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Motherson Sumi Systems Directors Report, Motherson Sumi Reports by Directors
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Motherson Sumi Systems

BSE: 517334|NSE: MOTHERSUMI|ISIN: INE775A01035|SECTOR: Auto Ancillaries
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Directors Report Year End : Mar '19    Mar 17

BOARD''S REPORT

To the Members,

The Directors have the pleasure in presenting the 32nd Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

The summarized financial results for the year ended March 31, 2019 and for previous year ended March 31, 2018 are as follows:

Rs,in Million

Particulars

Standalone

Consolidated

March 31, 2019

March 31, 2018

March 31, 2019

March 31, 2018

Gross Revenue from operations

75,813

76,673

635,229

565,213

Net Revenue from operations

75,813

74,561

635,229

562,933

Other Income

1,865

1,404

2,202

1,701

Profit before depreciation, interest and tax

14,593

14,723

55,686

52,927

Less: Depreciation and amortization expense

2,193

2,183

20,582

15,752

Less: Finance Costs

176

433

4,232

4,108

Less: Exceptional Expenses

-

-

-

1,777

Add: Share of profit / (loss) in associates

-

-

1,131

1,381

Profit Before Tax

12,224

12,107

32,003

32,671

Less: Provision for Tax

4,086

3,316

11,022

10,072

Less: Minority Interest

-

-

4,850

6,629

Profit after tax

8,138

8,791

16,131

15,970

Add: Balance brought forward

27,258

23,467

59,338

48,310

Profit available for appropriation

35,396

32,258

75,469

64,280

On consolidated basis for the financial year 2018-19, your Company achieved total revenue of Rs,635,229 million resulting in a growth of about 13% over its revenue of Rs,562,933 million of the previous financial year ended March 31, 2018. Net profit for the year at Rs,16,131 million was higher by 1% over the previous year''s net profit of Rs,15,970 million.

On standalone basis for the financial year 2018-19, your Company achieved total revenue of Rs,75,813 million resulting in a growth of about 2% over its total revenue of Rs,74,561 million of the previous financial year ended March 31, 2018. The profit after tax for the year ended March 31, 2019 at Rs,8,138 million.

The operational performance of the Company has been comprehensively covered in the Management Discussion and Analysis Report.

The Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) is presented in a separate section forming part of the Annual Report.

During the financial year, your Company had increased the Authorized Share Capital from the existing Rs,312,30,00,000/-(Rupees Three Hundred Twelve Crore and Thirty Lacs only) divided into 287,30,00,000 (Two Hundred Eighty Seven Crore and Thirty Lacs) Equity Shares of Rs,1 (Rupee One) each and 2,50,00,000 (Two Crore Fifty Lacs) Preference Shares of Rs,10 (Rupees Ten) each to Rs,630,00,00,000 (Rupees Six Hundred Thirty Crores only) by creation of additional 317,70,00,000 (Three Hundred Seventeen Crore Seventy Lacs) Equity Shares of Rs,1 (Rupee One) each.

The aforesaid increase in Authorized Share Capital was approved by the shareholders through postal ballot for which results were declared on October 18, 2018.

During the financial year, your Company has allotted 105,26,44,746 equity shares of face value of Rs,1 (Rupee One) each on account of the issue of Bonus Shares on November 1, 2018 in the ratio of one equity share against two equity shares held. This is ninth time the Company has rewarded its shareholders through a Bonus Issue.

After the allotment of Bonus Shares, the paid-up capital of the Company increased to Rs,3,157,934,237 divided into 3,157,934,237 equity shares of Rs,1 (Rupee One) each.

Issue of bonus shares were approved by the shareholders through postal ballot for which results were declared on October 18, 2018.

The Directors are pleased to recommend for approval of the members a payment of dividend of Rs,1.50 per share (face value of Rs,1 each) on the expanded Share Capital of the Company for the financial year ended March 31, 2019 to the equity shareholders.

The dividend, if approved by the members, would involve total cash outflow on account of dividend including dividend tax of Rs,5,711 Million resulting in a payout of 70% of the standalone profits of the Company and 35% of the consolidated profits of the Company.

The Company continues to enjoy Baa3” rating by Moody''s Investors Service, for its foreign currency and local currency issuer ratings to the Company.

CRISIL has assigned its Corporate Credit Rating of CRISIL AA /Stable for long term loans and short term rating of ''CRISIL A1 '' for its commercial paper program of Rs,1,500 million.

During the year ICRA upgraded its long term rating to [ICRA]AA from [ICRA]AA and short term rating continues at [ICRA]A1 for Rs,18,082.7 million line of Credit (LOC).

The Company continues to enjoy A1 ” rating by ICRA for its commercial paper / short-term debt program of Rs,1,500 million.

During the year India Ratings & Research assigned IND A1 for short term loans and IND AAA/Stable for long term loans.

Further, Standard & Poors Global Ratings (S&P”) has continued its outlook on Samvardhana Mothers on Automotive Systems Group B.V., Netherlands (SMRP BV), a subsidiary of the Company, to positive affirming ''BB '' long-term corporate credit rating on SMRP BV and Fitch Ratings (Fitch”) has rated SMRP BV at BB and continued to rate outstanding secured bonds of SMRP BV at BBB-SMRP BV.

The strong credit ratings by leading agencies reflect the Company''s established market position in the automotive components industry, its well-diversified customer base across geographies and product segments and its healthy relationships with leading global original equipment manufacturers (OEMs).

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

In accordance with the Companies Act, 2013 and Ind AS 110 - Consolidated Financial Statements read with Ind AS 28 - Investments in Associates and Ind AS 31 - Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

The performance of the Company on consolidated basis is discussed at length in the Management Discussion and Analysis Report.

Acquisition of Reydel Automotive Group by Samvardhana Mothers on Automotive Systems Group B.V., a subsidiary of the Company

The Company''s step down subsidiary Samvardhana Mothers on Automotive Systems Group B.V. (SMRP BV”) had completed acquisition of Reydel Automotive Group (Reydel”) on August 2, 2018. Thereafter, the name of Reydel has been changed to Samvardhana Mothers on Reydel Companies (SMRC”). SMRC is in the business of manufacturing interior components and modules for global automotive customers.

Acquisition by Mothers on Rolling Stock Systems GB Limited, U.K., a subsidiary of the Company#

Mothers on Rolling Stock Systems GB Limited, UK (MRSS”), (a wholly owned subsidiary of Mothers on Sumi Systems Ltd. through PKC Group Ltd.), has signed a definitive agreement on February 28, 2019 with Bombardier Transportation (Rolling Stock) UK Ltd. (Bombardier”) to acquire Bombardier''s assets in connection with the production and installation of electrical components and systems for applications in the rail industry, comprising among others, the manufacturing of wiring harnesses, panel and cabinet build and electromechanical assemblies in Derby, UK.

Through this acquisition, the Company will expand its supply of electricals and wiring systems to Bombardier Transportation, to cover UK rolling stock projects. The transaction includes transfer of assets, employee and inventories, on debt free and cash free basis and is valued at GBP 10.87 million (approx). The transaction has been completed in the month of April 2019.

#Completed subsequent to the financial year 2018-19.

The details of changes in Company''s subsidiaries, joint venture or associate companies, are as following:

1. Companies which became subsidiaries (direct and indirect) during financial year 2018-19 are as follows:

a. Subsidiary through incorporation:

(i) MSSL M Tooling Limited, Mauritius;

(ii) Mothers on Rolling Stock Systems GB Limited, UK;

(iii) Mothers on Innovations LLC;

(iv) Mothers on Ossia Innovations LLC; and

(v) Samvardhana Mothers on Corp Management Shanghai Co. Ltd.

b. Subsidiary through acquisition:

(i) SMRC Automotive Holdings B.V. (formerly Reydel Automotive Holdings B.V.); and

(ii) SMRC Automotive Interiors Management B.V. (formerly Reydel Automotive Management B.V.).

Further, with the acquisition of Reydel Automotive Group, its following subsidiaries have also become the subsidiary of the Company:-

(i) SMRC Automotive Holdings Netherlands (formerly B.V. Reydel Automotive B.V.);

(ii) SMRC Automotives Techno Minority Holdings B.V. (formerly Reydel Automotive Minority Holdings B.V.);

(iii) SMRC Smart Automotive Interior Technologies USA, LLC (formerly Reydel Automotive USA, LLC);

(iv) SMRC Automotive Modules France SAS (formerly Reydel Automotive France SAS);

(v) Samvardhana Mothers on Reydel Automotive Parts Holding Spain, S.L.U. (formerly Reydel Automotive Holding Spain, S.L.U);

(vi) SMRC Automotive Interiors Spain S.L.U. (formerly Reydel Automotive Spain, S.L.U);

(vii) SMRC Automotive Interior Modules Croatia d.o.o. (formerly Reydel Automotive Croatia d.o.o.);

(viii) Samvardhana Mothers on Reydel Autotecc Morocco SAS (formerly Reydel Automotive Morocco SAS);

(ix) SMRC Automotive Technology RU LLC (formerly Reydel Automotive Rus LLC);

(x) SMRC Smart Interior Systems Germany GmbH (formerly Reydel Automotive Germany GmbH);

(xi) SMRC Automotive Interiors Products Poland SA (formerly Reydel Automotive Poland SA);

(xii) SMRC Automotive Solutions Slovakia s.r.o. (formerly Reydel Automotive Slovakia s.r.o.);

(xiii) SMRC Automotive Holding South America B.V. (formerly Reydel Automotive South America B.V.);

(xiv) SMRC Automotive Modules South America Minority Holdings B.V. (formerly Reydel Automotive South America Minority Holdings

B.V.);

(xv) SMRC Automotive Tech Argentina S.A. (formerly Reydel Automotive Argentina SA);

(xvi) SMRC Fabricagao e Comercio de Produtos Automotivos do Brasil Ltd. (formerly Reydel Automotive Brazil Industria e Comercio de Sistemas Automotivos Ltd.);

(xvii) SMRC Automotive Products India Pvt. Ltd. (formerly Reydel Automotive India Pvt. Ltd.);

(xviii) SMRC Automotive Smart Interior Tech (Thailand) Ltd. (formerly Reydel Automotive Thailand Ltd.);

(xix) SMRC Automotive Interiors Japan Ltd. (formerly Reydel Automotive Japan Ltd.);

(xx) Shanghai SMRC Automotive Interiors Tech Consulting Co. Ltd. (formerly Shanghai Reydel Automotive Technology Consulting Co. Ltd.);

(xxi) PT SMRC Automotive Technology Indonesia (formerly PT Reydel Automotive Indonesia);

(xxii) Yujin SMRC Automotive Techno Corp. (formerly Yujin- Reydel Corp.);and

(xxiii) SMRC Automotives Technology Phil Inc. (formerly Reydel Automotive Phils Inc.).

2. Companies which ceased to be subsidiaries during

financial year 2018-19 are:

(i) Global Environment Management Australia Pty. Ltd. (dissolved on April 20, 2018); and

(ii) MSSL Overseas Wiring Systems Limited, U.K. (dissolved on January 29, 2019).

3. Company which became joint venture during financial year 2018-19 is:

(i) Tianjin Huaxiang Automotive Parts Co., Ltd., China (Wholly owned subsidiary of Ningbo SMR Huaxiang Automotive Mirrors Co. Ltd., a joint venture company).

In accordance with section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company including its subsidiaries, associate and joint venture companies form part of the Annual Report.

Further, a statement containing salient features of the financial statement of the Company''s subsidiaries, associate and joint venture companies is annexed in Form AOC-1, which forms a part of the Annual Report.

Details of subsidiaries of the Company and their performance are covered in Management Discussion and Analysis Report forming part of this Report.

The Company''s exports during the year were '' 9,878 million as against Rs,8,402 million in the previous financial year. The Company continues to make its efforts towards achieving higher growth by providing cost competitive quality solutions to its customers. In addition, the Company has facilities globally, to provide service to the customers as well as enhance customer relationships.

As per provisions of the Companies Act, 2013 and the

Articles of Association of the Company, Ms. Noriyo Nakamura (nominee of Sumitomo Wiring Systems Limited, Japan (SWS”)) and Mr. Pankaj Mital, Directors of the Company, retire by rotation in the ensuing Annual General Meeting. Ms. Noriyo Nakamura has shown her unwillingness for re-appointment. Mr. Pankaj Mital, Wholetime Director being eligible seeks his re-appointment. Accordingly, the Board of Directors recommend the reappointment of Mr. Pankaj Mital to the members of the Company.

The members in 27th Annual General Meeting (AGM”) held on August 25, 2014, inter-alia, appointed Mr. S.C. Tripathi, IAS (Retd.), Mr. Arjun Puri, Mr. Gautam Mukherjee and Ms. Geeta Mathur as Independent Director(s) to hold office for five (5) consecutive years for a term upto 32nd AGM to be held in the year 2019. Mr. S.C. Tripathi, IAS (Retd.), Mr. Arjun Puri, Mr. Gautam Mukherjee and Ms. Geeta Mathur are eligible for re-appointment for a second term of five (5) consecutive years. Accordingly, pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, based on the recommendation of the Nomination and Remuneration Committee, the Board recommends to the members for the reappointment of Mr. S.C. Tripathi, IAS (Retd.), Mr. Arjun Puri, Mr. Gautam Mukherjee and Ms. Geeta Mathur for second term of five (5) consecutive years, as mentioned in the notice convening 32nd Annual General Meeting of the Company, through special resolution(s).

The details of appointment/re-appointment of the Directors of the Company are mentioned in the Explanatory Statement under section 102 of the Companies Act, 2013 and annexure to the Notice of the 32nd AGM.

The Board of Directors has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(b) read with Regulation 25 of the Listing Regulations.

During the year, Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board of Directors and Committee(s). The details of remuneration and/ or other benefits of the Independent Directors are mentioned in the Corporate Governance Report.

In terms of the provisions of section 203 of the Companies Act, 2013, during the financial year under review the Company has following Key Managerial Personnel:

(a) Mr. Pankaj Mital, Whole-time Director and Chief Operating Officer;

(b) Mr. G.N. Gauba, Chief Financial Officer; and

(c) Mr. Alok Goel, Company Secretary.

Mr. G.N. Gauba was acting as Chief Financial Officer & Company Secretary till April 2, 2018 and re-designated as Chief Financial Officer effective April 2, 2018. Mr. Alok Goel was appointed as the Company Secretary effective April 2, 2018.

There is no other material change(s) and commitments between the end of financial year and the date of this report.

The Board of Directors met seven (7) times during the financial year 2018-19 and the details of same are given in the Corporate Governance Report forming part of this Annual Report.

The intervening gap between consecutive meetings was not more than one hundred and twenty (120) days as prescribed by the Companies Act, 2013 and the Listing Regulations.

The Audit Committee of the Board is comprised of Mr. S.C. Tripathi, IAS (Retd.) as Chairman, Mr. Arjun Puri, Mr. Gautam Mukherjee, Ms. Geeta Mathur as Independent Directors and Mr. Shunichiro Nishimura, Mr. Laksh Vaaman Sehgal as Members. During the year all the recommendations made by the Audit Committee were duly accepted by the Board.

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and Individual Directors pursuant to the provisions of the Act and Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.

In a separate meeting of Independent Directors, performance of non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In the board meeting that followed the meeting of the Independent Directors and meeting of Nomination and Remuneration Committee, the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

In adherence to the provisions of Section 134(3)(e) and 178(1) & (3) of the Companies Act, 2013, the Board of Directors upon recommendation of the Nomination and Remuneration Committee approved a policy on Director''s appointment and remuneration, including, criteria for determining qualifications, positive attributes, independence of a Director and other matters. The said Policy extract is covered in Corporate Governance Report which forms part of this Report and is also uploaded on the Company''s website at www.Mothers on.com.

Pursuant to section 134(3)(c) of the Companies Act, 2013 and subject to disclosures in the Annual Accounts, your Directors state as under :-

a) That in preparation of the annual accounts for the financial year ended March 31, 2019, the applicable Accounting Standards have been followed and there are no material departures;

b) That the Directors have selected appropriate Accounting Policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2019 and of the profit of the Company for that period;

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

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

e) That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) That the Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Statutory Auditors

As per section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in 30th AGM approved the appointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No. 301003E/IE300005), as the Statutory Auditors of the Company for a term of 5 (five) years, i.e., from the conclusion of 30th AGM till the conclusion of 35th AGM of the Company, to be held in the year 2022. Pursuant to amendments in Section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every AGM has been omitted with effect from May 7, 2018.

The notes on the financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

The Auditors Report annexed with this Annual Report, does not contain any qualification, reservation or adverse remarks.

During the Financial Year 2018-19, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

Cost Auditor

As per recommendation of the Audit Committee, the Board of Directors has appointed M/s. M.R. Vyas

& Associates, Cost and Management Accountants (Registration No. 101394) as Cost Auditor for conducting the audit of cost records of the Company for the financial year 2018-19.

Pursuant to the section 148 of the Companies Act, 2013 read with rule 8 of the Companies (Accounts) Rules, 2014, the cost accounts and records are duly made and maintained by the Company as specified by the Central Government under section 148(1) of the Companies Act, 2013.

During the Financial Year 2018-19, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

Secretarial Auditor

In terms of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, based upon the recommendations of the Audit Committee, the Board of Directors had appointed M/s. SGS Associates, Company Secretaries (CP No. 1509) as the Secretarial Auditor of the Company, for conducting the Secretarial Audit for financial year ended March 31, 2019.

The Secretarial Audit was carried out by M/s. SGS Associates, Company Secretaries (CP No. 1509) for the financial year ended March 31, 2019. The Report given by the Secretarial Auditor is annexed herewith and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.

During the Financial Year 2018-19, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

During the year, the Company had received various awards and recognitions, which have been described in Awards and Recognition” section, forming part of the Annual Report.

Particulars of loans given, Investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by recipient are provided in the standalone financial statement. Please refer Note No. 6(a), 6(b) and 7 to the standalone financial statements.

All contracts/ arrangements/ transactions entered by the Company during financial year with related parties were on arm''s length basis and were in ordinary course of business. During the year, the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material for which shareholders'' approval is required in accordance with the policy of the Company on materiality of related party transactions. Thus, provisions of section 188(1) of the Companies Act, 2013 are not applicable to the Company.

Pursuant to the provision of applicable Listing Regulations, all related party transactions are placed before the Audit Committee for approval including the transaction under section 188 of the Companies Act, 2013 and regulation 23 of Listing Regulation, i.e. the transactions which are unforeseen and within the limit of Rs,10 million. Prior omnibus approval of the Audit Committee has been obtained for transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to omnibus approval are presented to the Audit Committee by way of a statement giving details of all related party transactions.

The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website (as amended from time to time).

Your Directors draw attention of the members to Note No. 40 to standalone financial statement which sets out related party disclosures.

Information under section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of Companies (Accounts) Rules, 2014 is given in Annexure-A to this Report.

Disclosure pertaining to remuneration and other details as required under section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-B to this Report.

The Statement containing the particulars of employees as required under section 197(12) of the Companies Act, 2013 read with rule 5(2) and other applicable rules (if any) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of section 136 of the Companies Act, 2013 the said annexure is open for inspection at the registered office of the Company during the working hours. Any member interested in obtaining a copy of the same may write to the Company.

Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as prescribed under the Listing Regulations. A separate section on Corporate Governance, forming a part of this Report and the requisite certificate from the Company''s Auditors confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

Business Responsibility Report:

Pursuant to regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report by describing the initiatives taken from an environmental, social and governance perspective, in the prescribed format is available as a separate section of the Annual Report.

Dividend Distribution Policy:

As per regulation 43A of the Listing Regulations, the Dividend Distribution Policy of your Company is disclosed in the Corporate Governance Report and is also uploaded on the Company''s website.

Equity shares of your Company are presently listed at the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).The listing fees for the financial year 201920 have been paid to the said Stock Exchanges.

The Securities and Exchange Board of India (SEBI) vide its order dated 19 November, 2014 has withdrawn the recognition granted to Delhi Stock Exchange Limited (DSE).Therefore, the shares of your Company are deemed to be delisted from DSE. The Company''s shares continue to remain listed on NSE and BSE.

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit Reports are presented directly to the Chairman of the Audit Committee and its members.

Details about Internal controls and their adequacy are set out in the Management Discussion & Analysis Report which forms part of this report.

The Board of Directors had constituted Risk Management Committee to identify elements of risk in different areas of operations and to develop policy for actions associated to mitigate the risks. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continual basis.

The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report, which forms part of this report.

There are no significant material orders passed by the Regulators / Courts which impact the going concern status of the Company and its future operations.

In accordance with the requirements of section 135 of the Companies Act, 2013, your Company has a Corporate Social Responsibility (CSR) Committee. The CSR Committee comprises of Mr. V.C. Sehgal (Chairman), Mr. Arjun Puri, Independent Director and Mr. Laksh Vaaman Sehgal, Non-Executive Director.

The terms of reference of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report. Your Company has also formulated a Corporate Social Responsibility Policy (CSR Policy) which is available on the website of the Company at http://www.Mothers on.com/corporate-social-

responsibility.html.

Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure-C and forms integral part of this Report.

The Company is, inter-alia, also performing CSR activities through Swarn Lata Mothers on Trust which has been established for the sole purpose of CSR activities. Further, the Company continue to carry out CSR activities as specified under schedule VII to the Companies Act, 2013.

The Company has established a vigil mechanism which incorporates a whistle blower policy in terms of the Companies Act, 2013 and the Listing Regulations for Directors and employees to report their genuine concerns. The objective of the Policy is to create a window for any person who observes an unethical behavior, actual or suspected fraud, or violation of the Company''s Code of Conduct or ethics policy (hereinafter Unethical and Improper Practices”), either organizationally or individually to be able to raise it.

Thought Arbitrage Consultancy has been appointed by the Board of Directors as an independent external ombudsman under this Whistle-blower mechanism.

Protected Disclosure can be made by a Whistle Blower through an e-mail or dedicated telephone line or a letter to the Thought Arbitrage Consultancy or to the Chairman of the Audit Committee. The Whistle Blower Policy is available on the Company''s website at https://www. Mothers on.com/assets/corporate-governance/whistle-blower-policy-new.pdf.

In accordance with section 92(3) and section 134(3)(a) of the Companies Act, 2013 and rules framed thereunder, an extract of the annual return for the financial year 2018-19 in the prescribed Form MGT-9 is attached herewith as Annexure-D, which is part of this Report. The same is also available on the website of the Company at https://www.Mothers on.com/assets/annual-report/ Annual_Report_2018-19.pdf.

The relations with the employees and associates continued to remain cordial throughout the year. The Directors of your Company wish to place on record their appreciation for the excellent team spirit and dedication displayed by the employees of the Company.

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Committee composed of internal members and an external member who has extensive experience in the field.

During the Financial Year 2018-19, there were no cases filed under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Electronic copy of the Annual Report 2018-19 and the Notice of the 32nd AGM Annual General Meeting are sent to all members whose e-mail addresses are registered with the Company / depository participant(s). For members who have not registered their e-mail addresses, physical copy are sent in the permitted mode.

Your Board of Directors would like to place on record their sincere appreciation for the wholehearted support and contributions made by all the employees of the Company as well as customers, suppliers, bankers, investors and other authorities. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

The Directors also thank the Government of various countries, Government of India, State Governments in India and concerned Government Departments/ Agencies for their co-operation, support and look forward to their continued support in the future.

Last but not the least the Board of Directors wish to thank all the stakeholders of the Company and the collaborator Sumitomo Wiring Systems Limited, Japan for their continuous support.

For and on behalf of the Board

For Mothers on Sumi Systems Limited

Place: Noida V. C. Sehgal

Date: May 27, 2019 Chairman

Source : Dion Global Solutions Limited
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