The Directors are pleased to present the Fifty Seventh Annual Report together with theaudited fi nancial statement for the year ended March 31 2020.
|FINANCIAL HIGHLIGHTS (STANDALONE) || ||Rs in crores |
| ||2019-20 ||2018-19 |
|Revenue from operations ||3124.57 ||3990.22 |
|Other income ||20.44 ||29.67 |
|Total revenue ||3145.01 ||4019.89 |
|Total expenditure ||2576.95 ||3250.94 |
|Gross Profi t before interest depreciation and taxes ||568.06 ||768.95 |
|Less: Interest ||32.97 ||31.02 |
|Exchange Losses / (Gains) ||10.89 ||7.94 |
|Depreciation ||136.51 ||110.30 |
|Provision for impairment of investments in subsidiaries ||11.30 ||- |
|Profi t before tax ||376.40 ||619.69 |
|Less: Provision for tax ||62.36 ||183.50 |
|Profi t after tax ||314.04 ||436.19 |
|Add: Balance brought forward ||*188.03 ||174.18 |
|Balance available for appropriation ||502.07 ||610.37 |
|Appropriations || || |
|Interim Dividends ||152.34 ||98.76 |
|Tax on Interim Dividends ||29.79 ||20.64 |
|Transfer to Reserves ||200.00 ||300.00 |
|Transfer from special economic zone reinvestment reserve ||(35.73) ||(10.75) |
|Transfer from other comprehensive income to reserves ||1.23 ||13.69 |
|Balance carried forward ||154.44 ||188.03 |
| ||502.07 ||610.37 |
* Includes P&L carried forward balance of Sundram Precision Components Limited (anerstwhile wholly-owned subsidiary of the Company) on account of amalgamation with theCompany.
TRANSFER TO RESERVES
The Company has transferred Rs 200.00 Crores to Reserves.
The Board had earlier during the year declared an interim dividend of Rs 1.35/-per share (135%) absorbing a sum of Rs 33.73 Crores (including dividenddistribution tax) and the same was paid to the shareholders on November 28 2019. TheDirectors had approved payment of second interim dividend at Rs 2.80/- per share(280%) absorbing a sum of Rs 70.93 Crores (including dividend distribution tax) andthe same was paid to the shareholders on March 13 2020. No fi nal dividend has beenrecommended by the Board of Directors. Thus the total dividend paid for the fi nancialyear 2019-2020 aggregates to Rs 4.15/- per share amounting to Rs 104.66Crores (including dividend distribution tax).
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 STATEMENT
In addition to the fi nancial statement 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 Indian Accounting Standards (Ind AS) formpart of the Annual Report.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the Company hasplaced audited / unaudited fi nancial statement in respect of each of subsidiary on itswebsite www.sundram.com. The Company shall provide a copy of audited / unaudited financial statement as the case may be as prepared in respect of each of its subsidiaryupon request by any of its shareholders.
A separate report on Corporate Governance together with a certifi cate from theCompany's Auditor confi rming the compliance of conditions of Corporate Governance isenclosed to this report. Management Discussion and Analysis detailing the state of thecompany's affairs is also enclosed to this report (Please refer Page Nos.45 to 49).
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Business Responsibility Report for the year ended March 31 2020 isenclosed to this report (Please refer Page Nos. 50 to 58).
The existing composition of the Company's Board is fully in conformity with theapplicable provisions of the Companies Act 2013 and Regulations 17 and 17A of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with regard toindependent directors women directors and maximum number of directorships in listedentities.
Ms Arundathi Krishna Joint Managing Director (DIN: 00270935) of the Company is liableto retire by rotation at the ensuing Annual General Meeting (AGM) and being eligibleoffers herself for re-appointment. Necessary resolution for her re-appointment is beingplaced for approval of the members at the AGM. The Board therefore recommends herre-appointment as a Director of the Company. A brief resume of Ms Arundathi Krishna andother relevant information have been furnished in the notice convening the AGM.
Sri K Ramesh Non-Executive Non-Independent Director (DIN: 00556922) had resigned fromthe Board effective June 17 2019. The Company has benefi tted immensely through hisassociation and the Board of Directors place on record their sincere thanks for theservices rendered by him as a Director.
Sri R Srinivasan Director (DIN: 00043658) has been re-appointed as a Non-ExecutiveIndependent Director for the second term from September 22 2019 to September 21 2021.
Sri B Muthuraman Director (DIN: 00004757) has been re-appointed as a Non-ExecutiveIndependent Director for the second term from April 16 2020 to September 25 2024.
In the opinion of the Board of Directors Sri R Srinivasan and Sri B Muthuraman theNon-Executive Independent Directors who were re-appointed during the year fulfi l theconditions with regard to integrity expertise and experience (including the profi ciency)specifi ed in the Act and the Rules made there under and are independent of themanagement. They are exempted from passing the online self-assessment test having servedas a Director / Key Managerial Personnel for a period of not less than 10 years in alisted company or in an unlisted public company having a paid up capital of not less than Rs10 Crores.
Pursuant to the amendments to the Companies (Appointment and Qualifi cation ofDirectors) Rules 2014 which came into effect from December 1 2019 all the IndependentDirectors of the Company have completed the online registration process with the IndianInstitute of Corporate Affairs (Institute) [www.iica.nic.in] for inclusion of their namesin the databank portal.
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 a copy of the annual return isavailable on the Company's website www.sundram.com.
During the year fi ve meetings of the Board of Directors were held. The details of themeetings are furnished in the Annual Report disclosures under Regulation 34 read withSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015which is attached to this Report (Please refer Page No 61).
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confi rm 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 fi nancial year and of the profi t of theCompany for the year ended March 31 2020. 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 fi nancial controls to be followedby the Company and such internal fi nancial 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 paid is in line with the best comparablemarket practices both in India and other international markets. Such competitiveremuneration will act as a motivator to ensure long term availability of talent and alsoretention of the best talents. The Policy will have due regard to the location of thespecifi c regions in which the Company operates.
A brief description about the Company's Nomination and Remuneration Policy ondirectors' appointment and remuneration including criteria for determining qualifications positive attributes independence of a director and other related mattersprovided in Section 178(3) of the Companies Act 2013 are furnished in the Annual ReportDisclosures under Regulation 34 read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Please refer Page Nos. 63 & 64).
The Nomination and Remuneration Policy is available on the Company's websiteat:-http://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 Companies Act 2013 is enclosed vide Annexure- III to this report.
MATERIAL CHANGES AND COMMITMENTS
During the year the Company has been grappling with lower market demand and anuncertain business environment.
During the fourth quarter of FY 2019-2020 the situation for manufacturers had becomeeven more challenging with the novel Coronavirus Pandemic outbreak which has affectedsupply chains and disrupted manufacturing operations around the world. In view of thecomplete lockdown measures announced by the Central and State Governments across thecountry the Company had very modest operations during the months of March and April 2020.However the Company is confi dent of meeting its obligations towards its stakeholders.
The revenue from operations during the FY 2019-2020 was at Rs 3124.57 Crores asagainst Rs 3990.22 Crores during the previous fi nancial year 2018-2019.
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 Companies Act 2013 read withCompanies (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.
Brief description of terms of reference:-i. continuous review of business parameters ona regular basis by the management including commodity hedging positions in a moretransparent detailed and uniform manner. ii. exercising prudence while incurring capitalexpenditure or outlays on new projects.
iii. entering into long term contracts with customers to underwrite the capacitiescreated. iv. adoption of a diversifi ed business model in terms of products marketsegments geography and customers to ensure that Company is able to withstand anyinstability 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 therisk management policy.
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.
During the year one meeting of the Risk Management Committee was held. The details ofthe meeting are furnished in the Annual Report disclosures under Regulation 34 read withSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015which forms part of this Report (Please refer Page No 65).
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND IMPLEMENTATION
The salient features of the Policy are to:-i. 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; ii. impel measures and to provide solutions that will balance economicsocial and environmental issues; and iii. work together with our employees with acommitment for adhering to responsible business practices in terms of quality managementenvironmental sustainability 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 Annual Report disclosures under Regulation 34read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 which forms part of 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 fi nancialperformance of the subsidiaries during the fi nancial year 2019-2020 is givenhereunder:-The Company by way of initial subscription to the Memorandum of Associationhas subscribed to 10000 equity shares of TVS Engineering Limited'. TVS EngineeringLimited was incorporated as a wholly-owned subsidiary of the Company under the CompaniesAct 2013 with effect from February 10 2020 to manufacture and supply components / partsfor the Aerospace and Defence segments.
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 SFZL China is manufacture of fasteners and bearinghousing and that of CPFL UK is manufacture of precision forgings.
The total revenue from SFZL China during the year under review (January 2019 - March2020) was at Rs 283.72 Crores as against Rs 260.36 Crores in the previousyear. The net profi t was at Rs 9.23 Crores as against Rs 18.04 Crores inthe previous year.
The total revenue from CPFL UK during the year under review (January 2019 - March2020) was at Rs 140.06 Crores as against Rs 119.37 Crores in the previousyear. The net loss was at Rs (16.72) Crores as against Rs (6.99) Crores inthe previous year.
The total revenue from Sundram International Limited United Kingdom a wholly-ownedoverseas subsidiary during the year under review (January 2019 - March 2020) was at
Rs 2.94 Crores as against Rs 1.70 Crores in the previous year. The Companyhas provided for diminution in the value of investments amounting to Rs 37.12Crores. The net loss was at Rs (36.09) Crores as against Rs (0.33) Crores inthe previous year.
The total revenue from TVS Next Inc. USA (formerly known as TVS Infotech Inc.) astep-down overseas subsidiary during the year under review was at Rs 10.86 Croresas against Rs 18.36 Crores in the previous year. The net profi t / (loss) was at Rs(0.42) Crores as against Rs 0.62 Crores in the previous year.
TVS Upasana Limited is a wholly owned subsidiary and is engaged in the manufacture ofSpokes and Nipples automobile kits tools dowel pins small screws Cold Extruded Partsand other parts catering to automotive industry. The total revenue from TVS UpasanaLimited during the year under review was at Rs 148.01 Crores as against Rs172.19 Crores in the previous year. The net profi t was at Rs 8.72 Crores asagainst Rs 16.05 Crores in the previous year.
The total revenue from Sundram Non-Conventional Energy Systems Limited a subsidiaryduring the year under review was at Rs 2.93 Crores as against Rs 2.87 Croresin the previous year. The net profi t was at Rs 1.64 Crores as against Rs1.63 Crores in the previous year.
T h e t o t a l r e v e n u e f r o m S u n d r a m F a s t e n e r s InvestmentsLimited a wholly-owned subsidiary during the year under review was at Rs 0.01Crores as against Rs 0.01 Crores in the previous year. The net loss was at Rs(0.01) Crores as against Rs (0.003) Crores in the previous year.
TVS Next Limited (Formerly TVS Infotech Limited) [TVSN] a subsidiary engaged ininformation technology business providing Enterprise Solutions for core industries likeManufacturing Automotive and Distribution and focuses on off-shore and outsourcingoperations for clients in India and the U.S.A.The total revenue from operations from TVSNduring the year under review was at Rs 39.76 Crores as against Rs 27.31Crores in the previous year. The net profi t was at Rs 1.62 Crores as against Rs3.13 Crores in the previous year.
Sunfast TVS Limited (Sunfast) a Company incorporated on April 8 2019 is a whollyowned subsidiary and is engaged in manufacture and sale of components / parts for theAerospace and Defence segments. The total revenue from Sunfast during the year underreview was at Rs 0.003 Crores. The net loss was at Rs (0.02) Crores duringthe year under review.
The total revenue from all the subsidiaries of the Company in aggregate during the yearunder review was at Rs 628.86 Crores resulting in an overall contribution of 16.76%of the consolidated revenue.
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 enclosed to the fi nancial statement of the Company in Page No210.
CHANGE IN THE NATURE OF BUSINESS
There was no change in the nature of business of the Company during the fi nancialyear.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY'S SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
The Company by way of initial subscription to the Memorandum of Association hassubscribed to 10000 equity shares of Sunfast TVS Limited' and TVS EngineeringLimited'. Sunfast TVS Limited and TVS Engineering Limited were incorporated as newwholly-owned subsidiaries of the
Company under the Companies Act 2013 with effect from April 8 2019 and February 102020 respectively.
The National Company Law Tribunal Chennai Bench had sanctioned the Scheme ofAmalgamation of Sundram Precision Components Limited a wholly-owned subsidiary with theCompany the Appointed Date being April 11 2019.
The National Company Law Tribunal Chennai Bench had sanctioned the Scheme ofAmalgamation of TVS Next Private Limited a step-down subsidiary with TVS Next Limited(Formerly TVS Infotech Limited) a subsidiary of the Company on April 30 2019 with theAppointed Date being April 1 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 signifi cant and material orders were passed by the regulators or courts ortribunals impacting the going concern status of the Company and its future operations.
INTERNAL FINANCIAL CONTROLS OF THE COMPANY
The Company maintains all its fi nancial records in Systems Applications and Products(SAP) System and all fi nancial transaction fl ow and approvals are routed through SAP.The Company has in-house internal audit team to monitor the effectiveness of internal financial controls ensuring adequacy with respect to fi nancial statement and verifywhether the fi nancial transaction fl ow in the organisation is being done based on theapproved policies of the Company. The internal auditor presents the internal audit reportand the management comments on the internal audit observations every quarter 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 fi nancial information.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The statement in terms of Section 197(12) read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed vide AnnexureVI forming part 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 of Managerial Personnel) Rules 2014. The statement is available forinspection by the shareholders at the Registered Offi ce of the Company during businesshours.
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 offi ve years commencing from the conclusion of the Fifty Fourth AGM (i.e. August 242017).
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 fi nancial year 2019-2020. The audit committeerecommended his appointment and remuneration subject to the compliance of all therequirements as stipulated under the Act and circulars issued thereunder. SecretarialAudit Report issued by Sri K Sriram Practising Company Secretary (CP No.2215) PartnerM/s. S Krishnamurthy & Co. Company Secretaries Chennai in Form MR-3 is enclosed videAnnexure VII forming part of this report and does not contain any qualifi cation.The Board of Directors has appointed M/s. S Krishnamurthy
& Co. Company Secretaries Chennai as the Secretarial Auditor of the Company forthe fi nancial year 2020-2021. Necessary consent has been received from them to act asSecretarial 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 has appointed Sri PRaju Iyer Practising Cost Accountant (Membership No.6987) as Cost Auditor for the financial year 2020-2021. The audit committee recommended his appointment and remunerationsubject to the compliance of all the requirements as stipulated under the Act andcirculars issued thereunder. As specifi ed 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 being 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 And
Redressal) Act 2013. In compliance with the provisions under Section 4 of the SexualHarassment of Women at the Workplace (Prevention Prohibition And Redressal) Act 2013Internal Complaints Committee (ICC) of the Company has been constituted to redresscomplaints regarding sexual harassment. No complaint was received during the calendar year2019.
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 established a Vigil Mechanism through a Whistle Blower Policy. The details about thewhistle blower policy are provided in the Annual Report Disclosures under Regulation 34read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
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 One North East the Regional Development Authority forCramlington United Kingdom for the continued support extended to the step- downSubsidiary. The Directors wish to thank the Chinese Authorities Offi cers of HaiyanCounty Jiaxin City Zhejiang province Chinese tax and other administrative authoritiesfor the support extended to Sundram Fasteners (Zhejiang) Limited a step-down subsidiary.The Directors wish to thank the Company's bankers State Electricity Boards in Tamil NaduPuducherry Telangana Andhra Pradesh and Uttarakhand customers and vendors employeesfor all the assistance rendered by them from time to time.
| ||On behalf of the Board |
|June 11 2020 ||SURESH KRISHNA |
|Chennai ||Chairman |