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The Directors are pleased to present the Fifty Fifth Annual Report together with theaudited financial statements for the year ended March 31 2018. The Company celebrated itsGolden Jubilee year in 2017. The 50 years milestone is a significant event in the annalsof the company. The event was celebrated with the participation of the employeesdirectors and stakeholders of the company.
| || ||Rs in crores |
|FINANCIAL HIGHLIGHTS (STANDALONE) || || |
| ||2017 - 18 ||2016-17 |
|Revenue from Operations ||3396.11 ||2947.27 |
|Other Income ||29.62 ||12.92 |
|Total Revenue (net of excise duty) ||3425.73 ||2960.19 |
|Total Expenditure ||2775.36 ||2407.13 |
|Gross Profit before interest depreciation and taxes ||650.37 ||553.06 |
|Less: Interest ||18.80 ||30.31 |
|Exchange Losses / (Gains) ||13.76 ||6.01 |
|Depreciation ||98.07 ||89.77 |
|Profit before Exceptional items and taxes ||519.73 ||426.97 |
|Exceptional items ||- ||(2.37) |
|Profit Before Tax ||519.73 ||424.60 |
|Less: Provision for tax ||152.26 ||109.12 |
|Profit after Tax ||367.47 ||315.48 |
|Add: Balance brought forward ||220.82 ||198.28 |
|Balance available for appropriation ||588.29 ||513.76 |
|Appropriations || || |
|Interim / Final Dividends ||98.76 ||35.72 |
|Tax on Interim / Final Dividends ||18.17 ||7.22 |
|Transfer to Reserves ||300.00 ||250.00 |
|Balance carried forward ||171.36 ||220.82 |
| ||588.29 ||513.76 |
TRANSFER TO RESERVES
The Company has transferred Rs 300 Crores to Reserves.
The Board had earlier during the year declared first interim dividend of Rs1.90 per share (190%) and the same was paid on November 21 2017. The Directors havedecided to pay a second interim dividend of Rs 2.70 per share (270%) whichtogether with the first interim dividend declared and paid earlier would amount to atotal dividend of Rs 4.60 per share (460%) for the financial year 2017-2018.
The Dividend Distribution Policy formulated in accordance with Regulation 43A of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is available onthe Company's website at:- http://sundram.com/pdf/corporate/DividendDistributionPolicy02022017.pdf
CONSOLIDATED FINANCIAL STATEMENTS
The audited Consolidated Financial Statements of the Company prepared in accordancewith the Companies Act 2013 and the Accounting Standards (Ind AS) also form part of theAnnual Report.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the Company hasplaced separate audited accounts of its subsidiaries on its website www.sundram. com. TheCompany will make available the audited annual accounts and associated information of itssubsidiaries upon request by any of its shareholders.
A separate report on Corporate Governance together with a certificate from theCompany's auditors confirming the compliance of conditions of Corporate Governance isattached to this report. Management Discussion and Analysis detailing thestate of the company's affairs is also attached to this report (Please refer Page Nos. 37to 40).
The existing composition of the Company's Board is fully in conformity with theapplicable provisions of the Companies Act 2013 and Regulation 17 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with regard to independentdirectors and women directors.
Sri Suresh Krishna (DIN 00046919) retired as the Managing Director of the Companyeffective April 20 2018. He continues to be a Director and Chairman of the Board. MsArathi Krishna Joint Managing Director (DIN 00517456) and Ms Arundathi Krishna DeputyManaging Director (DIN: 00270935) were re-designated as Managing Director and JointManaging Director respectively effective April 20 2018.
Ms Arathi Krishna Managing Director (DIN: 00517456) of the Company is liable to retireby rotation at the ensuing Annual General Meeting (AGM) and being eligible offersherself for re-appointment. Necessary resolution for her re-appointment is being placedfor approval of the members at the AGM. The board therefore recommends herre-appointment as a Director of the Company. A brief resume of Ms Arathi Krishna and otherrelevant information have been furnished in the notice convening the AGM.
Ms Preethi Krishna Director (DIN 02037253) has been appointed as a Non-ExecutiveNon-Independent Director effective July 5 2017.
Sri Heramb R Hajarnavis (DIN 01680435) has been appointed as a Non-ExecutiveIndependent Director effective September 20 2017.
Sri R Ramakrishnan and Sri M Raghupathy Independent Directors retired from the Boardeffective September 22 2017.
Sri C V Karthik Narayanan has ceased to be a Director effective December 13 2017consequent to his demise. Sri S Mahalingam Director (DIN 00121727) has been appointed asa Non-Executive Independent Director effective January 30 2018.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (7) OFSECTION 149
All the independent directors have submitted a declaration pursuant to Section 149(7)of the Companies Act 2013 stating that they meet the criteria of independence asstipulated in Section 149(6).
EXTRACT OF ANNUAL RETURN
An extract of annual return in Form MGT-9 is annexed as Annexure I andforms part of this report.
During the year six meetings of the Board of Directors were held. The details of themeetings are furnished in the Annual Report disclosures under Regulation 34 andSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015which is attached to this Report (Please refer Page No. 52).
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm that: a)in the preparation of annual accounts the applicable accounting standards had beenfollowed and there were no material departures. b) they had selected appropriateaccounting policies and applied them consistently and made judgments and estimates thathave been made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit of theCompany for the year ended March 31 2018. c) they had taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. d) they had prepared the annual accounts on agoing concern basis. e) they had laid down the internal financial controls to be followedby the company and such internal financial controls are adequate and are operatingeffectively. f) they had devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.
NOMINATION AND REMUNERATION POLICY
A brief description about the Company's Nomination and Remuneration Policy ondirectors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other related mattersprovided in Section 178(3) of the Act are provided in the Annual Report Disclosures underRegulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. (Please refer Page Nos. 52 & 53).
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilised by the recipient is enclosed vide Annexure - II.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES (REFERRED TO INSUBSECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013)
All transactions with related parties were on arm's length basis and in the ordinarycourse of business. There was no material related party contract as defined under theCompanies Act 2013 during the year. Form AOC-2 as required under Section 134 (3)(h) ofthe Act is enclosed as Annexure - III to this report.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134 of the Act read with Companies(Accounts) Rules 2014 is enclosed as Annexure - IV.
The Company manages its risks through continuous review of business parameters on aregular basis by the management. Insurable risks are analysed and insurance policies aretaken to protect the company's interests. The Audit Committee is also informedperiodically of the risks and concerns. Corrective actions and mitigation measures aretaken as and when needed.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND IMPLEMENTATION
The Company has undertaken activities as per the CSR Policy (available on the Company'swebsite http://www.sundram.com/investors.php) and the Annual report on CSR activities isenclosed vide Annexure - V forming part of this report.
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board of Directors has carried outannual performance evaluation of its own performance the Directors individually as wellas the evaluation of the working of its Committees. The manner in which the evaluation hasbeen carried out has been explained in the Corporate Governance Report attached asAnnexure to this report.
PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES AND JOINTVENTURE
The Company has 6 Domestic Subsidiaries and 5 Overseas Subsidiaries. The financialperformance of some of the subsidiaries during financial year 2017-18 are givenhereunder:-Sundram Fasteners (Zhejiang) Limited China (SFZL China) and CramlingtonPrecision Forge Limited United Kingdom (CPFL UK) are step-down overseas subsidiaries ofthe Company. The principal activity of CPFL UK is manufacture of precision forgings andthat of SFZL China is manufacture of fasteners and bearing housing. SFZL China hasrecently set-up a foundry division to enable backward integration for the above products.
The revenue from operations from CPFL UK during the year under review was at Rs8217.48 lakhs as against Rs 6901.47 lakhs in the previous year. The net profit /(loss) was at Rs (458.72) lakhs as against Rs 148.15 lakhs in the previousyear.
The revenue from operations from SFZL China during the year under review was at Rs18774.99 lakhs as against Rs 13350.36 lakhs in the previous year. The net profitwas at Rs 1331.43 lakhs as against Rs 740.12 lakhs in the previous year.
TVS Upasana Limited is a wholly-owned subsidiary and is engaged in themanufacture of Spokes and Nipples automobile kits tools dowel pins small screws ColdExtruded Parts and other parts catering to automotive industry. The revenue fromoperations from TVS Upasana Limited during the year under review was at Rs15541.16 lakhs as against Rs 14793.60 lakhs in the previous year. The net profitwas at Rs 1744.50 lakhs as against Rs 1106.97 lakhs in the previous year.
Sundram Precision Components Limited (SPCL) a wholly- owned subsidiary isengaged in the manufacture of parts for motor vehicle sintered parts such as valveguides valve seats and other parts catering to automotive industry. The revenue fromoperations from SPCL during the year under review was at Rs 2645.32 lakhs asagainst Rs 2368.94 lakhs in the previous year. The net profit was at Rs193.00 lakhs as against Rs 253.51 lakhs in the previous year. The Board ofDirectors at their meeting held on May 24 2017 had approved the scheme of amalgamation ofSundram Precision Components Limited with the Company and the relevant process is inpreliminary stage.
TVS Infotech Limited (TVSi) a subsidiary is engaged in information technology businessproviding Enterprise Solutions for core industries like Manufacturing Automotive andDistribution and focuses on off-shore and outsourcing operations for clients in India andthe U.S.A. The revenue from operations from TVSi during the year under review was at Rs728.21 lakhs as against Rs 1993.64 lakhs (sale of SAP business during thefinancial year 2016-17) in the previous year. The net profit was at Rs 15.49 lakhsas against Rs 14.04 lakhs in the previous year.
TVS Next Private Limited (TVSN) is a subsidiary of TVSi and a step-down subsidiary ofthe Company. TVSN's focused efforts in targeting USA market and Indian Enterprisecustomers paid dividends in the form of increased revenues. The Company maintains ahealthy sales pipeline in both USA and India. Improved utilisation of resources andrelentless focus on cost control helped achieve higher profits this year. The revenue fromoperations from TVSN was at Rs 1567.10 lakhs during the year under review asagainst Rs 986.55 lakhs in the previous year. The net profit / (loss) was at Rs70.69 lakhs as against Rs (63.08) lakhs in the previous year.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with Rule5 of the Companies (Accounts) Rules 2014 a statement containing salient features of thefinancial statements of the Company's subsidiaries Associates and Joint Ventures indetail in Form AOC-1 is attached to the financial statements of the Company (Please referPage No. 175).
CHANGE IN THE NATURE OF BUSINESS
There was no change in the nature of business of the Company during the financial year.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY'S SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
No Company has become or ceased to be Company's subsidiary joint venture or associatecompany during the financial year 2017-2018.
During the year the Company has not accepted any deposits within the meaning ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014. No amount on account of principal or interest on deposits from public wasoutstanding as on Balance Sheet date.
REGULATORY / COURT ORDERS
No significant and material orders were passed by the regulators or courts or tribunalsimpacting the going concern status of the Company and its future operations.
INTERNAL FINANCIAL CONTROLS OF THE COMPANY
The Company maintains all its financial records in Systems Applications and Products(SAP) System and all financial transaction fl ow and approvals are routed through SAP. TheCompany has in-house internal audit team to observe the effective functioning of internalfinancial controls ensuring adequacy with respect to financial statements and verifywhether the financial transaction fl ow in the organisation is being done based on theapproved policies of the Company. The internal auditor presents the internal audit reportevery quarter and management comments on the internal audit observations to the AuditCommittee. The internal control mechanisms are in place for safeguarding of assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and timely preparation of reliable financial information.
APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNEL
The statement of particulars of Appointment and Remuneration of Key ManagerialPersonnel as per Section 197(12) read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed vide Annexure VI formingpart of this report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors had appointed M/s. S Krishnamurthy & Co. Company Secretaries Chennai asthe Secretarial Auditor of the Company for the financial year 2017-2018. Secretarial AuditReport issued by Sri K Sriram Practising Company Secretary (CP No.2215) Partner M/s. SKrishnamurthy & Co. Company Secretaries Chennai in Form MR-3 is enclosed in AnnexureVII forming part of this report and does not contain any qualification. The Board ofDirectors has appointed M/s. S Krishnamurthy & Co. Company Secretaries Chennai asthe Secretarial Auditor of the Company for the financial year 2018-2019. Necessary consenthas been received from them to act as Secretarial Auditors.
Pursuant to Section 139 of the Companies Act 2013 M/s. B S R & Co. LLP CharteredAccountants Chennai (Registration No. 101248 W / W- 100022 with the Institute ofChartered Accountants of India) were appointed as Statutory Auditors of the Company atthe Fifty Fourth Annual General Meeting (AGM) of the Company for a consecutive period offive years commencing from the conclusion of the Fifty Fourth AGM (i.e. August 24 2017).
In terms of Section 148 of the Companies Act 2013 (the Act) read with Companies (CostRecords and Audit) Rules 2014 as amended the Board of Directors had appointed Sri PRaju Iyer Practising Cost Accountant (Membership No.6987) as Cost Auditor for thefinancial year 2018-2019. The audit committee recommended his appointment and remunerationsubject to the compliance of all the requirements as stipulated under the Act andcirculars issued thereunder.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has adopted the Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) of the Company has beenconstituted to redress complaints regarding sexual harassment. One complaint was receivedand resolved during the calendar year 2017.
The Institute of Company Secretaries of India has issued Secretarial Standards(Meetings of the Board and General Meetings) on various aspects of corporate law andpractices. The Company has complied with each one of them.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Pursuant to Sections 177(9) and (10) of the Companies Act 2013 and Regulation 22 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhas a Vigil Mechanism through a Whistle Blower Policy.
The details about the whistle blower policy are provided in the Annual ReportDisclosures under Regulation 34 and Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
Industrial relations continued to remain congenial during the year. The Directors thankthe employees for their contribution to the progress of the Company during the year underreview.
The Directors wish to thank the Chinese Authorities Officers of Haiyan County JiaxinCity Zhejiang province Chinese tax and other administrative authorities for the supportextended to Sundram Fasteners (Zhejiang) Limited a step down subsidiary. The Directorswish to thank One North East the Regional Development Authority for Cramlington UnitedKingdom for the continued support extended to the step down Subsidiary. The Directors wishto thank the Company's bankers State Electricity Boards in Tamil Nadu PondicherryAndhra Pradesh and Uttarakhand customers and vendors employees for all the assistancerendered by them from time to time.
| ||On behalf of the Board |
|May 9 2018 ||SURESH KRISHNA |
|Chennai ||Chairman |