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Sundaram Clayton Ltd.

BSE: 520056 Sector: Auto
NSE: SUNCLAYLTD ISIN Code: INE105A01035
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OPEN 3536.10
PREVIOUS CLOSE 3485.60
VOLUME 1385
52-Week high 3999.00
52-Week low 1521.00
P/E 83.82
Mkt Cap.(Rs cr) 7,030
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3536.10
CLOSE 3485.60
VOLUME 1385
52-Week high 3999.00
52-Week low 1521.00
P/E 83.82
Mkt Cap.(Rs cr) 7,030
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sundaram Clayton Ltd. (SUNCLAYLTD) - Director Report

Company director report

The Directors have pleasure in presenting the 58th annual report and theaudited financial statements of the Company for the year ended 31st March 2020.

1. FINANCIAL HIGHLIGHTS

(Rs in Cr)

Particulars Year ended 31.03.2020 Year ended 31.03.2019
Sales (including Excise duty) and other income 1424.14 1932.94
EBITDA 237.62 277.83
Less: Finance Cost 55.40 55.16
Depreciation 92.65 92.19
89.57 130.48
Less: Exceptional cost* 20.40
Profit before tax after exceptional cost 69.17 130.48
Provision for tax 0.47 10.82
Profit after tax 68.70 119.66
Add: Balance in Statement of Profit and
Loss including General Reserve 497.48 450.93
Transfer from Other
Comprehensive Income (7.61) (0.28)
Total Comprehensive Income available 558.57 570.31
Appropriations:
Dividend 62.72 72.83
Adjustment as per Ind AS 116 net of tax
(Cumulative effect of retrospective application) 4.30
Surplus carried forward 491.55 497.48
Total 558.57 570.31

* Exceptional cost primarily represents one time costs associated with voluntaryseparations.

2. DIVIDEND

The Board of Directors of the Company (the Board) at its meeting held on 10thMarch 2020 declared an interim dividend of Rs 31 per share (620%) for the year 2019-20absorbing a sum of Rs 62.72 Cr. The same was paid to the shareholders on 21stMarch 2020.

The Board does not recommend any further dividend for the year under consideration.

The Company has set-off its dividend distribution tax payable under Section 115O (1A)of the Income Tax Act 1961 against the dividend distribution tax paid by one of itssubsidiary company on its dividend declared.

3. PERFORMANCE

India's real gross domestic product (GDP) estimated at 4.7% in FY20 as against 6.8% inFY19 as domestic investment and consumption collapsed under stress on non-bankingfinancial companies and a sharp slowdown in credit growth.

The global economy too recorded its lowest growth of the decade in 2019 falling to2.3% as a result of continued trade disputes and economic slowdown in major countries.

The GDP in the U.S. and EU markets registered a growth of 2.3% (2.9% in 2018) and 1.2%(1.9% in 2018).

Towards the end of 2019-20 starting 23rd March the Company's operationswere halted due to CoVID-19 pandemic. A nationwide lockdown was announced to contain thespread of the virus. Understanding the severity of the crisis the Company took lot ofmeasures to help and support its customers employees suppliers and society. The Companyalso set-up a Business Continuity Task Force and pro-actively rolled-out a slew ofmeasures to ensure health & safety of its employees and suppliers. Work from home wasimplemented for almost all executives & managers well on time. Some of the keyinitiatives undertaken by the Company to support the society in fighting this battleinclude providing protective face masks sanitization of numerous villages and townsproviding food packets to essential service providers and to the deprived sections of thesociety.

The following table highlights the performance of the Company during 2019-20:

FY FY Variance
Particulars
2019-20 2018-19 (in %)
Sales (Tonnage) 35837 48969 (26.8)
Sale of goods (Rs in Cr) 1240.28 1746.03 (28.9)
Domestic sales (Rs in Cr) 652.97 959.12 (31.9)
Export sales (Rs in Cr) 587.31 786.91 (25.4)
Profit After Tax (Rs in Cr) 68.70 119.66 (42.6)

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

I. INDUSTRY STRUCTURE AND DEVELOPMENT:

Domestic

The segment wise performance in the Indian automotive industry is given in thefollowing table.

(in Nos)

Category FY FY Variance
2019-20 2018-19 (in %)
Two Wheelers 20937992 24460688 (14.4)
Passenger Vehicles 3452990 4053581 (14.8)
Commercial Vehicles 248968 439408 (43.3)
(M&HCV)

 

(Source: SIAM+DICV internal estimate)

The Indian auto industry (domestic sales and exports) posted an overall de-growth of14.8% (Source: SIAM). This decline was triggered by many major factors like weak consumersentiments volatile rural demand as credit shortage from NBFC crisis hike in insurancecost revised axle norms and transition to BS-VI leading to the postponement of purchasesto FY21. Lockdown imposed due to CoVID19 outbreak further led to a contraction in theautomotive sector.

Exports

The following table highlights the North American and European truck registrationfigures in vehicle units:

(in Nos)

Market Category FY FY Variance
2019-20 2018-19 (in %)
North America Class 8 Trucks 318128 326913 (2.69)
North America Class 4-7 Trucks 279278 271679 2.80
Europe Medium & Heavy
Trucks 288138 311589 (7.53)

 

(Source: FTR & ACEA )

Though Class 8 truck sales in 2019 were the highest in the last decade build trendstarted to drop from August 2019. Due to the trade and political uncertainty Class 8orders dipped to tepid levels by the start of 2020. Orders for heavy trucks furthercollapsed by 52% in March 2020 due to the sharp and sudden downturn in economic conditionscaused by CoVID-19 outbreak.

The major EU markets performed worse than the year before owing to the introduction ofnew obligatory tachographs in heavy trucks and the onset of CoVID-19 pandemic.

II. BUSINESS OUTLOOK AND OVERVIEW

India's GDP growth has decelerated to 11 year low estimated at 4.7% in 2019-20. In2020-21 the economy will see significant challenges owing to the impact of CoVID-19pandemic and the resultant interruption to economic activity which is beginning to reopen.

Economic Activity and lifestyles will be rebuilt factoring in coexistence with CoVID19. Social Distancing (SD) and Work From Home (WFH) practices will see greater prevalence.These new long-term practices of SD could see consumer preferences change towards personalmobility this could prove to provide some opportunity especially to the 2-wheelerindustry.

The restriction of public mobility and impact on many sectors of the economy willaffect GDP disposable incomes consumer sentiment and the auto industry as well.Consequently a very sharp decline in the first quarter of 2020-21 is expected which maypartially alleviate in the following quarter with any upside possibilities only playingout in the later part of the year.

The favorable reservoir levels good rabi output and possibility of normal monsoon maysupport agriculture growth. To help revive the economy due to stalled economic activitiescaused by CoVID-19 the Central Government has announced a stimulus package. This specialeconomic and comprehensive package is expected to benefit various sections includingcottage industry MSMEs and industries among others.

Despite this the slowdown in manufacturing growth is likely to linger on beyond thefirst half of FY 2020-21 due to lower global growth and continued supply-chaindisruptions.

With the CoVID-19 pandemic hitting the US and EU the most both the economies areexpected to see a drop in growth in 2020. Hence the U.S GDP is expected to decline by5.0% in 2020. The U.S. truck market (Class 8) volumes are expected to decline by 65% in2020.

III. OPPORTUNITIES & THREATS

The Company supplies aluminum castings for commercial vehicles passenger cars and twowheeler segments of the automotive industry.

The revenue of the Company is derived from Medium & Heavy Commercial Vehicles(MHCV) (58%) followed by two wheeler industry (24%) and the car industry (18%).

The CoVID-19 pandemic is causing paradigm shifts in the consumer behaviour affectingmany industries including the automotive industry. Social Distancing norms followingacross the globe due to CoVID19 could become the new normal.

In the short to medium term the fear of using public transportation in the light ofthe CoVID-19 pandemic could lead to increased demand especially in two wheeler and smallpassenger car segments resulting in better prospects for the domestic auto industry.

In the long term in lieu of stringent emission norms and fuel economyregulations the thrust towards light-weighing is bound to increase leading to highercontent of aluminum in all vehicle types. The Company is well placed to leverage theseemerging opportunities. This will provide for increased growth opportunities since theCompany is already a preferred source for aluminum castings to major OEM's in India andabroad.

The supply chain disruptions caused by the lockdown could have major OEMs review theirglobal purchasing strategies and this could result in a strong push for localization tode-risk the supply chain despite cost impact. This could benefit the Company'ssubsidiary's US operations once it goes on stream next year as it will be strategicallylocated to leverage the growth opportunities.

Several Indian die casting companies and OEMs have set up new capacities or expandedexisting capacities over the past few years. With current market conditions the capacityutilization will drop further and the Company will be seeing actions to secure newbusiness to ensure better utilization of assets resulting in increased competition andcost pressure.

Intense competition makes it difficult to seek price increases to compensate theeffects of inflation bringing the margins under severe pressure. However the Company'ssupply contracts provide for periodic price adjustments indexed to the internationalprices of aluminum and this should offer some protection against volatility of commodityprices.

IV. RISKS AND CONCERNS

Economy

There are possible risks on the horizon both global and domestic. Economic recessiongripped global economy following the lockdown due to the CoVID-19 pandemic. While globaltrade may stabilize earlier macroeconomic impact of recession may be felt on the supplyand demand side for a prolonged period of time.

Movement of migrant workers to their homes is also expected to have a negative impacton the industry and will slow down the revival of manufacturing activity in the country.This along with further policy changes distressed financial markets could dampen thedomestic market.

Industry specific

The Indian commercial vehicle industry is a strong indicator of the economic activityin the country and has a strong correlation with the agricultural growth infrastructuredevelopment and the mining industry. While the steep fall of the past 2 years has createda low base supply disruptions due to CoVID-19 and cost push from BS-VI emission norms maykeep near-term demand subdued. Competition has increased in the Indian market due to entryof new players. The Company is aware of the increasing competition and is taking customerfocused measures to remain competitive in the market place.

The global automotive industry is also amidst experiencing the situation of a cyclicaldemand slowdown complicated further by the impact of CoVID-19.

Prices of aluminum have largely trended downward in 2019-20 interrupted only by asharp and short-lived upturns. Slowing global growth exacerbated by the CoVID-19pandemic has pushed down prices. Price gains are likely to be limited in 2020-21.

Forex

With significant exports import of raw materials and capital goods the Company isalways exposed to impact on account of currency fluctuations. However the Company has awell-defined forex hedging policy to mitigate the risks.

Contractual

The stipulation and requirements of the automobile industry demands high qualityproducts. Robust quality management systems meeting international standards like IATF16949 are in place to ensure excellent product quality. Additionally the Company has alsotaken appropriate recall and product liability insurance in line with standard industrypractice.

Just-in-time delivery is another important contractual obligation. Robust quality andproject management systems are in place to avoid delay in deliveries due to quality issuesor project implementation.

Capacity utilization

The Company adds capacity in existing and new locations to meet the projected demandof customers. The Company closely monitors the progress of customer projects / volumes andappropriately deploys the assets to protect from both underutilization and capacityshortages to meet the demand. During the year specific measures were taken to redeployunderutilized assets due to low demand scenario thereby saving significant investments.

Risk Management Policy

Company's risk management framework is well embedded and continually reviewed by theRisk Management Committee. It enables the Board to identify evaluate and monitorprincipal risks and where possible actively mitigate the risks that could affect theachievement of the Company's target.

As a process risks associated with the business are identified and prioritized basedon the Company's overall risk appetite strategy severity and probability of occurrence.

The Board is satisfied that there are adequate systems and procedures in place toidentify assess monitor and manage risks. The Company's Risk Management Committee isoverseeing all the risks that the organization faces such as strategic financial marketIT legal regulatory reputational and other risks and recommends suitable action. Riskmitigation policy has been approved by the Board.

V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board is accountable for evaluating and approving the effectiveness of internalcontrols including financial operational and compliance controls. The Company has aproper and adequate internal control system to ensure that all its assets are safeguardedand protected against any loss and that all the transactions are properly authorized andrecorded. The internal control system is subject to continuous improvement with systemeffectiveness assessed regularly. Information provided to management is reliable andtimely. Company ensures the reliability of financial reporting and compliance with lawsand regulations. Company is strengthening the controls by leveraging technology andcentralizing processes enhanced monitoring and maintaining effective tax and treasurystrategies.

The Audit Committee continues to monitor the effectiveness of internal control over theuse of new technologies that impact the financial controls and reporting enterprise risk.

Internal Financial Control

The Company has an established Internal Financial Control framework including internalcontrols over financial reporting operating controls and anti-fraud framework. Theframework is reviewed regularly by the management and tested by internal audit team andpresented to the Audit Committee. Based on the periodical testing the framework isstrengthened from time to time to ensure adequacy and effectiveness of InternalFinancial Control.

VI. KEY FINANCIAL RATIOS

As required under Regulation 34 of the Listing Regulations there was a significantchange in Return on Networth compared to the previous financial year.

Details of change in some of the ratios as compared to the previous financial year isgiven below.

Particulars Unit of measurement

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Interest Coverage Ratio Times 2.25 3.37 1.93 2.56
Net Profit Margin % 4.86 6.75 4.26 5.18
Return on Net worth % 10.79 17.96 8.56 11.93

Profit for the year is lower primarily due to de-growth in auto Industry and also dueto an exceptional item (one time voluntary seperation costs). Reduction in profit for thecurrent financial year has resulted in adverse movement of ratios.

VII. OPERATIONS REVIEW

A. Manufacturing

The Company has been using Total Quality Management (TQM) as the foundation of itsmanagement. The Company implemented the best practices like Total Productivity Management(TPM) and Lean Manufacturing (TPS) in its manufacturing facilities. It also has in placebest-in-class practices for safety pollution control work environment water and energyconservation.

Continuous improvement projects are implemented to improve the product quality andoperational efficiency in all the manufacturing locations. The Company's journey ofachieving manufacturing excellence was recognized and rewarded by the following customerduring FY 2019-20.

• PACCAR India - Supplier of the year 2019

• HMIL - Best performer 2019 for Production Support

• Hanon - Best process and systems

• Daimler - Supplier - Best practice sharing 2019

• Daimler - "A" rating - VDA 6.3 audit

• Cummins - Best supplier - Six sigma project

• Hanon - "Energy conservation 2019 - Gold" award

Srinivasan Services Trust (SST) CSR arm of the group has also used TQM way of work inits activities in the villages adopted.

Mr Venu Srinivasan Chairman of the Company has been conferred with the prestigiousDeming 'Distinguished Service Award for Dissemination and Promotion Overseas' by JapaneseUnion of Scientists and Engineers (JUSE) for his outstanding contribution in thedissemination and promotion of Total Quality Management (TQM) across all companies in thegroup. Chairman has also guided in permeating TQM practices in many companies in Indiathrough cluster approach initiated by CII and ACMA.

B. Quality

Achieving customer delight by consistently providing products of excellent quality isthe prime motto of the Company. This is achieved through state-of-art technologytraining effective quality system continuous improvement and total employee involvement.Poka-yokes process audits use of statistical tools for process optimization and onlineprocess controls also contribute towards improving and achieving consistency in productquality. The quality system is certified for IATF 16949 requirements.

TQM is a way of life in the Company. 100% employee involvement has been successfullyachieved for many years.

Employees have completed 671 projects by applying statistical tools through QualityControl Circles (QCC) in 2019-20. The average number of suggestions implemented peremployee was 40.

C. Cost Management

Cost management is a continuous journey and the Company manages the same throughdeployment monitoring and control of costs across all departments. Cross functional teamsare working on projects focussed on Value Added/Value Engineering (VA/VE) and improvingoperational efficiency. TPM and Lean initiatives are deployed Company-wide to achievereduction in manufacturing cost.

D. Information Technology

The Company uses ERP system that integrates all business processes across the Company.Suppliers and customers are also integrated into the system for better planning andexecution. During the year several dashboards were added to improve the productivityquality and reduce the cost of operations. As we move more towards digitization projectswere also implemented to further enhance the Information Security.

E. Research and Development

The Research and Development (R&D) team continued its focus on in-depth customerunderstanding technology development and design innovations. The R&D team continuestheir efforts in developing cutting-edge technologies that are relevant for the near andlong-term requirements of the Company's business plans. These developments are centered oncustomers emerging mobility needs advanced safety regulations and sustainability. TheCompany also collaborates with leading research establishments and educationalinstitutions both within and outside the country to develop breakthrough technologies.

VIII. HUMAN RESOURCE DEVELOPMENT

The Company considers employees as vital and most valuable assets. Human ResourceDevelopment (HRD) is aligned to business needs to enhance business performance andresults. HRD is practiced through an overall HRD framework with its constituents asresourcing employee engagement performance & compensation management competencybased development career & succession planning and organization development. Each ofthese constituent has a structured approach and process to deliver.

As a part of the long term strategies of the Company collaborative education programhas been initiated with three reputed institutes to develop role-ready engineers withCompany-specific knowledge at the entry level.

Career development workshop is conducted to identify high potential employees. Suchemployees are groomed for taking up higher responsibilities. A reward and recognitionsystem is in place to motivate and also provide fast track growth for the high potentialemployees.

Our engineers and executives are sponsored for advanced study offered by both Indianand foreign institutions. Customized technical and leadership competency improvementprograms are developed and delivered through reputed institutions.

The Company continuously measures and reports employee engagement every year andidentifies improvement areas to work on.

An excellent industrial relations environment continues to prevail at all themanufacturing units of the Company.

As on 31st March 2020 the Company had around 1917 employees on its rolls.

IX. ENVIRONMENT HEALTH & SAFETY

The Company is fully committed to the ultimate goal of employee safety. Safetymanagement is integrated with the overall Environment Health and Safety (EHS).

The Company has been certified under Integrated Management System (IMS) combining ISO14001 and OHSAS 18001 systems and procedures.

X. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company'sobjectives projections estimates and expectations may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the Company's operations include amongst others economicconditions affecting demand / supply and price conditions in the domestic and overseasmarket in which the Company operates changes in the Government Regulations Tax Laws andOther Statutes and Incidental Factors.

5. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Act with respect toDirectors' Responsibility Statement it is hereby stated that -

i. in the preparation of annual accounts for the financial year ended 31stMarch 2020 the applicable Accounting Standards had been followed along with properexplanation relating to material departures if any;

ii. the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for the year under review;

iii. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the accounts for the financial year ended 31stMarch 2020 on a "going concern basis";

v. the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

vi. the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR activities have already been textured into the Company's value system throughSrinivasan Services Trust (SST) established in 1996 with the vision of buildingself-reliant rural community.

Over 24 years of service SST has played a pivotal role in changing lives of people inrural India by creating self-reliant communities that are models of sustainabledevelopment.

The Company is eligible to spend on their ongoing projects / programmes falling withinthe CSR activities specified under the Act as mandated by the Ministry of CorporateAffairs for carrying out the CSR activities.

The Committee formulated and recommended a CSR policy in terms of Section 135 of theAct along with a list of projects / programmes to be undertaken for CSR spending inaccordance with the Companies (Corporate Social Responsibility Policy) Rules 2014.

Based on the recommendation of the CSR Committee the Board has approved the projects /programs to be carried out as CSR activities by Srinivasan Services Trust (SST) byundertaking these programmes / projects in compliance with the CSR policy of the Companyand contributed Rs 2 lakhs for the financial year 2019-20 towards CSR spending.

Presently SST is working in 5000 villages spread across Tamil Nadu KarnatakaMaharashtra Himachal Pradesh and Andhra Pradesh covering a population of about 24.50lakhs and 6.24 lakh families. SST has focussed on the areas of economic developmenthealth care education environment social and infrastructure actively in 3000 villages.SST will focus on 2000 villages also so that all the areas are covered in the next 3years.

As required under Section 135 of the Act read with Rule 8 of the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Annual Report on CSR containing theparticulars of the projects / programmes approved and recommended by CSR Committee andapproved by the Board for the financial year 2019-20 are given by way of Annexure-IVattached to this Report.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATES

The following companies and bodies corporate are the subsidiaries / associates of theCompany:

Subsidiaries

1. TVS Motor Company Limited Chennai;

2. Sundaram Auto Components Limited Chennai;

3. TVS Housing Limited Chennai;

4. TVS Motor Services Limited Chennai;

5. TVS Credit Services Limited Chennai;

6. TVS Two-wheeler Mall Private Limited Chennai;

7. TVS Micro Finance Private Limited Chennai;

8. Harita ARC Private Limited Chennai;

9. Harita Collection Services Private Limited Chennai;

10. TVS Commodity Financial Solutions Private Limited Chennai;

11. TVS Housing Finance Private Limited Chennai;

12. Sundaram-Clayton (USA) Limited USA;

13. TVS Motor Company (Europe) B.V. Amsterdam;

14. TVS Motor (Singapore) Pte. Limited Singapore;

15. PT TVS Motor Company Indonesia Jakarta;

16. Sundaram Holding USA Inc Delaware USA;

17. Green Hills Land Holding LLC South Carolina USA;

18. Components Equipment Leasing LLC South Carolina USA;

19. Sundaram-Clayton (USA) LLC South Carolina USA; and

20. Premier Land Holding LLC South Carolina USA.

Associates

1. Emerald Haven Realty Limited Chennai and its subsidiaries;

2. TVS Training and Services Limited Chennai; and

3. Sundram Non-Conventional Energy Systems Limited Chennai

SUBSIDIARIES / ASSOCIATES

TVS Motor Company Limited (TVSM)

TVSM is engaged in the business of manufacture of two and three wheelers. During theyear 2019-20 TVSM's total revenue including other income was Rs 16455.44 Cr and earned aprofit before tax of Rs 754.41 Cr after exceptional item of Rs 32.33 Cr.

TVSM for the year 2019-20 declared first interim dividend of Rs 2.10 per share (210%)absorbing a sum of Rs 120.28 Cr including dividend distribution tax and a second interimdividend of Rs 1.40 per share (140%) absorbing a sum of Rs 79.75 Cr including dividenddistribution tax.

Hence the total amount of dividend for the year ended 31st March 2020aggregated to Rs 3.50 per share (350%) on 475087114 equity shares of Rs 1 each.

Sundaram Auto Components Limited (SACL)

Sales of SACL was Rs 529.50 Cr for 2019-20 as against Rs 601.16 Cr in the previousyear.

SACL earned a Profit Before Tax of Rs 6.44 Cr during the year 2019-20 as against Rs17.37 Cr in the previous year.

SACL declared an interim dividend of Rs 0.50 per share (5%) for the year ended 31stMarch 2020 thereby absorbing a sum of Rs 2.54 Cr including dividend distribution tax.

During the year TVSM has subscribed a sum of Rs 60 Cr in the equity capital of SACL.

TVS Housing Limited (TVSH) / Emerald Haven Realty Limited (EHRL)

TVS Housing Limited is a 100% subsidiary of TVS Motor Company Limited.

EHRL

Chennai residential real estate market has de-grown by 20% in the financial year2019-20. The NBFC crisis changes to GST regulations and CoVID 19 led to a reduction inthe number of new launches by developers and postponement of purchase decision by buyersresulting in a general slowdown in the real estate market.

During the year all villas in the final phase of GreenHills and plots in Salamangalamin Chennai were sold.

In 2019-20 the Company launched Flourish Apartments at Salamangalam comprising of 208residential units. This project falls under the category of "affordable homes"defined by the Government of India. 61% of the apartments have been sold till date.

During 2019-20 project Lighthouse in Chennai was launched - a 14 storey residentialapartment complex comprising of 279 units and 73% of the apartments have been sold tilldate.

In January 2019 Emerald Haven Life Spaces (Radial Road) Limited (EHLSRRL) asubsidiary of EHRL acquired land admeasuring 6 acres to develop Multi-storeyed Building(MSB) at Kovilambakkam Radial Road Chennai.

During the year the Company geographically expanded to Bengaluru via Joint DevelopmentAgreement (JDA) for a 6.4 acre land parcel in Kagglipura Bengaluru.

During the year EHRL entered into a Joint Venture Agreement with ASK Real EstateSpecial Opportunities Fund - II (ASK) and invested a sum of Rs 16.63 Cr and ASK investedtheir share of Rs 15.98 Cr.

The Company has completed construction of 1.4 Million Sq.ft till date and the totalarea under development as on date is 5.5 Million Sq.ft

Subsidiaries of EHRL

1. Emerald Haven Development Limited (EHDL);

2. Emerald Haven Projects Private Limited (EHPPL);

3. Emerald Haven Life Spaces (Radial Road) Limited (EHLSRRL);

4. Emerald Haven Realty Developers (Paraniputhur) Private Ltd (EHRDPPL);

5. Emerald Haven Property Development Limited (EHPDL);

6. Emerald Haven Town and Country Private Limited (EHTCPL);

7. Happiness Harmony Property Developers Private Limited (HHPDPL); and

8. Emerald Haven Towers Limited (EHTL)

PT. TVS Motor Company Indonesia (PT TVSM)

The Indonesian two-wheeler Industry was stagnant during the year 2019-20 at around 7.2million units. While Skubek segment grew by 3% bebek and motorcycle segments sufferednegative growth of 15% and 21% respectively.

During the year under review PT TVS achieved sales of 53650 nos. of two wheelers asagainst 40760 nos. of last year thereby registering a growth of 31%. In three wheelersthe company recorded sales of 8100 units as against 2700 units of sales during theprevious year.

The impressive growth in sales numbers coupled with margin improvement enabled thecompany to achieve a positive EBITDA of USD 0.75 million for the full year as against aloss of USD 3.04 million of last year. It is also worthwhile to note that the companyachieved break even by posting operating profit for the second half of the financial year2019-20. During the year TVSM has invested a sum of USD 5 Mn in the ordinary shares of PTTVSM.

TVS Motor Company (Europe) B.V

TVSM had earlier incorporated TVS Motor Company (Europe) B.V. in Netherlands with aview to serve as special purpose vehicle for making and protecting the investments made inoverseas operations of PT TVSM.

TVS Motor (Singapore) Pte. Ltd

TVS Motor (Singapore) Pte Limited a wholly owned subsidiary of TVS Motor CompanyLimited in Singapore is leveraged to operationalize digital technology by delivering highquality solutions that address real life business challenges viz. harnessing the power ofAnalytics Artificial Intelligence Augmented Reality Machine Learning and Internet ofThings (IOT).

These are focused in areas of automotive and fintech industries that have directrelevance to Company and its subsidiaries. The digital strategy would be delivered throughboth organic and inorganic means.

As part of this strategy during the financial year 2019-20 TVS Motor (Singapore) PteLimited has made investments in US based companies viz. Altizon Inc PredictronicsScienaptics and in Tagbox Pte which are in the fields of IOT predictive maintenance andcredit underwriting with an aggregate investment of USD 16.57 Mn. During the year TVSMhas invested a sum of SGD 26.48 Mn in the ordinary shares of TVS Motor (Singapore) PteLimited.

Project 303 Bidco Limited United Kingdom (UK)

TVS Motor (Singapore) Pte Limited has acquired a newly incorporated company viz.Project 303 Bidco Limited UK (UK Subsidiary) on 2nd April 2020 andconsequently it has become wholly owned subsidiary.

UK Subsidiary has signed an asset purchase agreement with amongst others NortonMotorcycles Holdings Limited (in administration) and

Norton Motorcycles (UK) Limited (in administration) (together "Norton") toacquire certain assets from Norton including the brand "Norton" and otherassociated brands.

Norton Motorcycles (UK) Limited (in administration) was engaged in the business ofmanufacturing the iconic "Norton" and allied brand motorcycles. It is an entitybased in the United Kingdom of Great Britain and Northern Ireland.

TVS Motor Services Limited (TVS MS)

TVS MS was initially the investment SPV of TVS Motor Company Limited for funding TVSCredit Services Limited (TVS CS).

The National Company Law Tribunal Chennai (NCLT) on 16th April 2019approved a Scheme of Arrangement (Scheme) between TVS MS TVS CS and their respectiveshareholders and became effective 9th May 2019 being the date of filing of thesaid approved Scheme with the Ministry of Corporate Affairs.

In terms of the Scheme TVS MS redeemed its entire Non-cumulative Redeemable PreferenceShares (NCRPS) previously held by TVS Motor Company Limited (TVSM) by transferring theinvestment held by it in TVS CS equity shares in favour of TVSM on 6th June2019.

Post transfer of equity shares of TVS CS TVS Motor Company Limited now holds 83.95% ofthe equity capital directly in TVS CS which was earlier held through TVS MS the whollyowned subsidiary of TVSM. TVS MS continues to be a 100% subsidiary of TVSM.

During the year TVSM subscribed to 45000000 Equity Shares of TVS MS aggregating toRs 45 Cr at a price of Rs 10/- per share.

TVS Credit Services Limited (TVS CS)

TVS CS is the retail finance arm of TVS Motor Company Limited for financing oftwo-wheelers.

During the year 2019-20 TVS CS's overall disbursements registered at Rs 7585 Cr ascompared to Rs 7067 Cr in the previous year. During the year under review the assetsunder management stood at Rs 9215 Cr as against Rs 8335 Cr during the previous yearregistering a growth of 10%. Total income during the financial year FY 2020 increased toRs 2015 Cr from Rs 1635 Cr during the financial year an increase of 23.1% over theprevious year.

The profit before tax and exceptional items for the year has also improved and stood atRs 219 Cr as against Rs 216 Cr during the previous year. During the year TVSM hasinvested a sum of Rs 45 Cr in the Equity capital of TVS CS.

The following companies are the subsidiaries of TVS CS.

1. TVS Two-wheeler Mall Private Limited

2. TVS Micro Finance Private Limited

3. Harita ARC Private Limited

4. Harita Collection Services Private Limited

5. TVS Commodity Financial Solutions Private Limited

6. TVS Housing Finance Private Limited

All the above subsidiaries are yet to commence its operations.

Sundaram-Clayton (USA) Limited

Sundaram-Clayton (USA) Limited a wholly owned subsidiary of the Company is engaged inthe business of providing Professional Employer Organisation ("PEO") services tothe employees of the Company. The Company earned revenue of USD 7078 and net income afteradjustment of expenses amounted to USD 390 for the year ended 31st March 2020.

Sundaram Holding USA Inc. (SHUI) & its subsidiaries

The Company along with Sundaram Auto Components Limited (SACL) has formed SundaramHolding USA Inc. (SHUI) a company established under the applicable provisions of Laws ofThe United States of America.

SHUI's wholly owned subsidiaries are:

1. Green Hills Land holding LLC South Carolina USA

2. Component Equipment Leasing LLC South Carolina USA

3. Sundaram-Clayton USA LLC South Carolina USA

4. Premier Land Holding LLC South Carolina USA

During the year 2019-20 the Company invested a sum of USD 2 Mn and SACL has invested asum of USD 6 Mn in the ordinary shares of SHUI and holds 25% (Balance 75% held by SACL) ofthe total capital of SHUI as on 31st March 2020.

TVS Training and Services Limited (TVS TSL)

TVS TSL is engaged in the business of establishing and providing vocational trainingservices to various industries and is participating in the National Skill DevelopmentProjects. During the year the Company earned an income of Rs 34.20 Cr and profit aftertax for the year ended 31st March 2020 was Rs 2.01 Cr.

Sundram Non-Conventional Energy Systems Limited (SNCES)

SNCES is engaged in the business of generation of power. During the year the Companyearned a total revenue of Rs 2.93 Cr and Profit after tax was Rs 1.64 Cr.

8. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance withthe provisions of Section 129 of the Act read with the Companies (Accounts) Rules 2014and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) along with a separate statement containing the salient featuresof the financial performance of subsidiaries / associates in the prescribed form. Theaudited consolidated financial statements together with Auditors' Report forms part of theAnnual Report.

The audited financial statements of the subsidiary companies will be made available tothe shareholders on receipt of a request from any Shareholder and it has also been placedon the website of the Company. This will also be available for inspection by theshareholders at the Registered Office during the business hours as mentioned in the Noticeof AGM.

The consolidated Profit Before Tax of the Company and its subsidiaries & associatesamounted to Rs 845.21 Cr for the financial year 2019-20 as against Rs 1117.74 Cr of theprevious year.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL

Directors' appointment / re-appointment

In terms of the provisions of sub-section (6) read with explanation to Section 152 ofthe Act two-thirds of the total number of Directors i.e. excluding IDs are liable toretire by rotation and out of which one-third is liable to retire by rotation at everyannual general meeting.

Mr Gopal Srinivasan and Dr. Lakshmi Venu are liable to retire by rotation at theensuing AGM and being eligible offer themselves for reappointment.

The Directors have recommended their re-appointment for the approval of shareholders.Brief resume of the Directors are furnished in the Notice convening the AGM of theCompany.

Independent Directors (IDs)

All IDs hold office for a fixed term and are not liable to retire by rotation. At theAGM held on 23rd July 2019 Ms Sasikala Varadachari was appointed as ID for thefirst term of five consecutive years. Vice Admiral P J Jacob was re-appointed as ID for asecond term of five consecutive years from 21st August 2019 and M/s VSubramanian S Santhanakrishnan R Vijayaraghavan and Kamlesh Gandhi were re-appointed asIDs for the second term of three consecutive years from 21st August 2019. MrGopalan was re-appointed as ID for the second term of three consecutive years from 24thJuly 2019.

The terms cover inter-alia duties rights of access to information disclosureof their interest / concern dealing in Company's shares remuneration and expensesinsurance and indemnity. The IDs are provided with copies of the Company's policies andcharters of various Committees of the Board. In accordance with Section 149(7) of the Actall IDs have declared that they meet the criteria of independence as provided underSection 149(6) of the Act and Regulation 25 of the Listing Regulations and the Boardconfirms that they are independent of the management.

The detailed terms of appointment of IDs are disclosed on the Company's website in thelink as provided in page no. 76 of this Annual Report. All the IDs have registeredthemselves with the databank of Independent Directors developed by the Indian Institute ofCorporate Affairs in accordance with the provisions of Section 150 of the Act and obtainedID registration certificate.

Separate meeting of Independent Directors

During the year under review a separate meeting of IDs was held on 10thMarch 2020.

Based on the set of questionnaires complete feedback on Non-IDs and details of variousactivities undertaken by the Company were provided to IDs to facilitate their review /evaluation.

(a) Non-Independent Directors (Non-IDs)

IDs used various criteria and methodology practiced in Industry prescribed by NRC forevaluation of Non-IDs viz. M/s. Venu Srinivasan Chairman and Managing Director Dr.Lakshmi Venu Joint Managing Director and Sudarshan Venu T K Balaji and Gopal SrinivasanDirectors Chairman of the Board and Board as a whole.

IDs evaluated the performance of all Non-IDs individually through a set ofquestionnaires. They reviewed their interaction during the Board/ Committee meetings andstrategic inputs given by them to improve the risk management internal controls andcontribution to the Company's growth.

IDs were satisfied fully with the performance of all Non-IDs.

(b) Chairman

The IDs reviewed the performance of Chairman of the Board after taking into account hisperformance and benchmarked the achievement of the Company with industry under thestewardship of Chairman.

The IDs also placed on record their appreciation of Chairman's high level ofintegrity trust confidentiality impartial & judicious approach transparency andcommitment to governance setting high standards for the Company outstanding ability tomotivate the board's involvement and stimulate discussions particularly during a year ofdiverse challenges and tough state of economy and clear initiatives for staying ahead ofcompetition.

Chairman was also nominated for the "Padma Bhushan" the third highestcivilian award and was conferred with the prestigious Deming 'Distinguished Service Awardfor Dissemination and Promotion Overseas' and becomes the First Industrialist from Indiato be bestowed this prestigious award for his contributions in the field of Total QualityManagement (TQM).

The Deming Prize is the highest award for TQM in the world. Deming 'DistinguishedService Award for Dissemination and Promotion Overseas' is given to individuals who havemade outstanding contributions in the dissemination and promotion of Total QualityManagement (TQM) and is sponsored by Japanese Union of Scientists and Engineers (JUSE). Heis also a key member of Prime Minister Council on Trade and Industry.

They also recorded the growth story of the Company under the leadership of Chairman andincrease in customer base and turnover.

(c) Board

IDs also evaluated Board's composition size mix of skills and experience its meetingsequence effectiveness of discussion decision making follow up action so as to improvegovernance and enhance personal effectiveness of Directors.

The evaluation process focused on Board Dynamics and the Board upon evaluationconcluded that it is well balanced in terms of diversity of experience with expert in eachdomain viz. Engineering Leadership Strategy Finance Legal Banking and Regulatory andGovernance. The Company has a Board with wide range of expertise in all aspects ofbusiness.

IDs recorded that they were always kept involved through open and free discussions andprovided additional inputs in emerging areas being forayed into by the Company and highlevels of Corporate Governance in all management discussion and decisions were maintained.

The IDs unanimously evaluated the prerequisites of the Board viz. formulation ofstrategy acquisition & allocation of overall resources setting up policiesdirectors' selection processes and cohesiveness on key issues and satisfied themselvesthat they were adequate.

They were satisfied with the Company's performance on all fronts and finally concludedthat the Board operates with best practices.

(d) Quality Quantity and Timeliness of flow of Information between the CompanyManagement and the Board

All IDs have expressed their overall satisfaction with the support received from themanagement and the excellent work done by the management during the year under review andalso that the relationship between the top management and Board is smooth and seamless.

The information provided for the meetings were clear concise and comprehensive tofacilitate detailed discussions and periodic external presentations on specific areas wellsupplemented the management inputs. The emerging e-technology was duly incorporated in theoverall review of the board.

KEY MANAGERIAL PERSONNEL (KMP)

During the year the board at its meeting held on 5th February 2020re-appointed Dr. Lakshmi Venu as Joint Managing Director of the Company (JMD) for afurther period of five years effective 22nd March 2020 on such terms andconditions and the same was approved by the shareholders through Postal ballot on 17thMarch 2020.

Mr Venu Srinivasan Chairman and Managing Director Dr Lakshmi Venu Joint ManagingDirector Mr Vivek S Joshi CEO Mr K Gopala Desikan CFO and Mr R Raja Prakash CompanySecretary are the 'Key Managerial Personnel' of the Company as on date of this Report.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition ofthe Board to ensure an appropriate mix of abilities experience and diversity to serve theinterests of all stakeholders of the Company.

Nomination and Remuneration Policy was approved by the Board at its meeting held on 24thSeptember 2014 and amended from time- to-time to maintain consistency and statutoryamendments to be reflected in the policies to make it upto date and more comprehensive.The objective of such policy shall be to attract retain and motivate executive managementand devise remuneration structure to link to Company's strategic long term goalsappropriateness relevance and risk appetite.

NRC will identify ascertain the integrity qualification appropriate expertise andexperience having regard to the skills that the candidate will bring to the Board /Company whenever the need arises for appointment of Directors / KMP.

Criteria for performance evaluation disclosures on the remuneration of Directorscriteria of making payments to Non-Executive Directors have been disclosed as part ofCorporate Governance Report attached herewith.

Remuneration payable to Non-executive Independent Directors

The shareholders through Postal Ballot on 22nd June 2016 approved theremuneration by way of commission not exceeding 1% of the net profits in aggregatepayable to Non-Executive and Independent Directors of the Company (NE-IDs) for every yearsubject to the performance of the Company for a period of 5 years commencing from 1stApril 2016.

NE-IDs devote considerable time in deliberating the operational and other issues of theCompany and provide valuable advice in regard to the management of the Company from timeto time and the Company also derives substantial benefit through their expertise andadvice.

Evaluation of Independent Directors and Committees of Directors

In terms of Section 134 of the Act and the Corporate Governance requirements asprescribed under Listing Regulations the Board reviewed and evaluated IndependentDirectors and various Committees viz. Audit Committee Risk Management CommitteeNomination and Remuneration Committee Corporate Social Responsibility Committee andStakeholders' Relationship Committee based on the evaluation criteria laid down by theNRC.

Board has carried out the evaluation of all Directors (excluding the Director beingevaluated) and its Committees through a set a questionnaires.

Independent Directors

The performance of all IDs were assessed against a range of criteria such ascontribution to the development of business strategy and performance of the Companyunderstanding the major risks affecting the Company clear direction to the management andcontribution to the Board cohesion. The performance evaluation has been done by the entireBoard of Directors except the Director concerned being evaluated.

The Board noted that all IDs have understood the opportunities and risks to theCompany's strategy and are supportive of the direction articulated by the management teamtowards consistent improvement.

On the basis of the report of performance evaluation of directors the Board noted andrecorded that all the directors should extend and continue their term of appointment asDirectors / Independent Director as the case may be.

Committees

Board delegates specific mandates to its Committees to optimize Directors' skills andtalent besides complying with key regulatory aspects.

- Audit Committee for overseeing financial Reporting;

- Risk Management Committee for overseeing the risk management framework;

- Nomination and Remuneration Committee for selecting and remunerating Directors /Employees;

- Stakeholders' Relationship Committee for redressing investors grievances; and

- Corporate Social Responsibility Committee for overseeing CSR initiatives andinclusive growth.

The performance of each Committee was evaluated by the Board after seeking inputs fromits Members on the basis of specific terms of reference its charter time spent by theCommittees in considering key issues quality of information received majorrecommendations / action plans and work of each Committee.

The Board is satisfied with the overall effectiveness and decision making of allCommittees. The Board reviewed each Committee's terms of reference to ensure that theCompany's existing practices remain appropriate.

Recommendations from each Committee were considered and approved by the Board prior toits implementation. The Board has accepted all the recommendations of the Committees whichare mandatorily required in the relevant financial year.

Details of Committees its charter functions are provided in the Corporate GovernanceReport attached to this Report.

Number of board meetings held:

The number of board meetings held during the financial year 2019-20 is provided as partof Corporate Governance Report prepared in terms of the Listing Regulations.

10. AUDITORS

Statutory Auditors

The Company at its fifty fifth AGM held on 19th July 2017 appointed M/sRaghavan Chaudhuri & Narayanan Chartered Accountants Bengaluru having FirmRegistration No. 007761S allotted by The Institute of Chartered Accountants of India asStatutory Auditors of the Company to hold office for the first term of five consecutiveyears from the conclusion of the said AGM at such remuneration in addition to applicabletaxes out of pocket expenses travelling and other expenses as may be mutually agreedbetween the Board of Directors of the Company and the Auditors.

The statutory auditors will continue to hold office for the fourth year in the firstterm of five consecutive years from the conclusion of this AGM.

The Company has obtained necessary certificate under Section 141 of the Act conveyingtheir eligibility for being statutory auditors of the Company for the year 2020-21.

The Auditors' Reports for the financial year 2019-20 do not contain any qualificationreservation or adverse remark and the same is attached with the annual financialstatements.

Secretarial Auditor

As required under Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company is required to appoint aSecretarial Auditor for auditing secretarial and related records of the Company.

The Secretarial Audit Report for the financial year 2019-20 given by Ms B ChandraPractising Company Secretary Chennai for auditing the secretarial and related records isattached to this report. The Secretarial Audit Report does not contain any qualificationreservation or other remarks.

The board at its meeting held on 29th May 2020 has re-appointed Ms BChandra Practising Company Secretary Chennai (CP No. 7859) as Secretarial Auditor forthe financial year 2020-21.

Cost Auditor

As per Section 148 of the Act read with the Companies (Cost Records and Audit) Rules2014 as amended the cost audit records maintained by the Company in respect of partsmanufactured by the Company covered under other machinery specified under Customs TariffAct heading in Table B to Rule 3 of the above rules are required to be audited by a CostAuditor.

In terms of the Companies (Cost Records and Audit) Amendment Rules 2014 the boardre-appointed Mr A N Raman Cost Accountant Chennai holding Certificate of practice No.5359 allotted by The Institute of Cost Accountants of India as a Cost Auditor forconducting cost audit for the financial year 2020-21.

The Company has also received necessary certificate under Section 141 of the Act fromhim conveying his eligibility to act as a cost auditor. A sum of Rs 3.50 lakhs has beenfixed by the board as remuneration in addition to reimbursement of all applicable taxesactual traveling and out-of-pocket expenses incurred by him and is required to be approvedand ratified by the members at the ensuing AGM as per Section 148(3) of the Act.

The Company has filed the Cost Audit Report of 2018-19 on 21st August 2019in XBRL format.

11. CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over theyears and lays strong emphasis on transparency accountability and integrity.

A separate section on Corporate Governance and a certificate from the StatutoryAuditors of the Company regarding compliance with the conditions of Corporate Governanceas stipulated under the Listing Regulations is given as Annexure-VII to this Report.

The Chairman and Managing Director and the Chief Financial Officer of the Company havecertified to the Board on financial statements and other matters in accordance withRegulation 17(8) of the Listing Regulations 2015 pertaining to CEO / CFO certificationfor the financial year ended 31st March 2020.

12. BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34 of the Listing Regulations the Business ResponsibilityReport for the year 2019-20 describing the initiatives taken from an environment socialand governance perspectives in the prescribed format is given as Annexure-VI to thisReport and is also available on the Company's website in the link as provided in page no.76 of this Annual Report.

13. POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism in accordance with the provisionsof the Act and Regulation 22 of the Listing Regulations which provides a formal mechanismfor all Directors Employees and other Stakeholders of the Company to report to themanagement their genuine concerns or grievances about unethical behaviour actual orsuspected fraud and any violation of the Company's Code of Business Conduct and Ethics.

The Code also provides a direct access to the Chairman of the Audit Committee to makeprotective disclosures to the management about grievances or violation of the Company'sCode.

The Board at its meeting held on 5th February 2020 made certain amendmentsto the Whistle Blower Policy for protecting whistle blower who made in good faith andexpress guidance on procedure to be undertaken by the investigators for carrying outinvestigation on complaints filed by employees.

The policy is disclosed on the Company's website in the link as provided in page no. 76of this Annual Report.

14. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section76 of the Act for the year ended 31st March 2020.

15. STATUTORY STATEMENTS

 

Information on conservation of energy technology absorption foreign exchange etc.

Relevant information is given in Annexure-I to this Report in terms of therequirements of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules2014.

Material changes and commitments

The Manufacturing facilities and all offices of the Company were closed on March 232020 following the countrywide lockdown due to CoVID-19. The Company has since obtainedrequired permissions and restarted its manufacturing facilities and all offices partially.Based on assessment of the impact of CoVID-19 on the operations of the Company and ongoingdiscussions with customers vendors and service providers the Company is confident ofobtaining regular supply of raw materials and components resuming supply chain logisticsand serving customers.

The Company has considered the possible effects of CoVID-19 on the carrying amounts ofProperty Plant and Equipment Investments Inventories Trade Receivable and OtherCurrent Assets. In developing the assumptions relating to the possible futureuncertainties in the economic conditions because of this pandemic the Company as at thedate of approval of the financial results has used external and internal sources ofinformation/ indicators to estimate the future performance of the Company. Based oncurrent estimates the Company expects the carrying amount of these assets to berecovered.

Significant and material orders passed by the Regulators or Courts or Tribunalsimpacting the going concern status of the Company

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.

Annual Return

Extract of the Annual Return in prescribed form is given as Annexure-II to this Reportin terms of the requirements of Section 134(3)(a) of the Act read with the Companies(Accounts) Rules 2014.

The same is available on the Company's website in the link as provided in page no. 76of this Annual Report.

Employee's remuneration

Details of employees receiving the remuneration in excess of the limits prescribedunder Section 197 of the Act read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed as a statement and given inAnnexure-III. In terms of first proviso to Section 136(1) of the Act the Annual Reportexcluding the aforesaid annexure is being sent to the Shareholders of the Company. Theannexure is available for inspection at the Registered Office of the Company duringbusiness hours as mentioned in the Notice of AGM and any Shareholder interested inobtaining a copy of the said annexure may write to the Company Secretary at the RegisteredOffice of the Company. Certain incentive / performance related payments for the financialyear 2019-20 for KMPs and SMPs have been reduced / deferred on account of CoVID-19.

Comparative analysis of remuneration paid

A comparative analysis of remuneration paid to Directors and employees with theCompany's performance is given as Annexure-V to this Report.

Details of material related party transactions

There are no material related party transactions under Section 188 of the Act read withCompanies (Meetings of Board and its Powers) Rules 2014. Details of all related partytransactions are enclosed as part of the accounts for the year ended 31st March2020.

Details of loans / guarantees / investments made

During the year under review the Company had not granted any loans or guaranteescovered under Section 186 of the Act.

Please refer note no. 5 to Notes on accounts for the financial year 2019-20 fordetails of investments made by the Company.

Reporting of fraud

The Auditors of the Company have not reported any fraud as specified under Section143(12) of the Act.

Secretarial Standards

The Company has complied with the applicable secretarial standards as amended from timeto time.

Disclosure in terms of Sexual Harassment of Women at workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has an Internal Complaints Committee as required under The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

During the year under review there were no cases filed pursuant to the provisions ofSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

16. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation receivedfrom the promoters of the Company viz. T V Sundram Iyengar & Sons Private LimitedSouthern Roadways Private Limited Sundaram Industries Private Limited and SundaramFinance Holdings Limited.

The Directors thank the vehicle manufacturers vendors and bankers for their continuedsupport and assistance.

The Directors wish to place on record their appreciation of the continued excellentwork done by all the employees of the Company during the year. The Directors speciallythank the shareholders for their continued faith in the Company.

Annexure - I to Directors' Report to the shareholders

Information pursuant to Section 134(3)(m) of the Companies Act 2013

A. CONSERVATION OF ENERGY

1. Measures taken – FY 2019-20:

(i) Replaced energy efficient compressed air dryers and reduced pressure drop from 1.0bar to 0.2 bar.

(ii) Replaced energy efficient compressor which resulted in reduction of specificenergy consumption upto 9%.

(iii) Incorporated Variable Frequency Drive (VFD) in the induced draught fan motor oftower furnace scrubber.

(iv) Introduced VFD in cooling tower delivery pump for constant water pressure in diesfor all Pressure Die Cast (PDC) machines to optimize the power consumption.

(v) Converted delta to star connection in hydraulic pump of tilting machines.

(vi) Introduced motion controller for the office lights to switch OFF when it is notrequired.

(vii) Air leak reduced from 13% to 7% by leakages arresting and modification ofpneumatic panels.

(viii) Air pressure reduction from 6.0 bar to 5.0 bar in Gravity Die Cast (GDC) andfettling area.

(ix) Introduced thyristor drives in furnaces - 10 Nos.

B

(x) Replaced energy efficient water delivery pumps in cooling towers.

(xi) Optimization of chillers and thermo regulation unit in PDC machines.

The above measures have resulted in an annual saving of about Rs 177.5 Lakhs.

2. Proposed Measures - FY 2020-21:

(i) Introduction of thyristor drives for the holding furnaces.

(ii) Introduction of damper control for underflow motor to optimize the powerrequirement.

(iii) Idle time cut off of Hydraulic pumps heaters Coolant pump and conveyors.

(iv) Introduction of Automatic Lid in the Gravity Die Casting Holding Furnaces.

(v) Introduction of low capacity compressors during low production and holidays.

(vi) Replacement of energy efficient air dryers & compressors.

(vii) Introduction of inlet valve flow control in compressor main header to optimizethe air flow & energy.

(viii) Replacement of conventional fans with BLDC (Brushless DC) fan for office andcanteen.

(ix) Compressor energy consumption reduction by air audit study and optimizing thecompressed utilization across all plants.

(x) Variable Frequency Drive installation of Air compressors.

The above measures are expected to yield an annual saving of about Rs 189.7 Lakhs.

3. Steps taken for utilizing alternate sources of energy:

During the year 2019-20 the Company has utilized power generated through wind andsolar energy to an extent of 157.7 and 18.6 lakh units.

The Company also plans to continue the utilization of wind and solar captive energy(176 lakh units) during the year 2020-21.

4. Capital investment in energy conservation equipment:

In the year 2019-20 the Company has invested Rs0.75 lakh towards energy conservationequipment's and accessories.

The Company is planning to invest around Rs 175 lakh in 2020-21 towards the greenenergy generation of Solar (5MW) of power.

B. TECHNOLOGY ABSORPTION FOR 2019-20

Research & Development (R & D)

1. Specific areas in which R & D is carried out by the Company Completedactivities:

(i) Developed abrasive flow machining (AFM) of closed volute housings and prototypesare supplied to customer for evaluation.

(ii) Performed Finite Element Analysis (FEA) and optimized the design of structuralparts to enhance manufacturing feasibility for aluminium alloys.

(iii) Co-developed prototype castings for structural parts which are currently beingproduced through fabrication at Customer end.

(iv) Converted twin Low Pressure Die Casting (LPDC) machines to four cavity machines.Converted single cavity U313 cylinder head to twin cavity.

(v) Introduced cylinder head Phoenix in four cavity die for first time.

(vi) Machined combustion chamber in cylinder head castings to meet BS-VI regulatorynorms.

(vii) Introduced thermal decoring for cylinder head dies to remove sand from thinwalled oil gallery cores.

(viii) Maintenance and re-usage of existing hydraulic cylinder in replacement and newproduct dies.

(ix) Improved productivity through controlled cooling at locations in the stringentquality requirements.

(x) Developed 48 New products - brackets timing chain cover cover Variator cylinderheads cover cylinder head etc.

Ongoing activities:

(i) Develop Semi-Solid (GISS) process for structural HPDC parts.

(ii) Die life enhancement using GISS by lower temperature of operation and reduction inthe flash.

(iii) Installation of large scale automated one-way AFM processes.

(iv) Co-development of Higher CC (225) cylinder head with Customer.

(v) Elimination of ED coating process in inlet manifold castings through theimplementation of superior alloy.

(vi) Rationalizing the number of aluminium alloys (GDC & PDC) to improve overallcost effectiveness of the process.

(vii) Stabilize the thermal balancing of castings by implementing closed loop controlsystem.

2. Benefits derived as a result of R & D:

(i) Developed new die cast products for customers;

(ii) Validation of product life by performance testing;

(iii) Ideas generated for new business;

(iv) Upgradation of technical competency of employees;

(v) Quality improvement in existing parts; and

(vi) Energy saving.

3. Future plan of action:

(i) Development of Squeeze casting

(ii) Indigenization of die steel grades.

(iii) Development of Gas Induced Semi Solid in GDC process.

(iv) Introduction of Advanced Thixotropy Metallurgy technology for yield improvement.

(v) Development of Salt core technology to produce HPDC castings with intricateprofiles HPDC process.

Data relating to imported technology:

Technology imported during the last three years reckoned from the beginning of thefinancial year - NIL

Expenditure on R&D - Rs 7.64 Cr

C. FOREIGN EXCHANGE ACTUAL EARNINGS AND OUTGO

1. Export activities

Export during the year ended 31st March 2020 amounted to Rs 587.31 Cr asagainst Rs 786.91 Cr for the year ended 31st March 2019.

2. Total foreign exchange earned and used (actual)

(Rs in Cr.)

a) Foreign exchange used 351.95
b) Foreign exchange earned 646.09