Timken India Ltd Directors Report.

To the Members,

The Board of Directors has pleasure in presenting 34 Annual Report of the Company for the year ended 31 March, 2021.

Financial Summary

(Rs in million)

Particulars Financial Year ended 31 March, 2021 Financial Year ended 31 March, 2020
Revenue from Operations 14,105.20 16,168.70
Add: Other Income 196.04 234.02
Total Income 14,301.24 16,402.72
Less: Total Expenses 12,350.61 13,339.15
Profit before tax (PBT) 1,950.63 3,063.57
Less: Tax expenses 518.84 602.58
Net Profit after tax (PAT) 1,431.79 2,460.99
Add: Other Comprehensive Income (3.11) (6.86)
Total Comprehensive Income 1,428.68 2,454.13

During FY 2020-21, the Companys revenue was down by 13% Y-o-Y, as operations of the Company were impacted during the first quarter due to lockdown, imposed by the Government in view of COVID-19 pandemic, however the Company has shown strong growth for rest of the year despite challenging economic environment. Total expenses decreased by 7% during the same period. The PBT is 14% for FY 2020-21 as against 19% in FY 2019-20. Decrease in PBT can be attributed to increase in raw material price, absorption of fixed overheads partially offset with better leverage of variable overheads.

The said Financial Statements for FY 2020-21 have been prepared in accordance with Indian Accounting Standards (“Ind-AS”).

Financial Position

The Company continues to remain debt free and generated adequate cash flow to meet its working capital needs. Trade receivables increased by 798.63 million in line with the increased revenue during the last quarter of FY 2020-21 compared to last quarter of FY 2019-20. Cash and cash equivalents as at March 31, 2021 were 1,704.04 million as compared to 4,146.51 million as at March 31, 2020. The reduction was primarily due to payment of dividend, which was partially offset with positive cash generation. For more details on financial position, please refer Management Discussion and Analysis.

The business of the Company has not undergone any change in the financial year under review.

Post Balance sheet event

There is no other reportable event comprising material changes and commitments between the date of financial year end and the date of this report affecting the financial position of the Company.


The Board of Directors of the Company did not propose to transfer any amount to reserves during the financial year under review.


The Board of Directors, based on Dividend Distribution Policy of the Company, recommends dividend of Rs. 1.50/- per equity share of Rs. 10/- each fully-paid up (15%) for the year ended 31 March, 2021. The dividend payable is subject to approval of members at ensuing Annual General Meeting (AGM) of the Company. Dividend, if declared at AGM, will be paid within 30 days from conclusion of AGM subject to deduction of TDS, wherever applicable. Dividend Distribution Policy is available on the website of the Company and can be accessed at https://www.timken.com/en-in/investors/policies/

Corporate Governance

Corporate Governance philosophy of the Company is based on core value of ethics and integrity. Your Company strongly believes that it can become a strong leader only by way of maintaining good and high level of Corporate Governance structure. Good Corporate Governance practices followed by the Company inter-alia include strong and independent Board, transparency and accountability, robust policies and regulatory compliance framework, strong internal controls and monitoring of such controls, empowerment of employees/various stakeholders and timely disclosures. Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations), Corporate Governance Report along with Compliance Certificate from Practicing Company Secretary is attached as Annexure - I.

Directors and Key Managerial Personnel

During the year under review, appointment of Mrs. N S Rama (DIN: 06720033) as an Independent Director and Mr. Douglas Smith (DIN: 02454618) as Director of the Company was approved by the members at 33 AGM of the Company. Mr. Avishrant Keshava (DIN: 07292484) was re-appointed as a Business Controller India, CFO & Whole-time Director of the Company for a further period of 5 years w.e.f. 30 September, 2020.

Mrs. N S Ramas (DIN: 06720033) current term as an Independent Director will come to an end on 24 October, 2021. Based on recommendation of the Nomination and Remuneration Committee, it is proposed to re-appoint Mrs. Rama as an Independent Director of the Company for a further period of 2 years w.e.f. 25 October, 2021 at the forthcoming AGM. In the opinion of the Board, Mrs. Rama posseses requisite expertise, integrity and experience and her association will be beneficial to the Company. In this connection, the Company has received following documents from Mrs. Rama:

a. Consent in Form DIR-2 b. Intimation in Form DIR-8 and c. Declaration of Independence

The Company is also in receipt of a Notice from a shareholder proposing the candidature of Mrs. Rama for re-appointment as an Independent Director of the Company at forthcoming AGM.

Mr. Douglas Smith (DIN: 02454618), Non-Executive Director retires by rotation and being eligible, offers himself for re-appointment.

A resolution seeking members approval for his re-appointment has been included in 34 AGM Notice.

Pursuant to Section 203 of the Companies Act, 2013 (the ‘Act), Mr. Sanjay Koul as Managing Director, Mr. Avishrant Keshava as Chief Financial Officer and Mr. Mandar Vasmatkar as Company Secretary serve as whole-time Key Managerial Personnel (‘KMP). During the year under review, there has been no change in KMP.

Directors Responsibility Statement

In pursuance of Section 134 (5) of the Act, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates 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 and loss of the Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Annual Declarations from Independent Directors

The Company has received necessary declarations from all Independent Directors of the Company confirming that each of them has met with criteria of independence laid down in Section 149 of the Act and Regulation 16 of Listing Regulations. All the Independent Directors have confirmed that their name has been included in the databank of Independent Directors maintained by Indian Institute of Corporate Affairs (IICA).

Meetings of the Board and its Committees

The Board and Audit Committee have met four times during FY 2020-21. The gap between two consecutive Board Meetings and two consecutive Audit Commitee Meetings was within timeline prescribed under the Act and Listing Regulations. The Board of Directors of the Company has accepted all recommendations put forward to it by the Audit Committee. The Nomination and Remuneration Committee and Stakeholders Relationship Committee met once while the Risk Management Committee met twice during FY 2020-21. Approval from the Corporate Social Responsibility Committee was obtained through resolution by way of circulation. Details relating to composition of the Board and its Committees along with its meetings held during FY 2020-21 are given in Corporate Governance Report which is attached as Annexure - I.

Independent Directors Meeting

One meeting of the Independent Directors was held on 22 February, 2021 which was attended by all the Independent Directors without participation of Non-Independent Directors and members of management.

Nomination and Remuneration Policy

Based on recommendation of the Nomination and Remuneration Committee, the Board has laid down a Policy for remuneration of Directors, KMPs and other employees. The salient features of the Policy are as follows:

• It lays down role of the Nomination and Remuneration Committee in line with Section 178 of the Act and Listing Regulations.

• It specifies aspects that need to be considered for appointment of a Director.

• It lays down terms and conditions that need to be considered for appointment of Directors, KMPs and Senior Management Personnel including tenure of appointment, removal and retirement.

• It also lays down parameters for payment of remuneration to Executive Directors, Non- Executive/ Independent Directors, KMPs and Senior Management Personnel.

During the year under review, no change was made in the Nomination and Remuneration Policy. This Policy is disclosed on the Companys website at https://www.timken.com/en-in/investors/policies/.

Ratio of Remuneration

Pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, applicable details are given in specified format which is attached as Annexure - II.

Information required under Section 197(12) of the Act read with Rules 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed to this report. However, this Report and the Financial Statements are being sent to the shareholders of the Company excluding the aforesaid information. Any shareholder, interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company. The said information is also available for inspection at the Registered Office during working hours up to the date of AGM.

Formal Annual Evaluation of the Board of Directors, its Committees and individual Directors

As specified by the Nomination and Remuneration Committee of the Board, performance evaluation of the Board of Directors as a whole, various Committees of the Board and individual Directors was carried out by the Board of Directors based on performance evaluation criteria. Each Director has provided feedback in writing to Chairman about the Board as a whole, various Committees and individual Directors. Further, Independent Directors in their separate meeting held on 22 February, 2021 has evaluated performance of Non- Independent Directors, Chairman and the Board as a whole.

Risk Management

The Board of Directors of the Company has constituted Risk Management Committee which inter-alia is responsible for assessment of risks, establishment of framework for monitoring risks and developing strategy for mitigation of various risks.

The Board of Directors of the Company has adopted a Risk Management Policy for the Company. The Policy has identified certain categories of risks that the Company may face in areas such as strategic, operational, financial, compliance and information technology. The Company undertakes efforts once in a year to evaluate risk profile of the Company. The Company has put in place adequate mechanism to identify and mitigate various risks and the Board is apprised on the same. The Management has taken appropriate measures from time to time to reduce adverse impact of Covid-19 on business which has yielded positive results. The Board is satisfied with risk controls put in place by the Company.

Vigil Mechanism

The Company believes that being ethical does not just mean doing the right thing by how we treat others, do our jobs or make decisions but it also means speaking up when we become aware that something is not right. The Company encourages everyone to act if they have an ethical question or are in a situation that they think threatens core value of ethics and integrity of the Company. The Company has adopted a Whistle Blower Policy in terms of which the Directors, associates of the Company have access to “Timken Helpline”, a toll free phone number that any associate can call and choose not to disclose his identity, if he has any concern or question, which he is not willing to discuss face to face with his Supervisor, Manager, member of the Human Resource Team or Senior Management. Other Stakeholders including customers, vendors, contractors can also raise their concern through Timken Helpline. The Company investigates all reports promptly, thoroughly and fairly and takes appropriate actions whenever necessary.

The Company follows Open-door Policy and adequately safeguards against victimization of reporting person. The Company does not tolerate acts of retaliation against anyone who makes report in good faith. This Vigil Mechanism enables the Company to better uphold its values and fulfill its commitments towards shareholders, customers, suppliers and the community. The Whistle Blower Policy of the Company is disclosed on the Companys website at https://www.timken.com/en-in/investors/policies/.

Corporate Social Responsibility

The Corporate Social Responsibility (CSR) Committee of the Board is responsible for evaluation and implementation of CSR Projects. Based on recommendation of the CSR Committee, the Board has approved and spent Rs. 4,47,30,430/- on CSR activities during FY 2020-21 in line with CSR Policy of the Company. CSR Policy is available on Companys website at https://www.timken.com/en-in/investors/policies/

Salient features of the CSR Policy are as follows:

• It lays down CSR Philosophy, Vision and Commitment of the Company.

• It specifies guidelines for implementation of CSR Projects through CSR Partners including eligibility criteria for CSR Partners.

• It also lays down roles and responsibilities of the CSR Committee.

Annual Report on CSR Activities is attached to this Report as Annexure - III.

Statutory Audit

Pursuant to Section 139 of the Act, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W/W100018) have been appointed as the Statutory Auditors of the Company for a period of 5 years from conclusion of 30 AGM till 35 AGM. The Independent Auditors Report for FY 2020-21do not contain any qualification or adverse remark. During the year under review, there were no frauds reported by the Auditors to the Audit Committee/ Board under Section 143(12) of the Act.

Secretarial Audit

Pursuant to Section 204 of the Act, Mr. Nagarjunn Y G, (ACS: 52406 & CP No: 19301), Company Secretary in Practice was appointed by the Board of Directors as a Secretarial Auditor to carry out Secretarial Audit of the Company for FY 2020-21. Mr. Nagarjunn Y G, has submitted the Secretarial Audit Report which is attached as Annexure - IV. There are no qualifications or adverse remark made by the Secretarial Auditor. The Company has complied with norms of applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

Cost Audit

The Board of Directors, on recommendation of the Audit Committee, has appointed M/s Shome and Banerjee (Firm Registration No. 000001) as Cost Auditors for FY 2021-22. In terms of Section 148 of the Act read along with Rules made thereunder, remuneration payable to Cost Auditors is required to be ratified by members of the Company. Accordingly, appropriate resolution for ratification of remuneration payable to Cost Auditors for FY 2021-22 has been inserted in the Notice convening 34 AGM. The Board requests members to approve/ratify remuneration of Rs. 4,40,000/-plus applicable taxes and out of pocket expenses payable to Cost Auditors for FY 2021-22.

In terms of Section 148 of the Act, the Company is required to maintain cost records and have its records audited by Cost Accountant. The Company has maintained the cost records for FY 2020-21 as required under Section 148 of the Act. The Cost Audit Report of the Company for FY 2019-20 was filed on 23 November, 2020 (within the stipulated due date).

Internal Audit

M/s KPMG Assurance and Consulting Services LLP (formerly known as KPMG) acted as Internal Auditors for FY 2020-21. They conducted periodical audits and submitted their reports to the Audit Committee. Their reports have been reviewed by the Audit Committee.

Internal Financial Controls

The Company has a system of internal controls commensurate with the nature of its business and the size and complexity of its operations. The Company has adequately documented policies, procedures and authorization matrix aligned with the level of responsibility which is designed to provide reasonable assurance on recording of transactions, effectiveness, and efficiency of operations, providing reliable financial information and safeguarding of assets. The Company has developed and implemented a framework for ensuring internal controls over financial reporting. The Company has carried out evaluation of design and effectiveness of these controls and noted no significant material weaknesses or deficiencies which can impact financial reporting.

Related Party Transactions

The Company is committed to uphold the highest ethical and legal conduct in fulfilling its responsibilities and recognizes that related party transactions can present a risk of actual or apparent conflicts of interest. The Company has adopted Related Party Transactions Policy and all its transactions in normal course of business are entered in accordance with the said Policy. Related Party Transactions Policy is available on the website of the Company at https://www.timken.com/en-in/investors/policies/. All related party transactions entered into by the Company during FY 2020-21 are disclosed in Financial Statements for the year ended 31 March, 2021. In terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, a summary of material related party transactions in the ordinary course of business and on arms length basis is given in Form AOC-2, attached to this Report marked as Annexure - V.

Listing with Stock Exchanges

The Company confirms that it has paid Annual Listing Fees for FY 2021-22 to National Stock Exchange of India Limited and BSE Limited where the Companys shares are listed.

Annual Return

A copy of Annual Return as on 31 March, 2020 filed during FY 2020-21 pursuant to Section 92 of the Act is placed on the Companys website at www.timken.com/en-in. Draft Annual Return as on 31 March, 2021 is available on website of the Company at www.timken.com/en-in

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Sl. No Particulars Remarks
(A) Conservation of energy:
1. Steps taken / impact on conservation of energy Both Jamshedpur and Bharuch plant of the Company are in compliance with ISO 50001 (Energy Management Systems).
Following are some steps taken for energy conservation by the Company at Jamshedpur and Bharuch plant:
i) implementation of energy management system (EnMS )
ii) Reduction in idle time for running of motors through M/C interlocking to save power
iii) Reduction in use of compressed air by modification of pipeline & proper management of valve operation
iv) Installation of motion sensors for auto switching off for AC and lights in Conference rooms, cabins and washrooms
v) Improved energy conservation through carb efficiency improvement through CTHT reduction.
2. Steps taken by the company for utilizing alternate sources of energy The Company had installed roof top solar panels in Jamshedpur plant with a potential of 1267 kWP. Further, the Company operates Wind Farm in the State of Gujarat.
Energy generated by windmills is passed on to the Distribution Company through grid and the Company gets credit for such energy generated and supplied to grid.
3. Capital investment on energy conservation equipments 22.85 Lakhs
(B) Technology absorption:
1. Efforts, in brief, made towards technology absorption The Timken Company, ultimate Parent Company of your Company, conducts research and development activities and focuses on development of new products and technologies. The Timken Company passes on newly developed products and technologies to all its group companies in the world from time to time.
2. Benefits derived because of the above efforts, e.g., product improvement, cost reduction, product development, import substitution Your Company has received technology from The Timken Company from time to time starting from FY 1991 -92 mainly in the area of machining, heat treatment and finishing to make further improvements in the manufacturing process, product quality and production output and related activities for manufacturing of bearings and components. This has helped the Company not only to develop new part numbers but also to manufacture products at lower cost and time. Technology transfer is continuous process and the Company has been utilizing technology transferred by The Timken Company to fullest extent possible.
3. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year):
a. Details of technology imported
b. Year of import
c. Whether the technology been fully absorbed
d. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof
4. Expenditure incurred on Research and Development
(C) Foreign exchange earnings and outgo FY 2020-21 (Rs in million) FY 2019-20 (Rs in million)
(i) Foreign Exchange Earnings 3,171 3,975
(ii) Foreign Exchange Outgo 3,140 3,657

Investor Education and Protection Fund

Pursuant to Section 124 the Act and Rules made thereunder:

(i) the Company has transferred following unclaimed dividend amounts to Investor Education and Protection Fund (‘IEPF) during FY 2020-21:

Particulars Amount (in )
Dividend paid by erstwhile ABC Bearings Limited (Amalgamated with the Company) for FY 2012-13 3,83,925/-
Dividend paid by the Company for FY 2012-13 25,24,724/-
Interim dividend paid by the Company for FY 2013-14 75,49,308/-
Dividend paid by the Company for FY 2019-20 against shares already transferred to IEPF 3,15,35,807/-

(ii) During FY 2020-21, the Company also transferred 1,55,940 equity shares to IEPF.

(iii) Unpaid dividend for FY 2013-14 relating to ABC Bearings Limited (amalgamated) and unpaid dividend for FY 2014-15 (Interim Dividend) relating to the Company are due for transfer to IEPF in the month of August, 2021 and December, 2021 respectively.

Financial Performance of any Subsidiary / Associate/ Joint Venture Company

The Company does not have any Subsidiary, Associate or Joint Venture Company.


The Company has not accepted Deposit, as defined in the Act and Rules framed thereunder.

Particulars of Loans, Guarantees or Investments

Particulars about investments made by the Company during the year are disclosed in the Financial Statements. During the year under review, the Company did not give any loans except to its employees as part of the conditions of the service. Also, the Company did not give any guarantee or extended any securities in connection with any loan.

Significant and/or material orders passed by the Regulators

No significant and/or material order was passed by any Regulator, any Court in India or any Tribunal, impacting going concern status and the Companys operations in future.

Other Reports/Annexures

Pursuant to the Act and Listing Regulations, following reports form part of this report:

1. Management Discussion and Analysis - Annexure - VI

2. Declaration regarding Compliance with Code of Conduct - Annexure - VII

3. Business Responsibility Report - Annexure - VIII

Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company does not tolerate discrimination, sexual harassment or any other harassment whether engaged in by management or associates or other individual with whom associates come into contact during work. The Company has adopted Anti-Sexual Harassment Policy in line with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted Internal Complaints Committee to redress complaints received regarding sexual harassment as required by aforesaid Act. During the year under review, the Company has not received any sexual harassment complaint.

Other Disclosures

Sweat Equity Share The Company has not issued any Sweat Equity Share and therefore, disclosure norms are not applicable to the Company.
Shares with differential Rights The Company has not issued any Share with differential rights and therefore, disclosure norms are not applicable to the Company.
Shares under Employees Stock Option Scheme The Company does not have any stock option scheme and therefore, disclosure norms are not applicable to the Company.
Purchase by Company or giving of loans by it for purchase of its shares The Company has not purchased or given any loan to purchase its Equity Share and therefore, disclosure norms are not applicable to the Company.
Buy Back of Shares The Company has not bought back any Equity Share and therefore, disclosure norms are not applicable to the Company.
Demat Suspense and Unclaimed Account Not applicable.
Settlement with Banks/Financial Institutions Not applicable.
Proceedings pending under Insolvency and Bankruptcy Code, 2016 Not applicable.


We wish to place on record sincere thanks for all our stakeholders including customers, vendors, investors, bankers for all their support during this challenging year. We thank and appreciate our employees for their ongoing dedication and support because of which we are well positioned during these challenging times to enter into new decade of possibilities.

For and on behalf of the Board of Directors
Sanjay Koul
Place : Bengaluru Chairman & Managing Director
Date : 18 June, 2021 DIN: 05159352