The Directors are pleased to present the Fifty Sixth Annual Report together with theaudited financial statements for the year ended March 31 2019.
|FINANCIAL HIGHLIGHTS (STANDALONE) || ||Rs in crores |
| ||2018-19 ||2017-18 |
|Revenue from operations ||4002.34 ||3419.79 |
|Other income ||31.94 ||29.62 |
|Total revenue (net of excise duty) ||4034.28 ||3449.41 |
|Total expenditure ||3265.45 ||2799.05 |
|Gross profit before interest depreciation and taxes ||768.83 ||650.36 |
|Less: Interest ||31.02 ||18.80 |
|Exchange losses / (gains) ||7.94 ||13.76 |
|Depreciation ||109.85 ||98.07 |
|Profit before tax ||620.02 ||519.73 |
|Less: Provision for tax ||182.90 ||152.26 |
|Profit after tax ||437.12 ||367.47 |
|Add: Balance brought forward ||171.36 ||220.82 |
|Balance available for appropriation ||608.48 ||588.29 |
|Appropriations || || |
|Interim / Final dividends ||98.76 ||98.76 |
|Tax on Interim dividends ||20.14 ||18.17 |
|Transfer to reserves ||300.00 ||300.00 |
|Transfer from special economic zone reinvestment reserve ||(10.75) ||- |
|Transfer from other comprehensive income to reserves ||13.68 ||- |
|Balance carried forward ||186.65 ||171.36 |
| ||608.48 ||588.29 |
TRANSFER TO RESERVES
The Company has transferred Rs 300.00 Crores to Reserves.
The Board had earlier during the year declared an interim dividend of Rs 2.00/-per share (200%) and the same was paid on November 22 2018. The Directors have decided topay a Second Interim Dividend of Rs 3.10 per share which together with the firstinterim dividend declared and paid earlier would amount to a total dividend of Rs 5.10/-per share for the financial year 2018-2019.
ABRIDGED FINANCIAL STATEMENT
In terms of the provision of Section 136(1) of the Companies Act 2013 Rule 10 ofCompanies (Accounts) Rules 2014 and Regulation 36 of the SEBI (Listing Obligations andDisclosure
Requirements) Regulations 2015 the Board of Directors has decided to circulate theAbridged financial statement to the shareholders for the financial year 2018-2019 whohave not registered their e-mail id.
Members who desire to obtain the full version of the report may write to the CorporateSecretarial Department at the registered office address and will be provided with a copyof the same. Full version of the Annual Report will also be available on the Company'swebsite www.sundram.com
CONSOLIDATED FINANCIAL STATEMENT
In addition to the financial statements the audited Consolidated Financial Statementof the Company and all of the subsidiaries prepared in the same form and manner as that ofits own and in accordance with the applicable Accounting Standards (Ind AS) form part ofthe Annual Report.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the Company hasplaced separate audited accounts in respect of each of subsidiary on its websitewww.sundram.com. The Company shall provide a copy of audited / unaudited financialstatement as the case may be as prepared in respect of each of its subsidiary uponrequest 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. 43to 47).
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.
Ms Preethi Krishna Director (DIN: 02037253) of the Company is liable to retire byrotation at the ensuing Annual General Meeting (AGM) and being eligible offers herselffor re-appointment. Necessary resolution for her re-appointment is being placed forapproval of the members at the AGM. The Board therefore recommends her re-appointment asa Director of the Company. A brief resume of Ms Preethi Krishna and other relevantinformation have been furnished in the notice convening the AGM.
Sri V Narayanan (DIN 00081673) Independent Director retired from the Board effectiveSeptember 22 2018. The Company has benefited immensely through his association and theBoard of Directors place on record their sincere thanks for the services rendered by himas a Director. Dr Nirmala Lakshman Director (DIN 00141632) has been appointed as aNon-Executive Independent Director effective September 20 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. In terms of the requirement of Section 134(3) of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 the same is available on theCompany's website www.sundram.com.
During the year five meetings of the Board of Directors were held. The details of themeetings are furnished in the Annual Report disclosures under Regulation 34 and Schedule Vof the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which isattached to this Report (Please refer Page No. 60).
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 2019. 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
Salient features of the Policy:
The policy is to ensure that the remuneration is in line with best comparable marketpractices as well as competitive vis--vis that of comparable companies both inIndia and other international markets which will have a motivating effect to act as adriving force to ensure long term availability of talent and also retention of the besttalents. The Policy will have due regard to the situation of the specific regions in whichthe Company operates.
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. 65 & 66).
The Nomination and Remuneration Policy is available on the Company's website at:-https://sundram.com/pdf/corporate/ NominationandRemunerationPolicy.pdf
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 during the year. FormAOC-2 as required under Section 134 (3)(h) of the Act is enclosed vide Annexure - IIIto 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 vide
Annexure - IV.
Pursuant to Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors at their meeting held on February 1 2019 hasconstituted the Risk Management Committee. Sri Suresh Krishna Chairman Ms. ArathiKrishna Managing Director and Ms. Arundathi Krishna Joint Managing Director are membersof the Committee.
Brief description of terms of reference:-i. continuous review of businessparameters on a regular basis by the management including commodity hedging positions ina more transparent detailed and uniform manner. ii. exercising prudence while incurringcapital expenditure or outlays on new projects. iii. entering into long term contractswith customers to underwrite the capacities created iv. adoption of a diversified businessmodel in terms of products market segments geography and customers to ensure thatCompany is able to withstand any instability in the entire business eco-system v.judicious approach to proportionate sourcing of inputs from indigenous and overseasmarkets in order to take advantage of commodity prices and exchange rate movements vi.monitoring reviewing and hedging foreign exchange risks in accordance with the riskmanagement policy The Company manages its risks through continuous review of businessparameters on a regular basis by the management. Insurable risks are analysed andinsurance policies are taken to protect the company's interests. The Audit Committee isalso informed periodically of the risks and concerns. Corrective actions and mitigationmeasures are taken as and when needed.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND IMPLEMENTATION
The salient features of the Policy are to actively engage and extend support to thecommunities in which it operates and thus build a better sustainable way of life bysupporting the weaker sections of the society and thus contribute to the humandevelopment to impel measures and to provide solutions that will balance economic socialand environmental issues and to work together with our employees with a commitment foradhering to responsible business practices in terms of quality management environmentalsustainability and support to the community.
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 7 Domestic Subsidiaries and 5 Overseas Subsidiaries. The financialperformance of the subsidiaries during financial year 2018-19 are given hereunder:-TheCompany by way of initial subscription to the Memorandum of Association has subscribedto 10000 equity shares of Sunfast TVS Limited'. Sunfast TVS Limited has beenincorporated as a new wholly-owned subsidiary of the Company under the Companies Act 2013with effect from April 8 2019.
Sundram Fasteners (Zhejiang) Limited China (SFZL China) and Cramlington PrecisionForge Limited United Kingdom (CPFL UK) are step-down overseas subsidiaries of theCompany. The principal activity of CPFL UK is manufacture of precision forgings and thatof SFZL China is manufacture of fasteners and bearing housing.
The revenue from operations from CPFL UK during the year under review was at Rs11936.91 lakhs as against Rs 8217.48 lakhs in the previous year. The net profit / (loss)was at Rs (699.85) lakhs as against Rs (458.72) lakhs in the previous year.
The revenue from operations from SFZL China during the year under review was at Rs26035.51 lakhs as against Rs 18832.33 lakhs in the previous year. The net profit was atRs 1803.64 lakhs as against Rs 1331.43 lakhs in the previous year.
The revenue from operations from Sundram International Limited a wholly-ownedsubsidiary during the year under review was at Rs 170.32 lakhs as against Rs 118.65 lakhsin the previous year. The net profit / (loss) was at Rs (33.75) lakhs as against Rs(72.20) 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 Rs 17218.98 lakhsas against Rs 15482.98 lakhs in the previous year. The net profit was at Rs 1604.69lakhs as against Rs 1744.52 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 2606.84 lakhs as against Rs2585.81 lakhs in the previous year. The net profit was at Rs 151.59 lakhs as against Rs193.00 lakhs in the previous year. The application with respect to the amalgamation ofSPCL (Transferor Company') with Sundram Fasteners Limited (TransfereeCompany') was filed by the transferor company during the financial year with the NationalCompany Law Tribunal Chennai Bench (NCLT). The final hearing by the NCLT with respect tothe amalgamation of transferor company with the transferee company was held during April2019. The matter was heard and the NCLT has sanctioned the scheme of amalgamation of SPCLwith SFL and their respective shareholders with Appointed Date as April 11 2019.
The revenue from operations from Sundram Non-Conventional Energy Systems Limited asubsidiary during the year under review was at Rs 286.68 lakhs as against Rs 364.36 lakhsin the previous year. The net profit was at Rs 162.76 lakhs as against Rs 208.53 lakhs inthe previous year.
The revenue from operations from Sundram Fasteners Investments Limited a wholly-ownedsubsidiary during the year under review was at Rs 0.98 lakhs as against Rs 0.52 lakhs inthe previous year. The net profit / (loss) was at Rs (0.34) lakhs as against Rs (0.41)lakhs in the previous year.
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 Rs667.98 lakhs as against Rs 786.59 lakhs in the previous year. The net profit was at Rs76.96 lakhs as against Rs 15.49 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 2191.56 lakhs as against Rs 1579.60 lakhs during the yearunder review. The net profit / (loss) was at Rs 83.15 lakhs as against Rs 70.69 lakhs inthe previous year.
The application with respect to the amalgamation of TVSN (Transferor Company')with TVS Infotech Limited (Transferee Company') was filed by the transferor companyduring the financial year with the National Company Law Tribunal Chennai Bench (NCLT).The final hearing by the NCLT with respect to the amalgamation of transferor company withthe transferee company was held during April 2019. The matter was heard and the NCLT hassanctioned the scheme of amalgamation of TVSN with TVS Infotech Limited and theirrespective shareholders with Appointed Date as April 01 2018.
The revenue from operations from TVS Infotech Inc a step-down subsidiary during theyear under review was at Rs 1835.91 lakhs as against Rs 2306.45 lakhs in the previousyear. The net profit was at Rs 62.14 lakhs as against Rs 84.07 lakhs in the previous year.
The revenue from operations from all the subsidiaries of the Company in aggregateduring the year under review was at Rs 550.42 Crores resulting in overall contribution of12.00% of the consolidated revenue and 5.00% of the consolidated net profits.
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.196).
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 2018-2019.
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 Section 136 (1) of the Companies Act 2013 the report of the Board ofDirectors is being sent to the shareholders of the Company excluding the statementprescribed under Rule 5 of the Companies (Appointment and Remuneration) Rules 2014. Thestatement is available for inspection by the shareholders at the Registered Office of theCompany during business hours.
Pursuant to Section 139 of the Companies Act 2013 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).
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 as theSecretarial Auditor of the Company for the financial year 2018-2019. 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 2019-2020. Necessary consenthas been received from them to act as Secretarial Auditors.
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 2019-2020. The audit committee recommended his appointment and remunerationsubject to the compliance of all the requirements as stipulated under the Act andcirculars issued thereunder. As specified by the Central Government under Section 148(1)of the Companies Act 2013 the cost records are required to be maintained by the Companyand accordingly such accounts and records are made and maintained.
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. In compliance with the provisions under Section 4 of the SexualHarassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013Internal Complaints Committee (ICC) of the Company has been constituted to redresscomplaints regarding sexual harassment. No complaint was received during the calendar year2018.
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 whistleblower policy are provided in the Annual Report Disclosures under Regulation 34 andSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
The Board of Directors during the financial year 2018-2019 has amended the WhistleBlower Policy pursuant to the
SEBI (Prohibition of Insider Trading) Regulations 2015 as amended on December 312018 notified by the Securities and Exchange Board of India to enable employees to reportinstances of leak of unpublished price sensitive information. The amendment has come intoeffect from April 1 2019.
Industrial relations continued to remain congenial during the current year. TheDirectors thank the employees for their contribution to the progress of the Company duringthe year under review.
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 2019 ||SURESH KRISHNA |
|Chennai ||Chairman |