You are here » Home » Companies » Company Overview » Sundram Fasteners Ltd

Sundram Fasteners Ltd.

BSE: 500403 Sector: Engineering
NSE: SUNDRMFAST ISIN Code: INE387A01021
BSE LIVE 15:40 | 21 Aug 388.30 -1.75
(-0.45%)
OPEN

389.25

HIGH

390.35

LOW

386.55

NSE 15:44 | 21 Aug 388.95 -1.55
(-0.40%)
OPEN

387.00

HIGH

391.90

LOW

387.00

OPEN 389.25
PREVIOUS CLOSE 390.05
VOLUME 1732
52-Week high 468.00
52-Week low 262.80
P/E 24.58
Mkt Cap.(Rs cr) 8,158
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 389.25
CLOSE 390.05
VOLUME 1732
52-Week high 468.00
52-Week low 262.80
P/E 24.58
Mkt Cap.(Rs cr) 8,158
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sundram Fasteners Ltd. (SUNDRMFAST) - Director Report

Company director report

The Directors are pleased to present the Fifty third Annual Report together with theaudited financial statements for the year ended 31st March 2016.

FINANCIAL RESULTS

Rs lakhs
2015-16 2014-15
Revenue from Operations 260657.91 238576.58
Other Income 3442.22 2335.50
Total Revenue 264100.13 240912.08
Total expenditure 222149.35 205233.41
Gross Profit before interest depreciation and taxes 41950.78 35678.67
Less: Interest 2022.33 2137.81
Exchange Losses / (Gains) 3975.29 6000.79
Depreciation 9180.57 8831.50
Profit before Exceptional items and taxes 26772.59 18708.57
Exceptional items (4559.96) (1000.00)
Profit Before Tax 22212.63 17708.57
Less: Provision for tax 1095.98 4176.33
Profit after Tax 21116.65 13532.24
Add: Balance brought forward 17318.05 7958.04
Balance available for appropriation 38434.70 21490.28
Appropriations
Interim Dividends 4517.76 3677.25
Tax on Interim Dividends 827.16 494.98
Transfer to General Reserve 15000.00
Balance carried forward 18089.78 17318.05
38434.70 21490.28

TRANSFER TO RESERVES

The Company has transferred Rs 15000.00 lakhs to general reserves.

DIVIDEND

The Directors at their meeting held on March 09 2016 had approved payment of secondinterim dividend at Rs 1.30 per share (130%) of face value Rs 1/- each absorbing a sum ofRs 32.01 crores (including dividend distribution tax) for the financial year ended March31 2016 and the same was paid to the shareholders on 28th March 2016. The Board hadearlier declared first interim dividend of Rs 0.85 per share (85%) of face of Rs 1 eachabsorbing a sum of Rs 21.44 crores (including dividend distribution tax) for the financialyear 2015-2016 and the same was paid on 24th November 2015. No final dividend has beenrecommended by the Board of Directors. Thus the total dividend paid during the periodunder review aggregates to Rs 2.15/- per share amounting to Rs 53.45 crores (includingdividend distribution tax).

CONSOLIDATED FINANCIAL STATEMENTS

The audited Consolidated Financial Statements of the Company prepared in accordancewith the Act and the Accounting Standards also form part of the Annual Report.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the Company hasplaced separate audited accounts of its subsidiaries on its website www.sundram.com. TheCompany will make available the audited annual accounts and associated information of itssubsidiaries upon request by any of its shareholders.

CORPORATE GOVERNANCE

A separate report on Corporate Governance together with a certificate from theCompany's auditors confirming the compliance of conditions of Corporate Governance isattached to this report. Management Discussion and Analysis detailing the state of thecompany's affairs is also attached to this report.

DIRECTORS

The existing composition of the Company’s Board is fully in conformity with theapplicable provisions of the Companies Act 2013 and Regulation 17 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (SEBI Listing Regulations2015) with regard to independent directors and women directors. Sri K Ramesh Director(DIN 00556922) of the company is liable to retire by rotation at the ensuing AnnualGeneral Meeting (AGM) and being eligible offers himself for re-appointment. Necessaryresolution for his re-appointment is being placed for approval of the members at the AGM.The board therefore recommends his re-appointment as a director of the Company. A briefresume of him and other relevant information have been furnished in the notice conveningthe AGM.

KEY MANAGERIAL PERSONNEL

Pursuant to Section 203 of the Companies Act 2013 the following are the whole-timeKey Managerial Personnel of the Company:

• Sri Suresh Krishna Chairman and Managing Director

• Ms Arathi Krishna Joint Managing Director

• Ms Arundathi Krishna Deputy Managing Director

• Sri V G Jaganathan Chief Financial Officer & Company Secretary till 31stMarch 2016

• Sri S Meenakshisundaram Chief Financial Officer effective 4th April 2016

• Sri R Dilip Kumar Vice President - Finance & Company Secretary effective4th April 2016

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (7) OFSECTION 149

All the independent directors have submitted a declaration pursuant to Section 149(7)of the Companies Act 2013 stating that they meet the criteria of independence asstipulated in Section 149(6).

EXTRACT OF ANNUAL RETURN

An extract of annual return in Form MGT-9 is annexed as Annexure - I and formspart of this report.

BOARD MEETINGS

The Company in consultation with the Directors prepares and circulates a tentativeannual calendar for the meetings of the Board and Board Committees in order to facilitateand assist the Directors to plan their schedules for the meetings.

There were seven Board Meetings during the year ended 31st March 2016 which were on29th May 2015 14th August 2015 2nd November 2015 18th January 2016 4th February 20169th March 2016 and 31st March 2016.

COMMITEES OF THE BOARD

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders’ Relationship Committee

5. Finance Committee

6. Strategy Committee

The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that:

a) in the preparation of annual accounts the applicable accounting standards had beenfollowed.

b) they had selected appropriate accounting policies and applied them consistently andmade judgments and estimates that have been made are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company at the end of the financialyear and of the profit of the Company for the year ended 31st March 2016.

c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

d) they had prepared the annual accounts on a going concern basis.

e) they had laid down the internal financial controls to be followed by the company andsuch internal financial controls are adequate and are operating effectively.

f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.

NOMINATION AND REMUNERATION POLICY

(I) Criteria for Determining Qualifications Positive Attributes & Independence ofDirector

1. Qualifications of Independent Director:

An independent director shall be a person of eminence standing and knowledge withsignificant achievements in business professions and/or public service or professionalpractice and desirable to have industry experience in which the company operates. AnIndependent director shall possess appropriate skills experience and knowledge in one ormore fields of finance law management sales marketing administration researchcorporate governance operations or other disciplines related to the company's business.

2. Positive attributes of Independent Directors:

Nomination and Remuneration Committee shall take into account the following positiveattributes while recommending the appointment of independent director.

a) To demonstrate integrity credibility trustworthiness ability to handle conflictconstructively and the willingness to address issues proactively.

b) Continuously update their knowledge and skills with the latest developments in theautomobile industry market conditions and applicable legal provisions.

c) Ability and willingness to devote sufficient time and attention to the Company'sbusiness and discharge their responsibilities.

d) Ability to bring an independent judgment to the Board's deliberations especially onissues of strategy performance risk management key appointments and standards ofconduct.

e) Ability to develop a good working relationship with other Board members andcontribute to the Board's working relationship with the senior management of the Company.

f) To act within their authority assist in protecting the legitimate interests of theCompany its shareholders and employees

g) Assist the company in implementing the best corporate governance practices.

3. Independence of Independent Directors:

An Independent director should meet the requirements of the Companies Act 2013 andSEBI Listing Regulations 2015 concerning independence of directors as may be specifiedfrom time to time.

(II) Remuneration Policy for Directors Key Managerial Personnel and other employees

A. NON-EXECUTIVE DIRECTORS

Sitting Fees

Non-executive Directors will be entitled to sitting fees for attending meetings of theBoard and its Committees as may be decided by the Board from time to time within thelimits prescribed under the Act. The sitting fees presently paid to the Non -ExecutiveDirector is Rs 50000/- per meeting of the Board and Rs 20000/- per meeting of anyCommittee of the Board or separate meeting of independent directors thereof.

Reimbursement of expenses

Non-executive Directors will be entitled to reimbursement of expenses incurred inconnection with attending the Board meetings Board Committee meetings meeting ofindependent directors general meetings and in relation to the business of the Companytowards hotel accommodation travelling and other out-of-pocket expenses.

B. MANAGING DIRECTOR KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The following will be the guiding factors with respect to remuneration to ManagingDirector(s) Key Managerial Personnel and other employees.

a) The objective of the policy is directed towards having a compensation philosophy andstructure that will reward and retain talent.

b) The Remuneration to Managing Director shall take into account the Company's overallperformance Managing Directors' contribution for the same and trends in the industry ingeneral in a manner which will ensure and support a high performance culture.

c) As the company does not have any stock options such instruments do not form part ofhis remuneration package.

d) The remuneration and commission to be paid to the Managing Director shall be inaccordance with the percentage / limits / conditions laid down in the Companies Act 2013.

e) Remuneration to Key Managerial Personnel and Senior Management personnel will have abalance between fixed and incentive pay reflecting both short and long term performanceobjectives appropriate to the working of the Company and its goals and objectives. Suchremuneration will generally comprise of fixed pay performance pay perquisites provisionof car and other work related benefits Directors & Officers' Liability InsurancePolicy (D&O Policy)

f) The Remuneration to the key managerial personnel and other employees will be such asto ensure that the relationship of remuneration to performance is clear and meetsappropriate performance benchmarks.

POLICY ON BOARD DIVERSITY

Pursuant to requirements under SEBI Listing Regulations 2015 the Nomination andRemuneration Committee (NRC) has framed a Policy on Board diversity appropriate to thebusiness requirements of the Company which inter-alia specifies optimumcombination of Executive Directors Non-Executive Directors and Independent Directors therecommendatory requirement for each of the directors to possess functional diversity androle of NRC to ensure that the Policy on Board diversity is considered while recommendingthe appointment of new directors on the Board of the Company.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013

Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilised by the recipient are provided in the standalone financial statement (Please referto Note No. 9 10 and 31 (18)(IV) & (29) to the standalone financial statement).

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES (REFERRED TO INSUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013)

All transactions with related parties were on arms' length basis and were in theordinary course of business. There was no material related party contract during the year.Form AOC-2 as required under Section 134 (3)(h) is enclosed as Annexure - II tothis report.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.

The Company's joint venture with Bleistahl Produktions GmbH through its subsidiarycompany is expected to be terminated during the financial year 2016-2017 as the assetpurchase and sale agreement and technical collaboration agreement had expired. In view ofthe above the name of the subsidiary company - Sundram Bleistahl Limited (i.e. the jointventure company) has been changed to Sundram Precision Components Limited during the yearunder review.

Upasana Engineering Limited (UEL) is a 100% subsidiary of Sundram Fasteners Limited(SFL) which is a part of TVS Group. T.V Sundram Iyengar & Sons Private Limited andSouthern Roadways Limited are the promoters of SFL. As UEL is a wholly-owned subsidiary ofSFL the Board of Directors felt that it would be appropriate to have the word‘TVS’ as a part of its name which helps easily in identifying the Company as apart of the ‘TVS’ Group. In view of the above the name of the subsidiarycompany - Upasana Engineering Limited has been changed to TVS Upasana Limited during theyear under review.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134 of the Act read with Companies(Accounts) Rules 2014 is enclosed as

Annexure - III.

RISK MANAGEMENT

The Company faces diverse risks in terms of slowdown in economy input pricesreputation interest rates foreign exchange information systems etc. The auto componentindustry has been operating in a challenging environment due to slowdown in the economy ingeneral and in particular automotive industry. The Company manages its risks in thefollowing manner:

a) exercising prudence while incurring capital expenditure or outlays on new projects

b) entering into long term contracts with customers to underwrite the capacitiescreated

c) determination of product prices after engineering studies

d) adoption of a diversified business model in terms of products market segmentsgeography and customers to ensure that Company is able to withstand any instability in theentire business eco-system

e) judicious approach to proportionate sourcing of inputs from indigenous and overseasmarkets in order to take advantage of commodity prices and exchange rate movements

f) analysing credit risks through market feedbacks

g) management of interest rate risks through a combination of loan products tenor offinancing and currency denomination

h) monitoring reviewing and hedging foreign exchange risks in accordance with the riskmanagement policy

All the above mentioned risks are managed through continuous review of businessparameters on a regular basis by the management. Insurable risks are analysed andinsurance policies are taken to protect the company's interests. The Board of Directorsare also informed periodically of the risks and concerns. Corrective actions andmitigation measures are taken as and when needed.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND IMPLEMENTATION

The Company has undertaken activities as per the CSR Policy (available on the Company'swebsite http://www.sundram.com/investors.php and the Annual report on CSR activities isenclosed vide Annexure - IV forming part of this report.

BOARD EVALUATION

The Nomination and Remuneration Committee (NRC) has laid down the criteria forperformance evaluation of independent directors and other directors Board of Directorsand Committees of the Board of Directors. The criteria for performance evaluation coverthe areas relevant to their functioning as independent directors or other directorsmember of Board or Committees of the Board.

Evaluation of all Board members is done by the Board NRC and Independent Directors onan annual basis with specific focus on the performance and effective functioning of theBoard and individual directors. During the year the Board adopted a formal mechanism forevaluating its performance and as well as that of its Committees and individual directorsincluding the Chairman of the Board. The exercise was carried out through an evaluationprocess covering various aspects of the Boards' functioning such as composition of theBoard and committees frequency of meetings administration of meeting flow ofinformation to the board experience and competencies performance of specific duties andobligations disclosure of information to stakeholders etc. Separate exercise was carriedout to evaluate the performance of individual directors including the Chairman who wereevaluated on parameters such as attendance contribution at the meetings and independentjudgement. The directors were satisfied with the evaluation results which reflected theoverall engagement of the Board and its Committees with the Company.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES AND JOINTVENTURE

Report on the performance and financial position of each of the subsidiariesassociates and joint venture companies of the Company is given along with ConsolidatedFinancial Statement in Form AOC-1.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the financial year.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY’S SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

A new wholly-owned subsidiary Company Sundram International Limited (SIL) has beenformed in United Kingdom. The company's shareholdings in Cramlington Precision ForgeLimited UK and Sundram Fasteners (Zhejiang) Limited China has been transferred to SILUK effective 31st March 2016.

Windbolt GmbH Germany has ceased to be an associate of our Company effective November2015. The Company has divested its shareholdings in Peiner Umformtechnik GmbH TVS PeinerServices GmbH and PUT Grundstucks GmbH (Peiner Group) the wholly owned subsidiaries inGermany. Hence Peiner Group companies have ceased to be subsidiaries of the Company witheffect from 30th March 2016.

Except for the details given above no other company has become or ceased to beCompany's subsidiary joint venture or associate company during the financial year.

PUBLIC DEPOSITS

During the year the Company has not accepted any deposits within the meaning ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014. No amount on account of principal or interest on deposits from public wasoutstanding as on Balance Sheet date.

REGULATORY / COURT ORDERS

There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company and its future operations.

INTERNAL FINANCIAL CONTROLS

The Company maintains all its financial records in System Applications and Products(SAP) System and all financial transaction flow and approvals are routed through SAP. TheCompany has in house internal audit team to observe the effective functioning of internalfinancial controls and verify whether the financial transaction flow in the organisationis being done based on the approved policies of the Company. During every quarterinternal auditor presents the internal audit report and management comments on theinternal audit observations to the Audit Committee. Further the Board of Directors of theCompany have adopted various policies like Related Party Transactions Policy WhistleBlower Policy Material Subsidiary Policy for ensuring the orderly and efficient conductof its business for safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and timely preparation ofreliable financial information.

APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNEL

The statement of particulars of Appointment and Remuneration of Key ManagerialPersonnel as per Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed vide Annexure V forming part of this report.

STATEMENT ON EMPLOYEES REMUNERATION

Pursuant to Section 136 (1) of the Companies Act 2013 the report of the Board ofDirectors is being sent to all the shareholders of the Company excluding the statementprescribed under Rule 5 of the Companies (Appointment and Remuneration) Rules 2014. Thestatement is available for inspection by the shareholders at the Registered Office of theCompany during business hours.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors had appointed M/s. S Krishnamurthy & Co. Company Secretaries Chennai asthe Secretarial Auditor of the Company for the financial year 2015-2016. Secretarial AuditReport issued by Sri K Sriram Practising Company Secretary (CP No. 2215) Partner M/s. SKrishnamurthy & Co. Company Secretaries Chennai in Form MR-3 is enclosed in AnnexureVI forming part of this report and does not contain any qualification.

SECRETARIAL AUDITORS

The Board of Directors has appointed M/s. S Krishnamurthy & Co. CompanySecretaries Chennai as the Secretarial Auditor of the Company for the financial year2016-2017. Necessary consent has been received from them to act as Secretarial Auditors.

STATUTORY AUDITORS

Pursuant to Section 139 of the Companies Act 2013 M/s Sundaram & SrinivasanChartered Accountants Chennai(Registration No. 004207S with the Institute of CharteredAccountants of India) were appointed as Auditors of the Company at the fifty first annualgeneral meeting of the company for a consecutive period of three years commencing from22nd September 2014. Accordingly the Board of Directors propose to ratify theirappointment as Auditors of the Company for the third consecutive year (within the term ofthree consecutive years approved by the shareholders at the Fifty First Annual GeneralMeeting held on 22nd September 2014). The Statutory Auditors have confirmed theireligibility for appointment.

COST AUDITOR

In terms of Section 148 of the Companies Act 2013 (the Act) read with Companies (CostRecords and Audits) Rules 2014 as amended the Board of Directors had appointed Sri PRaju Iyer Practising Cost Accountant (Membership No.6987) as Cost Auditor for thefinancial year 2016-2017. The audit committee recommended his appointment and remunerationsubject to the compliance of all the requirements as stipulated under the Act andcirculars issued thereunder.

AUDIT COMMITTEE

The Audit Committee consists of Sri R Srinivasan Sri V Narayanan and Sri RRamakrishnan all non-executive independent Directors of the Company with Sri RSrinivasan as its Chairman.

The Audit Committee met six times during the year on 29th May 2015 13th August 20152nd November 2015 18th January 2016 4th February 2016 and 31st March 2016.

The role and terms of reference of Audit Committee cover the matters specified forAudit Committees under SEBI Listing Regulations 2015 and Section 177 of the CompaniesAct 2013.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has adopted the Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) of the Company has beenconstituted to redress complaints regarding sexual harassment. No complaint was receivedduring the year 2015.

WHISTLE BLOWER POLICY (VIGIL MECHANISM)

The Company has a Vigil Mechanism through a Whistle Blower Policy. The policy enablesstakeholders including individual employees and their representative bodies to freelycommunicate their concerns about illegal or unethical practices if any reporting ofconcerns by directors and employees about unethical behaviour actual or suspected fraudor violation of the company's code of conduct or ethics policy or any other genuineconcerns or grievances. It also provides for adequate safeguards against victimisation ofemployees and directors who avail of the vigil mechanism and also provide for directaccess to the Chairman of the audit committee. No communication from any employee of thecompany under the whistle blower policy was received during the year.

INDUSTRIAL RELATIONS

Industrial relations continued to remain congenial during the current year. TheDirectors thank the employees for their contribution to the progress of the Company duringthe year under review.

ACKNOWLEDGMENT

The Directors wish to thank the Chinese Authorities Officers of Haiyan County JiaxinCity Zhejiang province Chinese tax and other administrative authorities for the supportextended to Sundram Fasteners (Zhejiang) Limited. The Directors wish to thank One NorthEast the Regional Development Authority for Cramlington United Kingdom for the continuedsupport extended to the Subsidiary. The Directors wish to thank the Company's bankersState Electricity Boards in Tamil Nadu Puducherry Andhra Pradesh and Uttarakhandcustomers and vendors employees for all the assistance rendered by them from time totime.

On behalf of the Board
Chennai SURESH KRISHNA
May 20 2016 Chairman and Managing Director