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TVS Motor Company

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Directors Report Year End : Mar '16    « Mar 15
The directors have pleasure in presenting the twenty-fourth annual
 report and the audited financial statements for the year ended 31st
 March 2016.
 
 1.  COMPANY PERFORMANCE
 
 The Company continued to grow ahead of the industry for the second year
 in succession and in 2015-16, registered sales of 25.7 lakh two
 wheelers, growing by 7% over last year. Sale of Motorcycles increased
 by 7% and scooters by 16%. Moped sales declined by 2.8%. Three-wheeler
 sales of the Company increased by 3% in 2015-16. Sales of spare parts
 grew by 12.7%. Despite continued weakness in economic activity and
 increased competitive intensity, Company managed to grow
 satisfactorily.
 
 Company''s products continued to top the quality charts.  Across
 categories almost all the products were labelled as best by the
 recently concluded JD Power Study for the second consecutive year.
 
 Total revenue of the Company including other income increased from
 Rs.10,072.62 Cr in the previous year to Rs.11,295.18 Cr in the current
 year. Profit before tax (PBT) for the year 2015-16 increased
 significantly from Rs. 456.16 Cr in the previous year to Rs.565.97 Cr
 in the current year. Similarly, PAT increased from Rs. 347.83 Cr
 achieved in the previous year after considering the extra- ordinary and
 exceptional items to Rs. 432.14 Cr in 2015-16.
 
 2.  FINANCIAL HIGHLIGHTS
 
                                           Year ended    Year ended 
 Details                                   31-03-2016    31-03-2015
 
 SALES
 
 Quantitative                                    (Numbers in lakhs)
 
 Motorcycles                                    10.17          9.51
 
 Mopeds                                          7.38          7.59
 
 Scooters                                        8.13          7.00
 
 Three Wheelers                                  1.11          1.08
 
 Total vehicles sold                            26.79         25.18
 
 Financials                                       (Rupees in crores)
 
 Motorcycles                                  4236.16       3810.20
 
 Mopeds                                       1554.81       1553.04
 
 Scooters                                     3054.91       2431.91
 
 Three Wheelers                               1023.92        976.00
 
 Spares & Accessories and
 Raw Materials                                1238.38       1093.10
 
 Other Operating Income                        135.69        178.08
 
 Other Income                                   51.31         30.29
 
 Sales (Net of Excise duty) &
 other income                                11295.18      10072.62
 
                                           Year ended    Year ended 
 Details                                   31-03-2016    31-03-2015
 
                                                  (Rupees in crores)
 
 EBITDA                                        848.35        668.91 
 
 Less:
 
 Finance Charges & Interest (Gross)             46.24         27.42
 
 Amortisation                                   46.30         32.00
 
 Depreciation                                  189.84        153.33
 
 Profit before tax                             565.97        456.16
 
 Less:Provision for tax                        133.83        108.33
 
 Profit for the year after tax                 432.14        347.83 
 
 Add: Balance in Statement
 of Profit and Loss                            722.08        481.76
 
 Profit available for appropriation           1154.22        829.59 
 
 Appropriations: Dividend and Dividend
 
 Distribution Tax #                            140.92        107.51
 
 Surplus carried forward                      1013.30        722.08
 
                                              1154.22        829.59
 
 # Rs.140.92 Cr includes Rs.0.20 Cr relating to increased surcharge
 applicable on dividend relating to 2014-15 paid in 2015-16.
 
 3.  DIVIDEND
 
 The board of directors of the Company (the board) at its meeting held
 on 29th January 2016, declared a first interim dividend of Re.1/- per
 share (100%) for the year 2015-16 absorbing a sum of Rs. 55.65 Cr
 including dividend distribution tax. The same was paid to the
 shareholders on 10th February 2016.
 
 The board at its meeting held on 12th March 2016 declared a second
 interim dividend of Rs. 1.50 per share (150%) for the year 2015-16
 absorbing a sum of Rs. 85.07 Cr including dividend distribution tax.
 The same was paid to the shareholders on 23rd March 2016.
 
 Hence, the total amount of both dividends for the year ended 31st March
 2016 aggregated to Rs. 2.50 per share (250%) on 47,50,87,114 equity
 shares of Re.1/- each.
 
 The board does not recommend any further dividend for the year under
 consideration.
 
 5. DIRECTORS'' RESPONSIBILITY STATEMENT
 
 In accordance with the provisions of Section 134(5) of the Act, with
 respect to Directors'' Responsibility Statement, it is hereby stated -
 
 i. that in the preparation of annual accounts for the financial year
 ended 31st March 2016, the applicable Accounting Standards had been
 followed and that there were no material departures;
 
 ii. that the directors had selected such accounting policies and
 applied them consistently and made judgments and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for the year under review;
 
 iii. that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act, for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv. that the directors had prepared the accounts for the financial year
 ended 31st March 2016 on a going concern basis;
 
 v. that the directors had laid down internal financial controls to be
 followed by the Company and that such internal financial controls are
 adequate and were operating effectively; and
 
 vi. that the directors had devised proper systems to ensure compliance
 with the provisions of all applicable laws and that such systems were
 adequate and operating effectively.
 
 6.  CORPORATE SOCIAL RESPONSIBILITY (CSR)
 
 CSR activities have already been textured into the Company''s value
 system through Srinivasan Services Trust (SST), the CSR arm of the
 Company established by the group companies in 1996 with the vision of
 building self-reliant rural community.
 
 Over 20 years of service, SST has played a pivotal role in changing
 lives of people in rural India by creating self-reliant communities
 that are models of sustainable development.
 
 The Company is eligible to spend on their ongoing projects/ programs,
 falling within the CSR activities specified under the Act, as mandated
 by the Ministry of Corporate Affairs for carrying out the CSR
 activities.
 
 The Committee formulated and recommended a CSR policy in terms of
 Section 135 of the Act along with a list of projects / programmes to be
 undertaken for CSR spending in accordance with the Companies (Corporate
 Social Responsibility Policy) Rules, 2014.
 
 Based on the recommendation of the CSR Committee, the board has
 approved the projects / programs carried out as CSR activities by the
 following non-profitable organizations having an established track
 record for more than the prescribed years in undertaking similar
 programmes / projects, constituting more than 2% of average net
 profits, for the immediate past three financial years, towards CSR
 spending for the current financial year 2015-16.
 
                                      Amount spent 
 S.
 No.  Name of the Trust              (Rs in Lakhs)
 
 1    Sri Sathya Sai Central Trust      385.00
 
 2    AIM for SEVA                       50.00
 
 3    NIMHANS                            64.50
 
 4    Voluntary Health Services          25.00
 
 5    Srinivasan Services Trust         191.00 
 
      Total                             715.50
 
 Presently, SST is working in 3,449 villages spread across Tamil Nadu,
 Karnataka, Maharashtra, Himachal Pradesh and Andhra Pradesh covering
 about 20,90,000 population and 4,63,500 families. Its major focus areas
 are Economic development, health care, quality education, environment
 and infrastructure.
 
 Of the 3,449 villages, 2,654 villages (16,72,620 population and
 3,67,170 families) have been funded by the Company during the year.
 
 Achievements in 2,654 villages are:
 
 Economic development:
 
 - 2,27,667 families living in these villages have a monthly income of
 above Rs.15,000/-. They have financial security.
 
 - 1880 farmers groups have been formed with 31,323 members.
 
 - Improved agriculture practices enabled 1,51,862 farmers owning
 1,64,124 hectares to increase the yields than the state average by 15%.
 
 - 1,36,050 families earn more than Rs 3,500/- per month through
 livestock.
 
 Women empowerment:
 
 - Formed 7,064 Self Help Groups. These groups have 1,06,720 women as
 members.
 
 - Of the 1,06,720 members, 99,170 members are in income generation
 activities. They earn a minimum income of Rs. 2,500/- per month.
 
 Health care:
 
 - 60,512 children in the age group below 5 are not malnourished.
 
 - 2,75,970 women are freed from anemia.
 
 - 2,32,436 households were provided access to toilet facilities.
 
 - The morbidity percentage reduced from 9% to 5%.
 
 - Enrolment in anganwadis increased from 86% to 100% and attendance is
 99%.
 
 - 1,073 anganwadis have met all the Integrated Child Development
 Services Scheme (ICDS) standards.
 
 - 88% involvement of mother volunteers in the functioning of
 anganwadis. They volunteer their time to ensure proper functioning.
 
 Quality education:
 
 - 100% enrolment of children in schools. There are no drop outs in the
 schools.
 
 - Percentage of slow learners reduced in schools from 27% to 14%.
 
 - Out of 1,204 schools, 807 schools are now model schools.
 
 - 73,345 illiterate women out of 1,18,872 have been made literates.
 
 Environment and Infrastructure:
 
 - 2,14,120 households dispose solid waste through individual and common
 compost pits. 82 tons of vermi compost generated per month from wastes.
 
 - Sewage water from 2,18,234 households disposed through soak pits,
 kitchen gardens and drains.
 
 - Safe drinking water is available to 2,137 villages.
 
 Communities take care of their development needs. 5,302 social leaders
 are active in this effort.
 
 As required under Section 135 of the Act read with Rule 8 of the
 Companies (Corporate Social Responsibility Policy) Rules, 2014, the
 annual report on CSR containing the particulars of the projects /
 programmes approved and recommended by CSR Committee and approved by
 the board for the financial year 2015-16 are given by way of Annexure
 IV attached to this Report.
 
 7.  FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATE
 COMPANIES
 
 The following companies and bodies corporate are the subsidiaries /
 associates of the Company:
 
 Subsidiaries
 
 - Sundaram Auto Components Limited, Chennai;
 
 - TVS Housing Limited, Chennai;
 
 - PT. TVS Motor Company Indonesia, Jakarta;
 
 - TVS Motor Company (Europe) B.V, Amsterdam;
 
 - TVS Motor (Singapore) Pte. Limited, Singapore;
 
 - Sundaram Business Development Consulting (Shanghai) Co. Ltd.,
 Shanghai; and
 
 - Sundaram Holding USA Inc., Delaware, USA.
 
 Associates
 
 Emerald Haven Realty Limited, Chennai; and
 
 - Green Infra Wind Energy Theni Limited, New Delhi.
 
 Sundaram Auto Components Limited (SACL)
 
 During the year, SACL, a wholly owned subsidiary of the Company,
 achieved a turnover of Rs.2,737 Cr including Rs.491 Cr in Plastics
 Component business. SACL earned a profit after tax of Rs.28.64 Cr
 during 2015-16.
 
 SACL increased its customer base by addition of new customers for
 manufacture of cluster components and heating, ventilating and
 air-conditioning parts.
 
 SACL productionized 314 new parts for various customers.
 
 SACL received the following awards:
 
 - Outstanding Supplier for achieving Delivery Target from TOYODA
 GOSEI
 
 - Q1 certification from FORD India
 
 - SQ mark certification from Hyundai Motors India Ltd.
 
 - Best Supplier Kaizen award from India Japan Lighting Pvt. Ltd.
 
 SACL on 24th December, 2015, declared a first interim dividend of
 Rs.4.00 per share (40%) for the year 2015-16 absorbing a sum of Rs.5.56
 Cr including dividend distribution tax.
 
 SACL again on 7th March, 2016 declared a second interim dividend of
 Rs.3.00 per share (30%) for the year 2015-16 absorbing a sum of Rs.4.18
 Cr. including dividend distribution tax.
 
 Hence, the total amount of both dividends paid, for the year ended 31st
 March, 2016 aggregates to Rs.7.00 per share (70%) thereby absorbing a
 sum of Rs.9.74 Cr. including dividend distribution tax.
 
 TVS Housing Limited (TVSH) / Emerald Haven Realty Limited (EHRL)
 
 EHRL is the developer of the Nedungundram, Chennai project of TVSH.
 Phase 1 was developed as apartments and Phase 2 was launched as villas
 and row houses.  As of 31st March 2016, all the 448 apartments have
 been sold and customers have taken possession of the apartments.
 Despite the tough real estate market condition in Chennai, the
 responses for the villas and row houses have been quite good. As the
 phase 2 is nearing completion, the Company has already sold about 90%
 of the units. The Company is confident that the remaining units would
 be sold during 2016-17.
 
 PT.TVS Motor Company Indonesia (PT TVSM)
 
 During 2015-16, motorcycle industry in Indonesia declined by 12% (from
 7.6 million units in 2014-15 to 6.6 million units in 2015-16). The
 decline was mainly due to lower economic growth and weak consumer
 sentiments due to subdued commodity prices and further tightening of
 credit. While the bebek segment declined by 33%, sports motorcycle
 segment went down by 23%. The scooter category marginally declined by
 5%. Within 2 wheelers, the scooter segment continued to dominate with a
 category share of 75%.
 
 During the year, PT TVSM launched the 110cc Dazz scooter with fuel
 injection system in Indonesian market. It also launched the new Apache
 200cc sports motorcycle.  PT TVSM continued its focus on exports to
 ASEAN and African countries. PT TVSM commenced its exports to Latin
 American market by entering Colombia.
 
 The decline in two wheeler industry resulted in lower domestic sales
 during 2015-16. PT TVSM sold total of 17,100 vehicles as against 23,300
 vehicles sold in the previous year. However, the focus on ASEAN and
 African markets helped the company to export 15,000 nos, registering an
 increase of 4% over the previous year. The EBITDA loss for the year of
 6.8 Mn USD is marginally lower than EBITDA loss of 7.7 Mn USD of
 2014-15. Focus during 2016-17 will be to build on the portfolio and
 substantially reduce the EBITDA loss.
 
 TVS Motor Company (Europe) B.V & TVS Motor (Singapore) Pte. Ltd
 
 TVSM had earlier incorporated both these entities with a view to serve
 as special purpose vehicles for making and protecting the investments
 made in overseas operations of PT TVSM.
 
 Sundaram Business Development Consulting (Shanghai) Company Limited
 (SBDC)
 
 SBDC was initially established to explore options of sourcing auto
 components and local assembly of two wheelers etc., in China. After a
 complete review, board felt that it may not be viable to carry out
 manufacturing activities in China and therefore steps were taken for
 closure of operations of SBDC. All required formalities were completed
 in April 2016.  Hence in the books a provision of Rs.1.07 Cr has been
 made for diminution in the value of investments.
 
 Sundaram Holding USA Inc.
 
 SACL made an investment of USD 750 consisting of 750 shares with face
 value of USD 1 each in Sundaram Holding USA Inc., (SHUI) a company
 established under the applicable laws of United States of America (USA)
 for carrying out the business of SACL in USA. SACL by this investment
 acquired 75% of the paid up capital of SHUI and hence, it has become a
 subsidiary of the Company effective 9th September 2015, by virtue of
 the provisions of Section 2(87) of the Act.
 
 Green Infra Wind Energy Theni Ltd (GIWETL)
 
 SACL had earlier invested Rs.3 Cr. (30 lakh shares of Rs.10 each)
 representing 21.58% of total share capital of Rs.13.9 Cr. of GIWETL.
 The above investment was made by SACL purely to comply with the legal
 requirement to draw low cost green energy from 6 MW committed to SACL
 by GIWETL. SACL has no operating control and not involved in daily
 operation of GIWETL. Hence, both the Company and SACL have not
 consolidated the financials of GIWETL.
 
 8.  CONSOLIDATED FINANCIAL STATEMENTS
 
 The consolidated financial statements of the Company are prepared in
 accordance with the provisions of Section 129 of the Act, read with the
 Companies (Accounts) Rules, 2014 and Regulation 33 of the SEBI (LODR)
 Regulations 2015 along with a separate statement containing the salient
 features of the financial performance of subsidiaries / associate in
 the prescribed form. The audited consolidated financial statements
 together with Auditors'' Report form part of the Annual Report.
 
 The audited financial statements of the subsidiary companies will be
 made available to the shareholders, on receipt of a request from any
 shareholder and it has also been placed on the website of the Company.
 This will also be available for inspection by the shareholders at the
 registered office during business hours.
 
 The consolidated profit after tax of the Company and its subsidiaries &
 associate amounted to Rs. 369.33 Cr for the financial year 2015-16 as
 compared to Rs. 328.26 Cr in the previous year.
 
 9.  DIRECTORS & KEY MANAGERIAL PERSONNEL Independent Directors (IDs)
 
 All IDs hold office for a fixed term of five years and are not liable
 to retire by rotation.
 
 At the annual general meeting held on 14th July 2014, M/s T Kannan, C R
 Dua, R Ramakrishnan, Prince Asirvatham and Hemant Krishan Singh, were
 appointed as IDs for the first term of five consecutive years from the
 conclusion of the twenty second AGM and entitled to receive
 remuneration by way of fees, reimbursement of expenses for
 participation in the meetings of the board and / or committees and
 profit related commission in terms of applicable provisions of the Act
 as determined by the board from time to time.
 
 On appointment, each ID has acknowledged the terms of appointment as
 set out in their letter of appointment. The terms cover, inter alia,
 duties, rights of access to information, disclosure of their interest /
 concern, dealing in Company''s shares, remuneration and expenses,
 insurance and indemnity. The IDs are provided with copies of the
 Company''s policies and charters of various committees of the board.
 
 In accordance with Section 149(7) of the Act, all IDs have declared
 that they met the criteria of independence as provided under Section
 149(6) of the Act.
 
 The detailed terms of appointment of IDs are disclosed on the Company''s
 website in the following link http://
 www.tvsmotor.com/pdf/Terms-of-Appointment-Independent- Directors.pdf.
 
 Separate meeting of Independent Directors
 
 The IDs were fully kept informed of the Company''s activities in all its
 spheres.
 
 During the year under review, a separate meeting of IDs was held on
 12th March 2016 and the IDs reviewed the performance of:
 
 (i) non-IDs viz., M/s Venu Srinivasan, Chairman and Managing Director,
 Sudarshan Venu, Joint Managing Director, H Lakshmanan, and Dr Lakshmi
 Venu, directors; and
 
 (ii) the board as a whole.
 
 They also reviewed the performance of Chairman after taking into
 account, the views of Executive and Non-Executive Directors.
 
 They also assessed the quality, quantity and timeliness of flow of
 information between the Company''s Management and the board that is
 necessary for the board to effectively and reasonably perform its
 duties.
 
 All the Independent Directors were present at the Meeting.
 
 Woman director
 
 In terms of Section 149 of the Act and Regulation 17 of the SEBI (LODR)
 Regulations 2015, the Company is required to have a woman director on
 its board.
 
 Dr Lakshmi Venu was appointed as non-executive and non-independent
 director of the Company in terms of Section 161 read with Section 149
 of the Act, effective 10th September 2014. Her appointment was
 regularized at the AGM held on 29th July 2015.
 
 Non-executive and non-independent directors (NE- NIDs)
 
 In terms of the provisions of sub-section (6) read with explanation to
 Section 152 of the Act, two-third of the total number of directors
 i.e., excluding IDs, are liable to retire by rotation and out of which,
 one-third is liable to retire by rotation at every AGM.
 
 Mr H Lakshmanan, director who is liable to retire by rotation at the
 AGM, and being eligible, offers himself for re-appointment.
 
 The directors, therefore, recommend his re-appointment as director of
 the Company.
 
 Key Managerial Personnel (KMP)
 
 M/s Venu Srinivasan, Chairman and Managing Director, Mr Sudarshan Venu,
 Joint Managing Director, Mr K N Radhakrishnan, Chief Executive Officer,
 Mr S G Murali, Chief Financial Officer and Mr K S Srinivasan, Company
 Secretary are KMP of the Company in terms of Section 2(51) and Section
 203 of the Act.
 
 Nomination and Remuneration Policy
 
 The Nomination and Remuneration Committee of Directors (NRC) reviews
 the composition of the board, to ensure that there is an appropriate
 mix of abilities, experience and diversity to serve the interests of
 all shareholders and the Company.
 
 In accordance with the requirements under Section 178 of the Act,
 Nomination and Remuneration Policy was formulated to govern the terms
 of nomination / appointment and remuneration of (i) Directors, (ii) KMP
 and (iii) Senior Management Personnel (SMP) of the Company. The same
 was approved by the board at its meeting held on 23rd September, 2014.
 There is no change in the Policy during the year under review.
 
 The NRC also reviews succession planning of KMP, SMP and board. The
 Company''s approach in recent years is to have a greater component of
 performance linked remuneration for SMP.
 
 The process of appointing a director / KMP / SMP is, that when a
 vacancy arises, or is expected, the NRC will identify, ascertain the
 integrity, qualification, appropriate expertise and experience, having
 regard to the skills that the candidate will bring to the board /
 Company, and the balance of skills added to that of which the existing
 members hold.
 
 The NRC will review the profile of persons and the most suitable person
 is either recommended for appointment by the board or is recommended to
 shareholders for their election. The NRC has discretion to decide
 whether qualification, expertise and experience possessed by a person
 are sufficient / satisfactory for the concerned position.
 
 NRC will ensure that any person(s) who is / are appointed or continues
 in the employment of the Company as its executive chairman, managing
 director, whole-time director shall comply with the conditions as laid
 out under Part I of Schedule V to the Act.
 
 NRC will ensure that any appointment of a person as an independent
 Director of the Company will be made in accordance with the provisions
 of Section 149 read with Schedule IV to the Act along with any other
 applicable provisions and SEBI (LODR) Regulations, 2015.
 
 Criteria for performance evaluation, disclosures on the remuneration of
 directors, criteria of making payments to non-executive directors have
 been disclosed as part of Corporate Governance Report attached
 herewith.
 
 Variation in the terms of remuneration payable to CMD and JMD
 
 The board, on the recommendation of NRC, at its meeting held on 3rd May
 2016, reviewed the remuneration payable to CMD after taking into
 consideration, the time spent and contribution to the growth of the
 Company including his active involvement in all spheres of affairs and
 leading the Company''s management in achieving sales and profits and
 felt that, CMD can be compensated by way of monthly remuneration and
 allied perquisites along with the profit related commission, from the
 financial year 2016-17 effective 1st April 2016, within the overall
 limits prescribed under Section 197 of the Act.
 
 The board also reviewed the remuneration payable to JMD after taking
 into consideration his active involvement in all spheres of management
 and exploring business opportunities both in India and abroad and felt
 that, JMD can be compensated by way of enhanced profit related
 commission.
 
 Such modification in the terms of remuneration will amount to variation
 of remuneration payable to them within the overall limit permissible
 under Sections 197 and 198 read with Schedule V to the Act and placed
 before the members for their approval by way of ordinary resolutions in
 the ensuing AGM.
 
 NRC has recommended the modifications in the terms of remuneration
 payable to both CMD and JMD, to the board subject to approval of the
 shareholders.
 
 Evaluation of the board, committees and directors
 
 In terms of Section 134 of the Act and the Corporate Governance
 requirements as prescribed under SEBI (LODR) Regulations 2015, the
 board reviewed and evaluated its own performance from the perspectives
 of Company''s performance, strategy and implementation, risk management
 and corporate ethics, based on the evaluation criteria laid down by the
 NRC.
 
 Board
 
 The board discussed and assessed its own composition, size, mix of
 skills and experience, its meeting sequence, effectiveness of
 discussion, decision making, follow up action, quality of information
 and the performance and reporting by the Committees viz., Audit
 Committee, NRC, Stakeholders Relationship Committee (SRC) and Corporate
 Social Responsibility Committee (CSR).
 
 The board upon evaluation concluded that it is well balanced in terms
 of diversity of experience encompassing all the activities of the
 Company. The Company endeavours to have a diverse board representing a
 range of experience at policy-making levels in business and technology,
 and in areas that are relevant to the Company''s global activities.
 
 The board also noted that corporate responsibility, ethics and
 compliance are taken seriously, and there is a good balance between the
 core values of the Company and the interests of stakeholders. The board
 is satisfied with the Company''s performance in all fronts viz., new
 product development, operations, sales and marketing, finance
 management, international business, employee relations and compliance
 with statutory / regulatory requirements and finally concluded that the
 board operates effectively and is closely aligned to the culture of the
 business.
 
 Directors
 
 The performance of individual directors including all Independent
 directors is assessed against a range of criteria such as contribution
 to the development of business strategy and performance of the Company,
 understanding the major risks affecting the Company, clear direction to
 the management and contribution to the board cohesion. The performance
 evaluation has been done by the entire board of directors, except the
 director concerned being evaluated.
 
 The board noted that all directors have understood the opportunities
 and risks to the Company''s strategy and are supportive of the direction
 articulated by the management team towards consistent improvement.
 
 Committees
 
 The performance of each committee was evaluated by the board after
 seeking inputs from its members on the basis of the criteria such as
 matters assessed against terms of reference, time spent by the
 committees in considering matters, quality of information received,
 work of each committee, overall effectiveness and decision making and
 compliance with the corporate governance requirements and concluded
 that all the committees continued to function effectively, with full
 participation by all its members and the members of executive
 management of the Company.
 
 The board reviewed each committee''s terms of reference to ensure that
 the Company''s existing practices remain appropriate. Recommendations
 from each committee are considered and approved by the board prior to
 implementation.
 
 Number of board meetings held
 
 The number of board meetings held during the financial year 2015-16 are
 provided as part of Corporate Governance Report prepared in terms of
 the SEBI (LODR) Regulations 2015.
 
 10.AUDITORS
 
 Statutory Auditors
 
 The Company at its twenty second AGM held on 14th July 2014 appointed
 M/s V Sankar Aiyar & Co., Chartered Accountants, Mumbai, having Firm
 Registration No.  109208W allotted by The Institute of Chartered
 Accountants of India, as statutory auditors of the Company to hold
 office, for four consecutive years in the first term of five
 consecutive years, from the conclusion of the said AGM, subject to
 ratification at every AGM, at such remuneration in addition to all
 applicable taxes, out of pocket expenses, travelling and other expenses
 as may be mutually agreed between the board and the Auditors.
 
 It is therefore proposed to continue them as statutory auditors for the
 fourth year in the first term of five consecutive years, from the
 conclusion of this AGM, subject to ratification by the members at the
 AGM.
 
 The Company has obtained necessary certificate under Section 141 of the
 Act conveying their eligibility for being statutory auditors of the
 Company for the year 2016-17.
 
 The Auditors'' Reports for the financial year 2015-16 does not contain
 any qualification, reservation or adverse remarks and the same is
 attached with the annual financial statements.
 
 Secretarial Auditors
 
 As per Section 204 of the Act and the Companies (Appointment and
 Remuneration of Managerial Personnel) Rules 2014, the Company is
 required to appoint a Secretarial Auditor for auditing secretarial and
 related records of the Company.
 
 As required by Section 204 of the Act, the Secretarial Audit Report for
 the year 2015-16 given by M/s S Krishnamurthy & Co., Company
 Secretaries, Chennai for auditing the secretarial and related records
 is attached to this report. The Secretarial Audit Report does not
 contain any qualification, reservation or other remarks.
 
 M/s S Krishnamurthy & Co., Company Secretaries, Chennai, was
 re-appointed as Secretarial Auditors for carrying out the secretarial
 audit for the financial year 2016-17.
 
 Cost Auditor
 
 As per Section 148 of the Act read with the Companies (Cost Records and
 Audit) Rules 2014, as amended, the cost audit records maintained by the
 Company in respect of engine parts, etc., manufactured by the Company
 specified under Central Excise Tariff Act heading in Table B to Rule 3
 of the above Rules, are required to be audited by a Cost Auditor.
 
 In terms of the Companies (Cost Records and Audit) Amendment Rules,
 2014, the board, subject to the approval of the Central Government, has
 re-appointed Mr A N Raman, Cost Accountant holding certificate of
 practice No. 5359 allotted by The Institute of Cost Accountants of
 India, as a Cost Auditor for conducting Cost Audit for the financial
 year 2016-17.
 
 The Company has also received necessary certificate under Section 141
 of the Act from him conveying his eligibility.  A sum of Rs.5 lakhs has
 been fixed by the board as remuneration in addition to reimbursement of
 all applicable taxes, travelling and out-of-pocket expenses payable to
 him for the financial year 2016-17 and is also required to be ratified
 by the members, at the ensuing AGM as per Section 148(3) of the Act.
 
 11.CORPORATE GOVERNANCE
 
 The Company has been practising the principles of good governance over
 the years and lays strong emphasis on transparency, accountability and
 integrity.
 
 A separate section on Corporate Governance and a certificate from the
 statutory auditors of the Company regarding compliance of conditions of
 Corporate Governance as stipulated under SEBI (LODR) Regulations 2015
 form part of this Annual Report.
 
 The chairman and managing director and the chief financial officer of
 the Company have certified to the board on financial statements and
 other matters in accordance with the Regulation 17 (8) of the SEBI
 (LODR) Regulations 2015 pertaining to CEO / CFO certification for the
 financial year ended 31st March 2016.
 
 12.POLICY ON VIGIL MECHANISM
 
 The Company has adopted a Policy on Vigil Mechanism in accordance with
 the provisions of the Act and Regulation 22 of SEBI (LODR) Regulations
 2015, which provides a formal mechanism for all directors, employees
 and other stakeholders of the Company to report to the management,
 their genuine concerns or grievances about unethical behaviour, actual
 or suspected fraud and any violation of the Company''s Code of conduct
 or ethics policy.
 
 The policy also provides a direct access to the Chairperson of the
 Audit Committee to make protective disclosures to the management about
 grievances or violation of the Company''s Code of conduct.
 
 The policy is disclosed on the Company''s website in the following link
 http://www.tvsmotor.com/pdf/Whistle-Blower- Policy.pdf.
 
 13.PUBLIC DEPOSITS
 
 The Company has not accepted any deposit from the public within the
 meaning of Chapter V of the Act, for the year ended 31st March 2016.
 
 14.STATUTORY STATEMENTS
 
 Information on conservation of energy, technology absorption, foreign
 exchange etc
 
 Information on conservation of energy, technology absorption and
 foreign exchange earnings and outgo are given in Annexure I to this
 report, in terms of the requirements of Section 134(3)(m) of the Act
 read with the Companies (Accounts) Rules 2014.
 
 Material changes and commitments
 
 There have been no material changes and commitments affecting the
 financial position of the Company, which have occurred between the end
 of the financial year of the Company to which the financial statements
 relate and the date of this report.
 
 Significant and material orders passed by the Regulators or Courts or
 Tribunals impacting the going concern status of the Company
 
 There are no significant and material orders passed by the Regulators
 or Courts or Tribunals, which would impact the going concern status of
 the Company and its future operations.
 
 Annual Return
 
 Extract of Annual Return in the prescribed form is given as Annexure II
 to this report, in terms of the requirements of Section 134(3)(a) of
 the Act read with the Companies (Accounts) Rules 2014.
 
 Employee''s remuneration
 
 Details of employees receiving the remuneration in excess of the limits
 prescribed under Section 197 of the Act read with Rule 5(2) of the
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014 are given in Annexure III. In terms of first proviso to Section
 136(1) of the Act, the Annual Report, excluding the aforesaid annexure
 is being sent to the shareholders of the Company. The annexure is
 available for inspection at the Registered Office of the Company during
 business hours and any shareholder interested in obtaining a copy of
 the said annexure may write to the Company Secretary at the Registered
 Office of the Company.
 
 Comparative analysis of remuneration paid
 
 A comparative analysis of remuneration paid to Directors and employees
 with the Company''s performance is given as Annexure V to this report.
 
 Details of related party transactions
 
 Details of material related party transactions under Section 188 of the
 Act read with the Companies (Meetings of Board and its Powers) Rules,
 2014, are given in Annexure VI to this report in the prescribed form.
 
 Details of loans / guarantees / investments made
 
 The details of loans and guarantees under Section 186 of the Act read
 with the Companies (Meetings of Board and its Powers) Rules, 2014, for
 the financial year 2015-16 are given as Annexure VII to this report. On
 loans granted to the employees, the Company has charged interest as per
 its remuneration policy, in compliance with Section 186 of the Act.
 
 Please refer note No. X to Notes on accounts for the financial year
 2015-16, for details of investments made by the Company.
 
 Other laws
 
 During the year under review, the Company has not received any
 complaints of sexual harassment from any of the women employees of the
 Company in terms of Sexual Harassment of Women at Workplace
 (Prevention, Prohibition and Redressal) Act 2013.
 
 15.ACKNOWLEDGEMENT
 
 The directors gratefully acknowledge the continued support and
 co-operation received from the holding company i.e.  Sundaram-Clayton
 Limited, Chennai. The directors thank the bankers, investing
 institutions, customers, dealers, vendors and sub-contractors for their
 valuable support and assistance.
 
 The directors wish to place on record their appreciation of the good
 work done by all the employees of the Company during the year under
 review.
 
 The directors also thank the investors for their continued faith in the
 Company.
 
                                    For and on behalf of the Board
 
 Bengaluru                                         VENU SRINIVASAN
 
 3rd May 2016                                             Chairman
Source : Dion Global Solutions Limited
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