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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

Board's Report

Your directors have pleasure in presenting the 24th Annual Report together with auditedaccounts for the year ended 31st March 2018. The summarised financial results of theCompany are presented hereunder:

FINANCIAL RESULTS:

(Rs. in cr.)

Particulars Year ended March 31 2018
Revenue from Portfolio Companies 57.00
Operating Revenue 13.50
Other Income 3.88
Total Revenue 74.38
Less: Total Expenses 14.53
Profit before Tax 59.85
Profit after Tax 54.43
Consolidated PAT 124.44

DIVIDEND

Your directors are pleased to recommend a dividend of '1.50 per share on the paid-upshare capital of '75.55 cr. (30% on the face value of ' 5/-) representing a dividendpay-out of 50.20% of profits (including dividend distribution tax).

The Dividend Distribution Policy formulated in accordance with the provisions ofRegulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is attached as part of this report vide Annexure I.

COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION

Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation(Scheme) by the Hon'ble National Company Law Tribunal (NCLT) Division Bench Chennaivide Order dated 12th January 2018 received by the Company on 18th January 2018 thede-merger of the ‘SFL Demerged Undertaking' i.e. non-core business activities ofSundaram

Finance Limited (SFL) viz. identified shared services undertaken by SFL includingshared services vested from Sundaram BPO India Limited training services rendered by SFLnon-financial services investments of SFL together with related assets into yourCompany as envisaged in the Scheme with effect from the ‘Appointed Date' i.e. 1stApril 2016 has become operative.

As provided in the Scheme on 12th February 2018 all the shareholders of SFL wereallotted 1 (One) equity share of ' 5/- each credited as fully paid-up in the capital ofSFHL for every 1 (One) fully paid-up equity share of '10/- held by them in SFL as on therecord date i.e. 2nd February 2018. The equity shares of the Company were listed on theNational Stock Exchange of India Limited with effect from 26th March 2018.

The accounts for the financial year ended 31st March 2018 have been prepared aftergiving effect to the Scheme and therefore the figures given herein and elsewhere in theAnnual Report are not strictly comparable with those of the previous year.

Pursuant to the transfer of the non-financial services investments of SFL into yourCompany the Company has been categorised as an exempted ‘Core Investment Company'under the Core Investment Companies (Reserve Bank) Directions 2016 issued by the ReserveBank of India.

MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL ECONOMY

According to the IMF's World Economic Outlook the Global economic growth strengthenedin 2017 to 3.8% with GDP continuing to accelerate over much of the world and is expectedto rise up to 3.9% in the current year. An important indication of the acceleration ingrowth was the strong employment growth in some of the countries that had highunemployment for some time. Some of the larger emerging market economies such asArgentina Brazil and Russia came out of their recessions. Equity valuations continued toclimb and are near record highs as central banks have maintained accommodative monetarypolicies due to weak inflation.

INDIAN ECONOMY

India has emerged as one of the fastest growing maj or economies in the world as perthe IME India's GDP is estimated to have grown by 6.6% in 2017-18 and is expected to growat 7.3% in 2018-19.

The growth in India's GDP has to be viewed as satisfactory in the aftermath of twomajor events - demonetisation and GST. Gross tax collections for the period April 2017-February 2018 showed an increase of 15.8% year-on-year while net retention to the Centrein tax collections recorded a growth of 17%.

India's foreign exchange reserves stood at USD 424.4 billion at the end of March 2018.However tepid export growth of 0.7% and higher import growth of 7.1 % resulted in thecurrent account deficit worsening to 2.0% from 1.4% in the previous year. Due to the oilprice movements this could worsen further.

The annual average CPI declined from 4.5% in 2016-17 to 3.6% in 2017-18. The IIPincreased by 4.3% during the period April to February 2018 as against 4.7% in thecorresponding period of the previous year.

However according to the World Bank's Doing Business Report India is still ranked only100 among 190 countries in the 2018 edition of the report.

AUTOMOTIVE SECTOR

A majority of your Company's investments are in the automotive sector. Growth in theautomotive sector was muted during early 2017-18 primarily due to three majordevelopments viz. demonetisation in the previous year changeover to the BSIV emissionnorms and implementation of GST. The industry settled down during the second quarter ofthe financial year and normal monsoon coupled with focus of the Government oninfrastructure festive demand and rural sentiment led to an overall strong comeback forthe automotive sector.

Society of Indian Automobile Manufacturers (SIAM) expects the growth momentum ofCommercial vehicle sales to continue at 10-12% (M&HCVs at 9-11% and LCVs at 10-12%) in2018-19. The government's continuing emphasis on infrastructure and a recovery in themining sector bodes well for sales of tippers.

Sales ofpassenger vehicles are expected to grow at 8-10% (utility vehicles at 14-15%and cars at 8-9%). As per a report by CRISIL tractor sales are projected to improve by11-13% in 2018-19 assuming a normal monsoon and increased government support. Demand insemi-urban towns and rural areas is expected to look up as the impact of demonetisationhas abated and a normal monsoon for a third year should bolster sales of passenger carsLCVs and especially tractors.

OPERATING AND FINANCIAL PERFORMANCE

The revenue earned by your Company during the financial year 2017-18 after consideringthe effects of the demerger was (Rs. 74.38 cr. as against (Rs. 4.84 cr. in the previousyear. The profit after tax for the year was ^54.43 cr. as against (Rs. 0.48 cr. in theprevious year. The company's net-worth stood at ^325.83 cr. as on 31.03.2018.

The consolidated profit after tax and networth for the year stood at ^124.44 cr.and^833.59 cr. respectively.

BPO BUSINESS

The BPO business of the Company comprises the following:

Type of Business Turnover (Rs. in cr.)
Shared services business managed by the Company 13.50
Sundaram Business Services Limited - for managing outsourced business of overseas clients (Wholly-owned Subsidiary) 30.05
Sundaram BPO India Limited - for managing outsourced business of domestic clients (Wholly- owned Subsidiary) 8.65
Total 52.20

• 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 (Rs. 13.50 cr. The business had 501 employees as on 31st March 2018.

• Sundaram Business Services Limited

Sundaram Business Services Limited (SBSL) is a global outsourcing company catering toover 35 clients in Australia and the UK. SBSL offers best in class outsourcing helpingAccounting firms CFOs and CMOs through its innovative service offerings. During the yearSBSL earned a revenue of (Rs. 30.05 cr. as compared to (Rs. 26.81 cr. in the previousyear. The company reported a profit after tax of (Rs. 6.56 cr. during the year as against^1.22 cr. in the previous year. The company had 345 employees as on 31st March 2018.

• Sundaram BPO India Limited

Sundaram BPO India Limited (SBIL) is a domestic BPO with over 15 clients across bothvoice and non-voice services. SBIL earned a total revenue of (Rs. 8.65 cr. during theyear after considering the effects of demerger as against (Rs. 17.10 cr. during theprevious year. The loss after tax for the year was at ^1.60 cr. as against (Rs. 0.42 cr.in the previous year. The company had 397 employees as on 31st March 2018.

The Board of Directors ofyour Company has decided in principle to amalgamate SBILwith SBSL in order to create greater scale and more focus on the BPO business goingforward.

INVESTMENT PORTFOLIO

Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation bythe Hon'ble NCLT the investments of Sundaram Finance Limited in several automotive andmanufacturing businesses have been demerged into your Company. Pursuant to the demergerthe Company holds investments in 17 portfolio companies as at 31.03.2018. The totalcarrying cost of these investments is ^118.89 cr. The performance of the key portfoliocompanies during 2017-18 was as follows:

(Rs. in cr.)

Portfolio Company Holding

Cost

Holding

(%)

Networth Share of Networth PAT Share of PAT
1 Turbo Energy Private Limited 1.89 32.00 1171.81 374.98 172.37 55.16
2 Brakes India Private Limited 0.15 6.67 1706.51 113.82 375.94 25.08
3 Dunes Oman LLC (FZC) 26.95 43.69 230.37 100.65 63.62 27.80
4 Sundaram Clayton Limited 14.28 11.24 664.00 74.63 54.92 6.17
5 Flometallic India Private Limited 32.50 40.63 139.23 56.57 34.09 13.85
6 Wheels India Limited 8.38 11.08 460.35 51.01 52.30 5.79
7 India Motor Parts and Accessories Limited 5.77 18.52 253.85 47.01 20.79 3.85
8 Axles India Limited 10.16 38.81 109.69 42.57 22.61 8.77
9 Lucas-TVS Limited 0.27 5.32 751.71 39.99 47.61 2.53
10 Delphi-TVS Diesel Systems Limited 0.18 3.19 287.00 9.15 6.19 0.20
11 Others 18.36 NA 126.99 22.23 3.71 2.77
Total 118.89 932.61 151.97

Note: The figures relating to the companies mentioned under Si. Nos. 2 9 and 10 arebased on the audited financial results for the year ended 31st March 2017. The figuresrelating to the companies mentioned under Si. Nos. 6 and 7 are based on the unauditedfinancial results for the nine months ended 31st December 2017 which were subjected toLimited Review. The figures relating to the companies mentioned under Si. Nos. 1 3 4 5and 8 are based on the audited financial results for the year ended 31st March 2018.

Turbo Energy Private Limited

Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbocharger parts in the country. Pursuant to the demerger your Company holds 32% stake inTurbo Energy Private Limited and has been categorised as one of the promoters of thatcompany. Borgwarner Turbo Systems (Germany) and Brakes India Private Limited are the otherpromoters of the company. During the year the revenue earned by the company grew by 19.79%from ^1031.96 cr. to ^1236.23 cr. The profit after tax for the year was ^172.37 cr. asagainst ^139.10 cr. in the previous year registering a growth of 23.92%. Your Companyreceived a total dividend of (Rs. 7.17 cr. from Turbo Energy Private Limited during thefinancial year 2017-18.

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. Pursuant to the demerger your Companyholds 6.67% stake in Brakes India Private Limited and has been categorised as one of thepromoters of that company. TRW Automotive (since acquired by and now part of ZF Group) andthe TVS Group are the other promoters of the company. The revenue earned by the companyfor the year ended 31st March 2017 grew by 5.90% from ^3906.02 cr. to ^4136.48cr. Theprofit after tax for the year ended 31st March 2017 was ^375.94 cr. as against ^307.19 cr.in the previous year registering a growth of 22.38%. Your Company received a totaldividend of (Rs. 8.77 cr. from Brakes India Private Limited during the financial year2017-18.

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. Pursuant to the demerger yourCompany holds 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of thepromoters of that company. Dunes Oman was copromoted with Brakes India Private Limited.During the year the revenue earned by the company grew by 1.97% from ^325.13 cr. to^331.55 cr. The profit after taxforthe year was(Rs. 63.62 cr. as against ^70.36 cr. in theprevious year. Your Company received a total dividend of ^26.08 cr. from Dunes Oman LLC(FZC) during the financial year 2017-18.

Sundaram Clayton Limited

Sundaram Clayton Limited is engaged in the manufacture of precision aluminium castproducts for both automotive and non-automotive applications. Pursuant to the demergeryour Company holds 11.24% stake in Sundaram Clayton Limited and has been categorised asone of the promoters of that company. The TVS Group is the other promoter of the company.During the year the revenue earned by the company grew by 11.14% from ^1589.67 cr. to^1766.74 cr. The profit after tax for the year was ^54.92 cr. as against ^105.59 cr. inthe previous year. The market capitalisation of the company as on 31 st March 2018 was^9745.29 cr. The value of your Company's holding on that basis was ^1094.89 cr. as on31st March 2018. Your Company received a total dividend of ^3.41 cr. from Sundaram ClaytonLimited during the financial year 2017-18.

Flometallic India Private Limited

Flometallic India Private Limited is engaged in the manufacture of iron castings forthe automotive industry. Pursuant to the demerger your Company holds 40.63% stake inFlometallic India Private Limited. During the year the revenue earned by the company grewby 14.15% from ^265.42 cr. to ^302.98 cr. The profit after tax for the year was ^34.09 cr.as against ^25.37 cr. in the previous year registering a growth of 34.37%. Your Companyreceived a total dividend of (Rs. 4.06 cr. from Flometallic India Private Limited duringthe financial year 2017-18.

Wheels India Limited

Wheels India Limited is the leading manufacturer of wheels and air suspensioncomponents for cars and commercial vehicles in the country. Pursuant to the demerger yourCompany holds 11.08% stake in Wheels India Limited and has been categorised as one of thepromoters of that company. Titan Limited and the TVS Group are the other promoters of thecompany. For the period ended 31st December 2017 the revenue earned by the company grewby 3.94% to ^1812.24 cr. as against ^1743.49 cr. for the corresponding period in theprevious year. The profit after tax for the nine months ended 31st December 2017 was^52.30 cr. as against ^41.11 cr. for the corresponding period in the previous yearregistering a growth of 27.22%. The market capitalisation of the company as on 31st March2018 was ^2707.68 cr. The value of your Company's holding on that basiswas ^300.14 cr.as on 31st March 2018. Your Company received a total dividend of ^1.87 cr. from WheelsIndia Limited during the financial year 2017-18.

India Motor Parts and Accessories Limited

India Motor Parts and Accessories Limited is the largest distributor of automotivespare parts and equipment in the country. Pursuant to the demerger your Company holds18.52% stake in India Motor Parts and Accessories Limited. For the period ended 31stDecember 2017 the revenue earned by the company stood at ^357.00 cr. as against ^397.23cr. for the corresponding period in the previous year. The profit after tax for the ninemonths ended 31st December 2017 stood at (Rs. 20.79 cr. as against ^22.96 cr. for thecorresponding period in the previous year. The market capitalisation of the company as on31st March 2018 was ^852.55 cr. The value of your Company's holding on that basiswas57.89 cr. as on 31st March 2018. Your Company received a total dividend of (Rs. 0.92 cr.from India Motor Parts and Accessories Limited during the financial year 2017-18.

Axles India Limited

Axles India Limited is a leading manufacturer of axle housings for medium and heavycommercial vehicles in the country. Pursuant to the demerger your Company holds 38.81 %stake in Axles India Limited and has been categorised as one of the promoters of thatcompany. Dana Corporation (USA) and Wheels India Limited are the other promoters of thecompany. During the year the revenue earned by the company grew by 15.40% from ^413.59 cr.to ^477.28 cr. The profit after tax for the year was (Rs. 22.6l cr. as against (Rs. 15.01cr. in the previous year registering a growth of 50.63%. Your Company received a totaldividend of .78 cr. from Axles India Limited during the financial year 2017-18.

Lucas-TVS Limited

Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Pursuantto the demerger your Company holds 5.32% stake in Lucas-TVS Limited and has beencategorised as one of the promoters of that company. The TVS Group is the other promoterof the company. The revenue earned by the company for the year ended 31st March 2017 grewby 8.25% from ^1908.57 cr. to ^2065.96 cr. The profit after tax for the year ended 31stMarch 2017 was (Rs. 47.6l cr. as against (Rs. 43.32 cr. in the previous year registeringa growth of 9.90%. Your Company received a total dividend of ^1.07 cr. from Lucas-TVSLimited during the financial year 2017-18.

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. Pursuant tothe demerger your Company holds 3.19% stake in Delphi TVS Diesel Systems Limited and hasbeen categorised as one of the promoters of that company. Delphi Automotive Systems andthe TVS Group are the other promoters of the company. The revenue earned by the companyfor the year ended 31st March 2017 grew by 3.37% from ^856.24 cr. to ^885.08 cr. Theprofit after tax for the year ended 31st March 2017 was (Rs. 6.19 cr. as against a loss of^1.73 cr. in the previous year. Your Company received a total dividend of (Rs. 0.35 cr.from Delphi TVS Diesel Systems Limited during the financial year 2017-18.

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 II.

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 the ordinarycourse of business and on an arm's length basis. The Company did not enter into anymaterial transaction with related parties under Section 188 of the Companies Act 2013during the year. Form AOC-2 as required under Section 134 (3) (h) of the Act read withRule 8 (2) of the Companies (Accounts) Rules 2014 is attached as part of this reportvide Annexure III (i). Further the Company's policy on Related Party

Transactions is attached as part of this report vide Annexure III (ii) as requiredunder Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has contributed towards preventive and general health care in consonancewith the CSR policy. Steps have been taken to put in place necessary infrastructure toidentify worthy causes which can be supported on an ongoing basis.

The Annual Report on CSR Activities undertaken by the Company for the Financial Year2017-18 is annexed with this report vide Annexure IV.

BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is enclosed as partof this report vide Annexure V.

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 ofWomen 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 year 2017-18.

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 VI.

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 VII.

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 VIII.

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 2017-18 foreign currency earnings amounted to (Rs. 26.08 cr. There wasno 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 activities 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

Pursuant to the demerger nearly 500 employees have been transferred from SundaramFinance Limited and Sundaram BPO India Limited into your Company on and from the‘Effective Date'. In an environment that is rapidly becoming technology and digitaloriented your Company believes in investing in long term people development fororganisational excellence. Part of the enduring tradition of the Sundaram Finance Groupover the decades has been the handing down of wisdom to successive generations ofemployees using the conventional methods of listening observing and on the job training.Your Company proposes to continue the tradition along with appropriate technologicalsupport to meet the 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 Management System and CIA(Confidentiality Integrity and Availability) Standards. To cater to the ever changingcustomer needs the IT infrastructure is being constantly upgraded with new / enhancedfeatures to facilitate smooth functioning of operations and defiver customer satisfaction.

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 Subsidiaries and Associates in Form AOC-1 formspart of the Annual Report.

The annual accounts of all the Subsidiary Companies have been posted on your Company'swebsite - www.sundaramholdings.in . Detailedinformation including the annual accounts of the Subsidiary Companies will be availablefor inspection by the members at the registered office of the Company and will also bemade available to the 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 Harsha Viji retires by rotation and being eligible offers himself for re-election.

KEY MANAGERIAL PERSONNEL

The following key managerial personnel were appointed during the year:

Name Designation Date of Appointment
Paramesh Krishnaier Chief Executive Officer 12-02-2018
P. N. Srikant Secretary & Compliance Officer 01-08-2017
T. Kailashapathy Chief Financial Officer 12-12-2017

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 of Directors discussed the requirement relating to formal evaluation of theBoard's performance and that of its committees and individual directors as required underSection 134 (3) (p) of the Companies Act 2013 and unanimously decided that the saidevaluation should carried out only from the next year since the operations of the Companyhad begun only with effect from 18th January 2018 the Effective Date of the sanctioningof the Scheme by the Hon'ble NCLT.

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 were appointed as StatutoryAuditors of your Company to hold office for a term of five (5) consecutive years from theconclusion of the 23rd Annual General Meeting until the conclusion of the 28th AnnualGeneral Meeting. Their appointment for periods subsequent to the conclusion of the 24thAnnual General Meeting shall be subject to one time ratification by the members at theensuing 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 to yourCompany by all its clients shareholders and bankers.

Your directors also place on record their special appreciation of the employees of theCompany for their dedication and commitment in delivering the highest quality of serviceto every one of our valued customers.

For and on behalf of the Board

Chennai 600 002 SVIJI
24.05.2018 Chairman