Maruti Suzuki India Ltd Directors Report.
Your Directors have pleasure in presenting the 38th annual report together with the audited financial statements for the year ended 31st March, 2019.
The Companys financial performance during 2018-19 as compared to the previous year 2017-18 is summarised below:
(Rs in million)
|Profit before tax||104,656||110,034|
|Profit after tax||75,006||77,218|
|Balance at the beginning of the year||363,008||313,189|
|Profit for the year||75,006||77,218|
|Other comprehensive income arising from remeasurement of defined benefit obligation*||(284)||(131)|
|Amount transferred to employee welfare fund||(772)||-|
|Income on funds earmarked for employee welfare fund||(36)||-|
|Amount transferred to scientific research fund||(772)||-|
|Payment of dividend on equity shares||(24,166)||(22,656)|
|Corporate dividend tax paid||(4,968)||(4,612)|
|Balance at the end of the year||407,016||363,008|
*net of income tax of 151 million (previous year 65 million)
The total revenue (net of excise) was Rs 885,813 million as against Rs 818,082 million in the previous year showing an increase of 8.28%. Sale of vehicles in the domestic market was 1,753,700 units as compared to 1,653,500 units in the previous year showing an increase of 6.1%. Total number of vehicles exported was 108,749 units as compared to 126,074 units in the previous year showing a decrease of 13.7%.
Profit before tax (PBT) was Rs 104,656 million against Rs 110,034 million showing a decrease of 4.89% and profit after tax (PAT) stood at Rs 75,006 million against Rs 77,218 million in the previous year showing a decrease of 2.86%.
The Board recommends a dividend of Rs 80 per equity share of Rs 5/- each for the year ended 31st March, 2019 amounting to Rs 29,134 million including dividend distribution tax of Rs 4,968 million. The Company has formulated a dividend distribution policy which forms part of the annual report.
The operations are exhaustively discussed in the Management Discussion and Analysis forming part of the annual report.
Consolidated Financial Statements
In accordance with Indian Accounting Standard (IND AS) - 110 on Consolidated Financial Statements read with Indian Accounting Standard (IND AS) - 28 on Investments in Associates and Joint Ventures, the audited consolidated financial statements are provided in the annual report.
A report containing the names of the companies which have become or ceased to become subsidiaries, joint ventures and associates, their performance, financial position and their contribution to the overall performance of the Company as required by the Companies Act, 2013 (Act) is provided as an annexure to the consolidated financial statements and hence are not repeated here for the purpose of brevity. (Form AOC-1)
The details forming part of the extract of the annual return in Form MGT-9 is attached as Annexure - A. The annual return of the Company for the year 2017-18 is available on its website at https://www.marutisuzuki . com/corporate/investors/companv-reports.
In accordance with Regulation 16(1)(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Company has a policy for determining material subsidiaries. The policy is available on its website at https://marutistoragenew . blob.core.windows.net/msilintiwebpdf/Policv on Subsidiary Companies.pdf
Particulars of Loans, Guarantees and Investments
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the notes forming part of the financial statements.
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, five board meetings were held, the details of which are given in the Corporate Governance Report.
For composition of the audit committee, please refer to the Corporate Governance Report.
The Company has received declarations of independence in accordance with the provisions of Section 149 of the Act and Listing Regulations from all the Independent Directors. The details of the familiarisation programmes for the Independent Directors are available on the website of the Company at https:// marutistoragenew.blob.core.windows.net/msilintiweb pdf/Familiarization Programme.pdf
Directors Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained, in terms of Section 134 of the Act, your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;
b) such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) internal financial controls were followed by the Company and they are adequate and are operating effectively; and
f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
Directors and Key Managerial Personnel (KMP)
Mr. Toshihiro Suzuki and Mr. Kazuhiko Ayabe shall retire by rotation in the ensuing Annual General Meeting of the Company. The Board in its meeting held on 27th March, 2019 re-appointed Mr. Kenichi Ayukawa as the Managing Director & CEO of the Company for a period of three years with effect from 1st April, 2019.
Pursuant to Regulation 21 of Listing Regulations, the Company has a Risk Management Committee, the details of which are given in the Corporate Governance Report. The Company has a risk management policy and identified risks and taken appropriate steps for their mitigation. For more details, please refer to the Management Discussion and Analysis (MD&A).
Internal Financial Controls
Internal financial controls have been discussed under CEO/CFO Certification in the Corporate Governance Report.
The Company has in place an established and effective mechanism called the Whistle Blower Policy (Policy). The mechanism under the Policy has been appropriately communicated within the organisation. The purpose of this policy is to provide a framework to promote responsible whistle blowing by employees. It protects employees wishing to raise concern about serious irregularities, unethical behaviour, actual or suspected fraud within the Company.
The Chairman of the audit committee is the ombudsperson and direct access has been provided to the employees to contact him through e-mail, post and telephone for reporting any matter.
Related Party Transactions
The Company has a policy on related party transactions which is available on the Companys website at https://marutistoragenew.blob.core.windows.net/ msilintiwebpdf/Policv on Related Party Transactions. pdf In terms of Section 134(3) (h) of the Act read with Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014, there was no transaction to be reported in Form AOC 2. The disclosure with respect to the transactions with promoter and promoter group which is holding 10% or more of the shareholding in the Company are given in the notes forming part of the financial statements.
Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of its committees. The evaluation criteria, inter-alia, covered various aspects of the functioning of the Board and its committees including composition, attendance of Directors, participation levels, bringing specialised knowledge for decision making, smooth functioning and effective decision making. The Board and the committees had been effective in achieving their respective charters of monitoring the overall performance of the Company, overseeing the performance of the management and thus upholding high standards of corporate governance. The Board and the committee meetings were run efficiently and the members acted with sufficient diligence and care. The Board and its committees had the needed diversity in terms of talent, competence, knowledge, gender and experience and had maintained high standards of corporate governance through their working, functioning and decision making. The performance of individual directors including the Independent Directors was evaluated on parameters such as level of engagement and contribution to the affairs of the Company including by way of attendance in Board and committee meetings, ability to discharge their duties and obligations diligently in the best interest of the Company, ability to provide effective leadership and checks and balances towards sustaining the highest levels of corporate governance in particular towards risk assessment and management, exercising duty of care and skill in the discharge of their functions, level of independence of judgment and safeguarding the interest of the Company and its minority shareholders. Considering the good performance of the Company in most spheres and the value delivered to all stakeholders, including customers, shareholders, the community and others, it was apparent that Directors had been diligent, meticulous and faithful in the performance of their duties. The Directors expressed their satisfaction with the evaluation process. The Board also noted that the Independent Directors had fulfilled the independence criteria as specified in the Listing Regulations and were independent from the management.
Nomination and Remuneration Policy
The Nomination and Remuneration Policy is attached as Annexure B.
Corporate Social Responsibility (CSR)
The annual report on CSR activities containing details of CSR Policy, composition of the CSR committee and other prescribed details are given in Annexure C.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti- Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has also complied with its provisions relating to the constitution of Internal Complaints Committee to redress complaints received regarding sexual harassment.
The status of the complaints received by the Company during the year is as under:
|a) Number of complaints filed||3|
|b) Number of complaints disposed of||2|
|c) Number of complaints pending as on the end of financial year||1|
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Information in accordance with Section 134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached as Annexure D.
The Company has complied with the corporate governance requirements, as stipulated under the Listing Regulations. A certificate of compliance by auditors shall form part of the annual report.
Secretarial Audit Report
In accordance with the provisions of Section 204 of the Act read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board appointed M/s RMG & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit for 2018-19. The report on secretarial audit is attached as Annexure E. The report does not contain any qualification.
The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.
Management Discussion and Analysis Report
The annual report has a detailed report on management discussion and analysis.
As required by the provisions of Section 197 of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees are set out in Annexure F. However, as per the provisions of Section 136 of the Act, the annual report is being sent to all the members of the Company excluding the aforesaid information. The said information is available for inspection by the members at the registered office of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.
Cost Auditors and Records
In accordance with the provisions of Section 148 of the Act read with Companies (Cost Records and Audit) Rules, 2014, M/s R.J. Goel & Co., Cost Accountants, New Delhi (Registration No. 000026) were appointed as the Cost Auditors of the Company to carry out the cost audit for 2019-20. The maintenance of cost records as specified by the Central Government under Section 148 (1) of the Act is required by the Company and such accounts and records are made and maintained.
The auditors, M/s Deloitte Haskins & Sells LLP were appointed in the 35th Annual General Meeting and hold their office till the conclusion of the 40th Annual General Meeting.
The Company was awarded the highest financial credit rating of AAA/stable (long term) and A1+ (short term) on its bank facilities by CRISIL. The rating underscores the financial strength of the Company in terms of the highest safety with regard to timely fulfillment of its financial obligations.
The Company has established and is maintaining an environment management system. During the year, surveillance audit for ISO-14001 was carried out by M/s AVI, Belgium for the manufacturing plants located at Gurugram, Manesar and R&D Centre in Rohtak. The auditors recommended continuance of ISO-14001 for all manufacturing facilities.
The quality management system of the Company is certified after the ISO 9001:2015 standard. Re-assessment of the quality systems is done at regular intervals and re-certification assessments are done every three years by an accredited third party agency. The Company has an internal assessment mechanism to verify and ensure adherence to defined quality systems across the Company.
Mr. Kenichi Ayukawa was awarded "Best CEO (Large Companies)" by Business Today third time in a row. Mr. R. C. Bhargava was bestowed with "Lifetime Achievement Award" by CNBC Awaaz Annual CEO Awards 2018.
The Company received many awards/recognitions/ rankings during the year. Some of these are mentioned hereunder:
Company of the year, 2018 by Business Standard.
Marketer of the year at Marquees 2018 and Gold Award for employee communication for its seat belt campaign #PehniKya? by South Asia Sabre.
Best of 2018 by AutoX Awards.
Swift won the following awards by AutoX:
Car of the year.
Indian Car of the year (ICOTY) third time in a row.
Ertiga won the following awards:
Best MPV of the year by AutoX and Autocar Awards 2019.
Car of the year and Value for money car of the year by Autocar Awards 2019.
Super Carry won the Prime Time Award.
4 Good rating by The Economic Times for all-round excellence in the field of Corporate Social Responsibility.
The Board of Directors would like to express its sincere thanks for the co-operation and advice received from the Government of India, Haryana Government and the Gujarat Government. Your Directors also take this opportunity to place on record their gratitude for timely and valuable assistance and support received from Suzuki Motor Corporation, Japan. The Board also places on record its appreciation for the enthusiastic co-operation, hard work and dedication of all the employees of the Company including the Japanese staff, dealers, vendors, customers, business associates, auto finance companies, state government authorities and all concerned without which it would not have been possible to achieve all round progress and growth of the Company. The Directors are thankful to the members for their continued patronage.
For and on behalf of the Board of Directors
|R.C. Bhargava||Kenichi Ayukawa|
|Chairman||Managing Director & CEO|
|25th April, 2019|