MANAGEMENT DISCUSSION AND ANALYSIS
Indian gross domestic product and the Index of Industrial Production registered agrowth of 8.6% (7.2%) and 7.8% (10.4%) respectively, reflecting the strong fundamentals ofIndian economy.
The global economy showed signs of slow recovery with emerging economies registering asizable growth, while developed economies responded slowly to stimulus packagesimplemented during the period of economic meltdown. The US economy limped back to growth;however the European economies have not shown similar growth due to financial crisis insome of the European countries.
During 2010-11, the manufacturing sector in India including the automotive sectorstaged a spectacular recovery to register an unprecedented growth. The following tableshows the sales trend of the industry:
|Automobile Sales Trends || || || ||(In Nos) |
| || |
Vehicle Sales during
|Category ||2009-10 ||2010-11 ||% increase over previous year ||CAGR % over 5 years |
|Medium & Heavy Commercial Vehicles ||250,171 ||344,542 ||37.72 ||3.19 |
|Light Commercial Vehicles ||316,437 ||408,193 ||29.00 ||12.83 |
|Total CVs ||566,608 ||752,735 ||32.85 ||7.78 |
|Passenger Cars ||1,926,484 ||2,453,113 ||27.34 ||14.09 |
|Utility Vehicles ||272,848 ||318,576 ||16.76 ||7.24 |
|MPVs ||151,908 ||215,607 ||41.93 ||20.63 |
|Total Passenger Vehicles ||2,351,240 ||2,987,296 ||27.05 ||13.61 |
|Scooters ||1,494,409 ||2,144,765 ||43.52 ||17.05 |
|Motorcycles ||8,444,852 ||10,527,111 ||24.66 ||8.20 |
|Mopeds ||571,070 ||704,575 ||23.38 ||12.36 |
|Electric two wheelers ||2,558 ||- ||- ||- |
|Total Two Wheelers ||10,512,889 ||13,376,451 ||27.24 ||9.55 |
|Three Wheelers ||619,093 ||799,553 ||29.15 ||7.86 |
|Tractors ||440,230 ||545,109 ||23.82 ||9.09 |
|Grand Total ||14,490,060 ||18,461,144 ||27.41 ||9.98 |
The domestic market showed a record growth. There has been a perceptible shift in thetype of production of Medium and Heavy commercial vehicles to larger and multi-axlevehicles. In the case of Light commercial vehicles, there has been a shift to smallervehicles with low haulage capacities. Sales of cars, utility vehicles, MPVs, LCVs andtwo-wheelers grew throughout the year due to introduction of new models and entry of newmanufacturers. Increase in disposable incomes and need for personal transportationcombined with availability of finance contributed to a strong growth of passengervehicles.
There was an improvement in the sales of passenger cars during 2010 in the US andEurope. The CV industry has continued to struggle, with growth of sales remaining at lowlevels. Growth levels in sales of passenger cars may remain muted during 2011 due to highlevels of unemployment, strident increase in gasoline prices and volatile consumerconfidence.
Domestic sales increased to Rs. 1328 crores from Rs. 1002 crores, a growth of 32%.Demand from automotive OEMs was buoyant throughout the year. Aftermarket sales also showedgrowth as confidence levels of dealers improved resulting in higher off-take and stocking.During the year, the Company started bulk supply of shimless tappets to Maruti-SuzukiIndia Ltd for use in their new K-series engines. The Company also commenced bulk supply ofparts to Tata Motors Ltd for use in their Nano vehicles.
The US markets showed signs of recovery and the confidence levels of the Company'scustomers improved perceptibly. European markets continued to be sluggish. Exports fromall the major units showed sizable growth enabling the Company to post record sales of atRs. 480 crores as against Rs. 332 crores in the previous year, an increase of 45%.TheCompany's quest for adding new products and new customers will result in furtherimprovement in exports in the near future. Volatility in exchange rates and slow recoveryin demand from European customers are causes for concern.
Improved market conditions resulted in higher sales in all the units of the Company.Raw material prices increased steadily during the year. Thanks to a strong demand, theCompany was able to recover a part of the increase from its customers. Input costs roseacross the board, especially of petroleum based products. Non-availability of power due toscheduled power-cuts up to 30% and unscheduled power outages forced the Company topurchase power and resort to self generation at higher costs. Wages increased as dearnessallowance increased in line with the cost of living index. Impact of long term wagesettlements for unionised employees at various factories and revision in pay levels fornon-unionised employees in line with the market added to Employee costs. The Companycontinued to be under pressure due to rising manufacturing costs. Freight rates increasedsharply in line with increase in cost of diesel and other inputs related to thetransportation industry.
The Company continues to adopt Total Productive Maintenance (TPM) practices in order toachieve a reasonable control over other operating expenses.
During the year, PBIDT (Profit before interest, foreign exchange fluctuation,depreciation and tax) was higher at Rs 228.44 crores as against Rs 170.33 crores in theprevious year.
Steady rise in demand for the Company's products resulted in additional investments inworking capital. The Company made substantial investments in creation of capacities fornew products and additional capacities for manufacture of existing products to meetprojected demand from domestic and international customers. These investments resulted inadditional interest costs. Tight money policies followed by Reserve Bank of India resultedin steep increase in interest rates on Rupee borrowings and forward premiums in respect offoreign currency borrowings. Interest rates on foreign currency loans were lower than inthe previous year. Interest charges were lower at Rs 20.97 crores against Rs 25.48 croresin the previous year. Foreign exchange fluctuation resulted in a loss of Rs 8.69 crores,as against a gain of Rs 10.49 crores in the previous year. In line with the AccountingStandard AS-11 (dealing with the effects of change in foreign exchange rates) and toensure the principles of consistency, the Company recognises the exchange differencesarising out foreign currency denominated items as expense or income in the profit and lossstatements.
Depreciation was higher at Rs 54.54 crores (Rs 47.48 crores) on account of increasedcapital expenditure incurred over the recent years.
Profit before tax was higher at Rs. 144.25 crores (Rs. 107.85 crores). Profit after taxamounted to Rs. 105.43 crores(Rs. 75.01 crores).
|Summary of operating results || ||Rs lakhs |
| ||2010-2011 ||2009-2010 |
|Net Sales ||180,839.40 ||133,386.06 |
|Other Income ||470.74 ||274.03 |
|Total Income ||181,310.14 ||133,660.09 |
|Total expenditure ||158,465.86 ||116,627.35 |
|Profit before depreciation, interest and tax (PBDIT) ||22,844.28 ||17,032.74 |
|Interest ||2,097.10 ||2,548.25 |
|Exchange losses/(gains) on loans ||868.95 ||(1,048.62) |
|Depreciation/Amortization ||5,453.72 ||4,748.40 |
|Profit before tax (PBT) and before extraordinary item ||14,424.51 ||10,784.71 |
|Extraordinary item (EOI) ||- ||- |
|Profit before tax (PBT) ||14,424.51 ||10,784.71 |
|Current tax ||3,410.43 ||2,575.63 |
|Deferred tax ||496.38 ||666.23 |
|Profit after tax (PAT) ||10,517.70 ||7,542.85 |
|Income Tax (paid) / refunds relating to earlier years ||24.87 ||(41.52) |
|Profit after tax and prior period items ||10,542.57 ||7,501.33 |
| ||2010-2011 ||2009-2010 |
|PBDIT/Total Revenue ||12.6% ||12.7% |
|Raw Material/Total Revenue ||46.3% ||46.8% |
|Operating expenses/Total Revenue ||41.1% ||40.5% |
|PBIT/Total Revenue ||9.6% ||9.2% |
|PBT/Total Revenue ||8.0% ||8.1% |
|PAT/Total Revenue ||5.8% ||5.6% |
|ROCE (Avg. Capital Employed) ||18.1% ||14.8% |
|RONW (Avg. Net Worth) ||20.3% ||16.6% |
|Economic Value Added (EVA) - Rs. lakhs ||3,581.81 ||1,675.81 |
|Incremental EVA - Rs lakhs ||1,905.99 ||1,777.50 |
Subsidiaries / Consolidated Results
The subsidiaries showed a vastly improved performance. Subsidiaries engaged inservicing the requirements of emerging markets have performed substantially better than inthe previous year. Subsidiaries catering to developed markets have also performed betterthan in the previous year as market conditions have improved, albeit slowly.
| || || ||Rs in Crores |
|Particulars ||2010-2011 ||2009-2010 ||% of Increase |
|Sales & Other Income ||536.81 ||415.36 ||29.24% |
|Cash Profit ||27.84 ||(9.73) ||386.13% |
|Net Profit ||7.57 ||(27.79) ||127.24% |
| || || ||Rs in Crores |
|Particulars ||2010-2011 ||2009-2010 ||% of Increase |
|Sales ||2280.44 ||1694.81 ||34.55% |
|Net Profit ||114.10 ||47.23 ||141.58% |
Capacities and Capital Expenditure
The automotive industry serves as the barometer of performance of the global economies.The industry is highly competitive and price sensitive. The cyclical nature of theindustry compels automobile manufacturers to continuously improve their products andreduce costs through product innovations and global sourcing. The presence ofmultinational manufacturers in India will, in the long term, provide significant growthopportunities to Indian component manufacturers to enlarge the scope of supply. TheCompany always looks forward to increasing its product portfolio by developing newproducts and diversifying its customer base.
During the year, the Company has incurred Rs. 134.90 crores towards capital expenditureon existing and new projects.
The Company is in the process of setting up facilities at Mittamandagapet in Tamil Nadufor the manufacture of fasteners for use in Wind Energy Generators with an initialinvestment of Rs. 30 crores. Currently, a substantial portion of the demand of IndianWind-turbine manufacturers is met through imports. Global demand for fasteners for WindEnergy industry will be quite high considering the emphasis being placed on generation ofclean power. Work on the Company's project for manufacture of sprockets at the factory atSEZ, Maraimalainagar at an initial investment of Rs. 25 crores is in progress.
The Company will also expand capacities further in the manufacture of sintered metalproducts, hubs and shafts and fasteners. The Company also proposes to add secondarycapacities to develop new products for its customers and expand wherever necessary to meetrequirements of the customers. The total capital expenditure commitments during 2011-12are likely to be around Rs. 150 crores, subject to market conditions and internalaccruals.
Research and Development
The Company focuses on up-gradation of existing products with added features andintroduction of new products by continuous efforts on research and development (R&D)activities. The Company accords high priority to its R&D initiatives. The Company'sR&D facilities at Padi, Chennai and at Hosur have been granted recognition by theDepartment of Scientific and Industrial Research (DSIR), making the Company eligible forweighted deduction under Section 35 (2AB) of the Income Tax Act. Application for grant ofrecognition for the R&D facilities at Velappanchavadi, Chennai is under considerationof DSIR. The Company continues to make additional investment in R&D activities aimedat development of new products and processes and cost optimisation.
Quality Systems, TPM and Cost reduction
All the major factories of the Company have obtained / retained certification accordingto the latest ISO/TS 16949-2002 standards.
The Company has continuously adopted Total Productivity Maintenance (TPM) techniquesfor over a decade. This has helped the Company to improve quality, productivity andoperational efficiency. The Company has been able to achieve increased equipment life spanand reduce cost of maintenance and equipment downtime considerably. The Company placesemphasis on cost control measures and on waste reduction / elimination. Clean environmentand high safety standards are built into plant operations resulting in employeesbenefitting through reduced fatigue, high morale and improved job satisfaction. TPMencourages employee participation across all levels and creation of cross-functional teamsto optimise the benefits. New ideas and systems developed by the teams are horizontallydeployed, wherever feasible, across the Company. A large number of employees participatein "Suggestion Schemes". Employees are suitably rewarded for suggestionsresulting in cost savings or improvement in performance.
Various teams representing different units of the Company have won Kaizen competitionsat all India level.
Human Resources and Industrial Relations
The Company believes that human resources are the most important assets of the Company.Over the years, the Company has been able to consistently meet customer requirements andshow a tremendous growth, thanks to its dedicated employees. For its part, the Companyoffers a professional work atmosphere and provides opportunities for focused learningexperiences to employees to stimulate support and develop their potential into workrelated competencies. The physical infrastructure provided is on par with the best inindustry. Continuous communication and periodic meetings enable employees to keep abreastof business developments and to generate ideas to improve the performance of the Company.Employees are trained to make extensive use of IT systems for optimal throughput.Compensation system for non-unionised employees includes variable remuneration based onindividual performance and performance of the Company. A Performance Appraisal system isin place to help employees improve in their area of work. The HR initiatives likeMentoring and Training & Development help to empower its employees.
The Company makes a concerted effort to engage its employees and their family membersin celebrating local festivals and the Company's achievements. This helps to createawareness among the family members of the environment in which the employees work. Familymembers are also invited to attend functions held to distribute scholarships.
The Company imparts practical training in computers and soft skills to the children ofemployees, in addition to offering substantial scholarship grants to pursue highereducation.
The Company has traditionally nurtured a culture of excellent industrial relations. Inkeeping with this tradition, amicable long-term wage settlements have been concluded atKrishnapuram and Padi factories. The agreements will go along way in sustaining cordialand productive industrial relations in the Company and limit employee attritions.
The Company has maintained its excellent industrial relations record of not losing evena single day due to industrial action since its inception in 1966.
Health, Safety and Environment
The Company accords the highest importance to the health and safety of its employees.The Company follows a policy of zero tolerance towards accidents. With this primaryobjective, the Company provides all facilities for a safe working environment. A number ofbest practices have been put in place to ensure prevention of accidents and maintenance ofsafety standards. As a part of the TPM methodologies the Company has implemented a systemof regular communication, training, mock drills and periodic reviews of practices. TheCompany maintains very high safety standards which are monitored at the highest level.Periodic audit, internal and external, ensures that no deviation from safety policiesoccurs.The Company's factories at Krishnapuram, Gummidipoondi and Velappanchavadi areaccredited with OHSAS 18001:2007 certification from Bureau Veritas Quality International(BVQI).
The Company believes that every business unit should remain environmentally sustainableat all times. The Company has instituted systems for monitoring and controlling pollutantsat all the factories, strictly complying with applicable environmental regulations andstandards. The Company has installed adequate equipments to control air / water pollutionand to treat eftluents in all its factories. All the major factories of the Company haveobtained certification for conformance to ISO 1400I standards.
The Company seeks to implement practices for resource conservation, particularly in theuse of oil, water and electrical energy. As a part of the TPM process, periodic checks areconducted by in-house personnel and external experts to ensure continuous improvement inareas related to manufacturing processes and energy conservation. The Company hasimplemented rain water harvesting techniques in all factories and uses recycled water tothe maximum extent possible. The Company has taken various initiatives to maintaindeveloped green belts around its factories in all seasons.
The Company is a leader in manufacture of automotive and engineering components.Automotive components industry is highly competitive and is subject to cyclical changes indemand affecting the automobile industry. The Company mitigates the risk by supplying awide variety of components to existing customers operating in different segments with inthe automobile industry. The risk of pressure on margins due to price competition iscompensated by additional sales volumes wherever possible. The Company continuously workson increasing its customer-base, within and outside India, as a counter balance tofluctuations in demand for its products.
Steel and aluminium are the primary inputs for the products manufactured by theCompany. Input costs fluctuate depending on global demand and supply. While the Companyattempts to keep the cost of inputs in check by diversifying its sources of supply,imported and indigenous, steep increases may affect the profitability of the Company asthere will be a time lag between the hike in cost of inputs and the pass through tocustomers.
The Company exports a sizable volume of its production and imports steel for meetingits input requirements, involving foreign currency transactions. The Company borrows fundsin foreign currency to meet its requirement of funds. The Company is exposed to the riskof currency fluctuations. The Company has an appropriate policy mechanism to limit thepotential adverse impact of currency fluctuations.
In line with the rest of the industry, the Company is susceptible to changes infinancial markets affecting liquidity, interest rates and consumer confidence. Policymeasures adopted by the Government of India and Reserve Bank of India will largelydetermine the availability and cost of funds. The Company hopes to limit the impact of thepolicy measures by judicious management of its capital expenditure programme andinvestments in working capital.
Internal Control Systems
The Company lays stress on high standards of Corporate Governance. The Company hasadopted a"Code of Business Conduct", which is binding all its employees. Theinternal control system is designed to ensure proper accounting controls, safe-guarding ofassets, generation of accurate and reliable data and monitoring of operations throughspeedy compilation of information and reports. Special emphasis is placed on compliancewith company policies, laws and regulations.. The Company has continued its efforts toalign all its processes and controls with industry best practices. The Company has acomprehensive system of budgetary controls and management reviews.
The Company has an independent Internal Audit department that conducts regular audits.The efficacy of internal checks and control systems are validated by self-audits, verifiedduring internal audits and reviewed by the Audit
Committee. The scope of internal audit within the Company is broad and oriented towardsmitigating risks in all are as of operations.
The Audit Committee of the Board of Directors comprising independent directorsregularly reviews the audit plans, significant audit findings, adequacy of internalcontrols and compliance with Accounting Standards. Statutory auditors also review theadequacy of internal audit.
Sundram Fasteners (Zhejiang) Limited (SFZL), China manufactures high tensile fastenersand bearing housings.
Sales and other income during the year 2010 amounted to RMB 86.425 million (Rs 5842.31lakhs) as against RMB 45.583 million (Rs 3,227.32 lakhs) during 2009. The operationsresulted in a net profit of RMB 4.964 million (Rs 336.21 lakhs) as against a loss of RMB1.137 million (Rs 61.76Iakhs)) in2009.
The business environment for SFZL's products appears to be encouraging. New productsfor existing customers and addition of new customers will enable SFZL to post sizable netprofits in the coming years. SFZL has retained certifications according to ISO/TS16949-2002 and ISO 9000-2000.
The company has so far invested USD 13 million (Rs 5,687.60 lakhs) in the Equitycapital.
German operations are carried out through 100% subsidiary companies viz. PeinerUmformtechnik GmbH (Peiner), TVS Peiner Services GmbH (TVSP) and PUT Grundstucks GmbH(PUTG). Peiner manufactures a wide range of standard and special fasteners catering to theautomotive, industrial and construction sectors. TVSP is engaged in providing warehousingand logistical services. PUTG owns the land and buildings from where Peiner operates. TheCompany has invested Euro 8.724 million (Rs, 4,822.121akhs).
Revenues during the year 2010 amounted to Euro 57.407 million (Rs 34,582.26 lakhs) asagainst Euro 45.182 million (Rs 30,480.00 lakhs) during 2009. While there has been a vastimprovement over the previous year, the operations resulted in a loss before depreciationand taxes of Euro 0.102 million (Rs 62.08 lakhs) as against loss of Euro 2.337 million (Rs1559.13 lakhs) during 2009. Loss after taxes amounts to Euro 1.241 million (Rs 743.38lakhs) during 2010 as against Euro 3.611 million (Rs 2,413.49 lakhs) during 2009.
Uncertain economic conditions prevailing in Europe continued to impact Germanoperations. There has been a slight improvement during 2011. Substantial improvement willonly happen when European markets return to normal.
Cramlington Precision Forge Limited (CPFL) UK, a 100% subsidiary of the Company, isengaged in manufacture of precision forged components for application in heavy vehiclesfor on-highway and off highway applications. The Company has invested GBP 1.9 million (Rs.1,523.14 lakhs) in CPFL.
Sales and other income during the year 2010 amounted to GBP 6.235 million (Rs 4389.24lakhs) as against GBP 3.225 million (Rs 2,442.25 lakhs) during 2009. CPFL made a netprofit of GBP 0.375 million (Rs 265.80 lakhs) as against loss of GBP 0.332 million (Rs249.54 lakhs) during 2009.
CPFL generated additional sales through new products introduced in late 2009.Relentless cost reduction measures and restructuring helped in achieving a remarkableturn-around during 2010. As the orders in the pipeline will help further improve capacityutilisation, the outlook for 2011 is encouraging.
Indian Subsidiaries Upasana Engineering Limited
Upasana Engineering Limited (UEL), a 100% subsidiary is engaged in the manufacture ofspokes and nipples, dies and tools, automotive components and cold extruded components.During the year, Sales and other income increased to Rs 6282.74 lakhs from Rs 3989.33lakhs in the previous year, an increase of 57%. Domestic Sales increased to Rs 5239.71lakhs from Rs 3527.17 lakhs in the previous year. Export Sales increased to Rs 999.64lakhs from Rs 448.93 lakhs. Profit after Tax amounted to Rs. 333.44 lakhs as against a netloss of Rs 9.15 lakhs in the previous year.
UEL's facility at Hosur for manufacture of cold extruded components has steadilyimproved its production and sales. With the demand picking up in domestic and Europeanmarkets, UEL will show substantial improvement in performance over the next few years.
Sundram Bleistahl Limited
Sundram Bleistahl Limited (SBL) is engaged in manufacture of sintered valve guides atits 100% export oriented unit at Hosur, Tamilnadu. Bleistahl Produktions GmbH and Co KGholds 24%. SBL caters to the needs of Bleistahl Productions GmbH & Co KG in Germany.The improvement in manufacture of cars in Germany resulted in improved off-take of SBL'sproducts. Sales and other income amounted to Rs. 2127.39 lakhs as against Rs. 998.83 lakhsin the previous year. SBL made a net profit of Rs. 431.95 lakhs as against a net loss ofRs. 127.64 lakhs in the previous year. The performance of the Company will further improveas general economic situation in Europe returns back to normal.
The Company has invested Rs 532 lakhs towards 76% of the Equity capital of thesubsidiary.
Prospects, Risks and concerns
Global automobile sector is expected to emerge out of a period of negative growththough slowly. Indian market is poised for growth as government spending on infrastructureand agriculture will provide the impetus. Growth in middle class population and higherdisposable incomes will result in changing lifestyles creating additional demand forconsumer durables and vehicles for transportation. Introduction of new fuel-efficientmodels of vehicles will create additional demand. Multinational vehicle manufacturersincluding new entrants will,to be cost-effective, need to localise their procurement ofparts as the volumes improve. Long term prospects for the auto-component industry appearto be good.
Inflationary conditions may result in less allocation of resources to non-essentialconsumption. Tight monetary policy measures aimed at slowing demand will lead to highercost of funds and limited availability of finance to purchase cars and two-wheelers. Truckfinancing will also become expensive as banks and NBFCs will increase interest ratesbesides reducing allocation of funds for the sector. Increase in commodity prices, ingeneral and petroleum product prices,in particular will constitute a major risk to theperformance of the Company. Non-availability of required quantity and quality of powerwill have an adverse impact on the Company. Volatility in exchange rates causesuncertainty in input costs and sales realisations.
During 2011-12, the pace of growth in domestic market wiIl moderate as the rate ofgrowth in 20I0-11 was above normal. The Company expects to improve its overall performancethrough development of new products for existing customers and by winning new customersbesides increased exports.
All subsidiaries will show better performance during 2011-12 as activity levels haveshown a marked improvement.
Corporate Social Responsibilities
The Company's factory at Krishnapuram, Virudhunagar District of Tamilnadu is located inan economically and socially backward area. The area is water-starved and agriculturalincome is very low.
The Company believes that economic up-liftment of the area can only be brought throughsystematic and high quality education of the rural children, especially girl children,over a sustained period of time. Social up-liftment will follow economic well-being. TheCompany is actively supporting the English medium higher secondary coeducational schoolrun under the auspices of Krishna Educational Society by providing subsidised education to35I children from the villages near the factory. It is noteworthy that the number ofstudents enrolled has been rising steadily over the years and the drop-out ratio isnegligible. With an excellent teacher-student ratio, the school provides the rightambience and environment to enable students to get proper education. Imparting educationto under privileged girl children in an under developed area will have an enormous socialimpact spread over generations. The school is consistently achieving 100% results in ClassX examinations, with many of the students securing distinction. Higher Secondary educationintroduced during 20I0 will provide additional steps towards higher education. The Companyprovides scholarships to students to pursue higher studies including University education.In addition to academics, the school provides the right infrastructure to perform well inco-curricular activities and sports. The students have performed exceedingly well incompetitions. The school offers medical facilities to every student, thereby nurturingtheir health. The school provides a roadmap for the students to become good futurecitizens of the country.
The Company offers medical facilities free of cost to villages near the Krishnapuramplant. The Company has adopted eight villages situated near the plant thereby benefittingabout 2500 families through the programme. The Company provides regular medical facilitiesespecially to women and children. With over 17500 footfalls per annum, the centre treatsabout 50-70 patients every day. Medical facilities include maternity services, nutritionalsupplementation, immunization, family planning, children's health, geriatric health andhealth education programmes. A large number of villagers (a majority of whom are women andchildren) attend monthly health education campaigns covering a wide variety of relevanttopics. Such campaigns aimed at educating women in particular will help bring about asocial change in terms of better hygiene and health of the people.
The Company actively encourages its employees to regularly donate for charitable causesof their choice and provides support for channelizing such donations.
Statements in this management discussion and analysis describing the Company'sobjectives, projections, estimates and expectations may be forward looking statements'within the meaning of applicable laws and regulations. Actual results might differsubstantially or materially from those expressed or implied. Important developments thatcould affect the Company's operations include a downtrend in the automobile industry,global or domestic or both, significant changes in political and economic environment inIndia or key markets abroad, tax laws, litigation, labour relations, foreign currencyfluctuations and interest costs.
To the members of Sundram Fasteners Limited
We have examined the compliance of the conditions of Corporate Governance by SundramFasteners Limited ('the Company') for the year ended 31st March 2011, as stipulated inClause 49 of the Listing Agreements of the said Company with Stock Exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of themanagement. Our examination was limited to a review of the procedures and implementationthereof, adopted by the Company for ensuring the compliance of the conditions of CorporateGovernance as stipulated in the said Clause. It is neither an audit nor an expression ofopinion on the financial statements of the Company.
In our opinion, and to the best of our information and according to the explanationsgiven to us, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in Clause 49 of the above-mentioned Listing Agreements.
We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.
| ||For SUNDARAM & SRINIVASAN |
| ||Regd No. 004207S |
| ||Chartered Accountants |
| ||M BALASUBRAMANIYAM |
|Chennai ||Partner |
|May 30, 2011 ||Membership No. F7945 |