Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2023
Boardâs Report
Your directors have pleasure in presenting the 29th Annual
Report together with audited accounts for the year ended
31st March 2023. The summarised financial results of the
Company are presented hereunder:
OPERATING AND FINANCIAL PERFORMANCE:
Year ended |
Year ended |
||
Particulars |
31 March |
31 March |
|
2023 |
2022 |
||
Share of Profit from |
206.04 |
143.40 |
|
Dividend from minority |
15.14 |
18.44 |
|
Operating Revenue (Others) |
78.82 |
69.59 |
|
Total Revenue |
93.96 |
88.03 |
|
Profit before tax |
46.68 |
21.86 |
|
ii |
Profit after Tax |
31.51 |
17.29 |
iii |
Consolidated Profit after |
237.55 |
160.69 |
iv |
Standalone Profit after Tax |
94.75 |
46.91 |
Your Company paid an interim special dividend of ''1.50/- per
share (30%) in February 2023.
Your directors are pleased to recommend a final dividend of
''1.50/- per share (30% on the face value of '' 5/-).
In addition, your directors are pleased to recommend a special
dividend of ''1.00/- per share (20% on the face value of ''5/-),
which, together with the interim special dividend of ''1.50/- per
share,paid during February 2023, and the final dividend of
''1.50 /- per share paid now, would aggregate to a total Dividend
of ''4.00/- per share (80% on the face value of ''5/-)for the
Financial Year 2022-23.
Special dividends are paid out of a portion of the proceeds
received by Your Company from the dis-investments made
during the year.
The Dividend Distribution Policy, formulated in
accordance with the provisions of Regulation 43A of the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is is available in the company''s website
https://www.sundaramholdings.in/investorinfo/default.aspx
The Indian economy,appears to have moved on after its encounter
with the pandemic, staging a recovery in FY22 ahead of many
nations and positioning itself to ascend to the pre-pandemic
growth path in FY23. Statistics place real domestic product (GDP)
growth at 7% for FY 2023, which is higher than almost all major
economies in the world. This growth was driven primarily by
private consumption and investment.
As the Global Economy was recovering from the pandemic
induced output contraction, the Russia-Ukraine conflict which
broke out in February 2022, triggered a swing in commodity
prices and, thus, accelerating existing inflationary pressures.
This resulted in Indiaâs inflation increasing to 6.7% during FY
2023 as compared to 5.5%in FY2022.
As per the annual Economic Survey, industry is estimated to have
grown by4.1% in the last financial year. The services sector is
estimated to have grown by 9.1% in FY23, as against 8.4% in FY22
while agriculture is estimated to have grown by 3.5% in the year
under review, as against 3.0 % in the previous year,making India
one of the fastest growing economies in the world.
The fiscal deficit for the year 2022-23 is likely to hover around
the projected target of 6.4%, due to an appreciable increase in
tax collections during the year and prudent fiscal management
by the Government.
The third and fourth quarters of FY23 witnessed a gradual pickup
in most macro variables, with an improvement in consumption,
investment, capacity utilisation, among many others. As a result,
FY23 is likely to record a growth of about 7.2%, exceeding the
7% advance estimates released in February 2023.
Your company generates a significant portion of its income from
dividend flows from the portfolio companies that are engaged in
the automotive sector.
After facing the challenges like disruption caused by the
pandemic, semi-conductor chip shortages, supply chain
disruptions, the automotive sector witnessed growth across all
segments during FY 2023 as given in the below graphs.
During FY 2023, the domestic automotive industry continued to
witness multiple trends at play across segments such as increased
consumer confidence and recovery in demand, electrification of
power train, increasing digitalisation, supply chain recalibration
and moderation in exports. Escalating geopolitical tensions and
rising inflation during early FY 2023 resulted in sharp commodity
price increases and cast a shadow on the pace of global recovery.
Nevertheless, the domestic automotive industry witnessed a
healthy revival in demand, aided by a recovery in economic
activity and increased mobility.
Despite rising interest rates during the year and the increased
costs of vehicles owing to stricter emission norms and safety
norms, the demand recovery continued for commercial vehicles
with volumes rapidly approaching pre-pandemic peak levels.
Rising truck utilization has been crucial for firm freight rates
and improved demand for the truck segment. Demand grew at
27 percent growth in LCVs and 49 percent in MHCVs driven by
increased activity in roads, construction, housing as well as rising
e-com penetration and increased focus on last-mile connectivity.
Tractor sales hit a new peak in FY2023 driven by normal
monsoons, improved farm incomes and higher construction
activity. Passenger vehicles posted record sales in FY2023 with
a 27 percent YoY growth and surpassed pre-pandemic peak
levels despite lingering effects of supply chain constraints and
semiconductor shortages. This growth in passenger vehicles was
primarily driven by increased customer preference for UVs and
a shift from compact cars to compact UVs.
The outlook for 2023-24 is of continued recovery in vehicle sales,
primarily led by gradual easing of supply-side constraints, easing
inflationary pressures viz., on industrial commodities. Domestic
industry growth is estimated at mid-to high single digit levels
in the incoming year across various automotive segments. The
moderation in growth rates stem from a high base of the previous
year as well as the lagged impact of rate hikes and vehicle price
increases on demand.
Expected economic growth of ~6 percent, increased budget
allocation towards infrastructure spending and improving truck
operator profitability should support demand growth in CVs.
Passenger vehicle segment, despite challenges of long delivery
times, is expected to sustain growth rates viz., in the UV segment,
with a slew of launches expected from various players.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial
year ended 31st March 2023, the Company has fulfilled the
requisite criteria for being categorised as an exempted CIC
under the Core Investment Companies (Reserve Bank)
Directions, 2016.
The BPO business of the Company comprises the following:
Type of Business |
Turnover |
Shared services business managed by the |
13.62 |
Company |
|
Sundaram Business Services Limited - for |
46.15 |
managing outsourced business of overseas |
|
and domestic clients (Wholly owned |
|
Subsidiary) |
|
Total |
59.77 |
The shared services business of the Company encompasses
services provided to Sundaram Finance Limited and its
group and associate companies on an armâs length basis.
Such services include transaction processing, accounts
payable processing, tele-calling, training, learning and
development. The revenue earned from the shared services
business during the year was ''13.62 cr. The business had
282 employees as on 31st March 2023.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global
outsourcing company offering a wide range of services
to domestic and overseas clients. The service offerings
of SBSL include best in class outsourcing to 35 clients in
India, Australia,and the UK. During the year, SBSL earned
a revenue of ''46.15cr. and reported a profit after tax of
''15.01 cr.
INVESTMENTS MADE BY THE COMPANY
During the financial year 2022-23, your Company made portfolio
investments to the tune of ''22.03 Cr to increase its shareholding
in India Motor Parts & Accessories Limited, Wheels India Limited,
and Transenergy Private Limited.
Further, during the financial year 2022-23, your Company
disinvested its stake in Sundaram Clayton Limited by 2.25% for
a consideration of ''235 Cr.
Change in Accounting Policy of Valuation of
Investments
During the year the Company has changed the accounting policy
for valuation of investments in its Associate Companies from
deemed cost basis to Fair Value Through Other Comprehensive
Income (FVTOCI) basis
The Company believes that this change to FVTOCI will
provide more reliable and relevant information to the users
of financial statements about its value of investments on an
on-going basis.
As significant assumptions and estimations are involved in the fair
valuation of the investments coupled with the fact that from the
years 2020 to 2022 were covid impacted periods due to which the
economic and market conditions were not normal, the Company
is unable to determine the fair value of these investments for
prior periods using appropriate economic and market inputs.
Therefore, the above-mentioned change in accounting policy
is made effective on a prospective basis from the current year
in accordance with lnd AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors.
Following is the Impact i.e., increase / decrease of the said
change in policy on statement of profit and loss for the year
ended 31st March 2023.
The Company holds investments in 19 portfolio companies as at 31.03.2023. The performance of the key portfolio companies during
2022-23 was as follows:
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN ASSOCIATES |
||||||||
1 |
Brakes India Pvt. Limited |
403.85 |
1,080.64 |
23.57 |
2,597.23 |
612.12 |
359.27 |
84.67 |
2 |
Turbo Energy Pvt. Limited |
1.88 |
747.58 |
32.00 1,780.54 |
569.77 |
229.89 |
73.56 |
|
3 |
Axles India Limited |
10.16 |
141.45 |
38.81 211.11 |
81.92 |
52.64 |
20.42 |
|
4 |
Wheels India Limited |
149.98 |
327.28 |
23.85 764.17 |
182.27 |
54.15 |
13.67 |
|
5 |
The Dunes Oman FZC (LLC) |
17.25 |
161.53 |
43.69 245.52 |
107.26 |
30.36 |
13.27 |
|
6 |
India Motor Parts & Accessories |
19.61 |
180.74 |
20.00 1,368.13 |
273.63 |
51.71 |
10.33 |
|
7 |
Sundaram Dynacast Private Limited |
1.17 |
38.95 |
26.00 75.32 |
19.58 |
17.88 |
4.65 |
|
8 |
Transenergy Private Limited |
8.09 |
16.46 |
42.41 39.44 |
16.72 |
6.53 |
-1.55 |
|
9 |
Sundaram Composite Structures |
19.60 |
19.60 |
49.00 32.11 |
15.73 |
-7.22 |
-3.54 |
|
10 |
Mind S.r.l. |
41.08 |
- |
48.86 17.34 |
8.47 |
-15.86 |
-7.75 |
|
11 |
Sundaram Hydraulics Limited |
1.06 |
1.91 |
25.71 |
6.90 |
1.77 |
- |
- |
Subtotal |
673.73 |
2,716.14 |
7,137.81 |
1,889.24 |
779.35 |
207.73 |
Particulars |
Increase in |
Tax impact |
Net Impact |
On account |
2,05,912 |
38,164 |
1,67,748 |
S. No. |
Portfolio Company |
Holding Cost |
Values of |
Holding (%) |
Networth |
Share of |
PAT |
Share of |
INVESTMENT IN OTHERS: MINORITY STAKE |
||||||||
12 |
Sundaram Clayton Limited |
9.52 |
731.42 |
7.49 |
2,900.36 |
282.50 |
- |
- |
13 |
Lucas-TVS Limited |
0.27 |
80.71 |
5.32 |
1,181.48 |
62.62 |
- |
- |
14 |
Delphi TVS Technologies Limited |
0.18 |
15.29 |
3.19 |
479.06 |
15.33 |
- |
- |
15 |
Fettle Tone |
23.45 |
101.95 |
2.71 |
- |
- |
- |
- |
16 |
Others |
0.48 |
1.53 |
- |
- |
- |
- |
-1.69 |
Subtotal |
33.90 |
930.90 |
4,560.90 |
360.45 |
- |
-1.69 |
||
Total |
707.63 |
3,647.04 |
- |
11,698.71 |
2,249.69 |
779.35 |
206.04 |
Performance of our key investments are as given below,
Brakes India Private Limited
Brakes India Private Limited is the market leader in the
manufacture of braking systems for cars and commercial
vehicles in the country. Consequent to the merger of Flometallic
India Private Limited with Brakes India Private Limited, Your
Companyâs stake in Brakes India has increased to 23.57 % from
14.37%. and has been categorised as one of the promoters of
that company. Trichur Sundaram Santhanam and Family Private
Limited is the other promoter of the company. The revenue
earned by the company for the year ended 31st March 2023 stood
at ''6,685.51 cr. as against ''5,161.46 cr. The profit after tax for
the year was 465.63 cr. as against ''322.88 cr. in the previous
year. Your Company received a total dividend of ''31.48 cr. from
Brakes India Private Limited during the financial year 2022-23.
Turbo Energy Private Limited is the leading manufacturer of
turbo chargers and turbo charger parts in the country. Your
Company holds a 32% stake in Turbo Energy Private Limited and
has been categorised as one of the promoters of that company.
Borg Warner Turbo Systems (Germany) and Brakes India Private
Limited are the other promoters of the company. During the year,
the revenue earned by the company stood at ''2,443.41 cr as
against ''1,734.34 cr. in the previous year. The profit after tax for
the year was ''228.20 cr. as against ''164.90 cr. in the previous
year, registering a growth of 38.39%. Your Company received a
total dividend of '' 34.56 cr. from Turbo Energy Private Limited
during the financial year 2022-23.
Axles India Limited is a leading manufacturer of axle housings
for medium and heavy commercial vehicles in the country.
Your Company holds a 38.81% stake in Axles India Limited and
has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other
promoters of the company. During the year, the revenue earned
by the company stood at ''745.93 cr. as against ''572.37 cr. in
the previous year. The profit after tax for the year was ''52.64
cr. as against '' 33.83 cr. in the previous year.
Wheels India Limited is the leading manufacturer of wheels and
air suspension components for cars and commercial vehicles in
the country. During the year, your Company acquired 139,000
shares (0.57%). Pursuant to the investment, your Company
now holds 23.85% stake in Wheels India Limited and has been
categorised as one of the promoters of Wheels India Limited.
Trichur Sundaram Santhanam and Family Private Limited, and
India Motor Parts & Accessories Limited are the other promoters
of the company. During the year, the revenue earned by the
company stood at ''4,355.56 cr., as against ''3,701.07 cr. in the
previous year. The profit after tax for the year was ''65.17 cr. as
against ''79.79 cr. in the previous year. The market capitalisation
of the company as on 31st March 2023 was ''1,079.65 cr. The
value of your Companyâs holding on that basis, was ''286.86 cr.,
as on 31st March 2023. Your Company received a total dividend
of ''6.37 cr. from Wheels India Limited during the financial year
2022-23.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman,
is engaged in the manufacture of iron castings for the automotive
industry. Your Company holds a 43.69% stake in Dunes Oman
LLC (FZC) and has been categorised as one of the promoters
of that company. Dunes Oman was co-promoted with Brakes
India Private Limited. The companyâs revenue for the year stood
at ''293.18 cr. as against ''231.05 cr. in the previous year, while
the profit after tax for the year was '' 30.36 cr. as against ''25.52
cr. in the previous year.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest
distributor of automotive spare parts and equipment in the
country. During the year, your Company acquired 100,719 shares
(0.81%). Pursuant to the investment, your Company nowholds
20% stake in India Motor Parts and Accessories Limited. For the
yearended 31st Mar 2023, the revenue earned by the company
stood at '' 737.97 cr., as against ''643.07 cr. in the previous
year. The profit after tax for the year stood at 73.67 cr. as against
''56.81 cr., for the corresponding period in the previous year.
The market capitalisation of the company as on 31st March 2023
was ''741.56 cr. The value of your Companyâs holding on that
basis, was ''148.31 cr., as on 31st March 2023. Your Company
received a total dividend of ''5.38 cr. from India Motor Parts &
Accessories Limited during the financial year 2022-23
Sundaram Dynacast Private Limited
Sundaram Dynacast is a leading manufacturer of precision Zinc
and Aluminium die-cast parts. Your Company holds a 26% stake
in Sundaram Dynacast. The revenue earned by the company for
the year ended 31st March 2023 stood at '' 150.19 cr. as against
''116.72 cr. in the previous year. The profit after tax for the year
ended 31st March 2023 was ''17.88 cr. as against ''13.71 cr.
in the previous year. Your Company received a total dividend
of ''1.87 cr. from Sundaram Dynacast during the financial
year 2022-23.
A detailed report on corporate governance, together with a
certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure
Requirements), Regulations 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.
All transactions entered by the Company with related parties were
in the ordinary course of business and on an armâs length basis.
The transactions entered by the Company with Sundaram Finance
Limited during the financial year 2022-23 were material in
nature (as per the definition provided under Regulation 23(1)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015), for which, approval of the shareholders
was obtained vide ordinary resolution dated 18th July 2018. The
Company did not enter into any material transaction with other
related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act,
read with Rule 8 (2) of the Companies (Accounts) Rules 2014,
is attached as part of this report, vide Annexure II (i). Further,
the Companyâs policy on Related Party Transactions is attached
as part of this report, vide Annexure II (ii), as required under
Reg. 23(1) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the details of
the related party transactions with Sundaram Finance Limited,
Promoter, have been provided under Note 30 - Related Party
Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the
recommendations of the Audit Committee, recommended the
following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with
Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that
would be deemed to be related parties, upto an
overall aggregate amount not exceeding ''200 cr. and
individual investment(s) in any one such group company
not exceeding ''100 cr., from the conclusion of the
29th Annual General Meeting to the conclusion of the
30th Annual General Meeting to be held in 2024.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and
healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company
for the Financial Year 2022-23 is annexed with this report, vide
Annexure III.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
A Business Responsibility & Sustainability Report as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, is enclosed as part
of this report, vide Annexure IV.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL
HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of The Sexual
Harassment of Women at the Workplace (Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All
employees (permanent, contractual, temporary, trainees)
are covered under this policy. No complaints were received
during the financial year. None was pending unresolved as on
31st March 2023.
In terms of Section 204 of the Companies Act, 2013 and the
rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practising Company Secretary, as the Secretarial
Auditor of the Company. The Secretarial Audit Reports of the
Company and the subsidiary, viz., Sundaram Business Services
Limited, are annexed to this Report, vide Annexures V(i) and
V(ii).
REMUNERATION TO DIRECTORS / KEY MANAGERIAL
PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed, vide Annexure VI.
As required under Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration)
Rules, 2014, the link for the copy of the annual return in E-form
MGT-7 is https://www.sundaramholdings.in/investorinfo/default.
aspx
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS
During the year under review, no significant and material orders
were passed by the regulators, courts, or tribunals against
the Company, impacting its going concern status or its future
operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8 OF THE
COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy
or technology absorption..
The Company has a well-established internal financial control
and risk management framework, with appropriate policies
and procedures, to ensure the highest standards of integrity
and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to
all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including
adherence to policies (b) safeguarding of assets (c) prevention
and detection of frauds / errors (d) accuracy and completeness
of the accounting records and (e) timely preparation of reliable
financial information.
Your Company has taken effective steps to build a robust risk
management framework. Engaged, as it is, in the business of
making investments and business process outsourcing services,
the Company is required to manage various risks, including
investment related risk, business and market risk, operational
risk and technology related risk.The Risk Management
Committee has established systems and procedures to ensure
that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal
processes, people and systems or from external events are
adequately addressed by the internal control systems. These
systems are continuously reviewed, monitored, and modified, as
necessary. A stable and experienced management team provides
much needed continuity and expertise in managing the dynamic
changes in the market environment. Process improvements and
quality control are on-going imperatives and are built into the
employees'' training modules, as well. The Company has well
documented Standard Operating Procedures for all processes to
ensure better control over transaction processing and regulatory
compliance.
As part of the efforts to evaluate the effectiveness of the internal
control systems, your Company has employed the services of
the Internal Audit Department (IAD) of Sundaram Finance
Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements,
wherever appropriate. The Internal Audit team plays a vital role
in continuously monitoring the effectiveness of the Standard
Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced
personnel and reports directly to the Audit Committee of the
Board.The Audit Committee regularly reviews the audit findings
as well as the adequacy and effectiveness of the internal control
measures.
In an environment that is rapidly becoming technology and digital
oriented, your Company believes in investing in long term people
development, for organisational excellence. Part of the enduring
tradition of the Sundaram Finance Group, over the decades, has
been the handing down of wisdom to successive generations
of employees, using the conventional methods of listening,
observing and on the job training. Your Company proposes
to continue the tradition along with appropriate technological
support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company
during the pandemic. With a view to ensuring the safety of its
employees alongside business continuity, the Company has put
in place all the standard operating procedures notified by the
Central and State Governments, and these are implemented in full
measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data
Centre catering not only to its own needs, but also those of its
subsidiary, with over 99.5% uptime. Your company has a well-
planned Business Continuity Plan for all critical applications with
near real-time data replication.
The delivery centres meet the Information Security Management
System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT
infrastructure is being constantly upgraded with new / enhanced
features to facilitate smooth functioning of operations and deliver
customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the
Companies Act, 2013, the Consolidated Financial Statements,
drawn up in accordance with the applicable Accounting
Standards, form part of the Annual Report. A separate statement
containing the salient features of the financial statements of your
CompanyâsSubsidiary and Associates in Form AOC-I forms part
of the Annual Report.
The annual report of the subsidiary,Sundaram Business
Services Limited, has been posted on your Companyâs website -
https://www.sundaramholdings.in/investorinfo/default.aspx.
Detailed information, including the annual accounts of the
Subsidiary Company will be available for inspection by the
members, at the registered office of the Company and will also
be made available to the members upon request.
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished
in the Corporate Governance Report.
Sri T T Srinivasaraghavan, a Non - Executive Director of your
Company since inception, relinquished his office effective
03rd August 2022. Your directors place on record the significant
contribution made by him to the deliberations of the Board.
Sri Ananth Ramanujam was appointed as a Non -executive Non
Independent director, liable to retire by rotation, on the Board
with effect from 03rd August 2022.
Ms. Priyamvada Ramkumar was appointed as a Non-executive
Independent director on the Board and Sri. Sriram Viji was
appointed as a Non-executive Non Independent director, liable to
retire by rotation, on the Board with effect from 01st April 2023.
Sri Harsha Viji, Director, retires by rotation and being eligible,
offers himself for re-election.
Sri S Kalyanaraman was appointed as Secretary and Compliance
Officer of the Company with effect from 1st June 2022.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each
Independent Director of the Company under Section 149 (7)
of the Companies Act, 2013 that the Independent Directors of
the Company meet with the criteria of their Independence laid
down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance
and that of its committees and individual directors as required
under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;
2. The Company has selected such accounting policies and
applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit of the
company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going
concern basis ;
5. Adequate internal financial controls have been put in place
and they are operating effectively; and
6. Proper systems have been devised to ensure compliance
with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have
been re-appointed as Statutory Auditors of your Company, to hold
office for second term of 5 years term of a five (5) consecutive
years from the conclusion of the 28th Annual General Meeting
until the conclusion of the 33rd Annual General Meeting at such
remuneration as may be mutually agreed between the Board of
Directors of the Company and the Statutory Auditors.
Your directors gratefully acknowledge the support and co¬
operation extended to your Company by all its customers,
shareholders, and bankers.
Your directors also place on record their special appreciation
of the employees of the Company for their dedication and
commitment in delivering the highest quality of service to every
one of our valued customers during these trying times.
For and on behalf of the Board
Chennai 600 002 Harsha Viji
24.05.2023 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 69th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in crores) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Operations |
3,870.03 |
3,953.74 |
Other Income |
20.43 |
60.46 |
Total Revenue |
3,890.46 |
4,014.20 |
Less: Total Expenses |
2,713.56 |
2,957.90 |
Profit before exceptional items and tax |
1,176.90 |
1,056.29 |
Add: Exceptional item |
NIL |
NIL |
Profit before tax |
1,176.90 |
1,056.30 |
Profit after Tax |
903.41 |
809.05 |
Other Comprehensive Income |
(14.26) |
(4.83) |
Total Comprehensive Income for the Year |
889.15 |
804.22 |
Dividend |
||
- Final 2019-20 |
- |
33.33 |
- Interim 2020-21 |
- |
133.32 |
- Final 2020-21 |
66.66 |
- |
- Interim 2021-22 |
111.10 |
- |
Your Company paid an interim dividend of ''10/- per share in February 2022. Your Directors are pleased to recommend a final dividend of ''10/- per share, which, together with the interim dividend, would aggregate to a total dividend of ''20/-per share (200% on the face value of ''10/-), representing a dividend pay-out of 24.60%
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
Your company has always focused on ensuring the highest standards for prudence, ethics and transparency in
corporate governance over decades. The Board of Directors serve as stewards of the performance and health of your Company. The Boardâs mandate is to oversee your Companyâs strategic direction, monitor company & Group performance, maintain highest ethical standards of governance, assess the adequacy of risk management measures, evaluate internal financial controls, authorise and monitor strategic investments, facilitate and review Board and senior management succession planning and oversee regulatory compliance and corporate social responsibility activities. Their experience has been brought to bear to guide the Company through various challenges, including the recent pandemic-related complications. The Directorsâ deep industry knowledge, functional specialization and decades of experience has helped your Company handle complex issues related to macroeconomic uncertainty, regulatory
changes, technological & digital developments, market volatility & risk management and information security & cybersecurity threats.
The Corporate Governance Report of the Company provides information about the corporate philosophy, details of the Directors and their other directorships, number of Board Meetings and Committee Meetings held during FY 2021-22, various other details which evidence the fact that the company is customer-oriented, respectful in letter and spirit of all the regulatory provisions, mindful of high quality standards in all areas and above all follows a balanced approach to growth, quality and profitability.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions with related parties were in the ordinary course of business and on an armâs length basis. The Company did not enter into any material transaction with such related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). The Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii).
The Company did not have any transactions with any person or entity belonging to the promoter or promoter
group and holding 10% or more shareholding in the Company.
Your Company, along with its subsidiaries and associates, has always proactively invested in a responsible manner to the growing needs of the communities in which it operates and responded swiftly to health-related complications, weather & catastrophic events and other unexpected challenges that have impacted these communities. During the year, your Company has, in consonance with the CSR policy of the Company, undertaken a number of initiatives that contribute to society at large, in the areas of healthcare, education, environment and preservation of the countryâs rich culture and heritage. The Highlights of the CSR activities are
1. Average Net Profit as per S.135(5): ''906,27.54 lakhs
2. CSR Budget, Amount spent in CSR, Amount un-spent if any and amount to be set off in the financial year, if any.
Particulars |
Amount ('' in lakhs) |
Total CSR Obligation for FY 2021-22 |
18,12.55 |
Less: Set off from FY 2020-21 |
6.51 |
Net CSR Obligation for FY 2021-22 |
18,06.04 |
CSR spent during FY 2021-22 |
20,37.41 |
3. Amount spent on administrative overheads: ''91.00 lakhs
4. Amount spent in excess of the requirement: ''231.37 lakhs
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22, is annexed to this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (1) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year nor were any pending unresolved as on 31st March 2022.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed M/s Damodaran & Associates, Practising Company Secretaries, as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by them is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME (SFESOS)
Based on the recommendations of the Nomination, Compensation and Remuneration Committee, the Board has
granted, subject to regulatory approvals where necessary, 17,586 stock options and 2,534 Stock Appreciation Rights to select eligible employees, on 25th May 2022. The disclosure required under SEBI (Share Based Employee Benefits) Regulations, 2014 is furnished, vide Annexure VIII.
As required under Section 92 (3) of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the Annual Return in E-form MGT-7 is https://sundaramfinance.in/downloads#annualreports .
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134 (3) (M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, expenditure in foreign currencies amounted to ''18.81 cr. Foreign currency earnings amounted to ''1.65 cr.
The financial year 2021-22 (FY22) started with the brutal Wave 2 of the Covid-19 pandemic in the first quarter of the financial year. It closed with optimism of a post Covid-19 pandemic recovery but witnessed the invasion of Ukraine by
Russia in February 2022. The conflict has triggered economic sanctions on Russia which has, in turn, escalated into a costly humanitarian crisis. At the same time, economic damage from the conflict has contributed to a significant slowdown in global growth in 2022 and added to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest.
Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. The IMF states that beyond 2023, global growth is forecasted to decline to about 3.3 percent over the medium term.
Volatility has risen sharply in both equity and debt markets following the Russian invasion of Ukraine, reflecting heightened uncertainty on the economic and policy outlook. On the interest rate front, market-implied volatility has remained elevated, reflecting uncertainties about the policy normalization process in advanced economies.
Conditions have also tightened for many emerging market economies, reflecting higher interest rates to combat inflation, lower equity valuations, and higher external borrowing costs. By contrast, conditions have eased in China, as policymakers have provided additional policy support to offset an economic slowdown, partly stemming from continued strains among property developers.
Global firms have been hit by the rise in energy and raw material prices. In addition, supply chain challenges that have emerged during the pandemic have been exacerbated by the uncertainties and reductions in export quantities of agricultural commodities, energy, metals, and technology inputs affecting a variety of industries.
Emerging and developing economies that are net importers of energy and food will be hit the hardest by surging international
prices. Many of these countries already experienced scarring from the pandemic and have little fiscal space to tackle new spending pressures. Governments are focused on those most affected by the crisis and priority areas. Ensuring greater resilience through investment in health, food, and energy security from cleaner sources has become even more urgent. Global cooperation to achieve these objectives is more important now than ever.
While businesses across various parts of the country are resuming their operations gradually, they are still facing challenges due to the change in the macro-economic environment caused by pandemic, the 2nd wave of which dealt a blow to the health and wealth of the economy. The 3rd wave of the pandemic, which occurred in the later part of the year, thankfully had much less detrimental impact on the economy than the earlier ones. The last two quarters of FY 22 witnessed gradual pick-up in activity and most of the macro parameters such as n consumption, investment activity, capacity utilisation, etc. saw improvements. Domestic economic activity stabilised in March-April with the ebbing of the third wave of COVID-19 and the easing of restrictions. Urban demand appears to have maintained expansion, but some weakness persists in rural demand. Investment activity seems poised to gain traction. This was partly due to the support extended by the Centre which announced package of measures for around '' 6.3 trillion including extension of ECLGS programme, expansion of PLI scheme, a DISCOM reform package and outlays for health sector.
The Indian Rupee made an all-time-low and extended its fall towards 77.62 as strength in the US dollar index dented demand for the riskier assets. On the emerging market front,
the faster US rate hike, huge FII outflow, higher commodity prices, and overshooting inflation have urged central bankers to go for a rate hike and compromise their growth. RBI raised its policy rate by 40 basis points (Repo Rate 4.40%) in an out-of-turn monetary policy meeting in May, while continuing to maintain an accommodative stance. In view of the expected continued inflationary pressures, markets seem to expect further rate hikes taking the Repo levels, even to above pre-Covid levels.
Centre''s fiscal deficit at the end of February stood at 82.7% of the full-year budget target, mainly on account of higher expenditure. The government expects the fiscal deficit for FY 22 to be at around 6.8% as estimated in the beginning of the year. This was possible thanks to significant increase in tax collections, especially direct tax.
Inflation based on consumer price index has risen consistently for past 7 months, reaching 8-year high of 7.8% in April 2022. Even though the International Monetary Fund (IMF) has reduced Indiaâs GDP forecast to 8.2%, from the earlier projected figure of 9%, the estimate is far better than its estimates for other major economies like the US, China, and Japan.
Overall, automotive sales witnessed a de-growth of six percent (i.e., -6%) in the financial year 2021-22. All segments were facing supply side challenges and the industry is yet to see complete recovery after the disruptions they faced since the early 2020. There was a steep increase in commodity cost by 90%, aggravated further by Russia - Ukraine war.
Passenger vehicle exports were at 5.78 lakhs units during the financial year 2021-22 when compared to 4.04 lakh units in FY 2020-21; providing fillip to the manufacturers. That said, exports are down by 13% when compared with pre-Covid levels.
During the year, the sale of commercial vehicles as well as passenger vehicles got impacted in Q1 FY22 by the second wave of the pandemic, when most dealerships were closed, and RTO operations were impacted. Nevertheless, some sequential recovery was reported by September 2021 with volumes improving gradually. The Indian commercial vehicle industry registered a minor growth of 1% on a YoY basis in wholesale dispatches aided by the low base of the previous year, which still had lingering effects of the pandemic. The automotive sector showed an all-time low during March 2022 in domestic sales of passenger vehicles. CV industry volumes are on recovery track as a result of gradual improvement in the macroeconomic environment and healthy demand from the end user industries.
OPERATING & FINANCIAL PERFORMANCE
Your Companyâs disbursements at ''13,275 cr. (PY ''11,742 cr.) were up by 13.05% during the year under review, reflecting the improved market conditions in the automotive sector and focused efforts of the company. Disbursements against Commercial Vehicles, Passenger cars and utility vehicles recorded stronger growth though in unit terms the growth was less than the growth in the industry. Gross receivables managed by your Company as of March 31, 2022, stood at ''33,774 cr., as against ''35,736 cr., showing a drop over
the previous year. Your Companyâs tight rein on operating costs and its ability to raise resources at competitive rates enabled it to maintain its margins at a reasonably healthy level.
While the economic slowdown increased the cashflow strains faced by the customers, the clarification on the recognition and upgradation of the NPAâs for NBFCâs (circular dated 12th November 2021) by RBI increased your Companyâs delinquencies during the year. However, your Companyâs superior credit standards, strong customer relationships and systematic collection efforts ensured best-in-class performance on asset quality. Stage III assets, Gross and Net of ECL provisions, stood at 2.19% (PY 1.84% & December
2021 3.39%) and 1.07% (PY 1.01% and December 2021 2.09%) respectively, as at 31st March, 2022.
Your Company has been maintaining comfortable liquidity in the form of liquid investments and undrawn bank limits, to meet its maturing liabilities.
Your Company registered a net profit of '' 903 cr. compared to '' 809 cr. in the previous year, a growth of 11.66%. Your Companyâs net worth stood at ''6,893 cr., as on 31.3.2022. Capital adequacy (CRAR) at 24.37% was comfortably higher than the statutory requirement of 15%.
There are no significant changes in key financial ratios of the Company for F.Y. 2021-22 as compared to EY. 2020-21.
RESOURCE MOBILISATION
a) Deposits
During the year, your Company mobilised fresh deposits aggregating to ''574.14 cr. Renewal of deposits during the year amounted to ''1,519.25 cr. representing 79% of the matured deposits of ''1,940.27 cr. Deposits outstanding at the year-end were at ''4,103.19 cr. as against ''4,020.99 cr. in the previous year. The net accretion for the financial year was ''82.20 cr. As at 31st March 2022, 4,184 TDRs amounting to ''47.81 cr. had matured for payment and were due to be claimed or renewed. After close followup, these figures are currently 2,911 and ''28.05 cr. respectively. Continuous efforts are being made to arrange for repayment or renewal of these deposits. There has been no default in repayment of deposits or payment of interest thereon during the year. Investor Relation Services - Deposits continue to enjoy the ISO 9001:2015 Certification from Bureau Veritas (India) Private Limited.
In our continued digital journey, through our Online customer portal/Mobile App, our Depositors can place Additional Deposits, renew their TDRs, initiate payment requests, furnish Form 15G/H, initiate Change in Address and Bank Details.
b) Term Funding
During the year, your Company raised term funding from Banks, Mutual funds, Insurance companies and others in the form of non-convertible debentures and term loans to the tune of ''6,215 cr., across varying tenors.
c) Bank Finance
As part of the overall funding plan, your Companyâs working capital limits with consortium banks were
retained at ''3,000 cr. During the year, your Company also issued several tranches of commercial paper aggregating to ''3,950 cr. The maximum amount of outstanding commercial papers at any time was ''3,725 cr. and the amount outstanding at the end of the year was ''1,000 cr.
d) Assets Securitised / Assigned
During the year, your Company raised resources to the extent of ''2,048 cr. through securitisation and assignment of receivables.
Your Companyâs long term credit ratings have been retained at âAAAâ (Highest Degree of Safety) with a âStable Outlookâ, by both ICRA and CRISIL. The short-term borrowings (including commercial paper) are rated âA1 â by both ICRA and CRISIL. Fixed Deposits are rated âAAAâ (Highest Credit Quality) by both ICRA and CRISIL.
The financial year 2022-23 has gotten off to a mixed start. The third wave of the Covid pandemic has been contained due, in large part, to the successful vaccination drive and the improved immunity levels within the population. The risk of a fourth wave remains but confidence and optimism seem to have been re-established among the general population. However, a confluence of global and domestic factors creates macroeconomic uncertainty for the year.
Globally, five factors - i) the escalation of geopolitical tensions in general and the Russia-Ukraine conflict in particular,
ii) hardening of global commodity prices, iii) disruptions to the global supply chains due to Covid-related shutdowns in China, iv) dislocations in trade and capital flows, and, v) varying monetary policy actions around the globe and
associated uncertainty - are impacting economic growth and price stability.
Domestically, consumer demand & private investment remain tepid softening the momentum of the recovery in economic growth. Sustained investment by the government in infrastructure as well as the forecast of another normal monsoon are positives for economic activity. Simultaneously, food and oil price inflation driven by global forces have reached multi-year highs warranting monetary policy actions despite inflation being driven by insufficient supply and not overstimulated demand. In line with global trends, FY23 could be marked with stagflation as a plausible scenario for India - the RBIâs GDP growth forecast for the year indicates an exit to FY23 of 4.0% growth in Q4.
Competitive intensity in the financial services space is likely to remain high as banks expand their franchise and new age fintech players attempt to disrupt the space with differentiated offerings and the promise of enhanced customer experience. On the regulatory front, FY23 will mark the transition to scale-based regulatory framework for NBFCs that the RBI has already announced, and it is expected that the harmonisation of regulation as well as supervision of NBFCs with banks will continue.
Under these turbulent conditions, it seems a given that interest rates will move up through the course of the year through two phases: i) from the negative real rate territory to unwind all 115 basis points of pandemic accommodation in the nearterm, and, ii) continue the rate increases to establish neutral to small positive real interest rates by the end of the year. This would imply an additional 75 basis points of interest rate hikes in the first half of the year which, combined with the 40 basis point hike delivered by the RBI in May 2022, will undo the 115
basis point accommodation provided through the pandemic. There could be an incremental 75 to 100 basis point increase in the second half of FY23, based on how headline inflation moves, to ensure that real policy rates are in the 0.5-1% range for the year.
Against this macroeconomic backdrop, the much-awaited recovery of the commercial vehicle market faces new headwinds given how sensitive the sector is to economic momentum and sentiment. Dynamics are different across different categories of commercial vehicles.
⢠Larger fleet operators with sufficient financial wherewithal are likely to further increase their share of the medium and heavy commercial vehicle (MHCV) segment. Momentum in the tipper segment is expected to continue in FY23, driven by the push on infrastructure spending as well as the steady growth in the mining segment. The bus segment -transport bus, staff bus and school bus - is likely to witness replacement buying after two years of pandemic-driven disruption. Even as the small road transport operators get squeezed out of the MHCV segment due to higher BS VI prices as well as operating viability pressures, they are likely to migrate to operating used MHCV or shift to intermediate commercial vehicles (ICV).
⢠While this shift is likely to help the ICV segment, there is sufficient traction in the ICV segment with replacement of diesel versions with CNG gaining salience given the substantial commercial advantage that CNG offers and aided by increases in the CNG infrastructure network across the country. Replacement demand in the school bus segment as well as increasing deployment in inter-state e-Commerce goods movement are likely to provide fillip to the ICV segment.
⢠The light and small commercial vehicle (LSCV) segment, which has traditionally been the domain of NBFCs, is witnessing continued traction due to the growth of hub-and-spoke networks in logistics & supply chain solutions and deepening of e-Commerce-driven reach into the hinterland requiring last mile connectivity. Both CNG as well as electric variants are gaining favour and are likely to contribute to the continued growth of the LSCV segment.
The passenger cars & utility vehicles segment is witnessing mutually offsetting forces. On the one hand, Covid-led personal mobility preferences for personal transportation as well as an increasingly affluent middle-class segment shifting to segment B and utility vehicles bode well for demand momentum. However, the semi-conductor shortage that were prevalent through the pandemic continue to persist with supply chain disruptions in China as well as disruptions in supply of neon gas and palladium due to the Russia-Ukraine conflict. Consequently, it is expected that growth in passenger cars & utility vehicles in FY23 will be constrained by supply.
Rural inflation being well ahead of urban inflation remains a concern and consequently rural demand has remained soft in the last quarter of FY22 and early in the first quarter of FY23. The forecast of another normal monsoon is a positive as is the continued commitment of the government to ensuring that procurement remains robust and predictable. It is expected that the rural demand will bounce back on strong harvest and firm prices of commodities. Tractor and farm equipment demand is likely to remain positive; however, on account of enhanced supply in the last two years as well as
current supply constraints, tractor sales are likely to remain somewhat subdued.
Material Handling & Construction Equipment
The governmentâs strong thrust on infrastructure is a major boost for the Material Handling and Construction Equipment (MHCE) segment. In October 2021, the Union Cabinet of India approved the PM Gati Shakti National Master Plan, including implementation, monitoring and support mechanism for providing multi-modal connectivity. Salient elements of the plan include river linkage, Jal Shakti, Bullet train and freight corridor projects. As of 1st November 2021, Indiaâs project pipeline totalled 1,680 developments, worth INR 26.1 trillion (US$340.2 billion).
In sum, FY23 is likely to test your Companyâs well-established compass of GQP - Growth with Quality & Profitability - across the various customer segments we serve, the asset classes we finance and the geographies that we operate in. A âthrough cycleâ view to delivering near-term performance and building robust health is central to continuing the Companyâs tradition of being a long-term oriented, customer-obsessed, values-driven and employee-friendly organisation.
The Company has a well-established internal financial control and risk management framework to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure. Appropriate controls are in place to ensure:
a) the orderly and efficient conduct of business, including adherence to policies;
b) safeguarding of assets;
c) prevention and detection of frauds/errors;
d) accuracy and completeness of accounting records; and
e) timely preparation of reliable financial information.
Additionally, as part of Risk Based Internal Audit (RBIA) requirement, your Company has adopted appropriate policy and operating guidelines. Along with Risk Management team and Internal Audit department, the functional and operational risk control matrices have been designed to ensure that adequate controls as may be required are in place and operating effectively and efficiently.
Your Company has built a robust risk management framework over the years. Engaged as it is in retail financing, the Company has to manage various risks, including credit risk, liquidity risk, interest rate risk and operational risk among others. The Risk Management Committee and the Asset Liability Management Committee review and monitor these risks on a regular basis.
The primary objectives of the Risk Management Committee include:
i) To assist the Board in fulfilling its corporate governance oversight responsibilities with regard to all internal and external risks;
ii) To monitor and approve the enterprise risk management framework and associated practices of the Company;
iii) To periodically assess risks to the effective execution of business strategy by reviewing key leading indicators in this regard; and
iv) To periodically review the risk management processes and practices of the Company and ensure that the Company
is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.
The primary responsibility of ALCO (Asset Liability Committee) includes:
i) Monitoring and advising on Liquidity risk management;
ii) Management of market risks;
iii) Funding and capital planning;
iv) Profit planning and growth projection; and
v) Forecasting and analysing ''What if scenario'' and preparation of contingency plans with primary focus on Liquidity and Interest Rate risks as stipulated under RBI guidelines.
As part of risk management initiatives your Company has identified several risk drivers to monitor and mitigate risks wherever required. Programs like Early Warning Signals (EWS) developed to identify, monitor and mitigate risks. To spread risk culture, your Company has also developed a strong team of risk champions representing all functions and operational regions. Theme-based awareness programmes on a monthly basis are also conducted to create awareness on various risk types through the Intranet to reach all employees.
During this audit period, your Company has additionally taken steps to adopt the Enterprise Risk Management (ERM) framework that maps with the internal financial controls. This assists in several ways to identify and mitigate risk besides acting as a risk monitoring mechanism. The framework identifies as many as 10 key risk drivers that includes operational, Legal and Regulatory, Technology and Human capital among others. The risk management process fulfils the requirement under Section 134 of the Companies Act
2013 and also the guidelines under regulation 21 of Listing guidelines (schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Also as part of the risk management initiatives and regulatory requirements, your Company has implemented Risk Based Internal Audit (RBIA). Overall, the risk management process, together with robust internal controls, improves strategic decision-making.
The Company manages credit risk through stringent credit norms established through several decades of experience in retail lending and continues to follow the time-tested practice of personally assessing every borrower, before committing to a credit exposure. Credit team along with Internal Audit Team and Risk Management team ensure healthy asset quality, review monitoring controls right from customer onboarding.
The Company monitors ALM on an ongoing basis to mitigate liquidity risk, while interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles. The Company also measures the interest rate risk by the duration gap method.
Operational risks can arise due to changes in business environment or changes in processes, affecting the control design or operating effectiveness. The internal audit team reviews the processes and controls to ensure the design effectiveness and adequacy of controls to mitigate risk. A stable and experienced risk management team provide much-needed continuity and expertise in managing the dynamic changes in the market environment. Your Company has well- documented standard operating procedures and Risk Control Matrices for all processes to ensure superior control over transaction processing and regulatory compliance and periodical review of the same ensures that the risks including
technology risks are under control. The Risk Control Matrices enable identifying residual risks and pave way for strengthened risk monitoring. While meeting the strategic objectives is the primary goal, your Companyâs values and culture that are enshrined in the Sundaram Way of doing business and the obligations and commitment to our customers, employees, deposit holders and the community around us are the foundations on which its risk framework rests.
The detailed Risk Management Framework of your Company has been furnished in the Notes to the Accounts under Note No. 37, for your information.
Your Company has implemented the policy on Liquidity Coverage Ratio with effect from 1st December 2020, as mandated by RBI. RBI introduced the Liquidity Risk Management framework for NBFCs in the year 2019-20. During the year, the Board of Directors approved the Liquidity Risk Management Policy and implemented the Liquidity coverage ratio (LCR). Your Company will maintain a sufficient liquidity buffer in terms of LCR and ensure adequate High Quality Liquid Assets (HQLA) in line with regulatory norms in order to prudently manage any potential acute liquidity stress scenarios.
INTERNAL AUDIT
Your Companyâs internal audit department independently evaluates the adequacy of control measures on a periodic basis and recommends improvements, wherever appropriate to suit the changes in business and control environment. The effectiveness and efficiency of the controls, and the design are regularly measured through process reviews and risk assessment. The Internal Audit team plays a vital role in monitoring the effectiveness of the Standard Operating
Procedures and makes extensive use of software and analytical tools which enables effective offsite or remote auditing. A robust process that includes a continuous learning mechanism ensures that the Internal Audit team regularly updates its skills and knowledge base in order to analyse, assess, mitigate and continuously monitor the controls and guard against inadequacies including various risks that could pose a threat to your Companyâs strategic objectives, as part of key pillar or 3rd line of defence. Systematic identification of risks, red flags and early warning signals on a proactive basis enables quick decision-making on strengthening and redesigning the controls where required, through agile audit plans. The internal audit function is fully geared to meet the emerging challenges in the post COVID-19 era.
The internal audit department is staffed by qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
Additionally, an Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and IT-related areas, apart from information security related measures.
To ensure adequate strengthening of controls surrounding information security and mitigate technology risks, external information systems auditors carry out periodical and continuous reviews on both network and application systems. They work along with Internal Audit teams to ensure adequate independence while reviewing IT applications infrastructure and network management.
Pursuant to the introduction of Risk Based Internal Audit (RBIA) system and the guidelines issued by the RBI, the
Company has rolled out Risk Based Internal Audit Policy. The primary focus of Risk Based Internal Audit is to provide reasonable assurance to the Board and the Senior Management about the adequacy and effectiveness of the risk management and control framework of the Company. The internal audit function will broadly assess and contribute to the overall improvement of the organizationâs governance, risk management, and control processes using a systematic and disciplined approach. Audit will be conducted encompassing all the functional areas of the branch and Head office in such a manner that it serves as an important tool of internal control. The audit will cover the adequacy as well as implementation of various systems and procedures adopted in identification, measurement and mitigation of different risks.
INFORMATION TECHNOLOGY
Your company recognizes Information Technology as a critical pillar to run and grow its business. Significant investments continue to be made in IT infrastructure and applications to expand the breadth and depth of technology availability to our staff and customers, to enable delivery of the unique âSundaram Experienceâ to customers. Ensuring the reliability, security and integrity of our systems and data is of the highest priority.
Your Company strictly follows the IT Framework Master Directions laid down by RBI and conducts resilience drills regularly to safeguard the customersâ and shareholdersâ data.
The IT Strategy Committee of your Company periodically monitors the robustness of your Companyâs infrastructure and processes to protect the IT landscape. This committee also shares its expertise in strengthening various measures implemented by your Companyâs strong technology team.
Your Company has a state-of-the-art Data Centre catering not only to its own needs but also to those of its subsidiaries and associates, with a capacity of over 300 servers, managed by professionals providing 24/7 support, with over 99.99% uptime. The Data Centre is accredited for ISO/IEC 27001:2013 by TUV Rheinland for Information Security Management System. The Disaster Recovery Site for all critical applications is hosted at a separate facility located in a different seismic zone, with near real-time data replication. Your Company has built a secure and scalable IT infrastructure for remote working (Work From Home) to ensure smooth business operations and customer services in adversities like pandemic, lockdown, etc. Your Company has 24x7 Security Operations Centre (SOC) for real-time threat monitoring and alerting. Your Company continues to invest in various new technologies, software tools and monitoring mechanisms to improvise and modernize the IT Infrastructure. Your Company has engaged in regular discussions with external consultants, industry experts to reinforce Information & Cyber Security methodologies. Periodic vulnerability assessment and penetration testing were carried out on the infrastructure to ascertain the effectiveness of the practices laid down by your Company.
Your companyâs in-house IT team has built proficiency across various technologies and has developed solutions for a wide range of complex business needs. By working closely with the business functions, they have implemented solutions that touch every facet of our operations and enrich the jobs of our employees, improve our customersâ experience, enhance our risk management and controls processes and enable better decisions.
The ability to provide a credit decision in less than 30 seconds to a buyer in a car showroom, delivering a paperless loan
documentation experience to a customer on the move or facilitating a field officer to proactively monitor collections -these are some of illustrations of how your company is putting technology to use.
With the advantage of a solid foundation, your company is looking to take its technology base to the next level. Employing digital and intelligent solutions to enable customer acquisition, scale up new products, accelerate response times, broaden usage of data analytics and enhancing our customer interfaces for a richer experience are our key focus areas.
Your Company is in a relationship-centric business relying on physical interactions with customers and other stakeholders. The digital strategy has consciously been adopted to augment these relationships and for resources to be digitally available for customers, as and when they need them.
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-I forms part of the Annual Report.
The consolidated profit after tax is ''1,173.34 cr. as against ''1,165.09 cr. of the previous year. The total comprehensive income for the year was ''1,207.06 cr. as against ''1,210.13 cr. The consolidated net worth for the year stood at ''8,794.83 cr., as against ''7,730.25 cr. in the previous year.
The annual accounts of all the Subsidiary Companies have been posted on your Companyâs website - www.sundaramfinance.in. Detailed information, including the annual accounts of the
Subsidiary Companies will be available for inspection by the members, through a digital platform which would be provided by the Company as physical inspection of documents at the registered office of the Company is still not possible even though most of the restrictive procedures advised by the Central and State Governments as safety measures to avoid the COVID-19 risk, have been removed.
⢠Sundaram Finance Holdings Limited
Sundaram Finance Holdings Limited reported a gross income of ''80.08 cr. as against ''39.76 cr. in the previous year. Profit after tax was ''46.91cr. as compared to ''14.55 cr. in the previous year.
The Board of Directors has recommended a final dividend of ''1/-per share (20% on the face value of ''5/-) for the financial year ended 31st March 2022.
In addition, the company has recommended a Special Dividend of ''0.75 per share (15% on the face value of '' 5/-), which, together with the Special Dividend of '' 1/-per share (20% on face value of '' 5/-) paid on 25th February 2022 will make a total Special Dividend of ''1.75 per share (35% on the face value of ''5/-) for the financial year ended 31st March 2022.
Sundaram Home Finance Limited, during the year approved loans aggregating to ''2,476 cr. (Previous year ''1,446 cr. Disbursements during the year were higher by 84% at ''2,311 cr. (PY ''1,254 cr. The Company earned a gross income of ''957 cr. (PY ''1,039 cr. and reported a profit after tax at ''167.70 cr. (PY ''191.64 cr. The loan portfolio under management as at 31st March 2022 stood
at ''9,495 cr. as against ''9,173 cr. in the previous year. Gross Stage III assets stood at 3.00% (PY 4.48%) and net of ECL provisions stood at 1.57% (PY 1.09%), as at 31st March, 2022. The Board of Directors have recommended a final dividend of ''6.50 per share (65%) for the year ended 31st March 2022. This together with Interim dividend of ''1.50 per share (15%) already paid, would aggregate to a total dividend of ''8/- per share (80%).
The Company reported a consolidated gross income of ''345 cr. as against ''288.20 cr. in the previous year. Consolidated Profit after tax was ''71.63 cr. as compared to ''55.13 cr. during the previous year. The Average Assets under Management amounted to ''46,630 cr. for the year 2021-22 as compared to ''36,962 cr. in the previous year. The Company has recommended a final dividend of ''15.87 per share (158.7%) for the year ended 31st March 2022.
Sundaram Trustee Company Limited earned a gross income of ''1.85 cr., as against ''1.42 cr., in the previous year and reported a profit after tax of ''0.97 cr. for the year, as against ''0.72 cr. in the previous year. The Company recommended a dividend of ''60/- per share (600%) for the year ended 31st March 2022.
During the year, the Company reported a gross income of ''0.20cr. as against '' 0.11cr. in the previous year. The profit after tax for the year was ''0.12 cr. as against ''0.06cr. in the previous year. The Company recommended a dividend of ''5/- (50%) per share for the year.
Sundaram Fund Services Limited (formerly Sundaram BNP Paribas Fund Services Limited) earned an income of ''4.85 cr. during the year as against and ''4.94 cr. in the previous year. The Company reported a profit after tax at ''2.27 cr. as against a profit of ''0.11 cr. in the previous year.
Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)
Royal Sundaram reported a Gross Written Premium (GWP) of ''2,966 cr. as compared to ''2,883 cr. in the previous year, representing a growth of 2.8%. The Company reported a profit after tax (as per IND AS) of ''172 cr. for the current year as against ''313 cr. in the previous year. The current yearâs profit (as per IND AS) was lower majorly due to higher loss ratios because of Covid-19 pandemic and lower Mark to Market gain (net of tax) on equity investments compared to previous year. During the current year, ''33 cr. was MTM gain vs ''137 cr. in the previous year. The Company recommended a maiden dividend of ''0.60/- (6%) per share for the year ended 31st March 2022.
The details regarding number of board meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report. The details of all other Committees are provided elsewhere in this Annual Report.
Sri S. Ram, a Non-executive Director on the Board, demitted his directorship from the Board on 7th February 2022,
after an association of over three decades. Sri S. Ramâs invaluable expertise and experience in the automobile sector over five decades was of immense benefit to the Company. Your Directors place on record the guidance, advice and contributions of Sri S. Ram to the deliberations of the Board. Sri Srivats Ram, was appointed as a Non-executive, Non-Independent Director on the Board with effect from 28th March 2022.
Sri T. T. Srinivasaraghavan and Sri A. N. Raju, Directors, retire by rotation and being eligible, offer themselves for re-election.
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that they meet with the criteria of their Independence laid down in Section 149 (6).
The Board has made a formal evaluation of its own performance and that of its committees and individual Directors as required under Section 134(3) (p) of the Companies Act, 2013.
Your Directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company
at the end of the financial year and of the profit of the Company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/s B.K. Khare & co., Chartered Accountants, Mumbai (Regn. No. 105102W) and M/s N.C. Rajagopal & Co., Chartered Accountants, Chennai (Regn. No. 003398S) have been appointed as Joint Statutory Auditors of your Company, to hold office for a term of three (3) consecutive years from the conclusion of the 68th Annual General Meeting to the conclusion of the 71st Annual General Meeting, in accordance
with the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by the Reserve Bank of India vide their notification dated 27th April 2021, at such remuneration as may be mutually agreed to between the Board of Directors of the Company and the Joint Statutory Auditors.
Your Directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, depositors, shareholders, and bankers, as also the various mutual funds, insurance companies, automotive manufacturers and dealers.
Your Directors also place on record their special appreciation of Team Sundaram for its dedication and commitment in delivering the highest quality of service to every one of our valued customers, especially in these difficult and trying times.
For and on behalf of the Board Chennai 600 002 S. VIJI
25.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2022
Your directors have pleasure in presenting the 28th Annual Report together with audited accounts for the year ended 31st March 2022. The summarised financial results of the Company are presented hereunder:
('' in cr.) |
||
Particulars |
Year ended March 31, 2022 |
Year ended March 31, 2021 |
Revenue from Portfolio Companies |
40.90 |
14.13 |
Operating Revenue |
37.22 |
23.56 |
Other Income |
1.96 |
2.07 |
Total Revenue |
80.08 |
39.76 |
Less: Total Expenses |
29.65 |
22.11 |
Profit before Tax |
50.43 |
17.65 |
Profit after Tax |
46.91 |
14.55 |
Consolidated PAT |
160.70 |
73.88 |
Your Company paid a Special Dividend of ''1/- per share in February 2022.
Your directors are pleased to recommend a final dividend of ''1/- per share (20% on the face value of ''5/-).
In addition, your directors are pleased to recommend a special dividend of ''0.75 per share (15% on the face value of ''5/-), which, together with the Special Dividend paid during February 2022, would aggregate to a total Special Dividend of ''1.75/- per share (35% on the face value of ''5/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
The early part of financial year 2021-22 saw the world battle the disruption caused by the Covid-19 virus, with widespread vaccinations across countries. Following a year where the global economy had been battered by the pandemic, global GDP is estimated to have grown by 6.1% in 2021. The sudden increase in demand caused shortages of industrial materials leading to a commodity based inflation across the world.
In India, the last financial year started with a strong second wave of the virus that affected economic activity. However, widespread vaccination and other timely Government initiatives enabled the economy to recover strongly and grow at 9.2%. The onset of the 3rd wave, which was seen much later in the year, was relatively brief and had a more muted impact on both the economy and health metrics than the earlier two waves.
As per the annual Economic Survey, industry is estimated to have grown by 11.8% in the last financial year, following a contraction of 7% in previous year. The services sector is estimated to have grown by 8.2% in FY22, following a 8.4% contraction in FY21 while agriculture is estimated to have grown by 3.9% in the year under review, as against 3.6% in the previous year, making India one of the fastest growing economies in the world.
The fiscal deficit for the year 2021-22 is likely to hover around the projected target of 6.8%, due to an appreciable increase in tax collections during the year, particularly direct taxes, thereby helping the government maintain the quality of spending towards capex.
The third and fourth quarters of FY22 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY22 is likely to record a growth of about 8.4%, as compared to the previous year. The Centre announced a number of measures to support the economy, that included credit guarantee schemes, reform measures for power distribution and health sector outlays. The year also saw the government expand its PLI scheme and increase the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) program. The RBI continued to remain supportive of growth and remained in accommodative mode throughout the year. However, Russiaâs invasion of Ukraine led to a deep shift in the global growth-inflation dynamics and the year ended with a significant disruption to both commodity and financial markets, raising inflationary expectations across countries.
This caused the RBI to shift its priority in early FY23, to taming inflation expectations, resulting in a surprise Repo rate and CRR hike, while still maintaining an accommodative stance. CPI inflation is yet to peak and is expected to average above 6% for most of FY23. Markets, therefore, expect more rate hikes from the RBI, taking the Repo to above pre-COVID levels.
After two consecutive years of sharp volume decline in FY20 and FY21, most segments of the auto, industry came back to growth in FY22.
Passenger Vehicle volumes grew 13% YoY in FY22. Growth would have been much higher, if not for impact of chip shortages starting Aug-21. Production was disrupted and waiting periods for new/ popular models got extended. PV industry performance in FY22 was quite polarised, with the SUV category growing 40% and the overall industry ex-SUV, declining 4%.
Commercial Vehicles witnessed a good recovery from multiyear lows, with M&HCV and LCV registering growth of 50% and 17% respectively. Despite the 50% growth, absolute volumes of M&HCV in FY22 are 40% below the FY19 peak. The strong growth momentum is expected to continue in FY23 and beyond, with current average fleet-age at all-time highs.
Two-wheelers and tractors were the only segments to see YoY volume declines in FY22. Both were impacted by weakness in rural India, following the Covid 2nd wave. The 6% volume decline in tractors did not hurt much as it came off a high base of 27% growth in FY21. However, the two-wheeler segment saw its third consecutive year of decline. As a result, domestic twowheeler volumes in FY22 were 36% lower than the FY19 peak. The fall in the two-wheeler volumes is largely attributed to the cumulative price increases of 40% over FY19-22, due to multiple regulatory and input cost-related reasons. The two-wheeler and tractor segments are now showing signs of revival, based on remunerative prices for farmers.
Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.
Pursuant to the effective measures taken by the Government of India to control the spread of the COVID-19 pandemic during the early part of FY22, there has been reasonable recovery in the automotive sector, including the business operations of our portfolio companies, during the fiscal 2022. Thankfully, the disruption caused by the spread of the new COVID variant during the third quarter of FY22 had a relatively muted impact on the automotive sector and the economy as a whole.
While significant uncertainty continues to exist on the consistency in the performance of the automotive sector in 2022-23 due to factors such as the shortage in availability of semi-conductor chips and the developments in Europe, we remain positive on the automotive sector in the medium-term.
EXEMPTED CORE INVESTMENT COMPANY
As at the date of the audited balance sheet for the financial year ended 31st March 2022, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.
OPERATING AND FINANCIAL PERFORMANCE
Your Company earned a revenue of ''80.08 cr., during the financial year 2021-22, as against ''39.76 cr. in the previous year. The profit after tax for the year was ''46.91 cr., as against ''14.55 cr. in the previous year. The companyâs net-worth stood at ''2,106.12 cr. as on 31.03.2022.
The significant changes in key financial ratios of the Company for FY 2021-22 as compared to FY 2020-21 are as follows: |
|||||
Ratios |
March 2022 |
March 2021 |
Variance |
Reason for Change |
|
Current Ratio |
68.35 |
25.71 |
166% |
Due to increase in closing balance of Mutual Fund investments |
|
Operating Profit Margin (%) |
63.02 |
43.67 |
44% |
Due to increase in Net Profit and total revenue during FY 2021-22 |
|
Net Profit Margin (%) |
58.58 |
36.59 |
60% |
||
ROCE (%) |
2.31 |
1.10 |
109% |
Due to increase in Net Profit and capital employed during FY 2021-22 |
|
ROE (%) |
2.23 |
1.02 |
118% |
Due to increase in Net Profit and networth during FY 2021-22. |
|
The consolidated profit after tax and net worth for the year stood at ''160.70 cr. and ''3,002.05 cr. respectively. BPO BUSINESS The BPO business of the Company comprises the following: |
|||||
Type of Business |
Turnover ('' in cr.) |
||||
Shared services business managed by the Company |
13.52 |
||||
Sundaram Business Services Limited - for managing outsourced business of domestic and overseas clients (Wholly-owned Subsidiary) |
35.11 |
||||
Total |
48.63 |
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group and associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue earned from the shared services business during the year was ''13.52 cr. The business had 267 employees as on 31st March 2022.
⢠Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 41 clients in India, Australia and the UK. During the year, SBSL earned a revenue of ''36.33 cr. and reported a profit after tax of ''7.80 cr.
INVESTMENTS MADE BY THE COMPANY During the financial year 2021-22, your Company made portfolio investments in the following entities: |
|||||||
Name of the Entity |
% Stake held before investment |
Amount of Investment ('' in cr.) |
% Stake held after investment |
Remarks |
|||
Brakes India Private Limited |
6.67 |
350.00 |
14.37 |
Investment by way of an acquisition from the JV Partner, viz., ZF International UK Limited, as part of the Companyâs strategy to consolidate its holdings. |
|||
Sundaram Composite Structures Private Limited |
- |
19.60 |
49.00 |
Investment in Sundaram Composite Structures Private Limited to enter the Indian Carbon Fiber Market. Additionally, investment in Rights Issue was also made by the Company. |
|||
Mind S.r.l., Italy (Mind) |
40.60 |
17.17 |
48.86 |
Additional investment made in Mind, in continuation of the strategy to focus on the global carbon fiber market. |
|||
Flometallic India Private Limited |
40.00 |
12.50 |
46.84 |
Investment by way of an acquisition from the individual promoters of FIPL, as part of the Companyâs strategy to consolidate its holdings. |
|||
India Motor Parts & Accessories Limited |
18.62 |
5.74 |
19.22 |
Investment in India Motor Parts & Accessories Limited, by way of acquisition from the market. |
|||
Further, during the financial year 2021-22, your Company made the following disinvestments: |
|||||||
Name of the Entity |
% Stake held before dis-investment |
Consideration ('' in cr.) |
% Stake held after dis-investment |
Remarks |
|||
Sundaram Clayton Limited |
11.24 |
126.89 |
9.74 |
0.54% sold to India Opportunities Growth Fund Limited - Pinewood Strategy, Mauritius and 0.96% sold to T.V. Sundram Iyengar & Sons Private Limited. The cost of acquisition for the said shares was ''1.91 cr. |
|||
TVS Investments Private Limited |
14.98 |
33.00 |
- |
Sold to Geeyes Family Holdings Private Limited. The cost of acquisition for the said shares was ''2.91 cr. |
The Company holds investments in 19 portfolio companies as at 31.03.2022. The total cost of these investments is ''686.25 cr. The performance of the key portfolio companies during 2021-22 was as follows:
('' in cr.) |
|||||||
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Networth |
Share of Networth |
PAT |
Share of PAT |
1 |
Turbo Energy Pvt. Limited |
1.88 |
32.00 |
1,658.26 |
530.64 |
164.91 |
52.77 |
2 |
Brakes India Pvt. Limited |
353.35 |
14.37 |
2,927.35 |
420.66 |
358.47 |
51.51 |
3 |
Sundaram Clayton Limited |
12.38 |
9.74 |
2,900.36 |
282.50 |
2,276.69 |
221.75 |
4 |
India Motor Parts & Accessories Limited |
12.12 |
19.22 |
1,432.62 |
275.35 |
36.54 |
7.02 |
5 |
Wheels India Limited |
141.68 |
23.28 |
675.11 |
157.17 |
79.79 |
18.58 |
6 |
The Dunes Oman FZC (LLC) |
17.25 |
43.69 |
199.21 |
87.03 |
25.52 |
11.15 |
7 |
Flometallic India Pvt Limited |
50.50 |
46.84 |
161.46 |
75.63 |
(22.37) |
(10.48) |
8 |
Axles India Limited |
10.16 |
38.81 |
175.40 |
68.07 |
33.83 |
13.13 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
1,094.99 |
58.25 |
36.65 |
1.95 |
10 |
Sundaram Composite Structures Pvt. Limited |
19.60 |
49.00 |
39.34 |
19.28 |
-0.98 |
(0.48) |
11 |
Mind S.r.l. |
41.08 |
48.86 |
31.77 |
15.52 |
(14.19) |
(6.93) |
12 |
Delphi TVS Technologies Limited |
0.18 |
3.19 |
410.92 |
13.11 |
22.30 |
0.71 |
13 |
Others |
25.80 |
NA |
108.17 |
31.55 |
26.45 |
8.37 |
Total |
686.25 |
2,034.76 |
369.05 |
Note: The figures relating to the companies mentioned under Sl. Nos. 9 and 12 are based on the audited financial results for the year ended 31st March 2021. The figures relating to the company mentioned under Sl. No. 4 is based on the unaudited financial results for the nine months ended 31st December 2021, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1,2,3,5,6,7,8,10 and 11 are based on the audited financial results for the year ended 31st March 2022.
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. BorgWarner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year, the revenue
earned by the company stood at ''1,734.34 cr. as against ''1,333.64 cr. in the previous year. The profit after tax for the year was ''164.91cr. as against ''102.14 cr. in the previous year, registering a growth of 61.45%. Your Company received a total dividend of ''16.38 cr. from Turbo Energy Private Limited during the financial year 2021-22.
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Your Company holds a 14.37% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2022 stood at ''5,002.08 cr. as against ''3,682.90 cr. The profit after tax for the year ended 31st March 2022 was ''358.47 cr. as against ''167.82 cr. in the previous year. Your Company received a total dividend of ''2.87 cr. from Brakes India Private Limited during the financial year 2021-22.
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and nonautomotive applications. Your Company has been categorised as one of the promoters of that company. During the year, your Company sold 3,03,482 shares (1.50%) held in Sundaram Clayton Limited for a total consideration of ''126.89 cr. Pursuant to the sale, your Company now holds 9.74% stake in Sundaram Clayton Limited. TVS Holdings Private Limited is the other promoter of the company. During the year, the revenue earned by the company stood at ''1,836.86 cr. as against ''1,288.08 cr. in the previous year. The profit after tax for the year was ''2,276.69 cr. as against ''75.84 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''7,271.19 cr. The value of your Companyâs holding on that basis, was ''707.85 cr. as on 31st March 2022. Your Company received a total dividend of ''11.17 cr. from Sundaram Clayton Limited during the financial year 2021-22.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds a 19.22% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2021, the revenue earned by the company stood at ''465.16 cr., as against ''373.46 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2021 stood at ''36.54 cr. as against ''31.64 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2022 was ''942.36 cr. The value of your Companyâs holding on that basis, was ''181.13 cr., as on 31st March 2022. Your Company received a total dividend of ''2.32 cr. from India Motor Parts & Accessories Limited during the financial year 2021-22.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Your Company holds a 23.28% stake and has been categorised as one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''3,701.07 cr., as against ''2,215.94 cr. in the previous year. The profit after tax for the year was ''79.79 cr. as against ''6.75 cr. in the previous year. The market capitalisation of the company as on 31st March 2022 was ''1,232.47 cr. The value of your Companyâs holding on that basis, was ''286.86 cr., as on 31st March 2022. Your Company received a total dividend of ''0.56 cr. from Wheels India Limited during the financial year 2021-22.
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The companyâs revenue for the year stood at ''231.05 cr. as against ''231.85 cr. in the previous year, while the profit after tax for the year was ''25.52 cr. as against ''19.79 cr. in the previous year.
Flometallic India Private Limited
Flometallic India Private Limited (FIPL) is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 46.84% stake in Flometallic India Private Limited. During the year, the revenue earned by the company stood at ''332.29 cr. as against ''274.51 cr. in the previous year. The loss after tax for the year was ''22.37 cr. as against profit after tax of ''24.13 cr. in the previous year.
FIPL have submitted a Scheme of Amalgamation of that company with Brakes India Private Limited (BIPL) with the Honâble National Company Law Tribunal (NCLT), Chennai, for taking advantage of greater economies of scale, and leveraging on the synergies of the combined competitive position and negotiating power. Upon the Scheme becoming effective after the approval of the same by the Honâble NCLT, your Company will be allotted shares in BIPL, for the shares held in FIPL, pursuant to which, your Companyâs shareholding in BIPL will increase from 14.37% to 23.57%.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company.
Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at ''572.37 cr. as against ''312.02 cr. in the previous year. The profit after tax for the year was ''33.83 cr. as against ''2.96 cr. in the previous year.
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Your Company holds a 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. SB TVS Industrial Ventures Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,872.93 cr. as against ''2,119.51 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''36.65 cr. as against ''147.50 cr. in the previous year. Your Company received a total dividend of ''0.79 cr. from Lucas-TVS Limited during the financial year 2021-22.
Delphi-TVS Technologies Limited
Delphi-TVS Technologies Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles, and tractors. Your Company holds a 3.19% stake in Delphi-TVS Technologies Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and Cheema TVS Industrial Ventures Private Limited are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2021 stood at ''1,269.15 cr. as against ''1,101.95 cr. in the previous year. The profit after tax for the year ended 31st March 2021 was ''22.30 cr. as against ''32.68 cr. in the previous year. Your Company received a total dividend of ''0.25 cr. from Delphi-TVS Technologies Limited during the financial year 2021-22.
INVESTMENTS IN COMPOSITE BUSINESS
Your Company entered into a strategic partnership with MIND S.r.l. (MIND), an automotive component manufacturer in the
composite materials space, based in Bologna, Italy and acquired a 48.86% stake in MIND, in order to support the expansion of MIND in the rapidly growing composite materials space.
Globally, as auto makers look for solutions to render their vehicles light weight, they are increasingly turning to high-strength materials such as composites. While the use of composites has been extensive in motorsport and luxury vehicles, there is an increasing trend to leverage these materials in automotive mass production and electric vehicles due to the benefits in light weighting of parts that helps them to be energy efficient. This strategic investment in MIND would enable SFHL to facilitate the sharing of the groupâs manufacturing excellence, systems and automation, together with MINDâs composite manufacturing expertise.
MIND is a global supplier of components to the automotive and motorsport segments, with in house design and development capability. The parts are made from carbon fiber i.e., light weight aesthetic body parts or structural parts that are mostly internal & external parts going into high end vehicles. MIND was founded in 2006 and has since then established long-term relationships with marquee customers in the automotive industry along with a presence in aerospace and medical industries. MIND has unique expertise in structural and aesthetic composite design and part manufacturing: mold, prototypes (autoclave) and large volumes (press).
Additionally, your Company has invested in Sundaram Composite Structures Private Limited, an Indian green field carbon fiber composites manufacturing company promoted by Brakes India Private Limited, to support MIND in Italy, with a low-cost operational base.
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the
relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis.
The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2021-22 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 18th July 2018. The Company did not enter into any material transaction with other related parties, during the year.
Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 30 - Related Party Transactions, forming part of the notes to the accounts.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the following resolutions to the shareholders for approval:
a) contracts or arrangements to be entered into with Sundaram Finance Limited upto a limit of ''20 cr., and
b) i nvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding ''200 cr. and individual investment(s) in any one such group company not exceeding ''100 cr., from the conclusion of the 28th Annual General Meeting to the conclusion of the 29th Annual General Meeting to be held in 2023.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards education and healthcare, in consonance with its CSR policy.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2021-22 is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2022.
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana
Subramaniam, Practicing Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures VI(i) and VI (ii).
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the copy of the annual return in E-form MGT-7 is http://www.sundaramholdings.in/csa/csa.aspx.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2021-22, foreign currency earnings amounted to ''19.72 cr. and foreign currency expenditure /outflows amounted to ''367.56 cr.
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control
measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate âwork from homeâ policies.
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiary, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability)
Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Companyâs Subsidiary and Associates in Form AOC-I forms part of the Annual Report.
The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Companyâs website - www. sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
Sri Suresh I.S., appointed as Chief Financial Officer of the Company with effect from 1st March 2022 in the place of Sri V. Vaasen, who has been transferred to Sundaram Finance Limited for fulfilling a higher responsibility.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis ;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors. The first term of office of the Statutory Auditors of the Company is coming to a close at the conclusion of the 28th Annual General Meeting.
The Board of Directors of your Company has, based on the recommendations of the Audit Committee, recommended the re-appointment of M/s R.G.N. Price & Co., Chartered Accountants,
Chennai, as the Statutory Auditors of the Company for a further term of five (5) consecutive years, from the conclusion of 28th Annual General Meeting upto the conclusion of 33rd Annual General Meeting.
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers during these trying times.
For and on behalf of the Board Chennai 600 002 T.T. Srinivasaraghavan
24.05.2022 Chairman
Mar 31, 2019
Board''s Report
Your directors have pleasure in presenting the 66th Annual Report together with audited accounts for the year ended 31st March 2019. The summarised financial results of the Company are presented hereunder:
FINANCIAL RESULTS: STANDALONE
(Rs in cr.)
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
Revenue from Operations |
3397.61 |
2806.27 |
Other Income |
20.56 |
49.13 |
Total Revenue |
3418.17 |
2855.40 |
Less: Total Expenses |
2522.89 |
2005.69 |
Profit before exceptional items and tax |
895.28 |
849.71 |
Add: Exceptional item |
592.43 |
- |
Profit before tax |
1487.71 |
849.71 |
Profit after Tax |
1126.31 |
563.44 |
Other Comprehensive Income * |
(4.02) |
(1.51) |
Surplus brought forward |
767.20 |
636.85 |
Amount available for appropriation |
1889.49 |
1198.78 |
Appropriations to: |
||
- Statutory Reserve |
225.26 |
106.59 |
- General Reserve |
997.30 |
243.39 |
Dividend -Final 2016-17 |
- |
72.22 |
Interim 2017-18 |
55.55 |
- |
Final 2017- 18 |
77.77 |
- |
Interim 2018-19 |
55.55 |
- |
Dividend Tax |
33.30 |
9.38 |
Surplus carried to balance sheet |
444.76 |
767.20 |
Remeasurement of (loss)/gain (net) on defined plans, recognised as apart of retained earnings.
Your Company has, for the first time, adopted Indian Accounting Standards (IND AS) notified under Section 133 of Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules 2015 from 1st April 2018 and the effective date such transition is lst April 2017. The impact of the transition has been recorded in the opening reserves as at 1st April 2017.
FY |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
% |
110 |
115 |
120 |
175* |
FY |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
EPS (Rs) |
42.96 |
44.58 |
50.71 |
54.37 |
''excludes Exceptional Profit of Rs 522.26 cr.
DIVIDEND
Your Company paid an interim dividend of Rs 5/- per share in February 2019. Your directors are pleased to recommend a final dividend of Rs 7.50/- per share, which, together with the interim dividend, would aggregate to a total dividend of Rs 2.50/- per share (125% on the face value of Rs10/-). In addition, your directors are pleased to recommend a special dividend of Rs5/-per share (50% on the face value of Rs ./-)
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I. "includes Special Dividend - 50%
CORPORATE GOVERNANCE
A detailed report on corporate governance, together with a certificate from the Statutory Auditors, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions entered into by the Company with related parties were in the ordinary course of business and on an arm''s length basis. The Company did not enter into any material transaction with such related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Company''s policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii).
The Company did not enter into any transactions with any person or entity belonging to the promoter or promoter group and holding 10% or more shareholding in the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company, along with its subsidiaries and associates, has always responded in a responsible manner to the growing needs of the communities in which it operates. During the year, your Company has, in consonance with the CSR policy of the Company, undertaken a number of initiatives that contribute to society at large, in the areas of health, education, environment and preservation of the country''s rich culture and heritage.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2018-19, is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE ''PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY''
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31st March 2019.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed M/s Damodaran & Associates, Practising Company Secretaries, as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by them is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Based on the recommendations of the Nomination, Compensation and Remuneration Committee, your Board of Directors has granted, subject to regulatory approvals where necessary, 18750 stock options to select eligible employees, on 30th May 2019. The disclosure required under SEBI (Share Based Employee Benefits) Regulations, 2014 is furnished, vide Annexure VIII.
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in MGT-9 is annexed as part of this report, vide Annexure IX.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your company has no activity relating to conservation of energy or technology absorption. During 2018-19, expenditure in foreign currencies amounted to Rs 83.57 cr. foreign currency earnings amounted to Rs 244.38 lakhs.
MANAGEMENT DISCUSSION AND ANALYSIS GLOBAL ECONOMY
The International Monetary Fund (IMF) has cautioned that "following a broad-based upswing in cyclical growth that lasted nearly two years, the global economic expansion decelerated in the second half of 2018. Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies. Against this global backdrop, a combination of country and sector specific factors further reduced momentum. After peaking at close to 4% in 2017, global growth remained strong, at 3.8% in the first half of 2018, but dropped to 3.2% in the second half of the year." The IMFs growth forecast for 2019 is 3.3%.
INDIAN ECONOMY
India''s GDP has averaged 7.5% over the last five years, indicating a near normal growth and making it one of the fastest growing major economies in the world. However, it is estimated to have slowed down to about 7% during 2018-19, as against the original projection of 7.2%.
Tax collections for the period ended 2018-19 marked an increase of 18.3% over the previous year, but were well below the targeted collections for the year. Prices largely remained under control. While the average WPI inflation for 2018-19 was at 4.3% (an increase from 2.9% in the previous year), headline inflation, based on the Consumer Price Index for 2018-19, came in at 3.4% (compared to 3.6% in 2017-18), helped by softer food inflation.
Foreign Direct Investment flows continued to be encouraging and India''s foreign exchange reserves stood at USD 412 billion at the end of March 2019 as compared to USD 424 billion at the end of the previous year, as per RBI data. The Current account deficit (CAD) was higher at 2.6% as against 2.0% in the previous year, reflecting a lower growth in exports as also the effects of higher crude oil prices. The gross fiscal deficit came down marginally, to 3.4% for the period April 2018 to February 2019, as compared to 3.6% for the year 2017-18. The Rupee depreciated, ending the year at Rs 69.20 to the Dollar. According to the World Bank''s Ease of Doing Business Report, India has improved its global ranking by several notches, from 142 to 77 in the last five years.
Almost two years have elapsed since the introduction of The Goods and Services Tax (GST). While the operational issues in implementation are being addressed, movement of goods across the country has become easier thanks to the abolition of check posts and introduction of e-way billing, making for faster movement of goods across the country, thus creating a seamless national market.
Despite strong economic fundamentals, capital markets remained volatile though the NIFTY grew 14% during the year. Interest rates also fluctuated but the 10-year G-Sec ended the year roughly where it began, at 7.35%. Overall bank credit is reported to have grown at 12.3% in FY19, but industrial credit grew by only 7% and small and medium enterprises even lower.
The NBFC sector and the wider financial markets witnessed considerable turbulence with the default of AAA rated IL&FS in August 2018. This was Mowed by a few more downgrades of NBFCs and Housing finance companies, as a result of which lending to the NBFC sector, particularly smaller players, was severely constricted. With a view to partially mitigate this, RBI announced a relaxation in the securitisation norms, whereby the asset seasoning requirement was reduced from 12 to 6 months, thus enabling easier access to funds. This led to a dramatic increase in securitisation volumes, which more than doubled to 1.90 lakh crores for the year. However, the cost of funds for the NBFC sector witnessed a sharp increase, reflecting the liquidity situation as well as the heightened risk perception of lenders.
Thanks to the prudent financial practices Mowed by your Company and a robust Asset Liability Management framework, your company continues to enjoy the confidence of its lenders and was therefore able to withstand market pressures without any dislocation to its business, during the second half of 2018-19.
AUTOMOTIVE SECTOR
2018-19 was a difficult year for the automotive industry. Festive season demand which is one of the key drivers of vehicle sales was lacklustre, at best. Natural calamities in two of the Southern states also acted as a dampener. Increasing fuel prices, withdrawal of several NBFCs from the market, revised axle load norms and buyer fatigue are some of the reasons attributed to the overall slowing down in the automotive sector. The M&HCV segment which witnessed very strong growth during the first half of the financial year saw a complete reversal of fortunes in the second half, with volumes dropping dramatically month after month, ending with an overall growth of 10% for the year. Passenger car/SUV sales registered a meagre 3% growth over the previous year.
OPERATING & FINANCIAL PERFORMANCE
Your Company''s disbursements at Rs 17,170 cr. (PY Rs 15,712 cr.) grew by 9.3% during the year under review. Gross receivables managed by the Company stood at Rs 33,447 cr., as against Rs 28,648 cr., a growth of 17% over the previous year.
With sales of Medium and Heavy commercial vehicles falling sharply in the second half of the year and sales of passenger cars/SUVs remaining sluggish through the year, competition for the available business intensified, resulting in a squeeze on margins. The relaxation in axle load norms announced by the Government in July 2018 resulted in a capacity increase of 20-25% and had a dampening effect on freight rates. Coupled with the increase in fuel prices, transport operator''s viability came under strain. The liquidity squeeze faced by the NBFC sector meant that small and medium transport operators were starved of much needed working capital, thereby exerting pressure on their cash flows. Given this scenario, your Company tightened its credit filters for the M&HCV segment. However, its increased presence in the Construction equipment, intermediate and light commercial vehicle and tractor segments, enabled it to register a healthy growth in all of them.
As always, your Company''s sustained focus on maintaining superior asset quality ensured that its portfolio continued to be best in class. Gross and Net NPAs stood at 1.33% (1.27%) andO.83% (0.66%) respectively, as at 31st March, 2019. The net profit for the year after considering the exceptional profit (Rs 522.26 cr.) on sale of 25.9% stake in Royal Sundaram General Insurance Co. Limited was Rs 1126.31 cr., as against Rs 563.43 cr. in the previous year. The company''s net-worth crossed a major milestone and stood at Rs 5043.81 cr., as on 31.3.2019. Capital adequacy (CRAR) at 19.46% was comfortably higher than the statutory requirement of 15%.
There are no significant changes in key financial ratios of the Company for F.Y. 2018-19 as compared to F.Y. 2017-18 , except for the Mowing;
Ratios |
March 2019 |
March 2018 |
Variance |
Net Profit Margin (%)* |
28.08% |
19.73% |
42% |
Return on Net Worth (RONW)(%)* |
24.55% |
14.48% |
70% |
: The change in Net profit Margin and RONW as compared to the previous financial year is due to profit on sale of shares in Royal Sundaram General Insurance Co Ltd which is shown as an exceptional item in the audited financial statements.
RESOURCE MOBILISATION
March 2016 |
March 2017 |
March 2018 |
March 2019 |
|
Book Value (Rs) |
298.16 |
337.13 |
372.09 |
453.96 |
a) Deposits
During the year, your Company mobilised fresh deposits aggregating to Rs 701.52 cr. Renewal of deposits during the year amounted to Rs 980.71 cr, representing 85% of the matured deposits of Rs 1150.27 cr. Deposits outstanding at the year-end were at Rs 2975.l6 cr. as against Rs 2499.32 cr in the previous year. Your Company''s Deposit Balance crossed the Rs 3,000 cr. mark during the second week of April 2019. The Net accretion for the financial year was Rs 475.84 Cr being the highest ever in the history of your Company. As at 31st March 2019, 3452 deposits amounting to Rs 3l.11 cr. had matured for payment and were due to be claimed or renewed. After close follow-up, these figures are currently 2216 and Rs 15.17 Cr. respectively. Continuous efforts are being made to arrange for repayment or renewal of these deposits. There has been no default in repayment of deposits or payment of interest thereon during the year. Bureau Veritas (India) Private Limited has conferred accreditation for the Company''s Deposits to the revised ISO 9001:2015 Standard.
b) Term Funding
During the year, your Company raised term funding from Banks, Mutual funds, Insurance companies and others in the form of non-convertible debentures and term loans to the tune of Rs 70l4 cr., across various tenors.
c) Bank Finance
As part of the overall funding plan, your Company''s working capital limits with Consortium banks were increased from Rs 2750 cr. to Rs 3000 cr. During the year, your Company also issued several tranches of commercial paper aggregating to Rs 12498 cr. The maximum amount outstanding at any time was Rs 5250 cr. and the amount outstanding at the end of the year was Rs 1800 cr.
d) Assets Securitised / Assigned
During the year, your Company raised resources to the extent of Rs 3236 cr. through securitisation and assignment of receivables.
CREDIT RATINGS
Your Company''s long term credit ratings have been retained at "AAA", (Highest Degree of Safety) with a "Stable Outlook" by both ICRA & CRISIL. The short term borrowings (including commercial paper) are rated "A1 " (very strong degree of safety) by both ICRA and CRISIL. Fixed Deposits are rated "AAA" (Highest Credit Quality) by ICRA and CRISIL.
OUTLOOK
Most economic indicators seem to indicate a slowing growth momentum. Commercial vehicle and Passenger car / SUV have fallen sharply in April 2019 by 14% and 17% respectively. Vehicle sales growth has been feeble for nearly nine months now, for reasons articulated earlier. February saw the IIP growth drop to a twenty month low of 0.01% (y-o-y).The PM manufacturing index slipped to an eight month low, while the services sector PMI also declined to a six month low.
As per the Society of Indian Automotive Manufacturers (SIAM), M&HCV sales are estimated to grow at a mere 5% and LCVs at 9%-10%, in 2019-20. With the new BS VI emission norms slated for implementation, effective April 1 2020, predictions of significant pre-buying, ahead of the BS VI rollout, countered by the excess capacity argument, have lent an air of uncertainty to how the market participants would respond. Sales of passenger vehicles (Cars and SUVs) are projected to grow at 3%-5%. Tractor sales are expected to moderate after three or four years of strong growth. No doubt, the behaviour of the Southwest monsoon will have an important bearing not only on tractor sales, but also on the overall prosperity and well-being of rural India, which in turn will influence overall rural spending.
With the new Government in place, it is reasonably expected that the thrust on infrastructure would continue. Additionally, private sector investments which were subdued for the past few years are expected to pick up. However, the uncertainties surrounding market liquidity, interest rates, imminent introduction of the BS VI emission norms, and global oil prices, render forecasts difficult. Most economic commentaries seem to point to a challenging year ahead for the economy in general and the automotive sector in particular.
Your Company has taken these factors into account in drawing up its plans for the year, without losing sight of its core markets and segments. Rising interest rates in light of the tight liquidity and intensifying competition are likely to exert further pressure on margins. Your company expects to manage this through financing an appropriate mix of higher and lower yielding assets, while ensuring that asset quality continues to remain best in class.
INTERNAL FINANCIAL CONTROLS
The Company has a well established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds/errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has built a robust risk management framework over the years. Engaged, as it is, in retail financing, the Company has to manage various risks, including credit risk, liquidity risk, interest rate risk and operational risk. The Risk Management Committee and the Asset Liability Management Committee review and monitor these risks on a regular basis. The Company manages credit risk through stringent credit norms established through several decades of experience in retail lending and continues to follow the time tested practice of personally assessing every borrower, before committing to a credit exposure. The Company monitors ALM on an ongoing basis to mitigate liquidity risk, while interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles. The Company also measures the interest rate risk by the duration gap method.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. The company has well documented standard operating procedures for all processes to ensure better control over transaction processing and regulatory compliance and periodical review of the same ensures that the risk of obsolescence is avoided.
INTERNAL AUDIT
As part of its efforts to evaluate the effectiveness of the internal control systems, your Company''s internal audit department independently evaluates the adequacy of control measures on a periodic basis and recommends improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures and makes extensive use of software and analytical tools which enables effective offsite monitoring.
The internal audit department is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
Additionally, an Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and IT related areas, apart from information security related measures.
HUMAN RESOURCES
In an environment that is rapidly becoming technology and digital oriented, your Company continues to invest in long term people development, for organisational excellence. Part of the enduring Sundaram Finance tradition, over the decades, has been our adherence to the ''Sundaram Way''- the value system that has formed the bedrock of the Company, and the percolation of these values to successive generations of employees. For talent development, we have a healthy mix of learning programmes addressing both domain knowledge and soft skills. During the year, 30% of programmes were for domain knowledge and 70% in the area of soft skills, involving 3312 man hours of learning. The Sundaram Finance Centre of Excellence (CoE) launched in 2016-17, with a view to effectively leverage technology to accelerate the pace of institutional knowledge transfer across the Sundaram Finance landscape, has grown by leaps and bounds. The response has been very enthusiastic and over 2500 employees have participated in various modules of the CoE during the year. The increase in penetration of CoE has meant that the percentage of Facilitator led Domain Knowledge training programmes for senior managers has come down.
INFORMATION TECHNOLOGY
The IT Strategy Committee of the Company has laid down a comprehensive policy relating to Cyber Security,
Business Continuity, Outsourcing and Information Security / Technology, in line with its terms of reference.
Your Company has a State of the Art Data Centre catering not only to its own needs but also those of its subsidiaries and associates, with a capacity of over 300 servers, managed by professionals providing 24/7 support, with over 99.99% uptime. The Data Centre is accredited for ISO/IEC 27001:2013 by TUV Rheinland for Information Security Management System. The Disaster Recovery Site for all critical applications is hosted at a separate facility located in a different seismic zone, with near real-time data replication. Your company has implemented various protocols for managing Information and Cyber security across the organization. In its continuous efforts to ensure a secure environment, your Company has built a robust infrastructure and carries out periodic comprehensive vulnerability assessments and penetration testing, to identify and minimize external threats.
The internal IT Team has mastered a complex landscape of current technologies, marketing approaches, and operational capabilities to cater to the various business applications within the Company. Of special significance is their contribution to the complex task of transitioning to the IND AS regimen. Digital services and operations are raising the competitive bar in every sector. Your Company''s digital strategy is driven by the twin objectives of enriching our employee''s jobs on the one hand, while enhancing the customer experience, on the other. Our digital initiatives address these very objectives, by enhancing our speed of response to our customers and providing them a host of digital options to interact and transact with us, and a number of productivity enhancements through process automation which free up our people to deliver the unique ''Sundaram Experience'' to our customers. We are a relationship centric business and have consciously adopted digital, to augment these relationships and be digitally available for our customers, as and when they need us.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-I forms part of the Annual Report.
The Consolidated profit after tax is Rs 1160.85 cr. as against Rs 729.91 cr. of the previous year. The total comprehensive income for the year was Rs 1012.79 cr. as against Rs 877.87 cr.
The annual accounts of all the Subsidiary Companies have been posted on your Company''s website -www.sundaramfinance.in. Detailed information, including the annual accounts of the Subsidiary Companies will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
SUBSIDIARIES
⢠Sundaram Finance Holdings Limited
Your Company, along with its promoters, holds 53.34% in Sundaram Finance Holdings Limited and hence the latter is treated, under the applicable Accounting Standards, as subsidiary for consolidation purposes. Sundaram Finance Holdings Limited reported a gross income of Rs 120.71 cr. as against Rs 75.59 cr. in the previous year. Profit after tax was Rs 84.93 as compared to Rs 54.40 cr in the previous year.
⢠Sundaram Asset Management Company Limited
The Company reported a gross income of Rs 2 70.43 cr. as against Rs 328.73 cr. in the previous year. Profit after tax was Rs 19.86 cr. as compared to Rs 27.46 cr. during the previous year. The Average Assets under Management amounted to Rs 31,933 cr. for the year 2018-19 as compared to Rs 34,164 cr. in the previous year. The company recommended a dividend of Rs 7.50 per share for the year, on the paid-up equity capital of Rs 20 cr.
⢠Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs 1.55 cr., as against Rs 1.56 cr., in the previous year and reported a profit after tax of Rs 0.80 cr. for the year, as against Rs 0.85 cr. in the previous year. The company recommended a dividend of Rs 120 per share for the year.
⢠LGF Services Limited
During the year, the Company reported a gross income of Rs 0.38 cr. as against Rs 1.90 cr. in the previous year. The profit after tax for the year was Rs 0.2 5 cr. as against Rs 0.34 cr. in the previous year. The company proposed a dividend of Rs 6 per/- share for the year.
JOINT VENTURE
⢠Sundaram BNP Paribas Home Finance Limited
The company approved loans aggregating to Rs 2672 cr. (Previous year Rs 2993 cr.). Disbursements during the year were lower by 7%, at Rs 2449 cr. (PY Rs 2626 cr.). The company earned a gross income of Rs 1006.27 cr. (PY Rs 934.58 cr.) and reported a profit after tax at Rs 145.48 cr. (PY Rs 144.42 cr.). The loan portfolio under management as at 31st March 2019 stood at Rs 904l cr. as against Rs 8336 cr. in the previous year. The gross and net NPA stood at 2.95% and 1.39% respectively as of 31.03.2019. The company proposed a dividend of Rs 3.50 per share for the year (PY 35%).
⢠Royal Sundaram General Insurance Co. Limited (Royal Sundaram)
During the year, your Company sold 11,62,91,000 equity shares of Royal Sundaram, representing 25.90%, to Ageas Insurance International N.V., Belgium, for a total consideration of Rs 984.17 cr., reducing your Company''s shareholding in Royal Sundaram from 75.90% to 50%. Consequently, Royal Sundaram has become a joint venture.
Royal Sundaram reported a robust increase of 21% in Gross Written Premium (GWP) at Rs 3196 cr. as compared to Rs 2643 cr. in the previous year. Profit after tax for the year was Rs 121 cr., as against Rs 83 cr. in the previous year.
⢠Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited earned an income of Rs 35.25 cr. during the year. The company reported loss after tax at Rs 8.68 cr. during the year as against Rs 0.15 cr. in the previous year.
BOARD & AUDIT COMMITTEE
The details regarding number of board meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri N. Venkataramani, Independent Director of your Company since 2010, relinquished his directorship after completion of his first term as Independent Director under the Companies Act, 2013 on 31st March 2019. Your directors place on record the significant contribution made by him to the deliberations of the Board for nearly ten years.
Sri R Raghuttama Rao was co-opted as an Additional Director on the Board in independent capacity for a term of five (5) consecutive years with effect from 1st April 2019 and holds office as Additional Director up to the date of the ensuing Annual General Meeting. The Company has received due notice from a member proposing the appointment of Sri R Raghuttama Rao as Independent Director of the Company.
Sri S. Ravindran and Sri IT. Srinivasaraghavan, Directors retire by rotation and being eligible, offer themselves for re-election.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3) (p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/S Sundaram &Srinivasan Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 64th Annual General Meeting until the conclusion of the 69th Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation extended to your Company by all its customers, depositors, shareholders and bankers, as also the various mutual funds, insurance companies, automotive manufacturers and dealers.
Your directors also place on record their special appreciation of Team Sundaram for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.
For and on behalf of the Board |
|
Chennai 600 002 |
S VIJI |
30.05.2019 |
Chairman |
Aimexure -1
SFL Policy for Distribution of Dividends
[Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]
The SFL Policy (the Policy) for Distribution of Dividends shall come into effect from the date it is approved by the Board of Directors.
The Policy is being framed in compliance with the requirement stipulated under Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) for distribution of dividends, based on the following parameters:
1. The Board of Directors may declare one or more interim dividends after considering various financial and other parameters. The Board may recommend final dividend after approval of the final audited accounts.
2. Dividends shall generally be declared out of the annual standalone Profit After Tax of the Company relating to the current financial year, subject to any other regulatory provisions that may be introduced from time to time.
3. The Board will generally endeavour to maintain a dividend payout ratio (including dividend distribution tax) of 20% - 30% of the annual standalone profit after tax for each financial year.
4. The factors, internal and external, to be considered by the Board, for determining the quantum of dividend, will include the following:
(a) Internal Factors
⢠Growth in volume of business
⢠Quality of assets
⢠Profitability position
⢠Stability of earnings
⢠Carried forward balance in P & L account
⢠Accumulated reserves
(b) External Factors
⢠Macro-economic environment
⢠Performance of the automotive sector
⢠Changes in governmental policies
⢠Regulatory changes
5. The retained earnings of the Company may be used, inter alia, for one or more of the following purposes:
(i) Growth plans;
(ii) Capital expenditure;
(iii) Working capital requirements;
(iv) Capitalisation;
(v) Investment in new lines of business and / or additional investment in existing lines of business;
(vi) Repayment of debt;
(vii) Meeting contingency plans; and
(viii) Any other purpose as may be permitted by law.
The Board may consider utilising the retained earnings for declaration of dividend under special circumstances.
Mar 31, 2018
Boardâs Report
The directors have pleasure in presenting the 65 th Annual Report together with audited accounts for the year ended 31st March 2018. The summarized financial results of the Company are presented hereunder:
FINANCIAL RESULTS:
(Rs, in cr.)
Particulars |
Year ended March 31, 2018 |
Year ended March 31, 2017 |
Revenue from Operations |
2618.29 |
2356.79 |
Other Income |
78.05 |
101.49 |
Total Revenue |
2696.34 |
2458.28 |
Less: Total Expenses |
1889.55 |
1738.08 |
Profit before tax |
806.79 |
720.20 |
Profit after Tax |
532.95 |
495.35 |
Surplus brought forward |
227.43 |
176.47 |
Amount available for appropriation |
760.38 |
671.82 |
Appropriations to: |
||
- Statutory Reserve |
106.59 |
99.07 |
- General Reserve |
243.39 |
222.90 |
Dividend* - Interim 2016-17 |
- |
55.55 |
Final 2016-17 |
72.22 |
- |
Dividend Tax |
9.38 |
8.77 |
Surplus carried to balance sheet |
328.80 |
285.53 |
* Interim Dividend for the financial year 2017-18 which was paid during May 2018 and Final Dividend recommended for the financial year 2017-18, if approved by the Shareholders, will be recognized as a liability during the financial year 2018-19.
DIVIDEND
Your Company paid an interim dividend of Rs,5/- per share in May 2018. Your directors are pleased to recommend a final dividend of Rs,7/- per share, which, together with the interim dividend, would aggregate to a total dividend of Rs,12/-per share (120% on the face value of Rs,10/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
AMALAGAMATION OF SUNDARAM INFOTECH SOLUTIONS LIMITED
Sundaram Infotech Solutions Limited (SISL) was amalgamated with your Company with effect from the âAppointed Dateâ, i.e., 1st April 2016, pursuant to the Order of the Honâble National Company Law Tribunal (NCLT), Division Bench, Chennai, dated 26th September 2017 under Sections 230 to 232 of the Companies Act, 2013. Consequent to the Amalgamation, the accounts for the financial year ended 31st March 2018 have been prepared after taking into account the transactions of SISL and, therefore, the figures given herein and elsewhere in the Annual Report are not strictly comparable with those of the previous year.
COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION
Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation (Scheme) by the Honâble National Company Law Tribunal (NCLT), Division Bench,
Chennai, vide Order dated 12th January 2018, received by the Company on 18th January 2018, the following matters, as envisaged in the Scheme with effect from the âAppointed Dateâ, i.e., 1st April 2016, have become operative:
a. Amalgamation of Sundaram Insurance Broking Services Limited and Infreight Logistics Solutions Limited, wholly-owned subsidiaries, with your Company;
b. De-merger of the shared services business of Sundaram BPO India Limited (Sundaram BPO), subsidiary, into your Company; and
c. De-merger of the non-core business of the Company, viz. training services, identified shared services including shared services vested from Sundaram BPO, apart from the non-financial services investments, together with related assets, into Sundaram Finance Holdings Limited (SFHL).
As provided in the Scheme, on 12th February 2018, all the shareholders of your Company were allotted 1 (One) equity share of ''5/- each credited as fully paid-up in the capital of SFHL for every 1 (One) fully paid-up equity share of ''10/- held by them in your Company as on the record date, i.e., 2nd February 2018. Pursuant to the said allotment, the shareholding of your Company in SFHL got reduced from 100% to 26.47% and SFHL became an associate of your Company. The equity shares of SFHL were listed on the National Stock Exchange of India Limited with effect from 26th March 2018.
The accounts for the financial year ended 31st March 2018 have been prepared after giving effect to the Scheme and, therefore, the figures given herein and elsewhere in the Annual Report are not strictly comparable with those of the previous year.
CORPORATE GOVERNANCE
A detailed report on corporate governance, together with a certificate from the Secretarial Auditors, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis. The Company did not enter into any material transaction with related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III(i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III(ii).
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company, along with its subsidiaries and associates, has always responded in a responsible manner to the growing needs of the communities in which it operates. During the year, your Company has, in consonance with the CSR policy of the Company, undertaken a number of initiatives that contribute to society at large, in the areas of health, education, environment and preservation of the countryâs rich culture and heritage.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2017-18, is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE âPREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2017-18.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules there under, the Company has appointed M/s Damodaran & Associates as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by them is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Based on the recommendations of the Nomination, Compensation and Remuneration Committee, your Board of Directors has granted, subject to regulatory approvals where necessary, 20000 stock options to select eligible employees, on 2 5th May 2018. The disclosure required under SEBI (Share Based Employee Benefits) Regulations, 2014, is furnished, vide Annexure VIII.
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in MGT-9 is annexed as part of this report, vide Annexure IX.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2017-18, expenditure in foreign currencies amounted to Rs,78.56 cr. Foreign Currency earnings amounted to Rs,6.46 cr.
MANAGEMENT DISCUSSION AND ANALYSIS GLOBAL ECONOMY
The global economy continued its strong growth in 2017. One notable aspect of last yearâs upswing was its geographic breadth. Growth accelerated in about three quarters of countries worldwide. Even more important, some of the countries that have had high unemployment for some time, including several in the euro area, participated in the growth and are experiencing strong employment growth. Some of the larger emerging market economies, such as Argentina, Brazil, and Russia, came out of their recessions. Equity valuations continued to climb and are near record highs, as central banks have maintained accommodative monetary policies due to weak inflation. However, the paradoxes of growth remain. According to the World Bank, âthere were plenty of unsettling and upsetting events and trends. Catastrophic storms and flooding wrecked homes and livelihoods from South Asia to the Caribbean. Education quality in many countries fell short even as much of the world raced into the digital age. Yet extreme poverty continues to decline. Innovation and technology are enhancing the quality of life. And human capital is now the biggest driver of wealth in the world today. â
As per the IMFâs World Economic Outlook, âGlobal economic growth strengthened in 2017 to 3 8 %, with GDP continuing to accelerate over much of the world in what is seen as the broadest cyclical upswing since the start of the decade with a notable rebound in global trade. It was driven by an investment recovery in advanced economies, continued strong growth in emerging Asia, a notable upswing in emerging Europe, and signs of recovery in several commodity exporters. Global growth is expected to tick up to 3 9 % this year and next, supported by strong momentum, favorable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States. The partial recovery in commodity prices should allow conditions in commodity exporters to gradually improve.â The report however goes on to add that âThe global economic upswing that began around mid-2016 has become broader and stronger..., advanced economies as a group will continue to expand above their potential growth rates this year and next before decelerating, while growth in emerging market and developing economies will rise before leveling off. For most countries, current favorable growth rates will not last. Policymakers should seize this opportunity to bolster growth, make it more durable, and equip their governments better to counter the next downturn.â
INDIAN ECONOMY
India has emerged as one of the fastest growing major economies in the world as per the IMF and is expected to be amongst the top three economic powers of the world over the next two decades, backed by its strong democracy and partnerships. Indiaâs GDP is estimated to have grown by 6.6 % in 2017-18 and is expected to grow at 7.3 % in 2018-19.
The Goods and Services Tax (GST) which involved merging all indirect taxes into one, with a view to mitigate cascading or double taxation, was rolled out on July 1, 2017. As anticipated, there have been myriad issues, ranging from initial teething troubles to several technical issues. The first and most avoidable hiccups were the glitches on the Goods and Services Tax Network online portal (GSTN), which is the IT backbone for the new indirect tax regime, which hit small businesses particularly hard. The technical glitches on the GSTN forced the Government to extend the due date for various returns and forms on a number of occasions, raising concerns on the functioning of the IT backbone of GST. So also, the GST rates have been tinkered with time and again, which has hampered smooth transition and disrupted various sectors. However, things appear to be falling in place, albeit gradually, and it is to be hoped that things will settle down sooner than later.
The growth in Indiaâs GDP has to be viewed as satisfactory in the aftermath of two major events - demonetization and GST. Gross tax collections for the period April 2017- February 2018 showed an increase of 15.8% year-on-year while net retention to the Centre in tax collections recorded a growth of 17%.
India''s foreign exchange reserves stood at USD 424.4 billion at the end of March 2018 as compared to USD 370 billion at the end of the previous year, according to data from the RBI. However, tepid export growth of 0.7 % and higher import growth of 7.1%, primarily attributable to oil-imports, resulted in the current account deficit worsening to 2.0 % from 1.4 % in the previous year. Depending on the oil price movements, this could worsen further.
The annual average WPI inflation for 2017-18 stood at 2.9% as against 1.7% in the previous year, while the headline inflation based on Consumer Price Index for 2017-18 averaged 3.6%, as compared to 4.5 % in 2016-17. The IIP increased by 4.3% during the period Apr to Feb 2018, as against 4.7% in the corresponding period of the previous year. The production of eight core industries registered a growth of 5.3% during the year as against 0.6 % in the corresponding period of previous year.
According to the World Bank''s Doing Business Report, India has improved its ranking by 30 spots over its 2017 ranking and is now ranked 100 among 190 countries in the latest edition of the report.
AUTOMOTIVE SECTOR
The Commercial vehicle industry faced significant turbulence in 2017-18. The BS IV emission norms that went into effect from April 1, 2017, meant that prices of commercial vehicles increased sharply. In addition, the competing engine technologies EGR and SCR, with vehicle manufacturerâs proclaiming the superiority of one over the other, only added to the confusion for the average transport operator. Shortly thereafter, India entered the GST era which affected the movement of goods in the first few months and also increased the working capital requirements of transport operators. Against this backdrop it is hardly surprising that sales of Medium and Heavy commercial vehicles (M&HCV) registered a fall during the first half of the financial year compared to the previous year. Considering the fact that industrial activity remained muted, M&HCV demand in several states, especially in Southern and Western India were markedly lower than the previous year. However, a turnaround in the second half of the year, driven predominantly by the continuing focus of the government on infrastructure, robust demand in Northern India and the substantial discounts that were on offer, ensured that M&HCV sales registered a growth of 12.5%, for the year. The reduced turnaround times on account of inter-state check posts being dismantled, stricter implementation of overloading norms in several states and vastly improved highways, resulted in a significant shift towards higher tonnage vehicles, owing to better operating economics for transport operators.
The relatively good monsoons of the last two years have led to increased prosperity in the rural and semi urban areas of the country which has had a salutary effect on their purchasing power and a corresponding increase in demand for various goods and services.
Agrarian prosperity, coupled with the creation of large, new warehousing capacity across the country, the strengthening of the hub and spoke model, thanks to GST and the continuing boom in E commerce, provided a shot in the arm for Light and Small commercial vehicles which grew by over 13%. Sales of Passenger Cars and Utility vehicles grew 8% aided by the latter. However, with the emergence of taxi aggregators such as Uber and Ola and the rapid development of Metro rail in several major cities, some early signs of changes in buyer behavior appear to be emerging. As per the Society of Indian Automobile Manufacturers (SIAM), the contribution of the top 20 cities that generate about 50% of passenger vehicle sales has shown slower growth in the last four to five years, while there is greater demand from smaller towns and semi-urban areas. This could have major implications both for manufacturers and financiers, in the longer term.
The tractor industry witnessed another year of strong growth. Multiple factors ranging from subsidy support for tractor purchase by several States, a bountiful harvest on account of a good monsoon and the availability of retail finance saw the industry register a robust growth of 22% during the year.
OPERATING & FINANCIAL PERFORMANCE
Your Companyâs disbursements at ''15632 cr. (PY ''13196 cr.) registered a healthy growth of 18% over the previous year, notwithstanding the various disruptions faced by the automotive sector in the first half of the financial year. While sales of M&HCVs revived only towards the later part of the year, your Company increased its presence in the rapidly growing construction equipment and tractor segments while also deepening its presence in newer geographical areas and market segments. Pricing pressures continued unabated, with several new players, mostly private sector banks, seeking to gain a foothold in the fiercely competitive vehicle finance segment. Your Company was largely able to counter this on account of the strong customer relationships that it has built and nurtured over the decades, its ability to raise resources at or near the best rates in the debt markets and the deft management of its liabilities portfolio, thereby enabling it to maintain its strong market position. The gross receivables managed by the Company stood at Rs,28648 cr., as against Rs,24036 cr., a growth of 19% over the previous year. As always, your Companyâs sustained focus on maintaining superior asset quality ensured that its portfolio continued to be best in class, with Gross and Net NPAs which stood at 1.54% and 0.55% respectively in the previous year, coming down to 1.29% and 0.50%, respectively, as at 31st March, 2018. The net profit for the year after considering the effects of demerger was Rs,532.95 cr., as against Rs,460.57 cr. (adjusted net profit on demerger) in the previous year, registering a growth of 15.95% on a like to like basis. The companyâs net-worth stood at Rs,3970.85 cr., as on 31.3.2018. Capital adequacy (CRAR) at 17.64% was comfortably higher than the statutory requirement of 15%.
RESOURCE MOBILISATION a) Deposits
During the year, your Company mobilized fresh deposits aggregating to Rs,450.53 cr. Renewal of deposits during the year amounted to Rs,943.44 cr, representing 79% of the matured deposits of Rs,1170.48 cr. Deposits outstanding at the year-end were at Rs,2499.33 cr. as against Rs,2411.08 cr in the previous year. The Net accretion for the financial year was Rs,88.25 cr.
As at 31st March 2018, 4615 deposits amounting to Rs,32.67 cr. had matured for payment and were due to be claimed or renewed. After close follow-up, the figures are currently down to 2899 and Rs,16.17 cr. respectively. Continuous efforts are being made to arrange for repayment or renewal of these deposits. There has been no default in repayment of deposits or payment of interest thereon during the year. Investor Relation Services - Deposits currently enjoy the ISO 9001:2008 Certification from Bureau Veritas (India) Private Limited. The certification process to the revised standard ISO 9001:2015 is in progress and will be concluded in the second quarter.
b) Term Funding
During the year, your Company raised term funding from Banks, Mutual funds, Insurance companies and others in the form of non-convertible debentures and term loans to the tune of Rs,5545 cr., across various tenors.
c) Bank Finance
As part of the overall funding plan, your Companyâs working capital limits with Consortium banks were increased to Rs,2750 cr. from Rs,2250 cr. During the year, your Company also issued several tranches of commercial paper aggregating to Rs,14405 cr. The maximum amount outstanding at any time was Rs,4905 cr. and the amount outstanding at the end of the year was Rs,2025 cr.
d) Assets Securitised / Assigned
During the year, your Company raised resources to the extent of Rs,3879 cr. through securitization and assignment of receivables.
CREDIT RATINGS
During the year, your Companyâs long term credit ratings have been upgraded from AA to AAA, by both ICRA & CRISIL. The short term borrowings (including commercial paper) are rated âA1 â/P1 (very strong degree of safety). Fixed
Deposits are rated âAAAâ (Highest Credit Quality) by ICRA and CRISIL. The long term borrowings are rated âAAAâ (Highest Degree of Safety), with a âStable outlookâ by ICRA and CRISIL and AA (High Degree of Safety), with a âStable outlookâ by India Ratings.
OUTLOOK
The main thrust of the Union Budget for 2018-19 is on uplifting the rural economy and strengthening of the agriculture sector, healthcare for the economically less privileged, infrastructure creation and improvement in the quality of education. A total of Rs,14.34 lakh crores along with specific allocation for North-East Industrial Development Scheme is meant to improve livelihoods and infrastructure in rural areas; besides this, an increased budgetary allocation for infrastructure has been made at Rs,5.97 lakh crore for 2018-19. These increased allocations are expected to have an overall salutary impact on the Indian economy as a whole and the rural economy in particular.
SIAM expects the growth momentum of Commercial vehicle sales to continue at 10-12% (M&HCVs at 9-11% and LCVs at 10-12%) in 2018-19. The governmentâs continuing emphasis on infrastructure and a recovery in the mining sector bodes well for sales of tippers. Sales of passenger vehicles are expected to grow at 8-10% (utility vehicles at 14-15% and cars at 8-9%). As per a report by CRISIL, tractor sales are projected to increase by 11-13% in 2018-19, assuming a normal monsoon and increased government support. Demand in semi-urban towns and rural areas is expected to look up as the impact of demonetization has abated, and a normal monsoon for a third year should bolster sales of passenger cars, LCVs and especially tractors.
However, rising diesel prices and higher interest rates could prove a dampener from the point of view of the transport operatorâs viability and consequently on commercial vehicle off take. With inflation numbers trending upwards and liquidity tightening, interest rates have already shown an upward bias in the first few weeks of the current financial year. Pressure on inflation, retail as well as wholesale, is mounting. While the widely-tracked consumer price index(CPI) based inflation rate rose to a three month high of 4.58%, its wholesale price index (WPI) counterpart increased to a four-month high of 3.18% in April. This might justify the hawkish stance of the monetary policy committee (MPC). The general expectation is that RBI will start raising policy rates in the third quarter of 2018-19. However, recent events, notably the sharp increases in oil and commodity prices, could prompt them to raise rates even earlier. Although not an immediate concern, the specter of BS VI emission norms and the vehicle scrap page policy, both slated for implementation in April 2020, looms on the horizon.
Your Company has taken these factors into account in drawing up its plans for the year. While concentrating on its core markets and product segments, your company sees significant opportunities in the rapidly growing construction equipment segment, as also the LCV and tractor segments. Rising interest rates and intensifying competition are likely to exert pressure on margins. Your company expects to manage this through financing an appropriate mix of higher and lower yielding assets, while ensuring that asset quality continues to remain best in class.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has built a robust risk management framework over the years. Engaged, as it is, in retail financing, the Company has to manage various risks, including credit risk, liquidity risk, interest rate risk and operational risk. The Risk Management Committee and the Asset Liability Management Committee review and monitor these risks on a regular basis. The Company manages credit risk through stringent credit norms established through several decades of experience in retail lending and continues to follow the time tested practice of personally assessing every borrower, before committing to a credit exposure. The Company monitors ALM on an ongoing basis to mitigate liquidity risk, while interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles. The Company also measures the interest rate risk by the duration gap method.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going activities and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Companyâs internal audit department independently evaluates the adequacy of control measures on a periodic basis and recommends improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures and makes extensive use of software and analytical tools which enables effective offsite monitoring.
The internal audit department is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
Additionally, an Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and IT related areas, apart from information security related measures.
HUMAN RESOURCES
In an environment that is rapidly becoming technology and digital oriented, your Company continues to invest in long term people development, for organizational excellence. Part of the enduring Sundaram Finance tradition, over the decades, has been our adherence to the âSundaram Wayâ- the value system that has formed the bedrock of the Company and the percolation of these values to successive generations of employees. For talent development, we have a healthy mix of learning programmes addressing both domain knowledge and soft skills. During the year, 48% of programmes were for domain knowledge and 52% in the area of soft skills, involving 4600 man hours of learning. Your Company launched the Sundaram Finance Centre of Excellence (CoE) in 2016-17, with a view to effectively leverage technology to accelerate the pace of institutional knowledge transfer across the Sundaram Finance landscape, while still retaining the spirit of our Gurukulam system. The response has been very enthusiastic and over 1600 employees took the exams under various modules of the CoE during the year. The âEducator Orientation Programmesâ for the senior managers who act as guides and facilitators to those who take the CoE examinations every month has been institutionalized.
INFORMATION TECHNOLOGY
During the year, the Board of Directors formed the IT Strategy Committee, as required by RBI. The Committee has since framed the policies and procedures relating to Cyber Security, Business Continuity, Outsourcing and Information Security / Technology, in line with its terms of reference.
Your Company has a State of the Art Data Centre catering not only to its own needs but also those of its subsidiaries and associates, with a capacity of over 300 servers, managed by professionals providing 24/7 support, with over 99.99% uptime. The Data Centre is accredited for ISO/IEC 27001:2013 by TUV Rheinland for Information Security Management System. The Disaster Recovery Site for all critical applications is hosted at a separate facility located in a different seismic zone, with near real-time data replication. Your company has implemented various protocols for managing Information and Cyber security across the organization.
The internal IT Team has mastered a complex landscape of current technologies, marketing approaches, and operational capabilities to cater to the various business applications within the Company. Digital services and operations are raising the competitive bar in every sector. Your Companyâs digital strategy is driven by the twin objectives of making life easier for our employees and enhancing the customer experience. Our digital initiatives address these very objectives, by providing a host of digital options for our customers to interact and transact with us and a number of productivity enhancements through process automation which free up our people to deliver the unique âSundaram Experienceâ to our customers. We are a relationship centric business and have consciously adopted digital, to augment these relationships and be digitally available for our customers, as and when they need us to be.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129(3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-1 forms part of the Annual Report.
The annual accounts of all the Subsidiary Companies have been posted on your Companyâs website - www.sundaramfinance.in. Detailed information, including the annual accounts of the Subsidiary Companies will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
SUBSIDIARIES
- Sundaram BNP Paribas Home Finance Limited
The company approved loans aggregating to ''2996 cr. (Previous year Rs,2077 cr.). Disbursements during the year were higher by 43%, at Rs,2626 cr. (PY Rs, 1831 cr.). The company earned a gross income of Rs,898 cr. (PY Rs, 923 cr.) and reported a profit after tax at Rs,136 cr. (PY Rs,154 cr.). The loan portfolio under management as at 31st March 2018 stood at Rs,8336 cr. as against Rs,7639 cr. in the previous year. The gross and net NPA stood at 3.27% and 1.09% respectively as of 31.03.2018. The company proposed a dividend of Rs,3.50 per share for the year (PY 35%).
- Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)
Royal Sundaram reported a robust increase of 19.9% in Gross Written Premium (GWP) at Rs,2643 cr. as compared to Rs,2205 cr. in the previous year. Profit after tax for the year was Rs,83.00 cr., as against Rs,43.05 cr. in the previous year.
- Sundaram Asset Management Company Limited
Sundaram Asset Management Company Limited reported a gross income of Rs,308.04 cr. as against Rs,260.52 cr. in the previous year. Profit after tax was significantly higher at Rs,38.24 cr. as compared to Rs,30.73 cr. during the previous year. The Average Assets under Management amounted to Rs,34,306 cr. for the year 2017-18 as compared to Rs,28,260 cr. in the previous year. The company recommended a dividend of Rs,4/- per share for the year, on the paid-up capital of Rs,35 cr.
- Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs,1.50 cr., as against Rs,1.23 cr., in the previous year and reported a profit after tax of Rs,0.80 cr. for the year, as against Rs,0.58 cr. in the previous year. The company recommended a dividend of Rs,100/- per share for the year.
- LGF Services Limited
During the year, LGF Services Limited reported a gross income of Rs,1.90 cr. as against Rs,4.39 cr. in the previous year. The profit after tax for the year was Rs,0.34 cr. as against Rs,0.83 cr. in the previous year. The company proposed a dividend of Rs,25/- per share for the year, same as during the previous year.
- Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited earned an income of Rs,40.96 cr. during the year, an increase of 25.03% over the previous year. The companyâs reported loss was lower at Rs,0.22 cr. during the year as against Rs,4.62 cr. in the previous year.
BOARD & AUDIT COMMITTEE
The details regarding number of board meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri S. Viji and Sri S. Ram retire by rotation and being eligible, offer themselves for re-election.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/s Sundaram & Srinivasan, Chartered Accountants, Chennai, were appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 64th Annual General Meeting until the conclusion of the 69th Annual General Meeting. Their appointment for periods subsequent to the conclusion of the 65th Annual General Meeting shall be subject to one time ratification by the members at the ensuing Annual General Meeting, at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors.
A certificate from the Auditors that they satisfy the conditions prescribed under the Companies Act, 2013 and the Rules made there under (including satisfaction of criteria under Section 141 of the Companies Act, 2013) has been received from them.
AWARDS AND RECOGNITION
Your Company was chosen for Mahindra Transport Excellence Award instituted by Mahindra & Mahindra Limited, in the category, âEnablers of Social Changeâ, in recognition of the outstanding contribution made by your Company, in fostering and developing the transport ecosystem, especially single truck owners and small fleet owners, over several decades.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, depositors, shareholders and bankers, as also the various mutual funds, insurance companies, automotive manufacturers and dealers.
Your directors also place on record their special appreciation of Team Sundaram for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.
For and on behalf of the Board
Chennai 600 002 S VIJI
25.05.2018 Chairman
Mar 31, 2018
Boardâs Report
The directors have pleasure in presenting the 24th Annual Report together with audited accounts for the year ended 31st March 2018. The summarised financial results of the Company are presented hereunder:
FINANCIAL RESULTS:
(Rs, in cr.)
Particulars |
Year ended March 31, 2018 |
Revenue from Portfolio Companies |
57.00 |
Operating Revenue |
13.50 |
Other Income |
3.88 |
Total Revenue |
74.38 |
Less: Total Expenses |
14.53 |
Profit before Tax |
59.85 |
Profit after Tax |
54.43 |
Consolidated PAT |
124.44 |
Finance Limited (SFL), viz., identified shared services undertaken by SFL including shared services vested from Sundaram BPO India Limited, training services rendered by SFL, non-financial services investments of SFL, together with related assets, into your Company, as envisaged in the Scheme with effect from the âAppointed Dateâ, i.e., 1st April 2016, has become operative.
As provided in the Scheme, on 12th February 2018, all the shareholders of SFL were allotted 1 (One) equity share of '' 5/- each credited as fully paid-up in the capital of SFHL for every 1 (One) fully paid-up equity share of ''10/- held by them in SFL as on the record date, i.e., 2nd February 2018. The equity shares of the Company were listed on the National Stock Exchange of India Limited with effect from 26th March 2018.
The accounts for the financial year ended 31st March 2018 have been prepared after giving effect to the Scheme and, therefore, the figures given herein and elsewhere in the Annual Report are not strictly comparable with those of the previous year.
Pursuant to the transfer of the non-financial services investments of SFL into your Company, the Company has been categorised as an exempted âCore Investment Companyâ under the Core Investment Companies (Reserve Bank) Directions, 2016, issued by the Reserve Bank of India.
MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL ECONOMY
According to the IMFâs World Economic Outlook, the Global economic growth strengthened in 2017 to 3.8%, with GDP continuing to accelerate over much of the world and is expected to rise up to 3.9% in the current year. An important indication of the acceleration in growth was the strong employment growth in some of the countries that had high unemployment for some time. Some of the larger emerging market economies, such as Argentina, Brazil and Russia, came out of their recessions. Equity valuations continued to climb and are near record highs, as central banks have maintained accommodative monetary policies due to weak inflation.
DIVIDEND
Your directors are pleased to recommend a dividend of ''1.50 per share on the paid-up share capital of ''75.55 cr. (30% on the face value of '' 5/-), representing a dividend pay-out of 50.20% of profits (including dividend distribution tax).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION
Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation (Scheme) by the Honâble National Company Law Tribunal (NCLT), Division Bench, Chennai, vide Order dated 12th January 2018, received by the Company on 18th January 2018, the de-merger of the âSFL Demerged Undertakingâ, i.e., non-core business activities of INDIAN ECONOMY
India has emerged as one of the fastest growing maj or economies in the world as per the IMF. Indiaâs GDP is estimated to have grown by 6.6% in 2017-18 and is expected to grow at 7.3% in 2018-19.
The growth in Indiaâs GDP has to be viewed as satisfactory in the aftermath of two major events - demonetisation and GST. Gross tax collections for the period April 2017- February 2018 showed an increase of 15.8% year-on-year while net retention to the Centre in tax collections recorded a growth of 17%.
India''s foreign exchange reserves stood at USD 424.4 billion at the end of March 2018. However, tepid export growth of 0.7% and higher import growth of 7.1% resulted in the current account deficit worsening to 2.0% from 1.4% in the previous year. Due to the oil price movements, this could worsen further.
The annual average CPI declined from 4.5% in 2016-17 to 3.6% in 2017-18. The IIP increased by 4.3% during the period April to February 2018, as against 4.7% in the corresponding period of the previous year.
However, according to the World Bank''s Doing Business Report India is still ranked only 100 among 190 countries in the 2018 edition of the report.
AUTOMOTIVE SECTOR
A majority of your Companyâs investments are in the automotive sector. Growth in the automotive sector was muted during early 2017-18, primarily due to three major developments, viz., demonetisation in the previous year, changeover to the BS IV emission norms and implementation of GST. The industry settled down during the second quarter of the financial year and normal monsoon, coupled with focus of the Government on infrastructure, festive demand and rural sentiment led to an overall strong comeback for the automotive sector.
Society of Indian Automobile Manufacturers (SIAM) expects the growth momentum of Commercial vehicle sales to continue at 10-12% (M&HCVs at 9-11% and LCVs at 10-12%) in 2018-19. The governmentâs continuing emphasis on infrastructure and a recovery in the mining sector bodes well for sales of tippers.
⢠Shared Services Business
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group/ associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue
Sales of passenger vehicles are expected to grow at 8-10% (utility vehicles at 14-15% and cars at 8-9%). As per a report by CRISIL, tractor sales are projected to improve by 11-13% in 2018-19, assuming a normal monsoon and increased government support. Demand in semi-urban towns and rural areas is expected to look up as the impact of demonetisation has abated, and a normal monsoon for a third year should bolster sales of passenger cars, LCVs and especially tractors.
OPERATING AND FINANCIAL PERFORMANCE
The revenue earned by your Company during the financial year 2017-18, after considering the effects of the demerger, was Rs,74.38 cr., as against Rs,4.84 cr. in the previous year. The profit after tax for the year was Rs,54.43 cr., as against Rs,0.48 cr. in the previous year. The companyâs net-worth stood at Rs,325.83 cr. as on 31.03.2018.
The consolidated profit after tax and net worth for the year stood at Rs,124.44 cr.and Rs,833.59 cr. respectively.
BPO BUSINESS
The BPO business of the Company comprises the following:
Type of Business |
Turnover (Rs, in cr.) |
Shared services business managed by the Company |
13.50 |
Sundaram Business Services Limited - for managing outsourced business of overseas clients (Wholly-owned Subsidiary) |
30.05 |
Sundaram BPO India Limited - for managing outsourced business of domestic clients (Wholly-owned Subsidiary) |
8.65 |
Total |
52.20 |
effects of demerger, as against Rs,17.10 cr. during the previous year. The loss after tax for the year was at Rs,1.60 cr. as against Rs,0.42 cr. in the previous year. The company had 397 employees as on 31st March 2018.
The Board of Directors of your Company has decided, in principle, to amalgamate SBIL with SBSL, in order to create greater scale and more focus on the BPO business going forward.
INVESTMENT PORTFOLIO
Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation by the Honâble NCLT, the investments of Sundaram Finance Limited in several automotive and manufacturing businesses have been demerged into your Company. Pursuant to the demerger, the Company holds investments in 17 portfolio companies as at 31.03.2018. The total carrying cost of these investments is ''118.89 cr. The performance of the key portfolio companies during 2017-18 was as follows:
earned
from the shared services business during the year was ''13.50 cr. The business had 501 employees as on 31st March 2018.
- Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company catering to over 35 clients in Australia and the UK. SBSL offers best in class outsourcing, helping Accounting firms, CFOs and CMOs through its innovative service offerings. During the year, SBSL earned a revenue of ''30.05 cr., as compared to ''26.81 cr. in the previous year. The company reported a profit after tax of ''6.56 cr. during the year as against ''1.22 cr. in the previous year. The company had 345 employees as on 31st March 2018.
- Sundaram BPO India Limited
Sundaram BPO India Limited (SBIL) is a domestic BPO with over 15 clients across both voice and non-voice services. SBIL earned a total revenue of ''8.65 cr. during the year, after considering the
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Net worth |
Share of Net worth |
PAT |
Share of PAT |
1 |
Turbo Energy Private Limited |
1.89 |
32.00 |
1,171.81 |
374.98 |
172.37 |
55.16 |
2 |
Brakes India Private Limited |
0.15 |
6.67 |
1,706.51 |
113.82 |
375.94 |
25.08 |
3 |
Dunes Oman LLC (FZC) |
26.95 |
43.69 |
230.37 |
100.65 |
63.62 |
27.80 |
4 |
Sundaram Clayton Limited |
14.28 |
11.24 |
664.00 |
74.63 |
54.92 |
6.17 |
5 |
Flometallic India Private Limited |
32.50 |
40.63 |
139.23 |
56.57 |
34.09 |
13.85 |
6 |
Wheels India Limited |
8.38 |
11.08 |
460.35 |
51.01 |
52.30 |
5.79 |
7 |
India Motor Parts and Accessories Limited |
5.77 |
18.52 |
253.85 |
47.01 |
20.79 |
3.85 |
8 |
Axles India Limited |
10.16 |
38.81 |
109.69 |
42.57 |
22.61 |
8.77 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
751.71 |
39.99 |
47.61 |
2.53 |
10 |
Delphi-TVS Diesel Systems Limited |
0.18 |
3.19 |
287.00 |
9.15 |
6.19 |
0.20 |
11 |
Others |
18.36 |
NA |
126.99 |
22.23 |
3.71 |
2.77 |
Total |
118.89 |
932.61 |
151.97 |
Note: The figures relating to the companies mentioned under Sl. Nos. 2, 9 and 10 are based on the audited financial results for the year ended 31st March 2017. The figures relating to the companies mentioned under Sl. Nos. 6 and 7 are based on the unaudited financial results for the nine months ended 31st December 2017, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1, 3, 4, 5 and 8 are based on the audited financial results for the year ended 31st March 2018.
Turbo Energy Private Limited
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Pursuant to the demerger, your Company holds 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. Borg warner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year the revenue earned by the company grew by 19.79% from ''1031.96 cr. to ''1236.23 cr. The profit after tax for the year was ''172.37 cr. as against ''139.10 cr. in the previous year, registering a growth of 23.92%. Your Company received a total dividend of ''7.17 cr. from Turbo Energy Private Limited during the financial year 2017-18.
Brakes India Private Limited
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Pursuant to the demerger, your Company holds 6.67% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. TRW Automotive (since acquired by and now part of ZF Group) and the TVS Group are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 5.90% from ''3906.02 cr. to ''4136.48cr. The profit after tax for the year ended 31st March 2017 was ''375.94 cr. as against ''307.19 cr. in the previous year, registering a growth of 22.38%. Your Company received a total dividend of ''8.77 cr. from Brakes India Private Limited during the financial year 2017-18.
Dunes Oman LLC (FZC)
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Pursuant to the demerger, your Company holds 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was copromoted with Brakes India Private Limited. During the year the revenue earned by the company grew by 1.97% from Rs,325.13 cr. to Rs,331.55 cr. The profit after tax for the year was Rs,63.62 cr. as against Rs,70.36 cr. in the previous year. Your Company received a total dividend of ''26.08 cr. from Dunes Oman LLC (FZC) during the financial year 2017-18.
Sundaram Clayton Limited
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and non-automotive applications. Pursuant to the demerger, your Company holds 11.24% stake in Sundaram Clayton Limited and has been categorised as one of the promoters of that company. The TVS Group is the other promoter of the company. During the year the revenue earned by the company grew by 11.14% from Rs,1589.67 cr. to Rs,1766.74 cr. The profit after tax for the year was Rs,54.92 cr. as against Rs,105.59 cr. in the previous year. The market capitalisation of the company as on 31st March 2018 was Rs,9745.29 cr. The value of your Companyâs holding on that basis, was Rs,1094.89 cr., as on 31st March 2018. Your Company received a total dividend of Rs,3.41 cr. from Sundaram Clayton Limited during the financial year 2017-18.
Flometallic India Private Limited
Flometallic India Private Limited is engaged in the manufacture of iron castings for the automotive industry. Pursuant to the demerger, your Company holds 40.63% stake in Flometallic India Private Limited. During the year the revenue earned by the company grew by 14.15% from Rs,265.42 cr. to Rs,302.98 cr. The profit after tax for the year was Rs,34.09 cr. as against Rs,25.37 cr. in the previous year, registering a growth of 34.37%. Your Company received a total dividend of Rs,4.06 cr. from Flometallic India Private Limited during the financial year 2017-18.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Pursuant to the demerger, your Company holds 11.08% stake in Wheels India Limited and has been categorised as one of the promoters of that company. Titan Limited and the TVS Group are the other promoters of the company. For the period ended 31st December 2017, the revenue earned by the company grew by 3.94% to Rs,1812.24 cr., as against Rs,1743.49 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2017 was Rs,52.30 cr. as against Rs,41.11 cr. for the corresponding period in the previous year, registering a growth of 27.22%. The market capitalisation of the company as on 31st March 2018 was Rs,2707.68 cr. The value of your Companyâs holding on that basis, was Rs,300.14 cr., as on 31st March 2018. Your Company received a total dividend of Rs,1.87 cr. from Wheels India Limited during the financial year 2017-18.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Pursuant to the demerger, your Company holds 18.52% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2017, the revenue earned by the company stood at Rs,357.00 cr., as against Rs,397.23 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2017 stood at Rs,20.79 cr. as against Rs,22.96 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2018 was Rs,852.55 cr. The value of your Companyâs holding on that basis, was Rs,157.89 cr., as on 31st March 2018. Your Company received a total dividend of Rs,0.92 cr. from India Motor Parts and Accessories Limited during the financial year 2017-18.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Pursuant to the demerger, your Company holds 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company. Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year the revenue earned by the company grew by 15.40% from Rs,413.59 cr. to Rs,477.28 cr. The profit after tax for the year was Rs,22.61 cr. as against Rs,15.01 cr. in the previous year, registering a growth of 50.63%. Your Company received a total dividend of Rs,1.78 cr. from Axles India Limited during the financial year 2017-18.
Lucas-TVS Limited
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Pursuant to the demerger, your Company holds 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. The TVS Group is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 8.25% from Rs,1908.57 cr. to Rs,2065.96 cr. The profit after tax for the year ended 31st March 2017 was Rs,47.61 cr. as against Rs,43.32 cr. in the previous year, registering a growth of 9.90%. Your Company received a total dividend of Rs,1.07 cr. from Lucas-TVS Limited during the financial year 2017-18.
Delphi-TVS Diesel Systems Limited
Delphi TVS Diesel Systems Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles and tractors. Pursuant to the demerger, your Company holds 3.19% stake in Delphi TVS Diesel Systems Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and the TVS Group are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 3.37% from Rs,856.24 cr. to Rs,885.08 cr. The profit after tax for the year ended 31st March 2017 was Rs,6.19 cr. as against a loss of Rs,1.73 cr. in the previous year. Your Company received a total dividend of Rs,0.35 cr. from Delphi TVS Diesel Systems Limited during the financial year 2017-18.
CORPORATE GOVERNANCE
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis. The Company did not enter into any material transaction with related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party
Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards preventive and general health care, in consonance with the CSR policy. Steps have been taken to put in place necessary infrastructure to identify worthy causes which can be supported on an on going basis.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2017-18, is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2017-18.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana Subramaniam, Practising Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by him is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form No. MGT-9 is annexed as part of this report, vide Annexure VIII.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2017-18, foreign currency earnings amounted to Rs,26.08 cr. There was no expenditure in foreign currency.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the busines
of making investments and business process outsourcing services, the Company has to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Company has established
systems and procedures to ensure that these risks are identified, measured and managed effectively. The Audit Committee reviews these risks on a regular basis.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going activities and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
HUMAN RESOURCES
Pursuant to the demerger, nearly 500 employees have been transferred from Sundaram Finance Limited and Sundaram BPO India Limited into your Company on and from the âEffective Dateâ. In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
INFORMATION TECHNOLOGY
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiaries, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability) Standards. To cater to the ever changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-1 forms part of the Annual Report.
The annual accounts of all the Subsidiary Companies have been posted on your Companyâs website - www.sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Companies will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Harsha Viji retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
The following key managerial personnel were appointed during the year:
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, were appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting. Their appointment for periods subsequent to the conclusion of the 24th Annual General Meeting shall be subject to one time ratification by the members at the ensuing Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation extended to your Company by all its clients, shareholders and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.
For and on behalf of the Board
Chennai 600 002 S VIJI
24.05.2018 Chairman
Mar 31, 2018
Boardâs Report
The directors have pleasure in presenting the 24th Annual Report together with audited accounts for the year ended 31st March 2018. The summarised financial results of the Company are presented hereunder:
FINANCIAL RESULTS:
(Rs, in cr.)
Particulars |
Year ended March 31, 2018 |
Revenue from Portfolio Companies |
57.00 |
Operating Revenue |
13.50 |
Other Income |
3.88 |
Total Revenue |
74.38 |
Less: Total Expenses |
14.53 |
Profit before Tax |
59.85 |
Profit after Tax |
54.43 |
Consolidated PAT |
124.44 |
Finance Limited (SFL), viz., identified shared services undertaken by SFL including shared services vested from Sundaram BPO India Limited, training services rendered by SFL, non-financial services investments of SFL, together with related assets, into your Company, as envisaged in the Scheme with effect from the âAppointed Dateâ, i.e., 1st April 2016, has become operative.
As provided in the Scheme, on 12th February 2018, all the shareholders of SFL were allotted 1 (One) equity share of '' 5/- each credited as fully paid-up in the capital of SFHL for every 1 (One) fully paid-up equity share of ''10/- held by them in SFL as on the record date, i.e., 2nd February 2018. The equity shares of the Company were listed on the National Stock Exchange of India Limited with effect from 26th March 2018.
The accounts for the financial year ended 31st March 2018 have been prepared after giving effect to the Scheme and, therefore, the figures given herein and elsewhere in the Annual Report are not strictly comparable with those of the previous year.
Pursuant to the transfer of the non-financial services investments of SFL into your Company, the Company has been categorised as an exempted âCore Investment Companyâ under the Core Investment Companies (Reserve Bank) Directions, 2016, issued by the Reserve Bank of India.
MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL ECONOMY
According to the IMFâs World Economic Outlook, the Global economic growth strengthened in 2017 to 3.8%, with GDP continuing to accelerate over much of the world and is expected to rise up to 3.9% in the current year. An important indication of the acceleration in growth was the strong employment growth in some of the countries that had high unemployment for some time. Some of the larger emerging market economies, such as Argentina, Brazil and Russia, came out of their recessions. Equity valuations continued to climb and are near record highs, as central banks have maintained accommodative monetary policies due to weak inflation.
DIVIDEND
Your directors are pleased to recommend a dividend of ''1.50 per share on the paid-up share capital of ''75.55 cr. (30% on the face value of '' 5/-), representing a dividend pay-out of 50.20% of profits (including dividend distribution tax).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION
Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation (Scheme) by the Honâble National Company Law Tribunal (NCLT), Division Bench, Chennai, vide Order dated 12th January 2018, received by the Company on 18th January 2018, the de-merger of the âSFL Demerged Undertakingâ, i.e., non-core business activities of INDIAN ECONOMY
India has emerged as one of the fastest growing maj or economies in the world as per the IMF. Indiaâs GDP is estimated to have grown by 6.6% in 2017-18 and is expected to grow at 7.3% in 2018-19.
The growth in Indiaâs GDP has to be viewed as satisfactory in the aftermath of two major events - demonetisation and GST. Gross tax collections for the period April 2017- February 2018 showed an increase of 15.8% year-on-year while net retention to the Centre in tax collections recorded a growth of 17%.
India''s foreign exchange reserves stood at USD 424.4 billion at the end of March 2018. However, tepid export growth of 0.7% and higher import growth of 7.1% resulted in the current account deficit worsening to 2.0% from 1.4% in the previous year. Due to the oil price movements, this could worsen further.
The annual average CPI declined from 4.5% in 2016-17 to 3.6% in 2017-18. The IIP increased by 4.3% during the period April to February 2018, as against 4.7% in the corresponding period of the previous year.
However, according to the World Bank''s Doing Business Report India is still ranked only 100 among 190 countries in the 2018 edition of the report.
AUTOMOTIVE SECTOR
A majority of your Companyâs investments are in the automotive sector. Growth in the automotive sector was muted during early 2017-18, primarily due to three major developments, viz., demonetisation in the previous year, changeover to the BS IV emission norms and implementation of GST. The industry settled down during the second quarter of the financial year and normal monsoon, coupled with focus of the Government on infrastructure, festive demand and rural sentiment led to an overall strong comeback for the automotive sector.
Society of Indian Automobile Manufacturers (SIAM) expects the growth momentum of Commercial vehicle sales to continue at 10-12% (M&HCVs at 9-11% and LCVs at 10-12%) in 2018-19. The governmentâs continuing emphasis on infrastructure and a recovery in the mining sector bodes well for sales of tippers.
⢠Shared Services Business
The shared services business of the Company encompasses services provided to Sundaram Finance Limited and its group/ associate companies on an armâs length basis. Such services include transaction processing, accounts payable processing, tele-calling, training, learning and development. The revenue
Sales of passenger vehicles are expected to grow at 8-10% (utility vehicles at 14-15% and cars at 8-9%). As per a report by CRISIL, tractor sales are projected to improve by 11-13% in 2018-19, assuming a normal monsoon and increased government support. Demand in semi-urban towns and rural areas is expected to look up as the impact of demonetisation has abated, and a normal monsoon for a third year should bolster sales of passenger cars, LCVs and especially tractors.
OPERATING AND FINANCIAL PERFORMANCE
The revenue earned by your Company during the financial year 2017-18, after considering the effects of the demerger, was Rs,74.38 cr., as against Rs,4.84 cr. in the previous year. The profit after tax for the year was Rs,54.43 cr., as against Rs,0.48 cr. in the previous year. The companyâs net-worth stood at Rs,325.83 cr. as on 31.03.2018.
The consolidated profit after tax and net worth for the year stood at Rs,124.44 cr.and Rs,833.59 cr. respectively.
BPO BUSINESS
The BPO business of the Company comprises the following:
Type of Business |
Turnover (Rs, in cr.) |
Shared services business managed by the Company |
13.50 |
Sundaram Business Services Limited - for managing outsourced business of overseas clients (Wholly-owned Subsidiary) |
30.05 |
Sundaram BPO India Limited - for managing outsourced business of domestic clients (Wholly-owned Subsidiary) |
8.65 |
Total |
52.20 |
effects of demerger, as against Rs,17.10 cr. during the previous year. The loss after tax for the year was at Rs,1.60 cr. as against Rs,0.42 cr. in the previous year. The company had 397 employees as on 31st March 2018.
The Board of Directors of your Company has decided, in principle, to amalgamate SBIL with SBSL, in order to create greater scale and more focus on the BPO business going forward.
INVESTMENT PORTFOLIO
Pursuant to the sanctioning of the Composite Scheme of Arrangement and Amalgamation by the Honâble NCLT, the investments of Sundaram Finance Limited in several automotive and manufacturing businesses have been demerged into your Company. Pursuant to the demerger, the Company holds investments in 17 portfolio companies as at 31.03.2018. The total carrying cost of these investments is ''118.89 cr. The performance of the key portfolio companies during 2017-18 was as follows:
earned
from the shared services business during the year was ''13.50 cr. The business had 501 employees as on 31st March 2018.
- Sundaram Business Services Limited
Sundaram Business Services Limited (SBSL) is a global outsourcing company catering to over 35 clients in Australia and the UK. SBSL offers best in class outsourcing, helping Accounting firms, CFOs and CMOs through its innovative service offerings. During the year, SBSL earned a revenue of ''30.05 cr., as compared to ''26.81 cr. in the previous year. The company reported a profit after tax of ''6.56 cr. during the year as against ''1.22 cr. in the previous year. The company had 345 employees as on 31st March 2018.
- Sundaram BPO India Limited
Sundaram BPO India Limited (SBIL) is a domestic BPO with over 15 clients across both voice and non-voice services. SBIL earned a total revenue of ''8.65 cr. during the year, after considering the
Sl. No. |
Portfolio Company |
Holding Cost |
Holding (%) |
Net worth |
Share of Net worth |
PAT |
Share of PAT |
1 |
Turbo Energy Private Limited |
1.89 |
32.00 |
1,171.81 |
374.98 |
172.37 |
55.16 |
2 |
Brakes India Private Limited |
0.15 |
6.67 |
1,706.51 |
113.82 |
375.94 |
25.08 |
3 |
Dunes Oman LLC (FZC) |
26.95 |
43.69 |
230.37 |
100.65 |
63.62 |
27.80 |
4 |
Sundaram Clayton Limited |
14.28 |
11.24 |
664.00 |
74.63 |
54.92 |
6.17 |
5 |
Flometallic India Private Limited |
32.50 |
40.63 |
139.23 |
56.57 |
34.09 |
13.85 |
6 |
Wheels India Limited |
8.38 |
11.08 |
460.35 |
51.01 |
52.30 |
5.79 |
7 |
India Motor Parts and Accessories Limited |
5.77 |
18.52 |
253.85 |
47.01 |
20.79 |
3.85 |
8 |
Axles India Limited |
10.16 |
38.81 |
109.69 |
42.57 |
22.61 |
8.77 |
9 |
Lucas-TVS Limited |
0.27 |
5.32 |
751.71 |
39.99 |
47.61 |
2.53 |
10 |
Delphi-TVS Diesel Systems Limited |
0.18 |
3.19 |
287.00 |
9.15 |
6.19 |
0.20 |
11 |
Others |
18.36 |
NA |
126.99 |
22.23 |
3.71 |
2.77 |
Total |
118.89 |
932.61 |
151.97 |
Note: The figures relating to the companies mentioned under Sl. Nos. 2, 9 and 10 are based on the audited financial results for the year ended 31st March 2017. The figures relating to the companies mentioned under Sl. Nos. 6 and 7 are based on the unaudited financial results for the nine months ended 31st December 2017, which were subjected to Limited Review. The figures relating to the companies mentioned under Sl. Nos. 1, 3, 4, 5 and 8 are based on the audited financial results for the year ended 31st March 2018.
Turbo Energy Private Limited
Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Pursuant to the demerger, your Company holds 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. Borg warner Turbo Systems (Germany) and Brakes India Private Limited are the other promoters of the company. During the year the revenue earned by the company grew by 19.79% from ''1031.96 cr. to ''1236.23 cr. The profit after tax for the year was ''172.37 cr. as against ''139.10 cr. in the previous year, registering a growth of 23.92%. Your Company received a total dividend of ''7.17 cr. from Turbo Energy Private Limited during the financial year 2017-18.
Brakes India Private Limited
Brakes India Private Limited is the market leader in the manufacture of braking systems for cars and commercial vehicles in the country. Pursuant to the demerger, your Company holds 6.67% stake in Brakes India Private Limited and has been categorised as one of the promoters of that company. TRW Automotive (since acquired by and now part of ZF Group) and the TVS Group are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 5.90% from ''3906.02 cr. to ''4136.48cr. The profit after tax for the year ended 31st March 2017 was ''375.94 cr. as against ''307.19 cr. in the previous year, registering a growth of 22.38%. Your Company received a total dividend of ''8.77 cr. from Brakes India Private Limited during the financial year 2017-18.
Dunes Oman LLC (FZC)
Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Pursuant to the demerger, your Company holds 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was copromoted with Brakes India Private Limited. During the year the revenue earned by the company grew by 1.97% from Rs,325.13 cr. to Rs,331.55 cr. The profit after tax for the year was Rs,63.62 cr. as against Rs,70.36 cr. in the previous year. Your Company received a total dividend of ''26.08 cr. from Dunes Oman LLC (FZC) during the financial year 2017-18.
Sundaram Clayton Limited
Sundaram Clayton Limited is engaged in the manufacture of precision aluminium cast products for both automotive and non-automotive applications. Pursuant to the demerger, your Company holds 11.24% stake in Sundaram Clayton Limited and has been categorised as one of the promoters of that company. The TVS Group is the other promoter of the company. During the year the revenue earned by the company grew by 11.14% from Rs,1589.67 cr. to Rs,1766.74 cr. The profit after tax for the year was Rs,54.92 cr. as against Rs,105.59 cr. in the previous year. The market capitalisation of the company as on 31st March 2018 was Rs,9745.29 cr. The value of your Companyâs holding on that basis, was Rs,1094.89 cr., as on 31st March 2018. Your Company received a total dividend of Rs,3.41 cr. from Sundaram Clayton Limited during the financial year 2017-18.
Flometallic India Private Limited
Flometallic India Private Limited is engaged in the manufacture of iron castings for the automotive industry. Pursuant to the demerger, your Company holds 40.63% stake in Flometallic India Private Limited. During the year the revenue earned by the company grew by 14.15% from Rs,265.42 cr. to Rs,302.98 cr. The profit after tax for the year was Rs,34.09 cr. as against Rs,25.37 cr. in the previous year, registering a growth of 34.37%. Your Company received a total dividend of Rs,4.06 cr. from Flometallic India Private Limited during the financial year 2017-18.
Wheels India Limited
Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. Pursuant to the demerger, your Company holds 11.08% stake in Wheels India Limited and has been categorised as one of the promoters of that company. Titan Limited and the TVS Group are the other promoters of the company. For the period ended 31st December 2017, the revenue earned by the company grew by 3.94% to Rs,1812.24 cr., as against Rs,1743.49 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2017 was Rs,52.30 cr. as against Rs,41.11 cr. for the corresponding period in the previous year, registering a growth of 27.22%. The market capitalisation of the company as on 31st March 2018 was Rs,2707.68 cr. The value of your Companyâs holding on that basis, was Rs,300.14 cr., as on 31st March 2018. Your Company received a total dividend of Rs,1.87 cr. from Wheels India Limited during the financial year 2017-18.
India Motor Parts and Accessories Limited
India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Pursuant to the demerger, your Company holds 18.52% stake in India Motor Parts and Accessories Limited. For the period ended 31st December 2017, the revenue earned by the company stood at Rs,357.00 cr., as against Rs,397.23 cr. for the corresponding period in the previous year. The profit after tax for the nine months ended 31st December 2017 stood at Rs,20.79 cr. as against Rs,22.96 cr., for the corresponding period in the previous year. The market capitalisation of the company as on 31st March 2018 was Rs,852.55 cr. The value of your Companyâs holding on that basis, was Rs,157.89 cr., as on 31st March 2018. Your Company received a total dividend of Rs,0.92 cr. from India Motor Parts and Accessories Limited during the financial year 2017-18.
Axles India Limited
Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Pursuant to the demerger, your Company holds 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company. Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year the revenue earned by the company grew by 15.40% from Rs,413.59 cr. to Rs,477.28 cr. The profit after tax for the year was Rs,22.61 cr. as against Rs,15.01 cr. in the previous year, registering a growth of 50.63%. Your Company received a total dividend of Rs,1.78 cr. from Axles India Limited during the financial year 2017-18.
Lucas-TVS Limited
Lucas-TVS Limited is engaged in the manufacture of auto electrical equipment. Pursuant to the demerger, your Company holds 5.32% stake in Lucas-TVS Limited and has been categorised as one of the promoters of that company. The TVS Group is the other promoter of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 8.25% from Rs,1908.57 cr. to Rs,2065.96 cr. The profit after tax for the year ended 31st March 2017 was Rs,47.61 cr. as against Rs,43.32 cr. in the previous year, registering a growth of 9.90%. Your Company received a total dividend of Rs,1.07 cr. from Lucas-TVS Limited during the financial year 2017-18.
Delphi-TVS Diesel Systems Limited
Delphi TVS Diesel Systems Limited is engaged in the manufacture of diesel fuel injection equipment for passenger vehicles, commercial vehicles and tractors. Pursuant to the demerger, your Company holds 3.19% stake in Delphi TVS Diesel Systems Limited and has been categorised as one of the promoters of that company. Delphi Automotive Systems and the TVS Group are the other promoters of the company. The revenue earned by the company for the year ended 31st March 2017 grew by 3.37% from Rs,856.24 cr. to Rs,885.08 cr. The profit after tax for the year ended 31st March 2017 was Rs,6.19 cr. as against a loss of Rs,1.73 cr. in the previous year. Your Company received a total dividend of Rs,0.35 cr. from Delphi TVS Diesel Systems Limited during the financial year 2017-18.
CORPORATE GOVERNANCE
A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis. The Company did not enter into any material transaction with related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party
Transactions is attached as part of this report, vide Annexure III (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has contributed towards preventive and general health care, in consonance with the CSR policy. Steps have been taken to put in place necessary infrastructure to identify worthy causes which can be supported on an on going basis.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2017-18, is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2017-18.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. A. Kalyana Subramaniam, Practising Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by him is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure VII.
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form No. MGT-9 is annexed as part of this report, vide Annexure VIII.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2017-18, foreign currency earnings amounted to Rs,26.08 cr. There was no expenditure in foreign currency.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure:
(a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.
RISK MANAGEMENT
Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the busines
of making investments and business process outsourcing services, the Company has to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Company has established
systems and procedures to ensure that these risks are identified, measured and managed effectively. The Audit Committee reviews these risks on a regular basis.
Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going activities and are built into the employees'' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.
INTERNAL AUDIT
As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.
The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.
HUMAN RESOURCES
Pursuant to the demerger, nearly 500 employees have been transferred from Sundaram Finance Limited and Sundaram BPO India Limited into your Company on and from the âEffective Dateâ. In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.
INFORMATION TECHNOLOGY
Your Companyâs operations are supported by a full-fledged Data Centre catering not only to its own needs, but also those of its subsidiaries, with over 99.5% uptime. Your company has a well-planned Business Continuity Plan for all critical applications with near real-time data replication.
The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability) Standards. To cater to the ever changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-1 forms part of the Annual Report.
The annual accounts of all the Subsidiary Companies have been posted on your Companyâs website - www.sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Companies will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
BOARD AND AUDIT COMMITTEE
The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Sri Harsha Viji retires by rotation and being eligible, offers himself for re-election.
KEY MANAGERIAL PERSONNEL
The following key managerial personnel were appointed during the year:
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/s R.G.N. Price & Co., Chartered Accountants, Chennai, were appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 23rd Annual General Meeting until the conclusion of the 28th Annual General Meeting. Their appointment for periods subsequent to the conclusion of the 24th Annual General Meeting shall be subject to one time ratification by the members at the ensuing Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation extended to your Company by all its clients, shareholders and bankers.
Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.
For and on behalf of the Board
Chennai 600 002 S VIJI
24.05.2018 Chairman
Mar 31, 2017
The directors have pleasure in presenting the 64th Annual Report together with audited accounts for the year ended 31st March 2017. The summarised financial results of the Company are presented here under:
FINANCIAL RESULTS:
(Rs. in cr.)
Particulars |
Year ended March 31, 2017 |
Year ended March 31, 2016 |
Revenue from Operations |
2356.79 |
2312.39 |
Other Income |
101.49 |
162.63 |
Total Revenue |
2458.28 |
2475.02 |
Less: Total Expenses |
1738.08 |
1791.79 |
Profit before tax |
720.20 |
683.23 |
Profit after Tax |
495.35 |
477.28 |
Surplus brought forward |
176.47 |
162.11 |
Amount available for appropriation |
671.82 |
639.39 |
Appropriations to: |
||
- Statutory Reserve |
99.07 |
95.46 |
- General Reserve |
222.90 |
222.63 |
Dividend - Interim |
55.55 |
111.10 |
Final (Proposed)* |
- |
11.11 |
Dividend Tax |
8.77 |
22.62 |
Surplus carried to balance sheet |
285.53 |
176.47 |
* Will be recognised as a liability on approval by the shareholders at the Annual General Meeting.
DIVIDEND
Your Company paid an interim dividend of Rs.5/- per share in March 2017. Your directors are pleased to recommend a final dividend of Rs.6.50 per share, which, together with the interim dividend, would aggregate to a total dividend of Rs.11.50 per share (115% on the face value of Rs.10/-).
The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this report, vide Annexure I.
COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION
Over the decades, your Company has invested in various non-financial services businesses, including several investments in automotive and manufacturing businesses, as a co-promoter along with TVS group companies, many of them leaders in their respective markets. Your Company intends to demerge its non-financial services investments, which would result in ring-fencing the regulated financial services assets of the group. Consequent to the demerger, Sundaram Finance Holdings Limited (SFHL) would be the holding company for all non-financial services investments of your Company.
As per the proposal, all shareholders of your Company would receive one share of SFHL free of cost for every share held in your Company as on the record date. The Appointed Date for the scheme is 1st April, 2016. As a promoter, your Company would hold 26.47% stake in SFHL and the balance 73.53% will be issued to all shareholders of your Company. SFHL will be listed on the stock exchange, thereby providing a platform for shareholders to participate in the growth prospects of the investee companies.
The demerger process has been initiated through a Composite Scheme of Arrangement as per the requirements of the Companies Act, 2013. The Board of Directors of your Company, at the meeting held on 17th February 2017, approved the draft Composite Scheme of Arrangement and Amalgamation (Scheme), with effect from the Appointed Date, i.e. 1st April 2016. The Scheme, inter alia, envisages the following:
1. Amalgamation of Sundaram Insurance Broking Services Limited (SIBSL) and Infreight Logistics Solutions Limited (Infreight), wholly-owned subsidiaries, with your Company;
2. De-merger of the shared services business of Sundaram BPO India Limited (Sundaram BPO), subsidiary, into your Company; and
3. De-merger of the non-core business of the Company, viz. training services, identified shared services including shared services vested from Sundaram BPO, apart from the non-financial services investments mentioned above, together with related assets, into Sundaram Finance Holdings Limited (SFHL).
Your Company has obtained a âno-objectionâ letter from The National Stock Exchange of India Limited, in accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as well as the approval of the Competition Commission of India for the proposed combination under Section 6(2) of the Competition Act, 2002. Necessary steps are being taken to file an application with the National Company Law Tribunal for approval.
CORPORATE GOVERNANCE
A detailed report on corporate governance, together with a certificate from the Statutory Auditors, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure II.
Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions entered into by the Company with related parties were in the ordinary course of business and on an armâs length basis. The Company did not enter into any material transaction with related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure III (i). Further, the Companyâs policy on Related Party Transactions is attached as part of this report, vide Annexure III (ii), as required under the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company, along with its subsidiaries and associates, has always responded in a responsible manner to the growing needs of the communities in which it operates. During the year, your Company has, in consonance with the CSR policy of the Company, undertaken a number of initiatives that contribute to society at large, in the areas of health, education, environment and preservation of the countryâs rich culture and heritage.
The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2016-17, is annexed with this report, vide Annexure IV.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure V.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICYâ
The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2016-17.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed M/s Damodaran & Associates as the Secretarial Auditor of the Company. The Secretarial Audit Report as provided by them is annexed to this Report, vide Annexure VI.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, together with the statement prescribed under Rule 5 (2) of the said Rules, is annexed, vide Annexure VII.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Based on the recommendations of the Nomination, Compensation and Remuneration Committee, your Board of Directors has granted, subject to regulatory approvals where necessary, 18,550 stock options to select eligible employees, on 29.05.2017. The disclosure required under SEBI (Share Based Employee Benefits) Regulations, 2014, is furnished, vide Annexure VIII.
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in MGT-9 is annexed as part of this report, vide Annexure IX.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were passed by the regulators, courts or tribunals against the Company, impacting its going concern status or its future operations.
INFORMATION AS PER SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or technology absorption. During 2016-17, expenditure in foreign currencies amounted to Rs.45.75 cr. Foreign Currency earnings amounted to Rs.23.27 cr.
INFORMATION TECHNOLOGY
Your Company has a State of the Art Data Centre catering not only to its own needs but also those of its subsidiaries and associates, with a capacity of over 250 servers, managed by professionals providing 24/7 support, with over 99.99% uptime. The Data Centre is accredited for ISO/IEC 27001:2013 by TUV Rheinland for Information Security Management System. The Disaster Recovery Site for all critical applications is hosted at a separate facility located in a different seismic zone, with near real-time data replication.
The Company both develops & maintains robust Business Applications on the Oracle Technology platform, catering to various business verticals such as Hire Purchase, Loans, Leasing, Deposits and Treasury Management and continues to work with Oracle Financials and Hyperion for Financial Accounting and Reporting.
To cater to the ever changing Marketing & Operational needs, the Business Applications are being constantly upgraded with new / enhanced features to facilitate improved Turn-Around Time & Customer Satisfaction. As part of the digital initiatives, your Company has implemented applications in the functional areas of Lending, Deposits, Compliance, Human Resources and Training.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-I forms part of the Annual Report.
The consolidated net profit for the year was Rs.683.48 cr. as against Rs.583.17 cr. in the previous year, a growth of 17.20%. The Companyâs consolidated networth stood at Rs.4816.02 cr. as on 31st March 2017.
The annual accounts of all the Subsidiary Companies have been posted on your Companyâs website - www.sundaramfinance.in. Detailed information, including the annual accounts of the Subsidiary Companies will be available for inspection by the members, at the registered office of the Company and will also be made available to the members upon request.
SUBSIDIARIES
- Sundaram BNP Paribas Home Finance Limited
The company approved loans aggregating to Rs.2077 cr. (Previous year - Rs.1857 cr.). Disbursements during the year were higher by 5%, at Rs.1831 cr. (PY Rs.1743 cr.).
The company earned a gross income of Rs.923 cr. (PY Rs.927 cr.) and reported a profit after tax at Rs.154 cr. (PY Rs.153 cr.). The loan portfolio under management as at 31st March 2017 stood at Rs.7663 cr. as against Rs.7510 cr. in the previous year. The gross and net NPA stood at 2.94% and 0.98% respectively as of 31.03.2017. The company proposed a dividend of 35% for the year (PY 35%).
- Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)
Royal Sundaram reported a robust increase of 29.4% in Gross Written Premium (GWP) at Rs.2205 cr. as compared to Rs.1703 cr. in the previous year. Profit after tax for the year was Rs.43.05 cr., as against Rs.26.70 cr. in the previous year.
- Sundaram Asset Management Company Limited
Sundaram Asset Management Company Limited reported a gross income of Rs.260.54 cr. as against Rs.229.88 cr. in the previous year. Profit after tax was significantly higher at Rs.30.73 cr. as compared to Rs.4.42 cr. during the previous year.
The Average Assets under Management amounted to Rs.28312 cr. for the year 2016-17 as compared to Rs.23346 cr. in the previous year. The company recommended a dividend of 35% for the year, on the paid-up capital of Rs.20 cr.
- Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs.1.23 cr., as against Rs.1.00 cr., in the previous year and reported a profit after tax of Rs.0.58 cr. for the year, as against Rs.0.46 cr. in the previous year. The company recommended a dividend of 800% for the year as against 700% during the previous year.
- Sundaram Finance Holdings Limited (formerly Sundaram Finance Distribution Limited)
Sundaram Finance Holdings Limited reported a gross income of Rs.4.84 cr. as against Rs.8.14 cr. in the previous year. During the year, the main objects clause in the Memorandum of Association of the company was amended,with a view to engage in the business of investments and the name of the Company was changed from âSundaram Finance Distribution Limitedâ to âSundaram Finance Investments Limitedâ and subsequently, to âSundaram Finance Holdings Limitedâ. The profit after tax for the year was Rs.0.48 cr. as against Rs.1.00 cr. in the previous year. During February 2017, the paid-up share capital of the company was increased from Rs.50.00 lakhs to Rs.20.00 cr. by way of a rights issue of 1,95,00,000 equity shares of Rs.10/- each. The company proposed a dividend of 10% for the year on the enhanced capital, payable on pro-rata basis, as against 200% during the previous year.
- LGF Services Limited
During the year, LGF Services Limited reported a gross income of Rs.4.39 cr. as against Rs.6.45 cr. in the previous year. The profit after tax for the year was Rs.0.83 cr. as against Rs.0.82 cr. in the previous year. The company proposed a dividend of 250% for the year, as against 350% during the previous year.
- Sundaram Infotech Solutions Limited (SISL)
The company earned total revenue of Rs.15.17 cr. as against Rs.16.19 cr. in the previous year. The loss after tax for the year was at Rs.1.60 cr. as against Rs.0.82 cr. in the previous year.
The Board of Directors, at the meeting held on 25th November 2016, approved a draft Scheme of Amalgamation of SISL with your Company with effect from the Appointed Date, i.e. 1st April 2016. Your Company has received the âno-objectionâ letter from National Stock Exchange of India Limited for the draft Scheme and steps have been taken to file the application with the National Company Law Tribunal in accordance with the provisions of Section 232 read with Section 230 and other applicable provisions of the Companies Act, 2013.
- Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited earned an income of Rs.32.85 cr. during the year, an increase of 17.70% over the previous year. The companyâs reported loss was lower at Rs.4.62 cr. during the year as against Rs.7.93 cr. in the previous year.
- Sundaram BPO India Limited
Sundaram BPO India Limited earned a total revenue of Rs.17.10 cr. during the year as against Rs.16.21 cr. during the previous year. The company reported a loss after tax of Rs.0.42 cr. during the year, as against a profit after tax of Rs.0.06 cr. in the previous year.
- Sundaram Business Services Limited
During the year, Sundaram Business Services Limited earned a revenue of Rs.26.81 cr., as compared to Rs.24.41 cr. in the previous year. The company reported a profit of Rs.1.22 cr. during the year as against Rs.0.01 cr. in the previous year.
BOARD & AUDIT COMMITTEE
The details regarding number of board meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.
DIRECTORS
Your Board of Directors has re-appointed Sri T.T. Srinivasaraghavan as Managing Director for a further period of 3 years with effect from 1st April 2018.
Sri Harsha Viji and Sri A.N. Raju retire by rotation and being eligible, offer themselves for re-election.
Sri Aroon Raman, Independent Director of your Company since 2009, resigned his directorship effective 31st October 2016. Your directors place on record the significant contribution made by him to the deliberations of the Board for over seven years.
Sri Rajiv C. Lochan was co-opted as Independent Director on 25th November 2016 and holds office as Additional Director up to the date of the ensuing Annual General Meeting. The Company has received due notice from a member proposing the appointment of Sri Rajiv C. Lochan as Independent Director of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3) (p) of the Companies Act, 2013, based on the Criteria for Evaluation laid down by the Nomination, Compensation and Remuneration Committee and the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
3. Proper and sufficient care has been exercised 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;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they are operating effectively; and
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, Statutory Auditors of your Company hold office upto the conclusion of the 64th Annual General Meeting. Section 139(2) of the Companies Act, 2013 read with Rule 6 of the Companies (Audit and Auditors) Rules, 2014 stipulates that no listed company shall re-appoint an audit firm as statutory auditor for more than two terms of five consecutive years. M/s Brahmayya & Co. have been the statutory auditors of your Company since inception and are therefore not eligible for re-appointment.
Your directors recommend the appointment of M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, as Statutory Auditors of the Company, in accordance with the provisions of Sections 139, 141 and other applicable provisions of the Companies Act, 2013, to hold office from the conclusion of 64th Annual General Meeting until the conclusion of 69th Annual General Meeting, subject to the approval of the shareholders at the 64th Annual General Meeting and ratification at every Annual General Meeting thereafter.
Your Directors place on record their grateful appreciation of the contribution made and services rendered by M/s Brahmayya & Co. as Statutory Auditors since the inception of the Company.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation extended to your Company by all its customers, depositors, shareholders and bankers, as also the various mutual funds, insurance companies, automotive manufacturers and dealers.
Your directors also place on record their special appreciation of Team Sundaram for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.
For and on behalf of the Board
Chennai 600 002 S VIJI
29.05.2017 Chairman
Mar 31, 2015
Dear Members,
The directors have pleasure in presenting the 62 nd Annual Report with
audited accounts for the year ended 31st March 2015. The summarised
financial results of the Company are given hereunder:
FINANCIAL RESULTS:
(Rs. in cr.)
Particulars Year ended Year ended
March 31,2015 March 31,2014
Revenue from Operations 2254.66 2215.48
Other Income 114.41 98.43
Total Revenue 2369.07 2313.91
Less: Total Expenses 1717.87 1667.28
Profit before tax 651.20 646.63
Profit after Tax 454.14 442.51
Surplus brought forward 137.70 107.95
Less: Transition provision for 4.02 -
Depreciation
Amount available for appropriation 587.82 550.46
Appropriations to:
- Statutory Reserve 90.83 88.50
- General Reserve 200.00 199.00
Dividend - Interim 50.00 -
Final (Proposed) 66.66 111.10
Dividend Tax 18.22 14.16
Surplus carried to balance sheet 162.11 137.70
CAPITAL RESERVE
During the year, your Company credited an amount of Rs.256.56 cr. to
the Capital Reserve which pertains to the sale of 17,37,012 equity
shares of the Company, held by SFL Shares Trust. The Company received
the proceeds, being the sole beneficiary of the Trust. These shares
accrued to the Trust on account of the merger of Lakshmi General
Finance Limited with the Company, in the year 2005.
DIVIDEND
Your Company paid an interim dividend of Rs.4.50 per share (45% on the
face value of Rs.10/-) in February 2015. Your directors are now pleased
to recommend a final dividend of Rs.6/- per share (60% on the face
value of Rs.10/-). This, together with the interim dividend, aggregates
to a total dividend of Rs.10.50 per share (105% on the face value of
Rs.10/-) for the financial year ended 31st March 2015, on the paid-up
capital of Rs.111.10 cr.
CORPORATE GOVERNANCE
* A detailed report on corporate governance, together with a
certificate from the Statutory Auditors, in compliance with Clause 49
of the Listing Agreement, is attached as part of this report vide
Annexure I.
* Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
During the year, the Company did not enter into any material
transaction with related parties, under Section 188 of the Companies
Act, 2013. All transactions entered into by the Company with the
related parties were in the ordinary course of business and on an arm''s
length basis. Form AOC-2, as required under Section 134 (3)(h) of the
Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is
attached as part of this report vide Annexure II (i). Further, the
Company''s policy on Related Party Transactions is
attached as part of this report vide Annexure II (ii), as required
under the Non-Banking Financial Companies - Corporate Governance
(Reserve Bank) Directions, 2015.
CORPORATE SOCIAL RESPONSIBILITY
Your Company along with its subsidiaries and associates has always
responded in a responsible manner to the growing needs of the society.
A number of enriching and enlivening activities that contribute to the
community in the areas of health, education, environment and
preservation of the country''s rich culture and heritage have been taken
up.
Annual Report on CSR Activities undertaken by the Company for the
Financial Year 2014-15, is annexed with this report vide Annexure III.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as required under Clause 55 of the
Listing Agreement is enclosed as part of this report vide Annexure IV.
SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act, 2013 and the rules
thereunder, the Company has appointed M/s Damodaran & Associates as the
Secretarial Auditor of the Company. Secretarial Audit Report as
provided by M/s. M. Damodaran and Associates is annexed to this Report
vide Annexure V.
REMUNERATION TO DIRECTORS & KMP
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is annexed vide
Annexure VI.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Based on the recommendations of the Nomination, Compensation and
Remuneration Committee, your Board of Directors have granted 14,250
stock options to its eligible employees, on 29.05.2015. The disclosure
required under SEBI (Share Based Employee Benefits) Regulations, 2014,
in this regard, is furnished vide Annexure VII.
EXTRACT OF ANNUAL RETURN
As required pursuant to Section 92 (3) of the Companies Act, 2013 and
Rule 12 (1) of the Companies (Management and Administration) Rules,
2014, an extract of Annual Return in MGT-9 is annexed as a part of this
report vide Annexure VIII.
RESOURCE MOBILISATION
a) Deposits
During the year, your Company mobilised fresh deposits aggregating to
Rs.414.35 cr. Renewal of deposits during the year amounted to Rs.629.81
cr. representing 84% of the matured deposits of Rs.742.36 cr. Deposits
outstanding at the year-end were at Rs.1924.72 cr. as against
Rs.1665.57 cr. in the previous year. The Net accretion for the
financial year was Rs.259.15 cr. which is the highest in the history
of your Company.
As at 31st March 2015, 3103 deposits amounting to Rs.17.63 cr. had
matured for payment and were due to be claimed or renewed. After close
follow-up, the figures are currently down to 2036 and Rs.10.56 cr.
respectively. Steps are continuously being taken to arrange for
repayment or renewal of these deposits. There has been no default in
repayment of deposits or payment of interest thereon during the year.
Investor Relation Services - Deposits continue to enjoy the ISO
9001:2008 certification from Bureau Veritas Certification (India)
Private Limited.
b) Term Funding
During the year, your Company raised term funding from Banks, Mutual
funds, Insurance companies and others in the form of non-convertible
debentures and term loans to the tune of Rs.3878 cr., across various
tenors.
c) Bank Finance
As part of the overall funding plan, your Company''s working capital
limits with Consortium banks were retained at Rs. 1800 cr. During the
year, your Company also issued several tranches of commercial paper
aggregating to Rs.8216 cr. The maximum amount outstanding at any time
was Rs.3891 cr. and the amount outstanding at the end of the year was
Rs.2314 cr.
d) Assets Securitised / Assigned
During the year, your Company raised resources to the extent of Rs.1323
cr. through securitisation and assignment of hypothecation loan
receivables.
CREDIT RATINGS
All the borrowings of the Company are rated. The short term borrowings
(including commercial paper) are rated "A1 " (very strong degree of
safety). Fixed Deposits are rated "AAA" (Highest Credit Quality). The
long term borrowings are rated "AA " (High Degree of Safety), with a
"Stable outlook" and are rated by ICRA, CRISIL and India Ratings.
OUTLOOK
The Central government has taken several initiatives during its first
year in office, notably the transparent auctioning of the coal blocks
and spectrum, the passage of the Insurance Bill, introduction of a new
Financial Arm in MUDRA BANK, (Micro Units Development and Refinance
Agency Bank) and steps to curb leakages in distribution of subsidies.
Along with initiatives announced in the Union Budget to boost
investment in infrastructure, these factors should provide a conducive
framework for economic growth. RBI, for its part, has reduced the
policy rates by 50 basis points (in two tranches of 25 basis points
each), since January 2015.
Banks should ideally transmit the recent rate reductions of RBI into
their lending rates, with a view to encourage credit offtake. However,
the worrying factor is the magnitude of bad loans that have accumulated
in the banking system. Based on the latest data available, NPAs and
restructured assets of PSU banks accounted for more than 12% of their
assets, whereas it was 4% for private sector banks. While this could
make them more risk averse, lack of economic growth would exert greater
pressure on their asset quality, with obvious consequences for credit
expansion.
The downside risks on the external front could come from renewed
economic turmoil in Europe and the reversal of QE by the Fed, which
could result in slowing FII flows or worse still, a reverse flow, which
would put the Rupee under heavy downward pressure, making it
prohibitive for Indian companies to access global money and rendering
crude oil imports more expensive. This in turn, would have implications
on the inflation front and therefore, on interest rates. Closer home,
uncertainty surrounding the timing, adequacy and spatial distribution
of the monsoon and revival of the investment cycle are the two major
concerns.
Given the above uncertain scenario, growth projections for the
automotive sector pose a few challenges. Sales of M&HCVs are
projected to grow at 8 to 10% in 2015-16, while LCV sales are expected
to grow marginally, by 2-4%. The Society of Indian Automobile
Manufacturers (SIAM) estimates a growth of 6 to 8% in the Passenger
car/Utility vehicle segment. Tractor sales are expected to remain flat,
at best, given the various stresses in rural India.
Against this backdrop, your Company will continue to explore profitable
business opportunities, given that competition is likely to be intense,
in a market that is not expected to grow at a rapid pace. As always,
preservation of asset quality will remain a key imperative, especially
in an environment where road transport operators'' cash flows continue
to be strained. Consequently, your Company''s growth outlook remains
muted, given the uncertainties in the macroeconomic environment, as
also the challenges facing the automotive sector.
INTERNAL AUDIT
As part of the effort to evaluate the effectiveness of the internal
control systems, your Company''s internal audit department reviews all
the control measures on a periodic basis and recommends improvements,
wherever appropriate. The internal audit department is manned by highly
qualified and experienced personnel. As required under the Companies
Act, 2013 an internal auditor had been appointed by the Board on the
recommendation of the Audit committee. The Internal Auditor reports
directly to the Audit Committee of the Board. The Audit Committee
regularly reviews the audit findings as well as the adequacy and
effectiveness of the internal control measures.
Additionally, an Information Security Assurance Service is also
provided by independent external professionals. Based on their
recommendations, the Company has implemented a number of
control measures both in operational and accounting related areas,
apart from information security related measures.
RISK MANAGEMENT
Your Company, being in the business of financing of commercial
vehicles, cars, other vehicles and equipment in the retail segment, has
to manage various risks. These risks include credit risk, liquidity
risk, interest rate risk and operational risk. The Risk Management
Committee and the Asset Liability Management Committee review and
monitor these risks at periodic intervals. The Company manages credit
risk through stringent credit norms established through several years
of experience in this line of business and continues to follow the time
tested practice of personally assessing every borrower, before
committing to a credit exposure. This process ensures that the
expertise in lending operations acquired by the Company over decades is
put to best use and acts to mitigate credit risks. Liquidity risk and
interest rate risk arising out of maturity mismatch of assets and
liabilities are managed through regular monitoring of the maturity
profiles. The Company monitors ALM periodically to mitigate the
liquidity risk. The Company also measures the interest rate risk by the
duration gap method.
Operational risks arising from inadequate or failed internal processes,
people and systems or from external events are adequately addressed by
the internal control systems and are continuously reviewed and
monitored by a dedicated team of people. Process improvements and
quality control are on-going activities and are built into the
employee''s training modules, as well.
HUMAN RESOURCES
Your Company believes that its greatest assets are its people and
Training is an investment in long term people development, for
organisational excellence. During the year under review, your Company
has taken several new initiatives to ensure that the knowledge and
wisdom gained over decades is handed down to the next generation of
employees. A well balanced mix of domain knowledge and behavioural
training was taken up towards talent transformation. These initiatives
have paid rich dividends in the form of a strong group of in- house
facilitators of domain knowledge and a highly motivated team of
employees geared to fulfilling the needs of your Company''s valued
customers.
INFORMATION TECHNOLOGY
Your Company has a State of the Art Data Centre catering not only to
its own needs but also those of its subsidiaries and associates with a
capacity of over 250 servers, managed by professionals providing 24/7
support, with over 99.99% uptime. The Data Centre is accredited for
ISO/IEC 27001:2013 by TUV Rheinland for Information Security Management
System. The Disaster Recovery Site for all critical applications is
hosted at a separate facility with near real-time data replication.
The Company has developed robust business applications on the Oracle
Technology platform, catering to various business verticals such as
Hire Purchase, Loans, Leasing and Deposits. For Financial Accounting
and Reporting, the Company has implemented Oracle Financials and
Hyperion.
The Company has taken several initiatives in developing mobile
applications including "Sundaram MCollect", an application designed to
process collections, which enables our Executives in the field to serve
our customers at their door step. Extensive MIS and Dashboards
developed in ''Project Sundaram'', the Company''s proprietary software
platform, serve as key decision support tools.
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 requirements of The Sexual Harassment of Women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints
Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy. No complaints were
received during the year 2014-15.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 (3) of the Companies
Act, 2013, the Consolidated Financial Statements, drawn up in
accordance with the applicable Accounting Standards, form part of the
Annual Report. A separate statement containing the salient features of
the financial statements of Subsidiaries, Associates and Joint Ventures
in Form AOC-I forms part of the Annual Report.
Further,
* The annual accounts of all the Subsidiary Companies have been posted
on your company''s website - www.sundaramfinance.in
* Annual accounts of the Subsidiary Companies and related detailed
information will be available for inspection by the members, at the
registered office of the Company and will also be made available to the
members upon request.
SUBSIDIARIES
* Sundaram BNP Paribas Home Finance Limited
The company approved loans aggregating to Rs.2097 cr. (Previous year
Rs.2648 cr.). Reflecting the sluggishness in the real estate sector,
disbursements were down 22%, at Rs.1939 cr. (PY Rs.2493 cr.). The
company earned a gross income of Rs.954 cr. (PY Rs.888 cr.) and
reported a profit after tax at Rs.146 cr. (PY Rs.151 cr.). the Profit
after tax of the current year is not comparable as there was a Deferred
Tax Liability on Special Reserve, introduced for the first time during
the financial year 2014-15 to the extent of Rs. 9.59 crore. The loan
portfolio under management as at 31st March 2015 stood at Rs.7486 cr.
as against Rs.7112 cr. in the previous year. The gross and net NPA
stood at 2.46% and 0.75% respectively as of 31.03.2015. The company
proposed a dividend of 35% for the year as against 40% during the
previous year.
* Sundaram Asset Management Company Limited
Sundaram Asset Management Company Limited registered a good
performance, earning a gross income of Rs.149.83 cr. as against
Rs.124.06 cr. in the previous year. Profit after tax at Rs.21.69 cr.
registered a growth of 42% over the previous year. The Average Assets
under Management of the Company were Rs.19511 cr. for the year 2014-15
as compared to Rs.15248 cr. in the previous year. The company
recommended a dividend of 30% for the year, on the increased paid-up
capital of Rs.20 cr.
* Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs.0.92 cr.
as against Rs.1.19 cr. in the previous year and reported a profit after
tax of Rs.0.39 cr. for the year, as against Rs.0.58 cr. in the previous
year. The company recommended a dividend of 500% for the year as
against 800% during the previous year.
* Sundaram Finance Distribution Limited (SFDL)
During the year, SFDL reported a gross income of Rs.10.95 cr. as
against Rs.13.04 cr. in the previous year. The profit after tax for the
year was at Rs.1.91 cr. as against Rs.2.17 cr. in the previous year.
The company proposed a dividend of 250% for the year as against 300%
during the previous year.
During the year, Sundaram Parekh Warehousing Services Limited, a wholly
owned subsidiary of Infreight Logistics Solutions Limited (Infreight)
which is a wholly owned subsidiary of SFDL, merged with Infreight,
under a Scheme of Amalgamation under Section 391 to 394 of the
Companies Act, 2013, effective 1st April 2014.
* LGF Services Limited
During the year, LGF Services Limited reported a gross income of
Rs.7.72 cr. as against Rs.7.53 cr. in the previous year. The profit
after tax for the year was at Rs.1.49 cr. as against Rs.1.51 cr. in
the previous year. The company proposed a dividend of 400% for the
year, as in the previous year.
* Sundaram Infotech Solutions Limited
The company earned total revenue of Rs.16.75 cr. as against Rs.19.47
cr. in the previous year. The loss after tax for the year was at
Rs.2.33 cr. as against profit after tax of Rs.0.90 cr. earned
in the previous year. The company has made good progress in
marketing of the next generation software solution for Lending
Companies, which has received encouraging response from the market. The
company has made deeper inroads into the Australian market and has also
set up an office in Sharjah, UAE to tap into the potential of the
Middle East market.
* Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited earned an income of Rs.22.02
cr. during the year, up 19% from Rs.18.54 cr. in the previous year. The
company reported a loss of Rs.9.46 cr. during the year as against
Rs.11.89 cr. in the previous year.
During the year, the company has made investments in software to
facilitate provision of back office services to various clients in the
Private Equity (PE) segment. The company has created a strong control
framework in PE, based on global best practices.
The company has also been awarded the International Organisation for
Standardisations (ISO) 9001 certification. With this, the company has
received three certifications, ISO 9001, ISO 27001 and International
Standards for Assurance Engagements (ISAE) 3402 underlining the
company''s commitment to quality and continuous improvement.
* Sundaram BPO India Limited
Sundaram BPO India Limited earned a total revenue of Rs.20.19 cr.
during the year as against Rs.21.06 cr. during the previous year. The
company reported a profit after tax of Rs.0.72 cr. during the year, as
against Rs.0.13 cr. in the previous year. During the year, a large
client exited by mutual consent on account of a new operational
strategy being implemented by them. However, the company was able to
generate additional business from existing clients and also improve its
margins. In 2015-16, the company has planned to expand its presence in
the areas of finance and accounting outsourcing and customer service
voice operations.
* Sundaram Business Services Limited (SBSL)
During the year, SBSL earned a revenue of Rs. 24.03 cr. as compared to
Rs.21.36 cr. in the previous year. However, the company''s performance
was impacted by adverse movement of Australian Dollar. The company
reported a loss of Rs.1.70 cr. during the year as against Rs.2.90 cr.
in the previous year.
JOINT VENTURES
* Royal Sundaram Alliance Insurance Company Ltd (Royal Sundaram)
Royal Sundaram reported an increase of 9% in Gross Written Premium
(GWP) at Rs.1569 cr. as compared to Rs.1437 cr. in the previous year.
Profit after tax was Rs.21.99 cr. during the year, as against Rs.68.24
cr. in the previous year. The profit margins were impacted due to
continued drop in the premium rates in both the retail and commercial
segments, due to severe competition.
During the year, your Company and RSA Group, UK, reached an agreement
whereby RSA has agreed to sell its entire 26% equity stake in Royal
Sundaram Alliance Insurance Company Limited (Royal Sundaram) to your
Company for a consideration of Rs.450 cr., subject to all regulatory
approvals. The Company currently holds 49.90% in Royal Sundaram and
the said acquisition would increase its holding to 75.90%.
* BNP Paribas Sundaram Global Securities Operations Private Limited
BNP Paribas Sundaram Global Securities Operations Private Limited
earned a total revenue of Rs.150.28 cr. during the year as against
Rs.124.79 cr. in the previous year. The company reported a profit after
tax of Rs.11.91 cr. during the year, as against Rs.9.78 cr. in the
previous year. The company has declared an interim dividend of 117%
for the year ended 31st March 2015 as against final dividend of 101%
for the previous year.
BOARD & AUDIT COMMITTEE
The details regarding number of board meetings held during the
financial year and composition of Audit Committee is furnished in the
Corporate Governance Report.
DIRECTORS
Sri S Viji and Sri S Ram retire by rotation and, being eligible, offer
themselves for re-election.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent
Director of the Company under Section 149 (7) of the Companies Act,
2013 that the Independent Directors of the Company meet with the
criteria of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that
of its committees and individual directors as required under Section
134(3) (p) of the Companies Act, 2013.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for re-appointment. A certificate from the Auditors that they
satisfy the conditions prescribed under the Companies Act, 2013 and the
Rules made thereunder (including satisfaction of criteria under Section
141 of the Companies Act, 2013), has been received from them.
INFORMATION AS PER SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013 READ
WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Your Company has no activity relating to conservation of energy or
technology absorption. During 2014-15, expenditure in foreign
currencies amounted to Rs.110.92 lakhs. Foreign Currency earnings
amounted to Rs.15.50 cr.
PERSONNEL
In accordance with the provisions of first proviso to Section 136 (1)
of the Companies Act, 2013, the Directors'' Report is being sent to all
the shareholders of the Company excluding the statement prescribed
under Rule 5 (2) & (3) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014. The said statement is available
for inspection by the Members at the Registered Office of the Company
during office hours till the date of the Annual General Meeting.
AWARDS AND RECOGNITION
Your Company has been listed as one of ''India''s Top 500 Companies 2015''
by Dun & Bradstreet Information Services India Pvt. Ltd.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year 2014-15, no significant and material Orders were passed
by the Regulators or Courts or Tribunals impacting the going concern
status and company''s operations in future.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial control and risk
management framework, with appropriate policies and procedures, to
ensure the highest standards of integrity and transparency in its
operations and a strong corporate governance structure, while
maintaining excellence in services to all its stakeholders. Appropriate
controls are in place to ensure: (a) the orderly and efficient conduct
of business, including adherence to policies, (b) safeguarding of
assets, (c) prevention and detection of frauds / errors, (d) accuracy
and completeness of the accounting records and (e) timely preparation
of reliable financial information.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
2. The directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit of
the Company for that period;
3. The directors had 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;
4. The directors had prepared the annual accounts on a going concern
basis;
5. The directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively; and
6. The directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation
extended to your Company by all the customers, depositors,
shareholders, bankers, mutual funds, automotive manufacturers and
vehicle dealers.
Your directors also place on record their appreciation of the tireless
efforts of Team Sundaram, a dedicated and loyal band of people who have
displayed unswerving commitment to their work in these challenging
times and helped the Company deliver good results.
For and on behalf of the Board
Chennai 600 002 S VIJI
29th May 2015 Chairman
Mar 31, 2013
The directors have pleasure in presenting the 60th Annual Report with
audited accounts for the year ended 31st March 2013. The summarised
financial results of the Company are given hereunder:
FINANCIAL RESULTS:
(Rs. in cr.)
Particulars Year ended Year ended
March 31, 2013 March 31, 2012
Revenue from Operations 2063.02 1698.71
Other Income 68.76 60.39
Total Revenue 2131.78 1759.10
Less: Total Expenses 1539.17 1246.95
Profit before Tax 592.61 512.15
Profit after Tax 410.11 355.45
Surplus brought forward 67.56 60.14
Amount available for appropriation 477.67 415.59
Appropriations have been made as under:
Transfers to:
- Statutory Reserve 82.02 71.10
- General Reserve 174.88 179.45
Dividend - Interim 50.00 41.67
Final (Proposed) 50.00 44.44
Dividend Tax 12.82 11.37
Surplus carried to balance sheet 107.95 67.56
477.67 415.59
DIVIDEND
Your Company paid an interim dividend of Rs. 4.50 per share (45% on the
face value of Rs. 10/-) in February 2013. Your directors are now
pleased to recommend a final dividend of Rs. 4.50 per share (45% on the
face value of Rs. 10/-). This, together with the interim dividend,
aggregates to a total dividend of Rs. 9/- per share (90% on the face
value of Rs. 10/-) for the financial year ended 31st March 2013, on the
enhanced paid-up capital of Rs. 111.10 cr., as a result of the bonus
issue in the ratio of 1:1, in December 2012.
CORPORATE GOVERNANCE
- A detailed report on corporate governance, together with a
certificate from the Statutory Auditors, in compliance with Clause 49
of the Listing Agreement, is attached as part of this report.
- Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, drawn up in accordance with the
applicable Accounting Standards, form part of the Annual Report.
In accordance with the general exemption granted by the Central
Government under Section 212(8) of the Companies Act, 1956, the Balance
Sheet, Statement of Profit and Loss, Report of the Board of Directors
and Report of the Auditors of the Subsidiary Companies, are not
attached to the Balance Sheet of your Company. The financial
information relating to all the Subsidiary Companies, in the aggregate,
has been disclosed in the consolidated financial statements, as
required. Further,
- The annual accounts of all the Subsidiary Companies have been
posted on your Company''s website - www.sundaramfinance.in.
- Annual accounts of the Subsidiary Companies and related detailed
information will be available for inspection by the members, at the
head offices of the Company and the Subsidiary Companies concerned and
will also be made available to the members upon request.
SUBSIDIARIES
- Sundaram BNP Paribas Home Finance Limited
The Company reported another year of excellent performance. The Company
approved loans aggregating to Rs. 2847 cr. as against Rs. 2248 cr. in
the previous year (PY), while disbursements at Rs. 2572 cr. (PY Rs.
1948 cr.), grew significantly by 32%. The Company earned a gross income
of Rs. 692 cr. (PY Rs. 485 cr.) and reported an impressive 35% growth
in profit after tax at Rs. 126.55 cr. (PY Rs. 93.73 cr.). The loan
portfolio as at 31st March 2013 stood at Rs. 5902 cr. as against Rs.
4226 cr. in the previous year. The gross and net NPA stood at 0.77%
and 0.23% respectively as of 31.03.2013, clearly one of the best in the
industry. The Company proposed a higher dividend of 35% for the year as
against 25% during the previous year.
- Sundaram Asset Management Company Limited
Sundaram Asset Management Company Limited earned a gross income of Rs.
118.30 cr. as against Rs. 105.10 cr. in the previous year and reported
a profit after tax of Rs. 16.86 cr. as against Rs. 11.00 cr. in the
previous year. The Average Assets under Management of the Company were
Rs. 13574 cr. for the year 2012-13 as compared to Rs. 14226 cr. in the
previous year and the investor base stood at 1.63 million. The Company
recommended a dividend of 30% for the year as against 20% during the
previous year.
- Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs. 1.27 cr.
as against Rs. 1.34 cr. in the previous year and reported a profit
after tax of Rs. 0.40 cr. for the year, as against Rs. 0.46 cr. in the
previous year. The Company recommended a dividend of800% for the year,
in line with the previous year.
- Sundaram Finance Distribution Limited (SFDL)
During the year, SFDL earned revenue from operations of Rs. 12.39 cr.
as against Rs. 7.56 cr. in the previous year. The profit after tax for
the year was at Rs. 0.73 cr. as against Rs. 2.36 cr. in the previous
year. The Company recommended a dividend of 100% for the year.
- LGF Services Limited
During the year, LGF Services Limited earned revenue from operations of
Rs. 6.46 cr. as against Rs. 5.51 cr. in the previous year. The profit
after tax for the year was at Rs. 0.79 cr. as against Rs. 1.72 cr. in
the previous year. The Company recommended a dividend of 200% for the
year.
- Sundaram Infotech Solutions Limited (SISL)
The Company earned total revenue of Rs. 32.79 cr. as against Rs. 25.43
cr. in the previous year. The profit after tax for the year was at Rs.
6.54 cr. as against Rs. 0.18 cr. in the previous year. The Company has
made significant progress towards developing the next generation
software solution for Lending Companies. The Company has made deeper
inroads into the Australian market and has also set up an office in
Sharjah, UAE to tap into the potential of the Middle East market.
- Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited earned an income of Rs.
14.57 cr. during the year, which was higher by 21.59% as against Rs.
11.98 cr. in the previous year. The Company reported a loss of Rs.
13.78 cr. during the year as against Rs. 14.51 cr. in the previous
year.
During the year, the Company has secured the ISO 27001:2005
certification of its Information Security Management System covering
the entire gamut of services offered. The Company achieved an overall
quality processing level of above 99% which is a benchmark in the
industry.
- Infreight Logistics Solutions Limited (Infreight)
Consequent to the management''s decision to exit the logistics
business, contracts which expired were not renewed. Therefore, the
revenue of Infreight during the year dropped sharply to Rs. 0.89 cr. as
against Rs. 8.69 cr. in the previous year. The Company incurred a loss
of Rs. 0.05 cr. during the year as against profit of Rs. 1.77 cr.
earned during the previous year.
- Sundaram BPO India Limited
In order to centralise the domestic BPO operations under one umbrella,
Sundaram BPO India Limited was incorporated as a subsidiary of your
Company on 7th August 2012.
Sundaram Business Services Limited moved its India- centric business to
Sundaram BPO India Limited with effect from 1st October 2012.
Further, the subsidiaries which were engaged in India- centric
business, Professional Management Consultants Limited and Caltec
Servicez Private Limited, were merged with Sundaram BPO India Limited
with effect from 1st October 2012, pursuant to the Order passed by the
Honourable High Court of Judicature at Madras on 26th April 2013.
The Company earned a gross income of Rs. 11.07 cr. for the period 7th
August 2012 to 31st March 2013 and posted profit before tax of Rs. 0.14
cr.
- Sundaram Business Services Limited (SBSL)
During the year, SBSL earned revenue of Rs. 25.29 cr. as compared to
Rs. 27.15 cr. in the previous year. The drop in revenue was on account
of the transfer of all the domestic business of the Company to Sundaram
BPO India Limited effective 1st October 2012.
As against a profit before tax of Rs. 1.06 cr. last year, SBSL has
posted a loss Rs. 0.70 cr. before taxes. The loss was occasioned by
increased investments towards business development in new markets which
are expected to help the Company grow in the coming years.
- Professional Management Consultants Limited (PMC)
During the period ended 30th September 2012, PMC earned revenues of Rs.
1.91 cr. as compared to Rs. 6.13 cr. for the financial year ended 31st
March 2012. The Company was merged with Sundaram BPO India Limited
with effect from 1st October 2012, pursuant to the Order passed by the
Honourable High Court of Judicature at Madras on 26th April 2013.
- Caltec Servicez Private Limited (Caltec)
During the period ended 30th September 2012, Caltec earned revenues of
Rs. 2.15 cr. as compared to Rs. 4.98 cr. for the financial year ended
31st March 2012. The Company was merged with Sundaram BPO India Limited
with effect from 1st October 2012, pursuant to the Order passed by the
Honourable High Court of Judicature at Madras on 26th April 2013.
- Other Subsidiaries
The financials of Sundaram Parekh Warehousing Services Limited,
Sundaram Insurance Broking Services Limited and Sundaram Asset
Management Singapore Pte. Limited which have not yet commenced their
core business operations are furnished in the statement giving
financial information of subsidiary companies.
JOINT VENTURES
- Royal Sundaram Alliance Insurance Company Ltd. (Royal Sundaram)
Royal Sundaram reported an impressive profit after tax of Rs. 54.67 cr.
during the year. The Gross Written Premium (GWP) was Rs. 1560 cr. as
compared to Rs. 1479.79 cr. in the previous year. The Company has been
able to balance prudent selection and pricing of risks resulting in
focus on profitable growth. During the year, the shareholders of Royal
Sundaram infused additional capital of Rs. 40 cr. taking the total
paid-up capital of the Company to Rs. 315 cr.
- BNP Paribas Sundaram Global Securities Operations Private Limited
BNP Paribas Sundaram Global Securities Operations Private Limited
earned total revenue of Rs. 108.28 cr. during the year as against Rs.
76.95 cr. in the previous year. The Company reported a profit after tax
of Rs. 8.87 cr. during the year, as against Rs. 8.54 cr. in the
previous year. The Company recommended a dividend of 91% for the year
ended 31st March 2013 as against 89% for the previous year.
DIRECTORS
Sri S Ram, Sri Srinivas Acharya and Sri T T Srinivasaraghavan retire by
rotation and, being eligible, offer themselves for re-election.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for re-appointment. A certificate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
INFORMATION AS PER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. During 2012-13, expenditure in foreign
currencies amounted to Rs. 4.54 cr. on account of interest and other
charges. Foreign Currency earnings amounted to Rs. 13.31 cr.
PERSONNEL
In accordance with the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, the Directors'' Report is being sent to all the
shareholders of the Company excluding the annexure prescribed under
Section 217 (2A) of the Companies Act. The said annexure is available
for inspection by the Members at the Registered Office of the Company
during office hours till the date of the Annual General Meeting.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Based on the recommendations of the Compensation and Remuneration
Committee, your Board of Directors have granted 18,000 stock options to
its eligible employees, on 29.05.2013. The disclosure required under
SEBI Guidelines, in this regard, is furnished in the Annexure.
BUSINESS RESPONSIBILITY REPORT
SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated August 13, 2012, has
mandated the top 100 listed entities, based on market capitalisation at
BSE and NSE, to include Business Responsibility Report (BRR) as part of
the Annual Report, describing the initiatives taken by them from
Environmental, Social and Governance perspectives.
Though not mandatorily required to present the BRR, your Company has,
as a measure of good governance, presented it as part of this report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company along with its subsidiaries and associates (Sundaram
Finance Group) is involved in a number of community focused activities
in the areas of health, education and preservation of the country''s
rich culture and heritage.
Healthcare
In the healthcare sector, the Group has established the Sundaram
Medical Foundation, a non-profit Trust that runs the Dr. Rangarajan
Memorial Hospital. The primary objective of this community centric
hospital is to deliver affordable, high quality health care services.
Within a span of almost two decades, the Sundaram Medical Foundation
has established itself as a centre for clinical and academic
excellence. It occupies an eminent position in the healthcare sector of
India as a model of cost-conscious, affordable, healthcare delivery and
corporate involvement in social projects.
For the past 14 years, the Group has been associated with the Hindu
Mission Hospital in Tambaram, Chennai that caters to the medical needs
of under-served rural communities. It regularly conducts free rural
mobile clinics with the help of its 400 medical and paramedical staff.
Cancer, schizophrenia, kidney and ophthalmic care are some of the other
health care causes that the Group supports through organisations such
as the Cancer Institute, Cancer Relief Society, Schizophrenia Research
Foundation, Tanker Foundation and Sankara Nethralaya.
Education
The Group has been supporting the activities of several schools,
colleges, Universities and NGOs, such as the The Kuppuswami Sastri
Research Institute, Central Chinmaya Mission Trust, Vidya Mandir,
Ramakrishna Mission Students Home, Swami Vivekananda Rural Development
Society, Laxmi Charities, Kuruvilla Jacob Memorial Educational Trust,
Madras School of Economics, Vivekananda College, SASTRA University and
the University of Madras.
Culture, Heritage and Children''s Development
Your Company is involved in a wide spectrum of activities aimed at
encouraging children''s participation in art and craft, music and
personality development, through year round programmes. The Company is
also closely involved with the ''Sundaram Finance Mylapore
Festival'', a popular annual festival in Chennai that showcases folk
art, music and dance, again with emphasis on children.
Environment
Your Company was one of the earliest to adopt a public park, the
Nageswara Rao Park in Mylapore, Chennai. The upkeep and maintenance of
the park have come in for wide appreciation from the media and local
community, alike.
Your Company initiated the Solar Energy Project in 2011 with a view to
participate in the development of renewable energy, which is a pressing
need for the country. Your Company has taken up this initiative in
several branches across the country, as well as the Head Office at
Chennai. The installed capacity of Solar energy as at 31st March was
110 Kv and plans are afoot to add to this in the current year.
Sundaram Finance Group has adopted an eco-friendly e-waste management
and disposal process for all its electrical and electronic assets in
order to nurture the spirit of a Pollution- free Green World.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed;
2. They have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
3. They have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
4. They have prepared the annual accounts on a going- concern basis.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co- operation
extended to your Company by all the customers, depositors,
shareholders, bankers, mutual funds, automotive manufacturers and
vehicle dealers.
Your directors also place on record their appreciation of the tireless
efforts of Team Sundaram, a dedicated and loyal band of people who have
displayed unswerving commitment to their work in these challenging
times and helped the Company deliver strong results.
For and on behalf of the Board
Chennai 600 002 S VIJI
29th May 2013 Chairman
Mar 31, 2012
The directors have pleasure in presenting the 59th Annual Report with
audited accounts for the year ended 31st March 2012. The summarised
financial results of the Company are given hereunder:
FINANCIAL RESULTS:
(Rs in Cr.)
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Revenue from Operations 1701.43 1370.17
Other Income 60.45 80.24
Total Revenue 1761.88 1450.41
Less: Total Expenses 1249.73 1020.96
Profit before Tax 512.15 429.45
Profit after Tax 355.45 295.23
Surplus brought forward 60.14 61.02
Amount available for appropriation 415.59 356.25
Appropriations have been made as under:
Transfers to:
- Statutory Reserve 71.10 59.10
- General Reserve 179.45 154.79
Dividend - Interim 41.67 38.89
Final (Proposed) 44.44 38.89
Dividend Tax 11.37 4.45
Surplus carried to balance sheet 67.56 60.13
415.59 356.25
DIVIDEND
Your Company paid an interim dividend of Rs 7.50/- per share (75% on the
face value of Rs 10/-) in February 2012. Your directors are now pleased
to recommend a final dividend of Rs 8/- per share (80% on the face value
of Rs 10/-). This, together with the interim dividend, aggregates to a
total dividend of Rs 15.50 per share (155% on the face value of Rs 10/-)
for the financial year ended 31st March 2012, on the paid-up capital of
Rs 55.55 cr.
CORPORATE GOVERNANCE
- A detailed report on corporate governance, together with a
certificate from the Statutory Auditors, in compliance with Clause 49
of the Listing Agreement, is attached as part of this report.
- Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, drawn up in accordance with the
applicable Accounting Standards, form part of the Annual Report.
In accordance with the general exemption granted by the Central
Government under Section 212(8) of the Companies Act, 1956 in February
2011, the Balance Sheet, Profit and Loss Statement, Report of the Board
of Directors and Report of the Auditors of the Subsidiary Companies,
are not attached to the Balance Sheet of your Company. The financial
information relating to all the Subsidiary Companies, in the aggregate,
has been disclosed in the consolidated financial statements, as
required. Further,
- The annual accounts of all the Subsidiary Companies have been
posted by your Company on its website - www. sundaramfinance.in.
- Annual accounts of the Subsidiary Companies and related detailed
information will be available for inspection by the members, at the
head offices of the Company and the Subsidiary Companies concerned and
will also be made available to the members upon request.
SUBSIDIARIES
- Sundaram BNP Paribas Home Finance Limited
The company, approved loans aggregating to Rs 2248 cr. as against Rs
1447 cr. in the previous year (PY), while disbursements at Rs 1948 cr.
(PY Rs 1207 cr.), grew significantly by 61%. The company earned a gross
income of Rs 495 cr. (PY Rs 308 cr.) and reported an impressive 100%
growth
in profit after tax at Rs 93.73 cr. (PY Rs 47.68 cr.). The loan portfolio
as at 31st March 2012 stood at Rs 4241 cr. as against Rs 2940 cr. in the
previous year. The gross and net NPA stood at 0.31% and 0.06%
respectively as of 31.03.12, clearly one of the best in the industry.
The company proposed a higher dividend of 25% for the year as against
15% during the previous year.
- Sundaram Asset Management Company Limited.
The Average Assets under Management (AUM) of Sundaram Asset Management
Company Ltd. were Rs 14226 cr. for the year 2011-12 as compared to Rs
13946 cr. in the previous year. The investor base of Sundaram Asset
Management Company Limited stands at 1.99 million.
Sundaram Asset Management Company Limited earned a gross income of Rs
105.10 cr. as against Rs 122.40 cr. in the previous year. Reflecting the
volatility in the stock market, the company reported a profit after tax
of Rs 11.00 cr. as against Rs 13.36 cr. in the previous year. The
company recommended a dividend of 20% for the year as against 25%
during the previous year.
- Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs 133.92
lakhs as against Rs 129.18 lakhs in the previous year and reported a
profit after tax of Rs 45.81 lakhs for the year, as against Rs 41.01
lakhs in the previous year. The company recommended a dividend of 800%
for the year, in line with the previous year.
- Sundaram Finance Distribution Limited (SFDL)
During the year, SFDL earned revenue from operations of Rs 7.56 cr. as
against Rs 7.79 cr. in the previous year. The profit after tax for the
year was at Rs 2.36 cr. as against Rs 54.33 cr. (which included profit on
sale of shares of Rs 50.15 cr.) in the previous year. The company
recommended a dividend of 250% for the year as against 7770% during the
previous year.
- LGF Services Limited
During the year, LGF Services Limited earned revenue from operations of
Rs 5.51 cr. as against Rs 4.95 cr. in the previous year. The profit after
tax for the year was at Rs 1.72 cr. as against Rs 1.92 cr. in the
previous year. The company recommended a dividend of 500% for the year,
in line with the previous year.
- Sundaram Infotech Solutions Limited (SISL)
The company earned total revenue of Rs 25.43 cr. as against Rs 21.25 cr.
in the previous year. The profit after tax for the year was at Rs 0.18
cr. as against Rs 0.83 cr. in the previous year.
The company added 14 new clients during the year and made deeper
inroads into the Australian market. During the year, the company made
significant progress towards developing the next generation software
solution for Lending Companies.
- Sundaram Business Services Limited (SBSL)
During the year, SBSL's revenue increased to Rs 27.15 cr. as compared
to Rs 22.89 cr. in the previous year. The continued focus on cost
efficiency and better capacity utilization has resulted in SBSL making
a profit of Rs 1 cr. during the year as against a net loss of Rs 1.51 cr.
during the previous year. Initiatives are underway to grow the top line
through new verticals like mortgage processing, Equity Research and
financial planning back office. SBSL is also exploring opportunities in
other geographies and is working towards building a robust platform for
future growth.
- Professional Management Consultants Limited (PMC)
During the year, PMC earned revenues of Rs 6.13 cr. as compared to Rs
4.84 cr. in the previous year. Some of PMC's transaction processing
clients have moved out during the year due to a scaling down of their
operations and this is expected to adversely impact the revenues of PMC
for the coming year. PMC has ended the year with a loss of Rs 2.68 cr.
as against a net profit of Rs 0.02 cr. in the previous year. The higher
losses were largely on account of set up costs incurred for the call
centre business, as PMC had established new delivery centres for
handling voice processes. PMC is working on growing top line,
surrendering surplus capacity and on improving efficiencies, to address
the loss.
- Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited successfully completed the
second and final process of migration in relation to the balance
schemes of Sundaram Asset Management Company Limited from its existing
service provider and the operations in respect of those schemes went
live with effect from 6th June 2011. During the year, the company
managed various new schemes and New Fund Offers (NFO). The company
earned an income of Rs 11.98 cr. during the year which was higher by
228% as against Rs 3.66 cr. in the previous year. The company reported a
loss of Rs 14.51 cr. during the year as against Rs 17.02 cr. in the
previous year.
- Infreight Logistics Solutions Limited (Infreight)
The revenue of Infreight during the year was Rs 8.69 cr. as against Rs
19.16 cr. in the previous year. Profit for the year was at Rs 1.77 cr.
as against loss of Rs 1.27 cr. in the previous year.
Infreight became a wholly-owned subsidiary of SFDL and therefore of
your Company, consequent to the acquisition of the balance 21.41% stake
by SFDL from the promoters of Infreight.
During the year, the transition of contracts relating to select
transportation clients was completed and the consideration received was
utilised for the purpose of repaying loans to Bank as well as
inter-corporate loans taken to meet the working capital requirements of
the company.
- Sundaram Parekh Warehousing Services Limited
The company was incorporated in August 2010 with the objective of
providing full fledged high-end warehousing services across the
country. This year, in view of the market not being very conducive, the
company has stayed away from taking on any large warehousing services.
On the other hand, the company recorded a modest turnover from the
transportation segment, to the tune of Rs 0.38 cr. and with a profit of
Rs 0.04 cr.
- Sundaram Insurance Broking Services Limited
Sundaram Insurance Broking Services Limited would commence business in
due course after getting necessary regulatory approvals.
- Caltec Servicez Private Limited (Caltec)
During the year, SFDL acquired 51% stake in Caltec Servicez Private
Limited, Mumbai. Consequent to the said acquisition, Caltec became a
subsidiary of SFDL and therefore of your Company with effect from 31st
October 2011.
Caltec is engaged in providing call centre and other related solutions.
The company's revenue for the year was Rs 4.97 cr. as against Rs 6.74
cr. in the previous year. The fall in revenue by 25% from previous year
was primarily due to drop in volume from few existing clients and the
loss of some clients. Operations during the year resulted in net loss
of Rs 1.26 lakhs as against net profit of Rs 53.88 lakhs in the previous
year. Several initiatives are being taken to increase revenues and put
Caltec on the path to sustained profitability.
JOINT VENTURES
- Royal Sundaram Alliance Insurance Company Ltd (Royal Sundaram)
Royal Sundaram posted a top-line growth of 29%, outpacing the industry
growth, with a Gross Written Premium (GWP) of Rs 1479.79 cr. during the
year, as compared to the GWP of Rs 1143.99 cr. in the previous year.
During the year, IRDA issued guidelines relating to the methodology of
absorption of the past losses relating to the third party motor pool.
Insurance companies were provided with an option to either fully absorb
the prior year losses as per the loss ratios indicated by the Regulator
in one go or absorb the entire losses of 2007-08 and 2008-09 fully in
their books and absorb 1/3rd of the losses in respect of the years
2009-10, 2010-11 and 2011-12. The balance 2/3rd was permitted to be
amortised and absorbed over the next two financial years.
Based on the above Circular of IRDA, Royal Sundaram decided to absorb
as much of the losses as possible, during the current year itself.
Accordingly, the company has provided for a higher amount of Rs 222.49
cr. towards third party Motor Pool losses, leaving a sum of Rs 76.29 cr.
to be absorbed in the next two financial years. Hence, after making
provision for tax and motor pool losses, the company reported a profit
of Rs 22 lakhs for the year as against loss of Rs 20.1 cr. in the
previous year.
- BNP Paribas Sundaram Global Securities Operations Private Limited
BNP Paribas Sundaram Global Securities Operations Private Limited
earned total revenue of Rs 76.95 cr. during the year as against Rs 53.31
cr. in the previous year. The company reported a profit after tax of Rs
8.54 cr. during the year, as against Rs 6.42 cr. in the previous year.
The company recommended a dividend of 89% for the year ended 31st March
2012 as against 67% for the previous year.
DIRECTORS
Your Board of Directors has re-appointed Sri T.T. Srinivasaraghavan as
Managing Director for a further period of 5 years with effect from 1st
April 2013.
Sri S Viji, Sri S Prasad and Sri Aroon Raman retire by rotation and,
being eligible, offer themselves for re-election.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for re-appointment. A certificate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
INFORMATION AS PER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. During 2011-12, expenditure in foreign
currencies amounted to Rs 10.00 cr. on account of interest and other
charges. Foreign Currency earnings amounted to Rs 3.76 cr.
PERSONNEL
In accordance with the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, the Directors' Report is being sent to all the
shareholders of the Company excluding the annexure prescribed under
Section 217(2A) of the Companies Act. The said annexure is available
for inspection by the Members at the Registered Office of the Company
during office hours till the date of the Annual General Meeting.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Your Board of Directors, based on the recommendations of the
Compensation and Remuneration Committee, granted 16,750 stock options
to its eligible employees, on 28.05.2012. The disclosure required under
SEBI Guidelines, in this regard, is furnished in the Annexure.
DIRECTORS' RESPONSIBILITY STATEMENT
Your directors confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed;
2. They have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
3. They have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
4. They have prepared the annual accounts on a going-concern basis.
CORPORATE SOCIAL RESPONSIBILITY
In giving back to society, the Sundaram Finance Group is committed to a
number of community focused activities. These activities are spread
over different areas such as health, education, environment, promotion
of the country's rich culture and sports. Each one of the programmes or
projects that the Group is involved in, reflects the commitment,
concern, and care that it always has for society.
Healthcare
Your Company has been closely involved with the Sundaram Medical
Foundation, a non-profit Trust that runs the Dr. Rangarajan Memorial
Hospital, in Chennai, which has become a centre for clinical and
academic excellence. The primary objective of this community centric
hospital is to deliver affordable, high quality health care services.
The hospital lays great emphasis on maintaining quality standards.
Amongst the many ratings it has received, is the H-1 rating by ICRA for
best quality healthcare in the general hospital - medium size category.
While the Sundaram Medical Foundation caters mostly to the health needs
of people living in the city, the Group has also been associated with
the Hindu Mission Hospital, Chennai to take health care to the rural
communities. Your Company also supports other healthcare causes such as
cancer, schizophrenia, kidney and ophthalmic care.
Education
In its continuous effort to spread knowledge and education amongst
children and youth the Sundaram Finance Group has been actively
supporting several schools, colleges, Universities and NGOs. Laxmi
Charities, an educational charitable institution established 38 years
ago, assists meritorious students from the lower income groups to
pursue higher education. Each year about 1500 students, predominantly
college goers are provided assistance.
Environment, Heritage, Culture, Children's Development and Sports
Your Company is also involved in a wide spectrum of activities ranging
from the upkeep and maintenance of a public park in the heart of
Chennai and ecology awareness campaigns, to a host of activities aimed
at encouraging children's participation in art and craft, music and
personality development, through year round programmes. The Group is
also closely involved with a popular annual festival that showcases
folk art, music and dance, again with emphasis on children and an
All-India Veterans Tennis tournament. It is also the author of a new
charitable sports initiative called 'Mylapore Sports Trust' to nurture
young talent in tennis, shuttle, table tennis, and snooker.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation
extended to your company by all the customers, depositors,
shareholders, bankers, mutual funds, automotive manufacturers and
vehicle dealers.
For nearly six decades, your company has grown on the strong foundation
of a set of values that we call the 'Sundaram Way'. It is these
values that have been our anchor in difficult times and our beacon when
we have forged ahead on the path to growth. This would not have been
possible without the complete dedication and unswerving commitment
displayed by the employees of the Company, thus enabling it to report a
strong performance during the year.
For and on behalf of the Board
Chennai 600 002 S VIJI
28th May, 2012 Chairman
Mar 31, 2011
The directors have pleasure in presenting the 58th Annual Report with
audited accounts for the year ended 31st March 2011. The summarised
financial results of the Company are given hereunder:
FINANCIAL RESULTS:
(Rs. in Cr.)
Particulars Year ended Year ended
March 31, 2011 March 31, 2010
Income from Operations 1370.78 1204.15
Profit on Sale of Shares à 25.39
Other Income 79.63 41.42
Total Income 1450.41 1270.96
Less: Total Expenditure 1020.04 947.49
Profit before Tax 430.37 323.47
Profit after Tax 295.23 226.75
Surplus brought forward 61.02 41.96
Transfer from Special Reserve à 76.00
Amount available for appropriation 356.25 344.71
Appropriations have been made
as under: Transfers to:
à Statutory Reserve 59.10 45.40
à General Reserve 154.79 175.00
Dividend à Interim 38.89 33.33
Final (Proposed) 38.89 22.22
Dividend Tax 4.45 7.74
Surplus carried to balance sheet 60.13 61.02
356.25 344.71
DIVIDEND
Your Company paid a tax-free interim dividend of Rs. 7/- per share (70%
on the face value of Rs. 10/-). Your directors are now pleased to
recommend a final dividend of Rs. 7/- per share (70% on the face value
of Rs. 10/-). This, together with the interim dividend, aggregates to a
total dividend of Rs. 14/- per share (140% on the face value of Rs.
10/-) for the financial year ended 31st March 2011, on the paid-up
capital of Rs. 55.55 cr.
CORPORATE GOVERNANCE
- A detailed report on corporate governance together with a certificate
from the Statutory Auditors, in compliance with Clause 49 of the
Listing Agreement, is attached as part of this report.
- Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, drawn up in accordance with the
applicable Accounting Standards, form part of the Annual Report.
In accordance with the general exemption granted by the Central
Government under Section 212(8) of the Companies Act, 1956 in February
2 011, the Balance Sheet, Profit and Loss Account, Report of the Board
of Directors and Report of the Auditors of the Subsidiary Companies,
are not attached to the Balance Sheet of your Company. The financial
information relating to all the Subsidiary Companies, in the aggregate,
has been disclosed in the consolidated financial statements, as
required. Further,
- The annual accounts of all the Subsidiary Companies have been posted
by your Company on its website - www.sundaramfinance.in.
- Annual accounts of the Subsidiary Companies and related detailed
information will be available for inspection by the members, at the
head offices of the Company and the Subsidiary Companies concerned and
will also be made available to the members upon request.
SUBSIDIARIES
- Sundaram BNP Paribas Home Finance Limited
The company, approved loans aggregating to Rs. 1496 cr. as against Rs.
915 cr. in the Previous Year (PY), while disbursements at Rs. 1211 cr.
(PY Rs. 743 cr), grew significantly by 63%. The company earned a gross
income of Rs. 308 cr. (PY Rs. 236 cr.) and reported an impressive 72%
growth in profit after tax at Rs. 47.68 cr. (PY Rs. 27.72 cr.). The
loan portfolio as at 31st March 2011 stood at Rs. 2653 cr. as against
Rs. 1981 cr. in the previous year. The gross and net NPA stood at 0.29%
and 0.09% respectively as of 31.03.11, clearly one of the best in the
industry. The company proposed a higher dividend of 15% for the year as
against 10% during the previous year.
- Sundaram Asset Management Company Limited
Sundaram BNP Paribas Asset Management Company Limited and Sundaram BNP
Paribas Trustee Company Limited became wholly owned subsidiaries of
your company from October 2010, consequent to the acquisition of 49.90%
equity shares held by the joint venture partner, BNP Paribas Asset
Management, France in these companies. The names of the companies were
thereafter changed to Sundaram Asset Management Company Limited and
Sundaram Trustee Company Limited respectively.
The Average Assets under Management (AUM) of Sundaram Asset Management
Company Ltd. were Rs. 13946 cr. for the year 2010-11 as compared to Rs.
13878 cr. in the previous year. The investor base of Sundaram Asset
Management Company Limited stands at 2.22 million.
Sundaram Asset Management Company Limited earned a gross income ofRs.
122.40 cr. as against Rs. 111.83 cr. in the previous year. Reflecting
the volatility in the stock market and several
regulatory changes, the company reported a profit after tax ofRs. 13.36
cr. as against Rs. 20.84 cr. in the previous year. The company
recommended a dividend of 25% for the year as against 40% during the
previous year.
- Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs. 129.18
lakhs as against Rs. 124.10 lakhs in the previous year and reported a
profit after tax of Rs. 40.90 lakhs for the year, as against Rs. 42.15
lakhs in the previous year. The company recommended a higher dividend
of 800% for the year as against 600% during the previous year.
- Sundaram Finance Distribution Limited (SFDL)
SFDLs income from operations at Rs. 7.79 cr. (PY Rs. 5.61 cr) grew by
39% over the previous year. During the year, SFDL divested its holdings
in Credit Analysis and Research Limited (CARE), resulting in a profit
of Rs. 50.15 cr. (net of tax outgo). Consequently, the profit after
tax for the year was higher at Rs. 54.33 cr as against Rs. 1.97 cr. in
the previous year.
During February 2011, SFDL paid a Special Interim Dividend of 7770%
which was treated as final dividend for the year as against 225% paid
during the previous year.
- LGF Services Limited
During the year, LGF Services Limited earned an income from operations
of Rs. 4.95 cr. as against Rs. 5.59 cr. in the previous year. The
profit after tax for the year was higher at Rs. 1.92 cr. as against Rs.
1.83 cr. in the previous year. The company recommended a dividend of
500% for the year, in line with the previous year.
- Sundaram Infotech Solutions Limited
The company earned a gross income of Rs. 21.22 cr, as against Rs. 18.82
cr. in the previous year. The profit after tax for the year was at Rs.
0.83 cr. as against Rs. 1.31 cr. in the previous year.
- Sundaram Business Services Limited (SBSL)
During the year, SBSL earned a gross income of Rs. 22.82 cr, as against
Rs. 19.91 cr. in the previous year. The company reported
a loss of Rs. 1.51 cr. as against Rs. 3.11 cr. in the previous year.
The company remains focused on the Banking, Financial Services and
Insurance segments and the Accounting and Payroll horizontals. The
company has embarked on further business development efforts in
Australia and expects to make further progress during 2011-12.
- Professional Management Consultants Limited (PMC)
During the year, PMC earned a gross income of Rs. 4.83 cr. as against
Rs. 4.87 cr. in the previous year. The company enforced strict cost
control which resulted in profit of Rs. 2.38 lakhs as against loss of
Rs. 68.98 lakhs in the previous year. The company has stepped up its
business development efforts and expects to make further progress
during the year 2011-12.
- Sundaram BNP Paribas Fund Services Limited
Sundaram BNP Paribas Fund Services Limited successfully completed the
process of migration in relation to a few schemes of Sundaram Asset
Management Company Limited from its existing service provider and the
operations in respect of those schemes went live with effect from 6th
December 2010. The company handled 24 New Fund Offers aggregating to
Rs. 1755.21 cr. from 32,436 investors. The company earned an income of
Rs. 3.66 cr. during the year as against Rs. 1.13 cr. for the period
ended October 2009 to March 2010. The company is servicing 92 schemes
amounting to Rs. 3393 cr. in assets. The company reported a loss of
Rs. 17.02 cr. during the year as against Rs. 2.22 cr. for the period
ended October 2009 to March 2010.
- Infreight Logistics Solutions Limited (Infreight)
During the year, Infreight earned a gross income of Rs. 19.16 cr. as
against Rs. 17.26 cr. in the previous year. The company continued its
efforts to streamline its business operations to further increase the
productivity and reduce operating loss. The efforts yielded
satisfactory results. Loss for the year was at Rs. 1.27 cr. as against
Rs. 2.07 cr. in the previous year.
The company has since transitioned contracts relating to select
transportation clients for a consideration of Rs. 4.75 cr, which was
used for settling a major portion of their borrowings which
would reduce the interest burden and strengthen the financials of the
company.
- Sundaram Parekh Warehousing Services Limited Sundaram Parekh
Warehousing Services Limited was incorporated in August 2010 by
Infreight Logistics Solutions Limited as its subsidiary with 51%
shareholding and Parekh Integrated Services Pvt. Ltd., holding the
balance with the objective of providing full fledged high-end
warehousing services across the country. Parekh Integrated Services
Pvt. Ltd. is one of the largest distribution and logistics company
catering to specialised industry like pharmaceuticals, which will make
available its expertise in operating warehousing facilities across the
country. The company proposes to take on lease warehousing facilities
at different locations and is expected to become operational during the
financial year 2011-12.
- Sundaram Insurance Broking Services Limited
Sundaram Insurance Broking Services Limited was incorporated as a
subsidiary of your Company on 15th November 2010 to provide insurance
broking services. The company is yet to commence its operations.
JOINT VENTURES
- Royal Sundaram Alliance Insurance Company Ltd (Royal Sundaram)
Royal Sundaram posted a top-line growth of 25 percent with a Gross
Written Premium (GWP) of Rs. 1143.99 cr, during the year, as compared
to the GWP of Rs. 913.11 cr, in the previous year. The Company has also
recorded a healthy Profit before Tax (before motor pool loss) of Rs.
60.93 cr, registering a growth of 18 percent over the last year.
However, in March 2011 IRDA announced a steep increase in loss ratios
for the third party motor pool, requiring the company to make a higher
provision of Rs. 75.81 cr. for the year, as against Rs. 17.67 cr, in
the previous year. Hence, after making provision for tax and motor pool
losses, the company reported a loss of Rs. 20.14 cr. for the year as
against profit of Rs. 30.97 cr. in the previous year.
Your Company has been receiving enquiries regarding its continuance in
the general insurance business and its investment in Royal Sundaram
Insurance Company. Your Company wishes to clarify that while
preliminary discussions had taken place in connection with a potential
divestment, no further progress has been made, in view of the lack of
clarity on the regulatory front, regarding mergers and acquisitions.
- BNP Paribas Sundaram Global Securities Operations Private Limited
BNP Paribas Sundaram Global Securities Operations Private Limited
earned gross income of Rs. 54.38 cr. during the year as against Rs.
24.75 cr. for the six months ended March 2010. The company reported a
profit after tax of Rs. 6.42 cr. during the year as against Rs. 4.31
cr. for the six months ended March 2010. The company recommended a
dividend of 67% for the year ended 31st March 2011 as against 44% for
the six months ended 31st March 2010.
DIRECTORS
Sri S Narayanan, a Director of your Company, retired from the Board on
24th September 2010. Your directors place on record the sterling
contribution made by him to the growth and development of your Company
through his wealth of knowledge and experience during his long tenure
of over 24 years as a Director of your Company.
Sri N Venkataramani and Sri P N Venkatachalam were co-opted as
independent directors during the year. Sri Harsha Viji was co-opted as
additional director and appointed as Director (Strategy & Planning)
with effect from 24th September 2010.
Sri Srinivas Acharya and Sri S Ravindran retire by rotation and, being
eligible, offer themselves for re-election. Sri T R Seshadri, Director,
who retires by rotation has not offered himself for re-election. Your
directors place on record the immense contribution made by him to the
growth and development of your Company through his rich experience and
expertise in financial sector during his tenure of 16 years as a
Director of your Company. The Board recommends that the vacancy caused
by his retirement not be filled.
Sri N Venkataramani, Sri P N Venkatachalam and Sri Harsha Viji hold
office as Additional Directors up to the date of the ensuing Annual
General Meeting. The Company has received due notices from some
members, proposing their appointment as directors of the Company.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for re-appointment. A certificate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
INFORMATION AS PER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. During 2010-11, expenditure in foreign
currencies amounted to Rs. 16.94 lakhs on account of other charges.
Foreign Currency earnings amounted to Rs. 68.41 lakhs.
PERSONNEL
In accordance with the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, the Directors Report is being sent to all the
shareholders of the Company excluding the annexure prescribed under
Section 217(2A) of the Companies Act. The said annexure, is available
for inspection by the Members at the Registered Office of the Company
during office hours till the date of the Annual General Meeting.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Your Board of Directors, based on the recommendations of the
Compensation Committee, granted 16,500 stock options to its eligible
employees, on 30.05.2011. The disclosure required under SEBI
Guidelines, in this regard, is furnished in the Annexure.
DIRECTORS RESPONSIBILITY STATEMENT
Your directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed;
2. they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
4. they have prepared the annual accounts on a going-concern basis.
CORPORATE SOCIAL RESPONSIBILITY
The Sundaram Finance Group is involved in a number of community focused
activities that exemplify its strong commitment to society at large.
Some of the major initiatives that the Group is involved in, are in the
areas of health, education and promotion of the countrys rich culture
and heritage.
Healthcare
Your Company has been deeply involved with the Sundaram Medical
Foundation, a non-profit Trust that runs the Dr. Rangarajan Memorial
Hospital, since its inception. The hospital occupies an eminent
position in the healthcare sector of India as a model of
cost-conscious, affordable, healthcare delivery and corporate
involvement in social projects. For the past 14 years, the Group has
also been associated with the Hindu Mission Hospital in Tambaram,
Chennai that caters to the medical needs of under served rural
communities. Cancer, schizophrenia, kidney and ophthalmic care are some
of the other health care causes that the Group supports through
organisations such as the Cancer Institute, Cancer Relief Society,
Schizophrenia Research Foundation, Tanker Foundation and Sankara
Nethralaya.
Education
Foremost among the many causes that the Group is involved with, in the
field of education, is Laxmi Charities, established 37 years ago. A
charitable educational institution, it assists meritorious students
from the lower income groups to pursue higher education. Over the
nearly four decades of its existence, this institution has assisted
over 34000 deserving and needy scholars in pursuing their careers. The
Group has also been actively supporting several schools, colleges,
Universities and NGOs involved in primary education.
Environment, Heritage, Culture and Sports
The Group is also involved in a wide spectrum of activities ranging
from the upkeep and maintenance of a public park in the heart of
Chennai, ecology awareness campaigns, to a host of activities aimed at
encouraging childrens participation in art and craft, music and
personality development, through year round programmes. The Group is
also closely involved with a popular annual festival that showcases
folk art, music and dance, again with emphasis on children and an
All-India Veterans Tennis tournament.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation
extended to your Company by all the customers, depositors,
shareholders, bankers, mutual funds, automotive manufacturers and
vehicle dealers.
For nearly six decades, your Company has grown on the strong foundation
of a set of values that we call the ÃSundaram Way. It is these values
that have been our anchor in difficult times and our beacon when we
have forged ahead on the path to growth. This would not have been
possible without the complete dedication and unswerving commitment
displayed by the employees of the Company, thus enabling it to report a
strong performance during the year.
For and on behalf of the Board
S VIJI
Chairman
Chennai 600 002
30th May 2011
Mar 31, 2010
The directors have pleasure in presenting the 57th Annual Report with
audited accounts for the year ended 31st March 2010. The summarised
financial results of the Company are given hereunder:
FINANCIAL RESULTS:
(Rs. in Cr.)
Particulars Year ended Year ended
March 31, 2010 March 31, 2009
Income from Operations 1181.89 1082.78
profit on Sale of Shares in
WABCO-TVS (INDIA) Limited 25.39 --
Other Income 41.43 31.99
Total Income 1248.71 1114.77
Less: Total Expenditure 925.23 895.06
profit before Tax 323.48 219.71
profit after Tax 226.75 150.73
Surplus brought forward 41.96 47.14
Transfer from Special Reserve 76.00 --
Amount available for appropriation 344.71 197.87
Appropriations have been made as
under: Transfers to:
à Statutory Reserve 45.40 30.20
à Special Reserve -- 2.00
à General Reserve 175.00 82.72
Dividend à Interim 33.33 22.22
Final (Proposed) 22.22 13.89
Dividend Tax 7.74 4.87
Surplus carried to balance sheet 61.02 41.97
344.71 197.87
DIVIDEND
Your Company paid a tax-free interim dividend of Rs.6/- per share (60%
on the face value of Rs.10/-). Your directors are now pleased to
recommend a fnal dividend of Rs.4/- per share (40% on the face value of
Rs.10/-). This, together with the interim dividend, aggregates to a
total dividend of Rs.10/- per share (100% on the face value of Rs.10/-)
for the financial year ended 31st March 2010, on the paid-up capital of
Rs.55.55 cr.
CORPORATE GOVERNANCE
à A detailed report on corporate governance together with a certificate
from the Statutory Auditors, in compliance with Clause 49 of the
Listing Agreement, is attached as part of this report.
à Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
DIRECTORS
The term of offce of Sri Srinivas Acharya as Deputy Managing Director
expired on 31 st March 2010. Your Directors wish to place on record the
valuable contribution made by him for the growth and development of
your Company during his tenure as Deputy Managing Director. Sri Acharya
continues as a Director on the Board.
Sri A. Rangaswami, a Director of your Company since 1995, resigned his
directorship effective 1 st April 2 010. He was the Chairman of the
Audit Committee and Share Transfer & Investor Relations Committee.
Your directors place on record the significant contribution made by him
to the deliberations of the Board and Audit Committee for over a
decade. His association with the Sundaram Finance group spanned over
fve decades and his invaluable wisdom and guidance will be missed.
Consequent to the resignation of Sri A. Rangaswami, Sri S Prasad, an
independent director of your Company, was appointed as Chairman of the
Audit Committee and Share Transfer & Investor Relations
Committee and Sri Srinivas Acharya was appointed as a member of the
Share Transfer & Investor Relations Committee effective 1st April 2010.
Sri S. Viji, Sri S. Ram and Sri T. T. Srinivasaraghavan retire by
rotation and, being eligible, offer themselves for re-election.
Necessary resolutions are submitted for your approval.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for re-appointment. A certifcate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
INFORMATION AS PER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. During 2009-10, expenditure in foreign
currencies amounted to Rs.145.04 lakhs, on account of interest and
other charges. Foreign Currency earnings amounted to Rs. 94.78 lakhs.
PERSONNEL
In accordance with the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Directorsà Report is being sent to all the
shareholders of the Company excluding the annexure prescribed under
Section 217(2A) of the Companies Act. The said annexure, setting out
the names and other particulars of employees, is available for
inspection by the Members at the Registered Offce of the Company during
offce hours till the date of the Annual General Meeting.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME
Your Board of Directors, based on the recommendations of the
Compensation Committee, granted 17,250 stock options to its eligible
employees, on 28.05.2010. The disclosure required under SEBI
Guidelines, in this regard, is furnished in the Annexure.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Your directors confrm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed;
2. They have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
3. They have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
4. They have prepared the annual accounts on a going-concern basis.
ACKNOWLEDGEMENT
Your directors gratefully acknowledge the support and co-operation
extended to your company by all the customers, depositors,
shareholders, bankers, mutual funds, automotive manufacturers and
vehicle dealers.
For over fve and a half decades, your company has been built on the
strong foundation of a set of values that we call the ÃSundaram WayÃ.
It is these values that have been our anchor in diffcult times and our
beacon when we have forged ahead on the path to growth. This would not
have been possible without the dedication and unswerving commitment
displayed by the employees of the Company, thus enabling it to report a
strong performance during the year.
For and on behalf of the Board
Chennai 600 002 S VIJI
28th May 2010 Chairman
Mar 31, 2010
The Directors present the Sixteenth Annual Report and Audited Accounts
for the year ended 31st March, 2010.
Financial Results (Rs. in Lakhs)
Particulars Year ended Year ended
31.03.2010 31.03.2009
Profit after tax 196.60 137.08
Add: Surplus of Previous Year 119.46 124.38
Amount available for
appropriation 316.06 261.46
Transfer to General Reserve 20.00 25.00
Interim Dividend - 50.00
Final Dividend 112.50 50.00
Dividend Tax 18.68 17.00
Surplus carried to Balance Sheet 164.87 119.46
Business Review
In spite of signifcant changes in the regulatory guidelines and decline
in the number of New Fund Offers by mutual funds, the income from
mutual fund distribution has gone up to Rs.158.40 lakhs during 2009-10
from Rs.104.46 lakhs during 2008-09. Despite reduction in insurance
premium levels consequent to de-tariffng, your Company has earned a
higher commission of Rs.401.22 lakhs through stepped-up efforts in
distribution of insurance products during the year as against Rs.228.27
lakhs in the previous year. The Profit after tax for the year amounted
to Rs.196.60 lakhs as against Rs.137.08 lakhs in the previous year.
Dividend
Your directors are happy to recommend a higher dividend of Rs. 22.50
per share for the fnancial year 2009-10 on the paid-up capital of
Rs.50.00 lakhs comprising 5,00,000 equity shares of Rs.10/- each. The
dividend together with dividend tax of Rs.18.68 lakhs absorbs a sum of
Rs.131.18 lakhs.
Directors
Sri Sankara Kumar, Director, retires by rotation and being eligible
offers himself for re-election. Necessary resolution is submitted for
your approval.
Directors Responsibility Statement
Your directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv) they have prepared the annual accounts on a going-concern basis.
Secretarial Compliance Certificate
In accordance with Section 383A of the Companies Act, 1956, the
Secretarial Compliance Certifcate is attached with this report.
Information as per section 217(1)(e) of the Companies act, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. Your Company did not have any foreign exchange
earnings or outgo during the year.
Personnel
None of the employees of the Company is in receipt of remuneration in
excess of limits prescribed under Section 217(2A) of the Companies Act,
1956.
Deposits
Your Company has not accepted any public deposit during the period
under review.
Auditors
M/s Brahmayya & Co, Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certifcate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
Acknowledgement
Your Directors thank the holding company, Sundaram Finance Ltd for its
support. Your Directors also wish to place on record their
appreciation of the contribution made by the management team and the
employees at all levels.
S Venkatesan
A N Raju
Chennai 600 002 K Sankarakumar
Date : 13th May 2010 Directors
Mar 31, 2010
The Directors present the Sixteenth Annual Report and Audited Accounts
for the year ended 31st March, 2010.
Financial Results (Rs. in Lakhs)
Particulars Year ended Year ended
31.03.2010 31.03.2009
Profit after tax 196.60 137.08
Add: Surplus of Previous Year 119.46 124.38
Amount available for
appropriation 316.06 261.46
Transfer to General Reserve 20.00 25.00
Interim Dividend - 50.00
Final Dividend 112.50 50.00
Dividend Tax 18.68 17.00
Surplus carried to Balance Sheet 164.87 119.46
Business Review
In spite of signifcant changes in the regulatory guidelines and decline
in the number of New Fund Offers by mutual funds, the income from
mutual fund distribution has gone up to Rs.158.40 lakhs during 2009-10
from Rs.104.46 lakhs during 2008-09. Despite reduction in insurance
premium levels consequent to de-tariffng, your Company has earned a
higher commission of Rs.401.22 lakhs through stepped-up efforts in
distribution of insurance products during the year as against Rs.228.27
lakhs in the previous year. The Profit after tax for the year amounted
to Rs.196.60 lakhs as against Rs.137.08 lakhs in the previous year.
Dividend
Your directors are happy to recommend a higher dividend of Rs. 22.50
per share for the fnancial year 2009-10 on the paid-up capital of
Rs.50.00 lakhs comprising 5,00,000 equity shares of Rs.10/- each. The
dividend together with dividend tax of Rs.18.68 lakhs absorbs a sum of
Rs.131.18 lakhs.
Directors
Sri Sankara Kumar, Director, retires by rotation and being eligible
offers himself for re-election. Necessary resolution is submitted for
your approval.
Directors Responsibility Statement
Your directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv) they have prepared the annual accounts on a going-concern basis.
Secretarial Compliance Certificate
In accordance with Section 383A of the Companies Act, 1956, the
Secretarial Compliance Certifcate is attached with this report.
Information as per section 217(1)(e) of the Companies act, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. Your Company did not have any foreign exchange
earnings or outgo during the year.
Personnel
None of the employees of the Company is in receipt of remuneration in
excess of limits prescribed under Section 217(2A) of the Companies Act,
1956.
Deposits
Your Company has not accepted any public deposit during the period
under review.
Auditors
M/s Brahmayya & Co, Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certifcate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
Acknowledgement
Your Directors thank the holding company, Sundaram Finance Ltd for its
support. Your Directors also wish to place on record their
appreciation of the contribution made by the management team and the
employees at all levels.
S Venkatesan
A N Raju
Chennai 600 002 K Sankarakumar
Date : 13th May 2010 Directors
Mar 31, 2009
The Directors present the Fifteenth Annual Report and Audited Accounts
for the year ended 31st March, 2009.
FinAnCiAl Results
(Rs. in Lakhs)
Particulars Year ended Year ended
31.03.2009 31.03.2008
Proft after tax 137.08 167.82
Add: Surplus of Previous Year 124.38 90.55
Amount available for 261.46 258.37
appropriation
Transfer to General Reserve 25.00 17.00
Interim Dividend 50.00 -
Final Dividend 50.00 100.00
Dividend Tax 17.00 17.00
Surplus carried to Balance Sheet 119.46 124.37
Business Review
Due to decline in New Fund Offers (NFOs) by mutual funds consequent to
tightening liquidity and slowdown in stock markets, your companyÂs
income through distribution of various mutual fund and fnancial
products was lower at Rs.104.46 lakhs as against Rs.281.58 lakhs in the
previous year. However, despite reduction in insurance premium levels
consequent to detariffng, your Company earned a higher commission of
Rs.228.27 lakhs through stepped- up efforts in distribution of
insurance products during the year as against Rs. 82.38 lakhs in the
previous year. The proft after tax for the year amounted to Rs.137.08
lakhs as against Rs.167.82 lakhs in the previous year.
DIVIDEND
Your Company paid a interim dividend of Rs.10/- per share on 3rd March
2009. Your directors are now pleased to recommend a fnal dividend of
Rs.10/- per share. This, together with the interim dividend, aggregates
to a total dividend of Rs.20/- per share for the financial year ended
31st March 2009, on the paid-up capital of Rs.50 lakhs comprising
5,00,000 equity shares of Rs.10/- each.
DIRECTORS
Sri A. N. Raju, Director, retires by rotation and being eligible offers
himself for re-election. Necessary resolution is submitted for your
approval.
DIRECTORS RESPONSIBILITY STATEMENTYour directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv) they have prepared the annual accounts on a going-concern basis.
SECRETARIAL COMPLIANCE CERTIFICATE
In accordance with Section 383A of the Companies Act, 1956, the
Secretarial Compliance Certificate is attached with this report.
INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. Your Company did not have any foreign exchange
earnings or outgo during the year.
PERSONNEL
Your Company has no employees on its payroll. The provisions of Section
217(2A) of the Companies Act, 1956 are not applicable.
DEPOSITS
Your Company has not accepted any public deposit during the period
under review.
AUDITORS
M/s Brahmayya & Co, Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certifcate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
ACKNOWLEDGEMENT
Your Directors thank the holding company, Sundaram Finance Ltd for its
support.
S Venkatesan
A N Raju
Chennai 600 002 K Sankarakumar
Date : 15th May 2009 Directors
Mar 31, 2009
The Directors present the Fifteenth Annual Report and Audited Accounts
for the year ended 31st March, 2009.
FinAnCiAl Results
(Rs. in Lakhs)
Particulars Year ended Year ended
31.03.2009 31.03.2008
Proft after tax 137.08 167.82
Add: Surplus of Previous Year 124.38 90.55
Amount available for 261.46 258.37
appropriation
Transfer to General Reserve 25.00 17.00
Interim Dividend 50.00 -
Final Dividend 50.00 100.00
Dividend Tax 17.00 17.00
Surplus carried to Balance Sheet 119.46 124.37
Business Review
Due to decline in New Fund Offers (NFOs) by mutual funds consequent to
tightening liquidity and slowdown in stock markets, your companyÂs
income through distribution of various mutual fund and fnancial
products was lower at Rs.104.46 lakhs as against Rs.281.58 lakhs in the
previous year. However, despite reduction in insurance premium levels
consequent to detariffng, your Company earned a higher commission of
Rs.228.27 lakhs through stepped- up efforts in distribution of
insurance products during the year as against Rs. 82.38 lakhs in the
previous year. The proft after tax for the year amounted to Rs.137.08
lakhs as against Rs.167.82 lakhs in the previous year.
DIVIDEND
Your Company paid a interim dividend of Rs.10/- per share on 3rd March
2009. Your directors are now pleased to recommend a fnal dividend of
Rs.10/- per share. This, together with the interim dividend, aggregates
to a total dividend of Rs.20/- per share for the financial year ended
31st March 2009, on the paid-up capital of Rs.50 lakhs comprising
5,00,000 equity shares of Rs.10/- each.
DIRECTORS
Sri A. N. Raju, Director, retires by rotation and being eligible offers
himself for re-election. Necessary resolution is submitted for your
approval.
DIRECTORS RESPONSIBILITY STATEMENTYour directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records, in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv) they have prepared the annual accounts on a going-concern basis.
SECRETARIAL COMPLIANCE CERTIFICATE
In accordance with Section 383A of the Companies Act, 1956, the
Secretarial Compliance Certificate is attached with this report.
INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
Your Company has no activity relating to conservation of energy or
technology absorption. Your Company did not have any foreign exchange
earnings or outgo during the year.
PERSONNEL
Your Company has no employees on its payroll. The provisions of Section
217(2A) of the Companies Act, 1956 are not applicable.
DEPOSITS
Your Company has not accepted any public deposit during the period
under review.
AUDITORS
M/s Brahmayya & Co, Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certifcate under Section 224(1B) of the
Companies Act, 1956 has been received from them.
ACKNOWLEDGEMENT
Your Directors thank the holding company, Sundaram Finance Ltd for its
support.
S Venkatesan
A N Raju
Chennai 600 002 K Sankarakumar
Date : 15th May 2009 Directors
Mar 31, 1998
The Directors have pleasure in presenting their Fourth Annual Report of
the Company along with the audited accounts for the year ended 31st
March 1998.
Financial Results
Year ended
(Rs. in lakhs)
31.03.1988 31.03.1977
Profit before Depreciation and Tax 8.93 3.05
Less : Depreciation 4.39 0.83
Profit before Tax 4.54 2.22
Less : Provision for Tax 3.50 0.90
Profit after Tax 1.04 1.32
Add : Surplus of previous year 0.67 0.35
Surplus available for appropriation 1.71 1.67
Appropriation :
Transfer to General Reserve 1.00 1.00
Surplus carried forward to
Balance Sheet 0.71 0.67
Business Review
The year under review, on the whole, witnessed a fair degree of growth
in secondary market operations, despite a few prolonged spells of
sluggishness in between. The Company was able to take advantage of
this, thanks largely to vigorous marketing efforts this stands
reflected in the increase from Rs. 8.57 lakhs to Rs. 21.16 lakhs in
brokerage income from a largely retail client base; and this despite
the Company's own NSE terminals becoming available only late in January
'98, (i.e. for barely 2 months in the year). Good progress was also
made during the year in buying / selling PSU / Bank bonds and in
rendering advisory / placement services. Consequently, we are glad to
report that the Company's operating profit almost trebled to Rs. 8.93
lakhs. Net profit (PAT), however, is marginally lower because of the
substantially higher tax outgo.
With the NSE terminal now fully operational, the current year should
continue to witness a healthy growth in business volume, provided
secondary market conditions remain reasonably steady.
Deposits
`The Company has not accepted any public deposit during the period
under review.
Directors
Sri S. Viji and Sri T. Ramabhadran retire by rotation and being
eligible, offer themselves for re-election.
Information as per Section 217(1) (e) of The Companies Act, 1956.
The Company has no activity relating to conservation of energy or
technology absorption. Neither does the Company have any foreign
exchange earnings or outgo.
Personnel
None of the employees of the Company is in receipt of remuneration in
excess of limits prescribed under Section 217 (2A) of the Companies
Act, 1956.
Auditors
M/s. Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certificate under Section 224 (1B) of
the Companies Act, 1956 has been received from them.
Mar 31, 1998
The Directors have pleasure in presenting their Fourth Annual Report of
the Company along with the audited accounts for the year ended 31st
March 1998.
Financial Results
Year ended
(Rs. in lakhs)
31.03.1988 31.03.1977
Profit before Depreciation and Tax 8.93 3.05
Less : Depreciation 4.39 0.83
Profit before Tax 4.54 2.22
Less : Provision for Tax 3.50 0.90
Profit after Tax 1.04 1.32
Add : Surplus of previous year 0.67 0.35
Surplus available for appropriation 1.71 1.67
Appropriation :
Transfer to General Reserve 1.00 1.00
Surplus carried forward to
Balance Sheet 0.71 0.67
Business Review
The year under review, on the whole, witnessed a fair degree of growth
in secondary market operations, despite a few prolonged spells of
sluggishness in between. The Company was able to take advantage of
this, thanks largely to vigorous marketing efforts this stands
reflected in the increase from Rs. 8.57 lakhs to Rs. 21.16 lakhs in
brokerage income from a largely retail client base; and this despite
the Company's own NSE terminals becoming available only late in January
'98, (i.e. for barely 2 months in the year). Good progress was also
made during the year in buying / selling PSU / Bank bonds and in
rendering advisory / placement services. Consequently, we are glad to
report that the Company's operating profit almost trebled to Rs. 8.93
lakhs. Net profit (PAT), however, is marginally lower because of the
substantially higher tax outgo.
With the NSE terminal now fully operational, the current year should
continue to witness a healthy growth in business volume, provided
secondary market conditions remain reasonably steady.
Deposits
`The Company has not accepted any public deposit during the period
under review.
Directors
Sri S. Viji and Sri T. Ramabhadran retire by rotation and being
eligible, offer themselves for re-election.
Information as per Section 217(1) (e) of The Companies Act, 1956.
The Company has no activity relating to conservation of energy or
technology absorption. Neither does the Company have any foreign
exchange earnings or outgo.
Personnel
None of the employees of the Company is in receipt of remuneration in
excess of limits prescribed under Section 217 (2A) of the Companies
Act, 1956.
Auditors
M/s. Brahmayya & Co., Chartered Accountants, Chennai, retire and are
eligible for reappointment. A certificate under Section 224 (1B) of
the Companies Act, 1956 has been received from them.
Mar 31, 1996
SUNDARAM FINANCE SECURITIES LIMITED
TO THE MEMBERS
The Directors present their Second Annual Report of your
Company along with the audited accounts for the 15 months
period from 1st January '95 to 31st March '96.
It was considered desirable to adopt a 15 month accounting
period in order to synchronise its accounting year end with
that of the parent company. On the last occasion, your
Company's books had to be closed as at 31st December, 1994
because of the need to comply with the provisions of
Section 166 of the Companies Act, 1956.
BUSINESS
Your Company's business volume and, consequently, profits
during the period under review were affected by highly
adverse business conditions both in the primary and
secondary markets for the most part of 1995.
With some improvement in the business climate since the
beginning of 1996, your Directors feel reasonably confident
that the working results for the current year would show
improvement aided also by the transfer of membership in
OTCEI from the holding company and the acquiring of
membership in NSE, currently at an advanced stage.
INFORMATION AS PER SECTION 217 (I)(e) OF THE COMPANIES ACT
The Company has no activity relating to conservation of
energy or technology absorption. Neither does your Company
have any foreign exchange earnings or outgo.
PERSONNEL
Details as per Sec 217 (2A) is annexed.
AUDITORS
M/s. Brahmayya & Co., Chartered Accountants, Madras, retire
and are eligible for reappointment. A certificate under
Section 224 (1-B) of the Companies Act, 1956 has been
received from them.
ACKNOWLEDGMENT
Your Directors wish to thank the Company's bankers and
clients for their co-operation. They also wish to
sincerely thank all the employees of the Company for their
sincere and dedicated service.
Mar 31, 1996
SUNDARAM FINANCE SECURITIES LIMITED
TO THE MEMBERS
The Directors present their Second Annual Report of your
Company along with the audited accounts for the 15 months
period from 1st January '95 to 31st March '96.
It was considered desirable to adopt a 15 month accounting
period in order to synchronise its accounting year end with
that of the parent company. On the last occasion, your
Company's books had to be closed as at 31st December, 1994
because of the need to comply with the provisions of
Section 166 of the Companies Act, 1956.
BUSINESS
Your Company's business volume and, consequently, profits
during the period under review were affected by highly
adverse business conditions both in the primary and
secondary markets for the most part of 1995.
With some improvement in the business climate since the
beginning of 1996, your Directors feel reasonably confident
that the working results for the current year would show
improvement aided also by the transfer of membership in
OTCEI from the holding company and the acquiring of
membership in NSE, currently at an advanced stage.
INFORMATION AS PER SECTION 217 (I)(e) OF THE COMPANIES ACT
The Company has no activity relating to conservation of
energy or technology absorption. Neither does your Company
have any foreign exchange earnings or outgo.
PERSONNEL
Details as per Sec 217 (2A) is annexed.
AUDITORS
M/s. Brahmayya & Co., Chartered Accountants, Madras, retire
and are eligible for reappointment. A certificate under
Section 224 (1-B) of the Companies Act, 1956 has been
received from them.
ACKNOWLEDGMENT
Your Directors wish to thank the Company's bankers and
clients for their co-operation. They also wish to
sincerely thank all the employees of the Company for their
sincere and dedicated service.
Dec 31, 1994
To the Members,
The Directors hereby present their First Annual Report of
the Company along with the audited Accounts for the period
from 13th October, 1993 being the date of incorporation of
the Company, to 31st December 1994.
The Company was incorporated as a private company and has
been converted into a public company with effect from
22nd November 1993 by virtue of Section 43A of the Companies
Act, 1956.
The paid-up capital of the Company was increased from
Rs. 3000 to 50,00,000 during the period.
Dividend
To strengthen the networth of the Company, your Directors
recommend the ploughback of the entire profits available for
appropriation to the reserves.
Reserves
Your Directors propose to transfer Rs. 5.00 Lakhs to General
Reserves and carry forward a surplus of Rs. 0.21 Lakhs.
Business
Your Company has been admitted as a Corporate Member of the
Madras Stock Exchange Ltd. on conversion and after obtaining
the approval of the Securities Exchange Board of India,
commenced trading on the floor of the Exchange from May
1994.
Your Company under Stock Broking wrote business of
Rs. 1326.79 Lakhs and earned an income of Rs. 16.41 Lakhs
during the period.
Deposits
Your Company has not accepted any deposit during the period
from the public.
Directors
Shri P.S.V. Chari and Shri M.A. Sathyavasu have relinquished
the Directorship during the period. The Directors wish to
place on record their appreciation for the services rendered
during their tenure.
Shri S. Viji, Shri. T. Ramabhadran,
Shri. C. R. Vijayaraghavan and Ms. Chitra Parthasarthy were
co-opted as additional Directors of the Company during the
period and appointed as Directors in the Extraordinary
General Meeting held during the year.
Shri S. Venkatesan, was appointed as Additional Director on
8th April, 1995. He shall hold office up to the date of the
ensuing Annual General Meeting. The Company has received
due notice from a member proposing his appointment as a
Director of the Company.
Shri R. Natarajan one of the first Directors of the Company
was appointed as whole-time Director under the designation
Director (Operations) with effect from 11th March, 1994.
Shri T. Ramabhadran and Shri C.R. Vijayaraghavan retire by
rotation and being eligible, offer themselves for
re-election.
Information as per Section 217 (1) (e) of the Companies Act,
1956
The Company has no activity relating to conservation of
energy or technology absorption. The Company does not have
any foreign exchange earnings or outgo.
Personnel
None of the employees of the Company except the Director
(Operations) is in receipt of remuneration in excess of the
limits prescribed under Section 217 (2A) of the Companies
Act, 1956.
Auditors
M/s Brahmayya & Co., Chartered Accountants, Madras, were
appointed as the first Auditors of the Company, whose term
of office expires at the ensuing Annual General Meeting.
They being eligible, offer themselves for re-appointment. A
certificate under Section 224 (1 -B) of the Companies Act,
1956 has been obtained from them.
Acknowledgement
Your Directors wish to thank the Company's bankers for their
co-operation. Your Directors also wish to thank the clients
and place on record the appreciation of the good work done
by all the employees of the Company.
Dec 31, 1994
To the Members,
The Directors hereby present their First Annual Report of
the Company along with the audited Accounts for the period
from 13th October, 1993 being the date of incorporation of
the Company, to 31st December 1994.
The Company was incorporated as a private company and has
been converted into a public company with effect from
22nd November 1993 by virtue of Section 43A of the Companies
Act, 1956.
The paid-up capital of the Company was increased from
Rs. 3000 to 50,00,000 during the period.
Dividend
To strengthen the networth of the Company, your Directors
recommend the ploughback of the entire profits available for
appropriation to the reserves.
Reserves
Your Directors propose to transfer Rs. 5.00 Lakhs to General
Reserves and carry forward a surplus of Rs. 0.21 Lakhs.
Business
Your Company has been admitted as a Corporate Member of the
Madras Stock Exchange Ltd. on conversion and after obtaining
the approval of the Securities Exchange Board of India,
commenced trading on the floor of the Exchange from May
1994.
Your Company under Stock Broking wrote business of
Rs. 1326.79 Lakhs and earned an income of Rs. 16.41 Lakhs
during the period.
Deposits
Your Company has not accepted any deposit during the period
from the public.
Directors
Shri P.S.V. Chari and Shri M.A. Sathyavasu have relinquished
the Directorship during the period. The Directors wish to
place on record their appreciation for the services rendered
during their tenure.
Shri S. Viji, Shri. T. Ramabhadran,
Shri. C. R. Vijayaraghavan and Ms. Chitra Parthasarthy were
co-opted as additional Directors of the Company during the
period and appointed as Directors in the Extraordinary
General Meeting held during the year.
Shri S. Venkatesan, was appointed as Additional Director on
8th April, 1995. He shall hold office up to the date of the
ensuing Annual General Meeting. The Company has received
due notice from a member proposing his appointment as a
Director of the Company.
Shri R. Natarajan one of the first Directors of the Company
was appointed as whole-time Director under the designation
Director (Operations) with effect from 11th March, 1994.
Shri T. Ramabhadran and Shri C.R. Vijayaraghavan retire by
rotation and being eligible, offer themselves for
re-election.
Information as per Section 217 (1) (e) of the Companies Act,
1956
The Company has no activity relating to conservation of
energy or technology absorption. The Company does not have
any foreign exchange earnings or outgo.
Personnel
None of the employees of the Company except the Director
(Operations) is in receipt of remuneration in excess of the
limits prescribed under Section 217 (2A) of the Companies
Act, 1956.
Auditors
M/s Brahmayya & Co., Chartered Accountants, Madras, were
appointed as the first Auditors of the Company, whose term
of office expires at the ensuing Annual General Meeting.
They being eligible, offer themselves for re-appointment. A
certificate under Section 224 (1 -B) of the Companies Act,
1956 has been obtained from them.
Acknowledgement
Your Directors wish to thank the Company's bankers for their
co-operation. Your Directors also wish to thank the clients
and place on record the appreciation of the good work done
by all the employees of the Company.