BOARD'S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS Dear Shareholders,, The Directors take pleasure in presenting the 67th Annual Report together with the audited Financial Statements of the Company for the year ended 31st March 2016. 1. Business Environment The business environment during 2015-16 continued to be a cause for concern due to adverse monsoon conditions in several parts of India which impacted crop yields, resulting in reduced rural disposable income and a lower spending tendency in the nation's bigger cities affecting thereby overall consumer demand and consumption. Globally, the year was marked by the Euro zone crisis, economic reforms and changing economic policies of the People's Republic of China mainly depreciation of its currency, RMB (Renminbi) against the USD (American Dollar), a rise in terrorism and meltdown of commodity prices. Growth fell much short of expectations in 2015, decelerating to 2.4% from 2.6% in the previous year. Going forward, global growth is projected to edge up in the coming years, as per the World Bank's Report on Global Economic Prospects albeit at a slower pace than originally envisioned, reaching 2.9% in 2016 and 3.1% in 2017. This pickup is predicated on continued gains in the major high-income countries, a gradual tightening of financing conditions, a stabilisation of commodity prices and a gradual rebalancing in the People's Republic of China. India's economic growth for 2015-16 is estimated at 7.5%. It is expected to further accelerate to 7.8% in 2016-17 and 7.9% in 2017-18 as per the World Bank's update on Indian economy. The Indian automobile sector grew 3% during 2015-16. In the four wheeler segment, passenger vehicles and commercial vehicles sale volumes were up 6% and 12% respectively. In the two wheeler segment, while scooters grew by 12%, motor cycles showed a decline by 2%. 3. Performance Overview During 2015-16, the Company achieved a net turnover of Rs.3790 Cr., growing 4% over 2014-15. The Profit before Depreciation, Interest, Exceptional Items and Tax for the year was at Rs.385 Cr. as against Rs.356 Cr. in the previous year, a growth of 8%. The Profit before Exceptional items and Tax was at Rs.139 Cr. as against Rs.121 Cr. in the previous year, a growth of 15% mainly due to higher sales. During the year, the Company disinvested part of its shareholding in its subsidiary, M/s. Cholamandalam MS General Insurance Co Ltd., to the joint venture partner, M/s. Mitsui Sumitomo Insurance Co Ltd., Japan, which yielded a profit of Rs.821 Cr. On account of various market factors, changes in future project potential and expected usage, the Company has, during the year under review, recognised an impairment loss of Rs.37 Cr. in Engineering and Metal Formed Products segments based on recoverable amounts determined by considering estimated net selling price for various asset classes. The Cycles and Accessories segment recorded a revenue of Rs.1485 Cr. as compared to Rs.1314 Cr. during 2014-15, growing 13%, which was on the back of higher institutional and Specials' sales. The operating profit before interest and tax stood at Rs.79 Cr. as compared to Rs.58 Cr. during the previous year, a growth of 37%. The Engineering segment registered revenue of Rs.1629 Cr. as compared to Rs.1725 Cr. during the previous year. The operating profit before interest and tax stood at Rs.95 Cr. as compared to Rs.103 Cr. during 2014-15. The drop in profits was due to additional costs associated with the new Large Diameter Tube manufacturing facility. The Metal Formed Products segment recorded a revenue of Rs.954 Cr. as compared to Rs.929 Cr. during the previous year, a growth of 3%. The operating profit before interest and tax stood at Rs.86 Cr. as compared to Rs.81 Cr. during the previous year, a growth of 6%. 4. Business Review - Standalone 4.1. Cycles and Accessories TI's Presence The Cycles and Accessories segment of the Company comprises bicycles of the Standard and Special variety including alloy bikes & specialty performance bikes, bicycle components sold as spares, fitness equipment such as motorised tread mills, elliptical, recumbent bikes etc. Industry Scenario Bicycles fall under two distinct categories - Standard and Special. The bicycle has come to be looked at as a product for fun, fitness and leisure activities in addition to being viewed as just a transportation medium. As per the industry estimates, buoyed by orders from the State Governments, bicycle industry volumes grew approximately 10% in 2015-16. However, aside of the institutional sales, trade volumes have actually witnessed a decline of around 8% during the year. Consumers today pay greater attention to design, features and retail experience in their purchase decisions. Increasing aspirations, higher purchasing power, international exposure to usage patterns and growing fitness consciousness have provided impetus to the high-end and Special bicycles. These segments continue to grow steadily year-on-year. Nearly 80% of the country's requirements are met by four major players. The smaller regional players and imports constitute the balance. The Company enjoys a share of over one-third of the total organised market with a much higher share in the premium segment. The domestic Fitness Industry remained attractive achieving significant growth during the year under review. The fitness equipment business can be broadly classified under two segments - home and commercial. The fitness business of the Company is largely restricted to the home segment. Higher income and a greater desire to be healthy and fit drive the growth of the Fitness Industry in India. Review of Performance The segment sold over 45 lakh bicycles during the year, registering a growth of 13% over 2014-15 mainly due to higher institutional volumes. The segment continues to focus on creating an enhanced retail experience especially with regard to the Specials and premium segment. Exclusive stores numbering 642 spread all over the country provide the customers with a superior purchasing experience of the segment's offerings. These retail outlets facilitate a better understanding of the market requirements through a direct interaction with the customers. In order to address the market's requirements, the segment invests continuously in strengthening the supply chain capabilities. The segment also has 16 premium stores under the "Track and Trail" banner in select identified locations. New retail concepts like the 'Ciclo Cafe', a cafe-cum-store, which was launched in Chennai in 2014-15 to promote the sale of high-end bicycles and to strengthen the presence amongst cycling communities, continue to receive encouraging response from cycling aficionados and experts alike. Extension of the cafe-cum-store concept to all major metro cities of the country is part of the segment's plans to reach out to even more customers, providing them with the opportunity for experiential purchase. Similar new concepts are also being planned in the Fitness business. Upgrading of the retail network under "Track and Trail" brand is also being done on a continuous basis. The segment expects to further improve its product portfolio by launching new products and designs. As part of its constant efforts to bring to the Indian customer the best bicycles available internationally, the Company launched the entire range of the world renowned 'Ridley' brand of bicycles in India, including an India-specific product portfolio, during the year. The latest premium bicycles from the Ridley stable have met with encouraging response from the Indian customers. The segment will pursue initiatives including foray into e-commerce to widen its distribution reach, targeted advertising to drive demand and enhancing plant capacities. Construction of the green-field bicycle plant at Rajpura, Punjab with a production capacity of 250,000 bicycles per month is nearing completion and commercial production is expected to commence in the second quarter of FY 2016-17. The Rajpura facility will enable the segment to take advantage of an established vendor base available nearby in Ludhiana and to cater to the high demand in select segments and geographies. The plant for producing bicycles for export at the existing Ambattur facility is expected to reach its rated capacity (30,000 bicycles per month) during the current year. To optimise capacities and costs across various plants, the segment is currently rolling out several initiatives. Efforts will also continue on cost reduction initiatives in order to improve competitiveness and profitability. The Fitness business is being revamped with an improved product portfolio and restructured operaions. During the year under review, the segment recorded revenue of Rs.1485 Cr. as compared to Rs.1314 Cr. during 2014-15, a growth of 13%. The operating profit before interest and tax stood at Rs.79 Cr. as compared to Rs.58 Cr. during the previous year, a growth of 37%. 4.2. Engineering TI's Presence The Engineering segment of the Company consists of cold rolled steel strips and precision steel tubes viz., Cold Drawn Welded tubes (CDW), Electric Resistance Welded tubes (ERW) and Stainless Steel tubes. These products primarily cater to the needs of the automotive, boiler, bicycle, general engineering and process industries. The Company is further engaged in the manufacture of large diameter welded tubes mainly for non-auto application which are largely imported. Industry Scenario The overall automotive industry grew by 3% during 2015-16. The passenger vehicle and two-wheeler segments registered growth of 6% and 2% respectively over the last fiscal. Within the two wheeler segment, while the sale volumes in scooters grew by 12%, motorcycles declined by 2%. The domestic commercial vehicle industry started recovering during the year from a prolonged slump lasting over two years. In Cold Rolled Steel Strips, the Company continued to be a 'niche player' in a market dominated by integrated steel manufacturers by focussing on special grades catering to varied applications in different sizes and grades. Review of Performance The Engineering segment continued to grow during the year under review thanks to the growth of the auto industry by taking good advantage of the capabilities, regional plants and distribution network of the segment. During the year, volumes of the precision steel tubes business grew 8%, while the cold rolled steel strips business declined 7%. Production of the large diameter tube manufacturing plant, which caters to the requirements of the power, infrastructure, off-highway and general engineering segments, is getting stablilised. Plans have been drawn up for optimum utilisation of this facility and improvement in the market share. During the year under review, the segment registered revenue of Rs.1629 Cr. as compared to Rs.1725 Cr. during the previous year. The operating profit before interest and tax stood at Rs.95 Cr. as compared toRs.103 Cr. during 2014-15. Product value addition, management of cost, modernisation of facility and further enhancement in efficiencies were the key business emphasis areas aiding improved profitability during the year under review. 4.3. Metal Formed Products TI's presence Automotive & industrial chains, fine blanked products, stamped products, roll-formed car doorframes and cold rolled formed sections for railway wagons and passenger coaches constitute the Metal Formed Products segment. Industry scenario The two wheeler segment registered a 2% growth in 2015-16. The scooter segment grew 12% and the passenger car segment 6%. The segment is one of the three major players manufacturing roller chains and fine blanked parts for the automotive industry in India. With the increasing two wheeler population, the replacement market for chains and sprockets continued to register healthy growth. The domestic demand for industrial chains has grown moderately. There are currently three established roll-formed car doorframe manufacturers in India. International car majors continue to invest in India and are increasingly using India as an export base. As a result, many component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and theirTier 1 suppliers. Within the railway segment, while the freight sub-segment is yet to show signs of a major revival, a pick-up was witnessed with regard to the passenger coach sub-segment with the segment supplying 112 coaches to the Integral Coach Factory, Chennai. Review of Performance The sale of automotive chains to OEMs (Original Equipment Manufacturers) registered a growth of 7% compared to 2014-15. The Company continues to expand its presence in the aftermarket segment benefiting from the growing population of two-wheelers. The sale of industrial chains in the domestic market recorded a growth of 6% during the year due to new products developed substituting imports as well as through appointment of dealers in the growing industrial belts. Fine blanked components volume grew by 8% primarily through new parts developed for four wheeler segment. Exports showed a decline of 1% over 2014-15 and continued to be a challenge in the light of difficult demand conditions in Europe, with a weak Euro affecting realisations. Doorframe sale volumes were lower at 5% during 2015-16 due to a decline in the sale of select models of major car manufacturers. The focus is on generating more business from the Auto OEMs, leveraging the Tier-1 position with specific emphasis on roll form channels used in passenger cars. In addition, growing the casings vertical with efforts spread across sectors and geographical regions, strengthening the current position in respect of coach parts and foraying into agri-rotovators, blades and other farm implements are some of the opportunities that will be looked into closely to sustain the journey towards growth. To sustain profitable growth, the chains business segment will be pursuing its core business processes to successfully handle fluctuations as well as change in the product mix to meet customers demand. The auto aftermarket continues to provide opportunities for growth, albeit with good competition and the business expects to strengthen on the sales structure, deepen its coverage and launch new products for new categories. During the year under review, the segment recorded revenue of Rs.954 Cr. as compared to Rs.929 Cr. during the previous year, a growth of 3%. The operating profit before interest and tax stood at Rs.86 Cr. as compared to Rs.81 Cr. during the previous year, a growth of 6%. 5. Dividend The Board of Directors has recommended a Special Dividend of Rs.3.50 per share, on equity share of face value of Rs.2 each for the financial year ended 31st March, 2016 considering the profit on sale of 14% stake in Cholamandalam MS General Insurance Company Limited. Together with the interim dividend of Rs.1.50 per share, paid on 5th February, 2016, the total dividend for the year works out to Rs.5 per share on equity share of face value of Rs.2 each. The Special Dividend, if approved by shareholders, will be paid on or after 8th August, 2016. Share Capital The paid up equity share capital as on 31st March 2016 was Rs.37.47 Cr. During the year under review, the Company has issued 2,14,873 equity shares to eligible employees under the Employee Stock Option Scheme. Finance Cash and Cash Equivalents as at 31st March 2016 were Rs.735 Cr. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring. 7.1. Non-Convertible Debentures During the year, Non-Convertible Debentures aggregating Rs.375 Cr. were issued and Rs.350 Cr. were redeemed. As on 31st March 2016, Non-Convertible Debentures aggregating Rs.1075 Cr. were outstanding. 7.2. Deposits The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31st March 2016. 7.3. Particulars of Loans, Guarantees or Investments During the year, the Company has not invested or given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. Business Review - Associate, Subsidiaries and Joint Ventures 9.1. Cholamandalam Investment and Finance Co Ltd (CIFCL) CIFCL, an associate of the Company, had another year of fine performance on the back of sustained performance by its vehicle finance and home equity verticals, CIFCL's profit before tax grew 32%, at Rs.870 Cr. (previous year: Rs.657 Cr.) and profit after tax increased to Rs.569 Cr. (previous year: Rs.435 Cr.). Disbursements of CIFCL increased to Rs.16,380 Cr. in 2015-16 (previous year: Rs.12,808 Cr.). CIFCL allotted 1,22,85,012 equity shares of Rs.10/- each to M/s. Dynasty Acquisition (FDI) Ltd., on conversion of the Compulsorily Convertible Preference Shares issued by them, resulting in reduction of Company's shareholding in CIFCL from 50.24% to 46.28%, even though the number of shares held by our Company in CIFCL remains at 7,22,33,019 equity shares as in the previous year. Consequently, CIFCL ceased to be a subsidiary of the Company with effect from 2nd September, 2015. 9.2. Cholamandalam MS General Insurance Co. Ltd (CMSGICL) CMSGICL, a joint venture with M/s. Mitsui Sumitomo Insurance Company Ltd., Japan (MS), achieved a Gross Written Premium (including reinsurance acceptance) of Rs.2466 Cr. during 2015-16 (previous year: Rs.1,896 Cr.), registering a growth of 30%. The profit before tax was Rs.213 Cr. for the year (previous year: Rs.199 Cr.), registering a growth of 6%. During the year, the Company sold 4,18,32,798 equity shares of face value Rs.10/- each representing 14% shareholding in CMSGICL to MS for an aggregate consideration of Rs.882.67 Cr. Consequent to this, the Company's shareholding in CMSGICL reduced from about 74% to 60% and MS' shareholding has gone up from 26% to 40%. The Company continues to hold 17,92,82,861 equity shares, aggregating about 60% in CMSGICL's equity capital. 9.3. Shanthi Gears Ltd (SGL) SGL, the Company's subsidiary, recorded a turnover of Rs.162 Cr. in 2015-16 against Rs.152 Cr. in the previous year. Profit before tax was Rs.23 Cr. (previous year: Rs.13 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers. SGL grew its order book by 34% due to the efforts taken in the previous years to enhance presence in the market especially in key user locations, enhancing its reach by strengthening its sales and service teams, building references in high potential segments, entry into the defence segment and building its capability in certain high-end applications. SGL continues to pursue opportunities to grow the customer base, enhance product offerings, reduce cost and improve execution capabilities to meet customer expectations. 9.4. Financiere C10 SAS (FC10) FC10, the Company's wholly-owned subsidiary in France, recorded a consolidated turnover of Euro 33 Mn in 2015 (previous year: Euro 33 Mn). The loss before tax for the year was Euro 0.34 Mn (previous year: loss before tax Euro 0.38 Mn). The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS & S2CI in France and Sedis Co Ltd in UK. 9.5. TI Tsubamex Private Ltd (TTPL) TTPL is a joint venture of the Company with Tsubamex Company Limited, Japan to engage in the business of design and engineering of sheet metal dies and fixtures and providing related services. The Company holds 1,95,00,000 equity shares, aggregating 75% of TTPL's equity capital. TTPL's die manufacturing facility at Oragadam near Chennai is currently in trial production mode after successful installation and commissioning of imported capital equipment. With a good order book for die design and manufacture secured from the major Japanese automakers in India, TTPL is set to commence commercial production in the current year. TTPL's loss before tax for the year was Rs.3.52 Cr. (previous year: Rs.1.94 Cr.). 9.6. TI Financial Holdings Ltd (TIFHL) TIFHL is a wholly-owned subsidiary of the Company with an investment of Rs.0.11 Cr. and is yet to commence its operations. 9.7. Cholamandalam MS Risk Services Ltd (CMSRSL) CMSRSL, a joint venture with M/s. Mitsui Sumitomo Insurance Company Ltd., Japan, offers consulting services in the areas of risk assessment and mitigation across a range of industries. CMSRSL recorded a revenue of Rs.32.42 Cr. during 2015-16 (previous year: Rs.35.33 Cr.). The profit before tax for the year was Rs.2.83 Cr. (previous year: Rs.2.04 Cr.). The Statement containing the information in respect of the Company's subsidiaries, joint ventures and associate companies is attached. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Accounting Standard (AS) 21, form part of the Annual Report. 10. Financial Review 10.1. Profits & Profitability While Operating Profit before Depreciation and Interest registered a marginal growth over the previous year through continued control on costs and better operating efficiencies, the Operating Profit before Tax excluding exceptional items was impacted by costs incurred on the Large Diameter Tube plant which is yet to reach full production levels. On certain occasions, the Company was not able to fully recover the increase in cost from its customers. All the business segments of the Company maintained their focus on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business. 10.2. Capital Expenditure The Company's Large Diameter Tube manufacturing plant is expected to stabilise its production in the current year. The Company continues to invest in facilities with a view to servicing its customers in a more timely and efficient manner, modernising its assets and aims to be the best in class. The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invest appropriately for the long-term. To compete more effectively in the market and to address the growing bicycle segment in the northern and western parts of the country, the Company is setting up a new facility in Punjab for manufacturing bicycles. The Company provides for accelerated depreciation with respect to some of its assets to reflect the remaining estimated useful life given the dynamic market conditions. 10.3. Interest Cost The Company's average cost of borrowing reduced to 9% p.a. through a judicious mix of foreign currency and Indian Rupee borrowing in long and short-term funds. The interest cost for the year was lower due to the lower quantum of borrowings and lower interest rates. 10.4. Internal Control Systems Internal control systems in the organisation are looked at as the key to its effective functioning. The Internal Audit team periodically evaluates the adequacy and effectiveness of these internal controls, recommends improvements and also reviews adherence to policies based on which corrective action is taken to address gaps, if any. The Company has a risk management policy and its internal control systems are an integral part of this policy. The Company has extensive internal control systems to mitigate risks inherent to day-to-day functioning and covers all areas of operations. Revenue and capital expenditures are governed by approved budgets and the levels are defined by a delegation of authority mechanism. Review of capital expenditure is undertaken with reference to benefits expected in line with the policy for the same. Investment decisions are subject to formal detailed evaluation and approved by the relevant authority as defined in the delegation of authority mechanism. The Audit Committee reviews the plan for internal audit, significant internal audit observations and functioning of the Company's Internal Audit department on a periodic basis. 10.5. Internal Financial Control Systems with reference to the Financial Statements The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company's business processes are enabled by an Enterprise-wide Resource Platform (ERP) for monitoring and reporting processes resulting in financial discipline and accountability. 11. Enterprise Risk Analysis and Management Risk management refers to the formal processes whereby risks associated with the "enterprise", as a whole, are managed. Risk management encompasses the following sequence: • Identification of risks and risk owners • Evaluation of the risks as to likelihood and consequences • Assessment of options for mitigating the risks • Prioritising the risk management efforts • Development of risk management plans • Authorisation for the implementation of the risk management plans • Implementation and review of the risk management efforts Risk management strengthens the robustness of the business. The Company has an established risk assessment and minimisation procedure. There are normal constraints of time, efficiency and cost. Some of the risks associated with the businesses and the related mitigation plans are discussed hereunder. The risks given below are not exhaustive and the evaluation of risk is based on management's percepion. The Risk Management Committee of the Board of Directors, constituted specifically to identify/ monitor key risks of the Company and evaluate the management of such risks for effective mitigation, met on four occasions during the year as per details given in the Annexure to the Corporate Governance Report. At its meetings, the Committee comprehensively reviewed the risks and related mitigation plans across the various SBUs (Strategic Business Units) of the Company. 12. Corporate Social Responsibility (CSR) The Company, being part of the Murugappa Group, is known for its tradition of philanthropy and community service. The Company's philosophy is to reach out to the community by establishing service-oriented philanthropic institutions in the field of education and healthcare as the core focus areas. With the enactment of the CSR provisions in the Companies Act, 2013, the Company has put in place a CSR policy incorporating the requirements therein which is also available on the Company's website at the following link, <http://www.tiindia.com/article/values/467>. As per the provisions of the Companies Act, 2013, the Company is required to spend Rs.2.11 Cr. The Company has spent Rs.2.73 Cr. towards CSR projects/ activities during 2015-16. The projects/activities were identified with a view to make an impact in the areas of the Company's operations by working closely with the local communities. Details are furnished in the Annual Report of CSR activities for 2015-16 annexed to and forming part of this Report as Annexure-B as well as in the Company's website at the following link, <http://www.tiindia.com/article/values/547>. 13. Corporate Governance Your Company is committed to maintaining high standards of corporate governance. During the year under review, the Securities & Exchange Board of India (SEBI) notified the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") with the objective of bringing the framework governing listed entities in line with the Companies Act, 2013 and to consolidate all the SEBI Regulations and Circulars hitherto governing the equity and the debt segments of the capital market under a single document. As required under the new SEBI Listing Regulations, the Company executed the Uniform Listing Agreement with the National Stock Exchange of India and the BSE Ltd. The Company was wholly in compliance with the requirements of the Listing Agreement with the Stock Exchanges (up to 30th November, 2015) as well as the new SEBI Listing Regulations (from 1st December, 2015). A report on corporate governance together with a certificate from the Auditors is annexed in accordance with the terms of the SEBI Listing Regulations and forms part of the Board's Report. The Managing Director has submitted a certificate to the Board regarding the financial statements and other matters in terms of Part B of Schedule II [Corporate Governance] of the SEBI Listing Regulations. The Report further contains details as required to be provided in the Board's Report on the policy on Directors' appointment and remuneration including the criteria, annual evaluation by the Board and Directors, composition and other details of Board committees, implementation of risk management policy, whistle-blower policy/vigil mechanism etc. 14. Human Resources The Company firmly believes that human resources play a vital role in its continued growth and success. The Company continued to invest in the development of people capabilities during the year under review with the objective of building an internal talent pipeline. Identified promising employees were put through a program aimed at building their capabilities to handle future leadership roles. The central recruitment team sources and recruits the best talent for the various businesses of the Company. Further, in continuation of the initiative taken during last year, the Individual Development Plans (IDPs) of high-potential employees were given sharp focus to address specific organisational needs. Development Centre to identify the strengths, areas for improvement and learning styles of such employees followed by a business simulation program was conducted to enable them appreciate holistic business perspective. A reverse mentoring programme has been introduced in the Bicycles business where the senior leadership team members are being mentored by their young professional colleagues. This initiative is well received and appreciated by all concerned. The Operational Excellence (OPEX) initiative to bring about process excellence gained greater momentum and comprehensive implementation during the year under review across the Company by involving each employee. The OPEX team continues to actively support the Company's businesses in the thrust areas viz., OPEX structure and systems and culture. Industrial relations remained cordial at all our units and long-term settlements were successfully concluded at TI Cycles of India, Ambattur and Nashik and TIDC India, Hyderabad. Number of permanent employees on the rolls of the Company as on 31st March 2016 was 3409. The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in the said regard. The disclosure with regard to remuneration as required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-C. 15. Prevention of sexual harassment at workplace The Company has framed a policy on prevention of sexual harassment at workplace in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment has been constituted. The policy extends to all employees (permanent, contractual, temporary and trainees). Employees at all levels are being sensitised about the new Policy and the remedies available thereunder. No complaints were received and disposed off during the year under review. 16. Employee Stock Option Scheme Details of the Company's Employee Stock Option Scheme as required under the relevant SEBI Regulations are displayed in the Company's website at the following link, <http://www.tiindia.com/article/> values/554. 17. Directors' Responsibility Statement The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. Further, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors confirm that: (i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departures therefrom; (ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities (iv) t hey have prepared the annual accounts on a going concern basis; (v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31st March, 2016; and (vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended 31st March, 2016. 18. Auditors At the previous Annual General Meeting, M/s. S.R. Batliboi & Associates LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company for a period of 5 years from the conclusion of the said 66th Annual General Meeting till the conclusion of the 71st Annual General Meeting. In terms of the Companies Act, 2013, the appointment of the said Statutory Auditors is subject to ratification each year. Further, in terms of the Shareholders' approval, the remuneration payable to the said Statutory Auditors in respect of their appointment is to be fixed each year. Accordingly, the Board of Directors recommend the ratification of the appointment of M/s. S.R. Batliboi & Associates LLP, Chartered Accountants as the Statutory Auditors of the Company for the period from the conclusion of the 67th Annual General Meeting to the 68th Annual General Meeting on the terms of remuneration as set out in the resolution contained the Notice of the Annual General Meeting. Consequent to the applicability of cost audit under the Companies (Cost Records and Audit) Amendment Rules, 2014, Mr. V Kalyanaraman, Cost Accountant was appointed as the Cost Auditor for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial year ended 31st March, 2016. The Cost Audit Report will be filed within the stipulated period of 180 days from the close of financial year. In respect of the previous year, 2014-15, the Cost Audit and Compliance Reports relating to Steel Products and Metal Formed Products, audited by Mr. V Kalyanaraman, Cost Auditor, were filed electronically in XBRL mode, on 18th September, 2015 viz., well within the limit of within 180 days from the end of the financial year stipulated by Ministry of Corporate Affairs. 19. Related Party Transactions All related party transactions that were entered into during the financial year under review were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under the Accounting Standard (AS) 18 have been made in the notes to the Financial Statements. The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company's website, <http://www.tiindia.com/article/values/476>. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company. 20. Directors Mr. N Srinivasan will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 ("the Act") and being eligible, he offers himselffor re-appointment. Mr. L Ramkumar was re-appointed by the Board of Directors, at the meeting held on 30th March, 2016, as Managing Director of the Company, for a fresh term, from 9th April, 2016 till the conclusion of the Annual General Meeting of the Company in 2018 (both days inclusive). Necessary resolution for the re-appointment of Mr. L Ramkumar, payment of remuneration and other terms of his re-appointment thereof form part of the Notice of the ensuing Annual General Meeting for Shareholders' approval. The Board takes pleasure in recommending the appointment of Mr. N Srinivasan as Director and the re-appointment of Mr. L Ramkumar as Managing Director of the Company at the forthcoming Annual General Meeting. All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated there under. 21. Declarations/Affirmations During the year under review: - there was no change in the Company's nature of business; - there were no material changes and commitments which occurred during the period under review affecting the Company's financial position; & - there were no significant material orders passed by the regulators or courts or tribunals impacting the Company's going concern status and its operations in future. 22. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. R Sridharan of Messrs R. Sridharan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-D. No qualifications or observation or other remarks have been made by the Secretarial Auditor in his said Report. 23. Annual Return Extract of the Annual Return is annexed and forms part of this Report as Annexure-E. 24. Key Managerial Personnel Mr. L Ramkumar, Managing Director and Mr. S Suresh, Company Secretary are the Key Managerial Personnel of the Company as per Section 203 of the Companies Act, 2013. Mr. L Ramkumar, Managing Director was also appointed by the Board of Directors of TI Tsubamex Private Limited, the Company's die manufacturing joint venture with Tsubamex Co. Limited, Japan, as its Managing Director in accordance with the requirements of the Companies Act, 2013. His term of appointment is from 1st January, 2016 to 31st March, 2018 (both days inclusive) without any remuneration. Mr Arjun Ananth, Chief Financial Officer of the Company resigned from the services of the Company for personal reasons and was relieved on 29th February, 2016. 25. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith and forms part of this Report as Annexure-F. The Directors thank all Customers, Vendors, Financial Institutions, Banks, State Governments, Joint Venture Partners and Investors for their continued support to your Company's performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company resulting in the good performance during the year under review. On behalf of the Board M M Murugappan Chairman Place : Chennai Date : 3rd May, 2016 |