Sundram Fasteners Ltd Directors Report

The Directors are pleased to present the Sixty First Annual Report together with the audited financial statement for the year ended March 31,2024.

FINANCIAL HIGHLIGHTS (STANDALONE)	Rs in Crores
	2023 - 2024	2022 - 2023
Revenue from Operations	4,905.65	4,921.61
Other Income	47.33	29.83
Total Revenue	4,952.98	4,951.44
Total Expenditure	4,127.61	4,154.27
Gross Profit before interest, depreciation and taxes	825.37	797.18
Less: Interest	17.31	18.67
Exchange Losses / (Gains)	0.68	5.96
Depreciation	168.31	157.25
Profit before Tax	639.07	615.30
Less: Provision for tax	159.36	151.56
Profit after Tax	479.71	463.74
Add: Balance brought forward	377.44	205.88
Balance available for appropriation	857.15	669.62
Appropriations
Interim / Final Dividends	120.61	117.12
Transfer to Reserves	200.00	175.00
Transfer from other comprehensive income to reserves	1.33	0.06
Balance carried forward	535.21	377.44
	857.15	669.62

TRANSFER TO RESERVES

The Company has transferred Rs 200.00 Crores to Reserves.

DIVIDEND

The Board had earlier during the year, declared an interim dividend of Rs 2.68/- per share (268%) for the financial year 2023-2024 absorbing a sum of Rs 56.31 Crores and the same was paid to the shareholders on December 1, 2023. The Directors have decided to pay a second interim dividend of Rs 4.17 per share (417%), which, together with the first interim dividend, declared and paid earlier, would amount to a total dividend of Rs 6.85 per share (685%) for the financial year 2023-2024.

No final dividend has been recommended by the Board of Directors.

The Dividend Distribution Policy, formulated in accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the Companys website at: http://sundram.com/pdf/corporate/DividendDistributionPolicy02022017.pdf

CONSOLIDATED FINANCIAL STATEMENT

In addition to the financial statement, the audited Consolidated Financial Statement of the Company and all of the subsidiaries prepared in the same form and manner as that of its own and in accordance with the applicable Indian Accounting Standards (Ind AS), form part of the Annual Report.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited financial statement in respect of each of its subsidiary on its website, www.sundram.com. The Company shall provide a copy of audited financial statement, as the case may be, as prepared in respect of each of its subsidiary, upon request by any of its shareholders.

CORPORATE GOVERNANCE

A separate report on Corporate Governance together with a certificate from the Companys auditors confirming the compliance of conditions of Corporate Governance is enclosed to this report. Management Discussion and Analysis detailing the state of the Companys affairs is also enclosed to this report (Please refer to Page Nos. 75 to 89).

ENVIRONMENT, SOCIAL AND GOVERNANCE REPORT

During the year under review, the Company has launched its maiden Environment, Social and Governance (ESG) report, which is hosted on the Companys website at https://www. sundram.com/esgreport.php

The Company prioritizes responsible operations and aligns with the National Guidelines on Responsible Business Conduct Principles and United Nation Sustainable Development Goals. The Company has implemented several initiatives to minimize its ecological footprint and foster a sustainable future. On the social front, the Company is committed to create a positive impact on society and fostering sustainable development in the communities in which it operates. To ensure good governance practices, the Company has implemented a robust monitoring system for compliance.

In pursuit of the ESG journey, the Company has identified the following goals:-

S. No Themes	Focus Areas	Goals	Measures
1 Environment	Energy and Greenhouse Gas (GHG) Management	Carbon Neutral operations by 2045	Increase the share of renewable energy to 70% by 2030
2	Waste Management	Zero Waste to landfill by 2040	Process optimization to reduce generation of sludge
3	Water Management	Water neutral operations by 2040	Reduction of 20% freshwater consumption by 2030
4 Social	Human rights and labour practices	To develop, respect and sustain the human rights of every stakeholder along the value chain	100% coverage of employees on Human Rights training by 2025
5	Employee wellbeing	Create a healthy workplace by implementing wellbeing programs	Achieve improvements by 2030 on the Companys wellbeing index from the baseline year of 2025
6	Occupational health and safety	Promote ‘zero incident work culture	Achieving ISO 45001 certification across all locations by 2025
7	Training and development	Promote training programs for skillset enhancements	Sustain 100% training across all workforce by 2030
8 Governance	Supply Chain Management	Magnify SFLs supply chain management by adding environmental and societal goals	Coverage of the Companys supply chain program by extending training to 100% of critical suppliers by 2030
9	Data Security	Protecting critical information from cyber risks	Achieving ISO 27001 Certification by 2025

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability Report for the year ended March 31,2024 is enclosed to this report (Please refer to Page Nos. 42 to 73).

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The existing composition of the Companys Board is fully in conformity with the applicable provisions of the Companies Act, 2013 and Regulations 17 and 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with regard to independent directors, women directors and maximum number of directorships in listed entities.

Ms Arathi Krishna, Managing Director (DIN: 00517456) of the Company is liable to retire by rotation at the ensuing Annual General Meeting (AGM), and being eligible, offers herself for re-appointment. Necessary resolution for her re-appointment is being placed for approval of the members at the AGM. The Board recommends her re-appointment as a Director of the Company. A brief resume of Ms Arathi Krishna and other relevant information have been furnished in the notice convening the AGM.

Dr. Nirmala Lakshman, Director (DIN: 00141632) has been re-appointed as a Non-Executive Independent Director for the second term, from September 20, 2023 to September 19, 2028.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (7) OF SECTION 149 OF THE COMPANIES ACT, 2013 (ACT)

All the independent directors have submitted a declaration pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as stipulated in Section 149(6) of the Act.

ANNUAL RETURN

In terms of the requirement of Section 92(3) read with Section 134(3) of the Companies Act, 2013, the draft annual return of the Company as on March 31, 2024 is available on the Companys website, www.sundram.com.

BOARD MEETINGS

During the year, five meetings of the Board of Directors were held. The details of the meetings and the attendance are furnished in the Annual Report disclosures under Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which is attached to this Report (Please refer to Page No. 76).

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

a) in the preparation of annual accounts, the applicable accounting standards had been followed and there were no material departures.

b) they had selected appropriate accounting policies and applied them consistently and made judgments and estimates that have been made 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 the year ended March 31,2024.

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

d) they had prepared the annual accounts on a going concern basis.

e) they had laid down the internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively.

f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUD, IF ANY, REPORTED BY THE AUDITORS

M/s. B S R & Co. LLP, Chartered Accountants, Chennai, the Statutory Auditors of the Company have stated that during the course of their audit, there was no fraud by the Company or on the Company by its officers or employees noticed or reported in Independent Auditors Report which forms part of this Report. Hence, there was no requirement to report the same to the Audit Committee or Board of Directors of the Company.

NOMINATION AND REMUNERATION POLICY

Salient features of the Policy:

The policy is to ensure that the remuneration is in line with best comparable market practices, as well as competitive vis- a-vis that of comparable companies both in India and other international markets, which will have a motivating effect to act as a driving force to ensure long term availability of talent and also retention of the best talents. The Policy will have due regard to the situation of the specific regions in which the Company operates.

A brief description about the Companys Nomination and Remuneration Policy on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a Director and other related matters provided in Section 178(3) of the Companies Act, 2013 are provided in the Annual Report Disclosures under Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Please refer to Page No. 78).

The Nomination and Remuneration Policy is available on the Companys website at:- https://sundram.com/pdf/corporate/NominationandRemunerationPolicy.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient is enclosed vide Annexure - I.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES (REFERRED TO IN SUB- SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013)

All transactions with related parties were on arms length basis and in the ordinary course of business. There was no material related party contract during the year. Form AOC-2 as required under Section 134 (3)(h) of the Companies Act, 2013 is enclosed vide Annexure - II to this report.

MATERIAL CHANGES AND COMMITMENTS

There were 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.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is enclosed vide Annexure - III.

RISK MANAGEMENT

In compliance with Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company has constituted a Risk Management Committee.

Brief description of terms of reference of the Commiittee is as follows:-

i. To review and approve the risk management policy of the Company and to make amendments thereto from time to time.

ii. To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems.

iii. To periodically review the risk management policy, by considering the changing industry dynamics and evolving complexity.

iv. To identify methodology, processes and systems to monitor and evaluate risk.

v. To identify internal and external risks in particular including financial, operational, sectoral, department-wise risk, business sustainability particularly, Environmental, Social and Governance (ESG) related risks, information, cyber security risks. Cyber security risks cover ransomware, phishing, data leakage, hacking, insider threat etc.

The Company manages its risks through continuous review of business parameters on a regular basis by the management. Insurable risks are analysed and insurance policies are taken to protect the companys interests. The Audit Committee is also informed periodically of the risks and concerns. Corrective actions and mitigation measures are taken as and when needed.

During the year, two meetings of the Risk Management Committee were held. The details of the meetings are furnished in the Annual Report disclosures under Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which forms part of this Report (Please refer to Page No. 80).

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND IMPLEMENTATION

The salient features of the Policy are to:

i. actively engage and extend support to the communities in which it operates and thus build a better, sustainable way of life by supporting the weaker sections of the society and thus contribute to the human development;

ii. drive measures and to provide solutions that will balance economic, social and environmental issues; and

iii. work together with our employees with a commitment for adhering to responsible business practices in terms of quality management, environmental sustainability and support to the community.

The Company has undertaken activities as per the CSR Policy and the Annual report on CSR activities for the Financial Year 2023-2024 is enclosed vide Annexure - IV forming part of this report.

The CSR Policy, including the annual action plan is available on the Companys website at www.sundram.com/investors.php

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has carried out annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Annual Report disclosures under Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which forms part of this report (Please refer to Page No. 78).

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE

The Company has four Domestic Subsidiaries and five Overseas Subsidiaries. The financial performance of the subsidiaries during the financial year 2023-2024 is given hereunder: -

Sundram Fasteners (Zhejiang) Limited, China (SFZL, China), Cramlington Precision Forge Limited, United Kingdom (CPFL, UK) and TVS Next Inc., USA are step-down overseas subsidiaries of the Company. The principal activity of SFZL, China is manufacture of fasteners and bearing housing and that of CPFL, UK is manufacture of precision forgings.

The total revenue from SFZL, China during the year under review was at Rs 368.61 Crores as against Rs 335.75 Crores in the previous year. The net profit was at Rs 19.95 Crores as against net profit of Rs 4.30 Crores in the previous year.

The total revenue from CPFL, UK during the year under review was at Rs 183.33 Crores as against Rs 176.55 Crores in the previous year. The net profit was at Rs 14.71 Crores as against net profit at Rs 3.69 Crores in the previous year.

The total revenue from TVS Next Inc., USA, a step-down overseas subsidiary during the year under review was at Rs 62.00 Crores as against Rs 64.18 Crores in the previous year. The net profit was at 0.81 Crores as against net profit of Rs 1.35 Crores in the previous year.

TVS Upasana Limited is a wholly-owned subsidiary and is engaged in the manufacture of spokes and nipples, automobile kits, tools, dowel pins, small screws, cold extruded parts and other parts catering to automotive industry. The total revenue from TVS Upasana Limited during the year under review was at Rs 178.82 Crores as against Rs 181.39 Crores in the previous year. The net profit was at Rs 7.92 Crores as against Rs 12.05 Crores in the previous year.

The total revenue from Sundram Non-Conventional Energy Systems Limited, a subsidiary during the year under review was at Rs 3.28 Crores as against Rs 3.04 Crores in the previous year. The net profit was at Rs 2.73 Crores as against net profit of Rs 3.59 Crores in the previous year.

The total revenue from Sundram Fasteners Investments Limited, a wholly-owned subsidiary during the year under review was at 0.26 Crores as against 0.24 Crores in the previous year. The net profit was at 0.24 Crores as against net profit of 0.27 Crores in the previous year.

TVS Next Limited (TVSN), a subsidiary, is engaged in the information technology business providing Enterprise Solutions for core industries like Manufacturing, Automotive and Distribution and focuses on off-shore and outsourcing operations for clients in India and the U.S.A. The total revenue from TVSN during the year under review was at Rs 75.52 Crores as against Rs 82.86 Crores in the previous year. The net profit was at Rs 7.45 Crores as against net profit of Rs 10.92 Crores in the previous year.

The total revenue from Sundram International Inc., USA, a wholly-owned subsidiary during the year under review was at Nil as against Nil Crores in the previous year. The net profit / (loss) was at Nil as against net profit / (loss) of Nil in the previous year.

Sundram International Limited, United Kingdom, a wholly-owned overseas subsidiary, was established as an intermediate holding company that holds investments in two operating subsidiaries viz., in China and the United Kingdom. The total revenue from Sundram International Limited during the year under review was at Rs 2.79 Crores as against 0.21 Crores in the previous year. The net profit/ (loss) was at Rs 2.29 Crores as against net profit/ (loss) of (27.20) Crores in the previous year.

The total revenue from all the subsidiaries of the Company in aggregate during the year under review was at Rs 875.06 Crores resulting in an overall contribution of 15.30% of the consolidated revenue as against Rs 845.12 Crores which resulted in an overall contribution of 14.81% of the consolidated revenue in the previous year.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statement of the Companys subsidiaries, Associates and Joint Ventures in detail in Form AOC-1 is enclosed to the financial statement of the Company in Page No. 254.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the financial year.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANYS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

During the year under review, two of the Companys wholly owned subsidiaries, viz. Sunfast TVS Limited and TVS Engineering Limited were merged with the Company pursuant to the approval of the Honble National Company Law Tribunal, Chennai bench. The appointed date for the purpose was April 1, 2023. Except the foregoing, no other Company has either become or ceased to be Companys joint venture or associate company during the financial year 2023-24.

PUBLIC DEPOSITS

During the year, the Company has not accepted any deposits, within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. No amount on account of principal or interest on deposits from public was outstanding as on the Balance Sheet date.

REGULATORY / COURT ORDERS

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Company and its future operations.

PROCEEDINGS PENDING, IF ANY, UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

The Company has neither filed an application during the year under review nor are any proceedings pending under the Insolvency and Bankruptcy Code, 2016 as at March 31,2024.

THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

No such event has occurred during the year under review.

INTERNAL FINANCIAL CONTROLS OF THE COMPANY

The Company maintains all its financial records in Systems, Applications and Products (SAP) System and all financial transaction flow and approvals are routed through SAP. The Company has in-house internal audit team to monitor the effectiveness of internal financial controls, ensuring adequacy with respect to financial statement and verify whether the financial transaction flow in the organisation is being done based on the approved policies of the Company. The internal auditor presents the internal audit report and the management comments on the internal audit observations every quarter to the Audit Committee. The internal control mechanisms are in place for safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial information.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The statement in terms of Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed vide Annexure V forming part of this report.

Pursuant to Section 136 (1) of the Companies Act, 2013, the report of the Board of Directors is being sent to the shareholders of the Company excluding the statement prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement is available for inspection by the shareholders at the Registered Office of the Company during business hours.

STATUTORY AUDITORS

Pursuant to Section 139 of the Companies Act, 2013, M/s. B S R & Co. LLP, Chartered Accountants, Chennai,

(Registration No. 101248 W / W- 100022 with the Institute of Chartered Accountants of India), were appointed as Statutory Auditors of the Company at the Fifty Ninth Annual General Meeting (AGM) of the Company for the second term of five consecutive years commencing from the conclusion of the Fifty Ninth AGM (i.e., June 29, 2022). M/s. BSR & Co. LLP holds Peer Review Certificate No 0014196 dated May 18, 2022 issued by the Institute of Chartered Accountants of India.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed M/s S Krishnamurthy & Co., Company Secretaries, Chennai as the Secretarial Auditor of the Company for the financial year 2023-2024. Secretarial Audit Report issued by Sri K Sriram, Practising Company Secretary (CP No.2215), Partner, M/s. S Krishnamurthy & Co., Company Secretaries, Chennai in Form MR-3 is enclosed vide Annexure VI forming part of this report and does not contain any qualification. The Board of Directors has appointed M/s. S Krishnamurthy & Co., Company Secretaries, Chennai as the Secretarial Auditor of the Company for the financial year 2024-2025. Necessary consent has been received from them to act as Secretarial Auditors. M/s. S. Krishnamurthy & Co, Company Secretaries holds Peer Review Certificate No. 739/2020 dated May 28, 2020, issued by the Institute of Company Secretaries of India, which is valid for a period of five years from the date of issue.

COST AUDITOR

In terms of Section 148 of the Companies Act, 2013 (the Act) read with Companies (Cost Records and Audit) Rules, 2014, as amended, the Board of Directors has appointed Sri P Raju Iyer, Practising Cost Accountant (Membership No.6987) as Cost Auditor for the financial year 2024-2025. The Audit Committee recommended his appointment and remuneration subject to the compliance of all the requirements as stipulated under the Act and circulars issued thereunder. As specified by the Central Government under Section 148(1) of the Companies Act, 2013, the Company is required to maintain cost records and accordingly, such accounts and records are made and maintained.

BOARDS COMMENT ON THE AUDITORS REPORT

There are no qualifications, adverse remarks or reservations made by Statutory Auditors and Secretarial Auditors in their report, which were required to be addressed by the Board in its report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has adopted the Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. In compliance with the provisions under Section 4 of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, Internal Complaints Committee (ICC) of the Company has been constituted to redress complaints regarding sexual harassment. No complaint was received during the calendar year 2023.

SECRETARIAL STANDARDS

The Institute of Company Secretaries of India has issued Secretarial Standards (Meetings of the Board and General Meetings) on various aspects of corporate law and practices amended in line with the recent changes in the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations). The Company has complied with each one of them.

WHISTLE BLOWER POLICY (VIGIL MECHANISM)

Pursuant to Sections 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a Vigil Mechanism through a Whistle Blower Policy. The details about the whistle blower policy are provided in the Annual Report Disclosures under Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. (Please refer to Page No. 86).

INDUSTRIAL RELATIONS

Industrial relations continued to remain congenial during the current year. The Directors thank the employees for their contribution to the progress of the Company during the year under review.

ACKNOWLEDGMENT

The Directors wish to thank the Chinese Authorities, Officers of Haiyan County, Jiaxin City, Zhejiang province, Chinese tax and other administrative authorities for the support extended to Sundram Fasteners (Zhejiang) Limited, a step- down subsidiary. The Directors wish to thank One North East, the Regional Development Authority for Cramlington, United Kingdom for the continued support extended to the step-down Subsidiary. The Directors also wish to thank the Companys bankers, State Electricity Boards in Tamil Nadu, Puducherry, Telangana, Andhra Pradesh and Uttarakhand, customers and vendors, employees for all the assistance rendered by them from time to time.

	On behalf of the Board
	SURESH KRISHNA
May 22, 2024	Chairman
Chennai	DIN: 00046919