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EQUITY - MARKET SCREENER

Motherson Sumi Systems Ltd
Industry :  Auto Ancillaries
BSE Code
ISIN Demat
Book Value()
517334
INE775A01035
15.4641168
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
MOTHERSUMI
54.78
55431.13
EPS(TTM)
Face Value()
Div & Yield %
2.24
1
0.85
 

As on: May 27, 2022 01:39 AM

To the Members,

Your Directors have the pleasure in presenting the 34th Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2021. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

FINANCIAL RESULTS

The summarized financial results for the year ended March 31, 2021 and for previous year ended March 31, 2020 are as follows:

Rs. in Million

Particulars Standalone Consolidated
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Continuing Operations
Revenue from contract with customers 36,353 39,411 569,513 602,783
Other operating revenue 339 439 4,186 4,506
Revenue from operations 36,692 39,850 573,669 607,289
Other Income 1,104 3,723 2,293 2,246
Profit before depreciation, interest and tax 5,511 9,269 45,882 48,786
Less: Depreciation and amortisation expense 1,983 2,313 29,260 27,210
Less: Finance Costs 897 248 5,115 5,928
Less: Exceptional Expenses 199 - 623 -
Add: Share of profit / (loss) in associates - - 849 575
Profit Before Tax from continuing operations 2,432 6,708 11,733 16,223
Less: Provision for Tax 491 1,323 (694) 6,881
Less: Minority Interest - - 5,302 1,244
Profit after tax from continuing operations 1,941 5,385 7,125 8,098
Discontinued Operations
Revenue from operations 41,382 39,439 41,382 39,439
Other income 275 64 275 64
Profit before tax from discontinued operations 4,396 4,906 4,396 4,906
Tax expenses 1,129 1,303 1,129 1,303
Profit after tax from discontinued operations 3,267 3,603 3,267 3,603
Total Profit from continuing and discontinued operations 5,207 8,988 10,392 11,701
Add: Balance brought forward 27,725 29,836 70,642 69,792
Profit available for appropriation 32,932 38,824 80,184 82,343
Other Comprehensive income from continuing operations (227) (48) 3,227 2,690
Other Comprehensive income from discontinued operations (8) (64) (8) (64)
Total other Comprehensive income from continuing and discontinued operations (235) (112) 3,219 2,626

The Composite Scheme of Amalgamation and Arrangement amongst your Company (‘the Amalgamated Company'), Samvardhana Motherson International Limited (‘the Amalgamating Company') and Motherson Sumi Wiring India Limited (‘the Resulting Company') and their respective shareholders and creditors has been considered as highly probable and meets the criteria prescribed in Ind AS 105 (Non-current Assets Held for Sale and Discontinued Operations) to be considered as discontinued operation.

Accordingly Domestic Wiring Harness Business has been disclosed as discontinued operation in the financial results for the quarters ended September 30, 2020, December 31, 2020 and March 31, 2021. All previous periods figures in the financial results were also restated. The income and expenses of continuing operation during the said period included transactions with discontinued operation, which does not have impact on "Profit / (loss) for the period from continuing and discontinued operations" as disclosed in the financial results of the aforesaid periods.

The profit available for appropriation for the year ended March 31, 2021 is Rs. 32,932 million and being carried over as surplus to the Profit & Loss Account as on March 31, 2021.

DIVIDEND

The Directors are pleased to recommend for approval of the members a payment of dividend of Rs. 1.50 per share (face value of Rs. 1/- each) on the Share Capital of the Company for the financial year ended March 31, 2021 to the equity shareholders.

The dividend, if approved by the members, would involve total cash outflow on account of dividend of Rs. 4,737 Million resulting in a pay-out of 91% of the standalone profit s of the Company and 46% of the consolidated profit s of the Company.

IMPACT OF COVID - 19 ON PERFORMANCE AND OPERATIONS

The COVID_19 pandemic represents an unprecedented disruption to the global economy and world trade, as production and consumption are scaled back across the globe due to preventive directives from authorities' world over. COVID_19 outbreak continues to grow in most of the areas of the world with severe toll on health. The Company has taken a holistic approach to protect the interest of various stakeholders including employees, customers, investors and societies. The Company's Operations and performance were impacted partially by the outbreak of COVID_19 pandemic and the consequent lockdown announced by central and state governments, due to which the operations were suspended for a large part of the quarter ended June 30, 2020 and resumed gradually with prescribed regulations and precautions and reached up to the pre-pandemic outbreak levels at most locations in the quarter ended December 31, 2020 and the Company sustained the pre pandemic operations levels during the quarter ended March 31, 2021.

Despite of the challenges posed due to pandemic, the Group was better placed for sourcing raw material due to various backward integration and advantage of in-house supply chain. The Management believes that the strong trust of the customers as evident from order book, helped the Company to combat with the pandemic.

OPERATIONS AND PERFORMANCE

On consolidated basis for the financial year 2020_21, your Company achieved total revenue of Rs. 601,954 million as compared to the revenue of Rs. 635,368 million of the previous financial year ended March 31, 2020. Net profit for the financial year is at Rs. 10,392 million as compared to the previous year's net profit of Rs. 11,701 million.

On standalone basis for the financial year 2020_21, your Company achieved total revenue of Rs. 65,661 million as compared to its total revenue of Rs. 68,738 million of the previous financial year ended March 31, 2020. The profit after tax for the year ended March 31, 2021 is Rs. 5,207 million. The operational performance of the Company has been comprehensively covered in the Management Discussion and Analysis Report.

The Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations") is presented in a separate section forming part of the Annual Report.

CREDIT RATING

Moody's Investor services has revised and improved the Rating Outlook to "stable" from "Negative" while aJirming the Ba1 corporate family rating (CFR) to the Company. In addition, the Company enjoys following domestic ratings:

Rating ICRA CRISIL India Ratings and Research
Long Term [ICRA] AA+ (Stable Outlook) CRISIL AA+/Stable IND AAA/Stable
Short Term [ICRA] A1+ CRISIL A1+ IND AAA/Stable/IND A1+
Commercial Papers [ICRA] A1+ CRISIL A1+ IND A1+
Non-convertible Debentures - - IND AAA/Stable

India Ratings and Research (Ind-Ra) has aJirmed your Company's Long-Term Issuer Rating at ‘IND AAA'. The Outlook has revised to Stable from Negative.

Further, Standard & Poor's Global Ratings ("S&P") has revised its rating for Samvardhana Motherson Automotive Systems Group B.V., Netherlands (SMRP BV), a subsidiary of the Company, for its long term credit from ‘BB+' to ‘BB (stable outlook)'. Fitch Ratings has revised the Outlook on SMRP BV to Stable, from Negative, and has aJirmed its Long-Term Issuer Default Rating at ‘BB'. Fitch ratings has also aJirmed SMRP BV's senior secured notes at ‘BB+'. The details of the credit ratings of the Company are available on its website www.motherson.com.

FIXED DEPOSITS

The Company has neither invited nor accepted any deposits from public covered under Chapter V of the Companies Act, 2013, and as such, no amount on account of principal or interest on deposits from public was outstanding or remained unclaimed or unpaid lying with the Company, as on the date of the balance sheet. There are no deposits invited or accepted by the Company which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 and Ind AS 110 – Consolidated Financial Statements read with Ind AS 28 – Investments in Associates, Ind AS 31 – Interests in Joint Ventures and Ind AS 116 – Leases, the audited consolidated financial statement is provided in the Annual Report.

The performance of the Company on consolidated basis is discussed at length in the Management Discussion and Analysis Report.

MATERIAL DEVELOPMENTS DURING THE FINANCIAL YEAR 2020_21

The Board of Directors of your Company at its meeting held on July 2, 2020, approved the composite Scheme of Amalgamation and Arrangement amongst your

Company ("the Amalgamated Company"), Samvardhana Motherson International Limited ("the Amalgamating Company") and Motherson Sumi Wiring India Limited ("the Resulting Company") and their respective shareholders and creditors (hereinafter referred to as "the Scheme"). The Scheme, inter-alia, provides to

(A) demerge the Domestic Wiring Harness Undertaking or DWH Undertaking (as de_ined in the Scheme) into the Resulting Company and

(B) amalgamate the Amalgamating Company with the Company, by absorption, subsequent to the completion of the demerger referred to in (A). Further, the Scheme is subject to receipt of necessary Statutory and Regulatory approvals under applicable laws including but not limited to approval of BSE Limited and National Stock Exchange of India Limited, approval of requisite majority of the shareholders and creditors of the Company and Hon'ble National Company Law Tribunal, Mumbai Bench ("Hon'ble NCLT").

In respect to the Scheme, the Company had received no-observation letters from BSE Limited and National Stock Exchange of India Limited on December 4, 2020 and December 7, 2020 respectively. Thereafter, the first motion application was filed with Hon'ble NCLT on December 18, 2020 along with the Scheme for convening meetings of members of the Company.

Since the consent of secured creditors was obtained to the Scheme, the Hon'ble NCLT vide its order dated February 16, 2021, dispensed with the requirement of calling a meeting of secured creditors. Further, the Hon'ble NCLT directed to hold shareholders' meeting on April 29, 2021 for consideration of the Scheme by the members of the Company. The Hon'ble NCLT also advised the Company to send notices of the Scheme to all regulatory authorities and seek objections / comments (if any).

The shareholders of the Company at their meeting convened and held pursuant to the order of the Hon'ble NCLT on April 29, 2021 had considered and approved the Scheme. The voting results showed that 99.44% of the non-promoter shareholders who voted, were in favour of the proposed restructuring (i.e. majority of minority requirement). Accordingly, the Scheme was approved by

(a) majority of members in number representing three-fourths in value of the members of Company; and

(b) the votes cast by the public shareholders of Company in favour of the Scheme being more than the number of votes cast by the public shareholders against it.

Thereafter, the Company has filed second motion application to the Hon'ble NCLT for sanction of the Scheme and has prayed for appropriate orders and directions.

The Scheme on becoming effective, will lead to simpli_ication of the group structure leading to growth and value creation in the long run, maximising the value and returns to the shareholders and higher stakeholders accountability. The Scheme as approved by the Board of Directors and Members of the Company is available on the website of the Company at www.motherson.com.

CAPITAL AND DEBT STRUCTURE

There is no change in the Authorized and Paid Up share Capital of the Company during the financial year ended March 31, 2021.

During the Financial year 2020_21, the Company has raised funds by issue of Non-Convertible Debentures ("NCDs") on a private placement basis, key terms of which are as below:

A) NCDs allotted on April 21, 2020

Instrument Rated, Secured, Listed, Redeemable Non-Convertible Debentures
Amount Raised Rs. 500 Crores
Face Value Rs. 10,00,000/- each
Number of Securities 5000
Maturity Date April 20, 2023
Interest 7.84% Annually (Payable on April
Payment 20, 2021; April 20, 2022 and April 20, 2023)
End Use Proceeds used for refinancing of existing debt, and/or General corporate purpose and/or Working Capital requirement.
Credit Rating IND AAA/RWN by India Ratings and Research Private Limited
ISIN INE775A07016
Listed on Stock Exchange BSE Limited

B) NCDs allotted on September 14, 2020

Instrument Rated, Listed, Unsecured, Redeemable Non-Convertible Debentures
Amount Raised Rs. 2130 Crore
Face Value Rs. 10,00,000/- each
Number of Securities 21300
Maturity Date September 14, 2023
Interest 6.65% Annually (Payable on
Payment September 14, 2021; September 14, 2022 and September 14, 2023)
End Use Proceeds used for acquisition of equity (equity / compulsorily convertible equity like instrument) in and / or loans and advances to overseas joint ventures / wholly owned subsidiaries or in other overseas companies, new or existing, as strategic investment and / or any other bona_ide business purposes including capital expenditure, Operating expenses and/or working capital of the Company.
Credit Rating IND AAA by India Ratings and Research Private Limited
ISIN INE775A08048
Listed on Stock Exchange BSE Limited

During the Financial year 2020_21, the Company has raised funds by issue of Commercial Papers, key terms of which are as below:

A) Commercial Paper issued on July 29, 2020

Instrument Listed, Unsecured Commercial Paper
Issue Size Rs. 50 Crore
Maturity Date September 30, 2020
Interest Rate 3.85%
ISIN INE775A14749
Listed on Stock Exchange BSE Limited

B) Commercial Paper issued on August 11, 2020

Instrument Listed, Unsecured Commercial Paper
Issue Size Rs. 75 Crore
Maturity Date November 9, 2020
Interest Rate 3.73%
ISIN INE775A14756
Listed on Stock Exchange BSE Limited

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

The details of changes in Company's subsidiaries, joint venture or associate companies, are as following:

1. Companies which became subsidiaries (direct and indirect) during financial year 2020_21 are as follows: Subsidiary through incorporation:

(i) Motherson Sumi Wiring India Limited ("MSWIL") was incorporated in India effective July 2, 2020, as a wholly owned subsidiary of your Company.

MSWIL is the transferee entity for the Domestic Wiring Harness Undertaking of your Company pursuant to proposed Composite Scheme of Arrangement and Amalgamation;

(ii) SMP Automotive Interior Modules d.o.o. Cuprija was incorporated in Serbia on July 28, 2020, by SMRC Automotive Holdings Netherlands B.V., Netherlands, a step down subsidiary of the Company for manufacturing of parts and accessories for motor vehicles;

(iii) Shenyang SMP Automotive Trim Co., Ltd was incorporated in China on September 4, 2020 by Changchun Peguform Automotive Plastics Technology Co., Limited, China, a step down subsidiary of the Company. The said company was incorporated to avail incentive / subsidy scheme(s) from the local authorities for setting up of new manufacturing units in Tiexi district of Shenyang City of China;

(iv) Motherson Rolling Stocks S. de R.L. de C.V. was incorporated in Mexico on September 30, 2020 by TKV Sarjat Oy, Finland, as step down subsidiary of the Company to acquire new business from Bombardier in Mexico;

(v) Motherson Business Service Hungary Kft., was incorporated in Hungary on November 9, 2020 by SMR Automotive Mirror Technology Hungary Bt., Hungary, a step down subsidiary of the Company to act as Shared Service Centre for SMR; and

(vi) Fuyang PKC Vehicle Technology Co., Ltd. was incorporated in Fuyang, China on November 27, 2020 by PKC Vehicle Technology (Hefei) Co. Ltd., China, a step down subsidiary of the Company to support the growth and meet the increasing demands from the customer.

2. Companies which ceased to be subsidiaries during financial year 2020_21 are:

(i) Motherson Polymers Compounding Solutions Limited (‘MPCSL'), a wholly owned subsidiary of your Company amalgamated with the Company effective from September 30, 2020.

As per merger scheme, all assets and liabilities and reserves of MPCSL have been recorded in the books of account of the Company at their existing carrying amounts. Considering immaterial impact of merger, previous period comparatives were not restated in standalone financial of the Company.

(ii) MSSL M Tooling Limited, Mauritius, an indirect subsidiary of your Company through MSSL Mauritius Holding Limited has been dissolved effective from October 30, 2020; and

(iii) SMRC Automotive Interiors Management B.V., Netherlands, an indirect subsidiary of your Company through Samvardhana Motherson Automotive Systems Group B.V., Netherlands has been dissolved effective from March 24, 2021.

In accordance with section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company and all of its subsidiaries, associate and joint venture companies form part of the Annual Report. Further, a statement containing salient features of the financial statement of the Company's subsidiaries, associate and joint venture companies is annexed in Form AOC_1, which forms a part of the Annual Report. Details of subsidiaries of the Company, their performance are covered in Management Discussion and Analysis Report forming part of this Report.

EXPORTS FROM INDIA

The Company's exports during the year were Rs. 8,576 million as against Rs. 9,975 million in the previous financial year. The Company continues to make its efforts towards achieving higher growth by providing cost competitive quality solutions to its customers. In addition, the Company has facilities globally, to provide service to the customers as well as enhance customer relationships.

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met eleven (11) times during the financial year 2020_21 and the details of same are given in the Corporate Governance Report forming part of this Annual Report. The intervening gap between two consecutive meetings was not more than one hundred and twenty (120) days as prescribed by the Companies Act, 2013 and the Listing Regulations.

DIRECTORS

The Board of Directors regret to inform you about sad demise of Mr. Sushil Chandra Tripathi, IAS (Retd.), an Independent Director of the Company on May 19, 2021 due to COVID_19. Mr. Tripathi was appointed as Director of the Company on September 10, 2012. During his distinguished career, he held many important assignments in Uttar Pradesh and Central Government. He retired as Secretary of the Ministry of Petroleum in Government of India. He was a visionary and an industry stalwart, managing diverse roles across various industries in his long career. He was a fountainhead of knowledge and a source of inspiration for the Company. Mr. Tripathi made significant contribution as a member of the Board and was Chairman of the Audit Committee, as well as Lead Independent Director. During his association, the Company bene_ited immensely from his valuable guidance and contributions at the Board and its various committees. The Board of Directors on behalf of all the members and employees of the Company convey deepest condolences to his family.

The Board of Directors of the Company, based on the recommendation of the Nomination and Remuneration Committee, in its meeting held on August 10, 2021 appointed Ms. Rekha Sethi (DIN: 06809515) as an Additional and Independent Director, not liable to retire by rotation, for a period of 5 (five) years commencing from August 10, 2021 to August 9, 2026, subject to approval of the shareholders. The Board recommends appointment of Ms. Rekha Sethi as Independent Director of the Company for approval of the members at the ensuing 34th Annual General Meeting ("AGM") of the Company. As per provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Takeshi Fujimi (nominee of Sumitomo Wiring Systems Limited, Japan ("SWS")) and Mr. Pankaj Mital, Directors of the Company, retire by rotation in the ensuing AGM. Mr. Takeshi Fujimi and Mr. Pankaj Mital being eligible seeks their re-appointment. Accordingly, the Board of Directors recommend the re- appointment of Mr. Takeshi Fujimi and Mr. Pankaj Mital to the members of the Company.

The members of the Company in their 30th AGM held on August 21, 2017 re-appointed Mr. Pankaj Mital as Whole-time Director (WTD) designated as Chief Operating Officer (COO) for a period from April 1, 2017 to September 30, 2021. Based on the recommendation of Nomination and Remuneration Committee and keeping in view of the vast experience of Mr. Pankaj Mital in the Automobile Industry, the Board of Directors in its meeting held on August 10, 2021 re-appointed Mr. Pankaj Mital, as WTD designated as COO of the Company for a further period of five (5) years effective from October 1, 2021 to September 30, 2026, liable to retire by rotation, subject to approval of the shareholders. The Board recommends appointment of Mr. Pankaj Mital as WTD designated as COO of the Company for approval of the members at the ensuing 34th AGM of the Company.

The details of appointment/re-appointment of the Directors of the Company are mentioned in Explanatory Statement under section 102 of the Companies Act, 2013 and annexure to the 34th AGM Notice of the shareholders.

STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS

The Board of Directors has received declarations from all the Independent Directors of the Company con_irming that they meet with criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(b) read with Regulation 25 of the Listing Regulations. The Board is of the opinion that they are the persons of integrity and possesses relevant expertise and experience.

During the year, Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board of Directors and Committee(s). The details of remuneration and/ or other benefits of the Independent Directors are mentioned in the Corporate Governance Report.

AUDIT COMMITTEE

The Audit Committee of the Board for the financial year ended March 31, 2021 was comprised of Mr. Sushil Chandra Tripathi, IAS (Retd.) as Chairman, Mr. Arjun Puri, Mr. Gautam Mukherjee, Ms. Geeta Mathur as Independent Directors and Mr. Shunichiro Nishimura, Mr. Laksh Vaaman Sehgal as Members. During the year all the recommendations made by the Audit Committee were duly accepted by the Board.

Further, consequent upon vacation of the office of Mr. Sushil Chandra Tripathi as director of the Company, the Board of Directors of the Company inducted Mr. Naveen Ganzu as member of the Audit Committee effective from May 28, 2021. Accordingly the re-constituted Audit Committee now comprise of the following:

1. Mr. Shunichiro Nishimura

2. Mr. Arjun Puri

3. Mr. Gautam Mukherjee

4. Ms. Geeta Mathur

5. Mr. L.V. Sehgal

6. Mr. Naveen Ganzu

COMMITTEES OF BOARD

Details on Committees constituted by the Board under the Companies Act, 2013 and the Listing Regulations, their composition as well as changes in their composition, if any, during the year and the number and dates of meetings of such committees held during the year are covered in Corporate Governance Report which forms part of the Annual Report for the Financial Year 2020_21.

KEY MANAGERIAL PERSONNEL

In terms of the provisions of section 203 of the Companies Act, 2013, during the financial year under review the Company has following whole-time Key Managerial Personnel:

1. Mr. Pankaj Mital, Whole-time Director and Chief Operating Officer

2. Mr. G.N. Gauba, Chief Financial Officer

3. Mr. Alok Goel, Company Secretary

MATERIAL CHANGES BETWEEN THE END OF FINANCIAL YEAR AND DATE OF THIS REPORT

Your Company made the following acquisitions:

(a) The Company's material subsidiary Samvardhana Motherson Automotive Systems Group B.V., Netherland ("SMRP BV"), acquired 75% stake in Plast Met Plastik Metal Sanayi lmalat ve Ticaret Anonim Sirketi (PM_Bursa) and Plast Met Kahp Sanayi lmalat ve Ticaret Anonim Sirketi (PM_Istanbul) to enhance diversifiication across customer portfolio and have access to significant Turkish automotive market. The closing for above transaction was on April 29, 2021. (b) Motherson Rolling Stocks S. de R.L. de C.V. ("MRS"), a wholly owned indirect subsidiary of your Company through PKC Group Oy, had acquired Bombardier Transportation's manufacturing site for Electrical Wiring Interconnection Systems in Huehuetoca, Mexico to establish a long-term supplier partnership for electrical harnesses and assemblies in the Americas region. The closing for above transaction was on May 1, 2021.

BOARD EVALUATION

In terms of the requirement of the Companies Act, 2013 and Listing Regulations, the Board carried out an annual evaluation of its own performance, Board Committees, individual Directors including the Independent Director and the Chairman of the Company on the basis of the criteria specifiied as per the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India with the aim to improve the effectiveness of the Board and the Committees.

The criteria for evaluation under different categories depends on the role the person(s)/group(s) plays in the Company. The criteria for every evaluation for the FY 2020_21 was decided at every level depending on the functions, responsibilities, competencies required, nature of business etc., detailed as below:

Person(s)/ Group(s) Evaluation Criteria
Chairman of the Company Leadership, steering skills, impartiality, commitment, ability to keep shareholder's interest in mind etc.
Board The board composition and structure, meetings of the Board, effectiveness of board processes and its functions, monitoring effectiveness of Governance practices, evaluation of performance of management and providing their feedback etc.
Committees of the Board The composition of Committees, structure of Committees, effectiveness of Committee meetings, independence of the Committees from the Board, contribution to the decisions of the Board etc.
Executive/ Non-Executive/ Independent Director(s) Criteria for all type of Directors- qualification, experience, knowledge and competencies, fulfillment of functions, commitment and their participation and contribution at the Board meetings and Committee meetings etc.
Additional criteria in case of Independent Directors, i.e., independent from the Company and other Directors, providing independent views and judgement.

In a separate meeting of Independent Directors held during the financial year 2020_21, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive Directors and non-executive Directors. The Independent Directors at their meeting held, also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. During the year, Board Evaluation was completed by the Company internally which included the Evaluation of the Board as a whole, Board Committees and Evaluation of the Directors. The exercise was led by the Chairman of the Board whereby the process involved independent discussions with all Board members who gave their feedback and inputs about the performance of the Board, its Committees, Individual Directors, and the Chairman of the Company and effectiveness of the Board/Committee processes.

It was noted that the Board as a whole is functioning as a cohesive body which is well engaged with different perspectives. The Board Members from different backgrounds bring about different complementarities and deliberations in the Board and Committee Meetings. It was also noted that the Committees are functioning well and all important issues are brought up and discussed in the Committees as per its terms of reference as mandated by law.

In the board meeting that followed the meeting of the Independent Directors and meeting of Nomination and Remuneration Committee, the performance of the board, its committees and individual directors was also discussed. Performance evaluation of Independent Directors was done by the entire board, excluding the Independent Directors being evaluated.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

Pursuant to Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Committee constituted under the provisions of section 178(1) of the Companies Act, 2013, recommended to the Board of Directors of your Company, a policy on Director's appointment and remuneration, including, criteria for determining qualifiications, positive attributes, independence of a Director and other matters. The said policy as approved by the Board of Directors, is uploaded on the Company's website at www.motherson.com. The extract of the said Policy is also covered in Corporate Governance Report which forms part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 134(3)(c) of the Companies Act, 2013 and subject to disclosures in the Annual Accounts, your Directors state as under :-

(a) That in preparation of the annual accounts for the financial year ended March 31, 2021, the applicable Accounting Standards have been followed and there are no material departures;

(b) That the Directors have selected appropriate Accounting Policies and applied them consistently and made judgment 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 March 31, 2021 and of the profit of the Company for that period;

(c) That the Directors have taken proper and suJicient 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) That the Directors have prepared the annual . accounts on a going concern basis;

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

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

AUDITORS AND AUDITORS' REPORT

Statutory Auditors

As per section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in 30th AGM approved the appointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No. 301003E/IE300005), as the Statutory Auditors of the Company for a term of 5 (five) years, i.e., from the conclusion of 30th AGM till the conclusion of 35th AGM of the Company, to be held in the year 2022.

The notes on the financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

The Auditors Report annexed with this Annual Report, does not contain any qualifiication, reservation or adverse remarks.

During the Financial Year 2020_21, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

Cost Auditor

The maintenance of cost records as specifiied by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records have been prepared and maintained by the Company for the financial year 2020_21.

As per recommendation of the Audit Committee, the Board of Directors has appointed M/s. M.R. Vyas & Associates, Cost and Management Accountants (Registration No. 101394) as Cost Auditor for conducting the audit of cost records of the Company for the financial year 2020_21.

During the Financial Year 2020_21, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

Secretarial Auditor

In terms of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, based upon the recommendations of the Audit Committee, the Board of Directors had appointed M/s. SGS Associates, Company Secretaries (CP No. 1509) as the Secretarial Auditor of the Company, for conducting the Secretarial Audit for financial year ended March 31, 2021.

The Report given by the Secretarial Auditor is annexed herewith and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.

During the Financial Year 2020_21, the Auditors have not reported any matter under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under section 134(3)(ca) of the Companies Act, 2013.

AWARDS & RECOGNITIONS

During the year, the Company had received various awards and recognitions, which have been described in "Awards and Recognition" section, forming part of the Annual Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

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 utilized by recipient are provided in the standalone financial statement. Please refer Note No. 6(a), 6(b) and 7 to the standalone financial statements.

PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

Pursuant to Policy on Related Party Transaction of the Company, all contracts/ arrangements/ transactions entered by the Company during financial year with related parties which were on arm's length basis and were in ordinary course of business were approved by the Audit Committee. During the year, the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material for which shareholders' approval is required in accordance with the policy of the Company on materiality of related party transactions. Thus, provisions of section 188(1) of the Companies Act, 2013 are not applicable to the Company. Pursuant to the provision of applicable Listing Regulations, all related party transactions are placed before the Audit Committee for approval including the transaction under section 188 of the Companies Act, 2013 and regulation 23 of Listing Regulations. Prior omnibus approval of the Audit Committee has been obtained for transactions which are foreseen and repetitive in nature and where the need for related party transaction cannot be foreseen, audit committee granted omnibus approval for such transactions having value upto rupees one crore per transaction. The transactions entered into pursuant to omnibus approval were presented to the Audit Committee on quarterly basis by way of a statement giving details of all related party transactions.

The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for purpose of identifiication and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board and amended from time to time is uploaded on the Company's website.

Your Directors draw attention of the members to Note No. 40 to standalone financial statement which sets out related party disclosures.

Approval of Related Party Transactions to be undertaken by Motherson Sumi Wiring India Limited after demerger of Domestic Wiring Harness Business ("DWH Business") Subject to the receipt of approval of the Hon'ble NCLT and other approval(s), pursuant to the Composite Scheme of Amalgamation and Arrangement amongst your Company, Samvardhana Motherson International Limited and Motherson Sumi Wiring India Limited ("MSWIL"), the DWH Business of your Company will be transferred to MSWIL

At present, DWH Business being carried on as a part of the business of the Company and will continue to be carried on as such, till the Scheme becomes effective. The Company (either directly or through its subsidiaries or joint ventures) has, over the years, developed an in-house value chain of these products through various backward integration initiatives which give it a distinct cost advantage. Accordingly, DWH Business has various inter-dependencies, inter-alia, with remaining business of the Company (including subsidiaries and joint ventures of Samvardhana Motherson International Limited ("SAMIL") which will become subsidiaries and joint ventures of the Company pursuant to the Scheme).

To ensure that, post the demerger, the bene_it of the in-house value chain continues to be available to all the businesses, certain related party transactions will be carried out by MSWIL with your Company, Sumitomo Wiring Systems Limited (SWS) including their subsidiaries and joint venture companies and other related parties. In this respect, as a matter of abundant caution and good corporate governance the approval of the shareholders of the Company was sought at its Extra-ordinary General Meeting held on April 29, 2021. The shareholders of the Company in the said meeting had approved various related party transactions to be undertaken by MSWIL, as more particularly mentioned in the Notice for the said meeting read with the explanatory statement attached thereto pursuant to section 102 of the Companies Act, 2013. The Notice convening the said meeting is as placed on the website of the Company at www.motherson.com. On demerger becoming effective the shareholding of MSWIL will be a mirror-image of your Company. Since prior to the Scheme becoming effective, your Company is the ultimate shareholder of MSWIL, the said related party transactions approved by the shareholders of your Company will be deemed to be an approval obtained by MSWIL as per the requirements of the Listing Regulations.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of Companies (Accounts) Rules, 2014 is given in Annexure-A to this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure pertaining to remuneration and other details as required under section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure–B to this Report.

The Statement containing the particulars of employees as required under section 197(12) of the Companies Act, 2013 read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and other applicable rules (if any), is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of section 136 of the Companies Act, 2013 the said annexure is open for inspection at the registered office of the Company during the working hours for a period of twenty-one days before the date of the AGM. Any member interested in obtaining a copy of the same may write to the Company.

CORPORATE GOVERNANCE

Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as prescribed under the Listing Regulations. A separate section on Corporate Governance forming a part of Annual Report and the requisite Certificate from the Company's Auditors con_irming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

DISCLOSURE REQUIREMENT

Business Responsibility Report:

Pursuant to regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report describing the initiatives taken by your Company from an environmental, social and governance perspective, in the prescribed format is available as a separate section of the Annual Report.

Dividend Distribution Policy:

As per regulation 43A of the Listing Regulations, the extract of Dividend Distribution Policy of your Company is disclosed in the Corporate Governance Report and the said Policy is also uploaded on the Company's website.

LISTING OF EQUITY SHARES

The Equity shares of your Company are presently listed at the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

NCDs issued and allotted by your Company during the financial year 2020_21 are listed on BSE Limited (BSE). The listing fees for the financial year 2021_22 have been paid to the said Stock Exchanges.

The Company's equity shares continue to remain listed on NSE and BSE while its NCDs remain listed on BSE.

INTERNAL CONTROL

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit Reports are presented directly to the Chairman of the Audit Committee and its members. Details about Internal controls and their adequacy are set out in the Management Discussion & Analysis Report which forms part of this report.

RISK MANAGEMENT

The Board of Directors had constituted Risk Management Committee to assist the Board with regard to the identifiication, evaluation and mitigation of strategic, operational, external environment and cyber security risks and in fulfilling its corporate governance oversight responsibilities and to develop policy for actions associated to mitigate the risks. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The major risks identifiied by the businesses and functions are systematically addressed through mitigating actions on a continual basis.

On recommendation of the Risk Management Committee, the Board of Directors of your Company in its meeting held on November 10, 2020 adopted the amended Risk Management Policy for the Company. The development and implementation of Risk Management Policy has been covered in the Management Discussion and Analysis Report, which forms part of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the period under review, no such order is passed by any Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations other than the orders mentioned herein above.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the requirements of section 135 of the Companies Act, 2013, your Company has a Corporate Social Responsibility (CSR) Committee. The CSR Committee comprises of Mr. Vivek Chaand Sehgal (Chairman), Mr. Arjun Puri, Independent Director and Mr. Laksh Vaaman Sehgal, Non-Executive Director.

The terms of reference of the Corporate Social Responsibility (CSR) Committee is provided in the Corporate Governance Report. Your Company has also formulated a Corporate Social Responsibility Policy (CSR Policy) which is available on the website of the Company at www.motherson.com.

Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure–C and forms integral part of this Report.

The Company is, inter-alia, also performing CSR activities through Swarn Lata Motherson Trust which has been established for the sole purpose of CSR activities. Further, the Company continue to carry out CSR activities as specifiied under schedule VII to the Companies Act, 2013.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism which incorporates a whistle blower policy in terms of the Companies Act, 2013 and the Listing Regulations for Directors and employees to report their genuine concerns. The objective of the Policy is to create a window for any person who observes an unethical behaviour, actual or suspected fraud, or violation of the Company's Code of Conduct or ethics policy (hereinafter "Unethical and Improper Practices"), either organizationally or individually, to be able to raise it and to provide for adequate safeguards against victimization of whistle blower and also to provide for direct access to the chairperson of the audit committee.

Thought Arbitrage Consultancy has been appointed by the Board of Directors as an independent external ombudsman under this Whistle-blower mechanism.

Protected Disclosure can be made by a Whistle Blower through an e-mail or dedicated telephone line or a letter to the Thought Arbitrage Consultancy or to the Chairman of the Audit Committee. The Whistle Blower Policy is available on the Company's website at www.motherson. com.

ANNUAL RETURN

In accordance with the provisions of Section 92(3) read with section 134 (3) (a) of the Companies Act, 2013 and Rules framed thereunder, an annual return in the prescribed format for the financial year 2020_21 is available on the website of the Company at www.motherson.com.

COMPLIANCE WITH SECRETARIAL STANDARDS

Your Company has complied with the secretarial standards with respect to General and Board Meetings specifiied by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.

HUMAN RESOURCES

The relations with the employees and associates continued to remain cordial throughout the year. The Directors of your Company wish to place on record their appreciation for the excellent team spirit and dedication displayed by the employees of the Company.

DISCLOSURE UNDER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDERSSAL) ACT, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Committee composed of internal members and an external member who has extensive experience in the field.

During the Financial Year 2020_21, there were no cases filed under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

For and on behalf of the Board
For Motherson Sumi Systems Limited
Vivek Chaand Sehgal
Place : Dubai Chairman
Date : August 10, 2021 DIN:00291126