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Directors Report of Shanthi Gears Ltd.

Mar 31, 2022

Your Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2022


1. Business Environment

The Business environment during FY221 was competitive mainly in the first half year. The last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and Global inflation have made the policy-making more challenging. Further the war in Ukraine has triggered a costly crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Global growth is projected to slow from an estimated 6.1% in 20212 to 3.6% in 2022 and 2023

On the Economy

Global Economy: In 2021, the global economy resurged with strength. The global GDP increased by 6.1% against a contraction of 3.1% in 2020. This stellar performance was primarily due to the fiscal support given by nations across the globe (particularly the advanced economies), the widespread vaccination in advanced and developing and emerging markets,

the lifting of lockdown restrictions in many countries and the renewal of commercial activities across the globe.

Global trade climbed to US$28.5 trillion in 2021 surpassing the pre-pandemic level of 2019 by 13%. Global trade in services rose by US$50 billion to touch US$1.6 trillion.

Global manufacturing production increased by 9.4% in 2021 after a 4.2% contraction in the previous year. The world was all set to sustain its momentum in the current year only to be thwarted by the global geopolitical crisis. This challenge has further intensified prevailing supply-chain issues, in addition to leading to a significant rise in food, fuel and commodity prices, dampening the prospects of sustaining the global economic recovery. The effect of inflation is expected to be more on emerging and developing nations than on advanced economies.

The International Monetary Fund in its document dated April 2022, has reduced its global GDP growth estimates for 2022 and 2023 to 3.6%.

Indian Economy: Aligned with the global trend, the Indian economy reported a healthy reversal in the economic trend as India’s GDP grew by 8.7% in FY22 against a contraction of 6.6% in FY21.

While the agriculture segment improved its performance (from a 3.6% growth in FY21 to a 3.9% growth in FY22), the important thrust to the economy came from the industrial sector (growth of 11.8% in FY22 against a contraction of 2.8% in FY21) and the services sector (growth of 8.2% in FY22 against a contraction of 7.8% in FY21).

The keen thrust on vaccination drives across the Indian landmass helped drive fear out of the minds of Indians. Further, the Government’s favourable policies attracted significant investment by the private sector which resulted in a significant uptick in industrial and services activity across the nation. Exports reached a new pinnacle as the world looked upon India as a key supply partner in the wake of global supply chain disruption.

India’s fiscal deficit position improved to 6.7% of the GDP over the revised budget estimate of 6.9% mainly on account of higher tax realisation.

India’s economic resurgence would have been more pronounced had it not been for the geopolitical crisis that erupted towards the close of the fiscal. The resultant inflationary pressure from this crisis weighed on India’s performance in the last quarter of FY22. It will continue to do so in FY23.

As a result, the Reserve Bank of India (RBI) has lowered its estimate for India’s GDP growth in FY23 from the earlier 7.8%

to 7.2%. Despite this drop, India is expected to remain the fastest growing major economy in the world.

On the Industrial Gear Industry

Global gear sector prospects: The global industrial gearbox market was worth US$26.17 billion in 2020. It is anticipated to be around US$38.10 billion in 2028 with a CAGR of 4.5% during the 2021-28 period. The pandemic has, to some extent, derailed these estimates.

What are gears? Gears are mechanical devices that are used to transmit motion and torque through engagement with other gears, shafts, or some other parts. Gears can be standardised as well as highly customisable too. The applications for industrial gears are diverse and they can be used everywhere where speed reduction, speed increase, power transmission, motion transmission, and force reduction are needed.

A gearbox is an enclosed system of collection of gears that put the gears in a usable format. Gearboxes can be used in many different devices for a wide range of applications. These machines can be found attached to cooling towers or conveyor belts among many other machines. Many large industries such as paper, cement, sugar and steel use a mix of these gearboxes depending on their functionality.

Needed as speed reducers, planetary gears are mainly used in motorised wheels, automatic door openers, conveyors, fluid transfer, appliances, tools and robotics.

Helical gearboxes are used with winding tooth lines and parallel shafts. A worm gear motor is used in heavy-duty operations such

2. Company Performance

(H Crores)

Particulars

Year ended 31.03.2022

Year ended 31.03.2021

Revenue from operations (Net)

337.07

215.53

Earnings Before Interest Tax Depreciation & Amortisation

69.10

34.93

Depreciation and amortisation expense

10.37

8.86

Profit Before Tax

58.73

26.07

Less: Tax Expenses

16.26

5.90

Profit After Tax

42.47

20.17

Add: Surplus brought forward

24.89

16.23

Appropriations:

Final dividend paid during the year

Tax on Final dividend paid during the year

Interim dividend paid during the year

19.18

11.51

Tax on Interim dividend paid during year

Balance carried to Balance Sheet

48.18

24.89

as fertilizers, chemical and minerals and is used for increased speed reduction between non-intersecting crossed axis shafts.

Indian gear sector prospects: India, an agricultural economy till now, is steadily taking giant strides toward an industrial world. Manufacturing has emerged as one of the high-growth sectors in India. The Prime Minister of India launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy.

The Government of India has taken several initiatives to promote a healthy environment for the growth of the manufacturing sector in the country. Some of the notable initiatives and developments are:

The PLI Scheme: Production-linked incentive (PLI) schemes are a cornerstone of the government’s push for achieving an Atmanirbhar Bharat. The objective is to make India’s domestic manufacturing globally competitive and to create global champions in manufacturing. The Union Budget 2022 detailed an outlay of H1.97 Lakh Crores over five years for the PLI Schemes in 13 key sectors.

The Union Budget 2023: The MSME sector received a boost with the extension of ECLGS and an increased guarantee cover of H50,000 crore (US$ 6.55 billion).

The Union Budget 2022: This budget document promised to enhance India’s domestic growth in manufacturing, trade and other sectors. The development of a robust infrastructure, logistics and utility environment for the manufacturing sector is a primary focus field.

All these factors point to one reality, the demand for gears will remain strong over the coming years.

Sector-wise prospects

Infrastructure: The Government plans to invest about H102 lakh crore on infrastructure projects by FY25. During fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure on infrastructure in India. The infrastructure in India is estimated to grow at an approximate 7% CAGR up to FY25.

The urban transport solution: India is planning to spend US$507 billion to build urban transport solutions and interstate

expressways in the next 10 years, out of which US$151 billion will be spent to build sub-urban and metro systems in 100 Indian cities and more than US$100 billion for building highspeed rail networks. In addition to that, US$256 billion will be spent on expressways.

Steel: The Indian steel industry is a modern cutting-edge establishment that strives for a continuous increase in excellence and quality. Recently, it has emerged as the second largest steel producer in the world, going past Japan. In keeping with the growing investment in infrastructure, steel demand is expected to grow multi-fold over the next decade — from 106 Mn T in FY22 to 230 Mn T by FY31. Further, in July 2021, the Union Cabinet approved an H6,322 crore PLI scheme to boost the production of specialty steel in India.

Cement: The prospects of the cement sector are closely dovetailed with the development of infrastructure. Owing to the aggressive thrust by the Government on developing world-class infrastructure, the prospects of the cement industry appear particularly positive. India’s overall cement production in FY21 was 294.4 million tonne (MT)- this is expected to reach 419.92 MT in FY27.

Crane and Material Handling: Indian material handling equipment market is part of the much bigger Indian manufacturing scenario. The crane market in India was worth $922 million in 2021 which is expected to grow to $1,248 million in FY27 with a CAGR of 5.3% between 2022 and 2027. Additionally, the rapid growth of the warehousing sector is expected to provide impetus to this growth of this business space.

Railway: Demand from Electric Locomotive, Electric Multiple Units, High-Speed Trains and Diesel Multiple Un its & Diesel Electric Towers Cars will witness a surge in demand due to aggressive Production Plans announced by the Railway Board wherein there are plans to add 40% additional capacity annually. The Make in India Initiative for the Vande Bharat Express will be a game changer for the Indian Railways.

Extrusion: The escalating demand for extruded plastic products in the consumer goods, packaging, automotive, and construction sectors is primarily driving the plastic extrusion machines market. Additionally, the shifting preferences towards automated plastic processing and manufacturing are further catalysing the market growth. Besides this, the elevating requirement for these processes in manufacturing fixed crosssectional products with high accuracy is also augmenting the global market. In India, this segment is expected to grow by 4.5% up to FY27.

3. Review of Operations

In FY22, the Company reported improved performance. Revenue from Operations at H337 Crore, registering a growth of 56% growth over the previous year. This growth was owing to an increase in order inflow and deliveries.

Focus on Service and Replacement segment in power transmission helped in sustaining the competitive advantage. The business continued to build relationships through high levels of customer engagement during the year.

Specific attention is given to development of alternate materials and processes to drive value addition and cost reduction. Capital investments were made wherever technological upgradation was required.

EBITDA increased from H34.9 Crore in FY21 to H69.1 Crore in FY22 - a growth of 98%. The Company registered a net profit of H42.5 Crore (an 111% increase).

From a liquidity standpoint, the Company generated a Free Cash Flow of H34.1 Crore during the financial year and registered 61% growth over the previous year. Free Cash Flow to PAT is 80%.

The Company’s Return on Invested Capital improved to 36% in FY22 from 15% in FY21 — this showcased the better utilisation of every rupee invested in the business.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

4. Dividend

The Company has declared an interim dividend of H2.5/- per equity share of Face Value H1/- in February, 2022 and paid during February 2022. The Board has not recommended any final dividend for FY22 and the interim dividend already declared and paid will be considered as the Dividend for the FY22.

The dividend pay-out is in accordance with the Company’s policy on Dividend Distribution. The said Policy as approved by the Board is uploaded and is available on the following link on the Company’s website,http://www. shanthigea.rs.com/wp-content/uploa.ds/2021/04/SGL-Dividend-Distribution-Policy.pdf.

Details thereof also form part of this Annual Report for the information of shareholders as Annexure—A.

of the Companies Act affirming that they meet the criteria of independence as stipulated under the Companies Act. In the opinion of the Board, all the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and are independent of the Management.

9. Key Managerial Personnel

Mr. M Karunakaran, Whole-time Director, Mr. C Subramaniam, Company Secretary and Mr. Ranjan Kumar Pati, Chief Financial Officer are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurating with its size, scale and complexity of its operations.

It has a sound system of internal controls in place to ensure the achievement of goals, evaluation of risks, and reliable financial and operational reporting.

This efficient internal control procedure is driven by a robust system of checks and balances that ensures the safeguarding of assets, compliance with all regulatory norms, and procedural and systemic improvements periodically.

The Company uses an ERP (Enterprise Resource Planning) package supported by in-built controls. This guarantees timely financial reporting. The audit system periodically reviews the control mechanism and legal, regulatory, and environmental compliances.

The internal audit team also checks the effectiveness of internal controls and initiates necessary changes arising out of inadequacies, if any. All financial and audit controls are further reviewed by the Audit Committee of the Board of Directors.

11. Internal Financial Control Systems with reference to financial statements

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company’s business processes are enabled by an Enterprise-wide Resource Platform (ERP) for monitoring and reporting processes resulting financial discipline and accountability.


5. Share Capital

The paid up Equity Share Capital as on 31 March 2022 was H7.67 Crores.

6. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31 March 2022.

7. Particulars of Loans, Guarantees

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. As part of treasury management, the Company deploys short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8. Directors

Mr. M.A.M. Arunachalam will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act,2013 and being eligible, he offers himself for re-appointment.

Mr. Mukesh Ahuja was appointed as Additional Director (Non-Executive Director) on 22 October 2021, liable to retire by rotation and he continues upto the ensuing Annual General Meeting (AGM). Necessary resolution proposing the appointment of Mr. Mukesh Ahuja as a Director liable to retire by rotation under Section 152 of the Companies Act, 2013 forms part of the Notice for the ensuing AGM.

The Board recommends the appointment of Mr. L Ramkumar, Present Non-Executive Director as Independent Director under section 149 of the Companies Act, 2013 for a term of four years viz. from the date of the 49th AGM (2022) till the date of 53rd AGM (2026).

Notice has been received from a Member proposing the candidature of Mr. Mukesh Ahuja as Director and Mr. L Ramkumar as Independent Director of the Company.

The Board takes pleasure in recommending the appointment of Mr. Mukesh Ahuja as Director and Mr. L Ramkumar as Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6)

12. Enterprise Risk Analysis and Management

The Company’s risk strategy is determined by its risk appetite defined by a series of risk criteria. The criteria are based on sectoral realities, customer circumstances, liquidity available and its earnings target within accepted volatility limits. These criteria provide a reference for our operating divisions.

The Company’s risk management framework comprises a combination of centrally issued policies and divisionally-evolved procedures that are regularly reviewed for their alignment with sectoral dynamics and evolving trends.

The framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks with the goal of making the business model emerge stronger and business growth becomes sustainable.

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company operates across various product platforms built over the years. Relative advantages and disadvantages of such product verticals are studied and advances are tracked. The Company seeks to address technology gaps through continuous benchmarking of existing manufacturing processes with developments in the industry and in this connection has made arrangements with technology consultants.

Sub-par utilization of capacities may lead to inadequate leverage benefits. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of its products, exploring development of alternate products and establishing a range of applications.

13. Corporate Governance

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

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner.

The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program, the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-B.

15. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual return as on 31 March 2022 is available on the Company’s website at the following link:httpj// www.sha.nthigea.rs.com/wp-content/uploads/ 2022/04/

Form MGT 7-2022.pdf

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

b) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2022 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2022; and

f) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2022.


17. Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http:// www.sha.nthigears.com/wp-c.ontent/uploads /2019/05/

SGL,-Remunera.tion-Policy-Ma.r-2019.pdf

18. Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website http://www. sha.nthigea.rs.c.om/wp-c.ontent/uploa.ds/2019/05/SGL,-RPT-Policy-Mar-2019.pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

19. Board Evaluation

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

20. Vigil Mechanism/ Whistle Blower Policy

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

21. Business Responsibility Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility Report as part of the Annual Report for the top 1000 listed entities based on market capitalisation, the Business Responsibility Report forms part of the Annual Report as Annexure-F. The Business Responsibility Policy of the Company is displayed in the Company’s website at the following link:

To be updated

22. Declarations/Affirmations

During the year under review:

- there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31 March 2022 and the date of this Report; &

- there were no significant material orders passed by the regulators or courts or tribunals impacting the Company’s going concern status and its operations in future.

23. Human Resources

Intellectual capital has been the cornerstone of Shanthi Gear’s sustenance over the years. The has a large pool of engineers. This critical competitive edge has enabled the Company to stand out from the clutter and develop niche solutions that address the ever-evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs)for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-Job projects, job enlargement /job rotation, mentoring support to the Talents are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have

been given opportunities to take up higher roles and grow in the system under Grow from within Scheme.

The Company had 533 permanent employees on its rolls, as on 31 March 2022.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-C.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the datWwe of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place a Prevention of Sexual Harassment policy (POSH) in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during FY22.

26.Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. R Sridharan Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

27.Auditors

The Members have appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 45th AGM (2018) till the conclusion of 50th AGM (2023) subject to ratification of such appointment by members at every AGM. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from 7 May 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the Forty-ninth AGM.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2023. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 7 May 2022. The Cost Audit report will be filed within the stipulated period.

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


Mar 31, 2019

BOARD’S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

Dear Shareholders,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2019

COMPANY PERFORMANCE Rs, Crores

PARTICULARS

YEAR ENDED 31.03.2019

YEAR ENDED 31.03.2018

Revenue from operations (Net)

242.97

219.55

Earnings Before Interest Tax Depreciation & Amortization

53.08

48.73

Depreciation and Amortization expense

10.62

15.56

Profit Before Tax

42.46

33.17

Less : Tax expense

9.11

4.59

Profit After Tax

33.35

28.58

Add : Surplus brought forward

34.71

32.33

Appropriations :

Transferred to General reserve

-

9.00

Final dividend paid during the year

-

6.13

Tax on Final dividend paid during the year

-

1.24

Interim dividend paid during the year

40.86

8.17

Tax on Interim dividend paid during the year

8.40

1.66

Balance carried to Balance Sheet

18.80

34.71

Review of Operations

During the year the business registered a top-line growth of 14% to Rs, 243 Crores aided by growth in revenues, the profit after tax grew by 17% to Rs, 33.4 Crores. The business continued to build relationships through high levels of customer engagement during the year. Focus on Servicing and Solution expertise in power transmission helped in sustaining the competitive advantage.

Conscious effort on cash generation helped us to sustain the reduced net working capital levels of previous year. In its endeavor to build sustainable business, the Company continued its journey on certifications and became the first Asian Company to get IRIS (International Railway Industry Standard) certification.

Specific attention is given to development of alternate materials and processes to drive value addition and cost reduction. Consolidation of operations is on-going, in a phased manner. Capital investments were made wherever technological up gradation was required.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

Management Discussion and Analysis

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

Dividend

The Board of Directors has recommended a final Dividend of Rs,1/- (Rupee one only) per share on equity share of face value of Rs,1 /- each for the financial year ended 31 March 2019. Together with the one-time special interim dividend of Rs,5/-per share, paid on 14 January 2019, the total dividend for the year works out to Rs,6/-per share on the equity share of face value of Rs,1/- each. The final dividend, if approved by the shareholders, will be paid after 23 July 2019.

Buyback

The Board, at its meeting on 26 December 2018, approved a proposal for the Company to buy back its fully paid-up equity shares of face value of Rs,1/- each from the eligible equity shareholders of the Company for an amount not exceeding Rs,70 Crores. The shareholders approved the said proposal of buyback of equity shares through the postal ballot that concluded on 29 January 2019. The buyback offer comprised the purchase of 50 Lakhs equity shares aggregating 6.12% of the paid-up equity share capital of the Company at a price of Rs,140/- per equity share. The buyback was offered to all eligible equity shareholders of the Company as on the record date (i.e., 08 February, 2019) on a proportionate basis through the ''Tender offer'' route. The Company concluded the buyback procedures on 09 April 2019 and 50 Lakhs equity shares were extinguished on the same day.

One-time Special Interim Dividend and the buyback have been done after taking into consideration the fund requirements for its growth plans in the coming years.

Directors

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment.

Mr. Vellayan Subbiah was appointed as Additional Director (Non-Executive Director) on 01 February 2019, liable to retire by rotation and he continues up to the ensuing Annual General Meeting (AGM). Necessary resolution proposing the appointment of Mr. Vellayan Subbiah as a Director liable to retire by rotation under Section 152 of the Companies Act, 2013 forms part of the Notice for the ensuing AGM.

Mr. Krishna Samaraj was appointed as Additional Director on25 March 2019 under Section 149 of the Companies Act, 2013. He holds office up to the date of the ensuing AGM. The Board recommends his appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 46th AGM (2019) till the date of 51" AGM (2024).

Mr. J Balamurugan was appointed as an Independent Director. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under Section 149 of the Act for further term of five years viz., from the date of 46* AGM (2019) till the date of the 51" AGM (2024).

Notice has been received from a Member proposing the candidature of Mr. Vellayan Subbiah as Director and Mr. Krishna Samaraj and Mr. J Balamurugan as Independent Directors of the Company.

The Board takes pleasure in recommending the appointment of Mr. L Ramkumar, Mr. Vellayan Subbiah as Directors and Mr. Krishna Samaraj and Mr. J Balamurugan as Independent Directors of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

In the opinion of the Board, all the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and are independent of the Management.

Key Managerial Personnel

Mr. Rajiv Narayanamoorthy, resigned as Chief Executive Officer with effect from 01 February 2019 as he wishes to pursue other interests. The Board wishes to place on record valuable contribution made by Mr. Rajiv Narayanamoorthy during his tenure with the Company.

Mr. M Karunakaran was appointed as Chief Executive Officer of the Company with effect from 01 February 2019.

Mr. M Karunakaran, Chief Executive Officer, Mr. B Balamurugan, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Internal Control System and their Adequacy

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

Corporate Governance

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

Corporate Social Responsibility (CSR)

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

Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure-C.

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2019 and of the profit of the Company for the year ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2019; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2019.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http: //www. shanthigears. com/wp-content/uploads/2019 705/SGL-Remuneration-Policy-Mar-2019.pdf

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm''s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company''s website http://www.shanthigears.com/wp-content/uploads/2019/ 05/SGL-RPT-Policy-Mar-2019 .pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

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

Vigil Mechanism/ Whistle Blower Policy

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

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing a lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs) for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-job projects, job enlargement / job rotation, mentoring support to the target group are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have been given opportunities to take up higher roles and grow in the system.

The Company had 541 permanent employees on its rolls, as on 31 March 2019.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2018-19.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members have appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 45th AGM (2018) till the conclusion of 50th AGM (2023).

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2020. A resolution seeking Members'' ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 29 April 2019. The Cost Audit report will be filed within the stipulated period.

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

On behalf of the Board

L Ramkumar

Coimbatore

Chairman

29 April 2019 DIN-00090089


Mar 31, 2018

Dear Shareholders,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2018

COMPANY PERFORMANCE

Rs. Crores

PARTICULARS

YEAR ENDED

YEAR ENDED

31.03.2018

31.03.2017

Revenue from Operations (Net)

219.55

203.82

Earnings Before Interest, Tax, Depreciation & Amortisation

48.73

46.33

Depreciation & Amortisation Expense

15.56

17.83

Profit Before Tax

33.17

28.50

Less: Tax Expense

4.59

5.99

Profit After Tax

28.58

22.51

Add: Surplus brought forward

32.33

15.82

Appropriations :

Transfer to General Reserve

9.00

6.00

Final Dividend for 2016-17 paid

6.13

-

Tax on Final Dividend

1.25

-

Interim Dividend for 2017-18 paid

8.17

-

Tax on Interim Dividend

1.67

-

Balance carried to Balance Sheet

34.69

32.33

Review of Operations

In 2017-18, your Company registered a topline growth of 16% to Rs.209.1 Crores aided by growth in revenues, the profit after tax grew by 27% to Rs.28.6 Crores. The business continued to build relationships through high levels of customer engagement during the year through the Connect programs. New Product Development and Import Substitution helped in sustaining the competitive advantage.

Focus on lean principles helped the business to reduce the net working capital by 14%. In its endeavor to build sustainable business, your Company embarked on certifications such as IMS (QMS, EMS and OHSAS) coupled with approvals from Defence, Industrial Scientific Research and Aerospace.

Significant number of VAVE projects were taken up to meet cost reduction through improvement in material efficiencies and labour productivity. Focus continued to be on consolidation of operations and maximizing returns on the investments made in the earlier years. Capital investments were made in core value add areas to debottleneck capacities.

Management Discussion and Analysis

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

Dividend

The Company has declared an interim dividend of Rs.1/- per equity share of Face Value Rs.1/- in February, 2018 (PY Rs.0.75/- per share). The same has been treated as final dividend.

Directors

Mr. M M Murugappan, Chairman resigned from the Board due to his other commitments with effect from 2 November 2017. The Board places on record its appreciation on the service rendered by Mr. M M Murugappan during his tenure as Chairman of the Board.

Mr. C R Swaminathan, Non-Executive Independent Director will retire at the ensuing Annual General Meeting under Section 149 of the Companies Act, 2013 (“the Act’). The Board places on record its appreciation of the service rendered by Mr. C R Swaminathan during his tenure as Director of the Company.

During the year the Company appointed Mr. S K Sundararaman as an Additional Director of the Company under Section 149 of the Companies Act, 2013 with effect from 6 February 2018. He holds office up to the date of the ensuing AGM. He has wide experience in the field of Textile Technology and well known for his innovative approach and Development of new technical textile products. His knowledge and experience will be of benefit to the Company. The Board recommends his appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 45th AGM (2018) till the date of 50th AGM (2023).

Notice has been received from a Member proposing the candidature of Mr. S K Sundararaman for appointment as an Independent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Act and being eligible, he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment of Mr L Ramkumar as Director and Mr. S K Sundararaman as an Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

Key Managerial Personnel

During the year, Mr. B Balamurugan was appointed as Chief Financial Officer of the Company.

Mr. Rajiv Narayanamoorty, Chief Executive Officer, Mr. B Balamurugan, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Internal Control System and their Adequacy

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

Corporate Governance

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

Corporate Social Responsibility (CSR)

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

Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure-C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that :

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2018 and of the profit of the Company for the year ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2018; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2018.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears.com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website, http://www.shanthigears.com/wp-content/ themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

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

Vigil Mechanism/ Whistle Blower Policy

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

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

The Company had 534 permanent employees on its rolls, as on 31 March 2018.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2017-18.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. No qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41st AGM (2014) till the conclusion of the ensuing Annual General Meeting.

It is proposed to re-appoint M/s Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company for a period of five years from the conclusion of the ensuing 45th Annual General Meeting (2018) till the conclusion of the 50th Annual General Meeting (2023).

M/s Deloitte Haskins & Sells, Chartered Accountants have confirmed that they are eligible under section 141 of the Companies Act, 2013 (‘theAct”) and the Rules thereunder for re-appointment as the Statutory Auditors and have further furnished their consent under the second proviso to Section 139 of the Act and also necessary confirmations. Further, they have also furnished a copy of the certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Board recommends the re-appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as the Statutory Auditors for a five-year period and on terms of remuneration as set out in the resolution contained in the Notice of the ensuing Annual General Meeting.

Mr. B Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2019. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 2 May 2018. The Cost Audit report will be filed within the stipulated period.

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

On behalf of the Board

Coimbatore L Ramkumar

02 May 2018 Chairman

DIN-00090089


Mar 31, 2017

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2017

COMPANY PERFORMANCE

Rs.Crores

Particulars

Year Ended 31.03.2017

Year Ended 31.03.2016

Revenue from Operations (Net)

203.82

182.11

Earnings Before Interest, Tax, Depreciation & Amortization

46.33

39.86

Depreciation & Amortization Expense

17.83

16.71

Profit Before Tax

28.50

23.15

Less: Tax Expense

5.99

5.42

Profit After Tax

22.51

17.73

Add: Surplus brought forward

15.82

13.01

Appropriations:

Transfer to General Reserve

6.00

10.00

Interim Dividend paid

-

4.09

Tax on Interim Dividend

-

0.83

Balance Carried to Balance Sheet

32.33

15.82

Review of Operations

In 2016-17 your Company launched a program titled Connect 2016. The objective was to reach out to customers and end users across the country through structured programs to understand how the business could service them better. With special focus on revenue models the business deployed more resources to understand end user applications to provide comprehensive end to end solutions in gearing. R&D and Engineering teams unleased more custom built solutions targeting conventional markets such Steel, Cement and Power. A superior range of catalogue range of products was launched in the helical and worm series to target demanding needs of the market.

Operational Excellence remains a key priority for the business. Internally the plants worked on improving efficiencies and productivity. Our efforts to engage talent in Value add activities continues and the business has seen good progress. Capital investments during the year addressed enhancement of manufacturing capabilities and productivity.

Recruiting the right talent, engaging and developing them created an ambience of high performance culture within the business.

The revenue during the year was Rs.203.82 Crores against Rs.182.11 Crores in the previous year with growth of 12%. The Profit before tax for the current year amounts to Rs.28.50 Crores as against Rs.23.15 Crores in the previous year.

Management Discussion and Analysis

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

Dividend

The Board of Directors has recommended a dividend of Rs.0.75/-(Paise Seventy Five only) per equity share of Face Value Rs.1/- each for the financial year 2016-17. Dividend, if approved by the shareholders, will be paid on or after 31 July 2017.

Directors

Mr. V Venkiteswaran, Non-Executive Independent Director will retire at the ensuing Annual General Meeting under Section 149 of the Companies Act, 2013 (“the Act”). The Board places on record its appreciation of the service rendered by Mr. V Venkiteswaran during his tenure as Director of the Company.

Mr. C R Swaminathan was appointed as an Independent Director. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under Section 149 of the Act for a term of one year viz., from the date of 44th Annual General Meeting (2017) till the date of the 45th Annual General Meeting (2018).

Notice along with the deposit in terms of Section 160 of the Act has been received from a Member proposing the candidature of Mr. C R Swaminathan for appointment as an Independent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Act and being eligible, he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment Mr. L Ramkumar as Director and Mr. C R Swaminathan as an Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149 (6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

Key Managerial Personnel

Mr. Rajiv Narayanamoorty, Chief Executive Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Mr. Saurabh Jain, Chief Financial Officer of the Company resigned from the services of the Company for personal reasons and was relieved on 14 March 2017.

Internal Control System and their Adequacy

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

Corporate Governance

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

Corporate Social Responsibility (CSR)

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

Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures there from;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2017 and of the profit of the Company for the year ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2017; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2017.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178(4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears. com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website, http://www.shanthigears.co m/wp-content/ themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

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

Vigil Mechanism/ Whistle Blower Policy

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

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

The Company had 547 permanent employees on its rolls, as on 31 March 2017.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2016-17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. No qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members appointed M/s. Deloitte Haskins & Sells, the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41st AGM (2014) till the conclusion of 45th AGM (2018). A resolution seeking ratification of the appointment of Statutory Auditors and remuneration payable to them for the financial year 2017-18 is included in the aGm Notice dated 03 May 2017.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2018. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 03 May 2017. The Cost Audit report will be filed within the stipulated period.

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

On behalf of the Board

Coimbatore M M Murugappan

03 May 2017 Chairman


Mar 31, 2015

DIRECTORS' REPORT TO THE SHAREHOLDERS

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

FINANCIAL RESULTS (Rs. Crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2015 31.03.2014

Revenue from Operations (Gross) 165.03 166.69

Less: Excise Duty 13.03 15.92

Revenue from Operations (Net) 152.00 150.77

Earnings Before Interest, Tax, Depreciation & Amortisation 29.89 51.56

Finance Cost 0.03 0.02

Depreciation & Amortisation Expense 16.75 25.61

Profit Before Tax 13.11 25.93

Less: Tax Expense 3.79 7.55

Profit After Tax 9.32 18.38

Add: Surplus brought forward 13.92 15.10

23.24 33.48 Appropriations :

Transfer to General Reserve 5.00 10.00

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

Interim / Final Dividend paid 4.09 8.17

Tax on Interim / Final Dividend 0.82 1.39

Balance carried to Balance Sheet 13.26 13.92

Review of Operations

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

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

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

Management Discussion and Analysis

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

Dividend

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

Directors

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

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

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

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

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

Key Managerial Personnel

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

Internal Control System and their Adequacy

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

Corporate Governance

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

Human Resources

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

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

Corporate Social Responsibility Initiative

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

Extract of Annual Report

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

Meetings

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

Directors Responsibility Statement

Directors Responsibility Statement is annexed herewith as Annexure C.

Remuneration Policy

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

Related Party Transactions

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

Board Evaluation

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

Vigil Mechanism/ Whistle Blower Policy

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

Particulars of Employees

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

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

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

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

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

Auditors

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

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

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

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

Directors' Responsibility Statement

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

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

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

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

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

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

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

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

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

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2015 Chairman


Mar 31, 2014

Dear Members,

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

FINANCIAL RESULTS (Rs. In crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2014 31.03.2013

Revenue from Operations (Gross) 166.69 159.01

Less: Excise Duty 15.91 15.29

Revenue from Operations (Net) 150.78 143.72

Earnings Before Interest, Tax, Depreciation & Amortisation 51.56 50.92

Finance Cost 0.02 0.29

Depreciation & Amortisation Expense 25.61 28.56

Profit Before Tax 25.93 22.07

Less: Tax Expense 7.55 6.60

Profit After Tax 18.38 15.47

Add: Surplus brought forward 15.10 10.36

33.48 25.83

Appropriations :

Transfer to General Reserve 10.00 5.00

Interim / Final Dividend paid 8.17 4.90

Tax on Interim / Final Dividend 1.39 0.83

Balance carried to Balance Sheet 13.92 15.10

Review of Operations

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

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

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

Management Discussion and Analysis

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

Dividend

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

Directors

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

Sl.No. Name of Independent Director Period of Appointment

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

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

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

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

Corporate Governance

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

Human Resources

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

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

Social Commitment

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

Auditors

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

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

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

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

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2014 Chairman


Mar 31, 2013

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

FINANCIAL RESULTS

(Rs. Crores)

PARTICULARS YEAR ENDED YEAR ENDED 31.03.2013 31.03.2012

Revenue from Operations (Gross) 160.94 186.67

Less : Excise Duty 15.29 14.35

Revenue from Operations (Net) 145.65 172.32

Earnings Before Interest, Tax, Depreciation & Amortisation 50.93 69.32

Finance Cost 0.29 0.62

Depreciation & Amortisation Expense 28.57 27.10

Profit Before Tax 22.07 41.60

Less : Tax Expense 6.60 13.47

Profit After Tax 15.47 28.13

Add: Surplus brought forward 10.36 9.23

25.83 37.36

Appropriations :

Transfer to General Reserve 5.00 17.50

Proposed Dividend 4.90 8.17

Tax on Dividend 0.83 1.33

Balance carried to Balance Sheet 15.10 10.36

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

Review of Operations

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

Management Discussion and Analysis

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

Dividend

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

Directors

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

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

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

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

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

Corporate Governance

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

Human Resources

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

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

Social Commitment

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

Auditors

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

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

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

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

On behalf of the Board Chennai M M Murugappan

30th April, 2013 Chairman


Mar 31, 2012

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

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

Gross Profit before Interest & Depreciation 693.481 716.672

Less : Finance Cost 6.197 10.309

Depreciation 270.994 268.461

Donations 0.336 0.292

Provision for Taxation / Withholding Tax Paid 170.160 180.162

Deferred Tax (35.266) (32.363)

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

281.274 278.615

Add : Surplus brought forward 92.290 83.646

373.564 362.261

Appropriations:

Proposed Dividend 81.716 81.716

Tax on Dividend 13.256 13.256

General Reserve 175.000 175.000

Surplus in Profit & Loss Account 103.592 92.289

373.564 362.261

DIVIDEND

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

OPERATING RESULTS

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

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

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

FIXED DEPOSITS

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

DIRECTORS

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

Sri M.J.Vijayaraaghavan

Sri C.G.Kumar

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit and Loss Account of the Company for the Financial year;

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

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

CORPORATE GOVERNANCE

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

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

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

AUDITOR

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

PERSONNEL

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

APPRECIATION

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

For the Board of Directors

Coimbatore P. Subramanian

25th May, 2012 Chairman & Managing Director


Mar 31, 2011

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

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

Rs. in Million

Gross Profit before Interest & Depreciation 715.122 551.083

Less: Interest 8.759 38.132

Depreciation 268.461 269.266

Donations 0.292 0.423

Provision for Taxation / Withholding Tax Paid 180.162 110.275

Deferred Tax (32.363) (25.934)

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

278.615 161.848

Add : Surplus brought forward 83.646 98.028

362.261 259.876

Appropriations:

Proposed Dividend 81.716 65.373

Tax on Dividend 13.256 10.857

General Reserve 175.000 100.000

Surplus in Profit & Loss Account 92.289 83.646

362.261 259.876



DIVIDEND

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

OPERATING RESULTS

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

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

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

FIXED DEPOSITS

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

DIRECTORS

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

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

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

DIRECTORS RESPONSIBILITY STATEMENT

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

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

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit and Loss Account of the Company for the Financial year;

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

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

CORPORATE GOVERNANCE

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

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

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

AUDITOR

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

PERSONNEL

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

APPRECIATION

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

For the Board of Directors

P. Subramanian

Chairman & Managing Director

Coimbatore 13th May, 2011


Mar 31, 2010

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

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

Rs. in Million

Gross Profit before Interest & Depreciation 531.784 1032.573

Less: Interest 18.833 86.247

Depreciation 269.266 257.723

Donations 0.423 0.533

Provision for Taxation / Withholding Tax Paid 110.275 231.196

Fringe Benefit Tax - 2.500

Deferred Tax (25.934) 10.261

Prior Year Tax - 3.618

158.921 440.495

Add: Excess Provision no longer required 2.927 0.115

Surplus brought forward 98.028 72.142

259.876 512.752 Appropriations:

Proposed Dividend 65.373 98.059

Tax on Dividend 10.857 16.665

General Reserve 100.000 300.000

Surplus in Profit & Loss Account 83.646 98.028

259.876 512.752

DIVIDEND

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

OPERATING RESULTS

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

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

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

FIXED DEPOSITS

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

DIRECTORS

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

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

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

DIRECTORS RESPONSIBILITY STATEMENT

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

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

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit and Loss Account of the Company for the Financial year;

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

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

CORPORATE GOVERNANCE

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

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

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

AUDITOR

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

PERSONNEL

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

APPRECIATION

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

For the Board of Directors Coimbatore P. Subramanian

24th May, 2010 Chairman & Managing Director

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