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TVS Motor Company Directors Report, TVS Motor Reports by Directors
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TVS Motor Company
BSE: 532343|NSE: TVSMOTOR|ISIN: INE494B01023|SECTOR: Auto - 2 & 3 Wheelers
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Download Annual Report PDF Format 2012 | 2011
Directors Report Year End : Mar '12    « Mar 11
The directors have pleasure in presenting the twentieth annual report
 and the audited accounts for the year ended 31st March 2012.
 
 1.  FINANCIAL HIGHLIGHTS
 
                                               Year ended   Year ended 
 Details                                       31-03-2012   31-03-2011
 
 QUANTITATIVE                                   (Numbers in lakhs) 
 
 Sales:
 
 Motorcycles                                       8.44         8.33
 
 Mopeds                                            7.78         7.05
 
 Scooters                                          5.25         4.66
 
 Three wheelers                                    0.40         0.39
 
 Total vehicles sold                              21.87        20.43
 
 FINANCIAL                                        (Rupees in crores)
 
 Motorcycles                                    2895.79      2748.88
 
 Mopeds                                         1458.74      1235.34
 
 Scooters                                       1622.82      1340.69
 
 Spares and accessories                          692.97       539.17
 
 Three wheelers                                  323.65       314.35
 
 Other operating income                          132.23       109.59
 
 Other income                                     21.71        35.62 
 
 Sales (Net of Excise duty)
 and Other income                               7147.91      6323.64
 
 EBITDA                                          519.86       491.34
 
 Finance costs                                    57.09        72.33
 
 Amortisation                                     28.78        63.67
 
 Depreciation                                    117.53       107.25
 
 Profit before tax                               316.46       248.09
 
 Provision for tax                                67.39        53.51
 
 Profit for the year after tax                   249.07       194.58
 
 2.  DIVIDEND
 
 The board of directors of the Company at their meeting held on 14th
 March 2012, declared an interim dividend of Re.0.60 per share (60%) for
 the year 2011-12 absorbing a sum of Rs.33.13 Cr including dividend
 distribution tax. The same was paid to the shareholders on 26th March
 2012.
 
 The board of directors of the Company at their meeting held on 24th May
 2012 declared a second interim dividend of Re.0.70 per share (70%) for
 the year 2011-12 absorbing a sum of Rs.38.65 Cr including dividend
 distribution tax.  The same will be paid to the shareholders on or
 after 12th June 2012. Hence, the total amount of dividend including the
 second interim dividend payable, for the year ended 31st March 2012
 will aggregate to Rs.1.30/- per share (130%) on 47,50,87,114 equity
 shares of Re.1/- each.
 
 The board of directors of the Company do not recommend any further
 dividend for the year under consideration.
 
 4.  SUBSIDIARY COMPANIES
 
 As on date of this report, the following are the subsidiaries of the
 Company
 
 Name of the Company                         Subsidiary of
 
 Sundaram Auto Components Limited (SACL)
 
 TVS Energy Limited (TVS Energy)
 
 TVS Housing Limited                         TVS Motor Company Limited
 
 TVS Motor Company (Europe) B.V.
 
 TVS Motor (Singapore) Pte. Limited 
 
 Sundaram Business Development
 
 Consulting (Shanghai) Company Limited
 
 PT. TVS Motor Company Indonesia             TVS Motor (Singapore) Pte.
                                             Limited
 
 TVS Wind Power Limited   
 
 TVS Wind Energy Limited                     TVS Energy Limited
 
 Sundaram Engineering Products Services      51% of share capital held by
 Limited                                     SACL and TVS Energy
 
 During the year under review, the Company has established a wholly
 foreign owned enterprise (WFOE) in China under the name of Sundaram
 Business Development Consulting (Shanghai) Co. Ltd, Shanghai, China.
 The body corporate was registered in Shanghai province of China on 2nd
 September 2011 and the Company invested a sum of Rs.0.20 Cr in the
 equity capital and thereby it became a subsidiary of the Company on
 that date.
 
 The WFOE closed its accounts for the first year, for a short period
 from 2nd September 2011 to 31st December 2011.
 
 On 23rd January 2012, Sundaram Auto Components Limited, the wholly
 owned subsidiary and TVS Energy Limited, subsidiary company invested in
 the equity capital of Sundaram Engineering Products Services Limited
 (SEPSL), an unlisted public company, incorporated on 1st December 2011
 with the main object of rendering consultancy services for catering to
 the needs of the group companies and is yet to commence its activities.
 SEPSL has also become a subsidiary of the Company by virtue of the
 provisions of Section 4(1)(c) of the Companies Act, 1956, in view of
 the investment made by the subsidiaries of the Company.
 
 5.  PERFORMANCE OF SUBSIDIARIES
 
 PT.TVS Motor Company Indonesia (PT TVS)
 
 PT.TVS Motor Company Indonesia (PT TVS) ended the financial year
 2011-12, with a sales of 23,000 vehicles which is a 16% growth from the
 previous year. Turnover of the Company increased from Rs. 85.36 Cr in
 2010-11 to Rs. 107.36 Cr in 2011-12. Operating loss at EBITDA level was
 lower at Rs. 49 Cr during the current year compared to loss at EBITDA
 level (excluding amortisation of Foreign
 
 Currency Monetary Translation Reserve) was Rs. 58.4 Cr of previous
 year.
 
 The Indonesian motorcycle industry has been growing at 15% in the last
 5 years and is expected to grow at 10% to 12% over the next five years.
 However, there has been a significant shift in the form of vehicles
 sold. The popular Bebeks category which constituted close to 80% of the
 market 5 years back has now come down to 40% on the back of strong
 growth from the scooters (skubeck) category.  The scooters offer
 greater convenience and imagery over the Bebeks and hence are a
 preferred choice. The category share of Sports model, however, remains
 stable at 8%.
 
 PT TVS has 3 brands in the Bebek category and one brand in the Sports
 category and is still unrepresented in the Scooters category. All the
 product brands have been well received by the customers.
 
 PT TVS has just completed the launch of 2012 model of Neo in February
 2012. This was followed by the launch of new TVS RockZ in May 2012. All
 new TVS Apache in 3 models viz., 160cc, 180cc and 180cc ABS (first in
 the category) will also be launched during the year 2012-13.
 
 The company has decided to focus on 6 identified provinces and increase
 its share in these markets through focused expansion and improving the
 productivity of existing dealers.  The present strength of around 110
 dealers will be increased to 240 by end of next year.
 
 Retail finance, being the most important enabler to sales has been
 given high priority. The Company has tied up with 3 national and
 several regional financing companies that will provide retail
 financing.
 
 The company had, in the last year, exported 10,000 units to countries
 like Iran, Philippines and West Africa. PT TVS plans to expand its
 presence in new markets like Laos, Columbia, Argentina, Peru,
 Guatemala, Nigeria, Brazil and Vietnam.
 
 Sundaram Auto Components Limited (SACL)
 
 During the year, SACL achieved a growth of 10% in the sale of Rubber
 and Plastics component business. SACL earned a profit after tax of Rs
 5.13 Cr during the year 2011-12 as against Rs.8.22 Cr in the previous
 year.
 
 Due to abnormal increase in the price of polymers and increase in fixed
 costs, the profitability of SACL was affected and resulted in lower
 contribution and consequently lower profits during 2011-12.
 
 SACL has added injection moulding machines with annual capacity of 680
 tons of plastics at its plant located at Mysore to support its
 customers. During the year, SACL has also productionised 92 new parts
 for various customers.
 
 SACL was awarded National Best Partner for Business Development by
 Hyundai Mobis for the third consecutive year in recognition of
 outstanding performance and achievement in India during the year.
 
 SACL declared and paid an interim dividend of Rs 1.50 per share (15%)
 for the year ended 31st March 2012.
 
 TVS Energy Limited (TVS Energy)
 
 During the year, power generation by TVS Energy''s wind turbines had to
 be backed down under instruction of the state transmission utility,
 viz., Tamil Nadu Transmission Corporation Limited (TANTRANSCO) during
 the peak wind season due to overloading and high frequency of the grid.
 Consequently, the energy generation from four wind energy projects with
 a capacity of 34.25 MW located in Tamilnadu was severely affected. The
 revenue earned by TVS Energy for the year was Rs.16.64 Cr and EBITDA
 was Rs. 13.34 Cr.  However after providing for interest of Rs. 13.06 Cr
 and depreciation of Rs. 7.15 Cr, the net loss from operations is Rs.
 6.87 Cr. TVS Energy expects the grid availability to improve during the
 current year.
 
 During the year, TVS Energy planned to set up a 25.5 MW capacity wind
 energy project in Maharashtra. The power generated by this project is
 proposed to be sold to power distribution utility in Maharashtra. Two
 turbines (3 MW) were commissioned during the year and the remaining
 fifteen turbines (22.5 MW) are expected to be commissioned during the
 current financial year 2012-2013.
 
 Investment in subsidiaries:
 
 During the year under review, the Company made additional investments
 in its subsidiaries:
 
 - USD 18 Million in non cumulative, non convertible and redeemable
 shares (Class B) of PT TVS.
 
 - Rs 24.90 Cr in the equity capital of SACL.
 
 - Rs 25.00 Cr in the equity capital of TVS Energy.
 
 - Euro 5450000 in the equity capital of TVS Motor Company (Europe) B.V.
 
 - USD 40000 in equity capital of Sundaram Business Development
 Consulting (Shanghai) Company Limited.
 
 6.  CONSOLIDATED FINANCIAL STATEMENTS
 
 As required under the Listing Agreement with the Stock Exchanges, the
 consolidated financial statements of the Company have been prepared in
 compliance with the applicable Accounting Standards and are attached.
 
 The Ministry of Corporate Affairs (MCA) vide its circular No. 2 in file
 No. 51/12/2007-CL-III dated: 8th February 2011 has granted general
 exemption from attaching annual reports of subsidiaries along with the
 annual report of the holding companies without seeking any approval of
 the Central Government, subject to the conditions laid down therein.
 
 The board of directors at their meeting held on 11th April 2012 passed
 necessary resolution for complying with all the conditions enabling the
 circulation of annual report of the Company without attaching all the
 documents referred to in Section 212(1) of the Act, of the subsidiary
 companies to the shareholders of the Company.
 
 The annual accounts, reports and other documents of the subsidiary
 companies will be made available to the members, on receipt of a
 request from them. The annual accounts of the subsidiary companies will
 be available at the registered office of the Company and at the
 registered offices of the respective subsidiary companies concerned. If
 any member or investor wishes to inspect the same, it will be available
 during the business hours of any working day of the Company.
 
 A statement giving the following information in aggregate of each
 subsidiary including subsidiaries of subsidiaries consisting of (a)
 capital (b) reserves (c) total assets (d) total liabilities (e) details
 of investment (except in case of investment in the subsidiaries) (f)
 turnover (g) profit before taxation (h) provision for taxation (i)
 profit after taxation (j) proposed dividend has been attached with the
 consolidated balance sheet of the Company in compliance with the
 conditions of the said circular issued by MCA.  A statement referred to
 in clause (e) of sub-section 1 of Section 212 of the Act disclosing the
 Company''s interest in subsidiaries and other information as required,
 is attached.
 
 7.  DIRECTORS
 
 In terms of the Articles of Association of the Company, Mr T Kannan and
 Mr Prince Asirvatham, directors of the Company, are liable to retire by
 rotation at the ensuing annual general meeting of the Company, and
 being eligible, offer themselves for re-appointment.
 
 The brief resume of these directors and other information have been
 detailed in the notice convening the annual general meeting of the
 Company. Appropriate resolutions for their re-appointment are being
 placed for approval of the shareholders at the ensuing annual general
 meeting.  The directors recommend their re-appointment as directors of
 the Company.
 
 8.  AUDITORS
 
 M/s.Sundaram & Srinivasan, Chartered Accountants, Chennai, the
 statutory auditors of the Company retire at the ensuing annual general
 meeting and are eligible for re-appointment.
 
 The Company has received a letter from them, stating that the
 appointment, if made, will be within the prescribed limit under Section
 224(1B) of the Act.
 
 9.  COST AUDITOR
 
 The Company filed the Cost Audit Report in terms of Cost Accounting
 Records (Motor Vehicles) Rules, 1997 for the financial year 2010-2011
 on 19th September 2011 which was due to be filed with the MCA on or
 before 30th September 2011.
 
 The Company has received a letter from the Cost Auditor, stating that
 the appointment, if made, will be within the prescribed limit under
 Section 224(1B) of the Companies Act, 1956.
 
 The board of directors, subject to the approval of the Central
 Government, appointed Mr A N Raman, a Cost Accountant holding
 certificate of practice No.5359, as a Cost Auditor for conducting the
 Cost Audit for the financial year 2012-2013.  The audit committee of
 directors recommended his appointment subject to the compliance of all
 the requirements as stipulated in circular no.15/2011 dated 11th April
 2011 issued by the MCA. The Central Government has also accorded its
 approval for the appointment.
 
 10.  CORPORATE GOVERNANCE
 
 The Company has been practicing the principles of good corporate
 governance over the years and lays strong emphasis on transparency,
 accountability and integrity.
 
 A separate section on Corporate Governance and a certificate from the
 statutory auditors of the Company regarding compliance of conditions of
 Corporate Governance as stipulated under Clause 49 of the Listing
 Agreement with the Stock Exchange(s) form part of this Annual Report.
 
 The chairman and managing director and the executive vice president -
 finance of the Company have certified to the board on financial
 statements and other matters in accordance with the Clause 49 (V) of
 the Listing Agreement pertaining to CEO/ CFO certification for the
 financial year ended 31st March 2012.
 
 11.  STATUTORY STATEMENTS
 
 Conservation of energy, technology absorption and foreign exchange
 earnings and outgo
 
 As per the requirements of Section 217(1)(e) of the Act read with the
 Companies (Disclosure of particulars in the report of board of
 directors) Rules 1988, the information regarding conservation of
 energy, technology absorption and foreign exchange earnings and outgo
 are given in Annexure I to this report.
 
 Particulars of employees
 
 The particulars required pursuant to Section 217(2A) of the Act read
 with the Companies (Particulars of Employees) Rules, 1975 as amended,
 are given in Annexure II to this report. However, in terms of the
 provisions of Section 219(1)(b)(iv) of the Act, the Directors'' Report
 (excluding Annexure II) is being sent to all the shareholders of the
 Company. Any shareholder interested in obtaining a copy of the said
 annexure may write to the Company Secretary at the registered office of
 the Company.
 
 Public Deposits
 
 The Company has not accepted any deposit from the public within the
 meaning of Section 58A of the Act, during the year ended 31st March
 2012.
 
 Directors'' Responsibility Statement
 
 In accordance with the provisions of Section 217(2AA) of the Act, with
 respect to Directors'' Responsibility Statement, it is hereby stated -
 
 i.  that in the preparation of annual accounts for the financial year
 ended 31st March 2012, the applicable Accounting Standards had been
 followed and that there are no material departures;
 
 ii.  that the directors had selected such accounting policies and
 applied them consistently and made judgments and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for the year under review;
 
 iii. that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act, for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities; and
 
 iv.  that the directors had prepared the accounts for the financial
 year ended 31st March 2012 on a going concern basis.
 
 ACKNOWLEDGEMENT
 
 The directors gratefully acknowledge the continued support and
 co-operation received from the holding company i.e., Sundaram-Clayton
 Limited, Chennai. The directors thank the bankers, investing
 institutions, customers, dealers, vendors and sub-contractors for their
 valuable support and assistance.
 
 The directors wish to place on record their appreciation of the very
 good work done by all the employees of the Company during the year
 under review.
 
 The directors also thank the investors for their continued faith in the
 Company.
 
 
                                         For and on behalf of the Board
 
 Bengaluru                                              VENU SRINIVASAN
 
 May 24, 2012                                                  Chairman
Source : Dion Global Solutions Limited
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