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Directors Report of Sona Koyo Steering Systems Ltd.

Mar 31, 2015

Dear MEMBERS,

The Directors have pleasure in presenting their 31 ' Annual Report together with audited accounts of the Company for the year ended 31st March, 2015.

1) Financial Results

STANDALONE AND CONSOLIDATED PERFORMANCE OF THE COMPANY

(Rs. / Lacs)

Standalone

Current Year Previous Year

31.03.2015 31.03.2014

Sales (Net of Excise Duty) and other 108281.42 108330.80 income

Profit before interest & depreciation 12669.30 13929.28

-Interest 2492.59 3189.43

- Depreciation & write offs 7799.74 4909.85

Profit before tax 2376.97 5830.00

Less: Provision for tax 1251.00 1275.00

Provision for deferred tax liability (671.75) (12.23) / (assets)

Earlier years excess provision of tax - 11.17 written back

Minimum alternate tax (MAT) credit - (610.09) entitlement

Profit after tax 1797.72 5166.15

Less: Share of profit transferred to - - minority

Less: Share of loss of an associate - -

Consolidated profit for the year 1797.72 5166.15

Add: Profit brought forward 8394.51 5613.50

Add: Adjustment on account of - - amalgamation

Less:-Adjustment of Depriciation (648.33) - Change as

per Schedule II of the Companies Act 2013

Profit available for appropriations 9543.90 10779.65

Appropriations

Proposed Dividend 1291.82 1589.93

Tax on Dividend 262.98 270.21

Transfer to General Reserve - 525.00

Corporate Social Responsibility Exp 23.00 -

Balance Carried Forward 7966.10 8394.51

Consolidated

Current Year Previous Year

31.03.2015 31.03.2014

Sales (Net of Excise Duty) and other 155784.08 153201.57 income

Profit before interest & depreciation 22053.49 21822.11

-Interest 3114.48 3923.42

- Depreciation & write offs 10368.33 6794.92

Profit before tax 8570.68 11103.77

Less: Provision for tax 3380.79 2986.50

Provision for deferred tax liability (704.40) 85.91 / (assets)

Earlier years excess provision of tax (0.71) 11.17 written back

Minimum alternate tax (MAT) credit (4.37) (610.09) entitlement

Profit after tax 5899.37 8630.28

Less: Share of profit transferred to 2044.79 1777.31 minority

Less: Share of loss of an associate (64.78) (77.47)

Consolidated profit for the year 3789.80 6775.50

Add: Profit brought forward 12640.96 7523.81

Add: Adjustment on account of - 739.54 amalgamation

Less:-Adjustment of Depriciation (760.20) - Change as

per Schedule II of the Companies Act 2013

Profit available for appropriations 15670.56 15038.85

Appropriations

Proposed Dividend 1291.82 1589.93

Tax on Dividend 262.98 282.96

Transfer to General Reserve - 525.00

Corporate Social Responsibility Exp 23.00 -

Balance Carried Forward 14092.76 12640.96

2) State of Affairs of the Company

Revenue from operations increased by 3.4% to Rs. 10786 million. PBDIT improved by 10% to Rs. 1393 million. The Company changed the basis of providing depreciation in accordance with Schedule II of Companies Act, 2013. The change resulted in increase in Depreciation charge in Profit & Loss Account by Rs. 205 million. The Company reported PAT of Rs. 180 million after providing this additional depreciation. Improvement in PBDIT numbers shows the success of Company's efforts in reducing the material cost by following aggressive localization program and through backward integration.

The growth in Company's revenues was in line with the growth in the Passenger Vehicle Market segment. FY15 closed on a brighter note for the Indian auto industry with passenger cars growing for the first time in three years and all segments except Commercial Vehicles (CV) registering positive growth. In FY15, Passenger Vehicles (PV) segment grew by 3.9% YoY to reach 2.6 million units. Within PV, Passenger Cars and UV registered a growth of 5.0% YoY and 5.3% YoY respectively, while Vans saw a decline of (-) 10.2% YoY. Passenger cars returned to positive growth territory after two years of decline, (-) 4.7% YoY in FY14 and (-) 7.7% in FY13, driven by slew of new launches and variants in the year amidst improving consumer sentiments under the new Government, fall in fuel prices, softening of interest rates and excise cuts that continued till December, 2014.

The Capital Expenditure for 2014-15 was Rs. 650 million. The capital expenditure was principally on account of ongoing projects aimed at backward integration, achieving manufacturing excellence by reduction of cycle time and changing plant layout and increasing the production capacity for manual gear.

2) Dividend

Your directors are pleased to recommend a dividend of 65% on equity share capital of the Company for the financial year 2014-2015 as against the dividend paid at the rate of 80% on the equity share capital for the previous financial year.

3) Reserves

(Rs. / Lacs)

31-Mar-15 31-Mar-14

Balance as per last financial statements 8394.51 5613.50

Add: Profit for the year 1797.72 5166.15

Less: Adjustment of depreciation charge 648.33 -

Less: Appropriations

Proposed dividend 1291.82 1589.93

Tax on proposed dividend 262.98 270.21

Transfer to general reserve - 525.00

CSR expenses 23.00 -

Net surplus in the statement of profit & loss 7966.10 8394.51

4) Change of Nature of Business (if any)

There has been no change in the nature of business of the Company during the financial year.

5) Share Capital

The Paid Up Equity Share Capital of the Company as at March 31, 2015 stood at Rs. 1987.42 lacs. During the year under review, the Company has not issued any shares/securities. As on March 31, 2015, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

6) Significant and material Orders passed by the Regulators or Courts

There are no significant or material Orders passed by the Regulators or Courts that would impact the going concern status of the Company and its future operations.

7) Material changes and commitments, if any, affecting the financial position of the company

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which financial statements relate and the date of the report.

8) Details in respect of adequacy of internal controls

Your Company has an effective internal control and risk- mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to Ernst & Young LLP (E&Y), a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust management information system, which is an integral part of the control mechanism.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the internal audit function reports to the Chairman of the Audit Committee.

9) Details and Performance of Subsidiary Companies / Associate Company

Subsidiary Companies

The Company has the following two Subsidiaries and one Associate Company :

a) JTEKT SONA Automotive India Limited (JSAI)

In JSAI, the Company is holding 49% of the equity capital but it has the right to nominate majority of Directors on the Board of JSAI. This Joint Venture Company has been established with JTEKT Corporation, Japan with a business objective of manufacturing Column Type Electric Power Steering (C-EPS) Systems. The Plants of JSAI are located in Bawal (Haryana), Chennai and Bengaluru. During the year ended 31st March, 2015, JSAI has achieved total income of Rs. 60,643.58 lacs and earned net profit of Rs. 3,613.42 lacs.

b) Sona Fuji Kiko Automotive Limited (SFAL)

In SFAL, the Company is holding 51% of the Equity Capital. This Joint Venture Company has been established with FUJI KIKO Co. Ltd., Japan with a business objective of manufacturing Columns to be used in the manufacturing of C-EPS by JSAI. The Plant of SFAL is located in Bawal (Haryana). During the year ended 31st March, 2015, SFAL has achieved total income of Rs. 6,162.10 lacs and earned net profit of Rs. 466.10 lacs.

Associate Company

a) Sona Skill Development Centre Limited (SSDCL)

SSDCL is a skill development Company which provides skill development and training programs such as TQM, Problem Solving, Flow Manufacturing (Lean), Safety, and Innovation as well as comprehensive training program that includes 5S, safety, QC 7 tools, measurement, maintenance, Toyota Production System, basic conventional machine operation, CNC machine operation, material selection, and soft skills such as team work and conflict management. Sona Koyo Steering Systems Limited has made the investment in the equity share capital of SSDCL which is equivalent to 49.99% of the paid up share capital of SSDCL. Accordingly, SSDCL has been covered in the definition of Associate Company. During the year ended 31st March, 2015, SSDCL has achieved total income of Rs. 138.59 lacs and has incurred a loss of Rs. 129.56 lacs.

No company has become/ceased to be a Subsidiary or Associate during the financial year 2014-15.

10) Subsidiary Companies Accounts

During the year, the Board of Directors reviewed the affairs of the subsidiaries and associate companies. In accordance with Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company forms part of the Annual Report. Further, a statement containing the salient features of the financial statement of the subsidiaries and associate companies in the prescribed Form AOC-1 is attached along with financial statement. The statement also provides the details of performance, financial position of each of the subsidiaries and associate company.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries and associate company, are available on Company's website www.sonakoyosteering.com. These documents will also be available for inspection during business hours at Company's registered office. The Company shall provide the copy of financial statements of its subsidiaries and associate company to the shareholder upon their request.

In accordance with the Accounting Standard 'AS-21' on Consolidated Financial Statements read with Accounting Standard 'AS-27' on Financial Reporting of interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report.

11) Extract of Annual Return

The extract of Annual Return as provided under Sub-Section (3) of Section 92 of the Companies Act, 2013 is enclosed as Annexure - I in the prescribed form MGT-9 and forms part of this Report.

12) Corporate Social Responsibility

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure - II.

13) Number of meetings of the Board of Directors

The Board of Directors met 4 (four) times in the year ended 31st March, 2015. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

14) Nomination & Remuneration Committee and its policy

A Nomination & Remuneration Committee has been constituted to review formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees and such other ancillary functions as may be required.

The Company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board.

15) Particulars of contracts or arrangements with related parties

The Company has entered into contracts / arrangements with the related parties in the ordinary course of business and on arm's length basis. Thus provisions of Section 188(1) of the Act are not applicable.

However, in terms of Clause 49 of the Listing Agreement, all transactions with related parties, which are of material in nature, are subject to the approval of the Members of the Company. The requisite resolution in order to comply with the aforesaid requirements of Clause 49 of the Listing Agreement, as detailed at Item No. 7 of the Notice and relevant Explanatory Statement is commended for the members' approval.

16) Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013, the Company had appointed Mr. S.S Gupta, Company Secretaries, in Practice, as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2014-15. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2014-15 is annexed to this report as Annexure - III. The report does not contain any qualification.

17) Risk Management Policy

A Risk Management Committee was constituted on 13th November, 2014 to oversee the risk management process in the company.

The company has laid down a well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risks. The Risk Management Committee periodically reviews the risks and suggests the steps to be taken to control and mitigate the same through a properly defined framework.

18) Corporate Governance

The Company has been pro-active in following the principles and practices of good corporate governance. The Company has taken adequate steps to ensure that the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied in its letter and spirit. The Company has also complied with corporate governance requirements as per the provisions of the Companies Act, 2013.

A separate section on Corporate Governance is produced as a part of the Annual Report along with the Auditors' Certificate on its compliance.

19) Vigil Mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. For details, please refer to the Corporate Governance Report attached to this Report.

20) Listing

The Securities of your Company are listed at National Stock Exchange and Bombay Stock Exchange and the Company has paid the Listing Fee due to them.

21) Deposits

During the year the Company has not invited any deposits covered under Chapter V of the Act.

22) Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements, which are self-explanatory.

23) Directors & Key Managerial Personnel

As on 31st March, 2015, your Company has Twelve (12) Directors consisting of Six (6) Independent Directors, Three (3) Non-executive Directors and Executive Chairman, Managing Director & Dy. Managing Director.

In terms of the definition of 'Independence' of Directors as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act, 2013 and based on the confirmation / disclosures received from the Directors, the following Non- Executive Directors are Independent Directors :-

1) Mr. Ravi Bhoothalingam

2) Mr. Prem Kumar Chadha

3) Lt.Gen.(Retd.) Shamsher Singh Mehta

4) Mr. Ramesh Suri

5) Mrs. Ramni Nirula

6) Mr. Prasan Abhaykumar Firodia

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

During the year under review, our colleague Mr. Hiroyuki Miyazaki, Nominee of JTEKT, has ceased to be a Director of the Company due to withdrawal of his nomination by JTEKT. Consequent upon cessation of Mr. Hiroyuki Miyazaki from the office of Board of Directors of the Company, Mr. Keiichi Sakamoto, being an Alternate Director to Mr. Hiroyuki Miyazaki, has also ceased to be the Alternate Director of the Company. In place of Mr. Miyazaki, JTEKT has nominated Mr. Hidekazu Omura, who has been appointed as Director in the meeting of the Board of Directors held on 30th May, 2014. Our another colleague Mr. B.L. Passi, who has been on the Board of the Company since March 1995, also resigned from the Board with effect from 28th July, 2014. The Board of Directors have in their meeting held on 1st August, 2014 appointed Mr. Prasan Abhaykumar Firodia, as an Independent Director. Your Directors take this opportunity to place on record the appreciation of services rendered by Mr. Hiroyuki Miyazaki, Mr. Keiichi Sakamoto and Mr. B.L. Passi during their association with the Company.

The Executive Chairman, Managing Director and Dy. Managing Director of the Company have not received any remuneration or commission, except Sitting Fee, from any of the subsidiaries of the Company.

Pursuant to the provisions of Section 152(6) and Articles of Association of the Company, Mr. Jug Mohan Kapur (DIN: 00447138) will retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re- appointment.

Pursuant to the provisions of Section 203 of the Act, the appointment of Mr. Sunjay Kapur, Managing Director, Mr. Sudhir Chopra, President & Company Secretary and Mr. Rajiv Chanana, Chief Financial Officer, were formalized as the whole-time Key Managerial Personnel of the Company.

24) Board Evaluation

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors.

The performance evaluation of the Board, its Committees and individual directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, Committees and self-evaluation. Based on the questionnaire and feedback, the performance of every director was evaluated in the meeting of the Nomination and Remuneration Committee.

A separate meeting of the independent directors was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual Independent Directors, meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the Nomination & Remuneration Committee with the Board's Chairman covering performance of the Board as a whole; performance of the non-independent directors and performance of the Board Chairman.

25) Audit Committee

Pursuant to the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges, the Audit Committee of Directors of the Company consists of the following members:

1) Mr. Ravi Bhoothalingam, Chairman

2) Mr. P.K. Chadha, Member

3) Mr. Sunjay Kapur, Member

4) Lt. Gen. (Retd.) Shamsher Singh Mehta, Member

5) Mrs. Ramni Nirula, Member

More details on the committee are given in the Corporate Governance Report.

26) Directors' Responsibility Statement

Pursuant to clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the directors confirm that:

a) in the preparation of the annual accounts, for the financial year 2014-15, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

d) the directors have prepared the annual accounts on a going concern basis;

e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30) Statutory Auditors and their Report

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rules framed thereunder, M/s. S.P. Puri & Co., Chartered Accountants (ICAI Registration No. 001152N), were appointed as Statutory Auditors of the Company from the conclusion of the 30th Annual General Meeting of the Company held on 23rd September, 2014 till the conclusion of the 33rd Annual General Meeting to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

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

A statement containing the necessary information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to provisions of Section 134 of the Companies Act, 2013, read with the rules made thereunder is annexed as Annexure - IV and forms part of this report.

32) Employees

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in Annexure - V(a) to this Report.

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lacs or more, or employed for part of the year and in receipt of Rs. 5 lacs or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure - V(b) to this Report.

33) Acknowledgements

Your Directors acknowledge with gratitude the co-operation and support extended by SONA's customers namely Maruti Suzuki, Mahindra & Mahindra, Tata Motors, Honda, Hyundai, Fiat India, Toyota Kirloskar, General Motors, Ford, John Deere, Club Car, E-z-go and Renault-Nissan, the Financial Institutions, Banks, various agencies of the Government, SONA's collaborators - JTEKT Corporation, Japan and Fuji Autotech AB, Sweden.

Your Directors also wish to place on record their sincere appreciation of the services rendered by all the employees of the Company and are thankful to the Shareholders for their continued patronage.

For and on behalf of the Board

Place : Gurgaon Dr. Surinder Kapur Dated : 15th May, 2015 Chairman


Mar 31, 2014

TO THE MEMBERS,

The Directors have pleasure in presenting their Annual Report together with audited accounts of the Company for the year ended 31st March, 2014.

Consolidated Performance 2013-14 2012-13 Rs./Lacs Rs./Lacs

Sales and other income 153202 146937

Profit before interest & depreciation 21822 17390

- Interest 3923 4109

- Depreciation & write offs 6795 5850

Profit before tax 11104 7431

Less : Provision for tax 2987 1638

Provision for deferred tax liability/(assets) 86 1202

Earlier years excess provision 11 (151) of tax written back

Minimum alternate tax (MAT) (610) (55) credit entitlement

Profit after tax 8630 4797

Less : Share of profit transferred to minority 1778 988

Less : Share of loss of an associate 77 -

Consolidated profit for the year 6775 3809

Add : Profit brought forward 7524 5552

Add Adjustment on account of amalgamation 740 -

Profit available for appropriations 15039 9361 Appropriations

Proposed dividend 1590 1292

Tax on dividend 283 220

Transfer to General Reserve 525 325

Balance carried forward 12641 7524

15039 9361

Dividend

Your directors are pleased to recommend a dividend of 80% on equity share capital of the Company for the financial year 2013-2014 as against the dividend paid at the rate of 65% on the equity share capital for the previous financial year.

Subsidiary Companies

The Company has the following Subsidiaries:

a) JTEKT SONA Automotive India Limited (JSAI)

In JSAI, the Company is holding 49% of the equity capital but it has the right to nominate majority of Directors on the Board of JSAI. This Joint Venture Company has been established with JTEKT Corporation, Japan with a business objective of manufacturing Column Type Electric Power Steering (C-EPS) Systems. The Plants of JSAI are located in Bawal, Chennai and Bengaluru. During the year ended 31st March, 2014, JSAI has achieved total income of Rs. 605.26 crores and earned net profit of Rs. 30.15 crores.

b) Sona Fuji Kiko Automotive Limited (SFAL)

In SFAL, the Company is holding 51% of the equity capital. This Joint Venture Company has been established with FUJI KIKO Co. Ltd., Japan with a business objective of manufacturing Columns to be used in the manufacturing of C-EPS by JSAI. The Plant of SFAL is located in Bawal, Haryana. During the year ended 31st March, 2014, SFAL has achieved total income of Rs. 55.90 crores and earned net profit of Rs. 6.37 crores. As recommended by the Board, the shareholders of SFAL have 2 n their Annual General Meeting held on 28th-July,^014 declared maiden dividend @ 7.5% on the equity shares of the Company.—

Subsidiary Companies Accounts

In terms of general exemption granted by the Ministry of Corporate Affairs vide General Circular Number 2/2011 dated 8th February, 2011, copy of the balance sheets, statement of profit & loss, reports of the Board of Directors and Auditors of the subsidiary companies have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any member of the Company interested in obtaining the same. However, as per the requirement of the said Circular, the financial data of the subsidiaries have been disclosed under ''Summarised Statement of Financials of Subsidiary Companies'' forming part of the Annual Report. The Annual Accounts of the subsidiary companies will be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies.

Consolidation of Accounts

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-27 on Financial Reporting for Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report.

Amalgamation of Sona Stampings Limited (SSL) with the Company

SSL was established with a business objective of sheet metal processing, comprising of press work and welding within automotive component sector. Keeping in view the benefits arising out of better business synergies, reduced cost and tax advantage etc., the Board of Directors of the Company had through resolutions passed on 15th May, 2013 and 1st June, 2013, approved of a Scheme of Amalgamation ("Scheme") between SSL and your Company. The said Scheme was sanctioned by the Hon''ble High Courts of Delhi and Chandigarh on 16th April, 2014 and 28th April, 2014 respectively. The Orders of the Hon''ble High Courts have been filed with the Registrar of Companies on 27th May, 2014. The said Scheme has also been approved by various capital market regulators viz. SEBI, Stock Exchanges and Depositories. Accordingly, SSL stands merged with your Company with effect from the appointed date i.e. 1st April, 2013. The standalone financial results of the Company for the financial year ended 31st March, 2014 thus comprised the financials of SSL also.

Corporate Governance

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied in its letter and spirit.

A separate section on Corporate Governance is produced as a part of the Annual Report along with the Auditors'' Certificate on its compliance.

Listing

The Securities of your Company are listed at National Stock Exchange and Bombay Stock Exchange and the Company has paid the Listing Fee due to them.

Fixed Deposits

During the year the Company has not invited any deposits from the public.

Directors

During the year under review, our colleague Mr. Hiroyuki Miyazaki, Nominee of JTEKT, has ceased to be a Director of the Company due to withdrawal of nomination by JTEKT. Consequent upon cessation of Mr. Hiroyuki Miyazaki from the office of Board of Directors of the Company, Mr. Keiichi Sakamoto, being an Alternate Director to Mr. Hiroyuki Miyazaki, has also ceased to be the Alternate Director of the Company. Our another colleague Mr. B.L. Passi, who has been on the Board of the Company since March 1995, also resigned from the Board with-effect from 28th ajjjy, 2014. Your Directors take this opportunity to pTlc:e on:r:ecord the appreciation of services rendered by Mr. Hiroyuki Miyazaki,^

Mr. Keiichi Sakamoto and Mr. B.L. Passi during their association with the Company.

JTEKT has now nominated Mr. Hidekazu Omura and the Board of Directors of the Company in their meeting held on 30th May, 2014 appointed Mr. Omura as an Additional Director of the Company. He shall hold office up to the ensuing Annual General Meeting of the Company pursuant to the provisions of Section 161 of the Companies Act, 2013. Requisite notice has been received under Section 160 of the Companies Act, 2013 from a member for the appointment of Mr. Hidekazu Omura.

To fill the casual vacancy caused due to the resignation of Mr. B.L. Passi, the Board of Directors have in their meeting held on 1st August, 2014 appointed Mr. Prasan Abhaykumar Firodia, as an Independent Director. Mr. Passi would have become due for retirement at the ensuing Annual General Meeting, had he not submitted his resignation. Since Mr. Firodia has been appointed to fill the casual vacancy caused due to the resignation of Mr. Passi, he shall pursuant to the provisions of Section 161(4) of the Companies Act, 2013 retire at this Annual General Meeting.

As the existing tenure of the appointment of Mr. Sunjay Kapur, Managing Director of the Company is expiring on 22nd October, 2014, keeping in view the recommendation of the Remuneration Committee of Directors, the Board of Directors of the Company in its meeting held on 30th May, 2014 have, subject to the approval of Shareholders and such sanction(s) as may be necessary, approved the re- appointment of Mr. Sunjay Kapur as Managing Director of the Company for a further period of three years, with remuneration, effective from 22nd October, 2014, on the revised terms and conditions.

The requisite resolutions pertaining to the appointment of Mr. Hidekazu Omura, Mr. Prasan Abhaykumar Firodia and Mr. Sunjay Kapur as detailed at item nos. 5, 6 and 12 of the Notice and relevant Explanatory Statement is commended for the Members'' approval.

Impending notification of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mr. Ravi Bhoothalingam, Mr. Prem Kumar Chadha, Mr. Ramesh Suri, Mr. Prasan Abhaykumar Firodia, Lt.Gen.(Retd.) Shamsher Singh Mehta and Mrs. Ramni Nirula as Independent Directors for five consecutive years i.e. upto 22nd September, 2019. Details of the proposal for appointment of Mr. Ravi Bhoothalingam, Mr. Prem Kumar Chadha, Mr. Ramesh Suri, Mr. Prasan Abhaykumar Firodia, Lt.Gen.(Retd.) Shamsher Singh Mehta and Mrs. Ramni Nirula are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 30th Annual General Meeting.

Pursuant to Article 122 of the Articles of Association of the Company, Mr. Kazuhiko Ayabe will retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

Audit Committee

Pursuant to the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges, the Audit Committee of Directors of the Company consists of the following members:

1) Mr. Ravi Bhoothalingam, Chairman

2) Mr. P.K. Chadha, Member

3) Mr. Sunjay Kapur, Member

4) Lt. Gen. (Retd.) Shamsher Singh Mehta, Member

5) Mrs. Ramni Nirula, Member

Directors'' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm having:

i) followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanation relating to material departures;

ii) selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period;

iii) 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 your Company and for preventing and detecting fraud and other irregularities; and

iv) prepared the Annual Accounts on a going concern basis.

Auditors

M/s. S.P. Puri & Co., Chartered Accountants, hold office as Auditors until the conclusion of the forthcoming Annual General Meeting and have indicated their willingness to be re-appointed as Auditors. The requisite certificate under Section 224(1B) of the Companies Act, 1956, has been received from them. The notes to accounts referred to in the Auditors'' Report are self-explanatory.

Cost Auditors

In accordance with the Order dated June 3, 2011 issued by the Ministry of Corporate Affairs pursuant to Section 233B of the Companies Act, 1956, your Company was required to get its cost accounting records audited by a Cost Auditor and had accordingly appointed M/s. Gurdeep Singh & Associates, Cost Accountants for this purpose for FY 2013-14. The cost audit for FY 2012-13 was completed within specified time and report was filed with the Registrar of Companies.

The Board in its meeting held on 30th May, 2014 has on the recommendation of the Audit committee, re-appointed M/s. Gurdeep Singh & Associates, Cost Accountants to conduct the audit of the cost accounting records for FY 2014-15.

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

A statement containing the necessary information as required under the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended March 31, 2014 is given as Annexure - ''A'' to this report.

Employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees are given in Annexure - ''B'' forming part of this report.

Acknowledgements

Your Directors acknowledge with gratitude the co-operation and support extended by SONA''s customers namely Maruti Suzuki, Mahindra & Mahindra, Tata Motors, Honda, Hyundai, Fiat India, Toyota Kirloskar, General Motors, Ford, John Deere, Club Car, E-z-go and Renault-Nissan, the Financial Institutions, Banks, various agencies of the Government, SONA''s collaborators - JTEKT Corporation, Japan and Fuji Autotech AB, Sweden.

Your Directors also wish to place on record their sincere appreciation of the services rendered by all employees of the Company and are thankful to the Shareholders for their continued patronage.

For and on behalf of the Board

Place :Gurgaon Dr. Surinder Kapur

Dated :1st August, 2014 Chairman


Mar 31, 2013

TO THE MEMBERS,

The Directors have pleasure in presenting their Annual Report together with audited accounts of the Company for the year ended 31st March, 2013.

Consolidated Performance 2012-13 2011-12

Rs./Lacs Rs./Lacs

Sales and other income 146937 142434

Profit before interest & depreciation 17390 17776

Interest 4109 4593

Depreciation & write offs 5850 4575

Profit before tax 7431 8608

Less : Provision for tax 1638 2438

Provision for deferred tax liability/(assets) 1202 438

Earlier years excess provision (151) of tax written back

Minimum alternate tax (MAT) (55) (290) credit entitlement

Profit after tax 4797 6022

Less:Share of profit transferred to minority 988 1151

Consolidated profit for the year 3809 4871

Add : Profit brought forward 5552 2644

Less: Prior period adjustment 11

Profit available for appropriations 9361 7504

Appropriations

Proposed dividend 1292 1292

Tax on dividend 220 210

Transfer to General Reserve 325 450

Balance carried forward 7524 5552

9361 7504

Dividend

Your Directors have recommended a dividend of 65% on Equity Share Capital of the Company for the Financial Year 2012-2013. The rate of dividend recommended this year is the same as declared of the previous financial year.

Subsidiary Companies

The Company has the following Subsidiaries:

a) JTEKT SONA Automotive India Limited (JSAI)

In JSAI, the Company is holding 49% of the Equity Capital but it has the right to nominate majority of Directors on the Board of JSAI. This Joint Venture Company has been established with JTEKT Corporation, Japan with a business objective of manufacturing Column Type Electric Power Steering (C-EPS) Systems. The Plants of JSAI are located in Bawal, Chennai and Bangalore. During the year ended 31st March, 2013, JSAI has achieved total income of Rs. 466.29 crores and earned net profit of Rs. 15.26 crores.

b) Sona Fuji Kiko Automotive Limited (SFAL)

In SFAL, the Company is holding 51% of the Equity Capital. This Joint Venture Company has been established with FUJI KIKO Co. Ltd., Japan with a business objective-of- —manufacturing Columns to be used in the manufacturing of C-EPS by JSAI. The Plant of SFAL is located in Bawal, Haryana. During the year ended 31st March, 2013, SFAL has achieved total income of Rs. 36.71 crores and earned net profit of Rs. 1.78 crores.

c) Sona Stampings Limited (SSL)

SSL was established as a Joint Venture Company with Arjan Auto Private Limited, India, with a business objective of Sheet Metal Processing, comprising of press work and welding within Automotive Component sector. During the year, the Company has acquired 30.08% of the Equity Capital from Arjan Auto Private Limited held by it in SSL and now SSL has become a wholly owned subsidiary of the Company. The Plant of SSL is located in Gurgaon. During the year ended 31st March, 2013, the Company has achieved total income of Rs. 11.20 crores and incurred loss of Rs. 2.52 crores. Keeping in view the benefits arising out of better business synergies, reduced cost and tax advantage etc., the Board of Directors of the Company has, in their meeting held on 15th May, 2013, approved the merger of SSL with the Company. The said scheme shall become effective when the Orders of Hon''ble High Courts of Delhi and Punjab & Haryana are filed with the Registrar of Companies.

Subsidiary Companies Accounts

In terms of general exemption granted by the Ministry of Corporate Affairs vide General Circular Number 2/2011 dated 8th February, 2011, copy of the balance sheets, statement of profit & loss, reports of the Board of Directors and Auditors of the Subsidiary Companies have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any member of the Company interested in obtaining the same. However, as per the requirement of the said Circular, the financial data of the subsidiaries have been disclosed under ''Summarised Statement of Financials of Subsidiary Companies'' forming part of the Annual Report. The Annual Accounts of the subsidiary companies will be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies.

Consolidation of Accounts

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-27 on Financial Reporting for Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report.

Corporate Governance

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges are complied in its letter and spirit.

A separate statement on Corporate Governance is produced as a part of the Annual Report along with the Auditors'' Certificate on its compliance.

As regards the Auditors'' observation in their report on Corporate Governance, it is to state that with the -restructuring of the Board in the Board Meeting held on 15th May, 2013, the Company is in total compliance with the requirement of Corporate Governance-under Clause 49 of the Listing Agreement.

Listing

The Securities of your Company are listed at National Stock Exchange and Bombay Stock Exchange and the Company has paid the Listing Fee due to them, on time.

Fixed Deposits

During the year the Company has not invited any deposits from the public.

Directors

Our colleague Dr. Rakesh Mohan, due to resignation, has ceased to be a Director of the Company, effective from 1st November, 2012.

Mr. Yoshio Tsuji, nominee of JTEKT, who was appointed as an additional director by the Board of Directors of the Company in their meeting held on 1st August, 2012, due to withdrawal of nomination by JTEKT, has ceased to be a director effective from 15th May, 2013.

Mr. K.M. Deshmukh has ceased to be Director of the Company effective from 30th April, 2013 on completion of his tenure as Dy. Managing Director.

Your Directors take this opportunity to place on record the appreciation of services rendered by Dr. Rakesh Mohan, Mr. Yoshio Tsuji and Mr. K.M. Deshmukh, during their association with the Company.

The Board of Directors of the Company in their meeting held on 15th May, 2013 approved the appointment of Mr. Kiyozumi Kamiki, nominee of JTEKT, as Dy. Managing Director of the Company effective from 15th May, 2013.

The requisite resolution pertaining to the appointment of Mr. Kiyozumi Kamiki as detailed at Item No. 7 of the Notice and relevant Explanatory Statement is commended for the Members'' approval.

Pursuant to Article 122 of the Articles of Association of the Company Mr. Kazuhiko Ayabe, Mr. B.L. Passi and Mr. J.M. Kapur will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re- appointment.

Audit Committee

Pursuant to the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement with Stock Exchanges, the Audit Committee of Directors of the Company consists of the following members:

1) Mr. Ravi Bhoothalingam, Chairman

2) Mr. P.K. Chadha, Member

3) Mr. Sunjay Kapur, Member

4) Lt. Gen. (Retd.) Shamsher Singh Mehta, Member

5) Ms. Ramni Nirula, Member

The Board of Directors of the Company in their meeting held on 1st August, 2012 reconstituted the Audit Committee of Directors by including Mr. Yoshio Tsuji as one of the members but due to withdrawal of his nomination from the directorship of the Company, Mr. Tsuji ceased to be a member of the Audit Committee effective from 15th May, 2013.-

Directors'' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm having:

i) followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanation relating to material departures;

ii) selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period;

iii) 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 your Company and for preventing and detecting fraud and other irregularities; and

iv) prepared the Annual Accounts on a going concern basis.

Auditors

M/s. S.P. Puri & Co., Chartered Accountants, hold office as Auditors until the conclusion of the forthcoming Annual General Meeting and have indicated their willingness to be re-appointed as Auditors. The requisite certificate under Section 224(1B) of the Companies Act, 1956, has been received from them. The notes to accounts referred to in the Auditors'' Report are self-explanatory.

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

A statement containing the necessary information as required under the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended March 31, 2013 is given as Annexure - ''A'' to this report.

Employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees are given in Annexure - ''B'' forming part of this report.

Acknowledgements

Your Directors acknowledge with gratitude the co-operation and support extended by SONA''s customers namely Maruti Suzuki India Limited, Hyundai Motors (India) Ltd., Toyota Kirloskar, Tata Motors Ltd., Mahindra & Mahindra, Hindustan Motors Ltd., JTEKT Corporation, Japan, Mando Corporation, Korea and Fuji Autotech Europe S.A.S, the Financial Institutions, Banks, various agencies of the Government, SONA''s collaborators - JTEKT Corporation, Japan and Fuji Autotech AB, Sweden.

Your Directors also wish to place on record their sincere appreciation of the services rendered by all employees of the Company and are thankful to the Shareholders for their continued patronage.

For and on behalf of the Board

Place:-Gurgaon Dr. Surinder Kapur

Dated: 15th May, 2013 Chairman

 
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