DIRECTORS' REPORT TO THE SHAREHOLDERS Your Directors have pleasure in presenting the 31st annual report and the audited accounts for the year ended 31st March, 2014 OPERATIONS Your Company witnessed a revenue growth of 13.6% from operations during FY14, despite challenging economic environment and auto sector slow-down. On a standalone basis, your company achieved total net sales and Other income of Rs.1672 crore as against Rs.1520 crore during the previous financial year. EBITDA was at Rs.124 crore as compared to 129 crore during the previous financial year. The net profit for the year under review was Rs.47 crore as against Rs.36 crore in the previous fiscal, a growth of almost 31%. During the year, the company recovered material price increase by price hike of its products, therefore was able to maintain its margin. Further, weak rupee helped in higher export realization. DIVIDEND Your Directors are pleased to recommend a dividend of Rs.16 per equity share of Rs.10/- each (i.e. 160%) for the financial year ended 31st March, 2014 absorbing a sum of Rs.1433.34 lakhs, including tax on dividend, for the approval of the shareholders, at the ensuing Annual General Meeting. SUBSIDIARY COMPANIES The following companies continue as subsidiaries of the Company and their audited accounts have been consolidated with those of the Company as on 31st March, 2014. a) TVS Srichakra Investments Limited b) TVS Europe Distribution Limited CONSOLIDATED ACCOUNTS As required under the Listing Agreement with the Stock Exchanges, the consolidated financial statements of the Company are attached. The Ministry of Corporate Affairs (MCA) vide its circular No.2 in file No.51/12/2007-CL-III dated 8th February, 2011 has granted general exemption from attaching annual reports of subsidiaries along with the annual report of the holding companies without seeking any approval of the Central Government, subject to the conditions laid down therein. The Board of Directors at their meeting held on May 24, 2014 passed necessary resolution for complying with all the conditions enabling the circulation of annual report of the Company without attaching all the documents referred to in Section 212(1) of the Act, of the subsidiary companies to the shareholders of the Company. The annual accounts, reports and other documents of the subsidiary companies will be made available to the members, on receipt of a request for the same. The annual accounts of the subsidiary companies will be available at the registered office of the Company and at the registered offices of the respective subsidiary companies concerned. If any member or investor wishes to inspect the same, it will be available during the business hours of any working day of the Company. A statement giving the following information in aggregate of each subsidiary consisting of (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend has been attached with the consolidated balance sheet of the Company in compliance with the conditions of the said circular issued by Ministry of Corporate Affairs. A statement referred to in clause (e) of sub-section 1 of Section 212 of the Companies Act, 1956 disclosing the Company's interest in subsidiaries and other information as required is attached. DIRECTORS LIABLE TO RETIRE BY ROTATION M/s S Narayanan and P Vijayaraghavan, Directors, will be retiring at this Annual General Meeting and, being eligible, offer themselves for re-appointment. The brief resume of the aforesaid Directors and other information have been detailed in the Notice convening the Annual General Meeting of the Company. Appropriate resolutions for their re-appointment are being placed for approval of the shareholders at the ensuing Annual General Meeting. Your Directors recommend their re-appointment as Directors of the Company. APPOINTMENT OF DIRECTOR Mr V Ramakrishnan was appointed as an Additional Director pursuant to Section 152 of the Companies Act, 2013, liable to retire by rotation, of the Company. The brief resume of Mr V Ramakrishnan and other information have been detailed in the Notice convening the Annual General Meeting of the Company. Appropriate resolutions for his appointment is being placed for approval of the shareholders at the ensuing Annual General Meeting. Necessary notice has already been received from a shareholder proposing his candidature to be appointed as a Director liable to retire by rotation at the ensuing Annual General Meeting. Your Directors recommend his appointment as Director of the Company, liable to retire by rotation. INDEPENDENT DIRECTORS Resignation Dr N H Atthreya, one of the Independent Directors resigned due to his health conditions with effect from 8.6.2014. Dr N H Atthreya has been on the Board right from inception of the Company giving valuable contributions and guidance to the Board of Directors. The Board of Directors would like to place on record, its appreciation of the contribution made by Dr N H Atthreya over these years. The vacancy created by the resignation of Dr N H Atthreya will be filled within the prescribed time limit as per the Companies Act, 2013 as well as Clause 49 of the Listing Agreement. Appointment of Independent Directors During the year, the Ministry of Corporate Affairs (MCA) has notified majority of the provisions inter alia provisions relating to selection, manner of appointment, roles, functions, duties, re-appointment of Independent Directors (IDs) and the relevant rules under the Companies Act, 2013 (the Act 2013) and made them effective 1st April, 2014. In terms of the provisions of Section 149(10) read with Section 149(5) of the Act 2013, Independent Directors are eligible to hold office for a term upto five consecutive years on the Board and eligible for re-appointment for the second term on passing special resolutions by the Company. During the period, they will not be liable to "retire by rotation" as per the provisions of Sections 150(2), 152(2) read with Schedule IV to the Act 2013. It is therefore, proposed to appoint them as Independent Directors for a period upto 31st March, 2019 at the ensuing Annual General Meeting. Necessary declarations have been obtained from them, as envisaged under the Act 2013. Both the Nomination and Remuneration Committee and the Board also ensured that their appointments as Independent Directors are in compliance with the requirements under the relevant statutes and that there were appropriate balance of skills, experience and knowledge in the Board, so as to enable the Board to discharge its functions and duties effectively. Notices in writing signifying the intention to offer their candidatures as Independent Directors of the Company along with the requisite deposit have been received from members of the Company in terms of Section 160 of the Act 2013. The brief resume of these directors proposed to be appointed and other relevant information have been furnished in the Notice convening the Annual General Meeting. Appropriate resolutions for their appointment are being placed for approval of the members at the Annual General Meeting. Your Directors recommend their appointment as Independent Directors of the Company. APPOINTMENT OF NEW INDEPENDENT DIRECTOR Mr Rasesh R Doshi was appointed as an Independent Director for a term of five years with effect from 24.5.2014. Mr Rasesh R Doshi does not suffer any of the dis-qualifications mentioned in sub-section 6 of Section 149 of the Companies Act, 2013 and is not disqualified under Section 274(1)(g) of the Companies Act, 1956 and Section 164 (2) of the Companies Act, 2013. The brief resume of Mr Rasesh R Doshi and other information have been detailed in the Notice convening the Annual General Meeting of the Company. Appropriate resolution for his appointment is being placed for approval of the shareholders at the ensuing Annual General Meeting. Necessary notice has already been received from a shareholder proposing his candidature to be appointed as a Director not liable to retire by rotation at the ensuing Annual General Meeting. Your Directors recommend his appointment as an Independent Director of the Company, for a period of 5 years from 24.5.2014 to 23.5.2019. APPOINTMENT OF MR R NARESH In order to comply with the provisions of Section 152 and other applicable provisions of the Companies Act, 2013, the Board of Directors proposes to appoint Mr. R Naresh as Managing Director of the Company, designated as Executive Vice Chairman, liable to retire by rotation, for a period of three (3) years with effect from June 16, 2014 at the remuneration / emoluments as recommended by the Nomination and Remuneration Committee. The brief resume of Mr R Naresh, and other information have been detailed in the Notice convening the Annual General Meeting of the Company. Appropriate resolutions for his appointment is being placed for approval of the shareholders at the ensuing Annual General Meeting. Necessary notice has already been received from a shareholder proposing his candidature to be appointed as Managing Director of the Company, designated as Executive Vice Chairman, liable to retire by rotation at the ensuing Annual General Meeting. Your Directors recommend his appointment as Managing Director of the Company, designated as Executive Vice Chairman, liable to retire by rotation at the ensuing Annual General Meeting. None of the aforementioned Directors is disqualified under Section 274(1)(g) of the Companies Act, 1956 and Section 164 (2) of the Companies Act, 2013. AUDITORS Pursuant to the provisions of Companies Act, 2013, M/s Sundaram & Srinivasan, Chartered Accountants, Madurai, are being appointed as Statutory Auditors of the Company, from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company has received a letter from them stating that the appointment, if made, shall be within the prescribed limit under Section 139(1) and 141 of the Companies Act, 2013. The Audit Committee and the Board recommends the appointment of M/s Sundaram & Srinivasan, Chartered Accountants, Madurai, as the Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. COST AUDITOR The Board of Directors have appointed Dr I Ashok, Cost Accountant, Madurai as Cost Auditor for carrying out the cost audit of the Company for the financial year 2014-15 subject to the approval of the Central Government. The Company has received a letter from the said Cost Accountant, stating that the appointment, if made, will be within the prescribed limit under the Companies Act, 2013. For the financial year under review, the Cost Audit Report will be filed with the Ministry of Corporate Affairs portal within the stipulated time in terms of Companies (Cost Accounting) Records Rules, 2011. 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 Clause 49 of the Listing Agreement with the Stock Exchanges form part of the annual report. The Managing Director and the Vice President - Finance (CFO) of the Company have certified to the Board on financial statements and other matters in accordance with Clause 49(V) of the Listing Agreement pertaining to CEO / CFO certification for the financial year ended 31st March 2014. SECRETARIAL AUDIT In compliance with the directives issued by the Securities and Exchange Board of India (SEBI), Secretarial Audit is being conducted by a Practicing Company Secretary at specified periodicity and the reports are being submitted to the Stock Exchanges. STATUTORY STATEMENTS Conservation of energy, technology absorption and foreign exchange earnings and outgo As per the requirements of Section 217(1)(e) of the Act, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure to this report. Particulars of employees No employee of the Company was in receipt of remuneration during the financial year 2013-14, in excess of the sum prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Public deposits The Company has not accepted any deposit from the public within the meaning of Section 58A of the Companies Act, 1956 for the year ended 31st March, 2014. Directors Responsibility Statement In accordance with the provisions of Section 217(2AA) of the Act with respect to Directors' Responsibility Statement, it is hereby stated a) That in the preparation of accounts for the financial year ended 31st March, 2014, the applicable accounting standards have been followed, along with proper explanation relating to material departures; b) That the Directors had selected the accounting policies and applied them consistently and made judgements 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; c) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and d) That the Directors have prepared the annual accounts for the year ended 31st March, 2014 on a "going concern" basis. ACKNOWLEDGEMENT The Directors thank the bankers, customers, dealers and vendors for their support and encouragement. The Directors wish to place on record their appreciation of the contribution made by the employees which made it possible for the Company to achieve these results. The Directors also thank the investors for their continued faith in the Company. For and on behalf of the Board R NARESH SHOBHANA EXECUTIVE VICE CHAIRMAN RAMACHANDHRAN MANAGING DIRECTOR Madurai 3.7.2014 |