The Directors are pleased to present the 35th Annual Report of the Company togetherwith the audited financial statement for the year ended 31st March 2018.
| || ||(Rupees in Crores) |
|Details ||Year ended 31st March 2018 ||Year ended 31st March 2017 |
|Sales & Other Income (including excise duty) ||2218.03 ||2140.65 |
|Profit before finance cost and depreciation ||267.16 ||292.51 |
|Less : Finance Cost ||29.70 ||20.13 |
|Depreciation ||68.21 ||55.67 |
|Profit after finance cost and depreciation ||169.25 ||216.71 |
|Less : Provision for || || |
|Income tax ||46.94 ||52.50 |
|Deferred tax ||4.70 ||8.88 |
|Profit after tax ||117.61 ||155.33 |
|Surplus brought forward from Previous Year ||533.41 ||378.23 |
|Remeasurement of post employment benefit obligation (net of tax) ||0.55 ||-0.15 |
|Dividend paid$ ||-38.83 ||- |
|Dividend Tax paid$ ||-7.90 ||- |
|Balance carried to Balance Sheet ||604.84 ||533.41 |
$ As per IND AS dividend is to be accounted only on payment basis from the financialyear 2017-18.
Your Company continues its focus on increasing plant efficiency and has improvedmargins through continuous improvements. The approach has been to focus on improving plantoperations enhance margins through continuous improvements and strive for growth.
During the financial year 2017-2018 the Company has witnessed a marginal growth inrevenue despite various factors affecting the overall industry.
STANDALONE FINANCIAL PERFORMANCE
During the financial year under review your company registered net sales of Rs.2218.03Crores (including other income) as against Rs.2140.65 crores during the previous financialyear. Profit before Finance Cost and Depreciation stood at Rs.267.16 crores as againstRs.292.51 crores during the previous financial year. The net profit after tax for thecurrent financial year stood at Rs.117.61 crores compared to Rs.155.33 crores during theprevious financial year.
Your Company achieved a consolidated turnover of Rs.2218.13 (including excise duty)crores for the year ended 31st March 2018 as compared to Rs.2135.53 crores in theprevious year.
Profit before tax was at Rs.168.98 crores for the year ended 31st March 2018 ascompared to Rs.211.07 crores in the previous year.
Your Company recorded a net profit of Rs.117.34 crores for the year ended 31st March2018 as against Rs.149.69 crores for the previous year on a consolidated basis.
HIGHLIGHTS ON PERFORMANCE OF SUBSIDIARY AND ASSOCIATES AND THEIR CONTRIBUTION TO THEOVERALL PERFORMANCE OF THE COMPANY
Your Company's wholly owned subsidiary TVS Srichakra Investments Limited (TSIL)recorded a net loss of Rs.26.82 lakhs (PY Rs.576 lakhs). During the year interest onOptionally Convertible Debentures (OCDs) was waived.
During the year ZF Electronics TVS (India) Pvt. Limited (ZFTVS) an associate Companyrecorded a total revenue of Rs.49.07 Crores (PY Rs.46.43 Crores) ZFTVS made an EBITDA ofRs.1.12 Crores (PY Rs.(0.35) Crores) and incured a net loss of Rs.2.45 Crores (PY Rs.3.82Crores) mainly due to increase in cost of raw materials. Subsequently ZFTVS has become awholly owned subsidiary of TSIL with effect from 4th June 2018 and the namewas changed to TVS Sensing Solutions Private Limited (TSSPL) on 5th July 2018.TSSPL is identifying business development opportunities and cost reduction actions forturning around and continuing its past track record of profitability.
The Board of Directors has recommended a dividend of Rs.40/- (400%) per equity share ofRs.10/- each for the financial year ended 31st March 2018 amounting to Rs.36.92 crores(inclusive of dividend distribution tax of Rs.6.30 crores). The dividend payment issubject to approval of members 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%20DISTRIBUTION%20POLICY.pdf
Your Company was able to continue its sustained efforts in judicious management ofworking capital through regular monitoring receivables inventories and other workingcapital parameters. The Cash and cash equivalent as at 31st March 2018 was at Rs.6.63crores.
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.
Particulars of investments made by your Company are furnished in the notes to thefinancial statements.
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 2009-10 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.1733280/- remained unclaimed and the same was transferred to IEPF Accounton 15.4.2017.
TRANSFER OF UNCLAIMED DIVIDEND SHARES TO INVESTOR EDUCATION AND PROTECTION FUNDAUTHORITY (IEPF Authority)
Pursuant to the provisions of IEPF Rules/Securities and Exchange Board of India (SEBI)notification all shares in respect of which dividend has not been paid or claimed for aperiod of seven consecutive years shall be transferred by the Company to the designatedDemat Account of the IEPF Authority ('IEPF Account'). In this regard the Company has sentletters to the shareholders concerned and also published notice in the newspapers as perthe IEPF Rules. Accordingly the Company had transferred 90195 equity shares to the IEPFAccount on 30.11.2017
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR Committee constituted as per Section 135 of the Companies Act 2013 comprisesof Ms. Shobhana Ramachandhran Mr. P Vijayaraghavan and Mr. Rasesh R Doshi. Details ofrole and functioning of the Committee are given in the Corporate Governance Report.
The Company's Corporate Social Responsibility (CSR) activities/projects are focusedtowards promoting general health care providing safe drinking water empowering women byproviding education and employment enhancing vocation skills and by setting up day carecenters ensuring environmental sustainability and conservation and maintenance of naturalresources protection of natural heritage sports arts and culture. The CSR policy may beaccessed at the Company's website at the link: http://www.tvstyres.com/policy/CSR%20POLICY.pdf
The Company would also undertake other need based initiatives in compliance withSchedule VII to the Companies Act 2013. The "Annual Report on CSR Activities"is annexed to the Board's Report as Annexure 1.
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.
The Vigil Mechanism as envisaged in the Companies Act 2013 the Rules prescribedthereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 ("the Regulations") is implemented through the Company's Whistle BlowerPolicy to report any serious actual or suspected frauds concerns relating to financialmatters/reporting unethical or illegal conduct or actual or possible violation of Code ofConduct/Ethical Standards and provides adequate safeguard against victimization of personswho use such mechanism. The policy has been uploaded on the website of the Company: http://www.tvstyres.com/policy/WHISTLE%20BLOWER%20POLICY.pdf.
During the year no instances were reported under this mechanism and details pertainingto Vigil mechanism/Whistle Blower Policy are explained in the Corporate Governance Report.
The audited accounts of the subsidiary company TVS Srichakra Investments Limited havebeen consolidated with the Company as on 31st March 2018.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statement (CFS) of the Company and its subsidiary company(s)is prepared in accordance with the Act relevant rules Accounting Standards and asstipulated in the Regulations. The audited financial statement including the CFS alongwith all relevant documents and the Auditors' Report form a part of this Annual Reportand may be accessed on the Company's website www.tvstyres.com.
A statement containing the salient features of the financial statement ofsubsidiary/associate company(s) is provided in Form AOC 1 as Annexure 2 to the DirectorsReport.
The financial statement of the subsidiary company(s) may also be accessed on theCompany's website www.tvstyres.com. These documents will also be available for inspectionduring normal business hours on working days at the Registered Office of the Company. Acopy of the financial statements of the subsidiary shall be provided free of cost to theshareholders up on request.
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.
Directors liable to retire by rotation
Mr. R Naresh (DIN : 00273609) Director on the Board is liable to retire by rotation atthe 35th Annual General Meeting (AGM) and being eligible offers himself forre-appointment.
Brief resume of the Director seeking re-appointment along with other details requiredare provided in the notice of 35th AGM of the Company. Appropriate resolutionfor his re-appointment is being placed for approval of the members at the ensuing AGM. TheBoard of directors on the recommendation of Nomination and Remuneration Committeerecommends his re-appointment as Director.
The term of office of Mr. M S Viraraghavan and Mr. H Janardana Iyer as IndependentDirectors is upto 31st March 2019 and Mr. Rasesh R Doshi as an Independent Director isupto 23rd May 2019. The Board of Directors on recommendation of the Nomination andRemuneration Committee has recommended re-appointment of Mr. M S Viraraghavan Mr. HJanardana Iyer and Mr. Rasesh R Doshi as Independent Directors of the Company for asecond term of 5 (five) consecutive years on the expiry of their current term of office.
The Board based on the recommendation of the Nomination and Remuneration Committee hasrecommended that Mr. V Ramakrishnan be appointed as an Independent Director of the Companyby the members for a term of 5 (five) consecutive years.
Brief resume of the Independent Directors seeking appointment/re-appointment along withother details required are provided in the notice of 35th AGM of the Company.Appropriate resolution for their re-appointment is being placed for approval of themembers at the ensuing AGM. The Board recommends their appointment/re-appointment asIndependent Directors.
The Company has received declarations from all the Independent Directors of the Companyand Mr. V Ramakrishnan confirming that they meet the criteria of independence prescribedunder the Act and the Regulations.
Familiarization Programme for Independent Directors
The Company has done various programmes to familiarize Independent Directors with theCompany responsibilities in the Company nature of the industry in which the Companyoperates business model of the Company and related matters.
Periodic presentations are made at the Board and Committee meetings on business andperformance of the Company. Details of the familiarization programme for IndependentDirectors are explained in the Corporate Governance Report.
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.
The evaluation process considers attendance of Directors at Board Committee and AnnualGeneral Meeting effective participation domain knowledge etc.
Directors/Key Managerial Personnel appointed or resigned during the year
The members of the Company at their 34th Annual General Meeting have approved there-appointment of Mr. R Naresh Managing Director (designated as Executive Vice Chairman)of the Company liable to retire by rotation for a term of three (3) years with effectfrom 16.6.2017.
The Board of Directors based on the recommendation of the Nomination and RemunerationCommittee and approval of Audit Committee appointed Mr. K V Ganesh as Chief FinancialOfficer of the Company in place of Mr. K P Rangaraj who has resigned from the services ofthe Company.
Mr. K V Ganesh is a Chartered Accountant and Company Secretary having completed hisgraduation from Shri Ram College of Commerce (SRCC) Delhi. He also pursued Executive MBAfrom the Indian Institute of Management (IIM) Kolkata. He brings with him rich experienceof about 3 decades in Finance & Corporate Governance of which 19 years at CFO Level.
Appointment and Remuneration Policy
The policy on Director's appointment and remuneration including remuneration for SeniorManagement and other employees and on board diversity is approved by the Nomination &Remuneration Committee and the Board. The main objective of the said policy is to ensurethat the level and composition of remuneration is reasonable and sufficient to attractretain and motivate the Directors KMP Senior Management and other employees. Theremuneration involves a balance between fixed and variable pay reflecting short andlong-term performance objectives appropriate to the working of the company and its goals.
The policy is available at: http://tvstyres.com/policy/REMUNERATION%20POLICY.pdf andthe same is reproduced in the Corporate Governance Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report as Annexure 3.
Further a statement showing the names and other particulars of employees drawingremuneration in excess of the limits set out in Rule 5(2) and Rule 5(3) of the aforesaidRules forms part of this report. However in terms of the first proviso of Section 136 ofthe Act the Annual Report is being sent to the members and others entitled theretoexcluding the above information. The said information is available for inspection bymembers at the Registered Office of the Company during business hours on working days uptothe date of the ensuing Annual General Meeting. If any member is interested in obtaining acopy thereof such member may write to the Company Secretary and the same will befurnished.
Calendar of Meetings is prepared and circulated in advance to the Directors.
Six meetings of the Board of Directors were held during the year. The particulars ofmeetings held and attended by each Director are detailed in the Corporate GovernanceReport.
The Audit Committee comprises of Mr. M S Viraraghavan (Chairman) Mr. P VijayaraghavanMr. H Janardana Iyer and Mr. Rasesh R Doshi as members. During the year all therecommendations made by the Audit Committee were accepted by the Board.
RELATED PARTY TRANSACTIONS
All contracts/transactions entered by the Company during the financial year withrelated parties were in its ordinary course of business and on an arms' length basis.
The Policy on Materiality of Related Party Transactions and on dealing with RelatedParty Transactions as approved by the Board may be accessed on the Company's website at: http://tvstyres.com/policy/RELATED%20PARTY%20TRANSACTION%20POLICY.pdf
There were no materially significant related party transactions which could havepotential conflict with interest of the Company at large.
Members may refer to Note 37 (b) to the Standalone Financial Statement which sets outrelated party disclosures pursuant to IND AS.
In accordance with Section 134(3)(h) of the Act read with Rule 8(2) of the Companies(Accounts) Rules 2014 Form AOC 2 is given in Annexure 4.
MATERIAL CHANGES AND COMMITMENTS
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 date of the report. There has been no change inthe nature of business of the Company.
The Members at the 34th AGM of the Company had appointed M/s. PKF Sridhar &Santhanam LLP (ICAI Registration No. 003990S/S200018) Chartered Accountants Chennai asthe Statutory Auditor of the Company to hold office for a term of
five years i.e. from the conclusion of the said AGM until the conclusion of 39th AGMof the Company subject to ratification of their appointment by the members every year.The Ministry of Corporate Affairs vide its Notification dated 7th May 2018 has dispensedwith the requirement of ratification of Auditor's appointment by the members every year.Hence the resolution relating to ratification of Auditor's appointment is not included inthe Notice of the ensuing AGM.
The Auditors' Report does not contain any qualification.
Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee appointed Dr. I Ashok Cost Accountant (MembershipNo. M11929) as the Cost Auditor of the company for the financial year 2018 - 2019 and hasrecommended his remuneration to the members for ratification at the ensuing Annual GeneralMeeting. Accordingly the resolution seeking the same is included in the notice conveningthe AGM.
Dr. I Ashok has given his consent to act as Cost Auditor and confirmed that hisappointment is within the limits of the Section 139 of the Companies Act 2013. He hasalso certified that he is free from any disqualifications specified under Section 141 ofthe Companies Act 2013.
The Cost Audit Report does not contain any qualification.
The Board had appointed Mr. N Balachandran (Membership No 5113) Practicing CompanySecretary to conduct Secretarial Audit for the financial year 2017-18. The SecretarialAudit Report for the financial year ended 31st March 2018 is annexed herewith marked asAnnexure 5 to this Report. The Secretarial Audit Report does not contain anyqualification.
The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Board Meetings and General Meetings.
The report on Corporate Governance as stipulated under the Regulations forms anintegral part of this Report. The requisite certificate from the Auditors of the Companyconfirming compliance with the conditions of Corporate Governance is attached to thereport on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulatedunder the Regulations is presented in a separate section forming part of the AnnualReport.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure 6 to this Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the annual return in Form MGT-9 is given asAnnexure 7 to this Report.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Regulations the Business Responsibility Report describing theinitiatives taken by the Company from an environmental social and governance perspectiveis attached as a part of the Annual Report.
No deposits were accepted by the Company from the public falling within theambit of Chapter V of the Act.
During the year the Company has not issued shares with differential rights asto voting dividend or otherwise.
The Company does not have any scheme of provision of money for the purchase ofits own shares by employees or by trustees for the benefit of employees.
T he Company has not issued shares under sweat equity/stock options scheme toits employees. There is no change in the Share capital of the Company during the financialyear under review
T he Company has zero tolerance towards sexual harassment at the workplace andto this end has adopted a policy on prevention of sexual harassment of women at workplace. During the financial year under review no cases were reported under SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Neither the Managing Director nor the Managing Director designated as ExecutiveVice Chairman of the Company receive any remuneration or commission from its subsidiary.
No significant and material orders were passed by the regulators or courts ortribunals impacting the going concern status and Company's operation in future.
No fraud has been reported by the Auditors to the Audit Committee or the Board.
The Company continued to enjoy cordial and peaceful industrial relations withthe workers and employees at all levels.
The Board of Directors would like to express their sincere appreciation for theassistance and co-operation received from the banks Government authorities customersvendors and members during the year under review. The Board of Directors also wish toplace on record its deep sense of appreciation for the committed services by all employeesof the Company.
| || |
For and on behalf of the Board
|Madurai ||R NARESH ||SHOBHANA RAMACHANDHRAN |
|17.7.2018 ||EXECUTIVE VICE CHAIRMAN ||MANAGING DIRECTOR |