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TVS Motor Company Ltd.

BSE: 532343 Sector: Auto
NSE: TVSMOTOR ISIN Code: INE494B01023
BSE 00:00 | 14 Oct 583.50 6.55
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NSE 00:00 | 14 Oct 583.80 6.60
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OPEN 583.10
PREVIOUS CLOSE 576.95
VOLUME 137227
52-Week high 665.70
52-Week low 407.25
P/E 33.53
Mkt Cap.(Rs cr) 27,722
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 583.10
CLOSE 576.95
VOLUME 137227
52-Week high 665.70
52-Week low 407.25
P/E 33.53
Mkt Cap.(Rs cr) 27,722
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

The Directors have pleasure in presenting the twenty ninth annual report and theaudited accounts for the year ended 31st March 2021.

1. COMPANY PERFORMANCE

The Company registered sales of 29.3 lakh units of two wheelers in 2020-21.

2020-21 tested the strength of the very fundamentals of India its institutionsadministrative and healthcare system and even its social moral and economic fibre. Thechoices between lives and livelihood needed to be made every day by individual citizensorganizations institutions and the entire administrative system. The nationwide 42 daylockdown a key response led to GDP contraction of 24% in the first quarter. But with theeasing of the active cases and the Government intervening with multiple initiativesrecovery in Quarter 2 was ahead of estimates with a 7% GDP decline instead of theestimated 11% decline. The Q3 & Q4 saw the GDP return to positive territory postinggains of 0.5% and 1.6% bringing the full year to a 7.5% decline.

The domestic two wheeler industry declined by 13% in 2020-21 over 18% decline during2019-20. The two wheeler industry saw sharp changes in growth momentum over the quarters.Q1 2020-21 contracted due to the pandemic with a 74% decline and when the markets openedup registered 0% growth in Q2 13% in Q3 and 24% growth in Q4.

Compared to 2W industry decline of 13% Company's performance in domestic was at 10%decline in sales volume of 2020-21.

In the International Business exports of two wheelers in 2020-21 were at 7.6 lakhunits with a growth of 12% over 2019-20. Company exited the month of March 2021 with anall-time high of 105282 two wheelers exports resulting in Q4 volume of 284098 with agrowth of 74%. Three-wheeler exports during the year reached 1.15 lakh units with adecline of 29% over 2019-20.

Sales revenue of spare parts grew by 1% in domestic and 41% in exports.

In course of the transition to BS VI compliant technology TVS Motor was the first andonly company to launch dual Fi platforms catering to consumer use cases - Eco Thrust Fuelinjection (ETFi) for enhanced fuel efficiency and Race Tuned Fuel injection (RTFi) forenhanced throttle response. Across the portfolio consumer insights were converted tothoughtful improvements that went beyond BS VI like ride modes for Apache or additionalunderseat storage for Jupiter. This enhanced portfolio was also taken to consumers in amuch loved corporate campaign "Hum Banaye Jo Aapka Dil Chahe !" this focused onTVS DNA of customer centric innovation.

Continuing with customer centric innovation beyond the BS VI transitions saw newlaunches like TVS NTORQ 125 super squad edition RTR 200 4V with riding modes Jupiter ZXDisc intelliGo and TVS XL100 Win Edition. During the year 2020-21 Company's productsbagged 10 awards of which Moped won 5 awards Motorcycles won 3 awards and Scooter 2awards.

The Company also ensured systematic company-wide initiatives to control costsprioritize capex improve productivity and above all improve health of cash flows acrossthe extended enterprise unlocking significant potential for velocity and financialreturns.

Total income of the Company including other income was $ 16783.51 Cr in the currentyear 2020-21 as against $ 16455.44 Cr in the previous year. Profit before tax (PBT) was $826.24 Cr in the current year as against $ 754.41 Cr in the previous year (afterexceptional item of $ 32.33 Cr). Similarly Profit after tax (PAT) was $ 612.04 Cr in thecurrent year as against $ 592.25 Cr in 2019-20.

The Company has always recognized its social responsibility as an integral and criticalpart of its value system. The response to CoVID-19 needed to be widespread and collective.The Company and its CSR arm the Srinivasan Services Trust (SST) undertook the followinginitiatives:

• 10 lakh masks 1.5 lakh gloves were handed to Government agencies.

• 12.5 lakh Food Packets were distributed.

• 30000 man-hours of community service.

• 4122 Villages covered with sanitization drives across states.

• Donated Disinfectant Mist Spray Cannon mounted truck to the Corporation ofChennai.

• Contributed to PM CARES fund CM Funds of Tamil Nadu and Karnataka.

Towards the employees & their families:

• Crisis Management task force deployed to ensure business continuity plans.

• 2000+ employees were seamlessly migrated to work from home with no loss ofproductivity.

• TVSM Health Centre has been operating 24/7.

• Employees & families provided sensitization about safe practices at home.

• Best Practice SOPs designed and deployed for resumption of operations.

Towards the extended enterprise:

• The supplier / dealer claim payment settlements were expedited.

• Significant benefits in the form of interest waiver schemes were introduced.

• Training for Suppliers Indian and International dealers and almost 25000 oftheir staff on best practices and SOPs in order to prepare for the opening of dealershipspost lockdown.

Towards consumers:

• Service Workshops and Road Side Assistance (RSA) programs were kept operational.

• Over 100 service camps conducted for frontline law & order and healthcareprofessionals.

• Ongoing communication on how to take care of the 2-wheeler through thelockdown(s).

• 100% ongoing adherence to strict Sanitization Protocol for all dealershipfacilities.

2. FINANCIAL HIGHLIGHTS

Details Year ended 31-03-2021 Year ended 31-03-2020
SALES
Quantitative
Motorcycles 13.42 13.63
Mopeds 6.26 6.51
Scooters 9.61 10.75
Three Wheelers 1.24 1.74
Total vehicles sold 30.53 32.63

 

Financials

(Rupees in Crores)

Revenue from operations 16750.54 16423.34
Other Income 32.97 32.10
Profit / loss before Depreciation
Finance Costs Exceptional
items and Tax Expense 1461.52 1377.96
Less:
Depreciation / Amortization /
Impairment 493.68 489.03
Profit /loss before Finance Costs
Exceptional items and
Tax Expense 967.84 888.93
Less: Finance Costs 141.60 102.19
Profit /loss before Exceptional items and Tax Expense 826.24 786.74
Less: Exceptional items 32.33
Profit /loss before Tax Expense 826.24 754.41
Less:
Tax Expense (Current & Deferred) 214.20 162.16
Profit /loss for the year 612.04 592.25
Comprehensive Income / (loss) 107.09 (118.23)
Total 719.13 474.02
Less: Dividend on
Equity Shares 166.28 166.28
Less: Dividend Distribution Tax 33.75
Balance carried forward 552.85 273.99

3. DIVIDEND

The Board of Directors of the Company (the Board) at their meeting held on 28thJanuary 2021 declared a first interim dividend of $ 2.10 per share (210%) for the year2020-21 absorbing a sum of $ 99.77 Cr. The same was paid on 12th February 2021.

The Board at its meeting held on 24th March 2021 declared a second interimdividend of $ 1.40 per share (140%) for the year 2020-21 absorbing a sum of $ 66.51 Cr.The same was paid on 9th April 2021.

Thus the total amount of both dividends for the year ended 31st March 2021aggregated to $ 3.50 per share (350%) on 475087114 equity shares of $1/- each absorbing$ 166.28 Cr. From 1st April 2020 the dividend income earned by theshareholders will be taxable in their hands at the rates applicable to them.

The Board does not recommend any further dividend for the year under consideration. Thedividend pay-out is in accordance with the Company's Dividend Distribution Policy..

The Board is not considering any transfer of amount to General Reserves for the yearunder review as it is not mandatorily required.

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE AND DEVELOPMENTS

Two-wheeler

The domestic two wheeler industry recorded a sale of 15.1 Mn units in 2020-21 adecline of 13% from 17.4 Mn units of 2019-20. It witnessed a decline of 74% in Q1.However for the rest of the year the industry revived and grew by 11% compared to sameperiod previous year. This growth was primarily led by a resilient rural economy which wasless affected due to the pandemic supported by good monsoon and agriculture growth.

The scooter industry declined by 20% with 4.5 Mn units sold in 2020-21 over 5.6 Mnunits in 2019-20. The category share declined to 29.7% in 2020-21 from 32% in 2019-20.This was primarily led by higher spread of CoVID-19 cases in urban areas stringentlockdown norms and implementation of work from home.

The motorcycle industry declined by 11% over last year. The category share ofmotorcycle grew by 1.9% to 66.3% in 2020-21. The premium motorcycle sales declined by 14%from 1.61 Mn units in 2019-20 to 1.39 Mn units in 2020-21 maintaining category share at9.2%. The commuter motorcycle category share grew 1.5% to 51.5% while volumes declined by11% to 7.8 Mn units in 2020-21 from 8.7 Mn units in 2019-20.

In international market two wheeler industry declined by 7% in 2020-21 over 2019-20.Industry was adversely impacted by the CoVID-19 related lockdowns of the demand marketsand also by supply side factors which impaired the speed to restore export supplies due toCoVID-19 during Q1. However stable price of crude oil steady rates and availability offorex and continued growth in Africa propelled the growth of exports in the remainingquarters of 2020-21.

Three-wheeler

Overall three wheeler small passenger industry (3 plus 1 segment) declined by 41% in2020-21 (from 7.46 lakh units in 2019-20 to 4.42 lakh units in 2020-21). Domestic industrydeclined by 77% and exports market declined by 22% in 2020-21 over last year.

BUSINESS OUTLOOK AND OVERVIEW

Directors are optimistic about the future but are concerned about the evolving CoVID-19scenario across the country and it's effects on consumer demand.

The second wave of rising cases could adversely impact customer sentiment however amore measured approach by regulators adopting more targeted localized responses andincreased vaccination should see minimized disruption and a swift recovery in the economy.Post normalization it is also expected that travel and tourism will bounce back in2021-22 as most of the surveys indicate customers willingness to travel once normalcyreturns. This is likely to result in a 10-11% growth in service sector.

On the rural front 2021-22 is likely to witness a normal monsoon and hence agricultureis expected to grow by 3.5%-4%. Since much of the sale of two wheelers are in semi urbanand rural areas two wheeler industry could see some benefit from this.

Despite the rising second wave of active cases the Company remains confident thatadverse impact would be lower and bounce back swifter. This outlook of cautious optimismis built upon on one hand the Company's own supply chain preparedness and on the othera belief that the administrative responses would be far more measured targeted andwidespread vaccination drive to "Break the Chain".

Social Distancing and Work From Home practices will continue. These new long-termpractices of social distancing could see consumer preferences change towards personalmobility leading to new demand in the Two wheeler industry. The Company is cognizant ofthis opportunity and well poised to leverage this opportunity with its superior productofferings across the widest range of personal mobility needs.

Export of two wheelers is likely to see a growth during the year fueled by consumptiongrowth and stable economic & political situation in all operating geographies. Stablecrude oil prices will have a positive impact on export market growth in oil dependenteconomies of Africa and LATAM.

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 83592units of BMW 310cc motorcycle till date.

New Product Launches and Initiatives

During the year 2020-21 the following new products and variants were launched.

TVS Jupiter:

TVS Jupiter reached 4 Mn+ happy customers during FY'20-21.

To continue the journey of providing "Zyada ka Fayda" ZX Disc intelliGO and asheet metal wheel variant was introduced in this period.

TVS Jupiter ZX Disc intelliGO was launched in February 2021 making it the first 110ccscooter to have Stop-go technology (idle stop / start). TVS Jupiter ZX Disc intelliGOfurther enhances the Zyada philosophy by reinstating Zyada Convenience Zyada Mileage andalso enhancing technologically advanced imagery. The non alloy wheel variant was launchedin October 2020 catering to more price sensitive customers who are looking foraffordability and utility led features and has received positive response across markets.

To sustain the strong brand association and to establish Jupiter offers better featuresand higher value than others in the segment campaign named 'Har Scooter se Zyada' wasaired with high frequency during festive season and was again promoted in Q4 for sustainedmind share.

TVS Apache:

TVS Apache Series has been a pioneer in race performance and introduced many industryfirsts and best-in-class offering. As a brand keeping in view of the evolving customerneeds it has proudly upheld the tradition this year as well. The Apache series achievedglobal sales milestone of 4 Million in the month of October 2020.

The customer experience is further enhanced by the presence of exquisite brandexperience program with Apache Owners Group (AOG) APP (Apache Pro Performance) ApacheRiding Experience (ARE) TVS Racing Training School Women's Training and Selection andOne Make Championship which continue to develop aspiration. The brand witnessed it'snever seen before increase in customer experience program with 172 activities in just 4active months. Leading the 200cc sports segment with its technological prowess the TVSApache RTR 200 4V was introduced with ride modes. This is not just an industry first butalso a technology usually seen in 650cc and above motorcycles. The three ride modes are"Sport Urban and Rain" with varying acceleration and ABS response; all fromthe same engine. Another development this year was upgrade of Apache RTR 160 4V with 17.63PS of power making it the most powerful 160cc motorcycle.

Leading the two wheeler industry with another big breakthrough was the launch of firstever Augmented Reality experience by a two wheeler OEM- TVS ARIVE. This app allowscustomers to view the TVS Apache series motorcycles right before their eyes from theplace of their choice. Adding to that it offers detailed information about the machinewith the options of booking a test ride and placing an order instantly.

TVS XL100 HD i-TouchStart:

TVS XL100 HD i-TouchStart crossed a new milestone of 4 million customers since itslaunch in 2015. The year 2020 was the 40th anniversary year of TVS mopeds and aspecial edition variant - "Win Edition" was launched to mark this celebration.

Win edition was launched with many appealing style features including a new color'Delight Blue' chrome finish mirrors metal shield for the platform diamond patternseats and chrome style elements. HeavyDuty series has been the most popular one among XLcustomers and the new edition would add more interesting style option for them to choosefrom. This variant comes with useful features like easy on-off combo switch and USB mobilecharging. Also the Company has introduced entry level variants with kick start to provideaffordable option to the customers with BS VI technology benefits.

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 future mobility experience. It comes equipped withSmartXonnect advanced features like Geo-fencing Ride Statistics Telematics Remotecharge assist and Navigation assist along with 117 connected features. With a top speed of78 kmph a range of 75 Km in a single charge and features like Q-Park assist the TVSiQUBE redefines style comfort and riding experience. A dedicated public chargingecosystem spanning across 10 dealerships in Bengaluru further enhances customer ease andexperience.

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 on

Electric Vehicles the TVS iQUBE is a strong contender in this space in the times tocome.

TVS NTORQ:

TVS NTORQ was launched in February 2018 and it was Company's first 125cc product in theScooter segment. Designed for Gen-Z TVS NTORQ provides a revolutionary riding experiencewith cutting edge technology style and performance.

Keeping the core customers in mind this product has been provided with manytechnologically superior features like Bluetooth connectivity- the first ever scooter tohave this feature.

TVS NTORQ became one of the fastest growing scooters crossing 1 lakh sales within 6months of launch. The product continues to delight customers and has garnered severalaccolades since its inception.

In October 2019 TVS NTORQ Race Edition was introduced in the market and it foundexceptional resonance with customers. It is currently the only scooter with a Race TunedFuel Injection system with Best-in-class Performance in its category.

In FY 2020-21 TVS NTORQ introduced a special variant in the portfolio

- Super Squad Edition in association with Marvel Studios inspired from the epiccharacters of the Marvel Avenger's series

- a first of its kind association in the two wheeler industry in India. This resultedin significant growth of the brand (13% growth from July-March over LY) and the variantcurrently contributes to 30% of the overall portfolio in just 6 months of launch.

Domestic Sales

The Company achieved sales of 21.6 lakh units of two wheelers in the domestic marketcompared to sales of 24.1 lakhs in 2019-20. The Company outperformed the broader Industrywhich declined by 13%.

In domestic motorcycles Company achieved sales of 6.3 lakh units and registered adecline of 17% over 2019-20. The TVS Apache grew better than the Premium motorcycleindustry with sale of 3.3 lakh units posting a decline of only 11% while the PremiumMotorcycle industry declined by 14% in 2020-21 against 2019-20.

In domestic scooters Company achieved sales of 9.2 lakh units and registered a declineof 10% over 2019-20. However Scooters volume growth was higher than Industry supported byproduct interventions in Jupiter and launch of Super Squad edition in TVS NTORQ.

Exports sales - two-wheeler and three-wheeler

The Company's two wheeler exports in 2020-21 were 7.64 lakh units and witnessed animprovement with a growth of 12% over 2019-20.

Three wheeler exports during the year reached 1.15 lakh units and recorded a decline of29% over 2019-20.

Opportunities

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 needfor a personal mobility solution. This could emerge as an area of opportunity for twowheelers.

The move towards alternative-energy based mobility solutions is needed and has beenreceiving considerable policy support. In light of the revised priorities post CoVID-19the speed and extent of the policy support may alter modifying the rate of change.

The Company will be closely studying such factors and is well poised to leverage thisspace through appropriate offerings across its wide stable of technology products andbusiness solutions. The EV portfolio of the Company today has TVS iQUBE which had beenvery well received in Bengaluru. The TVS iQUBE was then launched in New Delhi as wellbasis the strong pre-launch online interest evinced by the customers from New Delhi.Across its 2 cities there is a 8-week order-book and the Company is looking to service thesame expeditiously. Through the year The TVS iQUBE footprint will expand to 20 moreIndian cities. The portfolio also is set to expand to newer formats including a 3Wversion.

RISKS AND CONCERNS Domestic Business:

The Government has already started the vaccination drive and has covered some of thevulnerable sections frontline responders senior citizens and individuals withco-morbidities. The stated intent is to inoculate 30% of the population by September.However a widespread second wave could result and contribute to delay of this plan.While it is expected that the response to the second wave will be very measured targetedand localized there will be economic implications / impact of the counter measures. Thiscould include:

1. Impact from the demand side: Consumption may take a hit. The uncertainty of the dateand speed of resolution might further weaken the overall consumer sentiment and affectdemand. The severity of impact is likely to be higher at the lower to mid income levelwho form bulk of the commuter 2W consumers.

2. Impact from the supply side: Labour reverse migration leading to non-availability ofmanpower at tier-2 and tier-3 suppliers affecting the supply of parts and dailyoperations. The transit per se of goods should not be impacted but some localizedhubs may see lockdowns impacting productivity. The Company has taken appropriate steps tominimize the impact of such risks based on learnings from last year.

3. Semi-conductor availability: The increase in demand for consumer goods andunexpected growth in auto sector had led to supply shortfall of semi-conductors and thelead time for these goods have increased from 3 months to 18 months. These semi-conductorsform a critical component in two wheelers too. The shortfall of semiconductors is likelyto continue and pose as a risk in meeting the production demand.

International Business:

1. Container availability - Due to continued high traffic container movement from Chinato North America and Europe post CoVID-19 outbreak there has been shortages of containersat Indian ports. This clubbed with increased exports from India is posing further shortageof space availability or availability at higher costs. This situation is expected tocontinue and result in delayed supplies to global customers.

2. Some of the Company's target markets/countries might witness a rapid spread ofCoVID-19 second wave thereby lowering economic activity. A sustained drop in commodityprices and exports could reduce foreign exchange income in some of the export countries.The effect of second wave is already seen in LATAM Bangladesh and Tanzania which areimportant export destinations. The Company has looked at options to minimize the impact byleveraging opportunity in less affected countries and by launching new products andleveraging financing solutions for customers.

3. Country specific Socio economic political factors. The Company keenly tracksprogress of country specific factors which could impact its ability to service itsconsumers like: a. Ban of two wheeler imports in Srilanka - Sri Lankan Government bannedimport of all motor vehicles (except special category of vehicles) since March 2020. Thisimport ban is put in place to preserve the foreign currency reserve. b. Political turmoilin Myanmar: Exports from India and PT TVS Indonesia to Myanmar is affected due to thecurrent political situation there. This is expected to affect the exports.

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)

Total Quality Management (TQM) remained key focus in the organization during thepandemic to mitigate the business risks during uncertain industry environment in the firsthalf of the year and to drive the organization towards growth path in the second half.

In Daily Work Management (DWM) emphasized culture of speed and rigor in executionduring the pandemic through 'new normal' way of working with Daily management by seniorleadership team on revenue achievement working capital management and CoVID-19 riskmitigation. Taskforce-based approach in specific geography / products helped in retainingmarket share during the year inspite of challenges in the market. Strengthened Crossfunctional management 5S and permeation of 'Focus on process for results' in front-endtowards dealer transformation. The Company's plant in Himachal Pradesh received 'Award forExcellence in Consistent TPM Commitment.' Total Employee Involvement culture wassignificantly permeated towards profitability of the organization by promoting 'ProfitImprovement Plan'. Both workmen Executives & Managers significantly focused onimplementing cost reduction towards operational improvements and waste elimination tosupport and enable lower spending during the year. Theme of 'waste elimination' in areasof inventory management and asset management helped the Company to improve its workingcapital management.

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 import substitution/ localization to reduce material costs. During the year focused working capitalmanagement and improved operating performance helped the Company to generate significantfree cash flow. These proceeds are being used to reduce the debt. Rigorous focus on leantrade stock with the dealers also enhanced the financial health of the channel partners byreducing non-value adding costs and improving speed and freshness across the entire supplychain. Waste elimination productivity improvements and process improvements throughmultiple means including small scale automation will continue across the supply chainduring 2021-22.

In the area of fixed cost similar systematic approach of deployment of cost reductionis being done with significant and increasing digitalization of internal processes toeliminate cost and enhance speed.

Research and Development

The year 2020-21 witnessed launch of products with many segment firsts from theCompany. TVS Apache 200 4V was launched with Ride Modes with technical breakthrough inoffering functionality with Mechanical Throttle Body. The engine ride modes ABS modes andadjustable suspension adjustable control levers stand as good examples of R&D'spursuit of innovations that enhance customer experience with the products of the Company.The complete product range for both domestic and international markets has receivedupgrades and refreshes with proliferation of the TVS SmartXonnect technology offeringconnected experience on many more offerings.

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 providing advancedsafety systems and sustainability. The Company continues to leverage global talent throughseveral co-operations with Indian and global expert organizations.

Research is intensified in chosen fields of science and engineering in order to befuture ready.

TVS Racing an arm of the Research and Development department had a very successfulseason 2020. India's oldest factory racing team has seen consistent investment towardssignificant engineering advancement of motorcycles and scooters used for racing. Thetechnology and engineering advancements implemented in the Racing products are developedthrough research projects by the internal R&D team leading to a swift transfer ofsuch advancements to the mass production products. The TVS Racing team garnered 100%podium finish in the 24 races participated and won 10 out of 10 championships.

Information Technology

The Company continues to implement several projects to improve its efficiencytransparency and process control across supply chain from supplier plant dealer andultimately consumer. Major focus areas are improvements at factory retail management andimproving customer experience at dealerships. Various initiatives on industry 4.0 arebeing adopted for improving quality productivity traceability and waste elimination.

This year saw the organisation contend with a rapid transformation of workingconditions to facilitate and accommodate a greater proportion of WFH (Work From Home).The Company was able to ensure data and information security while minimizing loss ofproductivity by rapidly evolving policies and deploying tools like VPN networks MS TEAMSthat facilitated collaboration and ensure employee productivity. While production willstill need people at the plants in all other areas the Company has evolved to be able toadapt and deal with any future situation which needs an evolving responsive blend of workpractices blending WFH Work From Anywhere (WFA) with the traditional office model. In2020-21 the Company launched TVS A.R.I.V.E aimed at transforming customerexperience of virtual exploration of two wheelers through an innovative mobileapplication. The Augmented Reality Interactive Vehicle Experience (A.R.I.V.E) app allowsan in-depth product exploration and purchase experience using AR technology from theconvenience of the homes. This first in its segment app will offer a superior holisticand engaging experience for its customers. As part of continuous improvement andtechnology benchmarking the Company's IT systems were audited by external experts andrecommendations were implemented. The Company has enhanced information security byadopting new cyber security tools. The Company has engaged one of the major consultingfirms to do benchmark study on cyber security framework and implemented controls based onrecommendations. The Company has enhanced security by implementing multi-layered firewallsand deployed security control centres. The Company has formed a cyber-security governancecouncil consisting of senior management and industry experts for improving its cybersecurity.

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.

In 2020-21 the Company established a data management and governance office and hasbegun a systematic program to drive discipline in how data is managed and governed in the21st century. In addition a study to understand potential implications of theimpending personal data protection bill has been conducted to ensure seamless complianceand necessary actions have been identified to be undertaken in FY 2021-22. During theyear the Company expanded the use of data engineering reports with live data and Machinelearning (ML) based decisions across its products and business functions. In customer& commercial processes data engineering and power BI based visualizations have beenbuilt to provide real-time insights and actionable recommendations. Real-time dashboardshave been created for connected vehicles and operations. Additionally ML engines andcomputer vision frameworks pilots are deployed at multiple points of the organisation toexpedite the digital transformation of internal processes.

INTERNAL CONTROL AND THEIR ADEQUACY

The Board is accountable for evaluating and approving the effectiveness of the 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. TheCompany 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 an Independent audit firmas well as internal audit team and presented to the Audit Committee. Based on theperiodical testing the framework is strengthened from time to time to ensure adequacyand effectiveness of Internal Financial Controls.

KEY FINANCIAL RATIOS

As required under Regulation 34 of the Listing Regulations there was a significantchange in Debtors turnover ratio and Debt equity ratio. Details of changes are:

Ratios UOM

Standalone

Consolidated

2020-21 2019-20 2020-21 2019-20
Debtors Turnover Ratio Times 15.57 12.19 13.96 11.35
Debt Equity Ratio Times 0.06 0.44 2.46 2.85
Return on Net worth % 15.72 17.01 16.72 19.36

The ratios in the current year have improved compared to the previous year primarilyreflecting better operational performance and reduction in borrowing.

Return on Networth was adversely affected mainly due to impact of CoVID-19 during thefirst quarter of the financial year.

NON-CONVERTIBLE DEBENTURES

The Company had issued and allotted 5000 unsecured redeemable non-convertibledebentures (NCD) of face value of $ 10 Lakhs each on 15th May 2020 aggregatingto $ 500 Crores at 7.5% p.a. and redeemable at the end of 3rd year. The NCDswere listed with National Stock Exchange of India Limited (NSE) on 19th May2020.

Environment Occupational Health & Safety:

Company's manufacturing facilities have been certified under Integrated ManagementSystem (IMS). ISO 14001 (Environment Management System) and ISO 45001 (Occupational Health& Safety Management System) standards and are integrated into a common system makingit leaner and more efficient.

Company has reduced 21% specific water consumption with respect to previous year.Company's approach was "Demand side Water management" which best utilizes theavailable water. The water management framework has - water resource management waterdistribution & supply management management of water by end-users and finally wastewater management.

The renewable power contributes to 84% in overall share of power. Out of which 76% ofenergy utilized from Wind power and 8% of energy trapped from Solar. These initiatives ofrenewable energy resulted in emissions reduction of CO2 58812 tons during2020-21.

In process design efforts have been taken to minimize the generation of waste byintroduction of cleaner technologies. With continuous safety improvements average PlantSafety Rating System score has improved. Proactive hazard control measures have beenimplemented which resulted in reduction of first aid injuries. Towards sensitizingemployees on safety around 58000 hours of safety training was provided coveringemployees of all categories.

During lockdown due to pandemic the Company's Occupational Health Centre (OHC)provided 24x7 support to employees and their families. Counselling was done to patientsand family members through online and tele-consultation. The medical team assistedemployees and their families for hospitalisation across India and for home care.

Post lockdown all employees were screened while onboarding to duty. Homeopathymedicines immunity boosting medicines were distributed to all employees. Towards creatingawareness about CoVID-19 online sessions were conducted with experts. Also an on-goingcampaign to drive CoVID-19 appropriate behaviour by all employees is being conducted viaawareness videos newsletters intranet and posters.

The Company has announced that it would cover the cost of vaccination for all employeesand their families. 45 year plus employees have been reached out to with special camps insync with local health authorities. This is not only an individual health practice but asa duty as a member of the community to build collective immunity and help "BREAKTHE CHAIN".

HUMAN RESOURCE DEVELOPMENT (HRD)

Constituents of Human Resources Development framework followed at the Company includeWorkforce planning Employee engagement Performance & rewards Learning andDevelopment Career & Succession planning and Organization Development. Towardssustenance and delivering improved results these constituents have a structured approachpolicies and standard operating procedures which are reviewed and updated periodically.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.

TVS Institute of Quality & Leadership (IQL) was certified as a Corporate Universityin 2018 by Global Council of Corporate Universities. This institute set on 75 acrescampus near Attibele Karnataka focuses on cultural capabilities collectivecapabilities supporting strategy delivery and enhancing sustainability.

Towards collective capability and supporting strategy IQL adapted the concept ofCommunity of Practice (CoP) in the least 4 years. During 2020-21 three CoPs were launchedfor Operations Research (OR) Reliability Engineering and TRIZ (Inventive problemmethodology). These CoPs contributed significantly for tangible and intangible businessimpact. Skills training center in IQL supported the ramping-up of production volumes bytraining the freshers for the Company's plants and also for suppliers. Skills trainingcenter trained 2584 person in the areas of assembly fabrication painting CKD for IB.

With the constrains of pandemic IQL organized virtual Learning Convention 2021 withLearning Conference and Learning Showcase. The conference was organized with 4 themes ofpanel discussion namely Social Learning to drive Business excellence Competency to driveRetail excellence CoPs for Breakthrough Management and Accelerating DigitalTransformation with powerful key note addresses and case studies. Dr. David GreenhoodDirector of Industrial Engagement The University of Warwick addressed the LearningConvention on the theme of "Getting Future Ready" This virtual event wasattended by over 1200 Managers and Executives.

The Company continues to maintain its record of good industrial relations without anyinterruption in work. As on 31st March 2021 the Company had 5035 employees onits 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 Companies Act 2013 (theAct 2013) with respect to Directors' Responsibility Statement it is hereby stated-i.that in the preparation of annual accounts for the financial year ended 31stMarch 2021 the applicable Accounting Standards had been followed along with properexplanation relating to material departures; ii. that the Directors had selected suchaccounting policies and applied them consistently and made judgments and estimates thatwere reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for the yearunder review; iii. that the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; iv. that the Directors had prepared the annual accounts for thefinancial year ended 31st March 2021 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 compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.

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 25 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 projects/ programmes fallingwithin the CSR activities specified under the Act 2013 as mandated by the Ministry ofCorporate 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 Srinivasan Services Trust for an amount of $18.38 Cr for undertaking similar programmes / projects constituting more than 2% of theaverage net profits of the Company made during the three immediately preceding financialyears towards CSR spending for the financial year 2020-21.

Presently SST is working in thousands of 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 focussed on the areas of economic developmenthealth care education environment social infrastructure and water conservationactively in 3000 villages. SST will focus on 2000 more villages also so that all theseareas are covered in the next 3 years.

It may also be noted that the CSR Committee has approved the projects or programmes tobe undertaken by the SST for the year 2021-22 preferably in local areas including mannerof execution modalities of utilisation of funds and implementation schedules and alsomonitoring and reporting mechanism for the projects or programmes as required under theCompanies Amendment Act 2020.

The Company has also ensured that none of the projects undertaken through SST requiresimpact assessment as these projects are within the threshold limit of $ 1 Cr. As requiredunder Section 135 of the Act 2013 read with Rule 8 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 the annual Report on CSR containing the particularsof the projects / programmes approved and recommended by CSR Committee and approved by theBoard for the financial year 2020-21 are given by way of Annexure IV attached to thisReport.

7. FINANCIAL PERFORMANCE 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. Intellicar Telematics PrivateLimited Bengaluru 12. TVS Motor Company (Europe) B.V. Amsterdam 13. TVS Motor(Singapore) Pte. Limited Singapore 14. The Norton Motorcycle Co Limited UK

15. PT TVS Motor Company Indonesia Jakarta

16. Sundaram Holding USA Inc Delaware USA

17. Green Hills Land Holding LLC South Carolina USA

18. Components Equipment Leasing LLC South Carolina USA

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

20. Premier Land Holding LLC South Carolina USA

Associates

- Emerald Haven Realty Limited Chennai and its subsidiaries

- Ultraviolette Automotive Private Limited Bengaluru

- Tagbox Solutions Private Limited Bengaluru

Associates of TVS Motor (Singapore) Pte Ltd

- Tagbox Pte Limited Singapore

- Predictronics Corp. USA

- Scienaptic Systems Inc. USA

- Altizon Inc USA

PERFORMANCE OF SUBSIDIARIES

Sundaram Auto Components Limited (SACL)

Total income of SACL was $ 463 Cr in the current year as against $ 530 Cr in theprevious year 2019-20.

SACL incurred a loss of $ 19.08 Cr including an exceptional item of $ 9.36 Cr duringthe year 2020-21 as against PBT of $ 6.44 Cr in the previous year.

TVS Housing Limited (TVSH)

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

TVS Motor Services Limited (TVS MS)

TVS MS was initially the investment SPV of the Company for funding TVS Credit ServicesLimited (TVS CS). Pursuant to order of the National Company Law Tribunal Chennai (NCLT)TVS MS transferred its investments in equity shares of TVS CS in the previous year tothe Company for the redemption of its preference shares held by the Company. TVS MS nowholds 0.57% only in TVS CS and TVS MS continues to be a 100% subsidiary of the Company.

TVS Credit Services Limited (TVS CS)

TVS CS is the retail finance arm of the Company for financing of two wheelers.

During the year 2020-21 TVS CS's overall disbursements registered at $ 8627 Cr ascompared to $ 7628 Cr in the previous year registering growth of 13%. During the yearunder review the assets under management are around $ 11200 Cr as against $ 9215 Crduring the previous year registering a growth of 21%. Total income during the financialyear FY 2020-21 increased to $ 2241 Cr from $ 2000 Cr during the financial year anincrease of 11.6% over the previous year.

The profit before tax and exceptional items for the year stood at $ 105 Cr as against $218 Cr during the previous year and the reduction is due to loss of business during firstquarter of the year increase in investment on recovery related initiatives and higherlevel of CoVID-19 related provisions. The following companies are the subsidiaries of TVSCS.

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.

Intellicar Telematics Private Limited (Intellicar)

During the financial year effective 31st December 2020 the Company acquiredthe entire equity shares of Intellicar Telematics Private Limited (Intellicar) a start-upcompany and thereby it has become a wholly owned subsidiary of the Company. Intellicarprovides advanced fleet management solutions through an integrated platform powered by IoTtechnologies coupled with strong analytics and data management capabilities. It will helpaccelerate the ongoing digital initiative of the Company that are targeted at deliveringenhanced customer experience.

Total income of Intellicar was at $ 7.88 Cr in the current year as against $ 16.11 Crin the previous year 2019-20. Intellicar incurred a loss of $ 4.83 Cr in the year 2020-21as against loss of $ 0.93 Cr in the previous year 2019-20.

PT. TVS Motor Company Indonesia (PT TVS)

The Indonesian two wheeler Industry declined by 30% during the year 2020-21 at around3.2 million units.

During the year under review PT TVS achieved sales in three wheelers and recordedsales of 4420 units as against 7806 units of sales during the previous year and 58901nos. of two wheelers as against 53641 nos. of last year thereby registering a growth of10%.

The growth in sales numbers coupled with margin improvement enabled PT TVS to achievea positive EBITDA of USD 3 million for the full year as against a USD 0.50 million of lastyear. It is also worthwhile to note that the Company achieved break even by postingoperating profit for the financial year 2020-21.

TVS Motor Company (Europe) B.V

TVS Motor Company (Europe) B.V. was incorporated with a view to serve as specialpurpose vehicle for making and protecting the investments made in overseas operations ofPT TVS.

TVS Motor (Singapore) Pte. Ltd

TVS Motor (Singapore) Pte Limited a wholly owned subsidiary is being leveraged tooperationalize a digital technology organization focused on delivering high qualitydigital solutions that address real life business challenges by harnessing the power ofAnalytics Artificial Intelligence Augmented Reality Machine Learning and Internet ofThings. The solutions and offerings are focused in the areas of automotive and fintechindustries that have direct relevance to the Company and its subsidiaries.

TVS Motor (Singapore) Pte Limited had made investments aggregating USD 19.52 Mn inAltizon Inc (USA) in the area of Digital Manufacturing focused on Digitizing LegacyFactories Predictronics Corporation (USA) in the area of Digital Manufacturing focused onPredictive Maintenance Scienaptic (USA) in the area of Credit Services focused on CreditDecisioning Underwriting and Collections and in Tagbox (Singapore) in the area of FleetManagement focused on Granular Asset Tracking.

Despite the severe negative impact on businesses across the globe due to CoVID-19 theCompany invested entities have performed very well with Predictronics Scienaptic andTagbox registering double digit revenue growth with improved operational metrices comparedto the previous financial year. Thanks to the growth in digital technologies driven byCoVID-19 it is expected that the invested start-ups will deliver material growth in FY2021-22 with solid financial and operational results while continuing to add value to theongoing digital transformation initiatives in group companies.

During the year the Company has invested a sum of SGD 35.44 Mn in the ordinary sharesof TVS Motor (Singapore) Pte Limited.

The Norton Motorcycle Co Limited UK (formerly known as Project 303 Bidco Limited)

In April 2020 The Norton Motorcycle Co. Limited UK (Norton) (formerly known as Project303 Bidco Limited) a wholly owned subsidiary of TVS Motor (Singapore) Pte Limitedconcluded an asset purchase transaction which included the brand "Norton" andother associated brands trademarks and certain other assets from Norton MotorcycleHoldings Limited (in administration) & Norton Motorcycles UK Limited (inadministration).

Post-acquisition a new state-of-the art facility is being created in Solar ParkSolihull near Coventry. The facility will focus on producing high end premium motorcycles.During FY 2020-21 Norton focussed on building new brand vision and strategy enhancingthe organisation strength establishing supply chain network product readiness with highquality standards planning product and marketing strategy for future. Production andsales from new facility will commence during the first half of FY 2021-22.

Norton will continue to invest in development of new premium motorcycles R&D anddeveloping the dealer network across the globe.

Sundaram Holding USA Inc. (SHUI) & its subsidiaries

Sundaram Holding USA Inc. (SHUI) a company established under the applicable provisionsof Laws of The United States of America is owned by Sundaram Auto Components Ltd (SACL)(wholly owned subsidiary of the Company) and Sundaram-Clayton Limited (SCL) (holdingcompany of the Company).

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 2020-21 SACL and SCL have invested a sum of USD 3 Mn and USD 7.4 Mn inthe ordinary shares of SHUI and holds 68% and 32% respectively of the total capital ofSHUI as on 31st March 2021.

Post CoVID-19 and with the US economy recovering SHUI is preparing production andsupply chain activities and is likely to commence the commercial production by first halfof 2021-22.

Associates:

Emerald Haven Realty Limited (EHRL)

Chennai residential real estate market was severely impacted by CoVID-19 due tolockdown restrictions imposed job losses pay cuts and postponement of purchase decisionby customers impacting enquiries and absorption.

In H1 FY21 absorption fell sharply and no new projects were launched by major playersleading to an increase in inventory overhang. Construction activities at the project siteswere also impacted due to lockdown restrictions non-availability of migrant workforce andraw material supply constraints. In line with the overall industry trend EHRL faced achallenging H1 with low walk-ins low sales and collections higher cancellations andslowing down of construction activities across projects.

However in H2 FY21 EHRL registered a sharp increase in sales collections andconstruction activities compared to H1 83% of annual sales 70% of annual collections and61% of construction activities were done in H2 FY21.

The Company has completed development of 1.4 Million Sft till date and the balance areaunder development as on date is 4.5 Million Sft.

Subsidiaries of EHRL

1. Emerald Haven Development Limited;

2. Emerald Haven Projects Private Limited;

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

4. Emerald Haven Realty Developers (Paraniputhur) Private Limited;

5. Emerald Haven Property Development Limited;

6. Emerald Haven Town and Country Private Limited;

7. Happiness Harmony Property Developers Private Limited; and

8. Emerald Haven Towers Limited.

Ultraviolette Automotive Private Limited (UV)

UV incurred a loss of $ 1.61 Cr in the year 2020-21 as against loss of $ 3.49 Cr in theprevious year 2019-20. UV is a start-up company engaged in developing electric mobilitysolutions.

Tagbox Solutions Pvt Ltd India / Tagbox Pte Ltd Singapore (Tagbox)

Total income of Tagbox Solutions Private Ltd was at $ 6.1 Cr in the current year asagainst $ 4.6 Cr in the previous year 2019-20. Tagbox Solutions Private Ltd earned a PBTof $ 0.9 Cr in the year 2020-21 as against PBT of $ 0.3 Cr in the previous year 2019-20.

Total income of Tagbox Pte Ltd was at $ 0.11 Cr in the current year as against $ 0.13Cr in the previous year 2019-20. Tagbox Pte Ltd incurred a loss of $ 1.1 Cr in the year2020-21 as against loss of $ 0.6 Cr in the previous year 2019-20. Tagbox is a start-upcompany which provides an IoT based monitoring solution to predict and preventunfavourable events optimize reefer fleet and routes and manage inventory.

Predictronics Corp (Predictronics) USA

Sales of Predictronics was at $ 7.8 Cr in the current year as against $ 6.6 Cr in theprevious year 2019-20. Predictronics incurred a loss of $ 4.6 Cr in the year 2020-21 asagainst a loss of $ 5.5 Cr in the previous year 2019-20. Predictronics is a start-upcompany engaged in predictive analytics solution for critical assets vertical softwarefor industrial robots and consulting services.

Scienaptic System Inc (Scienaptic) USA

Total income of Scienaptic was at $ 26.7 Cr in the current year as against $ 18.9 Cr inthe previous year 2019-20. Scienaptic incurred a loss of $ 19.3 Cr in the year 2020-21 asagainst loss of $ 12.0 Cr in the previous year 2019-20. Scienaptic is a start-up companyengaged in AI powered Advanced underwriting decisioning platform.

Altizon Inc (Altizon) USA

Total income of Altizon was at $ 4.1 Cr in the current year as against $ 5.3 Cr in theprevious year 2019-20. Altizon incurred a loss of $ 8.6 Cr in the year 2020-21 as againstloss of $ 13.9 Cr in the previous year 2019-20. Altizon is a start-up company whichprovides an industrial IoT helping enterprises use machine data to drive businessdecisions.

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 the Listing Regulations along with a separate statementcontaining the salient features of the financial performance of subsidiaries / associatesin the prescribed form. The audited consolidated financial statements together withAuditors' Report form part of the Annual Report.

The financial statements of the subsidiary companies will be made available to theShareholders on receipt of a request from any Shareholder and it has also been placed onthe website of the Company. This will also be available for inspection by the Shareholdersat the Registered Office during the business hours as mentioned in the Notice of AGM.

The consolidated Profit Before Tax of the Company and its subsidiaries & associatesamounted to $ 822 Cr for the financial year 2020-21 as compared to $ 865 Cr in theprevious year.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL

Directors' appointment / re-appointment / cessation

During the year under review the Board has appointed Prof. Sir Ralf Dieter Speth (SirRalf) as Non-Executive Non-Independent Director (NE-NID) and Mr Kuok Meng Xiong (MX) asNon-Executive Independent Director (NE-ID) on the board at its meeting held on 24thMarch 2021 on the recommendation of the Nomination and Remuneration Committee.

Prof. Sir Ralf Dieter Speth (Sir Ralf)

Sir Ralf is an outstanding engineer and brings with him exemplary experience from someof the highest echelons of the global automotive industry. He has served as the ChiefExecutive Officer of Jaguar Land Rover (JLR) and during his stint JLR developedstrategies designs styling and products for making it one of the most respectedautomotive and luxury brands in the world. Sir Ralf is widely acclaimed for his tremendousleadership at JLR and for transforming it into the global marquee it is today. Hecontinues to serve on the board of JLR as Vice Chairman. He began his career in BMW anddid his PhD at Warwick Manufacturing Group University of Warwick and later he joined FordMotor Company's Premier Automotive Group (PAG) where he was responsible for productplanning and quality. Later he moved to the chemical giant Linde where he ran globaloperations.

Sir Ralf's passion for technology deep knowledge and tremendous connect with thecurrent global automotive industry including in terms of engineering marketing andpeople and his deep insights and guidance academic knowledge and rich practicalexperience in automotive industry will be invaluable to the management team as the Companyembraces the future of mobility. Sir Ralf will mentor the Company and its management.

Then the Board considered his appointment as an additional and NE-NID of the Companytill the ensuing annual general meeting and his appointment as a Director is subject tothe approval of the shareholders liable to retire by rotation.

Mr Kuok Meng Xiong (Mr MX)

Mr MX is the scion of the reputed Kuok Group in Singapore and from one of Asia's mostrespected business houses running Wilmar one of the largest grain trading businessShangri La Hotels and real estate business globally.

Mr MX is the Founder & Managing Partner of K3 Ventures a Singapore-based venturecapital investment firm. In the last 8 years he has invested in and partnered withvisionary founders of category-leading companies that drive innovation in today's world.The K3 Ventures portfolio comprises 70 companies including ByteDance Grab PalantirPlanet Perfect Day Aspiration Genki Forest SpaceX Airbnb and Next Gen Foods.

Mr MX serves as a director on the boards of ByteDance (Singapore) Next Gen FoodsSoCash Logivan and the Anglo-Chinese Schools Foundation. He is also a Senior Advisor toTPG Capital.

Mr MX started his career at the Group's Shangri La Hotels expanding it to Europe WestAsia and Sri Lanka. He started the venture firm K3 where he has led early investments inmost of the world's leading startups in technology field and many Asian unicorns.

Mr MX strengths include his experience of helping build and manage a hotel chain aswell as growing up in a family that values relationships over short-term monetary gains.While recommending his co-option on the board as NE-ID NRC considered his experience withdigital technology and start up would be more helpful to sourcing as well as forinvestments by the Company in digital start-ups.

Mr MX achievements at young age and his varied insights would be helpful to theCompany's diversification as he ceded several companies in the last 10 years and hisappointment on the board would certainly be a great asset to the Company and he wouldbring a unique mix of strong corporate values and a clear vision of the future digitalworld. Then the Board considered his appointment as an Additional Director of theCompany till the ensuing annual general meeting and appointment as a NE-ID for a periodof five consecutive years effective 24th March 2021 is subject to the approvalof the shareholders not liable to retire by rotation. The Company is seeking approval ofthe shareholders for the appointment of Prof. Sir Ralf Dieter Speth as NE-NID and Mr KuokMeng Xiong as NE-ID for a term of five consecutive years effective 24th March 2021 atthe ensuing AGM.

During the year under review Mr Rajesh Narasimhan tendered his resignation as aNon-Executive Non-Independent director of the Company with effect from the close ofbusiness hours on 24th March 2021 due to his various business commitments andincreased responsibilities within the group.

The board also noted that post resignation / appointment of NE-NID / NE-ID thecomposition of the Board is in compliance with half of the Board consisting ofNon-Executive Independent Directors as required under the Listing Regulations.

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. Mr Sudarshan Venu and Mr K N Radhakrishnan Directors are liableto retire by rotation at the ensuing AGM and being eligible offer themselves forre-appointment.

The Directors have recommended their appointment / re-appointment for the approval ofshareholders. Brief resume of the Directors are furnished in the Notice convening the AGMof the Company.

Independent Directors (IDs)

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

On 5th March 2019 the IDs viz. M/s. T Kannan C R Dua Prince Asirvathamand Hemant Krishan Singh were reappointed for the second term of 5 consecutive years from14th July 2019. Mrs Lalita D Gupte and Mr R Gopalan were appointed asAdditional and Non-executive Independent Directors for a term of 5 years by the board atits meeting held on 23rd October 2018 and 30th April 2019respectively and the same were approved by the shareholders at the AGM held on 22ndJuly 2019. The terms of appointment of IDs include the remuneration payable to them by wayof fees and profit related commission if any. The Company is seeking approval of theshareholders for the appointment of Mr Kuok Meng Xiong as NE-ID for a term of fiveconsecutive years effective 24th March 2021 at the ensuing AGM.

The terms of IDs cover inter-alia duties rights of access to informationdisclosure of their interest / concern dealing in Company's shares remuneration andexpenses insurance and indemnity. The IDs are provided with copies of the Company'spolicies and charters 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'swebsite in the link as provided in page no. 85 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 Companies Act 2013 and obtained ID registration certificate and renewed the same forfive years / life time as the case may be.

Separate meeting of Independent Directors

During the year under review a separate meeting of IDs was held on 22ndMarch 2021.

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 the Nomination and Remuneration Committee (NRC)for evaluation of Non-IDs viz. M/s Venu Srinivasan Chairman and Managing DirectorSudarshan Venu Joint Managing Director K N Radhakrishnan Director & CEO HLakshmanan Dr. Lakshmi Venu and Rajesh Narasimhan Directors and also of Chairman of theBoard 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 cyber security frameworksupplier management 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 considering hisperformance vis-a-vis benchmarking the performance of the Company with industry under thestewardship of Chairman.

The IDs also placed on record their appreciation of Chairman's timely and proactiveinterventions for making progress on production sales and managing the financialrelationships with distributors in an exceptionally difficult and unpredictable yearbattered by pandemic. IDs have also commended the transparency and commitment togovernance and he stayed ahead in setting high standards for the Company.

They also commended his strenuous push for the acquisition of British iconic brand"Norton" despite the pandemic and the disturbances caused to the entireoperations of the Company. They also recorded their appreciation for his exceptionalcompetence in handling such critical situation and the Company has done very well both ingovernance and performance even during strained times.

IDs have also applauded the organized & timely response to the community and socialinitiatives during CoVID-19 times.

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 processfocused on Board Dynamics. The Company has a Board with wide range of expertise in allaspects of business and outstanding diversity of the Board with the presence of variedpersonalities from diverse fields viz. Engineering Management Legal AdministrationAccounting and Finance. The Board upon evaluation concluded that it is well balanced interms of diversity of experience with expert in each domain viz. Automotive Leadership /Strategy Finance Legal & Regulatory and Governance. They also expressed theirsatisfaction on the presentations on major litigations supplier advances InternationalBusiness risk Status update on investment in start-ups Cyber security threat that havebeen fairly made to all IDs with open door discussions. IDs recorded that they were alwayskept involved through open and free discussions and provided additional inputs in emergingareas being forayed into by the Company and high levels of Corporate Governance in allmanagement 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)

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 KMPs of the Company in terms ofSection 2(51) read with 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 with statutoryamendments to be reflected in the policies to make it uptodate 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. NE-IDs devote considerable time in deliberating theoperational and other issues of the Company and provide valuable advice in regard to themanagement of the Company from time to time and the Company also derives substantialbenefit through their expertise and advice.

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 the 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 accepted by the Board prior toits implementation during the financial year under review.

Details of Committees its charter and functions are provided in the CorporateGovernance Report.

Number of Board meetings held:

The number of Board meetings held during the financial year 2020-21 is provided as partof Corporate Governance Report prepared in terms of the Listing Regulations.

10.AUDITORS

Statutory Auditors

The Company at its 26th AGM held on 7th August 2018 reappointedM/s V. 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 4th yearin the second 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 year2021-22.

The Auditors' Report for the financial year 2020-21 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 2020-21 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 27th April 2021 has re-appointed M/s. SKrishnamurthy & Co. Practising Company Secretaries Chennai having RegistrationNo.2215 allotted by the Institute of Company Secretaries of India as Secretarial Auditorsfor the financial year 2021-22.

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 2021-22.

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 $ 6 lakhs has beenfixed by the Board as remuneration in addition to reimbursement of applicable taxestravelling and out-of-pocket expenses payable to him for the year 2021-22 which isrequired to be approved and ratified by the Members at the ensuing AGM as per Section148(3) of the Act 2013.

The Company has filed the Cost Audit Report of 2019-20 on 26th August 2020in 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 of conditions of Corporate Governance asstipulated 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 with theRegulation 17 (8) of the Listing Regulations pertaining to CEO / CFO certification for thefinancial year ended 31st March 2021.

12. BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34 of the Listing Regulations the Business ResponsibilityReport for the year 2020-21 describing the initiatives taken from an environment socialand governance perspective in the prescribed format is given as Annexure VII to thisReport and is available on the Company's website in the link as provided in page no. 85 ofthis Annual Report.

13.POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism in accordance with the provisionsof Companies Act 2013 and Regulation 22 of the Listing Regulations which provides aformal mechanism for all Directors Employees and other Stakeholders of the Company toreport to the management their genuine concerns or grievances about unethical behaviouractual or suspected fraud and any violation of the Company's Code of Business Conduct andEthics.

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 Policy is disclosed on the Company's website in the link as provided in page no. 85of 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 2021.

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 if any affecting the financial position of thecompany having occurred since the end of the year and till the date of the Report:

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.

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:

Copy of the Annual Return (Annexure II) in prescribed form is available on theCompany's website in the link as provided in page no. 85 of this Annual Report in termsof the requirements of Section 134(3)(a) of the Act 2013 read with the Companies(Accounts) Rules 2014.

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.

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 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 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 2020-21are 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 details of investments made by theCompany.

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
27th April 2021

Chairman

.