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Directors Report of India Nippon Electricals Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Thirtieth Annual Report and Audited Accounts for the year ended 31st March 2015.

1. FINANCIAL HIGHLIGHTS

Rs. Lacs

Year ended Year ended 31st March 15 31st March 14

Sales (Net of excise duty) 32653 26153

Profit before depreciation, 3962 3172

exceptional items and taxes

Less:

Depreciation 775 562

Profit before tax & 3187 2610 exceptional items

Exceptional items - -

Profit before tax 3187 2610

Taxation 921 644

Profit after tax 2266 1966

Profit brought forward 1199 1181 from previous year (*)

Dividends 1018 1018

Dividend distribution tax 204 173

Transfer to general 900 750 reserve & share capital

Retained in profit and 1343 1206 loss account

(*) Consequent to the adoption of the revised estimates of useful life of fixed assets as stipulated in Sch. II of the Companies Act, 2013, with effect from 1st April 2014, an amount of Rs. 6.86 lacs arising out of realignment with useful life as prescribed has been debited to the opening balance of retaining earnings.

2. FINANCIAL AND OPERATIONAL PERFORMANCE

Your Company's sales has gone up as compared to the previous year by 24.9% in value terms. Profit before tax and exceptional items has increased by around 22.1% over the previous year because of increased level of sales and cost reduction initiatives undertaken. Your company also increased production capacity in Rewari to meet the higher demand from the customers.

4. SUBSIDIARY COMPANY AND ASSOCIATE COMPANY AND THE CONSOLIDATED FINANCIAL STATEMENTS

4.1 Subsidiary Company

The subsidiary of your company, PT Automotive Systems Indonesia is exploring various business opportunities in that country as it also has a large two wheeler population and an appropriate decision will be taken within the time granted by the Governmental authorities of Indonesia. The Government authorities of Indonesia have given time till March 2017 for the decision to be reached. The details relating to the subsidiary have been provided in the prescribed form as part of the accounts.

The annual accounts of the subsidiary company will be available at the Registered office of the Company and of the subsidiary company concerned, if any member or investor wishes to inspect them during the business hours on any working day.

4.2 Associate Company

M/s Synergy Shakthi Renewable Energy Limited (SSREL), in which your Company has made a strategic investment, reported a profit of Rs. 70.52 lacs for its financial year ended 31st March 2015 which has been recognised appropriately in the consolidated accounts. During the year under review, their plant generated 41.31 million units of power that represented 53% PLF as against previous year's 72%. The drop is due to temporary suspension of third party sales by the state utility during the second quarter of the year account of partial withdrawal of power cuts. SSREL also augmented its revenue by trading in Renewable Energy Certificates (RECs) where the market under-performed due to ineffective enforcement of Renewable Purchase Obligations (RPOs) by the regulatory authorities. Based on the renewable energy sector's representations to the Government and other regulatory agencies, it is hoped that appropriate measures will be in place to provide a fillip to the REC market with an effective enforcement of RPOs in the near future.

Financial position of the subsidiary and the associate company are provided in AOC- 1 as required under Section 129 (3) of the Companies Act 2013 as part of the financial statements.

4.3 Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance with the provisions of Section 129 (3) of the Companies Act 2013 and relevant Accounting Standards issued by the Institute of Chartered Accountants of India form part of the Annual Report.

5 DIVIDEND

Your Company had paid an interim dividend of Rs. 4.50 per share in the month of Feb'15. A final dividend of Rs. 4.50 per share has been recommended by the Board of Directors for approval of the shareholders. If approved, the total dividend for the year will be Rs. 9 per share absorbing a sum of Rs. 1017.97 lacs besides an additional outgo on dividend distribution tax of Rs. 203.56 lacs.

6 PUBLIC DEPOSITS

Your Company has not accepted any deposits falling within the ambit of Section 73 of the Companies Act, 2013 read with Companies [Acceptance of Deposits] Rules 2014.

7 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

Please refer to Annexure-1 to the Directors' Report to the Shareholders.

8 PARTICULARS OF EMPLOYEES

The information required under Section 197 (12) of the Companies Act, 2013 and the rules made thereunder, as amended, has been given in Annexure 2 appended hereto and forms part of this report.

The Comparative Analysis of the remuneration paid to Directors and Key Managerial Personnel with the Company's performance is given in Annexure 3.

9 ANNUAL RETURN

Extract of Annual Return is given as Annexure 4 to this report.

10 CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the 'Report on Corporate Governance' is enclosed as part of this report.

A certificate from the Auditors of Your Company regarding compliance of the conditions of the Corporate Governance as stipulated by Clause 49 of the Listing Agreement is attached to this report as Annexure 6.

The certificates required from Managing Director / CFO, are also attached to this report.

11. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm:-

i. That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. That 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 the affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

iii. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors had prepared the Annual Accounts on a going-concern basis;

v. That 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;

vi. That 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.

12. DIRECTORS

Mr. T K Balaji, who opted to retire by rotation in the Board meeting held on 23rd May 2014 and Mr. K Seshadri, will be retiring by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

At the Annual General Meeting held on 27th August 2014 the members had appointed the existing Independent Directors M/S K G Raghavan, V Balaraman, G Chidambar, R Vijayaraghavan and Ms. Jayshree Suresh as Independent Directors under the Act, each for a term of five years with effect from that date.

All Independent Directors, on appointment, were issued letter of appointment setting out the terms of appointment, duties, remuneration etc which was acknowledged by them.

12.1 Declaration by Independent Directors as required u/s 149:

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and Clause 49 of the listing agreement.

12.2 Terms of appointment of Independent Directors of India Nippon Electricals Limited

The terms of appointment is available on the website of the company viz., www. indianippon.com.

12.3 Number of meeting of the Board

Six meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the corporate governance report, which forms part of this report.

12.4 Board Evaluation

The Nomination & Remuneration Committee (N&RC) of the company approved an evaluation policy which provides for evaluation of the Board, the Committees of the Board and individual directors.

Pursuant to Sch IV of the Companies Act 2013, the independent directors of the company convened on 23rd March 2015 an exclusive meeting without the attendance of non-independent Directors and members of management to review.

(i) the performance of non-independent Directors and the Board as a whole;

(ii) the performance of the Chairman of the Company; and

(iii) Assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

On the same day, the performance evaluation of the independent directors was also done by the entire Board excluding the directors being evaluated.

13. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:

Particulars 31st March 2015 31st March 2014 % change

Market capitalisation 476.18 226.21 110.50 (in Rs. crores)

Price Earnings Ratio 21.10 11.51 83.32

14. AUDITORS

(i) Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 and Rules made thereunder, M/s Brahmayya & Co., Chartered Accountants, were appointed for a period of three years from the conclusion of the 29th Annual General Meeting held on 27th August 2014 until the conclusion of the 32nd Annual General Meeting. Their continuation in the appointment is placed for ratification in the ensuing Annual General Meeting as required under the Act.

(ii) Cost Auditor

The Board of Directors on the recommendation of the Audit Committee has appointed Mr. K Suryanarayanan as Cost Auditor for the financial year 2015- 16 and fixed his remuneration, as cost audit is applicable for the products manufactured by the company vide notification dated 31st December 2014 issued by the Ministry of Corporate Affairs, Govt. of India. The ratification of his remuneration is included as an item in the Notice of the Annual General Meeting as required under Section 148 (3) of the Companies Act 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014.

(iii) Secretarial Auditor & the Secretarial Audit Report

Ms. B Chandra, Practicing Company Secretary was appointed as Secretarial Auditor by the Board of Directors for the financial year 2014-15 whose report is attached separately to this report (Annexure 7)

(iv) Qualification/reservation/adverse remark in Audit Report

There were no qualification / reservation / adverse remark in the auditor's report or in the secretarial audit report.

15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the transactions with related parties are in the ordinary course of business and on arm's length basis and there are no 'material' contracts or arrangements or transactions at arm's length basis and thus disclosure in form AOC - 2 is not required.

15.1 Policy on Related Party Transactions of the Company

The Company has a policy on Related Party Transactions and the same is displayed on the Company's website viz., www.indianippon.com.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186:

The Company has not given any loans or guarantee as specified under Section 186 of the Companies Act 2013.

The investments made by the Company during the period 2014-15 are depicted below. The same is well within the prescribed limits under provisions of Section 186 of the Act.

S.no Loans, Guarantees & Investments Amount 60% of Paid made in (In Rs.Lacs) up capital and Free Reserves

1 Investment in equity instruments 4632.06

2 Investments in bonds 2162.55

3 Investments in venture capital funds 627.58

4 Investments in mutual funds 6755.31

Total 14177.50 12652.31



S.no Loans, Guarantees & Investments 100% of Free Remarks made in Reserves

1 Investment in equity instruments

2 Investments in bonds

3 Investments in venture capital funds

4 Investments in mutual funds

Total 19956.12

17. EMPLOYEE STOCK OPTION:

There is no scheme of employees' stock option in your Company.

18. Policy on Directors' Appointment and Remuneration including criteria for determining qualifications, Positive Attributes, Independence of Directors, Key Managerial Personnel and Other Employees

The Board shall have minimum 3 and maximum 12 Directors.

The Nomination and Remuneration Committee of your Company has laid down criteria and qualification for appointment of Directors and Key Managerial Personnel. The person for such appointment should possess adequate qualification, expertise, experience and integrity.

The Managing Director of the Company is entitled to monthly remuneration and commission based on the profit computed in the manner prescribed under the Companies Act, 2013 and subject to the overall ceiling specified in Section 198 of the Act. All other Directors are entitled to sitting fees for attending the meetings of the Board of Directors and its Committees and also to commission based on the profit subject to the ceiling as specified in Section 198 of the Companies Act 2013.

Some of the additional reports as required under the Companies Act 2013 and forming part of the Directors Report are attached to this report.

19. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company.

Your Directors also acknowledge the continued support received from Lucas Indian Service Ltd, Chennai, Kokusan Denki Co Ltd., Japan and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors

Bengaluru T K BALAJI 25th May 2015 Chairman




Mar 31, 2014

The Directors have pleasure in presenting the Twenty Ninth Annual Report and Audited Accounts for the year ended 31st March 2014.

1. FINANCIAL HIGHLIGHTS

Lacs

Year ended Year ended 31st March 14 31st March 13

Sales (Net of excise duty) 26153 26802

Profit before depreciation 3172 4128

and taxes

Less:

Depreciation 562 613

Profit before tax 2610 3515

Taxation 644 78

Profit after tax 1966 2837

Profit brought forward 1181 1532 from previous year

Dividends 1018 1018

Dividend distribution tax 173 170

Transfer to general reserve 750 2000

& share capital

Retained in profit and loss 1206 1181

account

2. OPERATIONAL PERFORMANCE

Your Company''s sales during the year under review fell by 2.40% compared to the previous year owing to adverse business conditions. Your Company went for an aggressive price strategy to get enhanced market share particularly for fly wheel magneto which coupled with the loss of business of profitable electronic component due to changes in the model of one of the major customers impacted the bottom line significantly. Efforts at cost reduction which, by and large, went according to the plan drawn up and restricting price increases to suppliers helped to mitigate the impact on the company''s bottom line. The tax incidence on the profit earned was more than the previous year due to completion of the tax holiday period by one of the units of the Company.

4. SUBSIDIARY COMPANY

The subsidiary of your company, PT Automotive Systems Indonesia has been granted three more years time up to March 2017 to establish manufacturing operations in Indonesia. Your Company is exploring various business opportunities in that country as it has a large two wheeler population and an appropriate decision will be taken within the time granted by the Governmental authorities of Indonesia. The annual accounts of the subsidiary company will be available at the registered office of the Company and of the subsidiary company concerned, if any member or investor wishes to inspect them during the business hours on any working day.

5. ASSOCIATE COMPANY

M/s Synergy Shakthi Renewable Energy Limited (SSREL), in which your Company has made a strategic investment, reported a profit of Rs.195.02 lacs for its financial year ended 31st March 2014 which has been recognised appropriately in the consolidated accounts. SSREL continued its focus on improving the capacity utilization of its power plant by securing alternate sources of biomass and stepping up its operations by addressing the plant issues. On the market front, the base was enlarged by SSREL by targeting better realizations from short term open access customers. SSREL also augmented its revenue by trading in Renewable Energy Certificates (RECs) where the market under- performed due to ineffective enforcement of Renewable Purchase Obligations (RPOs) by the regulatory authorities. As the viability of the project is also dependent upon the performance of the REC market, the industry association is in continuous dialogue with the Government and the regulators to address this need.

6. DIVIDEND

Your Company had paid an interim dividend of Rs. 4 per share in the month of Feb''14. A further dividend of Rs. 5 will be paid in June ''14. The total dividend of Rs. 9 per share is being treated as final dividend for the year. The dividends will absorb a sum of Rs. 1017.97 lacs besides an additional outgo on dividend distribution tax of Rs. 173 lacs.

7. PUBLIC DEPOSITS

Your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 read with Companies [Acceptance of Deposits] Rules 1975.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

Please refer to Annexure–I to the Directors'' Report to the Shareholders.

9. PARTICULARS OF EMPLOYEES

None of the employees is drawing remuneration in excess of the amounts specified as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975 as amended.

10. CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the ''Report on Corporate Governance'' is enclosed as part of this report. A certificate from the Auditors of your Company regarding compliance of the conditions of the Corporate Governance as stipulated by Clause 49 of the Listing Agreement is attached to this report. The certificates required from Head of Operations/ CFO, are also attached to this report.

11. DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 on the Directors'' Responsibility Statement, it is hereby confirmed:

a) that in the preparation of accounts for the financial year ended 31st March 2014 the applicable accounting standards have been followed.

b) that the Directors have selected the 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, at the end of the financial year under review and of the Profit of the Company, for the year under review.

c) that the Directors have 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.

d) that the Directors have prepared the annual accounts for the year ended 31st March 2014 on a ''going concern'' basis.

12. DIRECTORS

In terms of Section 149 read with Section 152 of the Companies Act 2013, Independent Directors can be appointed for a term upto five years and they need not retire by rotation during their tenure. Accordingly, resolutions are placed for consideration of the Members to appoint independent directors for a term upto 5 years in the ensuing Annual General Meeting (A.G.M.).

Mr T K Balaji, Chairman of the Company who was appointed as Director not liable to retire by rotation in the A.G.M. held in 1987 has opted to retire by rotation to fulfil the requirement of Section 149 read with Section 152 of the Companies Act 2013. Mr. N S Murthy resigned from the Board of Directors with effect from 29th October 2013 and Ms. Jayshree Suresh was appointed as an independent Director with effect from 26th March 2014 in the casual vacancy caused by his resignation. Mr Y Tomita retires by rotation and does not seek re- election. Mr. Tadaya Momose is being proposed for appointment as a Non- independent Director liable for retirement by rotation. The Company has received proposals for the above appointments from shareholders as required under Section 160 of the Companies Act 2013.

The Board would like to place on record its appreciation of the valuable contributions made by M/s N S Murthy and Y Tomita during their tenure as Directors of the Company.

13. AUDITORS

M/s Brahmayya & Co., Chartered Accountants, retire at the conclusion of the Annual General Meeting and are eligible for re-appointment.

14. COST AUDITORS

Mr. K Suryanarayanan who was appointed as cost auditor for the financial year 2012-13 filed the cost audit report with the MCA within the stipulated time. He was also re-appointed as Cost Auditor by the Board of Directors, for the financial year 2013 -14 who will be completing the cost audit for the year ended 31st March 2014 and file the cost audit report before the due date.

15. GENERAL

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company. Your Directors also acknowledge the continued support received from Lucas Indian Service Ltd, Chennai, Kokusan Denki Co Ltd., Japan and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors

Chennai T K BALAJI

23rd May 2014 Chairman


Mar 31, 2013

To the Shareholders

The Directors have pleasure in presenting the Twenty Eighth Annual Report and Audited Accounts for the year ended 31st March 2013.

1. FINANCIAL HIGHLIGHTS

Rs.lacs

Year ended Year ended 31st March 2013 31st March 2012

Sales (Net of excise duty) 26802 26005

Profit before depreciation, exceptional items and taxes 4128 4371

Less: Depreciation 613 528 Profit before tax & exceptional items 3515 3843

Exceptional items 133

Profit before tax 3515 3976

Taxation 678 846

Profit after tax 2837 3130

Profit brought forward from previous year 1532 785

Dividends 1018 1018

Dividend distribution tax 170 165

Transfer to general reserve & share capital 2000 1200

Retained in profit and loss account 1181 1532

2. FINANCIAL AND OPERATIONAL PERFORMANCE

Your Company''s sales grew by 3% over the previous year in value terms. Profit before tax and exceptional items, as a percentage of sales, dropped by around 1.70% over the previous year mainly, due to increase in material and conversion costs given to suppliers not recouped, in full by the customers. Metal prices were on the higher side in the first half of the year resulting in higher material cost. Other expenses were higher primarily due to higher fuel consumption arising out of higher power cuts and higher expenses on new product tooling, purchase of critical spares for plant and machinery, travel for business development etc. Depreciation was more due to capacity expansion in Hosur and Rewari units.

3. SUBSIDIARY COMPANY

Your company acquired land in Indonesia through its subsidiary company, PT Automotive Systems Indonesia, with a view to establish manufacturing operations to support TVS

Motors. However, as the volumes have not reached our expectations, we cannot proceed with the same. Our current approvals are valid till March 2014, by which time an appropriate decision will be taken.

The Ministr y of Corporate Affairs vide the General Circular No.2/2011/circular no.5/12/2007-CL-III dated 8th February 2011 had granted general exemption from the requirement of attaching the annual report of subsidiary company, subject to fulfilment of conditions stipulated in the circular. Your company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

The annual accounts of the subsidiary company will be available at the registered office of the Company and of the subsidiary company concerned, if any member or investor wishes to inspect them during the business hours on any working day.

4. ASSOCIATE COMPANY

M/s Synergy Shakthi Renewable Energy Limited (SSREL), in which your Company has made a strategic investment, improved its capacity utilization during FY 2012-13 by procuring biomass through alternate sources and stepping up its plant operations. The company enlarged its customer base by targeting better realizations from short term open access consumers. SSREL has also augmented its revenue by trading in Renewable Energy Certificates (RECs) which showed buoyancy during the first half of the year. With these measures, we are happy to report that your investee Company has been able to achieve profits during the year under review. Going forward, sourcing of biomass fuels of right quality in required volumes at affordable cost would pose challenges. During the current year, many State utilities have also not been forthcoming in buying RECs from renewable energy generators. The viability of the project is dependent upon support from realisation of revenue through sale of RECs. This, in turn, is subject to effective enforcement of renewable purchase obligations by the regulators. The industry association is in continuous dialogue with the Government and regulatory authorities on the matter, to address these issues.

6. DIVIDEND

Your Company had paid an interim dividend of Rs. 4.00 per share in the month of Mar''13. A further dividend of Rs. 5.00 per share will be paid in June ''13. The total dividend of Rs. 9.00 per share is being treated as final dividend for the year. The dividends will absorb a sum of Rs. 1017.97 lacs besides an additional outgo on dividend distribution tax of Rs.169.51 lacs.

7. PUBLIC DEPOSITS

Your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 read with Companies [Acceptance of Deposits] Rules 1975.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

Please refer to Annexure–I to the Directors'' Report to the Shareholders.

9. PARTICULARS OF EMPLOYEES

None of the employees is drawing remuneration in excess of the amounts specified as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975 as amended.

10.CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the ''Report on Corporate Governance'' is enclosed as part of this report.

A certificate from the Auditors of Your Company regarding compliance of the conditions of the Corporate Governance as stipulated by Clause 49 of the Listing Agreement is attached to this report.

The certificates required from Head of Operations/ CFO, are also attached to this report.

11.DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 on the Directors'' Responsibility Statement, it is hereby confirmed:

a) that in the preparation of accounts for the financial year ended 31st March 2013 the applicable accounting standards have been followed.

b) that the Directors have selected the 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, at the end of the financial year under review and of the Profit of the Company, for the year under review.

c) that the Directors have 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.

d) that the Directors have prepared the annual accounts for the year ended 31st March 2013 on a ''going concern'' basis.

12.DIRECTORS

Mr. K Seshadri and Mr. KG Raghavan are retiring by rotation at the ensuing Annual General meeting and being eligible offer themselves for re-appointment. Mr. Arvind Balaji was appointed during the year as an additional Director and he will be proposed for appointment as a director not liable to retire by rotation at the ensuing Annual General Meeting. Mr. Arvind Balaji, has also been appointed as a Whole-time Director of the Company u/s 269 of the Companies Act, 1956 effective 1st April 2013. A separate resolution will be proposed for approval of the aforesaid appointment at the ensuing Annual General Meeting.

Mr. RD Flint who also retires by rotation at the ensuing Annual General meeting does not seek re-election.

The Board would like to place on record its appreciation of the valuable contributions made by Mr. RD Flint during his tenure as Director of the Company.

Mr. R Vijayaraghavan was appointed as an Additional Director who will be proposed for appointment as a director liable to retire by rotation at the ensuing Annual General Meeting.

13. AUDITORS

M/s Brahmayya & Co., Chartered Accountants, retire at the conclusion of the Annual General Meeting and are eligible for re-appointment.

14. COST AUDITORS

Ministry of Corporate Affairs (MCA) issued an industry specific Cost Audit Order vide No.52/26/CAB-2010 dated 24th January 2012, thereby requiring all such companies, which are in the manufacturing activities of automotive components to appoint a Cost Auditor for auditing the cost accounting information effective 1st April 2012 for the financial year 2012-13 and file a report with the Central Government on or before 30th September every year.

The Board of Directors have appointed Mr K Suryanarayanan, Practising Cost Accountant, Chennai for carrying out the cost audit of the company for the year 2012-13 and the cost audit report will be filed with the MCA within the stipulated time.

15. GENERAL

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company.

Your Directors also acknowledge the continued support received from Lucas Indian Service Ltd, Chennai, Kokusan Denki Co Ltd., Japan and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors

Chennai T K BALAJI

28th May 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Twenty Seventh Annual Report and Audited Accounts for the year ended 31st March 2012.

1. FINANCIAL HIGHLIGHTS

Rs lacs

Year ended Year ended 31st March 2012 31st March 2011

Sales (Net of excise duty) 26005 22885

Profit before depreciation, exceptional items and taxes 4371 3750

Less:

Depreciation 528 415

Profit before tax & exceptional items 3843 3335

Exceptional items 133 -

Profit before tax 3976 3335

Taxation 846 792

Profit after tax 3130 2543

Profit brought forward from previous year 785 836

Dividends 1018 767

Dividend distribution tax 165 127

Transfer to general reserve & share capital 1200 1700

Retained in profit and loss account 1532 785

2. OPERATIONS

Your Company's sales grew by 14% over the previous year, from Rs 228.85 crores to Rs 260.05 crores. Profit before tax and exceptional items at Rs 38.43 crores showed an improvement of 15% over the previous year.

4. INTERNATIONAL APPRECIATION

The 'smart regulator' developed through in- house R&D by your company has won an award from a well known motorcycle maker from Japan, for fuel efficiency. A certificate in appreciation of the development has been given to the joint venture partner of your company, M/s Kokusan Denki, acknowledging this development by your company in India. The customer is also keen to promote the use of this regulator in its products manufactured in other parts of the world.

5. PT AUTOMOTIVE SYSTEMS INDONESIA (PT ASI)

Your Company has obtained approval from the designated authorities at Indonesia for extension of time by two more years for commencing commercial production which is expiring in March 2014. Your Company is continuing to explore various options and an appropriate decision will be made.

The Ministry of Corporate Affairs viae its General Circular No.2/2011/circular no.5/12/2007-CL-lll dated 8th February 2011 has granted general exemption from the requirement of attaching the annual report of subsidiary company subject to fulfilment of conditions stipulated in the circular. Your company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

The annual accounts of the subsidiary company will be available at the registered office of the Company and of the subsidiary company concerned, if any member or investor wishes to inspect them during the business hours on any working day.

6. ASSOCIATE COMPANY

As indicated in the last year's report, in the context of the growing need to reduce dependence on conventional sources of energy and on environmental grounds, the Central Government is accelerating initiatives to promote use of renewable sources of energy from the Twelfth Plan (2012- 17). Introduction of Renewable Purchase Obligation (RPO) for industrial consumers and state distribution utilities alongside Renewable Energy Certificates (REC) scheme for the renewable power generators is a step in this direction. Mandatory compliance of RPO commencing from FY 2011 -12 is expected to gather momentum in the coming years. The Ministry of New and Renewable Energy is also in the process of formulating a National Biomass Mission policy framework to support biomass-based power generators on issues ranging from long term fuel security to viable energy tariffs for this sector.

Synergy Shakthi Renewable Energy Limited (SSREL), in which your Company has made a strategic investment, has gradually improved its capacity utilization during the second half of the year under review by securing alternate sources of biomass and fine tuning its operations. SSREL has also received accreditation from the regulatory authorities for trading in RECs to which it would be entitled based on energy sold to its customers. Realization from en-cashing the certificates by sale to the obligated entities is expected to support the long term viability of your investee company.

7. DIVIDEND

Your Company had paid an interim dividend of Rs 4.00 per share in the month of February '12, A further dividend of Rs 5 per share will be paid in June '12. The total dividend of Rs 9 per share is being treated as final dividend for the year. The dividends will absorb a sum of Rs 101 7,97 lacs besides an additional outgo on dividend distribution tax of Rs 165.15 lacs.

8. BONUS SHARES

During the year, your Company issued and allotted 32,31,632 equity shares of Rs 10/- each as bonus shares on 22nd September 2011 in the ratio of 2 equity shares for every 5 equity shares held to the eligible shareholders as on the record date i.e. 21 st September 2011 by capitalizing an equivalent amount standing to the credit of the general reserve account of the Company. As a result, the Company's share capital now stands at Rs 11.31 crores. The said issue and allotment of bonus shares was completed within the stipulated period of two months of its declaration by the Board of Directors in terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

9. PUBLIC DEPOSITS

Your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 read with Companies [Acceptance of Deposits] Rules 1975.

10.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

Please refer to Annexure-I to the Directors' Report to the Shareholders.

11. PARTICULARS OF EMPLOYEES

None of the employees is drawing remuneration in excess of the amounts specified as per Section 21 7 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975 as amended.

12.CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the 'Report on Corporate Governance' is enclosed as part of this report.

A certificate from the Auditors of your Company regarding compliance of the conditions of the Corporate Governance as stipulated by Clause 49 of the Listing Agreement is attached to this report.

The certificate required from CEO/ CFO, is also attached to this report.

13. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 on the Directors'

Responsibility Statement, it is hereby confirmed:

a) that in the preparation of accounts for the financial year ended 31st March 2012 the applicable accounting standards have been followed.

b) that the Directors have selected the 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, at the end of the financial year under review and of the Profit of the Company, for the year under review.

c) that the Directors have 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.

d) that the Directors have prepared the annual accounts for the year ended 31st March 2012 on a 'going concern' basis.

14. DIRECTORS

Mr. K Nakamura has resigned from the Board of Directors and Mr Y Tomita has been inducted in the casual vacancy caused by his resignation effective 1st June 2012. Mr Y Tomita, will be proposed for appointment as a Director liable to retire by rotation in the ensuing Annual General Meeting.

Mr. N S Murthy and Mr. G Chidambar are retiring by rotation at the ensuing Annual General meeting and being eligible offer themselves for re-appointment.

15. AUDITORS

M/s Brahmayya & Co., Chartered Accountants, retire at the conclusion of the Annual General Meeting and are eligible for re-appointment.

16. GENERAL

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company.

Your Directors also acknowledge the continued support received from Lucas Indian Service Ltd, Chennai, Kokusan Denki Co Ltd., Japan and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors

Chennai T K BALAJI

30th May 2012 Chairman


Mar 31, 2011

To the Shareholders

The Directors have pleasure in presenting the Twenty Sixth Annual Report and Audited Accounts for the year ended 31st March 2011.

1. FINANCIAL HIGHLIGHTS

Rs. lacs Year ended Year ended 31st March 31st March 2011 2010

Sales 22885 16908 (Net of excise duty)

Profit before depreciation and taxes 3750 2934

Less:

Depreciation 415 357

Profit before tax 3335 2577

Taxation 792 585

Profit after tax 2543 1992

Profit brought forward from previous year 836 4101

Dividends 767 606

Dividend distribution tax 127 101

Transfer to general reserve 1700 4550

Retained in Profit and Loss 785 836 Account

2. OPERATIONS

Your Company's sales grew by 35% over the previous year, from Rs. 169.08 crores to Rs.228.85 crores. Your Company achieved a double digit growth, in value terms, in all vehicle segments and the business in electronics more than doubled. Profit before tax at Rs.33.35 crores showed an improvement of 29% over the previous year.

4. PT AUTOMOTIVE SYSTEMS INDONESIA (PT ASI)

As reported earlier, your Company has obtained approval from the designated authorities at Indonesia for extension of time by two years for commencing commercial production which is expiring in March 2012. Your Company is continuing to explore various options and an appropriate decision will be made.

Your Company has obtained approval from the Ministry of Corporate Affairs, New Delhi vide letter no.47/102/2011-CL-lll dated 9th February 2011, in terms of Section 212 (8) of the Companies Act, 1956 exempting it from attaching the annual report of its subsidiary company.

The annual accounts of the subsidiary company will be available at the registered office of the Company and of the subsidiary company concerned, if any member or investor wishes to inspect them during the business hours on any working day.

5. SYNERGY SHAKTHI RENEWABLE ENERGY LTD

To promote sustainable economic development, the Government of India has placed considerable emphasis on power generation out of renewable resources. Reflecting our commitment to this cause, we have made an investment in Synergy Shakthi Renewable Energy Limited (SSREL) which is a project for producing power out of biomass. The company has now completed one full year of operation. SSREL is, however, facing acute shortage of biomass availability. As a result of overall economic growth, a number of industries are competing to procure biomass not only for power generation but also for other industrial purposes. Consequently, SSREL along with other investors in the renewable energy in Tamilnadu have been facing shortage of raw material coupled with the rising cost of inputs, affecting their operations. Consequently, despite growing demand for power, SSREL is unable to generate to its full capacity and incurring some losses. In the near term, the company is making determined efforts to find alternate sources of biomass. The company is also planning to raise additional finance from other strategic investors, The company has clearly a long-term potential given the support that the renewable energy segment is poised to receive from the government

6. DIVIDEND

Your Company had paid interim dividends of Rs.5.00, Rs.3.50 and Re. 1.00 per share in the months of Dec' 10, Mar' 11 and May' 11. The total dividend of Rs.9.50 per share is being treated as final dividend for the year. The dividends will absorb a sum of Rs.767.51 lacs besides an additional outgo on dividend distribution tax of Rs. 127.15 lacs.

7. PUBLIC DEPOSITS

Your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 read with Companies [Acceptance of Deposits] Rules 1975.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO AND EARNINGS

Please refer to Annexure-I to the Directors' Report to the Shareholders.

9. PARTICULARS OF EMPLOYEES

None of the employees is drawing remuneration in excess of the amounts specified as per Section 217 (2A) of the Companies Act, 1956 read with Companies [Particulars of Employees] Rules 1975 as amended,

10. CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the 'Report on Corporate Governance' is enclosed as part of this report.

A certificate from the Auditors of your Company regarding compliance of the conditions of the Corporate Governance as stipulated by Clause 49 of the Listing Agreement is attached to this report.

The certificates required from CEO/ CFO, are also attached to this report.

11 .DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 on the Directors' Responsibility Statement, it is hereby confirmed:

a) that in the preparation of accounts for the financial year ended 31 st March 2011 the applicable accounting standards have been followed.

b) that the Directors have selected the 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, at the end of the financial year under review and of the profit of the Company, for the year under review.

c) that the Directors have 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.

d) that the Directors have prepared the annual accounts for the year ended 31st March 2011 on a 'going concern' basis.

12.DIRECTORS

Mr H Nanjo has resigned from the Board of Directors and Mr M Namatame has been inducted in his place effective 1st April 2011. Mr. M Namatame will be proposed for appointment as a Director not liable to retire by rotation in the ensuing Annual General Meeting. Mr K Nakamura, who was appointed by the shareholders as a Director not liable to retire by rotation in the Annual General Meeting held on 21 st August 2008 is resigning with effect from 20th August 2011 as such non-retiring Director and will be proposed for appointment as a Director liable to retire by rotation in the ensuing Annual General Meeting.

Mr K G Raghavan and Mr V Balaraman are retiring by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

13.AUDITORS

M/s Brahmayya & Co., Chartered Accountants, retire at the conclusion of the Annual General Meeting and are eligible for re-appointment.

14.GENERAL

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company.

Your Directors also acknowledge the continued support received from Lucas Indian Service Ltd, Chennai, Kokusan Denki Co Ltd., Japan and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors T K BALAJI Chairman

Chennai 27.05.2011

 
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