforts to increase revenues from the product segment.

2009-10 2008-09A Capex 4,877 4,038B Recurring 41,888 28,013C Total 32,051D Total R & D expenses as a

percentage of total turnover 1.68%

TECHNOLOGY ABSORPTION, ADAPTATION

1. Efforts, in briefThe company has a range of formulations and technology base to compete effectively in a wide range of markets including domestic & overseas. The Company has been continuously benchmarking with JV Partner and similar industries towards absorbing best practices and continuous improvements. The company has invested in new manufacturing technologies for disc pads and brake linings for passenger cars / Utility vehicles to enhance product quality. These steps have enabled the Company to enhance the competitiveness and thereby continue its growth in their OEM business.

efforts technology absorption:The company has been able to offer localization solutions to major international customers for their new programs. The potential to add few more domestic customers has also been strengthened.

3. (a) Technology Imported: (Technology imported during the last 5 years reckoned

Technical service and know how relating to design and manufacture of disc pads and brake linings from M/s Nisshinbo Brake Inc., (Formerly known as Nisshinbo Industries Inc.,) Japan.(b) Year of Import : 2005(c) Has technology been fully absorbed : Yes(d) Areas where technology not fully absorbed, reason and : Not future plan of action applicable

For and on behalf of the Board

L GANESHChairman

Chennai L LAKSHMAN May 19, 2010 Director

Annexure A to Report of the Directors

10

AN

NEX

UR

E-B

to R

epor

t of t

he D

irect

ors

(Con

td.)

Part

icul

ars

as p

er S

ectio

n 21

7(2A

) of

the

Com

pani

es A

ct,

1956

, re

ad w

ith t

he C

ompa

nies

(Pa

rtic

ular

s of

Em

ploy

ees)

Rul

es,

1975

, an

nexe

d to

and

form

ing

part

of t

he D

irect

ors’

Rep

ort f

or th

e ye

ar e

nded

Mar

ch 3

1, 2

010.

SI.

No.

Nam

eA

geD

esig

natio

n /

Nat

ure

of D

utie

sR

emun

erat

ion

(Rs.

)Ex

perie

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(Yea

rs)

Dat

e of

C

omm

ence

men

tof

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t Em

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t

1.R

ao P

S58

Pre

side

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,14,

813

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ech

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.04.

2001

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stw

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Ran

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Lim

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**

Em

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r pa

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the

year

Not

es:

1. R

emun

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ion

as s

how

n ab

ove

incl

udes

sal

ary,

hou

se re

nt a

nd o

ther

allo

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con

tribu

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to p

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and

oth

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and

perq

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eval

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d as

per

Inco

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Tax

Rul

es.

2.Th

e se

rvic

es o

f em

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ee is

con

tract

ual i

n na

ture

.3.

Non

e of

the

abov

e em

ploy

ees

is re

late

d to

any

Dire

ctor

of t

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ompa

ny.

4.N

o em

ploy

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f the

Com

pany

is c

over

ed b

y th

e pr

ovis

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of S

ectio

n 21

7(2A

)(a)

(iii)

of th

e C

ompa

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Act

, 195

6.

For a

nd o

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half

of th

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oard

L G

AN

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Cha

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Che

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L LA

KSH

MA

N

May

19, 2

010

Dire

ctor

Ran

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Lim

ited


11

1. Philosophy on Code of Governance

The cornerstone of the philosophy of Governance adopted by the Board has at all times been based on integrity, transparency and fairness in all its dealings. The Company will continue to seek enhancement to shareholder value within the framework of business ethics, regulatory compliances and contribution to society. The

titled “Ethical Standards of Behaviour” outlining

obligations for its employees to the Company.2. Board of Directors

The composition of the Board is given below: Promoter Group: Mr. L Ganesh, ChairmanMr. L LakshmanMr. Harish Lakshman

Independent and Non- executive Directors:Mr. S A Murali Prasad Mr. S Sandilya Mr. Anil Kumar V Epur Mr. Suresh Chandra GuptaNon-independent and Non-Executive Director:Mr. Koji Nishihara 1 Nominees of M/s. Nisshinbo

Mr. Kunihiro Toda 2 Holdings Inc., Japan

Mr. L Lakshman is related to Mr. L Ganesh and Mr. Harish Lakshman.

3. Details of Attendance at Board meetings and last AGM and details of memberships in other Boards and Board committees

year on May 27, 2009, July 20, 2009, October 22, 2009, January 21, 2010 and March 19, 2010.

Name of the DirectorNo. of board

meetingsattended

WhetherattendedLast AGM

Membership in other Boards #

Committee @

Membership Chairmanship

Mr. L Lakshman 5 Yes 10 10 5Mr. L Ganesh 5 Yes 10 10 2Mr. Harish Lakshman 4 Yes 7 4 2Mr. S A Murali Prasad 4 Yes 1 2 1Mr. S Sandilya 5 Yes 4 4 2Mr. Anil Kumar V Epur 4 Yes 2 3 2Mr. Suresh Chandra Gupta 5 Yes - 1 -Mr. Koji Nishihara 1 1 No 2 - -Mr. Kunihiro Toda 2 - No 6 - -

# Excludes companies exempted under Section 278 of the Companies Act, 1956 and foreign companies.@ Membership in Audit Committee and Investors’ Service / Grievance Committee only is considered.1 Co-opted as additional director at the Board meeting held on May 27, 20092 Ceased to be a director w.e.f. May 27, 2009

The information as required under Annexure IA to Clause 49 of the listing agreement such as annual operating plans and budgets, quarterly results for the Company, minutes of meetings of audit committee and other committees of the board, quarterly details of foreign exchange exposures, risk management and mitigation measures, etc., are placed before the Board of Directors.

The Institute of Company Secretaries of India (ICSI) has published Standards on secretarial practices relating to meetings of the Board/Committees, General Meetings, Dividends etc. These are recommendatory in nature. The Secretarial and the operating practices of the Company are in line with the above Secretarial Standards.

Annexure C to Report of the Directors


12

The scope of reference to the committee, inter alia, includes:

1. Review of scope of audit and discuss post-audit area of concern, if any, with Statutory Auditors and Internal Auditors.

2. Recommending the appointment of statutory

statements with statutory auditors and management before submission to the Board.

4. Review of internal control systems with the Management, Statutory Auditors and Internal Auditors.

5. Reviewing the adequacy of internal audit function.

policies of the Company.

7. Reviewing defaults, if any, in payments to depositors, shareholders and creditors.

related party transactions submitted by the management

9. Reviewing the management letters/ letters of internal control weaknesses issued by the statutory auditors, if any.

10. Management discussion and analysis of

The composition of audit committee is as follows:

Mr. S Sandilya - Chairman - Independent Director

Mr. S C Gupta - Member - Independent Director

Mr. S A Murali Prasad - Member - Independent Director

Mr. L Ganesh - Member - Non-Executive Director

All the members of the audit committee are

Mr. G Karthikeyan, Secretary of the Company is the Secretary to the Committee.

The committee met four times during the year on May 27, 2009, July 20, 2009, October 22, 2009 and January 21, 2010.

Name of the Director No. of Meetings AttendedMr. S Sandilya 4Mr. S A Murali Prasad 3Mr. S C Gupta 4Mr. L Ganesh 4

The statutory auditors were present as invitees in all the meetings except at the meeting held on January 21, 2010. The internal auditors were present as invitees in all the meetings. The President and Head of Finance of the Company attended the meeting by invitation. The audit committee reviews all mandatory information under Clause 49 of the listing agreement.

5. Remuneration to DirectorsMr. L Lakshman, Director, was appointed as Manager under the Companies Act, 1956,without any remuneration for a period of three years with effect from June 1, 2009 to March 31, 2012. There is no severance fee payable to the Manager. Sitting fees of Rs. 20,000 per meeting was paid to the non-executive directors for each Meeting of the Board & Audit Committee and Rs. 2,500 for attending meeting of other committees of the Board, apart from reimbursement of actual travel and out-of-pocket expenses incurred by them for attending the meetings. Since, Mr. L Lakshman, Director, draws commission as part of his remuneration from the holding company, viz. Rane Holdings Limited, he does not receive sitting fees for attending the meetings of the board or other committees of the board with effect from July 20, 2009. No stock option scheme exists in the Company.The details of sitting fees paid to the directors are as follows:

Name of the Director Amount (Rs.)Mr. S A Murali Prasad 140,000Mr. L Ganesh 187,500Mr. S Sandilya 180,000Mr. Suresh Chandra Gupta 180,000Mr. Anil Kumar V Epur 85,000Mr. L Lakshman 22,500Mr. Harish Lakshman 80,000Mr. Koji Nishihara 20,000

(Contd.)


13

The sitting fee payable to Mr. L Ganesh, Chairman has been withdrawn with effect from April 1, 2010in order to remunerate him by way of payment of commission of upto one percent (1%) on the net

by him as non-executive Chairman, subject to approval of the shareholders. This commission after approval of the shareholders would be paid

ended March 31, 2010, ref Note.13 of the Notes on Accounts.

Mr. L Lakshman, Mr. L Ganesh and Mr. Harish Lakshman hold 50 equity shares each in the Company as on March 31, 2010. None of the other directors holds any share in the Company.

6. Code of Conduct

The Board of Directors has laid down a code of conduct for all Board Members and Senior Management of the Company. The same has also been posted on the website of the Company, viz. URL: http://www.rane.co.in/pdf/coc.pdf.The Board Members and Senior Management

the code of conduct for the year under review.

this effect forms part of this report.

The Board of Directors has also laid down a code of conduct for prevention of insider trading. The

with the code.

7. Investors’ Service Committee

An Investors’ Service Committee is constituted to look into all types of grievances from shareholders

manner. The composition of the committee is as follows:Mr. Harish Lakshman, Chairman (w.e.f. March 19,2010)Mr. L Ganesh Mr. Anil Kumar V EpurMr. L Lakshman (up to March 19, 2010)Mr. G Karthikeyan, Secretary, is the Compliance

The Committee met three times during the year on May 27, 2009, July 20, 2009 and January 21, 2010.

Name of the Director No. of Meetings AttendedMr. L Ganesh 3Mr. L Lakshman 3Mr. Anil Kumar V Epur 2

During the year, the Company received 8 complaints from the investors and all of them were resolved to the satisfaction of the shareholders. The complaints pertain to non-receipt of dividend

complaint was received from Stock Exchanges/ SEBI / Ministry of Corporate Affairs.

Details of last three Annual General Meetings are as under:

Date of AGM Specialresolutions

passed

Time

July 20, 2009(Fourth AGM)

Amendmentto Articles

of Association

10.30A M

Music Academy (Mini Hall), New No. 168,T.T.K. Road, Royapettah,Chennai600 014

July 22, 2008(Third AGM)

Appointmentof Mr. P S Rao

asManager

10.15A M

Narada Gana Sabha (Main Hall),314, TTK Road,Chennai600 018

June 04, 2007(SecondAGM)

No special resolution

was passed

10.00A M

Old No 133,New No. 19,Coral StreetChennai600 001

There was no resolution that was required to be passed by means of postal ballot by the members of the company during the year 2009-10.

9. DisclosuresDuring the year, the Company had not entered into any transaction of material nature with any of the promoters, directors, management or relatives etc., which were

The details of the related party transactions as stated in Note 17-Notes on Accounts, have been reviewed by the Audit Committee.

There was no instance of non compliance by the Company on any matters relating to the capital

(Contd.)


14

markets; nor was there any penalty / strictures imposed by the stock exchanges or SEBI or any other statutory authority during the last three years.

The Company has complied with all the mandatory requirements prescribed under revised Clause 49 of the Listing Agreement. The Company has

from the CEO and CFO on matters stated in Clause 49 (V) of the listing agreement.

The Company has complied with the following non-mandatory requirements:-

ii. adopting best practices to ensure a regime of

iii. individual communication of half-yearly results to shareholders.

No remuneration committee meeting was required to be held during the year. The other non-mandatory requirements such as Whistle Blower Policy and training for Board members have not been adopted.

The Company is evaluating the impact on the implementation of the Voluntary Guidelines on Corporate Governance issued by the Ministry of Corporate Affairs during the year 2009 for adoption in due course.

10. Means of communication

published in ”Business Standard” and “Dinamani”

and the shareholding pattern were uploaded in the websites of the stock exchanges and the Company viz., http://rane.in. During the year, there was no presentation made to the analysts / institutional investors.

11. General Shareholder Information

i. Information about director seeking re-appointment in this Annual General Meeting

Name of the Director Mr. S A Murali Prasad Mr. Anil Kumar V Epur

Father’s Name Mr. S A Venkatarama Iyer Mr. E V Ram Reddy

Date of Birth September 27, 1941 November 17, 1948

Educational A.C.A, A.I.C.W.A B.S. MEE and MBA – Cornell University, USA

Experience

Mr. Murali Prasad provides consultancy services for large and medium-sized corporate. He has over 40 years of experience.

Mr. Anil Kumar has over 34 years of industrial experience

Date of Appointment February 6, 2008 February 6, 2008

Other Directorships1. Sakthi Finance Limited2. Sam Consultancy Services Pvt.

Limited

1. Rane Diecast Limited2. B2B Software Technologies Limited

CommitteeMemberships

Chairman – Audit1. Sakthi Finance Limited

Chairman – Audit1. Rane Diecast Limited2. B2B Software Technologies Limited

Member – Audit1. Rane Brake Lining Limited

Member – Investor Service1. Rane Brake Lining Limited

Chairman – Remuneration1. Sakthi Finance Limited2. Rane Brake Lining Limited

Member – Remuneration 1. B2B Software Technologies Limited

Number of shares held NIL NIL

(Contd.)


15

ii. Annual General Meeting July 21, 2010 at 10.30 a.m.

The Music Academy, (Mini Hall)New No: 168, T.T.K Road, Royapettah, Chennai 600 014.

iii. Financial Year: 1st April - 31st March

Financial Calendar:

Board Meeting for approval of Tentative Date

Annual Accounts for the year ended March 31, 2010

May 19, 2010

Un-audited results for the 1st quarter ending June 30, 2010

July 21, 2010

Un-audited results for the 2nd quarter ending September 30, 2010

October 22, 2010

Un-audited results for the 3rd quarter ending December 31, 2010

January 25, 2011

Annual Accounts for the year ending March 31, 2011

Fourth week of May 2011

iv. Book Closure & Dividend:The book closure period is from July 14, 2010(Wednesday) to July 21, 2010 (Wednesday), both days inclusive.Dividend : The Board has recommended a

May 19, 2010. The dividend, if declared by the shareholders, will be made payable on or after July 27, 2010.

v. Listing on Stock Exchanges:

Stock Exchanges Stock Code

Madras Stock Exchange Limited (MSE)11, Second Line Beach, Chennai 600 001 RANE BRAKE

National Stock Exchange of India Ltd. (NSE)Exchange Plaza, 5th Floor, Plot No. C/1,G Block, Bandra Kurla Complex,Bandra Kurla Complex,Bandra (E), Mumbai 400 051Mumbai 400 051

RBL

Bombay Stock Exchange Limited (BSE) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001.

532987

year 2010-11 have been paid to all the stock exchanges where the shares of the company are listed.

vi. Unpaid / Unclaimed Dividends:

ended March 31, 2003 and thereafter which remain unclaimed for a period of seven years (including dividend declared by erstwhile Rane Brake Linings Limited) will be transferred to the Investor Education and Protection Fund (IEPF) of the Central Government.

March 31, 2002.Information in respect of such unclaimed dividends when due for transfer to the said fund is given below:

Year Date of declaration Last Date for claiming unpaid dividend

Due date for transfer to IEPF u/s 205A(5)

31.03.2003 25.07.2003 28.08.2010 26.09.201031.03.2004 ** 31.01.2004 04.03.2011 02.04.201131.03.2005 ** 27.01.2005 04.03.2012 02.04.201231.03. 2005 22.07.2005 26.08.2012 24.09.201231.03. 2006 ** 23.01.2006 26.02.2013 27.03.201331.03. 2006 26.07.2006 29.08.2013 27.09.201331.03. 2007 ** 23.01.2007 27.02.2014 28.03.201431.03. 2007 ** 22.03.2007 25.04.2014 24.05.201431.03.2008 22.07.2008 25.08.2015 23.09.201531.03.2009 20.07.2009 24.08.2016 22.09.201631.03.2010** 21.01.2010 25.02.2017 26.03.2017

**Interim Dividend

(Contd.)


16

vii. Share Price Data:

There has been no trading in Madras Stock Exchange Limited. The share price data as quoted on the

year viz. April 1, 2009 – March 31, 2010 is given below :

National Stock Exchange of India Ltd. (NSE) Bombay Stock Exchange Ltd. (BSE)

Share Prices (Rs.) NSE S&P Nifty Share Prices (Rs.) BSE Sensex

Month High Low High Low High Low High Low

April 2009 49.90 45.00 3,517.25 2,965.70 50.05 45.00 11,492.10 9,546.29

May 2009 67.90 47.60 4,509.40 3,478.70 67.30 47.25 14,930.54 11,621.30

June 2009 70.25 52.05 4,693.20 4,143.25 70.65 53.20 15,600.30 14,016.95

July 2009 67.75 47.00 4,669.75 3,918.75 67.95 48.50 15,732.81 13,219.99

August 2009 75.00 63.30 4,743.75 4,353.45 75.00 63.30 16,002.46 14,684.45

September 2009 92.90 67.30 5,087.60 4,576.60 89.40 67.00 17,142.52 15,356.72

October 2009 104.75 81.00 5,181.95 4,687.50 103.95 81.00 17,493.17 15,805.20

November 2009 96.00 77.80 5,138.00 4,538.50 96.00 76.60 17,290.48 15,330.56

December 2009 109.50 88.00 5,221.85 4,943.95 112.00 88.80 17,530.94 16,577.78

January 2010 128.50 100.85 5,310.85 4,766.00 128.50 101.00 17,790.33 15,982.08

February 2010 119.50 96.00 4,992.00 4,675.40 117.00 95.00 16,669.25 15,651.99

March 2010 116.95 99.05 5,329.55 4,935.35 119.80 100.15 17,793.01 16,438.45

Source : www.bseindia.com & www.nseindia.com

viii. Registrar and Transfer Agents

The contact details of the Registrar and Transfer Agents is as follows:-Integrated Enterprises (India) Ltd.,II Floor, ‘Kences Towers’,No.1, Ramakrishna Street, North Usman Road,T. Nagar, Chennai – 600 017.Phone: 28140801 – 03, Fax: 28142479, 28143378.e-mail: [email protected] of the contact person: Mr. K. Suresh Babu, Asst. Vice President

ix. Share Transfer SystemThe power to approve transfer of shares has been delegated by the Board to the Share Transfer Committee. Share transfer process is completed within 30 days from the date of receipt of transfer document by the

basis by the RTA.

(Contd.)


17

x. Distribution of shareholding as on March 31, 2010

Number of shares held

Folio SharesNumber Number

Upto 500 5954 91.39 655960 8.29501 – 1000 252 3.87 195191 2.46

1001 – 2000 134 2.06 199947 2.532001 – 5000 113 1.73 359696 4.545001 – 10000 33 0.51 240486 3.04

10001 – 20000 13 0.20 199664 2.5220001 – 50000 11 0.17 315546 3.9950001 – 100000 1 0.02 90000 1.14

100001 & above 4 0.05 5658490 71.49 Total 6515 100.00 100.00

xi. Pattern of shareholding as on March 31, 2010

Sl. No. Category No. of Folios No. of shares capitalA Promoters 12 4907812 62.01

B Banks & Financial Institutions 4 1340 0.02

C Mutual Funds 1 200 0.00

D Insurance Companies 2 770528 9.73

E Bodies Corporate 226 264292 3.34

F NRIs / OCBs 67 15009 0.19

G FII 1 2000 0.03

H Individuals 6202 1953799 24.68

Total 6515 100.00

xii. Dematerialisation of shares and liquidity The Company has entered into the necessary agreements with National Securities Depository Limited and Central Depositories Services (India) Limited for dematerialisation of the shares held by investors. As of March 31, 2010, about 95.96% of the shareholdings have been dematerialised.Demat ISIN Number:

xiii. Plant locations - given in the First page of the Annual Report.

xiv. Address for communication:

Mr. G Karthikeyan,

Rane Brake Lining Limited,Rane Corporate Centre,“Maithri” 132, Cathedral Road, ORChennai 600 086.Ph.28112472 Fax: 28112449E-mail: [email protected]

Mr. K Suresh Babu, Asst. Vice President,Integrated Enterprises (India) Ltd., II Floor, ‘Kences Towers’, No.1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai – 600 017.Phone: 28140801–03, Fax: 28142479E-mail: [email protected]

(Contd.)


18

AUDITORS’ CERTIFICATE

To the Members of Rane Brake Lining Limited

We have examined the compliance with the conditions of Corporate Governance by Rane Brake Lining Limited, for the year ended March 31, 2010, as stipulated in Clause 49 of the Listing Agreements of the Company with stock exchanges in India with the relevant records and documents maintained by the Company and furnished to us for our examination and the report on Corporate Governance as approved by the Board of Directors.

The compliance with conditions of Corporate Governance is the responsibility of the Company’s management.

(as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on

Based on the aforesaid examination and according to the information and explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the

For Price Waterhouse & Co.Firm Registration Number : 007567S

Chartered Accountants

S DattaChennai PartnerMay 19, 2010 (Membership No.F14128)

To

The Members


I, hereby declare that to the best of my knowledge and information, all the Board Members and

March 31, 2010.

Place: Chennai L LakshmanDated : May 19, 2010 Manager / Director

19

AUDITORS’ REPORT TO THE MEMBERS OF RANE BRAKE LINING LIMITEDRANE BRAKE LINING LIMITED

1. We have audited the attached Balance Sheet of RANE BRAKE LINING LIMITED (the “Company”)

Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this

responsibility of the Company’s Management. Our responsibility is to express an opinion on

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance

of material misstatement. An audit includes examining, on a test basis, evidence supporting

statements. An audit also includes assessing

estimates made by Management, as well

presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (together the “Order”), issued by the Government of India in terms of Section 227 (4A) of ‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we set out in the

in paragraphs 4 and 5 of the said Order.4. Further to our comments in the Annexure referred

to in paragraph 3 above, we report that:(a) We have obtained all the information and

explanations which, to the best of our

knowledge and belief, were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

and Cash Flow Statement dealt with by this report are in agreement with the books of account;

Loss Account and Cash Flow Statement dealt with by this report have been prepared, in all material respect, in compliance with the applicable accounting standards referred to in Section 211(3C) of the Act;

(e) On the basis of written representations received from the directors and taken on record by the Board of Directors, none of the

from being appointed as a director in terms of Section 274 (1) (g) of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us,

the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, and also give a true and fair view in conformity with the accounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the

state of affairs of the company as at March 31, 2010;

date; and(iii) in the case of the Cash Flow Statement,

that date.




20

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date to the members of RANE BRAKE LINING LIMITED on

(i) (a) The Company has maintained proper records to show full particulars including quantitative details and situation of its

the management according to a phased programme designed to cover all the items over a period of three years, which we consider reasonable. Pursuant to the

carried out by the management and no material discrepancies between the book records and the physical inventory have been noticed.

Company has been disposed of during the year.

(ii) (a) The inventories of the Company at all its

the management during the year. In our

reasonable. In respect of inventories lying

obtained from the subcontractors.

(b) In our opinion, the procedures of physical

the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company has maintained proper records in respect of inventories and the discrepancies between the physical inventories and the book records, which have been properly dealt with in the books of account, were not material.

(iii) (a) The company has not granted any loans, secured or unsecured, to companies,

register maintained under Section 301 of the Act.

(b) The Company has not taken any loans, secured or unsecured, from companies,

register maintained under Section 301 of the Act.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of

sale of goods. We have not observed any major weaknesses in the aforesaid internal control system during the course of our audit.

(v) (a) In our opinion, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) With regard to transactions made in pursuance of such contracts or arrangements there are no comparable market prices as the related goods/services are considered to be of special nature as explained by the management of the Company.

(vi) In our opinion, the Company has complied with the provisions of Sections 58A and 58AA of the Act and the rules framed thereunder with regard to the deposits accepted from public and no Order under the aforesaid Sections has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) On the basis of the records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under Section 209 (1)(d) of the Act have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

21

(ix) (a) The Company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as applicable with the appropriate authorities in India .

(b) According to the records produced, at the year end there were no dues of income tax, sales tax, value added tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute except as follows

Nature of Statute Natureof Dues

Amount(Rs.000)

Forum where dispute is pending

Tamilnadu General Sales Tax Act, 1959

SalesTax 1,466

AppellateAssistantCommissioner

Tamilnadu General Sales Tax Act, 1959

SalesTax 111 Assistant

Commissioner

Central Sales Tax Act, 1956

SalesTax 1,406

AppellateAssistantCommissioner

Uttar Pradesh Trade Tax Act

SalesTax 92 Appellate Joint

CommissionerCentral Excise Act, 1944

ExciseDuty 11,614 CESTAT

Finance Act ServiceTax 10,744 CESTAT

Income Tax Act, 1961

IncomeTax 43,606

Commissionerof Income Tax (Appeals)

(x) The Company has no accumulated losses as at March 31, 2010 and it has not incurred any cash losses during the

ANNEXURE TO THE AUDITORS’ REPORT (contd.)

(xi) According to the records produced, the Company has not defaulted in repayment

bank as at the Balance Sheet date.(xii) The Company has not granted any loans

and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company has not given any guarantee for loans taken by others from

year. (xiv) On the basis of review of utilisation of

funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilisation of funds on an overall basis, in our opinion, the funds raised on short term basis have not been used for long term investment.

(xvi) The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Act.

(xvii) The Company has not issued any debentures during the year.

(xviii) During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

(xix) Clauses (xiii), (xiv), and (xx) of the aforesaid Order are not applicable to the Company.





22

BALANCE SHEET AS AT 31 MARCH 2010 As at As at

Schedule 31 March 2010 31 March 2009SOURCES OF FUNDS Rs. 000Shareholders’ FundsCapital A 79,150 72,150Reserves and Surplus B 595,199

667,349 Loan FundsSecured Loans C 277,350 555,869 Unsecured Loans D 66,906

622,775 Deferred Tax Liability (Net) 80,305 (Note 7 on Schedule T)

Total 1,370,429APPLICATION OF FUNDSFixed Assets EGross Block 1,806,857Less: Depreciation / Amortisation 1,002,235 895,501Net Block 911,356Capital Work-in-progress 15,693 43,863

915,500 955,219Investments F 25,000 - Current Assets, Loans and AdvancesInventories G 169,660 128,656Sundry Debtors H 435,715Cash and Bank Balances I 41,267Other Current Assets J 1,350Loans and Advances K 73,612

775,011 680,600 Less: Current Liabilities and ProvisionsLiabilities L 233,088 Provisions M 32,302

265,390 Net Current Assets 415,210

Total 1,370,429

Notes on Accounts TThe schedules referred to above form an integral part of these accounts

This is the Balance Sheet referred to in our report of even date For and on behalf of the BoardFor Price Waterhouse & Co.Firm Registration Number : 007567SChartered Accountants L GANESH

S DattaChairman

Partner(Membership No.F14128)Chennai G KARTHIKEYAN L LAKSHMANMay 19, 2010 Secretary Director


23

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2010 Year ended Year ended

Schedule 31 March 2010 31 March 2009Rs. ‘000

INCOMESales and Operating Revenue N 2,363,002 1,913,481Other Income O 13,765 17,982

2,376,767 1,931,463EXPENDITURECost of Goods Sold P 879,983 Employee Costs Q 294,726 Other Manufacturing, Administration and Selling Expenses R 544,240

Interest and Finance Charges S 61,362Depreciation / Amortisation 107,916

1,888,227PROFIT BEFORE TAX 43,236 Tax expense :

Current 5,000 Deferred 6,300

- 3,000 14,300

PROFIT AFTER TAX 28,936 Balance brought forward from previous year 104,688

133,624APPROPRIATIONS :

Transfer to General Reserve 10,090 2,900 Interim Dividend 30% (Previous year Nil) - Proposed Final Dividend 15 % (Previous year 20%) 15,830Tax on Dividends 6,053 2,690 Balance carried to Balance Sheet 112,204

133,624EARNINGS PER SHARE OF RS.10 EACH (Basic and Diluted) in Rs. 4.01

Notes on Accounts T

The schedules referred to above form an integral part of these accounts

For Price Waterhouse & Co.Firm Registration Number : 007567SChartered Accountants L GANESH

S DattaChairman



24

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2010 Rs. ‘000 PARTICULARS 31 March 2010 31 March 2009

(A) 43,236

Adjustment for: Depreciation / Amortisation 107,916 Interest Charges 61,362 Miscellaneous Expenditure amortised - 11,927

(5,102) Dividend Income (317) - Interest income from deposits (1,361) (985) 175,118

218,354 Adjustment for changes in working capital

Inventories (8,955) Sundry Debtors 82,634 Loans and Advances 45,060 Trade and other payables 155,799 (62,368) 56,371

Cash generated from operating activities 274,725 Direct Taxes Paid (21,394)

Net Cash from Operating Activities 253,331 (B)

Purchase of Fixed Assets (210,084) Sale proceeds of Fixed Assets 6,222 Purchase of Investments - Sale of Investments 60,000 - Interest received 1,087 Dividend received -

months / otherwise restricted (1,869) Net Cash used in Investing Activities (204,644)

(C) Increase / (Decrease) in long term loans (net) (101,316) (51,913) Proceeds from A.P Government Sales tax deferral Scheme 6,610 Increase / (Decrease) in Fixed Deposits 96,920 780 Proceeds from / (Replenishment) of Short term loans 60,000 (50,000) Net increase in Cash credit and Packing credit (236,966) 140,463 Dividend and Dividend tax paid (33,765) Proceeds from issue of share capital 35,000 - Interest paid (60,809)

Net Cash used in Financing Activities (48,634) Net Increase / (Decrease) in Cash and Cash Equivalents ( A + B + C ) (21,010) 53

(D) Cash and Cash Equivalents At the Beginning of the Year 35,360 (E) Cash and Cash Equivalents At the End of the Year 35,413

Note:Cash and Cash Equivalents at the end of the year As per Balance sheet 41,267Less: Deposits with maturity period beyond three months / otherwise restricted 5,854

35,413Cash and Cash Equivalents at the beginning of the year As per Balance sheet 39,345 Less: Deposits with maturity period beyond three months / otherwise restricted 3,985

35,360

This is the Cash Flow Statement referred to in our report of even date For and on behalf of the BoardFor Price Waterhouse & Co.Firm Registration Number : 007567SChartered Accountants L GANESH

S DattaChairman



25

As at 31 March 2010

As at 31 March 2009

Rs. ‘000SCHEDULE ACAPITALAuthorised10,000,000 Equity Shares of Rs.10 each 100,000 100,000

100,000 100,000Issued and Subscribed 7,914,980 (Previous Year : 7,214,980) Equity Shares of Rs.10 each fully paid-up 79,150 72,150

79,150 72,150

SCHEDULE BRs. ‘000

Description As at31 March 2009 Additions As at

31 March 2010Securities Premium Account - 28,000General Reserve 482,995 10,090

112,204 -595,199 -

SCHEDULE CSECURED LOANSFrom Banks

Term Loans 283,847Cash Credit and Packing Credit 271,239Short Term Loan from a bank 60,000 - Interest accrued and due 783

277,350 555,869

For Security particulars refer Note 3 on Schedule T

Schedules forming part of the Accounts

SCHEDULE DUNSECURED LOANS Fixed Deposits (Notes below) 120,375 23,455Interest free loan from A.P.Government under Sales Tax Deferral Scheme (Note 4 on Schedule T) 43,451

66,906

Notes:1. Fixed Deposits held by Directors 2,9302. Fixed Deposits repayable within one year 9,660 9,005

26

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27

UnitsAs at

31 March 2010 UnitsAs at

31 March 2009Rs. ‘000

SCHEDULE F

Non Trade Current InvestmentsMutual Fund units of Rs.10 each fully paid upHDFC Cash Management Fund-Treasury Advantage Plan-WS

25,000 - -

25,000 - Notes : 1. Market value of quoted investments 25,177 - 2. 5,981,159 units of HDFC Cash Management

Fund-Treasury Advantage Plan-WS (Cost Rs. 60,000 thousands) have been purchased and sold during the year

SCHEDULE G

Stores and Spares 11,705 11,187Raw Materials and Components 74,469Goods-in-transit 5,411Work-in-progress 31,053 23,259Finished Goods 14,330

169,660 128,656

SCHEDULE HSUNDRY DEBTORSUnsecuredDebts outstanding for a period exceeding six months

Considered Good 1,252 895Considered Doubtful 11,377

12,272Other Debts

Considered Good 434,820523,569 447,092

Less : Provision for Doubtful Debts 11,377435,715



28

SCHEDULE JOTHER CURRENT ASSETS(Unsecured - considered good)Interest accrued on Deposits 1,250 1,350Dividend accrued on Mutual Funds 177 -

1,350

SCHEDULE K

(Unsecured - considered good except otherwise stated)Advances recoverable in cash or in kind or for value to be received 25,475

Deposits (Net of doubtful deposits Rs. 3,484 thousands provided for) (Previous year : Rs.Nil) 19,672 22,570

Balances with Customs and Excise etc. 25,492

thousands) (Previous year : Rs. 13,576 thousands) 75 75

73,612

SCHEDULE LLIABILITIESAcceptances 32,295 1,593Sundry Creditors

- Due to Micro and Small Enterprises (Note 6 on Schedule T) 664

- Others 210,979211,643

Other Liabilities 15,921Unclaimed Dividends 1,205 1,362Unclaimed matured Fixed Deposits 50Fixed deposit interest paid but not encashed 13 232Interest accrued but not due on Loans / Fixed Deposits 2,287

233,088Note:There are no amounts due to Investor Education and Protection Fund

As at 31 March 2010

As at 31 March 2009

Rs. ‘000SCHEDULE ICASH AND BANK BALANCESCash on hand ( Including Cheques on hand) 14,252Balances with Scheduled Banks on

Current Accounts 11,912 21,161Deposit Accounts (Note below) 5,854

41,267Note:Deposit receipts lodged with Government Department and margin money deposits 3,906



29

As at31 March 2010

As at31 March 2009

Rs. ‘000

SCHEDULE M

Provision for Tax (Current) 417,714Less : Advance payment of Tax and Tax Deducted at Source 416,507

1,207Proposed Dividend 15,830Tax on Dividend 2,690Leave Encashment 11,316 12,575

32,302

Year ended31 March 2010

Year ended31 March 2009

Rs. ‘000

SCHEDULE N

Sales 2,158,117Less : Excise Duty 211,626 254,390Net Sales 2,357,003 1,903,727Sale of Scrap 2,997 4,704Less : Excise Duty 216 221Net Scrap Sales 4,483Sale of Material 5,943Less : Excise Duty 672Net Sale of Material 5,271

2,363,002 1,913,481



30

Year ended 31 March 2010

Year ended 31 March 2009

Rs. ‘000SCHEDULE OOTHER INCOMEDividend income from Current investments 317 -Interest on Customer overdues (Tax deducted at source Rs.177 thousands) (Previous year Rs.986 thousands)

2,083

Interest on deposits (Tax deducted at source Rs.189thousands) (Previous year Rs.197 thousands) 1,361 985

5,102Liabilities no longer required written back 7,912 4,815Others 2,695 4,997

13,765 17,982

SCHEDULE PCOST OF GOODS SOLDRaw Materials and Components Consumed * 839,894Freight inward 32,551 25,072Sub Contract charges 13,667Excise Duty on Closing Stock of Finished Goods 770 1,067Less: Excise Duty on Opening Stock of Finished Goods 1,067 2,033

(297) (966)

work-in-progress:Opening Stock:Work-in-progress 23,259 27,090Finished Goods 12,815

39,905Less: Closing Stock:Work-in-progress 31,053 23,259Finished Goods 14,330

37,589(2,272) 2,316

879,983

* Includes Cost of raw materials and components Sold 5,044

SCHEDULE QEMPLOYEE COSTSSalaries, Wages and Bonus (Note Below) 238,820Contribution to Provident and Other Funds 36,313 16,518Staff Welfare Expenses 39,388

294,726Note:

under Voluntary Retirement Scheme - 11,927



31

Year ended Year ended31 March 2010 31 March 2009

Rs. ‘000SCHEDULE ROTHER MANUFACTURING, ADMINISTRATION AND SELLING EXPENSESStores, Spares and Tools consumed (all indigenous) 33,538Power and Fuel 132,632 109,115Repairs and Maintenance :

Buildings 1,175Plant and Machinery 34,457Others 15,927 14,071

Service Contractors’ charges 27,532 25,453Rent 619 2,714Insurance 5,137 4,813Rates and Taxes 13,603 10,319Travelling and Conveyance 19,357 19,607Professional Charges 30,420Royalty and Technical Fees 24,375Packing and Forwarding 101,367 97,605Advertisement and Sales Promotion 17,478Discount and Incentive 69,965Sales Commission 13,927 12,778Directors’ Sitting Fees 915Donation 210Provision for doubtful debts 3,656 9,971Miscellaneous Expenses (Note below) 31,386

550,365Less : Expenses recovered - (6,125)

544,240Note :

-

SCHEDULE SINTEREST AND FINANCE CHARGESInterest : Term Loans 44,291Fixed Deposits (Note below) 1,788Cash Credit and Others 5,999 15,283

61,362Note :Includes interest paid to Manager -



32

SCHEDULE TNOTES ON ACCOUNTS

1.1 Basis of preparation of Financial Statements

accepted accounting principles in India and comply in all material respects with the accounting standards

Companies Act, 1956.

1.2 Use of Estimates

in India requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. The estimates and assumptions

estimates.

1.3 Fixed Assets

Fixed Assets are stated at cost of acquisition or construction, net of cenvat credit and depreciation. Cost

until the assets are ready for use. Capital work-in-progress includes cost of assets not ready for their

to the Companies Act, 1956 except for the following assets, which are depreciated at the rates indicated below.

AssetsVehicles 20.00Furniture and Fittings 20.00

33.33Laboratory Equipments 33.33Computers 25.00

Depreciation charge on additions / deletions is restricted to the period of use.

Assets individually costing Rs.10,000 or less are fully depreciated in the year of addition. Software licence fee is amortised over a period of three years.

1.5 InvestmentsCurrent Investments are valued at lower of cost and fair value.

1.6 Inventories

Stores and spares, raw materials and components are valued at cost of purchase (net of cenvat and applicable VAT credits) ascertained on moving weighted average basis. Goods in transit are valued at cost.



33

customs duty, excise duty and conversion costs and other expenses incurred for bringing the inventories to their present condition and location.

1.7 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.

At the year end all monetary assets and liabilities denominated in foreign currency are restated at contracted / closing exchange rates as applicable. Exchange differences on settlement / restatement are

the period of the contracts. Realised gains or losses on cancellation of forward contracts are recognised

Revenue expenditure on Research and Development is charged off as and when incurred.

a. Short Term

as per the Company’s scheme based on expected obligations on undiscounted basis.

b. Long term

on actuarial valuation using projected unit credit method.

c. Post retirement

accounted for as follows:

i) Provident Fund

contributions.

ii) Superannuation Fund

employees’ salary towards superannuation fund administered by Life Insurance Corporation of India (LIC) effective July 1, 2009.The Company has no further obligations for future superannuation

when due.

iii) Gratuity

is determined based on the actuarial valuation using projected unit credit method. Actuarial gains and losses comprising of experience adjustments and the effects of changes in actuarial

Schedules forming part of the AccountsNOTES ON ACCOUNTS (Contd.)


34

1.10 Revenue Recognition

Revenue from sales is recognised on despatch of goods to customers. Sales include excise duty but are net of sales returns and trade discounts and exclude sales tax.

1.11 Taxation

Provision for current tax is made based on the liability computed in accordance with the relevant tax rates and tax laws. Deferred tax is accounted for by computing the tax effect of the timing differences, which arise during the year and reverse out in the subsequent periods. Deferred tax is calculated at the tax rates enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is a virtual certainty that they will be realised in the foreseeable future and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date.

1.12 Financial instruments

by following established risk management policies including the use of derivatives. The Company enters into forward exchange contracts, where the counter party is a bank.

The forward rate contracts in foreign currencies taken in respect of highly probable forecast transactions

2. Change in Accounting Estimates

Based on the reassessment of the provisioning norms for debtors and inventory, all debts in excess of 180 days have been provided as doubtful debts as against 270 days in the previous year. In respect of

doubtful debts and non-moving inventory has increased by Rs. 1,959 thousands and Rs.3,074 thousands

3. Secured Loans

3.1 Term loans other than short term loan are secured on a pari passu basis by way of hypothecation of all the

of hypothecation of inventories and book debts.

Government of Andhra Pradesh, Commissionerate of Industries had issued to the company Eligibility

turnover of Rs.21 crores for a period of 14 years i.e. from 01.07.1998 to 30.06.2012 which would be treated as interest free loan subject to execution of agreement and other documents with the Commercial Taxes Department as per terms and conditions stipulated by the Department.



35

The Company had accordingly executed an agreement on 23rd November 1999 with the Government of Andhra Pradesh Commercial Taxes Department. However, pending creation of a charge / mortgage on all immovable properties situated at Pregnapur Village, Hyderabad, the sales tax deferred for the period from 1st January 1999 to 31st March 2010 aggregating Rs. 48,086 thousands (Rs. 43,451 thousands) has

5. Cash and Bank Balances

Current Accounts include Interest Warrant Account Rs.559 thousands (Rs. 206 thousands) and Unpaid Dividend Account Rs. 1,207 thousands (Rs. 1,365 thousands)

6. Current Liabilities

Disclosure relating to Micro and Small enterprises

Particulars 31 March 2010 31 March 2009

Total amount outstanding 664Total amount outstanding beyond the appointed date Nil NilAmount of Interest accrued and due as on March 31 on the balance outstanding beyondthe appointed date Nil NilTotal amount paid during the year beyond the appointed date 106,012 7,645Amount of interest accrued and due as on March 31 on amount paid during the yearbeyond the appointed date 122

The above information and that given in Schedule L “ Liabilities” regarding Micro and Small enterprises

with the Company.

7. Deferred TaxThe net deferred tax liability is on account of

Liability:Difference between book and tax writtendown value of Fixed Assets 99,505 96,596Assets:Voluntary Retirement Scheme 2,095 4,208Provision for expenses allowable on payment basis 8,463Others 3,166 3,620

19,633 16,291Net Deferred Tax Liability 80,305



36

31 March 2010 31 March 2009Rs. ‘000

Capital CommitmentEstimated amount of contracts remaining to be executed on capital account and not provided for (net of advance)

57,095 8,268

9. Contingent LiabilitiesClaims against the Company not acknowledged as debts 70,519 48,530

10. Other Financial InformationOutstanding Bank Guarantees 18,146Outstanding Letters of Credit 6,896

5,580

11. Amount paid / payable to AuditorsStatutory Audit 1,300 1,300Tax Audit 200 200Other Services 95 50Out of pocket expense 15 -

1,610 1,550

12. Research and Development CostCapital expenditure 4,038Revenue expenditure 28,013

13. Managerial Remuneration13.1 Remuneration to Manager

Salaries and Allowances 3,995Contribution to Provident and Other Funds 36 401Perquisites 90

4,486** Represents remuneration for part of the year

13.2 Commission payable to Chairman 1,532 -Remuneration payable to chairman requires approval of shareholders

13.3Companies Act, 1956 and calculation of commission to chairman.

-Add: Remuneration to Manager -Commission to Chariman 1,532 -Directors sitting fees -Total -Commission at 1% (Previous year : Nil) 1,532 -



37

31 March 2010 Rs’000

31 March 2009 Rs’000

Present value of obligation at the beginning of the year 42,434 50,381 3,392 3,7102,836 6,045

(31) -(4,271) (7,998)19,281 (9,704)

Present value of obligation as at the end of the year 63,641 42,434 Fair Value of plan assets at the beginning of the year 46,153 41,752

4,101 3,365 - 8,623

(4,271) (7,998)- 411

Fair value of plan assets at the end of the year 45,983 46,153Amounts recognised in the balance sheet

63,641 42,434 45,983 46,15317,658 (3,719)

- 3,719Net (asset) / liability recognised in the Balance Sheet 17,658 -

2,836 6,045 3,392 3,710

(4,101) (3,365)19,281 (10,115)

(31) 6

(3,719) 3,719

17,658 -Principal actuarial assumptions as at balance sheet date

8.00% 7.70%9.30% 9.30%8.00% 6.42%1-3% 5.23%

14. Disclosure under Accounting Standard 15 (Revised)

8.00% 7.70%8.00% 6.42%1-3% 5.23%

15. Earnings Per Share – Basic and DilutedA 100,870 28,936B 7,891,966 7,214,980

12.78 4.01

Schedules forming part of the AccountsNOTES ON ACCOUNTS


38

(c) Particulars of transactions during the year and balances as at March 31, 2010Rs. '000

DescriptionHolding

CompanyFellow

Subsidiary (RML)Key Manangement Personnel (KMP)

Relatives of(KMP) Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009Transactions during the yearTrademark Fee 12,307 9,918 - - - - - - 12,307 9,918Professional Charges 27,040 27,156 - - - - - - 27,040 27,156Reimbursement of Expenses - - 2,607 - - - - - 2,607 -RemunerationP S Rao - - - - 1,490 4,486 - - 1,490 4,486L Ganesh - - - - 1,532 - - - 1,532 -Fixed Deposits Accepted - - - - 500 - 1,850 - 2,350 -Fixed Deposits Renewed - - - - 2,580 - 500 - 3,080 -Interest on Fixed Deposits - - - - 516 - 239 - 755 -Sitting fees L Lakshman - - - - 23 - - - 23 -L Ganesh - - - - 188 - - - 188 -Harish Lakshman - - - - - - 80 - 80 -Balances as at year endFixed Deposits - - - - 5,280 - 2,950 - 8,230 -Sundry Creditors 2,970 - - - - - - - 2,970 -Advances - - 187 - - - - - 187 -

16. Segment ReportingThe company is engaged in the business of manufacture of “components for Transportation Industry” which is considered to be the only reportable business segment as per the Accounting Standard 17. As the exports are predominantly to developed countries, geographical risk is not different from domestic market and hence no separate secondary segment disclosure is required.

17. Related Party Disclosures

(a) List of Related Parties (i) Holding Company Rane Holdings Limited (RHL)(ii) Fellow subsidiaries Rane (Madras) Limited (RML) Rane Diecast Limited (RDL) Rane Engine Valve Limited (REVL)

Nisshinbo Holdings Inc.(iv) Key Management Personnel Mr. P S Rao, Manager (till May 31,2009) under the Companies Act, 1956 Mr. L Lakshman Manager (with effect from June 1, 2009) under the

Companies Act, 1956 without remuneration Mr. L Ganesh, Chairman(v) Relatives of Key Management Mrs. Pushpa Lakshman, Mr. Harish Lakshman,

Personnel (L Lakshman and L Ganesh) Mrs. Hema C Kumar, Mrs. Vanaja Aghoram and Mrs. Shanthi Narayan

(b) The above information regarding related parties have been determined to the extent such parties have



39

31 March 2010Quantity

31 March 2009Quantity

A Particulars of goods produceda. Licensed capacity per annum MT 11,579 11,579

(Excluding Non - Asbestos products for which industriallicense is not required)

management) MT 18,892

000 Nos. 320 267d. Production 000 Nos. 25,083e. Sales 000 Nos. 25,030

000 Nos. 320B Raw materials and Components consumed Quantity Quantity Rs. ‘000

a. Asbestos MT 127,366 4,524 115,388b. Chemicals & Resins MT 11,255 8,607 554,593c. Steel Components 000 Nos. 10,376 162,560d. Others* 7,353

Total 839,894* (Individually less than 10% of total consumption)

C Raw Materials and Components %a. Imported 37.7 316,929b. Indigenous 55.5 62.3 522,965

Total 100.0 100.0 839,894D

a. Raw Materials and Components 293,001b. Capital Goods 5,464

Total 298,465E Expenditure in foreign currency (on payment basis)

a. Royalty (net of tax) 17,339 13,020b. Technical Fees (net of tax) 7,748c. Travelling 233 347d. Sales Commission 1,945e. Professional and consultancy charges 3,991 7,530

F Remittance in foreign currency on account of DividendNo. of Non Resident Share Holders Nos 1 1No. of Shares held Nos 721,500Dividend remitted during the year (Rs. ‘000)For 2007-08 (Final) - 2,886For 2008-09 (Final) 3,190 -For 2009-10 (Interim) -

G Earnings in foreign exchangeFOB value of Exports 143,044

19.

Signature to Schedules A to TFor Price Waterhouse & Co. For and on behalf of the BoardFirm Registration Number : 007567SChartered Accountants L GANESH

S DattaChairman




40

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I Registration DetailsRegistration No. U 63011 TN 2004 PLC 054948Balance Sheet Date 31.03.2010State Code 18

II Capital Raised during the year (Rupees in thousands)Public Issue NilRights Issue NilBonus Issue NilPrivate Placement 7,000

III Position of Mobilisation and Deployment of Funds (Rupees in thousands)Total Liabilities 1,715,511Total Assets 1,715,511Source of FundsPaid-up Capital 79,150Reserves and Surplus 682,399Secured Loans 277,350Unsecured Loans 168,461Deferred Tax Liability 79,872Application of FundsNet Fixed Assets 915,500Investments 25,000Net Current Assets 346,732Misc. Expenditure -Performance of the Company (Rupees in thousands)Turnover (including Other Income) 2,376,767Total Expenditure 2,227,440

149,327100,870

Earnings per Share Rs. 12.78Dividend rate % 45Generic names of three principal products / services of the Company (as per monetary terms)Item Code No. (ITC Code) 681390.10Product Description Asbestos Friction MaterialsItem Code No. (ITC Code) 87.08

Product Description Parts & Accessories of motor vehiclesAsbestos Free Friction Materials

Item Code No. (ITC Code) 8607.29Product Description Railway Brakes & Parts there of-Others

Rane Brake Lining Limited‘Maithri’, 132, Cathedral Road, Chennai 600 086.

5th Annual General Meeting at 10.30 a.m. on Wednesday, July 21, 2010 at The Music Academy (Mini Hall), New No.168, TTK Road, Royapettah, Chennai 600 014.

ATTENDANCE SLIP

No. of No. D P ID No. Client ID No.

Annual General Meeting

BLOCK LETTERS

...............................................................................................................

Rane Brake Lining Limited ‘Maithri’, 132, Cathedral Road, Chennai 600 086.

PROXY FORM

RANE BRAKE LINING LIMITED,

behalf at the 5th Annual General Meeting of the Company to be held at 10.30 a.m. on Wednesday, July 21, 2010

No. of D P ID No. Client ID No.

If undelivered please return to:

Rane Brake Lining Limited“MAITHRI”, No.132, Cathedral Road,Chennai - 600 086

Book PostUnder Certificate of Posting

Prin

ted

at P

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hop

Pvt

. Ltd

., P

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44 -

4359

0504

/ 05

5dqh %udnh /lqlqj /lplwhg · rane brake lining limited 3 notice is hereby given that the fifth...

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