TO THE SHAREHOLDERS
Your Directors take pleasure in presenting the 37th Annual Report of the Companytogether with the audited financial statements (standalone and consolidated) for the yearended 31st March 2020.
FINANCIAL HIGHLIGHTS (Standalone)
| || ||(Rupees in Crores) |
|Details ||Year ended 31st March 2020 ||Year ended 31st March 2019 |
|Sales & Other Income ||2061.72 ||2393.18 |
|Profit before finance cost and depreciation ||223.36 ||270.63 |
|Less : Finance Cost ||35.93 ||34.50 |
|Depreciation ||97.66 ||82.83 |
|Profit after finance cost and depreciation ||89.77 ||153.30 |
|Less : Provision for || || |
|Income tax ||27.75 ||46.00 |
|Deferred tax ||(22.40) ||4.13 |
|Profit after tax ||84.42 ||103.17 |
|Surplus brought forward from Previous Year ||668.07 ||604.84 |
|Re-measurement of post-employment benefit obligation (net of tax) ||(0.46) ||(3.00) |
|Dividend paid ||(46.01) ||(30.63) |
|Dividend Tax paid ||(9.46) ||(6.30) |
|Impact of IND AS 116 - Lease Rentals ||(9.65) ||- |
|Balance carried to Balance Sheet ||686.91 ||668.07 |
During the year under review on standalone basis your Company recorded a net revenuefrom operations of Rs.2052.24 crores a decrease of 13.84 % over last year. TheCompany achieved a net profit of Rs.84.42 crores during the current year representing adecrease of 18.17 % compared to last year.
On a consolidated basis your Company registered a turnover of Rs.2103.74 crores adecrease of 13.46%. The Company's consolidated net profit stood at Rs.82.27 crores asagainst the previous year's net profit of Rs.103.27 crores a reduction of 20.34%.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES AND THEIR CONTRIBUTION TO THE OVERALLPERFORMANCE OF THE COMPANY
TVS Srichakra Investments Limited (TSIL) wholly owned subsidiary of your Companyrecorded a net loss of Rs.135.12 lakhs (previous year net loss of Rs.141.48 lakhs).Interest on Optionally Convertible Debentures (OCDs) was waived during the year ended 31stMarch 2020.
TVS Sensing Solutions Private Limited (TSSPL) which is a wholly owned subsidiary ofTSIL recorded a net operational turnover of Rs.51.68 Crores during the year under reviewshowing a decrease of Rs.5.07 crores compared to the previous year. TSSPL made an EBITDAof Rs.3.53 crores as against Rs.4.06 crores for the year ended 31st March 2019.
During the year under review TSSPL has set-up a subsidiary with a name and styleFiber Optic Sensing Solutions Private Limited (FOSSPL) and accordingly the accounts ofFOSSPL has been consolidated with that of TVS Srichakra Limited.
STATE OF COMPANY'S AFFAIRS
During the year under review your Company's focus was on developing the aftermarketconsolidating and increasing its presence with OEMs - particularly in the premiumsegments and building its presence in the export markets. With this in mind numerousbranding activities were initiated including a grand re-launch of TVS Eurogrip brand.Your Company also showcased its R&D capabilities with OEMs and other customersegments in order to expand and fulfill its objectives
Your Company has successfully developed produced and tested tyres for vehicles used inraces. Your Company continues to stress the importance of application of contemporarytechnology in its new product development program
Various modernization initiatives were commenced and are being implemented in theCompany's manufacturing facilities targeted at enhancing agility and flexibility to meetdynamic and evolving market requirements.
Towards the end of the year your Company like others was affected by the COVID 19pandemic. Timely efforts taken by the Company backed by consistent and continuous reviewof the various measures announced by the Government helped the Company to tide over thesituation as best as possible and restart the operations in a safe and phased manner.
The Company has a consistent track record of rewarding its shareholders with a generousdividend pay-out. The Board of Directors declared an interim dividend of Rs.20.10/- perequity share (201%) which resulted in a total payout of Rs.18.54 crores (inclusive ofdividend distribution tax of Rs.3.16 crores) and this shall be treated as Final Dividendfor the year.
The Dividend Distribution Policy of the Company is available on the Company's website:
Cash and cash equivalent as at 31st March 2020 was Rs.1.61 Crores.
Your Company has a robust working capital management process that facilitatescontinuous monitoring and control over receivables payables and other parameters.
Overall the Industrial Relations in all our manufacturing units have been harmoniousand cordial. Both production and productivity were maintained at desired and satisfactorylevels throughout the year in all plants.
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 2011-12 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.2425666/- remained unclaimed and the same was transferred to IEPF Accounton 15.11.2019.
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 11166 equity shares had been transferred by the Company tothe IEPF Authority on 5.12.2019. 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) initiatives of the Company are aimed at inclusivedevelopment of the community through a range of social interventions enhancing skills andbuilding social infrastructure to improve the livelihood of the beneficiaries Your Companyhas constituted a CSR Committee in accordance with Section 135 of the Companies Act 2013and has developed and implemented the policy on Corporate Social Responsibility. The CSRCommittee comprises of Ms. Shobhana Ramachandhran Mr. P Vijayaraghavan and Mr. Rasesh RDoshi. The Committee inter alia monitors the CSR activities.
The Company was required to spend an amount of Rs.360 lakhs and ensured that the samewas fully spent during the year.
The CSR policy of the Company is posted on the Company's website athttps://www.tvseurogrip.com/wp-content/uploads/2020/05/CSR-POLICY.pdf and the "AnnualReport on CSR Activities" is annexed to the Board's Report as Annexure 1. The Companyalso undertakes other need based initiatives in compliance with Schedule VII to the Act.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has adequate internal financial control with reference to the financialstatements commensurate with its size and nature of business. These controls include welldocumented procedures covering financial and operational functions. The internalfinancial controls of the Company are adequate to ensure the accuracy and completeness ofaccounting records timely preparation of reliable financial information prevention anddetection of frauds and errors and safeguard against any losses or unauthorized use ordisposal of assets. These controls are assessed on a regular basis by Internal Audit.
BUSINESS RISK MANAGEMENT
The risk in the current business environment is changing dynamically including thedimensions of cyber security information security business continuity data privacy andlarge deal execution. We have deployed a risk management framework which helpsproactively identify prioritize and mitigate risks.
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 vigilance 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:https://www.tvseurogrip.com/wp-content/uploads/2020/02/WHISTLE-BLOWER-POLICY.pdf
No instances were reported under this mechanism and detail about this policy areavailable in the Corporate Governance Report.
AWARDS RECEIVED DURING THE YEAR
Your Company was certified for Occupational Health & Safety Standard ISO 45001 in2020. This is in addition to the Certification of Quality (IATF 16949) & Environmental(ISO 14001) Management Standards.
The audited accounts of the following subsidiary companies have been consolidated withthe Company as on 31st March 2020
a) TVS Srichakra Investments Limited (TSIL)
b) TVS Sensing Solutions Private Limited (TSSPL) (formerly known as ZF Electronics TVS(India) Private Limited) - subsidiary of TSIL
c) Fiber Optic Sensing Solutions Private Limited - subsidiary of TSSPL
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company for the year ended 31st March2020 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.tvseurogrip.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 companies to the Members upon their request. The financial statements ofthe subsidiary companies are also available on the website of the Company atwww.tvseurogrip.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.
DIRECTORS Retirement by rotation
Mr. R. Naresh (DIN:00273609) will retire by rotation at the ensuing Annual GeneralMeeting 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 37th Annual General Meeting of the Company. Appropriateresolution for his re-appointment is being placed for approval of the members at theensuing Annual General Meeting. Your Directors recommend his re-appointment as Director ofthe Company.
Declaration of Independence
The Company has received necessary declarations under Section 149(7) of the CompaniesAct 2013 as well as SEBI LODR (including statutory re-enactment(s) thereof for the timebeing in force) from the Independent Directors stating that they meet the prescribedcriteria for independence. In the opinion of the Board all the Independent Directorssatisfy the criteria of independence as defined under the Companies Act 2013 and theListing Regulations.
Familiarization Programme for Independent Directors
Periodic presentations are made at the Board and Committee meetings on businessstrategy with updates on the performance of the Company. The Company has run variousprogrammes to familiarize Independent Directors with the Company their responsibilitiesin the Company nature of the industry in which the Company operates business model ofthe Company and related matters.
Details of the familiarization programme for Independent Directors are explained in theCorporate 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 Directors
The Board of Directors have re-appointed Mr R Naresh (DIN 00273609) as ManagingDirector (designated as Executive Vice Chairman) for a period of 3 years (three) witheffect from 16.6.2020 and Ms. Shobhana Ramachandhran (DIN 00273837) as Managing Directorof the Company for a period of 5 years (five) with effect from 25.8.2020 subject to theapproval of the shareholders. The approval of shareholders is sought through Postal Ballotby e-voting.
The shareholders of the Company at its Annual General Meeting held on 11th September2019 have approved appointment of Dr. Anantha Nageswaran (DIN: 00760377) as an IndependentDirector of the Company for a term of 5 (five) consecutive years.
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee appointed Ms S V Mathangi (DIN: 02596421) as an Additional Director in thecategory of Non-Executive Independent Director. Her appointment is subject to the approvalof shareholders which is sought through Postal Ballot by e-voting.
Key Managerial Personnel
Mr. K V Ganesh CFO resigned on 23.10.2019. Consequently Mr. B Rajagopalan wasappointed as CFO in the Board meeting held on 13.11.2019.
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 covering Key Mangerial Personnel and other employeespursuant to the provisions of the Act and SEBI LODR. The remuneration determined forExecutive/ Independent Directors is subject to the recommendation of the NRC and approvalof the Board of Directors. The Non-Executive Directors are compensated by way ofprofit-sharing commission and sitting fees for attending the Board/Committee Meetings. Thepolicy mentioned above is also uploaded on the website of the Company:https://www.tvseurogrip.com/wp-content/uploads/2020/05/Remuneration-Policy.pdf and isreproduced in the Corporate Governance 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 up to the date of the 37th Annual GeneralMeeting.
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 this Report.
An annual calendar of Board and Committee Meetings planned during the year wascirculated in advance to the Directors.
The Board of Directors met 7 (seven) times during the year ended 31st March 2020. Thedetails of the Board Meetings and the attendance of the Directors are provided in theCorporate 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 5 (five) times during the year. The Committeecomprises of Mr. M S Viraraghavan as Chairman and Mr. P Vijayaraghavan Mr. H JanardanaIyer 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
During the financial year ended March 31 2020 all transactions with the RelatedParties as defined under the Companies Act 2013 read with Rules framed thereunder were inthe ordinary course of business' and at arm's length' basis. Your Company doesnot have a Material Subsidiary' as defined under Regulation 16(1)(c) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 [Listing Regulations']. Your Company has formulated a Policy onRelated Party Transactions and the said Policy has been uploaded on the website of theCompany athttps://www.tvseurogrip.com/wp-content/uploads/2020/05/Related-Part-Transactions-Policy.pdf
Also your Company has an internal mechanism for the purpose of identification andmonitoring of Related Party Transactions. During the year under review your Company didnot enter into any Related Party Transactions which require prior approval of the Members.All Related Party Transactions of your Company had prior approval of the Audit Committeeand the Board of Directors as required under the Listing Regulations. Subsequently theAudit Committee and the Board have reviewed the Related Party Transactions on a quarterlybasis. During the year under review there has been no materially significant RelatedParty Transactions having potential conflict with the interest of the Company.
AUDITORS Statutory Auditor
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 5 (five) years i.e.from the conclusion of the said AGM until the conclusion of 39th AGM of the Companysubject to ratification of their appointment by the members every year. The Ministry ofCorporate Affairs vide its Notification dated 7th May 2018 has dispensed with therequirement of ratification of Auditor's appointment by the members every year. Hencethe resolution relating to ratification of Auditor's appointment is not included in theNotice of the ensuing AGM.
The Auditors' Report for the financial year ended 31st March 2020 does not contain anyqualification.
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 2020-21 on remuneration as mentioned at Item No. 4 in the Noticeof 37th 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 37th AGM and the same is recommended for yourconsideration 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 31st March2020. 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 Internal Auditor Cost Auditor andSecretarial Auditor have not reported any instances of fraud committed in the Company tothe Audit Committee 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 LODRforms 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 conditions 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 outgo 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.tvseurogrip.com.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report of the Company for the year ended 31st March 2020forms part of this Report.
CONFIRMATION OF COMPLIANCE ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
Your Company is providing a safe and secure environment to its women employees acrossits functions and other women stakeholders as they are considered as integral andimportant part of the organization. In terms of provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and Rules framedthereunder your Company has duly adopted a Policy and has also complied with theprovisions relating to the constitution of Internal Complaints Committee (ICC).
Your Company has been conducting awareness campaign across all its manufacturing unitswarehouses and office premises to encourage its employees to be more responsible and alertwhile discharging their duties.
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.
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 to place on record its deep sense of appreciation forthe committed services rendered by all employees of the Company.
| || |
For and on behalf of the Board
|Madurai ||R NARESH ||SHOBHANA RAMACHANDHRAN |
|26.06.2020 ||EXECUTIVE VICE CHAIRMAN ||MANAGING DIRECTOR |
| ||(DIN : 00273609) ||(DIN : 00273837) |