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Directors Report of Shanthi Gears Ltd.

Mar 31, 2015

DIRECTORS' REPORT TO THE SHAREHOLDERS

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31st March, 2015

FINANCIAL RESULTS (Rs. Crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2015 31.03.2014

Revenue from Operations (Gross) 165.03 166.69

Less: Excise Duty 13.03 15.92

Revenue from Operations (Net) 152.00 150.77

Earnings Before Interest, Tax, Depreciation & Amortisation 29.89 51.56

Finance Cost 0.03 0.02

Depreciation & Amortisation Expense 16.75 25.61

Profit Before Tax 13.11 25.93

Less: Tax Expense 3.79 7.55

Profit After Tax 9.32 18.38

Add: Surplus brought forward 13.92 15.10

23.24 33.48 Appropriations :

Transfer to General Reserve 5.00 10.00

Depreciation on transition to Schedule II of the Companies Act, 2013 (0.07) -

Interim / Final Dividend paid 4.09 8.17

Tax on Interim / Final Dividend 0.82 1.39

Balance carried to Balance Sheet 13.26 13.92

Review of Operations

The year 2014-15 was a year of building the base for the Company. It was a year in which a firm foundation was laid with a view to positioning the Company for the future.

The key initiatives undertaken by the Company were building references (track record of supplies) and experience in large sized gearboxes to several key customers, making a breakthrough in the high growth segments such as Defence, consolidating our strong position in the Railways and Metro segments, building capability in the designing of high-value added critical gearboxes for complex applications, establishing a strong Service network and capability in Gearbox Condition Monitoring (GCMC), establishing strategic alliances and building a strong team and future leadership pipeline capable of handling the upcoming challenges. These initiatives helped re-establish the Shanthi brand in the market place and position it as a reliable, dependable and quality brand. The Company also undertook many measures aimed at improving its execution and servicing its customers better. This process is expected to be taken forward further in this year paving the way for a stable execution environment. The transformation to a customer-centric organization has begun.

The revenue during the year was at Rs.152.00 crores against Rs.150.77 crores in the previous year. The Company grew its order book significantly during the year and registered a growth of 20%. This growth in orders booked came largely from the initiatives mentioned above as well as the measures taken last year to expand our presence in the market, build the service network and enter into new segments and industries hitherto not addressed. While we were able to grow the order book we could not execute some of the large value orders due to delays in the project implementation by customers, internal issues with respect to ramping up execution and technical challenges constraining our growth. The benefits of these initiatives, being long term in nature, are expected to accrue to the Company during the current year and in the years to come. The Profit before Tax for the current year amounts to Rs.13.11 crores as compared to Rs.25.93 crores last year. The profit for the year was affected due to the one time impact of providing for certain doubtful debts, (Rs.3.03 crores) strategic need for some products at a lower margin and making an entry in certain segments.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company.

Dividend

The Company declared an interim dividend of Rs.0.50/- per equity share of Face Value Rs.1/- in February, 2015.(PY Rs.1/- per share). The same has been treated as final dividend.

Directors

During the year the Company appointed Ms. Soundara Kumar as an Additional Director of the Company under Section 149 of the Companies Act, 2013 with effect from 31st March, 2015. She holds office up to the date of the ensuing AGM. Ms. Soundara Kumar has worked extensively in State Bank of India and has held several important positions including being the CEO of SBI in California and Managing Director of State Bank of Indore. Her knowledge and experience will be of benefit to the Company. The Board recommends her appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 42nd AGM (2015) till the date of 47th AGM (2020).

Mr. L Ramkumar is liable to retire by rotation and being eligible, offers himself for re-appointment.

Dr. Sreeram Srinivasan, President & Executive Director, resigned from the Board of Directors as he wishes to pursue other interests. Dr. Sreeram Srinivasan guided the Company since it was acquired by Tube Investments of India Ltd and led it through the transition years under the new Management. The foundation he laid in terms of customer goodwill and building a strong leadership team along with the various processes and systems put in place will help the Company in the years to come. The Board wishes to place on record its appreciation of the good work done by Dr. Sreeram Srinivasan during his tenure with the Company.

All Independent Directors have given a declaration that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Composition of Audit Committee and its terms of references are given in Report on Corporate Governance. Board has accepted all recommendations of Audit Committee.

Key Managerial Personnel

Mr. Krishna Ramnath, was appointed as Chief Financial Officer with effect from 29th April, 2014. The remuneration and other particulars of Mr. Krishna Ramnath is included in extract of Annual Report in Form MGT 9 annexed as Annexure B.

Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurate with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. The Company designed specific programs for building skills of its current employees, Graduate Engineer Trainees and Management Trainees. A Grow from Within program was also introduced to facilitate the growth of new entrants. Industrial Relations continued to be cordial and the first wage settlement with the Union was concluded amicably. Several unique features have been introduced to enhance and drive shop-floor productivity as a part of the settlement.

The Company had 562 permanent employees on its rolls, as on 31st March, 2015.

Corporate Social Responsibility Initiative

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program the company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure A.

Extract of Annual Report

The Details forming part of the extract of the Annual Report form MGT 9 is annexed herewith as Annexure B.

Meetings

A Calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2014-15 Six Board Meetings and Four Audit Committee Meetings were held. The details of which are given in the Corporate Governance Report.

Directors Responsibility Statement

Directors Responsibility Statement is annexed herewith as Annexure C.

Remuneration Policy

The Board has on recommendation of Nomination & Remuneration Committee formed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is annexed herewith as Annexure D.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm's length basis and were in ordinary course of business. All related party transactions are placed before the Audit Committee for approval. The Policy on Related Party Transactions, as approved by the Board, is uploaded on the company's website. Weblink:http://www.shanthigears.com/wp-content/themes/shanthi/pdf/ Policy-on-Related-Party-Transactions.pdf.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

Particulars of Employees

The information required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to Members and others entitled thereto excluding the information on employees particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. There are no employees drawing salaries in excess of the limit prescribed under Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014.

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

Conservation of energy, Technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure E.

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

The Company has in place an anti sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The company has not received any compliant about sexual harassment during the year 2014-15.

Auditors

The Members appointed M/s Deloitte Haskins & Sells, the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41st AGM (2014) till the conclusion of 45th AGM (2018). A resolution seeking ratification of the appointment of Statutory Auditors and remuneration payable to them for the financial year 2015-16 is included in the AGM Notice dated 29th April, 2015.

Mr. B Venkateswar, was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31st March, 2016. A resolution seeking Members' ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 29th April, 2015. The Cost Audit report will be filed within the stipulated period.

Mr. M.R.L Narasimha, Practicing Company Secretary was appointed to undertake the Secretarial Audit of the Company. The Report of Secretarial Audit is annexed herewith as Annexure F.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company's performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

Directors' Responsibility Statement

(Pursuant to Section 134 (3) (c) of the Companies Act, 2013)

Pursuant to Section 134 (3) (c) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

- in the preparation of the Statement of Profit for the financial year ended 31st March, 2015 and the Balance Sheet as at that date ("financial statements"), applicable Accounting Standards have been followed.

- appropriate accounting policies have been selected and applied consistently and such judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period.

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit function.

- the financial statements have been prepared on a going concern basis.

- that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

- the systems to ensure compliances with the provisions of all applicable laws were in place and were adequate and operating effectively.

- the financial statements have been audited by Messrs. Deloitte Haskins & Sells, Statutory Auditors and their report is appended thereto.

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2015 Chairman


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31st March, 2014

FINANCIAL RESULTS (Rs. In crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2014 31.03.2013

Revenue from Operations (Gross) 166.69 159.01

Less: Excise Duty 15.91 15.29

Revenue from Operations (Net) 150.78 143.72

Earnings Before Interest, Tax, Depreciation & Amortisation 51.56 50.92

Finance Cost 0.02 0.29

Depreciation & Amortisation Expense 25.61 28.56

Profit Before Tax 25.93 22.07

Less: Tax Expense 7.55 6.60

Profit After Tax 18.38 15.47

Add: Surplus brought forward 15.10 10.36

33.48 25.83

Appropriations :

Transfer to General Reserve 10.00 5.00

Interim / Final Dividend paid 8.17 4.90

Tax on Interim / Final Dividend 1.39 0.83

Balance carried to Balance Sheet 13.92 15.10

Review of Operations

The year 2013-14 was a satisfactory year for the Company. The year marked the first full year of operation as a Murugappa Group Company. While the country witnessed a good monsoon in some parts, economic activity remained subdued and the Capital Goods sector in particular fared poorly.

During the year under review, the Company recorded a revenue of Rs. 151 crores as against Rs. 144 crores in the previous year, a growth of 5%. During the year, the Company focused on enhancing its customer base; improving efficiency in operations; building the skill base and on-boarding key talents. On the customer front the Company continued to direct its efforts towards winning back customers as well as breaking into new accounts. Expanding reach to customers and ensuring prompt and appropriate service was also a key thrust area. These measures have begun to yield results and the full benefit of these initiatives is expected to accrue in the coming years. The Company has also streamlined many processes by leveraging IT as a part of its Operational Excellence journey resulting in improved deliveries to customers.

The year 2013-14 was challenging in many respects. The key user segments of the Company''s products such as cement, mining, construction & infrastructure either declined or remained at the same level as in the previous year. The policy uncertainty combined with high interest rates prevailing in the country acted as a deterrent to investments and new projects. The resulting shrinkage in the gears and gear box market led to intense competition and pricing pressures. Added to the above, poor power availability and increase in input costs exerted pressure on margins. Despite these challenges, the Company was able to maintain its trend of booking orders and continued to have a healthy order book position. Focus on key customers and segments, improvement in servicing and enhanced presence in the market helped the Company grow its top line by 6%. The Company embarked on various cost management initiatives aimed at protecting its margins in a difficult market. The Profit before Tax was at Rs. 25.93 crores against Rs. 22.07 crores in the previous year.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of the Annual Report, sets out an analysis of the business, the industrial scenario and the performance.

Dividend

The Company declared an interim dividend of Rs. 1/- per equity share of Face Value Rs. 1/- in January, 2014. The same has been treated as final dividend.

Directors

Consequent to the introduction of the Companies Act, 2013 the Independent Directors of the Company have to be appointed for a period of 5 years in accordance with Section 149 of the said Act. The Company has a policy governing the retirement of Non-Executive/ Independent Directors. In line with this, Independent Directors retire at the age of 70 years. Accordingly, Independent Directors seek re-appointment as follows :

Sl.No. Name of Independent Director Period of Appointment

1 Mr. C R Swaminathan Three consecutive years from the conclusion of this Annual General Meeting.

2 Mr. J Balamurugan Five consecutive years from the conclusion of this Annual General Meeting.

3 Mr. V Venkiteswaran Two consecutive years from the conclusion of this Annual General Meeting.

Mr. M M Murugappan is liable to retire by rotation and being eligible offers himself for re-appointment.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans. With a view to building capabilities, professionals with talent and of high caliber have been on boarded at various levels in the organisation. The operating teams have also been strengthened with infusion of fresh engineers and experienced people both from within the industry and elsewhere. The current focus for the Company is to enhance and strengthen its Sales and Distribution network.

The Company had 562 permanent employees on its rolls, as on 31st March, 2014.

Social Commitment

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research, etc.

Auditors

M/s. Deloitte Haskins & Sells, the Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. M/s. Deloitte Haskins & Sells are seeking re-appointment and have confirmed that their appointment, if approved, will be in compliance with Section 141 of the Companies Act, 2013. In accordance with Section 139 of the Companies Act, 2013 the auditors of the Company are to be appointed for a period of five years. In line with this requirement the appointment of M/s. Deloitte Haskins & Sells will be for a period of 4 years commencing from the conclusion of the ensuing Annual General Meeting, making in all five years together with the current year.

Mr. B Venkateswar, has been appointed as Cost Auditor for audit of the Cost Accounting records for Engineering Products for the year ended 31st March, 2014. The Cost Audit report relating to the above products will be filed within the stipulated period of 180 days from the close of the financial year.

The other information required to be furnished in the Directors'' Report under the provisions of Section 217 of the Companies Act, 1956 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, particulars of employees and Directors'' Responsibility Statement are annexed and form a part of this Report.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March, 2013

FINANCIAL RESULTS

(Rs. Crores)

PARTICULARS YEAR ENDED YEAR ENDED 31.03.2013 31.03.2012

Revenue from Operations (Gross) 160.94 186.67

Less : Excise Duty 15.29 14.35

Revenue from Operations (Net) 145.65 172.32

Earnings Before Interest, Tax, Depreciation & Amortisation 50.93 69.32

Finance Cost 0.29 0.62

Depreciation & Amortisation Expense 28.57 27.10

Profit Before Tax 22.07 41.60

Less : Tax Expense 6.60 13.47

Profit After Tax 15.47 28.13

Add: Surplus brought forward 10.36 9.23

25.83 37.36

Appropriations :

Transfer to General Reserve 5.00 17.50

Proposed Dividend 4.90 8.17

Tax on Dividend 0.83 1.33

Balance carried to Balance Sheet 15.10 10.36

The year 2012-13 has been a landmark year for the Company. During this year the founder promoter of the Company Mr. P Subramanian decided to retire from active Corporate Responsibilities and focus on his other personal interests in the social sphere. Tube Investments of India Ltd (TII) acquired his entire stake and followed it up with an Open Offer in line with the regulations and acquired another 26% from the general public. Effective 19th November, 2012 Shanthi Gears Ltd (SGL) became a subsidiary of TII. The Board wishes to place on record its appreciation of the passionate and pioneering efforts by Mr. P Subramanian which helped build SGL into the company as it now exists. The Board also wishes to place on record its appreciation of the services rendered by the other members of the erstwhile Board of Directors of SGL for their valuable contribution to the growth and success of SGL.

Review of Operations

During the year under review, the Company achieved a turnover of Rs. 146 crores as against Rs. 172 crores in the previous year, a decline of 15%. The year 2012-13 was challenging in many respects. The economic growth levels witnessed by the country in the previous years declined and the business sentiment remained largely negative. Poor monsoons, high interest rates, low growth, slowdown in infrastructure projects and overall drop in consumer confidence impacted the economy as a whole and consequently the sales of the Company as well. The Profit Before Tax was at Rs. 22.07 cr. against Rs. 41.60 cr. in the previous year. The decline in profit was due to the lower turnover, impact of input cost increases and higher fixed costs. The Company is focusing on enhancing customer base, improving its operational efficiencies and cost management to mitigate the effect of these factors. The benefit of these initiatives is expected to accrue in the current year.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of the Annual Report, sets out an analysis of the business, the industrial scenario and the performance.

Dividend

Your Directors recommend a Dividend of Rs. 0.60 per Equity Share of Rs. 1 each fully paid up.

Directors

Consequent to the acquisition of the Company by TII, the Board inducted the following Directors as additional Directors with effect from 3rd September, 2012

Mr. M M Murugappan Mr. L Ramkumar Mr. C R Swaminathan Mr. J Balamurugan Dr. Sreeram Srinivasan

Mr. V Venkiteswaran was inducted as an additional Director with effect from 30th January, 2013.

All the above Directors are seeking appointment at the ensuing Annual General Meeting.

Effective 3rd September, 2012 Mr. P Subramanian, Mr. M J Vijayaraaghavan, Dr. D Padmanaban, Mr. C G Kumar and Mr. M Alagiriswamy resigned from their position as Director. The Board wishes to thank them for their guidance & contribution.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of it ambitious growth plans. During the few months since the take-over thrust has been on creating a more effective organization, induction of new talent and building capabilities across the organization.

The Company had 581 permanent employees on its rolls, as on 31st March , 2013.

Social Commitment

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company made a small contribution from its profit for the promotion of worthy causes like education, healthcare, scientific research etc.

Auditors

M/s. S Lakshminarayanan Associates, the Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. M/s. S Lakshminarayan Associates has expressed a desire not to seek re-appointment at this meeting. The Board wishes to place on record its appreciation of the services rendered by M/s. S Lakshminarayanan Associates as Statutory Auditors of the Company since its inception.

Mr. B Venkateswar, has been appointed as the Cost Auditor for audit of the Cost Accounting records for Engineering products for the financial year ended 31st March, 2013. The Cost Audit report relating to the above product will be filed within the stipulated period of 180 days from the close of the financial year.

The other information required to be furnished in the Directors'' Report under the provisions of Section 217 of the Companies Act, 1956 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, particulars of employees and Directors'' Responsibility Statement are annexed and form a part of this Report.

The Directors thank all Customers, Vendors, Banks, Central & State Governments and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering a good performance during the year.

On behalf of the Board Chennai M M Murugappan

30th April, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting to you the Thirty Nineth Annual Report, together with the audited accounts of your Company, for the year ended 31st March, 2012.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2012 31-03-2011 Rs. in Million

Gross Profit before Interest & Depreciation 693.481 716.672

Less : Finance Cost 6.197 10.309

Depreciation 270.994 268.461

Donations 0.336 0.292

Provision for Taxation / Withholding Tax Paid 170.160 180.162

Deferred Tax (35.266) (32.363)

Income Tax / FBT paid for earlier years (0.214) 11.196

281.274 278.615

Add : Surplus brought forward 92.290 83.646

373.564 362.261

Appropriations:

Proposed Dividend 81.716 81.716

Tax on Dividend 13.256 13.256

General Reserve 175.000 175.000

Surplus in Profit & Loss Account 103.592 92.289

373.564 362.261

DIVIDEND

Your Directors recommend a Dividend of Re.1 per Equity Share of Re.1 each fully paid up (100% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1730.053 Million for the year under review as against the turnover of Rs. 1623.481 Million of the previous year showing a growth of 6.56%. The other financial parameters have also improved in line with the sales growth. Barring unforeseen circumstances your Directors hope to achieve satisfactory results for the current year.

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

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Company's existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 200.759 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumable Stores & Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription, Taxes & Licenses, Training and Technical Consultancy Charges amounted Rs. 34.826 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

The following Directors are due to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-election

Sri M.J.Vijayaraaghavan

Sri C.G.Kumar

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record-

(i) that in preparing the Annual Accounts, all applicable Accounting Standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors' Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Company's auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions. The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors

Coimbatore P. Subramanian

25th May, 2012 Chairman & Managing Director


Mar 31, 2011

The Directors have pleasure in presenting to you the Thirty Eighth Annual Report, together with the audited accounts of your Company, for the year ended 31st March, 2011.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2011 31-03-2010

Rs. in Million

Gross Profit before Interest & Depreciation 715.122 551.083

Less: Interest 8.759 38.132

Depreciation 268.461 269.266

Donations 0.292 0.423

Provision for Taxation / Withholding Tax Paid 180.162 110.275

Deferred Tax (32.363) (25.934)

Income Tax / FBT paid for earlier years 11.196 (2.927)

278.615 161.848

Add : Surplus brought forward 83.646 98.028

362.261 259.876

Appropriations:

Proposed Dividend 81.716 65.373

Tax on Dividend 13.256 10.857

General Reserve 175.000 100.000

Surplus in Profit & Loss Account 92.289 83.646

362.261 259.876



DIVIDEND

Your Directors recommend a Dividend of Re.1 per Equity Share of Re.1 each fully paid up (100% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1603.602 Million for the year under review as against the turnover of Rs. 1213.871 Million of the previous year showing a growth of 32.11%. The other financial parameters have also improved in line with the sales growth. Barring unforeseen circumstances your Directors hope to achieve satisfactory results for the current year.

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

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Companys existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 105.165 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumable Stores & Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription and Germany Liaison Office Expenses amounted Rs. 125.115 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Ms. S.Sangeetha resigned from the Board with effect from 30th June, 2010 due to pre-occupation. The Directors place on record the valuable guidance and support rendered by Ms.S.Sangeetha during her tenure of office as Wholetime Director.

Dr. D.Padmanaban retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

Sri. M.Alagiriswamy who was appointed as Director in the place of casual vacancy caused by resignation of Ms.S.Sangeetha, retires at the ensuing Annual General Meeting. A member has given a notice in writing proposing Sri.M.Alagiriswamy for the office of Director along with required deposit amount.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record-

(i) that in preparing the Annual Accounts, all applicable Accounting Standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Companys auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions. The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors

P. Subramanian

Chairman & Managing Director

Coimbatore 13th May, 2011


Mar 31, 2010

The Directors have pleasure in presenting to you the Thirty Seventh Annual Report, together with the audited accounts of your Company, for the year ended 31 st March, 2010.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2010 31-03-2009

Rs. in Million

Gross Profit before Interest & Depreciation 531.784 1032.573

Less: Interest 18.833 86.247

Depreciation 269.266 257.723

Donations 0.423 0.533

Provision for Taxation / Withholding Tax Paid 110.275 231.196

Fringe Benefit Tax - 2.500

Deferred Tax (25.934) 10.261

Prior Year Tax - 3.618

158.921 440.495

Add: Excess Provision no longer required 2.927 0.115

Surplus brought forward 98.028 72.142

259.876 512.752 Appropriations:

Proposed Dividend 65.373 98.059

Tax on Dividend 10.857 16.665

General Reserve 100.000 300.000

Surplus in Profit & Loss Account 83.646 98.028

259.876 512.752

DIVIDEND

Your Directors recommend a Dividend of Rs. 0.80 per Equity Share of Re. 1 each fully paid up (80% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1213.871 Million for the year under review as against the turnover of Rs. 2524.842 Million of the previous year. Various factors such as change in management team, labour unrest, the measures taken by the Company to revamp, restructure and relocating of machines, scaling down of plant operations has resulted in decrease in turnover. The Companys policy of manufacturing niche and value added products have helped the Company to maintain profitability irrespective of reduction in sales. The Company proposes to follow the same policy during the current year,

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

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Companys existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 93.579 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumoble Stores 8c Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription and Germany Liaison Office Expenses amounted Rs. 47.71 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Sri P.N. Gopal resigned from the Board on 25th January, 2010 due to health condition. He was associated with the Company from 17.03.1986. The Directors place on record the valuable guidance and support rendered by Sri. P.N.Gopal during his tenure of office as Director.

Sri.M.J. Vijayaraaghavan retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

Sri. C.G.Kumar was appointed as additional Director on 25th January, 2010, retires at the ensuing Annual General Meeting, A member has given a notice in writing proposing Sri, C.G.Kumar for the office of Director along with required deposit amount.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record

(i) that in preparing the Annual Accounts, all applicable accounting standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased I to annex the following: ,

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Companys auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions, The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors Coimbatore P. Subramanian

24th May, 2010 Chairman & Managing Director



 
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