Home  »  Company  »  TVS Motor Co. Ltd.  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of TVS Motor Company Ltd.

Mar 31, 2015

Dear Members,

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

1. COMPANY PERFORMANCE

The Company achieved higher than the industry growth in 2014-15, registering sales of 24.1 lakh two wheelers, growing by 20.9% over last year. Sale of Motorcycles increased by 21% and scooters by 47.7%. Moped sales grew at a modest 3.6%. Three-wheeler sales of the Company increased by 35% in 2014-15. Sales of spare parts grew by 19.7%. This performance was achieved despite a challenging year characterized by slow economic activity, successive crop failures and severe competitive intensity.

TVS Jupiter, StaR City , Scooty Zest and Apache won several national and international awards clearly signaling a very strong customer acceptance and strong portfolio.

Total revenue of the Company including other income increased from Rs.7,996.15 Cr in the previous year to Rs.10,130.83 Cr in the current year. Profit before tax (PBT) for the year 2014-15 increased significantly to Rs.456.16 Cr from Rs. 352.54 Cr in the previous year. Similarly Profit After Tax increased from Rs.261.63 Cr achieved in the previous year after considering the exceptional items to Rs.347.83 Cr in 2014-15.

2. FINANCIAL HIGHLIGHTS

Year ended Year ended Details 31-03-2015 31-03-2014

SALES Quantitative (Numbers in lakhs)

Motorcycles 9.51 7.86

Mopeds 7.59 7.33

Scooters 7.00 4.74

Three Wheelers 1.08 0.80

Total vehicles sold 25.18 20.73

Financials (Rupees in crores)

Motorcycles 3815.09 3061.41

Mopeds 1553.20 1470.23

Scooters 2433.07 1609.77

Spares & Accessories and

Raw Materials 1095.27 947.34

Three Wheelers 1023.51 768.95

Other Operating Income 178.08 108.24

Other Income 32.61 30.21

Sales (Net of Excise duty) &

other income 10130.83 7996.15

(Rupees in crores)

EBITDA 668.91 536.04

Finance Charges & Interest (Gross) 27.42 25.40

Amortisation 32.00 23.64

Depreciation 153.33 131.65

Profit before tax before exceptional items 456.16 355.35

Exceptional items - (2.81)

Profit before tax after exceptional items 456.16 352.54

Provision for Tax 108.33 90.91

Profit for the year after tax 347.83 261.63

Balance in Statement of Profit and Loss 481.76 323.81

Profit available for appropriation 829.59 585.44

Appropriations:

Dividend and Dividend

Distribution Tax 107.51 77.52

Transfer to General Reserve - 26.16

Surplus carried forward 722.08 481.76

829.59 585.44

3. DIVIDEND

The board of directors of the Company (the board), at their meeting held on 3rd February, 2015, declared a 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. The same was paid to the shareholders on 13th February 2015.

The board at its meeting held on 29th April, 2015 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. The same will be paid to the shareholders on or after 9th May, 2015. Hence, the total amount of dividend including the second interim dividend payable, 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.

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

5. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 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, 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 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 CSR Committee formulated and recommended a CSR 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 recommendations 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, constituting more than 2% of average net profits, for the immediate past three financial years, towards CSR spending for the current financial year 2014-2015.

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

1 Srinivasan Services Trust 515.00

2 Sri Sathya Sai Loka Seva Trust 125.00

Total 640.00

Presently, SST is working in 2,501 villages spread across Tamil Nadu, Karnataka, Maharashtra, Himachal Pradesh and Andhra Pradesh. Its major focus areas are: Economic development, Health care, Quality education, Environment and Infrastructure.

Of the 2,501 villages, 1,573 villages (11,69,104 population and 2,51,234 families) have been funded by the Company over the years.

Achievements in 1,573 villages are:

Economic development:

- 1,44,800 families living in these villages have a monthly income of above Rs.15,000/-. They have financial security.

- 1244 farmers groups have been formed with 22,109 members.

- 1,01,834 farmers owning 1,17,089 hectares have increased the yields higher than the state average of the crops by 15%.

- 1,03,000 families earn more than Rs 3,500/- per month through livestock.

Women empowerment:

- Formed 5,091 Self Help Groups. These groups have 79,373 women as members.

- Of the 79,373 members, 71,774 members are in income generation activities. They earn a minimum additional income of Rs. 2500/- per month.

Health care:

- 23,009 children in the age group below 5 are not malnourished.

- 1,21,288 women are not anaemic any more.

- 75,749 additional households have access to toilet facilities (from 71,851 to 1,47,600)

- The morbidity percentage reduced from 17% to 5%.

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

- 691 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 747 schools, 503 schools are now model schools.

- 50,354 illiterate women out of 65,042 have been made literates.

Environment and Infrastructure:

- 1,39,280 households dispose solid waste through individual and common compost pits. 83 tons of vermi compost generated per month from wastes.

- Sewage water from 1,41,186 households disposed through soak pits, kitchen gardens and drain.

- Safe drinking water is available to 704 villages.

Community takes care of their development needs. 2,484 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 2014-15 are given by way of Annexure IV attached to this Report.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATE COMPANIES

The following companies and bodies corporate are the subsidiaries/associates of the Company:

Subsidiaries

- Sundaram Auto Components Limited, Chennai;

- TVS Housing Limited, Chennai;

- PT. TVS Motor Company Indonesia, Jakarta;

- TVS Motor Company (Europe) B.V., Amsterdam;

- TVS Motor (Singapore) Pte. Limited, Singapore; and

- Sundaram Business Development Consulting (Shanghai) Company Limited, Shanghai.

Associates

- Emerald Haven Realty Limited, Chennai; and

- Green Infra Wind Energy Theni Limited, New Delhi.

Sundaram Auto Components Limited (SACL)

During the year, SACL, a wholly owned subsidiary of the Company, achieved a turnover of Rs.415 Cr in Plastics component business. SACL earned a profit after tax of Rs.25.32 Cr during the year 2014-15.

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)

During the year, TVSH has successfully completed phase 1 of the projects at its Nedungundram land at Chennai.

EHRL is the developer of the Nedungundram project of TVSH.

Construction of apartments have been completed and will be handed over to the buyers by June 2015. In Phase 2 of the Nedungundram project, villas are being developed and will be completed by June 2016.

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 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, the Company 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.

TVS Motor Company (Europe) B.V &

TVS Motor (Singapore) Pte. Ltd

The Company 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 TVS.

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

Green Infra Wind Energy Theni Ltd (GIWETL)

SACL had earlier invested Rs.3 Crores (30,00,000 shares of Rs.10 each) representing 21.58 % out of a total share capital of Rs.13.9 crores of GIWETL and in terms of the provisions of AS 18, GIWETL became an associate of the Company.

This investment by SACL was made purely to comply with the legal requirement to be eligible as captive consumer to draw low cost green energy units produced.

GIWETL has an installed capacity of 7.5 MW out of which 6 MW is committed to SACL. During the year under review, GIWETL reported a PBT of Rs.1.16 Cr and pro rata share of profit is considered for consolidation.

Financial position of all subsidiaries and associate companies are provided as an Annexure to consolidated financial statements.

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 under 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 them, 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 T Kannan, C R Dua, R Ramakrishnan, Prince Asirvatham and Hemant Krishan Singh, were appointed as IDs for the first term of five consecutive years from the conclusion of the twenty-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 14th July, 2014 at the annual general meeting as determined by the board from time to time.

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.tvsmotor.com/pdf/Terms-of-Appointment-Independent- Directors.pdf.

Separate meeting of Independent Directors:

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 25th March, 2015 and the IDs reviewed the performance of:

(i) non-IDs viz., M/s. Venu Srinivasan, Chairman and Managing Director Sudarshan Venu, Joint Managing Director, H Lakshmanan, and Dr Lakshmi Venu, 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 director on its board.

Dr Lakshmi Venu was appointed as additional, non-executive and non-independent director of the Company in terms of Section 161 read with Section 149 of the Act 2013, at the board meeting held on 10th September, 2014. She will vacate office in terms of Section 161 of the Act 2013 at the AGM and, being eligible, seeks herself for re-appointment at the ensuing AGM.

The board, based on the recommendation of nomination and remuneration committee, has recommended her appointment as non-executive and non independent director, liable to retire by rotation, in accordance with the articles of association of the Company (AoA), at the AGM, for approval by the shareholders.

A notice has been received from the holding company viz., Sundaram-Clayton Limited, as per the provisions of Section 160 of the Act 2013, along with a requisite deposit amount signifying its intention to propose the candidature of Dr Lakshmi Venu for appointment as director at the AGM.

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 Sudarshan Venu, JMD, who is liable to retire by rotation, at the AGM, and being eligible, offers himself for re-appointment.

Executive directors

Joint Managing Director (JMD)

During the year, the board, at its meeting held on 10th September, 2014, based on the recommendation of the NRC, appointed Mr Sudarshan Venu, who 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 - as JMD from the position of the whole-time director, subject to the approval of the shareholders at the AGM.

The other terms and conditions of his appointment and remuneration, as earlier approved by the board as well as by the shareholders of the Company on 18th March, 2013 through postal ballot and on 14th July, 2014 at the twenty- second annual general meeting of the Company, would remain unchanged.

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 holding company, namely Sundaram-Clayton Limited (SCL) 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.

Chairman and Managing Director (CMD)

During the year, the board, at its meeting held on 3rd February, 2015 re-appointed Mr Venu Srinivasan as chairman and managing director of the Company (CMD), effective 24th April 2015 to hold the office for a period of five years on such terms and conditions, subject to the approval of the shareholders at the AGM.

Mr Venu Srinivasan was conferred an Honorary Doctorate of Management degree by Purdue University, USA in May 2014. The honour was conferred on him in recognition of his contributions in the field of management.

Further, in December 2014, Mayor of Busan Metropolitan City, Republic of Korea, His Excellency Suh Byung-soo conferred on him the Honorary Consul General of the Republic of Korea in Chennai. This award is one of the highest of its kind being awarded to a foreign national by the Korean. He is also the first Indian industrialist to be granted this honorary citizenship, in recognition of his valuable contribution in promoting Korea-India bilateral relations.

The board, based on the recommendation of NRC, has appointed and recommended his reappointment and the terms of remuneration as CMD, in accordance with the articles of association of the Company (AoA), at the AGM. Mr Venu Srinivasan as CMD of both the holding company namely Sundaram-Clayton Limited (SCL) 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.

The brief resume of the directors proposed to be appointed and reappointed and other relevant information have been furnished in the Notice convening the annual general meeting of the Company. 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 meeting held on 29th April, 2014, Mr Venu Srinivasan, CMD, Mr Sudarshan Venu, now JMD, Mr K N Radhakrishnan, President & Chief Executive Officer, Mr S G Murali Chief Financial Officer and Mr K S Srinivasan Company Secretary were designated as ''Key Managerial Personnel'' of the Company in terms 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 23rd 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.

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.

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.We endeavour 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 at its twenty second AGM held on 14th July 2014 appointed M/s V Sankar Aiyar & Co., Chartered Accountants, Mumbai, having Firm Registration No. 109208W allotted by The Institute of Chartered Accountants of India, as statutory auditors of the Company to hold office, for four consecutive years from the conclusion of the said AGM, subject to ratification at every AGM. The Auditors'' Report for the financial year 2014-15 does not contain any qualification, reservation or adverse remark and the same is attached with the annual report.

The Company has obtained necessary certificate under Section 141 of the Act 2013 from them conveying their eligibility for being statutory auditors of the Company for the year 2015-16.

Cost Auditors

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.5 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, M/s S Krishnamurthy & Co., Company Secretaries, Chennai, was appointed as Secretarial Auditors for carrying out the secretarial audit for the financial year 2015-16.

As required by Section 204 of the Act, 2013, the Secretarial Audit Report for the year 2014-15, given by M/s S Krishnamurthy & Co., Company Secretaries, 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 chairman and managing director and the executive vice president - finance 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 23rd 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.tvsmotor.com/pdf/Whistle-Blower- Policy.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.

Employees'' 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

Details of material related party transactions under Section 188 of the Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, are given in Annexure VI to this report in the prescribed form.

Details of loans / guarantees / investments made

The details of loans and guarantees under Section 186 of the Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, for the financial year 2014-2015 are given as Annexure VII to this report. On loans granted to the employees, the Company has charged interest as per its remuneration policy, in compliance with 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 holding company i.e. Sundaram-Clayton Limited, Chennai. The directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review.

The directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board Bengaluru VENU SRINIVASAN 29th April 2015 Chairman


Mar 31, 2013

To the Shareholders

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

1. FINANCIAL HIGHLIGHTS

Year ended Year ended

Details 31-03-2013 31-03-2012

SALES:

Quantitative (Numbers in lakhs)

Motorcycles 7.56 8.44

Mopeds 7.93 7.78

Scooters 4.46 5.25

Three wheelers 0.49 0.40

Total vehicles sold 20.44 21.87

Financial (Rupees in crores)

Motorcycles 2794.98 2901.15

Mopeds 1547.07 1461.43

Scooters 1441.54 1625.82

Spares & Accessories 741.70 696.64

Three Wheelers 440.11 324.25

Other Operating Income 99.60 132.23

Other Income 23.84 21.71

Sales (Net of Excise duty & other income) 7088.84 7163.23

EBITDA 460.62 519.86

Finance charges & Interest (Gross) 48.04 57.09

Amortisation 27.75 28.78

Depreciation 130.41 117.53

Profit before tax and exceptional item 254.42 316.46

Exceptional item (91.63)

Profit before tax after exceptional item 162.79 316.46

Extraordinary items 0.79

Profit before tax after extraordinary item 163.58 316.46

Provision for tax 47.56 67.39

Profit for the year after tax 116.02 249.07



2. DIVIDEND

The board of directors of the Company at its meeting held on 1st February 2013, declared a first interim dividend of Re.0.60 per share (60%) for the year 2012-13 absorbing a sum of Rs. 32.85 Cr including dividend distribution tax. The same was paid to the shareholders on 12th February 2013.

The board of directors of the Company at its meeting held on 30th April 2013 declared a second interim dividend of Re. 0.60 per share (60%) for the year 2012-13 absorbing a sum of Rs. 32.66 Cr including dividend distribution tax. The same will be paid to the shareholders on or after 10th 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.1.20 per share (120%) on 47,50,87,114 equity shares of Re.1/- each.

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

3. SUBSIDIARY COMPANIES

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

Name of the Company Subsidiary of

Sundaram Auto Components Limited TVS Energy Limited

TVS Housing Limited TVS Motor Company Limited

TVS Motor Company (Europe) B.V. TVS Motor (Singapore) Re. Limited Sundaram Business Development Consulting (Shanghai) Company Limited

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

TVS Wind Power Limited _,„,_ ,. UJ

TVS Energy Limited TVS Wind Energy Limited

4. PERFORMANCE OF SUBSIDIARIES

PT.TVS Motor Company Indonesia (PT TVS)

During the year under review, PT TVS''s sales, was lower at 19,000 nos. compared to 23,000 nos. sold during 2011-12, consequent to steep fall in the sales of Bebek category in Indonesia, where its current products are focused. However, improved margin resulted in lower EBITDA loss at Rs.37.53 Cr, compared to EBITDA loss of Rs.49 Cr of 2011-12.

During the year, PT TVS sold its surplus land of 200,000 sq.meters bought in 2008 for a sale consideration of USD 23.4 million, generating a profit of USD 16.9 million. Consequently, PBT for the year was Rs.7.57 Cr compared to loss of Rs.87.72 Cr in 2011-12. The sale of surplus land does not affect the manufacturing facilities of PT TVS.

The Motorcycle industry in Indonesia declined by 10%, during the year, mainly due to the introduction of new regulations on the down payment for consumer financing. The total two wheelers sold during 2012-13 was 7.2 mn. The category share of bebek, which was dominant for five years, came down from 39% to 27% during 2012-13.

The scooter (skubek) category grew by 5% and its category share went up from 53% to 61%. The sports motorcycle category, witnessed a significant growth of 28%, with the category share moving to 12%, indicating the new preference of Indonesian customers.

During the year, PT TVS successfully launched a new style Apache 160 cc and 180 cc, which were received well by the customers. PT TVS grew by 15% in this category over the last year. It is planning to launch a new skubek and a new motorcycle during 2013-14. Both these products are expected to perform well and increase the sales during 2013-14.

Presently, PT TVS has around 100 dealers and has plans to expand the network to 150 dealers by the end of March 2014. PT TVS also plans to tie-up with multi-finance companies, to leverage retail finance and grow the sales during 2013-14.

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

It has been proposed by the board of directors of TVSM Europe to close down the investment outfit considering the general down turn in the business environment in Europe and across other parts of the world. It has also been proposed, as part of their closing down the activities, distribution of assets and liabilities to the Company''s another overseas subsidiary, namely TVS Motor (Singapore) Pte. Limited, in the manner they now appear in their books of accounts.

By way of a provision for diminution in the value of investment viz. to the tune of Rs.91.63 Cr. representing the investment in the share capital of PT TVS Motor Company, Indonesia by TVSM Europe impairment has also been provided for in the books of the Company in the current financial year.

Way back in March 2011, TVSM Europe has taken this investment value at nil in their books.

Sundaram Auto Components Limited (SACL)

During the year, SACL achieved a turnover of Rs.298 Cr in Rubber and Plastics component business. SACL earned a profit after tax of Rs. 13.62 Cr during the year 2012-13 including the profit from sale of rubber business.

Focused improvement in material productivity resulted in 10% improvement in contribution compared to previous year even with increase in energy cost. During the year, the Company has also productionised 107 new parts for various customers. The current product profile of Rubber component business is limited. Therefore, the board of directors of SACL, after obtaining the approval of its shareholders, divested the Rubber Component business at a value of Rs.21 Cr. This will help SACL to focus and expand the Plastic business.

SACL was awarded "Best Supplier award for delivery" by the Company for the year 2012-13.

SACL declared an interim dividend of Rs.2.50 per share (25%) for the year ended 31st March 2013.

TVS Energy Limited (TVS Energy)

During the year, TVS Energy commissioned the remaining 15 turbines of the 25.5 MW project in Maharashtra and executed Energy Purchase Agreement with the state utility Maharashtra State Electricity Distribution Company Limited for sale of energy from this project.

It had also successfully registered all the wind energy projects with UNFCCC under Clean Development Mechanism (CDM) for Carbon credits.

TVS Energy, in order to tide over the power evacuation issues faced during 2011 high wind season by the turbines in Tamil Nadu, identified improvement actions based on study of the grid infrastructure and pursued implementation of improvement actions with the state utility to minimize back down of generation. Consequently, the grid availability for the turbines improved significantly during 2012-13 and this resulted in a substantial increase in energy generation by the turbines during the year under review.

The revenue earned by TVS Energy for the year is Rs.43.62 Cr and EBITDA is Rs.39.68 Cr. After providing for interest of Rs.21.89 Cr and depreciation of Rs.12.89 Cr, the PBT is Rs.4.90 Cr for the year 2012-13, compared to loss of Rs.6.87 Cr for the year 2011-12. The PAT for the year 2012-13 is Rs.4.50 Cr compared to loss of Rs.7.34 Cr for the year 2011-12.

Investment in subsidiaries:

During the year under review, the Company has made additional investment of Rs.0.61 Cr equivalent to USD 110,000 in equity capital of Sundaram Business Development Consulting (Shanghai) Company Limited.

5. 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-lll 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 conditions laid down therein.

The board of directors at its meeting held on 30th April 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 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. If any member or investor wishes to inspect the same, it will be available at the registered office of the Company 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 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.

6. DIRECTORS

Mr Hemant Krishan Singh who was appointed as an additional director effective 1st February 2013 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 Non executive and Independent director of the Company.

Mr Sudarshan Venu who was appointed as an additional director effective 1st February 2013 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.

Mr Sudarshan Venu was also appointed in the rank of whole time director for a period of five years effective 1st February 2013 and the terms and conditions of appointment and remuneration payable to him were approved by the shareholders by way of special resolution through Postal Ballot on 18,h March 2013.

Notices in terms of Section 257 of the Companies Act, 1956 have been received from the members of the Company signifying their proposals for the appointment of Mr Hemant Krishan Singh and Mr Sudarshan Venu as directors, at the ensuing annual general meeting.

In terms of the Articles of Association of the Company, Mr H Lakshmanan, and Mr R Ramakrishnan, directors of the Company, are liable to retire by rotation at the ensuing annual general meeting of the Company, 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 / appointment are being placed for approval of the shareholders at the ensuing annual general meeting. The directors recommend their appointment / re-appointment as directors of the Company.

7. AUDITORS

M/s Sundaram & Srinivasan, Chartered Accountants, Chennai were re-appointed as statutory auditors at the last annual general meeting held on 12th September 2012 to hold office till the conclusion of the ensuing annual general meeting.

M/s Sundaram & Srinivasan, Chartered Accountants, Chennai have informed that they do not wish to be re-appointed as the statutory auditors of the Company at the ensuing Annual General Meeting.

In view of this, the board of directors have recommended the appointment of M/s V Sankar Aiyar & Co., Chartered Accountants, Mumbai as the statutory auditors of the Company, subject to the approval of the shareholders at the ensuing Annual General Meeting. The Company has received consent from M/s V Sankar Aiyar & Co., Chartered Accountants, Mumbai to serve as statutory auditors of the Company, if they are so appointed.

They have also furnished necessary certificate u/s 224(1 B) of the Companies Act, 1956 conveying their eligibility in terms of the number of company audits.

Directors place on record their sincere appreciation of the valuable services rendered by M/s Sundaram & Srinivasan, Chartered Accountants, Chennai since inception of the Company as statutory auditors of the Company.

8. COST AUDITOR

As per the Companies (Cost Accounting Records) Rules 2011, the Company filed the Cost Audit Report along with Cost Compliance Report for the financial year 2011-12 in XBRL format.

The board of directors, subject to the approval of the Central Government, re-appointed Mr A N Raman, Cost Accountant, holding certificate of practice No.5359, as a Cost Auditor for conducting the Cost Audit for the financial year 2013-14. Subject to the compliance with all the requirements as stipulated in circular no.15/2011 dated 11th April 2011 and No. 36/2012 dated 6th November 2012 issued by the MCA, the audit committee of directors recommended his re-appointment.

The Company has also received a letter from the Cost Auditor, stating that the appointment, if made, will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

9. 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 with the 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 chairman and managing director and the executive vice president - finance of the Company have certified to the board on the 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 2013.

10. 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 (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 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 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 2013 on a "going concern basis".

ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the holding Company i.e. Sundaram-Clayton Limited, Chennai. The directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review.

The directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board

Bengaluru VENU SRINIVASAN

30th April 2013 Chairman


Mar 31, 2012

The directors have pleasure in presenting the twentieth annual report and the audited accounts for the year ended 31st March 2012.

1. FINANCIAL HIGHLIGHTS

Year ended Year ended Details 31-03-2012 31-03-2011

QUANTITATIVE (Numbers in lakhs)

Sales:

Motorcycles 8.44 8.33

Mopeds 7.78 7.05

Scooters 5.25 4.66

Three wheelers 0.40 0.39

Total vehicles sold 21.87 20.43

FINANCIAL (Rupees in crores)

Motorcycles 2895.79 2748.88

Mopeds 1458.74 1235.34

Scooters 1622.82 1340.69

Spares and accessories 692.97 539.17

Three wheelers 323.65 314.35

Other operating income 132.23 109.59

Other income 21.71 35.62

Sales (Net of Excise duty) and Other income 7147.91 6323.64

EBITDA 519.86 491.34

Finance costs 57.09 72.33

Amortisation 28.78 63.67

Depreciation 117.53 107.25

Profit before tax 316.46 248.09

Provision for tax 67.39 53.51

Profit for the year after tax 249.07 194.58

2. DIVIDEND

The board of directors of the Company at their meeting held on 14th March 2012, declared an interim dividend of Re.0.60 per share (60%) for the year 2011-12 absorbing a sum of Rs.33.13 Cr including dividend distribution tax. The same was paid to the shareholders on 26th March 2012.

The board of directors of the Company at their meeting held on 24th May 2012 declared a second interim dividend of Re.0.70 per share (70%) for the year 2011-12 absorbing a sum of Rs.38.65 Cr including dividend distribution tax. The same will be paid to the shareholders on or after 12th June 2012. Hence, the total amount of dividend including the second interim dividend payable, for the year ended 31st March 2012 will aggregate to Rs.1.30/- per share (130%) on 47,50,87,114 equity shares of Re.1/- each.

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

4. SUBSIDIARY COMPANIES

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

Name of the Company Subsidiary of

Sundaram Auto Components Limited (SACL)

TVS Energy Limited (TVS Energy)

TVS Housing Limited TVS Motor Company Limited

TVS Motor Company (Europe) B.V.

TVS Motor (Singapore) Pte. Limited

Sundaram Business Development

Consulting (Shanghai) Company Limited

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

TVS Wind Power Limited

TVS Wind Energy Limited TVS Energy Limited

Sundaram Engineering Products Services 51% of share capital held by Limited SACL and TVS Energy

During the year under review, the Company has established a wholly foreign owned enterprise (WFOE) in China under the name of Sundaram Business Development Consulting (Shanghai) Co. Ltd, Shanghai, China. The body corporate was registered in Shanghai province of China on 2nd September 2011 and the Company invested a sum of Rs.0.20 Cr in the equity capital and thereby it became a subsidiary of the Company on that date.

The WFOE closed its accounts for the first year, for a short period from 2nd September 2011 to 31st December 2011.

On 23rd January 2012, Sundaram Auto Components Limited, the wholly owned subsidiary and TVS Energy Limited, subsidiary company invested in the equity capital of Sundaram Engineering Products Services Limited (SEPSL), an unlisted public company, incorporated on 1st December 2011 with the main object of rendering consultancy services for catering to the needs of the group companies and is yet to commence its activities. SEPSL has also become a subsidiary of the Company by virtue of the provisions of Section 4(1)(c) of the Companies Act, 1956, in view of the investment made by the subsidiaries of the Company.

5. PERFORMANCE OF SUBSIDIARIES

PT.TVS Motor Company Indonesia (PT TVS)

PT.TVS Motor Company Indonesia (PT TVS) ended the financial year 2011-12, with a sales of 23,000 vehicles which is a 16% growth from the previous year. Turnover of the Company increased from Rs. 85.36 Cr in 2010-11 to Rs. 107.36 Cr in 2011-12. Operating loss at EBITDA level was lower at Rs. 49 Cr during the current year compared to loss at EBITDA level (excluding amortisation of Foreign

Currency Monetary Translation Reserve) was Rs. 58.4 Cr of previous year.

The Indonesian motorcycle industry has been growing at 15% in the last 5 years and is expected to grow at 10% to 12% over the next five years. However, there has been a significant shift in the form of vehicles sold. The popular Bebeks category which constituted close to 80% of the market 5 years back has now come down to 40% on the back of strong growth from the scooters (skubeck) category. The scooters offer greater convenience and imagery over the Bebeks and hence are a preferred choice. The category share of Sports model, however, remains stable at 8%.

PT TVS has 3 brands in the Bebek category and one brand in the Sports category and is still unrepresented in the Scooters category. All the product brands have been well received by the customers.

PT TVS has just completed the launch of 2012 model of Neo in February 2012. This was followed by the launch of new TVS RockZ in May 2012. All new TVS Apache in 3 models viz., 160cc, 180cc and 180cc ABS (first in the category) will also be launched during the year 2012-13.

The company has decided to focus on 6 identified provinces and increase its share in these markets through focused expansion and improving the productivity of existing dealers. The present strength of around 110 dealers will be increased to 240 by end of next year.

Retail finance, being the most important enabler to sales has been given high priority. The Company has tied up with 3 national and several regional financing companies that will provide retail financing.

The company had, in the last year, exported 10,000 units to countries like Iran, Philippines and West Africa. PT TVS plans to expand its presence in new markets like Laos, Columbia, Argentina, Peru, Guatemala, Nigeria, Brazil and Vietnam.

Sundaram Auto Components Limited (SACL)

During the year, SACL achieved a growth of 10% in the sale of Rubber and Plastics component business. SACL earned a profit after tax of Rs 5.13 Cr during the year 2011-12 as against Rs.8.22 Cr in the previous year.

Due to abnormal increase in the price of polymers and increase in fixed costs, the profitability of SACL was affected and resulted in lower contribution and consequently lower profits during 2011-12.

SACL has added injection moulding machines with annual capacity of 680 tons of plastics at its plant located at Mysore to support its customers. During the year, SACL has also productionised 92 new parts for various customers.

SACL was awarded "National Best Partner for Business Development" by Hyundai Mobis for the third consecutive year in recognition of outstanding performance and achievement in India during the year.

SACL declared and paid an interim dividend of Rs 1.50 per share (15%) for the year ended 31st March 2012.

TVS Energy Limited (TVS Energy)

During the year, power generation by TVS Energy's wind turbines had to be backed down under instruction of the state transmission utility, viz., Tamil Nadu Transmission Corporation Limited (TANTRANSCO) during the peak wind season due to overloading and high frequency of the grid. Consequently, the energy generation from four wind energy projects with a capacity of 34.25 MW located in Tamilnadu was severely affected. The revenue earned by TVS Energy for the year was Rs.16.64 Cr and EBITDA was Rs. 13.34 Cr. However after providing for interest of Rs. 13.06 Cr and depreciation of Rs. 7.15 Cr, the net loss from operations is Rs. 6.87 Cr. TVS Energy expects the grid availability to improve during the current year.

During the year, TVS Energy planned to set up a 25.5 MW capacity wind energy project in Maharashtra. The power generated by this project is proposed to be sold to power distribution utility in Maharashtra. Two turbines (3 MW) were commissioned during the year and the remaining fifteen turbines (22.5 MW) are expected to be commissioned during the current financial year 2012-2013.

Investment in subsidiaries:

During the year under review, the Company made additional investments in its subsidiaries:

- USD 18 Million in non cumulative, non convertible and redeemable shares (Class B) of PT TVS.

- Rs 24.90 Cr in the equity capital of SACL.

- Rs 25.00 Cr in the equity capital of TVS Energy.

- Euro 5450000 in the equity capital of TVS Motor Company (Europe) B.V.

- USD 40000 in equity capital of Sundaram Business Development Consulting (Shanghai) Company Limited.

6. CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement with the Stock Exchanges, the consolidated financial statements of the Company have been prepared in compliance with the applicable Accounting Standards and 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 conditions laid down therein.

The board of directors at their meeting held on 11th April 2012 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, 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 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, Mr T Kannan and Mr Prince Asirvatham, directors of the Company, are liable to retire by rotation at the ensuing annual general meeting of the Company, 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.

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

9. COST AUDITOR

The Company filed the Cost Audit Report in terms of Cost Accounting Records (Motor Vehicles) Rules, 1997 for the financial year 2010-2011 on 19th September 2011 which was due to be filed with the MCA on or before 30th September 2011.

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 Companies Act, 1956.

The board of directors, subject to the approval of the Central Government, appointed Mr A N Raman, a Cost Accountant holding certificate of practice No.5359, as a Cost Auditor for conducting the Cost Audit for the financial year 2012-2013. The audit committee of directors recommended his appointment subject to the compliance of all the requirements as stipulated in circular no.15/2011 dated 11th April 2011 issued by the MCA. The Central Government has also accorded its approval for the appointment.

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 this Annual Report.

The chairman and managing director and the executive vice president - finance 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 2012.

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, during the year ended 31st March 2012.

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 2012, the applicable Accounting Standards had been followed and that there are 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 2012 on a "going concern basis."

ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the holding company i.e., Sundaram-Clayton Limited, Chennai. The directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review.

The directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board

Bengaluru VENU SRINIVASAN

May 24, 2012 Chairman


Mar 31, 2011

Directors' report to the Shareholders

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

1. FINANCIAL HIGHLIGHTS

Details Year ended Year ended

31-03-2011 31-03-2010

QUANTITATIVE (Numbers in lakhs)

Sales:

Motorcycles 8.33 6.38

Mopeds 7.05 5.71

Scooters 4.66 3.10

Three wheelers 0.39 0.15

Total vehicles sold 20.43 15.34

FINANCIAL (Rupees in crores)

Motorcycles 2,748.88 2,046.23

Mopeds 1,235.34 952.48

Scooters 1,340.69 822.03

Spares and accessories 540.22 421.84

Three wheelers 314.35 120.53

Other income 119.18 121.57

Sales (net of excise duty) and other income 6,298.66 4,484.68

EBITDA 466.00 303.62

Interest and finance charges (net) 46.99 63.17

Amortisation 63.67 61.75

Depreciation 107.25 102.53

Profit before tax 248.09 76.17

Provision for tax (including deferred tax and fringe benefit tax) 53.51 (11.84)

Profit for the year (after tax) 194.58 88.01

Surplus brought forward 34.12 33.02

Profit available for appropriation 228.70 121.03

APPROPRIATIONS

First Interim dividend 23.76 16.63

Second Interim dividend payable 28.51 11.88

Tax on dividend paid 3.95 2.83

Provision for dividend tax 4.26 1.53

Transfer to general reserve 32.75 54.04

Surplus carried forward 135.47 34.12

2. DIVIDEND

The board of directors of the Company at their meeting held on 20th January 2011, declared first interim dividend of Re.0.50 per share (50%) for the year 2010-11 absorbing a sum of Rs.27.71 Cr including dividend distribution tax. The same was paid to the shareholders on 1st February 2011.

The board of directors of the Company at their meeting held on 29th July 2011 declared a second interim dividend of Re.0.60 per share (60%) for the year 2010-11 absorbing a sum of Rs.32.77 Cr including dividend distribution tax. Hence, the total amount of dividend including the second interim dividend payable, for the year ended 31st March 2011 will aggregate to Rs.1.10 per share (110%) on 47,50,87,114 Equity shares of Re.1/- each.

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

3. PERFORMANCE

During the year under review, the Company for the first time achieved annual two wheeler sales of two million, a growth of 32% from 1.52 mn units sold in the previous year, driven by growth across all segments of two wheelers. The sales of three wheelers significantly increased from 14,702 Nos. in 2009-10 to 39,257 Nos. in 2010-11.

During the year, the Company strengthened its portfolio of two wheelers by launching Apache RTR 180 equipped with Anti-lock Brake System (ABS) and Max 4R motor cycle.

The Company's total revenue including other income grew from Rs.4,484.68 Cr in the previous year to Rs.6,298.66 Cr in the current year. The profit before tax (PBT) of Rs. 248.09 Cr for the year was higher by 226% than the previous year's PBT of Rs.76.17 Cr. The profit after tax (PAT) of Rs.194.58 Cr for the year was higher by 121% than the previous year's PAT of Rs.88.01 Cr.

The Company expects to grow further in the two wheeler segment, with additional sales coming from the new products launched during the year and the exports of three wheelers. The Company is well positioned to improve business performance during the year 2011-12.

4. BONUS SHARES

During the year, the Company issued and allotted 23,75,43,557 equity shares of Re.1/- each as bonus equity shares on 10th September 2010 in the ratio of 1:1 to the eligible shareholders of the Company as on the record date, i.e, 9th September 2010 by capitalizing an equivalent amount standing to the credit of the general reserve account of the Company as approved by the shareholders through postal ballot on 30th August 2010.

As a result, the Company's paid up equity share capital now stands at Rs. 47.51 Cr. The said issue, allotment and listing of bonus equity shares were 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.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Two wheeler industry continued its impressive growth during 2010-11. The industry registered a growth of 27% with all segments recording an impressive growth.

The Company recorded an overall growth of 32% in two wheeler sales. This was driven by an impressive 50% growth in scooter segment, 23% growth in moped segment and 31% growth in the motorcycle segment. Launch of Apache RTR180 ABS has reinforced the Company's position in the Premium segment of the motorcycle market. TVS Wego in the big scooter segment has contributed considerably to the sales and the scooter segment was further strengthened with the launch of Scooty Babelicious series. The Company launched the Max 4R series to serve the load carrying need of the customers. The Company launched TVS Jive in the Executive segment, which forms 60% of the motorcycle category. During the year, the three wheeler sales have increased from 14,702 nos. in 2009-10 to 39,257 nos. in 2010-11. Sales of spare parts grew by 28%.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The overall two wheeler sales increased by 27% from 10.5 mn numbers in 2009-10 to 13.32 mn numbers in 2010-11. This growth was mainly propelled by a 24% growth in motorcycles from 8.4 mn numbers to 10.5 mn numbers. Scooters grew by an impressive 42% from 1.5 mn numbers to 2.1 mn numbers. Mopeds registered a growth of 23% from 0.57 mn numbers to 0.70 mn numbers. Exports of two wheeler have grown by 34%. The Petrol Passenger three wheeler industry (3 plus 1 segment) grew by 36% during 2010-11 to reach 4 lakh units. Domestic market grew by 21% to reach (1.6 lakh numbers) and Export market grew by 48% (2.5 lakh numbers).

In motorcycle category, the Executive segment grew by 26% and the Premium segment by 38%. Absence of adequate retail finance in all areas continued to affect the Economy segment and it grew only by 12%.

Industry sales of two wheelers (Domestic plus Export)

2009-10 2010-11 Particulars Sales Growth Category Sales Growth Category in mn in % share in mn in % share (nos.) (nos.)

Motorcycles 8.44 24 80% 10.50 24 79%

Un-Geared scooters 1.49 28 14% 2.12 42 16%

Mopeds 0.57 27 6% 0.70 23 5%

Total two wheelers 10.50 25 100% 13.32 27 100%

BUSINESS OUTLOOK AND OVERVIEW

Tight liquidity, high interest cost and inflation are likely to result in lower GDP growth for the country during 2011-12 compared to previous year. The two wheeler industry is also consequently expected to grow at a lower rate of 12% to 14% compared to 27% growth recorded in the previous year. Commodity cost which showed a mild upward bias in the first half may come down in the second half of the year.

COMPANY PERFORMANCE

New Product Launches and Initiatives

During the year 2010-11, the following new products and variants were launched.

TVS Apache RTR 180 first Indian Motorcycle with ABS, is a technical showcase of the RTR Series. Inspired from the track, the RTR Series is a class definer when it comes to performance. The Racing DNA is further personified with the highest in class power to weight ratio and Racing Ergonomics, which render agility and superb handling to the RTR Series.

Inspired by the new generation of young India, the Company launched the Scooty Pep babelicious series with five stunning colours. Along with fresh graphics, this collection is meant for young women. Scooty is known to be a pioneer with successful fashion editions and colour innovations launched in the past. Leading the fashion trend with the babelicious series along with benefits of ease and lightweight, Scooty is further likely to consolidate its position as the most preferred scooter for young women.

Sensing the imminent need of a sturdy and durable motorcycle the Company launched TVS Max4R during the year. The noticeable differentiator is the four shock absorbers that are fitted at the rear end of the motorcycle, so that the bike can easily carry heavy loads.

Two wheeler operations: Domestic:

The Company registered higher growth rates than the market across the segments. While motorcycle segment grew by 23%, TVS grew by 29%.

TVS grew by 50% in the scooter segment. Entry of Wego has further strengthened TVS scooter portfolio. Mopeds grew by 23% with growth coming from both southern and non southern markets.

The Company's products are distributed by network of dealers and authorised service centers across India. The Company will continuously seek to increase distribution reach.

Exports:

TVS crossed a new milestone in exports with all time high sales of 2.23 lakh numbers. The growth of 37% over last year is driven by improved sales in South Asian market, Africa, Brazil and foray into Mexico.

Three wheeler operations:

The Company has cumulatively sold over 58,700 vehicles till March 2011 in India and in international markets since launch.

During the year 2010-11, TVS Motor launched a new customer service initiative "TVS Service Anytime Anywhere (24x7)" in three major cities, which is first of its kind in the industry.

The Company has exported three wheelers to 18 countries. Export of three wheelers provides an excellent opportunity in the current year.

Opportunities and Threats:

Growth in two wheeler demand will come mainly from rising population in target age and income groups. Increased use of personal transport would also be a significant demand driver. Smaller towns are expected to contribute more to the industry growth. TVS StaR City and TVS Sport motorcycles stand to gain from this. Customer acceptance and high customer satisfaction of TVS Jive are expected to result in higher sales. Buoyant rural economy is expected to drive the demand for MAX 4R.

Apache RTR 180 ABS has further strengthened the Company's position in the Premium segment.

The Company has a strong presence in the sub 100cc ungeared scooter segment. The launch of TVS Wego in the large scooter segment further increases the Company's growth prospects in the scooter category.

The rising interest cost, tight liquidity and high inflation may however impact the growth prospect during 2011-12.

OPERATIONS REVIEW

Quality:

The Company has significantly improved the quality of all its existing and new products. Steps have also been taken to improve the quality of after-sales service. The combination of these measures has enabled the Company to achieve best in class customer satisfaction.

Total Quality Management (TQM):

The Company has adopted the philosophies of TQM as the cornerstone of its management. In an attempt to standardize, strengthen and deepen the understanding, the Company has formalized and documented these philosophies titled as "TVS Way". The Company has continued to benefit from 100% participation of employees in TQM activities, for the fifth year in succession. The employees have completed and presented more than 1,600 projects through QC Circles and Cross Functional Teams for the year 2010-11 towards achieving Company's objectives.

During 2010-11, the Company received and implemented on an average 47 suggestions per employee. The Company has won the first prize for "Excellence in Suggestion Scheme" from INSSAN (Indian National Suggestion Scheme Association) for the eighth consecutive year.

Cost management:

The Company continues its rigorous focus on its costs through an effective deployment system. Value engineering and aggressive global sourcing projects are being pursued to reduce material costs and also to partially neutralize input material cost increases.

Research and Development (R&D):

The Company's strong R&D team is supported by modern computer aided laboratory, capable of developing new and innovative products. It has state-of-art facilities for engine testing, noise, vibration and harshness (NVH) measurements and life testing. At present, more than 600 engineers are working on development of new products and in other advanced areas of technology. The Company works with leading technological research laboratories and institutions. The Company is also working on development of fuel-efficient technologies and CO2 reduction technologies to remain ahead of needs of consumers and environment regulations.

R&D has developed and launched a new 110cc 4 stroke ungeared scooter with disc brake system for export market. R&D has developed and launched a new 150cc 4 stroke liquid cooled engine for Indonesian Market. R&D has also developed and launched a 180cc 4 stroke motorcycle with ABS technology.

R&D team has so far published 72 technical papers in national and international conferences.

Information technology:

The Company has been using enterprise wide system to integrate all the business processes within the Company as well as integrating suppliers' and dealers' business processes. Several projects have been implemented during the year to improve productivity and quality. The Company also uses Product Lifecycle Management to reduce the new product development lead time, control cost and improve quality. During the year, the Company has developed applications and dashboards to monitor and improve product quality using early watch and alert system.

Dealer Management System (DMS) - developed by the Company has been extended to all dealers of the Company. DMS also helps the Company to exchange information between the Company and dealers online and provides business intelligence for undertaking initiatives to improve sales, service, product development and customer satisfaction.

RISKS AND CONCERNS

The fragility in global economic recovery is a major concern. Apart from the political unrest in some countries, tight monetary stance, the contagion of hardening crude and commodity prices in international markets are expected to impact Indian economy significantly. Any failure of monsoon could trigger significant supply constraints further fuelling inflation and interest rates. The success of new launches is important to maintain the momentum for the Company.

Government of India has indicated that with effect from 1st October 2011, the current DEPB scheme applicable to exports of two wheeler and three wheeler may be replaced by a duty drawback scheme. Industry expects the new scheme to adequately protect the current benefits to ensure continued competitiveness in the global markets.

INTERNAL CONTROL 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, recorded and reported.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development is focussed and aligned to business needs towards improved performance and business results through the HR roadmap evolved over the years. The key components of the roadmap are - Employee engagement, resourcing, performance and compensation management, Competency based development, Career and succession planning and Organisation building.

The Company continues to be an employer of choice in most engineering schools and polytechnics in the country. The online performance management system has been streamlined across plants and locations including the field staff. Learning Management System (LMS) was leveraged fully for the functional competencies at entry level roles in the engineering streams. Competency assessment and development through various training programs have improved the capability of engineers for their delivery on the job. Skill Training Centre focusing on training and enhancement of fundamental skills have been expanded to other processes such as painting, welding, maintenance and material handling. Talent review conducted as a part of the talent management process has improved the rigour in identifying potential and providing individual development plans. Towards leadership development, the key competencies have been identified and exclusive assessment and development workshops conducted to cover top 200 of the senior management team.

The Company continues to maintain its record on industrial relations without any interruption in work.

As on 31st March 2011, the Company had 4,589 employees on its rolls.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

The Company bagged the "Parivartan Sustainability Leadership Award" for 2011. This award is for Water Conservation Thought Leadership to recognize Indian companies, which have embraced sustainability in their business operations and supply chain and have shown leadership by taking initiatives for making their products, processes and facilities sustainable.

Efforts in material stewardship and 4R measures have helped to effectively manage the waste generated across the operations. Significant reduction in generation of paint sludge has been achieved through introduction of robot in painting operation. Introduction of advanced waste-water treatment technologies, simplification of treatment processes and optimization of chemical dosing through automation have resulted in reduction of chemical sludge generation.

A number of energy saving initiatives viz., optimal utilization of different equipments; heat loss elimination and efficiency improvements in the ovens and boilers; optimisation of higher rating motors and pumps and LED based street lights have resulted in reduction of specific fuel by 5% and specific power by 7% in comparison to previous year.

Rigor in implementing hazard control measures and effective safety training to all new recruits have further improved the safety standards in the Company.

The Company has been recertified second time under Environmental Management System (ISO14001:2004) and Occupational Health and Safety Management System (OHSAS 18001:2007).

CORPORATE SOCIAL RESPONSIBILITY

Srinivasan Services Trust (SST), co-sponsored by the Company with the vision of building self reliant rural community, was established in 1996. Over 15 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.

At present, SST is working in 1,000 villages, spread across Tamil Nadu, Karnataka, Maharashtra, Gujarat and Himachal Pradesh. Its major focus areas are: Economic Development, Health, Education, Environment and Infrastructure. Its significant achievements are:

- Through partnership with the community helped to form over 2,635 Self Help Groups (SHG).

- The Infant Mortality Rate and Maternal Mortality Rate reduced to 2 /1000 live births and 25 / one lakh births.

- 100% enrolment of children in schools and over 36,000 adult women made literate.

- Proper solid and liquid waste management practices adopted in 662 villages.

- Over 1,62,000 hectares of degraded forests reforested and 13,000 hectares of dry lands covered by watershed development activities.

- Over 39,657 families have taken up income generating activities. They earn an additional income from Rs.2,000/- to Rs.4,000/- per month.

- SHG members have a group saving of Rs.10.01 Cr.

- Over 61,600 of the families living in these villages have a monthly income around Rs.10,000/- per family.

Over 200 persons are involved in the activities, consisting of employees, volunteers, field directors, doctors, etc.

Charitable organisations, voluntary institutions, commercial entities have also joined the Company as 'Partners in Progress'.

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.

6. SUBSIDIARY COMPANIES

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

Name of the Company Subsidiary of

Sundaram Auto Components Limited

TVS Energy Limited

TVS Housing Limited TVS Motor Company Limited

TVS Motor Company (Europe) B.V.

TVS Motor (Singapore) Pte. Limited

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

TVS Wind Power Limited TVS Energy Limited TVS Wind Energy Limited

During the year under review, the Company acquired the entire paid up capital of Rs.5 lakhs of TVS Housing Limited (TVS Housing) and thereby TVS Housing became a wholly owned subsidiary of the Company effective 21st June 2010.

During the year under review, the subsidiary company viz., TVS Energy Limited subscribed to the equity capital of TVS Wind Power Limited (TVS Wind Power) and TVS Wind Energy Limited (TVS Wind Energy) amounting to Rs. 4.10 Cr and Rs. 10.15 Cr respectively, constituting 73% of the paid up equity capital of these special purpose vehicles (SPVs).

SPVs therefore became subsidiaries of TVS Energy Limited effective 16th February 2011 in terms of Section 4(1)(b) of the Companies Act, 1956 (the Act) and thereby they became subsidiaries of the Company in terms of Section 4(1)(c) of the Act effective that date. TVS Wind Power and TVS Wind Energy closed their accounts for the first year, for a short period from 6th January 2011 to 31st March 2011 to coincide with the closing of the annual accounts of the holding company, viz., 31st March 2011.

7. CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement with the Stock Exchanges, the 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 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 fulfillment of conditions as stipulated in the said circular granting exemption to the holding company and passing of a resolution by the board in this regard.

The board of directors at their meeting held on 29th April 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 in 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 of the Company in compliance with the conditions of the said circular issued by MCA.

Performance of subsidiaries:

PT.TVS Motor Company Indonesia (PT.TVS)

During the year, PT.TVS Motor Company Indonesia (PT.TVS) increased its sale of two wheelers from 15,000 nos. to 19,800 nos., registering a growth of about 32%. The company's export initiatives proved successful as the company also exported about 4,700 nos. of vehicles to various countries.

The turnover of the company increased from Rs. 68.31 Cr in 2009-10 to Rs. 85.36 Cr in 2010-11. Increased margin and control over costs helped PT.TVS to reduce its operating loss level to Rs.39.84 Cr compared to Rs.64.23 Cr incurred in the last year.

PT.TVS continued its network expansion and as at the end of March 2011, the Company had its network across 16 provinces with 160 dealerships across Indonesia. During the year under review, the Company launched a new re-style version of TVS Neo and a refresh of TVS RockZ. The company also launched a double disc version of Apache and all these products are well accepted in the market. The company was quite successful in launching good quality products and more than 50,000 satisfied customers bear testimony to this fact. PT.TVS's products have won several awards for its superior style, design and features from leading auto magazines. PT.TVS tied up with leading finance companies to extend retail finance to its products.

During the first quarter of the current financial year 2011-12, the company was able to improve its sales to 7,000 nos. as against 5,700 nos. during the corresponding period of the last year. In May 2011, the company launched a new 150 cc hi-technology bebek TVS Tormax motorcycle in the market and it is expected to bring in additional sales numbers.

Sundaram Auto Components Limited (SACL)

The continued growth in automotive industry has enabled SACL to record its improved performance this year also.

During the year, SACL achieved a growth of 44% in the sale of Rubber and Plastics components business. SACL also earned a profit after tax of Rs.8.2 Cr during the year 2010-11 as against Rs.10 Cr in the previous year.

Due to abnormal increase in price of rubber and increase in fixed costs, the profitability of SACL was affected and resulted in lower contribution and consequently lower profits during 2010-11.

With the stability in commodity prices, SACL expects an improved performance during 2011-12.

SACL was awarded "National Best Partner for Business Development" by Hyundai Mobis in recognition of outstanding performance and achievement in India during the year.

SACL declared and paid an interim dividend of Rs.3/- per share (30%) for the year ended 31st March 2011.

TVS Energy Limited (TVS Energy)

During the year, TVS Energy successfully commissioned the Wind Energy project with a capacity of 9.35 MW at Gandamanur in Theni district, Tamil Nadu for captive consumption and 14.4 MW at Vagaikulam in Tirunelveli district, Tamil Nadu for sale of energy to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) under Renewable Energy Certificate (REC) scheme.

It has registered the 14.40 MW project under REC scheme with the National Load Despatch Centre (central agency) and under Generation Based Incentive scheme with Indian Renewable Energy Development Agency Limited. Its entire revenue of Rs.2.79 Cr from operations was on account of wheeling of energy generated from 9.35 MW project to the captive consumer.

It has also promoted two SPVs namely TVS Wind Energy and TVS Wind Power as its subsidiaries for setting-up of 10.5 MW Wind Energy Capacity in Theni district, Tamil Nadu for wheeling energy to Captive Consumers. It has also signed agreements with Engineering Procurement and Construction (EPC) supplier for setting-up this Wind Energy Capacity.

Investment in subsidiaries:

During the year under review, the Company made additional investment in its subsidiary, PT.TVS to the tune of Rs.59.56 Cr in non cumulative, non convertible and redeemable shares of PT. TVS.

The Company also invested a sum of Rs.14.25 Cr in the equity capital of TVS Energy Limited during the year under review.

8. DIRECTORS

In terms of the Articles of Association of the Company, Mr K S Bajpai and Mr C R Dua, directors of the Company, are liable to retire by rotation at the ensuing annual general meeting of the Company, 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.

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. COST AUDITOR

The board of directors, subject to the approval of the Central Government, appointed Mr A N Raman, a Cost Accountant within the meaning of the Cost & Works Accountants Act, 1959 and holding a valid certificate of practice No.5359, as a Cost Auditor for conducting the Cost Audit for the financial year 2011-2012. The audit committee of directors recommended his appointment subject to the compliance of the requirements as stipulated in circular no.15/2011 dated 11th April 2011 issued by MCA.

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. The Central Government has also accorded its approval for the appointment.

The Company filed the Cost Audit Report in terms of Cost Accounting Records (Motor Vehicles) Rules, 1997 for the financial year 2009-2010 on 17th September 2010 which was due to be filed with the MCA on or before 30th September 2010.

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 in clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of this Annual Report.

The chairman and managing director and the executive vice president - finance 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.

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 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 members of the Company. Any member 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 are 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."

ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the holding company i.e. Sundaram-Clayton Limited, Chennai. The directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review.

The directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board

Bengaluru VENU SRINIVASAN

July 29, 2011 Chairman


Mar 31, 2010

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

1. FINANCIAL HIGHLIGHTS

Details Year ended Year ended

31.03.2010 31.03.2009

QUANTITATIVE

(Numbers in lakhs)

Sales:

Motorcycles 6.38 6.44

Mopeds 5.71 4.38

Scooters 3.10 2.59

Three wheelers 0.15 0.05

Total vehicles sold 15.34 13.46

FINANCIAL

(Rupees in crores)

Sales (net of excise duty) and

other income 4,484.68 3,741.18

EBITDA 303.62 247.02

Interest and finance charges (net) 63.17 55.01

Amortisation 61.75 58.03

Depreciation 102.53 102.88

Profit before tax 76.17 31.10

Provision for tax (including deferred

tax and fringe benefit tax) (11.84) 0.02

Profit for the year (after tax) 88.01 31.08

Surplus brought forward 33.02 31.40

Profit available for appropriation 121.03 62.48

APPROPRIATIONS:

First Interim dividend 16.63 16.63

Second Interim dividend 11.88 -

Tax on dividend paid 2.83 -

Provision for dividend tax 1.53 2.83

Transfer to general reserve 54.04 10.00

Surplus carried forward 34.12 33.02

2. DIVIDEND

The board of directors of the Company at their meeting held on 20th January 2010, declared first interim dividend of Re.0.70 per share (70%) absorbing a sum of Rs.19.46 Cr including dividend distribution tax for the year 2009-10. It was paid to the shareholders on 29th January 2010.

The board of directors of the Company at their meeting held on 21st July 2010 declared a second interim dividend of Re.0.50

per share (50%) absorbing a sum of Rs.13.41 Cr including dividend distribution tax for the year 2009-10. Hence the total amount of dividend including the second interim dividend, for the year ended 31s1 March 2010 will aggregate to Rs.1.20/- per share (120%) on 23,75,43,557 equity shares of Re.1/- each.

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

3. PERFORMANCE

During the year under review, the Company recorded a growth of 13.1% in sales with overall two-wheeler sales growing from 13.4 lakh units in the previous financial year to 15.2 lakh units, mainly driven by impressive growth of 19.4% in scooters and 30% in mopeds. Motorcycles declined marginally by 1% due to lower exports.

However, new launches of TVS JIVE and TVS wego will enable the Company to grow in the hitherto un-addressed segments of motorcycles and scooters respectively. With the launch of 4-stroke three-wheelers, the Company expanded its sales of three-wheelers and doubled its market share to 10% in the domestic market.

The Companys total revenue including other income grew from Rs. 3,741.18 Cr in the previous year to Rs. 4,484.68 Cr in the current year. Profit for the year after tax and exceptional items was Rs. 88.01 Cr as against Rs. 31.08 C r of previous year.

The Company expects to consolidate further in the two-wheeler segment, with additional sales coming from the new products launched during the year and it will also commence exports of three-wheelers during 2010-11. With these, the Company is confident of further improved business performance during 2010-11.

4. BONUS SHARES

The board has recommended issue of bonus equity shares to the shareholders in the proportion of one equity share of Re.1/- each for every one equity share of Re.1/- each held by them by capitalising an equivalent amount standing to the credit of the general reserve account of the Company for approval of the shareholders through Postal Ballot. The said bonus equity shares will be issued and allotted to those shareholders whose names appear in the register of members and in the beneficial ownership position held with the depositories as on the record date to be fixed later.

5. AMENDMENT TO MEMORANDUM OF ASSOCIATION

The board has approved a proposal for amendment to the capital clause of the memorandum of association of the Company for increase in the authorized share capital from Rs.25 Cr to Rs.50 Cr, in order to accommodate the increase in share capital after the proposed issue of bonus equity shares. This is subject to approval of the shareholders through Postal Ballot.

The board has recommended the proposed issue of bonus equity shares to be considered and approved by the shareholders by passing appropriate resolutions through Postal Ballot process in accordance with the rules governing Postal Ballot and in order to complete the issue of bonus equity shares within two months as required under SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009.

Therefore, a separate notice is being sent to the shareholders seeking their consents through Postal Ballot for increasing the authorized share capital of the Company in terms of Sections, 16, 94 and other applicable provisions of the Companies Act, 1956 and for capitalization of an equivalent amount standing to the credit of the general reserve account in order to accommodate the proposed issue of bonus equity shares.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In 2009-10, the two wheeler industry saw remarkable growth after two consecutive years of low growth and sales crossed 10 mn units. Early recovery of the economy from the financial crisis and resurgence in domestic demand aided by fiscal stimulus resulted in exceptional growth rates of 33% and 40% in third and fourth quarters of 2009-10 respectively, resulting in an annual growth rate of 24% for the year.

The Company recorded an overall growth of 13.1% in two wheeler sales. This was driven by an impressive 19.4% growth in scooter segment and 30.3% growth in the moped segment. Motorcycle sales declined marginally by 1 % mainly due to lower exports owing to the global financial crisis. Domestic motorcycle sales, however, grew by 6%. New launches of TVS JIVE and TVS wego gave the Company an impressive entry into the unaddressed markets of executive segment of motorcycle and higher cc scooter segment respectively. Both products are expected to pave the way for a higher market share for the Company in the coming years. Launch of Apache RTR180 has reinforced the Companys position in the premium segment of the motorcycle market. During the year, the Company also launched a four stroke three wheeler with superior features. Sales of spare parts grew by 34%.

The Company achieved annual two wheeler sales of 1.52 mn, a growth of 13.1% from 1.34 mn units sold in the previous year. The turnover increased from Rs.3,741 Cr to Rs.4,485 Cr. The profit before tax (PBT) of Rs.76.17 Cr for the year was higher by 144% than the previous years PBT of Rs 31.10 Cr. The profit after tax (PAT) of Rs.88.01 Cr for the year was higher by 183% than the previous years PAT of Rs.31.08 Cr.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The two wheeler industry experienced an impressive growth of 24% during 2009-10. Smaller towns (<1mn population), which accounted for 75% of the industry, grew by 29% in spite of restricted availability of retail finance to end customers.

Domestic motorcycle sales grew by 30%. Exports declined by 1% in the first half of the year, but witnessed a dramatic turnaround in the second half growing at 34% leading to annual growth of 16%.

In the motorcycle category, economy segment grew by 6% mainly led by export demand. Aided by new launches, executive and premium segments grew by 30% and 38% respectively. However, the category share of motorcycles marginally declined from 81% in 2008-09 to 80% in 2009-10.

Ungeared scooters maintained its momentum with a growth of 24%. Introduction of new products and renewed focus on market expansion by industry players enabled this growth. The category share remained constant at 14%.

In contrast to the low growth of 2% in 2008-09, mopeds grew by 28% in 2009-10. The category share increased from 5% in 2008-09 to 6% in 2009-10.

BUSINESS OUTLOOK AND OVERVIEW

2008-09 2009-10

Particulars Sales Growth Category Sales Growth Category

in Mn in % share in Mn in % share (units) (units)

Motorcycles 6.79 4% 81% 8.42 24% 80%

Ungeared scooters 1.15 12% 14% 1.47 24% 14%

Mopeds 0.45 2% 5% 0.57 28% 6%

Total two wheelers 8.39 5% 100% 10.46 24% 100%

The growth momentum of the economy is expected to strengthen further. Coupled with the Government focus on infrastructure improvement, this will bolster the economies of smaller towns (<1 mn population) and rural areas. This translates to significantly enhanced disposable incomes across segments. Thus higher affordability and increased mobility needs will provide considerable scope for industry growth.

Consequently motorcycle segment is expected to grow by 14%, ungeared scooter segment by 24% and mopeds by 10%.

COMPANY PERFORMANCE

New Product Launches and Initiatives:

During the year 2009-10, the following new products and variants were launched.

The Company introduced TVS JIVE 110 cc with innovative T-Matic technology in the executive segment which accounts for 60% of the total motorcycle market. This motorcycle allows hands-free gear shift because of absence of the clutch lever. Coupled with this an anti-stall mechanism makes smooth riding possible at low speeds even in high gears, without the engine shutting off. It is also the first motorcycle in the country to have an under-seat storage compartment, large enough to hold a water bottle, vehicle documents and even a small umbrella.

TVS wego marks the foray of the Company into the higher cc (>100 cc) scooter segment which accounts for 80% of the scooter market. It is a family-friendly scooter that is designed for multiple users, be they are men or women, young or old. This sleek metal bodied scooter strikes a perfect balance between stability and maneuverability, power and mileage, making it a delight to ride for any category of users. The all aluminium low-friction engine ensures best-in- class mileage. Multi-reflector halogen headlamps and LED tail lamp with optical guides give the scooter dynamic styling and effective lighting. The Body Balance Technology makes it the best scooter to handle in city traffic conditions.

TVS Apache RTR 180s sporty, chiseled looks and unmatched performance enabled by superior engine technology, make the bike a Class leader in terms of performance and styling. The bike has an aerodynamic design and high power-to-weight ratio that enable excellent acceleration and handling.

TVS TRU 4 oil launched successfully 3 years ago, has captured 3% market share in 4T market. In line with the changes happening in lubricants international market, the Company has developed TRU4 PREMIUM SAE 10 w 30 oil, a semi synthetic and fuel efficient lubricant. Subsequent to the successful tests, this product was awarded JASO MA2 certification. With TRU4, the Company has entered international markets like Srilanka and Africa.

Two Wheeler Operations:

Domestic:

In motorcycle category, the Company achieved a sales growth of 6% during 2009-10. Sales of TVS Apache grew by an impressive 26% and TVS StaR grew by 5%. TVS JIVE launched at end of the year is well received by the target segment and expected to contribute significantly in the next year.

"Scooty" continues to be a significant player in the scooter segment.The sales of Scooty Pep and Streak grew by 19%.The Company market share in the overall scooter market declined marginally from 21 % to 20%.There was a delay of six months in the launch of TVS wego a unisex higher cc scooter. The product is well accepted in the market and will help the Company to regain market share in the scooter segment. With an improved rural economy, mopeds grew by 30.3% during the year.

Exports:

During the year, the Company exported 1.63 lakh vehicles. The global financial crisis and consequent lower sales mainly in Africa resulted in a 17% decline in sales. However value of exports declined only by 1%, due to better product mix and higher realization. Exports revived in the 4,h quarter registering a growth of 13% and are expected to grow further during 2010-11. During 2009-10, the Company commenced export of TVS Apache to Brazil and the initial response has been encouraging.

Three Wheeler Operations:

The three wheeler industry (non diesel 3 plus 1 segment) grew by 28% during 2009-10 to reach 3 lakh units. Domestic market grew by 45% to reach 1.32 lakh numbers. Domestic Industry has registered an impressive growth after 3 years . Export market at 1.68 lakhs grew by 17%.

The Company has launched its four stroke three wheeler,

offering much superior features, performance and experience. During the year, the Company also developed a pan India presence in three wheelers. These initiatives enabled the Company to double its market share in the domestic market to10% in 2009-10.The Company has started exploring the export markets which may contribute significantly to the total three wheeler market.

OPPORTUNITIES AND THREATS

Growth in two-wheeler demand will come mainly from rising population in target age and income groups and increased use of personal transport. Smaller towns are expected to contribute more to the industry growth.

TVS StaR City and TVS Sport motorcycles stand to gain from this. Customer acceptance, appreciation of the new technology and positive word of mouth will result in increased sales of TVS JIVE motorcycles.

Apache RTR 180 has further strengthened the Companys position in the premium segment. However it requires frequent refreshes and upgrades to remain on top of mind of younger customers.

The Company has a strong presence in the sub 100cc ungeared scooter segment. The launch of TVS wego in the large scooter segment further increases the Companys growth prospects in the scooter category.

OPERATIONS REVIEW

Quality:

The Company has significantly improved the quality of all its existing and new products. Steps have also been taken to improve the quality of after-sales service. The combination of these measures has enabled the Company to achieve best in class customer satisfaction.

Total Quality Management (TQM):

The Company has been using the philosophies of TQM as the cornerstone of its management. The Company has continued to benefit from 100% participation of employees in TQM activities, for the fourth year in succession. The employees have completed more than 1,300 projects through QC Circles and Cross Functional Teams.

During 2009-10, the Company received and implemented an average of 44 suggestions per employee. The Company won First Prize for "Excellence in Suggestion Scheme" from INSSAN (Indian National Suggestion Scheme Association) for seventh consecutive year.

Cost management:

The Company continues its rigorous focus on its costs through an effective deployment system. Value engineering and aggressive global sourcing projects are being pursued to reduce material costs and also to partially neutralize input material cost increases.

Research and development:

The Companys strong Research and Development (R&D) team is supported by modern computer aided laboratory, capable of developing new and innovative products. It has state-of-art facilities for engine testing, Noise, Vibration and Harshness (NVH) measurements and life testing. At present, nearly 600 engineers are working on development of new products and in other advanced areas of technology. The Company works with leading technological research laboratories and institutions. The Company is also working on development of fuel-efficient technologies and C02 reduction technologies to remain ahead of needs of consumers and environment regulations.

R&D has developed and launched 3-wheelers with alternate fuels like LPG and CNG. Indias first motorcycle with auto clutch technology, a motorcycle which runs on ethanol blended fuel for Brazilian market, a two wheeler with music system for ASEAN market are the innovations in the current year. R&D has developed and demonstrated a motorcycle with Anti Lock brake system technology, a scooter and a 3-wheelev with hybrid technology. R&D has also ensured that during 2010-11 all products will meet new emission norms.

R&D team has so far published 58 technical papers in national and international conferences.

Information technology:

The Company has been using enterprise wide system to integrate all the business processes within the Company as well as integrating suppliers and dealers business processes. The Company also uses Product Lifecycle Management to reduce the new product development lead time, control cost and improve quality. During the year, the Company has developed applications to monitor and improve product quality using early watch and alert system.

Dealer Management System (DMS) - developed by the Company has been further simplified and extended to 143 more dealers during the year. DMS also helps the Company to exchange information between the Company and dealers on-line and provide business intelligence for undertaking initiatives to improve sales, service and product development.

Long term wage settlement with Union:

The workers of the Company in Hosur and Mysore plants formed a Trade Union called TVS Motor Company Employees Union. During the year, the Hosur branch of the Union concluded a wage settlement with the management whereby the emoluments of the employees have increased substantially.

Similarly, the long term wage settlement is due for renewal for Mysore plant and negotiations with the Union will commence after the receipt of charter of demands from them.

Financial Performance:

The Companys financial performance for the year 2009-10 as compared to the previous year is furnished in the following table:

Year 2009-10 Year 2008-09

Particulars Rs in % Rs in %

crores crores

Sales:

Motorcycles 2,046.23 45.7 1899.72 50.8

Mopeds 952.48 21.2 707.34 18.9

Scooters 822.03 18.3 664.81 17.8

Spares and accessories 421.84 9.4 363.93 9.7

Three Wheelers 120.53 2.7 35.12 0.9

Other income 121.57 2.7 70.26 1.9

Total Revenue 4,484.68100.0 3741.18 100.0

Raw material consumed 3114.00 69.4 2761.64 73.8

Staff cost 251.25 5.6 204.52 5.5

Stores and tools

consumed 34.36 0.8 30.70 0.8

Power and fuel 49.74 1.1 46.25 1.2

Repairs and

maintenance 48.08 1.1 34.09 0.9

Packing and

freight charges 132.71 3.0 116.82 3.1

Advertisement and

publicity 118.67 2.6 55.54 1.5

Sales promotion and

other marketing expenses 163.28 3.6 122.34 3.3

Other expenses 268.97 6.0 122.26 3.3

Total (Excl. Interest,

Amortisation &

Depreciation) 4181.06 93.3 3494.16 93.4

EBIDTA 303.62 6.8 247.02 6.6

Interest 63.17 1.4 55.01 1.5

Amortisation 61.75 1.4 58.03 1.5

Depreciation 102.53 2.3 102.88 2.8

Profit before tax 76.17 1.7 31.10 0.8

Provision for tax

(incl deferred tax) (11.84)(0.3) 0.02 -

Profit after tax 88.01 2.0 31.08 0.8

Profit before tax for the year 2009-10 is after net debit of Rs.46.72 Cr. on account of exceptional items comprising of (a) Profit on sale of land - Rs.54.07 Cr. (included under other income); (b) Accelerated amortization of tools & dies of slow moving models - Rs.11.77 Cr. (included under Raw materials consumed); and (c) Loss on sale of investment in TVS Finance and Services Limited - Rs.89.02 Cr. (included in other expenses).

Profit before tax for the year 2008-09 is after debit of Rs.3.27 Cr. on account of exceptional item relating to accelerated amortization of moulds and dies on slow moving models (included under Raw materials consumed).

Some of the key ratios for the current year are furnished below:

Description UOM 2009-10 2008-09

EBITDA / turnover % 6.8 6.6

(including exceptional items)

EBITDA / turnover % 7.8 6.7

Profit before tax / turnover % 1.7 0.8

(including exceptional items)

Profit before tax / turnover % 2.7 0.9

Return on capital employed % 8.0 5.6

Return on net worth % 11.2 4.1

Earnings per share at a face

value of Re. 1/-per share Rs. 3.7 1.3

RISKS AND CONCERNS

The continued economic crisis in some European countries can lead to global economic downturn. Any failure of monsoon could trigger a significant rise in inflation and interest rates thus squeezing the disposable income of the customer. Retail finance continues to be a concern. A further rise in interest rate would be detrimental to industry growth. The success of new launches would be highly significant for continued momentum for the Company.

INTERNAL CONTROLS 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, recorded and reported.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development is focussed and aligned to business needs towards improved performance and business results through the HR roadmap evolved over the years. The key components of the roadmap are - Employee engagement, Resourcing, Performance & compensation management, Competency based development, Career & succession planning and Organisation building. The Company continues to be an employer of choice in most engineering schools and polytechnics in the country.

Focus on workmen training took a new impetus with the setting up of Skill Training Centre, focussing on training and enhancement of fundamental skills. Functional competencies for various functions across the Company have been finalised and an online Learning Management System (LMS) has been rolled out.

Career templates and succession plans are in place for all critical roles.Towards Leadership development key competencies have been identified and exclusive assessment and development workshops conducted for the top 100 of the senior management team.

The Company continues to maintain its record on industrial relations without any interruption in work. As on 31sl March 2010, the Company had 4,248 employees on its rolls.

ENVIRONMENT, HEALTH & SAFETY (EHS)

Introduction of advanced waste water treatment technologies, simplification of treatment processes and optimization of chemical dosing and automation resulted in 31% reduction of specific Effluent Treatment Plant (ETP) sludge generation at Hosur plant and 14% at Mysore plant.

Significant reduction in generation of paint sludge has been achieved through process improvement, use of textured plastics and pigmented plastics.

A number of energy saving projects, optimal utilization of different equipments and waste heat recovery have resulted in reduction of specific fuel by 15% and specific power by 11 %

Rigour in implementing hazard control measures and effective safety training to all new recruits have further improved the safety standards in the Company.

Environmental Management System (ISO14001:2004) and Occupational Health and Safety Management System (OHSAS 18001:2007) are being adopted as an integrated EHS Management System.

CORPORATE SOCIAL RESPONSIBILITY

Srinivasan Services Trust (SST), co-sponsored by the Company with the vision of building self reliant rural community, was established in 1996. Over the 14 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.

At present, SST is working in 703 villages, spread over in the States of Tamilnadu, Kamataka, Maharashtra, Gujarat and Himachal Pradesh. Its major focus areas are: Economic Development, Health, Education, Environment and Infrastructure.

One of the ways to involve rural women in community development has been through Self Help Groups (SHG). These voluntary bodies have succeeded in giving them access to credit with the necessary training to establish micro enterprises that can give them a regular income. SHG have also provided a forum where women are exposed to programmes that impact their lives - education, healthcare, hygiene, nutrition and environmental issues. Increased awareness has resulted in women taking control of their lives and playing a more active role in their households and the community at large.

Over 40% of the families living in these villages have a monthly income around Rs. 10,000/-. Its significant achievements are:

- There has been no maternal mortality in any of the project villages.

- Infant mortality is down to 1.8 per 1,000 live births.

- 100% enrolment of children in schools.

- Over 21,000 adult women made literate.

- Proper solid and liquid waste management practices adopted in most villages.

- Over 1,40,000 hectares of degraded forests reforested.

- Almost 13,000 hectares of dry land covered by watershed development activities.

Achievements:

- Our partnership with the community has helped to form over 2,122 SHG.

- Over 30,654 families have taken up income generating activities. They earn an additional income from Rs.1,500/- to Rs.2,500/- per month.

- SHG members have a group saving of Rs.7.03 Cr and have received bank loans of Rs.23.79 Cr.

- Increased participation of women in development programmes, greater access and control over community resources / government schemes.

- More women are now aware of issues relating to health, nutrition, family planning and womens rights.

- Visible changes in womens participation and attendance in meetings and training programmes.

- 43% of the local representatives are members of SHG.

- Increase in social status at home and in the community.

CAUTIONARY STATEMENT

Statements in the management discussion and analysis report describing the Companys 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 Companys 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.

7. SUBSIDIARY COMPANIES

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

Name of the Company (M/s) Subsidiary of M/s

Sundaram Auto Components Limited TVS Motor Company Limited

TVS Energy Limited TVS Motor Company Limited

TVS Housing Limited TVS Motor Company Limited

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

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

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

During the year under review, the Company acquired the entire shareholding of M/s TVS Energy Limited (TVS Energy) and thereby TVS Energy became a wholly owned subsidiary of the Company effective 3rd December 2009.

During the year 2010-11, the holding company viz., M/s.Sundaram-Clayton Limited has also participated in the equity capital of TVS Energy and hence the status of TVS Energy changed to subsidiary of the Company from that of wholly owned subsidiary.

The accounts of the subsidiaries are consolidated with the accounts of the Company in accordance with Accounting Standard 21 (AS 21) prescribed by The Institute of Chartered Accountants of India. The consolidated accounts duly audited by the statutory auditors and the consolidated financial information form part of the annual 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 its letter No. 47/516/2010-CL-III dated 4th 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, if any member wishes to inspect the same during the business hours of any working day.

The Company on 21st June 2010 acquired the entire paid up capital of Rs. 5 lakhs of TVS Housing Limited (TVS Housing) and thereby TVS Housing has become a wholly owned subsidiary of the Company effective 21st June 2010. TVS Housing was incorporated on 22nd March 2010 and it will close its first years accounts by 31 st March 2011.

Performance of Subsidiaries:

PT. TVS Motor Company Indonesia (PT. TVS)

PT. TVS which is in its third year of operation has so far sold around 30,000 vehicles. During the year 2009, the Company launched a new 125 cc bebek TVS RockZ with the unique feature of integrated music system and the product, apart from winning awards for its attractive design and style, has been well received in the market.

During the year 2009-10, the Company was able to improve its exit gross margin from a level of 5% to around 17% in March 2010. The Company has already achieved around 50% of localization in procurement of materials and plans to increase this over a period of time. Another milestone was to start exporting its products to other Asian markets.

During the year 2009-10, PT. TVS sold 15000 two wheelers. Consequent to higher expenditure required on product development and brand building, the operations of the Company resulted in a loss (before tax) of Rs. 104.49 Cr.

In the coming years, the focus will be on building the brand image of TVS as a trustworthy manufacturer of durable and innovative products, increasing the sales and distribution network from current 106 to 500 and reaching a monthly sales of 10,000 two wheelers.

Sundaram Auto Components Limited (SACL)

The growth in automotive industry has enabled SACL to record an improved performance during the year.

SACL also has secured substantial business from Daimler India, Ashok Leyland - Nissan and Toyota India for their vehicles. SACL has shown a sales growth of 23% in the year 2009-10, compared to the previous year 2008-09. The profit before tax for the year is Rs. 12.40 Cr as against a loss of Rs. 2.07 Cr in the previous year 2008-09.SACL has earned a profit after tax of Rs.10.00 Cr in the year 2009-10.

SACL has also declared an interim dividend of Rs.3.50 per share (35%) for the year ended 31st March 2010 and the same was paid on 19th April 2010.

Investment in subsidiaries:

During the year under review, the Company made additional investment in its subsidiary, PT. TVS Motor Company Indonesia to the tune of Rs.93.55 Cr through the Companys wholly owned foreign subsidiary, namely TVS Motor (Singapore) Pte Limited.

The Company also invested a sum of Rs. 37.50 Cr in TVS Energy Limited during the year under review. It will start operating in the year 2010-11.

8. DIRECTORS

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

Mr Venu Srinivasan also received the distinguished civilian honour "Order of Diplomatic Service Merit" from the President of the 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 Venu Srinivasan was re-appointed as chairman and managing director of the Company, effective 24th April 2010 by the board at its meeting held on 21st April 2010 on such terms and conditions, subject to the approval of the shareholders at the ensuing annual general meeting of the Company.

Mr H Lakshmanan, director and Mr R Ramakrishnan, who was co-opted as a director of the Company in the casual vacancy caused by resignation of Mr Gopal Srinivasan, retire at the ensuing annual general meeting of the Company in terms of the Articles of Association, and being eligible, offer themselves for re-appointment.

The brief resume of the directors M/s. Venu Srinivasan, R Ramakrishnan and H Lakshmanan and other information have been detailed in the notice convening the annual general meeting of the Company. Appropriate resolutions for their reappointment 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, 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(1 B) of the Companies Act, 1956.

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 chairman and managing director and executive vice president - finance 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.

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 Companies Act, 1956 read with the Companies (Disclosure of par ticulars in the report of board of directors) Rules, 1988, the inf ormation 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 31s1 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."

12. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and co-operation received from the holding Company i.e. Sundaram-Clayton Limited, Chennai.The directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review.

The directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board

VENU SRINIVASAN Chairman

Bengaluru July 21, 2010

 
Subscribe now to get personal finance updates in your inbox!