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

Directors Report of Tube Investments of India Ltd.

Mar 31, 2023

The Directors take pleasure in presenting the 15th Annual

Report together with the audited financial statements of the

Company for the year ended 31st March 2023.

1. Business Environment

The financial year 2022-23 was a challenging year for the global economy starting with the conflict between Russia and Ukraine leaving the oil/energy prices to go up significantly. This was followed by inflation due to increase in the prices of commodities across the globe and energy crisis. Most of the major economies witnessed unprecedented inflation rates in its history and all the central banks started continuously raising the interest rates. Due to increasing oil prices, the US dollar had gained against all currencies which resulted in inflationary pressures on emerging economies who are import dependent and the chain effect continued.

The aforesaid developments in the global economy influenced and posed a downside risk to the Indian economy. The erratic climate conditions including unseasonal rains also affected the food supply and resulted in increased food inflation in India during FY 2022-23. Consequently, Reserve Bank of India continued to increase the repo rates to tame the inflation within the upper tolerance limit. In spite of all the headwinds, India continued to be the fastest growing major economy for FY 2022-23 @ 7.2% as a result of the strong macro-economic fundamentals, domestic consumption and increase in exports.

The Indian economy is projected to grow at around 6.3% in FY 2023-24 amid global headwinds and rising costs. This is mainly driven by private consumption and private investments backed by supportive Government policies to improve the infrastructure and business ecosystem. The Government has indicated that to sustain the current growth trajectory, structural changes for ensuring financial discipline and compliance will be introduced. The digital infrastructure expansion, implementation of production linked incentive schemes have incentivised the corporates for setting up of infrastructure for sustained growth in the future.

The latest episodes of banking sector crisis across the major economies have exposed the financial risks faced not only by these countries but also globally. Also, with the fear of recession looming large at the world, 2023-24 is expected to be an even more challenging and turbulent year. However, it is expected that the Indian economy will remain insulated to some extent due to its strong domestic demand and sound macro-economic fundamentals.

The automotive industry, a sector in which the Company has a large exposure, has witnessed a healthy revival in FY 2022-23 and is expected to carry forward similar momentum going forward. The Government''s push for capital outlay of ''2.4 lakh crores for railways as part of the Union Budget, will be favourable to the Company which expects its railways business to benefit out of this spend. Further, other announcements to boost domestic manufacturing, promote exports and green energy will be advantageous to the Company.

Reserve Bank of India has finally paused the rate hike after six consecutive increases in April 2023. It is an indicator of the strong resilience shown by the Indian economy. Though there appears to be a pause in the investment climate, it is expected that a mix of cautious and necessary investments will still continue through this financial year which may help the Indian economy to continue its growth momentum.

2. Standalone Financial Highlights

'' in Cr.

Particulars

2022-23

2021-22

Sale of Products

6,791.61

5,986.79

Profit Before Exceptional Items and Tax

928.29

628.04

Exceptional Items

(52.72)

-

Profit Before Tax

875.57

628.04

Tax Expense

(210.37)

(152.87)

Profit After Tax

665.20

475.17

The Board of Directors has decided to retain the entire amount of profit for the financial year 2022-23 in the Statement of Profit and Loss.

3. Performance Overview

During 2022-23, the Company has achieved a turnover of ''6,792 Cr., registering a growth of 13% over the previous year. The Profit before Depreciation, Interest, Exceptional Items and Tax was at ''1,095 Cr. as against ''785 Cr. in the previous year. The Profit before Tax and Exceptional Items was at ''928 Cr. as against ''628 Cr. in the previous year.

The Engineering segment registered a revenue of ''4,562 Cr. as compared to ''3,868 Cr. during the previous year, a growth of 18%. The operating profit before interest and tax stood at ''549 Cr. as compared to ''376 Cr. during previous year, a growth of 46%.

The Metal Formed Products segment recorded a revenue of ''1,424 Cr. as compared to ''1,240 Cr. during the previous year, a growth of 15%. The operating profit before interest and tax stood at ''174 Cr. as compared to ''136 Cr. during previous year, a growth of 27%.

The Mobility segment recorded a revenue of ''800 Cr. as compared to ''963 Cr. during previous year, a de-growth of 17%, due to adverse market conditions. The operating profit before interest and tax stood at ''17 Cr. as compared to ''55 Cr. during the previous year.

Other businesses segment including Industrial Chains registered a revenue of ''768 Cr as compared to ''562 Cr. during the previous year, a growth of 37%. The operating profit before interest and tax stood at ''48 Cr. as compared to ''36 Cr. during previous year, a growth of 31%.

4. New business initiatives4.1. Clean Mobility business: TI Clean Mobility Private Limited

The Company had incorporated M/s. TI Clean Mobility Private Limited (“TICMPL”) in February 2022 as a wholly-owned subsidiary to focus on clean mobility solutions. TICMPL is pursuing electric three-wheelers business and has launched the passenger threewheeler in the market. TICMPL is also developing cargo and e-rick variants, which are expected to be launched in the second half of FY 2023-24.

In March 2022, TICMPL had acquired 69.95% of M/s. Cellestial E-Mobility Private Limited (“CEMPL”), manufacturer of electric tractor, for ''161 Cr. During the year, TICMPL had acquired the balance 30.05% for ''51 Cr. making it a wholly-owned subsidiary. CEMPL is in the advanced stage of introducing electric tractors in the market. A new manufacturing facility is coming up at Poonamalle, near Chennai for electric tractors.

During the year, TICMPL had acquired 65.2% of the equity share capital of M/s. IPLTech Electric Private Limited (“IPLT”), a company engaged in manufacturing of electric heavy commercial vehicles for ''245 Cr., through a combination of primary and secondary purchase of shares. IPLT is the first manufacturer for 55T electric truck predominantly used in steel and cement industry for short haulages. IPLT is awaiting necessary approvals, under the new and revised guidelines, for launch of electric heavy commercial trucks and is expected to expand rapidly in FY 2023-24. A dedicated facility with automated assembly line is coming up near Manesar. The unique selling proposition offered by IPLT to its customers includes reduction in logistics cost, higher uptime and

comprehensive annual maintenance. IPLT is working on development of other variants to cater to different customer segments and enhancing its presence.

As of 31st March 2023, TII has invested ''250 Cr. towards Equity Shares and ''167 Cr. towards Compulsorily Convertible Preference Shares (“CCPS”) in TICMPL. TII and TICMPL entered into definitive agreements with M/s. Multiples Private Equity Fund III & M/s. State Bank of India (together “Investors”) for raising about ''600 Cr. through issue of Equity Shares and CCPS. The Investors have so far invested about ''400 Cr. towards 100 Equity Shares and 4,00,00,000 Series A1 CCPS. Pursuant to the said agreement, TII has agreed to invest ''425 Cr. towards CCPS and has already invested ''167 Cr. 16700000 Series B CCPS.

On 5th May 2023, TICMPL entered into definitive agreements with TII, M/s. Multiples Private Equity Fund III, M/s. Multiples Private Equity Fund IV, M/s. Multiples Private Equity Gift Fund IV and their co-investors (together “Investors”) for raising about ''600 Cr. through issue of Equity Shares and CCPS to Investors and ''75 Cr through issue of CCPS to TII.

4.2. Foray into Contract Development and Manufacturing Services

The Company has identified contract development and manufacturing operation (“CDMO”) and active pharmaceutical ingredients as a new line of business with the potential to grow and expand in the future. The approval of the Members was obtained for amendment to the Memorandum of Association of the Company on 16th April 2023 to include this business in the Objects Clause.

The Company had entered into an agreement with Mr. N Govindarajan, an experienced and well recognised professional in the Indian pharmaceutical industry to incorporate a subsidiary for pursuing the CDMO business. Pursuant to the said agreement, the Company proposes to invest up to ''285 Cr. into this subsidiary in the form of equity and compulsorily convertible preference shares in tranches and Mr. N Govindarajan will be investing up to ''15 Cr. in equity and compulsorily convertible preference shares in tranches. Subject to the performance and other terms and conditions specified in the agreement, Mr. N Govindarajan will be entitled to get up to 25% of the equity for his investment. The CDMO subsidiary, M/s. 3xper Innoventure Limited, was incorporated on 12th May 2023.

The CDMO subsidiary is finalising a strategic location for establishment of the manufacturing facility. The R&D facility is coming up at Chennai.

4.3. Acquisition of M/s. Lotus Surgicals Private Limited, a medical devices company

The Company joined hands with M/s. PI Opportunity Fund I Scheme II (“Premji Invest”) to acquire M/s. Lotus Surgicals Private Limited (“Lotus”). TII acquired 33,61,902 equity shares representing 67% of the share capital for about ''233 Cr. and Premji Invest acquired 16,55,862 equity shares representing 33% of the share capital for about ''115 Cr. on 10th May 2023. Lotus is a subsidiary company under Section 2(87) of the Companies Act, 2013 with effect from the date of acquisition (10th May 2023). Lotus will be vehicle for medical devices business of TII.

Lotus was incorporated in 2005 and is engaged in the business of manufacturing and supply of surgical sutures & other medical devices. It has a comprehensive product portfolio focused on high end specialties such as cardiac, liver transplant, GI oncology and bariatrics. Lotus is the second largest domestic player in the aforesaid segments. The product portfolio includes sutures, mesh, skin staplers, laparoscopy instruments, energy devices etc. It has state of the art manufacturing facility and is also setting up in-house needle manufacturing capabilities.

4.4. Acquisition of M/s. Moshine Electronics Private Limited

The Company as part of its foray into electronics business, acquired 20,66,628 equity shares representing 76% of the share capital of M/s. Moshine Electronics Private Limited (“Moshine”) on 23rd September 2022.

Moshine is engaged in manufacture and sale of camera module for mobile phones. Moshine is engaging with new customers for growth in FY 2023-24.

5. Business Review - Standalone5.1. Engineering Tl’s Presence

The Engineering segment of the Company consists of cold rolled steel strips and precision steel tubes viz., Cold Drawn Welded tubes (CDW) and Electric Resistance Welded tubes (ERW). These products primarily cater to the needs of the automotive, boiler, bicycle, general engineering and process industries. The Company is further engaged in the manufacture of large diameter welded tubes mainly for non-auto application which are largely imported.

lndustry Scenario

During 2022-23, the automotive industry''s production volume grew by 13%. Passenger vehicle and commercial vehicle grew by 25% and 29% respectively and two-wheeler segment grew by 9% over the last fiscal year.

Review of Performance

The Engineering segment was able to grow its volumes leveraging the growth of passenger vehicles and commercial vehicles. The business also focussed and realized the increased opportunities in the export market. The volumes of tubes grew by 13%, cold rolled steel strips business grew by 6% and large diameter tubes grew by 12%.

The business continued to drive efficiency improvement and spending capital expenditure prudently on critical growth projects. The business is in the process of increasing capacities for large diameter tubes and Cold Rolled steel strips to meet the increased market demand.

The business started Lean implementation for eliminating/reducing wastes in the value chain by focussing on productivity & quality improvement, inventory reduction & creating a flow in production system using Lean tools & techniques.

Career path initiatives were taken up to provide opportunities to employees within the organization for new openings and to enable cross function exposure and growth.

The business continued to participate in the reviews of US Department of Commerce on complaint of alleged dumping of cold-drawn steel mechanical tubes from India and some other countries, the Countervailing Duty (CVD) and Anti-dumping Duty (AD) on the Company''s exports to the US market, to reduce duty rates to enhance export volumes.

5.2. Metal Formed ProductsTl’s presence

Automotive chains, fine blanked products, roll-formed car doorframes and shell sub-assemblies for passenger coaches constitute the Metal Formed Products segment.

lndustry scenario

During 2022-23, production of two-wheeler segment grew by 9.2% and passenger cars grew by 18.4%.

FY 2022-23 is the first full year of business without any disruption post pandemic. Continuing from the

last year, the business was faced with increase in steel prices, increase in the input costs and inflation during first half of the year. During second half of the year, steel prices began softening. The business continued to prove its mettle by taking advantage of economies of scale, prudent capital spending, operating with an optimum working capital along with control on the costs through various cost reduction measures. Lean initiatives are being driven through inculcating kaizen culture in all the areas.

With international car majors continuing to invest in the country and increasingly using India as an export base, many component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and their Tier 1 Suppliers.

The Railways business continued to go through a subdued phase as demand continues to be at lower levels.

Review of Performance

Backed by the demand in the four-wheeler segment, the business dependent on these segments did extremely well. Despite the two-wheeler industry volume not reaching the pre-pandemic level, business maintained its market share in key segments. The Company continued to focus in the aftermarket segment benefiting from the two-wheeler population growth. The replacement market continues to provide opportunities for growth notwithstanding good competition and the business expects to strengthen on the sales structure, deepen its coverage and launch new products for new categories.

Fine blanking and Doorframe sales were higher by 26% during 2022-23 and the business manages to hold on to the market due to good traction seen in four wheeler segment. The businesses continue to gain additional market share by maintaining high quality standards and customer satisfaction. The focus has been on generating more new businesses from the Original Equipment Manufacturers (OEMs) / Tier 1 Suppliers to OEMs by value addition and cost competitiveness. The business is also focused on exploring new products / technologies for growth in the top line.

I n addition, increased volumes and increased price realisation in coach parts, focus on metros and expanding the customer/product base are some of the driving factors that will put the Railways business back on track.

5.3. Mobility Business TI’s Presence

Mobility segment of the Company comprises of bicycles of Standards and Specials including alloy bikes & performance bikes, cycling accessories, bicycle components sold as spares and home/semi commercial fitness equipment. This year the scope of business has expanded by introducing SMART - Spares Maintenance Accessories Recreational Toddler. Company has also embarked on the export business as a growth lever/strategy.

Industry Scenario

Bicycles fall under two distinct categories - Standards and Specials. While standard cycles are largely used for commuting, especially in small towns & rural areas, special cycles cater to recreational usage, where the product is used for fun, fitness, and leisure activities. During the financial year, the organised trade industry witnessed a decline of 12% as against the previous year. Standards segment dropped by 2% and specials segment by about 16%.

Consumer demand continued towards economy range of products and unbranded players with low priced products gained an edge in the industry. To counter the penetration of unbranded players, playing on price, the organised players i.e., AICMA (All India Cycle Manufacturer''s Association) have ventured into launching low priced products in Kids and Mountain Terrain Bikes (“MTB”) segments.

FY 2020-21 witnessed a pent-up demand in cycles due to lockdown of schools, workplaces, and fitness centres. However, in the current scenario, the usage of cycles has significantly reduced due to resumption of all activities leading to a drop in demand.

Over 60% of the country''s requirements are met by four major players. The smaller regional players and imports constitute the balance. TI Cycles enjoys a share of about 25.1% of the total organised trade market.

Review of Performance

TI Cycles sold 17 lakh bicycles during the year in trade, which was lower by 16% compared to previous year. Overall Trade bicycle industry itself registered de-growth of 12% over the previous year. The thrust on Specials segment was driven through frequent new product launches, product innovations, enhanced digital marketing and superior consumer experience through exclusive retail outlets under the exclusive retail brand ‘Track & Trail'' and a new concept “Star MBO”- a shop-in-shop experience leveraging multi-brand outlets. We have opened 45 of such

shops during last year. Expansion of export business and domestic spares business are considered to be new avenues of business to the Company. To participate in the growing economy sub-segment, 5 economy products were launched in major categories like Kids and MTB.

I n 2022-23, 49 new model bicycles were launched, and 55 models were refreshed. 33% of the trade sales volume came from new products. We have lined up 7 launch ready innovations - such as knuckle guard light, saddle sensor light, balenso, agresso, dirt tricks, buddy back rest, integrated utility solution slated to be launched during 2023-24.

On the consumer outreach front, we ran digital, influencer campaigns for its major brands, with BSA, Hercules, Roadeo, and Montra delivering a significant lift in brand awareness. We have started various demand generation offline activities. The objective of the campaigns/demand generation activities was to increase brand awareness and product consideration among the target group.

6. Dividend

The Board of Directors declared an Interim Dividend of ''2/- per share (@ 200%) on equity share of face value of ''1/- each for the financial year 2022-23, which was paid on 27th February 2023 to all the eligible shareholders. ''1.50/- per share (@ 150%) of Final Dividend has been proposed by the Board for the said financial year and together with the Interim Dividend of ''2/- per equity share, already declared and paid, in respect of the financial year 2022-23, ''3.50 per share (@ 350%) will be considered as the total Dividend for the said financial year.

The dividend pay-out is in line with the Company''s policy on Dividend Distribution. The Company has proposed to conserve cash for the capital expenditure and funding requirements. The said Policy as approved by the Board is uploaded and is available on the following link on the Company''s website: https://tiindia.com/dividend-distribution-policy/

7. Share Capital

The paid-up Equity Share Capital of the Company as on 31st March 2023 was ''19,31,21,076/- consisting of 19,31,21,076 Equity Shares of the face value of ''1/-each fully paid up. During the financial year 2022-23, the Company allotted 1,70,855 equity shares consequent to exercise to employees stock options.

8. Finance

Cash and Cash Equivalents as at 31st March 2023 were ''111 Cr. In addition, Company has investments in Liquid Schemes of Mutual Funds for ''293 Cr.

The Company continues to focus on judicious management of its working capital. The Company has taken many steps during the year to improve the working capital turns. The working capital parameters were kept under strict check through continuous monitoring.

8.1. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating ''50 Cr. were redeemed by the Company. As at 31st March 2023, there are no NCDs outstanding.

8.2. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as on 31st March 2023.

8.3. Particulars of Loans, Guarantees or Investments

As per Section 186 of the Companies Act, 2013, details of the loans, guarantees and investments made during the FY 2022-23 are given below:

Name of the Companies

Nature of transaction -Loans/Investments

'' in Cr.

TI Clean Mobility Private Limited

Investment in equity shares Investment in Compulsorily Convertible Preference Shares Inter-Corporate Deposits / Loans

150.00

167.00

325.00

Moshine

Acquisition of equity

7.38

Electronics

shares from the

Private Limited

existing shareholders

Inter-Corporate

3.75

Deposits / Loans

X2Fuels and

Investment in equity

6.15

Energy Private

shares

Limited

CG Power

Conversion of share

54.72

and Industrial

warrants to equity

Solutions

shares

Limited

The aforesaid investments are in compliance with Section 186 of the Companies Act, 2013 and used for the business activities by the respective companies. Further details form part of the Notes to the financial statements provided in this Annual Report.

As part of treasury management, the Company also deploys any short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8.4. Consolidated Financial Highlights

'' in Cr.

Particulars |

2022-23

2021-22

Revenue from contract with customers (net)

14,430.95

11,982.53

Profit / (Loss) Before share of Profit / Loss of Associates / Joint Ventures, Exceptional Items and Tax

1,592.51

1,111.15

Exceptional items

8.06

20.21

Profit / (Loss) Before share of Profit / Loss of Associates / Joint Ventures and Tax

1,600.57

1,131.36

Tax Expense

422.59

160.83

Profit / (Loss) Before share of Profit / Loss of Associates / Joint Ventures

1,177.98

970.53

9. Business Review - Subsidiaries and Joint Venture9.1. Shanthi Gears Ltd (SGL)

SGL, a subsidiary of the Company, recorded revenue of ''446 Cr. in 2022-23 against ''337 Cr. in the previous year. Profit before tax was ''90 Cr. (Previous year: ''59 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers.

SGL continued to look at enlarging its market presence, create a robust channel, enhance its process capabilities and launch new products to meet the growing expectations of customers.

SGL also declared and paid an Interim Dividend of ''3/- per share for the financial year 2022-23.

9.2. Financiere C10 SAS (FC10)

FC10, the Company''s wholly owned subsidiary in France, recorded consolidated revenue of Euro 39 Mn in 2022 (previous year: Euro 33 Mn). The profit after tax for the year was Euro 0.39 Mn as compared with the profit after tax of Euro 0.25 Mn. in the previous year. The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS, Sedis GmbH and Sedis Co Ltd in UK.

9.3. Great Cycles (Private) Limited (GCPL)

GCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of GCPL’s equity capital.

During the year under review, GCPL recorded revenue of ''6 Cr. (Previous year: ''32 Cr.) and registered loss before tax of ''1 Cr. (previous year profit before tax: ''9 Cr.)

9.4. Creative Cycles (Private) Limited (CCPL)

CCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of CCPL’s equity capital.

During the year under review, CCPL recorded revenue of ''32 Cr. (Previous year: ''77 Cr.) and registered profit before tax of ''3 Cr. (Previous year loss before tax: ''14 Cr.).

9.5. CG Power and Industrial Solutions Limited (CG Power)

CG Power is the Company''s subsidiary acquired in November 2020. The Company holds 58.05% of CG Power''s equity capital.

During the year under review, CG Power at a consolidated level recorded revenue of ''6,973 Cr. (previous year: ''5,484 Cr.) and registered profit before tax & exceptional items of ''950 Cr. (Previous year: ''504 Cr.)

CG Power has registered an impressive turnaround which only reaffirms the confidence of the Board at the time of acquisition that CG Power would create better value for itself and the Company in the coming years.

CG Power also declared and paid an Interim Dividend of ''1.50 per share for the financial year 2022-23.

9.6. TI Clean Mobility Private Limited (TICMPL)

TICMPL, the Company''s subsidiary was incorporated on 12th February 2022.

During the year under review, TICMPL on a standalone basis registered a loss before tax of ''79 Cr.

During the year under review, IPLTech Electric Private Limited registered a loss before tax of ''33 Cr. from acquisition date.

During the year under review, Cellestial E-Mobility Private Limited registered a loss before tax of ''11 Cr. and Cellestial E-Trac Private Limited registered a loss before tax of ''13 Cr. from acquisition date.

9.7. Moshine Electronics Private Limited (MEPL)

During the year under review, MEPL recorded ''6 Cr as revenue and registered a loss before tax of ''1 Cr. from acquisition date.

9.8. X2Fuels and Energy Private Limited (X2Fuels)

During the year under review, X2Fuels registered a loss before tax of ''0.06 Cr. from acquisition date.

10. Financial Review10.1. Profits & Profitability

The Profit before Tax and exceptional items has registered a growth by 48%. All the business segments of the Company maintained their focus on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business.

10.2. Capital Expenditure

The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invests appropriately for the long-term, with a view to servicing its customers in a more timely and efficient manner.

10.3. Interest Cost

The Company''s interest cost during FY 2022-23 was ''22 Cr. compared to ''12 Cr. in the previous year. The Company had a net debt of ''69 Cr. (Net of Cash & Cash Equivalents and investment in mutual funds) as on 31st March 2023 as compared to ''65 Cr. as on 31st March 2022.

10.4. Financial Ratios

The key financial ratios of the Company during the financial year compared to the previous financial year are as under:

Sl.

No.

Financial Ratio*

FY 2022-23

FY 2021-22

% change over previous year

1

Interest Coverage Ratio (times)

50.7

60.4

(19.2%)

2

Debt-Equity Ratio (times)

0.1

0.1

11.5%

3

Net Profit Margin

9.2%

7.5%

23.0%

4

Return on Net Worth

20.2%

17.6%

12.9%

5

Return on Capital Employed

27.6%

22.6%

22.2%

6

Revenue Growth

13.8%

49.4%

7

Debtors Turnover (times)

10.4

9.9

4.7%

8

Inventory Turnover (times)

7.5

7.1

4.5%

9

Current Ratio (times)

1.1

1.1

2.9%

10

Operating Profit Margin

13.0%

10.9%

16.0%

*Ratios are tracked by the Company on a standalone basis

10.5. Internal Control Systems

Internal control systems in the organisation are looked at as the key to its effective functioning. The Company believes that internal control is one of the key pillars of governance which provides freedom to the management within a framework of appropriate checks and balances. Given the nature of business and size of operations, the Company has designed and instituted a robust internal control system that comprises well-defined organisation structure, roles and responsibilities, documented policies and procedures to reduce business risks through a framework of internal controls and processes. These controls ensure:

• Recording of transactions are accurate, complete and properly authorised;

• Adherence to Accounting Standards, compliance to applicable Statutes, Company policies and procedures and timely preparation of financial statements;

• Effective usage of resources and safeguarding of assets;

• Prevention and detection of frauds/errors; &

• Efficient conduct of operations.

To ensure efficient internal control systems, the Company has a well-established, independent and multi-disciplinary Internal Audit function that carries out periodic audits across locations and functions. The scope and authority of the Internal Audit function is derived from the Internal Audit charter duly approved by the Management. The Internal Audit function reviews compliance vis-a-vis the established design of the internal control, as also the efficiency and effectiveness of operations. Internal Audit function is responsible for providing, assurance on compliance with operating systems, internal policies and legal requirements as well as suggesting improvements to systems and processes. It reviews and reports to management and the Audit Committee about compliance with internal controls, and the efficiency and effectiveness of operations as well as the key process risks. The Company also has established whistle-blower mechanism operative across the Company.

In its continued efforts to further strengthen its Internal Audit process through utilizing the services of a specialist agency in order to benefit from the best of practices available (including the use of analytical tools) to monitor various processes, the Company has re-appointed M/s. Pricewaterhouse Coopers (“PwC”) as Internal Auditors of the Company for the financial years 2023-24 and 2024-25. The Company is seeing benefits from the professional approach and practises adopted by the said Internal Auditors.

The Audit Committee of the Board of Directors, comprising of independent directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any.

The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation are submitted to the Audit Committee every quarter for review, and concerns if any, are reported to the Board. This process ensures robustness of internal control system and compliance with laws and regulations including resource utilisation and system efficacy.

Revenue and capital expenditures are governed by approved budgets and the levels are defined by a delegation of authority mechanism. Review of capital expenditure is undertaken with reference to benefits expected in line with the policy for the same.

I nvestment decisions are subject to formal detailed evaluation and approved by the relevant authority as defined in the delegation of authority mechanism. The Audit Committee reviews the plan for internal audit, significant internal audit observations and functioning of the Company''s Internal Audit department on a periodic basis.

10.6. Internal Financial Control Systems with reference to the Financial Statements

The Company has complied with the specific requirements of the Companies Act, 2013 which call for establishment and implementation of an Internal

Financial Control framework that supports compliance with requirements of the said Act in relation to the Directors'' Responsibility Statement.

The Company’s business processes are enabled by an Enterprise-wide Resource Platform (ERP) as its core IT system. The operating management is not only responsible for revenue and profitability, but for also maintaining financial discipline and accountability. The systems and processes are continuously improved by adopting best in class processes, automation and implementing latest Information Technology tools.

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. This is reviewed regularly and tested by Internal Audit Team. The Company’s business processes are enabled by the ERP for monitoring and reporting processes resulting in financial discipline and accountability.

11. Enterprise Risk Analysis and Management

The Company has an established risk assessment and minimisation framework. This framework provides a mechanism to identify the risk, evaluation of likelihood of happening and consequences. It also provides for assessment of options to mitigate the risk and develop appropriate risk management plans. There are normal constraints of time, efficiency and cost.

The Risk Management Committee of the Board of Directors reviews the risk mitigation plans periodically to monitor the key risks of the Company and evaluate the management of such risks for effective mitigation.

During the year under review, the Risk Management Committee met on 1st August 2022, 4th November 2022 & 22nd March 2023 and reviewed the risks and mitigation plans of the divisions.

Some of the risks associated with the business and the related mitigation plans are discussed hereunder. The risks given below are not exhaustive and the evaluation of risk is based on management’s perception.

12. Corporate Social Responsibility (CSR)

The Company, being part of the Murugappa Group, is known for its tradition of philanthropy and community service. The Company''s philosophy is to reach out to the community by establishing service-oriented philanthropic institutions in the field of education and healthcare as the core focus areas. The CSR Policy of the Company is available on the Company''s website at the following link: https://tiindia.com/csr-policy/.

As per the provisions of the Companies Act, 2013, the Company was required to spend ''9.09 Cr. and had also carried forward an excess balance of ''0.31 Cr. After adjustment of the said excess carried forward balance, the minimum mandatory amount required to be spent during the financial year 2022-23 was ''8.78 Cr, against which, the Company spent ''9.04 Cr. towards identified CSR projects in the fields of education, health care and community development during the year.

The Annual Report on CSR for 2022-23 is annexed to and forms part of this Report (refer Annexure-B) as well as on the Company''s website at the following link: https://tiindia.com/wp-content/uploads/2023/07/CSR-Annual-Report-2022-23.pdf

13. Corporate Governance

The Company is committed to maintaining high standards of corporate governance.

The Company was wholly in compliance with the requirements of the Listing Agreement with the Stock Exchanges as well as the SEBI Listing Regulations.

A report on corporate governance together with a certificate from the Practising Company Secretary is annexed in accordance with the terms of the SEBI Listing Regulations and forms part of the Board''s Report (refer Annexure-C). The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters in terms of Part B of Schedule II [Corporate Governance] of the SEBI Listing Regulations.

The Report further contains details as required to be provided in the Board''s Report on the policy on Directors'' appointment and remuneration including the criteria, annual evaluation by the Board and Directors, composition and other details of Board committees, implementation of risk management policy, whistle-blower policy/vigil mechanism, dividend policy etc.

14. Business Responsibility and Sustainability Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility and Sustainability Report as part of the Annual Report for the top 1000 listed entities, the Business Responsibility and Sustainability Report forms part of the Annual Report (refer Annexure-D).

The Business Responsibility Policy of the Company is displayed on the Company''s website at the following link: https://tiindia.com/business-responsibility-policy/

The report emphasises reporting on the ESG (Environmental, Social and Governance) matters and describes the initiatives taken by the Company with specific focus on ESG.

15. Human Resources

This year the focus has been on continuing the journey towards nurturing a high performing work culture to achieve organisational goals. We continued to march ahead with process discipline, creating more and more oneness across all verticals of TII and driving a culture of high drive for achievement.

To foster the organisational oneness the theme of “One TII - Many possibilities - Ample opportunities” was unveiled at the Annual Communication meeting. Employees can aspire to grow within TII as the organisation itself is in the precipice of exploring possibilities in newer business areas. A core focus of the organisation has been towards employee engagement and well-being. Several focussed group discussions, manager conversations have helped the organisation to move forward with a concrete plan to drive engagement as a key metric. Insights from all the conversations have been translated into tangible actions which are being deployed across various employee groups. Safety and employee involvement continues to be a focus areas and in that regard various trainings, audits and corrective actions are implemented across all Business units.

Company continues to lay emphasis on the initiatives that are part of its long-term Human Resources Strategy. Significant work towards driving High Performance Work Culture through standardization of metrics across various business units and arriving at consistent People Productivity Index has helped identify various avenues to improve the same. TI Way of working, by standardizing various policies and processes, is progressing across all work locations.

The adoption of TI Way will be a game changer as the Company continues to pursue aggressive growth paths through several green field and M&A activities.

Consistent and significant efforts have been put in place to ensure that the TI Talent Development Engine (TDE) supports the growing needs of the leaders as the company progresses ahead.

As part of the TDE, three senior leaders were nominated for the Harvard AMP to make them future ready to take on leadership roles in existing as well as new businesses. 11 leaders have graduated this year from the group''s Business Leadership Program and were assigned additional responsibilities or new roles. A total of 20% of overall Managers are going through development journeys to move to next level roles. The Talent Board continues to guide, support and mentor the various developmental actions, interventions and suggest appropriate next steps for accelerated talent development in TI.

Lot of focus this year has also been on improving the digital capabilities of the HR functions. A new system is being implemented in phases and the journey towards paperless HR has started. These are steps that the organisation is taking towards sustainable practices.

The Company embarked on its Lean (Kaizen) journey with the guidance from Japanese consultants in order to be competitive, adapt changes to market & economy. The focus was to eliminate/reduce waste in the value chain, create value to customer and be more productive in “what we do” & the “way we do”. The main focus will be on improving productivity (daily despatches), quality improvement, reducing inventory & lead time, creating a flow in production processes using lean tools like Takt time production, line balancing, operator load balancing (Yamazumi), standard work combination, levelled production, operator & machine cycle time reduction.

The total number of permanent employees on the rolls of the Company as on 31st March 2023 is 3,038.

I ndustrial relations continued to remain cordial at all the Company''s units during the period under review.

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

obtaining a copy thereof, such Member may write to the Company Secretary in the said regard.

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

16. Prevention of sexual harassment at workplace

The Company has policy on prevention of sexual harassment at workplace in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment has been constituted in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy extends to all employees (permanent, contractual, temporary and trainees). Employees at all levels are being sensitized about the Policy and the remedies available thereunder.

No complaints were received by the ICC during the year under review and no complaint was pending as at the end of the year.

17. Employee Stock Option Scheme

During the year under review, the Company had granted 1,89,800 options to eligible employees under its Employee Stock Option Plan viz., ESOP 2017.

Details in respect of the ESOP 2017 as required under the relevant SEBI Regulations are displayed on the Company''s website at the following link: https://tiindia.com/esop/

18. Directors’ Responsibility Statement

The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) t hat in the preparation of the annual Financial

Statements for the year ended 31st March 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) t hat such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2023 and of the profit of the Company for the year ended on that date;

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

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; &

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

19. Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants (LLP Identity no.AAB-4295) were appointed as Statutory Auditors at the 14th Annual General Meeting held on 2nd August 2022 for a period of four years viz., from the conclusion of the said 14th Annual General Meeting till the conclusion of the ensuing 18th Annual General Meeting. The remuneration payable to them for the financial year 2022-23 has already been fixed at the 14th Annual General Meeting.

The Company is required to maintain cost records in respect of Steel Products, Metal Formed Products and parts & accessories of auto components of the Company and such accounts and records are made and maintained. M/s. S Mahadevan & Co. (firm no.000007), Cost Accountants were appointed as the Cost Auditors of the Company for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial year 2023-24. Necessary resolution for ratification of their remuneration in respect of the aforesaid terms of appointment for the financial year 2023-24 forms part of the Notice for the ensuing Annual General Meeting, which the Board recommends for the shareholders'' approval.

20. Related Party Transactions

All related party transactions that were entered into during the financial year under review were on an arm''s length basis and were in the ordinary course of business.

The Company did not enter into any materially significant related party contracts or arrangements or transactions during the financial year which may have a potential conflict with the interest of the Company at large or which is required to be reported in Form No. AOC-2 in terms of Section 134(3) (h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Necessary disclosures as required under the Indian Accounting Standards have been made in the notes to the Financial Statements.

The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company''s website: https://tiindia.com/rpt-policy/

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

21. Directors

During the year under review, the following key Board level changes were effected to evolve and realign the senior management team after considering the growth aspirations in the existing businesses, the number of new initiatives/businesses in the anvil and towards long-term succession planning:

- Mr. M A M Arunachalam was appointed as a Whole-time Director (Key Managerial Personnel), designated as the Executive Chairman for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive);

- Mr. Vellayan Subbiah was appointed as a Whole-time Director (Key Managerial Personnel), designated as the Executive Vice Chairman for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive); and

- Mr. Mukesh Ahuja was appointed as Managing Director (Key Managerial Personnel) for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive).

- Mr. Vellayan Subbiah, Executive Vice Chairman retires by rotation at the ensuing Annual General Meeting to facilitate the compliance of the requirements of Section 152 of the Companies Act, 2013 (“the Act”) and being eligible, he

offers himself for re-appointment. The Board, based on and after taking into consideration the recommendations of the Nomination and Remuneration Committee, recommends the re-appointment of Mr. Vellayan Subbiah as Director, liable to retire by rotation only to comply with the provisions of the Act, at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished the necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated thereunder. In the opinion of the Board, all the Independent Directors have the integrity, expertise and experience including the proficiency as required to effectively discharge their roles and responsibilities in directing and guiding the affairs of the Company and, are independent of the management.

- Mr. Sanjay Johri will be retiring at the conclusion of the ensuing Annual General Meeting on completing his term of office as an Independent Director. The Board places on record its grateful appreciation for the distinguished services rendered by Mr. Sanjay Johri during his association, since August 2018, as an Independent Director of the Company.

22. Declarations/Affirmations

During the year under review:

- there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31st March 2023 and the date of this Report; &

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

23. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. R Sridharan of Messrs R. Sridharan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report (refer Annexure-F).

The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualifications or observations or other remarks have been made by the Secretarial Auditor in his said Report.

24. Annual Return

A copy of the Annual Return of the Company is placed on the website of the Company and the same is available on the following link: https://tiindia.com/financial-information/.

25. Key Managerial Personnel

Mr. M A M Arunachalam, Executive Chairman, Mr. Vellayan Subbiah, Executive Vice Chairman, Mr. Mukesh Ahuja, Managing Director, Mr. K R Srinivasan, President & Whole-time Director, Mr. AN Meyyappan, Chief Financial Officer and Mr. S Suresh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Companies Act, 2013. Mr. K Mahendra kumar ceased to be the Chief Financial Officer with effect from the close of business hours on 8th September 2022.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith and part of this Report (refer Annexure-G).

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

On behalf of the Board Chennai M A M Arunachalam

15th May 2023 Executive Chairman


Mar 31, 2022

The Directors take pleasure in presenting the 14th Annual

Report together with the Audited Financial Statements of

the Company for the year ended 31st March 2022.

1. Business Environment

The fiscal year 2021-22 was a year of transition with the focus shifting away from the pandemic and more towards recovery and growth. Due to the widespread vaccine coverage, the economic impact of the recurrent COVID-19 wave was much lesser than witnessed during the total lockdown in 202021. While the pandemic influenced the first quarter''s performance to some extent, there was a strong recovery in the subsequent quarters.

Nonetheless the global ecosystem is still in a state of flux. The invasion of Ukraine by Russia has resulted in a slew of new supply-chain bottlenecks and adversely impacted the international crude oil prices. The recent spike of COVID-19 cases in China resulting in lockdowns in some parts of that country and the economic turmoil in Sri Lanka point to a challenging future.

Due to projection revisions, global growth was predicted to moderate from 5.9% in 2021 to 4.4% in 2022, down half a percentage point from the World Economic Outlook October 2021 Forecast of the World Bank. In the advanced as well as the emerging economies, inflation has become the key problem with the rising prices of energy, non-food commodities, inputs, the global supply chain disruptions and increased freight costs continuing to fuel it across, sparing none. In India, the consumer price inflation fell to 5.2% in 2021-22 (April-December) from 6.6% in 2020-21. It was 5.6% higher than the previous year in December 2021. WPI (Wholesale Price Inflation) is likewise in double figures.

Following a contraction of 7.3% in 2020-21, the Indian economy is expected to grow to 8.9% in real terms in 2021-22. In 2022-23, the GDP is predicted to be 7.2%. The Government and the Reserve Bank of India ("RBI") are taking well-timed steps to assist a robust economic recovery such as establishing Production Linked Incentive (PLI) Scheme for thirteen industries including automobiles, telecommunications, and pharmaceuticals. The Indian Railways'' capital expenditure increased to ''155,181 Cr. (US$

20.78 Bn.) in 2020-21, up from an average annual expenditure of ''45,980 Cr. (US$ 6.15 Bn.) between 2009 and 2014 and is further expected to increase to ''215,058 Cr. (US$ 28.80 Bn.) in 2021-22, a five-fold increase over the 2014 figure. Additional impetus has been given by the Government in the Union Budget 2022 for capital expenditure, with an allocation of ''7.5 lakh Cr., up from ''5.54 lakh Cr., providing greater fiscal space to States for capital investments amongst other initiatives.

As per the Society of Indian Automobile Manufacturers (SIAM), in 2021-22, sales of passenger vehicles (PVs) grew by 17%, commercial vehicles (CVs) by 31%, three-wheelers (3Ws) by 24% while two-wheelers (2Ws) declined by 3%. The overall automobile sector experienced a decline of 6% in FY 2022 in sales. However, on the back of Government initiatives on infrastructure spending, the PLI Scheme for auto and auto components, vehicle scrappage policy, favourable policies for adoption of electric vehicles by OEMs etc, the auto industry is expected to come back strong on performance in 2022-23, putting the sector back on track.

Overall macro-economic stability indicators show that the Indian economy is well-positioned to meet the challenges of 2022-23 as per the Economic Survey 2021-22. However, the challenges posed by the external environment need to be kept firmly in view for a timely and effective strategy to achieve stability and growth. Of real concern are the current economic indicators which signal some key issues for the Government''s intervention and action, namely, the rising inflation, increasing commodity, food and fuel prices to an extent due to the geo-political situation. These have also resulted in the RBI coming forward with a hike in the interest rates and the Cash Reserve Ratio (CRR) to check the runaway inflation. World over including the USA, an increase in interest rates is seen. It is likely that such a measure could impact and dampen consumer demand in the medium term. The investment climate may also slow down due to higher interest rates amongst others. With RBI keeping a close watch on the situation, it is likely that periodical, calibrated interventions through more rate hikes can be expected in the current fiscal.

'' in Cr.

Particulars

2021-22

2020-21

Sale of Products

5,986.79

4,026.23

Profit Before Exceptional Items and Tax

628.04

380.71

Provision for Employee Voluntary Retirement Scheme Expense

-

(21.67)

Profit Before Tax

628.04

359.04

Tax Expense

(152.87)

(85.86)

Profit After Tax

475.17

273.18


2. Standalone Financial Highlights

The Board of Directors has decided to retain the entire amount of profit for the financial year 2021-22 in the Statement of Profit and Loss.

3. Performance Overview

During 2021-22, the Company has achieved a turnover of ''5,986.79 Cr., registering a growth of 49% over the previous year. The Profit before Depreciation, Interest, Exceptional Items and Tax was at ''785 Cr. as against ''549 Cr. in the previous year. The Profit before Tax and Exceptional Items was at ''628 Cr. as against ''381 Cr. in the previous year.

The Mobility segment recorded a revenue of ''963 Cr. as compared to ''847 Cr. during 2020-21, a growth of 14% despite adverse market conditions. The operating profit before interest and tax stood at ''55 Cr. as compared to ''44 Cr. during the previous year, registering a growth of 25%.

The Engineering segment registered a revenue of ''3,868 Cr. as compared to ''2,317 Cr. during the previous year, a growth of 67%. The operating profit before interest and tax stood at ''376 Cr. as compared to ''251 Cr. during 2020-21, a growth of 50%.

The Metal Formed Products segment recorded a revenue of ''1,240 Cr. as compared to ''1,032 Cr. during the previous year, a growth of 20%. The operating profit before interest and tax stood at ''136 Cr. as compared to ''75 Cr. during previous year, a growth of 81%.

4. Second wave of the pandemic

With a resurgence in the COVID-19 pandemic resulting in a second wave, lockdown/lockdown-

like restrictions were again imposed across several States from April 2021, which had some impact on the operations of the manufacturing plants and warehouses of the Company located in those States during the first quarter of the financial year 2021-22.

With the easing of restrictions and the vigorous vaccination drive launched by the Central Government to inoculate the huge population contributing to an overall improvement in the confidence level in managing the situation, operations started from mid-June 2021 onwards leading to improved revenue growth. The Company on its part initiated multiple vaccination drives to inoculate its employees, their relatives and contract staff to provide a safe and healthy work environment to everyone.

The Company has considered the possible effects/ impact arising from COVID-19 on its financial results for 2021-22 and at this stage, it has concluded that no material adjustments are required to the same. The Company will continue to closely monitor any material changes in future economic conditions.

5. Venturing into Clean Mobility business5.1. Incorporation of Wholly-owned Subsidiary: TI Clean Mobility Private Limited

The Company has been exploring various new opportunities in its pursuit for growth. The Company has identified the clean mobility space, which offers good business potential and exciting prospects to grow.

To bring more focus to this, the Company formed a wholly-owned subsidiary during the year under review to focus on clean mobility.

TI Clean Mobility Private Limited ("TICMPL") was accordingly incorporated as a wholly-owned subsidiary on 12th February 2022 to focus exclusively on clean mobility solutions. The Company invested ''100 Cr. in subscribing to 10 crore equity shares of ''10/- each of TICMPL. The Company has also extended an Inter-Corporate Deposit amounting to ''64 Cr. to TICMPL for its business operations as on 31st March 2022. This new subsidiary will comprise of the electric three-wheeler venture and other EV-related ventures of the Company.

The assets of the three-wheeler electric vehicle business, which was earlier part of the Company were moved from the Company to TICMPL. TICMPL is actively engaged on the product launch preparations which is expected in Q2 of FY 2023 and work is on towards product reliability testing, getting statutory approvals, manufacturing and infrastructure facilities readiness, ensuring quality systems, sales channel and service set-up and brand building activities.

5.2. Acquisition of Cellestial E-Mobility Private Limited

I n continuation of its foray into clean mobility, with shareholders'' approval, the Company, through its subsidiary, TICMPL acquired 69.95% in the equity share capital of M/s. Cellestial E-Mobility Private Limited ("Cellestial") for a total investment of ''161 Cr. through a combination of primary infusion and secondary purchase of shares.

TICMPL was allotted 44,030 equity shares of the face value of ''10/- per share for an aggregate amount of ''50 Cr. and acquired 97,647 equity shares from the existing shareholders of Cellestial for a total consideration of ''110.88 Cr.

Consequent to the aforesaid allotment and acquisition of equity shares, TICMPL acquired a controlling interest of 69.95% in Cellestial. Cellestial thus became a subsidiary of TICMPL under Section 2(87) of the Companies Act, 2013 (hereinafter referred to as "the Act" in this Report) with effect from 4th March 2022 (treated as a joint venture under Ind AS).

Cellestial is a start-up engaged inter alia in the design and manufacture of e-Tractors. The e-Tractors developed by Cellestial offer several advantages like a swappable battery and lower total cost of ownership compared to the conventional internal combustion engine tractors. Besides, these e-Tractors will also result in lower carbon di-oxide emissions, promote green farming and will take a step towards a circular economy.

Further, another new Company viz., M/s. Cellestial E-Trac Private Limited was incorporated as a wholly-owned subsidiary of Cellestial on 25th February 2022 with an authorized share capital of ''5 lakhs. The paid-up capital of the said Company as on 31st March 2022 was ''1 lakh.

Cellestial is currently working towards building 7 prototypes with different mechanical variants catering to different customer and industry segments. Product testing is at its peak and a roadmap has been prepared for product variations, new product development and platform development. Distribution partners are also being on boarded. It has also finalized a location in Chennai for manufacturing.

6. Business Review - Standalone6.1. Mobility Business TI''s Presence

Mobility segment of the Company comprises of bicycles of the Standard and Special variety including alloy bikes 8 speciality performance bikes, cycling accessories, bicycle components sold as spares and home fitness equipment. This year the scope of business expanded by introducing the flagship product of e-bicycle.

Industry Scenario

Bicycles fall under two distinct categories - Standards and Specials. While Standard cycles are largely used for commuting, especially in small towns 8 rural areas, Special cater to recreational usage, where the product is used for fun, fitness and leisure activities. During the year under review, the trade industry witnessed a negative growth of about 13% as against the previous year. Standards de-grew by 13% and Specials too de-grew by about 14%. In addition to this, movements by the unorganized players based on economy offerings have also impacted the organized trade (All India Cycle Manufacturer''s Association-AICMA) players'' sales volume.

Significant increase in commodity prices over last year has impacted product pricing in the market, resulting in consumers downgrading to mass and economy range of products. In addition to this, the cycling euphoria of 2021 post the first lockdown was not seen post the second lockdown as schools, workplaces and fitness centres opened up, changing the consumer behaviour towards cycling, resulting in a market drop.

Over 86% of the country''s requirements are met by four major players and the smaller regional players and imports constitute the balance. The Company''s cycles business viz., TI Cycles enjoys a share of

about 26% of the total organised trade market. The Company''s exports segment registered a growth of 23% and e-commerce by over 100% compared to the last fiscal.

Review of Performance

TI Cycles sold about 20.6 lakh bicycles during the year in trade which was lower by 6.6% compared to the previous year. Overall Trade bicycle industry itself registered a de-growth of 13% over the previous year. Despite tough market conditions, TI Cycles registered an overall market share gain of 1.8%. The thrust on Specials segment was driven through frequent new product launches, product innovations, enhanced digital marketing and superior consumer experience through exclusive retail outlets under the exclusive retail brand ''Track & Trail''. Moreover, the expansion of export business and domestic spares business is considered to be a new avenue of business to the Company. To participate in the growing economy sub-segment, 9 low cost products were launched in major categories like Kids and Mountain Terrain Bikes (MTB).

I n 2021-22, 66 new model bicycles were launched, and 23 models were refreshed. 24% of the trade sales volume came from new products.18 innovations were introduced for the first time in the industry, notable among them being introduction of split basket in junior SLR, pedal light, dual braking force, turbo drive 2.0 and anti-slip chain 2.0.

On the consumer outreach front, the business onboarded Mr. Rishabh Pant, well known Indian cricketer as the brand ambassador for Hercules, and consistently ran digital influencer campaigns for its major brands, with BSA Ladybird, Hercules, Roadeo, and Montra delivering a significant lift in brand awareness. The objective of the campaigns was to increase brand awareness and product consideration among the target group.

6.2. Engineering TI''s Presence

The Engineering segment of the Company consists of Cold Rolled Steel Strips (CRSS) and precision steel tubes viz., Cold Drawn Welded tubes (CDW) and Electric Resistance Welded tubes (ERW). These products primarily cater to the needs of the automotive, boiler, bicycle, general engineering and

process industries. The Company is further engaged in the manufacture of large diameter welded tubes mainly for non-auto application which are largely imported.

Industry Scenario

During 2021-22, the automotive industry''s production volume de-grew by 6%. Passenger vehicle and commercial vehicle grew by 19% and 29% respectively and two-wheeler segment de-grew by 3% over the previous year.

Review of Performance

The Engineering segment was able to grow its volumes leveraging the growth of passenger vehicles and commercial vehicles. The business also focussed and realized the increased opportunities in the export market. The volumes of tubes in domestic business grew by 18%, CRSS business grew by 14% and large diameter tubes grew by 26%. Overall export volume grew by 98% during the year.

The business continued to drive efficiency improvement and spending capital expenditure prudently on critical growth projects.

The business started Lean implementation for eliminating/reducing wastes in the value chain by focussing on productivity & quality improvement, inventory reduction & creating a flow in production system using Lean tools & techniques.

Career path initiatives were taken up to provide opportunities to employees within the organization for new openings and to enable cross function exposure and growth.

The business continued to participate in the reviews of the US Department of Commerce on the complaint of alleged dumping of cold-drawn steel mechanical tubes from India and some other countries, the Countervailing Duty (CVD) and Anti-dumping Duty (AD) on the Company''s exports to the US market, to reduce duty rates to enhance export volumes.

6.3. Metal Formed ProductsTI''s presence

Automotive chains, fine blanked products, roll-formed car doorframes and cold roll formed sections for passenger coaches constitute the Metal Formed Products segment.

Industry scenario

During 2021-22, production of two-wheeler segment de-grew by 3% and passenger cars grew by 17%.

The financial year was a challenging one amidst the rise in steel prices, global shortage in semi-conductor chips coupled with negligible growth of auto industry. The business demonstrated resilience despite these challenges through prudent capital spending, operating with an optimum working capital along with control over costs.

This segment is one of the major players in the manufacturing of roller chains and fine blanked parts for the automotive industry in India.

With international car majors continuing to invest in the country and increasingly using India as an export base, many component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and their Tier 1 suppliers.

Post COVID-19 pandemic, the Railways business continued to go through a turbulent phase as demand continues to be subdued.

Review of Performance

Due to State-wide lock down in first few months of the year, all the businesses were affected during the first quarter. Though the first quarter was impacted due to the pandemic, the auto segment improved from the second quarter onwards. The global shortage of semi-conductor chips affected certain segments of the businesses during the year. The Company continued to focus in the aftermarket segment benefiting from the two-wheeler population growth. The replacement market continues to provide opportunities for growth notwithstanding good competition and the business expects to strengthen on sales structure, deepen its coverage and launch new products for new categories.

Doorframe sales were higher by 11% during 202122 and the business manages to hold on to market due to good traction seen in select models with renowned auto majors. The focus is on generating more business from the auto OEMs, leveraging the Tier-1 position with specific emphasis on roll formed products and other tubular parts used in passenger

cars. In addition, increased volumes in coach parts, focus on metros and expanding the customer/product base are some of the driving factors that will put the Railways business back on track.

6.4. Others Segment

Effective 1st April 2021, the Company has reorganized certain business units and its operating structure across all the business units and a reporting segment "Others" was formed.

This segment consists of the Industrial Chains and New Businesses of the Company viz, Truck Body Works, TMT Bars and TI Opto Electronic Solutions,

Industrial Chains business manufactures Power Transmission Chains, Engineering Class Chains, Agricultural Chains and Textile Chains for use in agriculture, cement, steel, sugar, textiles, food and other sectors. This business has performed well during the year with healthy growth in both domestic and exports.

New businesses comprising of Truck Body Works, TMT Bars and TI Opto Electronic Solutions have begun to stabilize post the 1st and 2nd wave of COVID-19 pandemic and are expected to grow their performance in the coming years.

7. Dividend

The Board of Directors declared an Interim Dividend of ''2/- per share (@ 200%) on equity share of face value of ''1/- each for the financial year 2021-22, which was paid on 4th March 2022 to all the eligible shareholders. Final dividend of ''1.50/- per share (@ 150%) has been proposed by the Board for the said financial year and together with the Interim Dividend of ''2/- per equity share, already declared and paid, in respect of the financial year 2021-22, ''3.50 per share (@ 350%) will be considered as the total Dividend for the said financial year.

The dividend payout is in accordance with the Company''s Policy on Dividend Distribution. The said Policy as approved by the Board is uploaded and is available on the following link on the Company''s website: https://tiindia.com/dividend-distribution-policy/

Details thereof also form part of this Annual Report for the information of shareholders.

8. Share Capital

The paid-up Equity Share Capital of the Company as on 31st March 2022 was ''19,29,50,221/- consisting of 19,29,50,221 Equity Shares of the face value of ''1/- each fully paid up.

9. Finance

Cash and Cash Equivalents as at 31st March 2022 were ''2.36 Cr. In addition, the Company has investments in liquid schemes of mutual funds for ''280.45 Cr. The Company continues to focus on judicious management of its working capital. The Company took many steps during the year to improve the working capital turns. The working capital parameters were kept under strict check through continuous monitoring.

9.1. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating ''50 Cr. were redeemed. As at 31st March 2022, NCDs aggregating ''50 Cr. were outstanding, which were subsequently redeemed in April 2022 on the due date. Accordingly, no NCDs of the Company are outstanding as on date of this Report.

9.2. Deposits

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

9.3. Particulars of Loans, Guarantees or Investments

During the year under review, the Company incorporated a Wholly-Owned Subsidiary, M/s. TI Clean Mobility Private limited ("TICMPL") and invested ''100 Cr. in its equity capital. Further the Company had given an Inter-Corporate Loan of ''64 Cr. to TICMPL under Section 186 of the Companies Act, 2013, the details relating to which form part of the Notes to the Audited Financial Statements provided in this Annual Report.

During the year under review, the Company made a strategic investment in M/s. Aerostrovilos Energy Private Limited ("AEPL"), a Chennai based start-up engaged in the development of micro-gas turbine technology, by way of subscription to 4,151

equity shares, for an aggregate sum of ''3.46 Cr., representing 27.78% of the paid-up equity share capital of AEPL and 25% of the equity share capital considering the ESOP Pool. Consequently, AEPL became an associate Company with effect from 24th November 2021. AEPL is currently carrying on the process of building the proto-type of micro gas turbine.

During the year under review, in February 2022, the Company exercised the option to convert 9 crore Share Warrants into equal number of equity shares of M/s. CG Power and Industrial Solutions Limited ("CG Power"), the Company''s subsidiary, by paying the balance subscription amount of ''57.78 Cr. and was allotted equal number of equity shares by CG Power.

Post allotment of the shares on conversion of the Share Warrants, the Company holds 80,12,51,887 equity shares of ''10/- each fully paid up of CG Power, constituting 55.57% of the subscribed and paid up capital of CG Power.

The Company decided to exercise the option to convert the remaining 8,52,33,645 Share Warrants, in May 2022, into equity shares of CG Power in the current financial year 2022-23, and paid the balance of the purchase consideration of about ''54.72 Cr. Post allotment of the shares in respect of the second and final conversion of Warrants, the Company holds 88,64,85,532 equity shares of ''10/- each representing 58.05% of the subscribed and paid up capital of CG Power on a fully diluted basis.

Consequent to the improved business performance of CG Power, State Bank of India ("SBI"), the lender of CG Power released and cancelled the corporate guarantee earlier provided by the Company in favour of SBI towards the fund-based facilities aggregating ''1,365 Cr. extended by SBI to CG Power.

As part of treasury management, the Company also deploys any short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the Audited Financial Statements provided in this Annual Report.

9.4. Consolidated Financial Highlights

'' in Cr.

Particulars

2021-22

2020-21

Revenue from contract with customers (net)

12,060.40

5,827.46

Profit before share of profit of a Joint Venture and Exceptional items

1,134.87

406.38

Share of profit/ (Loss) of Joint Venture

(2.92)

-

Exceptional items

20.21

(41.88)

Profit Before Tax and exceptional items

1,152.16

364.50

Tax Expense

160.77

78.76

Profit for the year before Minority Interest and share of profit from Associate

991.39

285.74

10. Business Review - Subsidiaries and Joint Venture10.1. Shanthi Gears Ltd (SGL)

SGL, a subsidiary of the Company, recorded revenue of ''337 Cr. in 2021-22 against ''216 Cr. in the previous year. Profit before tax was ''59 Cr. (previous year: ''26 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers.

SGL continued to look at enlarging its market presence, create a robust channel, enhance its process capabilities and launch new products to meet the growing expectations of customers.

SGL declared and paid an Interim Dividend of ''2.50 per share for the financial year 2021-22.

10.2. Financiere C10 SAS (FC10)

FC10, the Company''s wholly-owned subsidiary in France recorded consolidated revenue of Euro 33 Mn. in 2021 (previous year: Euro 26 Mn.). The profit after tax for the year was Euro 0.25 Mn. as compared with the loss of Euro 0.67 Mn. in the previous year. The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS, Sedis GmbH and Sedis Co Ltd in UK.

10.3. Great Cycles (Private) Limited (GCPL)

GCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of GCPL''s equity capital.

During the year under review, GCPL recorded revenue of ''32 Cr. (previous year: ''19 Cr.) and registered profit before tax of ''9 Cr. (previous year profit before tax: ''2 Cr.).

10.4. Creative Cycles (Private) Limited (CCPL)

CCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of CCPL''s equity capital.

During the year under review, CCPL recorded revenue of ''77 Cr. (previous year: ''41 Cr.) and registered loss before tax of ''14 Cr. (previous year loss before tax: ''2 Cr.).

10.5. CG Power and Industrial Solutions Limited (CG Power)

CG Power is the Company''s subsidiary acquired in November 2020. The Company holds 55.57% of CG Power''s equity capital.

During the year under review, CG Power recorded revenue of ''5,561 Cr. and registered profit before exceptional items and tax of ''527.82 Cr.

The operations of CG Power have stabilized, and its performance has registered an impressive turnaround during 2021-22, which only reaffirms the confidence of the Board at the time of acquisition that CG Power would create better value for itself and the Company in the coming years.

10.6. TI Clean Mobility Private Limited (TICMPL)

TICMPL is the Company''s wholly-owned subsidiary incorporated on 12th February 2022.

During the year under review, TICMPL recorded Nil revenue and registered a loss before tax of ''12.96 Cr.

During the year under review, Cellestial E-Mobility Private Limited recorded revenue of ''0.06 Cr and registered a loss before tax of ''4.36 Cr

10.7. TI Tsubamex Private Limited (TTPL)

Consequent to discontinuance of its business operations, the application made by TTPL to the Registrar of Companies, Tamilnadu, Chennai (RoC) was approved and the name of TTPL was struck off the Register of Companies maintained by the RoC and TTPL stood dissolved effective 25th October 2021.

11. Financial Review11.1. Profits S Profitability

The Profit before Tax and exceptional items has registered a growth by 65%. All the business segments of the Company maintained their focus

on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business.

11.2. Capital Expenditure

The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invests appropriately for the longterm with a view to servicing its customers in a more timely and efficient manner.

11.3. Interest Cost

The Company''s interest cost reduced to ''12 Cr. in 2021-22 from ''19 Cr. in the previous year, mainly on

account of lower borrowing and better management of net working capital. The Company had a net debt of ''65.26 Cr. (Net of borrowings, cash and investment in mutual funds; and debt securities) as on 31st March 2022 as compared to the cash surplus (Net of borrowings, cash and investment in mutual funds; and debt securities) of ''10 Cr. as on 31st March 2021.

11.4. Financial Ratios

The key financial ratios of the Company in which there were significant changes (more than 25%) during the financial year compared to the previous financial year, with reasons therefor, are as under:

Sl.

No.

Financial Ratio1

FY 2021-22

FY 2020-21

% change over previous year

Reasons

1

Interest Coverage Ratio (times)

60.4

25.2

139.6%

Favourable average borrowing rates

2

Debt-Equity Ratio (times)

0.1

0.1

(4.3%)

-

3

Net Profit Margin

7.5%

6.4%

17.1%

Improvement in profit mainly due to reduced fixed cost and interest cost

4

Return on Net Worth

17.6%

11.9%

47.7%

Increase in profits with improved

5

Return on Capital Employed

22.6%

17.8%

27.0%

business scenario

6

Revenue Growth

49.0%

(0.5%)

Higher sales driven primarily after post-pandemic period

7

Debtors Turnover (times)

9.5

8.4

13.1%

Better management of working ¦ capital

8

Inventory Turnover (times)

7.1

5.4

31.5%

9

Current Ratio (times)

1.1

1.0

10.0%

10

Operating Profit Margin

12.3%

12.9%

(0.1%)

Increase in profits with improved business scenario

to applicable Statutes, Company policies and procedures and timely preparation of financial statements;

• Effective usage of resources and safeguarding of assets;

• Prevention and detection of frauds/errors;

• Efficient conduct of operations.

To ensure efficient internal control systems, the Company has a well-established, independent and multi-disciplinary in-house Internal Audit function that carries out periodic audits across locations and functions. The scope and authority of the Internal Audit function is derived from the Internal Audit charter duly approved by the Management. The Internal Audit function reviews compliance vis-avis the established design of the internal control, as

also the efficiency and effectiveness of operations. Internal Audit function is responsible for providing, assurance on compliance with operating systems, internal policies and legal requirements as well as suggesting improvements to systems and processes. It reviews and reports to management and the Audit Committee about compliance with internal controls, and the efficiency and effectiveness of operations as well as the key process risks. The Company also has established whistle-blower mechanism operative across the Company.

In its continued efforts to further strengthen its Internal Audit process through utilizing the services of a specialist agency in order to benefit from the best of practices available (including the use of analytical tools) to monitor various processes, the Company has re-appointed M/s. PricewaterhouseCoopers ("PwC") as Internal Auditors of the Company for the current financial year 2022-23 also. The Company is seeing benefits from the professional approach and practises adopted by the said Internal Auditors.

The Audit Committee of the Board of Directors, comprising of independent directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any.

The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation are submitted to the Audit Committee every quarter for review, and concerns if any, are reported to the Board. This process ensures robustness of internal control system and compliance with laws and regulations including resource utilisation and system efficacy.

Revenue and capital expenditures are governed by approved budgets and the levels are defined by a delegation of authority mechanism. Review of capital expenditure is undertaken with reference to benefits expected in line with the policy for the same.

I nvestment decisions are subject to formal detailed evaluation and approved by the relevant authority as defined in the delegation of authority mechanism. The Audit Committee reviews the plan for internal audit, significant internal audit observations and functioning of the Company''s Internal Audit department on a periodic basis.

11.6. Internal Financial Control Systems with reference to the Financial Statements

The Company has complied with the specific requirements of the Act, which call for establishment and implementation of an Internal Financial Control framework that supports compliance with requirements of the said Act in relation to the Directors'' Responsibility Statement.

The Company''s business processes are enabled by an Enterprise-wide Resource Platform (ERP) as its core IT system. The operating management is not only responsible for revenue and profitability but for also maintaining financial discipline and accountability. The systems and processes are continuously improved by adopting best in class processes, automation and implementing latest Information Technology tools.

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. This is reviewed regularly and tested by the Internal Audit Team. The Company''s business processes are enabled by the ERP for monitoring and reporting processes resulting in financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company has an established risk assessment and minimisation framework. This framework provides a mechanism to identify the risk, evaluation of likelihood of happening and consequences. It also provides for assessment of options to mitigate the risk and develop appropriate risk management plans. There are normal constraints of time, efficiency and cost.

The Risk Management Committee of the Board of Directors reviews the risk mitigation plans periodically to monitor the key risks of the Company and evaluate the management of such risks for effective mitigation.

During the year under review, the Risk Management Committee met on 17th June 2021, 27th October 2021 and 16th March 2022 and reviewed the risks and mitigation plans of the SBUs of the Company.

Some of the risks associated with the business and the related mitigation plans are discussed hereunder.

The risks given below are not exhaustive and the evaluation of risk is based on management''s perception.

13. Corporate Social Responsibility (CSR)

The Company, being part of the Murugappa Group, is known for its tradition of philanthropy and community service. The Company''s philosophy is to reach out to the community by establishing service-oriented philanthropic institutions in the field of education and healthcare as the core focus areas. The CSR Policy of the Company is available on the Company''s website at the following link, https://tiindia.com/csr-policy/.

As per the provisions of the Act, the Company was required to spend ''7.34 Cr. and had also carried forward an excess balance of ''1.17 Cr. After adjustment of the said excess carried forward balance, the minimum mandatory amount required to be spent during the financial year 2021-22 was ''6.17 Cr, against which, the Company spent ''6.48 Cr. towards identified CSR projects in the fields of education, health care and public infrastructure during the year.

The Annual Report on CSR for 2021-22 is annexed to and forms part of this Report as well as in the Company''s website at the following link, https://tiindia.com/csr-budget-and-spend-details/

14. Corporate Governance

The Company is committed to maintaining high standards of corporate governance.

The Company was wholly in compliance with the requirements of the Listing Agreement with the Stock Exchanges as well as the SEBI Listing Regulations.

A report on corporate governance together with a certificate from the Practising Company Secretary is annexed in accordance with the terms of the SEBI Listing Regulations and forms part of the Board''s Report. The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters in terms of Part B of Schedule II [Corporate Governance] of the SEBI Listing Regulations.

The Report further contains details as required to be provided in the Board''s Report on the policy on Directors'' appointment and remuneration including the criteria, annual evaluation by the Board and Directors, composition and other details of Board committees, implementation of risk management

policy, whistle-blower policy/vigil mechanism, dividend policy etc.

15. Business Responsibility Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility Report as part of the Annual Report for the top 1000 listed entities, the Business Responsibility Report forms part of the Annual Report.

The Business Responsibility Policy of the Company is displayed in the Company''s website at the following link, https://tiindia.com/business-responsibilitv-policv/

With the increasing emphasis on reporting on the ESG (Environmental, Social and Governance) matters, the Company has taken steps to bring focus to ESG initiatives.

16. Human Resources

The Company continues to lay emphasis on creating a high performing work culture to achieve organisational goals of the present as well as those of the future in a sustainable way by establishing a culture of process discipline, organisational oneness and achievement orientation across its businesses through simplification and digitization, empowerment, project-based working and customer centricity.

The initiatives taken by the Company are in line with its long-term HR strategy drawn up with three broad thrust areas - TI Way of working, TI talent development and creating a high-performance work culture.

As the Company embarked on its ambitious plan for expansion and growth, it has co-created a comprehensive operational framework to guide the employees in this journey covering all divisions/ business units/functions. ''TI Way'' is a set of guidelines for critical processes in the organization thereby uniting their approaches irrespective of the business units. TI Way rests on key three pillars - process discipline, organisational oneness and achievement orientation and powered by three key directional initiatives - talent development, Lean management and business acquisition. The journey on all these three initiatives has started well.

As part of the talent development engine, the Company has developed a framework that will

ensure a structured approach towards identification, development and availability of talent ready pool for occupying elevated roles in top, middle and junior management categories. The Company has constituted a ''Talent Board'' which is an integral part of the talent development engine. The Talent Board will play an active role in development of resources across levels and will guide, support and constantly review the various developmental actions, interventions and suggest appropriate next steps for accelerated talent development in the Company.

I n order to further strengthen the value chain and being competitive, the Company focuses on "we must to do more with less" and adapt to changes in the market and economy. In line with this, the Company started the Lean implementation for eliminating/ reducing wastes in the value chain and for improving customer defined value, to products and services. Lean is being practised at Tube Products of India, TI Cycles of India, Industrial Chains and the Fine Blanking businesses and also at Shanthi Gears Limited, focussing on Muda (waste) elimination, implementation of standard work, productivity 8 quality improvement, inventory 8 creating a flow in the production system using Lean tools 8 techniques.

The total number of permanent employees on the rolls of the Company as on 31st March 2022 is 3,107.

Industrial relations continued to remain cordial at all the Company''s units during the period under review.

The information relating to employees and other particulars required under Section 197 of the Act read with Rule 5 of the Companies (Appointment 8 Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in the said regard.

The disclosure with regard to remuneration as required under Section 197 of the Act read with Rule

5 of the aforementioned Rules is attached and forms part of this Report.

17. Prevention of sexual harassment at workplace

The Company has policy on prevention of sexual harassment at workplace in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition 8 Redressal) Act 2013. An Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment has been constituted in compliance with the requirements of the aforementioned Act. The policy extends to all employees (permanent, contractual, temporary and trainees). Employees at all levels are being sensitized about the said Policy and the remedies available thereunder.

No complaints were received by the ICC during the year under review and no complaint was pending as at the end of the year.

18. Employee Stock Option Scheme

During the year under review, the Company had granted 2,85,400 Options to eligible employees under its Employee Stock Option Plan viz., ESOP 2017.

Details in respect of the ESOP 2017 as required under the relevant SEBI Regulations are displayed in the Company''s website at the following link: https://tiindia.com/esop/

19. Directors'' Responsibility Statement

The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act 2013:

a) that in the preparation of the annual Financial Statements for the year ended 31st March 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and

judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2022 and of the profit of the Company for the year ended on that date;

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

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; 8

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

20. Auditors

M/s. S R Batliboi 8 Associates LLP, Chartered Accountants (Firm Registration Number : 101049W/ E300004) were appointed as Statutory Auditors at the 9th Annual General Meeting held on 6th November 2017 for a period of five years viz., from the conclusion of the said 9th Annual General Meeting till the conclusion of the ensuing 14th Annual General Meeting.

As the term of the Statutory Auditors is valid only till the ensuing Annual General Meeting, it is proposed to re-appoint M/s. S R Batliboi 8 Associates LLP, Chartered Accountants as Statutory Auditors of the Company for a second term, to which they are eligible under the Act.

The Statutory Auditors will be completing audit of the financials of the Company for a continuous period of ten years in FY 2025-26 if their appointment in the casual vacancy to do the statutory audit in FY 2016-17 is also reckoned. It is hence proposed to recommend a second term of four years only for re-appointment of the Statutory Auditors viz., from the conclusion of the ensuing 14th Annual General Meeting to the conclusion of the 18th Annual General Meeting.

Necessary consent for the re-appointment has been received from M/s. S R Batliboi 8 Associates LLP. The resolution proposing the said re-appointment of M/s. S R Batliboi 8 Associates LLP as Statutory Auditors of the Company for a period of four years along with the remuneration thereof forms part of the Notice for the ensuing 14th Annual General Meeting, which the Board recommends for the shareholders'' approval.

The Company is required to maintain cost records in respect of Steel Products, Metal Formed Products and parts 8 accessories of auto components of the Company and such accounts and records are made and maintained. M/s. S Mahadevan 8 Co. (Firm no.000007), Cost Accountants were appointed as the Cost Auditors of the Company for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial year 2022-23. Necessary resolution for ratification of their remuneration in respect of the terms of their appointment for the financial year 2022-23 forms part of the Notice for the ensuing Annual General Meeting, which the Board recommends for the shareholders'' approval.

21. Related Party Transactions

All related party transactions that were entered into during the financial year under review were on an arm''s length basis and were in the ordinary course of business.

The Company did not enter into any materially significant related party contracts or arrangements or transactions during the financial year which may have a potential conflict with the interest of the Company at large or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014.

Necessary disclosures as required under the Indian Accounting Standards have been made in the notes to the Financial Statements.

The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company''s website, https://tiindia.com/rpt-policy/. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

22. Directors

During the year under review, the following key Board level changes were effected to evolve and realign the senior management team after considering the growth aspirations in the existing businesses, the number of new initiatives/businesses in the anvil and towards long-term succession planning:

- Mr. M A M Arunachalam, who was the nonexecutive Chairman till 31st March 2022, was appointed as a Whole-time Director (Key Managerial Personnel), designated as the Executive Chairman for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive) for guiding the Company''s existing business interests, helping in identifying new business interests, actively promoting good governance, nurturing business relationships and other corporate affairs including representing the Company at various forums, interacting with the Government for active promotion of the Company''s business interests etc.;

- Mr. Vellayan Subbiah, who was the Managing Director till 31st March 2022, was appointed as a Whole-time Director (Key Managerial Personnel), designated as the Executive Vice Chairman for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive) for providing the overall leadership, identifying the growth vectors for the Company and look at the long-term business opportunities, organic as well as inorganic besides continuing to provide tactical direction, to guide and support the business teams and its leaders in strategic and operational matters; and

- Mr. Mukesh Ahuja, who was heading Tube Products of India, the largest division of the Company was appointed as Additional Director and as the Managing Director (Key Managerial Personnel) for a 5-year term of Office from 1st April 2022 to 31st March 2027 (both days inclusive) as part of long-term succession planning and in view of appointment of Mr. Vellayan Subbiah as the Executive Vice Chairman, to focus on growing the existing businesses and to facilitate future growth of the Company.

Mr. Tejpreet Singh Chopra was appointed by the Board of Directors as an Additional Director in the Independent Director category of the Company on 16th March 2022.

In respect of all the four appointments as aforementioned, the Board decided to recommend the same to the shareholders and further seek the approval of the shareholders through the issue of a Notice of Postal Ballot & E-voting dated 12th May 2022, since the amended SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 stipulates inter alia that in respect of appointment of any directors, shareholders'' approval be taken within three months from the date of appointment by the Board of Directors.

Consequent to his appointment as the Executive Vice Chairman (Whole-time Director) effective 1st April 2022, Mr. Vellayan Subbiah stepped down as Managing Director effective close of business hours on 31st March 2022.

The Board further places on record its appreciation of the major role played by Mr. Vellayan Subbiah as the Managing Director of the Company during his term of Office from 19th August 2017 to 31st March 2022 in actively driving the growth of the existing businesses of the Company, apart from providing strategic direction for the acquisitions and step outs into new lines of business by the Company. The Board also wishes him, Mr. M A M Arunachalam and Mr. Mukesh Ahuja the very best in their respective new roles.

During the year 2021-22, Ms. Madhu Dubhashi, Independent Director retired on the completion of her second term, at the 13th Annual General Meeting of the Company. Mr. Mahesh Chhabria, Independent Director resigned from the Board in October 2021 citing potential conflict of interest on account of the Company''s business strategies with his senior management position with another Company.

The Board places on record its appreciation of the distinguished services rendered by Ms. Madhu Dubhashi and Mr. Mahesh Chhabria during their term of office as Directors of the Company.

Mr. K R Srinivasan, President and Whole-time Director retires by rotation at the ensuing Annual General Meeting to facilitate the compliance of the requirements of Section 152 of the Act and being eligible, he offers himself for re-appointment. The Board, based on and after taking into consideration the recommendations of the Nomination and Remuneration Committee, recommends the re-appointment of Mr. K R Srinivasan as Director, not liable to retire by rotation, at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished the necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated thereunder. In the opinion of the Board, all the Independent Directors have the integrity, expertise and experience including the proficiency as required to effectively discharge their roles and responsibilities in directing and guiding the affairs of the Company and, are independent of the management.

23. Declarations/Affirmations

During the year under review:

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

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

24. Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed Mr. R Sridharan of Messrs. R. Sridharan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith and forms part of this Report.

The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualifications or observations or other remarks have been made by the Secretarial Auditor in his said Report.

25. Annual Return

A copy of the Annual Return of the Company is placed on the website of the Company and the same is available on the following link, https://tiindia.com/financial-information/.

26. Key Managerial Personnel

Arising out of the Board level changes during the year, Mr. M A M Arunachalam, Executive Chairman, Mr. Vellayan Subbiah, Executive Vice Chairman, Mr. Mukesh Ahuja, Managing Director, Mr. K R Srinivasan, President & Whole-time Director, Mr. K Mahendra Kumar, Chief Financial Officer and Mr. S Suresh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Act.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith and forms part of this Report.

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

On behalf of the Board

Chennai M A M Arunachalam

12th May 2022 Executive Chairman

1

Ratios are tracked by the Company on a standalone basis

11.5. Internal Control Systems

Internal control systems in the organisation are looked at as the key to its effective functioning. The Company believes that internal control is one of the key pillars of governance which provides freedom to the management within a framework of appropriate checks and balances. Given the nature of business and size of its operations, the Company has designed and instituted a robust internal control system that comprises well-defined organisation structure, roles and responsibilities, documented policies and procedures to reduce business risks through a framework of internal controls and processes. These controls ensure:

• Recording of transactions are accurate, complete and properly authorised;

• Adherence to Accounting Standards, compliance


Mar 31, 2021

The Directors take pleasure in presenting the 13th Annual

Report together with the audited financial statements of

the Company for the year ended 31st March 2021.

1. Business Environment

Outbreak of the COVID-19 pandemic in early 2020 and the sharp resurgence of the pandemic again in the recent months of 2021, even as the situation appeared to be kept under good control, in the form of a more serious and devastating second wave, have come to pose an unprecedented global crisis, of a scale never witnessed before in the annals of the history of mankind. Measures to contain rapid spread of the pandemic through the imposition of lockdowns/lockdown like restrictions, while helping in stemming the spread of the pandemic to a large extent, have, at the same time, applied brakes on economic activity with serious implications to consumption and investment. The impact is well evident as India''s Gross Domestic Product (GDP) contracted by 7.3%, in 2020-21 as per the provisional National Income estimates released by the National Statistical Office recently. The Gross Value Added (GVA) in the economy shrank 6.2% in 2020-21 compared to an increase of 4.1% in the previous year. While this is the bleakest performance on record for the economy, the fourth quarter of 2020-21 helped in repairing the damage, with a higher than expected growth of 1.6% in the GDP. This marked the second quarter of positive growth after the country entered a technical recession in the first half of the year. With a lower contraction in the GDP as well GVA in 2020-21, the sharp recovery projected for 2021-22 for the Indian economy by a number of agencies like the International Monetary Fund, at 12.5% and the Reserve Bank of India, at 10.5% may appear difficult at this point as the scourge of the Novel Coronavirus has returned to hurt and blunt economic activity once again.

Although the global economic output is recovering from the collapse triggered by the COVID-19 pandemic, it appears that it will remain below prepandemic trends for a prolonged period of time. The pandemic has exacerbated the risks associated with a decade-long wave of global debt accumulation. As per the World Economic Update issued by the World

Bank, although the recent vaccine approvals have given rise to hopes of a turnaround in the pandemic situation later this year, renewed waves and new variants of the Coronavirus pose concerns for the outlook. Amid exceptional uncertainty, the global economy is projected to grow 5.5% in 2021 and 4.2% in 2022.

For the Indian automotive industry, which accounts for nearly half of the manufacturing GDP of the country, the year 2020-21 was an exceptional one for the wrong reasons. The industry was replete with and staring at a series of problems, one bigger than the other, that affected production, productivity and sales. Even as the year started in the backdrop of a very long slowdown still looming large, the industry was a witness to a further list of bigger problems like economic uncertainty, transition to BS-VI, the pandemic and the resultant lockdown, constraints in supply chain and the migration of labour.

As per the Society of Indian Automobile Manufacturers (SIAM), the apex automobile body in the country, all segments of the Indian auto sector witnessed a de-growth in sales during 2020-21 with passenger vehicles (PVs) witnessing a CAGR of -6.2%, commercial vehicles (CVs) at -12.8%, three wheelers (3Ws) at -30.2% and two-wheelers (2Ws) at -9.2%.

As the country is still trying its best to navigate through this unparalleled crisis, the Government and the Reserve Bank of India are taking well calibrated measures to support a robust economic recovery. The Union Budget 2021 was one good example of the initiatives of the Government in focusing on regaining the growth momentum in the economy through several measures including keeping the tax rates stable and enhancing investments in infrastructure.

2. Standalone Financial Highlights

_____(? in Cr.)

Particulars__2020-21 2019-20

Sale of Products__4,026.23 4,052.67

Profit Before Exceptional Items 380.71 420.72

and Tax_______

Profit on Shares tendered under - 19.11

Buyback Scheme_______

Provision for Employee Voluntary (21.67) (21.97)

Retirement Scheme Expense_______

Profit Before Tax__359.04 417.86

Tax Expense__(85.86) (87.31)

Profit After Tax__273.18 330.55

The Board of Directors has decided to retain the entire amount of profit for the financial year 2020-21 in the Statement of Profit and Loss.

3. Performance Overview

During 2020-21, the Company achieved a turnover of ''4,026 Cr., registering a very marginal de-growth of 0.7% over the previous year due to country wide lockdown imposed on account of the outbreak of COVID-19 pandemic. The Company focused on reducing fixed costs, manage working capital more efficiently and making capital expenditure prudently on critical growth projects. The Profit before Depreciation, Interest, Exceptional Items and Tax was at ''549 Cr. as against ''610 Cr. in the previous year. The Profit before Tax and Exceptional Items was at ''381 Cr. as against ''421 Cr. in the previous year.

During the year, the Company implemented voluntary retirement schemes in certain locations at a cost of ''22 Cr. to improve the productivity and competitiveness of its business. This is shown as exceptional loss in the financial statements.

The Cycles and Accessories segment recorded revenue of ''847 Cr. as compared to ''781 Cr. during 2019-20, a growth of 8%, despite the adverse market conditions and pandemic. The operating profit before interest and tax stood at ''44 Cr. as compared to ''26 Cr. during the previous year, registering a growth of 70%.

The Engineering segment registered revenue of ''2,317 Cr. as compared to ''2,258 Cr. during the previous year. The operating profit before interest and tax stood at ''251 Cr. as compared to ''264 Cr. during 2019-20, a de-growth of 5%.

The Metal Formed Products segment recorded revenue of ''1,274 Cr. as compared to ''1,399 Cr. during the previous year, a de-growth of 9%. The operating profit before interest and tax stood at ''87 Cr. as compared to ''123 Cr. during previous year, a de-growth of 29%.

4. COVID-19 and its impact

Consequent to the outbreak of the COVID-19 pandemic and the lockdown/curfew introduced by the Central and State Governments, the operations in the Company''s manufacturing plants situated across various locations of the Country had to be shut down or were disrupted till the latter half of April 2020.

With the easing in the lockdown/curfew and the Governments permitting operations to be resumed with necessary permission from the local authorities, the Company from end April 2020 onwards resumed operations, in a partial manner, in almost all the plants. As the situation improved, the Company''s operations were also scaled up to the pre-pandemic level in line with improvement in the economic activity in the Country.

With the widespread resurgence of the

COVID-19 virus resulting in a more serious, second wave of the pandemic, the Governments across various States of the country started imposing lockdown/lockdown-like restrictions again from the month of April 2021 onwards. These measures have come to impact the operations of the manufacturing plants and warehouses of the Company located in those States leading to no or minimum level operations only as permitted in the respective States.

Considering the seriousness of the pandemic

situation, the Company is taking various measures to ensure the health and safety of its employees and to comply with the directives regularly being issued by the Central and the respective State Governments besides the local authorities at all its business

locations. The Company will continue to monitor the situation for taking timely action based on the guidance from the Governments and the authorities.

The Company has considered the possible effects/ impact arising from COVID-19 on its financial results for the year 2020-21 and at this stage, it has concluded that no material adjustments are required to the same. The Company will continue to closely monitor any material changes to future economic conditions.

5. Acquisition of controlling interest in CG Power

During the year under review, the Company acquired controlling interest in M/s. CG Power and Industrial Solutions Limited ("CG Power"), which is engaged in the industrial and power sector, with its equity shares listed on the BSE Limited and the National Stock Exchange of India Limited. CG Power has 18 manufacturing facilities and provides gainful employment to over 11,000 persons directly and indirectly.

The decision by the Company to acquire controlling interest in CG Power was driven by the strong

conviction and belief that the Company''s operational, financial and governance capabilities and experience will help towards removing the difficulties and hardships faced by CG Power largely resulting from paucity of funds for working capital and, in the process, facilitate value creation for the Company as well as CG Power. With both the companies being engaged in the engineering business, the acquisition, it was further expected would bring in synergy for both of them.

CG Power, being a well-established company of over eight decades standing with a robust business model, was under significant financial stress due to lack of steady credit lines and its lenders had initiated the process for resolution of the stress under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019. Identifying the business opportunity presented by CG Power, the Company entered into a Securities Subscription Agreement on 7th August 2020 with CG Power which provided for the Company acquiring, for an all cash consideration, by way of subscription to fresh equity shares and convertible share warrants of CG Power for about ''700 Cr., subject to approval of the Competition Commission of India and satisfactory fulfilment of the Conditions Precedents contained in the said Securities Subscription Agreement. To take the process forward, the Company further made a proposal for a binding bid under the Swiss Challenge bid process launched by the lenders of CG Power for interested suitors to bid for acquiring controlling interest in CG Power under the said RBI Directions and at the end of the said bid process, the lenders of CG Power, on 28th August 2020, declared the Company''s offer as the successful offer and the Company as the successful bidder for the acquisition of controlling interest in CG Power.

The Company further decided in early September 2020 to make an additional investment to facilitate the enhanced funding needs of CG Power, as subsequently assessed, by way of subscription to additional equity shares on a preferential issue basis for about ''100 Cr.

The acquisition received the approval of the CCI under Section 31(1) of the Competition Act, 2002 on 13th October 2020.

The Company was allotted on 26th November 2020 by CG Power, upon making the agreed investment,

a) 64,25,23,365 equity shares of the face value of ''2/- each at a price of ''8.56/- (including premium) per equity share, for an aggregate consideration of about ''550 Cr.; &

b) 17,52,33,645 warrants, each carrying a right exercisable by the Company as the warrant holder to subscribe to equal number of equity shares within 18 months from allotment, for a subscription amount of about ''37.50 Cr., being 25% of the aggregate consideration payable for subscribing to equity shares upon exercise of the warrants.

Consequent to the aforesaid allotment of equity shares, the Company acquired controlling interest in CG Power thereby becoming its promoter, holding 50.62% of the issued, subscribed and paid up equity share capital of CG Power and also, CG Power became a subsidiary of the Company with effect from 26th November 2020 under Section 2(87)(ii) of Companies Act, 2013. In terms of the Subscription Agreement, the Board of Directors of CG Power also was reconstituted.

Subsequently, on 19th December 2020, the Company was allotted 6,87,28,522 equity shares of ''2/- each at a price of ''14.55/- per equity share (including premium) for an aggregate consideration of about ''100 Cr. towards the additional investment committed by the Company.

Arising from the above, the Company presently holds 71,12,51,887 equity shares of ''2/- each of CG Power, resulting in a 53.16% shareholding, and along with the investment in 17,52,33,645 convertible share warrants as per details aforementioned, the Company holds an aggregate shareholding of 58.58% in CG Power on a fully diluted basis.

Towards easing of the fund constraints of CG Power, the Company, with the approval of its shareholders, at the Extraordinary General Meeting held on 30th November 2020, pursuant to Section 186 of the Companies Act, 2013 and the Rules thereunder, furnished guarantee(s) in favour of the lenders of CG Power for the financial assistance to be availed by CG Power for an aggregate amount of up to ''1,365 Cr. CG Power is well on course to improve its financial and operational performance so as to service and satisfy fully all its debts by itself without any need for the lenders of CG Power to seek recourse to the guarantees furnished by the Company.

CG Power completed the One Time Settlement (OTS) process with its existing lenders on 24th December 2020 (confirmed on 28th December 2020) with payment of an upfront consideration of ''650 Cr., submission of counter guarantee for the non-fund based facilities, issuance of unrated, unsecured, unlisted, non-convertible debentures for ''200 Cr. and the recognition of debt of ''150 Cr. in the books against its corporate headquarters viz., CG House property. As per the terms of the OTS process, the lenders of CG Power provided a waiver of about ''1,100 Cr.

With the credit lines becoming assured and regular, post-acquisition of controlling interest by the Company, CG Power has started showing steady improvement in its operational and financial performance and the Board of Directors of the Company is confident that the operations of CG Power would, barring any unforeseen developments, stabilize and turnaround within a reasonable period of time and also create better value for itself and the Company in the coming years.

6. Business Review - Standalone6.1. Cycles and Components TI''s Presence

The Cycles and Components segment of the Company comprises of bicycles of the Standard and Special variety including alloy bikes & specialty performance bikes, cycling accessories, bicycle components sold as spares and home fitness equipment.

Industry Scenario

Bicycles fall under two distinct categories - Standards and Specials. While Standard cycles are largely used for commuting, especially in small towns & rural areas, Special cycles cater to recreational usage, where the product is used for fun, fitness and leisure activities. During the financial year, the Trade industry witnessed a growth of about 8% as against the previous year. Standards have de-grown by 10% and Specials have grown by about 20%. However, Performance Cycling Group (PCG) as a subset of Specials have declined by 10% due to lower affinity for premium products in general. In addition to this, movements by the unorganized players based on economy offerings have also impacted

the organized trade (All India Cycle Manufacturers'' Association-AICMA) players'' sales volume.

Over 74% of the country''s requirements are met by four major players. The smaller regional players and imports constitute the balance. TI Cycles enjoys a share of about 24% of the total organised trade market with a much higher share in the premium segment.

Review of Performance

Due to nation-wide lock down in first few months of the year, all the businesses were affected in the initial part of the year. TI Cycles sold about 22.34 lakh bicycles during the year in trade, which is about 1.10 lakh bicycles higher as compared to 2019-20. Overall Trade bicycle industry itself registered a growth of 8.38% over the previous year. The thrust on Specials segment was driven by a concerted effort to enhance consumer experience through exclusive retail outlets under the exclusive retail brand ''Track & Trail''. Moreover, the expansion of export business and domestic spares business is considered to be a new avenue of business to the Company. To participate in the growing economy sub-segment, 9 low cost products were launched in major categories like Kids and Mountain Terrain Bikes (MTB).

I n 2020-21, 43 new model bicycles were launched, and 54 older models were refreshed. 29% of the trade sales volume came from new products. Multiple innovations were introduced for the first time in the industry, notable among them being introduction of knuckle guard in ''Hercules Black Hunter'' bicycle. Coloured rims in neon colours were introduced as FX200 DX2 and FX100 models in MTB segment.

On the consumer outreach front, the business consistently ran digital campaigns for its major brands, with BSA Ladybird, Hercules, Roadeo, and Montra delivering a significant lift in brand awareness. The objective of the campaign was to increase brand awareness and product consideration among the target group.

6.2. Engineering TI''s Presence

The Engineering Segment of the Company consists of cold rolled steel strips and precision steel tubes viz., Cold Drawn Welded tubes (CDW) and Electric

Resistance Welded tubes (ERW). These products primarily cater to the needs of the automotive, boiler, bicycle, general engineering and process industries. The Company is further engaged in the manufacture of large diameter welded tubes mainly for non-auto application which are largely imported.

Industry Scenario

During 2020-21, the automotive industry''s production volume was lower by 14% impacted mainly by the pandemic in H1 (de-growth by 43%) and partially recovered with a surge in demand in H2 (21% growth).

Across all segments of automotive industry there was a de-growth over the last fiscal year. Passenger vehicle, commercial vehicle and two-wheeler segments were lower by 11%, 17% and 13% respectively over the last fiscal year.

Review of Performance

Due to nation-wide lock down in first few months of the year, all the businesses were affected in the initial part of the year. The Engineering segment was able to maintain its revenues during the year despite the adverse business environment.

The volumes of tubes business grew by 1%, cold rolled steel strips business de-grew by 2.4% and large diameter tubes grew by 16%. Tubes overall export volume grew by 12.4% during the year.

Given the situation of lower demand, the business focused on internal measures to control cash fixed expenses, optimize manufacturing cost reduction and other fixed expenses to partially offset the drop on account of lower volumes.

The business focused on reducing working capital and spending capital expenditure prudently on critical growth projects.

The business continued to focus on Total Quality Management (TQM) journey to improve its quality and focused on employee development. Career path initiatives were taken up to provide opportunities to employees within the organization for new openings and to enable cross function exposure and growth.

With regard to the ongoing investigation by the US Department of Commerce on complaint of alleged dumping of cold-drawn steel mechanical tubes from

India and some other countries, the Countervailing Duty (CVD) and Anti-dumping Duty (AD) on the Company''s exports to the US market, the Company has participated in the first review and obtained a favourable outcome which will enable improved opportunities on exports to US.

6.3. Metal Formed ProductsTI''s presence

Automotive & industrial chains, fine blanked products, roll-formed car doorframes and cold roll formed sections for passenger coaches constitute the Metal Formed Products segment.

Industry scenario

During 2020-21, production of two-wheeler segment and passenger vehicles de-grew by 13% and 11% respectively.

This segment is one of the major players in the manufacturing of roller chains and fine blanked parts for the automotive industry in India. From end of the second quarter, the Chains, fine blanked products and doorframes recovered well from the COVID-19 pandemic impact backed by resumption in auto sector.

With international car majors continuing to invest in the country and increasingly using India as an export base, many component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and their Tier 1 suppliers.

Due to the COVID-19 pandemic situation, the Railways business is going through a difficult phase as demand continues to be subdued. However, the green shoots are visible which could help bring the railways business back on track.

Review of Performance

Due to nation-wide lock down in first few months of the year, all the businesses were affected in the initial part of the year. Though the first quarter was severely impacted due to the pandemic, the auto and industrial segments came back strongly from Q2 onwards. The Company continued to focus in the aftermarket segment benefiting from the two-wheeler population growth.

The Industrial chains business segment will continue its core business processes to handle both volume fluctuations and change in the product mix to meet customers'' demand. The replacement market continues to provide opportunities for growth notwithstanding good competition and the business expects to strengthen on the sales structure, deepen its coverage and launch new products for new categories.

Doorframe sales were lower by 14% during 202021, consequent to the de-growth in the passenger car segment. Despite the same, the business manages to hold on to the market due to good traction seen on select models with renowned auto majors. The focus is on generating more business from the auto Original Equipment Manufacturers (OEMs), leveraging the Tier-1 position with specific emphasis on roll formed products and other tubular parts used in passenger cars. In addition, strengthening the current position in respect of coach parts, focusing on metros and expanding the customer base are some of the opportunities that are looked into closely which will drive the Railways business towards growth path.

7. Dividend

The Board of Directors declared an Interim Dividend of ''2/- per share (@ 200%) on equity share of face value of ''1 each for the financial year 2020-21, which was paid on 9th March 2021 to all the eligible shareholders. ''1.50 per share (@ 150%) of Final Dividend has been proposed by the Board for the said financial year and together with the Interim Dividend of ''2/- per equity share, already declared and paid, in respect of the financial year 2020-21, ''3.50 per share (@ 350%) will be considered as the total Dividend for the said financial year.

The dividend pay-out is in accordance with the Company''s Dividend Distribution Policy. The said Policy as approved by the Board is uploaded and is available on the following link on the Company''s website, http://www.tiindia.com/article/values/601.

8. Share Capital

The paid-up Equity Share Capital as on 31st March 2021 was ''19.28 Cr.

9. Finance

Cash and Cash Equivalents as at 31st March 2021 were ''7.09 Cr. In addition, Company has investments in Liquid Schemes of Mutual Funds for ''304.30 Cr.

The Company continues to focus on judicious management of its working capital. The Company has taken many steps during the year to improve the working capital turns. The working capital parameters were kept under strict check through continuous monitoring.

9.1. Preferential Issue of Equity Shares

During the year, with the approval of the shareholders at the Extraordinary General Meeting (EGM) held on 21st December 2020 pursuant to Section 62(1)(c) and other applicable provisions of the Companies Act, 2013, and the Rules thereunder, the Company had issued and allotted 47,83,380 equity shares, in accordance with the applicable SEBI Regulations, to identified investors (M/s. Azim Premji Trust - ''200 Cr. approx. and M/s. SBI Mutual Fund - ''150 Cr. approx.) on a preferential basis at a price of ''731.70 per share (including a premium of ''730.70) aggregating about ''350 Cr. The issue proceeds were fully utilised by the Company for the purposes/objects as stated in the Offer document and Explanatory Statement to the Notice of the said EGM. The Board of Directors and the Company are thankful to the investors for their investment and the confidence reposed in the Company.

9.2. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating ''100 Cr. were redeemed and NCDs for ''100 Cr. were issued by way of private placement during the year, which was made in accordance with the SEBI circular on fund raising dated 26th November 2018. As on 31st March 2021, NCDs aggregating ''100 Cr. are outstanding.

9.3. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013, and as such no amount of principal and interest were outstanding as on 31st March 2021.

9.4. Particulars of Loans, Guarantees or Investments

During the year under review, the Company entered into a Securities Subscription Agreement with CG Power and Industrial Solutions Limited ("CG Power"), pursuant to which, the Company made investments in acquiring 71,12,51,887 equity shares of ''2/- each viz., for a consideration of ''650 Cr. in the aggregate, resulting in a 53.16% shareholding in CG Power and

also invested in 17,52,33,645 warrants issued by CG Power which are convertible into an equal number of equity shares at an exercise price of ''8.56 per share, including premium, within 18 months against which the Company has paid an upfront consideration of 25% viz., ''37.50 Cr., resulting in a shareholding of 58.58% by the Company in CG Power on a fully diluted basis. The Company had also given Corporate Guarantee to the lenders of CG Power in connection with the term loans and fund based working capital limits sanctioned to CG Power for an amount not exceeding ''1,365 Cr., after obtaining the approval of its shareholders under the provisions of Section 186 of the Companies Act, 2013, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

As part of treasury management, the Company also deploys any short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

9.5. Consolidated Financial Highlights

'' in Cr.

Particulars

2020-21

2019-20

Revenue from contract with customers (net)

6,083.29

4,750.39

Profit Before Exceptional items and Tax

454.07

425.18

Exceptional items

(41.85)

(21.97)

Profit Before Tax and exceptional items

412.22

403.21

Tax Expense

(107.53)

(89.94)

Net Profit for the Year

304.69

313.27

10. Business Review - Subsidiaries and Joint Venture10.1. Shanthi Gears Ltd (SGL)

SGL, a subsidiary of the Company, recorded revenue of ''216 Cr. in 2020-21 against ''242 Cr. in the previous year. Profit before tax was ''26 Cr. (previous year: ''33 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers.

SGL continued to look at enlarging its market presence, create a robust channel, enhance its process capabilities and launch new products to meet the growing expectations of customers.

SGL also declared and paid an Interim Dividend of ''1.50 per share for the financial year 2020-21.

10.2. Financiere C10 SAS (FC10)

FC10, the Company''s wholly owned subsidiary in France, recorded consolidated revenue of Euro 26 Mn in 2020 (previous year: Euro 32 Mn). The loss after tax for the year was Euro 0.80 Mn as compared with the loss of Euro 0.70 Mn. in the previous year. The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS, Sedis GmbH and Sedis Co Ltd in UK.

10.3. TI Tsubamex Private Limited (TTPL)

TTPL (Company''s shareholding: 78.3%), had, consequent to discontinuance of its operations, sale of its assets and settling of its liabilities, made an application to the Registrar of Companies, Chennai during the year under review for striking off its name from the Register of Companies. The final approval is awaited.

Necessary impairment in the entire investment made by the Company in TTPL has already been recognized in the books of account of the Company for the financial years 2017-18 and 2018-19.

10.4. Great Cycles (Private) Limited (GCPL)

GCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of GCPL''s equity capital.

During the year under review, GCPL recorded revenue of ''19 Cr. (previous year: ''3 Cr.) and registered profit before tax of ''2 Cr. (previous year loss before tax: ''1 Cr.).

10.5. Creative Cycles (Private) Limited (CCPL)

CCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of CCPL''s equity capital.

During the year under review, CCPL recorded revenue of ''41 Cr. (previous year: ''8 Cr.) and registered loss before tax of ''2 Cr. (previous year loss before tax: ''2 Cr.).

10.6. CG Power and Industrial Solutions Limited (CGPISL)

CGPISL is the Company''s subsidiary acquired in November 2020. The Company holds 53.16% of CGPISL''s equity capital.

During the year under review, CGPISL recorded revenue of ''1,393 Cr. and registered profit

before tax of ''46 Cr. between December 2020 and March 2021.

The statement containing salient features of the financial statements of the company''s subsidiaries/ Joint venture is attached as Annexure - A. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Indian Accounting Standards.

11. Financial Review

The statement containing salient features of the financial statements of the Company''s Subsidiaries/ Joint Venture is attached as Annexure-A. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Indian Accounting Standards, form part of the Annual Report.

11.1. Profits & Profitability

The Profit before Tax and exceptional items registered has de-grown by 9.5% on standalone basis, considering the adverse market conditions and

nanrlcimir citnatinn

All the business segments of the Company maintained their focus on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business.

11.2. Capital Expenditure

The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invests appropriately for the long-term, with a view to servicing its customers in a more timely and efficient manner.

11.3. Interest Cost

The Company''s interest cost reduced to ''19 Cr. in the year 2020-21 from ''29 Cr. in the previous year mainly on account of lower borrowing and better management of net working capital. With strong focus on cash generation, the Company achieved a significant level of net debt reduction of ''159 Cr. during the year. The Company had a cash surplus of ''10 Cr. (net of borrowings) as on 31st March 2021 as compared to the net borrowing (net of Cash and Current Investments) of ''149 Cr. as on 31st March 2020.

11.5. Internal Control Systems

Internal control systems in the organisation are looked at as the key to its effective functioning. The Company believes that internal control is one of the key pillars of governance which provides freedom to the management within a framework of appropriate checks and balances. Given the nature of business and size of operations, the Company has designed and instituted a robust internal control system that comprises well-defined organisation structure, roles and responsibilities, documented policies and procedures to reduce business risks through a framework of internal controls and processes. These controls ensure:

• Recording of transactions are accurate, complete and properly authorised;

• Adherence to Accounting Standards, compliance to applicable Statutes, Company policies and procedures and timely preparation of financial statements;

• Effective usage of resources and safeguarding of assets;

• Prevention and detection of frauds/errors;

• Efficient conduct of operations.

To ensure efficient internal control systems, the Company has a well-established, independent and multi-disciplinary in-house Internal Audit function that carries out periodic audits across locations and functions. The scope and authority of the Internal Audit function is derived from the Internal Audit charter duly approved by the Management. The Internal Audit function reviews compliance vis-avis the established design of the internal control, as also the efficiency and effectiveness of operations. Internal Audit function is responsible for providing, assurance on compliance with operating systems, internal policies and legal requirements as well as suggesting improvements to systems and processes. It reviews and reports to management and the Audit Committee about compliance with internal controls, and the efficiency and effectiveness of operations as well as the key process risks. The Company also has established whistle-blower mechanism operative across the Company.

To further strengthen its Internal Audit process through appointment of a specialist agency in order to benefit from the best of practices available (including the use of analytical tools) to monitor various processes, the Company has appointed M/s. PricewaterhouseCoopers ("PwC") as Internal Auditors of the Company for the financial year 2021-22.

The Audit Committee of the Board of Directors, comprising of a majority of independent directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any.

The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation are submitted to the Audit Committee every quarter for review, and concerns if any, are reported to the Board. This process ensures robustness of internal control system and compliance with laws and regulations including resource utilisation and system efficacy.

Revenue and capital expenditures are governed by approved budgets and the levels are defined by a delegation of authority mechanism. Review of capital expenditure is undertaken with reference to benefits expected in line with the policy for the same.

I nvestment decisions are subject to formal detailed evaluation and approved by the relevant authority as defined in the delegation of authority mechanism. The Audit Committee reviews the plan for internal audit, significant internal audit observations and functioning of the Company''s Internal Audit department on a periodic basis.

11.6. Internal Financial Control Systems with reference to the Financial Statements

The Company has complied with the specific requirements of the Companies Act, 2013, which call for establishment and implementation of an Internal Financial Control framework that supports compliance with requirements of the said Act in relation to the Directors'' Responsibility Statement.

The Company''s business processes are enabled by an Enterprise-wide Resource Platform (ERP) as its core IT system. The operating management is not only responsible for revenue and profitability, but for also maintaining financial discipline and

accountability. The systems and processes are continuously improved by adopting best in class processes, automation and implementing latest Information Technology tools.

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. This is reviewed regularly and tested by Internal Audit Team. The Company''s business processes are enabled by the ERP for monitoring and reporting processes resulting in financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company has an established risk assessment and minimisation framework. This framework provides a mechanism to identify the risk, evaluation of likelihood of happening and consequences. It also provides for assessment of options to mitigate

the risk and develop appropriate risk management plans. There are normal constraints of time, efficiency and cost.

The Risk Management Committee of the Board of Directors reviews the risk mitigation plans periodically to monitor the key risks of the Company and evaluate the management of such risks for effective mitigation.

During the year under review, the Risk Management Committee met on 11th February 2021 and reviewed the risks and mitigation plans of the SBUs of the Company.

Some of the risks associated with the business and the related mitigation plans are discussed hereunder. The risks given below are not exhaustive and the evaluation of risk is based on management''s perception:


Mar 31, 2019

Board''s Report & Management Discussion and Analysis

Dear Shareholders,

The Directors take pleasure in presenting the 11th Annual Report together with the audited financial statements of the Company for the year ended 31stMarch, 2019.

2. Standalone Financial Highlights (Rs, in Cr.)

Particulars

2018-19

2017-18

Sale of Products - Gross

4,983.05

4,409.67

Excise Duty on Sales

-

(74.57)

Sale of Products - Net

4,983.05

4,335.10

Profit Before Exceptional Items and Tax

371.08

217.94

Provision for Impairment on Investments (Net)

(9.00)

(25.25)

Profit Before Tax

362.08

192.69

Tax Expense

(118.57)

(56.23)

Profit After Tax

243.51

136.46

No transfer to the General Reserves has been proposed for the year under review.

5. Dividend

The Board of Directors has recommended a final dividend of Rs,0.75 per share on equity share of face value of Rs,1 each for the financial year ended 31st March, 2019. Together with the interim dividend of Rs,1.75 per share, paid on 24th February, 2019, on which a Dividend Distribution Tax (DDT) of ''8 Cr. was paid, the total dividend for the year works out to Rs,2.50 per share on equity share of face value of Rs,1 each. The final dividend, if approved by shareholders, will be paid on or after 28th July, 2019. It would involve payment of DDT of about Rs,2.9 Cr.

The dividend pay-out is in accordance with the Company''s policy on Dividend Distribution. The said Policy as approved by the Board is uploaded and is available on the following link on the Company''s website, http://www.tiindia.com/ article/values/601. Details thereof also form part of this Annual Report for the information of shareholders as Annexure- A.

6. Share Capital

The paid up Equity Share Capital as on 31st March, 2019 was Rs,18.77 Cr.

7. Finance

Cash and Cash Equivalents as at 31st March, 2019 were Rs,26.28 Cr. The Company continues to focus on judicious management of its working capital. The Company has taken many steps during the year to improve the working capital turns. The working capital parameters were kept under strict check through continuous monitoring.

7.1. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating Rs,250 Cr. were redeemed and no fresh NCDs were issued during the year. As on 31st March, 2019, NCDs aggregating Rs,200 Cr. were outstanding.

7.2. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31st March, 2019.

7.3. Particulars of Loans, Guarantees or Investments

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. The Company purchased 1,50,663 equity shares of the face value of Rs,10 each, fully paid up, at par, of M/s. Watsun Infrabuild Private Limited, for an aggregate amount of Rs,0.15 Cr., during the year. As part of treasury management, the Company also deploys any short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8.2. Financiered C10 SAS (FC10)

FC10, the Company''s wholly-owned subsidiary in France, recorded consolidated revenue of Euro 34 Mn in 2018 (previous year: Euro 30 Mn). The Profit before Tax for the year was Euro 0.07 Mn (previous year: Euro 0.01 Mn.). The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS, Sedis GmbH and Sedis Co Ltd in UK.

8.3. TI Tsubamex Private Limited (TTPL)

TTPL is a joint venture of the Company with M/s. Tsubamex Company Limited, Japan to engage in the business of design and engineering of sheet metal dies and fixtures and providing related services The Company presently holds 78.3% of TTPL''s equity capital.

Since its incorporation, TTPL has been facing operational challenges in terms of winning new orders, and also in meeting rising customer expectations on quality and price parameters. The small size of its operations and high working capital intensity have further made the business situation difficult for TTPL as its customers, being OEMs, require technically superior products. Under the circumstances, TTPL sold its identified manufacturing assets to M/s. Nagata Auto Engineering India Private Limited for an aggregate consideration of ''8 Cr. excluding taxes. The amount realized through the sale is being utilized by TTPL to repay its creditors.

TTPL recorded revenue of ''6 Cr., in 2018-19 compared with Rs,26 Cr. in 2017-18 and recorded a loss before tax of Rs,11 Cr., during 2018-19 compared with the loss before tax of Rs,7 Cr. in the previous year.

The Company has provided for impairment in the value of its investment for Rs,12 Cr. in its books of account for the financial year under review. In the previous year, the Company had provided impairment in the value of investments for Rs,11.50 Cr. Accordingly, the entire investments have been impaired as at 31st March, 2019.

8.4. Great Cycles (Private) Limited (GCPL)

GCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of GCPL''s equity capital.

During the year under review, GCPL recorded revenue of Rs,16 Cr. and registered Profit before Tax of Rs,2 Cr.

8.5. Creative Cycles (Private) Limited (CCPL)

CCPL is the Company''s subsidiary in Sri Lanka acquired in March 2018. The Company holds 80% of CCPL''s equity capital.

During the year under review, CCPL recorded revenue of Rs,55 Cr. and registered Profit before Tax of Rs,1 Cr.

8.6. TI Absolute Concepts Private Limited (TIACPL)

During the year under review, the Company exited TIACPL by divesting its 50% stake in the joint venture company in favour of the joint venture partner viz., Absolute Speciality Foods Chennai Private Limited at a consideration of Rs,3 Cr. Consequently, TIACPL ceased to be a joint venture company during the year.

TIACPL had been facing operational difficulties due to competitive operating environment including certain restrictive regulatory orders affecting the food and beverage industry.

The Company had provided for impairment in the value of its investment of Rs,13.75 Cr., in its books of account during the previous financial year, 2017-18 itself.

9.4 Financial Ratios

The key financial ratios of the Company in which there were significant changes (more than 25%) during the financial year compared to the previous financial year, with reasons therefor, are as under:

Sl.

No.

Financial Ratio*

FY

2018-19

FY

2017-18

% change over previous year

Reasons

1

Interest Coverage Ratio

10.72

6.69

60%

Reduction in borrowing & finance charges and increase in the Profit before Interest Tax and Depreciation.

2

Debt-Equity Ratio

0.36

0.56

36%

Reduction in debt and increase in net worth due to higher profits.

3

Net Profit Margin

4.9%

3.2%

55%

Improvement in profits and reduction of fixed and interest cost.

4

Return on Net Worth

17.1%

11.2%

52%

Higher profits for the year.

5

Return on Capital Employed (in %)

21.4%

14.3%

50%

Higher profits and maintenance of capital employed at lower level despite increase in sales.

6

Sales Growth

14.9%

10.4%

43%

Higher sales driven primarily by growth in Auto Industry in H1 of FY 2018-19, Railways and exports.

The Statement containing salient features of the financial statements of the Company''s Subsidiaries/Associate Companies /Joint Ventures is attached as Annexure-B. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Indian Accounting Standards, form part of the Annual Report.

9. Financial Review

9.1. Profits & Profitability

The Profit before Tax and exceptional items registered a growth of 70%, through higher volumes, better operating efficiencies, input and fixed cost reduction initiatives and reduction in interest costs.

All the business segments of the Company maintained their focus on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business.

9.2. Capital Expenditure

The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invests appropriately for the long-term, with a view to servicing its customers in a more timely and efficient manner. The Company''s new plant in Rajpura, Punjab for precision tube manufacturing was operational during the financial year and the Company has planned for further expansion in the coming financial year.

9.3. Interest Cost

The Company''s interest cost reduced to Rs,51.68 Cr. In 2018-19 from Rs,56.38 Cr. in the previous year mainly on account of lower borrowing. With strong focus on cash generation, the Company achieved a significant level of debt reduction of Rs,166 Cr. during the year. The total borrowings were reduced to Rs,513 Cr. as on 31st March, 2019 from ''679 Cr. as on 31st March, 2018.

Internal control systems in the organization are looked at as the key to its effective functioning. The Company believes that internal control is one of the key pillars of governance which provides freedom to the management within a framework of appropriate checks and balances. Given the nature of business and size of operations, the Company has designed and instituted a robust internal control system that comprises well-defined organization structure, roles and responsibilities, documented policies and procedures to prevent business risks through a framework of internal controls and processes. These controls ensure:

a) Recording of transactions are accurate, complete and properly authorized;

b) Adherence to Accounting Standards, compliance to applicable Statutes, Company policies and procedures and timely preparation of financial statements;

c) Effective usage of resources and safeguarding of assets;

d) Prevention and detection of frauds/errors; &

e) Efficient conduct of operations.

To ensure efficient internal control systems, the Company has a well-established, independent and multi-disciplinary in-house Internal Audit function that carries out periodic audits across locations and functions. The scope and authority of the Internal Audit function is derived from the Internal Audit charter duly approved by the Management. The Internal Audit function reviews compliance vis-a-vis the established design of the internal control, as also the efficiency and effectiveness of operations. Internal Audit function is responsible for providing, assurance on compliance with operating systems, internal policies and legal requirements as well as suggesting improvements to systems and processes.

The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation are submitted to the Audit Committee every quarter for review, and concerns if any, are reported to the Board. This process ensures robustness of internal control system and compliance with laws and regulations including resource utilization and system efficacy.

Revenue and capital expenditures are governed by approved budgets and the levels are defined by a delegation of authority mechanism. Review of capital expenditure is undertaken with reference to benefits expected in line with the policy for the same.

Investment decisions are subject to formal detailed evaluation and approved by the relevant authority as defined in the delegation of authority mechanism. The Audit Committee reviews the plan for internal audit, significant internal audit observations and functioning of the Company''s Internal Audit department on a periodic basis.

9.6. Internal Financial Control Systems with reference to the Financial Statements

The Company has complied with the specific requirements of the Companies Act, 2013 which call for establishment and implementation of an Internal Financial Control framework that supports compliance with requirements of the said Act in relation to the Directors'' Responsibility Statement.

The Company''s business processes are enabled by an Enterprise-wide Resource Platform (ERP) as its core IT system. The operating management is not only responsible for revenue and profitability, but for also maintaining financial discipline and accountability. The systems and processes are continuously improved by adopting best in class processes, automation and implementing latest Information Technology tools.

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company''s business processes are enabled by the ERP for monitoring and reporting processes resulting in financial discipline and accountability.

11. Corporate Social Responsibility (CSR)

The Company, being part of the Murugappa Group, is known for its tradition of philanthropy and community service. The Company''s philosophy is to reach out to the community by establishing service-oriented philanthropic institutions in the field of education and healthcare as the core focus areas. The CSR Policy of the Company is available on the Company''s website at the following link, http://www.tiindia.com/article/values/467.

As per the provisions of the Companies Act, 2013, the Company was required to spend Rs,2.67 Cr., during the financial year, 2018-19. The Company spent Rs,2.69 Cr. towards the identified CSR projects in the fields of education, health care and rural sustainability during the year.

The Annual Report on CSR for 2018-19 is annexed to and forms part of this Report as Annexure-C as well as in the Company''s website at the following link, http://www.tiindia.com/article/csrprojectsprograms/546.

12. Alteration of Memorandum of Association

During the financial year, 2018-19, with the approval of the Members by means of a Special Resolution passed with the requisite majority at the 10th Annual General Meeting, sub-clause 10 under III(B) of the Memorandum of Association of the Company was altered to provide for/facilitate the making of contribution for political purposes. No contribution for political purposes was made during the year.

The Board had, by Notice of Postal Ballot & Electronic Voting dated 27th March, 2019, further proposed for the Members'' approval by means of a Special Resolution, through postal ballot and electronic voting, an alteration to Clause III(A) [Main Objects Clause] of the Memorandum of Association by insertion of a new sub-clause 10 to facilitate the Company''s foray into the business of vision products and components, as and when decided appropriate.

13. Corporate Governance

The Company is committed to maintaining high standards of corporate governance.

The Company was wholly in compliance with the requirements of the Listing Agreement with the Stock Exchanges as well as the SEBI Listing Regulations.

A report on corporate governance together with a certificate from the Auditors is annexed in accordance with the terms of the SEBI Listing Regulations and forms part of the Board''s Report as Annexure-D. The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters in terms of Part B of Schedule II [Corporate Governance] of the SEBI Listing Regulations.

The Report further contains details as required to be provided in the Board''s Report on the policy on Directors'' appointment and remuneration including the criteria, annual evaluation by the Board and Directors, composition and other details of Board committees, implementation of risk management policy, whistle-blower policy/vigil mechanism, dividend policy etc.

18. Directors'' Responsibility Statement

The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system. The Internal Audit team periodically evaluates the adequacy and effectiveness of these internal controls, recommends improvements and also reviews adherence to policies based on which corrective action is taken to address gaps, if any. The internal controls are also monitored and reviewed by the Audit Committee and the Board and also subjected to a review by the Statutory Auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual Financial Statements for the year ended 31st March, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and of the profit of the Company for the year ended on that date;

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

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and,

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

19. Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants (LLP Identity no.AAB-4295) were appointed as Statutory Auditors at the 9th Annual General Meeting held on 6th November, 2017 for a period of five years viz., from the conclusion of the said 9th Annual General Meeting till the conclusion of the 14th Annual General Meeting.

I n terms of the resolution passed by the Members with regard to the appointment of the Statutory Auditors, the same is subject to ratification by the Members at every Annual General Meeting and their remuneration will be recommended to the Shareholders at the time of taking up such ratification of appointment each year. In the said regard, by an amendment to the Companies Act, 2013 under the Companies (Amendment) Act, 2017, the requirement for ratification of appointment of the Statutory Auditors at each Annual General Meeting has been done away with. Accordingly, there is no requirement under the present law for ratification of appointment of the Statutory Auditors. The remuneration payable to them in respect for FY 2019-20 hence needs to be fixed at the Annual General Meeting as required under Section 142 of the Companies Act, 2013.

Accordingly, the Board recommends the terms of remuneration payable to the Statutory Auditors as set out in the resolution contained in the Notice of the ensuing Annual General Meeting.

M/s. S Mahadevan & Co., (firm no.000007), Cost Accountants were appointed as the Cost Auditors of the Company for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial year, 2019-20. Necessary resolution for ratification of their remuneration in respect of the aforesaid terms of appointment for financial year, 2019-20 forms part of the Notice for the ensuing Annual General Meeting.

20. Related Party Transactions

All related party transactions that were entered into during the financial year under review were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under the Indian Accounting Standards have been made in the notes to the Financial Statements.

The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company''s website, http://www.tiindia.com/ article/values/476. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

21. Directors

Mr. Ramesh K B Menon, Director will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 ("the Act") and being eligible, he offers himself for re-appointment.

Mr. Sanjay Johri was appointed as Additional Director with effect from 14th August, 2018. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his appointment as Independent Director under Section 149 of the Act for a term of four years viz., from the date of the 11th AGM (2019) till the date of the 15th AGM (2023).

Mr. Mahesh Chhabria was appointed as Additional Director with effect from 5th February, 2019. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his appointment as Independent Director under Section 149 of the Act for a term of five years viz., from the date of the 11th AGM (2019) till the date of the 16th AGM (2024).

The present term of Ms. Madhu Dubhashi as Independent Director is till the date of the ensuing 11th Annual General Meeting and she is eligible for a second term. The Board recommends her re-appointment as Independent Director under Section 149 of the Act for a second term of two years viz., from the date of the 11th AGM (2019) till the date of the 13th AGM (2021) by means of a Special Resolution as proposed in the Notice.

All the Independent Directors of the Company including the aforementioned Independent Director appointees have furnished necessary declaration in terms of Section 149(6) of the Act and the Listing Regulations affirming that they meet the criteria of independence as stipulated there under.

The Board takes pleasure in recommending the appointment of Mr. Sanjay Johri and Mr. Mahesh Chhabria as Independent Directors and the re-appointment of Ms. Madhu Dubhashi for a second term as Independent

Director for such term of Office as provided under the relevant item of the Notice for the ensuing Annual General Meeting.

22. Declarations/Affirmations

During the year under review:

- t here were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31st March, 2019 and the date of this Report; &

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

23. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. R Sridharan of Messrs. R. Sridharan & Associates, a firm of Company Secretaries in Practice (C.P. No.3239) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith and forms part of this Report as Annexure-G.

The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualifications or observations or other remarks have been made by the Secretarial Auditor in his said Report.

24. Annual Return

Extract of the Annual Return of the Company is annexed and forms part of the Report as Annexure-H. The same is also available on the website of the Company at the following link, http://www.tiindia.com/investors/750.

25. Key Managerial Personnel

Mr. L Ramkumar retired as Managing Director of the Company upon completion of his term at the conclusion of the previous Annual General Meeting held on 13th August, 2018.

Mr. Vellayan Subbiah, Managing Director (Designate) assumed Office as the Managing Director of the Company with effect from 14th August, 2018.

Mr. Vellayan Subbiah, Managing Director, Mr. K Mahendra Kumar, Chief Financial Officer and Mr. S Suresh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Companies Act, 2013.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith and forms part of this Report as Annexure-I.

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

On behalf of the Board

Chennai M M Murugappan

30th April, 2019 Chairman


Mar 31, 2018

Dear Shareholders,

The Directors take pleasure in presenting the 10th Annual Report together with the audited financial statements of the Company for the year ended 31st March 2018.

1. Business Environment

With growth in the Gross Domestic Product (GDP) averaging 7.5% between 2014-15 and 2016-17, India can be rated as among the best performing economies in the world. Although growth is expected to decline to 6.7% in 2017-18, bringing the four year average to 7.3%, the broad story of India’s GDP growth to be significantly higher than most economies of the world remains intact. It is all the more creditable that this growth has been achieved in a milieu of lower inflation, improved current account balance and notable reduction in the fiscal deficit to GDP ratio.

In addition to the introduction of Goods & Services Tax (GST), the year also witnessed noteworthy steps being taken towards resolving the problems associated with Non-Performing Assets (NPAs) of banks, further liberalization of Foreign Direct Investment (FDI) etc., thereby strengthening the reform momentum. After remaining in the negative territory for a couple of years, growth of exports rebounded into the positive zone during 2016-17 and further strengthened in 2017-18. There was an augmentation in the foreign exchange reserves of the country, which closed at an all-time high of US$414 billion. As with any major reform, implementation of the GST is fraught with issues that businesses are still grappling with so as to familiarize themselves with the nuances of the new legislation. The months just before and after GST implementation saw a slowdown in business activity which had a dampening impact on the economy as businesses were assessing the impact of the legislation before taking major business decisions. Government played a very active role in clarifying many vexed and contentious issues, simplifying and relaxing many of the compliance processes due to which business activity has steadily picked up now.

Globally, economic activity continued to firm up during the year. The global output is estimated to have grown by 3.7% in 2017, 0.5% higher than in 2016. Global growth forecasts for 2018 and 2019 have been projected at 3.9%, reflective of the increased growth momentum and the expected impact of the recently approved U.S. tax policy changes to cut corporate income-tax rates.

However, the system of rules and regulations that governed world trade for the last several decades is under serious threat. Perhaps the clearest threat to world trade comes from the US Administration which decided to impose tariffs of 25% on steel articles and 10% on aluminium products imported from all countries except Canada and Mexico ostensibly to protect the local industry. At the very least, this shift is likely to mean a substantial change in the way international trade is organised.

The recent developments suggest the danger of an all-out trade war between countries.

In an eventful year that followed the demonetisation and ban on sale and registration of BS (Bharat Stage)-III vehicles in the previous year, the Indian automobile sector managed to grow 14% during 2017-18. In the four wheeler segment, passenger vehicle and commercial vehicle sale volumes were up by 8% and 20%. In the two wheeler segment, scooters grew by 20% and motor cycles grew by 14%.

2. Standalone Financial Highlights Rs. in Cr.

Particulars

2017-18

2016-17

Sale of Products - Gross

4409.98

4207.77

Excise Duty on Sales

(74.57)

(282.63)

Sale of Products - Net

4335.41

3925.14

Profit Before Exceptional Items and Tax

217.94

201.50

Provision for Impairment on Investments

(25.25)

-

Profit Before Tax

192.69

201.50

Tax Expense

(56.23)

(42.55)

Profit After Tax

136.46

158.95

3. Performance Overview

During 2017-18, the Company achieved a net turnover of Rs.4,335 Cr., growing 10% over the previous year’s Rs.3,925 Cr. The Profit before Depreciation, Interest, Exceptional Items and Tax was at Rs.403 Cr. as against Rs.395 Cr. in the previous year. The Profit before Tax and Exceptional Items was at Rs.218 Cr. as against Rs.202 Cr. in the previous year, a growth of 8%.

On account of various market factors, changes in future project potential and accumulated losses, the Company has recognised during the year an impairment loss of Rs.25.25 Cr. in the Statement of Profit and Loss in respect of investment made in joint ventures.

The Cycles and Accessories segment recorded revenue, net of excise duty of Rs.1,303 Cr as compared to Rs.1,343 Cr. during 2016-17, a de-growth of 3%, since the Cycles market was sluggish. The operating profit before interest and tax stood at Rs.0.33 Cr. as compared to Rs.36 Cr. during the previous year. The lower profit was mainly due to the mix between Institutional and Trade sales and costs incurred towards closure of the Nashik Plant with the objective of achieving cost efficiency and consolidation of overall capacity at two locations viz., Ambattur (Chennai) and Rajpura (Punjab).

The Engineering segment registered revenue, net of excise duty of Rs.2,317 Cr. as compared to Rs.1,866 Cr. during the previous year, a growth of 24%. The operating profit before interest and tax stood at Rs.175 Cr. as compared to Rs.146 Cr. during 2016-17, registering a growth of 20%. The increase in exports and stabilisation of the Large Diameter Tube manufacturing facility contributed to the increase in profits of the segment.

The Metal Formed Products segment recorded revenues, net of excise duty of Rs.1,157 Cr. as compared to Rs.1,038 Cr. during the previous year, a growth of 11%. The operating profit before interest and tax stood at Rs.102 Cr. as compared to Rs.88 Cr. during the previous year, a growth of 16%.

4. Business Review - Standalone

4.1. Cycles and Components

TI’s Presence

The Cycles and Components segment of the Company comprises bicycles of the Standard and Special variety including alloy bikes & specialty performance bikes, cycling accessories, bicycle components sold as spares and home fitness equipment.

Industry Scenario

Bicycles fall under two distinct categories - Standards and Specials. While Standard cycles are largely used for commuting, especially in small towns & rural areas, Specials cycles cater to recreational usage, where the product is used for fun, fitness and leisure activities. As per the industry estimates, bicycle industry volumes grew by 5% during 2017-18. While orders from the Government Schemes witnessed a growth of 30% over previous year, trade volumes witnessed a decline of around 10% during the year. The year 2017-18 was a very challenging one for the bicycle industry with the Standards segment registering a drop of 21% over previous year in trade. On the other hand, due to increasing aspirations, higher purchasing power, international exposure to usage patterns and growing fitness consciousness, the use of high-end special bicycles continued to receive impetus, contributing to the continued steady growth of sale volumes year-on-year.

Nearly 80% of the country’s requirements are met by four major players. The smaller regional players and imports constitute the balance. The Company enjoys a share of over one-fourth of the total organised market with a much higher share in the premium segment.

Review of Performance

The segment sold over 37.6 lakh bicycles during the year, which was however lower by 4.9% when compared with 2016-17. The thrust on Specials segment was driven by a concerted effort to enhance consumer experience through exclusive retail outlets under the brand “Track & Trail”. 48 new Track & Trail outlets were opened in 2017-18 and many more migrated from the older format, taking the total of exclusive “Track & Trail” outlets to 227. The segment also made a strong entry into e-commerce with a presence in well-known e-commerce portals like Flipkart and Amazon apart from its own e-commerce portal, www.trackandtrail.in.

I n 2017-18, 67 new model bicycles were launched and 60 old models were refreshed, contributing to 41% of the turnover from such new products and refreshes. Multiple innovations were introduced for the first time in the industry, notable among them being the Anti-Slip Chain and a range of ergonomic handlebars. One of the marquee models Brut received the best design award in the Automotive category for 2017-18 from the Confederation of Indian Industry (CII).

On the consumer outreach front, a large scale school contact programme was conducted across the States of Maharashtra, Uttar Pradesh and Karnataka, reaching about 2.7 lac children. The objective of the programme was to get children (in the age group of 8-14 years) excited about cycling, while teaching them road safety, basics of cycling and self-defence for girls. Through the year, the bicycle brands of the segment were consistently active on the digital medium. Mach City, a brand which helps urban adults rediscover cycling, was awarded the Best Social Media brand by Social Samosa, a leading online platform for analysis and research relating to social media.

As the Company has started ramping up its production in 2017-18 in the newly commissioned state-of-the-art bicycle manufacturing plant at Rajpura (Punjab), which has an installed capacity of 2,50,000 bicycles per month, the segment has closed down the Nashik facility to derive cost efficiencies through consolidation of overall capacities.

4.2. Engineering TI’s Presence

The Engineering Segment of the Company consists of cold rolled steel strips and precision steel tubes viz., Cold Drawn Welded tubes (CDW) and Electric Resistance Welded tubes (ERW). These products primarily cater to the needs of the automotive, boiler, bicycle, general engineering and process industries. The Company is further engaged in the manufacture of large diameter welded tubes mainly for non-auto application. In the past, such products were largely imported.

Industry Scenario

During 2017-18, the overall automotive industry growth was at 15%. The passenger vehicle, commercial vehicle and two-wheeler segments registered growth of 5%, 10% and 16% respectively over the last fiscal. In the two wheeler segment, the sale volumes in scooters grew by 20%, while motorcycles grew by 16%.

In Cold Rolled Steel Strips, in a market which is dominated by integrated steel manufacturers, the Company continued to be a ‘niche player’ by focussing on special grades catering to varied applications in different sizes and grades.

Review of Performance

The Engineering segment continued on the growth path on the back of growth in the domestic auto industry and in exports by taking good advantage of the capabilities, regional plants and distribution network of the segment.

During the year, volumes of the tubes business grew 18%, while the cold rolled steel strips business grew 11%. The Large Diameter Tube manufacturing plant, which caters to the requirements of the power, infrastructure, off-highway and general engineering segments further stabilized during the year. Plans have been drawn up for optimum utilisation of this facility and improvement in the market share.

During the year under review, the segment registered revenue net of excise duty of Rs.2,317 Cr. as compared to Rs.1,866 Cr. during the previous year. The operating profit before interest and tax stood at Rs.175 Cr. as compared to Rs.146 Cr. during 2016-17, registering a strong growth of 20%.

Increase in volumes in the domestic market, modernisation of facility and further enhancement in efficiencies were the key business emphasis areas aiding improved profitability during 2017-18.

The US Department of Commerce had initiated an investigation on the imports of cold-drawn steel mechanical tubes from India and some other countries in response to a complaint of dumping from the local manufacturers. Based on frivolous grounds, the US Department of Commerce has determined a Countervailing Duty (CVD) of 42.60% and an Anti-dumping Duty (AD) of 5.87% on the Company’s export of cold-drawn tubes to the US market. Taking into account the 25% tariff imposed under Section 232 of the US Trade Expansion Act, 1962, the total tariff works out to 73.5%, making the export of cold-drawn tubes to the US unviable. The CVD and AD will be revised based on the first review by the US Department of Commerce scheduled some time in May 2019.

4.3. Metal Formed Products TI’s presence

Automotive & industrial chains, fine blanked products, stamped products, roll-formed car doorframes and cold rolled formed sections for railway wagons and passenger coaches constitute the Metal Formed Products segment.

Industry scenario

During 2017-18, the two wheeler segment grew 16% driven by scooter growth of 20% and the passenger vehicles segment by 5%. The segment is one of the major players manufacturing roller chains and fine blanked parts for the automotive industry in India. The replacement market for chains and sprockets continued to register a good growth due to the increasing two wheeler population. The domestic demand for industrial chains has grown moderately.

With international car majors continuing to invest in the country and increasingly using India as an export base, many component manufacturers have the opportunity to cater to the global needs of automobile manufacturers and their Tier 1 suppliers. Within the railway segment, the freight sub-segment is yet to show any sign of a major revival. The passenger coach segment witnessed huge growth as the Ministry of Railways is focussing on passenger safety by initiating conversion of all old type coaches into stainless steel. This segment has achieved 41% growth over previous year, supplying to various customers.

Review of Performance

Sale of automotive chains and industrial chains grew by 18% and 8% respectively when compared to 201617 in volume terms. The Company continued to expand its presence in the aftermarket segment benefiting from the two-wheeler population growth. Fine blanked components volumes grew by 29% primarily through new parts developed for the four wheeler segment. Though exports volume registered a growth of 5% over 2016-17, the challenges faced continued due to the difficult demand conditions in Europe.

Doorframe sale volumes were higher at 6% during 2017-18 due to higher sales on select models with two of the renowned auto majors. The focus is on generating more business from the auto OEMs, leveraging the Tier-1 position with specific emphasis on roll form products and other tubular parts used in passenger cars. In addition, growing the casings vertical with efforts spread across sectors catering to new customers for both four wheeler and two wheeler auto electrical manufacturers, strengthening the current position in respect of coach parts, expanding the customer base and foraying into agri-rotovators blades and other farm implements are some of the opportunities that will be looked into closely to sustain the drive towards growth.

During the year, the doorframe operations at Halol which catered exclusively to the requirements of a major auto MNC for one of its car models was suspended and the fixed assets moved to other locations due to the said auto MNC discontinuing the said car model.

The chains business segment will continue its core business processes to handle both volume fluctuations and change in the product mix to meet customers’ demand. The replacement market continues to provide opportunities for growth notwithstanding good competition and the business expects to strengthen on the sales structure, deepen its coverage and launch new products for new categories.

During the year under review, the segment recorded revenue net of excise duty of Rs.1,157 Cr. as compared to Rs.1,038 Cr. during the previous year, a growth of 11%. The operating profit before interest and tax stood at Rs.102 Cr. as compared to Rs.88 Cr. during the previous year, a growth of 16%.

5. Dividend

The Board of Directors has recommended a Dividend of Rs.0.50 (fifty paise) per share on equity share of face value of Rs.1 each for the financial year ended 31st March, 2018. Together with the interim dividend of Rs.1.25 per share, paid on 28th February, 2018, the total dividend for the year works out to Rs.1.75 per share on equity share of face value of Rs.1 each. The final dividend, if approved by shareholders, will be paid on or after 17th August, 2018.

The policy on Dividend Distribution as approved by the Board is uploaded and available on the following link on the Company’s website, http://www.tiindia.com/ article/values/601. The Policy also forms part of this Annual Report for the information of shareholders as Annexure-A.

6. Share Capital

The paid up Equity Share Capital as on 31st March 2018 was Rs.18.75 Cr.

7. Finance

Cash and Cash Equivalents as at 31st March 2018 were Rs.19.25 Cr. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

7.1. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating Rs.125 Cr. were redeemed and NCDs for Rs.100 Cr. were issued. As on 31st March 2018, NCDs aggregating Rs.450 Cr. were outstanding.

7.2. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as on 31st March 2018.

7.3. Particulars of Loans, Guarantees or Investments

During the year, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. The Company made the following investments:

- Subscribed to 40,00,000 Equity Shares of Rs.10 each of TI Tsubamex Private Ltd, for an aggregate amount of Rs.4 Cr;

- Subscribed to 37,50,000 Equity Shares of Rs.10 each of TI Absolute Concepts Private Ltd., for an aggregate amount of Rs.3.75 Cr.;

- Acquired by way of purchase 40,00,000 Equity Shares of Sri Lankan Rupees (SLR) 10 each of Great Cycles (Private) Ltd., for an aggregate consideration of Rs.16.98 Cr.

- Acquired by way of purchase 40,00,000 Equity Shares of SLR 10 each of Creative Cycles (Private) Ltd., for an aggregate consideration of Rs.6.47 Cr.

8. Consolidated Financial Highlights Rs. in Cr.

Particulars

2017-18

2016-17

Revenue from Operation

5116.28

4820.20

Profit Before Exceptional items and Tax

230.17

228.55

Exceptional items

(3.26)

-

Profit Before Tax and Exceptional Items

226.91

228.55

Tax Expense

(58.32)

(46.75)

Profit for the year before Minority Interest and share of profit from Associate

168.59

181.80

Share of loss from Associate

(13.08)

(7.45)

Net Profit for the Year

155.51

174.35

9. Business Review - Subsidiaries and Joint Ventures

9.1. Shanthi Gears Ltd (SGL)

SGL, a subsidiary of the Company, recorded revenue net of excise duty of Rs.214 Cr. in 2017-18 against Rs.184 Cr. in the previous year. Profit before tax was Rs.33 Cr. (previous year: Rs.29 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers.

SGL continued to look at enlarging its market presence, create a robust channel, enhance its process capabilities and launch new products to meet the growing expectations of customers.

9.2. Financiere C10 SAS (FC10)

FC10, the Company’s wholly-owned subsidiary in France, recorded a consolidated revenue of Euro 33 Mn in 2017 (previous year: Euro 30 Mn). The profit/loss before tax for the year was Euro 0.14 Mn (previous year: loss before tax Euro 0.19 Mn). The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS (France), Sedis GmbH (Germany) and Sedis Co Ltd (UK).

9.3. TI Tsubamex Private Limited (TTPL)

TTPL is a joint venture of the Company with M/s. Tsubamex Company Limited, Japan to engage in the business of design and engineering of sheet metal dies and fixtures and providing related services The Company presently holds 78.3% of TTPL’s equity capital.

During the course of 2017-18, TTPL successfully completed and delivered varied projects for different auto OEMs and their Tier 1 suppliers. The highlight was delivery of skin panel dies for an auto major’s new project. The company was able to attract, recruit and train tool & die engineers from reputed polytechnics such as Nettur Technical Training Foundation (NTTF) and Murugappa Polytechnic. This paved the way for reducing dependence on high cost contract shop floor personnel. Efforts are in progress to reduce the fixed costs further.

The joint venture partner is providing continuous support by way of assigning specific experts to work alongside TTPL’s employees and impart specific skills in die assembly and die finishing.

TTPL recorded a revenue net of excise duty of Rs.25.72 Cr. for 2017-18 and recorded a loss before tax of Rs.6.98 Cr. (previous year: Rs.5.81 Cr.).

9.4. Great Cycles (Private) Limited (GCPL)

GCPL is the Company’s subsidiary in Sri Lanka acquired in March 2018. The Company presently holds 80% of GCPL’s equity capital.

9.5. Creative Cycles (Private) Limited (CCPL)

CCPL is the Company’s subsidiary in Sri Lanka acquired in March 2018. The Company presently holds 80% of CCPL’s equity capital.

9.6. TI Absolute Concepts Private Limited (TIACPL)

TIACPL is the joint venture between the Company and M/s. Absolute Speciality Foods Chennai Private Limited with regard to the operation of bicycle theme based restaurants under the concept of ‘Ciclo Cafe’.

During the year under review, the Company had invested in the aggregate Rs.3.75 Cr. in the equity share capital of TIACPL, with the joint venture partner also making an equal contribution as envisaged under the Joint Venture Agreement. The Company presently holds 50% of TIACPL’s equity capital.

Ciclo Cafes operated by TIACPL are functioning at Kotturpuram (Chennai), Hyderabad and Bengaluru.

TIACPL achieved a turnover of Rs.11 Cr. for 2017-18 and recorded a loss before tax of Rs.16 Cr.

The Statement containing salient features of the financial statements of the Company’s Subsidiaries / Associate Companies / Joint Ventures is attached as Annexure-B. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Indian Accounting Standards, form part of the Annual Report.

Further, consequent to the demerger sanctioned by the National Company Law Tribunal, Chennai vide its Order dated 17th July, 2017 and effective 1st April, 2016 viz., the Appointed Date under the Scheme of Arrangement (Demerger), Cholamandalam Investment and Finance Company Limited ceased to be an Associate of the Company, Cholamandalam MS General Insurance Company Limited ceased to be subsidiary of the Company and Cholamandalam MS Risk Services Limited ceased to be the Joint Venture of the Company.

15. Corporate Governance

The Company is committed to maintaining high standards of corporate governance.

As stated above, with the listing of its equity shares on the Stock Exchanges, the Company became a listed company with effect from 2nd November, 2017. The Company was wholly in compliance with the requirements of the Listing Agreement with the Stock Exchanges as well as the SEBI Listing Regulations.

A report on corporate governance together with a certificate from the Auditors is annexed in accordance with the terms of the SEBI Listing Regulations as Annexure-D and forms part of the Board’s Report. The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters in terms of Part B of Schedule II [Corporate Governance] of the SEBI Listing Regulations.

The Report further contains details as required to be provided in the Board’s Report on the policy on Directors’ appointment and remuneration including the criteria, annual evaluation by the Board and Directors, composition and other details of Board committees, implementation of risk management policy, whistleblower policy/vigil mechanism, dividend policy etc.

16. Business Responsibility Reporting

For the financial year 2017-18, the Company forms part of the top 500 listed entities of the country based on market capitalisation. Accordingly, as required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility Report as part of the Annual Report for the top 500 listed entities, the Business Responsibility Report forms part of the Annual Report as Annexure-E.

The Business Responsibility Policy of the Company is displayed in the Company’s website at the following link, htt p://www.tiindia.com/article/values/667.

17. Human Resources

The Company continues to leverage its strength in human capital by attracting the right talent, nurturing & developing, and retaining them to meet the short-term and long-term organization goals. The key HR imperatives were addressed through Organization Structure & Design, building technical & Operational Excellence (OPEX) capabilities, building leadership & talent pool, productivity improvement and employee cost reduction programs, maintaining cordial Industrial Relations and digitizing HR processes.

The Company is successful in attracting talent from outside and during the year close to two hundred people were hired across different levels and functions. Behavioural event and competency based interviewing training for strengthening the talent acquisition process was also initiated during the year.

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

Several initiatives have been taken up towards enhancing the technical capability of employees across businesses. Focus was towards building an internal team of Subject Matter Experts (SMEs) in critical areas. Employees were trained in areas like Six Sigma, Value Stream Mapping (VSM), energy management and welding through in-house training, on-the-job training, certification programs, live projects and mentoring. The SMEs are deployed in improvement projects across businesses. A Technical Training Laboratory has also been established for welding at the Basic Training Centre, Avadi, which is being used to enhance the Metal Inert Gas (MIG) welding skills of employees as well as vendors’ employees.

The OPEX programme drives operational efficiency, capability development and employee involvement towards continual improvement. The objective is to achieve the benchmark targets in the eight OPEX verticals.

The total number of permanent employees on the rolls of the Company as on 31st March, 2018 is 3,365.

Industrial relations remained cordial at all the Company’s units during the period under review.

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

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

18. Prevention of sexual harassment at workplace

The Company has policy on prevention of sexual harassment at workplace in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment has been constituted. The policy extends to all employees (permanent, contractual, temporary and trainees). Employees at all levels are being sensitized about the new Policy and the remedies available thereunder. No complaints were received and disposed off during the year under review.

19. Employee Stock Option Scheme

In accordance with the Scheme of Arrangement for Demerger sanctioned by the National Company Law Tribunal, during the year, 3,63,763 Stock Options under the Company’s Employee Stock Option Plan (ESOP 2017) were granted to eligible employees at the rate of 1 Stock Option for each Stock Option held and outstanding in the erstwhile Tube Investments of India Limited viz., the Demerged Company under the Scheme.

Further, a grant of 10,86,480 Stock Options and 2,62,200 Stock Options to eligible employees of the Company under the ESOP 2017 with graded vesting periods in respect of each of said grants was also made to eligible employees during the year.

During the year under review, the Company has issued 45,777 equity shares to eligible employees consequent to exercise by them of the stock options vested under the ESOP 2017.

Details in respect of the Company’s ESOP 2017 as required under the relevant SEBI Regulations are displayed in the Company’s website at the following link, http://www.tiindia.com/article/values/554.

20. Directors’ Responsibility Statement

The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual Financial Statements for the year ended 31st March 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the year ended on that date;

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

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; &

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

21. Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants (LLP Identity no.AAB-4295) were appointed as Statutory Auditors at the previous 9th Annual General Meeting held on 6th November, 2017 for a period of five years viz., from the conclusion of the said 9th Annual General Meeting till the conclusion of the 14th Annual General Meeting. In terms of the resolution passed by the Members, the said appointment is subject to ratification by the Members at every Annual General Meeting and their remuneration will be recommended to the Shareholders at the time of taking up such ratification of appointment each year.

Accordingly, the Board recommends the ratification of, and the terms of remuneration payable to, the Statutory Auditors as set out in the resolution contained in the Notice of the ensuing Annual General Meeting.

M/s. S Mahadevan & Co., (firm no.000007), Cost Accountants were appointed as the Cost Auditors of the Company for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial year, 2018-19. Necessary resolution for ratification of their remuneration in respect of the aforesaid terms of appointment for financial year, 2018-19 forms part of the Notice for the ensuing Annual General Meeting.

22. Related Party Transactions

All related party transactions that were entered into during the financial year under review were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under the Indian Accounting Standards have been made in the notes to the Financial Statements.

The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company’s website, http://www.tiindia.com/article/values/476. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

23. Directors

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

Mr. Ramesh K B Menon was appointed as Additional Director (Non-Executive Director) on 16th November, 2017, liable to retire by rotation and he continues up to the ensuing Annual General Meeting. Necessary resolution proposing the appointment of Mr. Ramesh K B Menon as a Director liable to retire by rotation under Section 152 of the Companies Act, 2013 forms part of the Notice for the ensuing Annual General Meeting.

The Board takes pleasure in recommending the appointment of Mr. M M Murugappan and Mr. Ramesh K B Menon as Directors at the forthcoming Annual General Meeting.

Mr. L Ramkumar, Managing Director of the Company retires at the conclusion of the ensuing Annual General Meeting. The Board places on record its appreciation of the distinguished services rendered by Mr. L Ramkumar during his decade long association, since 2008, with TII as Managing Director before and after its demerger.

Consequent to the retirement of Mr. L Ramkumar as Managing Director at the conclusion of the forthcoming Annual General Meeting, Mr. Vellayan Subbiah assumes charge as Managing Director of the Company.

Mr. S Sandilya’s term as Independent Director ends at the conclusion of the ensuing Annual General Meeting. The Board places on record its appreciation of the distinguished services rendered by Mr. S Sandilya during his long association, since January, 2005, as Director of TII, before and after its demerger.

Mr. Hemant M Nerurkar’s term as Independent Director ends at the conclusion of the ensuing Annual General Meeting. Mr. Nerurkar has been associated with TII since May, 2014. The Board places on record its appreciation of the distinguished services rendered by Mr. Hemant M Nerurkar during his association as Director of TII, before and after its demerger.

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

24. Declarations/Affirmations

During the year under review:

- the manufacturing business undertaking of the Demerged Company was transferred and vested into the Company pursuant to the Scheme of Arrangement sanctioned by the National Company Law Tribunal, Chennai by its Order dated 17th July, 2017. Consequently, the business of the Company is in the nature of manufacturing business;

- apart from the demerger of the Manufacturing Business Undertaking which has been given effect in the Financial Statements, there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the Financial Statements relate viz., 31st March, 2018 and the date of this Report; &

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

25. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. R Sridharan of Messrs R. Sridharan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-G.

The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualifications or observations or other remarks have been made by the Secretarial Auditor in his said Report.

26. Annual Return

Extract of the Annual Return is annexed and forms part of this Report as Annexure-H.

27. Key Managerial Personnel

Mr. L Ramkumar, Managing Director, Mr. K Mahendra Kumar, Chief Financial Officer and Mr. S Suresh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Companies Act, 2013. They were appointed to their respective offices as KMPs with effect from the close of business hours on 1st August, 2017.

Mr. Vellayan Subbiah, Managing Director (Designate) -KMP was appointed with effect from 19th August, 2017.

Mr. L Ramkumar also holds office as the Managing Director (KMP) of TI Tsubamex Private Limited (TTPL), the Company’s die manufacturing joint venture with Tsubamex Co. Limited, Japan and also a subsidiary of the Company, on ‘nil’ remuneration. He was re-appointed as Managing Director (KMP) of TTPL for the period from 1st April, 2018 to 13th August, 2018 (both days inclusive).

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith and forms part of this Report as Annexure-I.

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

On behalf of the Board

Chennai M M Murugappan

7th May 2018 Chairman


Mar 31, 2017

Dear Shareholders.,

The Directors take pleasure in presenting the 9th Annual Report together with the audited financial statements of the Company for the year ended 31st March 2017

1. Scheme of Arrangement (Demerger), Share Capital and Listing of Equity Shares

Scheme of Arrangement and sanction by National Company Law Tribunal

The Board of Directors of the Company, at the meeting held on 3rd November 2016, approved a Scheme of Arrangement (‘Scheme’) for the demerger of the Manufacturing Business Undertaking of the Demerged Company viz., Tube Investments of India Limited, (now known as TI Financial Holdings Limited) on a going concern basis, in favour of the Company (Resulting Company). The Manufacturing Business Undertaking which has vested in the Company means the manufacturing of tubes, strips, tubular components, bicycles and fitness products, chains for automobile sector and industrial applications, roll-formed sections, other metal formed products, industrial gears, designing and manufacturing of dies and includes investments in Shanthi Gears Limited, Financiere C10 SAS, Sedis SAS, Sedis Co Limited, Sedis GmbH, TI Tsubamex Private Limited and TI Absolute Concepts Private Limited. etc. The Scheme received the approval of the shareholders of the Demerged Company at the Equity Shareholders Meeting convened and held on 24th April 2017 as per the directions of the National Company Law Tribunal, Chennai (‘NCLT’). The Scheme was sanctioned by the NCLT vide its Order dated 17th July 2017. The Scheme has become effective on 1st August 2017, being the date of filing of the aforementioned Order of Sanction with the Registrar of Companies, Tamil Nadu, Chennai.

Appointed Date

The Appointed Date for transfer and vesting of the Manufacturing Business Undertaking of the Demerged Company into the Company was 1st April 2016.

Change in name of the Company

Consequent to the said demerger of the manufacturing activities and vesting thereof into the Company, the business of the Company is manufacturing covering the activities as listed above.

To reflect the change in business of the Company from being an investment company to a manufacturing business, the name of the Company was changed from TI Financial Holdings Limited to Tube Investments of India Limited, as envisaged under the Scheme.

Cancellation of shares held by Demerged Company

In accordance with the Scheme, 11,00,000 equity shares of ''1/- each paid up and held by the Demerged Company in the Company were cancelled and the Company ceased to be its Wholly-owned Subsidiary.

Issue of shares to shareholders of Demerged Company and listing of the shares

Pursuant to the Scheme, the shareholders of the Demerged Company are entitled for issue and allotment of corresponding number of equity shares of ''1/- each in the Company. The shares so issued will be listed on the same Stock Exchanges where the equity shares of the Demerged Company are listed viz., the BSE Limited and the National Stock Exchange of India Limited. Necessary formalities are being complied with for issue and allotment of equity shares in the Company to the shareholders of the Demerged Company and for the listing of the said shares thereafter.

During the year under review, the Company has not issued shares with differential voting rights and sweat equity shares.

2. Business Environment

During 2016-17, despite persevering global sluggishness, the Indian economy continued to consolidate gains achieved in restoring macro-economic stability. Measures taken by the Government for fiscal consolidation through rationalization of expenditure, efforts to raise revenues, thrust on administrative measures for co-operative financial governance and active steps for controlling inflation have contributed significantly to the stability of Indian economy. India thus remains one of the fastest growing economies of the World despite the temporary negative consumption shock induced due to the recent demonetization measure of the Government. However, the impediments faced by private investment in the form of corporate debt overhang, stress in the financial sector where non-productive assets (NPAs) continue to increase, excess capacity, and sharp regulatory & policy challenges could prove to be dampeners imparting downside pressures on economic growth. Rapid increases in oil and other commodity prices could also lead to a negative terms-of-trade shock. On the other hand, recent developments like smooth implementation of the Goods and Services Tax (GST) and faster resolution of banking sector stress could prove to be the welcome positives. India’s economic growth for 2016-17 is at 7.1%, which is further expected to accelerate to 7.2% in 2017 and 7.7% in 2018.

Globally, 2016-17 was a witness to continued uncertainties including rising global protectionism and a renewed slowdown in the Chinese economy which could delay a meaningful recovery of external demand. However, economic activity around the globe is picking up with a long-awaited cyclical recovery in investment, manufacturing, and trade, World growth is expected to rise from 3.1% in 2016 to 3.5% in 2017. Stronger activity, expectations of more robust global demand, reduced deflationary pressures, and optimistic financial markets are all upside developments that reflect in the positive outlook.

In an eventful year that witnessed diesel vehicle ban, demonetization and ban on sale and registration of BS (Bharat Stage)-III vehicles, the Indian automobile sector managed to grow 7% during 2016-17. In the four wheeler segment, passenger vehicle and commercial vehicle sale volumes were up by 9%. In the two wheeler segment, while scooters grew by 11%, motor cycles showed a modest growth of 4%.

3. Standalone Financial Highlights Rs, in Crores

Particulars

2016-17*

2015-16*

Revenue from Operations

4415.89

-

Profit Before Tax

201.50

-

Tax Expense

(42.55)

-

Net Profit for the Year

158.95

-

* Consequent to the demerger of the Manufacturing Business Undertaking from the Demerged Company with effect from 1st April 2016 and vesting of the same in the Company, the Company is engaged in manufacturing business. Accordingly, figures for the financial year ended 31st March 2016 and 31st March 2017 are not comparable.

4. Performance Overview

Note: Any reference to previous year performance/figures relating to 2015-16 in this Report is for ease of relative comparison and for understanding only. In view of the foot note under the tabulation in “3. Standalone Financial Highlights” as above, the performance/figures relating to the financial years 2016-17 and 2015-16 are not comparable.

During the year 2016-17, the Company achieved a gross turnover of Rs,4208 Cr., growing 4% over the previous yearRs,s Rs,4041 Cr. The Profit before Depreciation, Interest, exceptional items and Tax was at Rs,395 Cr. as against Rs,365 Cr in the previous year, a growth of 8%. The Profit before Tax was at Rs,202 Cr. as against Rs,84 Cr. in the previous year.

The Cycles and Accessories segment recorded revenue of Rs,1359 Cr as compared to Rs,1491 Cr during 2015-16, a de-growth of 9%, since sales were affected due to demonetization. The operating profit before interest and tax stood at Rs,36 Cr. as compared to Rs,79 Cr. during the previous year.

The Engineering segment registered revenue of Rs,2077 Cr. as compared to Rs,1821 Cr. during the previous year, a growth of 14%. The operating profit before interest and tax stood at Rs,146 Cr. as compared to Rs,94 Cr. during

2015-16. The increase in profits was mainly due to exports and stabilization of the Large Diameter Tube manufacturing facility.

The Metal Formed Products segment recorded revenues of Rs,1141 Cr. as compared to Rs,1044 Cr. during the previous year, a growth of 9%. The operating profit before interest and tax stood at Rs,92 Cr. as compared to Rs,86 Cr. during the previous year, a growth of 7%.

Review of Performance

Sale of automotive chains to OEMs (Original Equipment Manufacturers) grew negatively at 3% when compared to 2015-16. The Company continued to expand its presence in the aftermarket segment benefiting from the two-wheeler population growth. Sale of industrial chains in the domestic market recorded a growth of 15% during the year due to new products developed substituting the imports as well as through the appointment of dealers in growing industrial belts. Fine blanked components volumes grew by 5% primarily through new parts developed for the four wheeler segment. Though exports registered a growth of 4% over 2015-16, the challenges faced continued due to the difficult demand conditions in Europe, with a weak Euro affecting realizations.

Doorframe sale volumes were higher at 6% during 2016-17 due to higher sales on selected models with two of the renowned auto majors. The focus is on generating more business from the auto OEMs, leveraging the Tier-1 position with specific emphasis on roll form channels and other tubular parts used in passenger cars. In addition, growing the casings vertical with efforts spread across sectors and geographical regions catering to new customers for both four wheeler and two wheeler auto electrical manufacturers, strengthening the current position in respect of coach parts, expanding the customer base beyond ICF and foraying into agri-rotovators blades and other farm implements are some of the opportunities that will be looked into closely to sustain the drive towards growth.

The chains business segment will be pursuing its core business processes to successfully handle fluctuations as well as change in the product mix to meet customers demand in order to grow. The auto aftermarket continues to provide opportunities for growth notwithstanding good competition and the business expects to strengthen on the sales structure, deepen its coverage and launch new products for new categories.

During the year under review, the segment recorded revenue of ''1141 Cr. as compared to ''1044 Cr. during the previous year, a growth of 9%. The operating profit before interest and tax stood at ''92 Cr. as compared to ''86 Cr. during the previous year, a growth of 7%.

6. Dividend

The Board of Directors has recommended a Dividend of ''2 per share on equity share of face value of ''1 each for the financial year ended 31st March 2017. The Company has not declared any interim dividend during the year. The Dividend, if approved by shareholders, will be paid on or after 10th November 2017,

7. Share Capital

The Equity Share Capital of ''0.11 Cr. of the Company as on the Appointed Date shall stand cancelled. The Company shall issue and allot 1 (One) fully paid up Equity Share of ''1 (Rupee One Only) each for every 1 (One) fully paid up equity share of ''2 (Rupees Two) each held in the Demerged Company.

8. Finance

Cash and Cash Equivalents as at 31st March 2017 were ''19 Cr. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

8.1. Non-Convertible Debentures

During the year, Non-Convertible Debentures (NCDs) aggregating ''700 Cr. were redeemed and NCDs for ''100 Cr. were issued. As on 31st March 2017, NCDs aggregating ''475 Cr. were outstanding.

8.2. Long-term buyers credit

During the year, the long-term buyers credit of ''33 Cr. was repaid. The Company does not have any long-term buyers credit outstanding at the end of the year,

8.3. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as on 31st March 2017.

8.4. Particulars of Loans, Guarantees or Investments

During the year, the Company has not invested or given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013.

9. Consolidated Financial Highlights '' Cr.

Particulars

2016-17*

2015-16*

Revenue from Operation

4820.20

-

Profit Before Tax

221.10

-

Tax Expense

(46.75)

-

Profit for the year before Minority Interest

174.35

-

Share of Profit attributable to Minority Interest

(6.73)

-

Net Profit for the Year

167.62

_

* Consequent to the demerger of the Manufacturing Business Undertaking from the Demerged Company with effect from 1st April 2016 and vesting of the same in the Company, the Company is engaged in manufacturing business. Accordingly, figures for the financial year ended 31st March 2016 and 31st March 2017 are not comparable.

The Company’s consolidated Net Profit for the year was at ''174 Cr.

10. Business Review - Subsidiaries and Joint Venture

10.1. Shanthi Gears Ltd (SGL)

SGL, a subsidiary of the Company, recorded a revenue of ''204 Cr. in 2016-17 against ''182 Cr. in the previous year. Profit before tax was ''29 Cr. (previous year: ''23 Cr.). During the year, SGL renewed its focus on re-establishing itself in the market and gaining new customers.

SGL continued to look at enlarging its market presence, create a robust channel, enhance its process capabilities and launch new products to meet the growing expectations of customers.

10.2. Financiere C10 SAS (FC10)

FC10, the Company’s wholly-owned subsidiary in France, recorded a consolidated turnover of Euro 30 Mn in 2016 (previous year: Euro 33 Mn). The loss before tax for the year was Euro 0.19 Mn (previous year: loss before tax Euro

0.20 Mn). The consolidated results of FC10 include results of its subsidiaries viz., Sedis SAS, S2CI in France (merged with Sedis SAS), Sedis GmbH in Germany and Sedis Co Ltd in UK.

10.3. TI Tsubamex Private Limited (TTPL)

TTPL is a joint venture of the Company with M/s. Tsubamex Company Limited, Japan to engage in the business of design and engineering of sheet metal dies and fixtures and providing related services. The Company holds 75% of TTPL’s equity capital.

The year 2016-17 was TTPL’s first full year of manufacturing operations. The company experienced good volumes in terms of business from its target customers. The year closed with an order load of about ''25 Cr. TTPL’s focus during the year was in setting up the manufacturing system and establishing a vendor base for supply of castings with rough machining. The company fell short of the revenue target since training of fresh operators and establishment of vendor base took longer than expected. The joint venture partner is providing continuous support by way of assigning specific experts to work alongside TTPL’s employees and impart specific skills in die assembly and die finishing.

TTPL achieved a turnover of ''4.90 Cr. for 2016-17 and recorded a loss before tax of ''0.21 Cr. (previous year: ''3.69 Cr.).

10.4. TI Absolute Concepts Private Limited (TIACPL)

TIACPL is the joint venture between the Company and M/s. Absolute Speciality Foods Chennai Private Limited with regard to the operation of bicycle theme based restaurants under the concept of ‘Ciclo Cafe’.

During the year under review, the Company had invested an aggregate ''10 Cr. in the equity share capital of TIACPL, with the joint venture partner also making an equal contribution as envisaged under the Joint Venture Agreement.

TIACPL has established Ciclo Cafes at Kotturpuram (Chennai), Hyderabad and Gurugram.

I n its first year of operations, TIACPL achieved a turnover of ''2.65 Cr. for 2016-17 and recorded a loss before tax of ''5.45 Cr.

The Statement containing salient features of the financial statements of the Company’s subsidiaries and the joint ventures is attached as Annexure-A. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Indian Accounting Standards, form part of the Annual Report.

Further, consequent to the demerger, effective 1st April 2016, the Appointed Date under the Scheme of Arrangement (Demerger), Cholamandalam Investment and Finance Company Limited ceased to be an Associate of the Company, Cholamandalam MS General Insurance Company Limited ceased to be subsidiary of the Company and Cholamandalam MS Risk Services Limited ceased to be the Joint Venture of the Company,

11. Financial Review

11.1. Profits & Profitability

The Profit before Depreciation, Interest, exceptional items and tax registered a growth of 8% over the previous year. The Profit before Tax registered a growth of 141%, through continued control on costs, better operating efficiencies, stabilization of Large Diameter Tube Plant and reduction of Interest costs. On certain occasions, the Company was not able to fully recover the increase in cost from its customers.

All the business segments of the Company maintained their focus on servicing customers, improving efficiencies, controlling working capital and reducing resources employed in the business.

11.2. Capital Expenditure

The Company’s Large Diameter Tube manufacturing plant got stabilized during the current year. The Company continues to invest in facilities with a view to servicing its customers in a more timely and efficient manner, modernizing its assets and aims to be the best in class. The Company continues to assess the trends emerging in the industry and the changing requirements of its customers and invest appropriately for the long-term. The new green-field bicycle plant at Punjab with a production capacity of 2,50,000 bicycles per month was inaugurated during the year. The Company also started construction of a new plant in Rajpura, Punjab to manufacture precision tubes. The Company provides for accelerated depreciation with respect to some of its assets to reflect the remaining estimated useful life given the dynamic market conditions.

19. Auditors

M/s. S.R. Batliboi & Associates LLP, Chartered Accountants (LLP Identity no.AAB-4295), were appointed as the Statutory Auditors of the Company at the Extra-ordinary General Meeting of the Company held on 29th March 2017 for the financial year, 2016-17 in the casual vacancy caused by the resignation of M/s. R G N Price & Co., Chartered Accountants. They hold office till the conclusion of the ensuing Annual General Meeting.

I t is proposed to appoint M/s. S.R. Batliboi & Associates LLP, Chartered Accountants, as the Statutory Auditors of the Company for a period of five years from the conclusion of the ensuing 9th Annual General Meeting till the conclusion of the 14th Annual General Meeting.

M/s. S.R. Batliboi & Associates LLP., Chartered Accountants have confirmed that they are eligible under Section 141 of the Companies Act, 2013 (“the Act”) and the Rules there under for appointment as the Statutory Auditors and have further furnished their consent under the second proviso to Section 139 of the Act and also other necessary confirmations. Further, they have also furnished a copy of the certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

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

M/s. S Mahadevan & Co., (firm no.000007), Cost Accountants were appointed as the Cost Auditors of the Company for auditing the cost accounting records maintained by the Company in respect of the applicable products for the financial years, 2016-17 and 2017-18. Necessary resolutions for ratification of their remuneration in respect of the aforesaid terms of appointment form part of the Notice for the ensuing Annual General Meeting.

I n respect of the financial years, 2015-16 and 2016-17, the Cost Audit and Compliance Reports relating to the applicable products, audited by the Cost Auditors, were filed electronically in XBRL mode, on 26th August 2016 and 7th September 2017 viz., within the prescribed time limit.

20. Related Party Transactions

All related party transactions that were entered into during the financial year under review were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under the Indian Accounting Standards have been made in the notes to the Financial Statements.

The policy on Related Party Transactions as approved by the Board is uploaded and is available on the following link on the Company’s website, http://www.tiindia.com/article/ values/476. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

21. Directors

Consequent to the demerger of the Manufacturing Business Undertaking and vesting thereof into the Company, to facilitate reconstitution of the Board, Mr. N Prasad and Mr. S Suresh resigned as Directors with effect from 1st August 2017. Earlier, Mr. Arjun Ananth, resigned as Director with effect from 14th October 2016 for personal reasons. The Board places on record its appreciation of the services rendered by them during their term as Directors of the Company.

Mr. M M Murugappan (Promoter, Non-Executive Director), Mr. Hemant M Nerurkar (Independent Director), Ms. Madhu Dubhashi (Independent Director), Mr. Pradeep

V Bhide (Independent Director) and Mr. S Sandilya (Independent Director) were appointed as Additional Directors of the Company with effect from 1st August 2017. Mr. M M Murugappan was elected as the Chairman of the Board of Directors of the Company.

Mr. L Ramkumar was appointed as Managing Director of the Company with effect from 1st August 2017 till the conclusion of the Annual General Meeting of the Company in 2018, subject to the approval of the shareholders.

Mr. Vellayan Subbiah was appointed as Additional Director and Managing Director (Designate) with effect from 19th August 2017, subject to the approval of the shareholders. In terms of his appointment, he will hold office as Managing Director of the Company after the completion of term of Mr. L Ramkumar.

A resolution proposing the appointment of Mr. L Ramkumar as a Director. under Section 152 of the Companies Act, 2013 (‘the Act’), forms part of the Notice for the ensuing Annual General Meeting.

Mr. Hemant M Nerurkar, Ms. Madhu Dubhashi, Mr. Pradeep

V Bhide and Mr. S Sandilya, Independent Directors, offer themselves for appointment as Independent Directors pursuant to Section 149 of the Act. Each of them has furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated thereunder.

The Board takes pleasure in recommending the appointment of Mr. M M Murugappan, Mr. L Ramkumar, Mr. Hemant M Nerurkar, Ms. Madhu Dubhashi, Mr. Pradeep

V Bhide, Mr. S Sandilya and Mr. Vellayan Subbiah at the forthcoming Annual General Meeting as Directors as per details contained in the Notice for the ensuing Annual General Meeting.

Necessary resolutions proposing the appointment of Mr. L Ramkumar as Managing Director and Mr. Vellayan Subbiah as Managing Director (Designate)/Managing Director and the terms and conditions relating to the same form part of the Notice of the ensuing Annual General Meeting. The Board takes pleasure in recommending the appointment of Mr. L Ramkumar as Managing Director and Mr. Vellayan Subbiah as Managing Director (Designate)/ Managing Director as per the details contained in the Notice of the Annual General Meeting.

22. Declarations/Affirmations

During the year under review:

- the Manufacturing Business Undertaking of the Demerged Company was transferred and vested into the Company pursuant to the Scheme of Arrangement as per details furnished in paragraph 1 above [Scheme of Arrangement, Share Capital and Listing of Equity Shares]. Consequently, the business of the Company is in the nature of manufacturing business;

- apart from the demerger of the Manufacturing Business Undertaking which has been given effect in the Financial Statements, there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31st March 2017 and the date of this Report; &

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

23. Annual Return

Extract of the Annual Return is annexed and forms part of this Report as Annexure-C.

24. Key Managerial Personnel

Mr. L Ramkumar, Managing Director, Mr. K Mahendra Kumar, Chief Financial Officer and Mr. S Suresh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Companies Act, 2013. They were appointed to their above referred offices as KMPs with effect from the close of business hours on 1st August 2017.

Mr. L Ramkumar also holds office as the Managing Director of TI Tsubamex Private Limited, the Company’s die manufacturing joint venture & subsidiary with Tsubamex Co. Limited, Japan on ‘nil’ remuneration.

Mr. Vellayan Subbiah was appointed as the Managing Director (Designate) - KMP with effect from 19th August 2017.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith and forms part of this Report as Annexure-D.

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

On behalf of the Board Chennai

M M Murugappan

9th August 2017 Chairman

Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X