You are here » Home » Companies » Company Overview » TVS Motor Company Ltd

TVS Motor Company Ltd.

BSE: 532343 Sector: Auto
NSE: TVSMOTOR ISIN Code: INE494B01023
BSE 00:00 | 16 Jun 622.05 -7.40
(-1.18%)
OPEN

629.55

HIGH

632.50

LOW

620.45

NSE 00:00 | 16 Jun 622.35 -7.15
(-1.14%)
OPEN

628.50

HIGH

632.70

LOW

620.20

OPEN 629.55
PREVIOUS CLOSE 629.45
VOLUME 33798
52-Week high 665.70
52-Week low 316.55
P/E 48.30
Mkt Cap.(Rs cr) 29,554
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 629.55
CLOSE 629.45
VOLUME 33798
52-Week high 665.70
52-Week low 316.55
P/E 48.30
Mkt Cap.(Rs cr) 29,554
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

TVS Motor Company Ltd. (TVSMOTOR) - Director Report

Company director report

TO THE SHAREHOLDERS

The Directors have pleasure in presenting the twenty eighth annual report and theaudited accounts of the Company for the year ended 31st March 2020.

1. COMPANY PERFORMANCE

The Company registered sales of 30.9 lakh units of two wheelers in 2019-20. The 2Windustry declined by 14.4% majorly impacted by on-road price increase in domestic marketdue to increase in motor vehicle insurance mandatory safety norms and tepid demand due tolower GDP growth estimated at 4.7%.

Company's performance was better than the industry with 11% decline in the first halfof the FY 2019-20. In the second half the Company transitioned into BS-VI emission normswell ahead of the competition and successfully positioned entire portfolio with BS-VIproduct line up by January 2020 (3 months before deadline). Exports of two-wheeler in2019-20 were at 6.79 lakh units with a growth of 9.2% over 2018-19. Three-wheeler salesgrew by 11% in 2019-20 mainly on account of good acceptance of the product from theinternational customer base. Sales revenue of spare parts grew by 6%.

The Company forayed in the electric vehicle space with the launch of its first electricScooter TVS iQUBE. The product came with 58 exciting features with many 'Industry-first'elements like Geo-fencing Ride Statistics Telematics Remote Charge Status andNavigation Assist all brought together to give the customer an overwhelming connectedexperience. In the existing product categories new launches like TVS NTORQ 125 racingedition TVS Jupiter Grande "SmartXonnect" and TVS XL100 Comfort"i-TouchStart" further enhanced its positioning as a company with focus oninnovative technology and passion for customers.

With continued efforts towards customer satisfaction and focus on quality the Companysecured leadership position in JD Power's Two-wheeler Customer Service Index (2W CSI)survey for consecutive years since 2016. During the year 2019-20 Company's productsbagged 15 awards of which the premium brands like TVS NTORQ 125 and TVS Apache won themost.

Towards the end of 2019-20 starting 23rd March the Company's operationswere halted due to the CoVID-19 pandemic. A nationwide lockdown was announced to containthe spread of the virus. Understanding the severity of the crisis the Company took lot ofmeasures to help and support its customers employees dealers suppliers and society.The Company also set-up a Business Continuity Task Force and pro-actively rolled-out aslew of measures to ensure health & safety of its employees suppliers and dealers.Work from home was implemented for almost all executives & managers well on time. Someof the key initiatives undertaken by the Company to support the society in fighting thisbattle include providing 1 Million protective face masks sanitization of numerousvillages and towns providing food packets to essential service providers and to thedeprived sections of the society.

The Company has spent $ 32.33 Cr towards CoVID-19 relief measures which includescontribution to Prime Minister's dedicated National Fund "PM CARES" and TamilNadu Chief Minister's Public Relief Fund.

Total revenue of the Company including other income was Rs.16455.44 Cr in the currentyear as against Rs.18217.46 Cr in the previous year. Profit before tax (PBT) wasRs.754.41 Cr in the current year (after exceptional item of Rs.32.33 Cr) as againstRs.960.96 Cr in the previous year. Similarly Profit after tax (PAT) was Rs.592.25 Cr inthe current year as against Rs.670.14 Cr in 2018-19.

2. FINANCIAL HIGHLIGHTS

Details Year ended 31-03-2020 Year ended 31-03-2019
SALES
Quantitative (Numbers in lakhs)
Motorcycles 13.63 15.59
Mopeds 6.51 8.97
Scooters 10.75 13.01
Three Wheelers 1.74 1.56
Total vehicles sold 32.63 39.13
Financials (Rupees in Crores)
Revenue from operations 16073.63 17912.51
Other Operating Income 349.71 297.41
Other Income 32.10 7.54
Revenue 16455.44 18217.46
EBITDA 1377.96 1440.79
Less:
Finance Charges & Interest (Gross) 102.19 80.56
Depreciation 489.03 399.27
Profit before tax 786.74 960.96
Less: Exceptional Item 32.33
Profit before tax after exceptional Item 754.41 960.96
Provision for Tax 162.16 290.82
Profit after tax 592.25 670.14

3. DIVIDEND

The Board of Directors of the Company (the Board) at their meeting held on 4thFebruary 2020 declared a first interim dividend of Rs.2.10 per share (210%) for the year2019-20

The Board at its meeting held on 10th March 2020 declared a second interimdividend of Rs.1.40 per share (140%) for the year 2019-20 absorbing a sum of Rs.79.75 Crincluding dividend distribution tax. The same was paid on 20th March 2020.Thus the total amount of both dividends for the year ended 31st March 2020aggregated to Rs.3.50 per share (350%) on 475087114 equity shares of Rs.1/- eachabsorbing

$ 200.03 Cr including dividend distribution tax.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A)of the Income Tax Act 1961 against the dividend distribution tax paid by one of Company'ssubsidiary on its dividend declared to the extent available. The Board does not recommendany further dividend for the year under consideration.

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE AND DEVELOPMENTS

Two-wheeler

2019-20 marked the successful transition to BS-VI for the Indian 2-wheeler industry. Aglobal first of leapfrogging from Stage IV - Stage VI emission norms in 3 years. Howeverthe domestic two-wheeler industry recorded a sale of 17.4 Mn units in 2019-20 a declineof 17.7% from 21.2 Mn units of 2018-19. 16% was the decline in the first half of the yearon back of weakening consumer sentiment falling GDP growth forecasts and increased 2Wprices due to insurance cost increases and mandatory safety regulations. The declinefurther intensified in second half to 20% owing to BS-VI transition wherein 2W pricesfurther went up by an average of 15%. The year ended with start of the single mindedstruggle against CoVID-19 pandemic.

The scooter category declining 16.7% with 5.6 Mn Units in 2019-20 over 6.7 Mn Units in2018-19. The category share increased marginally to 32% in 2019-20 from 31.6% in 2018-19.

The motorcycle category also declined by 17% over last year. The category share formotorcycle settled at 64.4%. Within motorcycles the premium segment with a category shareof 9.3% declined by 25% from 2.15 Mn units in 2018-19 to 1.61 Mn units in 2019-20. Thecommuter segment category share however moved to 50% while volumes declined by 16% to 8.7Mn units in 2019-20 from 10.4 Mn units in 2018-19.

In the international market two-wheeler industry had a growth of 7% over last year.Stable price of crude oil and continued growth in Africa propelled the growth of exports.

Three-wheeler

Overall three-wheeler small passenger industry (3 plus 1 segment) declined by 12% in2019-20 (from 8.45 lakh units in 2018-19 to 7.45 lakh units in 2019-20). Domestic industrydeclined by 14% and exports market declined by 11% in 2019-20 over last year.

BUSINESS OUTLOOK AND OVERVIEW

India's GDP growth has decelerated to 11 year low estimated at 4.7% in 2019-20. In2020-21 the economy will see significant challenges owing to the impact of CoVID-19pandemic and the resultant interruption to economic activity which is beginning to reopen.

Economic activity and lifestyles will be rebuilt factoring in coexistence withCoVID-19. Social Distancing (SD) and Work From Home (WFH) practices will see greaterprevalence. These new long-term practices of SD could see consumer preferences changetowards personal mobility which could prove to provide some opportunity especially tothe 2-wheeler industry. The Company is cognizant of this opportunity and well poised toleverage this opportunity with its superior BS-VI offerings across the widest range ofpersonal mobility needs. The restriction on public mobility and impact on many sectors ofthe economy will affect GDP disposable incomes consumer sentiment and the auto industryas well. Consequently a very sharp decline in the first quarter of 2020-21 is expectedwhich may partially alleviate in the following quarter with any upside possibilities onlyplaying out in the later part of the year. BS-VI Two wheelers offer consumers affordablesafe and eco friendly personal transport and may see less impact due to the need for suchsolutions. The favorable reservoir levels good rabi output and possibility of normalmonsoon may support agriculture growth. It is to be noted that much of the sale of twowheelers are in semi urban and rural areas which could see some benefit of this. Aspandemic CoVID-19 is affecting most countries across the globe export of two-wheeler islikely to see a decline during initial part of the year. A sustained trend of low crudeprices may also impact export market growth in oil dependent economies of Africa. Howeverthe economic impact of CoVID-19 is expected to be more pronounced in the markets of LATAMwhereas the African countries seem to be lesser impacted and the core demand may returnsooner.

Strategic partnership with BMW Motorrad

The Company has a strategic partnership with BMW Motorrad to develop and manufacturesub-500cc bikes both for domestic and global markets. The Company has produced over 72000units of BMW 310cc motorcycle till date.

Norton Acquisition

The Company acquired Norton Motorcycles in an all-cash transaction for a considerationof GBP 16 Mn through one of the Company's overseas subsidiaries. The "Norton""Commando" "Dominator" and the more recent "V4RR" are partof the portfolio of this historic motorcycle Company. The first of many 'Isle of Man' winsdates as far back as 1908. An integral part of British popular culture identity andhistory it has a loyal following across Europe.

This acquisition enhances the Company's global portfolio bringing in complementaryproduct segments markets and capabilities. The Company also believes that NortonMotorcycles can leverage its additional geographical network reach and global supply chaincapabilities to expand to new markets and audiences with existing and upcoming products.

New Product Launches and Initiatives

During the year 2019-20 the following new products and variants were launched.

TVS Jupiter Grande:

TVS Jupiter has become a strong household brand in the last 6 years since inceptionwith more than 3.5 Mn happy customers by FY 2019-20. Continuing the journey of providing"Zyada ka Fayda" TVS Jupiter Grande SmartXonnect was launched during festivalseason (October 2018) making it the first Bluetooth enabled scooter in the 110cc segment.Apart from having a differentiated visual appeal TVS Jupiter Grande SmartXonnect isloaded with practical useful features such as call & message notifications highspeed alert helmet reminder trip data and many more.

The brand communication campaign named 'Dil Ka Mileage' went on to bag the prestigious'Marketing Campaign of the Year Award' at the Global Awards for Retail Excellence event byET NOW.

TVS Jupiter Classic BS-VI was the first BS-VI offering by the Company launched inNovember 2019.

TVS Apache:

TVS Apache Series crossed 3.8 Mn global customers milestone in March 2020. Through theyears TVS Apache has stood for providing an unrivalled experience backed by its rich 38years of TVS Racing pedigree technological prowess and stylish design. Over the last 14years the brand has developed a host of premium offerings ranging from 160cc to 310cccreating aspiration along every step of evolution. TVS Apache Series has multiple customerexperience properties like AOG (Apache Owners Group) ARE (Apache Racing Experience) APP(Apache Pro Performance) TVS Racing Training School & One Make Championship all ofwhich bring the Apache owners together to celebrate the spirit of 'Racing'.

The 1st edition of TVS Racing MotoSoul Days the biggest bike festival forTVS was organized in October 2019 in Goa that saw a strong participation of 1000+motorcycle enthusiasts. It was also a stage for the launch of TVS Racing PerformanceGears a range of high performance and quality riding gears helmets and merchandize forTVS Apache Customers.

The end of the financial year 2019-20 saw the launch of the TVS Apache RR310 BS-VI withmany first in segment features making it one of the most 'technology-rich' motorcycles inits class. The motorcycle continues to resonate with lots of enthusiasts thus increasingits loyalists exponentially across the globe.

In the transition to BS-VI the TVS Apache Series has received a major update thatincludes a style refresh and an addition of many first in segment features. The entireseries is now powered by RT-Fi (Race Tuned Fuel Injection) technology which ensuresdelivery of best race performance at all driving conditions. The 4V Series comes with abest in class LED headlamp while the RTR 200 4V also boasts of the TVS SmartXonnect. Oneof the most loved features of the RTR's - the signature exhaust note has gotten racier andmore refined. TVS Apache RR310 has seen the biggest upgrade with a multitude of best inclass features - new Titanium Black dual tone graphics scheme Throttle by wiretechnology customizable 5" TFT cluster TVS SmartXonnect with advanced ride analysisand 4 ride modes of Track Sport Urban and Rain (first in segment). The entireseries also features the introduction of first in segment Glide Through Technology (GTT)which allows the rider to easily navigate through traffic thus reducing rider fatigue.

TVS Radeon:

A unique blend of sturdy build robust style and plush comfort TVS Radeon is targetedat the discerning progressive Millennials of Middle India. TVS Radeon has upped the choicefor everyday commuters and is successfully creating lot of excitement & delightamongst its consumers. Over 2 lakh proud consumers overjoyed with their 'Buland' choice.

TVS Radeon has received many accolades and became one the most awarded commutermotorcycles in its early days itself. The 'Commuter of the Year' Celebratory SpecialEdition stays true to the TVS Radeon 'Buland' DNA and celebrates its spirit.

TVS Radeon BS-VI comes with next-gen Eco Thrust Fuel Injection (ET-Fi) Technologywhich boasts of 15% better mileage along with enhanced engine performance betterdurability & smooth riding experience. TVS Radeon offers 20 Best in Class featuresincluding chrome bezel headlamp with DRL car like speedometer stylish petrol tank withribbed thigh pads largest cushion seat solid suspension among others. The ridingexperience is made seamless with an optimum seat height high ground clearance longwheel-base and handy functional features like USB charging spot and convenient pilliongrab-rail.

With distinctiveness and practicality TVS Radeon continues to live true to its promiseto Live Strong Ride Strong (JIYO BULAND BADHO BULAND).

TVS XL100 HD i-TouchStart:

TVS XL100 crossed a new milestone of 3 Mn customers since its launch in 2015 and aSpecial edition variant was launched to mark this celebration.

Further a new variant TVS XL100 Comfort i-TouchStart focusing on entry level commuterswas also launched. This variant comes with many style features like head lamp fairingcushion back rest chrome finish elements along with mobile charging option. With compactlight weight design new suspension setup auto gear this variant would be an idealchoice for those seeking affordable 'easy to ride' product for everyday commute -including elderly people & women. The product series is now upgraded to meet BS-VIemission norms and launched with exciting features for the customers. Now TVS XL100 seriesis powered by ET-Fi technology which delivers 15% more mileage excellent power and pickupwith smoother engine. Also many useful customer friendly features are added to improveconvenience and safety - easy on-off combo switch hydraulic suspension wider platformcomfortable handlebar low fuel indicator roll-over switch off mobile charger and more.TVS XL100 series has advanced in terms of technology and benefits yet remains affordableto the customer and continues to offer high value.

TVS iQUBE:

Launched in January 2020 TVS iQUBE marked the foray of Company into the ElectricVehicle segment. The TVS iQUBE is a smart mobility solution that promises to deliver aconvenient personalized connected and eco-friendly experience. It comes equipped withSmartXonnect advanced features like Geo-fencing Ride Statistics Telematics RemoteCharge Status and Navigation Assist.

With a top speed of 78 kmph a range of 75 Km in a single charge and features likeQ-Park Assist the TVS iQUBE redefines style comfort and riding experience. A dedicatedpublic charging ecosystem spanning across 10 dealerships in Bengaluru further enhancescustomer ease and experience.

With TVS iQUBE the Company also leveraged digital channels for vehicles booking andsales. A digitally enabled purchase process allows seamless home charging unitinstallations providing a truly hassle-free experience to the customers. The product hasseen extremely encouraging response from the customers. With the increased focus onElectric Vehicles the TVS iQUBE is expected to be a strong contender in this space in thetimes to come. TVS iQUBE will increase its presence in India in a phased manner havingstarted with Bengaluru and gradually moving to other key cities.

TVS King:

TVS King got a new variant in May 2019 with the introduction of TVS King Duramax withalternate fuel options like Petrol LPG and CNG. This new variant comes with the 225 ccengine equipped with latest Liquid cooled technology providing a great combination ofspeed power and performance. This also ensures low wear and tear of engine parts leadingto higher life of engine. The brighter headlamp and strengthened B and C Pillars addbetter safety to driver and passengers. The new and sublime changes in both exterior andinterior of DURAMAX brings a refreshing change and pride of ownership. The new lookdashboard styling handlebar with compact speedo cluster integrated fuel gauge and dualtone seat add style to the variant. TVS King Duramax is an ideal choice for those who wantto embrace technology to make their daily earnings better.

TVS King family (comprising Deluxe and Duramax variants) is now upgraded to meet thenew BS-VI norms. The new BS-VI variants come with integrated starter generator silenti-touch start single start-stop switch anti-wheel lock control and automatic altitudefuel correction. The bi-fuel option will be unique in this category. TVS King willcontinue to provide best combination of adequate power mileage comfort and lower runningcost delivering a great value to the customer.

Domestic Sales

The Company achieved sales of 24.1 lakh units of two-wheelers in the domestic marketcompared to sales of 31.4 lakhs in 2018-19. Company's domestic volumes declined in 2019-20mainly due to falling consumer sentiment and rapid increase in cost of ownership towardshigher mandatory insurance costs and enhanced safety norms. At the end of the yeartowards a planned transition from BS-IV to BS-VI stock was effected throughout the trade.

In domestic motorcycles the Company achieved sales of 7.6 lakh units and registered adecline of 25% over 2018-19. TVS Apache however was able to garner a substantial share ofthe Premium motorcycle market with 3.7 lakh units posting a decline of only 21% whilethe Premium Motorcycle industry declined by 25% in 2019-20 against 2018-19.

In domestic scooters the Company achieved sales of 10.2 lakh units and registered adecline of 18% over 2018-19. However inspite of the headwinds TVS NTORQ 125 sales grewby 24% in 2019-20 and TVS NTORQ 125 Racing Edition created a great momentum for the brand.The product continues to delight the customers and has garnered several accolades sinceits inception.

The Company also invested time for training all its service advisors and mechanics(18000 employees of the extended enterprises) adequately across the country on BS-VIproducts and technology.

Exports sales - two-wheeler and three-wheeler

The Company's two-wheeler exports in 2019-20 were at 6.79 lakh units and witnessed animprovement with a growth of 9.2% over 2018-19.

Three-wheeler exports during the year reached 1.62 lakh units and recorded a 15.9%growth over 2018-19.

Opportunities and Threats

The CoVID-19 pandemic is causing paradigm shifts in consumer behavior affecting manyindustries including the automobile Industry. Social distancing norms followed across theglobe due to CoVID-19 could become the new normal. People may move away from use ofshared/public transport solutions. This changed preference would lead to enhanced need fora personal mobility solution and could emerge as an area of opportunity for two-wheelers.

The Company has also strengthened its offerings in the premium segment catering towardsyounger customers. Many products in the new BS-VI line up of the Company have first inclass and best in class features to attract such customers. TVS Apache TVS NTORQ and theelectric TVS iQube will all help the Company in these segments.

RISKS AND CONCERNS

Domestic Business:

The brunt of the adverse economic environment will be manifest in real contraction ofdisposable income and weak consumer sentiment. The severity of impact is also higher atthe lower to mid income with customers who form bulk of the commuter 2W industry.Consumers will conserve cash in view of unforeseen events like potential job loss andsalary cuts levels. This will lead to delay in purchase of all non-essential durables andmay pose a risk to many industries in the manufacturing sector including automobiles. Thismay result in delayed recovery of the 2W industry. While government and RBI are takingmeasures for enhancing availability of credit for dealers and suppliers the participationwould be dependent on the business outlook. This could lead to challenges in workingcapital management in the supply chain. The Company is cognizant and is advising dealersand suppliers to make prudent choices in cost reduction and enhance working capitalmanagement. From the supply side availability of manpower in tier-2 and tier-3 suppliersaffecting the supply of parts and daily operations are likely risks. Casual workmen andmigrant workers hailing from other states may not return rapidly posing risks across thesupply chain of the Company. The Company has taken appropriate steps to minimize theimpact of such risks and has channelled efforts to get back to normalcy at the earliest.

International Business:

The global pandemic has impacted economic activity across the world hurting consumersentiment disrupting supply chains and reducing demand across many categories. The risingnumber of CoVID-19 cases in the Company's exports markets of LATAM Asia AfricaSouth-east Asia continue to pose high risk to various industries. Some of the Company'sexporting countries have seen a rapid spread of CoVID-19 thereby lowering economicactivity while other export markets including some in Africa have seen a more limitedimpact. A sustained drop in commodity prices and exports will reduce foreign exchangeincome in some of the export countries. The Company has looked at options to minimize theimpact by leveraging opportunity in less affected countries and by launching new productsand leveraging financing solutions for customers.

RISK MANAGEMENT POLICY

Company's risk management framework is well embedded and continually reviewed by theRisk Management Committee. It enables the Board to identify evaluate and monitorprincipal risks and where possible actively mitigate the risks that could affect theachievement of the Company's target.

As a process risks associated with the business are identified and prioritized basedon the Company's overall risk appetite strategy severity and probability of occurrence.

The Board is satisfied that there are adequate systems and procedures in place toidentify assess monitor and manage risks. The Company's Risk Management Committee isoverseeing all the risks that the organization faces such as strategic financial marketIT legal regulatory reputational and other risks and recommends suitable action. Riskmitigation policy has been approved by the board.

OPERATIONS REVIEW

Total Quality Management (TQM)

TQM has always been a way of life towards driving sustainable growth across the entirechain of suppliers dealers stakeholders and community. Continuous drive oncross-functional cluster approach to achieve breakthrough has helped significantly thebusiness processes in the Company.

Several initiatives taken as part of policy management process has facilitatedimplementing breakthrough initiatives like BS-VI transition cost reduction andInternational business market growth. Emphasis on adhering to 'Daily Work Management'practices was continued for retainment. Towards TVS Way permeation 170 managers weretrained on 'TVS way of working' for developing champions and cascading the initiatives inthe respective functions.

Total Employee Involvement continues to be the strong area with focus expanding from'functional excellence' to 'contribution towards business results' through theme-basedkaizens. Employees have significantly contributed in the cost reduction initiatives byfocusing on eliminating wastes in processes. 'War room' approach towards cost reductionwas intensified and expanded to all functions. Teams had focused on speedy implementationof improvements while strictly adhering to guiding principle of "speed withouthaste". Focus continued towards enhancing people capability in problem solving whichhas helped in increasing the speed of implementation of key projects for achievingbusiness results.

Srinivasan Services Trust (SST) CSR arm of the group has also used TQM way of work inits activities in the villages adopted.

Mr Venu Srinivasan Chairman of the Company has been conferred with the prestigiousDeming 'Distinguished Service Award for Dissemination and Promotion Overseas' by JapaneseUnion of Scientists and Engineers (JUSE) for his outstanding contribution in thedissemination and promotion of Total Quality Management (TQM) across all companies in thegroup. Chairman has also guided in permeating TQM practices in many companies in Indiathrough cluster approach initiated by CII and ACMA.

Cost Management

The Company continues to focus on all the elements and drivers of cost. Raw materialscomponents and conversion cost constitute major element of material cost. The Companypursued process innovation value engineering alternate sourcing and localization toreduce material costs. Waste elimination productivity improvements and processimprovement will continue across the supply chain during 2020-21.

In the area of fixed cost similar systematic approach of deployment of cost reductionis being done.

Research and Development

The Research and Development (R&D) team continued its focus on in-depth customerunderstanding technology development and design innovations. This resulted in launch ofTVS iQUBE the first Electric scooter from TVS stable with cutting edge technologiesincluding Smart Connect. The team has developed technologies to meet the stringent BS-VInorms which is significantly lower than the BS-IV emissions for both 2W and 3W models inthe portfolio. Focused work on advanced engine technologies for further improvements infuel efficiency performance and reduction of emission is being pursued for both domesticand CO2 international markets. Further technologies in the area of electricpowertrains are continuously pursued with a strong focus towards future requirements.

The R&D team continues their efforts in developing cutting-edge technologies thatare relevant for the near and long-term requirements of the Company's business plans.These developments are centered on customers emerging mobility needs advanced safetyregulations and sustainability. The Company also collaborates with leading researchestablishments and educational institutions both within and outside the country todevelop breakthrough technologies. TVS Racing continued its dominance with highperformance during the year with 97% podium positions and 9 championship wins out of 10participations. Several technology and product development projects in R&D are closelylinked with the racing technology development leveraging the decades of racingexperience.

Information Technology

The Company continues to implement several projects to improve its efficiencytransparency and process control across supply chain from suppliers to dealers. Majorfocus areas are improvements at factory retail management and improving customerexperience at dealerships. Various initiatives on industry 4.0 are being adopted forimproving quality productivity traceability and waste elimination. The Company hasadopted various machine learning tools for improving quality of its products andprocesses.

Company has developed new products with connected technologies and developed skills totake them to the next phase.

As part of continuous improvement and technology benchmarking the Company's IT systemswere audited by external experts and recommendations were implemented. The Company hasenhanced information security by adopting new cyber security tools. Periodic audits areconducted by external experts and necessary control measures are taken. The Company hasengaged one of the major consulting firms to do benchmark study on cyber securityframework and implemented controls based on recommendations. The Company has enhancedsecurity by implementing multilayered firewalls and deployed security control centres. TheCompany has formed a cyber-security governance council consisting of senior management andindustry experts for improving its cyber security.

The Company is ISO 27001:2013 certified for all manufacturing units and sales offices.Business continuity plan for major business and design applications has been implementedand tested. The Company is certified for ISO 22301 for Business continuity. The Companyhas been certified for CMM level 3 for its software development process.

The Company is leveraging digital technology to enhance consumer experience and sheerreach with high engagement. Social listening is institutionalized and the Company isleveraging it for grievance redressal consumer learnings and overall online reputationmanagement.

INTERNAL CONTROL AND THEIR ADEQUACY

The Board is accountable for evaluating and approving the effectiveness of internalcontrols including financial operational and compliance controls. Company has a properand adequate internal control system to ensure that all its assets are safeguarded andprotected against any loss and that all the transactions are properly authorized andrecorded. The internal control system is subject to continuous improvement with systemeffectiveness assessed regularly. Information provided to management is reliable andtimely. Company ensures the reliability of financial reporting and compliance with lawsand regulations.

Company is strengthening the controls by leveraging technology and centralizingprocesses enhancing monitoring and maintaining effective tax and treasury strategies. TheAudit Committee continues to monitor the effectiveness of internal control over the use ofnew technologies that impact the Financial controls and reporting enterprise risk.

KEY FINANCIAL RATIOS

As required under Regulation 34 of the Listing Regulations there was a significantchange in Interest coverage ratio compared to the previous financial year.

Details of change in Interest coverage and Return on Net Worth as compared to theprevious financial year is given below.

Standalone Consolidated
Particulars UOM* 2019-20 2018-19 2019-20 2018-19
Interest coverage Times 8.38 12.93 2.01 2.63
Return on Net worth % 17.01 21.52 19.36 24.10

* UOM - Unit of measurement

Profit for the year is lower primarily due to suspension of plant operations on accountof CoVID-19 pandemic and transition from BS-IV to BS-VI.

Also exceptional expenses associated with CoVID-19 has negatively impacted the profitfor the year. Reduction in profit for the current financial year has resulted in adversemovement of ratios.

ISSUE OF NON-CONVERTIBLE DEBENTURES

During the month of April 2020 the Board approved the issue of rated unsecuredredeemable non-convertible debentures (NCD) for a sum of Rs.500 Cr (Rupees Five HundredCrores Only). The Company had allotted on 15th May 2020 5000 NCDs of facevalue of Rs.10 Lakhs each aggregating to

$ 500 Cr with a tenor of 3 years at the rate of 7.5% p.a. NCDs will be redeemed at theend of 3rd year by way of bullet payment. The NCDs were listed with NationalStock Exchange of India Limited (NSE) on 19th May 2020.

INTERNAL FINANCIAL CONTROL

The Company has an established Internal Financial Control framework including internalcontrols over financial reporting operating controls and anti-fraud framework. Theframework is reviewed regularly by the management and tested by internal audit team andpresented to the Audit Committee. Based on the periodical testing the framework isstrengthened from time to time to ensure adequacy and effectiveness of InternalFinancial Controls.

Occupational Health & Safety (OHS)

Environment

To promote sustainability to stakeholders a conference was organized with the theme"Sustainability in Manufacturing Supply Chain" during February 2020. TheCompany's manufacturing facilities have been certified under Integrated Management System(IMS). ISO 14001 (Environment Management System) and ISO 45001 (Occupational Health &Safety Management System) standards are integrated into a common system that meets therequirements of each of the standards.

a. Utilization of Non-renewable energy:

The renewable power contributes to 76% in overall share of power. These initiatives ofrenewable energy resulted emission reduction of about 60000 tonnes during in CO22019-20. Company has invested in group captive mode to the tune of 35 MW wind power androof top solar power of 5.9 MW.

b. Conservation of water

To conserve water consumption in canteen the Company has introduced dishwasher andautomated washing machines for vegetables which resulted in substantial water saving.

c. Material conservation & waste minimisation

In process design efforts have been taken to minimize the generation of waste byintroduction of clean technologies. Water based paint application (cathodicelectro-deposition) pre-treatment based on nano technology in powder coating have beenadopted. Robotic paint application is being continuously augmented towards enhancing painttransfer efficiency. Virtual training facility has been established for training operatorstowards improving their painting skills without using paint and generating waste.

d. Effluent treatment

Automation and advanced treatment processes have been adopted in Effluent treatmentRecycling Evaporator and Sewage treatment facilities. During 2019-20 a unique effluenttreatment process which maximizes recycling efficiency in RO plants was established totreat effluents with different characteristics in a common facility. The chemical sludgefrom waste water treatment plants and paint sludge generated during paint application areused for co-processing in cement industry.

Towards IT & IOT initiatives ambient air quality ambient VOC and stationaryemissions are monitored through online systems. Water & energy consumption ismonitored through online system. The forms and returns under applicable Environmental Actsand Rules were made online.

Health & Safety

Implementation of ISO 45001:2018 has helped to improve occupational health and safetyperformance by proactively preventing work-related injury and ill health. As part ofcontinual improvement in safety around 643 proactive hazard control measures have beenimplemented across plants. The Company has achieved a reduction of 33% in frequency rateof accidents compared to previous year.

Towards building a sustainable safety culture periodical safety trainings have beenorganized and around 7352 employees were covered. During National Safety Day celebrationon 4th March 2020 as a part of "Buckle up & Strap up" - RoadSafety campaign various promotional activities were conducted and all the employees werecovered across Hosur Mysore & Nalagarh locations. TVSM-Hosur plant received three"First prizes" from Government of Tamil Nadu in the State Safety Awards functionheld in Chennai during September 2019. This recognition for achieving longest accidentfree period & reducing frequency rate of accident.

Influenza immunization was done to employees under high risk categories including thosein marketing and field staff all over India. Health days were celebrated (World HealthDay Diabetic Heart No Tobacco and Aids Days) to create awareness among employeesthrough talks posters quiz competitions standees. Walkathon conducted during March2020 to promote idea of health and wellness among employees and encourage walking amongthem and their families.

HUMAN RESOURCE DEVELOPMENT (HRD)

Constituents of Human Resources Development framework followed at the Company includeWorkforce planning Employee engagement Performance & Compensation managementLearning and Development Career & Succession planning and Organization Development.Towards sustenance and delivering improved results these constituents have a structuredapproach policies and standard operating procedures which are reviewed and updatedperiodically.

Current and future Skill-based competency development are planned and executed throughboth in-house programs and globally acclaimed programs continuing education challengingproject assignments and job rotations. The Company continues to maintain its record ofgood industrial relations without any interruption in work. As on 31st March2020 the Company had 5133 employees on its rolls.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company'sobjectives projections estimates and expectations may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the Company's operations include amongst others EconomicConditions affecting demand/ supply and Price Conditions in the Domestic and OverseasMarket in which the Company operates changes in the Government Regulations Tax Laws andOther Statutes and Incidental Factors.

5. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Act 2013 with respect toDirectors' Responsibility Statement it is hereby stated-i. that in the preparation ofannual accounts for the financial year ended 31st March 2020 the applicableAccounting Standards had been followed along with proper explanation relating to materialdepartures if any;

ii. that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for the year under review;

iii. that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv. that the Directors had prepared the annual accounts for the financial year ended 31stMarch 2020 on a "going concern basis";

v. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

vi. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR activities have already been textured into the Company's value system throughSrinivasan Services Trust (SST) established in 1996 with the vision of buildingself-reliant rural community.

Over 24 years of service SST has played a pivotal role in changing lives of people inrural India by creating self-reliant communities that are models of sustainabledevelopment. The Company is eligible to spend on their ongoing projects/ programmesfalling within the CSR activities specified under the Act 2013 as mandated by theMinistry of Corporate Affairs for carrying out the CSR activities.

The Committee formulated and recommended a CSR Policy in terms of Section 135 of theAct 2013 along with a list of projects / programmes to be undertaken for CSR spending inaccordance with the Companies (Corporate Social Responsibility Policy) Rules 2014.

Based on the recommendation of the CSR Committee the Board has approved the projects /programmes carried out as CSR activities by the following non-profitable organizationshaving an established track record for more than the prescribed years in undertakingsimilar programmes / projects constituting more than 2% of the average net profits of theCompany made during the three immediately preceding financial years towards CSR spendingfor the financial year 2019-20.

The Company spent an additional sum of Rs.17 Cr by way of contribution to PM CARESfund which is covered under the CSR provisions of the Act 2013.

Amount spent
S.No. Name of the Organisation ($ in Cr)
1. Srinivasan Services Trust (SST) 7.66
2. Sri Sathya Sai Central Trust 3.00
3. Ramakrishna Mission Centre For Human Excellence 3.00
4. Seva Bharati Purbanchal 2.00
5. Sreevalsam Educational Trust 1.00
6. PM CARES 17.00
Total 33.66

Presently SST is working in 5000 villages spread across Tamil Nadu KarnatakaMaharashtra Himachal Pradesh and Andhra Pradesh covering a population of about 24.50lakhs and 6.24 lakh families. SST has focused on the areas of economic development healthcare education environment social and infrastructure actively in 3000 villages. SSTwill focus on 2000 villages also so that all the areas are covered in the next 3 years.

As required under Section 135 of the Act 2013 read with Rule 8 of the Companies(Corporate Social Responsibility Policy) Rules 2014 the annual Report on CSR containingthe particulars of the projects / programmes approved and recommended by CSR Committee andapproved by the Board for the financial year 2019-20 are given by way of Annexure IVattached to this Report.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATES

The following companies and bodies corporate are the subsidiaries / associates of theCompany:

Subsidiaries

1. Sundaram Auto Components Limited Chennai

2. TVS Housing Limited Chennai

3. TVS Motor Services Limited Chennai

4. TVS Credit Services Limited Chennai

5. TVS Two-wheeler Mall Private Limited Chennai

6. TVS Micro Finance Private Limited Chennai

7. Harita ARC Private Limited Chennai

8. Harita Collection Services Private Limited Chennai

9. TVS Commodity Financial Solutions Private Limited Chennai

10. TVS Housing Finance Private Limited Chennai

11. TVS Motor Company (Europe) B.V. Amsterdam

12. TVS Motor (Singapore) Pte. Limited Singapore

13. PT TVS Motor Company Indonesia Jakarta 14. Sundaram Holding USA Inc Delaware USA

15. Green Hills Land Holding LLC South Carolina USA

16. Components Equipment Leasing LLC South Carolina USA

17. Sundaram - Clayton (USA) LLC South Carolina USA

18. Premier Land Holding LLC South Carolina USA

Associates

- Emerald Haven Realty Limited Chennai and its subsidiaries.

- Ultraviolette Automotive Private Limited Bengaluru.

- Tagbox Solutions Pvt Ltd Bengaluru.

Associates of TVS Motor (Singapore) Pte Ltd

- Tagbox Pte Ltd Singapore.

- Predictronics Corp USA.

PERFORMANCE OF SUBSIDIARIES

Sundaram Auto Components Limited (SACL)

Sales of SACL was Rs.530 Cr in 2019-20 as against Rs.601 Cr in the previous year.

SACL earned a Profit Before Tax of Rs.6.44 Cr during the year 2019-20 as againstRs.17.37 Cr in the previous year. SACL declared an interim dividend of Rs.0.50 per share(5%) for the year ended 31st March 2020 thereby absorbing a sum of Rs.2.54 Crincluding dividend distribution tax and paid to the Company.

During the year TVSM (the Company) has subscribed a sum of Rs.60 Cr in the equitycapital of SACL.

TVS Housing Limited (TVSH) / Emerald Haven Realty Limited (EHRL)

TVS Housing Limited is a 100% subsidiary of the Company.

EHRL

Chennai residential real estate market has de-grown by 20% in the financial year2019-20. The NBFC crisis changes to GST regulations and CoVID-19 led to a reduction inthe number of new launches by developers and postponement of purchase decision by buyersresulting in a general slowdown in the real estate market.

During the year all villas in the final phase of GreenHills and plots in SalamangalamChennai were sold.

In 2019-20 the Company launched Flourish Apartments at Salamangalam comprising of 208residential units. This project falls under the category of "affordable homes"defined by the Government of India. 61% of the apartments have been sold till date.

During 2019-20 project Lighthouse in Chennai was launched - a 14 storey residentialapartment complex comprising of 279 units and 73% of the apartments have been sold tilldate. In January 2019 Emerald Haven Life Spaces (Radial Road) Limited (EHLSRRL) asubsidiary of EHRL acquired land admeasuring 6 acres to develop Multistoried Building(MSB) at Kovilambakkam Radial Road Chennai.

During the year the Company geographically expanded to Bengaluru via Joint DevelopmentAgreement (JDA) for a 6.4 acre land parcel in Kagglipura Bengaluru.

During the year EHRL entered into a Joint Venture Agreement with ASK Real EstateSpecial Opportunities Fund - II (ASK) and invested a sum of Rs.16.63 Cr and ASK investedtheir share of Rs.15.98 Cr.

The Company has completed construction of 1.4 Million Sft till date and the total areaunder development as on date is 5.5 Million Sft.

Subsidiaries of EHRL

1. Emerald Haven Development Limited (EHDL);

2. Emerald Haven Projects Private Limited (EHPPL);

3. Emerald Haven Life Spaces (Radial Road) Limited (EHLSRRL);

4. Emerald Haven Realty Developers (Paraniputhur) Private Ltd (EHRDPPL);

5. Emerald Haven Property Development Limited (EHPDL);

6. Emerald Haven Town and Country Private Limited (EHTCPL);

7. Happiness Harmony Property Developers Private Limited (HHPDPL); and

8. Emerald Haven Towers Limited (EHTL)

PT.TVS Motor Company Indonesia (PT TVSM)

The Indonesian two-wheeler Industry was stagnant during the year 2019-20 at around 7.2million units. While Skubek segment grew by 3% bebek and motorcycle segments sufferednegative growth of 15% and 21% respectively. During the year under review PT TVS achievedsales of 53650 nos. of two wheelers as against 40760 nos. of last year therebyregistering a growth of 31%. In three wheelers the Company recorded sales of 8100 unitsas against 2700 units of sales during the previous year.

The impressive growth in sales numbers coupled with margin improvement enabled thecompany to achieve a positive EBITDA of USD 0.75 million for the full year as against aloss of USD 3.04 million of last year. It is also worthwhile to note that the Companyachieved break even by posting operating profit for the second half of the financial year2019-20. During the year TVSM (the Company) has invested a sum of USD 5 Mn in theordinary shares of PT TVSM.

TVS Motor Company (Europe) B.V

TVSM had earlier incorporated TVS Motor Company (Europe) B.V. with a view to serve asspecial purpose vehicle for making and protecting the investments made in overseasoperations of PT TVSM.

TVS Motor (Singapore) Pte. Ltd

TVS Motor (Singapore) Pte Limited a wholly owned subsidiary is leveraged tooperationalize digital technology by delivering high quality solutions that addresses reallife business challenges viz. harnessing the power of Analytics Artificial IntelligenceAugumented Reality Machine Learning and Internet of Things.

These are focused in areas of automotive and fintech industries that have directrelevance to Company and its subsidiaries. The digital strategy would be delivered throughboth organic and inorganic means.

As part of this strategy during the financial year 2019-20 TVS Motor (Singapore) PteLimited has made investments in US based companies viz. Altizon Inc PredictronicsScienaptics and also in Tagbox Pte Singapore which are in the fields of IOT predictivemaintenance and credit underwriting with an aggregate investment of USD 16.57 Mn. Duringthe year TVSM (the Company) has invested a sum of SGD 26.48 Mn in the ordinary shares ofTVS Motor (Singapore) Pte Limited.

Project 303 Bidco Limited United Kingdom (UK)

TVS Motor (Singapore) Pte Limited has acquired a newly incorporated company viz.Project 303 Bidco Limited UK (UK Subsidiary) on 2nd April 2020 andconsequently it has become wholly owned subsidiary.

UK Subsidiary has signed an asset purchase agreement with amongst others NortonMotorcycles Holdings Limited (in administration) and Norton Motorcycles (UK) Limited (inadministration) (together "Norton") to acquire certain assets from Nortonincluding the brand "Norton" and other associated brands.

Norton Motorcycles (UK) Limited (in administration) was engaged in the business ofmanufacturing the iconic "Norton" and allied brand motorcycles. It is an entitybased in the United Kingdom of Great Britain and Northern Ireland.

TVS Motor Services Limited (TVS MS)

TVS MS was initially the investment SPV of the Company for funding TVS Credit ServicesLimited (TVS CS). The National Company Law Tribunal Chennai (NCLT) on 16thApril 2019 approved a Scheme of Arrangement (Scheme) between TVS MS TVS CS and theirrespective shareholders and became effective from 9th May 2019 being the dateof filing of the said approved Scheme with the Ministry of Corporate Affairs.

In terms of the said Scheme TVS MS redeemed its entire Non-cumulative RedeemablePreference Shares (NCRPS) held by the Company by transferring the investment held by it inTVS CS equity shares in favour of the Company on 6th June 2019.

Post transfer of equity shares of TVS CS the Company now holds 83.95% directly in TVSCS which was earlier held through TVS MS the wholly owned subsidiary of the Company. TVSMS continues to be a 100% subsidiary of the Company. During the year TVSM (the Company)subscribed to 45000000 Equity Shares of TVS MS aggregating to $ 45 Cr at a price ofRs.10/- per share.

TVS Credit Services Limited (TVS CS)

TVS CS is the retail finance arm of the Company inter-alia for financing oftwo-wheelers.

During the year 2019-20 TVS CS's overall disbursements registered at Rs.7585 Cr ascompared to Rs.7067 Cr in the previous year. During the year under review the assetsunder management stood at Rs.9215 Cr as against Rs.8335 Cr during the previous yearregistering a growth of 10%. Total income during the financial year 2019-20 increased toRs.2015 Cr from Rs.1635 Cr during the previous financial year registering an increaseof 23.2% over the previous year.

The profit before tax and exceptional items for the year has also improved and stood atRs.219 Cr as against Rs.216 Cr during the previous year. During the year TVSM (theCompany) has invested a sum of Rs.45 Cr in the Equity capital of TVS CS.

The following companies are the subsidiaries of TVS CS.

1. TVS Two-wheeler Mall Private Limited

2. TVS Micro Finance Private Limited

3. Harita ARC Private Limited

4. Harita Collection Services Private Limited

5. TVS Commodity Financial Solutions Private Limited

6. TVS Housing Finance Private Limited

All the above subsidiaries are yet to commence their operations.

Sundaram Holding USA Inc. (SHUI) and its subsidiaries

SACL along with the holding company viz. Sundaram-Clayton Limited have formedSundaram Holding USA Inc. (SHUI) a company established under the applicable provisions ofLaws of The United States of America. SHUI's wholly owned subsidiaries are:

1. Green Hills Land holding LLC South Carolina USA

2. Component Equipment Leasing LLC South Carolina USA

3. Sundaram-Clayton USA LLC South Carolina USA

4. Premier Land Holding LLC South Carolina USA

During the year 2019-20 SACL has invested a sum of USD 6 Mn in the ordinary shares ofSHUI and holds 75% of the total capital of SHUI as on 31st March 2020.

Ultraviolette Automotive Private Limited (UV)

The Company has invested a sum of Rs.11 Cr in the shares of UV including a sum of Rs.5Cr invested in Preference

Shares in 2019-20 and holds 25.76% of its total capital as on 31st March2020. UV is a start-up company engaged in developing electric mobility solutions.

8. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance withthe provisions of Section 129 of the Act 2013 read with the Companies (Accounts) Rules2014 and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations) along with a separate statement containing thesalient features of the financial performance of subsidiaries / associates in theprescribed form. The audited consolidated financial statements together with Auditors'Report form part of the Annual Report.

The audited financial statements of the subsidiary companies will be made available tothe Shareholders on receipt of a request from any Shareholder and it has also been placedon the website of the Company. This will also be available for inspection by theShareholders at the Registered Office during the business hours as mentioned in the Noticeof AGM.

The consolidated Profit Before Tax of the Company and its subsidiaries & associatesamounted to Rs.865 Cr (after exceptional item of Rs.40 Cr) for the financial year 2019-20as compared to Rs.1083 Cr in the previous year.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL

Directors appointment / re-appointment

In terms of the provisions of sub-section (6) read with explanation to Section 152 ofthe Act 2013 two-thirds of the total number of Directors i.e. excluding IDs are liableto retire by rotation and out of them one-third is liable to retire by rotation at everyannual general meeting. Dr. Lakshmi Venu and Mr H Lakshmanan Directors are liable toretire by rotation at AGM and being eligible offer themselves for re-appointment.

As per the Listing Regulations the appointment or continuation by a person as aNon-Executive Director who attained the age of 75 years requires a special resolution ofthe shareholders. Hence approval of the shareholders for the re-appointment of Mr HLakshmanan aged 86 years NE-ID of the Company who is liable to retire by rotation atthis ensuing AGM is being sought through special resolution.

Considering his over six decades of experience in the Group the Board recommended hisre-appointment to the shareholders based on the performance evaluation by IDs and NRC.

The Directors have recommended their re-appointment for the approval of shareholders.Brief resume of the Directors are furnished in the Notice convening the AGM of theCompany.

Independent Directors (IDs)

All IDs hold office for a fixed term of five years and are not liable to retire byrotation.

M/s T Kannan C R Dua Prince Asirvatham and Hemant Krishan Singh IDs werere-appointed by the shareholders through Postal Ballot on 5th March 2019 forthe second term of five consecutive years from 14th July 2019 as IDs of theCompany in terms of Section 149 of the Act 2013 on the same terms of appointment andremuneration by way of fees and profit related commission if any.

During the year Mr R Ramakrishnan (RK) who served as Director for more than a decadepassed away on 7th July 2019 after a brief illness.

RK's versatile knowledge and business acumen helped the Company over a decade toachieve its current growth. He was instrumental in enhancing the international business ofthe Company and the fact that the Company has spread globally in more than 60 countriesstands testimony to RK's contribution to the Company; his par excellent skill in dealerarrangement and resolving many critical issues between the dealers and the Company fromtime to time.

At the 27th AGM held on 22nd July 2019 the shareholders approvedthe appointment of Mrs Lalita D Gupte and Mr R Gopalan as IDs of the Company effective 23rdOctober 2018 and 30th April 2019 respectively for the first term of fiveconsecutive years from the respective dates of their appointment.

The terms of IDs cover inter-alia duties rights of access to information disclosureof their interest / concern dealing in Company's shares remuneration and expensesinsurance and indemnity. The IDs are provided with copies of the Company's policies andcharters of various Committees of the Board.

In accordance with Section 149(7) of the Act 2013 all IDs have declared that theymeet the criteria of independence as provided under Section 149(6) of the Act 2013 andRegulation 25 of the Listing Regulations and the Board confirms that they are independentof the management.

The detailed terms of appointment of IDs is disclosed on the Company's website in thelink as provided in page no. 97 of this Annual Report.

All the IDs have registered with the databank of Independent Directors developed by theIndian Institute of Corporate Affairs in accordance with the provisions of Section 150 ofthe Act 2013 and obtained ID registration certificate.

Separate meeting of Independent Directors

During the year under review a separate meeting of IDs was held on 10thMarch 2020.

Based on the set of questionnaires complete feedback on Non-Independent Directors anddetails of various activities undertaken by the Company were provided to IDs to facilitatetheir review /evaluation.

a) Non-Independent Directors (Non-IDs)

IDs used various criteria prescribed by NRC for evaluation of Non-IDs viz. M/s VenuSrinivasan Chairman and Managing Director Sudarshan Venu Joint Managing Director

K N Radhakrishnan Director & CEO H Lakshmanan Dr. Lakshmi Venu and RajeshNarasimhan Directors and also of Chairman of the Board and the Board as a whole.

IDs evaluated the performance of all Non-IDs individually through a set ofquestionnaires. They reviewed the Non-IDs' interaction during the Board / Committeemeetings and thoughtful inputs given by them to improve the risk management internalcontrols and contribution to the Company's growth.

IDs were satisfied fully with the performance of all Non-IDs.

b) Chairman

The IDs reviewed the performance of Chairman of the Board after taking into account hisperformance and benchmarked the achievement of the Company with industry under thestewardship of Chairman.

The IDs also placed on record their appreciation of Chairman's high level ofintegrity trust confidentiality impartial & judicious approach transparency andcommitment to governance setting high standards for the Company; Outstanding ability tomotivate the board's involvement and stimulate discussions particularly during a year ofdiverse challenges which included transition to BS-VI and related supply chain and otherchallenges and tough state of economy and clear initiatives for staying ahead ofcompetition.

Chairman was also nominated for the "Padma Bhushan" award the third highestcivilian award and was conferred with the prestigious Deming 'Distinguished Service Awardfor Dissemination and Promotion Overseas' and becomes the First Industrialist from Indiato be bestowed this prestigious award for his contributions in the field of Total QualityManagement (TQM).

The Deming Prize is the highest award for TQM in the world. Deming 'DistinguishedService Award for Dissemination and Promotion Overseas' is given to individuals who havemade outstanding contributions in the dissemination and promotion of Total QualityManagement (TQM) and is sponsored by Japanese Union of Scientists and Engineers (JUSE). Heis also a key member of Prime Minister council on Trade and Industry.

IDs also recorded the growth story of the Company under the stewardship of Chairman andsignificant increase in turnover & Profit and its effect on increased share price forpast five years.

c) Board

The IDs also evaluated Board's composition size mix of skills and experience itsmeeting sequence effectiveness of discussion decision making follow up action so as toimprove governance and enhance personal effectiveness of Directors.

The evaluation process focused on Board Dynamics. The Company has a Board with widerange of expertise in all aspects of business and outstanding diversity of the Board withthe presence of varied personalities from diverse fields. The Board upon evaluationconcluded that it is well balanced in terms of diversity of experience with expert in eachdomain viz. Automotive Leadership / Strategy Finance Legal & Regulatory BankingInformation Technology and Governance.

IDs recorded that they were always kept involved through open and free discussions andprovided additional inputs in emerging areas being forayed into by the Company and highlevels of Corporate Governance in all management discussion and decisions were maintained.

The IDs unanimously evaluated the prerequisites of the Board viz. formulation ofstrategy acquisition & allocation of overall resources setting up policiesdirectors' selection processes and cohesiveness on key issues and satisfied themselvesthat they were adequate.

They were satisfied with the Company's performance in all fronts and finally concludedthat the Board operates with best practices.

d) Quality Quantity and Timeliness of flow of Information between the CompanyManagement and the Board

All IDs have expressed their overall satisfaction with the support received from themanagement and the excellent work done by the management during the year under review andalso that the relationship between the top management and Board is smooth and seamless.

The information provided for the meetings were clear concise and comprehensive tofacilitate detailed discussions and periodic external presentations on specific areas wellsupplemented the management inputs. The emerging e-technology was duly incorporated in theoverall review of the board.

Key Managerial Personnel (KMP)

During the year the board at its meeting held on 4th February 2020re-appointed Mr Venu Srinivasan as Chairman and Managing Director of the Company (CMD)effective 24th April 2020 to hold the office for a further period of five yearson such terms and conditions and the same was approved by the shareholders through Postalballot on 17th March 2020 by way of a special resolution.

Mr Venu Srinivasan Chairman and Managing Director Mr Sudarshan Venu Joint ManagingDirector Mr K N Radhakrishnan Director & CEO Mr K Gopala Desikan Chief FinancialOfficer and Mr K S Srinivasan Company Secretary are the KMPs of the Company in terms ofSection 2(51) and Section 203 of the Act 2013 as on date of this Report.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition ofthe Board to ensure an appropriate mix of abilities experience and diversity to serve theinterests of all stakeholders of the Company.

Nomination and Remuneration Policy was approved by the Board at its meeting held on 23rdSeptember 2014 and amended from time to time to maintain consistency and statutoryamendments to be reflected in the policies to make it upto date and more comprehensive.

The objective of such policy shall be to attract retain and motivate executivemanagement and devise remuneration structure to link to Company's strategic long termgoals appropriateness relevance and risk appetite.

NRC will identify ascertain the integrity qualification appropriate expertise andexperience having regard to the skills that the candidate will bring to the Board /Company whenever the need arises for appointment of Directors / KMP.

Criteria for performance evaluation disclosures on the remuneration of Directorscriteria of making payments to Non-Executive Directors have been disclosed as part ofCorporate Governance Report attached herewith.

Remuneration payable to Non-executive Independent Directors

The Shareholders at the 25th AGM of the Company held on 11thAugust 2017 have renewed the payment of remuneration by way of commission not exceeding1% of the Net profits in aggregate payable to the Non-Executive Independent Directors ofthe Company (NE-IDs) every year. The Company derives substantial benefit through theirexpertise and advice increased involvement in policy issues and also by devotingconsiderable time in providing guidance to various issues of the Company from time totime.

Evaluation of the Independent Directors and Committees of Directors

In terms of Section 134 of the Act 2013 and the Corporate Governance requirements asprescribed under Listing Regulations the Board reviewed and evaluated IndependentDirectors and various Committees viz. Audit Committee Risk Management CommitteeNomination and Remuneration Committee Corporate Social Responsibility Committee andStakeholders' Relationship Committee based on the evaluation criteria laid down by theNRC. Board has carried out the evaluation of all Directors (excluding the Director beingevaluated) and its Committees through a set a questionnaires.

Independent Directors

The performance of all IDs were assessed against a range of criteria such ascontribution to the development of business strategy and performance of the Companyunderstanding the major risks affecting the Company clear direction to the management andcontribution to the Board cohesion. The performance evaluation has been done by the entireBoard of Directors except the Director concerned being evaluated. The Board noted thatall IDs have understood the opportunities and risks to the Company's strategy and aresupportive of the direction articulated by the management team towards consistentimprovement.

On the basis of the report of performance evaluation of directors the Board noted andrecorded that all the directors should extend and continue their term of appointment asDirectors / Independent Director as the case may be.

Committees

Board delegates specific mandates to its Committees to optimize Directors' skills andtalents besides complying with key regulatory aspects.

- Audit Committee for overseeing financial Reporting;

- Risk Management Committee for overseeing the risk management framework;

- Nomination and Remuneration Committee for selecting and compensating Directors /Employees;

- Stakeholders' Relationship Committee for redressing investors grievances; and

- Corporate Social Responsibility Committee for overseeing CSR initiatives andinclusive growth.

The performance of each Committee was evaluated by the Board after seeking inputs fromits Members on the basis of specific terms of reference its charter time spent by theCommittees in considering key issues quality of information received majorrecommendations / action plans and work of each Committee.

The Board is satisfied with overall effectiveness and decision making of allCommittees. The Board reviewed each Committee's terms of reference to ensure that theCompany's existing practices remain appropriate.

Recommendations from each Committee were considered and approved by the Board prior toits implementation. The Board has accepted all the recommendations of the committees whichare mandatorily required in the relevant financial year.

Details of Committees its charter functions are provided in the Corporate GovernanceReport attached to this Report.

Number of Board meetings held:

The number of Board meetings held during the financial year 2019-20 is provided as partof Corporate Governance Report prepared in terms of the Listing Regulations.

10.AUDITORS

Statutory Auditors

The Company at its twenty sixth AGM held on 7th August 2018 re-appointed M/sV. Sankar Aiyar & Co. Chartered Accountants Mumbai having Firm Registration No.109208W allotted by The Institute of Chartered Accountants of India as Statutory Auditorsof the Company to hold office for the second term of five consecutive years from theconclusion of 26th AGM till the conclusion of 31st AGM at suchremuneration in addition to applicable taxes out of pocket expenses travelling and otherexpenses as may be mutually agreed between the Board of Directors of the Company and theAuditors.

The Statutory Auditors will continue to hold office for the 3rd year in thesecond term of five consecutive years from the conclusion of this AGM.

The Company has obtained necessary certificate under Section 141 of the Act 2013conveying their eligibility for being the Statutory Auditors of the Company for the year2020-21.

The Auditors' Report for the financial year 2019-20 does not contain any qualificationreservation or adverse remark and the same is attached with the annual financialstatements.

Secretarial Auditors

As required under Section 204 of the Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company is required to appoint aSecretarial Auditor for auditing secretarial and related records of the Company.

The Secretarial Audit Report for the year 2019-20 given by M/s S Krishnamurthy &Co. Company Secretaries Chennai is attached to this Report. The Secretarial Audit Reportdoes not contain any qualification reservation or other remarks.

The Board at its meeting held on 28th May 2020 has re-appointed M/s. SKrishnamurthy & Co. Practising Company Secretaries Chennai having CP No. 2215allotted by the Institute of Company Secretaries of India as Secretarial Auditors for thefinancial year 2020-21.

Cost Auditor

As per Section 148 of the Act 2013 read with the Companies (Cost Records and Audit)Rules 2014 as amended the cost audit records maintained by the Company in respect of itsengine components manufactured by the Company specified under Customs Tariff Act headingin Table B to Rule 3 of the above rules are required to be audited by a Cost Auditor.

In terms of the Companies (Cost Records and Audit) Amendment Rules 2014 the Board hasre-appointed Mr A N Raman Cost Accountant holding Certificate of practice No. 5359allotted by The Institute of Cost Accountants of India as the Cost Auditor for conductingCost Audit for the financial year 2020-21.

The Company has also received necessary certificate under Section 141 of the Act 2013from him conveying his eligibility to act as a Cost Auditor. A sum of Rs.6 lakhs has beenfixed by the Board as remuneration in addition to reimbursement of applicable taxesactual travelling and out-of-pocket expenses incurred by him and is required to beapproved and ratified by the Members at the ensuing AGM as per Section 148(3) of the Act2013.

The Company has filed the Cost Audit Report of 2018-19 on 20th August 2019in XBRL format.

11.CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over theyears and lays strong emphasis on transparency accountability and integrity.

A separate Section on Corporate Governance and a certificate from the StatutoryAuditors of the Company regarding compliance with the conditions of Corporate Governanceas stipulated under Listing Regulations is given as Annexure VIII to this Report.

The Director & CEO and the Chief Financial Officer (CFO) of the Company havecertified to the Board on financial statements and other matters in accordance withRegulation 17 (8) of the Listing Regulations pertaining to CEO/CFO certification for thefinancial year ended 31st March 2020.

12. BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34 of Listing Regulations the Business Responsibility Reportfor the year 2019-20 describing the initiatives taken from an environment social andgovernance perspective in the prescribed format is given as Annexure VII to this Reportand is available on the Company's website in the link as provided in page no. 97 of thisAnnual Report.

13.POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism in accordance with the provisionsof Act 2013 and Regulation 22 of Listing Regulations which provides a formal mechanismfor all Directors Employees and other stakeholders of the Company to report to themanagement their genuine concerns or grievances about unethical behaviour actual orsuspected fraud and any violation of the Company's Code of Business Conduct and Ethics.

The Code also provides a direct access to the Chairman of the Audit Committee to makeprotective disclosures to the management about grievances or violation of the Company'sCode.

The Board at its meeting held on 4th February 2020 made certain amendmentsto the Whistle Blower Policy for protecting whistle blower who made in good faith andexpress guidance on procedure to be undertaken by the investigators for carrying outinvestigation on complaints filed by employees.

The Policy is disclosed on the Company's website in the link as provided in page no. 97of this Annual Report.

14.PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section76 of the Act 2013 for the year ended 31st March 2020.

15.STATUTORY STATEMENTS

Information on conservation of energy technology absorption foreign exchange etc:

Relevant information is given in Annexure I to this Report in terms of therequirements of Section 134(3)(m) of the Act 2013 read with the Companies (Accounts)Rules 2014.

Material changes and commitments:

The Manufacturing facilities and all offices of the Company were closed on March 232020 following the nationwide lockdown due to CoVID-19. The Company has since obtainedrequired permissions and restarted its manufacturing facilities and all offices partially.Based on assessment of the impact of CoVID-19 on the operations of the Company and ongoingdiscussions with customers vendors and service providers the Company is confident ofobtaining regular supply of raw materials and components resuming supply chain logisticsand serving customers.

The Company has considered the possible effects of CoVID-19 on the carrying amounts ofProperty Plant and Equipment Investments Inventories Trade Receivable and OtherCurrent Assets. In developing the assumptions relating to the possible futureuncertainties in the economic conditions because of this pandemic the Company as at thedate of approval of the financial results has used external and internal sources ofinformation / indicators to estimate the future performance of the Company. Based oncurrent estimates the Company expects the carrying amount of these assets to berecovered.

Significant and material orders passed by the Regulators or Courts or Tribunalsimpacting the going concern status of the Company:

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.

Annual Return:

Extract of the Annual Return in prescribed form is given as Annexure II to this Reportin terms of the requirements of Section 134(3)(a) of the Act 2013 read with the Companies(Accounts) Rules 2014.

The same is available on the Company's website in the link as provided in page no. 97of this Annual Report.

Employee's remuneration:

Details of Employees receiving the remuneration in excess of the limits prescribedunder Section 197 of the Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed as a statement and given inAnnexure-III. In terms of first proviso to Section 136(1) of the Act 2013 the AnnualReport excluding the aforesaid annexure is being sent to the Shareholders of the Company.The annexure is available for inspection at the Registered Office of the Company duringbusiness hours as mentioned in the Notice of AGM and any Shareholder interested inobtaining a copy of the said annexure may write to the Company Secretary at the RegisteredOffice of the Company. Certain incentive / performance related payments for the financialyear 2019-20 for KMPs and SMPs have been reduced / deferred on account of CoVID-19.

Comparative analysis of remuneration paid:

A comparative analysis of remuneration paid to Directors and Employees with theCompany's performance is given as Annexure V to this Report.

Details of material related party transactions:

There is no material related party transactions under Section 188 of the Act 2013 readwith the Companies (Meetings of Board and its Powers) Rules 2014. Details of all relatedparty transactions are enclosed as part of the accounts for the year ended 31stMarch 2020.

Details of loans / guarantees / investments made:

The details of loans and guarantees under Section 186 of the Act 2013 read with theCompanies (Meetings of Board and its Powers) Rules 2014 for the financial year 2019-20are given as Annexure VI to this Report. On loans granted to the Employees the Companyhas charged interest as per its remuneration policy in compliance with Section 186 of theAct 2013.

Please refer note No. 4 to Notes on accounts for the financial year 2019-20 fordetails of investments made by the Company.

Reporting of fraud

The Auditors of the Company have not reported any fraud as specified under Section143(12) of the Act 2013.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards as amended from timeto time.

Disclosure in terms of Sexual Harassment of Women at workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has an Internal Complaints Committee as required under The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Duringthe year under review there were no cases filed pursuant to the provisions of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

16.ACKNOWLEDGEMENT

The Directors gratefully acknowledge the continued support and co-operation receivedfrom the holding Company viz. Sundaram-Clayton Limited Chennai. The Directors also thankthe bankers investing institutions customers dealers vendors and sub-contractors fortheir valuable support and assistance. The Directors wish to place on record theirappreciation of the very good work done by all the employees of the Company during theyear under review.

The Directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board of Directors
Chennai VENU SRINIVASAN
28th May 2020 Chairman