TO THE SHAREHOLDERS
Your Directors take pleasure in presenting the 36th Annual Report of the Companytogether with the audited financial statements (standalone and consolidated) for the yearended 31st March 2019.
FINANCIAL HIGHLIGHTS (Standalone)
| || ||(Rupees in Crores) |
|Details ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Sales & Other Income ||2393.18 ||2218.03* |
|Profit before finance cost and depreciation ||270.63 ||267.16 |
|Less : Finance Cost ||34.50 ||29.70 |
|Depreciation ||82.83 ||68.21 |
|Profit after finance cost and depreciation ||153.30 ||169.25 |
|Less : Provision for || || |
|Income tax ||46.00 ||46.94 |
|Deferred tax ||4.13 ||4.70 |
|Profit after tax ||103.17 ||117.61 |
|Surplus brought forward from Previous Year ||604.84 ||533.41 |
|Remeasurement of post employment benefit obligation (net of tax) ||-3.00 ||0.55 |
|Dividend paid ||-30.63 ||-38.83 |
|Dividend Tax paid ||-6.30 ||-7.90 |
|Balance carried to Balance Sheet ||668.08 ||604.84 |
Your Company's focus is on improving plant operations enhance margins throughcontinuous improvements and strive for growth.
Your Company has witnessed a 8% growth in revenue during the financial year 2018-2019despite various factors affecting the overall industry. The Company continued to enjoycordial and peaceful industrial relations with the workers and employees at all levels.
Income comprising of revenue from operations and other income for the financial yearended 31st March 2019 was 2442.98 crores as compared to 2218.13* crores forthe year ended 31 st March 2018.
Total consolidated revenue from operations increased to 2430.98 crores from 2202.76*crores in 2017-18. Profit before tax for 2018-19 was 153.29 crores as compared to 168.98crores in the previous year. Profit after tax for 2018-19 was 103.27 crores as against117.34 crores for the previous year.
HIGHLIGHTS ON PERFORMANCE OF SUBSIDIARIES AND THEIR CONTRIBUTION TO THE OVERALLPERFORMANCE OF THE COMPANY
Wholly owned subsidiary of the Company TVS Srichakra Investments Limited (TSIL)recorded a net loss of 141.48 lakhs (previous year net loss of 26.82 lakhs) and intereston Optionally Convertible Debentures (OCDs) was waived during the year ended 31stMarch 2019.
TVS Sensing Solutions Private Limited (TSSPL) (formerly known as ZF Electronics TVSIndia Pvt. Limited (ZFTVS)) became a wholly owned subsidiary of TSIL from 4thJune 2018 and subsequently its name was changed to TSSPL. The total revenue fromoperations during the year under review of TSSPL increased to 58.12 crores compared to49.07 crores in the previous year. TSSPL made an EBITDA of 4.06 crores as against 1.12crores for the year ended 31 st March 2018.
The Company has a robust track record of rewarding its shareholders with a generousdividend pay-out. The Board of Directors is now pleased to recommend a dividend of 40/-per equity share (400%) which will result in a total payout of 36.90 crores (inclusive ofdividend distribution tax of 6.30 crores). The dividend payment is subject to approval ofmembers at the ensuing Annual General Meeting.
The Dividend Distribution Policy of the Company is available on the Company's website:http://www.tvstyres.com/policy/DIVIDEND% 20 DISTRIBUTION%20POLICY.pdf
* including excise duty
Cash and cash equivalent as at 31st March 2019 was 7.50 crores.
The Company's working capital management is robust and involves a well-organizedprocess which facilitates continuous monitoring and control over receivables and otherparameters.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
No loan or guarantee covered under the provisions of Section 186 of the Companies Act2013 ("the Act") has been given by your Company.
Details of investments made by your Company are furnished in the notes to the financialstatements.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
As per Section 125 of the Companies Act 2013 after completion of seven years from thedate of transfer to unpaid dividend account the unclaimed dividend amount has to betransferred to the Investor Education and Protection Fund Authority (IEPF Account).Accordingly the unclaimed dividend amount for the financial year 2010-11 became due fortransfer to IEPF Authority. The Company sent letters to those shareholders who have notencashed their dividend amount. Despite the reminder letters sent to such shareholders anamount of Rs.2067175/- remained unclaimed and the same was transferred to IEPF Accounton 1.10.2018.
TRANSFER OF UNCLAIMED DIVIDEND SHARES TO INVESTOR EDUCATION AND PROTECTION FUNDAUTHOIRTY (IEPF Authority)
As per Section 124 and other applicable provisions of the Companies Act 2013 pursuantto the provisions of IEPF Rules / Securities and Exchange Board of India (SEBI)notification shareholders who have not encashed dividend for seven consecutive yearssuch shares have to be transferred to the Investor Education and Protection Fund Authority(IEPF Authority). Accordingly 10646 equity shares had been transferred by the Company tothe IEPF Authority on 6.10.2018. Details of shares transferred to IEPF Authority had beenuploaded on the website of IEPF as well as on the Company's website.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility (CSR) has been an integral part of the Company and theCompany is committed to its social responsibilities and takes initiatives to serve thesociety as a good corporate citizen.
Your Company has constituted a CSR Committee in accordance with Section 135 of theCompanies Act 2013 and has developed and implemented the policy on Corporate SocialResponsibility. The CSR Committee comprises of Ms. Shobhana Ramachandhran Mr. PVijayaraghavan and Mr. Rasesh R Doshi. The Committee inter alia monitors the CSRactivities.
The Company was required to spend an amount of Rs.443.70 lakhs (including Rs.5.70 lakhsunspent amount of last year carried forward) and ensured that the same is fully spentduring the year.
The CSR policy of the Company is hosted on the Company's website athttp://www.tvstyres.com/policy/CSR%20POLICY.pdf and the "Annual Report on CSRActivities" is annexed to the Board's Report as Annexure 1.
The Company also undertakes other need based initiatives in compliance with ScheduleVII to the Act.
INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. Nonetheless your Company recognizes that anyinternal control framework no matter how well designed has inherent limitations andaccordingly regular audits and review processes ensure that such systems are re-enforcedon an ongoing basis. The internal financial controls with reference to the FinancialStatements are commensurate with the size and nature of business of the Company.
BUSINESS RISK MANAGEMENT
The Business risks identified by the Company are regularly reviewed by SeniorManagement and the key risks are revised and modified as per the changing scenario. TheBoard reviews the key risks identified and mitigation plan initiated by the Company on aquarterly basis.
Your Company has over the years established a reputation for doing business withintegrity and displays zero tolerance for any form of unethical behaviour. "WhistleBlower Policy" (WBP) is the vigil mechanism instituted by the Company to reportconcerns about unethical behaviour in compliance with the requirements of the CompaniesAct 2013 ("the Act") and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI LODR") and provides adequate safeguardagainst victimization of persons who use such mechanism. The whistle-blower policy is puton the Company's website and can be accessed at : http://www.tvstyres.com/ policy/WHISTLE%20BLOWER%20POLICY.pdf.
No instances were reported under this mechanism and detail about this policy isavailable in the Corporate Governance Report.
The audited accounts of the following subsidiary Company(s)
a) TVS Srichakra Investments Limited (TSIL)
b) TVS Sensing Solutions Private Limited (formerly known as ZF Electronics TVS IndiaPrivate Limited) subsidiary of TSIL has been consolidated with the Company as on 31stMarch 2019.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company for the year ended 31stMarch 2019 are prepared in compliance with the applicable provisions of the Act IndianAccounting Standards and SEBI LODR. The audited consolidated financial statements alongwith all relevant documents and the Auditor's Report thereon form part of Annual Reportand may be accessed on the Company's website www.tvstyres.com.
Pursuant to Section 129(3) of the Act a statement containing salient features of thefinancial statement of the subsidiaries in the prescribed Form AOC1 is attached asAnnexure 2.
The Financial Statements of the subsidiary companies are available for inspection bythe Members at the Registered Office of the Company pursuant to the provisions of Section136 of the Act. The Company shall provide free of cost a copy of the financial statementof its subsidiary Company(s) to the Members upon their request. The financial statement ofthe subsidiary companies are also available on the website of the Company atwww.tvstyres.com.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Act your Directors state that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Retirement by rotation
Mr. P Vijayaraghavan (DIN: 00633205) will retire by rotation at the ensuing AnnualGeneral Meeting of the Company and being eligible has offered himself for re-appointment.
The brief resume of the aforesaid Director and other information have been detailed inthe notice convening the 36th Annual General Meeting of the Company.Appropriate resolution for his re-appointment is being placed for approval of the membersat the ensuing Annual General Meeting. Your Directors recommend his re-appointment asDirector of the Company.
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee in its meeting held on 13.11.2018 subject to the approval by members of theCompany appointed Dr. V Anantha Nageswaran (DIN: 00760377) as an Additional Director inthe category of Independent Director with effect from 13.11.2018 for a term of 5consecutive years upto 12.11.2023.
Brief resume of the Independent Director seeking appointment along with other detailsrequired are provided in the Notice of 36th AGM of the Company. Appropriateresolution for his appointment is being placed for approval of the members at the ensuingAGM. The Board recommends his appointment as an Independent Director.
The Company has received declaration from all the Independent Directors that theycontinue to fulfill the criteria of independence as prescribed under the provisions of theAct as well as SEBI LODR (including statutory re-enactment(s) thereof for the time beingin force). In the opinion of the Board they fulfill the conditions of independence asspecified in the Act and the SEBI LODR and are independent of the management.
Familiarization Programme for Independent Directors
Periodic presentations are made at the Board and Committee meetings on business andperformance updates of the Company and business strategy. The Company has done variousprogrammes to familiarize Independent Directors with the Company responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany and related matters. Details of the familiarization programme for IndependentDirectors are explained in the Corporate Governance Report.
The evaluation process inter alia considers attendance of Directors at Board CommitteeMeetings and Annual General Meeting effective participation domain knowledge etc.
As per provisions of the Companies Act 2013 and Regulation 17(10) of the Regulationsthe evaluation process for the performance of the Board its committees and individualDirectors was carried out internally. The performance evaluation of the Chairman andNon-Independent Directors was carried out by Independent Directors. More details areavailable in the Corporate Governance Report.
Directors / Key Managerial Personnel appointed or resigned during the year
The shareholders of the Company at its Annual General Meeting held on 27thSeptember 2018 have approved re-appointment of Mr. M S Viraraghavan Mr. HJanardana Iyer and Mr. Rasesh R Doshi for a second term of 5 (five) consecutive years onthe Board of the Company by passing special resolution and appointed Mr. V Ramakrishnan asan Independent Director of the Company for a term of 5 (five) consecutive years.
Mr A Arumugam resigned as an Independent Director of the Company with effect from 24thDecember 2018 due to his personal priorities and other interest. The Board of Directorshas placed on record its sincere appreciation for the rich contribution made by Mr.A Arumugam during his tenure of association as an Independent Director.
Appointment and Remuneration Policy
On the recommendation of the Nomination and Remuneration Committee (NRC) the Board hasadopted and framed a policy on Director's appointment and remuneration includingremuneration for Senior Management and other employees pursuant to the provisions of theAct and SEBI LODR. The remuneration determined for Executive/Independent Directors issubject to the recommendation of the NRC and approval of the Board of Directors. TheNon-Executive Directors are compensated by way of profit-sharing commission and sittingfees for attending the Board/Committee Meetings.
The policy mentioned above is also uploaded on the website of the Company:http://tvstyres.com/policy/REMUNERATION%20POLICY. pdf and is reproduced in the CorporateGovernance Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the first proviso to Section 136 of the Act the Reports and Accounts arebeing sent to the shareholders excluding the information required under Rule 5(2) and (3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Anyshareholder interested in obtaining the same may write to the Company Secretary. The saidinformation is available for inspection by the Members at the Registered Office of theCompany on any working day of the Company upto the date of the 36thAnnual General Meeting.
The statement containing information as required under the provisions of Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in Annexure 3 and forms part of thisReport.
An annual calendar of Board and Committee Meetings planned during the year werecirculated in advance to the Directors.
The Board of Directors met 7 (seven) times during the year ended 31st March2019. The details of the board meetings and the attendance of the Directors are providedin the Corporate Governance Report forming part of this Report.
The Audit Committee comprises of 4 (four) members. The Chairman of the Committee is anIndependent Director. The Committee met 7 (seven) times during the year. The Committeecomprises of Mr. M S Viraraghavan as Chairman and Mr. P Vijayaraghavan Mr. HJanardana Iyer and Mr. Rasesh R Doshi as members.
There have been no instances during the year where recommendations of the AuditCommittee were not accepted by the Board.
RELATED PARTY TRANSACTIONS
In line with the requirements of the applicable laws the Company has formulated aPolicy on Related Party Transactions which is also available on the website of the Companyat : http://tvstyres.com/ policy/RELATED%20PARTY%20TRANSACTION%20POLICY.pdf All therelated party transactions are entered on an arm's length basis in the ordinary course ofbusiness and adhere to the applicable provisions of the Act and SEBI LODR. There are nomaterially significant related party transactions made by the Company which may have apotential conflict with the interests of the Company at large or which warrants theapproval of the shareholders. All Related Party Transactions are presented to the AuditCommittee and the Board. Omnibus approval is obtained before the commencement of the newfinancial year for the transactions which are repetitive in nature and also for thetransactions which are not foreseen. A statement of all related party transactionsis presented before the Audit Committee on a quarterly basis specifying the nature valueand terms & conditions of the transactions.
In accordance to Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of theCompanies (Accounts) Rules 2014 Form AOC-2 is attached as Annexure 4 of this Report.
The Members at the 34th AGM of the Company had appointed M/s. PKF Sridhar& Santhanam LLP (ICAI Registration No. 003990S / S200018) Chartered AccountantsChennai as the Statutory Auditor of the Company to hold office for a term of 5 (five)years i.e. from the conclusion of the said AGM until the conclusion of 39thAGM of the Company subject to ratification of their appointment by the members everyyear. The Ministry of Corporate Affairs vide its Notification dated 7th May 2018 hasdispensed with the requirement of ratification of Auditor's appointment by the membersevery year. Hence the resolution relating to ratification of Auditor's appointment is notincluded in the Notice of the ensuing AGM.
The Auditors' Report for the financial year ended 31st March 2019 does notcontain any qualification.
In terms of Section 148 of the Act read with Rule 8 of the Companies (Accounts) Rules2014 it is stated that the cost accounts and records are made and maintained by theCompany as specified by the Central Government under sub-Section (1) of Section 148 of theCompanies Act 2013.
In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directorsbased on the recommendation of the Audit Committee has appointed Dr I Ashok (MembershipNo. 11929) Cost Accountant as Cost Auditor of the Company for conducting the Cost Auditfor the financial year 2019-20 on remuneration as mentioned at Item No. 4 in the Noticeof 36th Annual General Meeting (AGM).
A Certificate from Dr. I Ashok Cost Accountant has been received to the effect thathis appointment as Cost Auditor of the Company if made would be in accordance with thelimits specified under Section 141 of the Act and Rules framed thereunder.
A resolution seeking Members' ratification for the remuneration payable to the CostAuditor forms part of the Notice of 36th AGM and the same is recommended foryour consideration and ratification.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company had appointed Mr. NBalachandran (Membership No 5113) Practicing Company Secretary as Secretarial Auditor toundertake the Secretarial Audit of the Company for the financial year ended 31stMarch 2019. The Secretarial Audit Report is appended to this report as Annexure 5.
The Secretarial Audit Report does not contain any qualification.
Reporting of frauds by Auditors
During the year under review the Statutory Auditor Cost Auditor and SecretarialAuditor have not reported any instances of fraud committed in the Company to the AuditCommittee or Board.
During the year under review the Company was in compliance with the SecretarialStandards. i.e. SS-1 and SS-2 relating to "Meetings of the Board of Directors"and "General Meetings" respectively.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by the Securities and ExchangeBoard of India (SEBI). The report on Corporate Governance as stipulated under SEBI (LODR)forms an integral part of this Report. The requisite certificate from the Auditors of theCompany confirming compliance with the conditions of Corporate Governance is attached tothe report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis of financial condition and results of operations ofthe Company is provided in the Management Discussion and Analysis Report which forms partof this Annual Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on the conservation of energy technology absorption foreign exchangeearnings and out go is required to be given pursuant to the provisions of Section 134 ofthe Act read with the Companies (Accounts) Rules 2014 which is marked Annexure 6 andforms part of this report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the annual return in Form MGT-9 is providedas Annexure 7 to this Report and is available on the website www.tvstyres.com
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended 31stMarch 2019 forms part of this Report.
The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013
The Company has in place a policy in line with the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. Internal Complaints Committeehas been set up to redress complaints received regarding sexual harassment.
During the year there was no complaint of sexual harassment received by the Committee.
No material changes and commitments have occurred between the end of the financial yearand the date of this Report which affect the financial statements of the Company inrespect of the reporting year. There has been no change in the nature of business of theCompany.
No disclosure or reporting is required with respect to the following items as therewere no transactions during the year under review:
Details relating to deposits that are covered under Chapter V of the Act.
The issue of equity shares with differential rights as to dividend voting orotherwise.
The issue of shares to the employees of the Company under any scheme (sweatequity or stock options). There is no change in the Share Capital Structure during theyear under review.
The Company does not have any scheme or provision of money for the purchase ofits own shares by employees or by trustees for the benefits of employees.
Neither the Managing Director nor the Managing Director designated as ExecutiveVice Chairman of the Company receive any remuneration or commission from any of itssubsidiary.
No significant or material orders were passed by the regulators or courts ortribunals impacting the going concern status and Company's operation in future.
Your Directors wish to place on record their sincere appreciation to the Company'sCustomers Investors Vendors Government authorities and to the Bankers for theircontinued support during the year.
The Directors also wish to place on record their appreciation for the dedication andcontribution made by employees at all levels and look forward to their support in futureas well.
| ||For and on behalf of the Board || |
|Madurai ||R NARESH ||SHOBHANA RAMACHANDHRAN |
|23.5.2019 ||EXECUTIVE VICE CHAIRMAN ||MANAGING DIRECTOR |