Home  »  Company  »  Sundaram Clayton  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Sundaram Clayton Ltd.

Mar 31, 2016

The directors have pleasure in presenting the fifty fourth annual report and the audited financial statements for the year ended 31st March 2016.

1. FINANCIAL HIGHLIGHTS

(Rs. in Cr)

Details Year ended Year ended 31.03.2016 31.03.2015

Sales and other income 1517.17 1,401.11

Profit before finance cost and depreciation 235.78 178.05

Less: Finance Cost 32.83 36.88

Depreciation 54.95 59.82

Profit after finance cost and depreciation 148.00 81.35

Add : Exceptional Item (Income) 6.03 3.06

Profit before tax 154.03 84.41

Less: Provision for :

Income tax 12.00 9.50

Tax relating to earlier years (1.57) -

Deferred tax 4.00 3.75

Profit after tax 139.60 71.16

Surplus brought forward from previous year 103.23 77.63

Total 242.83 148.79

Appropriations:

First interim dividend paid 42.49 18.21

Second interim dividend paid 40.46 8.09

Third interim dividend payable - 12.14

Dividend tax paid 0.06 -

Transfer to general reserve - 7.12

Balance carried to Balance Sheet 159.82 103.23

Total 242.83 148.79

2. DIVIDEND

The board of directors of the Company at its meeting held on 9th February 2016, declared a first interim dividend of Rs.21/- per share (420%) for the year 2015-16, absorbing a sum of Rs.42.55 Cr. including dividend distribution tax. The same was paid to the shareholders on 20th February 2016.

The board at its meeting held on 22nd March 2016, declared a second interim dividend of Rs.20/- per share (400%) for the year 2015-2016, absorbing a sum of Rs.40.46 Cr. The same was paid to the shareholders on 28th March 2016.

Hence, the total amount of both dividends paid for the year ended 31st March 2016 will aggregate to Rs. 41/- per share (820%) absorbing a sum of Rs.83.01 Cr on 2,02,32,085 equity shares of Rs.5/- each.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A) of the Income Tax Act, 1961 against the dividend distribution tax paid by one of its subsidiary company on its dividend declared to the extent available.

The board does not recommend any further dividend for the year under consideration.

3. PERFORMANCE

During the year 2015-16, the domestic macro-economic conditions largely remained consistent with that of the previous year. The Gross Domestic Product (GDP) registered a growth of 7.4% (2014-15: 7.3%). The Consumer Price Index (CPI) has been subdued at 4.9%.

Global economic environment continued to be weak and uncertain during 2015-16. In the US, the sluggish economy continued and consumer sales activity remained relatively tepid. The GDP in the US market registered a growth of 2.4% (2014:2.4%). The GDP in EU registered a growth of 1.5% (2014: 0.9%).

The following table highlights the performance of the Company during 2015-16:

Particulars FY FY Variance 2015-16 2014-15 (in %)

Sales (Tonnage) 45,675 44,065 3.6

Sale of goods (Rs. in Cr) 1,343.4 1,283.8 4.6

Domestic sales (Rs. in Cr) 796.5 752.9 5.8

Export sales (Rs. in Cr) 546.9 530.9 3.0

Profit before Tax (Rs. in Cr) 154.0 84.4 82.5

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

I. Industry Structure and Development:

Domestic

The segment wise performance in the Indian automotive industry is given in the following table.

FY FY Variance Category 2015-16 2014-15 (in %)

Two Wheelers 1,89,37,104 1,84,33,027 2.7

Passenger Vehicles 34,43,567 32,22,577 6.9

Commercial Vehicles 7,87,393 7,01,887 12.2

(Source: SIAM)

The Indian auto industry (domestic sales and exports) posted an overall growth of 3.5% (Source: SIAM). The industry''s performance was muted during FY15-16 with motorcycle, tractor, light commercial vehicle and construction equipment segments remaining weak.

Exports

The following table highlights the North American and European truck registration figures in vehicle units:

(in Nos)

FY FY Variance Market Category 2015-16 2014-15 (in %)

North America Class 8 Trucks 289,109 286,094 1.1

North America Class 4-7 Trucks 234,736 216,785 8.3

Europe Medium & Heavy trucks 270,099 226,117 19.5

(Source: FTR & ACEA)

Class 8 trucks reached the end of the cyclical upturn by mid of 2015. The sales and factory shipments declined by over 12% in the second half of the financial year.

II. Business Outlook and Overview

With no visible shift in the economic momentum, GDP growth rate in India for FY 2016-17 is likely to hover around 7.3% to 7.5%. A number of factors like low inflation, comfortable current account deficit (CAD), robust services growth, mild recovery in agriculture and supportive fiscal policy may help sustain growth rate at current levels.

In FY 2016-17, implementation of the seventh pay commission and government outlays under various schemes such as MUDRA, OROP are expected to support urban / semi-urban segments like passenger vehicle and two-wheeler. Rural demand will be contingent on healthy monsoon.

Given the economic outlook, the automobiles and auto-component sectors are expected to grow at similar levels in FY 2016-17.

Over the medium to long term, growth in the auto component industry is likely to be higher than the underlying automotive industry growth given the increasing localization by OEMs, higher component content per vehicle. Auto component export is another key growth driver. The "Make in India" pitch may further boost the growth of the component industry.

Globally, IMF continues to lower the GDP growth forecast. For 2016, the forecast has been reduced from 3.6% to 3.4%. Growth in advanced economies is expected to remain at 2.1%.

In the US, consumer spending and employment growth has been healthy, keeping the economy in the positive range. Instability in the financial markets may result in growth slipping to near recession conditions. Current data indicates that the US economy is continuing on its long-term, near 2% GDP growth rate.

The US truck market (Class 8) volumes are expected to significantly decline by over 20-25% in 2016. The market is expected to downshift to a lower, but more sustainable level.

The EU truck markets are expected to continue recovering in 2016 supported by gradually improving economic outlook. Lower fuel prices, credit availability and deferred replacement demand are all positive factors that are expected to support growth in 2016.

III. Opportunities & Threats

The Company supplies aluminum castings in machined condition for commercial vehicles, passenger cars and two wheeler segments of the automotive industry.

The revenue of the Company is derived from Medium & Heavy Commercial Vehicles (MHCV) (50%), followed by car industry (26%) and two wheeler industry (24%).

In the medium to long term, the projected growth of domestic auto industry, and ambitious export plans of the Indian OEMs are likely to benefit the Company.

In view of stringent emission norms and fuel economy regulations, the thrust towards light-weighting is bound to increase leading to higher content of aluminum in all vehicle types. The Company is well placed to leverage these emerging opportunities. This will provide for increased growth opportunities, since the company is already a preferred source for aluminum castings to major OEM''s in India and abroad.

India is emerging as one of the major manufacturing hubs, thanks to availability of well-educated engineers, skilled workforce and good supply base.

Several Indian die casting companies and OEMs are either setting up new capacities or expanding existing capacities resulting in increased competition.

Intense competition makes it extremely difficult to seek price increases to compensate the effects of inflation bringing the margins under severe pressure. However, the Company''s supply contracts provide for periodic price adjustments indexed to the international prices of aluminum and this should offer some protection against volatility of commodity prices.

IV. Risks and concerns Economy

There are possible risks on the horizon, both external and domestic. Spill-overs from weak global growth and potential global financial market volatility could be disruptive.

The international markets remain fragile. There are rising uncertainties concerning China''s economy and its impact on both emerging and developed economies. After 2016, recession risks start to rise considerably.

Overall, globally downside risks continue to persist, reflecting global headwinds and geo-political uncertainty.

In India, delayed monsoon could pose challenges for rural growth. Uncertainties surrounding inflation path still remains (emanating from likely upturn in commodity prices, especially oil).

Industry specific

The Indian commercial vehicle industry has strong correlation with the agricultural growth, infrastructure development, the mining industry and is cyclical.

Competition has increased in the Indian market due to entry of new players and expansion plans of existing ones. The Company is aware of the increasing competition and is taking customer focused measures to remain competitive in the market place.

As no major economic recovery in China is expected, international prices of aluminum is expected to remain at levels witnessed in FY 2015-16.

Forex

With significant exports, import of raw materials and capital goods and foreign currency liabilities, the Company is always exposed to currency fluctuations. The Company has a well-defined forex hedging policy to mitigate the risks.

Contractual

The stipulation and requirements of the automobile industry demands high quality products. Robust quality management systems meeting international standards like TS 16949 are in place to ensure excellent product quality. However, appropriate recall and product liability insurance in line with standard industry practice have been taken.

Just-in-time delivery is another important contractual obligation. Robust quality and project management systems are in place to avoid delay in deliveries due to quality issues or project implementation.

Capacity utilization

The Company adds capacity to meet the projected demand of customers. The Company closely monitors the progress of customer projects / volumes and appropriately deploys the assets to protect from both underutilization and capacity shortages to meet the demand.

Risk Management Policy

The Board has established a Risk Management Policy which formalizes the Company''s approach to overview and manage material business risks. The policy is implemented through a top down and bottom up approach identifying, assessing, monitoring and managing key risks across the Company''s business units.

Risks and effectiveness of their management are internally reviewed and reported regularly to the Board. The Management has reported to the Board that the Company''s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The board is satisfied that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. The Audit Committee also reviews reports by members of the management team and recommends suitable action. Risk Mitigation Policy has been approved by the board.

V. Internal control systems and their adequacy

The Company has a proper and adequate internal control system to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized and recorded. Information provided to management is reliable and timely. Company ensures adherence to all statutes.

Internal Financial Controls

The Company has an established Internal Financial Control framework including internal controls over financial reporting, operating controls and anti-fraud framework. The framework is reviewed regularly by the management and tested by internal audit team and presented to the audit committee. Based on periodical testing, the framework is strengthened, from time to time, to ensure adequacy and effectiveness of Internal Financial Controls.

VI. Operations Review

A. Manufacturing

The Company has been using Total Quality Management (TQM) as the foundation of its management. The Company implemented the best practices like Total Productivity Management (TPM) and Lean Manufacturing in its manufacturing facilities. It also has in place best-in- class practices for safety, pollution control, work environment, water and energy conservation.

Continuous improvement projects are implemented to improve the product quality and productivity in all the manufacturing locations. The Company''s journey of achieving manufacturing excellence was recognized and rewarded by the following customers during FY 2015-16.

- Hyundai - Award for disaster management

- Cummins - Best supplier - Six Sigma category

- Daimler - Special award for globally competitive supplies

- DAF-PACCAR - Certificate of honor for excellent PPM

B. Quality

Achieving customer delight by consistently providing products of excellent quality is the prime motto of the Company. This is achieved through state-of-art technology, training, effective quality system, continuous improvement and total employee involvement.

Poka-yokes, process audits, use of statistical tools for process optimization and online process controls also contribute towards improving and achieving consistency in product quality. The quality system is certified for ISO/ TS 16949 requirements.

TQM is a way of life in the Company. 100% employee involvement has been successfully achieved for many years.

Employees have completed 733 projects by applying statistical tools through Quality Control Circles (QCC) in 2015-16. The average number of suggestions implemented per employee was 42.

C. Cost Management

Cost management is a continuous journey and the Company manages the same through deployment of costs across all departments. A cross functional team is working on projects focussed on Value Added / Value Engineering (VA/VE) and operational efficiency. TPM and lean initiatives are deployed Company-wide to achieve reduction in manufacturing cost.

D. Information Technology

The Company uses ERP system that integrates all business processes across the Company. Suppliers and customers are also integrated into the system for better planning and execution. During the year, several dashboards were added to improve the productivity, quality and reduce the cost of operations. Projects were also implemented to further enhance the Information Security.

VII. Human Resource Development

The Company considers employees as vital and most valuable assets. Human Resource Development (HRD) is aligned to business needs to enhance business performance and results. HRD is practised through an overall HRD framework with its constituents as resourcing, employee engagement, performance & compensation management, competency based development, career & succession planning and organization development. Each of these constituent has a structured approach and process to deliver.

As a part of the long term strategies of the Company, collaborative education program has been initiated with three reputed institutes to develop role-ready engineers with Company-specific knowledge at the entry level.

Career development workshop is conducted to identify high potential employees. Such employees are groomed for taking up higher responsibilities. A reward and recognition system is in place to motivate and also provide fast track growth for the high potential employees.

Our engineers and executives are sponsored for advanced study offered by both Indian and foreign institutions. Customized technical and leadership competency improvement programs are developed and delivered through reputed institutions.

The Company continuously measures and reports employee engagement every year and identifies improvement areas to work on.

An excellent industrial relations environment continues to prevail at all the manufacturing units of the Company.

As on 31st March 2016, the Company had around 2,255 employees on its rolls.

VIII. Environment & Safety

The Company is fully committed to the ultimate goal of employee safety. Safety management is integrated with the overall Environment, Health and Safety (EHS).

The Company has been certified under Integrated Management System (IMS) combining ISO 14001 and OHSAS 18001 systems and procedures.

Cautionary statement

Statements in the management discussion and analysis report describing the Company''s objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company''s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas market in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.

5. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the the Act 2013, with respect to Directors'' Responsibility Statement, it is hereby stated -

i. that in the preparation of annual accounts for the financial year ended 31st March 2016, the applicable Accounting Standards had been followed and that there were no material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the directors had prepared the accounts for the financial year ended 31st March 2016 on a "going concern basis";

v. that the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR activities have already been textured into the Company''s value system through Srinivasan Services Trust (SST), the CSR arm of the Company, established by the group companies in 1996 with the vision of building self-reliant rural community.

Over 20 years of service, SST has played a pivotal role in changing lives of people in rural India by creating self-reliant communities that are models of sustainable development.

The Company is eligible to spend on their ongoing projects / programs, falling within the CSR activities specified under the Act, 2013, as mandated by the Ministry of Corporate Affairs for carrying out the CSR activities.

The Committee formulated and recommended a Corporate Social Responsibility Policy in terms of Section 135 of the Act, 2013, along with a list of projects / programmes to be undertaken for CSR spending in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Based on the recommendation of the CSR Committee, the board has approved the projects / programs carried out as CSR activities by SST, having a track record of more than the prescribed years in undertaking similar programmes / projects.

During the year 2015-16, the Company had spent Rs.47 Lakhs, constituting more than 2% of average net profits, for the immediate past three financial years, towards CSR activities through SST.

Presently, SST is working in 3,449 villages spread across Tamil Nadu, Karnataka, Maharashtra, Himachal Pradesh and Andhra Pradesh covering about 20,90,000 population and 4,63,500 families. Its major focus areas are Economic development, health care, quality education, environment and infrastructure.

Of the 3,449 villages, 2,654 villages (16,72,620 population and 3,67,170 families) have been funded by the Company during the year.

Achievements in 2,654 villages are:

Economic development:

- 2,27,667 families living in these villages have a monthly income of above Rs.15,000/-. They have financial security.

- 1880 farmers groups have been formed with 31,323 members.

- Improved agriculture practices enabled 1,51,862 farmers owning 1,64,124 hectares to increase the yields than the state average by 15%.

- 1,36,050 families earn more than Rs 3,500/- per month through livestock.

Women empowerment:

- Formed 7,064 Self Help Groups. These groups have 1,06,720 women as members.

- Of the 1,06,720 members, 99,170 members are in income generation activities. They earn a minimum income of Rs. 2,500/- per month.

Health care:

- 60,512 children in the age group below 5 are not malnourished.

- 2,75,970 women are freed from anemia.

- 2,32,436 households made access to toilet facilities.

- The morbidity percentage reduced from 9% to 5%.

- Enrolment in anganwadis increased from 86% to 100% and attendance is 99%.

- 1,073 anganwadis have met all the Integrated Child Development Services Scheme (ICDS) standards.

- 88% involvement of mother volunteers in the functioning of anganwadis. They volunteer their time to ensure proper functioning.

Quality education:

- 100% enrolment of children in schools. There are no drop outs in the schools.

- Number of percentage of slow learners reduced in schools from 27% to 14%.

- Out of 1,204 schools, 807 schools are now model schools.

- 73,345 illiterate women out of 1,18,872 have been made literates.

Environment and Infrastructure:

- 2,14,120 households dispose solid waste through individual and common compost pits. 82 tons of vermi compost generated per month from wastes.

- Sewage water from 2,18,234 households disposed through soak pits, kitchen gardens and drain.

- Safe drinking water is available to 2,137 villages.

Community takes care of their development needs. 5,302 social leaders are active in this effort.

As required under Section 135 of the Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on CSR containing the particulars of the projects / programmes approved and recommended by CSR Committee and approved by the board for the financial year 2015-16 are given by way of Annexure IV attached to this Report.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATE COMPANIES

The following are the subsidiaries and associates of the Company:

Name of the Company Status

TVS Motor Company Limited Subsidiaries of

Sundaram-Clayton (USA) Limited Sundaram-Clayton Limited

Sundaram Auto Components Limited

TVS Housing Limited

TVS Motor Company (Europe) B.V.

TVS Motor (Singapore) Pte. Limited Subsidiaries of

PT. TVS Motor Company Indonesia TVS Motor Company Limited

Sundaram Business Development

Consulting (Shanghai) Company Limited

Sundaram Holding USA Inc. Subsidiary of Sundaram Auto Components Limited

TVS Training and Services Limited

Sundram Non-Conventional Energy Associates of Systems Limited Sundaram-Clayton Limited

Emerald Haven Realty Limited

SUBSIDIARIES

TVS Motor Company Limited (TVSM)

TVS Motor Company Limited is engaged in the business of manufacture of two and three wheelers. During the year 2015-16, TVSM achieved a turnover of Rs. 11,295 Cr and earned a profit after tax of Rs. 432 Cr during the year 2015-16.

TVSM declared a first interim dividend of Re.1/- per share (100%) for the year 2015-16 absorbing a sum of Rs. 55.65 Cr including dividend distribution tax. It also declared a second interim dividend of Rs. 1.50 per share (150%) for the year 2015-16 absorbing a sum of Rs. 85.07 Cr including dividend distribution tax.

Hence, the total amount of both dividends for the year ended 31st March 2016 aggregated to Rs.2.50 per share (250%) on 47,50,87,114 equity shares of Re.1/- each.

Sundaram-Clayton (USA) Limited

Sundaram-Clayton (USA) Limited, a wholly owned subsidiary of the Company is engaged in the business of providing Professional Employer Organisation ("PEO") services to the employees of the Company. The Company earned revenue of USD 10,137 and net income after adjustment of expenses amounted to USD 319 for the year ended 31st March 2016.

Sundaram Auto Components Limited (SACL)

During the year, SACL, a wholly owned subsidiary of TVSM, achieved a turnover of Rs.2737 Cr including Rs.491 Cr in Plastics Component business. SACL earned a profit after tax of Rs.28.64 Cr during the year 2015-16.

SACL increased its customer base by addition of new customers for manufacture of cluster components and heating, ventilating and air-conditioning parts.

SACL productionized 314 new parts for various customers.

SACL received the following awards:

- "Outstanding Supplier for achieving Delivery Target" from TOYODA GOSEI

- "Q1" certification from FORD India

- "SQ mark" certification from Hyundai Motors India Ltd.

- "Best Supplier Kaizen award" from India Japan Lighting Pvt. Ltd.

SACL on 24th December, 2015, declared a first interim dividend of Rs.4.00 per share (40%) for the year 2015-16 absorbing a sum of Rs.5.56 Cr including dividend distribution tax.

SACL again on 7th March, 2016 declared a second interim dividend of Rs.3.00 per share (30%) for the year 2015-16 absorbing a sum of Rs.4.18 Cr including dividend distribution tax.

Hence, the total amount of both dividends paid for the year ended 31st March, 2016 aggregates to Rs.7.00 per share (70%) thereby absorbing a sum of Rs.9.74 Cr, including dividend distribution tax.

TVS Housing Limited (TVSH) - Subsidiary / Emerald Haven Realty Limited (EHRL) - Associate

EHRL is the developer of the Nedungundram, Chennai project of TVSH. Phase 1 was developed as apartments and Phase 2 was launched as villas and row houses. As of 31st March 2016, all the 448 apartments have been sold and customers have taken possession of the apartment. Despite the tough real estate market condition in Chennai, the response for the villa and row house have been quite good. As the phase 2 is nearing completion, the Company has already sold about 90% of the units. The Company is confident that the remaining units would be sold during 2016-17.

PT. TVS Motor Company Indonesia (PT. TVSM)

During 2015-16, motorcycle industry in Indonesia declined by 12% (from 7.6 million units in 2014-15 to 6.6 million units in 2015-16). The decline was mainly due to lower economic growth and weak consumer sentiments due to subdued commodity prices and further tightening of credit. While the bebek segment declined by 33%, sports motorcycle segment went down by 23%. The scooter category marginally declined by 5%. Within 2 wheelers, the scooter segment continued to dominate with a category share of 75%.

During the year, PT. TVSM launched the 110 cc Dazz scooter with Fuel Injection System in Indonesian market. It also launched the new Apache 200 cc sports motorcycle. PT. TVSM continued its focus on exports to ASEAN and African countries. PT. TVSM commenced its exports to Latin American market by entering Colombia.

The decline in two wheeler industry resulted in lower domestic sales during 2015-16. PT. TVSM sold total of 17,100 vehicles as against 23,300 vehicles sold in the previous year. However, the focus on ASEAN and African markets helped PT. TVSM to export 15,000 no''s, registering an increase of 4% over the previous year. The EBITDA loss for the year of 6.8 Mn USD is marginally lower than EBITDA loss of 7.7 Mn USD OF 2014-15. Focus during 2016-17 will be to build on the portfolio and substantially reduce the EBITDA loss.

TVS Motor Company (Europe) B.V & TVS Motor (Singapore) Pte. Limited

TVSM had earlier incorporated both these entities with a view to serve as special purpose vehicles for making and protecting the investments made in overseas operations of PT. TVSM.

Sundaram Business Development Consulting (Shanghai) Company Limited (SBDC)

SBDC was initially established to explore options of sourcing auto components and local assembly of two wheelers etc., in China. After a complete review, board felt that it may not be viable to carry out manufacturing activities in China and therefore steps were taken for closure of operations of SBDC. All required formalities were completed in April 2016. Hence in the books a provision of Rs.1.07 Cr has been made for diminution in the value of investments.

Sundaram Holding USA Inc.,

The Company made an investment of USD 250 consisting of 250 shares with face value of USD 1 each in Sundaram Holding USA Inc., (SHUI) constituting 25% of its paid up share capital. SHUI was incorporated under the applicable provisions of laws of United States of America for carrying out the business of the Company in USA.

SACL, another subsidiary of the Company has also invested USD 750 consisting of 750 shares with face value of USD 1 each in SHUI constituting 75% of its paid up share capital.

Hence, SHUI became the subsidiary of SACL effective 9th September 2015, and thereby the subsidiary of the Company by virtue of the provisions of Section 2(87) of the Act, 2013.

ASSOCIATES

TVS Training and Services Limited (TVS TSL)

TVS TSL is engaged in the business of establishing and providing vocational training services to various industries and is participating in the National Skill Development Projects. During the year the Company earned an income of Rs. 12.65 Cr and profit after tax for the year ended 31st March 2016 was Rs.0.36 Cr.

Sundram Non-Conventional Energy Systems Limited (SNCES)

SNCES is engaged in the business of generation of power. During the year the Company earned revenue of Rs. 2.71 Cr and profit after tax was Rs.1.41 Cr.

Financial position of all subsidiaries and associate companies are provided as part of consolidated financial statements in Form AOC-1 in the manner required under Section 129 read with the Companies (Accounts) Rules, 2014 of the Act, 2013.

8. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of SEBI (LODR) Regulations, 2015 along with a separate statement containing the salient features of the financial performance of subsidiaries / associates, in the prescribed form. The audited consolidated financial statements together with auditor''s report forms part of the Annual Report.

The audited financial statements in respect of each of its subsidiary companies will be made available to the shareholders, on receipt of a request from any shareholder of the Company and it has also been placed on the website of the Company. This will also be available for inspection by the shareholders at the registered office during the business hours.

The consolidated profit after tax of the Company and its subsidiaries & associates amounted to Rs. 408.24 Cr for the financial year 2015-16 as compared to Rs. 345.19 Cr in the previous year.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL

Independent Directors (IDs)

At the annual general meeting held on 21st August 2014, M/s. Vice Admiral P J Jacob (Retd.), V Subramanian, S Santhanakrishnan, R Vijayaraghavan and Kamlesh Gandhi, were appointed as IDs for the first term of five consecutive years from the conclusion of the fifty second AGM , not liable to retire by rotation, and to receive remuneration by way of fees, reimbursement of expenses for participation in the meetings of the board and / or committees and profit related commission in terms of applicable provisions of the Act 2013, within the overall limit, as determined by the board from time to time.

On appointment, each ID has acknowledged the terms of appointment as set out in their letters of appointment. The appointment letter covers, interalia, the terms of appointment, duties, remuneration and expenses, rights of access to information, other directorships, dealing in Company''s shares, disclosure of Director''s interests, insurance and indemnity. The IDs are provided with copies of the Company''s policies and charters of various committees of the board.

Mr Suresh Kumar Sharma, an independent director of the Company, ceased to be a director of the Company with effect from 23rd March 2016, due to his sad and untimely demise. The board placed on record its appreciation for the outstanding contribution made by Mr Suresh Kumar Sharma during his tenure as director of the Company.

As required under the provisions of Companies Act, 2013, the board proposed the appointment of Mr R Gopalan as Non-executive Independent director for approval of shareholders through process of postal ballot.

In accordance with Section 149(7) of the Act, 2013, all IDs have declared that they met the criteria of independence as provided under Section 149(6) of the Act, 2013.

The detailed terms of appointment of IDs is disclosed on the Company''s website in the following link http://www.sundaram-clayton.com/ Web%20files/Terms%20of%20IDs.pdf.

Separate meeting of Independent Directors (IDs)

The IDs were fully kept informed of the Company''s activities in all its spheres. During the year under review, a separate meeting of IDs was held on 14th March, 2016 and the IDs reviewed the performance of:

(i) non-IDs viz., M/s Venu Srinivasan, Chairman and Managing Director, Dr. Lakshmi Venu and Sudarshan Venu, Joint Managing Directors, K Mahesh, T K Balaji and Gopal Srinivasan, Directors; and

(ii) the board as a whole.

They also reviewed the performance of Chairman after taking into account the views of Executive and Non-Executive Directors.

They also assessed the quality, quantity and timeliness of flow of information between the Company''s Management and the Board that are necessary for the Board to effectively and reasonably perform their duties. All the IDs were present at the meeting.

Woman director

In terms of Section 149 of the Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 17 of SEBI (LODR) Regulations, 2015, the Company is required to have a woman director on its board.

Dr Lakshmi Venu, joint managing director, is already on the board of the Company as a director from 22nd March, 2010 and hence, the Company fulfills the requirement of the Act, 2013 and SEBI (LODR) Regulations, 2015 regarding the appointment of woman director on the board of the Company.

Non-executive and non-independent directors (NE-NIDs)

In terms of the provisions of sub-section (6) read with explanation to Section 152 of the Act 2013, two thirds of the total number of directors i.e., excluding IDs, are liable to retire by rotation and out of which, one third are liable to retire by rotation at every AGM.

Mr Gopal Srinivasan and Mr T K Balaji, directors are liable to retire by rotation, at the AGM, and being eligible, offer themselves for re-appointment.

The directors, therefore, recommend their re-appointment as directors of the Company.

Key Managerial Personnel (KMP)

In terms of Section 2(51) and Section 203 of the Act, 2013, Mr Venu Srinivasan, Chairman and Managing Director, Dr. Lakshmi Venu, Joint Managing Director, Mr C N Prasad, President & Chief Executive Officer, Mr V N Venkatanathan, Chief Financial Officer and Mr R Raja Prakash, Company Secretary are KMP of the Company.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition of the board, to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of all shareholders and the Company.

In accordance with the requirements under Section 178 of the Act, 2013, Nomination and Remuneration Policy was formulated to govern the terms of nomination / appointment and remuneration of (i) Directors, (ii) KMP and (iii) Senior Management Personnel (SMP) of the Company. The same was approved by the board at its meeting held on 24th September 2014. There is no change in the policy during the year under review.

The NRC also reviews succession planning of both SMP and board. The Company''s approach in recent years is to have a greater component of performance linked remuneration for SMP.

The process of appointing a director / KMP / SMP is, that when a vacancy arises, or is expected, the NRC will identify, ascertain the integrity, qualification, appropriate expertise and experience, having regard to the skills that the candidate will bring to the Board / Company, and the balance of skills added to that of which the existing members hold.

The NRC will review the profile of persons and the most suitable person is either recommended for appointment by the board or is recommended to shareholders for their election. The NRC has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position.

The NRC will ensure that any person(s) who is / are appointed or continues in the employment of the Company as its executive chairman, managing director, whole-time director shall comply with the conditions as laid out under Part I of Schedule V to the Act 2013. The NRC will ensure that any appointment of a person as an independent Director of the Company will be made in accordance with the provisions of Section 149 read with Schedule IV to the Act, 2013 alongwith any other applicable provisions and SEBI (LODR) Regulations, 2015.

Criteria for performance evaluation, disclosures on the remuneration of directors, criteria of making payments to non-executive directors have been disclosed as part of Corporate Governance Report attached herewith.

Evaluation of the board, committees and directors

In terms of Section 134 of the Act 2013 and the Corporate Governance requirements as prescribed under SEBI (LODR) Regulations, 2015, the board reviewed and evaluated its own performance from the perspectives of Company''s performance, strategy and implementation, risk management and corporate ethics, based on the evaluation criteria laid down by the NRC.

Board

The board discussed and assessed its own composition, size, mix of skills and experience, its meeting sequence, effectiveness of discussion, decision making, follow up action, quality of information and the performance and reporting by the Committees viz., Audit Committee, NRC, Stakeholders Relationship Committee (SRC) and Corporate Social Responsibility Committee (CSR).

The board upon evaluation concluded that it is well balanced in terms of diversity of experience encompassing all the activities of the Company. The Company endeavours to have a diverse board representing a range of experience at policy-making levels in business and technology, and in areas that are relevant to the Company''s global activities.

The board also noted that corporate responsibility, ethics and compliance are taken seriously, and there is a good balance between the core values of the Company and the interests of stakeholders. The board satisfied with the Company''s performance in all fronts viz., new product development, operations, sales and marketing, finance management, international business, employee relations and compliance with statutory / regulatory requirements and finally concluded that the board operates effectively and is closely aligned to the culture of the business.

Directors

The performance of individual directors including all Independent Directors are assessed against a range of criteria such as contribution to the development of business strategy and performance of the Company, understanding the major risks affecting the Company, clear direction to the management and contribution to the board cohesion. The performance evaluation has been done by the entire board of directors, except the director concerned being evaluated.

The board noted that all directors have understood the opportunities and risks to the Company''s strategy and are supportive of the direction articulated by the management team towards consistent improvement.

Committees

The performance of each committee was evaluated by the board after seeking inputs from its members on the basis of the criteria such as matters assessed against terms of reference, time spent by the committees in considering matters, quality of information received, work of each committee, overall effectiveness and decision making and compliance with the corporate governance requirements and concluded that all the committees continued to function effectively, with full participation by all its members and the members of executive management of the Company.

The board reviewed each committee''s terms of reference to ensure that the Company''s existing practices remain appropriate. Recommendations from each committee are considered and approved by the board prior to implementation.

Number of board meetings held

The number of board meetings held during the financial year 2015-16 are provided as part of Corporate Governance Report prepared in terms of the SEBI (LODR) Regulations 2015.

10. AUDITORS

Statutory Auditors

The Company at its AGM held on 21st August 2014 appointed M/s Sundaram & Srinivasan, Chartered Accountants, Chennai, having Firm Registration No. 004207S allotted by The Institute of Chartered Accountants of India, as statutory auditors of the Company to hold office, for the transitional period of three consecutive years from the conclusion of the said AGM, subject to ratification at every AGM, at such remuneration in addition to all applicable taxes, out of pocket expenses, travelling and other expenses as may be mutually agreed between the Board and the Auditors.

The Auditors'' Reports for the financial year 2015-16 does not contain any qualification, reservation or adverse remark and the same is attached with the annual report.

It is therefore proposed to re-appoint them as statutory auditors for the last year in the transitional period of three consecutive years, from the conclusion of this AGM, subject to ratification by the members at the AGM.

The Company has obtained necessary certificate under Section 141 of the Act 2013 conveying their eligibility for being statutory auditors of the Company for the year 2016-17.

Cost Auditor

As per Section 148 of the Act, 2013, read with the Companies (Cost Records and Audit) Rules 2014, as amended, the cost audit records maintained by the Company in respect of its engine parts, manufactured by the Company specified under Central Excise Tariff Act heading in Table B to Rule 3 of the above rules, are required to be audited by a Cost Auditor.

In terms of the Companies (Cost Records and Audit) Amendment Rules, 2014, the board, subject to the approval of the Central Government, has re-appointed Mr A N Raman, Cost Accountant holding Certificate of practice No. 5359 allotted by The Institute of Cost Accountants of India, as a Cost Auditor for conducting Cost Audit for the financial year 2016-17.

The Company has also received necessary certificate under Section 141 of the Act 2013 from him conveying his eligibility. A sum of Rs 3.00 lakhs has been fixed by the board as remuneration in addition to reimbursement of all applicable taxes, travelling and out-of-pocket expenses payable to him for the financial year 2016 -17 and is also required to be ratified by the members at the ensuing general meeting as per Section 148(3) of the Act 2013.

Secretarial Auditor

As per Section 204 of the Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company.

The Secretarial Audit Report for the year 2015-16, given by Ms B Chandra, Practising Company Secretary, Chennai for auditing the secretarial and related records is attached to this report. The Secretarial Audit Report does not contain any qualification, reservation or other remarks.

Ms B Chandra, Practising Company Secretary, Chennai, was re- appointed as Secretarial Auditors for carrying out the secretarial audit for the financial year 2016-17.

11. CORPORATE GOVERNANCE

The Company has been practicing the principles of good governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI (LODR) Regulations, 2015, forms part of this Annual Report.

The chairman and managing director and the chief financial officer of the Company have certified to the board on financial statements and other matters in accordance with Regulation 17 (8) of the SEBI (LODR) Regulations 2015 pertaining to CEO/CFO certification for the financial year ended 31st March 2016.

12. POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism in accordance with the provisions of Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations 2015, which provides a formal mechanism for all directors, employees and other stakeholders of the Company to report to the management, their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Company''s Code of conduct or ethics policy.

The policy also provides a direct access to the Chairperson of the Audit Committee to make protective disclosures to the management about grievances or violation of the Company''s Code of Conduct.

The policy is disclosed on the Company''s website in the following link http://www.sundaram-clayton.com/Web%20files/Investors/Whistle% 20Blower%20Policy.pdf.

13. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section 76 of the Act, 2013, for the year ended 31st March 2016.

14. STATUTORY STATEMENTS

Information on conservation of energy, technology absorption, foreign exchange, etc.,

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report, in terms of the requirements of Section 134(3)(m) of the Act, 2013, read with the Companies (Accounts) Rules 2014.

Material changes and commitments

There have been 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 the financial statements relate and the date of the report.

Significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company

There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of the Company and its future operations.

Annual Return

Extract of Annual Return in the prescribed form is given as Annexure II to this report, in terms of the requirement of Section 134(3)(a) of Act, 2013, read with the Companies (Accounts) Rules, 2014.

Employee''s remuneration

Details of employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure III. In terms of first proviso to Section 136(1) of the Act, 2013, the Annual Report, excluding the aforesaid annexure is being sent to the shareholders of the Company. The annexure is available for inspection at the Registered Office of the Company during business hours and any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Comparative analysis of remuneration paid

A comparative analysis of remuneration paid to Directors and employees with the Company''s performance is given as Annexure V to this report.

Details of related party transactions

There were no material related party transactions under Section 188 of the Act 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Details of loans / guarantees / investments made

During the year under review, the Company had not granted any loans or guarantees covered under Section 186 of the Act 2013.

Please refer note Number IX to Notes on accounts for the financial year 2015-16, for details of investments made by the Company

Other laws

During the year under review, the Company has not received any complaints of sexual harassment from any of the women employees of the Company in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

15. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the promoters of the Company, viz., T V Sundram Iyengar & Sons Private Limited, Southern Roadways Limited, Sundaram Industries Private Limited and Sundaram Finance Limited.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the board

Chennai VENU SRINIVASAN

12th May 2016 Chairman


Mar 31, 2015

Dear Members,

The directors have pleasure in presenting the fifty third annual report and the audited accounts for the year ended 31st March 2015.

1. FINANCIAL HIGHLIGHTS

(Rs. in Cr)

Details Year ended Year ended 31.03.2015 31.03.2014

Sales and other income 1,401.11 1,232.54

Profit before finance cost and depreciation 178.05 143.82

Less: Finance Cost 36.88 35.65

Depreciation 59.82 53.21

Profit after finance cost and depreciation 81.35 54.96

Add : Exceptional Item (Income) 3.06 5.83

Profit before tax 84.41 60.79

Less: Provision for :

Income tax 9.50 5.50

Deferred tax 3.75 1.63

Profit after tax 71.16 53.66

Surplus brought forward from

previous year 77.63 68.49

Total 148.79 122.15

Appropriations:

First interim dividend paid 18.21 18.21

Second interim dividend paid 8.09 7.59

Third interim dividend payable 12.14 13.15

Dividend tax paid - 0.20

Transfer to general reserve 7.12 5.37

Balance carried to Balance Sheet 103.23 77.63

Total 148.79 122.15

2. DIVIDEND

The board of directors (the board) at their meeting held on 4th February 2015, declared a first interim dividend of Rs.9.00 per share (180%) absorbing a sum of Rs.18.21 Cr for the year 2014-15 and the same was paid to the shareholders on 14th February 2015.

The board at its meeting held on 20th March 2015, declared a second interim dividend of Rs.4 per share (80%) absorbing a sum of Rs. 8.09 Cr for the year 2014-15 and the same was paid to the shareholders on 30th March 2015.

The board, at its meeting held on 8th May 2015, declared a third interim dividend of Rs. 6 per share (120%) for the year 2014-15 absorbing a sum of Rs 12.14 Cr. The same will be paid to the shareholders on or after 18th May 2015.

Hence, the total amount of dividend including the third interim dividend payable, for the year ended 31st March 2015 will aggregate to Rs.19 per share (380%) on 2,02,32,085 equity shares of Rs. 5/- each.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A) of the Income Tax Act, 1961 against the dividend distribution tax paid by one of its subsidiary companies on the dividend declared.

The board does not recommend any further dividend for the year under consideration.

3. PERFORMANCE

During the year 2014-15, Gross Domestic Product (GDP) registered a growth rate of 7.4% as against the 6.9% achieved in 2013-14 (Source: RBI). The Indian auto industry also has posted growth of 8.3% (Source: SIAM).

During 2014, GDP estimates in US increased to 2.4% as against 2.2% in 2013 (Source: World Bank) and Europe's GDP estimates at 0.8% in 2014 as against -0.4% in 2013 (Source: World Bank).

In this background, North American class 8 truck segment grew by 14% (Source: FTR), while, the sale of European medium and heavy trucks declined by 6% (Source: ACEA)

The following table highlights the performance of the Company during 2014-15:

Particulars 2014-15 2013-14 Variance (in %)

Sales (Tonnage) 44065 39505 12

Sale of goods (Rs. in Cr) 1257.6 1143.8 10

Domestic sales (Rs. in Cr) 726.7 573.9 27

Export sales (Rs. in Cr) 530.9 569.9 -7

Profit before Tax (Rs. in Cr) 84.4 60.8 39

5. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with 134(5) of the Act 2013, with respect to Directors' Responsibility Statement, it is hereby stated -

i. that in the preparation of annual accounts for the financial year ended 31st March 2015, the applicable Accounting Standards had been followed and that there were no material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the directors had prepared the accounts for the financial year ended 31st March 2015 on a "going concern basis."

v. that the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR activities have already been textured into the Company's value system through Srinivasan Services Trust (SST), established by the group companies in 1996 with the vision of building self-reliant rural community.

SST, the CSR arm of the Company, with the vision of building self-reliant rural communities, was established in 1996. Over 19 years of service, SST has played a pivotal role in changing lives of people in many villages in rural India by creating self-reliant communities that are models of sustainable development.

The Company is therefore eligible to spend on their ongoing projects / programs, falling within the CSR activities specified under the Act 2013, as mandated by the Ministry of Corporate Affairs (MCA) for carrying out the CSR activities and also projects undertaken by other non-profitable organizations having a track record of more than the prescribed years in undertaking similar projects and programmes.

The CSR Committee of directors of the Company formulated and recommended a Corporate Social Responsibility policy in terms of Section 135 of the Act 2013 along with a list of projects / programmes to be undertaken for CSR spending in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Based on the recommendation of the CSR Committee, the board has approved the projects / programs carried out as CSR activities by the following non-profitable organizations having a track record of more than the prescribed years in undertaking similar programmes / projects, for CSR spending not less than 2% of average net profits, made during the immediately preceding three financial years, for the current financial year 2014-2015.

Amount spent S. No. Name of the Trust (Rs. in Lakhs)

1. Sri Sathya Sai Lokaseva Trust 10.00

2. Sri Sathya Sai Central Trust 15.00

3. Andhra Pradesh Chief Minister's Relief Fund 11.00

Total 36.00

As required under Section 135 of the Act 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on CSR activities containing the particulars of the projects / programmes approved and recommended by CSR Committee and approved by the board are given by way of Annexure IV attached to this Report.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATE COMPANIES

The following are the subsidiaries and associates of the Company:

Name of the Company Status

Sundaram-Clayton (USA) Limited Subsidiaries of TVS Motor Company Limited Sundaram-Clayton Limited

Sundaram Auto Components Limited TVS Housing Limited TVS Motor Company (Europe) B.V. TVS Motor (Singapore) Pte. Limited Subsidiaries of PT. TVS Motor Company Indonesia TVS Motor Company Limited Sundaram Business Development Consulting (Shanghai) Company Limited

TVS Training and Services Limited Sundram Non-Conventional Energy Associates of Systems Limited Sundaram-Clayton Limited Emerald Haven Realty Limited

Subsidiaries of the Company

Sundaram - Clayton (USA) Limited

Sundaram-Clayton (USA) Limited, a wholly subsidiary of the Company is engaged in the business of providing Professional Employer Organization ("PEO") services to the employees of the Company. The Company earned a revenue of USD 6,598 and net income after adjustment of expenses amounted to USD 263 for the year ended 31st March 2015.

TVS Motor Company Limited (TVSM)

TVS Motor Company Limited (TVSM), a listed company, is engaged in the business of manufacture of two and three wheelers. During the year, TVSM achieved a turnover of Rs. 10130.83 Cr and earned a profit after tax of Rs. 347.83 Cr during the year 2014-15.

TVSM declared first interim dividend of Re.0.75 per share (75%) for the year 2014-15 absorbing a sum of Rs. 41.95 Cr including dividend distribution tax. It also declared a second interim dividend of Rs.1.15 per share (115%) for the year 2014-15 absorbing a sum of Rs.65.56 Cr including dividend distribution tax.

Hence, the total amount of dividend including the second interim dividend for the year ended 31st March 2015 will aggregate to Rs.1.90 per share (190%) on 47,50,87,114 equity shares of Re.1/- each.

Sundaram Auto Components Limited (SACL)

During the year, SACL, a wholly owned subsidiary of TVSM, has achieved a turnover of Rs.415 Cr in Plastics component business and earned a profit after tax of Rs.25.32 Cr.

SACL was awarded the best supplier "System Rating" by Visteon CCS for the year 2014-15. During the year, SACL secured new businesses for manufacture of exterior painted parts and assemblies, safety critical air bag cover parts, interior assemblies and Heating, Ventilating and Air-Conditioning (HVAC) parts. During the year, SACL productionized 140 new parts for various customers.

SACL on 28th January, 2015, declared an interim dividend of Rs.3.50 per share (35%) for the year 2014-15 absorbing a sum of Rs.485.10 lakhs including dividend distribution tax.

SACL on 23rd April, 2015 recommended a final dividend of Rs.2.50 per share (25%) for the year 2014-15, for approval of shareholders, absorbing a sum of Rs.346.49 lakhs including dividend distribution tax.

Hence, the total amount of dividend including the final dividend recommended, for the year ended 31st March, 2015 will aggregate to Rs.6 per share (60%) on 1,15,50,000 equity shares of Rs.10/- each absorbing a sum of Rs.831.59 lakhs including dividend distribution tax.

TVS Housing Limited (TVSH) & Emerald Haven Realty Limited (EHRL)

TVSH, a wholly owned subsidiary of TVSM, and EHRL an associate of TVSM, in terms of the arrangement entered into between them launched Phase I of development at its land at Nedungundram, Chennai and is successfully nearing completion. Similarly, Phase II of the development at Nedungundram (Project Green Hills - Villas) successfully launched during the year.

PT.TVS Motor Company Indonesia (PT TVS)

During the year, motorcycle industry in Indonesia declined by 3%. The decline was more pronounced in the last quarter of the financial year when the industry plunged by 17% due to weak consumer sentiments arising out of poor commodity prices and the credit squeeze on hire purchase. The scooter category grew by 6% triggered by new product launches to end the year with a share of 70%. The sports motorcycle category and bebek category declined by 10% and 25% respectively.

PT TVS, a wholly owned subsidiary of TVSM, introduced two variants of 125cc sports motorcycle designed for specific customer segment during the later part of the year. During 2014-15, PT TVS sold 23,300 vehicles as against 19,200 vehicles sold during 2013-14, thereby registering a growth of 21%. While the domestic sales remained flat, exports grew by 40%. PT TVS continued its focus on exports and exported more than 14,000 units to ASEAN, Middle East and African countries.

During 2014-15, the loss at EBITDA level was marginally lower at USD 8 Mn compared to loss of USD 9 Mn recorded during 2013-14. During 2015-16, PT TVS plans to launch a new 200cc sports motorcycle and a new variant of its 110cc Dazz scooter with fuel injection system.

During the year under review, TVSM has made an additional investment of USD 4 Mn in 4,00,000 ordinary shares of USD 10 each (Rs.24.92 Cr) in PT TVS, to meet its fund requirements.

TVS Motor Company (Europe) B.V & TVS Motor (Singapore) Pte. Ltd

TVSM had earlier incorporated both these entities as its wholly owned subsidiaries, with a view to serve as special purpose vehicles (SPVs) for making and protecting its investments made in the overseas operations of PT TVS.

Considering the change in the evaluation, TVSM has now initiated steps to voluntarily wind up TVSM Europe, subject to such regulatory approvals / consents as may be required, both under Indian / Foreign laws. The other overseas entity viz TVS Motor Singapore Pte. Ltd will continue to hold the investment in PT TVS.

During the year under review, TVSM has made an additional investment of Rs. 2.01 Cr in the ordinary shares of TVS Motor Singapore Pte. Ltd and the shares were allotted in April 2015.

Sundaram Business Development Consulting (Shanghai) Company Limited (SBDC)

SBDC, a wholly owned subsidiary of TVSM was initially established to explore options of sourcing, local assembly of two wheeler etc., in China for TVSM. After a complete review of the proposed activities through SBDC by TVSM, it was advised that local manufacturing operations may not be required in China. Hence, the board of TVSM has decided to retain the "Representative office" in China but to close down the operations of SBDC.

Associates of the Company

TVS Training and Services Limited (TVS TSL)

TVS TSL, an associate of the Company, is engaged in the business of establishing, managing and administering educational and vocational institutions. During the year, TVS TSL earned an income of Rs. 8.42 Cr and loss after adjustment of expenses was Rs. 0.27 Cr.

Sundram Non-Conventional Energy Systems Limited (SNES)

SNES, an associate of the Company, is engaged in the business of generation of power. During the year, it has earned Rs. 2.99 Cr and the profit after tax was Rs. 1.49 Cr.

Financial position of all subsidiaries and associate companies are provided as part of consolidated financial statements in Form AOC-1 in the manner required under Section 129 read with the Companies (Accounts) Rules, 2014, of the Act 2013.

8. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and the Listing Agreement with the Stock Exchanges along with a separate statement containing the salient features of the financial performance of subsidiaries / associates.

The audited financial statements in respect of each of its subsidiary companies will be made available to the shareholders, on receipt of a request from any shareholder of the Company and it has also been placed on the website of the Company. This will also be available for inspection by the shareholders at the registered office during the business hours.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL

Independent Directors (IDs)

During the year, M/s. Vice Admiral P J Jacob (Retd.), V Subramanian, S Santhanakrishnan, Suresh Kumar Sharma, R Vijayaraghavan and Kamlesh Gandhi , were appointed as IDs for the first term of five consecutive years from the conclusion of the fifty-second Annual General Meeting and to receive remuneration by way of fees, reimbursement of expenses for participation in the meetings of the board and / or committees and profit related commission in terms of applicable provisions of the Act 2013 within the overall limit approved by the shareholders vide their resolution passed 21st August 2014, at the annual general meeting as determined by the board from time to time in terms of Section 197 and 198 and any other applicable provisions of the Act 2013.

On appointment, each ID has acknowledged the terms of appointment as set out in their letter of appointment. The appointment letter covers, inter alia, the terms of appointment, duties, remuneration and expenses, rights of access to information, other directorships, dealing in Company's shares, disclosure of Director's interests, insurance and indemnity. The IDs are provided with copies of the Company's policies and charters of various committees of the board.

All IDs have declared that they met all the criteria of independence as provided under Section 149(6) of the Act 2013 and Clause 49 of the Listing Agreement. The detailed terms of appointment of IDs are disclosed on the Company's website with following link http:// www.sundaramclayton.com/Web%20files/Terms%20of%20IDs.pdf.

Separate meeting of Independent Directors (IDs)

The IDs were fully kept informed of the Company's activities in all its spheres. During the year under review, a separate meeting of IDs was held on 20th March, 2015 and the IDs reviewed the performance of:

i) non-IDs viz., M/s. Venu Srinivasan, chairman and managing director, Dr Lakshmi Venu and Sudarshan Venu, joint managing directors, K Mahesh, T K Balaji and Gopal Srinivasan, directors; and

ii) the board as a whole.

They reviewed the performance of Chairman after taking into account the views of executive and non-executive directors.

They also assessed the quality, quantity and timeliness of flow of information between the Company's Management and the board that are necessary for the board to effectively and reasonably perform their duties. All the IDs were present at the meeting.

Woman director

In terms of Section 149 of the Act 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Clause 49 of the Listing Agreement, the Company is required to have a woman Dr Lakshmi Venu, joint managing director is already on the board of the Company from 22nd March, 2010 and hence, the Company fulfills the requirement of Section 149 of the Act 2013.

Non-executive and non-independent directors (NE-Non IDs)

In terms of the provisions of sub-section (6) read with explanation to Section 152 of the Act 2013 two-thirds of the total number of directors

i.e., excluding IDs, are liable to retire by rotation and out of which, one- third are liable to retire by rotation at every annual general meeting.

Mr K Mahesh, director, and Mr Sudarshan Venu, Joint Managing Director who are liable to retire by rotation, at the AGM, and being eligible, offer themselves for re-appointment.

Executive directors

During the year, the board, at its meeting held on 11th September, 2014, based on the recommendation of the NRC, re-designated Dr Lakshmi Venu as joint managing director considering her increased role and responsibility in the management of the Company, subject to the approval of the shareholders at the AGM.

The other terms and conditions of her appointment and remuneration, as earlier approved by the board as well as by the shareholders of the Company on 30th September 2011 and 21st August 2014 would remain unchanged.

During the year, the board, at its meeting held on 11th September, 2014, on the recommendation of the NRC, appointed Mr Sudarshan Venu, as JMD since he was actively involved in all spheres of the management of the Company and handling wider responsibilities for exploring new business opportunities - both in India and abroad subject to the approval of the shareholders at the AGM. The terms and conditions of appointment and remuneration as approved by the board is subject to the approval of the shareholders at the AGM.

Both the NRC and the board observed that the proposed appointment of Mr Sudarshan Venu as JMD also satisfies the requirements of the provisions of sub-section (3) of Section 196 of the Act 2013 and also part I of Schedule V of the Act 2013, dealing with the eligibility for appointment of managing directors.

Mr Sudarshan Venu as JMD of both the subsidiary company, namely TVS Motor Company Limited (TVSM) and the Company, would be entitled to draw remuneration from one or both the companies, provided that the total remuneration drawn from both the companies does not exceed the higher maximum limit admissible from any one of the companies.

Brief resume of directors

The brief resume of the directors proposed to be appointed and reappointed and other relevant information have been furnished in the Notice of AGM. Appropriate resolutions for their appointment / re-appointment are being placed for approval of the shareholders at the AGM.

The directors, therefore, recommend their appointment / re-appointment as directors of the Company.

Key Managerial Personnel (KMPs)

At the board meetings held on 8th May 2014 and 11th September 2014, Mr Venu Srinivasan, CMD, Dr Lakshmi Venu, JMD, Mr Sudarshan Venu JMD, Mr C N Prasad, President & Chief Executive Officer, Mr V N Venkatanathan, Chief Financial Officer and Mr R Raja Prakash, Company Secretary were designated as 'Key Managerial Personnel' of the Company in compliance with the requirement of Section 203 of the Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition of the board, to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of all shareholders and the Company.

During the year, in accordance with the requirements under Section 178 of the Act 2013 and Clause 49 of Listing Agreement, the NRC formulated a Nomination and Remuneration Policy to govern the terms of nomination / appointment and remuneration of (i) Directors, (ii) Key Managerial Personnel (KMPs) and (iii) Senior Management Personnel (SMPs) of the Company. The same was approved by the board at its meeting held on 24th September 2014. The NRC also reviews succession planning of both SMPs and board. The Company's approach in recent years is to have a greater component of performance linked remuneration for SMPs.

The process of appointing a director / KMPs / SMPs is, that when a vacancy arises, or is expected, the NRC will identify, ascertain the integrity, qualification, appropriate expertise and experience, having regard to the skills that the candidate will bring to the board / company, and the balance of skills added to that of which the existing members hold.

The NRC will review the profile of persons and the most suitable person is either recommended for appointment by the board or is recommended to shareholders for their election. The NRC has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position.

The NRC will ensure that any person(s) who is / are appointed or continues in the employment of the Company as its executive chairman, managing director, whole-time director shall comply with the conditions as laid out under Part I of Schedule V to the Act 2013. The NRC will ensure that any appointment of a person as an independent director of the Company will be made in accordance with the provisions of Section 149 read with Schedule IV of the Act 2013 along with any other applicable provisions and Clause 49 of the Listing Agreement.

Criteria for performance evaluation, disclosures on the remuneration of directors, criteria of making payments to non-executive directors have been disclosed as part of Corporate Governance Report attached herewith.

Evaluation of the board, committees and directors

In terms of Section 134 of the Act 2013 and the Corporate Governance requirements as prescribed under Clause 49 of the Listing Agreement, the board reviewed and evaluated its own performance from the perspectives of Company Performance, Strategy and Implementation, Risk Management, Corporate ethics, based on the evaluation criteria laid down by the NRC.

The board discussed and assessed its own composition, size, mix of skills and experience, its meeting sequence, effectiveness of discussion, decision making, follow up action, quality of information and the performance and reporting by the Committees viz., Audit Committee, Nomination and Remuneration Committee (NRC), Stakeholders Relationship Committee (SRC) and Corporate Social Responsibility Committee (CSR).

The board upon evaluation concluded that it is well balanced in terms of diversity of experience encompassing all the activities of the Company. The Company endeavours to have a diverse board representing a range of experience at policy-making levels in business and technology, and in areas that are relevant to the Company's global activities.

The performance of individual directors including all Independent directors assessed against a range of criteria such as contribution to the development of business strategy and performance of the Company, understanding the major risks affecting the Company, clear direction to the management and contribution to the board cohesion. The performance evaluation has been done by the entire board of directors, except the director concerned being evaluated. The board noted that all directors have understood the opportunities and risks to the Company's strategy and are supportive of the direction articulated by the management team towards consistent improvement.

The board also noted that corporate responsibility, ethics and compliance are taken seriously, and there is a good balance between the core values of the Company and the interests of stakeholders. The board satisfied with the Company's performance in all fronts viz., new product development, operations, sales and marketing, finance management, international business, employee relations and compliance with statutory / regulatory requirements and finally concluded that the board operates effectively and is closely aligned to the culture of the business.

The performance of each committee was evaluated by the board after seeking inputs from its members on the basis of the criteria such as matters assessed against terms of reference, time spent by the committees in considering matters, quality of information received, work of each committee, overall effectiveness and decision making and compliance with the corporate governance requirements and concluded that all the committees continued to function effectively, with full participation by all its members and the members of executive management of the Company.

The board reviewed each committee's terms of reference to ensure that the Company's existing practices remain appropriate. Recommendations from each committee are considered and approved by the board prior to implementation.

Number of board meetings held

The number of board meetings held during the financial year 2014-15 is provided as part of Corporate Governance Report prepared in terms of Clause 49 of the Listing Agreement.

10. AUDITORS

Statutory Auditors

The Company, in terms of Section 139 (1) and (2) of the Act 2013 is required to appoint a statutory auditor for a term of five consecutive years i.e., till the conclusion of sixth annual general meeting and ratify their appointment, during the period, in every annual general meeting, till the sixth such meeting by way of passing of an ordinary resolution.

However, the period, for which any firm has held office as auditor prior to the commencement of the Act 2013 will be taken into account for calculating the period of five consecutive years, as per the fourth proviso to Section 139(2) of the Act 2013 read with Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014,

In view of these requirements, M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, who has been the statutory auditors of the Company for a period of more than 10 years, were appointed as statutory auditors of the Company for the transitional period of three consecutive years at the annual general meeting held on 21st August 2014, subject to the approval and ratification by the shareholders at each annual general meeting during the transitional period.

The Company has obtained necessary certificate under Section 141 of the Act 2013 conveying their eligibility for the above appointment.

The audit committee and the board reviewed their eligibility criteria, as laid down under Section 141 of the Act 2013 and recommended the ratification of the re-appointment for second year from the conclusion of the ensuing AGM till the conclusion of the next annual general meeting as auditors of the Company.

The notes on financial statements 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 remarks.

Cost Auditor

The board, subject to the approval of the Central Government, has re-appointed Mr A N Raman, Cost Accountant holding Certificate of practice No. 5359 allotted by The Institute of Cost Accountants of India, as a Cost Auditor for conducting Cost Audit for the financial year 2015-16, in terms of the Companies (Cost Records and Audit) Amendment Rules, 2014.

The Company has also received necessary certificate under Section 141 of the Act 2013 from him conveying his eligibility. A sum of Rs.3 lakhs has been fixed by the board, as remuneration in addition to reimbursement of service tax, travelling and out-of-pocket expenses payable to him and is also required to be ratified by the members, at the ensuing AGM as per Section 148(3) of the Act 2013. The Company does not require to carry out Cost Audit for the year 2014-15 and thereby filing of Cost Audit Report does not arise.

As required under the Cost (Cost Accounting Records) Rules, 2011, the Company has filed the Cost Audit Report for the year 2013-14 in XBRL format along with Cost Compliance Report.

Secretarial Auditors

As required under Section 204 of the Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company.

Accordingly, Ms B Chandra, Practising Company Secretary, Chennai, was appointed as Secretarial Auditors for carrying out the secretarial audit for the financial year 2014-15. As required by Section 204 of the Act, 2013, the Secretarial Audit Report for the year 2014-15, given by Ms B Chandra, Practising Company Secretary, Chennai for auditing the secretarial and related records is attached to this report. The Secretarial Audit Report does not contain any qualification, reservation or other remarks.

11. CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of this Annual Report.

The Chief Executive Officer and the Chief Financial Officer of the Company have certified to the board on financial statements and other matters in accordance with the Clause 49 (IX) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March 2015.

12. POLICY ON VIGIL MECHANISM

The board at its meeting held on 24th September 2014, adopted a Policy on Vigil Mechanism in accordance with the provisions of the Act 2013 and as per the revised Clause 49 of the Listing Agreement, which provides a formal mechanism for all directors, employees and other stakeholders of the Company, to report to the management their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Company's Code of Business Conduct or Ethics policy.

The Policy also provides a direct access to the Chairperson of the Audit Committee to make protective disclosures to the management about grievances or violation of the Company's Code of Business Conduct and Ethics.

The Policy is disclosed on the Company's website with the following link http://www.sundaramclayton.com/Web%20files/Investors/ Whistle%20Blower%20Policy.pdf.

13. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Chapter V of the Act 2013, for the year ended 31st March 2015.

14. DISCLOSURES

Information on conservation of energy, technology absorption, foreign exchange etc:

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report, in terms of the requirements of Section 134(3)(m) of the Act 2013 read with the Companies (Accounts) Rules 2014;

Annual Return:

Extract of Annual Return in the prescribed form is given as Annexure II to this report, in terms of the requirement of Section 134(3)(a) of Act 2013 read with the Companies (Accounts) Rules, 2014.

Employee's remuneration:

Details of employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as a statement and given in Annexure III. In terms of first proviso to Section 136(1) of the Act 2013 the Annual Report, excluding the aforesaid annexure is being sent to the shareholders of the Company. The annexure is available for inspection at the Registered Office of the Company during business hours and any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Comparative analysis of remuneration paid A comparative analysis of remuneration paid to directors and employees with the Company's performance is given as Annexure V to this report.

Details of related party transactions

There were no material related party transactions under Section 188 of the Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014.

Details of loans / guarantees / investments made

During the year under review, the Company had not granted any loans or guarantees covered under Section 186 of the Act 2013.

Please refer note No. IX to Notes on accounts for the financial year 2014-15, for details of investments made by the Company.

Other laws

During the year under review, there were no cases filed pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

15. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co- operation received from the promoters of the Company, viz., T V Sundram Iyengar & Sons Private Limited, Southern Roadways Limited, Sundaram Industries Private Limited and Sundaram Finance Limited.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the board

Chennai VENU SRINIVASAN 8th May 2015 Chairman


Mar 31, 2014

Dear Members,

The directors have pleasure in presenting the fifty second annual report and the audited accounts for the year ended 31st March 2014.

1. FINANCIAL HIGHLIGHTS

(Rs. in Cr)

Details Year ended Year ended

31.03.2014 31.03.2013

Sales and other income 1,232.54 1,056.68

Profit before finance cost and depreciation 143.82 127.87

Less: Finance Cost 35.65 44.32

Depreciation 53.21 51.25

Profit after finance cost and depreciation 54.96 32.30

Add : Exceptional Item (Income) 5.83 –

Profit before tax 60.79 32.30 Less: Provision for :

Income tax 5.50 –

Deferred tax 1.63 (3.12)

Profit after tax 53.66 35.42

Surplus brought forward from previous year 68.49 63.16

Total 122.15 98.58

Appropriations:

First interim dividend paid 18.21 17.07

Second interim dividend paid 7.59 9.48

Third interim dividend payable 13.15 –

Dividend tax paid 0.20 –

Transfer to general reserve 5.37 3.54

Balance carried to Balance Sheet 77.63 68.49

Total 122.15 98.58

2. DIVIDEND

The board of directors (the board) at their meeting held on 29th October 2013, declared a first interim dividend of Rs.9.00 per share (180%) absorbing a sum of Rs.18.21 Cr for the year 2013-14 and the same was paid to the shareholders on 9th November 2013.

The board at its meeting held on 18th March 2014, declared a second interim dividend of Rs.3.75 per share (75%) absorbing a sum of Rs.7.79 Cr for the year 2013-14 and the same was paid to the shareholders on 28th March 2014.

The board, at its meeting held on 14th May 2014, declared a third interim dividend of Rs. 6.50 per share (130%) for the year 2013-14 absorbing a sum of Rs.13.35 Cr including dividend distribution tax. The same will be paid to the shareholders on or after 24th May 2014. Hence, the total amount of dividend including the third interim dividend payable, for the year ended 31st March 2014 will aggregate to Rs.19.25 per share (385%) on 2,02,32,085 equity shares of Rs. 5/- each.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A) of the Income Ta x Act, 1961 against the dividend distribution tax paid by one of its subsidiary companies on the dividend declared.

The board does not recommend any further dividend for the year under consideration.

3. MINIMUM PUBLIC SHAREHOLDING REQUIREMENTS (MPS)

The Securities and Exchange Board of India (SEBI) vide its circular dated June 4, 2010, required all listed companies to raise the Minimum Public Shareholding (MPS) upto 25% within three years. Further, SEBI vide its various circulars prescribed the manner and norms for achieving the MPS.

During the year, the Company in order to comply with the MPS requirements for increasing its public shareholding from 20% to 25%, (i) issued and allotted 12,64,501 equity shares at Rs.293/- per share (face value per share - Rs.5/-, premium per share- Rs.288/-) on 11th July 2013 to Qualified Institutional Buyers (QIBs) on a preferential basis, in terms of Section 81(1A) of the Companies Act, 1956 and Chapter VIII-A of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended; and (ii) one of the Promoters of the Company, also divested 4 equity shares for complying with the MPS requirement, by way of ''Offer for Sale'' (OFS) route. Consequently, the public shareholding increased to 25%, as mandated by SEBI effective 12th July 2013.

Hence, the shareholding of the Promoters have come down from 80% to 75%, by which the Company is in compliance with the provisions of the Listing Agreement and Rules specified under Securities Contract (Regulations) Rules, 1957. The new shares issued by the Company, after listing, commenced trading on the Stock Exchanges effective 15th July 2013.

The entire issue proceeds of Rs.37.05 Cr were used for repaying the working capital demand loan of the Company.

4. PERFORMANCE

During the year 2013-14, Gross Domestic Product (GDP) was estimated to register a growth of 4.6% as against the 5% achieved in 2012-13 (Source: RBI). The Indian auto industry also has posted moderate growth of 4% (Source: SIAM).

During 2013, GDP estimates in US declined to 1.9% as against 2.8% in 2012 (Source: FTR / IMF) and Europe''s GDP estimates at -0.5% in 2013 as against -0.7% in 2012 (IMF).

In this background, North American class 8 truck segment declined by 7% (Source FTR), while, the sale of European medium and heavy trucks grew by 8% (Source ACEA) mainly due to the pre-buy effect in 2013 ahead of enforcement of Euro 6 norms in January 2014.

The following table highlights the performance of the Company during 2013-14:

Particulars 2013-14 2012-13 Growth (in %)

Sales (Tonnage) 39505 35625 11

Sale of goods (Rs. in Cr) 1143.80 974.72 17

Domestic sales (Rs. in Cr) 573.92 517.84 11

Export sales (Rs. in Cr) 569.88 456.88 25

Profit before Tax (Rs. in Cr) 60.79 32.30 88

6. SUBSIDIARY COMPANIES

As on date of this report, the following are the subsidiaries of the Company:

Name of the Company Subsidiary of

TVS Motor Company Limited Sundaram-Clayton Limited Sundaram-Clayton (USA) Limited

Sundaram Auto Components Limited

TVS Housing Limited

TVS Motor Company (Europe) B.V. TVS Motor Company Limited

TVS Motor (Singapore) Pte. Limited

Sundaram Business Development

Consulting (Shanghai) Company

Limited

PT. TVS Motor Company Indonesia TVS Motor (Singapore) Pte. Limited

During the year, TVS Motor Company Limited (TVSM), the subsidiary company disinvested 7,35,00,000 nos. of equity shares of Rs.10/- each of TVS Energy Limited (TVS Energy), constituting 90.46% of paid up capital in TVS Energy to and in favour of Green Infra Limited (GIL), New Delhi.

Consequently, TVS Energy and its two subsidiaries, namely TVS Wind Energy Limited and TVS Wind Power Limited, ceased to be subsidiaries of TVSM and of the Company, effective at the close of business hours of 16th August 2013.

Both the Company and TVSM continue to hold the required percentage of equity shares of Green Infra BTV Limited (earlier known as TVS Energy) for the purpose of fulfilling the norms of captive consumption.

7. CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement with the Stock Exchanges, the consolidated financial statements of the Company are attached.

The Ministry of Corporate Affairs (MCA) vide its circular No. 2 in file No. 51/12/2007-CL-III dated 8th February 2011 has granted general exemption from attaching annual reports of subsidiaries along with the annual report of the holding companies, without seeking any approval of the Central Government, subject to the fulfilment of the conditions laid down therein.

The board, at its meeting held on 14th May 2014, passed necessary resolution for complying with all the conditions enabling the circulation of annual report of the Company without attaching all the documents referred to in Section 212(1) of the Act 1956 of the subsidiary companies to the shareholders of the Company.

The annual accounts, reports and other documents of the subsidiary companies will be made available to the shareholders, on receipt of a request from them, at the registered office of the Company during business hours on any working day of the Company. If any member or investor wishes to inspect the same, it will be available during the business hours on any working day of the Company.

A statement giving the following information in aggregate of each subsidiary including subsidiaries of subsidiaries consisting of (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend has been attached with the consolidated balance sheet of the Company in compliance with the conditions of the said circular issued by MCA.

A statement referred to in clause (e) of sub-section 1 of Section 212 of the Act, 1956 disclosing the Company''s interest in subsidiaries and other information as required, is attached.

8. DIRECTORS

The Ministry of Corporate Affairs (MCA) has notified majority of the provisions inter alia relating to selection, manner of appointment, roles, functions, duties, re-appointment of independent directors (IDs) and the relevant rules under the Companies Act, 2013 (the Act 2013) and made them effective1st April 2014.

The existing composition of the Company''s board is fully in conformity with the applicable provisions of the Act 2013 and Clause 49 of the Listing Agreement having the following directors as non-executive IDs, namely M/s. Vice Admiral P J Jacob, V Subramaninan, Suresh Kumar Sharma, S Santhanakrishnan, R Vijayaraghavan and Kamlesh Gandhi.

In terms of the provisions of Section 149(10) read with Section 149(5) of the Act 2013, IDs are eligible to hold office for a term upto five consecutive years on the board and eligible for re-appointment for the second term on passing of special resolutions by the Company. During the period, they will not be liable to ''retire by rotation'' as per the provisions of Sections 150(2), 152(2) read with Schedule IV to the Act 2013.

It is, therefore, proposed to appoint them as IDs for a consecutive period of five years at the Annual General Meeting (AGM). Necessary declarations have been obtained from them, as envisaged under the Act, 2013.

Both the Nomination and Remuneration Committee and the board also ensured that their appointments as IDs are in compliance with the requirements under the relevant statutes and that there were appropriate balance of skills, experience and knowledge in the board, so as to enable the board to discharge its functions and duties effectively.

Notices in writing signifying the intention to offer their candidatures as IDs of the Company along with the requisite deposits have been received from members of the Company, in terms of Section 160 of the Act, 2013.

In terms of the provisions of sub-section (6) read with explanation to Section 152 of the Act 2013, two-third of the total number of directors i.e., excluding IDs, are liable to retire by rotation and out of which, one-third is liable to retire by rotation at every annual general meeting.

M/s. T K Balaji and Sudarshan Venu, directors of the Company, are therefore, liable to retire by rotation, at this AGM, and being eligible, offer themselves for re-appointment.

The brief resume of these directors proposed to be appointed and re-appointed and other relevant information have been furnished in the Notice of AGM. Appropriate resolutions for their appointment / re-appointment are being placed for approval of the members at the AGM.

The board, therefore, recommends their appointment / re-appointment as directors of the Company.

9. AUDITORS

Statutory Auditors

The Company, in terms of Section 139 (1) and (2) of the Act, 2013 is required to appoint a statutory auditor for a term of five consecutive years i.e., till the conclusion of sixth annual general meeting and ratify their appointment, during the period, in every annual general meeting, till the sixth such meeting by way of passing of an ordinary resolution.

The period, for which any firm has held office as auditor prior to the commencement of the Act, 2013 will be taken into account for calculating the period of five consecutive years, as per the fourth proviso to Section 139(2) of the Act, 2013 read with Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014.

M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, who were earlier appointed as statutory auditors of the Company, were functioning as auditor for more than ten years. Hence, they are eligible to be appointed for the transitional period of three years in terms of the aforesaid provisions and rules under the Act 2013.

It is proposed to appoint them as statutory auditors for the transitional period of three years, subject to the approval and ratification by the shareholders at this AGM and at subsequent AGM, held during the transitional period.

The Company has obtained necessary certificate under Section 141 of the Act 2013, conveying their eligibility for the above appointment. The audit committee and the Board reviewed their eligibility criteria, as laid down under Section 141 of the Act 2013 and recommended their appointment as auditors for the aforesaid period by the members.

Cost Auditor

As required under the Companies (Cost Accounting Records) Rules 2011, the Company filed the Cost Audit Report along with Cost Compliance Report for the financial year 2012-13 in XBRL format.

The board, subject to the approval of the Central Government, has re-appointed Mr A N Raman, practising cost accountant, holding Membership No.5359, allotted by The Institute of Cost Accountants of India, as Cost Auditor for conducting the Cost Audit for the financial year 2014-15. The audit committee recommended his appointment and remuneration, subject to the compliance of all the requirements as stipulated in circular no.15/2011 dated 11th April 2011 issued by the MCA.

The Company has also received necessary certificate under Section 141 of the Act 2013, conveying his eligibility for re-appointment. The remuneration fixed by the board, based on the recommendation of the audit committee, is required to be ratified by the members at the AGM, as per the requirement of Section 148(3) of the Act 2013.

Secretarial Auditor

As required under Section 204 of the Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company is required to appoint a Secretarial Auditor for auditing the secretarial and related records of the Company.

Accordingly, Ms B Chandra, practising company secretary has been appointed as Secretarial Auditor for carrying out the secretarial audit for the financial year 2014-2015 and the secretarial audit report given by her will be attached with Board''s report to the shareholders, as required.

10.CORPORATE GOVERNANCE

The Company has been practising the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on corporate governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of corporate governance, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report.

The chairman and managing director (CEO) and the executive vice president - finance (CFO) of the Company have certified to the board on financial statements and other matters in accordance with Clause 49(V) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March 2014.

11. STATUTORY STATEMENTS

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

As per the requirements of Section 217(1)(e) of the Act 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report.

Particulars of employees

The particulars required pursuant to Section 217(2A) of the Act 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Act 1956 the Directors'' Report excluding the said Annexure is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Public Deposits

The Company has not accepted any deposit from the public within the meaning of Section 58A of the Act 1956 for the year ended 31st March 2014.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Act 1956 with respect to Directors'' Responsibility Statement, it is hereby stated:

(i) that in the preparation of annual accounts for the financial year ended 31st March 2014, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

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

(iv) that the directors had prepared the accounts for the financial year ended 31st March 2014 on a "going concern basis".

12.ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the promoters of the Company, viz., T V Sundram Iyengar and Sons Limited, Southern Roadways Limited, Sundaram Industries Limited and Sundaram Finance Limited.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company, during the year.

The directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the board

Chennai VENU SRINIVASAN

14th May 2014 Chairman


Mar 31, 2013

To The Shareholders

The directors have pleasure in presenting the fifty first annual report and the audited accounts for the year ended 31st March 2013.

1. FINANCIAL HIGHLIGHTS

(Rupees in Crores)

Details Year ended Year ended 31.03.2013 31.03.2012

Sales and other income 1,056.68 1,051.23

Profit before finance cost and depreciation 127.87 141.34

Less: Finance Cost 44.32 38.42

Depreciation 51.25 47.34

Profit after finance cost and depreciation 32.30 55.58

Add : Exceptional Item (Income) 25.34

Profit before tax 32.30 80.92

Less: Provision for :

Income tax 10.35

Deferred tax (3.12) (1.72)

Profit after tax 35.42 72.29

Surplus brought forward from previous year 63.16 26.84

Total 98.58 99.13

Appropriations:

First interim dividend paid 17.07

Second interim dividend payable 9.48

Interim dividend payable 21.81

Dividend tax payable 3.54

Tax relating to earlier years 3.39

Transfer to general reserve 3.54 7.23

Balance carried to Balance Sheet 68.49 63.16

Total 98.58 99.13



2. DIVIDEND

The board of directors of the Company (the board) at their meeting held on 8th February 2013, declared an interim dividend of Rs.9.00 per share (180%) absorbing a sum of Rs.17.07 Cr for the year 2012-13 and the same was paid to the shareholders on 19th February 2013.

The board, at its meeting held on 8th May 2013, declared a second interim dividend of Rs. 5/- per share (100%) for the year 2012-13 absorbing a sum of Rs. 9.48 Cr including dividend distribution tax. The same will be paid to the shareholders on 17th May 2013. Hence, the total amount of dividend including the second interim dividend payable, for the year ended 31st March 2013 will aggregate to Rs.14/- per share (280%) on 1,89,67,584 equity shares of Rs. 5/- each.

The board of directors of the Company do not recommend any further dividend for the year under consideration.

3. INSTITUTIONAL PLACEMENT PROGRAMME (IPP)

During the year, the board, at its meeting held on 8th February, 2013 approved a proposal, subject to the approval of the shareholders in terms of Section 81(1A) of the Companies Act, 1956, (the Act), for additional issue and allotment of 12,64,501 New Equity Shares of Rs.5/- each, at a price to be determined at a later stage, by offering the said New Equity Shares to Qualified Institutional Buyers (QIBs), as defined in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations"), as amended, pursuant to an Institutional Placement Programme (IPP) in accordance with Chapter VIII-A of the ICDR Regulations.

The objective of the proposal was to facilitate (a) increasing the minimum public shareholding of the Company to 25 per cent, in the manner prescribed by the Securities and Exchange Board of India (SEBI) and also (b) raising the additional capital to partially meet the funding requirements of the Company.

The proposal was approved by the shareholders, by way of a special resolution, in terms of Section 81 (1A) of the Act, through postal ballot process on 20th March 2013.

As authorized by the shareholders, the board constituted an IPP committee of directors for taking all such steps for determining the terms and conditions for the offer and issue of the aforesaid New Equity Shares to QIBs, in consultation with lead managers, advisors, underwriters and such other intermediaries and authorities, as may be required, after due consideration of the prevailing market conditions and other relevant factors.

This proposal will also ensure that the Company complies with the requirement of achieving minimum public shareholding of atleast 25% in terms of Securities Contracts (Regulation) Rules,1957 and Clause 40A of the Listing Agreement.

4. PERFORMANCE

The year 2012 witnessed a downward trend in economic developments in the country, influenced by the negative sentiment in macro-economic scenario across overseas and domestic markets. The slowdown that commenced in 2011 continued through 2012 and is expected to prevail over the current year as well.

During the year 2012-13, the GDP is likely to register a growth rate of only 5% as against 6.5% achieved in 2011-12. This growth rate is significantly lower than the estimates at the beginning of the year.

During 2012, GDP in US grew by 2.2% as against 1.47% in 2011. (Source: BEA). GDP growth in the European Union was flat in 2012 compared to 1.5% in 2011 (Source: Eurostat / IMF).

In this background, North American class 8 truck segment witnessed a growth of 9% (Source ACT), while, the sale of European medium and heavy trucks suffered decline of 10% (Source ACEA).

The following table highlights the performance of the Company during 2012-13:

Particulars 2011-12 2012-13 (in %)

Sales (Tonnage) 36488 35625 -2.4

Sale of goods (Rs. Cr.) 972.91 974.72 0.2

Domestic sales (Rs. Cr.) 559.64 517.84 -7.5

Export sales (Rs. Cr.) 413.27 456.88 10.5

Profit before Tax (Rs. Cr.) 80.92* 32.30

* includes exceptional income and figures of Anusha Investments Limited consequent upon amalgamation and demerger of non-automotive business to Sundaram Investment Limited.

5. SUBSIDIARY COMPANIES

As on date of this report, the following are the subsidiaries of the Company:

6. CONSOLIDATED ACCOUNTS

As required under the Listing Agreement with the Stock Exchanges, the consolidated financial statements of the Company are attached.

The Ministry of Corporate Affairs (MCA) vide its circular No. 2 in file No. 51/12/2007-CL-III dated 8th February 2011 has granted general exemption from attaching annual reports of subsidiaries along with the annual report of the holding companies without seeking any approval of the Central Government, subject to fulfillment of the conditions laid down therein.

The board, at its meeting held on 8th May 2013, passed necessary resolution for complying with all the conditions enabling the circulation

of annual report of the Company without attaching all the documents referred to in Section 212(1) of the Companies Act, 1956 (the Act) of the subsidiary companies to the shareholders of the Company.

The annual accounts, reports and other documents of the subsidiary companies will be made available to the shareholders, on receipt of a request from them, at the registered office of the Company during business hours on any working day of the Company. If any member or investor wishes to inspect the same, it will be available during the business hours on any working day of the Company.

A statement giving the following information in aggregate of each subsidiary including subsidiaries of subsidiaries consisting of (a) capital

(b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend has been attached with the consolidated balance sheet of the Company in compliance with the conditions of the said circular issued by MCA.

A statement referred to in clause (e) of sub-section 1 of Section 212 of the Act disclosing the Company''s interest in subsidiaries and other information as required, is attached.

7. DIRECTORS

In terms of the Articles of Association of the Company, M/s Gopal Srinivasan, Vice Admiral P J Jacob (Retd.), S Santhanakrishnan and Suresh Kumar Sharma, directors, will be retiring at this annual general meeting and, being eligible, offer themselves for re-appointment.

The brief resume of these directors and other information have been detailed in the Notice convening the annual general meeting of the Company. Appropriate resolutions for their re-appointment are being placed for approval of the shareholders at the ensuing annual general meeting. The directors recommend their re-appointment as directors of the Company.

During the year, Mr Sudarshan Venu, director of the Company was also appointed as director in the rank of whole-time director, in TVS Motor Company Limited, the subsidiary company, effective 1st February 2013, subject to the terms and conditions, as approved by the shareholders of the subsidiary company, through postal ballot process on 18th March 2013 in accordance with the applicable provisions of the Act.

8. AUDITORS

M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, the statutory auditors of the Company, retire at the ensuing annual general meeting and are eligible for re-appointment.

The Company has also received a letter from them, stating that the appointment, if made, will be within the limit prescribed under Section 224(1B) of the Act.

9. COST AUDITOR

In terms of the Companies (Cost Accounting) Records Rules, 2011, the Company had filed the Cost Compliance Report for the financial year

2011-12 with the Ministry of Corporate Affairs (MCA) in XBRL format. Consequent to the MCA''s industry specific Cost Audit Order No. 52/26/CAB-2010 dated 24th January 2012, the Company appointed Mr A N Raman, a practicing cost accountant, as Cost Auditor for auditing the cost accounting information for the financial year 2012-13 and a report in this regard will be filed with the Central Government within the stipulated time. The Central Government has approved the appointment of Mr A N Raman as Cost Auditor for the said financial year.

The board, at its meeting held on 8th May 2013, re-appointed Mr A N Raman as Cost Auditor of the Company for the financial year

2013-14, subject to approval of the Central Government. The Company has received a letter from the cost auditor, stating that the appointment, if made, will be within the prescribed limit under Section 224(1B) of the Act.

10. CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on corporate governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of corporate governance, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges form part of the Annual Report. The chairman and managing director (CEO) and the executive vice president - finance (CFO) of the Company have certified to the board on financial statements and other matters in accordance with Clause 49(V) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March 2013.

11. STATUTORY STATEMENTS

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

As per the requirements of Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report.

Particulars of employees

The particulars required pursuant to Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Act, the Directors'' Report excluding the said Annexure is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Public Deposits

The Company has not accepted any deposit from the public within the meaning of Section 58A of the Act for the year ended 31st March 2013.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Act with respect to Directors'' Responsibility Statement, it is hereby stated:

(i) that in the preparation of annual accounts for the financial year ended 31st March 2013, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgements and estimates that were 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 the year under review;

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

(iv) that the directors had prepared the accounts for the financial year ended 31st March 2013 on a "going concern basis".

12. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the promoters of the Company, viz., T V Sundram Iyengar and Sons Limited, Southern Roadways Limited, Sundaram Industries Limited and Sundaram Finance Limited.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the board

Chennai VENU SRINIVASAN

8th May 2013 Chairman


Mar 31, 2011

Directors' report to the shareholders

The directors have pleasure in presenting the forty-ninth annual report and the audited accounts for the year ended 31st March 2011.

1.FINANCIAL HIGHLIGHTS

(Rupees in lakhs)

Details Year ended Year ended 31.03.2011 31.03.2010

Sales and other income 82,941.55 53,896.83

Gross profit before interest and depreciation 10,796.62 7,175.07

Less: Interest - Net 2,187.69 2,052.35 Depreciation 4,083.09 3,755.89

Profit before tax 4,525.84 1,366.83

Less: Provision for :

Income tax 661.52 90.00

Deferred tax 138.48 41.28

Profit after tax 3,725.84 1,235.55

Add:Tax relating to earlier years 70.68 (75.98)

3,796.52 1,159.57 Surplus brought forward from previous year 1,482.39 1,110.25

Total 5,278.91 2,269.82

Appropriations:

First Interim dividend paid 948.38 189.68

Dividend tax paid 3.75 -

Second Interim dividend payable 1,232.89 474.19

Dividend tax payable 37.78 -

Transfer to general reserve 372.59 123.56

Balance carried to Balance Sheet 2,683.52 1,482.39

5,278.91 2,269.82

2. DIVIDEND The board of directors at their meeting held on 28th January 2011, declared first interim dividend of Rs.2.50 per share (50%) absorbing a sum of Rs.9.48 Cr for the year 2010-11 and the same was paid to the shareholders on 7th February 2011.

The board of directors at their meeting held on 12th August 2011 declared a second interim dividend of Rs.3.25 per share (65%) absorbing a sum of Rs.12.33 Cr for the year 2010-11. Hence, the total amount of dividend including the second interim dividend payable, for the year ended 31st March 2011 will aggregate to Rs.5.75 per share (115%) on 3,79,35,168 equity shares of Rs.5/- each. The board of directors do not recommend any further dividend for the year under consideration.

3. PERFORMANCE

The global economic conditions continued to be strong and positive in 2010-11, resulting in a strong growth for the automotive sector. The Indian economy posted a remarkable recovery in terms of overall growth figures more importantly, in terms of certain fundamentals, which justify optimism for India in the medium to the long term. The data on National Income released by the Central Statistical Organisation estimates the growth of GDP at 8.6% in Financial Year (FY) 2010-11.

During the FY 2010-11, the domesticautomotive demand has recorded highest peaks in the history, with growth at 26.2% compared to FY 2009-10.

During the year under review, the medium / heavy commercial vehicles segment recorded a positive growth of 32% and the light commercial vehicle segment also registered a positive growth of 23%. Car segment achieved a positive growth of 30% and two wheeler segment registered a growth of 26% (Source: SIAM).

During 2010-11, economies across the world were on a steady growth path and the positive upswing in the World economy was better during second half of 2010.

- GDP in US surged by 2.9% in 2010 as against -2.6% in 2009. (Source: FTR).

- GDP in European Union (EU) was positive at 1.8% in 2010 compared to -4.3% in 2009 (Source: Eurostat / IMF)

In thisbackground, North American class 8 trucks market witnessed a positive growth of 28% (Source: FTR). Similarly, the Europe medium and heavy trucks witnessed a positive growth of 6% (Source: ACEA).

Particulars 2010-11 2009-10 Growth%

Sales (Tonnage) 32,239 23,193 39

Sales (Rs. Cr) 764.86 492.68 55

Domestic sales (Rs. Cr) 478.12 319.96 49

Export sales (Rs. Cr) 286.74 172.72 66

PBT (Rs. Cr) 45.26 13.67 231



5. RESTRUCTURING OF COMPANIES

It may be recalled that the board of directors earlier in August 2010 approved a draft composite Scheme of arrangement and amalgamation among the Company (the Scheme), and its wholly owned subsidiaries, namely Sundaram Investment Limited (SIL), TVS Investments Limited (TVSI) and Anusha Investments Limited (AIL) and their respective shareholders under Sections 391-394 of the Companies Act, 1956, (the Act), subject to the approval of the shareholders and other regulatory approvals, as may be required under the applicable securities laws.

Committee of directors formed for this purpose is in consultation with Merchant Bankers and Valuers for finalising the draft scheme and will be presenting it to the board of directors within the next 6 to 8 weeks.

The directors intend to take steps for finalising the Scheme dur ing the current financial year, seek the approval of the Stock Exchanges and complete the process of getting the approval of Hon'ble High Court of Madras.

6. SUBSIDIARY COMPANIES

As of 31st March 2011, the following are the subsidiaries of the Company:

S. No Name of the Company Subsidiary of

1. Anusha Investments Limited Sundaram-Clayton Limited

2. TVS Motor Company Limited Sundaram-Clayton Limited

3. Sundaram Auto Components Limited TVS Motor Company Limited

4. TVS Energy Limited TVS Motor Company Limited

5. TVS Housing Limited TVS Motor Company Limited

6. TVS Motor (Singapore) Pte Limited TVS Motor Company Limited

7. TVS Motor Company (Europe) B.V TVS Motor Company Limited

8. PT. TVS Motor Company Indonesia TVS Motor (Singapore) Pte Limited

9. TVS Wind Power Limited TVS Energy Limited

10.TVS Wind Energy Limited TVS Energy Limited

11.TVS Investments Limited Sundaram-Clayton Limited

12.Sundaram Investment Limited Sundaram-Clayton Limited

13.TVS Electronics Limited TVS Investments Limited

14.TVS Capital Funds Limited TVS Investments Limited

15.TVS-E Access (India) Limited TVS Investments Limited

16.TVS-E Servicetec Limited TVS Investments Limited

17.Sravanaa Properties Limited TVS Investments Limited

18.Tumkur Property Holdings Limited TVS Electronics Limited

19.Prime Property Holdings Limited TVS Electronics Limited

Performance of major unlisted subsidiaries:

Anusha Investments Limited (AIL)

During the year, the wholly owned subsidiary, namely AIL, has earned a total income of Rs.2,268.26 lakhs, which included a dividend income of Rs.1,755.82 lakhs. The profit for the year before tax stood at Rs.2,066.98 lakhs. The Company paid dividend of Rs.255/- per share (255%) on 5,00,000 equity shares of Rs.100/- each during the year 2010-11.

TVS Investments Limited (TVSI)

During the year, another wholly owned subsidiary, namely TVSI, has earned a total income of Rs.1,430.43 lakhs. The profit for the year before tax stood at Rs.113.61 lakhs.

7. CONSOLIDATED ACCOUNTS

As required under the Listing Agreement with the Stock Exchanges, Consolidated Financial Statements of the Company and all its subsidiaries are attached. The Consolidated Financial Statements have been prepared in accordance with the relevant Accounting Standards as prescribed under Section 211 (3C) of the Companies Act, 1956 (the Act). These financial statements disclose the assets, liabilities, income, expenses and other details of the Company, its subsidiaries and associates.

The Ministry of Corporate Affairs (MCA) vide its circular no.2 in file No. 51/12/2007-CL-III dated 8th February 2011 has granted general exemption under Section 212(8) of the Act, for holding companies from attaching annual reports of subsidiaries along with the annual report of the holding companies without seeking any approval of the Central Government. However, this is subject to fulfilment of conditions as stipulated in the said circular granting general exemption to the holding company and passing of a resolution by the board of directors in this regard.

The board of directors at their meeting held on 5th May 2011 passed necessary resolution for complying with all the conditions enabling the circulation of annual report of the Company without attaching all the documents referred to under Section 212(1) of the Act of the subsidiary companies to the shareholders of the Company.

The annual accounts, reports and other documents of the subsidiary companies will be made available to the members, on receipt of a request from them. The annual accounts of the subsidiary companies will be available at the registered office of the Company and at the registered offices of the respective subsidiary companies concerned. If any member or investor wishes to inspect the same, it will be available during the business hours of any working day of the Company.

A statement giving the following information in aggregate of each subsidiary including subsidiaries of subsidiaries consisting of (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend has been attached with the consolidated balance sheet in accordance with the conditions of the said circular issued by MCA.

8. DIRECTORS

M/s.Gopal Srinivasan, Vice Admiral P J Jacob (Retd), Suresh Kumar Sharma and S Santhanakrishnan, directors will be retiring at this annual general meeting and, being eligible, offer themselves for re-appointment in terms of Articles of Association of the Company.

The brief resume of the aforesaid directors to be re-appointed and other connected information have been detailed in the Notice convening the annual general meeting of the Company. Appropriate resolutions for their re-appointment are being placed for approval of the shareholders at the ensuing annual general meeting. The directors recommend their re-appointment as directors of the Company.

9. AUDITORS

M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, the statutory auditors of the Company, retire at the ensuing annual general meeting and are eligible for re-appointment.

The Company has received a letter from them, stating that the appointment, if made, will be within the prescribed limit under Section 224(1B) of the Act.

10.CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) form part of the Annual Report.

The managing director (CEO) and the executive vice president - finance (CFO) of the Company have certified to the board on financial statements and other matters in accordance with the clause 49(V) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March 2011.

11. STATUTORY STATEMENTS

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

As per the requirements of Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report.

Particulars of employees

The particulars required pursuant to Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Act, the Directors' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Public Deposits

The Company has not accepted any deposit from the public within the meaning of Section 58A of the Act for the year ended 31st March 2011.

Directors' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Act with respect to Directors' Responsibility Statement, it is hereby stated:

(i) that in the preparation of annual accounts for the financial year ended 31st March 2011, the applicable Accounting Standards had been followed and that there were no material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

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

(iv) that the directors had prepared the accounts for the financial year ended 31st March 2011 on a "going concern basis".

12.ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from M/s. T V Sundram Iyengar and Sons Limited, Madurai.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the board

Chennai GOPAL SRINIVASAN VENU SRINIVASAN

12th August 2011 Director Managing Director


Mar 31, 2010

The directors have pleasure in presenting the forty-eighth annual report and the audited accounts for the year ended 31st March 2010.

FINANCIAL HIGHLIGHTS

Rs. in lakhs

Details Year ended Year ended

31.03.2010 31.03.2009

Sales and other income 53,896.83 52,869.87

Gross profit before interest and

depreciation 7,175.07 6,008.07

Less: Interest - Net 2,052.35 2,207.17

Depreciation 3,755.89 3,105.06

Profit before tax 1,366.83 695.84

Less: Provision for:

Income tax 90.00 -

Fringe benefit tax - 51.00

Deferred tax 41.28 12.18

Profit after tax 1,235.55 632.66

Add: Dividend tax set off - 56.41

1,235.55 689.07

Surplus brought forward from previous year 1,110.25 866.64

Total 2,345.80 1,555.71

Appropriations:

Tax relating to earlier years 75.98 2.78

First Interim dividend paid 189.68 189.73

Second Interim dividend payable 474.19 -

Proposed dividend - 189.68

Transfer to general reserve 123.56 63.27

Balance carried to Balance Sheet 1,482.39 1,110.25

2,345.80 1,555.71

2. DIVIDEND

The board of directors of the Company at its meeting held on 25th January 2010, declared first interim dividend of Re.0.50 per share (10%) absorbing a sum of Rs.1.90 Cr for the year 2009-10 and the same was paid to the shareholders on 8th February 2010.

The board at its meeting held on 13th August 2010 declared a second interim dividend of Rs.1.25 per share (25%) absorbing a sum of Rs.4.74 Cr for the year 2009-10. Hence the total amount of dividend including the second interim dividend, for the year ended 31st March 2010 will aggregate to Rs.1.75 per share (35%) on 3,79,35,168 equity shares of Rs.5/- each.

3. BONUS SHARES

During the year, the Company issued and allotted 1,89,67,584 equity shares of Rs.5/- each on 14th October 2009 in the ratio of 1:1 to the eligible holders of equity shares of Rs.5/- each as on the record date, i.e., 12th October 2009 as bonus equity shares by capitalizing an equivalent amount standing to the credit of the general reserve account of the Company. As a result, the Companys paidup equity share capital now stands at Rs.18.97 Cr. The said issue and allotment of bonus shares was completed within the stipulated period of two months of its declaration by the board of directors in terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

4. PERFORMANCE

During 2009-10, economies across the world (barring few) showed signs of recovery and moved to growth phase after experiencing difficult market conditions due to economic slowdown in the automotive sector in previous years.

The Indian economy is able to bounce back quickly and strongly growing at 7.2% in 2009-10. The automotive sector in India grew steadily at the beginning of the year, gained momentum in all segments in the second half of the year. It has ended the year with a record growth and performance.

During the year under review, the medium / heavy commercial vehicles segment recorded a positive growth of 34% and the light commercial vehicle segment also registered a positive growth of 43%. Car segment achieved a positive growth of 26% and two wheeler segment registered a growth of 26%.

The Companys export business remained affected by the economic downturn in the key markets namely, US and Europe. US manufacturing showed signs of improvement during second half of the year, whereas the depressed conditions continued in Europe throughout 2009-10.

In this backdrop, North American class 8 trucks market witnessed a negative growth of 42%, while the class 5-7 trucks market witnessed a negative growth of 38%. Similarly, the Europe medium and heavy trucks witnessed a negative growth of 60%.

This corresponds to the sale of 19,499 tonnes of castings sold by the Company in the year 2009-10 as against 17,633 tonnes of castings sold in 2008-09. The Company achieved sales of Rs.492.68 Cr during 2009-10 as against Rs.492.37 Cr in 2008-09. Exports registered a decline and stood at Rs.172.72 Cr against Rs.197.49 Cr achieved in 2008-09. The Company achieved profit of Rs.12.36 Cr as against Rs.6.33 Cr in previous year, registering a growth of 95%.

6. RESTRUCTURING OF COMPANIES

Effective 3rd June 2009, the Company has become a subsidiary of T V Sundram Iyengar & Sons Limited, as was reported last year. The present holding of the Indian promoters is 80% in the share capital of the Company. In view of the guidelines on mandatory minimum public holding in the listed companies, ways to bring about reduction in the promoters holding from the existing 80% to 75%, have to be examined so that the public shareholding fulfills the stipulated percentage of 25%. . The Company is examining various alternatives in this regard.

In the meantime, in order to bring greater focus on automotive related businesses, a proposal is being considered for demerging the non-automotive related investments and other connected activity therewith to Sundaram Investment Limited (SIL), whose entire share capital is being presently held by the Company. SIL has thus become a wholly owned subsidiary of the Company effective 13th August 2010. The proposed demerger subject to the approval of shareholders and sanction by the Honble High Court of Madras in terms of the provisions of Section 391 - 394 of the Companies Act, 1956 is being embodied in a composite Scheme of Arrangement. Upon the Scheme of Arrangement being approved by the Honble High Court, the existing number of shares, held by the shareholders in the Company will be distributed as per the Scheme, equally between the Company and SIL. Thus, the shareholders of the Company will hold same number of shares of Rs. 51- each in both the companies, namely, the Company and SIL. The details of the composite Scheme of Arrangement will be circulated to the shareholders for approval at a Court convened meeting to be held in due course.

The proposed Scheme of Arrangement also envisages that the existing wholly owned subsidiary of the Company, TVS Investments Limited (TVSI), which, upon becoming a wholly owned subsidiary of SIL following the sanction of the Scheme by the Honble High Court of Madras, will as part of the same Scheme, be merged with SIL and SIL will be renamed as TVS Investments Limited with the approval of the Honble High Court of Madras. As part of the composite Scheme of Arrangement, M/s Anusha Investments Limited (AIL), a wholly owned subsidiary of the Company, is also proposed to be merged with the Company. By this process of rationalisation, the ability to concentrate on core businesses of the respective companies and correspondingly the shareholders value wilt get increased.

7. SUBSIDIARY COMPANIES

As of 31st March 2010, the following are the subsidiaries of the Company:

S. No Name of the Company Subsidiary of

Automotive related investments

1. Anusha Investments Limited Sundaram-Clayton Limited

2. TVS Motor Company Limited Sundaram-Clayton Limited

3. Sundaram Auto Components Limited TVS Motor Company Limited

4. TVS Energy Limited TVS Motor Company Limited

5. TVS Motor (Singapore) Pte Limited TVS Motor Company Limited

6. TVS Motor Company (Europe) B.V TVS Motor Company Limited

7. PT TVS Motor Company Indonesia TVS Motor (Singapore) Pte Limited Non automotive related investments

8. TVS Investments Limited Sundaram-Clayton Limited

9. TVS Electronics Limited TVS Investments Limited

10. TVS Capital Funds Limited TVS Investments Limited

11. TVS-E Access (India) Limited TVS Investments Limited

12. TVS-E Servicetec Limited TVS Investments Limited

13. Sravanaa Properties Limited TVS Investments Limited

14. Tumkur Property Holdings Limited TVS Electronics Limited

15. Prime Property Holdings Limited TVS Electronics Limited

The Company on 15th June 2010 invested an amount of Rs.4.50 Cr in the equity share capital of TVS Energy Limited, a subsidiary of the Company in terms of section 4(1 )(c) of the Companies Act, 1956.

TVS Motor Company Limited, Chennai (TVS Motor), a subsidiary of the Company acquired the entire paid-up capital consisting of Rs. 5 lakhs of TVS Housing Limited, Chennai (TVS Housing). TVS Housing became a wholly owned subsidiary of TVS Motor on 21st June 2010 and hence it became a subsidiary of the Company in terms of section 4(1 )(c) of the Companies Act, 1956.

Performance of Subsidiaries:

Anusha Investments Limited (AIL)

During the year, the wholly owned subsidiary, namely Anusha Investments Limited (AIL), has earned a total income of Rs.2062.70 lakhs, which included dividend income of Rs.1641.81 lakhs. The profit for the year stood at Rs. 1902.87 lakhs. The Company has declared a dividend of Rs.240/- per share on 5,00,000 equity shares of Rs.100/- each for the year 2009-10.

TVS Investments Limited (TVSI)

During the year, TVS Investments Limited (TVSI) has earned a total income of Rs.6387.04 lakhs. The profit for the year stood at Rs.1717.81 lakhs. TVSI has not declared any dividend for the year 2009-10.

8. CONSOLIDATED ACCOUNTS

In terms of Accounting Standard 21 prescribed by the Institute of Chartered Accountants of India / Companies (Accounting Standards) Rules, 2006, the accounts of the subsidiaries are consolidated with the accounts of the Company and the consolidated accounts form part of this report.

Pursuant to the application in terms of Section 212(8) of the Companies Act, 1956 made by the Company to the Central Government, seeking exemption from attaching the balance sheet and profit and loss account of its subsidiaries along with the report of the board of directors and that of the auditors thereon, with the Companys accounts, the Company has obtained the approval of the Central Government vide letter No.47/559/2010-CL-lll dated 11th June 2010.

The annual accounts, reports and other documents of the subsidiary companies will be made available to the members on receipt of a request from them.

The annual accounts of the subsidiary companies will be available at the registered office of the Company and at the respective subsidiary companies concerned, for inspection by any member during the business hours of any working day.

9. DIRECTORS

The directors are happy to report that Mr Venu Srinivasan, managing director of the Company has been conferred in January 2010 with Padmashri, a prestigious adoration by Government of India in appreciation of his significant contribution for the promotion of trade and industry.

Mr Venu Srinivasan also received the distinguished civilian honour "Order of Diplomatic Service Merit" from the President of Republic of Korea in the year 2010, in recognition of his valuable contribution in promoting Korea-India bilateral relations and for meritorious service to the extension of national prestige overseas for the promotion of friendship with other nations.

Mr T R Sridharan who was appointed as an additional director effective 25th January 2010 will vacate his office in terms of Section 260 of the Companies Act, 1956 at the ensuing annual general meeting and is eligible for appointment, as a director of the Company. In terms of Section 257 of the Companies Act, 1956, a notice has been received from a member of the Company signifying the proposal for the appointment of Mr T R Sridharan as a director, at the ensuing annual general meeting.

Dr Lakshmi Venu, who was appointed as an additional director effective 22nd March 2010 will vacate her office in terms of Section 260 of the Companies Act, 1956 at the ensuing annual general meeting and is eligible for appointment, as a director of the Company. In terms of Section 257 of the Companies Act, 1956, a notice has been received from a member of the Company signifying the proposal for the appointment of Dr Lakshmi Venu as a director, at the ensuing annual general meeting. Dr Lakshmi Venu was also appointed as Director-Strategy in the rank of managing director for a period of five years effective 22nd March 2010 on such terms and conditions subject to the approval of the shareholders at the ensuing annual general meeting of the Company. The abstract of the terms of appointment and memorandum of interest was circulated to members on 6th April 2010 pursuant to section 302 of the Companies Act, 1956.

M/s.Suresh Krishna, T K Balaji and K Mahesh, directors will be retiring at this annual general meeting and, being eligible, offer themselves for re-appointment.

The brief resume of the aforesaid directors to be re-appointed and/or appointed and other connected information have been detailed in the Notice convening the annual general meeting of the Company. Appropriate resolutions for their re-appointment and/or appointment are being placed for approval of the shareholders at the ensuing annual general meeting. The directors recommend their re-appointment / appointment as directors of the Company.

10. AUDITORS

M/s. Sundaram & Srinivasan, Chartered Accountants, retire at the ensuing annual general meeting and are eligible for re-appointment.

The Company has received a letter from them, stating that the appointment, if made, will be within the prescribed limit prescribed under section 224(1 B) of the Companies Act, 1956.

11.CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity,

A separate section on Corporate Governance and a cartificate from the statutory auditors of the Company regarding complia.ice of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of the Annual Report.

The managing director (CEO) and executive vice president - finance (CFO) of the Company have certified to the board on financial statements and other matters in accordance with the clause 49(V) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March 2010.

The Ministry of Corporate Affairs issued a Corporate Governance Voluntary Guidelines 2009 in the second half of December 2009. The guidelines broadly outline conditions for appointment of directors, their remuneration / responsibilities, risk management by the board, the enhanced role of audit committee, rotation of audit partners / firms and conduct of secretarial audit. The Company, while generally meeting the various requirements, has already commenced taking steps for appropriate action for compliance of the relevant items of the guidelines.

12. STATUTORY STATEMENTS

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

As per the requirements of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report.

Particulars of employees

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report (excluding Annexure II) is

being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Public Deposits

The Company has not accepted any deposit from the public within the meaning of Section 58A of the Companies Act, 1956 for the year ended 31st March 2010.

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby stated:

(i) that in the preparation of annual accounts for the financial year ended 31st March 2010, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

(iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with

the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the directors had prepared the accounts for the financial year ended 31st March 2010 on a "going concern basis".

13. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from M/s.T V Sundram Iyengar and Sons Limited, Madurai.

The directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The directors specially thank the shareholders for their continued faith in the Company.



For and on behalf of the board

Chennai GOPALSRINIVASAN VENUSRINIVASAN

13th August 2010 Director Managing Director



 
Subscribe now to get personal finance updates in your inbox!