Your Directors have pleasure in presenting to you the Fifty Eighth Annual Report andthe Audited Financial Statements for the financial year ended 31st March 2019.
|Financial Results || ||' Crores |
| ||2018 - 2019 ||2017 - 2018 |
|Total Income ||16254 ||15510 |
|Profit before tax ||1609 ||1602 |
|Provision for taxation ||512 ||510 |
|Profit for the year ||1097 ||1092 |
During the financial year ended 31st March 2019 your Company's total income was र16254 crores as against र 15510 crores in the previous year. The net profit for thefinancial year was र 1097 crores as against र 1092 crores in the previous year.
Across the board there was an overall increase in all product categories adding up toa 8% increase in total tyre production.
Your Company witnessed relatively high raw material prices in 20182019 when compared tothe previous year.
The Company's exports (including Indian Rupees Exports) stood at र 1566 crores forthe financial year ended 31st March 2019 as against र 1353 crores for the previousyear.
As required under regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report is attachedand forms part of this Annual Report.
Two interim dividends of र 3/- each per share (30% each) for the financial yearended 31st March 2019 were declared by the Board of Directors on 8th November 2018 and on7th February 2019. The Board of Directors is now pleased to recommend a final dividend ofर 54/- per share (540%) on the paid up equity share capital of the Company forconsideration and approval of the shareholders at the forthcoming Annual General Meetingof the Company. With this the total dividend for the financial year ended 31st March2019 works out to र 60/- per share (600%). The total amount of dividend aggregates to '25.45 crores.
The Directors recommend that after making provision for taxation debenture redemptionreserve and dividend an amount of र 1054 crores be transferred to general reserve.With this the Company's Reserves and Surplus stands at र 10649 crores.
Overall the Industrial Relations in all our manufacturing units has been harmoniousand cordial except in Thiruvottiyur plant on certain occasions only and on issues likeprolonged long term settlement and CCTV installation for better control in operations.Long term settlements have been concluded in Goa Ankenpally and Thiruvottiyur plants.Both production and productivity were maintained at the desired satisfactory levelsthroughout the year in all plants.
Performance of Subsidiaries
The consolidated financial statements of the Company prepared in accordance with theCompanies Act 2013 and applicable accounting standards form part of the Annual Report.The consolidated financial statements include the financial results of its subsidiaryCompanies.
Pursuant to the provisions of section 136 of the Companies Act 2013 the financialstatements consolidated financial statements along with the relevant documents andaudited accounts of subsidiaries are available on the website of the Company.
The Company has four subsidiaries viz. MRF Corp Limited MRF International Limited MRFLanka (P) Ltd and MRF SG PTE. LTD. The aggregate turnover of all four subsidiaries inequivalent Indian Rupees during the financial year ended 31st March 2019 was र 1816.84crores and the aggregate profit after tax was ' 29.94 crores.
A statement in Form AOC-1 containing the salient features of the financial statementsof the Company's subsidiaries is attached with the financial statements. The statementprovides details of performance and financial position of each of the subsidiaries.
The contribution of the subsidiaries to the overall performance of the company is givenin note 26 (d) of the consolidated financial statements.
During the year under review your Company has entered into transactions with MRF SGPTE. LTD a wholly owned subsidiary of your Company for purchase of raw materials and thetotal value of transactions executed during financial year 2018-2019 exceed themateriality threshold adopted by the Company. These transactions were in the ordinarycourse of business and were on an arms length basis details of which are provided inAnnexure V of the Board's Report as required under
section 134(3)(b) of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014.
Directors' Responsibility Statement
As required under section 134(3)(c) of the Companies Act 2013 your Directors statethat:
a) In the preparation of the annual accounts the applicable Accounting Standards havebeen followed and that there are no material departures;
b) They have in selection of the accounting policies consulted the Statutory Auditorsand applied them consistently making judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit of the Company for the year ended 31st March2019;
c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) Annual accounts have been prepared on a going concern basis;
e) Internal financial controls had been laid down and followed by the Company and suchinternal financial controls are adequate and were operating effectively; and
f) Proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and operating effectively.
The Company has developed and implemented a risk management policy for the Companyincluding identification therein of elements of risk if any which in the opinion of theBoard may threaten the existence of the Company. The "Risk Management Committee"which was constituted as required under the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 met on 27.04.201802.08.2018 and 23.10.2018. The Committee reviewed the risk management initiatives taken bythe Company.
Adequacy of Internal Financial Control
The Company has adequate internal financial control with reference to the financialstatements commensurate with its size and nature of business. These controls include welldocumented procedures covering financial and operational functions. The internalfinancial controls of the Company are adequate to ensure the accuracy and completeness ofaccounting records timely preparation of reliable financial information prevention anddetection of frauds and errors and safeguard against any losses or unauthorized use ordisposal of assets. These controls are assessed on a regular basis by Internal Audit.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Information as required to be given under section 134(3)(m) read with rule 8(3) of theCompanies (Accounts) Rules 2014 is provided in Annexure I forming part of this Report.
Corporate Social Responsibility (CSR)
As required under section 135 of the Companies Act 2013 the CSR Policy was formulatedby the CSR Committee and thereafter approved by the Board. CSR Policy is available on theCompany's website - http://www.mrftyres.com/downloads/download.php?filename=csr-Policy.pdf.
The details of the CSR initiatives undertaken during the financial year ended 31stMarch 2019 and other details required to be given under section 135 of the Companies Act2013 read with rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules2014 are given in Annexure II forming part of this Report.
Board and Key Management Personnel
The Board of Directors at its meeting held on 8th November 2018 approved subject toshareholders approval re-appointment of Mr. K M Mammen as Managing Director for a freshterm of five years with effect from 8th February 2019 in terms of Section 196 read withSchedule V of the Companies Act 2013. The aforesaid appointment was approved by theshareholders by postal ballot on 5th January 2019.
Dr. K C Mammen Director of the Company resigned from the Board of the Company witheffect from 9th November 2018. Dr. K C Mammen
has been on the Board since 1975. The Board places on record its sincere appreciationand gratitude to Dr. K C Mammen for the valuable services rendered by him during histenure on the Board.
Mrs. Vimla Abraham was appointed as Woman Independent Director of the Company by PostalBallot on 5th January2019. Her appointment took effect from 5th February 2019.
As required under Section 152 of the Companies Act 2013 Mr. Rahul Mammen MappillaiManaging Director and Mr. Samir Thariyan Mappillai Whole-time Director of the Companyretire by rotation at the forthcoming Annual General Meeting and being eligible haveoffered themselves for re-appointment.
Mr. S Dhanvanth Kumar was appointed as Company Secretary of the Company w.e.f 10thAugust 2018 in the place of Mr. Ravi Mannath Company Secretary of the Company.
The Board of Directors at its meeting held on 2nd May 2019 based on therecommendation of Nomination and Remuneration Committee and performance evaluation reporthave recommended the re-appointment of Mr. Vijay R Kirloskar Mr. V Sridhar Mr. Ranjit IJesudasen Dr. Salim Joseph Thomas Mr. Jacob Kurian and Mr. Ashok Jacob as IndependentDirectors of the Company for a second term of 5 (Five) consecutive years commencing from29th September 2019. Resolutions in this regard are set out in the Notice of AnnualGeneral Meeting for members' approval. The Company has received declarations ofindependence from all the Independent Directors confirming that they meet the criteria ofindependence as prescribed under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and that they areindependent from Management.
Mr. N Kumar and Mr. M Meyyappan Independent Directors have not sought re-appointmentand consequently will retire from the Board on 28th September 2019.
Performance evaluation of the Board its Committees and Directors
The Board of Directors has made a formal annual evaluation of its own performance andthat of its committees pursuant to the provisions of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015. The evaluation wasdone based on
the evaluation criteria formulated by Nomination and Remuneration Committee whichincludes criteria such as fulfilment of specific functions prescribed by the regulatoryframework adequacy of board meetings attendance and effectiveness of the deliberationsetc.
The Board and the Nomination and Remuneration Committee also carried out an evaluationof the performance of the individual Directors (excluding the Director who was evaluated)based on their attendance participation in deliberations understanding the Company'sbusiness and that of the industry and in guiding the Company in decisions affecting thebusiness and additionally in case of Independent Directors based on the roles andresponsibilities as specified in Schedule IV of the Companies Act 2013.
In accordance with Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Report on Corporate Governance along with the Auditors'Certificate confirming compliance is attached and forms part of this Annual Report.
The information pertaining to the number of Board meetings held the constitution ofthe Audit Committee Remuneration Policy of the Company criteria under section 178(3) ofthe Companies Act 2013 Related Party Transactions and the Vigil Mechanism as requiredunder the various provisions of the Companies Act 2013 have been disclosed in theCorporate Governance Report which forms part of this report. The details of related partytransactions are given in note 27(e) of the financial statements.
Business Responsibility Report
Business Responsibility Report as per Regulation 34 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 detailing the various initiatives taken bythe Company on the environment social and governance aspects of business forms part ofthis Annual Report.
Particulars of Employees
The disclosures pertaining to remuneration and other details of Directors and employeesas required under Section 197(12) of the Companies Act 2013 read with rule 5 of theCompanies (Appointment and Remuneration
of Managerial Personnel) Rules 2014 have been provided in the appendix forming part ofthis report. Having regard to the provisions of Section 136(1) read with relevantprovisions of the Companies Act 2013 the Annual Report excluding the aforesaidinformation is being sent to the members of the Company. The said information is availablefor inspection at the Registered Office of the Company during working hours and any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished to the members.
During the financial year under review the Company has not received any complaintunder The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Further Company has complied with provisions relating to the constitution ofInternal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Your Company has not accepted any deposits during the financial year ended 31st March2019. There were no defaults in respect of repayment of any deposits or payment ofinterest thereon during the financial year and all the deposits have been repaid as at theclose of the financial year ended 31st March 2019.
Awards received during the year
Your Company was awarded top honours in the J.D. Power 2018 Passenger Radial Study forthe 13th time - a feat without precedent or parallel. Your company has also been rankedno.1 in Customer Satisfaction in the Inaugural J.D. Power 2018 India Tractor TyreSatisfaction Index (TTSI) Study which validates MRF's position in the Indian Market as themost preferred Farm Tyre Brand amongst Tractor owners.
Messrs. SCA AND ASSOCIATES (Firm Regn. No.101174W) and Messrs. Mahesh Virender &Sriram (Firm Regn. No.001939S) were appointed joint statutory auditors of the Company fora term of 5 (five) consecutive years at the Annual General Meeting of the company held on11th August 2016 and 4th August 2017. Auditors Report to the shareholders for thefinancial year ended 31st March 2019 does not contain any qualification.
The Board of Directors on the recommendations of the Audit Committee has approved there-appointment of Mr. C. Govindan Kutty Cost Accountant (Mem. No. 2881) as Cost Auditorof the Company for the financial year ending 31st March 2020 under section 148 of theCompanies Act 2013 and recommends ratification of his remuneration by the shareholdersat the forthcoming Annual General Meeting of the Company.
Pursuant to provisions of Section 204 of the Companies Act 2013 read with rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Mr K Elangovan Elangovan Associates Company SecretariesChennai to conduct the Secretarial Audit of the Company for the financial year ended 31stMarch 2019. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-III tothis Report. The Secretarial Auditor's Report to the shareholders does not contain anyqualification.
Extract of Annual Return
An extract of Annual Return in Form MGT-9 as on 31st March 2019 is attached asAnnexure-IV to this Report.
There are no material changes and commitments affecting the financial position of theCompany between the financial year ended 31st March 2019 and the date of this report.
During the year under review there were no material and significant orders passed bythe regulators or courts or tribunals impacting the going concern status and the Company'soperations in future.
Details of investments as required under section 134 of the Companies Act 2013 isgiven in note 3 to the financial statements.
During the year under review the Board confirms that the Company has complied with theapplicable Secretarial Standards issued by the Institute of Company Secretaries of India.
During the year under review no fraud has been reported by the auditors to the auditcommittee or the board.
For Cost Audit Records we wish to confirm that we are covered by Cost Audit RecordsRules under section 148(1) of the Companies Act 2013 and accordingly such accounts andall relevant records are maintained by us.
Your Directors place on record their appreciation of the invaluable contribution madeby the Company's employees which made it possible for the Company to achieve theseresults. They would also like to take this opportunity to thank customers dealerssuppliers bankers financial institutions business associates and valued shareholdersfor their continued support and encouragement.
On behalf of the Board of Directors
Chennai K M MAMMEN
2nd May 2019 Chairman & Managing Director