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Directors Report of MRF Ltd.

Sep 30, 2014

Dear Members,

The Directors have pleasure in presenting to you the Fifty Fourth Annual Report and the Audited Financial Statements for the year ended 30th September, 2014.

Working of the Company

Financial Results

During the year under review, the Company achieved the following financial results:

(Rs. Crore)

2013-14 2012-13

Total Income 14714 13482

Profit before tax 1339 1227

Provision for taxation 441 425

Net Profit 898 802

During the year under review, your Company''s total income increased by around 9.14% to Rs.14,714 crore from Rs.13,482 crore in the previous year.

There was an increase of 5% in total tyre production in all segments. The major factors affecting the performance of the Indian tyre industry are the sluggish growth of the economy, interest rates, fuel prices, natural rubber prices and import duty on rubber. In the year under review, prices of natural rubber and fuel prices have softened. However, this benefit got partly offset by increase in overheads like wages, freight etc. This apart, your Company could achieve improved results, due to improved operating efficiencies and cost reduction measures which the Company has undertaken over a period of time.

Two interim dividends of Rs.3 each per share (30% each) for the year ended 30th September, 2014 were declared by the Board of Directors on 23.07.2014 and on 30.10.2014. The Board of Directors is now pleased to recommend a final dividend of Rs.44 per share (440%) on the paid- up equity share capital of the Company, for consideration and approval of the shareholders at the Annual General Meeting. With this, the total dividend for the entire year works out to Rs.50 per share (500%). The total amount of dividends aggregates to Rs.21.20 crore.

The Directors recommend that after making provision for taxation, debenture redemption reserve and proposed dividend, an amount of Rs.865.99 crore be transferred to general reserve. With this, the Company''s Reserves and Surplus stands at Rs.4,513.40 crore.

Industrial Relations

Overall, the industrial relations in all our manufacturing units had been harmonious as well as cordial, except in Thiruvottiyur unit wherein long-term wage settlement is pending. Efforts are being made to resolve it bilaterally. Both production & productivity were maintained at the desired satisfactory levels throughout the year.

The Management Discussion and Analysis which is attached with this report gives an overview of the developments in human resources/ industrial relations during the year.

Exports

The Company''s exports stood at Rs.1,332 crore for the year ended 30th September, 2014 as against Rs.1,293 crore for the previous year.

Overall business climate around the globe continued to show signs of a slowdown similar to the trends in 2012-13. The situation has in fact worsened with prices dropping further and the supply - demand equation clearly showing signs of a glut in the market. Mining across countries showed a sharp decline, erratic weather patterns affected agriculture and political stalemate/turmoil also took its toll on many of our key markets leading to lower business activity and demand.

Your Company has traditionally held on to its market share in heavy and light commercial bias segments and continued to do so this year against all odds. Softening of raw material prices has given us some head room to pass on support to our channel partners against very aggressive competition and still post a good growth in profit over the previous year. Revenues, however, grew only by a nominal 3% over 2012-13.

Prospects for the Current Year

The automobile industry is going through a sluggish phase for the second consecutive year. It is hoped that combined with the expected resurgence in the Indian economy, the vehicle manufacturing sector will see a slow but sure turnaround which would in turn have a positive bearing on tyre demand. In the interim, the replacement market continues to prop up the tyre industry demand. The capacity additions in the tyre industry would further fuel competition and this could put pressure on margins especially in the truck radial segment.

Your Company hopes to record satisfactory results on account of MRF''s high brand preference and trust reposed by customers in MRF products.

Directors'' Responsibility Statement

In compliance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) they have, in selection of the accounting policies, consulted the statutory auditors and applied them consistently, making 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 and of the profit of the Company for that period;

(iii) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis.

Subsidiaries

Your Company established a wholly owned subsidiary in Singapore named MRF Singapore Pte Limited in July, 2014.

Pursuant to the provisions of Section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs, Government of India, vide its General Circular No. 2 /2011 date 08.02.2011, has granted a general exemption subject to certain conditions to holding companies from complying with the provisions of Section 212 of the Companies Act, 1956, which requires the attaching of the balance sheet, profit and loss account etc., of the subsidiaries.

The Board of Directors at their meeting held on 23.07.2014 passed necessary resolution according consent for not attaching the financial statements in respect of all the subsidiary companies for the year ended 30th September, 2014. The statement pursuant to Section 212 of the Companies Act, 1956 containing details of Company''s subsidiaries is attached.

In accordance with the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial statements presented by your Company include the financial information of all its subsidiaries.

The financial statements of the subsidiary companies along with the report of the directors and auditors thereon and all related detailed information will be made available to shareholders of the Company on request and will also be kept open for inspection at the registered office of the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The details as required under the Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 are given as an annexure to the Directors'' Report.

Board

Mr. S S Vaidya, Director of the Company retired at the 53rd Annual General Meeting of the Company. The Board places on record its appreciation for the valuable services rendered by Mr. S S Vaidya during his tenure on the Board.

In compliance with Sections 149 and 152 and other applicable provisions, if any of the Companies Act, 2013 read with amended Clause 49 of the listing agreement effective 01.10.2014, Mr. Vijay R Kirloskar, Mr. V Sridhar, Mr. N Kumar, Mr Ranjit I Jesudasen, Mr. Ashok Jacob, Dr Salim Joseph Thomas, Mr. Jacob Kurian and Mr. M Meyyappan, Directors, were appointed as Independent Directors of the Company for a period of 5 (Five) years by the shareholders through postal ballot in September, 2014.

Mr. K M Mammen, Chairman and Managing Director, retires by rotation in compliance with Section 152 of the Companies Act, 2013, at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment. A brief profile of the Directors proposed to be re-appointed have been given in the notice convening the Annual General Meeting of the Company.

Corporate Governance

In accordance with Clause 49 of the listing agreement with the stock exchanges, a separate report on corporate governance along with the Auditors'' certificate confirming compliance is attached to this report.

The Chairman & Managing Director has confirmed and declared that all the members of the Board and the senior management have affirmed compliance with the code of conduct.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 forms an integral part of the Directors'' Report. However, in terms of the provisions of Section 219[1][b] of the Companies Act, 1956, the report and accounts are being sent to shareholders of the Company excluding the statement of particulars of employees under Section 217[2A] of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company and will be provided with a copy of the same.

Deposits

Three deposits aggregating Rs.1.80 lakh remain unclaimed as at the close of the year ended 30th September, 2014.

Awards received during the year

During the year, the Company won the J D Power Award for Customer Satisfaction for the 11th time in the last 14 years. The Company was also awarded the "Highest Export Award [Auto Tyre Sector]" by the All India Rubber Industries Association (AIRIA) yet another time during the period under review.

Auditors

Messrs Sastri & Shah and M. M. Nissim and Co., who are our Auditors, retire at the ensuing annual general meeting and are eligible for re- appointment. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has received a written consent from the auditors to their re-appointment and a certificate to the effect that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the rules framed thereunder and that they have satisfied the criteria provided in Section 141 of the Companies Act, 2013.

The Board recommends the re-appointment of Messrs Sastri & Shah and M. M. Nissim and Co., as the statutory auditors of the Company from the conclusion of this Annual General meeting till the conclusion of the next Annual General Meeting.

Cost Audit

Mr. C Govindan Kutty, Cost Accountant, has carried out audit of the Company''s cost records for the year ended 30th September, 2013. The due date for filing of the cost audit report with the Ministry of Corporate Affairs (MCA) for the year ended 30th September, 2013 was 31st March, 2014. The report was filed on 28.03.2014.

Mr. C Govindan Kutty, Cost Accountant, was appointed cost auditor for audit of the Company''s cost records for the year ended 30th September, 2014. The due date for filing of the cost audit report with the Ministry of Corporate Affairs (MCA) for the year ended 30th September, 2014 is 31st March, 2015. The report will be filed within its due date.

The Board, on the recommendation of the Audit Committee, has approved the re-appointment of Mr C Govindan Kutty, Cost Accountant, as cost auditor of the Company for the financial year commencing from 01.10.2014 under Section 148 of the Companies Act, 2013 and his remuneration. The remuneration to be paid is placed for ratification by the shareholders at the ensuing Annual General Meeting.

Appreciation

Your Directors place on record their appreciation of the invaluable contribution made by the Company''s employees which made it possible for the Company to achieve these results. They would also like to take this opportunity to thank customers, dealers, suppliers, bankers, financial institutions, business associates and valued shareholders for their continuous support and encouragement.

On behalf of the Board of Directors,

Chennai K M MAMMEN

26th November, 2014 Chairman & Managing Director


Sep 30, 2013

The Directors have pleasure in presenting to you the Fifty Third Annual Report and the Audited Statement of Accounts for the year ended 30th September, 2013.

Working of the Company

Financial Results

During the year under review, the Company achieved the following financial results:

(Rs. Crore)

2012-13 2011-12

Total Income 13482 13094

Profit before tax 1227 833

Provision for taxation 425 261

Net Profit 802 572

During the year under review, your Company''s total income increased by around 3% to Rs. 13482 crore from Rs. 13094 crore in the previous year.

There was an increase of 4% in total tyre production in almost all segments. During the year, the raw material prices were stable and this contributed to the margins of the Company despite depreciation of rupee. This apart, your Company could achieve improved results, due to improved operating efficiencies and cost reduction measures which the Company has undertaken over a period of time.

Two interim dividends of Rs. 3 each per share (30% each) for the year ended 30th September, 2013 were declared by the Board of Directors on 25-07-2013 and on 24-10-2013. The Board of Directors is now pleased to recommend a final dividend of Rs. 24 per share (240%) on the paid- up equity share capital of the Company, for consideration and approval of the shareholders at the Annual General Meeting. With this, the total dividend for the entire year works out to Rs. 30 per share (300%). The total amount of dividends aggregates to Rs. 12.72 crore.

The Directors recommend that after making provision for taxation, debenture redemption reserve and proposed dividend, an amount of Rs. 758.82 crore be transferred to General Reserve. With this, the Company''s Reserves and Surplus stands at Rs. 3640.90 crore.

Industrial Relations

Overall, the industrial relations in all our manufacturing units have been harmonious as well as cordial, except in Kottayam unit wherein the unions resorted to various forms of work stoppages and strikes which affected the production to a large extent and in Arakonam unit on certain issues. Both production and productivity were maintained at the desired satisfactory levels throughout the year.

The Management Discussion and Analysis which is attached with this report gives an overview of the developments in human resources/ industrial relations during the year.

Exports

The Company''s exports stood at Rs. 1 293 crore for the year ended 30th September, 201 3 as against Rs. 1281 crore for the previous year.

It was a very challenging year for the Company with the global markets showing very clear signs of a slowdown resulting in over supply and prices going on a downward spiral. In spite of these factors, export revenues posted a nominal growth of 1% over the previous year.

Prospects for the Current Year

The automobile industry is going through a recession and it is unlikely to turn favorable in the immediate future. This would have a bearing on tyre demand. The after-market demand continues to prop up the tyre industry demand. The capacity additions in the tyre industry would further fuel competition and this could put pressure on margins especially in the truck radial segment.

Your Company hopes to record satisfactory results on account of MRF''s high brand preference and trust reposed by customers in MRF products.

Directors'' Responsibility Statement

In compliance with the provisions of Section 21 7 (2AA) of the Companies Act, 1 956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) they have, in selection of the accounting policies, consulted the statutory auditors and applied them consistently, making 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;

(iii) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis.

Subsidiaries

Pursuant to the provisions of Section 21 2(8) of the Companies Act, 1 956, the Ministry of Corporate Affairs, Government of India, vide its General Circular No. 2 /2011 dated 08-02-2011, has granted a general exemption subject to certain conditions to holding companies from complying with the provisions of Section 21 2 of the Companies Act, 1 956, which requires the attaching of the balance sheet, profit and loss account etc., of the subsidiaries.

The Board of Directors at their meeting held on 25th July, 2013 passed necessary resolution according consent for not attaching the financial statements in respect of all the subsidiary companies for the year ended 30th September, 2013. The statement pursuant to Section 212 of the Companies Act, 1956 containing details of Company''s subsidiaries is attached.

In accordance with the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial statements presented by your Company include the financial information of all its subsidiaries.

The annual accounts of the subsidiary companies along with the report of the directors and auditors thereon and all related detailed information will be made available to shareholders of the Company on request and will also be kept open for inspection at the registered office of the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The details as required under the Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1 988 are given as an annexure to the Directors'' Report.

Board

Mr Vijay R Kirloskar, Mr K M Philip, Mr S S Vaidya and Mr N Kumar retire by rotation at the Annual General Meeting and are eligible for re-appointment. Mr S S Vaidya has expressed his desire to retire from the board and not to seek re-appointment.

A brief profile of Mr Vijay R Kirloskar, Mr K M Philip and Mr N Kumar has been given in the Notice convening the Annual General Meeting of the Company.

Corporate Governance

In accordance with Clause 49 of the listing agreement with the stock exchanges, a separate report on corporate governance along with the Auditors'' certificate confirming compliance, is attached to this report.

The Chairman & Managing Director has confirmed and declared that all the members of the Board and the senior management have affirmed compliance with the code of conduct.

Particulars of Employees

Information as per Section 21 7(2A) of the Companies Act, 1 956 read with Companies (Particulars of Employees) Rules, 1975 forms an integral part of the Directors'' Report. However, in terms of the provisions of Section 21 9[1 ] [b] of the Companies Act, 1 956, the report and accounts are being sent to shareholders of the Company excluding the statement of particulars of employees under Section 217[2A] of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company and will be provided with a copy of the same.

Deposits

2 deposits aggregatingRs. 0.70 lakh remain unclaimed as at the close of the year ended 30th September, 201 3.

Awards received during the year

During the year, the Company won the J D Power Award for customer satisfaction for the 1 0th time in the last 13 years. MRF was also awarded the "Highest Export Award [Auto Tyre Sector]" by the All India Rubber Industries Association (AIRIA) yet another time during the period under review.

Auditors

Messrs Sastri & Shah and M. M. Nissim and Co., who are our Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received certificates from both the auditors to the effect that their appointments will be within the limits prescribed under Section 224[1 B] of the Companies Act, 1 956.

Cost Audit

Mr C Govindan Kutty, Cost Accountant, has carried out audit of the Company''s cost records for the year ended 30th September, 2012. The due date for filing of the cost audit report with the Ministry of Corporate Affairs (MCA) for the year ended 30th September, 2012 was 31 st March, 201 3. The report was filed on 25th March, 201 3.

The Board has re-appointed Mr C Govindan Kutty, Cost Accountant, as cost auditor of the Company for the year ended 30th September, 2013 under Section 233B of the Companies Act, 1956, and the requisite approval from the Central Government has been obtained.

Appreciation

Your Directors place on record their appreciation of the invaluable contribution made by our employees which made it possible for the Company to achieve these results. They would also like to take this opportunity to thank the customers, dealers, suppliers, bankers, financial institutions, business associates and our valued shareholders for their continuous support and encouragement.

On behalf of the Board of Directors,

Chennai K. M. MAMMEN

28th November, 2013 Chairman & Managing Director


Sep 30, 2010

The Directors have pleasure in presenting to you the Fiftieth Annual Report and the Audited Statement of Accounts for the year ended 30th September, 2010.

Working of the Company

Financial Results

During the year under review, the Company achieved the following financial results:

(Rs. Crore)

2009-10 2008-09

Total income 8122.42 6176.34

Profit before tax 534.66 398.48

Provision for taxation 180.68 145.45

Net Profit 353.98 253.03

Your Company this year has crossed a sales turnover of Rs.8000 Crore, which is a landmark achievement. This reflects a sales growth of 31%. The growth was primarily driven by a remarkable turnaround in the automobile market, lower interest rates and the general recovery of business. During the year, there was an unprecedented increase in the price of natural rubber and other key raw materials, which has impacted the performance of the Company. Despite the above, your Company could achieve improved results due to better operating efficiencies, value systems and cost cutting measures which the Company has undertaken over a period of time.

Two interim dividends of Rs.3 each per share (30% each) for the year ended 30th September, 2010 were declared by the Board of Directors on 28-07-2010 and on 21-10-2010. The Board of Directors is now pleased to recommend a final dividend of Rs.19 per share (190%) and a special dividend of Rs.25 per share (250%) on the paid-up equity share capital of the Company, for consideration and approval of the shareholders at the Annual General Meeting. With this, the total dividend for the entire year works out to Rs.50 per share (500%). The total amount of dividends aggregates to Rs.21.20 Crore.

The Directors recommend that after making provision for taxation and proposed dividend, an amount of Rs.329.26 Crore be transferred to General Reserve. With this, the Companys Reserves and Surplus stands at Rs.1686.44 Crore.

Industrial Relations

Overall, the industrial relations in all our manufacturing units have been harmonious as well as cordial. Both production and productivity were maintained at the desired satisfactory levels throughout the year in all the units.

The Management Discussion and Analysis report gives an overview of the developments in human resources/industrial relations during the year.

Exports

The Companys exports stood at Rs.669.27 Crore for the year ended 30th September, 2010 as against Rs.500.56 Crore for the previous year.

MRF leveraged its efforts of 2007-08 and 2008-09 wherein focus was on a few markets. Initiatives were directed at getting closer to the consumer and offering market specific product solutions which helped in substantially increasing volumes during 2009-10.

The heavy commercial vehicle segment volumes grew by close to 40% and light commercial vehicle segment grew by over 50%. Overall export sales revenues grew by around 34% over 2008-09.

However, one disturbing trend during the year was the unabated increase in prices of key raw materials putting tremendous pressure on input costs and the need to make frequent price corrections.

Prospects for the Current Year

Whilst all tyre companies are expecting favourable growth ahead, rising raw material costs such as that of natural rubber, oil and oil derivatives which are used in the manufacture of tyres, interest costs and rising imports of tyres, until expansions can meet additional demand, will be a concern for all tyre companies. Since the tyre industry is highly competitive and price sensitive, it is unable to pass on completely the increase in raw material costs to its customers. Moreover, the imbalance in duty structure on import of raw materials which is at 20% while import on tyre which is at 8-10% is bound to affect the Indian tyre manufacturers in terms of efficiency and competition.

Despite the above, your Company hopes to record satisfactory results on account of MRFs high brand preference and trust reposed by customers in MRF products.

Directors Responsibility Statement

In compliance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) they have, in selection of the accounting policies, consulted the statutory auditors and applied them consistently making 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 and of the profit of the Company for that period;

(iii) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis.

Subsidiaries

The Ministry of Corporate Affairs, Government of India, vide its letter NO.47/681/2010-CL-III dated 08-09-2010, in exercise of its powers under Section 212(8) of the Companies Act, 1956, granted exemption to the Company from the provisions of Section 212(1) of the Companies Act, 1956, from attaching the balance sheet, profit & loss account etc., of the subsidiaries for the year ended 30th September, 2010, since the consolidated financial statement presented by the Company includes the financial information of the subsidiaries. In view of this, the annual reports of the subsidiary companies have not been annexed.

The annual accounts of the subsidiary companies along with the report of the directors and auditors thereon and all related detailed information will be made available to shareholders of the Company on request and will also be kept open for inspection at the registered office of the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The details as required under the Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 are given as an annexure to the Directors Report.

Board

Dr K C Mammen, Mr Vijay R Kirloskar and Mr K M Philip retire by rotation at the Annual General Meeting and are eligible for re-election.

Mr Rahul Mammen Mappillai was appointed as Additional Director and as Whole-time Director of the Company by the Board at its meeting held on 25-11-2010.

Mr S S Vaidya who was appointed as a Director effective from 23-01-2009 in the casual vacancy caused by the demise of Mr S Nandagopal, retires at this Annual General Meeting. A notice has been received from a member under Section 257 of the Companies Act, 1956 proposing his candidature for the office of the Director of the Company.

Corporate Governance

In accordance with Clause 49 of the listing agreement with the stock exchanges, a separate report on corporate governance along with the Auditors certificate confirming compliance, is attached to this report.

The Chairman & Managing Director has confirmed and declared that all the members of the Board and the senior management have affirmed compliance with the code of conduct.

Particulars of Employees

Information as per Section 217(2 A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 forms an integral part of the Directors Report. However, in terms of the provisions of Section 219|1][b] of the Companies Act, 1956, the report and accounts are being sent to shareholders of the Company excluding the statement of particulars of employees under Section 21 7[2A] of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company and will be provided with a copy of the same.

Deposits

10 deposits aggregating Rs.5.49 Lakhs remain unclaimed as at the close of the year ended 30th September, 2010.

Awards received during the year

During the year, MRF won the All India Rubber Industries Associations (AIRIA) award for "Highest Export Awards (Auto Tyre Sector)" category and "Top Export Award" from Chemicals & Allied Products Export Promotion Council (CAPEXIL) for 2009-10.

Auditors

Messrs Sastri & Shah and M.M. Nissim and Co., who are our Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received certificates from both the auditors to the effect that their appointments will be within the limits prescribed under Section 224[1B] of the Companies Act, 1956.

Cost Audit

Cost Audit for the year ended 30th September, 2010 will be conducted by the cost auditor Mr C Govindan Kutty, B.Com., ACA., AICWA., ACS., Chennai and the report will be submitted to the Government.

Appreciation

Your Directors place on record their appreciation of the invaluable contribution made by our employees which made it possible for the Company to achieve these results. They would also like to take this opportunity to thank the customers, dealers, suppliers, bankers, financial institutions, business associates and our valued shareholders for their continuous support and encouragement.

On behalf of the Board of Directors,

Chennai K. M. MAMMEN

25th November, 2010 Chairman & Managing Director




Sep 30, 2009

The Directors have pleasure in presenting to you the Forty Ninth Annual Report and the Audited Statement of Accounts for the year ended 30th September, 2009.

WORKING OF THE COMPANY

Financial Results

During the year under review, the Company achieved the following financial results:

(Rs. Crore)

2008-09 2007-08

Total Income 6176.34 5756.35

Profit before tax 398.48 211.39

Provision for taxation 145.45 66.83

Net Profit 253.03 144.56

Your Company sustained its leadership position in the tyre industry with its sales registering a growth of 7% over the previous year, despite extremely difficult market scenario and the production loss caused due to labour problem. During this period, the prices of key raw materials, especially that of natural rubber and petroleum derivatives came down. This development coupled with better operating efficiencies and overall cost reduction undertaken by the Company contributed to improved results during the year.

Two interim dividends of Rs.3 each per share (30% each) for the year ended 30th September, 2009 were declared by the Board of Directors on 27-07-2009 and on 27-10-2009. The Board of Directors is now pleased to recommend a final dividend of Rs.19 per share (190%) on the paid-up equity share capital of the Company, for consideration and approval of the shareholders at the Annual General Meeting. With this, the total dividend for the entire year works out to Rs.25 per share (250%). The total amount of dividends aggregates to Rs. 10.60 Crore.

The Directors recommend that after making provision for taxation and proposed dividend, the amount of Rs.240.63 Crore be transferred to General Reserve. With this, the Companys reserves and surplus stand at Rs.1357.18 Crore.

INDUSTRIAL RELATIONS

The industrial relations in all our manufacturing plants have been harmonious as well as cordial, except in Arkonam and Puducherry, for a short duration. Both production and productivity were maintained at the desired satisfactory levels throughout the year in all the plants.

The Management Discussion and Analysis Report gives an overview of the developments in human resources/industrial relations during the year.

EXPORTS

During the year, taking forward the initiatives of 2007-08 in the identified focus markets, the Company concentrated on efforts in strengthening end customer contact and creating preference for MRF brand. Impetus was given on segmentation of truck and light truck markets and providing product marketing support to the distributors in each segment to create product differentiation and preference among customers.

The first half of the year was very challenging in terms of generally low activity and slump in demand on account of global recession. The second half definitely showed quick recovery and the situation returned to normalcy by the fourth quarter.

During the year, the Company however managed to maintain its market share and volumes close to 2007-08 levels. Export turnover was Rs.1500.56 Crore for the year ended 30th September, 2009 as against Rs.497.22 Crore for the previous year.

PROSPECTS FOR THE CURRENT YEAR

With multinationals looking to India, it is expected that more vehicle manufacturers may set up facilities in India which could trigger increased original equipment demand in the future.

The Company also expects the government to increase expenditure in infrastructure and other sectors in the coming years. Government spending, coupled with the lowering of interest rates should hopefully give effect to a push in demand.

Wide fluctuations in the prices of natural rubber, petroleum derivatives and other duties can be anticipated in the coming years. The Company is geared to handle the situation by concentrating on improving operating efficiencies and implementing all round cost reduction measures to ensure that the cost push does not impact our profitability.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) they have, in selection of the accounting policies, consulted the statutory auditors and applied them consistently making 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 and of the profit of the Company for that period;

iii) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis.

SUBSIDIARIES

The Ministry of Corporate Affairs, Government of India, vide its letter No.47/682/2009-CL-lll dated 14-10-2009, in exercise of its powers under Section 212(8) of the Companies Act, 1956, granted an exemption to the Company from the provisions of Section 212(1) of the Companies Act, 1956, with regard to attaching the balance sheet, profit & loss account etc., of the subsidiaries for the year ended 30th September, 2009, since the consolidated financial statement presented by the Company includes the financial information of the subsidiaries. In view of this, the annual reports of the subsidiary Companies have not been annexed.

The annual accounts of the subsidiary Companies along with the report of the directors and auditors thereon and all related detailed information will be made available to shareholders of the Company on request and will also be kept open for inspection at the registered office of the Company.

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

The details as required under the Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 are given as an annexure to the Directors Report.

BOARD

We report with profound sorrow, the sad demise of our Director Mr S Nandagopal on 31-12-2008. He had served on the Board of the Company for almost 8 years. We place on record the valuable services rendered by him as Director on the Board as well as Chairman of the Audit and Remuneration Committees.

Mr Ranjit I Jesudasen, Mr Ashok Jacob and Mr V Sridhar retire by rotation at the Annual General Meeting and are eligible for re-election.

CORPORATE GOVERNANCE

In accordance with Clause 49 of the listing agreement with the stock exchanges, a separate report on corporate governance along with the Auditors certificate confirming compliance is attached to this report.

The Chairman & Managing Director has confirmed and declared that all the members of the Board and the senior management have affirmed compliance with the code of conduct.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, forms an integral part of the Directors Report. However, in terms of the provisions of Section 219(1) (b) of the Companies Act, 1956, the report and accounts are being sent to shareholders of the Company excluding the statement of particulars of employees under Section 21 7(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company and will be provided with a copy of the same.

DEPOSITS

6 deposits aggregating Rs.2.38 lakhs remain unclaimed as at the close of the year ended 30th September, 2009.

AWARDS RECEIVED DURING THE YEAR

During the year, we have received AIRIAs "Top Export Awards (Auto tyre sector)" and Chemicals & Allied Products Export Promotion Council (CAPEXIL) - "Merit Award".

AUDITORS

Messrs Sastri & Shah and M.M. Nissim and Co., who are our auditors, retire at the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received a certificate from the auditors to the effect that their appointment will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

COST AUDIT

Cost audit for the year ended 30th September, 2009 will be conducted by the cost auditor Mr C Govindan Kutty, B.Com., A.C.A., A.I.C.W.A., A.C.S., Chennai and the report will be submitted to the Government.

APPRECIATION

Your Directors place on record their appreciation of the invaluable contribution made by our employees which made it possible for the Company to achieve these results. They would also like to take this opportunity to thank the customers, dealers, suppliers, bankers, financial institutions, business associates and our valued shareholders for their continuous support and encouragement.

On behalf of the Board of Directors,

Chennai K. M. MAMMEN

21 st December, 2009 Chairman & Managing Director

 
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