CONQUERING CHALLENGES

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					RANE HOLDINGS LIMITED
ANNUAL REPORT 2008-09




CONQUERING CHALLENGES
Forward-looking statement
In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed
investment decisions. This report and other statements - written and oral - that we periodically make contain forward-looking statements that set
out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by
using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with
any discussion of future performance.

We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The
achievement of results is subject to risks, uncertainties and the underlying assumptions undergoing change. Should known or unknown risks or
uncertainties materialize, or should underlying assumptions not materialise, actual results could vary materially from those anticipated, estimated
or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.




Contents


02                                                                             34
Chairman’s overview                                                            Financial Highlights and Balance Sheet Summary

04                                                                             35
Milestones                                                                     Auditors’ Report


06                                                                             38
                                                                               Balance Sheet
Highlights, 2008-09

08                                                                             39
                                                                               Profit and Loss Account
Products, companies and markets

16                                                                             51
                                                                               Cash Flow Statement
Report of the Directors

23                                                                             52
Corporate Governance                                                           Balance Sheet Abstract

32                                                                             53
Financial Information of Subsidiary Companies                                  Consolidated Financial Statements
     RANE HOLDINGS LIMITED



     Information about directors seeking appointment / re-appointment in this Annual General Meeting in respect of item nos. 3 , 4 & 6
     of the Notice (In accordance with Clause 49 IV of the Listing Agreement)

                                  Item No. 3                             Item No. 4                              Item No. 6
     Name of the Director         Mr. Harish Lakshman                    Mr. Krishnan S Waran                    Mr. Ravi Vira Gupta

     Father’s name                Mr. L Lakshman                         Mr. K Appu Iyer                         Late Shri Kanti Vira Gupta

     Date of birth                February 12, 1974                      December 13, 1945                       November 19, 1937

     Educational qualifications   B.E., MSM                              Post -graduate in Commerce              B.A (Hons)
                                                                         and Financial Management

     Experience                   Mr. Harish Lakshman has 10 years       Mr. Krishnan S Waran aged               Mr. Ravi Vira Gupta has over
                                  of experience in his profession and    64 years is a Financial Consultant.     46 years of experience in
                                  currently he is Managing Director      He has 39 years of experience           his profession.
                                  of Rane TRW Steering Systems           in his profession.
                                  Limited.

     Date of appointment          May 19, 2004                           January 30, 2004                        June 04, 2009

     Other directorships          1. Rane TRW Steering Systems           1. Rane Investments Limited             1. Goodyear India Limited
                                     Limited                             2. Goa Glass Fibre Limited              2. Seshaseyee Paper & Board Ltd.
                                  2. Rane (Madras) Limited               3. Gitanjali Gems Limited               3. Honda Siel Power Products
                                  3. Rane Brake Lining Limited           4. Interactive Relative International      Limited
                                  4. Rane Engine Valve Limited              (P) Limited                          4. DCM Engineering Limited
                                  5. Rane Investments Limited            5. Interactive Entertainment (P)        5. Mawana Sugars Limited
                                  6. Rane NSK Steering Systems              Limited                              6. Delhi Safe Deposit Company
                                     Limited                             6. Sangamam Homes (P) Limited              Limited
                                  7. Rane Diecast Limited                   Digital Brands India Private         7. Ambit Holdings Pvt. Limited
                                  8. JMA Rane Marketing Limited             Limited                              8. India Value Fund Advisors Pvt.
                                  9. Savithur Enterprises Pvt. Limited   7. Digital Brands India Private            Limited
                                                                            Limited                              9. IVF Advisors Pvt. Limited
                                  10.Broadvision Perspectives India
                                     Private Limited
                                  11.Broadvision Services Private
                                     Limited

     Committee Memberships        Member – Audit                         Member – Audit                          Chairman – Audit
                                  1. Rane Diecast Limited                1. Gitanjali Gems Limited               1. Goodyear India Limited
                                  Member – Investors’ Service            Chairman – Audit                        2. Seshaseyee Paper & Board Ltd.
                                  1. Rane (Madras) Limited               1. Rane Holdings Limited                Member – Audit
                                  2 Rane Holdings Limited                2. Goa Glass Fibre Limited              1. Honda Siel Power Products
                                                                                                                    Limited
                                                                                                                 Member – Investor Service
                                                                                                                 1. Goodyear India Limited

     No of shares held            107,317                                Nil                                     Nil


                                                                                                                              By Order of the Board
                                                                                                                       For Rane Holdings Limited



     Place: Chennai                                                                                                                           C Siva
     Date: June 4, 2009                                                                                                                   Secretary




iv
                                                             Annual Report 2008-09




CONQUERING
CHALLENGES
WEAK DEMAND. RISING INPUT COST. VOLATILE CURRENCIES.
INVENTORY PILE-UP.

EACH ONE CAN BE BUSINESS-THREATENING BY ITSELF. AND WHEN
THEY HAPPEN TOGETHER - AS THEY DID IN 2008-09 - THE RESULT
WAS ONE OF THE MOST CHALLENGING YEARS IN MEMORY.

INDIA WAS NOT INSULATED FROM THIS PHENOMENON.

AT RANE GROUP, WE RESPONDED TO THIS REALITY WITH AN
OVERRIDING PRIORITY: ‘NEVER LOSE FOCUS… FROM CORE
COMPETENCE, CORE VALUES AND CORE RESOURCES’.

WE OPTIMISED THE USE OF RESOURCES, INSTITUTIONALISED COST-
REDUCTION, STRENGTHENED CASH, CAPITAL AND CREDIT
MANAGEMENT, AND ENRICHED INTELLECTUAL CAPITAL.

THE RESULT: A BUSINESS MODEL THAT IS LEANER AND BETTER
EQUIPPED TO ADDRESS THE CHALLENGES OF MARKET CYCLES.
    RANE HOLDINGS LIMITED


    Chairman’s overview


    “DESPITE
                                        How did the global economic slowdown                   How did the Company address this scenario?
                                        affect the automobile industry?                        We re-examined our customer mix, export
                                        The USD 2.5 bn Indian auto components industry         potential and people productivity (warranting

    CHALLENGES,                         experienced robust growth of 25% to 30% over
                                        the four years until the middle of the last year.
                                                                                               redeployment and transfer). We calibrated policies
                                                                                               and procedures – no replacement for retirements


    WE WOULD
                                        Although signs of an export slowdown were              is one example – to emerge leaner. We froze
                                        visible as early as July 2008, the industry            capital expenditure from November 2008
                                        sustained healthy margins till September 2008.         onwards, except in critical areas like maintenance.


    REMAIN
                                        Only when the collapse commenced from October          Even as this was happening, we trained
                                        2008 onwards did we see unprecedented gloom            aggressively to widen intellectual bandwidth; we
                                        building up. The double-edged impact of market         documented all plant savings and shared them

    STEADFAST IN                        slowdown and currency volatility affected the US
                                        and European automotive sectors; the impact
                                                                                               across the organisation. The result is that we
                                                                                               emerged stronger even as the business


    OUR VISION TO
                                        extended to India, though not as severely.             environment remained weak.
                                        Although the commercial vehicle segment was
                                        significantly affected, other segments witnessed       What were the lessons from this slowdown?


    REINFORCE OUR                       marginal growth or declines. The commercial            One important lesson was that the more flexible
                                        vehicle segment slowdown can be attributed to          you are, the quicker your response speed.
                                                                                               Consider this: Deutz (Germany), the single largest

    POSITION AS A
                                        lower government spending on infrastructure and
                                        the liquidity crisis, though the Indian economy as a   customer of Rane Engine Valve, reduced its
                                        whole fared relatively better. Notwithstanding         requirement by 50% from July 2008. We


    MAJOR
                                        these adversities, most of Rane’s businesses           responded immediately with a changed product
                                        reported growth.                                       mix and the result is that we now manufacture six
                                                                                               different valves for other domestic and


    COMPONENT                           What was the scenario after October 2008?
                                        Following inventory corrections, the commercial
                                                                                               international customers.
                                                                                               The other important learning was in the area of


    PLAYER IN THE
                                        vehicle industry now operates at half its capacity.    foreign exchange policy. We have now put in
                                        An upturn will be dependent on infrastructure          place a policy to not only manage forex risks but
                                        spend and credit availability and we do not see the    also associated sales risks.


    DOMESTIC AND
                                        growth of 2007-08 levels happening in the current
                                                                                               As a result, I would state that our flexibility and
                                        year.
                                                                                               speed in responding to changing realities helped


    INTERNATIONAL
                                        The global car segment is reviving slowly following    us emerge stronger.
                                        inventory correction by major automakers and the
                                        rising incidence of scheme-driven consumer             What were the highlights of 2008-09?


    MARKETS,                            demand. The general consensus is that the
                                        domestic market has bottomed out during the
                                                                                               A highlight during the year was the launch of Electric
                                                                                               Power Steering (EPS) in October 2008 through a


    GOING AHEAD.”
                                        third quarter of 2008-09 and if this demand            modern plant in Bawal (Haryana). Currently, we
                                        sustains into the second quarter of 2009-10, then      supply EPS products to Maruti Suzuki’s A Star cars,
                                        that would be considered a healthy revival.            which enjoy visibility in the domestic and overseas
    From the desk of Mr. L Lakshman,    Our export-dependent Group companies: Rane             markets.
    Executive Chairman, Rane Holdings   Engine Valve and Rane (Madras) were affected           The other significant development was the
    Limited                             from July 2008 onwards, while others reported a        commencement of engine valve production at a
                                        revenue decline from October 2008 onwards. There       new plant near Tiruchy for onward supply to
                                        was a 30-50% decline in exports and our                Volkswagen (German operations). I am happy to
                                        understanding is that the pain is expected to          state that REVL was awarded the Volkswagen
                                        prolong.                                               Group Award for sheer reliability.
                                        Last year, the prices of steel and petroleum-based     Besides, Rane Brake Lining inaugurated a state-of-
                                        products increased and while we recovered most         the-art disc pad manufacturing plant near Tiruchy,
                                        of it from customers, it was always so with a time     leveraging technical know-how from Nisshinbo
                                        lag. The result was that we ended up absorbing         Industries, Japan. Supplies from this plant
                                        cost differential, for a few quarters.                 commenced, enhancing our potential to secure
                                                                                               more Japanese OEM orders.


2
                                                                                                                                    Annual Report 2008-09



What are your priorities for the year ahead?


                                                          BUSINESS CHALLENGES FOR 2009
First, a word on the industry. India’s auto industry is
heading for consolidation, which is a good sign.
India can still achieve the ambitious USD 145 bn
revenue target by 2016, enunciated in the
                                                          Demand pressures                                    Cash flow and liquidity pressures from
Automotive Mission Plan, if infrastructural
                                                          The demand outlook for India’s component            working capital
bottlenecks and archaic labour laws are reformed.
                                                          sector remains subdued, the players focused on      OEMs are extending their payment cycles to
The domestic auto-component industry looks                the commercial vehicle (CV) segment likely to       auto component players, increasing working
forward to policy directions from the new                 be more severely impacted than those with           capital outlay. Exporters face the risk of a
government. Given the right stimulus, we believe
                                                          diversified product and customer profiles.          deteriorating financial profile of international
the Indian economy will resume its robust growth.
                                                          Component manufacturers with a strong after-        majors, potentially limiting bank credit. Working
However, the immediate export outlook does not
                                                          market sales component could be in a better         capital needs have also increased due to high
hold promise even though well placed companies
                                                          position and relatively less affected.              inventories.
will capitalise when markets rebound.
                                                                                                              Capex and high leverage accentuate
Our priority will be to remain profitable even if         Margin pressures on low capacity
                                                                                                              financial risks in the near term
conditions turn adverse. We believe this is possible      utilisation
as a result of several management actions. With                                                               The cash flows of component makers are likely
                                                          Most auto OEMs are demanding deeper price
the benefit of wisdom acquired, we expect to                                                                  to be stretched over CY’09 in view of sluggish
                                                          cuts from vendors already suffering from low-
manage the impact of exchange volatility better.                                                              demand and higher working capital
                                                          capacity utilisation. Many companies are also
Our new business development efforts will                                                                     requirements (likely to be financed through
                                                          nursing large idle capacities built over CY’08 in
continue but given the world market scenario, we                                                              debt). While some component manufacturers
                                                          anticipation of export orders. Softer commodity
do not expect any significant breakthrough during                                                             have deferred their expansions (in line with
                                                          prices could help, once higher cost inventories
the year ahead.                                                                                               OEMs), those that commissioned their
                                                          are liquidated. However, price cuts beyond
                                                                                                              capacities are yet to achieve targeted utilisation
What is your outlook for the auto component               current levels would probably be limited as many
                                                                                                              levels.
industry in general and the Rane Group in                 component makers already extended major price
particular?                                               concessions in CY’08.
On account of demand and margin pressures, 2009
will be difficult for Indian auto component
manufacturers. Economic revival following
government impetus could have a favourable
impact. However, being a member of the global
community, we will be subject to cross-currents in
the world’s leading economies. In that context, we
believe Rane is relatively better placed, thanks to
our diversified portfolio of products and markets.

What is your take on auto component imports
from China?
This is of serious concern for all domestic players
and tops the agenda of ACMA steering
committees. Chinese costs certainly suggest
dumping. Despite their WTO obligations, they seem
to find ways to encourage and support local
industry, which is something we can draw lessons
from.

What about quality and warranty issues with
Chinese products?
We think their quality just about meets basic
requirements and many of our customers who
expect us to operate at below 100 ppm, clearly see
no advantage in importing from China.



                                                                                                                                                                   3
    RANE HOLDINGS LIMITED




    RANE GROUP’S SIGNIFICANT
    MARKET PRESENCE AND SHARE
    ARE THE RESULT OF A CULTURE
    OF SUSTAINED PRODUCT-
    PROCESS EXCELLENCE.
       Lineage                                                  Location                                                   Market presence
       • Founded in 1929 to cater to the distribution           • Pan-India presence with 24 manufacturing                 • Globally benchmarked technological
       of automobiles and spare parts                           facilities across 7 states                                 capabilities and continuous quality improvement
       • Diversified into auto-component                        • Headquartered in Chennai, India                          reinforce domestic and global footprint
       manufacture in 1959                                      • Listed on the Bombay Stock Exchange and                  • Marketing network comprises dedicated
       • Consolidated into Rane Holdings Limited in             the National Stock Exchange                                marketing teams for domestic and export
       2008 (parent of Group companies like Rane                                                                           markets. The Company exports more than
       Engine Valve Limited, Kar Mobiles Limited,               Products                                                   17.5% of its manufactured products
       Rane Brake Lining Limited, Rane (Madras)                 • Driven by a philosophy of continuous                     • Offers innovative auto-component solutions
       Limited, Rane Diecast Limited, Rane NSK                  improvement and specialisation in automotive               with dominant market share in OEMs
       Steering Systems Limited and Rane TRW                    component design and manufacture
       Steering Systems Limited)                                                                                           Technology
                                                                • Diverse product portfolio comprises steering
       • Promoters held a 42.68% stake in the                   gear products (manual and power steering                   • Leverages technology alliances with
       Company’s equity (as on March 31, 2009)                  gear), steering linkage products, engine valves,           renowned auto-industry players
                                                                friction material products (brake lining, disc                – TRW Inc. (the US)
                                                                pad and clutch facing) and occupant-restraint                 – NSK (Japan)
                                                                products (seat belt)                                          – Nisshinbo Industries Inc. (Japan)
                                                                                                                           • Strengthened competencies through
                                                                                                                           internationally benchmarked technology transfer
                                                                                                                           and training




    MILESTONES
    1929                 1959                   1960              1964                   1974                  1975                 1987                  1991
    Incorporated to      Diversified into the   Extended into     Initiated friction     Founded Kar           Initiated manual     Formed a joint        Formed a joint
    cater to the         manufacture of IC      tie-rod end       materials              Mobiles Limited       steering gears       venture with TRW      venture with JMA
    distribution of      engine valves          manufacture       manufacture            for automotive and    manufacture          to manufacture        for auto
    automobiles and                                                                      large valve                                power steering        component
    spare parts                                                                          manufacture                                systems               distribution




4
                                                                                                                                    Annual Report 2008-09




                                                                                                                Awards
                                                                                                                • Awarded the prestigious ‘Volkswagen Group
                                                                                                                Award 2008’ as one of the most important
                                                                                                                business partners (Rane Engine Valve Limited)
                                                                                                                • Received the ‘Regional Award for Excellence
                                                                                                                in Training’ from the Employer Branding Institute




1995                 2000                2003                2005                             2006 2007                                             2008
Initiated            Institutionalised   Received the        Awarded the Deming Prize for     Implemented   Awarded the prestigious Deming          Consolidated
occupant-restraint   TQM under the       prestigious         Rane Engine Valve Ltd and        ERP across    Prize for Rane (Madras) Ltd, the        investments in
system               guidance of JUSE,   Deming Prize for    Rane TRW Steering System         all Group     fourth Group company to receive the     Rane Holdings
manufacture          Japan               Rane Brake Lining   Ltd (Steering Gear Division)     companies     coveted international recognition       Limited
                                         Ltd                 Invested in high-pressure
                                                             aluminium die-casting products


                                                                                                                                                                     5
    RANE HOLDINGS LIMITED




    HIGHLIGHTS, 2008-09




    FINANCIAL
    2.6%                             9%
    decline in turnover from         increase in Group exports
    Rs. 14,021 mn in 2007-08         from Rs. 1,964 mn in
    to Rs. 13,657 mn                 2007-08 to Rs. 2,155 mn



      Forayed into new technologies by            Collaborated with Nisshinbo            Upgraded technology at the
      inaugurating Rane NSK Steering              Industries Inc., Japan, for a state-   state-of-the-art engine valve
      Systems Limited’s Bawal plant               of-the-art brake lining plant at       plant at Tiruchy, Tamil Nadu
      for passenger car electronic                Tiruchy, Tamil Nadu
      power steering systems




      Adopted efficient HR initiatives,           Established the PSG Rane Centre        Commenced supply of auto         Received the ‘Regional Award for
      restructuring managerial                    for Manufacturing Systems at the       components to TATA’s small car   Excellence in Training’ from the
      bandwidth and creating a robust             PSG College of Technology,             Nano; bagged the contract for    Employer Branding Institute for
      leadership pipeline of people,              Coimbatore, reinforcing industry-      supplying technologically        Group performance; Rane Engine
      performance and potential                   institute collaboration                advanced seat belts to Maruti    Valve Limited was conferred the
                                                                                         Suzuki                           ‘Volkswagen Group Award 2008’
                                                                                                                          for being one of the best
                                                                                                                          suppliers




6
    04-05                                        11,232
    05-06                                           11,933
    06-07                                                           13,766

    07-08                                                            14,021




                                                                                Turnover (in mn)
    08-09                                                       13,657




    04-05                  1191
    05-06                         1379
    06-07                                 1660




                                                                                Exports (in mn)
    07-08                                          1964
    08-09                                                    2155




    04-05                                                    1039
    05-06                                                    1022
    06-07                                                                1164

    07-08                                              963




                                                                                Profit after tax (in mn)
    08-09       256




    04-05                                                           37
    05-06                                               33
    06-07                                         31

    07-08             17
    08-09       8




    04-05                                                                34
    05-06                                         27
    06-07                                         27

    07-08                            21
                                                                                                                                         Annual Report 2008-09




    08-09   5




7
                                                                                Return on operating assets (%) Return on net worth (%)
    RANE HOLDINGS LIMITED




    SHAREHOLDING PATTERN
    AND SERVICES
                                                                                                                  Rane Holdings Limited


    Rane Holdings Limited (RHL) is the holding company
                                                                   Rane Engine       Kar       Rane Brake             Rane             Rane              Rane     JMA Rane
    of the Rane Group. A listed entity, it owns equity                Valve        Mobiles       Lining           Investments        (Madras)           Diecast   Marketing
                                                                     Limited       Limited      Limited              Limited          Limited           Limited    Limited
    stakes in Group companies. A Group restructuring
    exercise led to the inception of the Company in 2005
    to consolidate and eliminate cross holdings among                                   Rane NSK Steering                         Rane TRW Steering
    Group companies.                                                                     Systems Limited                           Systems Limited

    The Company’s Board of Directors drives its strategic
    vision, value system and management practices. The
    Company is also involved in business development,
    information system support, training and
    development and investor-related services.




    Commodities, companies and markets                          Rane Group of companies and their products
                                                                                         Group companies                 Activities / products
    AUTOMOTIVE COMPONENT                                        Listed companies         Rane Holdings Ltd               Holding company


    MANUFACTURE –                                                                        Rane (Madras) Ltd               Manual steering
                                                                                                                         and suspension


    OUR CORE COMPETENCE
                                                                                                                         systems

                                                                                         Rane Brake Lining Ltd           Brake linings, disc pads and
                                                                                                                         composite brake blocks
    The Rane Group’s philosophy of continuous
    improvement and specialisation comprises the design
    and manufacture of automotive components like                                        Rane Engine Valve Ltd           Valves, valve guides and tappets
    steering gear products (manual and power steering
    gear), steering linkage products, engine valves, friction                            Kar Mobiles Ltd                 Engine valves for large marine /
    material products (brake lining, disc pad and clutch                                                                 diesel engines, including
    facing) and occupant-restraint products (seat belts).                                                                electromotive application

                                                                Joint venture            Rane NSK Steering               Solid and energy absorbing
                                                                companies                Systems Ltd                     steering columns and intermediate
                                                                                                                         shafts, among others.

                                                                                         Rane TRW Steering               Power steering systems and
                                                                                         Systems Ltd                     seat belt systems



                                                                                         JMA Rane Marketing Ltd          Distribution company for auto
                                                                                                                         components (Rane and others)


                                                                Unlisted companies       Rane Diecast Ltd                Machined diecast products




8
                                                                                                                                         Annual Report 2008-09




LEVERAGING
TECHNOLOGY ALLIANCES
TO DELIVER SUPERIOR
                                                        TRW Automotive US LLC                  NSK, Japan                             Nisshinbo Industries
                                                        Power steering systems, ball joints,   Energy absorbing steering columns      Inc., Japan

PERFORMANCE                                             seat belt systems, engine valves       and manual RCB steering gears          Brake linings, disc pads, clutch facings


Our technology partners TRW Inc. (the US), NSK          TRW Automotive is a leading            NSK Ltd is recognised as an            Nisshinbo Ind. Ltd is a reputed
(Japan) and Nisshinbo Industries (Japan) helped build   automotive supplier with a USD         industry major in the                  manufacturer of friction
core competencies. Their insights, technology           15-bn turnover in 2008. The            manufacture of bearings,               materials for automotive
transfers and absorptions enabled us to improve         growing size of its transaction        automotive components and              brakes, brake assemblies and
product offerings.                                      volume vindicates its global           precision machinery and parts.         anti-lock brakes systems. The
                                                        client-serving capabilities (40        It recorded a robust 772-bn yen        Company generated a 322-bn
                                                        major vehicle manufacturers            (USD 7.72 bn) turnover in 2008.        yen (USD 3.22 bn) turnover in
                                                        and 250 nameplates), emerging          Its global clientele is spread         2007-08. It also started
                                                        as a leader in all primary             across 25 countries and                manufacturing fibres and
                                                        product categories.                    manufacturing operations are           textiles, chemicals, paper
                                                                                               conducted from 30 international        products and precision
                                                                                               locations.                             instruments to evolve its
                                                                                                                                      business verticals.




Benefits of alliances
                                                        Global clients
The alliance with global technology leaders enhanced
the Company’s business viability, fortifying its        Case New Holland (the UK), Deutz, Volkswagen (Germany), John Deere (the US), GM (South
technology quotient through sharing and learning.       Africa), ElectroMotive (USA), Yamaha (Asia), TRW Automotive (Europe and Asia), Hatz Diesel
                                                        (Germany), Kuboto (Japan), Lister Petter (UK), Kuboto (Japan), Sirm Kuboto (Thailand).
The Company expanded its global OEM customer
base to include brands like Case New Holland (the
UK), Deutz (Germany), Volkswagen (Germany), GM          Indian clients
Electromotive Division (the US) and John Deere (the
US). During the year under review, exports              Ashok Leyland, Cummins, Eicher, Escorts, Force Motors, FIAT, Ford, Hero Honda, Hindustan
constituted 17.5% of the total revenue.                 Motors, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, Renault, Swaraj Mazda,
                                                        TAFE, TATA, Toyota, TVS and Yamaha




                    Sales by product lines                                Sales by industry segments                               Sales by market segments




                                                                                                                                                                                 9
     RANE HOLDINGS LIMITED




     RANE GROUP’S CORPORATE
     SUSTAINABILITY RECONCILES
     PRE-EMPTIVE PLANNING AND
     EXECUTION EXCELLENCE.
10
                                                                        Annual Report 2008-09



Total Productive Maintenance (TPM)                 utilisation; five related to manpower utilisation
At Rane, TPM reconciles cost optimisation and      and three related to cost) to improve OEE. This
process improvement to drive product               enabled moving towards zero break-down, zero
excellence and faster turnaround. TPM              defects, zero waste and zero accidents,
comprises planned equipment maintenance and        resulting in superior products and services,
continuous manpower training to enhance            lower unit cost and flexible operations to
capabilities, which reinforce competitive          counter market volatility.
advantage, control manufacturing cost and drive
                                                   Efficient working capital management,
a holistic pan-organisational quality culture.
                                                   ensuring smooth liquidity
The Company’s Overall Equipment Effectiveness      The Group reduced inventory in raw material,
(OEE) enhanced transparency in cost structure,     work in progress, finished goods, stores and
resulting in prudent calibration and               consumables across manufacturing facilities.
rationalisation. Besides, it facilitated machine
efficiency, extended machine life-span and         Effective human empowerment, driving
maximised return on assets.                        product-process innovation
                                                   The Group’s prudent rightsizing, intelligent
Improved equipment reliability, enhancing          human resources allocation and innovative
competitive advantage
                                                   training methodologies reduced people cost
The Group eliminated 16 major losses through       and enhanced collective performance.
TPM implementation (eight related to machine




                                                                                                       11
     RANE HOLDINGS LIMITED




     RANE GROUP’S TECHNOLOGY-
     CENTRICITY, ENRICHED PRODUCT
     PORTFOLIO AND LEADERSHIP
     PIPELINE REINFORCE COUNTER-
     RECESSIONARY INITIATIVES.




12
                                                                          Annual Report 2008-09




RHL’s Rane Data Centre was established to            organisation’s senior management personnel
provide centralised ERP services, mailing            possessed multiple business/geography
solutions and institutionalised Group information    experience, accelerating leadership
security management. Following extended              development. Workers’ participation in Rane
deliberation on technology, costs and benefits,      Operators Competency Enhancement (ROCE)
the SAP system was chosen. The migration             programme enhanced business awareness,
from varied home-grown legacy systems,               institutionalising participatory growth. Training
coupled with process multiplicity across             covered around 2,438 employees (12,190
businesses and locations, represented the            person-days) across 14 locations in the area of
principal challenge. All problems were logged        change management, social skills and techno-
and categorised into unique sets in a web-           quality competence.
based integrated interface for quicker solutions.
                                                     RHL’s Rane Institute for Employee Development
The Group also implemented business                  (RIED) collaborates with Group Companies to
warehouses and business intelligence systems         institutionalise Lean Production System, Theory
for in-depth analysis. Going forward, the road       of Inventive Problem Solving (TRIZ), Low Cost
map includes systems for workflow                    Automation (LCA) and Advanced Statistical
automation, supply chain management (SCM)            Process Control (SPC) through training and
and customer relations management (CRM).             post-training support.

The Rane Data Centre is working towards              Centre of Excellence for manufacturing
certification for Information Security               systems
Management Systems (ISMS), including                 A Centre of Excellence was established at the
disaster recovery.                                   PSG College of Technology, Coimbatore – PSG-
                                                     Rane Centre for Manufacturing Systems --- to
Manufacture of superior products and                 leverage industry-institute collaboration. The
enhanced services
                                                     institution provided Rane Group professionals
• Rane NSK Steering Systems Ltd’s newly              with a globally benchmarked environment of
inaugurated Bawal plant for the manufacture of       professional excellence. The creation of
electronic power steering systems for                institutions and competencies will help the
passengar cars                                       Group capitalise on the next industry rebound.
• State-of-the-art plant for brake linings at
                                                     Result:
Tiruchy in Tamil Nadu with technical collaboration
from Nisshinbo Industries Inc., Japan                • Robust order book, translating into market
                                                     leadership for products and acquisition of new
• Globally benchmarked Tiruchy plant for             customers
engine valves manufacture in Tamil Nadu, with
advanced technologies for catering to exports        • Standardisation of processes, focused

and domestic businesses.                             problem-solving and business integration
                                                     through SAP implementation
Creating people, performance and
                                                     • The Rane Institute for Employee
potential
                                                     Development (RIED) was awarded the regional
A comprehensive review of organisational             award for ‘Excellence in Training’ by the
structure enhanced managerial bandwidth              Employer Branding Institute.
through role combination and redistribution,
increased control span and internal movements
among various companies. Over 25% of the


                                                                                                         13
     RANE HOLDINGS LIMITED




     RANE GROUP’S
     COMMUNITY
     SENSITIVITY
     AND GREEN
     ORIENTATION
     VINDICATE ITS
     FUTURISTIC
     VISION




14
                                                                          Annual Report 2008-09




Continuous investments for community               Responsible environmental management
uplift                                             • Installing a green-technology generator,
Rane Group’s CSR activities enhance education,     reducing noise pollution and smoke emission
healthcare, women empowerment, while
                                                   • Installing wind ventilators on the shop floor
supporting differently-abled persons through
                                                   roof for temperature regulation inside
Rane Foundation, a registered public charitable
trust.                                             • Commissioning a packaged sewage
                                                   treatment plant to improve recycled water
During 2008-09, Rane Foundation provided
                                                   quality for aquatic life.
financial support to Ganapathy Iyer Girl’s High
School, Gopalapuram, Chennai, to improve           • Planting over 200 trees in the factory vicinity
infrastructural facilities and also conducted a
series of teacher training programmes. The
Foundation also worked closely with
Krishnamacharya Yoga Mandiram to impart the
benefits of yoga and healthcare in rural areas
adjoining Chennai. Besides, it acquired 7.02
acres in Sethurapati village in Tiruchy where it
proposes to set up a Polytechnic College within
a couple of years.


                                                                                                       15
     RANE HOLDINGS LIMITED




     REPORT OF THE DIRECTORS



     Your Directors have pleasure in presenting their 73rd annual report together with the accounts for the year ended March 31, 2009.

     1. Financial performance
     The financial highlights of the year under review are as follows



                                                                                                                                (Rs. mn)

                                                                                                          2008-09              2007-08
     Income                                                                                                 349.67              351.18
     Profit on sale of investments                                                                               –                70.25
     Total income                                                                                           349.67              421.43
     Profit before tax                                                                                      182.85              228.56
     Provision for tax                                                                                       19.89                19.57
     Profit after tax                                                                                       162.96              208.99
     Surplus brought forward                                                                                125.75                89.39
     Transfer to Capital Redemption Reserve                                                                      –                 8.75
     Amount available for appropriation                                                                     288.71              289.63




     Your Company derived income for the year 2008-09 mainly from       equity shares for the year ended March 31, 2009. The total
     a) Service fees (Rs. 145 mn) for rendering corporate services to   amount on this account inclusive of dividend distribution tax and
     the entire group companies consisting of Finance, HR,              surcharge thereon worked out to Rs. 57.11 mn. Your directors
     Secretarial and Information Technology including maintaining       have not recommended any final dividend for the year ended
     ERP etc; b) Trade mark fee (Rs. 64 mn) for using the logo          March 31, 2009.
     “Rane” by group companies and c) Dividend income (Rs. 124
     mn) from investments in group companies which are all in the       3. Management Discussion and Analysis
     Auto Components Industry.                                          Your Company’s main activity is investing in Group companies
                                                                        which is in the Auto Components Industry and hence discussion
     2. Appropriation
                                                                        and analysis mainly of the Automotive Industry, Group
     Profit available for appropriation was Rs. 288.71 mn. The
                                                                        Companies’ performance etc., would be relevant.
     Directors declared and paid an interim dividend of 40% on the
     paid up capital of 14,277,809 of Rs.10/- each fully paid-up



16
                                                                                                             Annual Report 2008-09




a. Industry structure and developments
Automotive industry
                                                                                                                           Growth in %

 2007-08                                                                                                                    2008-09
 16          Passenger Cars                                                                                                         5
 10          Utility Vehicles                                                                                                    –11
 26          Small Commercial Vehicles (One Ton & below)                                                                           12
 6           Light Commercial Vehicles                                                                                           –24
 0           Medium and Heavy Commercial Vehicles                                                                                –35
 –10         Three Wheelers                                                                                                        –1
 –5          Two Wheelers                                                                                                           4
 2           Farm Tractors                                                                                                         –7

                                                                                    Source: Society of Indian Automobile Manufacturers.




According to Centre for Monitoring Indian Economy‘s (CMIE)         of the revenues, there was an impact on performance of group
estimate country’s Industrial Output for 2008-09 would register    companies. Rane Engine Valve Limited, Rane Madras Limited
a growth rate of less than 5% after an impressive performance      and Rane Diecast Limited were impacted more due to their
in the previous five years due to a combination of factors         significant export portfolios.
including liquidity crisis, high interest rates, contraction in
domestic demand, global recession etc. As the above table          b. Financial and operational performance
indicates, Automobile Industry was one of the worst affected       Your Company’s total income at Rs. 350 mn is more or less the
with most of the segments witnessing negative growth. While        same as last year. Service fees had marginally declined from
the Medium and Heavy Commercial Vehicles declined by 35%,          Rs. 161 mn to Rs. 145 mn due to conscious decision taken by
the Light Commercial Vehicles and Utility Vehicles also declined   your Company in response to the slowdown to reduce cost
in double digits resulting in severe recession not witnessed by    which had been passed on to the group companies. Trade
the Industry in the recent past                                    Mark fee had also marginally declined from Rs. 66 mn in the
                                                                   previous year to Rs. 64 mn for 2008-09 due to decline in sales
Global economy                                                     of some of the group companies. However, dividend from
The impact of the meltdown in United States and Europe has         Group companies increased marginally to Rs. 124 mn from
been severe. The sales of automobiles in US have fallen by as      Rs. 115 mn in the previous year.
much as 40%. Recovery predictions are not greatly encouraging.
                                                                   The profit after tax at Rs. 163 mn was lower by Rs. 46 mn
The world currency markets witnessed extreme volatility. Rane      compared to the previous year. The earnings per share at
Group’s export content to USA and Europe being around 17%          Rs.11.41 were lower than previous year’s figure of Rs. 14.56



                                                                                                                                        17
     RANE HOLDINGS LIMITED




     which contained one time profit on sale of certain investments.    Profit Before Tax had marginally declined by 5% from Rs. 41.04
                                                                        mn to Rs. 39.12 mn. The prices of valve steel, alloying materials
     c. Performance of Group companies                                  and casting materials have stabilized and started declining
     All of your Company’s investments are strategic and long term      towards the end of the year. However exchange losses on
     in nature and are exclusively in the Rane Group of companies.      account of imports of raw materials both in US dollar and
     These companies in turn operate in the domain of                   Japanese Yen currencies impacted profitability of the Company.
     manufacturing and marketing of automotive components such          The Company had taken various cost reduction measures
     as steering linkages, steering gears (manual and power),           including rationalizing manpower, more efficient management
     steering columns, seat belts, brake linings and disc pads,         of working capital including reduction of inventory, reduced
     engine valves, etc.,                                               capital expenditure in order to conserve liquidity etc. but for
                                                                        which the Company’s profitability would have been more
     A brief performance review of the subsidiary and associate
                                                                        severely affected during the year under review.
     companies for the year 2008-09 are as follows:
                                                                        The Company has successfully commissioned two production
     (I) Subsidiary companies                                           lines with a capacity of 2.5 mn valves per annum on two shifts
     i. Rane (Madras) Limited                                           basis at its new plant near Tiruchy in the state of Tamilnadu.
     Sales and Operating Revenues at Rs. 3,525 mn is almost the         Commercial production had commenced during the year.
     same as last year despite the drop in overall volume by an
                                                                        iii. Rane Diecast Limited
     average of 10% across segments. This is mainly due to the
     price increases obtained from customers against raw material       During the year under review, Rane Diecast Ltd., had achieved
     cost Increases. The sales volume has dropped across all            49% growth in turnover to Rs. 244 mn. However, the loss was
     segments, with Medium and Heavy Commercial vehicles and            higher at Rs. 68 mn due to under utilization of capacity
     Light Commercial Vehicles being the most affected with a drop      consequent to drop in exports to US in the second half of the
     of 28% and 18% respectively.                                       year and significant foreign exchange losses.

     The Operating Profit for the year under review was Rs. 12.01 mn    iv. Rane Investments Limited (RIL)
     as   against    loss   before    extra-ordinary    income    of
                                                                        Rane Investments Limited is a wholly owned subsidiary of your
     Rs. (23.80) mn in the previous year. This was an encouraging
                                                                        Company. Rane Investments Limited in turn holds 50% equity in
     performance in the light of the significant drop in volume in
                                                                        Rane TRW Steering Systems Limited, a joint venture company
     domestic market and also in exports, increasing input costs for
                                                                        with TRW Automotive JV LLC, USA and together with your
     most part of the year and the exchange rate volatility. This was
                                                                        Company, 50% in Rane NSK Steering Systems Limited, another
     achieved by aggressive cost reduction efforts and to some
                                                                        joint venture company established with NSK Ltd., Japan. Apart
     extent through price increases obtained from Customers
                                                                        from these, RIL also holds some investments in group
     towards raw material cost increases.
                                                                        companies Rane Engine Valve Ltd. and Rane Brake Lining Ltd.

     ii. Rane Engine Valve Limited                                      The sales of Rane TRW Steering Systems Ltd. at Rs. 2,859 mn
     Despite adverse situation in the domestic and export markets,      had declined by 22% overall due to a steep fall in sales in
     Rane Engine Valve’s sales and operating revenues at Rs. 2,202      Commercial Vehicles segment. Sales in the served markets of
     mn had grown by 11% over the same period in the previous           the Passenger Car and Utility Vehicles segments also witnessed
     year. The Company’s OEM performance in both domestic and           de-growth during the year under review. Profit Before Tax had
     export markets were affected towards second half of the year.      declined by 59% due to reduction in sales as well as increase
     The replacement sales had shown positive growth due to             in material cost on account of commodity price increases which
     focused attention to improve supplies.                             could not be passed on to customers. Adverse exchange rates
                                                                        variation both in US dollar as well as in Japanese Yen made


18
                                                                                                                 Annual Report 2008-09




imports costlier. The increased usage of diesel generators for        Nisshinbo Industries Inc., Japan. The state of the art plant had
augmenting power supply at the Plants consequent to severe            commenced commercial production during the year and is
power cuts in the state of Tamil Nadu has also contributed to the     expected to play a significant role in the coming years in
decline in profits for the year. However, intense focus on cost       improving the sales revenue and profitability of the Company.
management and cost reduction initiatives of both variable and
fixed costs by the management team ensured profit for the year        ii. Kar Mobiles Limited
despite the dramatic reduction in sales.                              Despite adverse situation in domestic as well as export markets,
                                                                      the Company’s sales at Rs. 972 mn was a growth of 8% over
The sales of other Joint Venture company, Rane NSK Steering
                                                                      the previous year. The Company’s OEM performance in both
Systems Ltd. had increased by 54% over the previous year
                                                                      domestic and export markets were affected towards second
mainly due to the introduction of Electric Power Steering
                                                                      half of the year. The replacement sales in both markets were
Columns (EPS) for Maruti Suzuki during the year 2008-09.
                                                                      satisfactory although signs of inventory correction in the export
Increase in material cost on account of commodity price
                                                                      market affected sales in fourth quarter.
increases, surge in Japanese Yen against Rupee adversely
impacting imports, increase in power cost due to usage of             Profit Before Tax at Rs. 15.30 mn has declined by 66% for the
generators on account of short supply of power in the state of        year under review despite increase in sales. Adverse foreign
Tamil Nadu as well as higher interest expenses consequent to          currency fluctuations, increase in material cost, higher material
steep increase in borrowings on account of investments in             wastages coupled with increase in wage cost on account of
Bawal plant etc. had contributed to increased losses in the year      provision for long term settlement and temporary disruption of
under review.                                                         production in Tumkur Plant contributed to the decline in profits.
                                                                      Interest cost had increased substantially by 64% due to
Your Company received from Rane Investments Ltd., a dividend
                                                                      hardening of rates as well as increased borrowings for meeting
of Rs. 101 mn during 2008-09 which is higher than last year’s
                                                                      capital expenditure requirements during the year under review.
Rs. 76 mn.
                                                                      The Company has taken various remedial measures including
(II) Associate companies                                              recovering price increases from customers, reducing operating
                                                                      costs like power, consumable stores, other manufacturing and
i. Rane Brake Lining Limited
                                                                      administration overheads apart from rationalising temporary
The sales and operating revenues of Rane Brake Lining Ltd., at
                                                                      workforce but for which the profitability of the Company would
Rs. 1,913 mn had increased by 6% over previous year due to
                                                                      have been more adversely affected.
growth in After Market and Railway segments. The OEM sales
declined due to slowdown particularly in Commercial Vehicles          d. Outlook
and Utility Vehicles. There was some slowdown in the export
                                                                      In the last quarter of 2008-09, the automobile industry in India
market.
                                                                      witnessed some recovery except in Commercial Vehicles. It is
Profit Before Tax declined by 61% to Rs. 43.2 mn over the             too early to predict if the slowdown has bottomed and the
previous year due to decline in sales volumes, steep increase         recovery is sustainable.
in raw materials and other input costs including power. Price
                                                                      All Rane Group companies have made a conservative operating
increases from customers across various segments and cost
                                                                      plan for the year ahead with continued focus on cost
management initiatives undertaken by the Company including
                                                                      management. The expectation is that commodities and foreign
reducing power consumption had restricted the fall in profits
                                                                      exchange rates will be less volatile this year.
further during the year under review.

The Company has successfully completed the expansion project
in Tiruchy in the state of Tamil Nadu with the active participation
and technical inputs from the Company’s collaborator,


                                                                                                                                          19
     RANE HOLDINGS LIMITED




     e. Strengths, opportunities, threats and risks                      by your Company.

     The strengths of the Rane Group companies could be                  Mitigative measures have been put in place in respect of these risks.
     summarised as follows:                                              These would be periodically reviewed by the Board of Directors.

     • Market leadership
                                                                         g. Human resource development and industrial
     • Brand equity                                                      relations
     • Human resources                                                   Your Company provides HR services for the entire Rane Group.
     • Total Quality Management (TQM).                                   Given the shortage of skill supply, this function has assumed
                                                                         greater importance than ever before.
 The continuance of global majors in USA and Europe showing
 keen interest in sourcing auto components from India based on           The HR policy and practices are constantly reshaped to meet
 cost and quality, presents an opportunity to the automotive             these newer demands. Not only better hiring practices but also
 component industry in India.                                            improved nurturing practices are in place. The Rane Institute for
                                                                         Employee Development (RIED) is a group resource that imparts
 The main threats arise out of:-
                                                                         training towards continuous enhancement of technical and
     • Further slow down in the domestic economy                         managerial skills. The group companies as a policy have
     • Slow recovery of Commercial Vehicles segment in India             adopted 2% of man days per annum to be deployed towards
     • Worsening of global recession especially in US and Europe         training and development. Your Company works in close liaison
        affecting adversely export market.                               with the group companies to meet their emergent needs. The
                                                                         total number of employees on the rolls of your Company is 49.
     • Low priced products import from China
     • Volatility in commodities and foreign exchange rates              h. Cautionary statement
                                                                         The information and opinion expressed in this report may
     f. Internal control systems and risk management
                                                                         contain certain forward looking statements, which the
     Your Company continues to engage the services of an
                                                                         management believe are true to the best of its knowledge at the
     independent agency to carry out internal audit of all the Group
                                                                         time of its preparation. Actual results may differ materially from
     companies including your own. The Audit Committee of the
                                                                         those either expressed or implied in this report.
     Board approves the audit plan in the beginning of the financial
     year in consultation with the internal auditors, the statutory      4. Consolidated financial statements
     auditors and the operating management. The findings of the
                                                                         The Ministry of Corporate Affairs, New Delhi, vide order no.:
     internal auditors are placed before the Audit Committee for
                                                                         47/157/2009- CL-III dated March 31, 2009, has granted approval
     review. The response of the operating management and counter
                                                                         that the requirement to attach various documents in respect of
     measures proposed are discussed at the Audit Committee
                                                                         the subsidiary companies, as set out in Sub-section (1) of
     meetings. The process not only seeks to ensure the reliability of
                                                                         Section 212 of the Companies Act, 1956, shall not apply to the
     control systems and compliance with laws and regulations but
                                                                         Company. Accordingly, the Balance Sheet, Profit and Loss
     also covers resource utilisation and system efficacy.
                                                                         Account and other documents of the subsidiary companies are
     Risk Management is an integral part of the business process.        not being attached with the Balance Sheet of the Company.
     Your Company has mapped the risks at the business processes
                                                                         Financial Information of the subsidiary companies, as required
     and enterprise levels and has evolved a risk management
                                                                         by the said order, is disclosed in the Annual Report. The
     framework. The main strategic risks identified were loss of
                                                                         Company will make available the annual accounts of the
     dividend income from group companies due to poor operating
                                                                         subsidiary companies and the related detailed information to any
     performance as well as loss of market value of investments held
                                                                         member of the Company who may be interested in obtaining the



20
                                                                                                                  Annual Report 2008-09




same at its registered office viz., ‘Maithri’, 132, Cathedral Road,   9. Employees
Chennai – 600 086. The annual accounts of the subsidiary
                                                                      The particulars of employees, as per Section 217 (2A) of the
companies will also be kept open for inspection by any investor
                                                                      Companies Act, 1956, read with the Companies (Particulars of
at the registered office of the Company and that of the respective
                                                                      Employees) Rules, 1975, are given in Annexure A.
subsidiary companies. The consolidated financial statements
presented by the Company include financial results of its             10. Auditors
subsidiary companies, which form part of this annual report.
                                                                      M/s D Rangaswamy & Co., Chartered Accountants, Chennai,
                                                                      the auditors of the Company retire at the ensuing Annual
5. Fixed deposits
                                                                      General Meeting and are eligible for re-appointment. The
Your Company has not accepted any deposit falling under the
                                                                      declaration under Section 224 (1B) of the Companies Act, 1956
provisions of Section 58A of the Companies Act, 1956 and the
                                                                      has been received from them.
rules framed thereunder.
                                                                      11. Directors’ responsibility statement
6. Board of Directors
                                                                      Pursuant to Section 217(2AA) of the Companies Act, 1956, the
Mr. Harish Lakshman and Mr. Krishnan S Waran retire by
                                                                      Directors hereby confirm that they have:
rotation. Mr. Harish Lakshman and Mr. Krishnan S Waran, being
eligible, have offered themselves for reappointment.                  i.    Followed the applicable accounting standards in the
                                                                            preparation of the annual accounts;
The Board of directors has co-opted Mr. Ravi Vira Gupta to the
Board as additional director and he would hold office till the date   ii. Selected such accounting policies and applied them
of the ensuing Annual General Meeting.                                      consistently and made judgments and estimates that were
                                                                            reasonable and prudent so as to give a true and fair view of the
Notice has been received from a shareholder signifying the
                                                                            state of affairs of the Company at the end of the financial year
intention to propose the appointment of Mr. Ravi Vira Gupta as
                                                                            and of the profit of the Company for the year under review;
Director of the Company, at the ensuing Annual General Meeting.
                                                                      iii. Taken proper and sufficient care for the maintenance of
7. Conservation of energy, research and                                     adequate accounting records in accordance with the provisions
development activities                                                      of the Companies Act, 1956, for safeguarding the assets of the
In view of the nature of activities of the Company, provisions of           Company and detecting fraud and other irregularities;
Section 217(1)(e) of the Companies Act, 1956 are not applicable.      iv. Prepared the accounts for the financial year on a ‘going
                                                                            concern’ basis.
8. Foreign exchange earnings and outgo
There was no foreign exchange earned during 2008-09.The               12. Corporate Governance Report
foreign exchange outgo was Rs. 8.70 mn on account of                  A detailed report on Corporate Governance is attached in
professional / consultancy charges and foreign travel.                Annexure B.




                                                                                                          For and on behalf of the Board



Chennai                                                                          L Lakshman                                     L Ganesh
June 4, 2009                                                               Executive Chairman                              Vice Chairman




                                                                                                                                               21
     RANE HOLDINGS LIMITED




     Annexure - A to the Report of the Directors
     PARTICULARS AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 ATTACHED TO AND
     FORMING PART OF THE DIRECTORS' REPORT




     Sl.No. Name              Age Designation/          Remuneration       Qualification Experience         Date of          Particulars
                                    Nature of Duties           (Rs.)                        (Years)   commencement               of last
                                                                                                      of employment        employment
     1     L Lakshman           62 Executive Chairman      9,309,293      B.E. Executive        39       01.04.2008         Rane Brake
                                                                       MBA from London                                    Lining Limited
                                                                        Business School                               Managing Director

     2     S Venkataraman       51 VP - Corporate          2,853,636    B.Com., AICWA,          31       11-03-1999          Rane TRW
                                    Services                               ACS, PGDBA                                 Steering Systems
                                                                                                                                Limited
                                                                                                                           VP - Finance
                                                                                                                            & Secretary

     3     R Venkatanarayanan 48 VP - HRD                  2,805,567      B.Sc, MHRM,           24       06-01-2006       Prasad Group
                                                                              DSW(LW)                                         Head HR


     Notes :
     1. Remuneration as shown above includes salary, allowances, commission, contribution to provident and other funds
     2. The services of employees are contractural.
     3. Mr. L Lakshman is related to Mr. L Ganesh, Vice Chairman and Mr. Harish Lakshman, Director



                                                                                                        For and on behalf of the Board



     Chennai                                                                     L Lakshman                                 L Ganesh
     June 4, 2009                                                         Executive Chairman                            Vice Chairman




22
                                                                                                          Annual Report 2008-09




Annexure - B to the Report of the Directors

CORPORATE GOVERNANCE


1. Philosophy on Code of Governance                                  Independent and Non-Executive Directors
The cornerstone of the philosophy of Governance adopted by           Mr. V Narayanan
the Board at all times was based on integrity, transparency and      Mr. Krishnan S Waran
fairness in all its dealings. The Company will continue to seek      Mr. D Vijay Mohan
enhancement to shareholder value within the framework of             Mr. Shujaat Khan
business ethics, regulatory compliances and contribution to the      Mr. Ravi Vira Gupta1
society. The Rane Group has a clearly defined policy document
                                                                     Mr. L Lakshman is related to Mr. L Ganesh and Mr. Harish
titled “Ethical Standards of Behaviour” outlining the value
                                                                     Lakshman.
system of the Company and defines obligations of each of its
employees to the Company.                                            3. Details of attendance at Board meetings
                                                                     and last AGM and details of memberships in
2. Board of Directors                                                other Boards and Board committees
The composition of the Board is given below
                                                                     The Board met six times during the financial year on June 9,
                                                                     2008, July 30, 2008, October 29, 2008, January 29, 2009,
Promoter Group
                                                                     February 28, 2009 and March 24, 2009.
Mr. L Lakshman, Executive Chairman
Mr. L Ganesh, Non-Executive Director
Mr. Harish Lakshman, Non-Executive Director



 Name of the Director         Number of Board          Whether attended          Membership in               Committee @
                             meetings attended                    last AGM       other Boards $   Member-ship     Chairman-ship

 Mr. L Lakshman                               6                       Yes                   10               10               5
 Mr. L Ganesh                                 6                       Yes                   11               10               3
 Mr. Harish Lakshman                          6                       Yes                    8                3               –
 Mr. V Narayanan                              4                       Yes                   10                8               5
 Mr. Krishnan S. Waran                        6                       Yes                    3                3               2
 Mr. D Vijay Mohan2                           5                       Yes                   11                3               –
 Mr. Shujaat Khan                             5                        No                    1                –               –
 Mr. Muneesh Chawla3                          1                       Yes                    7

1 Appointed as Director on June 04, 2009
2 Appointed as Director on June 09, 2008
3 Appointed as an Alternate Director of Mr. Shujaat Khan for the meeting held on July 30, 2008
$ 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


                                                                                                                                    23
     RANE HOLDINGS LIMITED




 4. Audit Committee                                                      The Committee met five times during the year on June 9, 2008,
                                                                         July 30, 2008, October 29, 2008, January 29, 2009 and March
 The scope of reference to the Committee, inter alia, includes:
                                                                         24, 2009.
 1. Review of the scope of audit and discuss post-audit area of
       concern, if any, with Statutory Auditors and Internal Auditors.    Name of the Directors         Number of meetings attended
 2. Recommending the appointment of Statutory Auditor and                 Mr. Krishnan S Waran                                          5
       fixation of audit fee.                                             Mr. L Ganesh                                                  5
 3. Review of quarterly / annual financial statements with                Mr. V Narayanan                                               3
       Statutory Auditors and management before submission to             Mr. D Vijay Mohan                                             4
       the Board.                                                         Mr. Shujaat Khan*                                             1
 4. Reviewing        with   management      the    annual    financial   * Appointed as a member of the Audit Committee only for the
       statements of the subsidiary companies.                           meeting held on June 09, 2008.
 5. Review of internal control systems with the Management,
                                                                         The statutory auditors and the internal auditors were present as
       Statutory Auditors and Internal Auditors.
                                                                         invitees in all the meetings. The Executive Chairman and Vice
 6. Reviewing the adequacy of internal audit function.                   President (corporate services) of the Company attended the
 7. Review of financial and risk management policies of the              meetings by invitation.
       Company.
 8. Reviewing the statement of significant related party                 5. Remuneration to Directors
       transactions submitted by the management                          A Remuneration Committee, constituted under the provisions

 9. Reviewing the management letters/ letters of internal control        of the Schedule XIII to the Companies Act, 1956, comprises the

       weaknesses issued by the statutory auditors, if any.              following Directors as its members

 10. Reviewing defaults, if any, in payments to shareholders and          Mr. V Narayanan                                       Chairman
       creditors.                                                         Mr. Krishnan S Waran                                   Member

 11. Management discussion and analysis of financial condition            Mr. L Ganesh                                           Member

       and results of operation.
                                                                         The elements of remuneration payable to Executive Chairman,
 The composition of Audit Committee is as follows                        who is the Managing Director of the Company, was restructured

     Mr. Krishnan S Waran                                   Chairman     to include salary, allowances, perquisites, retirement benefit and

     Mr. V Narayanan                                         Member      commission, not exceeding 24 months salary, per annum. The

     Mr. D Vijay Mohan                                       Member      employment of the Executive Chairman is contractual and no

     Mr. L Ganesh                                            Member      sitting fee or severance fee is payable to him. The Company does

     Mr. Shujaat Khan*                                       Member      not have any stock option scheme. The terms of remuneration of
                                                                         the Executive Chairman was approved by the Remuneration
 Mr. C Siva, Secretary is the Secretary to the Committee.                Committee and the Board of Directors.



24
                                                                                                           Annual Report 2008-09




Sitting fee of Rs. 20,000 for attending each meeting of the        website of the Company viz. http://rane.in. All Board members
Board, Rs. 5,000 for attending each meeting of the Audit           and senior management personnel affirmed their compliance
Committee was paid to the Non-Executive Directors and              with the code of conduct.
Rs. 2,500 for attending meeting of other committees of the
Board, apart from reimbursement of actual travel and out-of-       7. Investors’ Service Committee
pocket expenses incurred by them for attending the meetings.       The Investors’ Service Committee was constituted to look into
No other remuneration is paid to the Non-Executive Directors.      all types of grievances from shareholders and redress them
                                                                   expeditiously in a fit and proper manner. The Committee
The details of sitting fee paid to the Directors are as follows
                                                                   comprises the following Directors
 Name of the Directors                            Amount (Rs.)      Mr. L Ganesh                                         Chairman
 Mr. L Ganesh                                           157,500     Mr. L Lakshman                                        Member
 Mr. Harish Lakshman                                    112,500     Mr. Harish Lakshman                                   Member
 Mr. V Narayanan                                          95,000
                                                                   Mr. C Siva, Company Secretary is the Compliance Officer of the
 Mr. Krishnan S Waran                                   145,000
                                                                   Company.
 Mr. D Vijay Mohan                                      120,000
 Mr. Shujaat Khan                                       105,000    The Committee met three times during the year on July 30,
                                                                   2008, October 29, 2008 and January 29, 2009.
Number of shares held by the Directors
                                                                    Name of the Directors        Number of meetings attended
 Name of the Directors                       Number of shares       Mr. L Ganesh                                                 3
 Mr. L Lakshman                                         529,712     Mr. L Lakshman                                               3
 Mr. L Ganesh                                           703,517     Mr. Harish Lakshman                                          3
 Mr. Harish Lakshman                                    107,317
                                                                   During the year, the Company received 34 complaints from the
None of the other Directors holds any shares in the Company.       investors and all of them were settled to the satisfaction of the
                                                                   shareholders. The complaints pertain to non-receipt of/loss of
6. Code of conduct                                                 share certificates and non-receipt of dividend warrant. During
The Board of Directors has laid down a code of conduct for all     the year, no complaint was received from stock exchanges/
the Board members and senior management of the Company             SEBI/ Ministry of Corporate Affairs. The complaints received
in furtherance of its emphasis towards good Corporate              from the investors were redressed to the satisfaction of the
Governance practices. The same has also been posted on the         investors within a period of seven days from the date of receipt.



                                                                                                                                       25
     RANE HOLDINGS LIMITED




     8. General body meetings
     Details of the previous Annual General Meetings are as follows

      Date of AGM           Special resolutions passed                                                      Time       Venue
      July 28, 2006         No Special Resolution was passed.                                           10.15 am      Narada Gana
      July 30, 2007         1. Approval of increase in remuneration for Mr. L Lakshman,                 10.15 am      Sabha
                            Chairman and Managing Director.                                                           (Main Hall),
                            2. Investments in shares of Rane Group Companies                                          314, TTK Road,
      July 30, 2008         1. Re-appointment of Mr. L Lakshman as Managing Director                    10.15 am      Chennai – 600 018



     The Board of Directors, at their meeting held on January 29,         process in a fair and transparent manner. The resolution was
     2009, proposed to conduct postal ballot for seeking the approval     approved by the members as special resolution and result in
     of the members of the Company for making inter-corporate             respect of the same was declared by the Vice Chairman on
     loans, guarantees and investments in Rane Group companies.           March 13, 2009, in terms of the rules. Following is the voting
                                                                          pattern in respect of the above resolutions:-
     Mr. K Sriram, partner, M/s. S Krishnamurthy & Co., Company
     Secretaries, acted as scrutinizer for conducting the postal ballot


     1. Number of valid postal ballot forms received                                             613
     2. Votes in favour of the resolution                                         Number of votes             % to total valid votes cast
             (a) Resolution number1                                                         5,699,920                                99.86%
     3. Votes against the resolution                                              Number of votes             % to total valid votes cast
             (a) Resolution Number1                                                            8,175                                 0.14%



     9. Disclosures                                                       i.   Constituted a Remuneration Committee to approve
                                                                               payment of remuneration to the Managing Director
     During the year, the Company did not enter into any transaction
     of material nature with any of the Promoters, Directors,             ii. Adopted the best practices to ensure a regime of
     Management, subsidiary company or relatives, etc., which were             unqualified financial statements
     in conflict with the interest of the Company. The details of the
     related party transactions are stated in note 21 - Notes on          10. Means of communication
     Accounts were reviewed by the Audit Committee.                       The quarterly/annual financial results are published in “Business
                                                                          Standard” and “Dinamani” (Tamil). The quarterly/annual
     There was no instance of non-compliance by the Company on
                                                                          financial results and the shareholding pattern are uploaded in
     any matters relating to the capital markets; nor was there any
                                                                          the website of SEBI under EDIFAR menu. The financial results
     penalty / strictures imposed by the stock exchanges or SEBI or
                                                                          are also uploaded in the website of the Company viz.
     any other statutory authority on such matters.
                                                                          http://rane.in.
     The Company has complied with all the mandatory requirements
     prescribed under revised Clause 49 of the Listing Agreement. The
     Company complied with the following non-mandatory requirements


26
                                                                                                            Annual Report 2008-09




11. General shareholder information
i) Information about Director seeking re-appointment/appointment in this Annual General Meeting

Name of the Director   Mr. Harish Lakshman                  Mr. Krishnan S Waran                    Mr. Ravi Vira Gupta
Father’s name          Mr. L Lakshman                       Mr. K Appu Iyer                         Late Shri Kanti Vira Gupta
Date of birth          February 12, 1974                    December 13, 1945                       November 19, 1937
Educational            B.E., MSM                            Post -graduate in Commerce and          B.A (Hons); IAS (Retd.)
qualifications                                              Financial Management
Experience             Mr. Harish Lakshman has 10           Mr. Krishnan S Waran aged               Mr. Ravi Vira Gupta has over
                       years of experience in his           64, is a Financial Consultant.          46 years of experience in
                       profession and currently he is the   He has 39 years of experience           his profession.
                       Managing Director of Rane TRW        in his profession.
                       Steering Systems Ltd.
Date of appointment    May 19, 2004                         January 30, 2004                        June 04, 2009
Other Directorships    1. Rane TRW Steering                 1. Rane Investments Ltd                 1. Goodyear India Limited
                           Systems Ltd
                       2. Rane (Madras) Ltd                 2. Goa Glass Fibre Limited              2. Seshaseyee Paper &
                                                                                                      Board Ltd.
                       3. Rane Brake Lining Ltd             3. Gitanjali Gems Limited               3. Honda Siel Power
                                                                                                      Products Limited
                       4. Rane Engine Valve Ltd             4. Interactive Relative International   4. DCM Engineering Limited
                                                               (P) Limited
                       5. Rane Investments Ltd              5. Interactive Entertainment            5. Mawana Sugars Limited
                                                               (P) Limited
                       6. Rane NSK Steering                 6. Sangamam Homes (P) Limited           6. Delhi Safe Deposit
                           Systems Ltd                                                                Company Limited
                       7. Rane Diecast Ltd                  7. Digital Brands India                 7. Ambit Holdings Pvt. Limited
                                                               Private Limited
                       8. JMA Rane Marketing Ltd                                                    8. India Value Fund Advisors
                                                                                                      Pvt. Limited
                       9. Savithur Enterprises Limited                                              9. IVF Advisors Pvt. Limited
                       10.Broadvision Perspectives
                           India Private Ltd
                       11.Broadvision Services
                           Private Limited
Committee              Member – Audit                       Member – Audit                          Chairman – Audit
Memberships            1. Rane Diecast Ltd                  1. Gitanjali Gems Limited               1. Goodyear India Limited
                                                                                                    2. Seshaseyee Paper &
                                                                                                      Board Ltd
                       Member – Investors’ Service          Chairman – Audit                        Member – Audit
                       1. Rane (Madras) Ltd                 1. Rane Holdings Ltd                    1. Honda Siel Power
                                                                                                      Products Limited
                       2. Rane Holdings Ltd                 2. Goa Glass Fibre Limited              Member – Investors’ Service
                                                                                                    1. Goodyear India Limited



                                                                                                                                     27
     RANE HOLDINGS LIMITED




     ii) Annual General Meeting              July 30, 2009 at 10.30 a.m.
                                             The Music Academy, (Mini Hall), New No: 168, T.T.K Road, Royapettah, Chennai – 600014

     Financial Year – April 1, 2009 to March 31, 2010
     Financial calendar (tentative): Board Meeting for approval of

      Purpose                                                                                                             Tentative date
      Annual accounts for the year ended March 31, 2009                                                                     June 4, 2009
      Un-audited results for the first quarter ending June 30, 2009                                                        July 30, 2009
      Un-audited results for the second quarter ending September 30, 2009                                              October 30, 2009
      Un-audited results for the third quarter ending December 31, 2009                                                January 29, 2010
      Annual accounts for the year ending March 31, 2010                                                         First week of June 2010


     Book closure period July 25, 2009 (Saturday) to July 30, 2009 (Thursday) (both days inclusive)



     iii) Listing on stock exchanges                                                                                         Stock code
     Madras Stock Exchange Ltd. (MSE)                                                                                 RANEHOLDINGS
     11, Second Line Beach, Chennai - 600 001
     National Stock Exchange of India Ltd. (NSE)                                                                         RANEHOLDIN
     Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051
     Bombay Stock Exchange Ltd. (BSE)                                                                                            505800
     Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001


     Listing fee                                                           iv) Unpaid/Unclaimed dividend
     Annual listing fees for the financial year 2009-10 have been paid     Pursuant to the provisions of Section 205A of the Companies
     to NSE and BSE. The Company has not paid the listing fee to           Act, 1956, dividend for the financial year ended March 31, 2004
     Madras Stock Exchange Limited (MSE) as it has made an                 and thereafter, which remain unclaimed for a period of seven
     application to MSE for delisting of 14,277,809 equity shares of       years will be transferred to the Investor Education and
     Rs.10 each on December 12, 2008. The Company is awaiting              Protection Fund (IEPF) of the Central Government. Members
     approval from MSE both for delisting and waiver of listing fee for    who have not en-cashed the dividend warrants for the said
     the year 2009-10.                                                     period are requested to make their claim to the Company.

     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)
      31.03.2004*               02.04.2004                                    08.05.2011                                     06.06.2011
      31.03.2005                20.07.2005                                    24.08.2012                                     22.09.2012
      31.03.2006*               31.01.2006                                    06.03.2013                                     04.04.2013
      31.03.2006                28.07.2006                                    31.08.2013                                     29.09.2013
      31.03.2007*               24.01.2007                                    27.02.2014                                     28.03.2014
      31.03.2007*               20.03.2007                                    25.04.2014                                     24.05.2014
      31.03.2008*               24.03.2008                                    02.05.2015                                     31.05.2015
      31.03.2009*               29.01.2009                                    20.03.2016                                     18.04.2016
     * Interim dividend


28
                                                                                                               Annual Report 2008-09




v) Share price data
                          National Stock Exchange of India Ltd (NSE)                         Bombay Stock Exchange Ltd (BSE)
                          Share price (Rs.)             NSE S&P Nifty                   Share price (Rs.)             BSE sensex
 Month                      High       Low             High            Low               High       Low             High           Low
 April 2008               156.90    112.85         5,230.80      4,628.80               148.00    113.90        17,480.74    15,297.96
 May 2008                 188.70    120.55         5,298.90      4,801.90               190.00    122.40        17,735.70    16,196.02
 June 2008                144.70    104.00         4,908.80      4,021.70               142.90    102.00        16,632.72    13,405.54
 July 2008                109.90      96.00        4,539.50      3,790.20               114.00     94.55        15,130.09    12,514.02
 August 2008              103.90      97.05        4,649.90      4,201.90               106.80     97.05        15,579.78    14,002.43
 September 2008           101.75      72.20        4,558.00      3,715.10               101.50     79.85        15,107.01    12,153.55
 October 2008               87.90     58.50        4,000.50      2,252.80                89.00     57.05        13,203.86     7,697.39
 November 2008              79.00     46.90        3,240.60      2,502.90                77.00     41.15        10,945.41     8,316.39
 December 2008              54.00     38.00        3,110.50      2,570.70                57.00     42.60        10,188.54     8,467.43
 January 2009               54.00     39.00        3,147.20      2,661.70                54.50     37.25        10,469.72     8,631.60
 February 2009              56.00     42.60        2,969.80      2,677.60                56.00     41.75         9,724.87     8,619.22
 March 2009                 52.90     42.20        3,123.40      2,539.50                55.25     39.00        10,127.09     8,047.17

                                                                                  (Source: www.bseindia.com and www.nseindia.com)

vi) Registrar and Transfer Agents                                        vii) Share transfer system
The contact details of the Registrar and Transfer Agents are             The power to approve transfer of shares has been delegated by
as follows:-                                                             the Board to the share transfer committee. Share transfer
                                                                         process is completed within 30 days from the date of receipt of
Integrated Enterprises (India) Ltd.
                                                                         transfer documents by the Registrar and Transfer Agents (RTA).
II Floor, ‘Kences Towers’, No.1, Ramakrishna Street, North
                                                                         Requests for dematerialisation are generally confirmed on a
Usman Road, T. Nagar, Chennai – 600 017.
                                                                         weekly basis by the RTA.
Phone: 28140801 – 03, Fax: 28142479, 28143378.
E-mail: sureshbabu@iepindia.com

Name of the contact person: Mr. K Suresh Babu, Asst. Vice-President

viii) Distribution of shareholding as on March 31, 2009
 Number of shares held                                                          Folio                                    Shares
                                                                      Number                 %                 Number                %
 Up to 500                                                             10,159             88.99              1,017,897             7.13
 501-1000                                                                567               4.97                413,743             2.90
 1001-2000                                                               297               2.60                426,117             2.98
 2001-5000                                                               215               1.88                647,632             4.54
 5001-10000                                                               75               0.66                521,646             3.65
 10001-20000                                                              40               0.35                573,233             4.01
 20001-50000                                                              29               0.25                906,108             6.35
 50001-100000                                                             12               0.11                824,968             5.78
 100001 and above                                                         22               0.19              8,946,465            62.66
 Total                                                                 11,416           100.00              14,277,809          100.00



                                                                                                                                          29
     RANE HOLDINGS LIMITED




     ix) Pattern of shareholding as on March 31, 2009
     Sl. No    Category                                                     No. of folios         No. of shares      % to total capital
     A         Promoters                                                               28              6,093,861                 42.68
     B         Mutual funds and UTI                                                     1                      150                0.00
     C         Banks, financial institutions and insurance companies                   16                731,202                  5.12
     D         Foreign institutional investors (FIIs)                                   2                157,260                  1.10
     E         Private corporate bodies                                              343               2,421,811                 16.96
     F         Indian public                                                      10,910               4,311,386                 30.20
     G         Non-resident Indians                                                  116                 562,139                  3.94
               Total                                                              11,416             14,277,809                 100.00



     x) Dematerialisation of shares and liquidity
     The Company has entered into the necessary agreements with the National Securities Depositories Limited and the Central
     Depository Services (India) Limited for dematerialisation of the shares held by investors. SEBI has included the shares of your
     Company in the list of scrips for trading only in dematerialised form for all investors w.e.f. June 26, 2000. As on March 31, 2009,
     about 94.56% of the shareholdings have been dematerialised.

     Demat ISIN Number: INE 384A01010



     xi) Address for communication
     Mr. C Siva                                               OR        Mr. K Suresh Babu
     Compliance Officer                                                 Asst. Vice-President
     Rane Holdings Ltd.,                                                Integrated Enterprises (India) Ltd.,
     Rane Corporate Centre,                                             II Floor, ‘Kences Towers’, No.1, Ramakrishna Street,
     “Maithri” 132, Cathedral Road, Chennai - 600 086.                  North Usman Road, , T. Nagar, Chennai - 600 017
     Phone : 28112472 Fax : 28112449                                    Phone: 28140801–03, Fax:28142479
     E-mail: investorservices@rane.co.in                                E-mail: sureshbabu@iepindia.com




30
                                                                                                         Annual Report 2008-09




To
The Members
Rane Holdings Ltd

Declaration by Chief Executive Officer on Code of Conduct under Clause 49 of the Listing
Agreement.

I hereby declare that to the best of my knowledge and information, all the Board members and senior management personnel have
affirmed compliance with the code of conduct for the year ended March 31, 2009.

Place: Chennai                                                                                                      L Lakshman
Dated: June 4, 2009                                                                                           Executive Chairman




Auditors’ Certification on Corporate Governance

To the shareholders of Rane Holdings Limited

We have examined the compliance of conditions of Corporate Governance by Rane Holdings Limited for the year ended March 31,
2009 as stipulated in Clause 49 of the Listing Agreement of the said company with the stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof adopted by the Company for ensuring compliance of the conditions of Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the above mentioned listing agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.

                                                                                                    For D. Rangaswamy & Co.
                                                                                                         Chartered Accountants



Chennai                                                                                                              B. Ramani
June 4, 2009                                                                                                             Partner
                                                                                                         Membership No. 19603




                                                                                                                                   31
     RANE HOLDINGS LIMITED




     FINANCIAL INFORMATION OF SUBSIDIARY COMPANIES




                                                                                                                 Rs. '000

                                                                  Name of the Company
     Sl.no Particulars                Rane Investments      Rane Diecast       Rane (Madras)             Rane Engine
                                               Limited           Limited                 Limited         Valve Limited
                                            31.03.2009        31.03.2009           31.03.2009              31.03.2009
     1      Reporting Currency                       INR            INR                     INR                    INR

     2      Capital                                 8,450        157,781                 101,641                51,510

     3      Reserves & Surplus                 355,056            58,201                 609,231               746,006

     4      Total Assets                       406,506           458,988             1,349,066               1,772,459

     5      Total Liabilities                  406,506           458,988             1,349,066               1,772,459

     6      Investments                        410,311                                       50                       –

     7      Turnover / Total Income            146,476           247,137             3,531,586               2,211,045

     8      Profit before Taxation             133,932          (68,017)                  12,012                39,125

     9      Provision for Taxation                   135        (21,086)                   8,395                17,025

     10     Profit after Taxation              133,797          (46,931)                   3,617                22,100

     11     Proposed Dividend                         NA             NA                      NA                   20%




                                                                                          For and on behalf of the Board



     Chennai                              C Siva                           L Lakshman                        L Ganesh
     June 4, 2009                       Secretary                   Executive Chairman                   Vice Chairman




32
                                                                                                            Annual Report 2008-09




STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO
SUBSIDIARY COMPANIES FOR THE FINANCIAL YEAR ENDED MARCH 31, 2009



1 Name of the Company                   Rane Investments Ltd.   Rane Diecast Limited   Rane (Madras) Ltd.   Rane Engine Valve Ltd.

2 Holding Company's Interest                  845,000 equity       7,700,100 equity     5,438,125 equity         2,675,285 equity
   Equity Share Capital                     shares of Rs.10/-     shares of Rs.10/-     shares of Rs.10/-       shares of Rs.10/-
                                                   each fully             each fully           each fully               each fully
                                             paid-up (100%)       paid-up (78.75%)       paid-up (53.5%)        paid-up (51.60%)


3 Aggregated amount of Profits /
   (Losses) since becoming the
   subsidiary, so far as it concerns
   the members of the holding
   company and not dealt with in
   the holding company's accounts
                                                       15,176              (34,774)              (11,484)                   3,223
   (i) For the subsidiary's financial
   year ended March 31, 2009
   (Rs.'000)
                                                      129,305              (15,915)              150,318                        –
   (ii) Upto the subsidiary's
   financial year ended March 31,
   2008 (Rs.'000)

4 Aggregated amount of Profits /
  (Losses) since becoming the
   subsidiary, so far as it concerns
   the members of the holding
   company and dealt with in the
   holding company's accounts
                                                      101,400                     –                    –                        –
   (i) For the subsidiary's financial
   year ended March 31, 2009
   (Rs.'000)
                                                      157,931                     –               31,273                        –
   (ii) Upto the subsidiary's
   financial year ended March 31,
   2008 (Rs.'000)

                                                                                                   For and on behalf of the Board



Chennai                                      C Siva                                L Lakshman                          L Ganesh
June 4, 2009                              Secretary                         Executive Chairman                     Vice Chairman


                                                                                                                                     33
     RANE HOLDINGS LIMITED




     FINANCIAL HIGHLIGHTS
     Year            Income           Profit       Profit          Profit after      Dividend         Reserves             Equity        Earnings
                                  before tax    after tax             tax and                         & Surplus            Share        per Share
                                                                   Dividends                                              Capital
                    (Rs. mn)       (Rs. mn)     (Rs. mn)             (Rs. mn)             %               (Rs. mn)       (Rs. mn)           (Rs.)
     2003-04        1,804.04            49.16      72.02                55.10             10               215.78           41.95           17.17
     2004-05             660.19         93.71      71.26                42.95             25               567.74           81.31           10.50
     2005-06             110.12      102.81        87.18                60.18             25               609.38           81.31           10.25
     2006-07             322.59      188.10       168.73                88.25             75               978.13           97.81           20.19
     2007-08             421.43      228.56       208.99               107.60             60              1,604.37        142.78            14.56
     2008-09             349.67      182.85       162.96               105.85             40              1,710.22        142.78            11.41




     BALANCE SHEET SUMMARY
     Year ended March 31                                    2009                  2008            2007        2006           2005           2004

     Gross Fixed Assets                                182.28                178.16              75.10        11.40           9.10       1,120.64

     Depreciation                                       22.46                     15.05            2.05        1.19           0.90         598.22

     Net Fixed Assets                                  159.82                163.11              73.05        10.21           8.20         522.42

     Investments                                     1,768.26              1,708.22            1,092.35      715.70         710.24          76.91

     Current Assets, Loans and Advances                136.89                255.86             116.26         9.55          10.21         685.22

     Deferred Tax Asset                                                              –               –               –              –       32.19

     Total Assets                                    2,064.97              2,127.19            1,281.66      735.46         728.65       1,316.74

     Secured,Unsecured Loans                           176.59                243.27             133.30         1.29           6.45         583.00

     Deferred Tax Liability                                 8.39                   9.71            1.29        1.70           1.12              –

     Current Liabilities & Provisions                   26.99                127.07              62.38         5.41          45.78         396.01

     Total Liabilities                                 211.97                380.05             196.97         8.40          53.35         979.01

     Net Worth                                       1,853.00              1,747.15            1,084.69      727.06         675.30         337.73

     Represented by:

     Equity Share Capital                              142.78                142.78              97.81        81.31          81.31          41.95

     Preference Share Capital                                  –                     –             8.75       17.50          26.25          80.00

     Reserves & Surplus                              1,710.22              1,604.37             978.13       628.25         567.74         215.78

     Net Worth per Equity Share                        129.78                122.37             110.90        89.42          79.82          61.43
     of Rs.10 each (Rs.)



34
                                                                                                             Annual Report 2008-09




AUDITORS’ REPORT


To
The Shareholders of
Rane Holdings Limited

We have audited the attached Balance Sheet of Rane Holdings            the books of account;
Limited as at 31st March, 2009, the Profit and Loss Account and
                                                                  d. in our opinion the Balance Sheet, Profit and Loss Account
also the Cash Flow Statement for the year ended on that date
                                                                       and Cash flow statement dealt with by this report comply
annexed thereto. These financial statements are the
                                                                       with the accounting standards referred to in the sub-section
responsibility of the Company’s management. Our responsibility
                                                                       (3C) of Section 211 of the Companies Act, 1956;
is to express an opinion on these financial statements based
on our audit.                                                     e. on the basis of written representations received from the
                                                                       Directors, as on 31st March, 2009, and taken on record by
We conducted our audit in accordance with auditing standards
                                                                       the Board of Directors, we report that none of the Directors
generally accepted in India. These Standards require that we
                                                                       are disqualified as on 31st March, 2009 from being
plan and perform the audit to obtain reasonable assurance
                                                                       appointed as a Director in terms of clause (g) of sub-section
about whether the financial statements are free of material
                                                                       (l) of Section 274 of the Companies Act, 1956;
misstatements. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the     f.   in our opinion and to the best of our information and
financial statements. An Audit also includes assessing the             according to the explanations given to us, the said accounts
accounting principles used and significant estimates made by           give the information required by the Companies Act, 1956,
the management, as well as evaluating the overall financial            in the manner so required and give a true and fair view in
statement presentation. We believe that our audit provides a           conformity with the accounting principles generally
reasonable basis for our opinion.                                      accepted in India:

As required by the Companies (Auditors’ Report) Order, 2003            i.   in the case of the Balance Sheet, of the state of affairs
issued by the Central Government of India in terms of sub –                 of the Company as at 31st March, 2009
section (4A) of Section 227 of the Companies Act, 1956, we             ii. in the case of the Profit and Loss Account, of the profit
enclose in the Annexure a statement on the matters specified in             of the Company for the year ended on that date and
paragraphs 4 and 5 of the said Order.
                                                                       iii. in the case of the Cash Flow Statement, of the Cash
Further to our comments in the Annexure referred to above, we               Flows for the year ended on that date.
report that:

a. we have obtained all the information and explanations,                                              For D Rangaswamy & Co.
     which to the best of our knowledge and belief were                                                     Chartered Accountants
     necessary for the purpose 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;                                                                                         B Ramani
c. the Balance Sheet, Profit and Loss Account and Cash flow            Place: Chennai                                       Partner
     statement dealt with by this report are in agreement with         Date : 4th June, 2009                         M. No.: 19603




                                                                                                                                        35
     RANE HOLDINGS LIMITED




     Annexure to the Auditors’ Report
 Annexure - Statement on the Companies (Auditor’s Report) Order, 2003
 (Referred to in Paragraph 3 of Our Report of even date)



     i.     The Company has maintained proper records showing full               of goods. During the course of our audit, we have not
            particulars including quantitative details and situation of          observed any major weaknesses in internal controls.
            fixed assets.
                                                                            v.   Based on our verification and according to the information
            Fixed assets are physically verified by the Management at            and explanations given to us, we are of the opinion that
            reasonable intervals having regard to the size of the                particulars of contracts or arrangements referred to in
            Company and nature of its assets. No discrepancies were              Section 301 of the Companies Act, 1956 have been entered
            noticed on such verification.                                        in the register required to be maintained under that section.
            No substantial part of the fixed assets has been sold during
                                                                                 In our opinion and according to the information and
            the year.
                                                                                 explanations given to us, the transactions made in the
     ii.    Provisions of clause (ii) on inventory are not applicable as         pursuance of contracts or arrangements entered in the
            the Company does not hold any inventory.                             register maintained under Section 301 of the Companies
                                                                                 Act, 1956 and exceeding the value of rupees five lakh in
     iii.   The Company has granted unsecured loans to Companies
                                                                                 respect of any party during the year have been made at
            covered in the register maintained under Section 301 of the
                                                                                 prices which are reasonable having regard to prevailing
            Act. The maximum amount outstanding during the year was
                                                                                 market rates or values at the relevant time.
            Rs. 895 lakhs and as at the year end balance of such loans
            amounted to Rs. 430 lakhs.                                      vi. The Company has not accepted any deposits from the
            In our opinion, the rate of interest and other terms and             public. Accordingly paragraph 4 (vi) of the Order is not
            conditions of such loans were not prima facie prejudicial to         applicable.
            the interest of the Company.                                    vii. The Company has been generally regular in depositing with
            In the case of loans granted to the body corporate listed in         appropriate authorities undisputed statutory dues including
            the register maintained under Section 301, the borrowers             provident fund, investor education protection fund, income
            have been regular in repaying the interest as stipulated. The        tax, sales tax, wealth tax, service tax, customs duty, excise
            terms of arrangement stipulate that the loans shall e repaid         duty, cess and other material statutory dues as applicable
            on demand.                                                           with the appropriate authorities in India.
            In respect of the aforesaid loans, there is no overdue               The Company has no dues in respect of disputed items of
            amount.                                                              sales tax, wealth tax, service tax, customs duty, excise duty
            The Company has not taken any loans, secured or                      and cess, except as follows:
            unsecured from companies, firms or parties covered in the       Name of the   Name of      Amount      Period to      From where
            register maintained under Section 301 of the Companies          Statute       the Dues     (Rs.)       which the      the dispute
            Act, 1956.                                                                                             amount relates is pending

     iv. In our opinion and according to the information and                Income-tax    Income-tax   85.48 lakhs 2004-05       Commissioner
                                                                            Act, 1961                                            of Income Tax
            explanations given to us, there is an adequate internal
                                                                                                                                 (Appeals)
            control system commensurate with the size of the
            Company and the nature of its business for the purchase of      viii. The Company has no accumulated losses as at 31st
            fixed assets and for the sale of services. The activities of         March, 2009 and it has not incurred any cash losses in the
            the Company do not involve purchase of inventory and sale            financial year ended on that date or in the immediately




36
                                                                                                            Annual Report 2008-09




     preceeding financial year.                                          basis, the funds raised on short term basis have not been
                                                                         used for long term investment.
ix. The Company has not defaulted in repayment of dues to
     any financial institution or bank. The Company has not          xvi. The Company has not made any preferential allotment of
     issued any debentures.                                              shares during the year to parties covered in the register
                                                                         maintained under Section 301 of the Companies Act, 1956.
x.   The Company has not granted any loans or advances on
     the basis of security by way of pledge of shares,               xvii. The Company has not issued any debentures. Accordingly,
     debentures and other securities.                                    paragraph 4(xix) of the Order is not applicable.

xi. In our opinion, the Company is not a chit fund or a nidhi or     xviii.The Company has not raised any money by public issue
     a mutual benefit fund or a society. Therefore the provisions        during the year. Accordingly, paragraph 4 (xx) of the Order
     of clause 4 (xiii) of the companies (Auditors’ Report) order,       is not applicable.
     2003 are not applicable to the Company.
                                                                     xix. During the course of examination of books of account
xii. In our opinion, the Company is not dealing in or trading in         carried out in accordance with the generally accepted
     shares, securities, debentures and other investments.               auditing practices in India, we have neither come across
     Accordingly, provisions of clause 4 (xiv) of the companies          any instance of fraud on or by the Company, noticed or
     (Auditors’ Report) Order, 2003 are not applicable to the            reported during the year, nor have we been informed of
     Company.                                                            such a case by the management.

xiii. In our opinion, the terms and conditions on which the                                            For D Rangaswamy & Co.
     Company has given guarantee for loan taken by others                                                   Chartered Accountants
     from banks and financial institutions are not prejudicial to
     the interest of the Company.

xiv. On the basis of review of utilisation of funds on an overall
     basis, the terms loans taken by the Company were applied                                                           B Ramani
     for the purposes for which the loans were obtained.                Place: Chennai                                      Partner
                                                                        Date : 4th June, 2009                        M. No.: 19603
xv. On the basis of review of utilisation of funds on an overall




                                                                                                                                      37
     RANE HOLDINGS LIMITED




     BALANCE SHEET As at 31st March, 2009                                                                                  (Rs. ‘000)
                                                        Schedule                         31.03.2009                     31.03.2008
     SOURCES OF FUNDS
     Shareholders' Funds
     Capital                                                 A              142,778                         142,778
     Reserves and Surplus                                    B             1,710,217                      1,604,368
                                                                                          1,852,995                      1,747,146
     Loan Funds
     Secured Loans                                           C                              176,593                        243,269
     Deferred Tax Liability                                                                   8,397                           9,708
                                                                                          2,037,985                      2,000,123
     APPLICATION OF FUNDS
     Fixed Assets                                            D
     Gross Block                                                            182,286                         178,161
     Less: Accumulated Depreciation                                          22,462                          15,054
                                                                                            159,824                        163,107
     Investments                                             E                            1,768,259                      1,708,221
     Current Assets, Loans and Advances
     Sundry Debtors                                          F               18,405                          34,467
     Cash and Bank balances                                  G               13,167                          91,370
     Loans and Advances                                      H              105,315                         130,024
                                                                            136,887                        255,861
     Less: Current Liabilities and Provisions
     Liabilities                                             I               26,985                         112,507
     Provisions                                              J                                               14,559
                                                                             26,985                        127,066
     Net Current Assets                                                                     109,902                        128,795
                                                                                          2,037,985                      2,000,123
     Contingent Liabilities (Note 14)
     Schedules referred to above form an integral part of these accounts




     As per our report of even date attached                                                          For and on behalf of the Board

     For D Rangaswamy & Co.
     Chartered Accountants

     B Ramani                                                                                                          L Lakshman
     Partner                                                                                                    Executive Chairman
     M.No.19603

     Place: Chennai                                                           C Siva                                      L Ganesh
     Date : 4th June, 2009                                                   Secretary                                Vice Chairman




38
                                                                                                        Annual Report 2008-09




PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2009                                                           (Rs. ‘000)
                                                   Schedule                        31.03.2009                      31.03.2008
INCOME                                                  K                             349,669                         421,425
EXPENDITURE
Expenses                                                L             139,319                         164,322
Finance Charges                                         M              19,950                          22,676
Depreciation                                                            7,555                           5,867
Total Expenditure                                                                    166,824                          192,865
Profit Before Tax                                                                    182,845                          228,560
Provision for Taxation   – Current                                    (20,500)                       (14,353)
                         – Deferred                                     1,310                          (4,177)
                         – Fringe Benefit Tax                           (695)                          (1,043)
                                                                                     (19,885)                         (19,573)
Profit After Tax                                                                     162,960                          208,987
Surplus brought forward (Refer Schedule B)                                            125,749                          89,390
Amount Available For Appropriation                                                    288,709                         298,377
Transfer to Capital Redemption Reserve                                                                  8,750
Less: Dividend on Preference Shares :
      Dividend @ Nil (13.5% )                                                                             984
      Dividend on Equity Shares:
      Interim Dividend @ 40% (60%)                                     57,111                          85,667
Tax on distributed profit (Note 2)                                                                     14,727
Transfer to General Reserve                                            16,296                          62,500
                                                                                       73,407                         172,628
Surplus carried to Balance Sheet                                                     215,302                          125,749
Earnings Per Share
Basic (Rs.)                                                                             11.41                            14.56
Diluted (Rs.)                                                                           11.41                            14.56
Number of shares used in computing Earnings per Share                              14,277,809                      14,277,809
Contingent Liabilities (Note 14)
Schedules referred to above form an integral part of these accounts




As per our report of even date attached                                                         For and on behalf of the Board

For D Rangaswamy & Co.
Chartered Accountants

B Ramani                                                                                                          L Lakshman
Partner                                                                                                   Executive Chairman
M.No.19603

Place: Chennai                                                          C Siva                                      L Ganesh
Date : 4th June, 2009                                                  Secretary                                 Vice Chairman




                                                                                                                                   39
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE BALANCE SHEET As at 31st March, 2009                                                                                           (Rs. ‘000)
                                                                                                                                        31.03.2009          31.03.2008

     Schedule A CAPITAL (Note 1)
 Authorised
 15,000,000 (15,000,000) Equity Shares of Rs.10 each                                                                                        150,000               150,000
     5,000,000 (5,000,000) 13.5% Cumulative Redeemable Preference Shares of Rs.10 each                                                        50,000               50,000
                                                                                                                                            200,000               200,000
 Issued, Subscribed, and Paid-up
     14,277,809 (14,277,809) Equity Shares of Rs. 10 each fully paid-up                                                                     142,778               142,778
                                                                                                                                            142,778               142,778



     Description                                                                                  As at                Additions   Deductions /                Balance
                                                                                            31.03.2008                during the   adjustments                    as at
                                                                                                                            year during the year            31.03.2009

     Schedule B RESERVES AND SURPLUS
     Capital Subsidy                                                                                  1,500                                                          1,500
     Capital Redemption Reserve                                                                      55,000                                                        55,000
     Securities Premium                                                                          439,509                                                          439,509
     General Reserve                                                                             463,981                534,925                                   998,906
     Capital Reserve on Merger (Note 3)                                                          518,629                                    518,629                       –
     Surplus in Profit and Loss Account                                                          125,749                215,302             125,749               215,302
     Total                                                                                    1,604,368                 750,227             644,378          1,710,217


                                                                                                                                        31.03.2009          31.03.2008

     Schedule C SECURED LOANS (NOTE 4)
     Term Loan - IDBI Bank Limited                                                                                                            90,400              110,200
     Term Loan - Citibank NA                                                                                                                  76,974               97,501
     Citibank Foregin Currency payable                                                                                                         9,219               11,660
     Cash Credit - Citibank NA                                                                                                                                     23,908
                                                                                                                                            176,593               243,269



     Schedule D FIXED ASSETS

     DESCRIPTION                                      GROSS BLOCK                                               DEPRECIATION                              NET BLOCK
                                As at   Transfer on     Additions / Deductions/     As at    As at     Transfer on For the Deductions/        As at       As at        As at
                            31 Mar 08 Amalgamation Adjustments Adjustments 31 Mar 09 31 Mar 08 Amalgamation              year Adjustments 31 Mar 09   31 Mar 09    31 Mar 08
     Licence                   1,689                                                1,689     366                        338                   704         985         1,323
     Land - Freehold          77,586                                               77,586        –                                                –     77,586        77,586
     Buildings                71,610                        2,119                  73,729    7,052                      1,303                 8,355     65,374        64,558
     Plant & Machinery         8,236                           67                   8,303    1,592                      1,544                 3,136       5,167        6,644
     Furniture & Fittings      4,294                          740          175      4,859    1,093                       961          79      1,975       2,884        3,202
     Office equipments        12,847                          326          163     13,010    4,273                      2,703         68      6,908       6,102        8,574
     Vehicles                  1,899                        1,211                   3,110     678                        706                  1,384       1,726        1,221
     Total                   178,161             –          4,463          338    182,286   15,054               –     7,555         147    22,462     159,824      163,107
     Previous year            57,744        74,593         46,243          419    178,161    2,050            7,038     5,867        409     15,054    163,107        55,694




40
                                                                                                Annual Report 2008-09




SCHEDULES FORMING PART OF THE BALANCE SHEET As at 31st March, 2009                                          (Rs. ‘000)
                                              Face Value                   31.03.2009                    31.03.2008
                                                           No. of Shares         Value   No. of Shares         Value
Schedule E INVESTMENTS (Note 5)
(1) Long Term
A. Quoted
    Equity Shares Fully Paid up
   Trade
   Kar Mobiles Limited                            10            828,949        53,314         826,191        53,133
  Rane Brake Lining Limited                       10          2,781,624        36,183       2,781,624        36,183
  Sona Koya Steering Systems Limited               1              4,000             7           2,000              7
   Non Trade
   Subsidiary Companies
   Rane (Madras) Limited                          10          5,438,125       457,201       5,438,125       457,201
   Rane Engine Valve Limited                      10          2,284,898       623,616       2,284,898       623,616
B. Unquoted
(i) Equity Shares Fully Paid up
   Trade
   JMA Rane Marketing Limited                     10            360,003         3,600         360,003          3,600
   Rane NSK Steering Systems Limited              10            950,000        95,238         950,000        95,238
   Non Trade
   Subsidiary Companies
   Rane Investments Limited                       10            845,000       281,632         845,000       281,632
   Rane Diecast Limited                           10          7,700,100       157,467       7,700,100       157,467
   Other Companies
   Wellingdon Corporate Foundation                10                 60             1              60              1
(ii) Preference Shares Fully Paid up
  Rane Diecast Limited                            10          6,000,000        60,000
                                                                            1,768,259                     1,708,078
(2) Current – Unquoted
   Mutual Fund :
   UTI Liquid Cash Plan institutional                                                         144,108           143
                                                                            1,768,259                     1,708,221
Aggregate value of Investments :
Quoted –Market value Rs. 438,011,730 (Rs. 453,890,754)                      1,170,321                       510,341
Unquoted                                                                      597,938                     1,197,880


                                                                                                            (Rs. ‘000)
                                                                                          31.03.2009     31.03.2008

Schedule F SUNDRY DEBTORS (Note 6)
Unsecured considered good
Over six months old                                                                                  –             –
Others                                                                                         18,405        34,467
                                                                                               18,405        34,467



                                                                                                                         41
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE BALANCE SHEET As at 31st March, 2009                   (Rs. ‘000)
                                                                           31.03.2009   31.03.2008

     Schedule G CASH AND BANK BALANCES
 Cash on hand                                                                     54            27
 Scheduled Banks
 Current Accounts                                                             11,570        5,212
 Unclaimed Dividend account                                                    1,543       86,131
                                                                              13,167       91,370




     Schedule H LOANS AND ADVANCES
     Advances recoverable in cash or in kind or for value to be received      18,747       18,486
     Loan to Subsidiary                                                       43,000       83,000
     Citibank Differed Premium                                                 9,219       11,494
     Advance Payment of Fringe Benefit Tax (Net of Provision)                    787          828
     Advance Payment of Income Tax (Net of Provision)                         31,047       13,758
     Balance with Service tax Authorities                                        754          854
     Deposits                                                                  1,761        1,604
                                                                             105,315      130,024




     Schedule I CURRENT LIABILITIES AND PROVISIONS
     Current Liabilities (Note 7)
     Sundry Creditors                                                          9,378        6,451
     For Other Liabilities                                                    14,642       19,430
     Unclaimed dividends                                                       1,543       86,131
     Interest accrued but not due                                              1,422          495
                                                                              26,985      112,507




     Schedule J PROVISIONS
     Provision for tax                                                         85,535       65,035
     Less : Advance payments and tax deducted at source                      116,582        78,793
     Net provision for tax *                                                 (31,047)     (13,758)
     Provision for tax on distributed profits                                               14,559
                                                                                           14,559

     * Shown under Loans and Advances




42
                                                                                 Annual Report 2008-09




SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2009(Rs. ‘000)
                                                                            31.03.2009    31.03.2008

Schedule K INCOME
Dividend from investments
                            – From Subsidiary                                  111,682       108,679
                            – From Others                                       12,615         6,846
Dividend from Mutual fund                                                        1,493           554
Trade mark fee                                                                  63,781        66,437
Service Fees                                                                   144,863       161,061
Profit on sale of investment                                                         –        70,254
Profit on sale of assets                                                             –            48
Miscellaneous Income                                                               490           538
Interest Received                                                               11,363         7,008
Provision no longer required written back                                        3,381
                                                                               349,669       421,425


Schedule L EXPENSES
Repairs and Maintenance
                    Buildings                                                    2,460         2,052
                    Others                                                       1,028           639
Salaries, Wages and Bonus                                                       41,157        37,361
Contribution to Provident and Other funds                                        4,496         5,251
Staff welfare expenses                                                           2,149         3,937
Rent                                                                             2,103         2,015
Insurance                                                                          411           461
Rates and Taxes                                                                  1,399         1,398
Travelling and Conveyance                                                        8,575         9,212
Professional Charges                                                            20,817        33,727
Administrative Expenses                                                          7,520         6,782
Advertisement and Sales Promotion                                                2,793        10,171
Information System Infrastructure expenses                                      38,824        41,871
Miscellaneous                                                                      225           361
Directors' Sitting Fees                                                            755           863
Audit Fees (Note : 8)                                                              500           500
Loss on sale of investments                                                          –            17
Loss on sale of assets                                                               3             –
Dimunition in value of Investments                                                   –         4,206
Loss on foreign exchange                                                         1,872         1,399
Bank Charges                                                                     1,058            99
Donation                                                                         1,175         2,000
                                                                               139,319       164,322


Schedule M FINANCE CHARGES
Interest on Term Loans                                                          17,163        18,585
Interest on Cash Credit                                                          2,252           433
Interest - Others                                                                  535         3,658
                                                                                19,950        22,676



                                                                                                       43
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE ACCOUNTS
     ACCOUNTING POLICIES AND NOTES

     ACCOUNTING POLICIES
     1. Basis of preparation of Financial Statements
        1.1 The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis. The
             Financial Statements are prepared in accordance with generally accepted accounting principles and accounting policies
             that are based on mandatory accounting standards as applicable.

     2.   Fixed Assets
          2.1 Fixed Assets are stated at cost of acquisition or construction, net of cenvat credit and depreciation. Cost includes direct
               cost and financing cost related to borrowing attributable to acquisition that are capitalised until the assets are ready for
               use. Capital work-in-progress includes cost of assets not ready for their intended use and includes advances paid to
               acquire fixed assets.

     3.   Depreciation
          3.1 Depreciation is charged on straight-line basis at rates specified in Schedule XIV of the Companies Act, 1956.
          3.2   Depreciation on the following assets is charged on the basis of their estimated useful lives at rates higher than those
                prescribed in the Companies Act, 1956.

                   Assets                                                                                      Useful life (years)
                1. Vehicles                                                                                             5
                2. Furniture and Fittings                                                                               5
                3. Office Equipment                                                                                     3

          3.3   Depreciation is provided pro-rata with reference to the month of addition / deletion.
          3.4   Assets costing less than Rs. 10,000 each are fully depreciated in the year of acquisition.
          3.5   Software license fee is amortised over a period of five years.

     4.   Investments
          4.1 Investments are categorised into Long Term and Current Investments.
          4.2   Long Term Investments are valued at cost and current investments are valued at lower of cost and fair value.
          4.3   Any decline in the value of long-term investments is recognised by reducing the value of Investments unless such
                reduction is of a temporary nature.
          4.4   Any gain or loss as the case may be, arising on disposal of such investments is reckoned as income or expenditure of
                the year.

     5.   Foreign currency transactions
          5.1 Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
          5.2   Gain or loss in respect of foreign exchange fluctuation on transactions concluded during the year is recognised as income
                or expenditure of the year.
          5.3   Current assets and current liabilities (other than those relating to fixed assets) in foreign currencies are translated at the
                rates of exchange prevailing on the balance sheet date. Gain or loss arising on such transactions is recognised as
                income or expenditure of the year.
          5.4   Gain or loss on translation of long term liabilities utilised for acquisition of fixed assets is adjusted against the carrying
                cost of the relevant fixed asset.
          5.5   In respect of forward contracts, the exchange differences is dealt with in the Profit and Loss Account over the period of
                the contracts. Realised gains or losses on cancellation of forward contracts are recognised in the Profit and Loss Account
                of the year in which they are cancelled.




44
                                                                                                                 Annual Report 2008-09




SCHEDULES FORMING PART OF THE ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)

6.   Borrowing costs
     6.1 Borrowing costs attributable to acquisition or construction of qualifying assets are capitalised as part of the cost of such
          assets. Qualifying assets are those that take substantial time to get ready for intended use. All other borrowing costs
          are recognised as revenue in nature.

7.   Employee Benefits
     7.1 Short term
         Short term Employee Benefits including accumulated compensated absence and Voluntary Retirement Scheme are
         recognised as expense as per the Company’s scheme based on expected obligations on undiscounted basis.
     7.2   Post retirement
           Post Retirement Benefits comprise Provident Fund, Superannuation Fund and Gratuity which are accounted for as follows:
           Provident Fund
           This is a defined contribution plan, and contributions made to the Fund are charged to Revenue. The Company has no
           further obligations for future provident fund benefits other than annual contributions.
           Superannuation Fund
           This is a defined contribution plan. The Company contributes a sum equivalent to 15% of eligible employees’ salary
           towards superannuation fund administered by the Trustees and managed by Life Insurance Corporation of India ( LIC).
           The Company has no further obligations for future superannuation benefits other than its annual contributions and
           recognises such contributions as expense as and when due.
           Gratuity
           This is a defined benefit plan. The Company’s scheme is administered by LIC. The liability is determined based on the actuarial
           valuation using projected unit credit method. Actuarial gains and losses, comprising experience adjustments and the effects
           of changes in actuarial assumptions, are recognised immediately in the profit and loss account as income or expense.
           Long term
           Long term employee benefits represent compensated absence which is provided for based on actuarial valuation using
           projected unit credit method.

8.   Revenue recognition
     8.1 Dividend income is recognised when the right to receive is established.
     8.2   Service fees and Trademark fees are recognised on accrual basis in accordance with terms of the relevant agreements.

9.   Taxes on Income
     9.1 Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is
          recognised on timing differences, being the difference between taxable income and accounting income that originate in
          one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are recognised only
          to the extent there is a reasonable certainty of its realisation.

NOTES
1.   Share Capital
     Paid up Equity Share Capital includes the following:
     a.    3,665,130 (3,665,130) Equity Shares of Rs.10 each allotted as fully paid Bonus Shares from General Reserves

     b.    1,650,000 shares with par value of Rs. 10 were allotted to the promoters/promoters group on a preferential basis at a
           premium of Rs. 170 per share as per Securities and Exchange Board of India (Disclosure and Investor Protection)
           Guidelines, 2000.

     c.    4,496,493 shares with par value of Rs.10 were allotted to the shareholders of Rane Engine Valves Limited (13,96.476) and
           Rane Brake Linings Limited (3,100,017) under the scheme of Demerger, Merger and Amalgamation approved by the
           Honorable High Court of Judicature at Madras.


                                                                                                                                         45
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE ACCOUNTS
     ACCOUNTING POLICIES AND NOTES (Contd.)

     2.   There is no liability towards Corporate dividend tax vide provision of Subsection (1A) of Section 115 - O of Income Tax Act,
          1961

     3.   Capital Reserve on merger has been transferred to General Reserve as per clause 21.7 (a (ii)) of the scheme of Demerger,
          Merger and Amalgamation approved by the shareholders of the Company and sanctioned by the High Court of Judicature at
          Madras.

     4.   Secured Loans:
          4.1 Term loans from IDBI Bank Limited and Citibank NA are secured by mortgage of the Company’s immovable properties.

          4.2   Cash credit is secured by mortgage of the Company’s immovable properties and also a charge on book debts both
                present and future.

     5.   Investments
          5.1   Details of purchases and sales/redemption of investments during the year
                Description                                                     Purchases                  Sales / redemption
                                                                                Nos.            Cost            Nos.            Cost
                                                                                            Rs. ‘000                        Rs. ‘000
                i)   Kar Mobiles limited                                       2,758          180.45
                ii) Rane Diecast Limited – Preference shares               6,000,000          60,000

          5.2   Consequent to the Demerger, Merger and Amalgamation proceedings, Shares of Rane Engine Valve Limited and Rane
                Brake Lining Limited remained unlisted as on 31.03.2008. They were subsequently listed in stock exchanges during the
                current year in June 2008.
     6.   Sundry Debtors
          6.1   Dues from companies under the same management:                                                              (Rs. ‘000)
                Rane Engine Valve Limited                                                                                      3,150
                Rane (Madras) Limited                                                                                          4,110
                Rane TRW Steering Systems Limited                                                                              8,905
                Rane Brake Lining Limited                                                                                      1,235
                Rane NSK Steerings Systems Limited                                                                                Nil
                Rane Investments Limited                                                                                          Nil
                Rane Diecast Limited                                                                                           1,006
                Kar Mobiles Limited                                                                                               Nil

     7.   Current Liabilities
          7.1 Current liabilities include Commission payable to Executive Chairman Rs. 3,950 (Rs. ‘000s) as computed in Note 8.2.
               Previous year – Rs. 6,000 (Rs.’000)
          7.2   There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

     8.   Expenses
          8.1   Audit fees:
                Auditors’ fees comprise the following                                                                       (Rs. ‘000)
                                                                                                         31.03.2009      31.03.2008
                Statutory Audit                                                                                  400             400
                Tax Audit                                                                                        100             100



46
                                                                                                            Annual Report 2008-09




SCHEDULES FORMING PART OF THE ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)

     8.2   Managerial Remuneration:
           A. Remuneration to Executive Chairman                                                                          (Rs. ‘000)
                                                                                                      31.03.2009      31.03.2008
              Salaries and Allowances                                                                       3,169
              Contribution to Provident and Other Funds                                                       751
              Perquisite value                                                                              1,439              483
              Commission                                                                                    3,950            6,000
              Sitting Fees                                                                                       –             138
              Total                                                                                         9,309           6,621

           B. Computation of Net Profit under Section 198 / 349 of the Companies Act, 1956

              Net Profit as per Profit and Loss Account                                                   182,845         228,561
              Add: Director’s sitting fees                                                                    755              863
              Commission                                                                                    3,950            6,000
              Total                                                                                       187,550         235,424

              Aggregate of the aforesaid remuneration is within the maximum permissible limit under Section 198 of the Companies
             Act, 1956.
9.   Disclosure as per AS 15 -Employee Benefits
     The Company has implemented Revised AS-15 and made the provisions accordingly. The disclosure as per Revised AS-15
     is produced below :
     The following tables set out details of amount recognised in the financial statements in respect of employee benefit schemes :
                                                                                                                          (Rs. ‘000)
     Defined benefit plan – Gratuity                                                                                      2008-09
     Present value of obligation at the beginning of the year                                                               3,849
     Interest Cost                                                                                                            220
     Current service cost                                                                                                     282
     Benefit paid                                                                                                           (450)
     Actuarial (gain)/loss on obligation                                                                                      519
     Present value of obliation as at the end of the year                                                                   4,420
     Fair value of plan assets at the beginning of the year                                                                 2,018
     Expected return on plan assets                                                                                           205
     Contribution                                                                                                           1,364
     Benefits paid                                                                                                          (450)
     Actuarial gain/l(loss) on plan assets                                                                                     94
     Fair value of plan assets at the end of the year                                                                       3,231
     Amounts recognised in the balance sheet
     Present value of obligation as at the end of the year                                                                   4,420
     Fair value of plan assets at the end of the year                                                                        3,231
     Funded status of the plan - (asset)/liability                                                                           1,189
     Amounts recognised in the statement of profit and loss
     Current service cost                                                                                                      282
     Interest cost                                                                                                             220
     Expected return on plan assets                                                                                            205
     Net Actuarial (gain)/loss recognised in the year                                                                          892
     Expenses recognised in the statement of profit and loss                                                                 1,189



                                                                                                                                       47
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE ACCOUNTS
     ACCOUNTING POLICIES AND NOTES (Contd.)
                                                                                                                            (Rs. ‘000)
        Defined benefit plan – Gratuity (Contd.)                                                                            2008-09
        Principal actural assumptions as at balance sheet date
        Discount rate                                                                                                            8%
        Salary escalation                                                                                                        8%
        Expected return on plan assets                                                                                           8%
        Attrition rate                                                                                                           5%

 10. Long Term Benefits- Compensated absence                                                                                (Rs. ‘000)
                                                                                                                            2008-09
        Principal actural assumptions as at balance sheet date
        Discount rate                                                                                                            8%
        Salary escalation                                                                                                        8%
        Attrition rate                                                                                                           5%

 11. As the activity of the Company relates to investments and services, disclosure requirements of quantitative particulars are not
        applicable.

 12. Expenditure in foreign currency during the financial year on account of :                                              (Rs. ‘000)
                                                                                                        31.03.2009       31.03.2008
        Travel                                                                                                  322              514
        Professional and consultancy charges                                                                   8,377           8,318


 13. Estimated amount of Contracts remaining to be executed on capital account and not provided for, net of advance - Nil
        (Rs. 1.97 million).

 14. Contingent Liabilities not provided for:                                                                               (Rs. ‘000)
                                                                                                        31.03.2009       31.03.2008
        Claims against the Company not acknowledged as debts                                                 27,321           13,105
        Guarantees issued                                                                                   146,500

        Contingent liabilities include
        a)    a sum of 8,548 (Rs. ’000s) being the income tax demand for the year 2004-05 which has been disputed by the Company
              and its appeal is pending disposal. In view of a favourable opinion issued by the tax counsel no provision has been made
              therefore.
 15. Deferred Tax Liability                                                                                                 (Rs. ‘000)
                                                                                                        31.03.2009       31.03.2008
        Deferred Tax Liability
        Depreciation                                                                                           9,764           9,362
        Leave salary                                                                                                             346
        Deferred Tax Asset
        Leave Salary                                                                                           1,367               –
        Net Deferred Tax Liability                                                                             8,397           9,708




48
                                                                                                    Annual Report 2008-09




SCHEDULES FORMING PART OF THE ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)
16. Related Party Transactions – Disclosure made in terms of Clause 32 of the Listing Agreement with Stock Exchanges.
    In accordance with AS 18 issued by ICAI, the following are the related party transactions:

                                                                                                                  (Rs. ‘000)
                                                                           31.03.2009                31.03.2008
    Related Party Transactions                                            Value    Outstanding      Value    Outstanding
    Associate Companies
    Service Fees Received                                                36,802                     42,054           3,493
    Trade Mark Fees Received                                              8,560            1,380     9,067           4,798
    Dividend Received                                                    12,615                      6,846
    Purchase of shares                                                                              95,238
    Subsidiary Companies
    Service Fees Received                                                64,418              881    72,423           2,895
    Trade Mark Fees Received                                             27,911            6,408    22,405           7,300
    Dividend Received                                                   111,682                    108,679
    Purchase of Equity shares                                                                       30,000
    Purchase of Preference Shares                                        60,000
    Loans granted
    (i) Rane Investments Limited                                                          43,000    88,000         63,000
    (ii) Rane Diecast Limited                                            28,000                     20,000         20,000
    Guarantee given – Rane Diecast Limited                              146.500         146,500
    Interest received                                                    11,363                      7,008
    Joint Venture Companies
    Service Fees Received                                                43,644                     46,584            344
    Trade Mark Fees Received                                             27,310            7,712    34,965           8,240
    Key Management Personnel
    Sitting fees                                                                                      138
    Salary and other perquisites                                          5,359
    Commission                                                            3,950                      6,000
    Acquired shares under open offer                                                                16,130
    Relatives of Key Management Personnel
    Sitting fees                                                            270                       303
    Acquired shares under open offer                                                                54,115




                                                                                                                               49
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE ACCOUNTS
     ACCOUNTING POLICIES AND NOTES (Contd.)


        Associate Companies                          : Rane Brake Lining Limited (RBL)
                                                        Kar Mobiles Limited (KML)
        Subsidiary Companies                         : Rane Investments Limited (RIL)
                                                        Rane Engine Valve Limited (REVL)
                                                        Rane (Madras) Limited (RML)
                                                        Rane Diecast Limited (RDL)
        Joint Venture Companies                      : Rane TRW Steering Systems Limited (RTSSL)
                                                        Rane NSK Steering Systems Limited (RNSSL)
                                                        JMA Rane Marketing Limited (JMA – RANE)
        Key Management Person                        : Mr. L Lakshman, Executive Chairman
        Relatives of Key Management Person           : Mr. L Ganesh, Mr. Harish Lakshman,
                                                        Mrs. Pushpa Lakshman, Mrs. Vanaja Aghoram,
                                                        Mrs. Shanti Narayan and Mr. Vinay Lakshman
 17. Figures of the previous year have been regrouped wherever necessary to confirm to this year’s grouping.

 18. Figures given in brackets in the notes pertain to the previous year.

 19. Schedules A to M, Accounting Policies 1 to 9 and Notes 1 to 18 annexed to the Balance Sheet and Profit and Loss Account
        form part of the accounts and should be read in conjunction therewith.




 As per our report of even date attached                                                          For and on behalf of the Board

 For D Rangaswamy & Co.
 Chartered Accountants

 B Ramani                                                                                                          L Lakshman
 Partner                                                                                                    Executive Chairman
 M.No.19603

 Place: Chennai                                                              C Siva                                   L Ganesh
 Date : 4th June, 2009                                                      Secretary                            Vice Chairman




50
                                                                                      Annual Report 2008-09




CASH FLOW STATEMENT For the year ended 31st March, 2009
                                                                                                     (Rs. ‘000)
                                                                                31.03.2009        31.03.2008
A) Operating Activities
   Net profit before tax and extra-ordinary items                                   182,845          228,560
   Adjustments for:
   Depreciation / Amortisation                                                        7,555             5,867
   Profit /Loss on sale of Investments - net                                                         (70,254)
   Diminishing investment value                                                                         4,206
   Profit / Loss on sale of Fixed Assets - net                                           3                (47)
   Operating Profit before working capital changes                                 190,403           168,332
   Changes in assets and liabilities
   Trade and other receivables                                                       18,018          (15,653)
   Trade payables                                                                  (34,651)          (23,805)
   Cash generated from operations                                                  173,770           128,874
   Interest Paid                                                                     19,950            22,676
   Direct taxes / Dividend tax paid (net of refund)                                (20,213)           (4,493)
   Net cash provided by Operating Activities                                       173,507           147,057
B) Cash flow from Investing Activities
   Purchase of Fixed Assets                                                          (4,463)         (28,884)
   Sale of fixed assets                                                                  188              341
   Sale of Investments                                                                   143           73,143
   Purchase of Investments                                                          (60,180)        (155,439)
   Net cash used in Investing Activities                                           (64,312)        (110,839)
C) Financing Activities
   Allotment of Preferential shares
   Redemption of preference shares                                                                     (8,750)
   Proceeds from long term borrowings                                               904,000           253,793
   Proceeds from Short term loans                                                                       23,908
   Repayment of long term borrowings                                               (946,768)        (133,190)
   Loan to Subsidiaries                                                              (28,000)         (88,000)
   Loan repayment by subsidiaries                                                      68,000           25,000
   Repayment of short term loan                                                      (23,908)         (33,250)
   Dividends paid                                                                  (141,699)          (41,040)
   Interest paid                                                                     (19,023)         (22,725)
   Net cash provided by Financing Activities                                      (187,398)          (24,255)
   Increase / (decrease) in cash and cash equivalents (A+B+C)                       (78,203)           11,964
   Cash outflow relating to merger/take over of business undertaking                                     3,450
D) Cash and cash equivalents - Opening Balance                                       91,370            75,956
E) Cash and cash equivalents - Closing Balance                                       13,167            91,370

As per our report of even date attached                                       For and on behalf of the Board
For D Rangaswamy & Co.
Chartered Accountants

B Ramani                                                                                       L Lakshman
Partner                                                                                  Executive Chairman
M.No.19603
Place: Chennai                                                     C Siva                           L Ganesh
Date : 4th June, 2009                                             Secretary                     Vice Chairman


                                                                                                                  51
     RANE HOLDINGS LIMITED




     BALANCE SHEET ABSTRACT and Company’s General Business Profile
     As per Schedule VI - Part IV to the Companies Act, 1956
     [Notification No.G.S.R.388(E)]
         I.   Registration Details
              Registration No.                                        2   2         0    2                                  State Code       1       8

              Balance Sheet Date           3      1   0       3       2   0         0    9
                                           Date       Month                   Year

          II. Capital Raised during the year (Amount in Rupees Thousands)

              Public/Preferential issue                               N   I     L       Rights Issue                                     N       I   L

              Bonus Issue                                             N   I     L       Private Placement                                N       I   L


         III. Position of Mobilisation and Deployment of Funds (Amount in Rupees Thousands)

              Total Liabilities                   2   0   3       7   9   8     5       Total Assets                   2    0    3   7   9       8   5

              Sources of Funds
              Paid-up Capital                         1   4       2   7   7     8       Reserves & Surplus             1    7    1   0   2       1   7

              Secured Loans                           1   7       6   5   9     3       Unsecured Loans                                  N       I   L

              Deferred Tax Liability                              8   3   9     7

              Application of Funds

              Net Fixed Assets                        1   5       9   8   2     4       Investments                    1    7    6   8   2       5   9

              Net Current Assets                      1   0       9   9   0     2       Misc. Expenditure                                N       I   L

              Accumulated Losses                                      N   I     L       Deferred Tax Asset                               N       I   L

         IV. Performance of Company (Amount in Rupees Thousands)

              Turnover                                3   4       9   6   6     9       Total Expenditure                   1    6   6   8       2   4

              Profit / (Loss) Before Tax              1   8       2   8   4     5       Profit / (Loss) After Tax           1    6   2   9       6   0

              Earning Per Share (Rs.)                     1       1   .   4     1       Dividend Rate %                                          4   0

         V. Generic Names of Three Principal Products / Services of Company (as per monetary terms)
              Not Applicable as the Company is investing in Group Companies

     As per our report of even date attached                                                                        For and on behalf of the Board
     For D Rangaswamy & Co.
     Chartered Accountants

     B Ramani                                                                                                                         L Lakshman
     Partner                                                                                                                    Executive Chairman
     M.No.19603
     Place: Chennai                                                                       C Siva                                         L Ganesh
     Date : 4th June, 2009                                                               Secretary                                   Vice Chairman


52
                                                                                                              Annual Report 2008-09




AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

To
The Board of Directors of
Rane Holdings Limited

We have audited the attached consolidated Balance Sheet of           We report that the consolidated financial statements have been
Rane Holdings Limited, its subsidiaries and joint ventures of a      prepared by the Company in accordance with the requirements
subsidiary (“the Group”) and associates as at 31st March, 2009,      of Accounting Standards (AS-21) on Consolidated Financial
the consolidated profit and Loss Account and the consolidated        Statements, Accounting Standard (AS-23) - Accounting for
cash flow statement of the Group for the year ended on that          Investments in Associates in Consolidated Financial Statements
date, annexed thereto. These consolidated financial statements       and Accounting Standard (AS-27) - Financial Reporting of
are the responsibility of the Rane Holdings Limited’s                Interests in Joint Ventures, issued by the institute of Chartered
management. Our responsibility is to express an opinion on the       Accountants of India and on the basis of the separate audited
financial statements based on our audit.                             financial statements of Rane Holdings Limited, its subsidiaries,
                                                                     joint ventures of a subsidiary and its associates included in the
We conducted our audit in accordance with generally accepted
                                                                     consolidated financial statements.
auditing standards in India. These standards require that we
plan and perform the audit to obtain reasonable assurance            On the basis of the information and explanations given to us
whether the financial statements are free of material                and on the consideration of the separate audit reports on
misstatement. An audit includes, examining on a test basis,          individual audited financial statements of Rane Holdings Limited
evidence supporting the amounts and disclosures in the               and its aforesaid subsidiaries, joint ventures of a subsidiary and
financial statements. An audit also includes assessing the           its associates, we are of the opinion that the consolidated
accounting principles used and significant estimates made by         financial statements give a true and fair view in conformity with
management, as well as evaluating the overall financial              accounting principles generally accepted in India.
statements presentation. We believe that our audit provides a        a. in the case of the Consolidated Balance Sheet, of the
reasonable basis for our opinion.                                       consolidated state of affairs of the Group as at 31st March,
We did not audit the financial statements of the subsidiaries and       2009;
joint venture of a subsidiary, whose financial statements reflect    b. in the case of the Consolidated Profit and Loss Account, of
total assets of Rs. 5,976 million as at 31st March, 2009 and total      the consolidated profit of the Group for the year ended on
revenue of Rs. 9,858 million and cash flows amounting to Rs. 38         that date; and
million for the year ended on that date, and associates whose        c. in the case of Consolidated Cash Flow Statement, of the
financial statements reflect the Group’s share of profit of Rs. 15      consolidated cash flows of the group for the year ended on
million for the year ended on that date as considered in the            that date.
consolidated financial statements. These financial statements
                                                                                                          For D Rangaswamy & Co.
have been audited by other auditors whose report have been
                                                                                                              Chartered Accountants
furnished to us, except in respect of JMA Rane Marketing
Limited, which has been consolidated on the basis of figures
furnished to us by the management and not reviewed by the
auditors, and our opinion, insofar as it relates to the amounts
                                                                                                                           B Ramani
included in respect of the subsidiaries, joint ventures of a
                                                                     Place: Chennai                                            Partner
subsidiary and associates, except JMA Rane Marketing Limited,
                                                                     Date : 4th June, 2009                             M. No.: 19603
is based solely on the reports of the other auditors.




                                                                                                                                         53
     RANE HOLDINGS LIMITED




     CONSOLIDATED BALANCE SHEET As at 31st March, 2009                                                                     (Rs. ‘000)
                                                         Schedule                        31.03.2009                     31.03.2008
     SOURCES OF FUNDS
     Shareholders' Funds
     Capital                                                  A              142,778                        142,778
     Reserves and Surplus                                     B            2,809,676                      2,758,446
                                                                                          2,952,454                      2,901,224
     Deferred grants                                                                            455                            503
     Minority Interest                                                                      727,729                        355,443
     Loan Funds
     Secured Loans                                            C            1,729,500                        813,732
     Unsecured Loans                                          D              285,885                         39,806
                                                                                          2,015,385                        853,538
     Deferred Tax Liability                                                                  79,196                         44,330
                                                                                          5,775,219                      4,155,038
     APPLICATION OF FUNDS
     Fixed Assets                                             E
     Gross Block                                                           6,636,520                      3,551,605
     Less: Accumulated Depreciation                                        2,750,156                      1,545,219
     Less : Impairment of assets                                               1,600
     Net block                                                             3,884,764                      2,006,386
     Capital Work-in-progress                                                197,775                        170,748
                                                                                          4,082,539                      2,177,134
     Investments                                              F                             323,973                      1,256,634
     Current Assets, Loans and Advances
     Inventories                                              G            1,146,551                        720,315
     Sundry Debtors                                           H            1,103,638                        792,241
     Cash and Bank balances                                   I              147,839                        129,990
     Loans and Advances                                       J              456,934                        241,706
                                                                           2,854,962                      1,884,252
     Less: Current Liabilities and Provisions
     Liabilities                                              K            1,354,196                      1,055,595
     Provisions                                               L              133,997                        110,185
                                                                           1,488,193                      1,165,780
     Net Current Assets                                                                   1,366,769                        718,472
     Miscellaneous Expenditure to the extent not written off or adjusted                      1,938                          2,798
                                                                                          5,775,219                      4,155,038

 Schedules referred to above form an integral part of these accounts



 As per our report of even date attached                                                              For and on behalf of the Board

 For D Rangaswamy & Co.
 Chartered Accountants

 B Ramani                                                                                                              L Lakshman
 Partner                                                                                                        Executive Chairman
 M.No.19603

 Place: Chennai                                                               C Siva                                      L Ganesh
 Date : 4th June, 2009                                                       Secretary                                Vice Chairman


54
                                                                                                         Annual Report 2008-09




CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2009                                              (Rs. ‘000)
                                                     Schedule                       31.03.2009                     31.03.2008
INCOME
Sales and Operating Revenue                             M             8,005,808                      5,772,002
Other Income                                            N               144,268                        199,731
Total Income                                                                         8,150,076                      5,971,733
EXPENDITURE
Manufacturing and Other Expenses                        O             7,377,285                      5,291,276
Finance Charges                                         P               198,303                        110,262
Depreciation                                                            359,342                        206,553
Total Expenditure                                                                    7,934,930                      5,608,091
Profit Before Tax                                                                      215,146                        363,642
Exceptional Items (Profit on sale of properties)                                                                      491,196
Prior period adjustments                                                                 2,774
Provision for Taxation - Current                                         80,757                        258,853
                          - MAT credit entitlement                      (4,310)
                          - Deferred                                   (21,904)                       (32,317)
                          - Fringe Benefit Tax                           10,108       (64,651)           9,123       (235,659)
Profit After Tax                                                                      153,269                          619,179
Minority Interest                                                                      (2,997)                       (161,859)
Share of Profits from Associates                                                        15,382                          48,442
Consolidated Profits                                                                  165,654                          505,762
Surplus brought forward (Refer Schedule B)                                            657,068                          408,184
Amount Available For Appropriation                                                    822,722                          913,946
Less: Transfer to Capital Redemption Reserve                                                            20,000
Less: Dividend on Preference Shares :
        Dividend @ Nil (13.5%)                                                                           1,665
        Dividend on Equity Shares:
        Interim Dividend @ 40 % (60%)                                   57,111                          85,667
Provision for tax on distributed profit                                 41,444                          66,727
Transfer to General Reserve                                             43,058                          82,819
                                                                                      141,613                         256,878
Surplus carried to Balance Sheet                                                      681,109                         657,068
Earnings Per Share
Basic (Rs.)                                                                              11.60                          35.29
Diluted (Rs.)                                                                            11.60                          35.29
Number of shares used in computing Earnings per Share                               14,277,800                     14,277,800

Schedules referred to above form an integral part of these accounts




As per our report of even date attached                                                          For and on behalf of the Board

For D Rangaswamy & Co.
Chartered Accountants

B Ramani                                                                                                          L Lakshman
Partner                                                                                                    Executive Chairman
M.No.19603

Place: Chennai                                                           C Siva                                      L Ganesh
Date : 4th June, 2009                                                   Secretary                                Vice Chairman




                                                                                                                                   55
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET As at 31st March, 2009 (Rs. ‘000)
                                                                                                    31.03.2009     31.03.2008

     Schedule A CAPITAL (Note 1)
 Authorised
 15,000,000 (15,000,000) Equity Shares of Rs.10 each                                                   150,000        150,000
 5,000,000 (5,000,000) 13.5% Cumulative Redeemable Preference Shares of Rs.10 each                      50,000         50,000
                                                                                                       200,000        200,000
 Issued, Subscribed, and Paid-up
 14,277,809 (14,277,809) Equity Shares of Rs. 10 each fully paid-up                                    142,778        142,778
                                                                                                       142,778        142,778




     Description                                                            As at      Additions   Deductions /       Balance
                                                                      31.03.2008      during the   adjustments           as at
                                                                                            year during the year   31.03.2009

     Schedule B RESERVES AND SURPLUS (Note 2)
     Capital Subsidy                                                          2,192                                      2,192
     Reserve fund                                                            16,900                                     16,900
     Capital Reserve                                                          5,044                                      5,044
     Capital Redemption Reserve                                              66,250           –                         66,250
     Investment Allowance reserve                                             1,854                                      1,854
     Capital Reserve on Amalgamation                                        727,006                     518,629       208,377
     Securities Premium                                                     589,505                                   589,505
     Hedge Reserve account                                                                               13,858       (13,858)
     General Reserve                                                      692,634       559,669                     1,252,303
     Surplus in Profit and Loss Account                                   657,061       681,109         657,061       681,109
     Total                                                              2,758,446     1,240,778       1,189,548     2,809,676




                                                                                                    31.03.2009     31.03.2008

     Schedule C SECURED LOANS
     Term Loans from Banks/ Financial Institutions                                                    1,013,337       542,967
     Interest accrued and due                                                                             1,062           386
     Interest free sales tax loan                                                                        61,273         2,315
     Advances from Banks - Cash Credit                                                                  653,828       268,064
                                                                                                      1,729,500       813,732




     Schedule D UNSECURED LOANS
     Fixed Deposits                                                                                     64,020         20,725
     Short term loan from banks/ Financial Institutions                                                215,236
     Karnataka State Government (Interest free) Sales Tax Deferral Scheme                                6,629         19,081
                                                                                                       285,885         39,806



56
                                                                                                                                                   Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET As at 31st March, 2009 (Rs. ‘000)
Schedule E FIXED ASSETS

DESCRIPTION                                         GROSS BLOCK                                                   DEPRECIATION                                     NET BLOCK
                             As at    Additions /     Deductions/ Additions on       As at       As at For the Deductions/     Additions on        As at            As at         As at
                         31 Mar 08   Adjustments     Adjustments Consolidation   31 Mar 09   31 Mar 08    year Adjustments Consolidation       31 Mar 09    31 Mar 09         31 Mar 08
Goodwill                   451,282             –               –       426,888     878,170           –       –           –                –            –         878,170        451,282
Licence                     30,135         2,118               –         7,894      40,147      26,977    4,295          –             3,289      34,561           5,586          3,158
Land - Leasehold             6,719        13,961               –             –      20,680         62     1,248          –                –        1,310          19,370          6,657
Land - Freehold            127,551        21,483               –        13,607     162,641           –       –           –                –            –         162,641        127,551
Buildings                  346,943       176,078             289       112,410     635,142      70,337   17,269        274          52,978       140,310         494,832        276,606
Plant and Machinery      2,433,557       835,608           43,191    1,441,757   4,667,731   1,348,384 307,207      34,098         781,773     2,403,266        2,264,465     1,085,173
Furniture and Fittings      45,391        14,736            1,983       35,566      93,709      23,816   10,608      1,151          29,480        62,754          30,956         21,575
Office Equipment            97,846         8,290             498        13,346     118,984      68,101   15,939        383          11,993        95,649          23,334         29,745
Vehicles                     9,424         2,477             511         5,169      16,559       4,787    2,775        466             2,453       9,550           7,009          4,637
Others                       2,756             –               –             –       2,756       2,756       –           –                –        2,756               –              –
Total                    3,551,604     1,074,751          46,472     2,056,637   6,636,520   1,545,220 359,342      36,373         881,966     2,750,156    3,886,364         2,006,384
Previous year            2,832,161       456,278           71,658      334,823   3,551,604   1,333,035 206,554      49,678          55,309     1,545,220        2,006,384     1,499,126




                                                                                                                                                                            (Rs. ‘000)
                                                                      Face Value                                    31.03.2009                                       31.03.2008
                                                                                              No. of Shares               Value          No. of Shares                     Value
Schedule F INVESTMENTS
(1) Long Term
A. Quoted
        Equity Shares Fully Paid up
        Trade
        Kar Mobiles Limited                                                 10                       828,949                 56,336              826,191                     53,133
        Rane Brake Lining Limited                                           10                    3,081,624             140,215                3,081,624                    127,856
        Sona Koya Steering Systems Limited                                  1                            4,000                     7                2,000                           7
        Non Trade
        Subsidiary Companies
        Rane Engine Valve Limited                                           10                                                                 2,657,285                    864,843
B. Unquoted
(i) Equity Shares Fully Paid up
        Trade
        JMA Rane Marketing Limited                                          10                                                                   360,003                       3,600
        Non Trade
        Other Companies
        Wellingdon Corporate Foundation                                     10                              60                     1                       60                       1




                                                                                                                                                                                          57
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET As at 31st March, 2009
                                                                                                                  (Rs. ‘000)
                                                    Face Value                   31.03.2009                    31.03.2008
                                                                 No. of Shares         Value   No. of Shares         Value
     Schedule F INVESTMENTS (Contd.)
     (2) Current - Unquoted
     (i) Mutual Fund :
        UTI Liquid Cash Plan institutional             10                                           144,108           143
        Birla Short Term Fund                          10           1,634,506        16,354       2,333,894        25,212
        HDFC Cash Management Fund                      10           2,064,393        21,957
        Kotak Liquid Fund                              10           2,237,819        22,557       2,777,325        33,962
        Sundaram BNP Money Fund Surplus                10                                         2,498,346        25,222
        Prudential ICICI Liquid Fund                   10           2,637,825        26,384       2,021,637        20,218
        UTI Liquid Fund                               1,000                                          80,812        82,381
        SBI Premier Liquid Fund                        10                                         1,994,165        20,007
        IDFC Cash Fund                                 10           3,257,512        32,580
        Reliance Medium Term Fund                      10             440,588         7,532
     (ii) Investment in Government Securities :
        National Savings Certificate                                                     50                             50
                                                                                    323,973                     1,256,634
     Aggregate value of Investments :
     Quoted -Market value Rs.192,262 (Rs.136,321)                                   196,558                        53,133
     Unquoted                                                                            51                       996,356
     Mutual Funds / Short Term Investments                                          127,364                       207,145

                                                                                                                  (Rs. ‘000)
                                                                                                31.03.2009     31.03.2008

     Schedule G INVENTORIES
 Stores and Spares                                                                                 134,911         72,372
 Loose Tools                                                                                        36,145         27,996
 Raw Materials and Components                                                                      395,557        233,030
 Goods in Transit and Bond                                                                          77,595         83,614
 Work-in-progress                                                                                  146,966         95,153
 Finished Goods                                                                                    355,377        208,150
                                                                                                 1,146,551        720,315

     Schedule H SUNDRY DEBTORS (Unsecured)
     Considered good
     Over six months old                                                                             52,973        13,221
     Others                                                                                       1,050,665       778,857
                                                                                                  1,103,638       792,078
 Considered doubtful
 Over six months old                                                                                14,504          5,324
 Less : Provision for doubtful debts                                                                14,504          5,161
                                                                                                 1,103,638        792,241




58
                                                                                                          Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET As at 31st March, 2009
                                                                                                                      (Rs. ‘000)
                                                                                                 31.03.2009        31.03.2008

Schedule I CASH AND BANK BALANCES
Cash balance on hand                                                                                      1,964          1,417
Cheques / DDs on hand                                                                                     1,111          5,626
Scheduled Banks
Current Accounts                                                                                     69,477           114,729
Fixed Deposits (made under Companies (Acceptance of Deposits) Rules, 1975)                           28,588             8,218
Deposits under capital gains scheme                                                                  46,699
                                                                                                    147,839           129,990



Schedule J LOANS AND ADVANCES
Advances recoverable in cash or in kind or for value to be received                                 207,220           172,830
Advance payment of Income Tax (Net of Provisions)                                                    91,368             8,351
Deposits                                                                                             39,566            20,920
Interest accrued on Deposits                                                                          2,036               833
MAT Credit Availment                                                                                  5,937
Balance with Customs, Excise and other authorities                                                  111,157            39,122
Provision for doubtful advances                                                                       (350)             (350)
                                                                                                    456,934           241,706


Schedule K CURRENT LIABILITIES
Acceptances                                                                                           41,608           90,204
Sundry Creditors For Goods
Due to Small Scale Industries                                                                        33,395            26,384
Others                                                                                            1,045,244           700,902
For Other Liabilities                                                                               189,395           119,554
Tooling advance received from customers                                                              31,436            22,892
Unclaimed dividends (**)                                                                              3,480            92,133
Unclaimed matured fixed deposits (**)                                                                    80                28
Fixed deposit interest paid but not encashed (**)                                                       455
Interest accrued but not due on loans / deposits                                                      9,103             3,498
                                                                                                  1,354,196         1,055,595

(**) There are no amounts due and outstanding to be credited to investor Education and Protection Fund.

Schedule L PROVISIONS
Provision for tax                                                                                    917,289          932,674
Less : Advance payments and tax deducted at source                                                   907,559          934,121
                                                                                                       9,730           (1,447)
Provision for Leave Liquidation Salary                                                                60,198           28,174
Provision for FBT (net of advance tax payments)                                                                            712
Provision for warranty                                                                               49,140            40,411
Provision for tax on distributed profits                                                             14,929            42,335
                                                                                                    133,997           110,185



                                                                                                                                   59
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2009
                                                                                                     (Rs. ‘000)
                                                                                     31.03.2009    31.03.2008

     Schedule M SALES AND OPERATING REVENUE
 Sales                                                                                 8,619,534    6,406,345
 Less : Excise Duty                                                                      771,229      774,690
                                                                                       7,848,305    5,631,655
     Operating Revenue
     Sale of Scrap                                                                        93,735       83,861
     Job order receipts                                                                      258        1,502
     Interest - trade                                                                      9,683        5,392
     Other Operating Revenue                                                              53,827       49,592
                                                                                       8,005,808    5,772,002


     Schedule N OTHER INCOME
     Income from Trade Investments
     Dividend from investments - Gross                                                    38,691      21,120
     Profit on Sale of Investments                                                                    18,560
     Profit on Sale of Assets                                                             1,853        1,287
     Service Fees                                                                        58,624      102,421
     Trade mark fee                                                                      22,215       36,400
     Liability no longer required written back                                           12,891        8,613
     Other Income                                                                         9,994       11,330
                                                                                        144,268      199,731


     Schedule O MANUFACTURING AND OTHER EXPENSES
     Opening Stock
     Finished Goods                                                                      300,438      287,420
     Work-in-progress                                                                    141,529       94,538
     Raw materials and Components consumed                                             4,514,500    3,378,894
     Stores and Tools consumed                                                           411,651      258,039
     Power and Fuel                                                                      230,385      124,236
     Royalty and Technical Fees                                                            5,665        1,277
     Trademark Fees                                                                       15,461       17,915
     Repairs and Maintenance
         Plant and Machinery                                                             124,411       77,480
         Buildings                                                                        34,679       42,495
         Others                                                                           32,970       43,000
     Salaries, Wages and Bonus                                                           919,587      503,830
     Contribution to Provident and other funds                                           107,820       63,610
     Staff Welfare Expenses                                                              120,468       77,252
     Rent                                                                                 11,077        7,198
     Insurance                                                                            27,937       20,680
     Rates and Taxes                                                                      20,984       20,537
     Travelling and Conveyance                                                            80,399       63,756
     Professional Charges                                                                 70,097       57,713
     Information system Infrastructure Expenses                                           42,797       64,150
     Administrative Expenses                                                              19,572       21,609



60
                                                                                     Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2009
                                                                                                 (Rs. ‘000)
                                                                                31.03.2009    31.03.2008

Schedule O MANUFACTURING AND OTHER EXPENSES (Contd.)
Selling and Distribution Expenses
   Freight Outward                                                                  112,134      124,089
   Packing and Forwarding                                                           182,364       98,908
   Commission                                                                        50,953       12,512
   Advertisement and Sales Promotion                                                 23,623       26,675
   Discount and Incentive                                                            32,933       24,437
   Provision for doubtful debts/Bad debts written off                                 6,384        2,229
   Warranty Claim                                                                    47,006       51,860
   Other marketing expenses                                                          25,070       19,311
Miscellaneous working expenses                                                       43,847       10,591
Bad & Doubtful debts Written off                                                      1,529          249
Directors' Sitting Fees & Commission                                                  2,803        2,118
Audit Fees                                                                            4,214        3,199
Loss on Sale of Assets                                                                  475           73
Loss on Sale of Investments/ Diminution in value                                                   4,222
Assets Written Off / Provision for Retirement of Assets                               3,213
Exchange Loss                                                                        86,950       13,272
Advances written off                                                                    418
Bank Charges                                                                         22,105        7,387
Donation                                                                              1,180        2,050
                                                                                  7,879,628    5,628,811
Less : Closing Stock
Finished Goods                                                                      355,377      242,382
Work-in-progress                                                                    146,966       95,153
                                                                                  7,377,285    5,291,276




Schedule P FINANCE CHARGES
Interest on Term Loans                                                              93,653        70,321
Interest on Fixed Deposits                                                           5,193         1,805
Interest on Cash Credit                                                             93,944        31,686
Other Interest                                                                       5,513         6,450
                                                                                   198,303       110,262




                                                                                                              61
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
     ACCOUNTING POLICIES AND NOTES
     ACCOUNTING POLICIES
     1. Principles of Consolidation
        The consolidated financial statements have been prepared on the following basis
         1.1   The Financial statements of the Company, its subsidiaries, Interests in Joint Ventures held through a subsidiary and
               investments in Associate companies are consolidated in accordance with Accounting Standard 21 (AS 21) –
               “Consolidated Financial Statements”, Accounting Standard 27 (AS 27) – “Financial Reporting of Interests in Joint
               Ventures” and Accounting Standard 23 (AS 23) – “Accounting for Investments in Associates in Consolidated Financial
               Statements” issued by Institute of Chartered Accountants of India, as detailed below:

         1.2   The financial statements of the parent company and its subsidiaries have been consolidated on a line-by-line basis by
               adding together the book values of like items, assets, liabilities, income and expenses, after eliminating intra-company
               balances, intra company transactions and unrealised profits/losses on intra-company transactions.

         1.3   The Company’s interests in joint ventures held through a subsidiary have been consolidated by including the subsidiary’s
               share of revenues, common expenses, assets and liabilities respectively in the joint ventures and then eliminating minority
               interest in the subsidiary.

         1.4   Investments in associate companies have been accounted for by using equity method whereby investment is initially
               recorded at cost and the carrying amount is adjusted thereafter for post acquisition change in the Company’s share of
               net assets of the associates.

         1.5   Goodwill/ Capital reserve arising on investment in Subsidiary and joint ventures are separately recognised in the
               consolidated financial statements. Goodwill/capital reserve arising on the acquisition of an associate is included in the
               carrying amount of investment in the associate. Goodwill is tested for impairment on annual basis.

         1.6   Investments other than in subsidiary, Joint Ventures and Associates have been accounted as per Accounting standard
               13 (AS 13) – “Accounting for Investments”

               Companies included in Consolidation

               Companies                                                            Equity shares held                % of voting power held
                                                                                31-03-2009         31-03-2008        31-03-2009        31-03-2008
               Subsidiaries
               Rane Investments Limited                                              845,000           845,000            100.0%            100.0%
               Rane (Madras) Limited                                               5,438,125         5,438,125             53.5%             53.5%
               Rane Diecast Limited                                                7,700,100         7.700,100             78.7%             78.7%
               Rane Engine Valve Limited **                                        2,657,285                               51.6%
               Interest in Joint Ventures held by the Company
               and through subsidiary
               Rane TRW Steering Systems Limited                                   4,369,115         4,369,115             50.0%              50.0%
               Rane NSK Steering Systems Limited                                   8,950,000         8,950,000             50.0%              50.0%
               JMA Rane Marketing Limited                                           3,60,003          3,60,003             49.0%              49.0%
               Interests in Associates – held by the Company
               and through its subsidiary
               Rane Brake Lining Limited                                           3,081,624         3,081,624             42.7%              42.7%
               Kar Mobiles Limited                                                   828,949           826,191             37.0%              36.9%
               Rane Engine Valve Limited **                                                          2,657,285                                51.6%

               * All the above companies are incorporated in India
                ** Financial statements of Rane Engine Valve Limited have been consolidated as a subsidiary during the current year while it was
                   consolidated as an associate in the previous year. Consequently, consolidated results for the year are not strictly comparable with
                   those of the previous year.


62
                                                                                                                Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)

     1.7   Financial results of JMA Rane Marketing Limited have been included in the consolidated results on the basis of
           management accounts not reviewed by auditors.
2.   Basis of preparation of Financial Statements
     2.1 The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis. The
          Financial Statements are prepared in accordance with generally accepted accounting principles and accounting policies
          that are based on mandatory accounting standards as applicable.
3.   Fixed Assets
     3.1 Fixed Assets are stated at cost of acquisition or construction, net of cenvat credit and depreciation. Cost includes direct
          cost and financing cost related to borrowing attributable to acquisition that are capitalised until the assets are ready for
          use. Capital work-in-progress includes cost of assets not ready for their intended use and includes advances paid to
          acquire fixed assets.
4.   Depreciation
     4.1 Depreciation is charged on straight-line basis at rates specified in Schedule XIV of the Companies Act, 1956.
     4.2   Depreciation on the following assets is charged on the basis of their estimated useful lives at rates higher than those
           prescribed in the Companies Act, 1956.

                Assets                                                                                    Useful life (years)
           1.   Vehicles                                                                                           5
           2.   Furniture and Fittings                                                                             5
           3.   Office Equipment                                                                                   3
           4.   Lab equipment                                                                                      3
           5.   Jigs and Fixtures (included in Plant and Machinery)                                                3

     4.3   Depreciation is provided pro-rata with reference to the month of addition / deletion.
     4.4   Assets costing less than Rs.10,000 each are fully depreciated in the year of acquisition.
5.   Investments
     5.1 Investments are categorised into Long Term and Current Investments.
     5.2   Long Term Investments are valued at cost and current investments are valued at lower of cost and fair value.
     5.3   Any decline in the value of long-term investments (other than associates) is recognised by reducing the value of
           Investments unless such reduction is of a temporary nature.
6.   Foreign currency transactions
     6.1 Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.
     6.2   Gain or loss in respect of foreign exchange fluctuation on transactions concluded during the year is recognised as income
           or expenditure of the year.
     6.3   Current assets and current liabilities (other than those relating to fixed assets) in foreign currencies are translated at the
           rates of exchange prevailing on the balance sheet date. Gain or loss arising on such transactions is recognised as
           income or expenditure of the year.
     6.4   Gain or loss on translation of long term liabilities utilised for acquisition of fixed assets is adjusted against the carrying
           cost of the relevant fixed asset.
     6.5   In respect of forward contracts, the exchange differences are dealt with in the Profit and Loss Account over the period of
           the contracts. Realised gains or losses on cancellation of forward contracts are recognised in the Profit and Loss Account
           of the year in which they are cancelled.




                                                                                                                                         63
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
     ACCOUNTING POLICIES AND NOTES
          6.6   Derivative Instrument and hedge accounting
                As per Accounting Standard AS 30 “Financial Instrument : Recognition and measurement”, the Company has provided
                for the effective portion for the changes in the fair values of forward contracts and options designated as cash flow
                hedges directly in ‘Hedge Reserve Account’ being part of the shareholders’ funds.
     7.   Borrowing costs
          7.1 Borrowing costs attributable to acquisition or construction of qualifying assets are capitalised as part of the cost of such
               assets. Qualifying assets are those that take substantial time to get ready for intended use. All other borrowing costs
               are recognised as revenue in nature.
     8.   Inventories
          8.1 Raw materials, work in progress and finished goods are valued at lower of cost and net realisable value. Other items of
               inventory are valued at cost. Cost is determined on weighted average basis. Cost includes conversion and other costs
               incurred in bringing the inventories to the present location and condition.
     9.   Capital Subsidy
          9.1 Lumpsum Capital Subsidies, not relating to any specific fixed asset, received from State Government for setting up new
               projects, are accounted as capital reserve
     10. Employee Benefits
         10.1 Short term
              Short term Employee Benefits including accumulated compensated absence and Voluntary Retirement Scheme are
              recognised as expense as per the Company’s scheme based on expected obligations on undiscounted basis.
          10.2 Post retirement
               Post retirement Benefits comprise Provident Fund, Superannuation Fund and Gratuity which are accounted for as follows:
                Provident Fund
                This is a defined contribution plan, and contributions made to the Fund are charged to Revenue. The Company has no
                further obligations for future provident fund benefits other than annual contributions.
                Superannuation Fund
                This is a defined contribution plan. The Company contributes a sum equivalent to 15% of eligible employees’ salary
                towards superannuation fund administered by the Trustees and managed by Life Insurance Corporation of India ( LIC).
                The Company has no further obligations for future superannuation benefits other than its annual contributions and
                recognises such contributions as expense as and when due.
                Gratuity
                This is a defined benefit plan. The Company’s scheme is administered by LIC. The liability 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 assumptions, are recognised immediately in the profit and loss account as income
                or expense.
                Long term
                Long term employee benefits represent compensated absence which is provided for based on actuarial valuation using
                projected unit credit method.
     11. Revenue recognition
         11.1 Sales are recognised on despatch of goods and recorded net of sales return and trade discounts and exclude sales tax
              and other charges.
          11.2 Sales include excise duty recovered.
          11.3 Dividend income is recognised when the right to receive is established
          11.4 Service fees and Trademark fees are recognised on accrual basis in accordance with terms of the relevant agreement


64
                                                                                                            Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)
12. Income Tax
    12.1 Current tax is determined as the amount of tax payable in respect of taxable income for the period.
     12.2 Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income
          that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are
          recognised only to the extent there is a reasonable certainty of its realisation.
13. Impairment of Fixed Assets
    13.1 Consideration is given at each Balance Sheet date, to determine whether there is any indication of impairment on the
         carrying amount of the Company’s fixed assets. If any indication exists, an asset’s recoverable amount is estimated and
         impairment loss is recognised whenever the carrying amount of an asset exceeds recoverable amount.
14. Provisions and Contingent Liabilities
    14.1 Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation
         as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not
         recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial
         statements.
15 . Earnings per share
     15.1 Earnings per share is determined by considering the net profit after tax attributable to Equity Shareholders and the
          weighted average number of shares outstanding at the year-end.

NOTES
1.   Share Capital
     Paid up Equity Share Capital includes the following:
     a.   3,665,130 Equity Shares of Rs.10 each allotted as fully paid Bonus Shares from General Reserves
     b.    1,650,000 shares with par value of Rs. 10 were allotted to the promoters/promoters group on a preferential basis at a
           premium of Rs. 170 per share as per Securities and Exchange Board of India (Disclosure and Investor Protection)
           Guidelines, 2000.
     c.    4,496,493 shares with par value of Rs.10 were allotted to the shareholders of Rane Engine Valves Limited (13,96.476) and
           Rane Brake Linings Limited (3,100,017) under the scheme of Demerger, Merger and Amalgamation approved by the
           Honourable High Court of Judicature at Madras.
2.   Reserves and Surplus
     Capital Reserve on amalgamation has been transferred to General Reserve as per clause 21.7 (a (ii)) of the scheme of
     Demerger, Merger and Amalgamation approved by the shareholders of the Company and sanctioned by the High Court of
     Judicature at Madras.
3.   Secured Loans:
     3.1 Term loans from Banks are secured on a pari passu basis by a first charge created / to be created of the Company’s
          immovable properties both present and future and are also secured by hypothecation of the Company’s movable
          properties both present and future, subject to prior charge on the book debts and inventories in favour of the bankers for
          working capital facilities.
     3.2   Cash credit and packing credit facilities are secured by a pari passu first charge by way of hypothecation of inventories
           and book debts and are also secured by a second charge on immovable properties and movable fixed assets of the
           Company both present and future.
     3.3   Interest Free Sales Tax Loan represents the loan amount eligible for deferment under liberalised scheme introduced by
           Government of Tamil Nadu. This loan is subject to a second charge on the Fixed Assets of the Seatbelt plant and Power
           Rack and Pinion plant to be created in favour of the Sales Tax Department.



                                                                                                                                       65
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
     ACCOUNTING POLICIES AND NOTES

     4.    Investments
          4.1 Details of purchases and sales/redemption of investments during the year                                 (Rs. Million)

                Description                                                   Purchases                  Sales / redemption
                                                                              Nos.           Cost            Nos.             Cost
                 1.   Kar Mobiles Limited                                    2,758             0.1
                 2.   Birla Short Term Fund                              4,576,650              44      5,276,038               53
                 3.   HDFC Cash Management Fund                          7,976,250            145       5,911,858               62
                 4.   Templeton Mutual Fund                              4,329,640             43       4,329,640               43
                 5.   Kotak Liquid Fund                                  2,545,774             26       3,085,280               37
                 6.   Sundaram BNP Fixed Maturity Plan                     750,000               8        750,000                8
                 7.   Sundaram BNP Money Fund Surplus                       51,431               1      2,549,777               26
                 8.   Prudential ICICI                                   4,287,958              45      3,671,769               39
                 9.   UTI Liquid Fund                                        1,665               2         82,478               84
                10.   SBI Premier Liquid Fund                            3,593,424             36       5,587,589               56
                11.   LIC Fixed Maturity Plan                            1,000,000             10       1,000,000               10
                12.   LIC Liquid Fund                                      503,144               5        503,144                5
                13.   IDFC Cash Fund                                     3,257,512             33
                14.   Reliance Medium Term Fund                            440,588               8

     5.   Goodwill
          5.1 There is no impairment in cash flow generation of the Company’s subsidiaries/ associates/joint ventures as on
              31st March, 2009. Hence no impairment on goodwill is provided for the year.
     6.   Sundry Debtors
          6.1   Dues from companies under the same management:                                                           (Rs. ‘000)
                Rane Engine Valve Limited                                                                                   3,150
                Rane (Madras) Limited                                                                                       4,110
                Rane TRW Steering Systems Limited                                                                           8,905
                Rane Brake Lining Limited                                                                                   1,235
                Rane NSK Steerings Limited                                                                                     Nil
                Rane Investments Limited                                                                                       Nil
                Rane Diecast Limited                                                                                        1,006
                Kar Mobiles Limited                                                                                            Nil

     7.   Current Liabilities
          7.1 Current liabilities include Commission payable to Executive Chairman Rs. 3,950 (Rs. ‘000s) as computed in Note 10.

     8.   There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund

     9.   Manufacturing and Other Expenses
          9.1 Raw Material and Components consumed:                                                                      (Rs. ‘000)
                                                                                                      31.03.2009      31.03.2008
                Opening Stock                                                                             536,332          96,022
                Add : Purchases during the year                                                         4,373,725      3,762,401
                                                                                                        4,910,057      3,858,423
                Less: Closing Stock                                                                       395,557        536,332
                Consumption during the year                                                             4,514,500      3,322,091


66
                                                                                                      Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)

    9.2   Audit fees
          Auditors’ fees comprise the following                                                                    (Rs. ‘000)
                                                                                                 31.03.2009     31.03.2008
          Statutory Audit                                                                              3,109          2,491
          Tax Audit                                                                                     468             328
          Others (Out of pocket expenses)                                                               620             281

10. Managerial Remuneration
    A.    Remuneration to Executive Chairman
          Salaries and Allowances                                                                     3,169
          Contribution to Provident and Other Funds                                                     751
          Perquisite value                                                                            1,439             483
          Commission                                                                                  3,950           6,000
          Sitting Fees                                                                                    –             138
          Total                                                                                       9,309           6,621

    B.    Computation of Net Profit under Section 198 / 349 of the Companies Act, 1956
          Net Profit as per Profit and Loss Account                                                 182,845        228,561
          Add: Director’s sitting fees                                                                  755            863
          Commission                                                                                  3,950          6,000
          Total                                                                                     187,550        235,424

          Aggregate of the aforesaid remuneration is within the maximum permissible limit under Section 198 of the Companies
          Act, 1956

11. Research & Development Cost :          Rs.’000s
    Capital expenditure                    Rs. 20,985 (Rs. 18,615)
    Revenue expenditure                    Rs. 55,662 (Rs. 36,413)

12. Expenditure in foreign currency during the financial year on account of :                                      (Rs. ‘000)
                                                                                                 31.03.2009     31.03.2008
    Travel                                                                                             5,465          5,236
    Professional and Consultancy                                                                     10,743          15,646
    Royalty                                                                                             538              93
    Others                                                                                           54,335          16,302


13. Estimated amount of contracts remaining to be executed on capital account (net of advance) including share in JVs and not
    provided for is Rs. 96.77 Millions (Rs. 152.77 Millions)

14. Contingent Liabilities not provided for (including proportionate share in JVs):
                                                                                                                   (Rs. ‘000)
                                                                                                 31.03.2009     31.03.2008
    Letter of Credits & Guarantees issued by Bank                                                    86,680          28,457
    Guarantees issued/Undertakings given                                                            165,747           4,714
    Bills discounted                                                                                101,398           4,279
    Claims against the Company not acknowledged as debts                                            128,098          64,470


                                                                                                                                67
     RANE HOLDINGS LIMITED




     SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
     ACCOUNTING POLICIES AND NOTES

     15. Segment reporting :
         The entire operations of the Companies consolidated relate to only one segment viz., Components for Transportation Industry

     16. Deferred Tax Liability
         Components of Deferred Tax Liability                                                                              (Rs. ‘000)
                                                                                                        31.03.2009     31.03.2008
         Fixed Assets                                                                                      269,384         144,575
         Unabsorbed loss                                                                                 (125,621)         (56,454)
         Provision for Doubtful debts                                                                       (3,043)         (3,315)
         Leave encashment and bonus                                                                       (12,027)            (513)
         VRS                                                                                              (24,540)         (28,767)
         Others                                                                                           (24,957)         (11,197)
         Closing balance                                                                                    79,196           44,330


     17. Related Party Transactions – Disclosure made in terms of Clause 32 of the Listing Agreement with Stock Exchanges.
         In accordance with AS 18 issued by ICAI, the following are the related party transactions:
                                                                                                                           (Rs. ‘000)
                                                                                31.03.2009                    31.03.2008
                                                                               Value    Outstanding          Value    Outstanding
         Associate Companies
         Service Fees Received                                                36,802                        42,054            3,493
         Trade Mark Fees Received                                              8,560            1,380        9,067            4,798
         Dividend Received                                                    12,615                         6,846
         Purchase of shares                                                                                 95,238
         Subsidiary Companies
         Service Fees Received                                                64,418              881       72,423            2,895
         Trade Mark Fees Received                                             27,911            6,408       22,405            7,300
         Dividend Received                                                   111,682                       108,679
         Purchase of Equity shares                                                                          30,000
         Purchase of Preference Shares                                        60,000
         Loans granted
         (i)    Rane Investments Limited                                                       43,000       88,000          63,000
         (ii) Rane Diecast Limited                                            28,000                        20,000          20,000
         Guarantee given – Rane Diecast Limited                              146,500         146,500
         Interest received                                                    11,363                         7,008
         Joint Venture Companies
         Service Fees Received                                                43,644                        46,584              344
         Trade Mark Fees Received                                             27,310            7,712       34,965            8,240
         Key Management Personnel
         Sitting fees                                                                                          138
         Salary and other perquisites                                          5,359
         Commission                                                            3,950                         6,000
         Acquired shares under open offer                                                                   16,130
         Relatives of Key Management Personnel
         Sitting fees                                                            270                           303
         Acquired shares under open offer                                                                   54,115




68
                                                                                                        Annual Report 2008-09




SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS
ACCOUNTING POLICIES AND NOTES (Contd.)

    Associate Companies                            : Rane Brake Lining Limited (RBL)
                                                      Kar Mobiles Limited (KML)
    Subsidiary Companies                           : Rane Investments Limited (RIL)
                                                      Rane Engine Valve Limited (REVL)
                                                      Rane (Madras) Limited (RML)
                                                      Rane Diecast Limited (RDL)
    Joint Venture Companies                        : Rane TRW Steering Systems Limited (RTSSL)
                                                      Rane NSK Steering Systems Limited (RNSSL)
                                                      JMA Rane Marketing Limited (JMA – RANE)
    Key Management Person                          : Mr. L Lakshman, Executive Chairman
    Relatives of Key Management Person             : Mr. L Ganesh, Mr. Harish Lakshman,
                                                      Mrs. Pushpa Lakshman, Mrs. Vanaja Aghoram,
                                                      Mrs. Shanti Narayan and Mr. Vinay Lakshman
18. Figures of the previous year have been restated wherever necessary to conform to this year’s grouping.

19. Figures given in brackets in the notes pertain to the previous year.

20. Schedules A to P, Accounting Policies 1 to 15 & Notes 1 to 19 annexed to the Balance Sheet and Profit and Loss Account
    form part of the accounts and should be read in conjunction therewith.




As per our report of even date attached                                                         For and on behalf of the Board

For D Rangaswamy & Co.
Chartered Accountants

B Ramani                                                                                                           L Lakshman
Partner                                                                                                      Executive Chairman
M.No.19603

Place: Chennai                                                              C Siva                                   L Ganesh
Date : 4th June, 2009                                                      Secretary                             Vice Chairman




                                                                                                                                  69
     RANE HOLDINGS LIMITED




     CONSOLIDATED CASH FLOW STATEMENT For the year ended 31st March, 2009
                                                                                                   (Rs. ‘000)
                                                                                31.03.2009      31.03.2008
 A) Operating Activities
     Net profit before tax and extra-ordinary items                                 215,146        854,839
     Adjustments for:
     Deferred Revenue Expenditure                                                       860          49,226
     Capital subsidy received                                                          (48)             (48)
     Depreciation / Amortisation                                                   359,342         206,553
     Dividend / Interest received                                                  (38,691)        (21,119)
     Profit /Loss on sale of Investments - net                                                     (18,560)
     Profit / Loss on sale of Fixed Assets - net                                    (1,378)         (1,287)
     Operating Profit before working capital changes                               535,231       1,069,604
     Changes in assets and liabilities
     Trade and other receivables                                                  (526,625)        (95,022)
     Inventories                                                                  (426,236)          17,449
     Trade payables                                                                 747,602         190,410
     Cash generated from operations                                                329,972       1,182,441
     Interest Paid                                                                  198,303         110,262
     Direct taxes / Dividend tax paid (net of refund)                             (144,228)       (324,382)
     Net cash provided by Operating Activities                                     384,047         968,321
 (B) Cash flow from Investing Activities
     Purchase of Fixed Assets                                                   (1,101,778)       (461,585)
     Sale of fixed assets                                                            11,478          23,266
     Sale of Investments                                                             83,381          20,949
     Purchase of Investments                                                          (180)        (69,695)
     Dividend received                                                               38,691          21,119
     Net cash used in Investing Activities                                       (968,408)        (465,946
 (C) Financing Activities
     Proceeds from issue of equity shares                                                            44,965
     Redemption of preference shares                                                                (8,750)
     Proceeds from long term borrowings                                             915,768        (97,405)
     Proceeds from Short term loans                                                 246,079       (149,899)
     Dividends paid                                                                (57,111)        (87,332)
     Interest paid                                                                (192,698)       (108,248)
     Net cash provided by Financing Activities                                     912,038       (406,669)
     Increase / (decrease) in cash and cash equivalents (A+B+C)                    327,677          95,706
     Investment in REVL, RDL and RML represented by assets                         309,828          74,561
     Net Increase / (decrease) in cash and cash equivalents (A+B+C)                  17849          21,146
 (D) Cash and cash equivalents - Opening Balance                                   129,990         108,847
 (E) Cash and cash equivalents - Closing Balance                                   147,839         129,989

 As per our report of even date attached                                      For and on behalf of the Board
 For D Rangaswamy & Co.
 Chartered Accountants

 B Ramani                                                                                     L Lakshman
 Partner                                                                                Executive Chairman
 M.No.19603
 Place: Chennai                                                    C Siva                         L Ganesh
 Date : 4th June, 2009                                            Secretary                   Vice Chairman


70
Corporate information
Rane Holdings Limited                                Chartered Accountants
                                                     Chennai-600 034.
Board of Directors
L Lakshman, Executive Chairman                       Listing of shares with
L Ganesh, Vice Chairman                              The Stock Exchange, Mumbai

V Narayanan                                          National Stock Exchange of India Ltd., Mumbai

Harish Lakshman                                      Bankers
Krishnan S Waran                                     IDBI Bank, Chennai-600 015.
R Natarajan                                          HDFC Bank, Chennai-600 004.
Shujaat Khan                                         Citibank N. A., Chennai-600 002.
D Vijay Mohan                                        Registered Office
Ravi Vira Gupta (w. e. f. 04.06.09)                   ‘MAITHRI’
Audit Committee                                      132, Cathedral Road, Chennai-600 086.
Krishnan S Waran, Chairman                           Phone: 044-28112472
V Narayanan                                          Fax : 044-28112449
                                                     Email : investorservices@rane.co.in
D Vijay Mohan
L Ganesh                                             Registrar and Share Transfer Agents
                                                     Integrated Enterprises (India) Limited
Investors' Service Committee
                                                     II Floor, "Kences Towers"
L Ganesh, Chairman
                                                     No.1, Ramakrishna Street
L Lakshman
                                                     North Usman Road
Harish Lakshman                                      T. Nagar, Chennai 600 017.
Secretary                                            Phone: 044-28140801-03
C Siva                                               Fax : 044-28142479
                                                     Email : sureshbabu@iepindia.com
Auditors
D Rangaswamy & Co.,




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