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Directors Report of Elgi Rubber Company Ltd.

Mar 31, 2015

The Board of Directors have pleasure in presenting the 9th annual report of the Company and the audited accounts for the year ended March 31, 2015 covering 12 months of operation. The Management Discussion and Analysis (MD&A) Report have been included at the appropriate places in this report.

Financial Highlights

(Rs. in million) 2014-2015 2013-2014

Profit before depreciation and tax 146.53 259.99

Less: Depreciation 67.82 50.92

Add: Exceptional items 0.29 _

Profit before taxation 79.00 209.07

Less: Provision for taxation 24.60 51.63

(Add) / Less: Provision for deferred tax (2.15) 6.20

Profit after tax 56.55 151.24

Add: Opening surplus 1,050.36 932.76

Profit available for appropriation 1,106.91 1,084.00

Appropriation

Transitional adjustment on account of depreciation 8.29 _

General reserve 5.66 15.12

Proposed dividend 10.51 18.52

Dividend distribution Tax _ _

Balance surplus carried to balance sheet 1,082.45 1,050.36

Review of Business Operations and Future Outlook

During the year under review, the Company recorded sales of INR 1,333.97 million as against INR 1,442.86 million in the last year The company earned a net profit of INR 56.55 million as against INR 151.24 million in the previous year. The Indian Subsidiary, Treads direct Limited achieved sales of INR 1,516.59 million and Profit after tax of INR 72.76 million.

The current year continues to be sluggish in terms of sales with the overall industry going through difficult times. The Company is taking steps to consolidate its operations with a view to reduce operating costs and to bring in higher efficiencies to improve the bottom line.

Transfer to Reserves

An amount of INR 5.66 million has been transferred to General Reserve and an amount of INR 1,082.45 million (including the previous year closing balance of INR 1,050.36 million) has been retained in Surplus in the Statement of Profit and Loss.

Dividend

The directors recommend a dividend of INR 0.21 per equity share of INR 1.00 each. This comes to INR 10.51 million. The dividend will be paid to the registered members, who are in the register of members as on the book closure date and upon approval by the members of the Company at the ensuing annual general meeting. In respect of the dematerialised shares, dividend will be paid to the beneficial owners based on the list provided by the depositories.

Transfer of Unclaimed Dividend to Investor Education and Protection Fund

In terms of Section 205(a) and 205(b) of the Companies Act, 1956, any unclaimed or unpaid dividend relating to the financial year 2007- 2008 is due for remittance on 30/09/2015 to the Investor Education and Protection Fund established by the Central Government.

Share Capital

The paid-up capital of the Company as at 31.03.2015 stood at INR 50.05 million. During the year under review the Company has not made any fresh issue of shares.

Extract of Annual Return

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure I of this Report.

Board and Committee meetings conducted during the period under review

During the year under review, 5 Meetings of the Board of Directors, 4 Meetings of the Audit Committee, 2 Meetings of the Nomination and Remuneration Committee, 1 Meeting of the Corporate Social Responsibility Committee and 22 Meetings of the Stakeholders Relationship Committee were held. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith.

Directors' Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013 with respect to Directors Responsibility Statement, the Board hereby confirms that:-

a. in the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures;

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.

Details in respect of frauds reported by Auditors under Section 143(12) of the Companies Act, 2013 other than those which are reportable to the Central Government

There have been no frauds reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013.

Declaration of Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchange.

Company's policy relating to Directors appointment, payment of remuneration and other matters provided under Section 178(3) of the Companies Act, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Nomination and Remuneration policy of the Company in annexed herewith as Annexure II and can also be accessed on the Company's website www.elgirubber.com.

Comments on Audit Report

There are no qualifications, reservations or adverse remarks or disclaimers made by Reddy, Goud and Janardhan, Statutory Auditors and by CN Paramasivam, Secretarial Auditor, in their report.

Particulars of loans, guarantees or investments made under Section 186 of the Companies Act, 2013

Details of loans given, investments made, guarantees given and securities provided pursuant to the provisions of Section 186 of the Companies Act, 2013 have been given in the Notes to the Financial Statements.

Particulars of contracts or arrangements made with related parties

All transactions entered into with related parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year 2014-2015 were in the ordinary course of business and on an arm's length pricing basis. Transactions of material nature in Form AOC-2 is attached to this Report as Annexure III.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Company's website www.elgirubber.com.

Material changes and commitment if any affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report

The Board of directors at their meeting held on 21st April, 2015 has approved the Scheme of Amalgamation of the wholly owned subsidiaries Treadsdirect Limited and Parani Steels Private Limited with the Company with effect from 01st April, 2015 subject to the approval of the Hon'ble High Court of Judicature at Madras and such other authorities as may be necessary in this regard. Other than this there are no material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure IV of this report.

Statement on Risk Management

The Board identifies and reviews the various elements of risk which the Company has to face and laid out the procedures and measures for mitigating those risks. The elements of risk threatening the Company's existence are very minimal.

The company does not face any risks other than those that are prevalent in the industry. The company has taken all possible steps to , overcome such risks. The main concerns are the volatility in raw material prices and fluctuations in foreign exchange rates. Effective planning in raw material purchasing and the ability to pass on raw material price increases have minimised the risk relating to the volatility in raw material prices. Foreign exchange fluctuation risk is minimised through proper planning and natural hedging. As a part of the overall risk management strategy, all assets are appropriately insured.

Details about the policy developed and implemented by the Company on Corporate Social responsibility initiatives

The Board has formed a Corporate Social Responsibility Committee comprising of Sudarsan Varadaraj, MD Selvaraj and Suresh Jagannathan. The Committee at its meeting held on 4th August, 2014, recommended a CSR policy for adoption by the Company. The CSR policy deals with allocation of funds, activities, identification of programmes, approval, implementation, monitoring and reporting mechanisms for CSR activities.

As part of its initiatives under CSR, the Company has undertaken projects in the areas of Education, Social development, Medical relief, Sports, Women empowerment, animal welfare, Cultural protection etc. These projects are by and large in accordance with Schedule VII of the Companies Act, 2013.

The CSR spend is predominantly directed through a registered trust. The trust expends the sums contributed by the Company towards educational and related activities only and also for having a corpus for undertaking construction of new school building within the next 5- 10 years. The trust has a proven track record of over three years in involvement in educational activities as it runs a full-fledged school comprising of 1,300 students and has earned a good reputation over time. The trust has medium term plans to construct a new school building with all modern amenities and aims to be a school of international standards in the years to come. Hence, the Company should continue to significantly contribute to the trust.

The trust also expends the funds towards Educational Scholarships, Medical Relief, to help the upliftment of rural people by way of building infrastructure like Schools, Street Lights, Roads etc. to support Special Children's School and also for the Building Corpus. The Annual Report on CSR activities is annexed herewith as Annexure V.

Annual evaluation of the Board on its own performance and of the individual directors

On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors, the Company formulated the criteria for the evaluation of the performance of the Board of Directors & its Committees, Independent Directors, Non-independent Directors and the Chairman & Managing Director. Based on that performance evaluation has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated.

Directors and Key Managerial Personnel

Suresh Jagannathan, MD Selvaraj, P Vijay Raghunath and Vidyasankar Bhuvaneshwari were appointed as Independent Directors of the Company at the Annual General Meeting held on 27th September 2014 for a term of five consecutive years.

As per the provisions of Section 152 of the Companies Act 2013, the Managing Director of the Company, Sudarsan Varadaraj, retires by rotation at this Annual General Meeting. Being eligible, he offers himself for re-appointment.

At the Board Meeting held on 19th May, 2014, Sudarsan Varadaraj, Chairman and Managing Director, SR Venkatachalam, Chief Financial '$

Officer (Vice-President - Finance) and C Shankar, GM - Finance and Company Secretary, were designated as "Key Managerial Personnel" of the Company pursuant to Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Sudarsan Varadaraj, Chairman and Managing Director of the Company, apart from drawing remuneration from this Company is also paid remuneration by way of commission by the wholly owned subsidiary, Treadsdirect Limited. This disclosure is made pursuant to the provisions of Section 197(14) of the Companies Act, 2013.

Subsidiaries, Joint Ventures and Associate Companies

The Board has approved a policy for determining material subsidiaries which has been uploaded on the Company's website www.elgirubber.com.

The annual accounts of the Subsidiary Companies are posted on the website of the Company www.elgirubber.com and kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide the copy of the annual accounts of Subsidiary Companies to the shareholders upon their request.

The statement pursuant to Section 129(3) of the Companies Act, 2013, containing the salient features of the Financial Statement of subsidiary Companies, forms part of this Annual Report.

Deposits

The Company has not accepted any fixed deposit and hence there are no unclaimed deposits as on 31st March 2015.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future

There were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and I

company's operations in future. I

Internal Control Systems and their adequacy

The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels. The Audit Committee of the Board constantly reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the Company and recommendations made for corrective action through the internal audit reports. The Committee reviews the statutory auditors' report, key issues, significant processes and accounting policies.

Statutory Auditors

Reddy, Goud and Janardhan, Chartered Accountants, Bangalore were appointed as Statutory Auditors for a period of 3 years at the previous Annual General Meeting held on 27th September 2014. Their continuance of appointment and payment of remuneration are to be ratified in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if the appointment is ratified, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, CN Paramasivam, Company Secretary in Practice, was appointed as the Secretarial Auditor of the Company to carry out the secretarial audit for the year ended 31st March, 2015. A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is enclosed with this Report as Annexure VI.

Particulars of employees

There are no employees who are in receipt of remuneration in excess of INR. 6,000,000/- for the whole Financial year 2014-15 or a part thereof during the year. Particulars pursuant to Rule 5(1) of Companies (Appointment and Remuneration of Managerial personnel) Rules 2014, is enclosed as Annexure VII

Human Resources and Industrial Relations

The Company continues to enjoy a cordial relationship with all its employees. The employee count as on March 31, 2015 is 318.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaint Committee has been set up to redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2014-2015.

Corporate Governance

A report on Corporate Governance is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

Whistle Blower Policy

The Company has a Whistle Blower Policy to deal with unethical or improper practice or violation of Company's Code of Business Conduct or any complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. The Policy gives a platform to the Whistle Blower to report the complaints on the above mentioned practices to the Chairman of the Audit Committee. Although the complainant is not expected to prove the truth of an allegation, the complainant aims to demonstrate that there are sufficient grounds for concern and is not done as a malicious act against an individual. The Audit Committee of the Board reviews the Complaints received, redressed, objected, withdrawn and dismissed for, every quarter in their meeting. The Whistle Blower Policy is available in the website of the Company at the following address www.elgirubber.com.

Cautionary Statement

Statements in this report, especially those relating to MD & A giving details of company's objectives, projections, estimates and expectations may be construed as "forward looking statements" within the realm of applicable laws and regulations. Actual results are liable to differ materially from those either expressed or implied.

Acknowledgement

The Directors thank the Company's customers, vendors, investors, business associates and bankers for their support to the Company. The Directors also wish to place on record their appreciation of the contributions made by all the employees towards the growth of the Company.

For the board of directors

Sudarsan Varadaraj

Coimbatore Chairman & Managing Director

30.07.2015 (DIN: 00133533)


Mar 31, 2014

Dear members,

The Board of Directors take pleasure in presenting the 8th annual report and the audited accounts for the year ended March 31, 2014. The Management Discussion and Analysis (MD & A) Report have been included at the appropriate places in this report.

Abstract of the Financial Results of the Company

(Rs. in million)

2013-2014 2012-2013

Profit before depreciation and tax 259.99 268.96

Less : Depreciation 50.92 36.30

Profit before taxation 209.07 232.66

Less: Provision for taxation 51.63 52.13

(Add) / Less: Provision for deferred tax 6.20 3.22

Profit after tax 151.24 177.31

Add: Opening surplus 932.76 812.94

Add: Dividend distribution tax of earlier year return back 3.85

Profit available for appropriation 1,084.00 994.10

Appropriation

General reserve 15.12 17.73

Proposed dividend 18.52 40.04

Dividend distribution tax - 3.57

Balance surplus carried to balance sheet 1,050.36 932.76

Dividend

The directors recommend a dividend of INR 0.37 per equity share of INR 1.00 each. This comes to INR 18.52 million. The dividend will be paid, upon approval by the members of the Company at the ensuing annual general meeting to the registered members, who are in the register of members as on the book closure date and in respect of the dematerialised shares, dividend will be paid to the beneficial owners based on the list provided by the depositories.

Review of Operations and Future Outlook

During the year under review, the Company recorded sales of INR 1442.86 million as against INR 1407.32 million in the previous year. The company earned a net profit of INR 151.24 million as against INR 177.31 million in the previous year.

The Indian Subsidiaries, Treadsdirect Limited and Titan Tyrecare Products Limited achieved sales of INR 1670.88 million and INR 45.66 million respectively during the year under review. The revenue from windmill operations increased to INR 35.41 million from INR 33.63 million in the previous year recording an increase of 5%.

There was only marginal improvement in overall sales due to global economic slowdown. The decrease in input costs was inadequate to offset the increases in employee, depreciation and overhead costs. Hence the margins were lower.

In February 2014, the Company commenced manufacture of buffing rasp blades, with the installation and commissioning of a state of the art furnace and relocated two presses at Kovilpalayam in September 2013 at total cost of INR 72.75 million.

The Company acquired the entire business of its wholly owned subsidiary Titan Tyrecare Products Limited with effect from 01.09.2013 consisting of manufacture of retreading machineries and a 100% EOU division engaged in manufacture of brazed carbide products for a consideration of INR 169.63 million.

During the year under review, two hydraulic presses were installed at Annur and new moulds were procured at a total cost of INR 20.62 million.

The Karur facility manufacturing tyre repair units was shifted to Annur in order to consolidate operations.

The wholly owned subsidiary Treadsdirect LLC, USA acquired the assets of Western states manufacturing company Inc which was engaged in manufacture and distribution of tyre repair and related products.

The Company has successfully retreaded aircraft tyres for the Indian Airforce on commercial basis in November 2013.

The Company expects to have considerable growth in sales and profitability in future on account of substantial capital investments made during the year.

Risk and Concerns

The company does not face any risks other than those that are prevalent in the industry. The company has taken all possible steps to overcome such risks. The main concerns are the volatility in raw material prices and fluctuations in foreign exchange rates. Effective planning in raw material purchasing and the ability to pass on raw material price increases have minimised the risk relating to the volatility in raw material prices. Foreign exchange fluctuation risk is minimised through proper planning and natural hedging.

As a part of the overall risk management strategy, all assets are appropriately insured.

Internal Control Systems

Quarterly Internal Audit is carried out by an independent firm of Chartered Accountants and the observations are reported to the management. Immediate steps are taken to rectify any discrepancies. All significant audit observations are discussed in the audit committee meetings.

Human Resources and Industrial Relations

The Company continues to enjoy a cordial relationship with all its employees. The employee count as on March 31, 2014 is 306.

Subsidiaries

The consolidated financial statements presented in this annual report include financial results of all the subsidiary companies. The details of the Subsidiary Companies are furnished in the statement pursuant to section 212 of the Companies Act, 1956.

Directors

The Board of Directors, at their meeting held on 31st July, 2014, have appointed Ms Vidyasankar Bhuvaneswari as an Additional Director of the Company and she holds office upto the ensuing Annual General Meeting. Further, the Board has recommended the appointment of Ms Vidyasankar Bhuvaneswari as the Independent Director and accordingly necessary Resolution has been included in the Agenda of the Notice convening the Annual General Meeting.

Further, the Board of Directors, at their meeting held on 31st July, 2014, has recommended the appointment of Mr Suresh Jagannathan, Mr P Vijay Raghunath and Mr M D Selvaraj, as the Independent Directors of the Company for a period of 5 consecutive years. Accordingly, necessary Resolution(s) proposing their appointment(s) has been included in the Agenda of the Notice convening the Annual General Meeting.

Dr Jairam Varadaraj, Director of the Company, retires by rotation and being eligible offers himself for re-appointment.

Auditors

Pursuant to the Section 139 of Companies Act, 2013 read with the Company (Audit and Auditors) Rules, 2014, the present auditors, M/s. Reddy, Goud and Janardhan, Chartered Accountants, Bangalore, is recommended for appointment as Statutory Auditors of the Company to hold the office for 3 years from the conclusion of the ensuing Annual General Meeting till the conclusion of 11th Annual General Meeting of the Company. Further, such appointment is liable to ratification by the members of the company at every annual general meeting during their tenure of office.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors confirm that they have

1. In the preparation of the annual accounts, followed the applicable accounting standards and there are no material departures.

2. Selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company and of the profit of the Company for the financial year.

3. 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.

4. Prepared the annual accounts on a going concern basis.

Other Information

Particulars as required by Section 217(1) (e) of the Companies Act, 1956, relating to Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo are provided as an annexure to this report. There are no employees who are in receipt of remuneration exceeding the specified limit as notified by the Government.

The Company has not accepted any fixed deposits and hence there were no unclaimed fixed deposit as on 31.03.2014.

Corporate Governance

A separate report on the compliance with Clause 49 of the Listing Agreement with the Stock Exchanges and the Auditor''s Certificate on the compliance form part of this report.

Cautionary Statement

Statements in this report, especially those relating to MD & A giving details of company''s objectives, projections, estimates and expectations may be construed as "forward looking statements" within the realm of applicable laws and regulations. Actual results are liable to differ materially from those either expressed or implied.

Acknowledgement

The Directors thank the Company''s customers, vendors, investors, business associates and bankers for their support to the Company. The Directors also wish to place on record their appreciation of the contributions made by all the employees towards the growth of the Company

For the Board of Directors

Coimbatore Sudarsan Varadaraj 31.07.2014 Chairman & Managing Director


Mar 31, 2013

The Board of Directors take pleasure in presenting the 7th annual report and the audited accounts for the year ended March 31,2013. The Management Discussion and Analysis (MD & A) Report have been included at the appropriate places in this report.

Abstract of the Financial Results of the Company

(Rs. in Million)

2012-2013 2011-2012

Profit before depreciation and tax 265.47 178.59

Less : Depreciation 36.30 39.37

Profit before taxation 229.17 139.22

Less: Provision for taxation 52.13 42.52

(Add) / Less: Provision for deferred tax 3.22 1.88

Profit after tax 173.82 94.82

(Add) / Less: Adjustment relating to earlier years (Income tax) (3.49) 0.95

177.31 93.87

Add: Opening surplus 812.94 757.54

Add: Dividend distribution tax of earlier year written back 3.85

Profit available for appropriation 994.10 851.41

Appropriation

General reserve 17.73 9.39

Proposed dividend 40.04 25.02

Dividend distribution tax (After adjustment of dividend distribution tax paid by subsidiaries) 3.57 4.06

Balance surplus carried to balance sheet 932.76 812.94

Dividend

The directors recommend a dividend of INR 0.80 per equity share of INR 1.00 each. This along with the dividend distribution tax comes to INR 43.61 Million. The dividend will be paid to the registered members, who are in the register of members as on the book closure date and upon approval by the members of the Company at the ensuing annual general meeting. In respect of the dematerialised shares, dividend will be paid to the beneficial owners based on the list provided by the depositories.

Review of operations and future outlook

During the year under review, the Company recorded sales of INR 1,407.32 Million as against INR 1,115.45 Million in the previous year. The Company earned a net profit of INR 177.32 Million as against INR 93.87 Million in the previous year.

The Indian subsidiaries, Treadsdirect Limited and Titan Tyrecare Products Limited achieved sales of INR 1,756.48 Million and INR 77.33 Million respectively during the year under review.

Acute power shortage and increase in cost of fuel during the financial year had a negative impact on the operations of the Company. Despite this, the Company achieved higher profitability on account of cost control and prudent financial management.

With increasing rubber prices, the margins are expected to be under pressure during the next financial year. The Company is taking measures to expand its market share overseas. These measures are expected to result in the growth of the Company''s business globally.

Risk and concerns

The Company does not face any risks other than those that are prevalent in the industry. The Company has taken all possible steps to overcome such risks. The main concerns are the volatility in raw material prices, availability of power and fluctuations in foreign exchange rates. Effective planning in raw material purchasing and the ability to pass on raw material price increases will minimise the risk relating to the volatility in raw material prices. Foreign exchange fluctuation risk will be minimised through proper planning and natural hedging.

As a part of the overall risk management strategy, all assets are appropriately insured.

Internal control systems

An independent firm of Chartered Accountants carries out quarterly internal audit and the observations are reported to the management. Immediate steps are taken to rectify any discrepancies. All significant audit observations are discussed in the audit committee meetings.

Human resources and industrial relations

The Company continues to enjoy a cordial relationship with all its employees. The employee count as on March 31, 2013 is 301.

Subsidiaries

In accordance with the circular issued by Ministry of Corporate Affairs, the Board of Directors of the Company at their meeting held on May 17, 2013 have approved waiving the requirement to attach the various documents related to the subsidiary companies. Upon request, the annual accounts of the subsidiary companies will be made available for inspection by any member of the Company at the registered office of the Company and that of the subsidiary companies. The consolidated financial statements presented in this annual report include financial results of the subsidiary companies. The details of the subsidiary companies are furnished in the statement pursuant to section 212 of the Companies Act, 1956.

Directors

As per the provisions of Companies Act, 1956, and the articles of association of the Company, the directors of the Company MD Selvaraj and Suresh Jagannathan retire by rotation. Being eligible, they offer themselves for reappointment.

Auditors

Reddy, Goud and Janardhan, Chartered Accountants, Statutory Auditors of the Company, retire in the ensuing annual general meeting and are eligible for reappointment.

Cost accounting records

In terms of the general order issued by the central government and pursuant to the provisions of section 233B of the Companies Act, 1956, the Company has appointed M/s. K.R.S & Associates, Cost Auditors, Coimbatore to audit the cost accounts of the Company for the year ended March 31, 2013. The cost audit report in respect of financial year 2012-2013 will be filed on or before the due date.

Pursuant to Sec. 209 (1)(d) of the Companies Act, 1956 and Rule 5 of The Companies (Cost Accounting Records) Rules, 2011, the cost compliance report for the financial year ended March 31, 2012 has been submitted to the central government.

Directors'' Responsibility statement

In accordance with the provisions of section 217(2AA) of the Companies Act, 1956, the Directors confirm that they have

1. In the preparation of the annual accounts, followed the applicable accounting standards and there are no material departures.

2. Selected relevant accounting policies, applied them consistently and made judgements and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company and of the profit of the Cbmpany for the financial year.

3. Taken proper care in the maintenance of 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.

4. Prepared the annual accounts on a going concern basis.

Other information

Particulars as required by section 217(1) (e) of the Companies Act, 1956, relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are provided as an annexure to this report. There are no employees who are in receipt of remuneration exceeding the specified limit as notified by the government.

The Company has not accepted any fixed deposits and there were no unclaimed fixed deposit as on 31.03.2013.

Corporate governance

A separate report on the compliance with clause 49 of the listing agreement with the stock exchanges and the auditor''s certificate on the compliance form a part of this report.

Cautionary statement

Statements in this report, especially those relating to MD & A giving details of company''s objectives, projections, estimates and expectations may be construed as "forward looking statements" within the realm of applicable laws and regulations. Actual results are liable to differ materially from those either expressed or implied.

Acknowledgement

The Directors thank the Company''s customers, vendors, investors, business associates and bankers for their support to the Company. The Directors also wish to place on record their appreciation of the contributions made by all the employees towards the growth of the Company.

For the Board of Directors

Coimbatore Sudarsan Varadaraj

17.05.2013 Chairman & Managing Director


Mar 31, 2012

The Board of Directors take pleasure in presenting the 6th annual report and the audited accounts for the year ended March 31, 2012. The Management Discussion and Analysis (MD&A) Report have been included at the appropriate places in this report.

Abstract of the Financial Results of the Company

(Rs. in Million)

2011-2012 2010-2011

Profit Before Depreciation and Tax 178.59 344.29

Less : Depreciation 39.37 58.68

Profit Before Taxation 139.22 285.61

Less : Provision for Taxation 42.52 105.15

(Add) / Less: Provision for Deferred Tax 1.88 (9.64)

Profit after Tax 94.82 190.10

Less : Adjustment relating to earlier years (Income tax) 0.95 1.40

93.87 188.70

Add : Balance surplus incorporated on amalgamation - 637.15

Add : Opening Surplus 757.54 -

Profit available for appropriation 851.41 825.85

Appropriation

General Reserve 9.39 18.87

Proposed Dividend 25.02 42.54

Dividend Distribution Tax 4.06 6.90

Balance surplus carried to balance sheet 812.94 757.54

Dividend

The directors recommend a dividend of INR 0.50 per equity share of INR 1.00 each. This along with the dividend distribution tax comes to INR 29.08 Million. The dividend will be paid to the registered members, who are in the register of members as on the book closure date and upon approval by the members of the Company at the ensuing annual general meeting. In respect of the dematerialised shares, dividend will be paid to the beneficial owners based on the list provided by the depositories.

Review of Operations and Future Outlook

During the year, under reviewed the Company recorded sales of INR 1,115.45 Million as against INR1,942.38 Million in the previous year. The company earned a net profit of INR 93.87 Million as against INR 188.70 Million in the previous year. The current year figures are not comparable with the previous year on account of the Scheme of Amalgamation and Arrangement implemented during the last year.

The Indian Subsidiaries, Treadsdirect Limited and Titan Tyrecare Products Limited achieved sales of INR 1,943.18 Million and 51.78 Millions respectively during the year under review.

Despite healthy improvement in sales quantities and higher capacity utilisation, high input costs during the second half of the financial year, has affected the bottom line. Through an aggressive marketing strategy, the company is expanding into new products and markets, both domestic and overseas. To meet the projected demand, addition to manufacturing capacities is being implemented.

In October 2011, the company acquired Pincott International Pty Ltd, an Australian company manufacturing buffing blade refills used in the tyre retreading and recycling industry. This wholly owned subsidiary registered sales of INR 47.77 Million for the 9 months ending March, 31 2012. This acquisition brings to the company new technologies and globally respected brand.

Risk and Concerns

The company does not face any risks other than those that are prevalent in the industry. The company has taken all possible steps to overcome such risks. The main concerns are the volatility in raw material prices and fluctuations in foreign exchange rates. Effective planning in raw material purchasing and the ability to pass on raw material price increases have minimised the risk relating to the volatility in raw material prices. Foreign exchange fluctuation risk is minimised through proper planning and natural hedging.

As a part of the overall risk management strategy, all assets are appropriately insured.

Internal Control Systems

Quarterly Internal Audit is carried out by an independent firm of Chartered Accountants and the observations are reported to the management. Immediate steps are taken to rectify any discrepancies. All significant audit observations are discussed in the audit committee meetings.

Human Resources and Industrial Relations

The Company continues to enjoy a cordial relationship with all its employees. The employee count as on March 31, 2012 is 288.

Subsidiaries

In accordance with the circular issued by Ministry of Corporate Affairs, the Board of Directors of the Company at their meeting held on May 23, 2012 have approved waiving the requirement to attach the various documents related to the subsidiary companies. Upon request, the annual accounts of the subsidiary companies will be made available for inspection by any member of the Company at the registered office of the Company and that of the subsidiary companies. The consolidated financial statements presented in this annual report include financial results of the subsidiary companies. The details of the Subsidiary Companies are furnished in the statement pursuant to section 212 of the Companies Act, 1956.

Directors

During the year CN Srivatsan, director, resigned with effect from November 01, 2011. As per the provisions of Companies Act and the Articles of Association of the Company, the directors of the Company Dr. Jairam Varadaraj and P Vijay Raghunath retire by rotation. Being eligible, they offer themselves for re-appointment.

Auditors

Reddy, Goud and Janardhan, Chartered Accountants, Statutory Auditors of the Company, retire in the ensuing Annual General Meeting and are eligible for re-appointment.

Cost Accounting Records

In conformity with the provisions of the Companies (Cost Accounting Records) Rules, 2011 (notified vide notification No. 52/26/CAB- 2010 dated 24th January 2012) issued by the Ministry of Corporate affairs, the company has appointed M/s K.R.S & Associates, Cost Accountants, Coimbatore as Cost Auditor for the year 2012 - 13.

Directors' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors confirm that they have

1. In the preparation of the annual accounts, followed the applicable accounting standards and there are no material departures.

2. Selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company and of the profit of the Company for the financial year.

3. 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.

4. Prepared the annual accounts on a going concern basis.

Other information

Particulars as required by Section 217(1) (e) of the Companies Act, 1956, relating to Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo are provided as an annexure to this report. There are no employees who are in receipt of remuneration exceeding the specified limit as notified by the Government.

The Company has not accepted any fixed deposits and hence there were no unclaimed fixed deposit as on 31.03.2012.

Corporate Governance

A separate report on the compliance with Clause 49 of the Listing Agreement with the Stock Exchanges and the Auditor's Certificate on the compliance form part of this report.

Cautionary Statement

Statements in this report, especially those relating to MD & A giving details of company's objectives, projections, estimates and expectations may be construed as "forward looking statements" within the realm of applicable laws and regulations. Actual results are liable to differ materially from those either expressed or implied.

Acknowledgement

The Directors thank the Company's customers, vendors, investors, business associates and bankers for their support to the Company. The Directors also wish to place on record their appreciation of the contributions made by all the employees towards the growth of the Company .

Annexure to Directors' Report

A. Conservation of Energy -

a. Energy conservation measures taken

Energy conservation is one of the primary objectives of the company and measures taken albeit small, is an ongoing process

b. Additional investments and proposals, if any, being implemented for reduction of consumption of energy There are no significant proposals

c. Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

There is a marginal reduction in energy costs.

d. Total energy consumption per unit of production

Not applicable

B. Technology absorption

e. Efforts made in technology absorption

i. Research and Development (R&D)

1. Specific areas in which R & D is carried out by the Company

Improvements in products and processes

2. Benefit derived as a result of above R&D Increase in orders from new markets.

3. Future plan of action No significant plans.

4. Expenditure on R& D Rs. in Million

a. Capital : Nil

b. Recurring : 5.19

c. Total : 5.19

d. Total R&D expenditure as a percentage of total turnover : 0.47%

ii. Technology absorption, adaptation and innovation

Not applicable

C. Foreign Exchange Earnings & Outgo

f. Activities relating to exports; initiatives taken to increase exports, development of new export markets for products and services and export plan

The Company is constantly and consciously planning to penetrate unexplored markets to improve its international market share.

g. Total Foreign Exchange earned and used

Foreign Exchange Earned : Rs. 254.10 Million

Foreign Exchange Used : Rs. 12.36 Million

For the Board of Directors

Coimbatore Sudarsan Varadaraj

23.05.2012 Chairman & Managing Director

 
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