TVS SRICHAKRA Directors Report

The Directors take pleasure in presenting the 34th Annual Report and the Company''''s audited financial statement for the year ended 31st March, 2017.


Pursuant to the notification dated 16th February, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards (“IND AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1st April, 2016. Financial statements for the year ended and as at 31st March, 2016 have been restated to conform to IND As.


FINANCIAL HIGHLIGHTS


(Rupees in Crores)












































































Details



Year ended 31.3.2017



Year ended 31.3.2016



Sales & other Income (including excise duty)



2140.65



2125.57



Profit before finance cost and depreciation



292.51



345.06



Less : finance Cost



20.13



15.75



Depreciation



55.67



42.32



Profit after finance cost and depreciation



216.71



286.99



Less : provision for







Income tax



52.50



85.27



Deferred tax



8.88



4.77



Profit after tax



155.33



196.95



Surplus brought forward from previous Year



378.42



236.76



Dividend paid $



-



45.94



Dividend Tax paid $



-



9.35



Balance carried to Balance Sheet



533.75



378.42



$ As per IND AS dividend is to be accounted only on payment basis from the financial year 2016-17.


OPERATIONS


TVS Srichakra Ltd. witnessed a growth in revenue during the financial year 2016-2017, despite various factors affecting the overall industry.


STANDALONE FINANCIAL PERFORMANCE


Your company recorded net sales of Rs.2140.65 crore (including other income) as against Rs.2125.57 crores during the previous financial year. Your Company''''s Profit before Finance Cost and Depreciation stood at Rs.292.51 crores as against Rs.345.06 crores during the previous financial year. Profit after Tax was at Rs.155.33 crores compared to Rs.196.95 crores during the previous financial year.


CONSOLIDATED PERFORMANCE


Income for the year ended 31st march, 2017 was at Rs.2135.53 crores (including excise duty) as compared to Rs.2385.83 crores for the previous year ended 31st march, 2016.


Profit Before Tax was at Rs.211.07 crores for the year ended 31st March, 2017 as against Rs.283.78 crores for the year ended 31st march, 2016.


Profit after Tax was at Rs.149.69 crores for the year ended 31st March, 2017 as against Rs.191.17 crores for the year ended 31st March, 2016.


HIGHLIGHTS ON PERFORMANCE OF SUBSIDIARY AND ASSOCIATES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY


Your Company''''s wholly owned subsidiary TVS Srichakra Investments Limited recorded a net loss of Rs.576 lakhs owing to finance cost on borrowings from the holding company. Your company is reviewing the interest rates and proposes to align these rates in line with its borrowing cost.


ZF Electronics TVs India pvt. Limited, an associate Company, recorded a total revenue of INR 46 crores (py INR 44 crores). the Company incurred a net loss INR 4 crores (py INR 1.1 crores), mainly due to increase in cost of raw materials. the Company, along with its Joint Venture partner, is identifying business development opportunities and aggressive cost reduction actions for turning around the Company and continuing its past track record of profitability.


DIVIDEND


In line with Regulation 43A of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 (“the Regulations”), your Company has formulated the Dividend Distribution policy and the same is available on the Company''''s website at the link: http7/wwwtvstyres.com/policy/DIVIDEND%20DISTRIBUTION%20POLICYpdf


Based on Company''''s performance, the Directors are pleased to recommend for approval of the members, a dividend of Rs.50.70 per share (507%) on 76,57,050 equity shares for the financial year ended 31st March, 2017. The dividend on equity shares, if approved by the members would result in a total cash outflow of Rs.46.72 crores including dividend distribution tax of Rs.7.90 crores as against Rs.55.30 crores including dividend distribution tax of Rs.9.35 crores in the previous year.


FINANCE


Cash and cash equivalent as at 31st march, 2017 was at Rs.9.37 crores.


The Company was able to continue its sustained efforts in judicious management of working capital, receivables, inventories and other working capital parameter through regular monitoring.


PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS


No loan or guarantee covered under the provisions of Section 186 of the Companies act, 2013 (“the act”) has been given by your Company.


Particulars of investments made by your Company is furnished in the notes to the financial statements.


TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND


as per section 125 of the companies act, 2013, after completion of seven years from the date of transfer to unpaid dividend account, the unclaimed dividend amount has to be transferred to the investor education and protection fund (iepf). accordingly, the unclaimed dividend amount for the financial year 2008-09 becomes due for transfer to iepf. the company sent letters to those shareholders, who have not encashed their dividend amount. despite the reminder letters sent to such shareholders, an amount of rs.6,60,818/- remains unclaimed and the same was transferred to iepf account on 18.11.2016.


CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES


The Company''''s Corporate Social Responsibility (CSR) activities / projects are focused towards education, health, sanitation, environment, safe drinking water and protection of national heritage, art and culture in line with the CSR policy of your Company. the CSR policy may be accessed at the Company''''s website at the link: http://www.tvstyres. com/policy/CSR%20poLICY.pdf


The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.


The CSR Committee comprises of Ms. Shobhana Ramachandhran, Mr. Rasesh R Doshi and Mr. p Vijayaraghavan. the Committee had met 3 times during the year on 11.5.2016, 19.8.2016 and 10.2.2017. Details of role and functioning of the Committee are given in the Corporate Governance report.


The “annual report on CSR activities” is annexed to the Board''''s report as annexure 1.


INTERNAL FINANCIAL CONTROLS


The Board and the audit Committee have been reviewing the Internal Financial controls and strengthening the same. Further audit Committee periodically reviews the Internal audit Reports and suggestions and corrective actions are implemented.


BUSINESS RISK MANAGEMENT


The Business risk identified by the Company is regularly reviewed by Senior Management and the key risks are revised and modified as per the changing scenario. The Board reviews the key risks identified and mitigation plan initiated by the Company on a quarterly basis.


VIGIL MECHANISM / WHISTLE BLOWER POLICY


the Company has a vigil mechanism in compliance with the provisions of Section 177(10) of the Companies act, 2013 and Regulation 22 of the Regulations to report any serious actual or suspected frauds, concerns relating to financial matters / reporting, unethical or illegal conduct or actual or possible violation of Code of Conduct / Ethical Standards and provides adequate safeguard against victimization. protected disclosure can be made by the whistle blower and the policy may be accessed on the Company''''s website at http7/www.tvstyres.com/policy/WHISTLE%20BLoWER%20 poLICY.pdf


During the year, no instances were reported under this mechanism and details pertaining to Whistle Blower policy are explained in the Corporate Governance Report.


PARTICULARS Of FRAUD OTHER THAN THOSE THAT ARE REPORTABLE TO THE CENTRAL GOVERNMENT REPORTED BY STATUTORY AUDITOR UNDER SECTION 143(12) OF THE COMPANIES ACT, 2013


The Statutory Auditor of the Company has not reported any fraud as specified under Section 143(12) of the Act.


SUBSIDIARY COMPANY(S)


The audited accounts of the subsidiary company TVs Srichakra Investments Limited have been consolidated with the Company as on 31st March, 2017.


CONSOLIDATED FINANCIAL STATEMENTS


The Consolidated financial Statements of the Company are prepared in compliance with the applicable provisions of the act, relevant rules and accounting Standards and as stipulated in the Regulations.


Pursuant to Section 129 of the Companies Act, 2013 a statement containing salient features of the financial statement of Company''''s subsidiary(s)/ associates are given in form AoC 1 as annexure 2 to the DIRECTORS'''' REPORT.


The audited financial statement including the consolidated financial statement of the Company together with all other documents required to be attached thereto and auditor''''s Report forms part of this annual Report and may be accessed on the Company''''s website: www.tvstyres.com. The financial statements of the subsidiary may also be accessed on the Company''''s website: www.tvstyres.com. These documents will also be available for inspection during normal business hours on working days at the Registered Office of the Company. A copy of the financial statements of the subsidiary shall be provided free of cost to the shareholders up on request.


DIRECTORS RESPONSIBILITY STATEMENT


In terms of Section 134(5) of the act, your Directors state that:


a) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;


b) the Directors had selected such accounting policies and applied them 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 at the end of the financial year and of the profit of the company for that period;


c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;


d) the Directors had prepared the annual accounts on a going concern basis;


e) the Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively, and


f) 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.


DIRECTORS


Directors liable to retire by rotation


In accordance with the provisions of Section 152 of the Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014, Mt p Vijayaraghavan (DIN: 00633205), Director, retires by rotation at this annual General meeting and being eligible, offers himself for re-appointment.


The brief resume of the aforesaid Director and other information have been detailed in the notice convening the annual General meeting of the Company. appropriate resolution for his re-appointment is being placed for approval of the members at the ensuing annual General meeting. Your Directors recommend his re-appointment as Director of the Company.


Independent Directors Declaration


In accordance with Section 149(7) of the Companies act 2013, each Independent Director has given a written declaration to the Company confirming that he meets the criteria of independence as mentioned under the Act and the Regulations.


Familiarization Programme for Independent Directors


The Company has put in place familiarization programme for Independent Directors to familiarize them with the working environment of the Company. periodic presentations are made at the Board and Committee meetings on business and performance of the Company. Details of the familiarization programme for Independent Directors are explained in the Corporate Governance Report.


Independent Directors are more actively involved in specialized presentations of your Company''''s strategic core team of Senior management.


Board Evaluation


pursuant to the provisions of the act read with the Rules issued there under and the Regulations, the Board carried out annual performance evaluation of the Board, Committees and Individual Directors. the performance evaluation of the Chairman and non-Independent Directors was carried out by Independent Directors. more details about it are available in the Corporate Governance Report.


The evaluation process considers attendance of Directors at Board, Committee and annual General meeting, effective participation, domain knowledge etc.


Remuneration Policy


The Committee has formulated a policy on Director''''s appointment and remuneration including recommendation of remuneration of the key managerial personnel and other employees and on board diversity.


The remuneration policy followed by the Company ensures that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the talent. The remuneration involves a balance of fixed and variable pay reflecting short and long term performance objectives appropriate to the working of the Company. More details about the nomination and Remuneration Committee, are available in the Corporate Governance Report.


PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES


Disclosures relating to remuneration and other details as required under Section 197(12) of the act read with Rule 5(1) of the Companies (appointment and Remuneration of managerial personnel) Rules, 2014 are furnished in Annexure 3.


a statement showing the names and other particulars of employees drawing remuneration as prescribed under rule 5(2) and rule 5(3) of the companies (appointment and remuneration of managerial personnel) rules, 2014 forms part of this report. however, in terms of the first proviso of section 136 of the act, the annual report is being sent to the members and others entitled thereto, excluding the above information. the above is open for inspection at the registered office of the company during business hours on working days up to the date of the ensuing annual general meeting. if any member is interested in obtaining a copy thereof, such member may write to the company secretary and the same will be furnished.


BOARD MEETING


Calendar of meetings is prepared and circulated in advance to the Directors.


During the year 6 (six) Board meetings were convened and held, details of which are given in the Corporate Governance Report.


AUDIT COMMITTEE


Audit Committee comprises four members and the Chairman is an Independent Director. the members of the Committee are Mr. M S Viraraghavan (Chairman), Mr. p Vijayaraghavan, Mr. H Janardana Iyer and Mr. Rasesh R Doshi and during the year the Committee has met 4 (four) times. All the recommendations made by the Audit Committee were accepted by the Board. More details are given in the Corporate Governance Report.


INDUSTRIAL RELATIONS


During the year, the Company continued to enjoy cordial and peaceful industrial relations with the workers and employees at all levels.


RELATED PARTY TRANSACTIONS


ah related party transactions are entered on arm''''s length basis, in the ordinary course of business and in compliance with the applicable provisions of the act and the regulations. there are no materially significant related party transactions made by the company, which may have potential conflict with the interest of the company at large or which warrants approval of the members.


ah transactions with related parties were reviewed and approved by the audit committee. prior approvals are granted by the audit committee for related party transactions which are of repetitive nature, entered in the ordinary course of business and are on arm''''s length basis in accordance with the provisions of section 188 of the companies act, 2013 read with the rules issued thereunder and the listing regulations.


The details of the related party transactions as per IND As 108 are set out in Note No.7 to the Standalone financial Statements forming part of this report.


Pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules 2014, form AoC 2 is given in Annexure 4.


The Related party transaction policy as approved by the Board is available at the weblink: http://tvstyres.com/policy/ RELATED%20PARTY%20TRANSACTION%20POLICY.pdf.


MATERIAL CHANGES AND COMMITMENTS


No material changes and commitments have occurred between the end of the financial year till the date of this report which affect the financial position of the Company.


AUDITORS


Statutory Auditor


As per the provision of the Section 139 of the Act, the term of office of M/s Sundaram & Srinivasan, Chartered Accountants, Madurai, (firm No:004207S) Statutory Auditors of the Company will conclude from the close of the forthcoming Annual General meeting (AGM).


The Board of Directors place on record its appreciation for the services rendered by M/s Sundaram & Srinivasan as Statutory Auditors of the Company.


The Board of Directors recommend subject to the approval of the members at the ensuing AGM, the appointment of M/s pKF Sridhar & Santhanam, Chartered Accountants (firm Regn. No.003990S / S200018), Chennai as Statutory Auditors of the Company for a period of 5 years from the conclusion of the ensuing Annual General Meeting till the conclusion of the 39th Annual General Meeting.


M/s pKF Sridhar & Santhanam have expressed their willingness to be appointed as Statutory Auditor and have confirmed their eligibility to the effect that their appointment, if made, would be within the limits prescribed under the Act and that they are not disqualified for appointment. They have also confirmed that they hold a valid certificate issued by the peer Review Board of the Institute of Chartered Accountants of India.


The Audit Committee and the Board recommend the appointment of M/s pKF Sridhar & Santhanam, Chartered Accountants, Chennai as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the 39th Annual General Meeting.


The Auditors'''' Report to the shareholder does not contain any qualification.


Cost Auditor


The Board of Directors on the recommendation of Audit Committee has appointed Dr. I Ashok, Cost Accountant (Membership No. M11929) as Cost Auditor of the Company for the financial year 2017-18 under Section 148 of the Act and the Companies (Audit and Auditors) Rules, 2014. Dr. I Ashok have confirmed that his appointment is within the limits prescribed by the Act and is free from any disqualification specified in Section 141 and proviso to Section 148(3) of the Act.


The remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for ratification. Accordingly, the resolution seeking the same is included in the notice convening the AGM. The Cost Audit'''' Report does not contain any qualification.


Secretarial Auditor


In terms of Section 204 of the Act, Mr. N Balachandran (Membership No 5113), practicing Company Secretary has been appointed to carry out the Secretarial Audit of the Company for the financial year 2016-17. The Board has received consent from Mr. n.Balachandran to act as the auditor for conducting audit of the Secretarial records for the financial year ending 31st March, 2017.


The Secretarial Audit Report for the year ended 31st March, 2017 is annexed as Annexure 5. the Secretarial Audit Report to the shareholders does not contain any qualification.


CORPORATE GOVERNANCE


A separate section on corporate governance in compliance with the Regulations together with a certificate from the Company''''s Auditors confirming compliance forms an integral part of this Annual Report.


MANAGEMENT DISCUSSION AND ANALYSIS REPORT


The Management Discussion and Analysis report has been separately furnished in the Annual Report and forms a part of the Annual Report.


ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO


Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 6 to the DIRECTORS'''' REPORT.


EXTRACT OF ANNUAL RETURN


Details forming part of the extract of Annual Return as on 31st March, 2017 in form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 is enclosed as Annexure 7 to the DIRECTORS'''' REPORT.


BUSINESS RESPONSIBILITY REPORT


a separate section on Business Responsibility detailing the various initiatives taken by your Company on the environmental, social and governance front forms part of this Annual Report as required under Regulation 34(2)(f) of the Regulations.


OTHER DISCLOSURES


- The Company has not accepted deposit from the public falling within the ambit of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).


- The Company has neither issued shares with differential rights as to voting, dividend or otherwise nor any sweat equity / stock options.


- No disclosure is required under Section 67(3)(c) of the Act, in respect of voting rights not exercised directly by employees of the Company as the provisions of the said Section are not applicable. The paid up equity capital is Rs.7,65,70,500/- as on 31st march, 2017. There is no change in the Share capital of the Company during the financial year under review


- The Company consciously strives to build a work culture that promotes the dignity of all employees. The Company has adopted a policy on prevention of sexual harassment of women at work place. During the year, no cases were reported under Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013,


- There have been no significant and material orders passed by the courts or regulators or tribunals impacting the going concern status and Company''''s operation in future.


ACKNOWLEDGEMENT


Your Directors are grateful to all valuable stakeholders of the Company viz. our customers, shareholders, dealers, vendors, banks and other business associates for their excellent support and help rendered during the year. The Directors also acknowledge the unstinted commitment and valued contribution of all employees of the Company.


for and on behalf of the Board


Madurai R NARESH SHOBHANA RAMACHANDHRAN


24.5.2017 EXECUTIVE VICE CHAIRMAN MANAGING DIRECTOR

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