MRF Ltd
Directors Reports
Your Directors have pleasure in presenting to you the Sixty Second
Annual Report and the Audited Financial Statements for the financial year ended 31st
March, 2023.
Standalone Financial Results
Rs Crores
|
2022-2023 |
2021-2022 |
| Total Income |
22826 |
19304 |
| Profit before tax |
1119 |
879 |
| Provision for taxation |
303 |
232 |
| Profit for the year |
816 |
647 |
Performance Overview
During the financial year ended 31st March, 2023, your Company's
total income was Rs 22826 crores as against Rs 19304 crores in the previous year,
recording a growth of 18%. The profit before tax stood at Rs 1119 crores for the year as
against Rs 879 crores for the previous financial year. The net provision for tax (current
tax and deferred tax) for the year is Rs303 crores (previous year Rs 232 crores). After
making provision for income tax, the net profit for the year ended 31st March, 2023 is Rs
816 crores as against
Rs 647 crores for the previous financial year.
The Company's exports (including Indian Rupee Exports) stood at Rs
1866 crores for the financial year ended 31st March, 2023, as against Rs 1779 crores for
the previous year.
Revenue from operations for 2022-23 registered good growth over the
previous year. The increase in sales was a result of growth in all product groups. The
unprecedented increase in raw material prices, which was witnessed during financial year
2021-22 due to the COVID pandemic and also the war in Ukraine, extended into the current
financial year. Despite efforts being taken to pass on the cost increases in a graduated
manner, the profitability continued to be low during the first three quarters of the year.
With easing of raw material prices during the later part of the year, the benefits of
lower raw material cost resulted in better profitability in the fourth quarter.
It is a matter of pride that Brand Finance, which is one of the
world's leading independent brand valuation and strategy consultancy, with
headquarters in London, has rated MRF as the second strongest Tyre brand in the world
besides being the most valued Tyre brand in India.
As required under regulation 34 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report
is attached and forms part of this Report.
Dividend
Two interim dividends of Rs 3/- each per share (30% each) for the
financial year ended 31st March, 2023 were declared by the Board of Directors on 8th
November, 2022 and on 9th February, 2023. The Board of Directors is pleased to recommend a
final dividend of Rs 169/- (1690%) per share of Rs 10 each on the paid up equity share
capital of the Company, for consideration and approval of the shareholders at the
forthcoming Annual General Meeting which shall be subject to deduction of applicable
income tax at source. The total dividend for the financial year ended 31st March, 2023
works out to Rs 175/- (1750%) per share of Rs 10 each. The above dividend declared by the
Company is in accordance with dividend distribution policy of the Company.
The Directors recommend that after considering provision for taxation
and the dividend paid during the year, an amount of Rs 753 crores be transferred to
general reserve. With this, the Company's Reserves and Surplus stands at Rs 14505
crores.
Industrial Relations
Overall, the industrial relations in all our manufacturing units have
been harmonious and cordial. Long term wage settlements have been concluded in our
factories at Thiruvottiyur in Tamil Nadu, Goa and Ankenpally in Telangana. Both production
and productivity were maintained at the desired levels throughout the year in all Plants.
Consolidated Financial Results and Performance of Subsidiaries
The consolidated financial statements of the Company prepared in
accordance with the Companies Act, 2013 and applicable accounting standards form part of
the Annual Report. The consolidated total income for 2022-23 was Rs23261 Crores and
consolidated profit before tax was Rs1070 Crores.
Pursuant to the provisions of section 136 of the Companies Act, 2013,
the financial statements, consolidated financial statements along with the relevant
documents and audited accounts of subsidiaries are available on the website of the
Company.
The Company has four subsidiaries viz. MRF Corp Limited, MRF
International Limited, MRF Lanka (P) Ltd. and MRF SG PTE. LTD. The aggregate turnover of
all four subsidiaries in equivalent Indian Rupees during the financial year ended 31st
March, 2023 was Rs2326 crores and the aggregate Loss for the year was Rs 48 crores. This
is due to MRF SG PTE. LTD, paying a sum of Rs 82 crores, being the price adjustment under
Bilateral Advance Pricing Arrangement (BAPA) payable to MRF Limited for the financial year
2015-16 to 2023-24. A statement in Form AOC-1, containing the salient features of the
financial statements of the Company's subsidiaries is attached with the financial
statements. The statement provides details of performance and financial position of each
of the subsidiaries.
The contribution of the subsidiaries to the overall performance of the
company is given in note 25d of the consolidated financial statements. During the year
under review, your Company has entered into transactions with MRF SG PTE. LTD, a wholly
owned subsidiary of your Company for purchase of raw materials and the total value of
transactions executed during financial year 2022-2023, exceeded the materiality threshold
adopted by the Company. These transactions were in the ordinary course of business and
were on an arms length basis, details of which are provided in Annexure IV of the
Board's Report as required under Section 134(3) (h) of the Companies Act, 2013 read
with Rule 8(2) of the Companies (Accounts) Rules, 2014.
Directors' Responsibility Statement
As required under section 134(3)(c) of the Companies Act, 2013, your
Directors state that: a) In the preparation of the annual accounts, the applicable
Accounting Standards have been followed and that there are no material departures; b) They
have, in selection of the accounting policies, consulted the statutory auditors and
applied them consistently, making judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the Company at the end of
the financial year and of the profit of the Company for the year ended 31st March, 2023;
c) Proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 2013 for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities; d)
Annual accounts have been prepared on a going concern basis; e) Internal financial
controls had been laid down and followed by the Company and such internal financial
controls are adequate and were operating effectively; and f) Proper systems to ensure
compliance with the provisions of all applicable laws have been devised and such systems
were adequate and operating effectively.
Risk Management
The company has developed and implemented a detailed risk management
policy for the Company including identification therein of elements of risk, if any, which
in the opinion of the Board may threaten the existence of the Company as required under
the Companies Act, 2013 read with Regulation 21 of the Listing regulations. The Company
has constituted a Risk Management Committee of the Board comprising of executive directors
and an independent director of the Company as required under Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The
Committee reviews the risk management initiatives taken by the Company on a half yearly
basis and evaluate its impact and the plans for mitigation. During the year the Committee
met on 9th September, 2022 and 3rd March, 2023.
Adequacy of Internal Financial Control
Internal financial control means the policies and procedures adopted by
the Company for ensuring the orderly and efficient conduct of its business, including
adherence to Company's policies, the safeguarding of its assets, timely prevention
and detection of frauds and errors, the accuracy and completeness of the accounting
records, and the timely preparation of reliable financial information. The Company has put
in place well defined procedures, covering financial and operating functions. Delegation
of authority and segregation of duties are also addressed to ensure that the financial
transactions are properly authorized. Further the Company has an integrated ERP system
connecting head office, plant and other locations to enable timely processing and proper
recording of transactions. Physical verification of fixed assets is carried out on a
periodical basis. The Internal audit department reviews the effectiveness of the internal
control systems and key observations are reviewed by the Audit Committee. These, in the
view of the Board, are designed to collectively provide an adequate system of internal
financial control with reference to the financial statements commensurate with the size
and nature of business of the Company.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
Information as required to be given under section 134(3)(m) read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure I, forming part
of this Report.
Corporate Social Responsibility (CSR)
As required under section 135 of the Companies Act, 2013, the CSR
Policy was formulated by the CSR Committee and thereafter approved by the Board. CSR
Policy is available on the Company's website:
https://www.mrftyres.com/investor-relations/corporate-social-responsibilty The details of
the CSR initiatives undertaken during the financial year ended 31st March, 2023 and other
details required to be given under section 135 of the Companies Act, 2013 read with the
Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended are given in
Annexure II forming part of this Report.
Board and Key Management Personnel
During the year under review, the following Managing Directors /
Whole-time Directors were re-appointed:
1. Mr. Rahul Mammen Mappillai (DIN: 03325290) as Managing Director for
a term of five years with effect from 4th May, 2022. The aforesaid appointment was
approved by the shareholders by postal ballot on 3rd May, 2022.
2. Mr. Samir Thariyan Mappillai (DIN: 07803982) and Mr.Varun Mammen
(DIN: 07804025) as Whole-time Directors of the Company for a term of five years with
effect from 4th August, 2022. The aforesaid appointment was approved by the shareholders
at the Annual General Meeting of the Company held on 4th August, 2022.
3. Mr. Arun Mammen (DIN: 00018558) as Managing Director of the Company
(with the designation "Vice Chairman and Managing Director" or such other
designation as approved by the Board from time to time) for a term of five years with
effect from 1st April 2023. The aforesaid appointment was approved by the shareholders by
postal ballot on 31st March, 2023.
Further, in November 2022, the Board decided to induct new Independent
Directors taking into consideration that six of the serving Independent Directors (viz.
Mr. Ashok Jacob, Mr. V Sridhar, Mr. Vijay R Kirloskar,
Mr. Ranjit I Jesudasen, Dr. Salim Joseph Thomas and Mr. Jacob Kurian)
are due to retire in September 2024. Since these six Independent Directors are serving
their second term, they will retire in September 2024 and will be stepping down from the
Board. Therefore, as part of the plan for orderly succession to the Board of Directors and
to facilitate a smooth transition, the Board at its meeting held on 8th November 2022
decided to induct three new Independent Directors and subsequently at its meeting held on
9th February 2023 three more Independent Directors. The details of these new Independent
Directors are given below:
1. Mr. Vikram Taranath Hosangady (DIN: 09757469), Mr. Ramesh Rangarajan
(DIN: 00141701) and Mr. Dinshaw Keku Parakh (DIN: 00238735) were appointed as Independent
Directors by the shareholders of the Company by postal ballot on 21st December 2022. The
appointment of the said Independent Directors took effect from 7th February 2023.
2. Mr. Arun Vasu (DIN: 00174675), Mr. Vikram Chesetty (DIN: 01799153)
and Mr. Prasad Oommen (DIN: 00385082) were also appointed as Independent Directors by the
shareholders of the Company by postal ballot on 31st March, 2023. The appointment of the
said Independent Directors will take effect upon receipt of requisite regulatory
approvals. As required under Section 152 of the Companies Act, 2013, Mr Varun Mammen (DIN:
07804025), Whole time Director and Mrs. Ambika Mammen (DIN: 00287074), Director of the
Company, retire by rotation at the forthcoming Annual General Meeting and being eligible
have offered themselves for re-appointment.
The Company has received declarations of independence from all the
Independent Directors confirming that they meet the criteria of independence as prescribed
under section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and that they are independent from Management.
The Board is of the opinion that all the Independent Directors of the Company are
person's of integrity and possess relevant expertise and experience (including the
proficiency) to act as Independent Directors of the Company. The Independent Directors of
the Company have confirmed that they have been registered with the Indian Institute of
Corporate Affairs, Manesar and have included their name in the databank of Independent
Directors within the statutory timeline as required under Rule 6 of the Companies
(Appointment and Qualification of Directors) Rules, 2014. Out of the above new Independent
Directors, two Directors are required to appear for the online proficiency test within a
period of two years.
Performance evaluation of the Board, its Committees and Directors
The Board of Directors has made a formal annual evaluation of its own
performance and that of its committees pursuant to the provisions of the Companies Act,
2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The
evaluation was done based on the evaluation criteria formulated by Nomination and
Remuneration Committee which includes criteria such as fulfilment of specific functions
prescribed by the regulatory framework, adequacy of meetings, attendance and effectiveness
of the deliberations etc.
The Board also carried out an evaluation of the performance of the
individual Directors (excluding the Director who was evaluated) based on their attendance,
participation in deliberations, understanding the Company's business and that of the
industry and in guiding the Company in decisions affecting the business and additionally
in case of Independent Directors based on the roles and responsibilities as specified in
Schedule IV of the Companies Act, 2013 and fulfilment of independence criteria and
independence from management.
Corporate Governance
In accordance with Regulation 34 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance along with
the Auditors' Certificate confirming compliance is attached and forms part of this
Report.
Following information required to be disclosed as per the Companies
Act, 2013 are set out in the Corporate Governance Report: a) Number of Board meetings held
- Para 2(c) of the Corporate Governance Report. b) Constitution of the Audit Committee and
related matters - Para 3(ii) and 14(o) of the Corporate Governance Report. c) Remuneration
Policy of the Company (including directors remuneration)- Para 7a of the Corporate
Governance Report.
d) Company's policy on directors' appointment including
criteria for determining qualifications, positive attributes, independence of a director
and other matters provided under sub-section (3) of section 178 - Para 5, 6 of the
Corporate Governance Report. The nomination and remuneration policy is also available on
the website of the Company. https://www.mrftyres.com/downloads/download.
php?filename=nominatio-%20and-remuneration-policy.pdf e) Related Party Transactions - Para
14(a) of the Corporate Governance Report. f) Vigil Mechanism - Para 14 (c) of the
Corporate Governance Report The details of related party transactions are given in note
28d of the financial statements.
Business Responsibility and Sustainability Report
Pursuant to Regulation 34 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability
Report of the Company for the financial year ended 31st March 2023 in the prescribed
format, giving an overview of the initiatives taken by the Company from an environmental,
social and governance perspective, forms part of this Annual Report.
Particulars of Employees
Disclosures with respect to the remuneration of the Directors,
KMP's and Employees as required under Section 197(12) of the Companies Act, 2013 read
with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 are given in Annexure V to this Report.
Further, the disclosures pertaining to remuneration of employees as
required under Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and (3) of
the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been
provided in the appendix forming part of this report. Having regard to the provisions of
Section 136(1) read with relevant provisions of the Companies Act, 2013, the Annual Report
excluding the aforesaid information is being sent to the members of the Company. The said
information is available for inspection at the Registered Office of the Company during
working hours and any member interested in obtaining such information may write to the
Company Secretary and the same will be furnished to the members.
During the financial year under review, the Company has not received
any complaint under The Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013. Further, Company has complied with provisions relating to the
constitution of Internal Complaints Committee under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Deposits
Your Company had discontinued acceptance of fixed deposits with effect
from 31st March, 2019 and all deposits have been repaid. No fresh deposits have been
accepted subsequently.
Auditors
M M Nissim & CO LLP, Chartered Accountants, (Firm Regn No. 107122W
/ W100672), Mumbai and Messrs. Sastri & Shah, Chartered Accountants (Firm Regn No.:
003643S), Chennai were appointed as joint statutory auditors of the Company for a term of
5 (five) consecutive years, at the Annual General Meeting of the company held on 12th
August, 2021 and 4th August, 2022.
Auditors Report to the shareholders for the financial year ended 31st
March, 2023, does not contain any qualification.
Cost Audit
The Board of Directors, on the recommendations of the Audit Committee,
has approved the re-appointment of Mr. C. Govindan Kutty, Cost Accountant (Mem. No. 2881),
as Cost Auditor of the Company for the financial year ending 31st March, 2024, under
section 148 of the Companies Act, 2013, and recommends ratification of his remuneration by
the shareholders at the forthcoming Annual General Meeting of the Company.
Secretarial Audit
Pursuant to provisions of Section 204 of the Companies Act, 2013 read
with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, your Company engaged the services of Mr K Elangovan, Elangovan Associates, Company
Secretaries, Chennai to conduct the Secretarial Audit of the Company for the financial
year ended 31st March, 2023. The Secretarial Audit Report (in Form MR-3) is attached as
Annexure-III, to this Report. The Secretarial Auditor's Report to the shareholders
does not contain any qualification.
Annual Return
The Annual Return as required under Section 92 and Section 134 of the
Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration)
Rules, 2014 is available on the Company's website: www.mrftyres.com.
Weblink:https://www. mrftyres.com/investor-relations/annual-return
Other Matters
There are no material changes and commitments affecting the financial
position of the Company between the financial year ended 31st March, 2023 and the date of
this report.
During the year under review, there were no material and significant
orders passed by the regulators or courts or tribunals impacting the going concern status
and the Company's operations in future.
The Competition Commission of India (‘CCI') had on 2nd
February, 2022 released its order dated 31st August, 2018, imposing penalty on certain
tyre manufacturers including the Company and also the Automotive Tyre Manufacturers'
Association, concerning the breach of the provisions of the Competition Act, 2002, during
the year 2011-12. A penalty of Rs622.09 Crores was imposed on the Company. The appeal
filed by the company before National Company Law Appellate Tribunal (NCLAT) has been
disposed of by remanding the matter to CCI for review after hearing the parties. In
February 2023 CCI has filed an appeal against the order of NCLAT before the Hon'ble
Supreme Court and the same is pending disposal.
Details of investments as required under section 134 of the Companies
Act, 2013 is given in note 3 to the financial statements.
During the year under review, the Board confirms that the Company has
complied with the applicable Secretarial Standards issued by the Institute of Company
Secretaries of India.
During the year under review, no fraud has been reported by the
auditors to the audit committee or the board.
During the year under review, there is no change in the nature of
business of your Company.
During the year under review, the Company has allotted 15,000 listed,
unsecured, rated, redeemable, taxable, non-convertible debentures aggregating to Rs 150
Crores on a private placement basis.
As regards Cost Audit Records, it is confirmed that the Company is
covered by Cost Audit Records Rules under section 148(1) of the Companies Act, 2013 and
accordingly, such accounts and all relevant records are maintained by the Company.
Appreciation
Your Directors place on record their appreciation of the invaluable
contribution made by the Company's employees which made it possible for the Company
to achieve these results. They would also like to take this opportunity to thank
customers, dealers, suppliers, bankers, financial institutions, business associates and
valued shareholders for their continued support and encouragement.
On behalf of the Board of Directors
| Chennai |
K M MAMMEN |
| 03rd May, 2023 |
Chairman & Managing Director |
|
DIN: 00020202 |
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