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Sundaram Finance Holdings Ltd.

BSE: 535060 Sector: Financials
NSE: SUNDARMHLD ISIN Code: INE202Z01029
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Sundaram Finance Holdings Ltd. (SUNDARMHLD) - Director Report

Company director report

Your directors have pleasure in presenting the 25th Annual Report together with auditedaccounts for the year ended 31st March 2019. The summarised financial results ofthe Company are presented hereunder:

FINANCIAL RESULTS:

(र in cr.)

Particulars

Year ended March 31 2019

Year ended March 31 2018

Revenue from

81.99

57.00

Portfolio Companies
Operating Revenue

36.76

16.96

Other Income

1.96

1.63

Total Revenue

120.71

75.59

Less: Total Expenses

25.22

15.51

Profit before Tax

95.49

60.08

Profit after Tax

84.93

54.40

Consolidated PAT

137.46

129.67

DIVIDEND

Your directors are pleased to recommend a dividend of र 1.75 per share on thepaid-up share capital of र 75.55 cr. (35% on the face value of र 5/-)representing a dividend pay-out of 37.53% of profits (including dividend distributiontax).

AMALGAMATION OF SUNDARAM BPO INDIA LIMITED WITH SUNDARAM BUSINESS SERVICES LIMITED

Sundaram BPO India Limited (SBIL) a wholly-owned subsidiary of your Company wasamalgamated with Sundaram Business Services Limited (SBSL) another wholly-ownedsubsidiary with effect from the Appointed Date viz. 1st April 2018 pursuant to theOrder of Hon'ble National Company Law Tribunal Chennai under Sections 230 to 232 of theCompanies Act 2013. Consequent to the Amalgamation the consolidated accounts for thefinancial year ended 31st March 2019 have been prepared after taking into account thetransactions of SBIL.

MANAGEMENT DISCUSSION AND ANALYSIS GLOBAL ECONOMY

The international market narrative in 2018-19 was largely dominated by the US-Chinatrade talks that eventually culminated in a trade war. Globally macro sentiments remainedsubdued due to concerns about a slowdown in the US Euro zone and China. The IMF revisedits global growth forecast downward by a cumulative 40 basis points pegging it at 3.5% in2019 and 3.6% in 2020. The perceived risk of a US slowdown increased with the 10year-3-month spread witnessing an inversion for the first time in over 12 years. The paceof economic growth in the Eurozone also remained tepid with its largest economy Germanynarrowly avoiding a technical recession in Q4 2018. The UK faced an extended politicalcrisis after the government's Brexit deal was rejected by the British parliament threetimes. China posted its slowest growth in December 2018 in over three decades.

INDIAN ECONOMY

India's macro-economic indicators remained fairly stable throughout the fiscal yearwith real GDP growth continuing to hover around 7%. Industry and services growth remainedsteady at around 7% while agriculture growth weakened to below 3% during the year. Thefiscal deficit has been maintained at 3.5% of GDP. Foreign Direct Investment flowscontinue to be encouraging and India's foreign exchange reserves as at end March stood ata comfortable level of $412 billion. The annual average CPI remained stable at 3.5% duringthe period from April 2018 to February 2019 as compared to 3.6% in 2017-18. India'sglobal ranking on the ease of doing business improved to 77 from 142 in just under fiveyears.

The Government announced various measures to shore up the Rupee including some toreduce non-essential import of goods. In February 2019 the Government presented itsinterim budget. The Government continued to strive for a balance between fiscal prudenceand providing growth stimulus with specific emphasis on the alleviation of stress inagricultural households. The budget was generally viewed positively with focus on thebottom of the pyramid and the middle class.

AUTOMOTIVE SECTOR

A majority of your Company's investments are in the automotive sector. FY19 started ona strong note for the domestic auto industry and continued that way for the first half ofthe financial year. However this came to a sudden halt with five major factors impactingconsumer sentiment: (a) Sharp increase in crude oil price in the 2nd quarter (b) vehicleprice increases (including third-party insurance costs) primarily impacting 2-wheelers and4-wheelers to a lesser extent (c) NBFC financing pullback due to liquidity tightening(d) relaxation of axle load norms impacting Commercial Vehicle demand in the second halfand (e) floods in Kerala. These factors together led to an abnormally low festive seasondemand as a result of which automotive dealers were saddled with high inventory levelsacross segments. With the rural economy slowing down due to deterioration in farm/non-farmincome rural sales momentum also began to moderate.

Among the various segments of the auto sector commercial vehicles witnessed robustgrowth of 38% in the first half of the financial year. However the demand situationdeteriorated leading to a 2nd half growth of only 3%. Overall FY19 Commercial Vehiclesales ended 17.5% up. Passenger Vehicles sales grew slowest at 2.7% YoY. 2-wheelersregistered 5% YoY growth primarily led by motorcycles up 8% YoY while scooter volumeswere flat. Weakness in the urban segment continues to impact the scooter segment.

Looking ahead the auto sector will have to transition to stricter Bharat Stage 6emission norms from 1st April 2020. This will inevitably drive up prices of vehiclesacross all auto segments. There is an expectation that this could drive some advancepurchases or pre-buying. The Government's focus on improving rural incomes through variousschemes such as the Prime Minister KISAN Yojna and RBI's concerted efforts to ensure lowerinterest rate transmission are also expected to increase auto demand. However on balance2019-20 is likely to be a muted year for the auto industry.

OPERATING AND FINANCIAL PERFORMANCE

Your Company earned a revenue of र 120.71 cr. during the financial year 2018-19as against र 75.59 cr. in the previous year. The profit after tax for the year wasर 84.93 cr. as against र 54.40 cr. in the previous year. The company'snet-worth stood at र 1769.93 cr. as on 31.03.2019.

There are no significant changes in key financial ratios of the Company for F.Y.2018-19 as compared to F.Y. 2017-18 except for the following:

Ratios

March

March

Variance

Reason for Change

2019

2018

Current

80.61

62.42

29%

Increase in current
Ratio investments
RONW (%)

4.80%

2.39%

100%

OCI movements in the
Profit & Loss Account

The consolidated profit after tax and net worth for the year stood at र 137.46 cr.and र 2365.62 cr. respectively.

BPO BUSINESS

The BPO business of the Company comprises the following:

Type of Business

Turnover

(र in cr.)

Shared services business managed by the

22.74

Company
Sundaram Business Services Limited - for

42.25

managing outsourced business of domestic and
overseas clients (Wholly-owned Subsidiary)
Total

64.99

Shared Services Business

The shared services business of the Company encompasses services provided to SundaramFinance Limited and its group/ associate companies on an arm's length basis. Such servicesinclude transaction processing accounts payable processing tele-calling traininglearning and development. The revenue earned from the shared services business during theyear was र 22.74 cr. The business had 583 employees as on 31st March 2019.

Sundaram Business Services Limited

Sundaram Business Services Limited (SBSL) is a global outsourcing company offering awide range of services to domestic and overseas clients. Pursuant to the amalgamation ofSBIL the service offerings of SBSL include best in class outsourcing to over 50 clientsin India Australia and the UK.

The accounts of SBSL for the financial year ended 31st March 2019 have been preparedafter giving effect to the Scheme of Amalgamation and consequently the figures relatingto that company for the current financial year are not strictly comparable with those ofthe previous years. During the year SBSL earned a revenue of र 42.25 cr. andreported a profit after tax of र 3.59 cr. As on date the company has 712employees.

INVESTMENT PORTFOLIO

The Company holds investments in 17 portfolio companies as at 31.03.2019. The totalcarrying cost of these investments is

Rs 102.62 cr. The performance of the key portfolio companies during 2018-19 was asfollows:

(र in cr.)

Sl. No. Portfolio Company

Holding

Holding

Networth

Share of

PAT

Share of

Cost

(%)

Networth

PAT

1 Turbo Energy Private Limited

1.88

32.00

1403.69

449.18

167.38

53.56

2 India Motor Parts and Accessories Limited

5.77

18.52

878.56

162.71

26.41

4.89

3 Brakes India Private Limited

0.15

6.67

1999.13

133.34

446.64

29.79

4 Dunes Oman LLC (FZC)

21.56

43.69

192.09

83.92

51.84

22.65

5 Sundaram Clayton Limited

14.28

11.24

688.70

77.41

119.66

13.45

6 Flometallic India Private Limited

32.50

40.63

156.90

63.74

28.65

11.64

7 Wheels India Limited

8.38

11.08

515.35

57.10

55.96

6.20

8 Axles India Limited

10.16

38.81

137.61

53.40

38.06

14.77

9 Lucas-TVS Limited

0.27

5.32

837.42

44.55

75.60

4.02

10 Delphi-TVS Diesel Systems Limited

0.18

3.19

316.84

10.11

44.47

1.42

11 Others

7.47

NA

140.80

24.98

12.65

4.72

Total

102.62

1160.45

167.11

Note: The figures relating to the companies mentioned under Sl. Nos. 3 9 and 10are based on the audited financial results for the year ended 31st March 2018. The figuresrelating to the companies mentioned under Sl. Nos. 2 and 7 are based on the unauditedfinancial results for the nine months ended 31st December 2018 which were subjected toLimited Review. The figures relating to the companies mentioned under Sl. Nos. 1456 and8 are based on the audited financial results for the year ended 31st March 2019.

Turbo Energy Private Limited

Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbocharger parts in the country. Your Company holds 32% stake in Turbo Energy Private Limitedand has been categorised as one of the promoters of that company. Borgwarner Turbo Systems(Germany) and Brakes India Private Limited are the other promoters of the company. Duringthe year the revenue earned by the company grew by 24.76% from र 1270.26 cr. toर 1584.80 cr. The profit after tax for the year was र 167.38 cr. as againstर 188.27 cr. in the previous year. Your Company received a total dividend of र 5.12 cr. from Turbo Energy Private Limited during the financial year 2018-19.

India Motor Parts and Accessories Limited

India Motor Parts and Accessories Limited is the largest distributor of automotivespare parts and equipment in the country. Your Company holds 18.52% stake in India MotorParts and Accessories Limited. For the period ended 31st December 2018 the revenueearned by the company stood at र 391.12 cr. as against र 357 cr. for thecorresponding period in the previous year. The profit after tax for the nine months ended31st December 2018 stood at र 26.41 cr. as against र 20.79 cr. for thecorresponding period in the previous year. The market capitalisation of the company as on31st March 2019 was र 758.75 cr. The value of your Company's holding on thatbasis was र 140.52 cr. as on 31st March 2019. Your Company received a totaldividend of र 1.69 cr. from India Motor Parts and Accessories Limited during thefinancial year 2018-19.

Brakes India Private Limited

Brakes India Private Limited is the market leader in the manufacture of braking systemsfor cars and commercial vehicles in the country. Your Company holds 6.67% stake in BrakesIndia Private Limited and has been categorised as one of the promoters of that company.TRW Automotive (since acquired by and now part of ZF Group) and the TVS Group are theother promoters of the company. The revenue earned by the company for the year ended 31stMarch 2018 grew by 6.88% from र 4136.48 cr. to र 4421.27 cr. The profitafter tax for the year ended 31st March 2018 was र 446.64 cr. as againstर 375.94 cr. in the previous year registering a growth of 18.81%. Your Companyreceived a total dividend of र 9.04 cr. from Brakes India Private Limited during thefinancial year 2018-19.

Dunes Oman LLC (FZC)

Dunes Oman LLC (FZC) operating in Salalah Sultanate of Oman is engaged in themanufacture of iron castings for the automotive industry. Your Company holds 43.69% stakein Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company.Dunes Oman was co-promoted with Brakes India Private Limited. During the year the companyreduced its paid-up equity share capital by 20% consequent to which the holding cost ofthe shares in Dunes Oman stands reduced from र 26.95 cr. to र 21.56 cr. Thecompany's revenue for the year grew by 5.37% from र 334.84 cr. to र 352.83 cr.while the profit after tax for the year was र 51.84 cr. as against र 66.81 cr.in the previous year. Your Company received a total dividend of र 26.92 cr. fromDunes Oman LLC (FZC) during the financial year 2018-19.

Sundaram Clayton Limited

Sundaram Clayton Limited is engaged in the manufacture of precision aluminium castproducts for both automotive and non-automotive applications. Your Company holds 11.24%stake in Sundaram Clayton Limited and has been categorised as one of the promoters of thatcompany. The TVS Group is the other promoter of the company. During the year the revenueearned by the company grew by 9.41% from र 1766.74 cr. to र 1932.94 cr.The profit after tax for the year was र 119.66 cr. as against र 54.92 cr. in theprevious year. The market capitalisation of the company as on 31st March 2019 was र 5917.88 cr. The value of your Company's holding on that basis was र 664.88 cr. as on31st March 2019. Your Company received a total dividend of र 8.18 cr. from SundaramClayton Limited during the financial year 2018-19.

Flometallic India Private Limited

Flometallic India Private Limited is engaged in the manufacture of iron castings forthe automotive industry. Your Company holds 40.63% stake in Flometallic India PrivateLimited. During the year the revenue earned by the company grew by 8.47% from र 305.26 cr. to र 331.11 cr. The profit after tax for the year was र 28.65 cr. asagainst र 33.64 cr. in the previous year. Your Company received a total dividend ofर 4.88 cr. from Flometallic India Private Limited during the financial year 2018-19.

Wheels India Limited

Wheels India Limited is the leading manufacturer of wheels and air suspensioncomponents for cars and commercial vehicles in the country. Your Company holds 11.08%stake in Wheels India Limited and has been categorised as one of the promoters of thatcompany. Titan Limited and the TVS Group are the other promoters of the company. For theperiod ended 31st December 2018 the revenue earned by the company grew by 28.78% toर 2333.78 cr. as against र 1812.24 cr. for the corresponding period in theprevious year. The profit after tax for the nine months ended 31st December 2018 wasर 55.96 cr. as against र 52.30 cr. for the corresponding period in the previousyear registering a growth of 7%. The market capitalisation of the company as on 31stMarch 2019 was र 2240.41 cr. The value of your Company's holding on that basis wasर 248.34 cr. as on 31st March 2019. Your Company received a total dividend ofर 2.07 cr. from Wheels India Limited during the financial year 2018-19.

Axles India Limited

Axles India Limited is a leading manufacturer of axle housings for medium and heavycommercial vehicles in the country. Your Company holds 38.81% stake in Axles India Limitedand has been categorised as one of the promoters of that company. Dana Corporation (USA)and Wheels India Limited are the other promoters of the company. During the year therevenue earned by the company grew by 28.35% from र 483.86 cr. to र 621.05 cr.The profit after tax for the year was र 38.06 cr. as against र 22.31 cr. inthe previous year registering a growth of 70.60%. Your Company received a total dividendof र 2.97 cr. from Axles India Limited during the financial year 2018-19.

Lucas-TVS Limited

Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. YourCompany holds 5.32% stake in Lucas-TVS Limited and has been categorised as one of thepromoters of that company. The TVS Group is the other promoter of the company. The revenueearned by the company for the year ended 31st March 2018 grew by 12.49% from र 2065.96 cr. to

र 2324.10 cr. The profit after tax for the year ended 31st March 2018 was र 75.60 cr. as against र 47.61 cr. in the previous year registering a growth of58.79%. Your Company received a total dividend of र 1.20 cr. from Lucas-TVS Limitedduring the financial year 2018-19.

Delphi-TVS Diesel Systems Limited

Delphi TVS Diesel Systems Limited is engaged in the manufacture of diesel fuelinjection equipment for passenger vehicles commercial vehicles and tractors. Your Companyholds 3.19% stake in Delphi TVS Diesel Systems Limited and has been categorised as one ofthe promoters of that company. Delphi Automotive Systems and the TVS Group are the otherpromoters of the company. The revenue earned by the company for the year ended 31st March2018 grew by 19.66% from र 885.08 cr. to र 1059.09 cr. The profit after tax forthe year ended 3st March 2018 was र 44.47 cr. as against र 6.19 cr. in theprevious year. Your Company received a total dividend of र 0.40 cr. from Delphi TVSDiesel Systems Limited during the financial year 2018-19.

CORPORATE GOVERNANCE

A detailed report on corporate governance together with a certificate from theSecretarial Auditor in compliance with the relevant provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is attached as part of thisreport vide Annexure I.

Compliance reports in respect of all laws applicable to the Company have been reviewedby the Board of Directors.

RELATED PARTY TRANSACTIONS

All transactions entered into by the Company with related parties were in theordinary course of business and on an arm's length basis. The transactions entered into bythe Company with Sundaram Finance Limited during the financial year 2018-19 were materialin nature (as per the definition provided under Regulation 23(1) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015) for which approval of theshareholders was obtained vide ordinary resolution dated 18th July 2018. The Company didnot enter into any material transaction with other related parties during the year. FormAOC-2 as required under Section 134 (3) (h) of the Act read with Rule 8 (2) of theCompanies (Accounts) Rules 2014 is attached as part of this report vide Annexure II (i).Further the Company's policy on Related Party Transactions is attached as part of thisreport vide Annexure II (ii) as required under Reg. 23(1) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. As required under Schedule Vto the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 thedetails of the related party transactions with Sundaram Finance Limited Promoter havebeen provided under Note 31 – Related Party Transactions forming part of the notesto the accounts.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has contributed towards preventive and general health care as well aseducation in consonance with its CSR policy. The Annual Report on CSR Activitiesundertaken by the Company for the Financial Year 2018-19 is annexed with this reportvide Annexure III.

DISCLOSURE UNDER THE ‘PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY'

The Company has in place a Policy for prevention of Sexual Harassment in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up toredress complaints. All employees (permanent contractual temporary trainees) arecovered under this policy. No complaints were received during the financial year. None waspending unresolved as on 31st March 2019.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act 2013 and the rules thereunder theCompany has appointed Mr. A. Kalyana Subramaniam Practising Company Secretary as theSecretarial Auditor of the Company. The Secretarial Audit Report as provided by him isannexed to this Report vide Annexure IV.

REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL

Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed vide Annexure V.

EXTRACT OF ANNUAL RETURN

As required under Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inForm No. MGT-9 is annexed as part of this report vide Annexure VI.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review no significant and material orders were passed by theregulators courts or tribunals against the Company impacting its going concern status orits future operations.

INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT 2013 READ WITH RULE 8 OF THECOMPANIES (ACCOUNTS) RULES 2014

Your Company has no activity relating to conservation of energy or technologyabsorption. During 2018-19 foreign currency earnings amounted to र 48.96 cr. Therewas no expenditure in foreign currency.

INTERNAL FINANCIAL CONTROLS

The Company has a well-established internal financial control and risk managementframework with appropriate policies and procedures to ensure the highest standards ofintegrity and transparency in its operations and a strong corporate governance structurewhile maintaining excellence in services to all its stakeholders. Appropriate controls arein place to ensure: (a) the orderly and efficient conduct of business including adherenceto policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d)accuracy and completeness of the accounting records and (e) timely preparation of reliablefinancial information.

RISK MANAGEMENT

Your Company has taken effective steps to build a robust risk management framework.Engaged as it is in the business of making investments and business process outsourcingservices the Company has to manage various risks including investment related riskbusiness and market risk operational risk and technology related risk. The Company hasestablished systems and procedures to ensure that these risks are identified measured andmanaged effectively. The Audit Committee reviews these risks on a regular basis.

Operational risks arising from inadequate or failed internal processes people andsystems or from external events are adequately addressed by the internal control systems.These systems are continuously reviewed monitored and modified as necessary. A stableand experienced management team provides much needed continuity and expertise in managingthe dynamic changes in the market environment. Process improvements and quality controlare on-going imperatives and are built into the employees' training modules as well. TheCompany has well documented Standard Operating Procedures for all processes to ensurebetter control over transaction processing and regulatory compliance.

INTERNAL AUDIT

As part of the efforts to evaluate the effectiveness of the internal control systemsyour Company has employed the services of the Internal Audit Department (IAD) of SundaramFinance Limited (SFL) to independently evaluate the adequacy of control measures on aperiodic basis and recommend improvements wherever appropriate. The Internal Audit teamplays a vital role in continuously monitoring the effectiveness of the Standard OperatingProcedures as a part of risk mitigation.

The IAD of SFL is manned by highly qualified and experienced personnel and reportsdirectly to the Audit Committee of the Board. The Audit Committee regularly reviews theaudit findings as well as the adequacy and effectiveness of the internal control measures.

HUMAN RESOURCES

In an environment that is rapidly becoming technology and digital oriented yourCompany believes in investing in long term people development for organisationalexcellence. Part of the enduring tradition of the Sundaram Finance Group over thedecades has been the handing down of wisdom to successive generations of employees usingthe conventional methods of listening observing and on the job training. Your Companyproposes to continue the tradition along with appropriate technological support to meetthe challenges of growth and scale.

INFORMATION TECHNOLOGY

Your Company's operations are supported by a full-fledged Data Centre catering not onlyto its own needs but also those of its subsidiaries with over 99.5% uptime. Your companyhas a well-planned Business Continuity Plan for all critical applications with nearreal-time data replication. The delivery centres meet the Information Security ManagementSystem and CIA (Confidentiality Integrity and Availability) Standards. To cater to theever changing customer needs the IT infrastructure is being constantly upgraded with new/ enhanced features to facilitate smooth functioning of operations and deliver customersatisfaction.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129 (3) of the Companies Act 2013 theConsolidated Financial Statements drawn up in accordance with the applicable AccountingStandards form part of the Annual Report. A separate statement containing the salientfeatures of the financial statements of your Company's Subsidiary and Associates in FormAOC-I forms part of the Annual Report.

The annual report of Sundaram Business Services Limited Subsidiary has been posted onyour Company's website – www.sundaramholdings.in. Detailed informationincluding the annual accounts of the Subsidiary Company will be available for inspectionby the members at the registered office of the Company and will also be made available tothe members upon request.

BOARD AND AUDIT COMMITTEE

The details regarding number of Board Meetings held during the financial year andcomposition of Audit Committee are furnished in the Corporate Governance Report.

DIRECTORS

Sri S. Viji Chairman relinquished his office as Director effective 27th August 2018.Your Directors place on record the significant contribution made by him to thedeliberations of the Board. The

Board of Directors elected Sri T.T. Srinivasaraghavan Director as Chairman of theBoard. Sri Srivats Ram was co-opted as Additional Director on 27th August 2018.Under Section 161 of the Companies Act 2013 he holds office up to the date of theensuing Annual General Meeting. Based on the recommendations of Nomination andRemuneration Committee Sri Srivats Ram is proposed to be appointed as a Director of theCompany subject to the approval of the shareholders. The Company has also received duenotice from a member proposing his appointment as Director of the Company.

Sri T.T. Srinivasaraghavan retires by rotation and being eligible offers himself forre-election.

Key Managerial Personnel

The following key managerial personnel were appointed / resigned during the year:

Name Designation

Date of

Resignation/

Appointment

T. Kailashapathy Chief Financial Officer

30.09.2018

V. Vaasen Chief Financial Officer

22.11.2018

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director of theCompany under Section 149 (7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149 (6).

ANNUAL EVALUATION BY THE BOARD

The Board has made a formal evaluation of its own performance and that of itscommittees and individual directors as required under Section 134(3)(p) of the CompaniesAct 2013.

DIRECTORS' RESPONSIBILITY STATEMENT

Your directors confirm that:

1. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

2. The Company has selected such accounting policies and applied them consistently andmade judgements and estimates that are 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 that period;

3. Proper and sufficient care has been exercised for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

4. The annual accounts have been prepared on a going concern basis;

5. Adequate internal financial controls have been put in place and they are operatingeffectively; and

6. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

AUDITORS

M/s R.G.N. Price & Co. Chartered Accountants Chennai have been appointed asStatutory Auditors of your Company to hold office for a term of five (5) consecutiveyears from the conclusion of the 23rd Annual General Meeting until the conclusion of the28th Annual General Meeting at such remuneration as may be mutually agreed between theBoard of Directors of the Company and the Statutory Auditors.

ACKNOWLEDGEMENT

Your directors gratefully acknowledge the support and co-operation extended toyour Company by all its customers shareholders and bankers. Your directors also place onrecord their special appreciation of the employees of the Company for their dedication andcommitment in delivering the highest quality of service to every one of our valuedcustomers.

For and on behalf of the Board

Chennai 600 002

T.T. Srinivasaraghavan

17.05.2019

Chairman