The Directors have pleasure in presenting the 61st Annual
Report and the audited financial statements for the year ended 31st March 2023.
1. FINANCIAL HIGHLIGHTS
($ in Cr)
Particulars |
Year ended 31.03.2023 |
Year ended 31.03.2022 |
Revenue from Operations |
2,073.96 |
1,743.27 |
Other Income |
132.76 |
93.59 |
Profit / (loss) before Depreciation, Finance
Costs, Exceptional items and Tax Expense |
381.73 |
324.54 |
Less: Depreciation / Amortization / Impairment |
99.94 |
101.74 |
Profit / (loss) before Finance Costs,
Exceptional items and Tax Expense |
281.79 |
222.80 |
Less: Finance Costs |
45.82 |
44.91 |
Profit / (loss) before Exceptional items and
Tax Expense |
235.97 |
177.89 |
Add / (less): Exceptional items |
(17.10) * |
(19.75) * |
Profit / (loss) before Tax Expense |
218.87 |
158.14 |
Less: Tax Expense (Current & Deferred) |
53.58 |
23.80 |
Profit / (loss) for the year |
165.29 |
134.34 |
Other Comprehensive Income / (loss) |
3.37 |
(3.12) |
Total Comprehensive Income |
168.66 |
131.22 |
* Exceptional item excludes interest on fixed deposits amounting
to $ 111.87 Crs and interest expense on Bonus 9% Cumulative Non-Convertible
Redeemable Preference Shares (NCRPS) amounting to $ 4.05 Crs for the year 2022-23
and profit on sale of shares (including interest on fixed deposits) amounting to$
2,142.35 Cr for the year 2021-22.
Profit Before Tax (PBT) including the above exceptional items works out
to
$ 326.69 Cr for the year 2022-23 and $ 2,300.49 Cr for the
year 2021-22.
2. DIVIDEND
The Board of Directors of the Company (the Board) at their meeting held
on 25th January 2023, declared an interim dividend of $ 59/- per share (1180%)
on 2,02,32,085 equity shares of $ 5/- each for the year 2022-23 involving an outgo of
$119.37 Cr. The same was paid to the members on 10th February 2023.
The Board does not recommend any further dividend for the year under
consideration. The dividend 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 year under review, as it is not mandatorily required.
3. PERFORMANCE
Indian economy:
India's real Gross Domestic Product (GDP) grew by 7.0% in FY23 as
against a growth of 8.7% in FY22. The high real GDP growth rate of
13.5% in Q1 FY23 was moderated by low single digit growth rates in Q2,
Q3 and Q4 of FY23 amid high inflationary pressures globally led to large spike in prices
of energy & commodities. RBI estimated the FY23 inflation in India at 6.7%.
World Bank estimates the World economies' GDP growth at 2.9% in 2022
against the growth rate of 5.9% in 2021. This slowdown in growth was attributed to the
concerted significant interest rate hike actions by the central banks across all the major
economies to control inflation.
US economy:
The US recorded GDP growth of 0.9% in 2022 compared to the growth of
5.7% in 2021. Retail spends remained strong during the year, despite inflation reaching as
high as 9.1% in June 2022 before easing to 6.0% in February 2023. However, the housing
demand tapered during the second half of the year.
EU economy:
The EU GDP grew at 3.6% in 2022 compared to the growth of 5.2% in 2021.
Inflation in the EU area touched a high of 10.6% during the year due to steep increases in
energy prices, mainly Natural Gas prices, which touched a high of USD 70 per million
metric British Thermal Unit (mmbtu). Natural Gas prices in EU averaged around USD 37 per
mmbtu in 2022 compared to the 10-year long-term average of USD 7 per mmbtu.
Company's Performance:
The Company posted its best ever performance both in turnover and
profit terms during the year by focusing on making systemic improvements across the
organization, by improving productivity & quality and by delivering the products to
the customer on-time. This is despite the adverse macro-economic factors, moderate
improvement in supply of semiconductors for the automotive sector and intermittent spikes
in COVID infections in China.
The following table highlights the performance of the Company during FY
2022-23:
|
FY |
FY |
Growth |
Particulars |
|
|
|
|
2022-23 |
2021-22 |
(in %) |
Sales (Tonnage) |
43,315 |
38,982 |
11 |
Sale of goods ($ in Cr) |
1,979.66 |
1,648.67 |
20 |
Domestic sales ($ in Cr) |
1,060.86 |
868.57 |
22 |
Export sales ($ in Cr) |
918.80 |
780.10 |
18 |
Profit before Tax ($ in Cr) |
218.86 |
158.14 |
38 |
The revenue of the Company is derived from Medium & Heavy
Commercial Vehicles (MHCV) segment (61%), followed by Two-wheeler segment (21%) and the
Passenger Vehicle segment (18%).
4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
I. INDUSTRY STRUCTURE AND DEVELOPMENT:
Domestic
The segment wise performance in the Indian automotive industry is given
in the following table.
(Figures in '000 nos)
|
FY |
FY |
Growth |
Category |
2022-23 |
2021-22 |
(in %) |
Two Wheelers |
19,443 |
17,909 |
9 |
Passenger Vehicles |
4,108 |
3,272 |
26 |
Commercial Vehicles |
|
|
|
(M&HCV) |
372 |
273 |
36 |
(Source: SIAM+DICV internal estimate)
Despite shortage of semiconductors, supply chain uncertainties, high
logistics costs and rising commodity prices, the Indian automotive industry performed
better than expected during the year FY23.
While Government spending on infrastructure projects improved the
demand for MHCVs, improvement in personal mobility resulted in increased demand for
passenger vehicle demand. In two-wheeler segment, domestic demand was healthy despite
witnessing sharp changes over the quarters, but the exports demand was affected by
liquidity crunch, currency devaluations and country specific local socio-political and
economic disturbances.
Despite external pressures, India's service exports have continued to
increase. The agricultural sector grew by 3.5%, and also strengthened Company?s
position as a net exporter of agricultural products.
In fiscal 2023, the overall growth of rural was slower than urban due
to relatively slower recovery in the rural non-agricultural sector.
Exports
The following table highlights the North American and European truck
registration figures in vehicle units: (Figures in '000 nos)
Market |
Category |
CY 2022 |
CY 2021 |
Variance (in %) |
North America |
Class 8 Trucks |
310 |
271 |
14 |
North America |
Class 4-7 Trucks |
247 |
266 |
(7) |
|
Heavy trucks |
|
|
|
Europe |
|
290 |
270 |
7 |
|
(>16T) |
|
|
|
(Source: FTR & ACEA)
North America: The Class 8 trucks sales were strong in 2022 despite
a slow start in Q1 2022. Although high inflation and interest rate hikes were major
threats to the Class 8 truck demand, their sales registered a growth of 14% in 2022 and
defied the recession fears due to high pent-up demand, fleet replacement, strong consumer
spending and stable freight rates. The global truck manufacturers circumvented the
semiconductors shortages by re-allocating semiconductors from other segments (Class 4-7)
and by developing technical solutions that allowed interchangeability of semiconductors.
Europe: In the EU markets, heavy commercial vehicles (>16 Ton
category) registered a decent growth of 7% in 2022 compared to 2021. Within the region's
largest markets, only Germany remained in negative territory (-0.9%), while all the other
high-volume EU markets for heavy trucks recorded growth in 2022: Spain (+13.6%), Poland
(+6.6%), Italy (+5.1%) and France (+2.3%). However, the numbers were still below the
pre-pandemic levels of 2019.
II. BUSINESS OUTLOOK AND OVERVIEW
The business environment is expected to be challenging in export
markets and healthy in India during 2023. The Company is optimistic about its future
considering the following scenario in all major markets that are of interest to the
Company.
India :
The Government allocated higher budget to infrastructure development
projects. In the Budget 2023-24, the Government has increased the outlay for capital
expenditure (capex) on infrastructure sector by 33 per cent from $ 7.5 lakh crore to $ 10
lakh crore. Current Account Deficit (CAD) of India is projected to be around 2.3% of GDP
in FY23 and further narrow down in FY24 on the back of increasing services export.
Rainfall is expected to be normal and inflation is expected to be within the comfort range
of RBI and GDP growth rate in FY24 is expected to be in the range of 5.8% to 6.5%.
In the medium term, there are various initiatives in place to continue
India's growth momentum. Production Linked Incentives for Automotive & Auto Component
sector & other sectors are expected to strengthen the manufacturing sector in India,
continuation of FAME scheme to transition to EV and special focus on setting up
semiconductor manufacturing in India are going to be major drivers for Auto industry's
growth.
In FY24, the sales of Passenger Vehicle and Commercial Vehicle segments
in India are expected to register around 10% growth and the sales of Two-wheelers are
expected to grow by around 5%.
Global scenario:
Global GDP growth rate is expected to decelerate to 1.7% in 2023 from
2.9% in 2022, due to geopolitical strife that emerged last year though localized had
global ramifications. This specter of strife hangs over the global economy and trade,
which impacted all major commodity prices and cross border trade.
The recent banking crisis is also expected to have an impact on global
growth. Central banks across the globe are now increasing the interest rates to rein the
high inflation that was not seen in the last few decades.
North America:
In 2023, the US economy is expected to maintain the GDP growth rate of
around 0.7%, similar to the growth rate of 2022. The Fed raised interest rates by 425
basis points in 2022 and by an additional 50 basis points as of March 2023. Fed may
tighten the supply of money by raising the interest rates vice-versa at a slower
rate, to rein in inflation. Therefore, the US Class 8 truck market volumes are expected to
be almost flat in 2023.
Europe :
EU economy is still facing the headwinds due to high energy prices,
despite some moderation in prices since January 2023. The European Central Bank has
increased the interest rates by 250 basis points in 2022 and an additional 100 basis
points as of March 2023 to control inflation. The economic activity is expected to be
muted in EU with no GDP growth in 2023, however, the chances of de-growth appear low as of
now. Consequently, the sales of EU heavy commercial vehicles (>16 Ton category) in 2023
are expected to be same as those in 2022 with no growth or minimal de-growth.
To summarize the export market outlook, the truck industry in the US
and the EU is expected to witness a low single digit growth in 2023.
III. OPPORTUNITIES & THREATS
The Company supplies aluminium castings for commercial vehicles,
passenger cars and two-wheeler segments of the automotive industry.
In the long term, technology changes such as stringent emission norms,
fuel economy regulations, adoption of alternate drivetrain technologies, etc., are the
major challenges the industry needs to tackle. Global truck manufacturers are already
offering zero emission vehicles in the US and the EU. However, the thrust towards
light-weighting and zero emission vehicles is bound to increase leading to higher content
of aluminium in all vehicle types. This shift to zero emission vehicles provides increased
growth opportunities to the Company and it is well placed to leverage these emerging
opportunities, being a preferred source for aluminium castings to major OEMs in India, the
US and the EU.
Many companies are expected to move out of China, which is a major
source of supplies for automotive parts. This is expected to provide additional growth
opportunities to the Company.
OEMs are estimating carbon footprint in every leg of their supply chain
in an effort to move towards net zero emissions and would eventually reorganize their
global purchasing strategies, which could result in a strong push for localization to cut
down their carbon footprint. The threat to business from this potential change in sourcing
policy is mitigated as the Company has already set up a manufacturing in the US. The
Company is closely monitoring these developments and will act to capitalize on business
opportunities to ensure continued growth. The Company is also taking various green
initiatives across its manufacturing sites and working to use more renewable energy in its
manufacturing processes as part of its sustainability measures.
Several Indian die casting companies and OEMs have set up or have been
setting up new capacities over the past few years. The Company will be continuing its
actions to secure new businesses to ensure better utilization of assets despite the
increased competition and cost pressure.
Intense competition makes it extremely difficult to seek price
increases to compensate the effects of inflation bringing the margins under severe
pressure. However, the Company's supply contracts provide for periodic price adjustments
indexed to the domestic and international prices of aluminium and this should offer some
protection against volatility of commodity prices. The Company is practicing strong cost
reduction initiatives including VA/VE to mitigate the margin pressures.
IV. RISKS AND CONCERNS
Macroeconomic risks
There are several possible risks on the horizon, both global and
domestic level. In India, rural recovery continues to be slow, and this significantly
impacts the growth trajectory of the economy. Less than normal monsoon may also lead to a
weaker performance of the rural agricultural sector impacting the already weakened rural
demand. Further the economic recovery could be hampered due to any increase in oil &
gas price. The above stated factors can create disruption to an already fragile global
trade & supply chain situation, increased inflation, and dampen the demand.
Industry and Company specific risks
The truck sales in the US and the EU are expected to witness no growth
or low single-digit growth in 2023.
In India, increase in manufacturing activity, steady agricultural
output, and the government's increased spending on infrastructure and moderated freight
costs are all expected to drive the demand. But disruptions like semiconductor shortages
and increased raw material prices could constrain the supply.
Significant unfavourable movement in prices of key raw material,
aluminium, in global markets is one key factor that can affect the profit margins of the
Company. The aftermath of COVID led supply chain disruptions and increase in power tariff
domestically are major factors that can impact financial performance in FY24. The
management is continuously monitoring the costs of raw material & logistics and taking
appropriate cost reduction measures or contract price negotiations to maintain and improve
the profit margins.
Forex
With significant exports, import of raw materials and capital goods,
the Company is always exposed to impact on account of currency fluctuations. However, the
Company has a well-defined forex hedging policy to mitigate the risks.
Contractual
The stipulation and requirements of the automobile industry demands
high quality products. Robust quality management systems meeting international standards
like IATF 16949 are in place to ensure excellent product quality. Additionally, the
Company has also taken appropriate recall and product liability insurance in line with
standard industry practice.
Just-in-time delivery is another important contractual obligation.
Robust quality and project management systems are in place to avoid delay in deliveries
due to quality issues or project implementation.
Capacity utilization
The Company adds capacity as required, in existing and new locations,
to meet the projected demand of customers. The Company closely monitors the progress of
customer projects / volumes and appropriately deploys the assets to protect from both
underutilization and capacity shortages to meet the demand.
Risk Management Policy
The Board has established a Risk Management Policy which formalizes the
Company's approach to overview and manage material business risks. The policy is
implemented through a top down and bottom-up approach for identifying, assessing,
monitoring and managing key risks across the Company's business units.
Company's risk management framework is well embedded and continually
reviewed by the Risk Management Committee. The Committee is regularly reporting to the
Board that the Company's risk management and internal compliance and control system is
operating efficiently and effectively in all material respects.
The Board is satisfied that there are adequate systems and procedures
in place to identify, assess, monitor and manage risks. The Audit Committee also reviews
reports by members of the management team and recommends suitable action. Risk Mitigation
Policy has been approved by the Board.
V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Board is accountable for evaluating and approving the effectiveness
of the internal controls, including financial, operational and compliance. The Company has
a proper and adequate internal control system to ensure that all the assets of the Company
are safeguarded and protected against any loss and that all the transactions are properly
authorized and recorded. Information provided to management is reliable and timely and
statutory obligations are adhered to.
Company is strengthening the controls by leveraging technology and
centralizing processes, enhancing monitoring and maintaining effective tax and treasury
strategies. The Audit Committee continues to monitor the effectiveness of internal control
through the use of new technologies that impact the financial controls and reporting
enterprise risk.
Internal Financial Controls
The Company has an established Internal Financial Control framework
including internal controls over financial reporting, operating controls and anti-fraud
framework. The framework is reviewed regularly by the management and tested by internal
audit team and presented to the Audit Committee. Based on periodical testing, the
framework is strengthened, from time to time, to ensure adequacy and effectiveness of
Internal Financial Controls.
VI. OPERATIONS REVIEW
A. Manufacturing
The Company has been using Total Quality Management (TQM) as the
foundation of its management. The Company implemented the best practices like Total
Productivity Management (TPM) and Lean Manufacturing (TPS) in its manufacturing
facilities. During FY23, the Company continued working with mentors to improve its systems
and processes. Significant aspect of the same is to synchronize Company?s operations
with customer demand. This will bring in better planning and execution system along with
control over inventories in the pipeline. It also has in place best-in-class practices for
safety, pollution control, work environment, water and energy conservation.
Continuous improvement projects are implemented for betterment of the
product quality and operational efficiency in all the manufacturing locations.
Re-energizing TPM practices helped in improving the equipment reliability and consequently
plant Overall Equipment Effectiveness (OEE). The Company has also initiated various
projects towards deploying Industry 4.0 practices through connected machines. This will be
scaled up in the coming years and is expected to bring significant gains in operational
efficiencies across manufacturing locations.
The Company's journey of achieving manufacturing excellence was
recognized and rewarded by the following customers during FY23.
Cummins - Customer support Excellence Award - Direct sourcing
for the year 2021.
DAF - Recognized SCL in "Leaders category". SCL is one
among 17 suppliers globally to be selected for this recognition for the 3rd consecutive
year.
Ford - Awarded for Quality and Flow for Panther 2.0 L engine
launch.
Hanon - Awarded as the Best Quality Consistent supplier.
In addition, the Company has also received Best Foundry Award in large
scale category at the casting industry event, ALUCAST 2022.
In line with the Company's vision, work is being done on developing
several futuristic technologies that will bring value to the customer. One such technology
that is now being offered to customers is the Abrasive Flow Machining (AFM) process for
which patent is owned in USA and EU. New orders are being given for the AFM technology and
our customers are delighted with our R&D facilities and technologies.
B. Quality
Achieving customer delight by consistently providing products of
excellent quality is the prime motto of the Company. This is achieved through
state-of-the-art technology, training, effective quality system, continuous improvement
and total employee involvement.
Poka-yokes, process audits, use of statistical tools for process
optimization and online process controls also contribute towards improving and achieving
consistency in product quality. During the year special focus has been given on advanced
statistical methods and widespread use of Taguchi DOE methodology to further improve the
product quality. The quality system is certified for IATF 16949 requirements.
TQM is a way of life in the Company. 100% employee involvement has been
successfully achieved for many years.
Employees have completed 362 projects by applying statistical tools
through Quality Control Circles (QCC) in FY23. The average number of suggestions
implemented per employee was 44.
C. Cost Management
Cost management is a continuous journey, and the Company manages the
same through rigorous deployment, monitoring and control of costs across all departments.
Cross functional teams are working on projects focussed on Value Added / Value Engineering
(VA/VE) and improving operational efficiency. TPM and Lean initiatives are deployed
Company-wide to achieve reduction in manufacturing cost. Given the cost pressures due to
the current inflationary pressures, significant cross functional team working ensured
mutual cross learning and fast horizontal deployment of ideas/projects across our
manufacturing locations.
D. Information Technology
The Company uses ERP system that integrates all business processes
across the Company. Suppliers and customers are also integrated into the system for better
planning and execution. During FY23, IT road map for organization was laid out and
deployment of Industry 4.0 projects was initiated to monitor, control and improve
manufacturing processes and quality. The Industry 4.0 projects have progressed as per plan
and selected cells in all the factories are connected. The Company worked with external
agency during the previous financial year and improved the cyber security controls and
mechanisms achieving a score of 3.62 / 5.0 and placing it amongst the leaders in the auto
component industry. The cyber security program with external agency is ongoing to sustain
and improve the security controls. As we move towards digitalization of our processes and
systems, special focus is being given to enhance the Information Security of our networks
with a special emphasis on cyber security aspects. These digitalization measures across
various functions will ensure all the processes and systems are optimised and aligned to
deliver customer delight.
VII. KEY FINANCIAL RATIOS
As required under Regulation 34 of the Listing Regulations, details of
changes in some of the ratios, as compared to the previous year are given below:
|
Unit of |
Standalone |
Consolidated |
Particulars |
measurement |
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Return on Networth $ |
% |
30.47 |
23.91 |
20.97 |
16.12 |
Net Debt to Equity ** |
% |
0.93 |
0.25 |
3.75 |
2.20 |
Interest Service Coverage Ratio $ |
Times |
8.53 |
7.57 |
11.57 |
6.87 |
$ The ratios have improved in the current year,
predominantly due to higher profits driven by better operational performance. ** Due to
capitalisation of reserves for issue of bonus preference shares.
VIII. NON-CONVERTIBLE DEBENTURES
The Company had issued and allotted 1,000 unsecured, redeemable,
non-convertible debentures (NCD) of face value of $ 10 Lakhs each on 18th
August 2020 aggregating to $ 100 Crores at 7.65% p.a. and redeemable in equal instalments
at the end of 4th year and 5th year. The NCDs were listed with
National Stock Exchange of India Limited (NSE) on 25th August 2020.
IX. HUMAN RESOURCE DEVELOPMENT
The Company considers employees as vital and most valuable assets.
Human Resource Development (HRD) is aligned to business needs to enhance business
performance and results. HRD is practiced through an overall HRD framework with its
constituents as resourcing, employee engagement, performance & compensation
management, competency- based development, career & succession planning and
organization development. Each of these constituents has a structured approach and process
to deliver.
As a part of the long-term strategy of the Company, collaborative
education program has been initiated with three reputed institutes to develop role-ready
engineers with Company-specific knowledge at the entry level. The Company also revamped
and launched the yellow belt and green belt programs during the year along with various
other systems-oriented training programs. This is expected to not only help solve chronic
problems faced on the shop floor but also help in building the competency of our engineers
in structured problem solving.
Career development workshop is conducted to identify high potential
employees. Such employees are groomed for taking up higher responsibilities. A reward and
recognition systems are in place to motivate and also provide fast track growth for the
high potential employees.
Our engineers and executives are sponsored for advanced study offered
by both Indian and foreign institutions. Customized technical and leadership competency
improvement programs are developed and delivered through reputed institutions.
The Company continuously measures and reports employee engagement every
year and identifies improvement areas to work on.
An excellent industrial relations environment continues to prevail at
all the manufacturing units of the Company.
X. ENVIRONMENT, HEALTH & SAFETY
The Company is fully committed towards employee safety. Safety
management is integrated with the overall Environment, Health and Safety (EHS).
The Company has been certified under Integrated Management System (IMS)
combining ISO 14001 and ISO 45001 systems and procedures.
The Company is working on its Sustainability roadmap by engaging with a
reputed external agency. The Company has already mapped the carbon footprint of its Indian
operations and is now working on detailed roadmap with actions to achieve carbon
neutrality.
XI. CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis Report describing
the Company's objectives, projections, estimates and expectations may be "forward
looking statements" within the meaning of applicable securities laws and regulations.
Actual results could differ materially from those expressed or implied. Important factors
that could make a difference to the Company's operations include, amongst others, economic
conditions affecting demand / supply and price conditions in the domestic and overseas
market in which the Company operates, changes in the Government Regulations, Tax Laws and
Other Statutes and Incidental Factors.
CORPORATE RESTRUCTURING
(I) COMPOSITE SCHEME OF ARRANGEMENT OF THE
COMPANY FOR ISSUE OF BONUS REDEEMABLE PREFERENCE SHARES AND DEMERGER OF
MANUFACTURING UNDERTAKING
The Board at its meeting held on 9th February 2022 has
approved the above Composite Scheme of Arrangement ("Composite Scheme")
of the Company, on the recommendation of the Audit Committee and Independent Directors at
their respective meetings held on that date. The Company had filed the Scheme with the
Stock Exchanges viz., BSE Limited ("BSE") and National Stock
Exchange of India Limited ("NSE") for "No Objection".
The Scheme provides for the following Parts:
(i) Part I- Deals with definitions, share capital and date of taking
effect and implementation of the Scheme;
(ii) Part II - Deals with the issue of Non-Convertible Redeemable
Preference Shares ("NCRPS") of the Company by way of bonus to the
shareholders of the Company by utilising the general reserves / retained earnings;
(iii) Part III - Deals with the amalgamation of the TVS Holdings
Private Limited ("TVSH") with the Company and cancellation of the share
capital of the Company held by the TVSH and the consideration thereof;
Further the name of the Company shall stand changed to "TVS
Holdings Limited".
(iv) Part IV - Deals with the amalgamation of VS Investments Private
Limited ("VSIPL") with the Company and cancellation of the share capital
of the Company held by the VSIPL and the consideration thereof; and
(v) Part V - Deals with the demerger, transfer and vesting of the
Demerged Undertaking (as defined in the Scheme) from the Company into Sundaram-Clayton DCD
Limited ("SCL DCD") on a going concern basis, reduction and cancellation
of the paid-up share capital of SCL DCD held by the Company and the consequent issue of
shares of SCL DCD by SCL DCD to the shareholders of the Company.
Post Demerger, the name of SCL DCD shall stand changed to
"Sundaram-Clayton Limited".
During the year under review, NSE and BSE by their respective letter
dated 29th July, 2022, issued to the Company their "No Objection"
on the Scheme, and based on their No Objection, the Company filed an application with
Hon'ble National Company Law Tribunal, Chennai Bench, ("Hon'ble NCLT")
for approval of the Composite Scheme.
Hon'ble NCLT vide their Order dated 9th November, 2022,
directed to convene the meetings of the Equity Shareholders, Unsecured Creditors of the
Company, and Secured Creditors of VSIPL, on 16th December, 2022 ("NCLT
Convened Meeting") for their approval. Pursuant to the directions of Hon'ble
NCLT, the NCLT Convened Meetings were held, and the resolutions were passed with requisite
majority. Post the approval of the shareholders and creditors, the Company filed a
petition with Hon'ble NCLT, and the Composite Scheme was sanctioned vide its Order dated 6th
March, 2023.
The Board at its meeting held on 13th March, 2023, noted the
Hon'ble NCLTs Order and the first part of the Composite Scheme was made effective on 14th
March, 2023. The Board also authorised the issuance of bonus NCRPS, by fixations of Record
Date 1 as 24th March, 2023, for the purpose of determining the eligible
shareholders of the Company.
The Company has made an application for seeking listing and trading
approvals for the above NCRPS to the Stock Exchanges, and the Company has received the
in-principle approval of NSE vide letter dated 27th April, 2023. Approval from
BSE is awaited. Further, the listing and trading approvals will be provided, subject to
the relaxation granted by SEBI under sub-rule (7) of Rule 19 of Securities Contract
(Regulation) Rules, 1957.
The Company will intimate to the Shareholders on further developments
in connection with other Parts of the Composite Scheme.
5. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies
Act, 2013, (the Act, 2013) with respect to Directors' Responsibility Statement, it is
hereby stated that -
i. in the preparation of annual accounts for the financial year ended
31st March 2023, the applicable Accounting Standards had been followed along
with proper explanation relating to material departures, if any;
ii. the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for the year under review;
iii. the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the Act,
2013 for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
iv. the Directors had prepared the accounts for the financial year
ended 31st March 2023 on a "going concern basis";
v. the Directors, had laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively; and
vi. the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
6. CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR activities have already been textured into the Company's value
system through Srinivasan Services Trust (SST), established in 1996 with the vision of
building self-reliant rural community.
Over 27 years of service, SST has played a pivotal role in changing
lives of people in rural India by creating self-reliant communities that are models of
sustainable development. The Committee formulated and recommended a CSR Policy in terms of
Section 135 of the Act, 2013 along with a list of projects / programmes to be undertaken
for CSR spending in accordance with the Companies (Corporate Social Responsibility Policy)
Rules, 2014. The projects / programmes undertaken by SST and other eligible Trusts are
falling within the CSR activities as specified under Schedule VII to the Act, 2013.
Based on the recommendation of the CSR Committee, the Board has
approved the projects / programmes carried out as CSR for an amount of $ 45 lakhs for
undertaking similar programmes / projects constituting more than 2% of the average net
profits of the Company, made during the three immediately preceding financial years,
towards CSR spending for the financial year 2022-23 and the Company has met the CSR
spending through SST. Chief Financial Officer (CFO) of the Company has also ensured the
spending through SST for FY 2022-23.
The work, SST has been doing, has matured into a model centered on
community participation in all its projects. It follows an integrated, holistic and
participatory approach to village development, working very closely with the communities
and the Government. SST's focus is to bring about sustainable development in villages. The
key focus areas are women empowerment, repairing and renovating the village government
infrastructure like the balwadis, primary schools, health centres and veterinary centres,
creation of water conservation structures, desilting of water bodies and preserving the
environment. SST encourages the community to alter their attitudes and take ownership of
changes that bring about lasting development.
To bring in expertise in specific intervention areas like education,
health and hygiene, SST is working in collaboration with organizations like Agastya
International Foundation, Villmart, Navsahyog Foundation and Gramalaya.
All of the projects undertaken through SST, are within the limit of
$ 1 Cr individually, and do not require impact assessment.
However, an impact study carried out by Institute of Rural Management
(IRMA), Anand has revealed that in the villages in Tiruvannamalai District, where SST has
been working show a household income growth of about 141% in 5 years (2017-2022) as
compared only to an 38% household income growth in neighbouring areas.
The study also highlights the overall behavioural changes in the
community in their approach to development in being more independent and adopting
sustainable approaches rather than over dependence on external factors to bring about the
change.
Another study by the Centre for Water Resources (CWR), Anna University
on 3 minor irrigation (MI) tanks in Krishnagiri, Tiruvannamalai and Tirunelveli districts
revealed that partial desilting of water bodies has made the water available for more than
one cropping season, 79% of farmers adopted changes in the cropping pattern and
cultivating more than one season. The underground water storage capacity has improved and
there is an increase in water level in bore wells and open wells in the area.
As required under Section 135 of the Act, 2013 read with Rule 8 of the
Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual Report on CSR,
containing the particulars of the projects / programmes approved and recommended by the
CSR Committee and approved by the Board for the financial year 2022-23 are given by way of
Annexure IV attached to this Report.
It may also be noted that the CSR Committee has approved the projects
or programmes to be undertaken by the SST and other eligible trusts for the year 2023-24,
preferably in local areas including the manner of execution, modalities of utilisation of
funds and implementation schedules and also monitoring and reporting mechanism for the
projects or programmes, as required under the Companies Amendment Act, 2020.
7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES &
ASSOCIATES
Acquisitions
During the year under review, the Company had additionally acquired
50.05% stake in Sundaram Holding USA Inc., USA (SHUI) from Sundaram Auto Components
Limited (SACL), a subsidiary of the Company on 22nd September 2022, thereby it
became a wholly owned subsidiary of the Company effective that date.
Consequent to the above acquisition, the Company's holding in SHUI
increased to 100% and thereby SHUI's subsidiaries in USA viz., Green Hills Land Holding
LLC, Component Equipment Leasing LLC, Sundaram-Clayton USA LLC and Premier Land Holding
LLC have also become wholly owned subsidiaries of the Company.
The Company had also acquired 25,000 shares of EUR 1/- each in
Sundaram-Clayton GmbH (SCL GmbH), Germany, effective 8th February 2023, thereby
it became a wholly owned subsidiary of the Company. SCL GmbH is incorporated with the
objective of establishing an engineering design centre.
The following companies and bodies corporate are the subsidiaries /
associates of the Company:
Subsidiaries
1. TVS Motor Company Limited, Chennai (TVSM)
2. Sundaram-Clayton (USA) Limited, USA
3. Sundaram-Clayton DCD Limited, Chennai
4. Sundaram Holding USA Inc, Delaware, USA
5. Sundaram-Clayton GmbH, Germany (from 08.02.2023)
Subsidiaries of TVSM
1. TVS Credit Services Limited (TVSCS), Chennai
2. Sundaram Auto Components Limited (SACL), Chennai
3. TVS Housing Limited, Chennai
4. TVS Motor Services Limited, Chennai
5. Intellicar Telematics Private Limited, Bengaluru (Intellicar)[upto
24.05.2022]
6. TVS Electric Mobility Ltd, Chennai
7. PT TVS Motor Company Indonesia, Jakarta.
8. TVS Motor (Singapore) Pte. Limited, Singapore (TVSM Singapore)
9. TVS Motor Company (Europe) B.V., Amsterdam
Subsidiaries of TVS CS
10. Harita ARC Private Limited, Chennai
11. TVS Housing Finance Private Limited, Chennai 12. Harita Two-wheeler
Mall Private Limited, Chennai
Subsidiaries of TVSM, Singapore
13. The GO Corporation, Switzerland (GO AG),
14. Swiss E-Mobility Group (Holding) AG, Switzerland (SEMG) 15. The
Norton Motorcycle Co Limited, UK
16. TVS Digital Pte Ltd, Singapore 17. EBCO Limited, UK
18. Celerity Motor GmbH, Germany (From 06.12.2022)
Subsidiaries of GO AG
19. EGO Movement, Stuttgart GmbH, Germany
Subsidiaries of SEMG
20. Swiss E-Mobility Group (Schweiz), Switzerland 21. Colag E-Mobility
GmbH, Germany
22. Alexand'Ro Edouard'O Passion V?lo S?rl (From 12.04.2022)
Subsidiary of Intellicar
23. Intellicar Singapore Pte Ltd [upto 24.05.2022]
Subsidiaries of Sundaram Holding USA Inc.
24. Green Hills Land Holding LLC, South Carolina, USA 25. Components
Equipment Leasing LLC, South Carolina, USA 26. Sundaram-Clayton (USA) LLC, South Carolina,
USA 27. Premier Land Holding LLC, South Carolina, USA
Associates
1. Emerald Haven Realty Limited, Chennai and its subsidiaries
2. TVS Training and Services Limited, Chennai
3 Sundram Non-Conventional Energy Systems Limited, Chennai
SUBSIDIARIES / ASSOCIATES
TVS Motor Company Limited (TVSM)
TVSM is engaged in the business of manufacture of two and three
wheelers. During the year 2022-23, TVSM's total revenue including other income was $
26,478.66 Cr and earned a profit after tax of
$ 1,491.03 Cr.
TVSM for the year 2022-23, declared interim dividend of $ 5 per share
(500%) absorbing a sum of $ 237.54 Cr on 47,50,87,114 equity shares of $1 each. The same
was paid on 9th February 2023.
Sundaram-Clayton (USA) Limited
Sundaram-Clayton (USA) Limited, a wholly owned subsidiary of the
Company is engaged in the business of providing Professional Employer Organisation
("PEO") services to the employees of the Company.
Sundaram-Clayton DCD Limited, Chennai
Sundaram-Clayton DCD limited is a wholly owned subsidiary of the
Company. This entity will carry on the business of Die-Casting upon demerger.
Sundaram Holding USA Inc., USA (SHUI) & its subsidiaries
Sundaram Holding USA Inc., USA (SHUI), a company established under the
applicable provisions of Laws of The United States of America.
SHUI's wholly owned subsidiaries are:
1. Green Hills Land holding LLC, South Carolina, USA
2. Component Equipment Leasing LLC, South Carolina, USA
3. Sundaram-Clayton USA LLC, South Carolina, USA
4. Premier Land Holding LLC, South Carolina, USA
During the year 2022-23, the Company had acquired an additional stake
of 50.05% in SHUI from Sundaram Auto Components Limited (SACL), a subsidiary of the
Company.
Consequent to the above acquisition, the Company's holding in SHUI
increased to 100% and thereby SHUI's subsidiaries in USA viz., Green Hills Land Holding
LLC, Component Equipment Leasing LLC, Sundaram-Clayton USA LLC and Premier Land Holding
LLC have also become wholly owned subsidiaries of the Company.
Sundaram-Clayton GmbH, Germany (SCL GmbH)
The Company had acquired 25,000 shares of EUR 1/- each in
Sundaram-Clayton GmbH (SCL GmbH) effective 8th February 2023. Sundaram-Clayton
GmbH (SCL GmbH), a wholly owned subsidiary of the Company is yet to commence it
operations. SCL GmbH is incorporated with the objective of establishing an engineering
design centre.
Sundaram Auto Components Limited (SACL)
The total income of SACL was $ 787 Cr in the current year as against
$ 608 Cr in the previous year 2021-22.
SACL earned a profit before tax of $ 24.08 Cr after incurring an
exceptional cost of $ 1.87 Cr during the year 2022-23 as against profit of $ 4.30 Cr in
the previous year after exceptional cost of $ 6.00 Cr. Exceptional cost includes
separation cost. SACL is a wholly owned subsidiary of TVSM.
TVS Housing Limited (TVSH)
TVS Housing Limited is a wholly owned subsidiary of TVSM.
TVS Motor Services Limited (TVS MS)
TVS MS was incorporated as the investment SPV of the Company, for
funding TVS Credit Services Limited (TVS CS).
TVS MS now holds 0.48% only in TVS CS and TVS MS continues to be a
wholly owned subsidiary of TVSM.
TVS Credit Services Limited (TVS CS)
TVS CS is the retail finance arm of the Company for financing of two
wheelers. TVS CS is a Non-Banking Finance Company catering to financing of retail focussed
products such as two-wheelers, used cars, used and new tractors, used commercial vehicles,
consumer durables, digital finance products and personal loans. TVS CS primarily caters to
self-employed, new to credit borrowers in the semi-urban and rural areas in the country.
During the year 2022-23, TVS CS's overall disbursements registered at $
21,652 Cr as compared to $12,533 Cr in the previous year registering growth of 73%.
During the year under review, the assets under management are around
$ 20,602 Cr as against $13,911 Cr during the previous year registering
a growth of 48%.
Total income during the financial year 2022-23 increased to $ 4,160 Cr
from $ 2,755 Cr during the financial year 2021-22, an increase of 51% over previous year.
The profit before tax after exceptional items for the year stood at $
511 Cr as against $ 151 Cr during the previous year registering a growth of 238%.
The following companies are the subsidiaries of TVS CS.
1. Harita ARC Private Limited, Chennai
2. TVS Housing Finance Private Limited, Chennai
3. Harita Two-wheeler Mall Private Limited, Chennai
All the above subsidiaries are yet to commence their operations.
TVS Electric Mobility Ltd, Chennai (TVSEM)
The Company was incorporated on 13th December, 2021 to
undertake Electric Mobility business. The entire shares of TVSEM have been subscribed by
TVSM and hence, TVSEM is a wholly owned subsidiary of TVSM. The Company is yet to commence
its operations.
TVS Motor Company (Europe) B.V
TVS Motor Company (Europe) B.V. was incorporated with a view to serve
as special purpose vehicle for making and protecting the investments made in overseas
operations of PT TVS.
TVS Motor (Singapore) Pte. Ltd
TVS Motor (Singapore) Pte Limited, a wholly owned subsidiary of the
Company through its subsidiary TVS Digital Pte. Ltd. During the year, TVSM has invested a
sum of SGD 91.53 Mn in the ordinary shares of SGD 1/- each of TVS Motor (Singapore) Pte
Limited.
The Company serves as a special vehicle for investments made in
overseas subsidiaries / associates.
PT. TVS Motor Company Indonesia (PT TVS)
PT TVS has posted Operating PBT of USD 5.6 Mn. for the full year.
PT TVS recorded sales of 19,096 nos. of three wheelers as against
11,043 nos. of sales during the previous year (growth of 73%) and 88,067 nos. of two
wheelers as against 86,025 nos. in last year, thereby registering a growth of 2%.
The growth in sales numbers, coupled with effective management of fixed
costs enabled PT TVS to achieve EBITDA of USD 8.3 Mn. (7.9% on turnover) as against USD
5.3 Mn. (6.4% on turnover) in last year.
Swiss E-Mobility Group (Holding) AG (SEMG)
During the previous year, TVSM acquired majority stake in Swiss
E-Mobility Group and its subsidiaries viz., Swiss E-Mobility Group (Schweiz) and Colag
E-Mobility GmbH through TVS Motor (Singapore) Pte Ltd.
The acquisition reaffirms TVSM's commitment to expansion in Europe,
largest eBike market outside of China, through a portfolio of premium and technology
leading brands including EGO Movement.
SEMG is a market-leading provider of e-mobility solutions within the
DACH region, operating the largest pure-play ebike retail chain m-way in Switzerland. SEMG
currently has a physical network of 33 stores at strategic locations across Switzerland
and two online e-commerce platforms for distribution of its products.
SEMG has strong omnichannel distribution and aspirational brands,
including Cilo, Simpel, Allegro and Zenith-Bikes.
SEMG is No. 1 in Switzerland with a market share of 20%. During last
calendar year 2022, SEMG Group reported a revenue of USD 69.5 Mn and a loss of USD 11.2
Mn. With further growth planned on physical stores and expansion further into the DACH
region, the expected revenue for the current calendar year 2023 is around USD 104 Mn. SEMG
acquisition gives an opportunity to grow in personal mobility business including e-kick
scooters and e-cargo bikes which are emerging trends.
E-bikes are emerging as the leading personal mobility solution in
Europe due to the increased ease of usage, regulatory support and overall perception as a
sustainable form of transport. With a current penetration of approximately 15% of the
total bicycle population in Europe and growing at a CAGR of ~18%, the market for the
e-bicycle holds significant growth potential. The global Industry for E-bikes is expected
to touch USD 25 bn in 5 years.
This acquisition of eBike business having a good market share and
opportunity to drive further value will augur well for the TVSM & the Company in the
long run.
The GO Corporation, Switzerland (the GO AG)
In September 2021, TVSM acquired majority stake in the GO AG,
Switzerland and its subsidiary EGO Movement through TVS Motor (Singapore) Pte Ltd.
Over the past decade, the personal mobility landscape has evolved
significantly with the global sustainability agenda, increasing urbanisation and
advancement in battery technology.
EGO Movement's product portfolio focuses on delivering sustainable
products with the latest technology and stylish designs. A powerful battery is blended
harmoniously into the frame, whose ergonomic design allows for a comfortable upright
sitting position. In addition, EGO Movement's Connectivity platform is enhancing security
and convenience for the vehicle's user with smart features such as keyless-go, GPS
location with theft alarm and access-sharing. The unique and innovative design philosophy
has earned the company multiple awards, including the prestigious Red Dot Award and in
2022 the German Brand Award.
This acquisition is in line with the Company's commitment towards
electrification and the broader sustainability agenda for building an aspirational product
portfolio while nurturing sustainable and scalable brands. EGO Movement is a Swiss
technology company providing innovative mobility solutions through a portfolio of e-bikes,
e-cargo bikes and matching accessories.
EGO Movement has a strong presence in Europe with customer-centric
products, a unique omnichannel network and a visionary team at its helm.
The Norton Motorcycle Co Limited, UK
During the financial year 2022-23, The Norton Motorcycle Co. Limited
(UK) (Norton) has started handing over the bikes to the Customers from the new state of
art facility established in Solihull, United Kingdom.
Norton has launched new 'Commando 961 Sports' bike with completely
redesigned components. A clear distribution strategy has been established with plans to
have a mix of sales direct to customer and through dealers. It has already set up few
dealers in United Kingdom and has formed or firmed up its product plan with a series of
new products to be launched in coming years catering to various markets and segments in
the premium motorcycle market.
Norton will continue to focus on improving the quality standards and
supply chain as it steps ups the production volumes and for the new products in the coming
years as part of its journey of relaunching this iconic brand to its rightful place at the
global level.
TVS Digital Pte Ltd, Singapore
TVS Digital Pte Limited, Singapore is a wholly owned subsidiary of TVS
Motor (Singapore) Pte Limited. The Digital start-up offers a range of solutions across
their Auto-tech and Fintech platforms and have secured clients in Bangladesh, Bolivia,
India, Indonesia, Nepal, Philippines and Singapore.
The product offerings centre around Credit Decisioning and Collections
in Fintech and a suite of Sales acceleration and Consumer Experience enhancements apps in
the Auto-tech platform that is also finding applicability in Real Estate and B2B
businesses.
Revenue streams have commenced and the team is now focused on
exponential growth through scale and adoption to help deliver focused unit economics
objectives.
Associates:
Emerald Haven Realty Limited (EHRL)
During the year, EHRL registered a sales booking value (BV) of
$ 930 Cr the highest ever annual sales BV in the history of EHRL, with
a growth of 189%, backed by strong sales across new launches and sustenance projects EHRL
a worked on various value engineering measures to control operating and fixed costs, which
helped in the operating performance of the Company.
EHRL completed 4 land acquisitions across Chennai and Bangalore with a
sales BV potential of $ 1,250 Crs for the year under review. The Company has completed
development of 2.4 Million Sft till date and the balance area under development as on date
is 6.25 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
TVS Training and Services Limited (TVS TSL)
TVS training services to various industries and is participating in the
National Skill Development Projects. During the year, TVS TSL earned an income of $ 43.58
Cr and profit after tax for the year ended 31st March 2023 was $ 0.71 Cr.
TVSTSL is engaged in the business of establishing and providing vocational
Sundram Non-Conventional Energy Systems Limited (SNCES)
SNCES is engaged in the business of generation of power. During the
year 2022-23, the SNCES earned a total revenue of $ 3.04 Cr and Profit after tax was $
3.59 Cr.
8. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company are prepared in
accordance with the provisions of Section 129 of the Act, 2013 read with the Companies
(Accounts) Rules, 2014 and Regulation 33 of Listing Regulations along with a separate
statement containing the salient features of the financial performance of subsidiaries /
associates, in the prescribed form. The audited consolidated financial statements together
with Auditors' Report forms part of the Annual Report.
The financial statements of the subsidiary companies will be made
available to the Shareholders, on receipt of a request from any
Shareholder and it has also been placed on the website of the Company.
This will also be available for inspection by the Shareholders at 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
& associates amounted to $ 2,013.32 Cr for the financial year 2022-23 as compared to $
1,184.20 Cr in the previous year.
9. DIRECTORS & KEY MANAGERIAL PERSONNEL
Special Recognition to Mr Venu Srinivasan, Chairman Emeritus &
Managing Director
Mr Venu Srinivasan was honoured with the "Outstanding Institution
Builder" of the year by AIMA (All India Management Association) at its 13th
Managing India Awards in recognition of excellence in Business Leadership and Management
and his significant contributions in building and shaping an institution, driving its
growth, and creating a lasting legacy.
Directors' appointment / re-appointment / cessation/ demise
During the year under review :
Mr R Gopalan, was appointed as Chairman effective 1st April
2022 and Mr Venu Srinivasan was designated as Chairman Emeritus & Managing Director
(CE & MD) effective 1st April 2022.
Dr. Lakshmi Venu was elevated as Managing Director of the Company
effective 6th May 2022.
Mr R Gopalan ceased to be an Independent Director on 23rd
July 2022 consequent to the expiry of second term of Independent Directorship. He was
subsequently appointed as Non-Executive Non-Independent Director on the Board effective 29th
July 2022, on the recommendation of the Nomination and Remuneration Committee with the
approval of the shareholders through postal ballot on 7th September 2022.
Mr Anuj Shah and Mr C R Dua, Directors were appointed as Non-Executive
Independent Director(s) (NE-ID) for a term of five consecutive years with effect from 29th
July 2022 and 13th March 2023, respectively, on the recommendation of the
Nomination and Remuneration Committee (NRC). The shareholders have approved their
appointment by way of special resolution through postal ballot on 7th September
2022 and 27th April 2023, respectively.
NRC had carried out evaluation of the appointed Directors before the
appointment on various parameters viz., integrity, qualification, expertise, experience
and it has satisfied itself with the positive attributes of the Directors in accordance
with the Nomination and Remuneration (NR) Policy read with the provisions of Section 178
of the Act, 2013 and the Listing Regulations.
Directors' cessation / demise
During the Year under review, Mr S Santhanakrishnan, Mr Kamlesh Gandhi,
Mr V Subramanian and Mr R Vijayaraghavan ceased as Independent Directors effective 20th
August 2022 consequent to the expiry of second term as Independent Directors and thereby
they also ceased as members of Committees wherever they held membership.
The Board recorded its appreciation on the contributions made by Mr S
Santhanakrishnan, Mr V Subramanian, Mr R Vijayaraghavan and Mr Kamlesh Gandhi and also
their uniqueness in handling issues to the granularity which made an indelible impression
on all directors of the Company.
The Board noted and appreciated the strategic initiatives, inquisitive
nature in dealing with operational issues by the Independent Directors, insights and
guidance provided to the management especially in legal, Banking and financial management
made the Board as an accomplished one.
With profound grief, the Board condoles the demise of Vice Admiral P J
Jacob, Independent Director of the Company, on 22nd January 2023. Vice Admiral
P J Jacob had been associated with the group for more than sixteen years. The Board
records the excellent contribution made by Vice Admiral P J Jacob during his tenure as an
Independent Director of the Company.
In terms of the provisions of sub-section (6) read with explanation to
Section 152 of the Act, 2013 two-thirds of the total number of Directors i.e., excluding
IDs, are liable to retire by rotation and out of which, one-third is liable to retire by
rotation at every annual general meeting. Mr Venu Srinivasan and Mr Rajesh Narasimhan are
liable to retire by rotation, at the ensuing AGM, and being eligible, offer themselves for
re-appointment.
The Directors have recommended their re-appointment for the approval of
shareholders. Brief resume of the Directors are furnished in the Notice convening the AGM
of the Company.
Independent Directors (IDs)
All IDs hold office for a fixed term of five years and are not liable
to retire by rotation.
As at 31st March 2023, M/s C R Dua, Anuj Shah and Sasikala
Varadachari are the Independent Directors of the Company.
Ms Sasikala Varadachari was appointed by the Board effective 24th October
2018 as NE-ID for a term of five consecutive years effective that date and the same was
approved by the shareholders at the 57th AGM held on 23rd July 2019.
The terms of appointment of IDs include the remuneration payable to
them by way of fees and profit related commission, if any.
The terms of IDs cover, inter-alia, duties, rights of access to
information, disclosure of their interest / concern, dealing in Company's shares,
remuneration and expenses, insurance and indemnity. The IDs are provided with copies of
the Company's policies and charters of various Committees of the Board.
In accordance with Section 149(7) of the Act, 2013, all IDs have
declared that they met the criteria of independence as provided under Section 149(6) of
the Act, 2013 and Regulation 25 of the Listing Regulations and the Board confirms that
they are independent of the management.
The detailed terms of appointment of IDs is disclosed on the Company's
website in the link as provided in page no. 93 of this Annual Report.
All the IDs have registered with the databank of Independent Directors
developed by the Indian Institute of Corporate Affairs in accordance with the provisions
of Section 150 of the Companies Act, 2013 and obtained ID registration certificate and
renewed the same for five 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 27th
March 2023.
Based on the set of questionnaires, complete feedback on
Non-Independent Directors and details of various activities undertaken by the Company were
provided to IDs to facilitate their 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 and Executive Directors viz., M/s. Venu
Srinivasan, Dr. Lakshmi Venu and Mr K Gopala Desikan and Non-IDs viz., M/s. Sudarshan
Venu, Rajesh Narasimhan and R Gopalan and also of Chairman of the Board and the Board as a
whole, for the year 2022-23.
IDs evaluated the performance of all Non-IDs individually, through a
set of questionnaires. They reviewed the developing strategic plans aligned with the
vision and mission of the Company, displaying leadership qualities for seizing the
opportunities and priorities, developing and executing business plans aware of the risks
involved, establishing an effective organizational structure, and demonstrating high
ethical standards and integrity and commitment to the organization besides participation
at the Board / Committee meetings, effective deployment of knowledge and expertise and
constructive comments/ guidance provided to management by the Non-IDs.
They have also noted the milestones achieved by the Company during the
year under review.
IDs were satisfied fully with the performance of all Non-IDs.
(b) Chairman
The IDs reviewed the performance of Chairman of the Board.
The IDs also placed on record their appreciation of Chairman's high
level of integrity & objectivity and judicious approach, and brings his vast
experience, helps to steer Board discussions and decisions for the benefit of the Company
and Shareholders.
(c) Board
IDs also evaluated Board's composition, size, mix of skills and
experience, its meeting sequence, effectiveness of discussion, decision making, follow up
action, so as to improve governance and enhance personal effectiveness of Directors.
The evaluation process focused on Board Dynamics and the Board upon
evaluation concluded that it is well balanced in terms of diversity of experience with
expert in each domain viz., Engineering, Leadership/ Strategy, Finance, Information
Technology, Marketing, Legal and
Regulatory and Governance. The Company has a Board with wide range of
expertise in all aspects of business.
IDs recorded that they were always kept involved through open and free
discussions and provided additional inputs in emerging areas being forayed into by the
Company and high levels of Corporate Governance in all management discussion and decisions
were maintained.
The IDs unanimously evaluated the prerequisites of the Board viz.,
formulation of strategy, acquisition & allocation of overall resources, setting up
policies, directors' selection processes and cohesiveness on key issues and satisfied
themselves that they were adequate.
They were satisfied with the Company's performance in all fronts and
finally concluded that the Board operates with best practices.
(d) Quality, Quantity and Timeliness of flow of Information between the
Company, Management and the Board
All IDs have expressed their overall satisfaction with the support
received from the management and the excellent work done by the management during the year
under review and also the relationship between the top management and Board is smooth and
seamless.
The Company is in compliance with the statutory requirements under both
the Companies Act and Listing Regulations and all the information provided to the
Directors are very wholesome.
The information provided for the meetings were clear, concise and
comprehensive to facilitate detailed discussions and periodic external presentations on
specific areas well supplemented the management inputs. The emerging e-technology was duly
incorporated in the overall review of the Board.
KEY MANAGERIAL PERSONNEL (KMP)
Mr Venu Srinivasan, Chairman Emeritus & Managing Director, Dr.
Lakshmi Venu, Managing Director, Mr K Gopala Desikan, Director and Group Chief Financial
Officer, Mr Vivek S Joshi, Chief Executive Officer, and Mr R Raja Prakash, Company
Secretary are the 'Key Managerial Personnel' of the Company in terms of Section 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 of the Board to ensure an appropriate mix of abilities, experience and
diversity to serve the interests of all stakeholders of the Company.
Nomination and Remuneration Policy was approved by the Board at its
meeting held on 24th September 2014 and amended from time-to-time to maintain
consistency and statutory amendments to be reflected in the policies to make it upto date
and more comprehensive. The objective of such policy shall be to attract, retain and
motivate executive management and devise remuneration structure to link to Company's
strategic long term goals, appropriateness, relevance and risk appetite.
NRC will identify, ascertain the integrity, qualification, appropriate
expertise and experience, 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
Directors, criteria of making payments to Non-Executive Directors have been disclosed as
part of Corporate Governance Report attached herewith.
Remuneration payable to Non-Executive Independent Directors
The shareholders at the 59th AGM held on 30th
July 2021 renewed the authorization for the payment of remuneration by way of commission
not exceeding 1% of the net profits, in aggregate, payable to Non-Executive and
Independent Directors of the Company (NE-IDs) for every year, from 1st April
2021.
NE-IDs devote considerable time in deliberating the operational and
other issues of the Company and provide valuable advice in regard to the management of the
Company from time to time, and the Company also derives substantial benefit through their
expertise and advice.
Evaluation of Independent Directors and Committees of Directors
In terms of Section 134 of the Act, 2013 and the Corporate Governance
requirements as prescribed under Listing Regulations, the Board reviewed and evaluated
Independent Directors and various Committees viz., Audit Committee, Risk Management
Committee, Nomination and Remuneration Committee, Corporate Social Responsibility
Committee and Stakeholders? Relationship Committee, based on the evaluation criteria
laid down by the NRC.
Board has carried out the evaluation of all Directors (excluding the
Director being evaluated) and its Committees through a set a questionnaires.
Independent Directors
The performance of all IDs were assessed against a range of criteria
such as contribution to the development of business strategy and performance of the
Company, understanding the major risks affecting the Company, clear direction to the
management and contribution to the Board cohesion. The performance evaluation has been
done by the entire Board of Directors, except the Director concerned being evaluated.
The IDs were always kept informed of the constitution of robust
framework for the Company and group companies against cyber threats and mitigation plans
against cyber-attacks for business continuity.
They also kept abreast of risk mitigation plans on Business risks viz.,
depreciation of currency, global economic scenarios, increasing material cost and global
inflationary pressure. They also evaluated and satisfied with the risk mitigation on CoVID
preparedness, to minimize the impact on business operations and employees health, from its
previous learnings.
The Board noted that all IDs have understood the opportunities and
risks to the Company's strategy and are supportive of the direction articulated by the
management team towards consistent improvement.
On the basis of the report of performance evaluation of directors, the
Board noted and recorded that all the directors should extend and continue their term of
appointment as Directors / Independent Director, as the case may be.
Committees
Board delegates specific mandates to its Committees, to optimize
Directors' skills and talents 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 and inclusive growth.
The performance of each Committee was evaluated by the Board after
seeking inputs from its members on the basis of specific terms of reference, its charter,
time spent by the Committees in considering key issues, quality of information received,
major recommendations / action plans and work of each Committee.
The Board is satisfied with the overall effectiveness and decision
making of all Committees. The Board reviewed each Committee's terms of reference to ensure
that the Company's existing practices remain appropriate.
Directors continued to devote such time as is necessary for the proper
performance and effectively discharge their duties, all of them were able to devote
appropriate time to fulfill their duties
Board and its Committees had an appropriate combination of skills,
experience and knowledge.
The current Committees structure was considered effective and all the
Committees of the Board were all considered to be working effectively.
Recommendations from each Committee were considered and approved by the
Board prior to its implementation, wherever necessary and there were no items where the
Board had not accepted any recommendation of any Committee of the Board in the relevant
financial year.
Details of Committees, its charter, functions are provided in the
Corporate Governance Report attached to this Report.
Number of Board meetings held:
During the FY 2022-23, the Board met eight times and details of the
meetings are provided as part of Corporate Governance Report prepared in terms of the
Listing Regulations.
10. AUDITORS
Statutory Auditors
The Company at its Sixtieth AGM held on 28th June 2022
re-appointed M/s Raghavan, Chaudhuri & Narayanan, Chartered Accountants, Bengaluru,
having Firm Registration No. 007761S allotted by The Institute of Chartered Accountants of
India, as Statutory Auditors of the Company to hold office, for the second term of five
consecutive years, from the conclusion of the said AGM till the conclusion of the 65th
AGM, at such remuneration in addition to applicable taxes, and reimbursement of travelling
and other out of pocket expenses as may be mutually agreed between the Board of Directors
of the Company on the recommendations of the Audit Committee and the Auditors.
The Company has obtained necessary certificate under Section 141 of the
Act, 2013 conveying their eligibility for being statutory auditors of the Company for the
year 2023-24.
The Auditors' Report for the financial year 2022-23 does not contain
any qualification, reservation or adverse remark and the same is attached with the annual
financial statements.
Secretarial Auditor
As required under Section 204 of the Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company is
required to appoint a Secretarial Auditor for auditing secretarial and related records of
the Company.
The Secretarial Audit Report for the financial year 2022-23, given by
Mrs B Chandra, Practising Company Secretary, Chennai for auditing the secretarial and
related records is attached to this report. The Secretarial Audit Report does not contain
any qualification, observation or other remarks.
The Board at its meeting held on 5th May 2023 has
re-appointed Mrs B Chandra, Practising Company Secretary, Chennai, (CP No. 7859) as
Secretarial Auditor for the financial year 2023-24.
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 parts manufactured by the Company covered under other machinery
specified under Customs Tariff Act heading in Table B to Rule 3 of the above rules, are
required to be audited by a Cost Auditor.
Mr A N Raman, Practicing Cost Accountant, having Registration No. 5359
allotted by The Institute of Cost Accountants of India, was re-appointed as Cost Auditor
of the Company at the Board meeting held on 6th May 2022 to carry out the audit
as per the aforesaid provisions of the Companies Act, 2013 for the financial year 2022-23.
His remuneration was also ratified by the members at the 60th AGM held on 28th
June 2022.
In terms of the Companies (Cost Records and Audit) Amendment Rules,
2014, the Board has appointed M/s C S Adawadkar & Co., Practising Cost Accountants,
having Firm Registration No. 100401 allotted by
The Institute of Cost Accountants of India, as Cost Auditor of the
Company, on the recommendation of the Audit Committee, in the place of Mr A N Raman,
Practising Cost Accountant, in terms of Section 148 of the Act, 2013, as the Cost Auditor
for conducting Cost Audit for the financial year 2023-24.
The Company has received consent from M/s C S Adawadkar & Co.,
Practicing Cost Accountants, to serve as Cost auditors of the Company for the financial
year 2023-24.
The Company has also received necessary certificate under Section 141
of the Act, 2013 from them conveying their eligibility to act as a Cost Auditor.
A sum of $ 5 lakhs has been fixed by the Board as remuneration in
addition to applicable taxes, and reimbursement of travelling and other out-of-pocket
expenses payable to him, for the financial year 2023-24, which is required to be approved
and ratified by the Members, at the ensuing AGM as per Section 148(3) of the Act, 2013.
Directors place on record their deep appreciation of the valuable
service rendered by Mr A N Raman, Cost Accountant, Chennai.
The Company has filed the Cost Audit Report of 2021-22 on 26th
August 2022 in XBRL format.
11. CORPORATE GOVERNANCE
The Company has been practicing the principles of good corporate
governance over the years and lays strong emphasis on transparency, accountability and
integrity.
A separate section on Corporate Governance and a certificate from the
Statutory Auditors of the Company regarding compliance of conditions of Corporate
Governance as stipulated under the Listing Regulations form part of this Annual Report.
The Chairman Emeritus & Managing Director and the Director and
Group Chief Financial Officer of the Company have certified to the Board on financial
statements and other matters in accordance with Regulation 17(8) of the Listing
Regulations, 2015 pertaining to CEO / CFO certification for the financial year ended 31st
March 2023.
12. BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT
In terms of Regulation 34 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("Listing Regulations") read with
relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed
under "Business Responsibility and Sustainability Report" ('BRSR'). The BRSR
seeks disclosure on the performance of the Company against nine principles of the
"National Guidelines on Responsible Business Conduct' ('NGRBCs').
As per the SEBI Circulars, effective from the financial year 2022-23,
filing of BRSR is mandatory for the top 1000 listed companies by market capitalisation.
Accordingly, for the financial year ended 31st March 2023,
Company has published BRSR, in the prescribed format is given as
Annexure IV to this Report and is available on the Company's website in the link as
provided in page no. 93 of this Annual Report.
13. POLICY ON VIGIL MECHANISM
The Company has adopted a Policy on Vigil Mechanism in accordance with
the provisions of the Act, 2013 and Regulation 22 of the Listing Regulations, which
provides a formal mechanism for all Directors, Employees and other Stakeholders of the
Company to report to the management, their genuine concerns or grievances about unethical
behaviour, actual or suspected fraud and any violation of the Company's Code of Business
Conduct and Ethics.
The Code also provides a direct access to the Chairman of the Audit
Committee to make protective disclosures to the management about grievances or violation
of the Company's Code.
The Policy is disclosed on the Company's website in the link as
provided in page no. 93 of this Annual Report.
14. PUBLIC DEPOSITS
The Company has not accepted any deposit from the public within the
meaning of Section 76 of the Act, 2013, for the year ended 31st March 2023.
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
the requirements 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 the Company, 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 of the Company, which have occurred between the end of the financial
year of the Company to which the financial statements relate and the date of this Report.
Significant and material orders passed by the Regulators or Courts or
Tribunals impacting the going concern status of the Company
There are no significant and material orders passed by the Regulators
or Courts or Tribunals, which would impact the going concern status of the Company and its
future operations.
Annual Return
Copy of the Annual Return (Annexure II) in prescribed form is available
on the Company's website in the link as provided in page no. 93 of this Annual Report, in
terms of 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
prescribed under Section 197 of the Act, 2013 read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as a
statement and given in Annexure-III. In terms of first proviso to Section 136(1) of the
Act, 2013 the Annual Report, 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 during business hours as mentioned in the Notice of AGM and any
Shareholder interested in obtaining a copy of the said annexure may write to the Company
Secretary at the Registered Office of the Company.
Comparative analysis of remuneration paid
A comparative analysis of remuneration paid to Directors and employees
with the Company's performance is given as Annexure-V to this Report.
Details of material related party transactions
There are no material related party transactions under Section 188 of
the Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.
Details of loans / guarantees / investments made
During the year under review, the Company had not granted any loans or
guarantees covered under Section 186 of the Act, 2013.
Please refer note no. 4 to Notes on accounts for the financial year
2022-23, for details of investments made by the Company.
Reporting of fraud
The Auditors of the Company have not reported any fraud as specified
under Section 143(12) of the Act, 2013.
Secretarial Standards
The Company has complied with the applicable secretarial standards as
amended from time to time.
General Disclosures
During the year, there were no transaction requiring
disclosure or reporting in respect of matters relating to:
(a) issue of equity shares with differential rights as to dividend,
voting or otherwise;
(b) issue of shares (including sweat equity shares) to employees of the
Company under any scheme;
(c) pendency of any proceeding under the Insolvency and Bankruptcy
Code, 2016 and
(d) instance of one-time settlement with any bank or financial
institution.
Disclosure in terms of Sexual Harassment of Women at workplace
(Prevention, Prohibition and Redressal) Act, 2013
As per the requirement of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 (POSH), the Company has an Internal
Complaints Committee as required under The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.
During the year under review, there were no cases filed pursuant to the
provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013.
During the year 2022-23, initiatives were undertaken to demonstrate
Company's zero tolerance policy against discrimination and sexual harassment, which
included creation of comprehensive and easy to understand training and communication
material. In addition, online workshops were also run for the employees to enhance
awareness and knowledge.
16. ACKNOWLEDGEMENT
The directors gratefully acknowledge the continued support and
cooperation received from the promoters of the Company.
The Directors thank the vehicle manufacturers, vendors and bankers for
their continued support and assistance.
The Directors wish to place on record their appreciation of the
continued excellent work done by all the employees of the Company during the year.
The Directors specially thank the shareholders for their continued
faith in the Company.
For and on behalf of the Board of Directors
|
R GOPALAN |
Chennai |
Chairman |
5th May 2023 |
DIN: 01624555 |
|