Denso India Ltd Directors Report

Your Directors present Twenty Ninth Annual Report of the Company together with the audited statement of accounts for the financial year ended 31st March 2014.

FINANCIAL RESULTS

	Rs. Million	Rs. Million
	For the year ended 31 March, 2014	For the year ended 31 March, 2013
Gross Sales	13,340	13,583
Sales (Net of Excise)	11,999	12,186
(Loss) before Exceptional items and tax	(558)	(637)
Exceptional Items	-	827
(Loss)/ Profit before Tax	(558)	190
Net Tax Expenses	5	62
(Loss)/ Profit for the year	(563)	128

OPERATIONS:

During the year under report turnover of your Company remained Rs. 13,340 million as against Rs. 13,583 million in 2012-13. While finance cost increased to Rs. 191 million from Rs. 78 million, the cost of material consumed, employee benefit expenses, administrative and other expenses remained almost at the same level.

Your Company suffered a loss of Rs 563 million during 2013-14 as against a loss of Rs. 637 million from operations during 2012-13. However the profit of Rs. 128 million during the year 2012-13 was due to an exceptional item, profit of Rs. 827 million from transfer of Small Motor Business which had contributed towards the profit for the year.

The Indian economy substantially slowed down during last few years and the slowdown has continued during the year under report. The slower growth particularly in agriculture and service sectors had considerable adverse impact on Auto industry. During the year under review, there was no respite from spiraling oil prices, inflation and high interest rates which continued to severely dampen automotive business sentiments. Depreciation of rupee to the dollar contributed to fuel price rise. Auto industry is in the midst of severe slow down and is struggling with the problem of excess capacity. These factors had adverse impact on operations of the Company.

DIVIDEND:

Considering the present financial condition and current market situation no dividend is recommended for the year ended March 31, 2014.

DELISTING PROPOSAL

During the year one of the Promoters of the Company, namely, M/s Denso Corporation, Japan, proposed to voluntarily delist the Equity Shares of the Company from Stock Exchanges and proposed to acquire 26.5% equity shares held by public shareholders.

The Board of Directors approved the delisting proposal in the meeting held on 27th April 2013. The shareholders approved the delisting proposal by special resolution passed through postal ballot on 17th June 2013.

Denso Corporation, Japan made a Public Announcement on 13th August 2013 to acquire 26.5% equity shares held by public shareholders and issued offer letters to them. Public shareholders supported the proposal and tendered more than 19% shares in the Reverse Book building process during the period from 17th September to 23rd September 2013. Denso Corporation, Japan announced exit price of Rs. 145 per share and acquired all the shares tendered under Reverse Book building process. Pursuant to successful completion of delisting offer of Denso Corporation, Japan , in accordance with Delisting Regulations, the shares of the Company have been delisted from the Stock Exchanges w.e.f. 5th Nov. 2013.

INTERNAL CONTROL SYSTEMS:

The Company has an adequate system of internal controls to ensure that transaction are properly recorded, authorized and reported apart from safeguarding Companys assets. Well-experienced Chartered Accountant firm appointed by the Company for internal audit, reviews operations at all the establishments of the Company. All significant internal audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the internal audit.

HUMAN RESOURCES:

Your Directors wish to place on record their appreciation for the commitment and dedication shown by the employees at all the areas of operation of the Company. Various HR initiatives are taken to align the HR policies to the growing requirements of the business. The Industrial Relations remained cordial during the year.

INSURANCE

All the assets of your Company including Plant & Machinery, Building, Equipment, and Vehicles etc. have been adequately insured.

FIXED DEPOSITS:

The Company has not invited or availed Fixed Deposits from the public during the year under review.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at forthcoming Annual General Meeting and are eligible for reappointment as Statutory Auditors. Observations made in the Auditors Report read with Notes to the Financial Statements are self explanatory and therefore, do not call for any further comments under Sec. 217 (3) of the Companies Act, 1956.

COST AUDITORS

Consequent to the issue of Cost Audit Order by the Cost Audit Branch, Ministry of Company Affairs, the Company has appointed M/sM.K.Kulshrestha& Associates, CostAccountants (Firm Registration No. 100209) as the Cost Auditors as per the provision of Section 233B of the Companies Act, 1956 to audit cost accounts for the year 2014-15 .

DIRECTORS:

Mr. E. Seto resigned from Directorship and Mr. K. Takashima was appointed as Director in casual vacancy w.e.f. 07/08/ 2013. Mr. T. Nanko ceased to be Alternate Director to Mr. E. Seto and was appointed as Alternate Director to Mr. K. Takashima w.e.f. 07/08/2013.

Mr. K. Asai resigned from Directorship w.e.f. 12/12/2013 and Mr. K. Ayukawa was appointed as Director in casual vacancy w.e.f. 21/01/2014. Mr. A.C. Chakrabortti, Mr. J.S. Baijal and Mr. R.K. Bhatnagar resigned as Independent Directors consequent to delisting of shares of the Company. Your Directors wish to place on records their deep appreciation for cooperation and unstinted support given by Mr. Seto, Mr. Asai, Mr. Chakrabortti, Mr. Baijal and Mr. Bhatnagar during their tenure as Directors on the Board of the Company.

Mr. M. Adachi and Mr. K. Ayukawa retire from the Board of Directors by rotation in accordance with the provisions of the Articles of Association of the Company and are eligible for reappointment.

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO.

The Statement pursuant to Section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the Annexure forming part of this Report.

PARTICULARS OF EMPLOYEES

As per the existing salary limits of Section 217(2)(A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 as amended, as on 31st March, 2014, no employee of the Company is covered.

DIRECTORS RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956.

1. The Financial Statement for the year ended 31.03.2014 are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

2. The Directors of Denso India Ltd. accept the responsibility for the integrity and objective of these Financial Statement as reflected through the consistent application of the Accounting Policies as well as for the estimates made and the judgment exercised relating to matters not concluded by year-end.

3. The Directors believe that the Financial Statements reflect fairly the form and substance of the transactions concluded and reasonably present the Companys financial condition and true and fair view of the results of the operation for the year and the state of affairs of the business as at 31st March, 2014.

4. The Company has installed an accounting system and the financial statements have been prepared on a going concern basis along with a system of controls which are reviewed, evaluated and updated on an on going basis.

5. Our internal Auditors have conducted periodic audits to provide reasonable assurance that the established policies and the procedures of the Company have been followed for safeguarding the assets of the Company and for preventing any form of fraud and other irregularities subject to the inherent limitations in any system and procedure and coverage thereof that should be recognized in weighing the assurance provided by any system of internal controls. These have been reviewed periodically at Audit Committee Meetings.

6. The financial statements have been audited by M/s. Deloitte Haskins & Sells, Chartered Accountants, the statutory auditors.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their deep appreciation of the unstinted support extended by the management of Denso Corporation, Japan, Sumitomo Corporation, Japan, ASMO Co. Ltd., Japan, Maruti Suzuki India Limited and Denso International India Pvt. Ltd . Your Director also wish to express their sincere gratitude to the customers, vendors, shareholders, the bankers, the Central and State Governments and other agencies for their continued co-operation and support during the year under review.

		For and on behalf of the Board
NOIDA	Kenichi Shibayama	M. Ono
29 May, 2014	Managing Director	Director

ANNEXURE TO DIRECTORS REPORT

INFORMATION REQUIRED UNDER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY

Form A of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 - Not Applicable.

B. TECHNOLOGY ABSORPTION

The Company has obtained technical know how for the manufacture of auto components from Denso Corporation, Japan. The process of absorption of the technology is a continuing process

No expenditure either of Capital or Revenue nature on Research & Development has been incurred during the year under review.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

Efforts made :	New models are being developed to help in further localisation by vehicle makers.
Benefits derived:	In-house skills are being developed in design, production engineering and endurance testing. Extensive help is also being provided to vendors to upgrade their technology to meet quality requirements.

a) Technology imported: Import of technology for the manufacture of auto electricals

b) Year of import:
Product	Year
Alternators	1984
Regulators	-do-
Starters	-do-
AC Generators / Flywheel Magnetos	1988
Ignition coils for two/thee wheeler	-do-
CDI Systems for two/three wheelers	-do-

c) Has technology been fully absorbed, areas where this has not taken place, reasons therefore and future plans of action.

Not applicable.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Company is pursuing its export plans. The exports of the products of the Company have been made to affiliates of Denso Companies around the world.

	Rs. in Million
EARNINGS [On Accrual Basis ]: FOB value of Exports	3
OUTGO [On Accrual Basis]: C.I.F value of Imports
Raw Material & Component (Including Trading Goods)	3799
Stores & Spare	30
Capital Goods	204
OUTGO [On Accural Basis]: Expenditure
Royalty	246
Application cost and Services fees	107
Travelling expensesjnterest on long term borrowings and Miscellaneous expenses	87

We are one of the major suppliers in our range of products to Maruti Suzuki India Limited for majority of their export designated vehicles.