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Sundaram-Clayton Ltd.


Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE105A01035 | SECTOR: Auto Ancillaries - Auto, Truck & Motorcycle Parts

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Directors’ report to the shareholders

The directors have pleasure in presenting the 57th annual report and the audited financial statements for the year ended 31st March 2019.


(Rs. in Cr)


Year ended 31.03.2019

Year ended 31.03.2018

Sales (including Excise duty) and other income






Less: Finance Cost






Profit before tax



Provision for tax



Profit after tax



Add: Balance in Statement of Profit and Loss including General Reserve



Transfer from Other Comprehensive Income



Total Comprehensive Income available







Surplus carried forward






* After considering MAT credit and deferred tax asset


The Board of Directors of the Company (the Board) at its meeting held on 25th January 2019, declared a first interim dividend of Rs. 20 per share (400%) for the year 2018-19, absorbing a sum of Rs. 40.46 Cr. The same was paid to the shareholders on 7th February 2019.

The Board at its meeting held on 11th March 2019 declared a second interim dividend of Rs. 16 per share (320%) for the year 2018-19 absorbing a sum of Rs. 32.37 Cr. The same was paid to the shareholders on 22nd March 2019.

Thus, the total amount of both the dividends for the year ended 31st March 2019 aggregated to Rs. 36 per share (720%) on 2,02,32,085 equity shares of Rs. 5/- each absorbing Rs. 72.83 Cr.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A) of the Income Tax Act, 1961 against the dividend distribution tax paid by one of its subsidiary company on its dividend declared.

The Board does not recommend any further dividend for the year under consideration.


India’s real gross domestic product (GDP) is expected to grow at 7% in FY19 as against 7.2% in FY18. The growth of the “Manufacturing” sector is expected to accelerate to 8.3% this fiscal, up from 5.7% in FY18.

Global economic and geo political environment continued to be volatile during 2018.The GDP in the U.S. and EU markets registered a growth of 2.9% (2.2% in 2017) and 1.8% (2.4% in 2017).

During the year, the Company was able to meet the customers demand out of the capacities created last year without resorting to outsourcing and premium air freight (which had impacted FY 2017-18 profits), resulting in improved profits for the current year.

The following table highlights the performance of the Company during 2018-19:






Variance (in %)

Sales (Tonnage)




Sale of goods (Rs. in Cr)




Domestic sales (Rs. in Cr)




Export sales (Rs. in Cr)




Profit After Tax (Rs. in Cr)







The segment wise performance in the Indian automotive industry is given in the following table.

(in Nos)


FY 2018-19

FY 2017-18

Variance (in %)

Two Wheelers




Passenger Vehicles




Commercial Vehicles





(Source: SIAM DICV internal estimate)

The Indian auto industry (domestic sales and exports) posted an overall growth of 6.45% (Source: SIAM). The automotive and related industries witnessed several headwinds in FY 2018-19 spaced out throughout the year such as floods in Kerala, increase in insurance premium, high fuel prices in the second quarter, new axle norms, safety regulations and rise in lending rate due to liquidity crunch, all of which hindered the industry’s performance.


The following table highlights the North American and European truck registration figures in vehicle units:

(in Nos)



FY 2018-19

FY 2017-18

Variance (in %)

North America

Class 8 Trucks




North America

Class 4-7 Trucks





Medium & Heavy Trucks




(Source: FTR & ACEA)

The Class 8 truck market in North America has outperformed the forecasted sales figures for the year. For the year 2018, Class 8 orders crushed a 14-year industry record for heavy-duty truck orders. The market scenario has now shifted from ‘demand constrained market’ to a ‘Supply constrained market’. France, Italy and Germany contributed positively to the full-year growth of European heavy trucks market.


The RBI’s Monetary Policy Committee has assessed the GDP growth at 7.2% in FY20 due to combination of weakening of domestic investment activity, moderation of growth in the global economy might impact India’s exports and possible downside risk from monsoon.

Recent Government actions on improving income for farmers and lower middle class can support improved consumption. Slower pace of monetary tightening than previously expected and ease in inflation pressures may help sustain growth rate at current levels.

The focus of the Interim Budget 2019 on the rural sector is a positive development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activities.

Implementation of key structural reforms with emphasis on growth could revive the economy and provide the industries with the much-needed stimulus for growth. Given the economic outlook, the automobiles and auto-component sectors are expected to see a flat growth year in FY 2019-20.

Over the medium to long term, growth in the auto component industry is likely to be higher than the underlying automotive industry growth given the increasing localization by OEMs and higher component content per vehicle. Auto component export is another key growth driver.

Globally, IMF expects global growth to be at 3.5% in 2019 (3.7% in 2018).

Changing trade policies of USA, Brexit and unforeseen challenges in Chinese economy can lead to escalation of uncertainty in global economic growth. Crude prices are expected to remain at the increased level of Q4 2018-19 during 2019-20 and may lead to higher costs for customers and OEMs.

The EU GDP is expected to grow at 1.6%. The slower momentum can be attributed to the introduction of new automobile fuel emission standards in Germany, concerns about sovereign and financial risks in Italy and the potential “no-deal” withdrawal of the United Kingdom from the European Union. The EU commercial vehicles demand (M&HCV segment) in 2019 is expected to go down by 3-5%.


The Company supplies aluminum castings for commercial vehicles, passenger cars and two-wheeler segments of the automotive industry.

The revenue of the Company is derived from Medium & Heavy Commercial Vehicles (MHCV) (58%), followed by two-wheeler industry (24%) and car industry (18%) .

In the medium to long term, the projected growth of domestic auto industry and ambitious export plans of the Indian OEMs are likely to benefit the Company.

In view of stringent emission norms and fuel economy regulations, the thrust towards light-weighting is bound to increase leading to higher content of aluminum in all types of vehicles. The Company is well placed to leverage these emerging opportunities. This will provide for increased growth opportunities, since the Company is already a preferred source for aluminum castings to major OEM’s in India and abroad.

India is emerging as one of the major manufacturing hubs, thanks to availability of well-educated engineers, skilled workforce, good supply base and initiatives by the Government.

Several Indian die casting companies and OEMs are either setting up new capacities or expanding existing capacities resulting in increased competition.

Intense competition makes it extremely difficult to seek price increases to compensate the effects of inflation bringing the margins under severe pressure. However, the Company’s supply contracts provide for periodic price adjustments indexed to the international prices of aluminum and this should offer protection against volatility of commodity prices.



There are possible risks on the horizon, both global and domestic. Global economic slowdown, changes in monetary policies of advanced economies, tariff wars and volatility in oil prices could affect India’s growth.

Good monsoon aids growth in domestic demand due to a significant share from rural markets. Any negative deviation from normal monsoon is a cause of concern.

In India, Government’s fiscal consolidation, liquidity concerns, monetary policy changes and poor monsoon could dampen the domestic market.

Industry specific

The Indian commercial vehicle industry is a strong indicator of the economic activity in the country and has a strong correlation with the agricultural growth, infrastructure development, the mining industry and is also cyclical.

The global automotive industry is experiencing the situation of a cyclical demand slowdown. Competition has increased in the Indian market due to entry of new players and expansion plans of existing ones. The Company is aware of the increasing competition and is taking customer focused measures to remain competitive in the market place.

Prices of aluminum have largely trended downward in 2018-19, interrupted only by a sharp and short-lived upturns. China’s slowing growth, exacerbated by the trade war with the US, has pushed down prices. Price gains are likely to be limited in 2019-20.


With significant exports, import of raw materials and capital goods, the Company is always exposed to impact on account of currency fluctuations. However, the Company has a well-defined forex hedging policy to mitigate the risks.


The stipulation and requirements of the automobile industry demands high quality products. Robust quality management systems meeting international standards like IATF 16949 are in place to ensure excellent product quality. Additionally, the Company has also taken appropriate recall and product liability insurance in line with standard industry practice.

Just-in-time delivery is another important contractual obligation. Robust quality and project management systems are in place to avoid delay in deliveries due to quality issues or project implementation.

Capacity utilization

The Company adds capacity, in existing and new locations, to meet the projected demand of customers. The Company closely monitors the progress of customer projects / volumes and appropriately deploys the assets to protect from both underutilization and capacity shortages to meet the demand.

Risk Management Policy

The Board has established a robust Risk Management framework to identify, monitor and minimize risks as well as to identify business opportunities.

Risk evaluation and management is an ongoing process. As a process, risks associated with the business are identified and prioritized based on the Company’s overall risk appetite, strategy, severity and probability of occurrence. Process owners are identified for each risk and metrics are developed for continuous monitoring and minimization of risk.

The Board is satisfied that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. The Company’s Risk Management Committee is overseeing all the risks that the organization faces such as strategic, financial, market, IT, legal, regulatory, reputational and other risks and recommends suitable action. Risk Mitigation Policy has already been approved by the Board.


The Company has a proper and adequate internal control system to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized and recorded. Information provided to management is reliable and timely. The Company ensures adherence to all statutes.



Unit of measurement







Interest Coverage Ratio






Operating Profit Margin (EBITDA)






Net Profit Margin






Return on Net worth






During 2018-19, the Company made Profit Before Tax of Rs. 130.48 Cr as against Rs. 0.84 Cr made during 2017-18. This has consequently resulted in improved ratios in 2018-19 both for standalone and consolidated results.

Internal Financial Control

The Company has an established Internal Financial Control framework including internal controls over financial reporting, operating controls and anti-fraud framework. The framework is reviewed regularly by the management and tested by internal audit team and presented to the Audit Committee. Based on periodical testing, the framework is strengthened, from time to time, to ensure adequacy, accuracy and completeness of accounting records, timely preparation of reliable financial information and effectiveness of Internal Financial Controls.



The Company has been using Total Quality Management (TQM) as the foundation of its management. The Company implemented the best practices like Total Productivity Management (TPM) and Lean Manufacturing (TPS) in its manufacturing facilities. It also has in place best-in-class practices for safety, pollution control, work environment, water and energy conservation.

Continuous improvement projects are implemented to improve the product quality and productivity in all the manufacturing locations. The Company’s journey of achieving manufacturing excellence was recognized and rewarded by the following customers during FY 2018-19.

- Hyundai Motor India Limited - Best production support

- Cummins - Rating of O - Outstanding supplier


Achieving customer delight by consistently providing products of excellent quality is the prime motto of the Company. This is achieved through state-of-the-art technology, training, effective quality system, continuous improvement and total employee involvement.

Poka-yokes, process audits, use of statistical tools for process optimization and online process controls also contribute towards improving and achieving consistency in product quality. The quality system is certified for IATF 16949 requirements.

TQM is a way of life in the Company. 100% employee involvement has been successfully achieved for many years.

Employees have completed 486 projects by applying statistical tools through Quality Control Circles (QCC) in 2018-19. The average number of suggestions implemented per employee was 39.

Cost Management

Cost management is a continuous journey and the Company manages the same through deployment of costs across all departments. A cross functional team is working on projects focussed on Value Added/Value Engineering (VA/VE) and operational efficiency. TPM and lean initiatives are deployed Company-wide, to achieve reduction in manufacturing cost.

Information Technology

The Company uses ERP system that integrates all business processes across the Company. Suppliers and customers are also integrated into the system for better planning and execution. During the year, several dashboards were added to improve the productivity, quality and reduce the cost of operations. Projects were also implemented to further enhance the Information Security.


The Company considers employees as vital and most valuable assets. Human Resource Development (HRD) is aligned to business needs to enhance business performance and results. HRD is practiced through an overall HRD framework with its constituents as resourcing, employee engagement, performance & compensation management, competency based development, career & succession planning and organization development. Each of these constituent has a structured approach and process to deliver.

As a part of the long term strategies of the Company, collaborative education program has been initiated with three reputed institutes to develop role-ready engineers with Company-specific knowledge at the entry level.

Career development workshop is conducted to identify high potential employees. Such employees are groomed for taking up higher responsibilities. A reward and recognition system is in place to motivate and also provide fast track growth for the high potential employees.

The engineers and executives of the Company are sponsored for advanced study, offered by both Indian and foreign institutions. Customized technical and leadership competency improvement programs are developed and delivered through reputed institutions.

The Company continuously measures and reports employee engagement every year and identifies improvement areas to work on.

An excellent industrial relations environment continues to prevail at all the manufacturing units of the Company.

As on 31st March 2019, the Company had around 2,318 employees on its rolls.


The Company is fully committed to the ultimate goal of employee safety. Safety management is integrated with the overall Environment, Health and Safety (EHS).

The Company has been certified under Integrated Management System (IMS) combining ISO 14001 and OHSAS 18001 systems and procedures.


Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates and expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include, amongst others, economic conditions affecting demand / supply and price conditions in the domestic and overseas market in which the Company operates, changes in the Government Regulations, Tax Laws and Other Statutes and Incidental Factors.


In accordance with the provisions of Section 134(5) of the Companies Act, 2013, (the Act, 2013) with respect to Directors’ Responsibility Statement, it is hereby stated that -

i. in the preparation of annual accounts for the financial year ended 31st March 2019, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

ii. 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. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the accounts for the financial year ended 31st March 2019 on a “going concern basis”;

v. 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. 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.


CSR activities have already been textured into the Company’s value system through Srinivasan Services Trust (SST), established in 1996 with the vision of building self-reliant rural community.

Over 23 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 / programmes, falling within the CSR activities specified under the Act, 2013, as mandated by the Ministry of Corporate Affairs for carrying out the CSR activities.

The Committee formulated and recommended a Corporate Social Responsibility policy in terms of Section 135 of the Act, 2013, 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 / programmes carried out as CSR activities by Sri Sathya Sai Central Trust having an established track record for more than the prescribed years in undertaking similar programmes / projects, constituting more than 2% of the average net profits of the Company, made during the three immediately preceding financial years, towards CSR spending for the financial year 2018-19 amounting to Rs. 25 Lakhs.

As required under Section 135 of the Act, 2013 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 2018-19 are given by way of Annexure-IV attached to this Report.


The following companies and bodies corporate are the subsidiaries / associates of the Company:


1. TVS Motor Company Limited, Chennai;

2. Sundaram Auto Components Limited, Chennai;

3. TVS Housing Limited, Chennai;

4. TVS Motor Services Limited, Chennai;

5. TVS Credit Services Limited, Chennai;

6. TVS Two-wheeler Mall Private Limited, Chennai;

7. TVS Micro Finance Private Limited, Chennai;

8. Harita ARC Private Limited, Chennai;

9. Harita Collection Services Private Limited, Chennai;

10. TVS Commodity Financial Solutions Private Limited, Chennai;

11. TVS Housing Finance Private Limited, Chennai;

12. Sundaram-Clayton (USA) Limited, USA;

13. TVS Motor Company (Europe) B.V., Amsterdam, Netherlands;

14. TVS Motor (Singapore) Pte. Limited, Singapore;

15. PT TVS Motor Company Indonesia, Jakarta;

16. Sundaram Holding USA Inc, Delaware, USA;

17. Green Hills Land Holding LLC, South Carolina, USA;

18. Components Equipment Leasing LLC, South Carolina, USA;

19. Sundaram-Clayton (USA) LLC, South Carolina, USA; and

20. Premier Land Holding LLC, South Carolina, USA.


1. Emerald Haven Realty Limited, Chennai and its subsidiaries;

2. TVS Training and Services Limited, Chennai; and

3. Sundram Non-Conventional Energy Systems Limited, Chennai


TVS Motor Company Limited (TVSM)

TVSM is engaged in the business of manufacture of two and three wheelers. During the year 2018-19, TVSM achieved a turnover of Rs.18,217 Cr and earned a profit after tax of Rs. 670 Cr.

TVSM for the year 2018-19, declared first interim dividend of Rs.2.10 per share (210%) absorbing a sum of Rs.120.28 Cr including dividend distribution tax and a second interim dividend of Rs.1.40 per share (140%) absorbing a sum of Rs.79.70 Cr including dividend distribution tax.

Hence, the total amount of dividend for the year ended 31st March 2019 aggregated to Rs.3.50 per share (350%) on 47,50,87,114 equity shares of Rs.1 each.

Sundaram Auto Components Limited (SACL)

Total revenue of SACL for the year 2018-19 was Rs.601.16 Cr as against Rs.1,143.37 Cr in the previous year. The decrease was mainly due to substantial reduction of business in automobile trading division post introduction of GST, effective 1st July 2017.

SACL earned a Profit Before Tax Rs.17.37 Cr during the year 201819 as against Rs.24.10 Cr in the previous year.

SACL declared an interim dividend of Rs.0.65 per share (6.5%), on 3,59,25,000 equity shares of Rs.10/- each fully paid up, thereby absorbing a sum of Rs.2.82 Cr including dividend distribution tax, for the year ended 31st March 2019.

National Company Law Tribunal (NCLT), Chennai approved a Scheme of Arrangement for Demerger of Automobile Trading Division (the Scheme) between SACL and TVS Motor Services Limited (TVS MS). TVS MS acquired the automobile trading division along with its relative assets and liabilities from SACL, as on 1st April 2018. The Scheme was filed with the Registrar of Companies on 20th February 2019 and became effective from that date.

As per the Scheme, TVS MS allotted 36,33,814 equity shares of Rs.10/- each to TVS Motor Company Limited (TVSM), as consideration for transfer of automobile trading division by SACL, on 27th February 2019. Since both TVS MS and SACL are wholly owned subsidiaries of TVSM, further allotment of shares by TVS Ms to TVSM has not affected their status as wholly owned subsidiaries of TVSM.

TVS Housing Limited (TVSH) / Emerald Haven Realty Limited (EHRL)

TVS Housing Limited is a 100% subsidiary of TVS Motor Company Limited.

EHRL has till date completed construction of 1.3 Mn sq ft of residential development and the total area under development as on date is 5.0 Mn sq ft.

During the year, EHRL launched new projects at Salamangalam, Radial Road, Porur, Kolapakkam in Chennai.

During the year, EHRL through its subsidiaries has acquired lands in Radial Road, Karapakkam and Manapakkam and also has been appointed as a manager for residential development at Vengaivasal, Chennai and geographically expanded to Bengaluru through a joint development agreement.

During the year, EHRL earned a Profit Before Tax of Rs. 7.97 Cr as against Rs. 6.56 Cr in the previous year on a consolidated basis.

PT. TVS Motor Company Indonesia (PT TVSM)

The Indonesian two-wheeler Industry grew by 14% over 2017-18. Bebek and Skubek segment grew by 9% and 17% respectively, whereas motorcycle segment suffered negative growth of 12%.

For PT TVSM, the total two wheeler sales increased from 37,096 vehicles in 2017-18 to 40,759 vehicles in 2018-19. Total 3W sales increased from 649 units in 2017-18 to 2,699 units in 2018-19. Export of 3W commenced during Q3 of 2018-19.

EBITDA loss for the year 2018-19 was USD 3 Mn. as against USD 3.72 Mn. in 2017-18.

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.

TVS Motor Services Limited (TVS MS)

TVS MS is the investment SPV of TVSM, for funding TVS Credit Services Limited (TVS CS).

National Law Company Tribunal, Chennai (NCLT), Chennai has approved a Scheme of Arrangement (Scheme) for redemption of Non-cumulative Redeemable Preference Shares (NCRPS) issued by TVS MS. As per the Scheme, TVS MS will be transferring its investment in the equity shares of TVS CS to the NCRPS holders against cancellation and extinguishment of the NCRPS. After transfer of TVS CS equity shares, TVSM will hold 86% of the total equity share capital in TVS CS.

TVS Credit Services Limited (TVS CS)

TVS CS is the retail finance arm of TVSM for financing of two-wheelers. In line with its long term vision of being preferred financier with diversified and profitable portfolio, TVS CS added MSME finance portfolio during the year 2018-19.

During the year 2018-19, TVS CS’s overall disbursements registered a growth of 44% at Rs. 7,067 Cr as compared to Rs. 4,899 Cr in the previous year. The assets under management stood at Rs. 8,335 Cr as against Rs. 6,152 Cr during the previous year thereby registering a growth of 35%. Total income during the year 2018-19 increased to Rs. 1,635 Cr from Rs. 1,279 Cr during the financial year, an increase of 28% over the previous year.

The Profit Before Tax for the year has also improved and stood at Rs. 216 Cr as against Rs. 206 Cr during the previous year.

The following companies are the subsidiaries of TVS CS.

1. TVS Two-wheeler Mall Private Limited

2. TVS Micro Finance Private Limited

3. Harita ARC Private Limited

4. Harita Collection Services Private Limited

5. TVS Commodity Financial Solutions Private Limited

6. TVS Housing Finance Private Limited

Sundaram-Clayton (USA) Limited

Sundaram-Clayton (USA) Limited, a wholly owned subsidiary of the Company is engaged in the business of providing Professional Employer Organisation (“PEO”) services to the employees of the Company. The Company earned revenue of USD 7574 and net income after adjustment of expenses amounted to USD 409 for the year ended 31st March 2019.

Sundaram Holding USA Inc. (SHUI) & its subsidiaries

The Company along with Sundaram Auto Components Limited have formed Sundaram Holding USA Inc., a Company established under the applicable provisions of Laws of The United States of America.

SHUI’s wholly owned subsidiaries are:

1. Green Hills Land Holding LLC, South Carolina, USA

2. Component Equipment Leasing LLC, South Carolina, USA

3. Sundaram-Clayton USA LLC, South Carolina, USA

4. Premier Land Holding LLC, South Carolina, USA Commercial production would commence during 2019-20.

TVS Training and Services Limited (TVS TSL)

TVS TSL is engaged in the business of establishing and providing vocational training services to various industries and is participating in the National Skill Development Projects. During the year, the Company earned an income of Rs. 40.04 Cr and profit after tax for the year ended 31st March 2019 was Rs. 5.81 Cr.

Sundram Non-Conventional Energy Systems Limited (SNCES)

SNCES is engaged in the business of generation of power. During the year, the Company earned a total revenue of Rs. 2.87 Cr and Profit after tax was Rs. 1.63 Cr.


The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) along with a separate statement containing the salient features of the financial performance of subsidiaries / associates, in the prescribed form. The audited consolidated financial statements together with Auditors’ Report forms 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 the business hours as mentioned in the Notice of AGM.

The consolidated Profit After Tax of the Company and its subsidiaries & associates amounted to Rs. 749.77 Cr for the financial year 2018-19.


Directors’ appointment / re-appointment

Based on the recommendation of the Nomination and Remuneration Committee (NRC), the Board at its meeting held on 24th October 2018 appointed Ms Sasikala Varadachari, as an Additional Director to comply with the requirement of having Independent Woman Director on the Board of the Company, in terms of the Listing Regulations.

The Company is seeking approval of the shareholders for the appointment of Ms Sasikala Varadachari as an Independent Director at the ensuing AGM.

Mr K Mahesh ceased to be a director of the Company w.e.f. 2nd February, 2019 due to his sad demise. The Board placed on record its appreciation for the valuable guidance and support provided by him during his tenure as Director of the Company.

Mr Sudarshan Venu relinquished his position as Joint Managing Director of the Company effective 11th March 2019 as he will not be able to give sufficient time to manage day-to-day affairs of the Company. He would however continue to serve as Non-Executive and Non Independent Director of the Company, which would be valuable and supportive to the Company considering his experience in automotive industry.

In terms of the provisions of sub-Section (6) read with explanation to Section 152 of the Act, 2013 two-thirds 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 Sudarshan Venu and Mr T K Balaji, Directors, who have been the longest in office, are liable to retire by rotation at the ensuing AGM, and being eligible, offer themselves for re-appointment.

The Directors have recommended their appointment / re-appointment for the approval of Shareholders. The brief profile of the Directors are furnished in the Notice convening the AGM of the Company.

Independent Directors (IDs)

All IDs hold office for a fixed term and are not liable to retire by rotation.

At the AGM held on 21st August 2014, M/s Vice Admiral P J Jacob (Retd.), V Subramanian, S Santhanakrishnan, R Vijayaraghavan and Kamlesh Gandhi, were appointed as IDs for the first term of five consecutive years from the conclusion of the fifty-second AGM, not liable to retire by rotation and 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, 2013, within the overall limit, as determined by the Board from time to time.

Mr R Gopalan, was appointed as Non-Executive Independent Director effective 21st June 2016 through Postal Ballot and he shall hold the office till the conclusion of the ensuing AGM.

Based on the performance evaluation by both the NRC and the Board, M/s Vice Admiral P J Jacob, would hold office as Independent Director for a second term of 5 (five) consecutive years from 21st August 2019 and M/s V Subramanian, S Santhanakrishnan, R Vijayaraghavan and Kamlesh Gandhi would hold office as Independent Directors for a second term of 3 (three) consecutive years from 21st August 2019 and R Gopalan would hold office as Independent Director for a second term of 3 (three) consecutive years from 24th July 2019, subject to the approval of the shareholders at the ensuing AGM, in terms of Section 149 of the Act, 2013 on the same terms of appointment and remuneration by way of fees and profit related commission, if any.

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, 2013, all IDs have declared that they meet the criteria of independence as provided under Section 149(6) of the Act, 2013 and Regulation 25 of the Listing Regulations.

The detailed terms of appointment of IDs is disclosed on the Company’s website in the following link:

Separate meeting of Independent Directors

During the year under review, a separate meeting of IDs was held on 11th March 2019 and all the IDs were present at the Meeting.

Based on the set of questionnaires, complete feedback on NonIndependent Directors and details of various activities undertaken by the Company were provided to IDs to facilitate their review / evaluation.

(a) Non-Independent Directors (Non-IDs)

IDs used various criteria and methodology practiced in Industry, prescribed by NRC for evaluation of Non-IDs M/s. Venu Srinivasan, Chairman and Managing Director, Dr. Lakshmi Venu, Joint Managing Director and Sudarshan Venu, T K Balaji and Gopal Srinivasan, Directors, Chairman of the Board and Board as a whole.

IDs evaluated the performance of all Non-IDs individually, through a set of questionnaires. They reviewed their interaction during the Board/ Committee meetings and strategic inputs given by them to improve the risk management, internal controls and contribution to the Company’s growth.

IDs were satisfied fully with the performance of all Non-IDs.

(b) Chairman

IDs reviewed the performance of Chairman of the Board after taking into account his performance and benchmarked the achievement of the Company with industry under the stewardship of Chairman.

IDs also placed on record, their appreciation of Chairman’s visionary leadership and appreciated him as a driving force for sustaining high ethical standard and transparency in boardroom discussions and actions, and has a great ability to listen to all members and stimulate discussions to benefit the businesses and to remain contemporary and futuristic both in the Company’s operations and its processes.

They also recorded the growth story of the Company under the leadership of Chairman and significant increase in turnover & Profit.

(c) Board

IDs also evaluated Board’s composition, size, mix of skills and experience, its meeting sequence, effectiveness of discussion, decision making, follow up action, so as to improve governance and enhance personal effectiveness of Directors.

The evaluation process focused on Board Dynamics and the Board upon evaluation concluded that it is well balanced in terms of diversity of experience with expert in each domain viz., Engineering, Leadership/ Strategy, Finance, Legal and Regulatory and Governance. The Company has a Board with wide range of expertise in all aspects of business.

IDs unanimously evaluated the pre-requisites of the Board viz., formulation of strategy, acquisition & allocation of overall resources, setting up policies, directors’ selection processes and cohesiveness on key issues and satisfied themselves that they were adequate.

They were satisfied with the Company’s performance in all fronts and finally concluded that the Board operates with best practices.

IDs have also ensured that the skills / expertise / competence of the Board of Directors are in line with the Company’s business requirement to enable it function effectively.

(d) Quality, Quantity and Timeliness of flow of Information between the Company, Management and the Board

All IDs have expressed their overall satisfaction with the support received from the management and the excellent work done by the management during the year under review and also the relationship between the top management and Board is smooth and seamless.


Chairman and Managing Director

During the year under review, Mr Venu Srinivasan was re-appointed as Chairman and Managing Director of the Company for a further period of five years commencing from 23rd May 2019 and the Shareholders have approved the same through Postal Ballot on 23rd April 2019.

In terms of Section 196 read with Schedule V to the Act, 2013, for continuation of appointment as Managing Director after attaining the age of 70 years requires approval of the shareholders by way of special resolution. Since, the age of CMD will cross 70 years during his tenure, the approval of the shareholders for the re-appointment was obtained by way of a Special Resolution.

Change in Chief Executive Officer

During the year under review, Mr M Muthuraj retired as the Chief Executive Officer of the Company effective 30th April 2018 and Mr Vivek S Joshi was appointed as the Chief Executive Officer of the Company, effective 25th January 2019, based on the recommendation of the NRC.

Change in Chief Financial Officer

During the year under review, Mr V N Venkatanathan resigned as the Chief Financial Officer of the Company and Mr K Gopala Desikan was appointed as the Chief Financial Officer effective 8th August 2018, based on the recommendation of the NRC and Audit Committee.

In terms of the Act, 2013, Mr Venu Srinivasan, Chairman and Managing Director, Dr. Lakshmi Venu, Joint Managing Director, Mr Vivek S Joshi, Chief Executive Officer, Mr K Gopala Desikan, Chief Financial Officer and Mr R Raja Prakash, Company Secretary are the ‘Key Managerial Personnel’ of the Company as on date of this Report.

Nomination and Remuneration Policy

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 of the Company.

Nomination and Remuneration Policy was approved by the Board at its meeting held on 24th September 2014 and amended from time-to-time in terms of Section 178 of the Act, 2013. The objective of such policy shall be to attract, retain and motivate executive management and devise remuneration structure to link to Company’s strategic long term goals, appropriateness, relevance and risk appetite.

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, whenever the need arises for appointment of Directors / KMP.

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.

Remuneration payable to Non-executive Independent Directors

The shareholders through Postal Ballot on 22nd June 2016 approved the remuneration by way of commission not exceeding 1% of the net profits, in aggregate, payable to Non-Executive and Independent Directors of the Company (NE-IDs) for every year, for a period of 5 years commencing from 1st April 2016.

NE-IDs devote considerable time in deliberating the operational and other issues of the Company and provide valuable advice in regard to the management of the Company from time to time, and the Company also derives substantial benefit through their expertise and advice.

Evaluation of Directors and Committees

In terms of Section 134 of the Act, 2013 and the Corporate Governance requirements as prescribed under the Listing Regulations, the Board reviewed and evaluated all Directors (excluding the Director being evaluated) and its Committees viz., Audit Committee, Risk Management Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders’ Relationship Committee, based on the evaluation criteria laid down by the NRC through a set of questionnaires.


The performance of all Directors were 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 IDs 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.

On the basis of the report of performance evaluation of directors, the Board noted and recorded that all the directors should extend and continue their term of appointment as Directors / Independent Director, as the case may be.


Board delegates specific mandates to its Committees, to optimize Directors’ skills and talents besides complying with key regulatory aspects.

- Audit Committee for overseeing financial Reporting;

- Risk Management Committee for overseeing the risk management framework;

- Nomination and Remuneration Committee for selecting and compensating Directors / KMPs / SMPs;

- Stakeholders’ Relationship Committee for redressing investors grievances; and

- Corporate Social Responsibility Committee for overseeing CSR initiatives and inclusive growth.

The performance of each Committee was evaluated by the Board after seeking inputs from its Members on the basis of specific terms of reference, its charter, time spent by the Committees in considering key issues, quality of information received, major recommendations / action plans and work of each Committee.

The Board is satisfied with the overall effectiveness and decision making of all Committees. The Board reviewed each Committee’s terms of reference to ensure that the Company’s existing practices remain appropriate.

Recommendations from each Committee were considered and approved by the Board prior to its implementation, wherever necessary and there were no items where the Board had not accepted any recommendation of any Committee of the Board in the relevant financial year.

Details of Committees, its charter, functions are provided in the Corporate Governance Report attached to this Report.

Number of board meetings held:

The number of board meetings held during the financial year 2018-19 is provided as part of Corporate Governance Report prepared in terms of the Listing Regulations.


Statutory Auditors

The Company at its fifty fifth AGM held on 19th July 2017 appointed M/s Raghavan, Chaudhuri & Narayanan, Chartered Accountants, Bengaluru, having Firm Registration No. 007761S allotted by The Institute of Chartered Accountants of India, as Statutory Auditors of the Company to hold office, for the first term of five consecutive years, from the conclusion of the said AGM, at such remuneration in addition to applicable taxes, out of pocket expenses, travelling and other expenses as may be mutually agreed between the Board of Directors of the Company and the Auditors.

The statutory auditors will continue to hold office for the third year in the first term of five consecutive years, from the conclusion of this AGM.

The Company has obtained necessary certificate under Section 141 of the Act, 2013 conveying their eligibility for being statutory auditors of the Company for the year 2019-20.

The Auditors’ Report for the financial year 2018-19 does not contain any qualification, reservation or adverse remark and the same is attached with the annual financial statements.

Secretarial Auditor

As required under Section 204 of the Act, 2013 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.

The Secretarial Audit Report for the financial year 2018-19, given by Ms B Chandra, Practising Company Secretary, 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.

The board at its meeting held on 2nd May 2019 has appointed B Chandra, Practising Company Secretary, Chennai, (CP No. 7859) as Secretarial Auditor for the financial year 2019-20.

Cost Auditor

As per Section 148 of the Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014, as amended, the cost audit records maintained by the Company in respect of parts manufactured by the Company covered under other machinery specified under Customs 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, re-appointed Mr A N Raman, Cost Accountant, Chennai 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 2019-20.

The Company has also received necessary certificate under Section 141 of the Act, 2013 from him conveying his eligibility to act as a cost auditor. A sum of Rs. 3.50 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, which is required to be approved and ratified by the members, at the ensuing AGM as per Section 148(3) of the Act, 2013.

The Company has filed the Cost Audit Report of 2017-18 on 6th September 2018 in XBRL format.


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 the Listing Regulations 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 Regulation 17(8) of the Listing Regulations, 2015 pertaining to CEO / CFO certification for the financial year ended 31st March 2019.


In terms of Regulation 34 of the Listing Regulations, the Business Responsibility Report for the year 2018-19 describing the initiatives taken from an environment, social and governance perspectives, in the prescribed format is given as Annexure-VI to this Report and is also available on the Company’s website viz.,


The Company has adopted a Policy on Vigil Mechanism in accordance with the provisions of the Act, 2013 and Regulation 22 of the Listing Regulations, 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 Business Conduct and Ethics.

The Code also provides a direct access to the Chairman of the Audit Committee to make protective disclosures to the management about grievances or violation of the Company’s Code.

The Board at its meeting held on 2nd May 2019 made certain amendments to the Whistle Blower Policy for reporting any allegations of material nature on any leakage of unpublished price sensitive information.

The policy is disclosed on the Company’s website in the following link


The Company has not accepted any deposit from the public within the meaning of Section 76 of the Act, 2013, for the year ended 31st March 2019.


Information on conservation of energy, technology absorption, foreign exchange, etc.,

Relevant information is given in Annexure-I to this Report, in terms of the requirements of Section 134(3)(m) of the Act, 2013 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 the 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 requirement of Section 134(3)(a) of Act, 2013 read with the Companies (Accounts) Rules, 2014.

The same is available on the Companies website in the following link:

Employee’s remuneration

Details of employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as a statement and given in Annexure-III. In terms of first proviso to Section 136(1) of the Act, 2013 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 as mentioned in the Notice of AGM 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 material related party transactions

There are no material related party transactions under Section 188 of the Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Details of loans / guarantees / investments made

During the year under review, the Company had not granted any loans or guarantees covered under Section 186 of the Act, 2013.

Please refer note no. 4 to Notes on accounts for the financial year 2018-19, for details of investments made by the Company.

Reporting of fraud

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Act, 2013.

Disclosure in terms of Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has Internal Complaints Committees as required under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, there were no cases filed pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.


The directors gratefully acknowledge the continued support and co-operation received from the promoters of the Company, viz., T V Sundram Iyengar & Sons Private Limited, Southern Roadways Limited, Sundaram Industries Private Limited and Sundaram Finance Holdings Limited.

The Directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The Directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The Directors specially thank the shareholders for their continued faith in the Company.

For and on behalf of the Board of Directors


2nd May 2019 Chairman

Director’s Report