Motherson Sumi Systems Limited AR 08 09

Motherson Sumi Systems Limited Creating wealth through global synergies

Growing trust. Transforming business. Enhancing value for all.

2 2 n d

A n n u a l

R e p o r t

2 0 0 8 - 0 9

What you will find inside

01 | Introduction 02 | Samvardhana Motherson Group 04 | Motherson Sumi Systems Ltd 05 | Sumitomo Wiring Systems Ltd 08 | Samvardha Samvardhana na Motherson Finance Ltd 09 | MSSL Overview 12 | Chairman’s Letter 15 | Vice Chairman’s Letter 16 | Growing trust, Transforming Business, Enhancing Value for all 20 | The Transformation so far 22 | The quantum leap – Visiocorp acquisition 26 | Global Presence 32 | Financial Highlights 34 | Customer Relationships 36 | Management Discussion and Analysis 37 | Director’s Report 52 | Report on Corporate Governance 57 | Auditor’s Report 67 | Balance Sheet 70 | Profit & Loss Account 71 | Cash Flow Statement 72 | Schedules 74 | Balance Sheet Abstract 104 Consolidated ed Financial Statements 10 | Consolidat 107 7 Corporate Information

Disclaimer In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements – written and oral – that we periodically make contain for ward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Corporate Information

FounderChairperson

Registered Office

(Late) Smt. S.L. Sehgal

2nd Floor, F-7, Block B-1, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi 110 044, India

Chairman Emeritus (Late) Sh. K.L. Sehgal

Investor Cell

Board of Directors

Mr. G.N. Gauba

Mr. Mohinder Singh Gujral

(Company Secretary & Chief Financial Officer)

Chairman

E-mail: investorrelations@mo [email protected] therson.com

Mr. Vivek Chaand Sehgal

Registrar

Vice Chairman

Mr. Toshimi Shirakawa

Karvy Computershare Pvt. Ltd. Karvy House, 46, Avenue 4, Street No. 1 Hyderabad 500 034, Andhra Pradesh, India

Director

Auditors Mr. Hiroto Murai Director

Mr. Bimal Dhar

Price Waterhouse Chartered Accountan Accountants ts Building 8, 7th & 8th Floor, DLF Cyber City Gurgaon 122 002, Haryana, India

Director

Mr. Toshihiro Toshihiro Watanabe Whole Time Director

Maj. Gen. Amarjit Singh (Retd.) Director

Mr. Arjun Puri

Bankers State Bank of India ICICI Bank Ltd. Citibank N.A. HDFC Bank Ltd. Bank of Tokyo Mitsubishi Ltd. Axis Bank Ltd.

Director

Mr. Laksh Vaaman Sehgal Director

Mr. Futoshi Urai Alternate Director

Mr. Pankaj K. Mital Alternate Director

Together we make it happen

1

Growing Trust. Transfor ransforming ming Business Business.. Enhancing Value For All.

A year of building on the edifice of the growing trust of our customers and partners. A year of strategically aligning our business to their changing needs and aspirations. A watershed year for MSSL. A year of big developments and bigger evolution. A year of pivotal growth and strategic expansion. A landmark year of expansive transformation. transformation. A year of delivering greater value to our valued customers. It was indeed a critical year in the growth odyssey of MSSL. It was a year when our relentless efforts towards fostering deeper customer relationships transformed into our game-changing acquisition of Visiocorp. It was a year of making a paradigm shift

2

Motherson Sumi Systems Limited

from our approach of successfully notching up incremental acquisitions to reaching out to global customers. The Visiocorp acquisition was a strategic move aimed at leveraging our existing product strengths and management expertise to provide the necessary synergies that would enable our expansion into the fast-growing and ever-expanding global automotive automot ive systems business. It was a transforma transformational tional move that provided us with direct access to global blue chip companies and a global manufacturing base through the extension of our core capabilities. This acquisition was indeed a momentous and meaningful development for MSSL, enabling its growth from a domestic OE supplier to a global entity encompassing a world market.

It was a far-sighted decision to look ahead, and beyond the current negative environment, to take a big step forward towards our further transformation and evolution into a bigger and better company. It was a decision that helped position us uniquely to deliver consistent growth and maximum value to all our customers and stakeholders at all times. It was a year when we took a quantum leap towards building greater trust to enable an even bigger transformation that would continue to drive us towards bigger returns and value for our expanding network of customers and partners around the world.

“It was a year of deeper trust, bigger transformation and better value for all our stakeholders.”

GLOBAL SCALE AMONG THE LARGEST MANUFACTURERS OF AUTOMOTIVE EXTERIOR REAR VIEW MIRRORS

DOMESTIC SCALE LARGEST MANUFACTURER OF AUTOMOTIVE WIRE HARNESSES IN INDIA LARGEST MANUFACTURER OF REAR VIEW MIRRORS FOR CARS & MUVS IN INDIA AMONG THE LARGEST MANUFACTURERS & SUPPLIERS OF AUTOMOTIVE PLASTIC COMPONENTS & MODULES AMONG THE MOST DIVERSIFIED GROUPS IN THE AUTOMOTIVE INDUSTRY


3

Samvardhana Motherson Group Trust is the core of successful growth, and transformation the growth driver. driver. And together, they combine to deliver exceptional value. It is this philosophy that has enabled the growth of Samvardhana Motherson Group (SMG) into one of India’s leading business houses. SMG is a focused, dynamic and progressive group that is geared towards providing customers with innovative and value-added products, services and solutions. The Group posted a combined revenue of Rs. 42.819 billion in 2008-09.

A growing business portfolio The business portfolio of the Samvardhana Motherson Group is a diversified bouquet of verticals, continuously growing to expand and encompass a wider and bigger choice of products and services that more than meet the transforming and exacting needs of its customers across the world. The unique competencies of the Group’s constituent companies combine to develop integrated solutions for its diverse customers. These solutions comprise a range of applications across diverse industries. The constituent companies also provide support through products and services that strengthen MSSL’s MSSL’s position as a full-system solutions provider.

FULL SYSTEM SOLUTIONS

Wiring Harness Manufacturing

Rear View Mirrors

Wiring Harness

Exterior Mirrors

High Tension Cords

Interior Mirrors

Battery Cables

Mirrors with Integrated Lighting

Wires Connectors & Terminals Wiring Harness Components

Blind Spot Detection Systems Telescopic Trailer Tow Mirrors

Polymer Processing & Tool Manufacturing Injection Molded Plastic Parts Plastic Blow Molded Parts Post Molding Processes Assemblies Tool Design & Analysis Tool Manufacturing

Modules

Elastomer Processing

Sunroofs

Rubber Injection Molding

Car HVAC Systems Bus Airconditioning Lighting & Air Intake Refrigeration Systems Transport & Stationary Cabins for Off - Highway Vehicles Environment Management Systems

4


Silicon Injection Molding Bonded Rubber Parts Rubber Extrusion Rubber Compounding

IT & Design Engineering

Metal Working

Precision Metal Software Machined Development Components Design Cutting Engineering Tools CAE Services CNC Code Generation & Press Die Design

Bimetal Band Saw Blades Gear Cutting Tools Thin Film Coating Metals

Manufacturing Support

Other Business

Air Compressors

Travel Services

Paint Coating Equipment

Management Services

Industrial Robots

Agencies

Automotive Manufacturing Engineering Auxiliary Equipment for Injection Molding Machines

Motherson Sumi Systems Ltd (MSSL) A TRACK RECORD OF MILESTONES EVOLVING AROUND THE NUCLEUS OF TRUST. AN EPOCH OF CONTINUOUS GROWTH AND EXPANSION. AN ODYSSEY OF TRANSFORMATION.

CONSTANT

AN ETHOS OF NURTURING ENHANCING VALUE.

CHANGE

RELATIONSHIPS

AND

AND

An apt description of the spirit of Motherson Sumi Systems Limited.


5

Motherson Sumi Systems Ltd. (MSSL), the flagship company of the Samvardhana Motherson Group, is a joint venture between Samvardhana Motherson Finance Limited (SMFL) and Sumitomo Wiring Systems (SWS), Japan, which is a global supplier and manufacturer of wiring harnesses, components & wires. MSSL is a customer-driven company providing innovative and value-added products, services and solutions to customers. The Company is listed at the stock exchanges since 1993. MSSL is India’s largest manufacturer of automotive wiring harnesses and mirrors for passenger cars, and is also a leading supplier of plastic components and modules to the automotive industry. industry. The recent acquisition of the mirror business from Visiocorp (now renamed as Samvardhana Motherson Reflectec) has helped it evolve as one of the world’s leading automotive mirror manufacturers. The present product range of MSSL comprises of wiring harnesses, rear view mirrors, molded plastic parts including car interior and exterior parts, complete modules including bumpers, dashboards and door trims, rubber components for automotive and industrial applications, high-precision machined metal parts, injection molded tools and car air conditioners. It has been bee n MSSL’s MSSL’s endeavour to constantly add new products in its product line, with the objective of emerging as a single-service interface for multiple customer needs. MSSL’s MSSL’s diversity of product range, coupled with sheer depth within each product portfolio, has helped the Company garner leadership in its area of operations.

6


Over the years, MSSL has evolved as a JV specialist, having collaborationss with global technology leaders to bring world-class collaboration technologies to serve its customers. The company has multiple JVs. These alliances give MSSL ready access to different technologies and keeps it updated with the latest technological developments. This has further helped the Company leverage its competencies in existing areas to create products fulfilling the emerging technical needs of its customers. MSSL and its joint ventures have invested in state-of-the-art technologies and infrastructure to ensure superior efficiencies and total customer satisfaction. MSSL is continuously strengthening its position as a globally preferred solutions provider by offering end-to-end solutions, encompassing designing from basic data to prototyping, tooling, molding, assembly and integrated modules. The ability to provide such end-to-end solutions in each product category, and to combine these solutions in the form of full system solutions, has enabled the Company to evolve as a preferred supplier. These solutions are supported by the flexibility to supply from any of the alternative manufacturing manufacturing bases and logistic models best suited to customer requirements. MSSL has developed a network of manufacturing bases, design centres, logistics centres, marketing support and sourcing hubs across a diversified geographical base. MSSL has presence in 20 countries which include India (Noida, Gurgaon, Faridabad, Manesar, Pune, Lucknow, Bangalore, Chennai, Kandla, & Pondicherry), UAE, Sri Lanka, Singapore, China, Korea, Japan,

Germany, UK, Czech Republic, Austria, Hungary, Italy, Spain, France, Ireland, USA, Mexico, Australia & Mauritius to provide timely and quality delivery to our customers worldwide. MSSL has manufacturing bases across four continents - Asia, Europe, North America & Australia, to support its customers. MSSL’s diverse global customer base comprises of almost all leading automobile manufacturers around the world.

MSSL Shareholding Pattern Sehgal Family 4.2%

FIIs & Mutual funds 10.6%

SWS 27.3%

Public 18.3% SMFL 39.6%


7

Sumitomo Wiring Systems Ltd, Japan (Our principal partner) Evolving from a relationship of growing trust, our partnership with Sumitomo Wiring Systems Ltd. (SWS) has constantly grown from strength to strength, since it started over two decades earlier earlier.. As MSSL’s MSSL’s oldest joint venture, dating back to 1986, this partnership has enabled us to ensure continuous up-gradation of technology and a high degree of backward integration for wiring harnesses. The relationship also brought in tooling technology and molding technology critical for wiring harnesses and got further strengthened with subsequent ventures.

Background A 100% subsidiary of Sumitomo Electric Industries (Japan). A global supplier engaged in the manufacture and sale of wire harnesses, components and wires. Enjoys the second-highest share in wire harnesses worldwide.

Collaboration Provided technical assistance for manufacturing wiring harnesses in 1983. Entered into a joint venture to form Motherson Sumi Systems Limited (MSSL) in 1986. Joint venture covered the manufacture of wiring harnesses, catering mainly to the needs of Japanese OEMs. Engaged as the principal partner of MSSL, initially providing access to latest technologies for manufacturing wiring harnesses & wires, and gradually providing technical support for wiring harnesses, components, injection molded parts, mould manufacturing (through (through group companies), engineering design and software development (through joint ventures). A second JV formed with MSSL for wiring harness manufacturing in Sharjah.

Support Pivotal in providing technical support to MSSL, in the form of resident technical advisors, training of engineers and production personnel, manufacturing methodologies, Japanese manufacturing techniques, quality circle activities, kaizen, as well as collaborative design and development. Instrumental in helping the Company stay abreast of state-of-the-art technologies and enhancing product quality at competitive costs. Buyback of wiring harnesses to SWS locations in Japan and Europe.

8


Samvardhana Motherson Finance Limited

Samvardhana Motherson Finance Ltd Samvardhana Motherson Finance Limited (SMFL) is the principal holding company of the Samvardhana Motherson Group. SMFL has investments in over 25 companies, including Motherson Sumi Systems Limited (MSSL) & other Group companies. SMFL acts as the central corporate body for managing the Group companies and for their overall co-ordination. It is also the main vehicle for exploring new business areas and forming new joint ventures of the Group in diversified areas.

The company has 39.6% stake in Motherson Sumi Systems Limited. On 6th March 2009, MSSL in joint venture with SMFL acquired the Rear View Mirror business of Visiocorp where SMFL holds 49% stake.


9

Samvardhana Motherson Finance Ltd : Product & Company Portfolio Wiring Harness Manufacturing

Rear View Mirrors

Motherson Sumi Systems Ltd. Kyungshin Kyung shin Industrial Motherson Ltd. Motherson Sumi Wiring System Ltd. (FZC) MSSL (GB) Ltd. MSSL Ireland Pvt. Ltd. MSSL Mideast (FZE) Motherson Sumi Electric Wires (A Division of MSSL) Motherson Electrical Wires Lanka Pvt. Ltd.

Samvardhana Motherson Reflectec Ltd. (SMR) • SMR Automotive Systems India Limited • SMR Automotive Taree Pty Limited • SMR Automotive Australia Pty Limited • SMR Automotive Yancheng Co. Limited • SMR Automotive Beijing Company Limited • Ningbo SMR Huaxiang Automotive Mirrors Limited • SMR Automotive Systems France S.A. • SMR Automotive Services GmbH • SMR Grundbesitz GmbH & Co. KG • SMR Automotive Mirrors Stuttgart GmbH • SMR Automotive Beteiligungen Deutschland GmbH • SMR Automotive Mirror Technology Hungary Bt • SMR Poong Jeong Automotive Mirrors Korea Ltd. • SMR Hyosang Automotive Ltd • SMR Patents S.à.r.l. • SMR Automotive Vision Systems Mexico S.A de C.V • SMR Automotive Systems Spain S.A.U. • SMR Automotive Mirrors UK Limited • SMR Automotive Systems USA Inc.

Polymer Processing & Tool Manufacturing

Balda Motherson Solution India Ltd. MSSL Advanced Polymers s.r.o. MSSL Polymers GmbH Motherson Automotive Technologies & Engineering (A Division of MSSL) Sumi Motherson Innovative Engineering Ltd. MSSL Tooling (FZE) CTM India Ltd. Motherson Molds and Diecasting Ltd.

Elastomer Processing Motherson Elastomer Pty Ltd. Woco Motherson Advanced Rubber Technologies Ltd. Woco Motherson Elastomer Ltd. Woco Motherson Ltd. (FZC)

10


SMFL ventures have a diversified product portfolio, encompassing the entire range of the Samvardhana Motherson Group products. SMFL ventures supplement and support MSSL products and enhance MSSL’s position as a full system solutions provider to a wide range of industries.

Modules & Systems

IT & Design Engineering

A Basic Concepts Designs Pty Ltd. Miyazu Motherson Engineering Design Ltd. MothersonSumi INfotech & Designs Ltd.

Metal Working Motherson Innovative Engineering Solutions (A Division of MSSL) Motherson ORCA Precision Technology Technology GmbH Motherson Techno Tools Ltd. Nachi Motherson Tool Technology Ltd. Nissin Advanced Coating Indo Co. Ltd.

Manufacturing Support AES (India) Engineering Ltd. Anest Iwata Motherson Ltd. Anest Iwata Motherson Coating Equipment Ltd. Matsui Technologies India Ltd. Motoman Motherson Robotics Ltd. Calsonic Kansei Motherson Auto Products Ltd. Fritzmeier Fritzm eier Motherson Cabin Engineering Ltd. Magneti Marelli Motherson Auto System Ltd. Motherson Zanotti Refrigeration Systems Ltd. Spheros Motherson Thermal System Ltd. Webasto Motherson Sunroofs Ltd. Global Environment Management (FZC) Together we make it happen

11

MSSL Overview

VISION

To be a Globally Preferred Solutions Provider Mission Ensure Customer Delight Involve Employees as “Partn “Partners” ers” in Progress Enhance Shareholder Valu Valuee Set new standards in good corporate citizenship

Values Be a lean, responsive and learning organisation Continuously improve to achieve world-class standards and total customer satisfaction Proactively manage change Maintain high standards of integrity and safety Ensure a common culture and a common set of values throughout the organisation Recognise individuals' contribution contributionss Develop stronger leadership skills, greater teamwork and a global perspective Constantly upgrade skill levels across the organisation through knowledge sharing programmes

12


Market Position

Facilities

One of the largest manufacturers of automotive rear view mirrors for passenger cars in the world

Wiring harness manufacturing: 20

Largest manufacturer of automotive wiring harnesses in India, with more than 65 per cent market share in passenger car segment, serving the entire automotive industry

Tube manufacturing: 1

Largest manufacturer of rear view mirrors for passenger cars and MUVs in India, with nearly 48 per cent share in the segment as assessed by the company

Liquid silicone rubber injection molding: 1

One of the largest manufacturers and suppliers of plastic components to automotive industry One of the most diversified groups in the Indian automotive industry

Wire manufacturing: 3 Plastic molding: 14 Rubber molding: 5 Injection molding tool manufacturing: 1 Design engineering: 15 IP/ cockpit assembly: 2 Door trim manufacturing: 3 Automotive mirror manufacturing: 18 Metal machining: 3


13

MSSL Overview Products Automotive Rear View Mirrors

Automotive

Wiring Harnesses

Off-Road Vehicles

Wires

Earthmoving and Material Handling Equipment

Injection Molded Product Productss

Agriculture and Farm Equipment

Blow Molded Products

Medical Diagnostics

Liquid Silicone Rubber Molded Components

Rubber and Tyre Industry

Injection Molding Tools

IT Hardware

Precision Machined Metal Components

Test and Measuring

Modules > IP/Cockpit > Door Trims > Bumpers > Air intake manifolds > Air filter systems > Car air conditioning systems Waste Recycling System

14

Industries Served


Scientific Equipment Elevators Electrical Equipment Lawn Equipment White Goods Electronics Office Automation

Chairman’s Chairman ’s Letter

WxtÜ f{tÜx{ÉÄwxÜá? IT GIVES ME IMMENSE PLEASURE TO PRESENT TO YOU THE 22ND ANNUAL REPORT OF YOUR COMPANY. IT IS MY FIRST LETTER TO YOU AS THE CHAIRMAN OF THE COMPANY. I have been associated with MSSL since 1992. From the listing of the company in 1993 till date I have seen the evolution of MSSL from an Indian wiring harness manufacturer to a global tier 1 manufacturer of modules and systems. MSSL has always been a consistent performer, but this year has been a truly special year. It has been a year of economic meltdown across the world. The automotive industry along with auto components industry has been severely affected. Though no one remains unaffected by the economic situation, MSSL still maintained its trend of growing faster than the market. This could be achieved because MSSL has been increasing its content per car through a balanced product portfolio coupled with a balanced customer base. Considering the given situation, MSSL’s growth of 28% on a consolidated basis is a fairly good growth. This demonstrates the resilience and inherent values of MSSL that have always been the motive force behind its growth. These are the values of building trust in customers, always trying to add value as a supplier and at the same time create more value for its investors.

As a part of its strategy for Vision 2010, MSSL acquired the business of Visiocorp, one of the world’s largest manufacturers of rear view mirrors. This acquisition establishes MSSL as a leading manufacturer of rear view mirrors and also as an established Tier-1 manufacturer to the global automotive industry. Since this acquisition was made in March 09, the real impact would be visible in the next fiscal. The Indian auto sector is on the recovery course. The world economy has also started showing signs of recovery. We have a positive outlook. With the improving improving economic conditions we see good opportunities in next couple of years. It has always been our endeavour to create more value for all our stakeholders. MSSL will continue its efforts to achieve its growth and profitability targets. I thank all our stakeholders for their continued support. Sincerely,

M.S. Gujral Chairman, Motherson Sumi Systems Limited


15

Vice Chairman’s

16


“SAMVARDHANA MOTHERSON GROUP”. SAMVARDHANA SAMVARDH ANA MEANS EVER INCREASING VALUE FOR ALL. THE NEW NAME OF THE GROUP

IS

A

PROJECTION

OF

OUR

COMMITMENT AND CONSISTENT FOCUS ON CREATING VALUE FOR ALL OUR STAKEHOLDERS.

Letter to the shareholders

WxtÜ f{tÜx{ÉÄwxÜá? I take this opportunity to present to you the new name of our group – “Samvardhana Motherson Group”. Samvardhana means ever increasing value for all. The new name of the group is a projection of our commitment and consistent focus on creating value for all our stakeholders.

business needs, moving forward in its vision of being a globally preferred solutions provider. The Company has transformed from being the largest manufacturer of wiring harnesses and rear view mirrors for passenger cars in India to one of the largest manufacturers of Rear Vision Systems in the world.

I also present to you a new face of your company; a new Motherson Sumi Systems Limited (MSSL) that is now a truly global company with a presence across four continents; the Company Company that has a much expanded product range, service offerings and technological capabilities and can now offer a broad range of integrated solutions to support customers’ evolving

In March 2009 MSSL along with group company Samvardhana Motherson Finance Limited has acquired global business of Visiocorp, one of the largest manufacturers of automotive rear view mirrors in the world. Visiocorp brings its own state-of-the-art technology, a global manufacturing base and a customer base covering almost every major automobile

manufacturer of the world. We are deeply honored for the confidence our customers have reposed in us and we look forward to further strengthening these excellent relationships. After the restructuring and turnaround, which we plan to bring about in the forthcoming years, it would emerge as a much stronger company. The new entity will operate under the new brand name Samvardhana Motherson Reflectec (SMR). I welcome all the members of Visiocorp to the Samvardhana Motherson family. We now have the capability to serve global OEs in all major markets. With this


17

IN WIRING HARNESSES WE CONTINUE TO BE MARKET LEADERS. THE COMPANY HAS ADDED NEW CUSTOMERS, NEW PRODUCTS AS WELL AS NEW TECHNOLOGIES IN BOTH WIRING HARNESSES AND POLYMERS.

acquisition we have moved closer to our Vision 2010: to make MSSL a Billion Dollar Company; Maximum share of any one customer in consolidated turnover to be less than 20%, and to have more than 60% sales to customers outside India. A dividend of 32% of the consolidated profit is already being paid to our shareholders in view of substantial investments being made by the Company. We aim to achieve cash positive position in the acquired entity in the first year itself. We strive to lay a strong foundation for years to come, to match the financial targets of the group. Though because of new investments and the acquisition ROCE has been impacted in the short term, we are focused on achieving our long term targets. This was an unprecedented year globally, globally, although not on a positive note. Most of the world economies went into a recession. Industrial output declined

18


following a severe slump in global demand. Auto industry faced probably the worst crisis in many decades with a number of major players struggling for survival. Collapsing banks, tight credit, soaring interest rates, fuel costs, raw material cost and exchange fluctuations all added to the gravity of the situation. Our performance also got impacted by the global meltdown. We could grow the top line but the bottom line was affected particularly on a standalone basis. Still we managed to maintain our profitability albeit lower than the previous year. Though not entirely to our satisfaction, considering the overall economic conditions and the industry performance this was not a bad performance. We still have strong cash flows and have a sound financial and operative health. We have survived the worst crisis faced by the industry in a long time. We have emerged as a leaner and a more efficient company.

In wiring harnesses we continue to be market leaders. The company has added new customers, new products as well as new technologies in both wiring harnesses and polymers. Air cleaner assemblies are significant additions in polymer products for which we have acquired new technologies through our collaborators. The mirror business in India now has around 48% share in rear view mirrors for passenger cars. We have got new business from Renault Nissan and Mahindra & Mahindra for their new models. During the year our joint venture Calsonic Kansei Motherson started commercial production of HVAC systems and compressors which are being supplied to Maruti Suzuki’s new model Ritz. The JV will be introducing more products and is geared up for the new launches. We have established new facilities for

rubber products in India. Aimed at the Indian market, the company will be introducing some of the rubber products and compounds using technologies acquired in Australia. The existing rubber business in Australia is doing well and has started supply of rubber to tyre retreading industry in Australia. We are making conscious efforts to increase the depth of product range in all our business verticals, thereby increasing our content per car. We are creating more value for our customer by offering more solutions and becoming a single window source for multiple products. With this increasing content we have been able to grow our sales even in a shrinking market condition. It seems that for the Indian automotive industry the worst is over. With the passenger cars sales picking up in the 1st quarter of 2009-10 aided by the stimulus

packages from the government, the situation is improving. Even at the global level there are slow but clear indications of recovery. The coming quarters may still be tough, but by the year end the global industry is expected to recover to a reasonable level.

witness a number of new car model launches. We now have a strong global footprint and a better global position as a tier-1 supplier. We are well poised to serve the requirements of our customers and to avail the emerging growth opportunities globally.

The results of the first quarter of the year 2009-10 has started on a promising note particularly on the domestic side which has resulted in positive growth on a year on year basis. Consolidated sales have grown by 133% while the standalone sale is stable. The operation of SMVSL has shown some signs of improvement and I am proud of the team of SMVSL who are taking the challenge of delivering the improved performance in this turbulent global scenario. SMVSL has shown positive EBIDTA in the first quarter.

We have always believed in transforming with the changing times, with a proactive approach towards growing faster than the markets. We believe in building trust by creating value for our stakeholders. We will always follow value creating growth. We value your trust in us and thank you for your support.

V. C. Sehg Sehgal al

For us years 2010-11 and 2011- 12 will be significant as the Indian market will

Vice Chairman Motherson Sumi Systems Ltd. Chairman Samvardhana Motherson Group


19

Growing Trust. Transfor ransforming ming Business Business.. Enhancing Value For All.

Trust is the basis for all growth and the core of all transformation… The trust MSSL shares amongst its stakeholders is a legacy it has built in the past 23 years, and which is today its greatest asset. A successful business is built through fruitful relationships and towering trust levels. With a philosophy rooted in this credo, MSSL believes in an increased propensity to strengthen trust among all its stakeholders. So deep-rooted and intrinsic to the Company’s business is this trust that most of the joint ventures of the Company have taken place at the behest of customers, either to partner with their follow-me source or to acquire a particular technology to meet their requirement. Calsonic Kansei Motherson, a joint venture, was formed to meet the requirements of Maruti Suzuki and Nissan Motors. Kyungshin Industrial Motherson Limited caters to wiring harness requirements of Hyundai motors in India. Both the partners in these JVs are major suppliers, globally, to their respective customers. These are just a few examples. MSSL itself is the oldest joint venture, being 23 years old. The relationships with our JV partners

20


have grown from strength to strength over the years, which is evident from formation of multiple JVs with the same JV partners. Another vital dimension of this ever-growing trust is the confidence the shareholders have in the Company. Good Corporate Governance means complete transparency, which is practised by MSSL in all its operations and activities. The Company has always believed in keeping its shareholders informed about the path it is taking in any venture or operation. The five-year target set by the Company for itself is made public, and each year the progress made in the direction of achieving the same is shared with all the stakeholders. Highly committed employees with high trust levels contribute in a big way to the productivity of MSSL. The integrity of the organization and the trust enjoyed by the Company from its customers, shareholders, employees and collaborators have helped it in achieving the goals and targets it has set over the years.

All growth is rooted in transformation, and therein lies the importance of change… Armed with the trust of its various stakeholders, MSSL has continuously evolved over the years, successfully transforming into its present form. The Company Company,, which started its journey as a wiring harness supplier to a single customer, customer, is now a supplier of multiple products ranging from Wiring Harness to Automotive Rear View Mirrors, from Plastic Molded Parts & Assemblies to Complete Modules, Injection Molding Tools & from Rubber Products Produc ts to Metal Machined components, components, serving more than 500 customers worldwide. The Company, Company, which was running through a single unit in India, has now grown into more than 60 units in 20 countries across Asia, Europe, North America and Australia. Starting with its partnership with SWS, today MSSL has transformed into a JV specialist, having multiple JV partners.

Trust is the basis for growth… growth is rooted in transformation… transformation leads to value enhancement for all. MSSL is a customer-driven company. Today, the Company is a single-window - complete solutions provider - for its customers. The Company’s passion for Quality, Cost, Delivery, Development, Management, Safety & Environment (QCDDMSE) yields both tangible & intangible value enhancement to all its customers. The Company has, since its inception, always striven to retain all its valued customers. It has established dedicated units to cater to the needs of specific customers. MSSL is committed to sustained and value-creating growth for all its stakeholders. A person who invested Rs 1,000 in MSSL in 1993 would have a value of Rs. 2,50,000 as on 31st March 2009. A strong foundation of trust is the basis of growth for MSSL. MSSL has been continuously transforming proactively to become a better and stronger company, creating more value for all.


21

22


The transformation so far

For MSSL, it has been a journey of transformation – a transformation rooted in the trust of all its customers and other stakeholders, and a transformation that has enabled it to deliver exceptional value to them at every stage of its growth. MSSL started as a wiring harness manufacturing company in 1986 --a single-product and a single-unit entity. What propelled MSSL’s growth was a core value of creating more value for all its stakeholders through constant transformation. It has been a continuous transformation spanning all the constituents of the Company’s business, be it products, technologies, partnerships, customer segments or geographical footprints.

Wide range of products MSSL offers a diverse range of products for varied applications. Over the years, the Company has leveraged its competence in existing areas and collaborated with global technology leaders to create products fulfilling the technical needs of its customers. And, in doing so, it has transformed from a wiring harness manufacturer to a single-service interface for multiple customer needs. MSSL has consistently grown its content per car by continuously adding new products. MSSL offers products ranging from wiring harnesses to automotive rear view mirrors, injection molding tools, plastic components, rubber molded and extruded components, waste management systems, machined metal components, vehicle air conditioning systems and integrated modules like door trims and cockpits. It is not just the diverse product range but also the sheer depth within each product portfolio that differentiates MSSL. Within each segment, the Company provides a comprehensive range of products tailored to specific customer needs across various industries. Together we make it happen

23

The transformation so far

Wiring harnesses ---from a simple single circuit to complex designs with hundreds of circuits.

Molded plastic parts --- as small as a clip to as large as a bumper. From functional plastic parts to aesthetic appearance parts --- painted, printed and upholstered. From a small component to fully integrated modules like dashboards and door trims.

State-of-the-art technologies Contemporary technologies background integration.

in

wiring

harnesses

with

Full range of molding technologies, encompassing plastic injection molding, gas assist molding, two componen componentt molding, thermo set molding, blow molding, compression molding and post-molding facilities. Rubber injection molding, liquid silicon injection molding and rubber extrusion. Comprehensive mould-making technologies. A full range of specialised and customised metal machining solutions. State-of-the-art assembly techniques. Patented Paten ted aeration technology for waste recycling systems.

Diverse customer segments MSSL has a customer base spread over a spectrum of industries.

24


Rubber components for automotive and industrial applications.

High precision machined metal parts for critical applications like fuel injectors.

Under automotives MSSL caters to - cars, SUVs, trucks, buses, two-wheelers, trailers, dump trucks, garbage disposers, material handling and earthmoving equipment (including forklifts, cranes, bulldozers, road rollers, loaders), tractors, tillers, harvesters and lawn mowers. Under non-automotives, MSSL caters to machines, microscopes, cameras, binoculars, elevators, office automation equipment, consumer electronics, medical equipment, diagnostic equipment, industrial mounts, mounts, computers, as well as a number of precision measuring equipments. MSSL is increasing the list of applications with a widening product range, penetrating deeper into each segment.

Key collaborators Based on customer preference for follow-me sources and the growing requirement for new technologies, MSSL has collaborated with technology leaders in their respective fields to bring relevant technologies for the products required by its customers. With Sumitomo Wiring Systems as its principal partner, the Company currently has multiple collaborations with different technology leaders.

Small moulds for a tiny connector to large moulds weighing a few tonnes.

Basic flat-plate automotive mirrors to electric mirrors loaded with features.

AC ducts to complete car AC systems.

Waste recycling systems

Extensive geographical presence

Leadership position in the market

By February 2009, MSSL had established its presence in 12 countries across Asia, Europe and Australia. MSSL has developed a network of manufacturing bases, design centres, logistics centres, marketing support and sourcing hubs across a diversified geographical base. This imparts MSSL the advantage of proximity to customers, flexibility of alternative manufacturing and the ability to serve customers from India, UAE, Europe and Australia. Within India, MSSL enjoys a multi-locational manufacturing base with facilities located strategically close to major customer clusters.

MSSL is the largest manufacturer of wiring harnesses and rear view mirrors, and is also one of the largest suppliers of molded plastic products and modules for the passenger car and MUV industry in India. It is considered among the largest auto ancillaries in India.

The worldwide customers base of MSSL demonstra demonstrates tes its ability in serving customers that are globally dispersed. In this, it is supported by its robust logistics management. Global vendor base: MSSL has a high degree of backward integration for key inputs, along with a well diversified vendor base. Its international presence has translated into a cost-effective global procurement network with alternative sourcing options for most of its input materials.

Track record of mergers and acquisitions MSSL has a long and extensive experience of successful mergers and takeovers. While most of the mergers of its subsidiaries and JVs were a part of its restructuring strategy to make MSSL a stronger company, the inorganic growth has come through acquisition of assets of companies in distress, which MSSL has successfully turned around. All these acquisitions were supported by a strong rationale, as they were all done at very favourable valuations with complete support of customers, and contributed significantly in terms of turnover, technology,, geographical presence, product range and above all, technology a ready presence in respective niche segments with a strong customer base.


25

26


The quantum leap – Visiocorp acquisition

About Visiocorp The mergers and acquisitions that the Company had been undertaking all these years contributed significantly to its growth. However, the recent acquisition of Visiocorp has a unique significance for the Company because of its size, turnover, customer base, technology, geographical spread and the way it has positioned MSSL as a tier-1 supplier on a global level. With this acquisition, MSSL has taken a big leap in its growth and expansion plans. Visiocorp is one of the largest manufacturers of exterior rear view mirrors for passenger cars in the world. Visiocorp was originally named Schefenacker. The rear view mirror business was developed by combining Britax, Engelmann and Schefenacker. Visiocorp’s global share of exterior mirrors for passenger cars is around 30%, and that for the Indian passenger car segment is around 48% as accessed by the company. The market leader in Europe, Visiocorp manufactures approx. 30 mn exterior mirrors and 10 mn interior mirrors per annum. It supplies exterior mirrors, interior interior mirrors and blind spot detection systems for all passenger vehicle segments to nearly every carmaker in North America, Europe, Asia and Australia. Visiocorp has about 50 customers covering all the major OEMs in the world. The main customers of Visiocorp include BMW, BMW, Chrysler, Daimler, Ford/Volvo, Ford/V olvo, GM, Hyundai/Kia, Mahindra & Mahindra, Maruti Suzuki, Mitsubishi, Porsche, PSA, Renault/Nissan, Tata JLR, Toyota, Volkswagen/Audi etc. In 2008, Visiocorp Group had a turnover of approx. Euro 660 million (unaudited).


27

Visiocorp’s various operating companies include manufacturing locations at the US, Mexico, Mexi co, Australia, UK, Hungary, Spain, France, China, India and Korea, together with design and engineering centers at each location and at Germany. It has in-house competencies for plastic molding, electric drives, lighting technologies, electronics, painting and glass processing.

What led to the Visiocorp sale Visiocorp, at the time of its sale, was held by private equity holders / hedge funds. The business was carrying a huge debt at the plc level, senior debt of Euro 165.5 million including revolver of Euro 25 million, and Mezzanine debt of Euro 124.5 million. The company required infusion of funds to support the operations, particularly in the present economic scenario. The company had financial problems coupled with management problems at plc le vel.

What the acquisition entails MSSL subsidiary, Samvardhana Motherson Visiocorp Solution Ltd. (SMVSL), now renamed as Samvardhana Motherson Reflectec has acquired all the operating subsidiaries of Visiocorp plc (in administration) for a cash consideration of approx. Euro 25 million and allotment of 5% consideration shares having face value of Euro 1.5 million. The acquisition from Visiocorp plc (in administration) comprises comprises only assets in the form of s hares of the operating companies and no debt is being acquired from Visiocorp plc (in administration). SMVSL is 95% owned by Samvardhana Motherson Global Holdings Limited (SAMVARDHANA MOTHERSON GROUP), a joint venture between MSSL and Samvardhana Motherson Finance Limited (SMFL), in the ratio of 51:49.

28

through constant transformation of our business with the ultimate aim of delivering the maximum value to all our stakeholders. Essentially an extension of our core activities, the acquisition was, as in the case of most of our previous major acquisitions, a customer-driven move that was totally in line with the transforming global scenario where customer needs are perpetually changing. With today’s customers essentially looking for one-window solutions through bigger product portfolio and better geographical reach, the acquisition of Visiocorp – with its global footprints and huge customer base – was completely aligned with our goal to strive constantly to meet the changing customer demands. What made the acquisition even more attractive and timely was that it was undertaken at an extremely good valuation since it involved assets that were in distress, thereby bringing in a high value accretion for MSSL. The acquisition promises positive cash flow from the first year itself, making it a highly beneficial strategic move for MSSL. It was, in fact, the prevailing economic situation that generated the right and ideal opportunity for the acquisition. This was the appropriate time to acquire Visiocorp as we were able to complete the acquisition at very attractive valuations. Also, as per the deal, we had complete access over the assets of the company and had no obligations for any of Visiocorp plc’s liabilities. Thus, it was a very favourable proposition to us.

The rationale behind our acquisition of Visiocorp

The acquisition is clearly also validated by the fact that it has not only propelled MSSL to the global Tier I league, opening new markets like China, Mexico, USA, Korea, Japan, Spain, France and Hungary, but has also opened up a huge vista of opportunity for our associates to take on more responsibilities and cater to the growing and diverse demands of our global customers.

A strategic fit for the MSSL business and its core competencies, the acquisition of Visiocorp is but an extension of our philosophy of developing the trust of our customers to generate bigger growth

Another key rationale for this morale-boosting acquisition is the complete synergy of the Visiocorp business with the Samvardhana Motherson Group, since mirrors, being a synergistic product,


brings re-sourcing value into MSSL’s existing business lines of Wiring Harness, Polymer Processing & Elastomer. Lending prudence to our move was also the fact that Visiocorp had been successfully running business in India for more than 13 years through Joint Ven Venture ture with MSSL.

Visible and projected advantages of the acquisition With this acquisition, MSSL has become one of the largest manufacturers of automotive mirrors in the world. The synergies of the Visiocorp business are completely aligned with the existing business of MSSL. Visiocorp is a market leader in exterior rear view mirror systems and brings with it cutting edge technology, covering the complete range of mirrors from low-end entry segments to high-end luxury segments. The product range also includes specialised unique solutions like the Telescopic Trailer Tow Mirrors and camera-based Blind Spot Detection systems. Importantly, this acquisition also paves the way for MSSL to accomplish its stated goal of reaching a sales turnover of US $1 billion by the year 2010. The acquisition has enabled MSSL to acquire its own technology, research base, product expertise, and a ready customer base that includes all the leading automobile manufacturers of the world. The acquisition of Visiocorp has enabled MSSL to enhance it’s position as a global Tier-1 supplier in very short time and has almost doubled MSSL’s turnover. The acquisition will also provide access to Visiocorp’s over 300 patents. With Visicorp, the Group now has over 80 group manufacturing locations in 20 countries, of which 60 are in India.

The acquisition has led to expansion of MSSL customer base, opening more opportunities, thus establishing a global platform for MSSL and opening new opportunities for extending relationship with global customers. It has extended MSSL’s presence to more countries - USA, Mexico, Spain, France, Hungary, China, Korea and Japan.

Turnaround plan for Visiocorp With a highly successful track record of managing multiple joint ventures with players from different countries, cultures, Motherson is working as a truly global group. Before this acquisition, the Group had overseas facilities in 13 countries. The experience of operating together with joint ventures and overseas plants will help the Group effectively integrate with the global organisation of Visiocorp. With synergies between the existing Group business and the Visiocorp business, the technical and operational integration is being well taken care of. Financial restructuring has already been done. The existing business of MSSL and SMG greatly supplements Visiocorp’s need for products and services, particularly in design engineering services, IT, molds, injection molded parts & assemblies and wiring harnesses. We will leverage these synergies to support Visiocorp. Earlier, because of the financial condition of the company, a lot of Visiocorp facilities were underutilized as customers were holding back orders. The situation is now improving in the wake of the acquisition. Apart from extending financial and management support to Visiocorp, MSSL, with its existing synergies in operations and the related backward integration, can also support Visiocorp by supplying wiring harnesses globally for the business and also extending support in design, tooling and molding.


29

In the driving seat

Visiocorp’s product portfolio The Visiocorp product range is a broad portfolio extending from exterior and interior mirrors to blind spot detection systems for all passenger vehicle segments. As a technology leader, Visiocorp introduced the world's first exterior mirrors with integral turn signal lights, the first combined power telescopic and power folding mirror for light trucks and the only camera-based blind spot detection system in the market, featuring leading edge image processing technology.

30

Exterior mirrors

Interior mirrors

Visiocorp offers extensive range of exterior mirrors with features which includes Convex and Aspheric glass, Electric glass adjustment, Glass heating, Power fold, Bulb and LED turn signals, Temperature sensors, Memory position adjustment, LED light guide turn signals, Bulb and LED ground illumination, Water repellent glass, LIN Bus node.

The interior mirrors that come from the Visiocorp house range from prismatic versions up to complex multifunction systems featuring Reading lamps, Ambient light, Microphones, Remote control garage door opener, Telematics interface & Emergency switch, Auto dimming glass, Rain sensor, Air temperature and humidity sensor.


A young visionary with a passion to drive growth-centric transformation, Mr. Laksh Vaaman Sehgal is the CEO of Samvardhana Motherson Reflectec. He is also on the Board of Directors of Motherson Sumi Systems Limited and Samvardhana Motherson Finance Limited, the flagship and the holding companies of Samvardhana Motherson Group (SMG) r espectively. The son of Mr. V.C. Sehgal, Chairman Samvardhana Motherson Group, Vaaman has an academic record par

excellence, holding a MBA degree from Columbia Business School (USA). Having undergone intensive training in all the main business ventures to gain hands-on knowledge of the Group, he has also spent three years working with the Group’s collaborators in Germany and Japan. Vaaman is closely involved in all the new ventures, and he is a member of the core strategic team that is responsible for the overall management of the Group.

Blind Spot Detection Systems The first -"seeing" mirror Visiocorp's high-tech Blind Spot Detection system has been in use since 2005 to monitor the blind spot, helping to make overtaking easier. It is the first driver assistance system which is able to independently recognise moving objects through electronic image processing. Digital cameras located in the door mirrors observe traffic behind the vehicle, taking 25 pictures a second. Small yet powerful microprocessors in the door mirrors process the image information. If a vehicle enters the warning zone, an orange LED located inside the car, near the door mirror lights up to warn the driver.

Turn signals

Telescopic Trailer Tow Mirrors

The mirror turn signal today shapes the appearance of many vehicle models of numerous car manufacturers. Its location at the outermost position of a vehicle and near the eye level of the driver ensures optimum visibility of the signal light. It was launched in the market in 1998 in cooperation with Mercedes-Benz. Today, Visiocorp Group's incandescent, LED and state-of-the-art light pipe turn signals provide unique styling to exterior mirrors.

Visiocorp is i s a world worl d leader in i n Telescopic Telescopic Trailer Tow (TTT) mirrors. It was the first to incorporate both powertelescoping and power- folding functions into a trailer tow mirror. This allows the driver to electrically extend the mirror heads when towing, retract it for normal driving conditions and electrically fold the mirrors to the vehicle when parking.


31

Global Presence

USA

MEXICO

Manufacturing Locations Design & Developement Centre Representative Office

32


IRELAND

UK

GERMANY

SOUTH KOREA CHINA

CZECH REPUBLIC

NOIDA & NCR REGION (FARIDABAD, GURGAON & MANESAR)

HUNGARY

SPAIN

ITALY

KANDLA

LUCKNOW

AUSTRIA

FRANCE

JAPAN NASHIK PUNE

CHENNAI

PONDICHERRY

BANGLORE

SRI LANKA

SINGAPORE

SHARJAH

MAURITIUS AUSTRALIA


33

Financial Highlights

Consolidated

Rs. in Million

Sales- Net of excise Within India Outside India Total Sales EBIDTA Profit before tax Profit after tax (Net) Earnings per share - Rs. Per share Reserves and surplus Loan Funds Foreign currency convertible bonds

2008-09

2007-08

% change

14,430.70 11,525.70 25,956.40 4,004.70 2,559.78 1,762.52 4.96 7,475.55 5,880.41 3,070.52

12,817.25 7,464.00 20,281.25 3,352.75 2,262.20 1,778.62 5.03 5,003.15 1,999.81 2,891.41

12.59% 54.42% 27.98% 19.44% 13.15% (0.91)% (1.39)% 49.42% 194.05% 6.19%

Capital Employed & ROCE 45

1800

40

1600

3071

1400

35 30

1200

n o i l l i M n i . s R

5880

10000 8000

2914

6000

2715

4000

1549

1238 2200

2000 0

2004-05

2939

Sales break-up

2000

15

1688

10

5359

3796

7831

) % ( E C O R

5

2006 20 06-0 -07 7

2007 20 07-0 -08 8

Total Loans

FCCB

2008 20 08-0 -09 9

ROCE%

Sales Profile HSCIL 2.1%

General Motors 2.2% Outside India 44.4%

Volkwagen 2.1%

Piaggio 2.4% Mahindra & Mahindra 2.7%

Within India 55.6%

Others 42.6%

Tata Motors 3.1% Maruti Suzuki 16.6%

Ford 5.2% SEWS Hungary 7.5%


20

0

2005 20 05-0 -06 6

Net Worth

34

25

2891

Hyundai 13.5%

Standalone

Rs. in Million

2008-09

2007-08

% change

Within India

10,382.22

10,420.37

(0.37)%

Outside India

2,567.21

2,610.64

(1.66)%

12,949.43 1,688.58 852.46

13,031.01 2,361.28 1,641.99

(0.63)% (28.49)% (48.08)%

Profit after tax (Net)

695.41

1,281.92

(45.75)%

Equity Capital

355.55

355.55

0.00%

Earnings per share - Rs. Per share Reserves and surplus

1.96 3,802.80

3.63 3,668.96

(46.01)% 3.65%

Load Funds

2,311.02

1,719.21

34.42%

3070.53

2,891.41

6.19%

Sales- Net of excise

Total Sales EBIDTA Profit before tax

Foreign currency convertible bonds

Capital Employed & ROCE 45

12000

40 10000

3071

8000

n o i l l i

M n i . s R

35 30

3071 2891

25

6000

2914

1719

2715

4000

20

2311

15

1066

10

1075

2000

722 1741

2280

4025

3010

4158

) % ( E C O R

5 0

0

2004-05

Net Worth

Sales break-up

2005 20 05-0 -06 6

2006 20 06-0 -07 7

2007 20 07-0 -08 8

Total Loans

FCCB

2008 20 08-0 -09 9

ROCE%

Sales Profile Hindustan Unilever 3.7%

Outside India 19.8%

SWS 2.7%

Ford 3.7%

JCB 2.7%

HSCIL 4.1% Others 30.7% Hyundai 4.8% Within India 80.2%

Piaggio 4.8% Maruti Suzuki 31.8%

Mahindra & Mahindra 5.4% Tata Motors 5.6%


35

Customer Relationships Armed with a philosophy of nurturing trust at all levels at all times, MSSL has, over the years, built trusted and long-standing relationships with major players of the Indian and global automobile industry. Being a highly customer-focused company, MSSL has always offered extremely customised solutions to its customers.

Most of the joint ventures and subsidiaries of MSSL have been established on the core of its trust, which has consistently and constantly enabled the Company to transform itself in line with the changing needs of customers across geographies and product profiles. This, in turn, has enabled the Company to deliver maximum value to its customers.

Customer recognition An endorsement of the trust that our customers have in us is the large number of awards and customer recognitions that we have earned over the years. A glance at some of the awards and endorsements received from our customers in 2008-09:

Honda Siel

Maruti Suzuki

Performance Award Overall Excellence

Performance Award MPS

Performance Award VA-VE

Gold award for Delivery

Performance Award Part Development

Ashok leyland

Performance Award System Audit

Performance Award Incoming Quality Improvement

Vendor Quality Awareness Quiz Award

National Top Top performer for service parts supply award

Sumitomo Wiring Systems

Hyundai

National Top performer for service parts supply award

Best Cooperation 08-09

Toyota

B es es t S up up pl pl ie ie r G ol ol d A wa wa rd rd

36

Z er er o P PM PM A wa wa rd rd


Merit Award 08

Good Practice Award

Tata Motors

Caterpillar

GE Healthcare

Outstanding Performance

Bronze level certification for “Supplier Quality Excellence Process"

Outstanding Delivery Performance as a Strategic Supplier

Management Discussions and Analysis Overview (2008-09)

Rs. in Million

The year 2008- 09 is unprecedented for MSSL. The year marked the acquisition of rear view mirror business of Visiocorp, a strategic move for leveraging on our existing strengths and fostering deeper customer relationship. This also transforms the company into a global player catering to Tier1 requirements globally.

The Indian vehicle market, after few years of consistent good growth, witnessed a distinct slowdown in growth. While both passenger car and Two Two wheelers market registered r egistered positive growth, the commercial vehicle segment has negative growth over the previous year. Figures in Thousand Nos. 2008-09

2007-08

2006-07

Passenger Vehicles Numbers Growth rate

2007-08

Growth %

Rubber/metal machined components

2,152

2,207

(3%)

Mirrors

3,643

353

932%

25,956

20,281

28%

Wiring harnesses

9,453

9,517

(1%)

Polymer components

3,216

3,120

3%

280

394

(29%)

12,949

13,031

(1%)

Total

Indian Vehicle Market

Segment

2008-09

1,846

1,754

1,545

5%

14%

18%

417

545

520

(23%)

5%

33%

8,348

8,009

8,444

4%

(5%)

11%

Standalone

Rubber/metal machined components Total

Some of the main highlights of the Company during the year 2008-09 were: 1)

The Com Company pany acqui acquired red the globa globall busines businesss of Visioc Visiocorp orp engaged in the manufacture of rear view mirrors on 6th of March 2009. With this acquisition, MSSL has become one of the largest manufacturers of automotive mirrors in the world. This further elevates its positioning as a major Tier 1 supplier to automotive industry with a global footprint spanning 20 countries. The consolidated figures include one month figures of acquired entities.

2)

The cons consolid olidated ated reve revenue nuess grew grew by 13% over the previous year, if we were to exclude one month of revenues of the acquired entity.

3)

The Com Compan pany's y's wirin wiring g harne harness ss busine business ss cross crossed ed Rs Rs 15 billion and witnessed a healthy growth of 17% over the previous year.

Commercial Vehicles Numbers Growth rate Two wheelers Numbers Growth rate

During the period, the consolidated revenues of MSSL grew by 28% to Rs 25,956 million and on a standalone basis , the revenues were almost flat at Rs 12,949 million Product Portfolio Rs. in Million 2008-09

2007-08

Growth %

15,675

13,351

17%

4,486

4,370

3%

Consolidated Wiring harnesses Polymer components

22nd Annual report 2008-09

37

Sales Performance The sales performance of the Company during the year 2008-09 on consolidated and stand-alone basis is as follows: Rs. in Million 2008-09

2007-08

% increase

Customers within India

14,431

12,817

13 %

Customers outside India

11,525

7,464

54 %

Total

25,956

20,281

28 %


10,382

10,420

-


2,567

2,611

(2 % )

12,949

13,031

(1 %)

Consolidated

Standalone

Total

The Company's sales to customers in India grew by 13% on consolidated basis while on standalone basis it declined marginally by 0.37%. Consolidated sales to customers outside India increased by 54% to Rs.11,525 million moving from 37% to 44% of total sales. With the acquisition of the rear view mirror business from Visiocorp, the non-automotive business will decline substantially. However, 2008-09 includes only one month figures of the acquired entity, the non automotive business is 12% of the consolidated revenue. The revenues of automotive and non automotive business for the year 2008-09 have been as follows: Rs. in Million Total Revenue

2008-09

% of Total

2007-08

% of Total

% Increase

23,969

87%

17,788

86%

35%

3,441

12%

3,139

15%

10%

156

1%

(135)

(1%)

216%

27,566

100%

20,792

100%

33%

11,685

88%

12,118

90%

(4%)

1,470

11%

1,494

11%

(2%)

167

1%

(134)

(1%)

225%

13,322

100%

13,478

100%

Consolidated Automotive Non automotive Unallocated Total Standalone Automotive Non automotive Unallocated Total

38


1%

Financial Review The summary of financial results of the Company on consolidated and standalone basis is as follows: As mentioned earlier, the results for the year 2008-09 include one month result of the acquired entities of Visiocorp. The acquisition has been done through special purpose vehicle , Samvardhana Motherson Global Holdings Limited, Cyprus in which the Company 's 100% subsidiary MSSL Mauritius Holding Limited is holding 51 % of the capital. In accordance with GAAPs accounting, the revenues are consolidated line by line as subsidiary and the share of profit/(loss) of minority shareholders is adjusted as "Minority Interest". Rs. in Million Consolidated

2008-09

2007-08

% increase

25,956

20,281

28%

3245

3379

(4%)

Exchange Fluctuations on FCCB

2 49

266

(6%)

Exceptional Income / (Expenditure) Net

8 97

240

2 74 %

Profit before taxes

2, 560

2,264

13 %

Profit after taxes

2,212

1,750

26 %

Concern Share after adjusting minority interest

1, 763

1779

(1%)

4. 96

5.03

(1%)

Sales Profit before interest, depreciation and tax(*)

Earning per share (Rs)

* Represents excluding foreign exchange fluctuation on FCCBs & exceptional income/expense The details of exceptional income / (expenditure) are as follows: 1.

During the year 2008-0 During 2008-09, 9, the Company Company has one time net income income of Rs 1,009 1,009 million million at Samvardhan Samvardhanaa Motherson Motherson Visiocorp Visiocorp Solutions Limited.

2.

Balda Motherson Motherson,, the Company Company 's joint venture venture has made provisio provision n of impairment impairment of fixed fixed assets assets of which Company Company has taken taken provision of Rs 112 million in its consolidated accounts in proportion of its shareholding in the joint venture.

3.

During Duri ng the year year 2007-08, 2007-08, the the Company Company has an income income of Rs 240 240 million million arising arising out of of profit profit on sale of land. land.


39

Rs. in Million Standalone

2008-09

2007-08

% increase

12,949

13,031

(1%)

2,048

2,387

(14%)

249

266

(6%)

(110)

240

(146%)

Profit before taxes

852

1,642

(48%)

Profit after taxes

695

1,282

(46%)

Earning per share (Rs)

1.96

3.63

(46%)

Sales Profit before interest, depreciation and tax(*) Exchange fluctuation on FCCBs Exceptional Income/ ( expenditure)

* Represents excluding foreign exchange fluctuation on FCCB & exceptional income/expense Notes: 1.

The Company Company has made provisio provision n for Rs 110 million million consequent consequent to impairmen impairmentt of fixed assets assets done done by Company's Company's JV Balda Motherson Motherson Solution Solution India Ltd.

2.

The figur figures es of 2007-08 2007-08 inclu include de Rs 240 milli million on toward towardss profit profit on sale sale of land. land.

Financial Position The financial position and other highlights are as follows: Rs. in Million 2008-09

2007-08

% change

2,627

1,695

55%

15,412

6,314

144%

Cash and Bank balances

2,766

954

190%

Net Current Assets

3,169

3,733

(15%)

Net Worth

7,566

4,939

53%

Foreign Currency Convertible Bonds

3,071

2,891

6%

(Euros 45.7 Million)


5,880

2,000

194%

Capital Expenditure (net of disposals)

2,119

1,241

71%

Net Fixed Assets

5,863

4,320

36%

179

327

(45%)

Consolidated Capital Expenditure (Net) Net Fixed Assets

(FCCBs) ** Loans other than FCCB Standalone

Cash and Bank Balances

40


Rs. in Million 2008-09

2007-08

% change

633

2,143

(70%)

3,893

3,605

8%

3,071

2,891

6%


(Euros 45 45.7 Mi Million)

2,311

1,719

Net Current Assets Net Worth Foreign Currency Convertible Bonds (FCCBs) ** Loans other than FCCB

34%

**Includes addition of Rs. 180 million and Rs. 244 million on re-instatement of FCCBs as on 31-03-2009 and 31-03-2008 respectively.

Wiring Harnesses The Company's brand has been closely associated with wiring harnesses because of its long standing presence in this product segment, dominant market share and a high proportion of corporate revenues derived from it. The wiring harness division accounts for nearly two-third of the Company's revenue. The Company together with it's Joint Ventures also enjoys 65% market share of the passenger car segment in India as accessed by the Company. The Company is a leading supplier of wiring harnesses to most of the OEMs in India. The division has the capability to design harnesses from the vehicle designing stage. There is a high degree of backward integration for the product. Critical inputs like wires, connectors, terminals, fuses and fuse boxes, tube clamps and binders, grommets and seals, caps and sleeves etc are all manufactured by the group which facilitates consistent, just-intime product supply and high quality end product.

Rs. in Million Wiring Harness

2008-09

2007-08

% Increase


10,801

9,510

14%


4,874

3,841

27%

15,675

13,351

17%


7,404

7,459

(1%)


2,049

2,058

(1%)

Total

9,453

9,517

(1%)

Consolidated

Total Standalone

The Company with its subsidiaries and joint ventures has its manufacturing base spread in India, Sharjah, Ireland and the United Kingdom. These manufacturing unit locations have been strategically selected to give logistical support to serve major customer destinations. The combination of design, range, quality, infrastructure, technology and proximity helped MSSL emerge as a complete service provider in the field of wiring harness. The customer base of MSSL spans the entire spectrum of the automotive industry and includes passenger cars and MUVs, two wheelers, commercial vehicles, tractors and farm equipment, earth moving and material -handling equipment, electrical & electronics and medical systems.

Domestic Market The Company continues to be a dominated player in the domestic market. During the year the copper prices together with volatile foreign exchange impacted the revenues of the division.


41

The wiring harness division continued to receive appreciation from its customers which is reflected in the awards received in the categories of Quality, Cost, Delivery, Development, Management, Vendor Performance & Supply to name a few.

Exports The total export of wiring harness on consolidated basis reached a new high level of Rs 4.9 billion. The exports from India were almost flat at Rs 2.05 billion, on standalone basis. The consolidated sales to customers outside India in this segment grew by 27%; the growth was also contributed by the Company's joint venture, Motherson Sumi Wiring System Ltd. (FZC), Sharjah. Out of the total exports of Rs 4,873 4, 873 million, direct exports constitute 52% of the total, the rest being exports to the collaborator for the global passenger car market for which manufacturing is done at Bangalore and Sharjah.

Outlook The Company's customer base has expanded this year both domestically and in the international market with the entry of various new customers across all segments. The customer base is expected to expand substantially in the coming years also as many new customers are entering the market and existing customers are introducing new models. The prospects of the segment appear encouraging across the foreseeable future. The cost of main raw material, copper continues to be volatile in the international market, which remains a challenge.

The range of products manufactured by the polymer division of the company - Motherson Automotive Technologies Engineering (MATE) (MA TE) includes injection-moulded components, assemblie s, blowmoulded components and integrated modules. In order to keep pace with increasing customer requirements, MATE continuously upgraded its existing facilities and added new facilities. MATE also manufactures air filters for automotive application with technology from Roki, Japan. MATE has 10 manufacturing facilities in India spread over Noida, Manesar, Bangalore, Chennai and Pondicherry. Rs. in Million Polymer

2008-09

2007-08

% Increase


2,970

2,718

9%


1,516

1,652

(8%)

Total

4,486

4,370

3%

2,810

2,714

4%

406

406

-

3,216

3,120

3%

Consolidated

Standalone Customers within India Customers outside India Total

The Company has expanded the following capacities during the year 2008-2009 







"New plants have been set up in Noida & Pune to meet the requirements of domestic and export market. New plant for export of wiring harnesses is being set-up at Kandla

Domestic

The extrusion capacity of Motherson Sumi Electrical Wires, Bangalore increased from 18,000 km to 26,000 km per month.

During the year, MATE achieved an increase of 3% in its domestic revenues. The division is focusing on adding new value added modules that require specialized engineering abilities.

During the year 2009-10, the company will be setting up unit at Chennai for future upcoming projects of Nissan

Markets outside India

Polymer The division has 14 manufacturing units across India, Sharjah, Germany and Czech Republic supported by various joint ventures and subsidiaries. It is amongst the largest plastic component suppliers to the automotive and consumer electronic industries in India. The division contributed approximately 17% to the Company's consolidated revenues in 2008-09.

42


The exports were severely affected by the global slowdown. On consolidated basis the sales to the customers outside India was Rs 1.5 billion. In addition to the revenues r evenues being contributed contri buted by MATE, this business is operated through the Company's subsidiaries namely MSSL Polymers GmbH (MSP-G), MSSL Tooling Ltd. (FZC) (MTL), Global Environment Management (GEM) and MSSL Advanced Polymers s.r.o.(MSP s.r.o.(MSP - CZ). GEM launched its product Aerobin in Europe, and is setting up the distribution network.

Outlook 





New units coming up in Pune and Chennai are near completion. These units will be meeting the growing demands of the domestic market mainly catering to the customers in these regions. MSSL Advanced Polymers s.r.o (Czech Republic) plans to build a new factory. Construction work for the same is to commence soon

Machined Metal Components, Rubber Components and others 1.

Metal Machi Metal Machinin ning g busines businesss is done done by Mother Motherson son Innov Innovat ative ive Engineering Solutions (MINES), a division of MSSL which has facilities at Bangalore and Chennai. In addition to this ,the Company has a JV Motherson ORCA Precision Technologies Technologies GmbH at Donaueschngen, Germany.

2.

Rubber Busin Rubber Business ess:: the Rubber Rubber Busin Business ess is condu conducte cted d through through the 3 joint ventures with Woco and Motherson Elastomers Pty Ltd., MSSL is establishing facilities for rubber compoun ding and products in India that will use the technology acquired in Australia.

3.

F u se se s , Fu Fu s e Ho Ho l d er er s a nd nd o t he he r s - T h i s b u s in in e s s i s conducted through its subsidiary Motherson Pudenz Wickmann Limited.

MATE will be setting up unit at Bangalore and in the Ford Supplier Park, Chennai.

Automotive Mirrors Till March 2009 the mirror business was conducted by MSSL through its joint venture company Visiocorp Motherson Limited. The JV is the market leader in Indian passenger car market with nearly 48% share as accessed by the Company. On 6th March 2009 MSSL took over the global rearview mirror business of Visiocorp Group which was under administration. With this takeover MSSL has become one of the largest manufacturers of rear view mirrors in the world. The details of this takeover have been discussed in detail in the earlier sections of this annual report. This division contributed a turnover of Rs 3,642 million which includes full year turnover of the Indian company (49% being MSSL direct holding) and one month turnover of Visiocorp group. The last year unaudited turnover of Visiocorp Group was USD 660 million. This division is going to be the major contributor to the turnover in the coming years. Rs. in Million Mirrors

2008-09

2007-08

% Increase

RUBBER/METAL MACHINED COMPONENTS

2008-09

2007-08

% Increase

25

261

(90% )


2,127

1,946

9%

Total

2,152

2,207

(3% )

Consolidated

Consolidated Customers within India

Rs. in Million

634

329

93%


3,009

24

1243%

Total

3,643

353

932%



43

Rs. in Million RUBBER/METAL MACHINED COMPONENTS

2008-09

2007-08

% Increase

Standalone Customers within India

168

248

(32% )


112

146

(23% )

Total

280

394

(29% )

The performance of these businesses namely rubber, metal, fuses and fuse related components has been discussed in details under "Performance "Performa nce of Subsidiaries and Joint Ventures Ventures""

Outlook The Company has set up facilities for rubber compounding and rubber moulding at Chennai by shifting part of the equipment from Australia. This is expected to increase competitiveness of the Company in the segment.

Performance of Subsidiaries & Joint Ventures The summary of the financial performance of the Company’s, subsidiaries is disclosed elsewhere in the annual report & forms part of the MDA. The summary of financial highlights of the JV companies is as follows:

Rs. in Million MSSL Holding

Capital Employed

Net Sales

Profit After Tax

Capital Expenditure

2 0 08 - 0 9 20 0 8 - 09 2 0 07 - 0 8 20 0 8- 0 9 2 00 7 - 08 2 0 0 8- 0 9 2 00 7 - 08 2 0 0 8- 0 9 2007-08 Kyungshin Industrial Motherson Ltd.

50 % 1,022.70

839.03 4,983.13 3,200.07

Visiocorp Motherson Ltd. (formerly Schefenacker Motherson Ltd.)

49%

337.19

177.91 1,073.12

Balda Motherson Solution India Limited

40%

397.04

744.53

Woco Motherson Ltd. (FZC)

33.33%

107.45

Woco Motherson Elastomer Ltd.

33.33%

Woco Motherson Advanced Rubber Technologies Ltd. Calsonic Kansei Motherson Auto Products Limited

44


440.08

274.96

184. 10

262. 62

719.62

67.51

39.70

148.93

18.31

199.82

13.97

(415.84) (4

( 130.49) (1

27.67

77.60

128.19

266.95

321.92

59.49

103.51

2.20

12.31

167.29

168.98

322.02

326.32

36.65

19.73

3.95

9.11

33.33%

307.53

342.73

374.51

385.48

70.34

77.06

12.09

17.52

49%

117.15 11

93.02

3.21

1.27

(45.57)

(6.98)

77.38

2.15

Brief of companies MSSL Mideast (FZE) MSSL (ME) is a 100% subsidiary of Motherson Sumi Systems Ltd and specializes in manufacturing of wiring harness. It is located in SAIF Zone Sharjah, UAE. Area of Business: It supplies wiring harness to leading manufacturers of material handling equipment and off-road vehicles in Europe. Certifications: TS 16949 & UL Certification Performance in 2008-09: During the year, the company's revenue grew from Euro 20 million to Euro 21 million. MSSL Mideast entered the Guinness Book of World records for constructing the longest balloons chain, for the longest contra line dance and also for maximum number of faces painted in one hour. This was a part of employee morale building exercise. Kyungshin Industrial Motherson Limited (KIML) KIML is a joint venture between Kyungshin Industrial Co. Ltd., South Korea and Motherson Sumi Systems Ltd. The company manufactures wiring harnesses at twin locations in Chennai (India).

Area of Business: The Company supplies wiring harness and related modules to niche segments in UK. Performance in 2008-09: MSSL (GB) achieved a turnover of GBP 4 million, as compared to GBP 5 million of the previous year. The company established its operations in 2007 and is now fully integrated with the group. Motherson Sumi Wiring Systems Limited The company is a joint venture between Motherson Sumi Systems Ltd. and Sumitomo Wiring Systems Ltd, Japan. The company is located in SAIF Zone, Sharjah, UAE. Area of Business: MSWS supplies wiring harness to Sumitomo Electric Wiring Systems in Europe. Performance in 2008-09: The joint venture grew its revenues from Euro 16 million to Euro 30 million registering a growth of 86%. Motherson Electrical Wires Lanka Private Limited The company is a 100% subsidiary of Motherson Sumi Systems Limited and is located in Sri Lanka.

Area of Business: It caters exclusively to the wiring harness requirements of Hyundai Motors India Limited for its complete range of cars manufactured in India.

Area of Business: The Company specializes in the manufacturing of wires for automotive applications. It supplies wires to different manufacturing locations of the group.

Certifications: ISO/TS 16949:2002, ISO 14001:2004, QUALITY 5 STAR

Certifications: BUREAU VERITAS Certification of ISO 9001:2000 STANDARD

Performance in 2008-09: KIML achieved a turnover of Rs 4983 million as compared to the Rs. 3200 million in the previous year. KIML is the 100% supplier of wiring harnesses to Hyundai Motors India since the beginning. During the year, year, KIML started mass production of wiring harness for Hyundai i20 for domestic and export market. The joint venture has expanded its capacity to meet the requirements of the customer.

Performance in 2008-09: MWL achieved revenue of US$ 25 million as compared to US $ 24 million of the previous year.

MSSL (GB) LTD. The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and located in New Castle, UK.

MSSL Tooling Limited (FZE) The company is a 100% subsidiary of Motherson Sumi Systems Limited and is located in Sharjah, UAE. Area of Business: It specializes in the manufacturing of plastic molded components and tooling.MTL supplies to Tier 1 customers and supports the polymer business in Europe


45

Performance in 2008-09: The revenue of MTL was Euro 4 million for the current year, as compared to Euro 2 million of the previous year registering a growth of 109%.

Area of Business: The company specializes in the manufacture of climate- control systems including HVAC modules, compressors, body control modules and meter clusters for the automotive industry.

Balda Motherson Solution India Limited Balda Motherson is a joint venture between Balda AG (Germany) and Motherson Sumi Systems Limited and is located in Chennai. Area of Business: The company supplies injection moulded components and assemblies for mobile phones, electrical and electronic equipments.

Performance in 2008-09: The company recorded a revenue of Euro 13 million, as compared to Euro 15 million of the previous year. A negative growth is shown due to drop in volume of work of major customers due to global recession.

Certifications: ISO 9000

MSSL Polymers s.r.o

Performance in 2008-09: The sales for the company reached Rs 200 million. New products comprised of mobile charger cover. Calsonic Kansei Motherson Auto Products Limited The company is a joint venture between Motherson Sumi Systems Ltd. and Calsonic Kansei, Japan. The manufacturing unit is located in Manesar, India.

The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Czech Republic. Area of Business: The company serves automotive and medical equipment industries, mainly the Tier 1 customers who have shifted base to Eastern Europe. Certifications: ISO/TS 16949

Area of Business: The Company specializes in the manufacture of climate- control systems including HVAC modules, compressors, body control modules and meter clusters for the automotive industry.

Performance in 2008-09: The revenue for the company remained flat at Euro 5 million as compared to 2007-08. A new factory to be set up in 2009-10 for which land has been acquired.

Performance in 2008-09: The company generated revenue of Rs 4 million. The company successfully launched HVAC (heating, ventilation and air conditioning) and Compressors for Maruti Suzuki India Limited. The company will be engaged in marketing, selling, exports, service, manufacturing and assembly of auto parts of integrated HVAC, ECM (Engine cooling module), Exhaust System (press and welding), CCM (cross car beam), Compressor, BCM (body control module), Instrument Cluster (meter, electronics) and CPM (cockpit module). The construction of the Chennai manufacturing unit has started and production to commence in the next year.

The Company is a joint venture between Motherson Sumi Systems Ltd. and WOCO Group of Germany. The company is located at the Sharjah Airport International Free Zone, Sharjah, UAE.

MSSL Polymers GmbH The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Germany.

46

Certifications: TS16949:2002; ISO 14001:2005; ISO 13485


WOCO Motherson Ltd. (FZC)

Area of Business: WML specializes in liquid silicone rubber injection Moulding. The product range includes products for automotive applications, medical equipment applications, measuring and control technology and kitchen appliances. Certifications: ISO/TS 16949 Performance in 2008-09: The revenue of the company stands at Euro 4 million as compared to Euro 5 million of the previous year. In calendar year 2008, the company distributed a total dividend of Euro 1.35 million.

WOCO Motherson Elastomer Ltd. The company is a joint venture between Motherson Sumi Systems Ltd. and WOCO Group of Germany and is located in Noida, India. Area of Business: The company manufactures and exports injection moulded rubber components back to the Joint Venture Partner.

Performance in 2008-09: The revenue for the company stands at AUD 32 million as compared to AUD 23 million of last year. To combat the recessionary trends in Automotive Business, the company has picked up business for Mixing Compound for Tyreretread and Mining Industry. The company plans to shift the moulding business to India to reduce the cost of production. Motherson ORCA Precision Technology GmbH

Certifications: ISO/TS 16949: 2002 & ISO 14001:2004 Performance in 2008-09: The revenue of the company stands at Rs 322 million as compared to Rs 326 million of the previous year. WOCO Motherson Advance Rubber Technologies Ltd. The Company is a joint venture between Motherson Sumi Systems Ltd. and WOCO Group of Germany and is located at Kandla Special Economic Zone.

The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Germany. It was previously called Mothersonsumi Reiner GmbH. Area of Business: The company serves automobile and auto component manufacturers and tier 1 customers. The product range includes high precision machined metal components for critical applications such as fuel pumps. Certifications: ISO /TS 16949:2002 (2nd edition: 2002-03-01)

Area of Business: The company focuses on automotive and auto component manufacturing. The range includes pedal parts and solid silicon articles for acoustic applications besides manufacturing and exporting rubber, rubber to metal and rubber to plastic bonded parts.

Performance in 2008-09: The revenue for the company stands at Euro 6 million. The operative business of Mothersonsumi Reiner Gmbh was recently transferred to Motherson Orca Precision Technology Gmbh. The company specializes in metal machining and provides key technical support to the venture.

Certifications: ISO/TS16949: 2004 Performance in 2008-09: The revenue for the company stands at Rs 375 million as compared to Rs 385 million of the previous year. Motherson Elastomer Pty Ltd The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Bendigo, Victoria in Australia. Area of Business: The company manufactures orbitread tyre compounds, conveyor belting rubber compounds, automotive component rubber compounds, weather strips, glass runs, boot and hood seals, tank straps, rubber flares, bonded components, suspension ushes, engine and transmission mounts, bump stops, large engine gaskets, silent blocks, industrial mountings and couplings, auto and truck suspension components Certifications: ISO/TS 16949(May2009) / ISO9000-200 / ISO14001-2004

Motherson Pudenz Wickmann Limited The company is a joint venture between Motherson Sumi Systems Ltd. and Wilhelm Pudenz GmbH & Wickmann Werke GmbH, Germany. MPWL is located in Noida, India. Area of Business: The company's key products are fuses and fuse holders and electronic circuit breakers. The target sector is consumer electronics. Performance in 2008-09: The revenue of the company stands at Rs 26 million as compared with Rs 29 million of the previous year. Global Environment Management (FZE) The company is a joint venture between Motherson Sumi Systems Ltd. and E- Compost Pty Ltd, Australia. It is located at the SAIF Zone, Sharjah, UAE.


47

Area of Business: The company has a 100% subsidiary in Australia for marketing its key product Aerobin in Australia. The product recycles household and garden wastes. Performance in 2008-09: The revenue of the company stands at AUD 2 million as compared to AUD 3 million in the last year. Sales revenue from Australia market is not expected to show any sign of significant recovery until Spring-09 - which in turn reflects the economic climate as much the seasonality that influences Aerobin/ Garden sales.

Support Subsidiaries

Ltd. The company is located in Ireland and provides design se rvices, mainly to wiring harnesses customers. It also provides logistics support services to MSSL and MSSL Mideast, enabling them to supply online to customers in Europe. MSSL (S) Pte Ltd.,Singapore The company is a 100% subsidiary of Motherson Sumi Systems Ltd and is located in Singapore. It provides support to MSSL and its group companies mainly for international purchasing. The company is also a holding company for the group investments in Australia.

MSSL GmbH, Germany

MSSL Handles GmbH, Austria

The company is a 100% subsidiary of MSSL through MSSL Mideast. MSSL GmbH is located in Gelnhausen near Frankfurt and acts as the holding company and corporate office providing support to the European entities.

The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Austria. It provides support to MSSL by coordinating with the customers. MSSL Australia Pty. Ltd.

MSSL Mauritius Holdings Ltd The company is a 100% subsidiary of Motherson Sumi Systems Ltd. and is located in Mauritius. The company is holding investments in Woco Motherson Limited (FZC) Sharjah, MSSL Ireland Pvt. Limited, Ireland, Samvardhana Motherson Global Holding Ltd, Cyprus.

The company is a 80% subsidiary of Motherson Sumi Systems Ltd. The Company, after phase- out of Door TRIM Program is now functioning as the corporate office and holding company for the group investments in Australia. MSSL Investment Pty. Ltd. The company is a 80% subsidiary of Motherson Sumi Systems Ltd. through MSSL Australia Pty. Ltd.

MSSL Ireland Pvt. Ltd., Ireland The company is a 100% subsidiary of MSSL Mauritius Holdings

Loan and funds position Rs. in Million Loans

48

Consolidated March 31, 2009 March 31, 2008

Standalone March 31, 2009 March 31, 2008

Short terms loans

2,040

1,458

885

1,380

Long term loans

3,840

542

1,426

339

Foreign Currency Convertible Bonds

3,071

2,891

3,071

2,891

TOTAL

8,951

4,891

5,382

4,610


Foreign Currency Convertible Bonds (FCCBs) During the year 2005-06, the Company had issued Zero Coupon Foreign Currency Convertible Bonds (FCCBs) of Euro 50.30 millions of which an amount of Euro 45.70 millions is outstanding as on 31-3-2009. The conversion price of these bonds is Rs 74.30 per share at fixed exchange rate of Rs 52.01 = Euro 1. In line with Company's conservative policy, the Company makes provision of premium payable at the redemption, in case conversion does not happen by the end date i.e 16th July 2010 as charge to Profit/ (Loss) account. In addition, the Company also provides for exchange fluctuation on the FCCBs (including on the premium charged so far to Profit & Loss account) as charge to Profit & Loss account. During the year, the company has charged an amount of Rs 249 million (Rs 589 million since issue of bonds) towards exchange fluctuation and amount of Rs 141 million (Rs 558 million since issue of bonds) as charge to Profit & Loss account.

Capital Expenditure During the year, the Company incurred capital expenditure of Rs 2,627 million and Rs 2,118 million on consolidated and standalone basis. The significant portion of this expenditure has been funded from internal accruals. During the year, the Company expects capital expenditure of Rs 3,000 million to Rs 4,000 million.

Human Resource Human resource is the organization’s most valued asset. Effective management of human resources is imperative to the success of any organization. MSSL believes in this maxim and hence starts by focusing on recruiting the best talent in the industry. Proper induction and orientation is stressed upon which provides a sense of belongingness and ownership towards the organization. This is the key to MSSL's success. Skills management is conducted as an ongoing process, with individuals assessing and updating their recorded skill sets regularly. This is done through training and development programmes. For senior executives, Leadership Development Programmes were institutionalized. MSSL provides an environment to its employees to take higher responsibilities and stretch assignments from very early stages of their career. To develop and reinforce the sense of belongingness to the organization various steps are taken. In our manufacturing units, for each activity there is a person declared as the owner of that activity, who takes the onus of maintaining and improving that

activity. Another way of involving employees outside the ambit of their jobs is in extra-curricular activities which includes cultural programmes and competitions. There are annual day celebrations, painting competition for the children of employees, picnics, cultural activities and quality circles, where maximum employee participation is solicited. Our team also participated in the global skill Olympics organized by our collaborator SWS. Such programs transcend all bars and create the "WE" feeling amongst employees. Quality Circle is another one of the employee participation methods. In MSSL they have emerged as a mechanism to develop and utilize the tremendous potential of people for improvement in product quality and productivity. The quality circle movement has been gaining strength in the Company. MSSL has more than 84 quality circles operating within the Company, its subsidiaries and joint ventures. It was a moment of pride for us when 'Uday' quality circle from SBU- IX was declared the winner at the QCC organized for the vendors by Maruti Suzuki India Limited. Another quality circle 'Utsah' from SBU IX was adjudged the winner in QC competition organized by Maruti Suzuki Supplier's Club. We also participated in the Quality Circle Convention organized by the Quality Circle Forum of India for the Delhi chapter and 'Jigyasa' quality circle from SBU- 1 AH was placed in the excellent category. MSSL today has a spread in 20 countries round the globe, where people of different nationalities, ethnicity, language and culture are working together. This benefits us both ways. It has helped us in giving a global exposure and understanding to our employees and has also facilitated in serving our customer across the globe in a better way. With a view to share its growth, employees are given option to have the shares of Samvardhana Motherson Finance Limited.

Environment, Health and Safety (EHS) The top priority for MSSL is to take the time and initiative to help protect their employees. Utmost attention is given to the safety of its employees, related communities and the environment at large. Health and safety form an integral part of work environment. In MSSL the responsibility of employee health and safety falls on Human Resource Management. Educating about safety programs, making employees aware about the health and safety policy of


49

the Company, conduct formal safety training, etc all form part of EHS training. The supervisors and departmental heads are responsible for maintaining safe working conditions. Various safety measures have started this year. A National safety week was conducted in MSSL from 4th March, 2009 to 10th March, 2009. Various activities were carried out this week which included display of safety banners, distribution of safety badges, a quiz competition on the safety measures and a safety march was held for the workers on the shop floor of the units. A meeting was also held with all contractors for safety awareness. In addition to these, Advanced Fire Fighting Technique cylinders were made available for the units. The year saw an incidence of fire in MSWS, Sharjah which was effectively controlled by the staff with the fire fighting team and other section associates. Fortunately, there was no harm/ injury to any of its people. To avoid even such lone incidences several measures have been taken. Safety audits are carried out at regular intervals in all the units. A training module of general safety is introduced for new employees. A new system has been started for issuing work permit. This work permit system covers all the aspects related to safety before starting of the work, after completion of work and also during the work. Most of the units of MSSL are accredited with ISO 14001 certification. MSSL re-affirms its commitment to provide a safe working place and clean environment to its employees and other stakeholders as an integral part of its business philosophy and values. The Company will continuously enhance its environmental, occupational health and safety performance in its activities, products and services through a structured MSSL management framework. MSSL develops products that help in improving the environment. Its subsidiary, Global Environment Management, is dedicated towards developing products for improving the environment. Their first product Aerobin is a technological breakthrough in home and garden waste management that allows households to effectively recycle organics at home. The product helps the avera ge household divert 50% of their waste away from landfill, into compost. Aerobin composts aerobically, a decomposition process that doesn't give off the potent, dangerous, greenhouse gases that occur when organic waste is decomposed an aerobically in landfill. This reduces household carbon emissions. The organic compost and diluted

50


Leachate produced by the Aerobin can be used as a natural soil conditioner in the garden also. The aim is to ensure that EHS risks and impacts are managed effectively and to identify opportunities to reduce risks and contribute to continuous improvement.

Opportunities and Future Prospects Global automotive industry is undergoing unprecedented turmoil that has found its most recent expression in a tightened credit market. In addition, the familiar industry challenges such as volatile raw materials costs and fuel prices, tighter regulations, have combined to create a business environment such as the industry has not experienced until now. The economic growth rate in India is expected to range between 6-7 percent in 2009-2010 and the situation will only improve from here. Government is supporting industry by combining monetary as well as fiscal measures- the stimulus package released by the government addresses a wide range of concerns and should hopefully give big boost to the slowing economy. It is a set of positive measures towards boosting growth. Interest rates have been reduced and a cut in the CRR, REPO and Reverse Repo by the government has increased the availability of credit in the market. OEMs are making substantial investments in India to cater to the Indian market as well as for exporting fully assembled cars from India. Factors such as superior engineering skills, modest domestic market growth, the sophistication of its IT industry and increasing free trade agreements in addition to low cost, are expected to boost India's auto-component sector growth over other countries in the coming years. MSSL is in the phase of consolidating its strengths and building its capacities for growth. Hence, when the economy world over stabilizes, the Company will be ready for the challenges the market will pose. MSSL is in a unique position to service the OEMs by bringing newer technologies through its joint ventures by being a complete system solution provider. In MSSL growth is imperative with time. While there are significant investments proposed to be made in expanding and upgrading of the facilities, we wi ll continue to be judicious in our capital spending and will continue to leverage our strong network of alliances /partnerships.

Corporate Social Responsibility - CSR In line with MSSL's commitment to a better society, Corporate Social Responsibility (CSR) is being taken up & adopted by the Company towards ensuring implementation of corporate values leading to helping deprived children of society through various programmes in the communities. Various CSR programmes for children of the deprived communities are being supported by the Company.

MSSL also lays special emphasis on using environment friendly product for safeguarding the environment through sustainable business products. It strives to achieve goals of achieving symbiosis with nature, and has been proceeding with efforts toward environmental protection in all aspects of its business activities.


51

Directors' Report

Your Directors have the pleasure in presenting the 22nd Annual Report together with the audited accounts of the Company for the financial year ended 31st March, 2009.

2008 at Rs. 1282 million. As per the Consolidated Accounts the profit after tax was Rs. 2212 million as compared to Rs. 1750 million in year 2007-2008.

Financial Results

The operational performance of the Company has been comprehensively covered in the Management discussions and analysis, which forms part of the Directors' Report.

The summarized financial results for the year ended 31st March, 2009 and for the previous year ended 31st March, 2008 are as follows: (Rs. in Million) Year ended 31.03.2009

Year ended 31.03.2008

Gross sales

14429

15156

Your Directors recommended payment of dividend of Rs.1.35 per share of Rs. 1/- each for the financial year ended March 31, 2009. The dividend, if approved by the members will be paid on or after September 24, 2009.

Net sales

12949

13031

Credit Rating

372

447

1689

2361

Less: Depreciation

545

500

Less: Interest (net)

291

219

Profit before tax

853

1642

Less: Provision for taxation

157

360

Profit after tax

696

1282

Add: Balance brought forward

1597

1127

Profit available for appropriation

2292

2409

Other Income Profit before depreciation, interest and tax

Operations and Performance During the year under review, your company achieved a turnover of Rs. 13321 million including other income of Rs. 372 million in comparison of its turnover of Rs. 13478 million including other income of Rs. 447 million of the previous financial year ended March, 2008.The marginal decline was due to unfavorable market conditions in the Automobile Sector. The profit after tax for the year ended March, 2009 at Rs. 696 million was lower than the previous financial year ended March,

52

Dividend


The Company continues to enjoy "A1+" rating by ICRA for its commercial paper / short-term debt program of Rs 1000 million.

Strategic Acquisition During the year 2008-2009, the Company has acquired global rear view mirror business from Visiocorp Plc. through its step down subsidiary Samvardhana Motherson Visiocorp Solution Limited, Jersey. The acquisition has been completed on 6th March, 2009. Visiocorp is a market leader in exterior rear view mirror systems and brings its cutting edge technology, covering the complete range of mirrors from low-end entry segments to high-end luxury segments. With this acquisition, Samvardhana Motherson Group has become one of the largest manufactures of automotive mirrors in the world. This further elevates the group's positioning as a major Tier 1 supplier to automotive industry with a global footprint spanning 20 countries and having 80 manufacturing units.

Fixed Deposits The Company has neither invited nor accepted any deposits from the public during the year yea r. There is no unclaimed uncla imed or unpaid deposit lying with the Company.

Directors

d)

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company Mr. Bimal Dhar and Mr.. Hiroto Murai, Directors of the Company retire by rotation and Mr being eligible, offer themselves for re-appointment.

Auditors

The Board of Directors have appointed appo inted Mr. M.S. Gujral as Chairman and Mr. V.C. Sehgal as Vice Chairman of the Company. Further, Mr. Laksh Vaaman Sehgal has been appointed as an Additional Director of the Company w.e.f. 30.04.2009. Your Directors welcome Mr. Laksh Vaaman Sehgal on the Board of the Company. Brief resume of the above Directors, nature of their expertise in functional areas and the name of the public companies in which they hold the Directorship and the Chairmanship/Membership of the Committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, are given as Annexure to the Notice convening the Annual General Meeting.

Directors' Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956 and subject to disclosures in the Annual Accounts, we state as under :a)

That in the the prepara preparation tion of the the annual annual accoun accounts, ts, the applica applicable ble accounting standards have been bee n followed and that no material departure were made for the same;

b)

That the Direc Directors tors have selec selected ted such such account accounting ing polici policies es and and applied then consistently and made judgments and estimates that were 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 year ended on that date;

c)

That the Direc Directors tors have take taken n proper proper and suffic sufficient ient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

That Direc Directors tors have prepa prepared red the the annual annual accoun accounts ts on a going going concern basis.

The Auditors of the Company M/s. Price Waterhouse, Chartered Accountants, Gurgaon, retire at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limit under section 224(1B) of the Companies Act 1956. The observations of the Auditors and the relevant notes on the accounts are self-explanatory and therefore do not call for any further comments.

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 AS -27 on Financial Reporting of Interests in Joint Venture in Consolidated Financial Statements, your Directors have the pleasure in attaching the Consolidated Financial Statements which form a part of the Annual Report. The performance of the Company on consolidated basis its subsidiaries and joint venture companies, is discussed at length in the Management discussion & analysis, analysis, which forms part of the Directors’ Report.

Particulars required as per Section 212 of the Companies Act, 1956 As per Section 212 of the Companies Act, 1956, your Company is required to attach the Directors report, balance sheet and profit and loss account of the subsidiaries of the Company. The Company has granted exemption for the year ended March 31, 2009 by the Ministry of Corporate Affairs from attaching to its Balance Sheet, the Annual Reports of its subsidiary companies. As per the terms of the Exemption Letter, Letter, a statement containing brief financial details of the Company's subsidiaries for the year ended March 31, 2009 is included in the Annual Report.


53

The annual accounts of the subsidiary companies, along with related detailed information shall be made available to the holding and subsidiary investors seeking such information at any point of time. Any shareholder of the Company/ its subsidiaries interested in obtaining the annual accounts of the subsidiaries may write to the Company Secretary at the Registered Office of the Company Company.. The annual accounts of the subsidiary companies shall also be kept for inspection by any investor in a Registered Office of the Company. In the opinion of the management, the consolidated accounts present a full and fair picture of the state of affairs and financial condition and they are accepted globally.

Audit Committee The Audit Committee was constituted in terms of the requirements set out in Clause 49 of the Listing Agreement with the stock exchange(s) on Corporate Governance comprising Mr. M. S. Gujral, Maj. Gen. Amarjit Singh (Retd.), Mr. Toshimi Shirakawa and Mr. Arjun Puri. Mr. M. S. Gujral is the Chairman of the Audit Committee.

Exports The Company's exports during the year were Rs. 2347 million as against Rs. 2499 million in the previous p revious 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 set up offices, mainly in Europe, to constantly service the customers as well as scan the markets for growth.

Corporate Governance A separate section on Corporate Governance, forming a part of the Director's Report and the certificate from the Company's auditors confirming compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement, is included in the Annual Report.

Listing The shares of your Company are listed at National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Delhi Stock Exchange Association Limited and Ahmedabad Stock Exchange. The bonds of the Company are listed at Singapore Exchange Securities Trading Trading Limited. The listing fees for the year 2009-2010 have been paid to the said Stock Exchanges.

54


Particulars of Employees Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of the employees are set out in the annexure to the Directors' Report. However, having regard to the provisions of section 219(1)(b)( However, 219(1)(b)(iv) iv) of the Companies Act, 1956, the Annual Report is being sent to all the shareholders of the company excluding the statement of particulars of employees under section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the registered office of the Company and same will be sent.

Energy Conservation, Technology Absorption and Foreign Exchange Earning and Outgo Information under section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure 'A' to this Report.

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.

Acknowledgement Your Board of Directors would like to place on record their sincere appreciation for the wholehearted support and contributions made by all the employees of the Company as well we ll as customers, suppliers, bankers and government authorities particularly in the state of Delhi, Haryana, Uttar Pradesh, Maharashtra, Tamilnadu and Karnataka towards the conduct of the efficient operations of your Company. Last but not the least the Board of Directors wish to thanks the shareholders, FCCB holders of the Company and the collaborator Sumitomo Wiring Systems Limited, Japan for its continuous support. For and on behalf of the Board for

Place: Noida Date: 27th July, 2009

MOTHERSON SUMI SYSTEMS LIMITED

M.S. Gujral Chairman

V. C. Sehgal Vice Chairman

Annexure `A' to Directors' Report Information regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Pursuant to Companies (Disclosures of Particulars Particulars in the Report of Board of Directors) Rules, 1988 and forming part of Directors' Report.

A. Con Conser servat vatio ion n of of Ener Energy gy

B. Tech echnol nolog ogyy Absor Absorpti ption on

a)

The following efforts are being made in technology absorption:

Energ En ergyy Con Conser servat vatio ion n meas measur ures es take taken n: The Company has constantly been emphasizing as optimization of energy consumption in every possible area in its units. Various avenues are being explored at periodic interval and after careful analysis and planning measures are being initiated to minimize the consumption of energy by optimum utilization of energy consuming consuming equipments. During the year under review, the following measures were initiated/ adopted for conservation and optimize utilization of energy. 





b)

The Company has been keeping pace with the technological advances by implementation of state-of-the-art manufacturing best practices. Research and Development was carried out for the development of the new models for several Indian and overseas customers.

Reduction in energy consumed by replacing high wattage bulbs on machines to low wattage LEDs. Energy saving tube lights installed across all units



Installed variable drive motors on compressors



Daylight sensors on street lights

In process engineering the Company introduced a silicon sealing machines for earth terminals. 2.

Futur Fu turee Propo Proposal salss for Energ Energyy Conver Conversio sion n

The above measures will result in energy saving and consequent decrease in cost of production.

Benefits Bene fits deri derived ved as a resu result lt of of the the above above R&D The benefits derived as a result of the above research and development programmes was in the form of winning new businesses, building confidence of existing customer and reducing the time to market.

Optimised air-cooling systems

Impact of the measu Impact measures res at (a) & (b) abov abovee for redu reductio ction n of energy consumption

Specific Spec ific area areass in which which R&D R&D is carr carried ied out out by the the Compa Company ny The Company has been continuously working towards enhancing its research and development capabilities. In addition to enhancing capabilities in the area of Wiring harness design and adoption of new methods and techniques for manufacturing and assembly of harnesses, the company is also focusing in enhancing its capabilities in the area of Jigs and applicators designing and manufacturing.

Installation of auto switch-off timer in fans

The Company will take necessary measures as may be required from time to time for conversion of energy. c)

1.

Installation of occupancy sensor to switch-off lights automatically





Research & Development (R&D)

3.

Fut utur ure e pl plan an of ac acti tion on Steps are continuously being taken for innovation and renovation of products and enhancement of product quality/ profile, to offer better products at relatively affordable prices to customers.


55

4.

Exp Ex pen end dit itu ure on R&D R&D

C. Fo Forei reign gn Exchan Exchange ge Earni Earnings ngs and and Outgo Outgo

During the year, the Company spent Rs. 50.72 million. This is equivalent of 0.38% of the turnover.

1.

Technology absorption, adaptation and innovation With the changing requirements in wiring harness manufacturing, the Company has acquired new machines and processes as per the product requirements. The Company has successfully implemented a number of Kaizen led improvements to enhance productivity and manufacturing efficiency.

The activ activities ities relat relating ing to export export,, incenti incentives ves to to increas increase e exports and developments of new export markets are discussed below. The Company has continued to maintain focus and avail of export opportunities based on economic consideration. During the year, the Company has exports (FOB value) worth Rs. 2347 million.

2.

Tota otall foreig foreign n excha exchange nge use used d and and earne earned d (Rs. in million)

The company sends it design engineering regularly to its Collaborator, for working together for designing and development of new harnesses for future models to be introduced by the OEMs, in addition to collaborators technicians providing on-site support to the company. -

Benefits derive Benefits derived d as a result result of of the above above effor efforts: ts: The The Compan Companyy is now partnering the new development and designing with its major customers.

- Imported Imported Techn Technolog ology: y: the company company has access access and implemented the latest processes and techniques in its manufacturing and design facilities.

56


a. Total Foreign exchange earned

2389

b. Total Foreign exchange used

4419

The detailed information on foreign exchange earnings and outgo is also furnished in the notes to the accounts. For and on behalf of the Board for MOTHERSON SUMI SYSTEMS LIMITED

Place: Noida Date: 27th July, 2009

M.S. Gujral Chairman

V. C. Sehgal Vice Chairman

Report on Corporate Governance Company's philosophy on Corporate Governance Corporate Governance is based on the principles of integrity, transparency, accountability and commitment to values. Your Company views its policies of Corporate Governance not only to comply with the statutory requirements in letter and spirit, but also to aim at implementing the best practices, keeping in view the overall interest of all its stakeholders. Your Company takes Corporate Governance as a Critical tool to enhance trust of the Company's customers, employees, investors, government and the Community at large and would help the Company achieve its goal of maximizing value for all its stakeholders.

Board of Directors The Board presently comprises of the majority of Non-executive and Independent Directors, who are eminent professionals with a rich experience in business, finance and public enterprises. The composition of the Board, and the number of other Directorships held by each Directors and relevant information for their category as on 31.03.2009 is given in the table below: Name of the Director

Executive/Non- executive/ Independent

Other Directorship (in Public Co.)

Committee memberships

Committee Chairmanships

Mr. V. C. Sehgal

Non-executive Director

12

6

1

Mr. Toshimi Shirakawa


2

1

-

Mr. M. S. Gujral

Independent Director

7

5

5

Mr. Hiroto Murai


-

-

-

Maj. Gen. Amarjit Singh (Retd.)


2

4

-

Mr. Bimal Dhar


10

4

-

Mr. Toshihiro Watanabe

Executive/Whole-time Director

2

1

-

Mr. Arjun Puri


1

2

-

Mr. Toshihide Ano*

Non-Executive Director

2

-

-

Executive/Chief Operating Officer

2

1

-

(Alternate Director to Mr. Hiroto Murai) Mr. Pankaj Mital (Alternate Director to Mr. Bimal Dhar) * Ceased to be an Alternate Director w.e.f. 29.06.2009. Note - Mr. Laksh Vaaman Sehgal has been appointed as an Additional Director of the Company w.e.f. 30.04.2009.

Attendance at Board meetings and Annual General Meetings

2. Quarterly Performance of our various units, subsidiaries and joint venture companies

The Board of Directors of the Company meets at least once a quarter to review the quarterly results and other items on the agenda.

3. Materially important important legal cases

The information regularly supplied to the Board of Directors include amongst others the following:

5. Developments on Human Resource Resource of the Company

1.

Annual Ann ual Opera Operating ting plan planss and budg budgets ets and and updates. updates.

4. Details of any Joint Venture Venture or collaboration agreement

The Board of Directors of the Company met five times during the financial year 2008-2009 : (i) June 2, 2008 (ii) July 26, 2008 (iii) October 21, 2008 (iv) January 2, 2009 and (v) January 27, 2009.


57

The table for the attendance record of the Directors is as given below: Name of the Director

No. of Board mee eettings at atte ten nded

Attendance at last Annual Gen eneera rall Mee Meettin ing g

5 1 5 4 5 4 4 1 5 1

Yes Yes Yes No Yes Yes Yes N.A. Yes Yes

-

Yes

Mr. V. C. Sehgal Mr. Toshimi Shirakawa* Mr. M. S. Gujral Mr. Hiroto Murai Maj. Gen. Amarjit Singh (Retd.) Mr. Bimal Dhar Mr. Arjun Puri Mr. Akihiko Yamauchi# Mr. Toshihiro Watanabe Mr. Pankaj Mital (Alternate Director to Mr. Bimal Dhar) Mr. Toshihede Ano (Alternate Director to Mr. Hiroto Murai)

* in addition to attending one meeting, he participated in one meeting over teleconference # resigned from the directorship of the Company w.e.f. 02.06.2008

Remuneration of Directors The details of the payments made to the Directors during the financial year ended March 31, 2009 are as follows: Name of the Director Mr. M. S. Gujral Maj. Gen. Amarjit Singh (Retd.) Mr. Arjun Puri

Gross remuneration (Rs.) Nil Nil Nil

Sitting fee* (Rs.)

Total (Rs.)

1,80,000 1,80,000 1,40,000

1,80,000 1,80,000 1,40,000

Salary

Amount

Basic salary Bonus Other be benefits Total Basic salary Bonus Othe Ot herr be bene nefi fits ts Total Basic salary Bonus Other be benefits Total

2,48,000.00 -1,34,492.00 3,82,492.00 14,40,000.00 -16,0 16 ,00, 0,75 751. 1.00 00 30,40,7 ,75 51.00 30,01,200.00 5,00,412.00 2,71,713.00 37,73,3 ,32 25.00

* Includes sitting fees paid for committee meetings Name of the Director Mr. Akihiko Yamauchi #

Mr. Toshihiro Watanabe @

Mr. Pankaj Mital

# resigned from the Directorship of the Company w.e.f. 02.06.2008. @ appointed as Whole-time Director of the Company w.e.f. 02.06.2008.

58


Audit Committee The Audit Committee of the Company comprises the majority of Independent Directors. The members of the Audit Committee met four times during the financial year 2008-09 and the Committee reviewed the quarterly, half-yearly and annual financial statements before submission to the Board. The dates on which the meetings were held are as follows: (i) June 2, 2008 (ii) July 26, 2008 (iii) October 21, 2008 & (iv) January 27, 2009. The composition and attendance of each member of the Committee is given below: N ame

De si g n ati on

Non-executive/ Independent

Committee meetings attended

Mr. M.S. Gujral

Chairman

In depen den t

4

Maj. Gen. Amarjit Singh (Retd.)

M e m b er

In depe nden t

4

Mr. Toshimi Shirakawa*

Member

N o n - e x e c u ti v e

1

Mr. Arjun Puri

Member

Ind epen den t

3

* in addition to attending one meeting, he participated in one meeting over teleconference The terms of reference of the Audit Committee comprises the following: a)

To hold periodic periodic discussi discussions ons with with the Statut Statutory ory Auditor Auditorss and Internal Auditors of the Company concerning the accounts of the Company, internal control systems, scope of audit and observations of the Auditors/Internal Auditors.

Name

Designation

Executive/Nonexecutive/ Independent

Mr. M.S. Gujral

Chairman

Independent/ Non-executive

Mr. Toshihiro Watanabe

Member

Executive

b)

To review review complianc compliance e with inter internal nal control control system systems. s.

Mr. G.N. Gauba, the Company Com pany Secretary, is the Compliance Officer. Offic er.

c)

To review the the quarterly quarterly,, half-yearl half-yearlyy and annual financ financial ial results results of the Company before submission to the Board.

Share Transfers 

d)

To investigate investigate into into any matter matter in relatio relation n to the items items specified specified in Section 292A of the Companies Act, 1956 or as may be referred to it by the Board and for this purpose to seek any relevant information contained in the records of the Company and also seek professional advice, if necessary.





All shares have been transferred and returned in about 20 days from the date of receipt, so long as the documents have been clear in all respects. The Share Transfer Committee meets normally once a fortnight. Total number of shares transferred in physical form during the year 2008-2009 was 29144 as compared to 57742 during 2007-2008.

e)

To review review the Company Company's 's financial financial and risk risk management management policies.

f)

To obtain obtain external external advic advice, e, legal legal or other other profess professional ional advis advise. e.

g)

To secure attend attendance ance of outside outside parties parties with with relevant relevant expertise expertise,, if it considers necessary necessary..

Investor Relations

h)

To seek seek inform information ation from any emplo employee. yee.

86 complaints relating to the non-receipt of shares after transfer, non-receipt of dividend etc. were received.

Investors' Grievance Committee The Company has an Investors' Grievance Committee which looks into shareholders' and investors' grievances. The following are the members of the Committee:



As on March 31, 2009, there are no equity shares pending for transfer.

All the complaints received during the year were cleared within the financial year. The complaints are generally responded to within 10 days from the date in which they are lodge with the Company.


59

Particulars of the past three AGMs Annual General Meeting

Date

Time

Venue

Special Resolutions passed

19th

August 07, 2006

11:00 A.M. FICCI Golden Jubilee Auditorium, New Delhi

20th

July 30, 2007

3:30 P.M.

FICCI Golden Jubilee Auditorium, New Delhi

Issue of Bonus Shares in the ratio of 1 share for every 2 shares held.

21st

August 11, 2008

11.30 A.M.

FICCI Golden Jubilee Auditorium, New Delhi

-Re-appointment of Mr. Pankaj Mital as Manager under the companies Act, 1956 for a period of 3 years w.e.f. 01.04.2008.

Nil

-Appointment of Mr. Toshihiro Watanabe as Whole-time Director for a period of 3 years w.e.f. 02.06.2008. - No postal ballot was conducted conducted during during the year. year. - The following Special Resolution Resolution is proposed to be conducted through through postal ballot:ballot:Amendment in the Object Incidental or Ancillary of the Main Objects. Particulars of loans/ advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement Rs. in Million Name of Company

Status

Nature

Balance as on March 31, 2009

Maximum outstanding During the year

MSSL Mideast (FZE)

100% Subsidiary

Loan

-

329.45

MSSL Mauritius Holdings Limited

100% Subsidiary

Loan

-

1.83

MSSL Handels GmbH

100% Subsidiary

Loan

10.68

10.68

MSSL (GB) Limited*

100% Subsidiary of MSSL Mideast (FZE)

Loan

73.14

84.13

MSSL GmbH* Motherson Sumi Wiring System Ltd. (FZC)*

100% Subsidiary of MSSL Mideast (FZE) 51% Subsidiary of MSSL Mideast (FZE)

Loan Loan

122.63 137.83

645.25 137.83

Global Environment Management (FZC)#

78.82% Subsidiary of MSSL Mauritius Holdings Ltd.

Loan

-

23.02

MSSL Australia Pty Limited @

80% Subsidiary of MSSL (S) Pte. Ltd.

Loan

394.85

394.85

* By MSSL Mideast (FZE) # By MSSL Mauritius Holdings Ltd. @ By MSSL (S) Pte. Ltd.

60


Disclosures 









No transaction of material nature has been entered into by the Company with the Directors or Management and their relatives, etc. that may have a potential conflict with the interests of the Company. Transactions with the related parties are disclosed in Note No. B(22) of Schedule XIII to the Accounts in the Annual Report. Report. No penalties or strictures were imposed by SEBI or the Stock Exchange. All mandatory requirements have been complied with and non mandatory requirements have not been complied with.



18.09.2009 to 24.09.2009 (both days inclusive) 4.

Divi Di vide dend nd pay payme ment nt da date te : on or after 24.09.2009

5.

Listin Lis ting g on sto stock ck ex excha change ngess

-

Equity sh shares Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Dalal Street, Mumbai Code : 517334

The annual, half-yearly and quarterly results are regularly posted by the Company on its website www.motherson.com. These are also submitted to the stock exchanges in accordance acc ordance with the Listing Agreement and published in leading newspapers like Business Standard.

National Stock Exchange of India Limited Exchange Plaza, 5th Floor, Plot no. C/1, G Block Bandra - Kurla Complex Bandra (E), Mumbai Code: MOTHERSUMI

Management discussion and analysis report forms a part of the Annual Report.

Delhi Stock Exchange Limited DSE House, 3/1, Asaf Ali Road, Delhi

Shareholders' information Annual Ann ual Gen Genera erall Meeti Meeting ng to to be hel held d - Date

:

24.09.2009

- Day

:

Thursday

- Ti me

:

11:30 A.M.

- Venue :

2. 



FICC FI CCII Gold Golden en Jub Jubililee ee Aud Audit itor oriu ium, m, Tan anse sen n Marg Marg,, New Delhi-11000 Delhi-110001 1

Financial Calendar (tentative and subject to change) Financial reporting for the first quarter ending June 30, 2009: July, 2009

Financial results for for the year ending March 31, 2009: May, 2010

3. Bo Book ok Cl Clos osur ure e dat date e:

Means of communication

1.

Financial reporting for the third quarter ending December 31, 2009: January, 2010

Ahmedabad Stock Exchange Kamdhenu Complex, Near Polytechnic Panjara Pole Ahmedabad -

Bonds: Singapore Exchange Securities Trading Trading Ltd. 2, Shenton Way # 19-00 SGX Centre I Singapore (FCCBs only)

Financial reporting for the second quarter ending September 30, 2009: October, 2009


61

6. Ma Mark rket et pr pric icee dat dataa

7.

62

Month

The Stock Exchange, Mumbai High Low

National Stock Exchange of India High Low

April - 2008

108.80

86.00

109.90

92.10

May - 2008

98.50

78.00

97.35

80.00

June - 2008

89.90

74.90

89.00

74.20

July - 2008

85.00

67.05

81.45

67.05

August - 2008

90.70

73.25

95.00

73.20

September-2008

93.00

81.35

93.90

70.80

October - 2008

88.50

56.00

89.00

55.00

November - 2008

68.45

47.20

71.65

47.20

December - 2008

70.00

38.00

70.00

39.50

January - 2009

73.00

51.25

75.80

51.45

February - 2009

73.25

55.00

75.50

53.00

March - 2009

71.45

52.00

71.45

51.00

Performance in comparison to broad based indices


8. Shareholding Pattern of the Company as on 31.03.2009

their queries to:

Category

M/s Karvy Computershare Pvt. Ltd.

No. of shaare sh ress hel held d

% of shar sh areh eho old ldin ing g

155764924

43.81

46, Avenue 4, Street no. 1,

Foreign Promoters

96891795

27.25

Banjara Hills, Hyderabad - 500 034

Financial Institutions, Mutual Funds & Banks

22425633

6.31

Foreign Institutional Investors

22068478

6.20

Bodies Corporate

24315800

6.84

General Public (Individuals)

32767259

9.22

1287819

0.36

32092

0.01

355553800

100.00

Indian Promoters

Ph. No.- 040-23312454

NRIs/ Trusts Clearing Members* Total *

(Unit - Motherson Sumi Systems Ltd.)

These shares lying in pool pool account account of NSDL/CDS NSDL/CDSLL since since buyers' buyers' ident identity ity are not established.

Fax No.- 040-23311968 E-mail - [email protected] 10. Shar Sharee Trans Transfer fer System System To expedite the share transfer tra nsfer process in the physical physi cal segment, authority has been delegated dele gated to the Share Transfer Committee which comprises: Mr. V.C. Sehgal Mr. Toshihiro Watanabe Mr. Pankaj Mital

9.

Registr Reg istrar ar and Trans ransfer fer Agen Agents ts The Registrar and Transfer Agent (RTA) of the Company is M/s Karvy Computershare Pvt. Ltd. The investors can send

Share transfer/ transmissions approved by the Committee are placed at the Board Meeting from time to time.

11. Distributio Distribution n of shareholding shareholding as as on March 31, 31, 2009 Range (Amount) 1 - 5000

No. of shareholders

% of shareholders to total

No. of shares

% of shares to total

7501

86.67

4467523

1.26

5001-10000

860

9.94

4740995

1.33

10001 - 20000

132

1.52

1674621

0.47

20001 - 30000

38

0.44

906979

0.26

30001- 40000

12

0.14

409948

0.12

40001 - 50000

11

0.13

514587

0.14

50001 - 100000

33

0.38

2209257

0.62

100001and above

68

0.78

340629890

95.80

8344

100.00

355553800

100.00

TOTAL

12. Dematerializ Dematerialization ation of of shares and liquidity liquidity Your Company's shares are tradable tr adable compulsorily in electronic ele ctronic form and your Company has established connectivity with both the depositories i.e. NSDL and CDSL. The members are requested to

dematerialize their physical holding in view of the various advantages in dematerialized form. Demat ISIN Number in NSDL and CDSL for equity shares: ISIN No. INE775A01035


63

13. Plan Plantt Locat Locations ions :

Representative Office(s)

Noida (Uttar Pradesh)

Sharjah

Faridabad (Haryana)

Germany

Gurgaon (Haryana)

14. Investors' correspon correspondence dence may may be addressed addressed to:

Manesar (Haryana)

Mr. G.N. Gauba. Vice President (Finance) & Company Secretary 2nd Floor, F-7, Block B-1, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi - 110 044 E-mail : [email protected]

Pune (Maharashtra) Bangalore (Karnataka) Chennai (Tamilnadu) Pondicherry

The above Report has been placed before the Board at its meeting held on June 29, 2009 and the same was approved.

Declaration This is to confirm that the Company has adopted a Code of Conduct for Board of Directors and Senior Management and the same is available on the Company's website. I confirm that the Company has in respect of the financial year March 31, 2009 received from the Board of Directors and Senior Management a declaration of compliance with the Code of Conduct. For Motherson Sumi Systems Limited Date : 29th June, 2009 Place : Noida

64


Pankaj Mital Chief Operating Officer

Auditors' Certificate regarding compliance of conditions of Corporate Governance To the Members of Motherson Sumi Systems Limited We have examined the compliance of conditions of Corporate Governance by Motherson Sumi Systems Limited, for the year ended March 31, 2009, as stipulated in Clause 49 of the Listing Agreement(s) of the said Company with stock exchange(s) in India. The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditi ons of Corporate Governance. It is neither neit her an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement(s). We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. Kaushik Dutta Partner Membership No: F88540

Date : 29th June, 2009 Place : Noida

For and on behalf of Price Waterhouse Chartered Accountants


65

Financial Section

66


Auditors' Report To the Members of Motherson Sumi Systems Limited 1.

2.

3.

We have audited audited the the attached attached Balance Balance Sheet Sheet of Mother Motherson son Sumi Systems Limited, as at March 31, 2009, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducte conducted d our audit audit in accorda accordance nce with with the auditin auditing g standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required required by the the Companies Companies (Audit (Auditor's or's Report) Report) Order Order,, 2003, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we further report that: (i) (a) The The Compa Company ny is main maintai taini ning ng prop proper er record recordss showin showing g full particulars including quantitative details and situation of fixed assets. (b)) The fixed assets are physically (b physically verified by by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according according to the informati information on and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. (ii) (a) The inven inventory tory (exc (excludi luding ng stoc stocks ks with third part parties) ies) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable. (b) In our opinion opinion,, the procedures procedures of of physical physical verification verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) On the the basis of of our examin examination ation of the invent inventory ory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. (iii) (a) The Comp Company any has has not not granted granted any loans loans,, secured secured or or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. (b) The Company Company has has not taken any any loans, secured or or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. (iv) In our opinion opinion and according according to the information information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have ne ither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.


67

(v)

(a) In ou ourr opin opinio ion n and and acc accord ordin ing g to to the the inf inform ormati ation on and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according according to to the information information and explanations given to us, having regard to the explanation that certain items/services purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant rel evant time.

(vi)

The Comp Company any has has not not accepte accepted d any depos deposits its from from the the public within the meaning of Sections 58A and 58AA of the Act or any other relevant provisions of the Act and the rules framed there under.

(vii) In our our opinion, opinion, the the Company Company ha hass an internal internal audit audit system commensurate with its size and nature of its business. (viii) (vi ii) We have have broadly reviewed reviewed the books books of account account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. (ix)

68

(a) Accord According ing to the inf inform ormati ation on and expl explana anatio tions ns given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales tax, wealth tax, excise duty, service tax, customs duty, and other material


statutory dues as applicable, with the appropriate authorities. (b) According According to to the information information and and explanation explanationss given to us and the records of the Company examined by us, there are no dues in respect of income-tax, wealth tax, and cess as at March 31, 2009 which have not been deposited on account of a dispute. The particulars of dues of service tax and custom duty that have not been deposited on account of a dispute are as follows Name of the Nature of statute dues

Amount (Rs.)

Period to which the amount relates

Forum where the dispute is pending

Cent Ce ntra rall Exci Excise se Se Serv rvic icee tax tax 31 311, 1,36 367 7

199919 99-20 2000 00 Cu Cust stom oms, s, Exc Excis isee and and

Act, 1944

a nd

Service Tax Appellate

2000-2001 20002001 Tribu ribunal, nal, Chen Chennai nai

(x)

The Com Compan panyy has has no accu accumula mulated ted loss losses es as at March March 31, 2009 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi)

According Accord ing to to the reco records rds of of the Comp Company any exami examined ned by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

(xii)) The Compan (xii Companyy has not grante granted d any loans loans and advanc advances es on the basis of security by way of pledge of shares, debentures and other securities. (xiii) The provisions provisions of any special statute applicable applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company. (xiv) In our opinion, opinion, the the Company Company is not a dealer or trader trader in shares, securities, debentures and other investments. (xv) In our our opinion opinion and accordin according g to the information information and explanations given to us, the terms and conditions of the guarantees given by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

(xvi) In our opinion, opinion, and according according to the informat information ion and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained. (xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

(c) The Balance Balance Sheet, Sheet, Profit Profit and and Loss Account Account and and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, opinion, the Balance Balance Sheet, Sheet, Profit and Loss Account Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of Section 211 of the Act;

(xix (x ix)) The Company does does not have any debentures debentures outstanding as at the year end.

(e) On the basis basis of written written representa representations tions received received from from the directors, as on March 31, 2009 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(xxi) During the the course of our our examination examination of the the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

5.

(b) In our opinion, opinion, proper proper books books of account account as requir required ed by law have been kept by the Company so far as appears from our examination of those books;

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

(xx) The Company Company has has not raise raised d any money money by public public issues during the year.

4.

(a) We have have obtained obtained all the informatio information n and explanations explanations,, which to the best of our knowledge and belief were necessary for the purposes of our audit;

We refer to note on B-6 of Schedule XIII regarding managerial remuneration amounting to Rs.3,041 thousand for the current year paid to whole time director, being a non resident whose appointment is subject to approval by the Central Government.

(f) In our opinion opinion and and to the best of our informat information ion and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and subject to our comments in paragraph 4 above give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the the case of the the Balance Balance Sheet, Sheet, of of the state of affairs of the Company as at March 31, 2009; (ii) in the case case of the Profit Profit and and Loss Account Account,, of the profit for the year ended on that date; and

In the event that the Central Government approval is not (iii) in the case of the Cash Flow Flow Statement, Statement, of the the cash received, these amounts are to be refunded by such flows for the year ended on that date. directors. This would then result in profit after taxation for the year to be Rs. 700,278 700,278 thousand (as against against reported Kaushik Dutta figure of Rs. 698,271 thousand), credit balance of Profit Partner and Loss Account to be Rs.1,632,922 thousand (as against Membership No. F 88540 the reported figure of Rs. 1,630,915 1,630,915 thousand), net Current Assets to be Rs..635,801 thousand (as against the reported For and on behalf of Price Waterhouse figure of Rs.632,760 thousand). Chartered Accountants Furth Fur ther er to to our our comm comment entss in par paragr agrap aph h 3 & 4 abo above, ve, we Place : Noida report that: Date : June 29, 2009


69

Balance Sheet as at March 31, 2009 (Figures in Rs. Thousands)

Schedule

As At March 31, 2009

As At March 31, 2008

I II

355,554 3,802,798 4,158,352

355,554 3,668,964 4,024,518

III IV

2,233,959 3,147,585 -

1,584,635 3,025,986 22,746

9,539,896

8,657,885

7,801,270 3,132,525 4,668,745 1,194,229 5,862,974 2,763,601 15,299

6,790,514 2,667,273 4,123,241 196,548 4,319,789 1,775,327 -

1,602,671 1,733,476 179,322 1,447,994 4,963,463

1,484,949 2,046,196 326,610 1,838,813 5,696,568

NET CURRENT ASSETS Miscellaneous Expenditure (To the extent not written off or adjusted) IX

2,745,799 1,584,904 4,330,703 632,760 265,262

2,042,870 1,510,715 3,553,585 2,142,983 419,786

TOTAL

9,539,896

8,657,885

SOURCES OF FUNDS Shareholders’ Funds Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans Deferred tax liability (net) (Refer B (19) of Schedule XIII) TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress

V

Investments Deferred tax assets (net) (Refer B (19) of Schedule XIII) Current Assets, Loans and Advances Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Less: Current Liabilities & Provisions Current Liabilities Provisions

VI VII

VIII

Significant Accounting Policies and Notes forming part of the AccountsXIII This is the Bal This Balanc ancee Sheet Sheet refe referred rred to in in our our report of even date KAUSHIK DUTTA Partner

The sch schedu edules les refe referred rred abo above ve form form int integr egral al part part of the the Bala Balance nce She Sheet et for and on behalf of the Board V.C. SEHGAL Vice Chairman

TOSHIHIRO WATANABE Whole time Director

M.No.: F88540 For and on behalf of Price Waterhouse Chartered Accountants

Placee : No Plac Noid idaa Datee : Jun Dat Junee 29, 29, 200 2009 9 70


G.N. GAUBA Co. Secretary & V.P. Finance

PANKAJ MITAL Chief Operating Officer

Profit and Loss Account for the year ended March 31, 2009 (Figures in Rs. Thousands)

Schedule

For the Year ended March 31, 2009

For the Year ended March 31, 2008

14,429,406 1,479,977 12,949,429 372,440

15,155,792 2,124,779 13,031,013 447,381

13,321,869

13,478,394

11,633,285 545,144 290,984

11,117,115 500,629 218,657

12,469,413

11,836,401

852,456

1,641,993

175,730 (38,045) 15,000 1,500 698,271 2,862 695,409 1,597,081 2,292,490

370,472 (28,217) 15,500 2,500 1,281,738 (179) 1,281,917 1,126,739 2,408,656

100,000 479,999 81,576 1,630,915

250,000 479,999 81,576 1,597,081

2,292,490

2,408,656

1.96

3.63

INCOME Sale of Finished Goods (Gross) Less: Excise duty Sale of Finished Goods (Net) Other Income

X

TOTAL EXPENDITURE Manufacturing and other expenses Depreciation and Impairment Interest (net)

XI V XII

TOTAL Profit Before Tax Expense Provision for Provision for Provision for Provision for

Taxation Current Income Tax Deferred Income Tax (R ( Refer B (19) of Schedule XIII) Fringe Benefit Tax Wealth Tax

Less : Income Tax for earlier years Profit After Taxation Add: Balance brought forward from previous year Surplus Available For Appropriation APPROPRIATIONS Transfer to General Reserve Proposed Dividend Tax on Dividend Balance Carried to Balance Sheet TOTAL Earning per share (Basic/ Diluted) of face value Re. 1/- each (Refer A(11) & B(18) of Schedule XIII) Significant Accounting Policies and Notes forming part of the AccountsXIII This is the Prof This Profit it and and Loss Loss Accou Account nt referr referred ed to in our report of even date KAUSHIK DUTTA Partner

The sche schedul dules es referre referred d above above form form integ integral ral part part of the the Prof Profit it and and Loss Loss Accoun Accountt for and on behalf of the Board V.C. SEHGAL Vice Chairman




G.N. GAUBA Co. Secretar Se cretaryy & V.P. Finance Financ e

Place: No Place: Noid idaa Datee : Jun Dat Junee 29, 29, 200 2009 9


71

Cash Flow Statement for the year ended March 31, 2009 (Figures in Rs. Thousands)

A. CASH FLOW FLOW FROM OPERATING OPERATING ACTIVI ACTIVITIES: TIES: Net profit before tax Adjustments for: Depreciation and Impairment Interest Expense Interest Income Income from Investment - Dividend Received Lease Rent Profit on Fixed Assets sold Debts / Advances Written off Provision for Bad & Doubtful Debts / Advances Liability no longer required written back Provision for Gratuity & Leave Encashment Provision for diminution in value of Long Term Investments Provision for diminution in value of Current Investments Unrealised foreign exchange (gain) /loss Operating profit before working capital changes Adjustments for changes in working capital : - (Increase)/ Decrease in Sundry Debtors - (Increase)/ Decrease in Other Receivables - (Increase)/ Decrease in Inventories - Increase/ (Decrease) in Trade and Other Payables Cash generated from operations - Ta Taxes (Paid) / Received (net of TDS and refunds received) Net cash from operating activities B. CASH FLOW FLOW FROM INVES INVESTING TING ACTIV ACTIVITIES ITIES:: Purchase of fixed assets Including CWIP Proceeds from sales of fixed assets Purchase of investments (including advance against equity) Loan to Subsidiaries/Joint Venture (net) Lease Rent Payment Interest Received (Revenue) Dividend Received Net cash used in investing activities

72


For th thee yea yearr en ende ded d March 31, 2009

For th thee yea yearr en ende ded d March 31, 2008

852,456

1,641,993

545,144 308,382 (17,398) (46,691) 5,902 (10,948) 1,379 (231) (383) 20,416 110,000 187 252,374 2,020,589

500,629 264,809 (46,152) (293) 2,118 (247,758) 841 (1,389) (14,483) 6,949 (5) 231,345 2,338,604

326,643 567,880 (117,722) 618,260 3,415,650 (209,353) 3,206,297

(310,924) (519,589) (280,133) 506,473 1,734,431 (318,401) 1,416,030

(2,138,901) 20,070 (1,098,460) (5,902) 35,018 46,691 (3,141,484)

(1,598,459) 357,908 (475,116) 115,144 (2,118) 34,019 293 (1,568,329)

Cash Flow Statement for the year ended March 31, 2009 (Figures in Rs. Thousands)

Forr th Fo thee ye year ar en ende ded d March 31, 2009

For th thee ye year ar en ende ded d March 31, 2008

1,058,957 (79,941)

118,743 (243,987)

(52,500) (432,058) (146,332) (478,704) (81,576) (212,154) (147,341) 326,610

42,500 708,574 (101,145) (351,733) (59,879) 113,073 (39,226) 365,922

Total Cash an and Cash Equivalents as per cash flow statement

179,269

326,696

Cash and cash equivalents comprise Cash In Hand Cheques In Hand Balance with Scheduled Banks Balance with Non - Scheduled Banks Cash and cash equivalents as per Balance Sheet (restated) Add: Net unrealised loss /(gain) on Foreign Currency Cash & Equivalents Cash and cash equivalents Closing

3,271 516 171,405 4,130 179,322 (53) 179,269

4,079 220,357 97,108 5,066 326,610 86 326,696

C. CASH FLOW FLOW FROM FINANCIN FINANCING G ACTIVITI ACTIVITIES: ES: Proceeds from long term borrowings Receipts Payments Proceeds from short term borrowings Receipts Payments Proceeds from Working Capital Facilities (net) Interest Paid Dividend Paid Dividend Tax Paid Net cash generated/ (used) in financing activities Net Increase/(Decrease) in Cash & Cash Equivalents Cash and cash equivalents Opening

(i) The above Cash Flow Statement has been prepared under the Indirect Method Method as set out out in the Accounting Accounting Standard Standard - 3 on on Cash Flow Statement issued by The Institute Institute of Chartered Accountants Accountants of India. (ii) Previous year's figures have been regrouped wherever necessary to conform to the current current year's classification. (iii) Following non non cash transactions have not been considered in the cash cash flow statement: -Tax deducted at source on income (iv) Figu Figures res in brackets brackets indicate indicate cash outgo. outgo. This is the Cash Flow Statement referred to in our report of even date KAUSHIK DUTTA Partner

for and on behalf of the Board V.C. SEHGAL Vice Chairman




G.N. GAUBA Co. Secretar Se cretaryy & V.P. Finance Financ e

Place: No Place: Noid idaa Datee : Jun Dat Junee 29, 29, 200 2009 9


73

Motherson Sumi Systems Limited AR 08 09

Recommend Documents