Board's Report Your directors have pleasure in presenting the 34th annual report together with the audited financial statements for the year ended 31st March 2015. FINANCIAL HIGHLIGHTS The total revenue (net of excise) was Rs. 508,022 million as against Rs. 445,235 million in the previous year showing an increase of 14 per cent. Sale of vehicles in the domestic market was 1,170,702 units as compared to 1,053,689 units in the previous year showing an increase of 11 per cent. Total number of vehicles exported was 121,713 units as compared to 101,352 units in the previous year showing an increase of 20 percent. Profit before tax (PBT) was Rs. 48,682 million against Rs. 36,585 million showing an increase of 33 per cent and profit after tax (PAT) stood at Rs. 37,112 million against Rs. 27,830 million in the previous year showing an increase of 33 per cent. Price earning ratio (based on last quoted price on NSE) as on 31st March 2014 and 31st March 2015 was 21.40 and 30.10 respectively. The Government of India came out with an 'offer for sale' at a price of Rs. 125/- per share in 2003. The market capitalisation as on 31st March 2014 and 31st March 2015 was Rs. 595,400 million and Rs. 1,117,394 million respectively. This is based on market price of the Company's shares (BSE closing) of Rs. 1,971 and Rs. 3,699 as at 31st March 2014 and 31st March 2015 respectively. The share price of the Company increased by 2859 percent as on 31st March 2015 vis-a-vis the price of allotted shares at the time of said offer for sale. DIVIDEND The board recommends a dividend of Rs. 25 per equity share of Rs. 5 each for the year ended 31st March 2015 amounting to Rs. 7,552 million. OPERATIONAL HIGHLIGHTS The operations are exhaustively discussed in 'Management Discussion and Analysis' forming part of the annual report. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Accounting Standard -21 on Consolidated Financial Statements read with Accounting Standard - 23 on Accounting for Investments in Associates and Accounting Standard - 27 on Financial Reporting of Interest in Joint Ventures, the audited consolidated financial statements are provided in the annual report. A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as annexure to the consolidated financial statement and hence not repeated here for the purpose of brevity. No company has become or ceased to become a subsidiary, joint venture or associate company during 2014-15. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is attached as Annexure A. MATERIAL SUBSIDIARIES In accordance with Clause 49(V) (D) of the Listing Agreement, the Company has formulated a policy for determining material subsidiaries. The policy has been uploaded on the website of the Company at http://www.marutisuzuki.com/ policy-on-subsidiary-companies.aspx. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes forming part of the financial statements. BOARD MEETINGS A calendar of meetings is prepared and circulated in advance to the directors. During the year, six board meetings were held, the details of which are given in the Corporate Governance Report. AUDIT COMMITTEE For composition of the audit committee, please refer to the Corporate Governance Report. INDEPENDENT DIRECTORS The Company has received declarations of independence in terms of Section 149 of the Companies Act, 2013 read with Clause 49 of the Listing Agreement from all the independent directors. The details of the familiarisation programmes for the independent directors have been uploaded on the website of the Company at http://www.marutisuzuki.com/familiarisation-programmes.aspx. 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 Companies Act, 2013, 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 Companies Act, 2013 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) i nternal 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. Shigetoshi Torii was appointed as a Whole-time Director designated as Director (Production) with effect from 31st July 2014 to fill the casual vacancy caused by the resignation of Mr. Masayuki Kamiya who resigned as Director (Production) from the close of the business hours of 30th July 2014. Mr. Kamiya resigned as his nomination was withdrawn by Suzuki Motor Corporation. The appointment of Key Managerial Personnel i.e. Managing Director & CEO, Company Secretary and Chief Financial Officer were taken on record with effect from 1st April 2014. RISK MANAGEMENT Pursuant to the provisions of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee, the details of which are given in the Corporate Governance Report. The Company has developed 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. VIGIL MECHANISM The Company already had 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 a 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 formulated a policy on related party transactions which has been uploaded on the Company's website at http://www. marutisuzuki.com/policy-on-related-party-transactions.aspx . In terms of Section 134(3) (h) of the Companies Act, 2013 read with Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014, there are no transactions to be reported in Form AOC 2. PERFORMANCE EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 board's functioning including its composition, attendance of Directors, participation levels, bringing specialised knowledge for decision making, smooth functioning of the Board and effective decision making. The performance of individual directors was evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders, time devoted, etc. The Directors expressed their satisfaction with the evaluation process. The criteria laid down by the Nomination and Remuneration Committee for evaluation of performance of independent directors included, inter-alia, the extent of engagement including attendance at the board/ committee meetings, ability to discharge their duties and provide effective leadership, exercise independence of judgement and safeguarding the interest of all the stakeholders including the minority shareholders. NOMINATION AND REMUNERATION POLICY Based on the recommendations of the Nomination and Remuneration Committee, the Board approved a Nomination and Remuneration Policy which is attached as Annexure B. CORPORATE SOCIAL RESPONSIBILITY (CSR) The composition of the CSR committee, CSR Policy, etc. 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. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the period under review, one complaint was received by the ICC and the same was disposed of. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached as Annexure D. CORPORATE GOVERNANCE The Company has complied with the corporate governance requirements, as stipulated under Clause 49 of the Listing Agreement and the certificate of compliance is contained in this annual report. SECRETARIAL AUDIT REPORT In accordance with the provisions of Section 204 of the Companies Act, 2013 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 2014-15. The report on secretarial audit is attached as Annexure E. The report does not contain any qualification. PERSONNEL As required by the provisions of Section 197 of the Companies Act, 2013 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 Companies Act, 2013, 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. AUDITORS The auditors, M/s Price Waterhouse, Firm Registration Number FRN301112E, Chartered Accountants, hold office until the conclusion of the ensuing annual general meeting and being eligible are recommended for re-appointment. A certificate from the auditors has been received to the effect that their re-appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013. A certificate has also been obtained from the Auditors to the effect that the Company is in compliance with the conditions of Foreign Direct Investment for the downstream investment made by the Company in subsidiary companies. The auditors' report to the shareholders for the year under review does not contain any qualification. CRISIL RATINGS 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. QUALITY The Company was awarded ISO/IEC 27001:2005 certification by STQC Directorate (Standardisation, Testing and Quality Certificate), Ministry of Communications and Information Technology, Government of India after re-assessment. The Company has established and is maintaining an information security management system. During the year, re-certification audit under ISO-14001 was carried out by M/s AVI, Belgium for the manufacturing plants located at Gurgaon and Manesar. The auditors recommended re-certification under ISO-14001 of all manufacturing facilities. The quality management system of the Company is certified against the ISO 9001:2008 standard. Re-assessment of the quality systems is done at regular intervals and re-certification assessments are done at every three years by an accredited third party agency. Recently, the Manesar powertrain plant including the two wheeler engine plant was added in the ISO-9001 certification scope in time with other plants of the Company. Also, the Company has an internal assessment mechanism to verify and ensure adherence to defined quality systems across the Company. AWARDS/RECOGNITION/RANKINGS The Company got the following awards/ recognitions/rankings during the year: • J D Power CSI Study ranked the Company highest. • Alto emerged as the 'World's Bestselling Small Car' for 2014 and Alto K10 AGS awarded 'Idea of The Year' by BBC Top Gear Magazine. • Celerio named 'Hatchback of The Year' by NDTV Car & Bike Awards;'Midsize Hatchback of The Year' by Zeeginition Auto Awards 2015; 'Transmission of The Year' and 'Technology of The Year' by Auto Tech Review magazine for the auto gear shift. • Ciaz named 'Compact Sedan of The Year' by NDTV Car & Bike Awards and 'Sedan of TheYear' by Auto Bild Golden Steering Wheel Awards 2015 and 'Best of 2014' by Auto X Magazine Awards. •'Manufacturer of the year - 2015' (four wheelers) honored to the Company by CNBC TV18 Overdrive. •'Golden Peacock Award' honored to the Company for CSR in the automobile sector and the occupational health and safety for 2014. •Greentech CSR Award under Platinum category in automobile sector. ACKNOWLEDGMENT The board of directors would like to express its sincere thanks for the co-operation and advice received from the Government of India and the Haryana 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 shareholders for their continued patronage. For and on behalf of the board of directors R.C. BHARGAVA Chairman KENICHI AYUKAWA Managing Director & CEO New Delhi 27th April 2015 |