The Directors have pleasure in presenting the 33rd Annual Report and Audited Accounts for the year ended 31st March 2018.

1. Financial Highlights (on standalone basis)

(Rs. in lacs)

2. Financial and Operational Performance

Your Company’s sales has gone up as compared to the previous year by 29% in value terms. However, the total income had gone up by 17% due to transition to Goods and Services Tax regime. Profit before tax and exceptional items, has increased by around 49% over the previous year because of increased level of sales and profitable sales product mix and cost reduction in material cost despite increase in employee cost. Your company also increased production capacity in Pondy and Hosur units to meet out the higher demand from the customers and increased investments in R&D equipment to take care of technological change requirements.

3. Internal Financial Controls

Your Company’s internal financial control system provides for well-documented policies and procedures that ensure orderly and efficient conduct of business, safeguarding of assets, detection and prevention of frauds and errors, adequacy and completeness of accounting records and timely preparation of reliable financial information.

4. Corporate Social Responsibility

Your Company has constituted the Corporate Social Responsibility Committee (CSR Committee) and laid down the CSR policy which is available on the Company’s website.

During the year the Company had spent Rs.69.50 lacs which is the equivalent of 2% of average net profits for the immediate past three financial years, towards CSR activities through Swami Dayananda Educational Trust, an eligible institution undertaking project on activities listed in Schedule VII of the Companies Act, 2013.

The report on CSR activities is annexed to this report.

5. Subsidiary Company and Associate Company and the Consolidated Financial Statements

5.1 Subsidiary company

Your subsidiary company, PT Automotive Systems Indonesia, was started as a subsidiary of your company in Indonesia to manufacture and supply products to one of its major customers from India. However as the volumes did not reach the expected levels, your company meets the requirements of the customer from India itself. The approvals granted by the appropriate authorities of the Government of Indonesia are valid till 2020 by which time an appropriate decision will be taken.

5.2. Associate company

Synergy Shakthi Renewable Energy Private Limited (SSREPL) was not in operation during the financial year 2017-18 due to restrictions on sale of power to third parties, unviable tariff offered by TNEB and adverse changes in regulatory policies. As a result, the associate company incurred a loss of Rs 98.45 lacs as against a loss of Rs 541.90 lacs during the previous year. SSREPL along with the State Biomass Industry Association made representations to various arms of the government seeking changes in policies to support renewable power producers as these projects were set up to reflect commitment to the cause of sustainable and environment-friendly clean energy. The project also provided linkages with the agro-economy for promotion of social cause of rural development and employment avenues for local population.

Considering the avowed objective of the government to promote renewable energy in line with the global trends and the commitments made in the national energy mission, it was hoped that there would be favourable changes in the regulatory policies that would enable SSREPL to re-establish its operations on a viable scale. As the efforts taken in this direction have not borne fruits so far and considering the need to reflect the diminution in the value of investments due to non-operation of the plant, appropriate provision has been made in the accounts.

5.3. Consolidated financial statements

The Consolidated Financial Statements of the Company prepared in accordance with the provisions of Section 1 29 (3) of the Companies Act 2013 read with the Companies (Accounts) Rules, 201 4 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a separate statement containing salient features of the financial performance of the subsidiary / associate, in the prescribed format, form part of the Annual Report.

Pursuant to the provisions of Section 1 36 of the Companies Act, 2013, the audited financial statements of the subsidiary has been placed on the website of the Company at www.indianippon. com and the same will be made available to the shareholders on receipt of a request from them. This will also be available for inspection by the shareholders at the registered office of the company during the business hours.

6. Sub-division of face value of shares

The Board of Directors in their meeting held on 29th January, 201 8 recommended sub-division of face value of shares from Rs.10 per share to Rs.5 per share and the same was approved by the shareholders through postal ballot on 8th March, 2018 with consequential amendments to the Memorandum and Articles of Association.

7. Dividend

Your Company had declared and paid a first interim dividend of Rs.6 per share on the pre subdivision face value of Rs.10 per share, in the meeting of the Board of Directors held on 29th January 2018 absorbing a sum of Rs.678.64 lacs, besides dividend distribution tax of Rs.13815 lacs and a second interim dividend of Rs.3.50 per share, in the meeting held on 8th May, 201 8 on the subdivided share of face value of Rs.5 per share, absorbing a sum of Rs.791.75 lacs, besides dividend distribution tax of Rs.162.74 lacs. The total outgo due to dividend, with respect to financial year 2017-18, was Rs.1 771.33 lacs (Rs.1470.44 lacs towards dividend and Rs.300.89 lacs dividend distribution tax). The first interim dividend declared for the year 2017-18 was paid during the year and was reflected in the financial statements. The second interim dividend was paid after the end of financial year and hence will be reflected in the financial statements of 2018-19.

8. Public Deposits

Your Company has not accepted any deposits falling within the ambit of Section 73 or Section 76 of the Companies Act, 201 3 read with Companies (Acceptance of Deposits) Rules 2014.

9. Conservation of Energy, Technology Absorption and Foreign Exchange Outgo and Earnings

Details of Conservation of Energy, technology absorption and Foreign Exchange outgo and earnings are given as Annexure to the Report.

10. Particulars of Employees

T he information required under Section 1 97 of the Companies Act, 201 3 and Rule 5(2) made thereunder, as amended, is given in Annexure 2. In terms of first proviso to Section 136(1) of the Companies Act 2013, the Annual Report, excluding the aforesaid annexure is being sent to the shareholders of the company. The annexure is available for inspection at the registered office of the company during business hours and any shareholder interested in obtaining a copy of said annexure may write to the Company Secretary at the registered office of the company.

The Comparative Analysis of the remuneration paid to Directors and Key Managerial Personnel with the Company’s performance is given in annexure to the Report.

11. Annual Return

Extract of Annual Return is given as annexure to the Report.

12. Corporate Governance

Pursuant to the Listing Regulations 2015, the ‘Report on Corporate Governance’ is enclosed as annexure to this report. The certificates required from Managing Director on Compliance with the Code of Conduct and Business Ethics and Managing Director / CFO Certification are annexed to this report.

13. Directors’ Responsibility Statement

As required under Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm: -

i. That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

iii. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors had prepared the Annual Accounts on a going-concern basis;

v. That the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

vi. That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

14. Directors & Key Managerial Personnel (KMP)

Mr. K Seshadri, resigned from the Board of Directors with effect from 29th January 2018 and in his place Ms. Priyamvada Balaji was appointed under Section 161 of the Companies Act, 2013 which is proposed for approval of members under Section 152 in the ensuing Annual General Meeting.

Mr. Tadaya Momose, will be retiring by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

A brief resume of Ms. Priyamvada Balaji and Mr. Tadaya Momose and other relevant information have been furnished in the Notice of the Annual General Meeting including the resolutions for the same. The Directors recommend these businesses for approval.

The Board wishes to place on record its appreciation of the contributions made by Mr. K Seshadri for the development of the Company during his long tenure as Director of the Company.

The term of appointment of Mr. Arvind Balaji Managing Director, was due for re-appointment and the shareholders approved his reappointment for a further period of five years with effect from 1st April, 2018 through postal ballot as recommended by the Nomination and Remuneration Committee and the Board of Directors.

Mr. Elango Srinivasan, Chief Financial Officer and Mr. S. Sampath, Company Secretary are KMPs in terms of Section 2(51) and Section 203 of the Companies Act 2013.

Mr. S Sampath, Company Secretary retired with effect from 8th May, 2018 and in his place Mr. G Venkatram (ACS No. A23989) was appointed with effect from the same date, as recommended by the Nomination and Remuneration Committee and approved by the Board of Directors.

14.1 Declaration by independent directors as required u/s 149:

At the Annual General Meeting held on 27th August 2014, M/s G Chidambar, V Balaraman, K G Raghavan, R Vijayaraghavan and Ms. Jayshree Suresh were appointed as independent directors not liable to retire by rotation, for a consecutive period of five years.

All Independent Directors have given declarations under Section 149 (7) of the Companies Act, 2013, that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and SEBI (LODR) Regulations 2015.

14.2 Terms of appointment of independent directors of India Nippon Electricals Limited

T he terms of appointment of the Independent Directors are available on the website of the company viz., www.indianippon.com.

14.3 Number of meetings of the board

Five meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the corporate governance report, which forms part of this report.

14.4 Board evaluation

The Nomination & Remuneration Committee (N&RC) of the company approved an evaluation policy which provides for evaluation of the Board, the Committees of the Board and individual Directors.

Pursuant to Schedule IV of the Companies Act 2013, the Independent Directors of the company met without the attendance of Non-independent Directors and members of management and reviewed

(i) the performance of non-independent Directors of the Board as a whole;

(ii) the performance of the Chairman of the Company; and

(iii) Assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

On the same day, the performance evaluation of the Independent Directors was also done by the entire Board excluding the Directors being evaluated and also of its own performance and that of its Committees and individual Directors.

14.5 Policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of directors, key managerial personnel and other employees Summary of the Nomination and Remuneration Policy, which details the principles underlying Directors/ Key Managerial Personnel appointment, remuneration etc is presented as part of the Corporate Governance Report. The policy can be accessed at www.indianippon. com. Additional details including various ratios required under the Companies Act 2013 is given as separate annexure to this report.

15. Auditors

(i) Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 and Rules made thereunder, M/S Deloitte, Haskins & Sells LLP, Chartered Accountants, were appointed for a period of five years from the conclusion of the 32nd Annual General Meeting held on 24th August 2017 until the conclusion of the forthcoming 37th Annual General Meeting subject to ratification by the members at every annual general meeting if so required under the Act.

(ii) Cost Auditor

Pursuant to the Companies (Cost Records and Audit) Rules, 201 4, the Company filed the Cost Audit Report, with the Ministry of Corporate Affairs, for the financial year 2016-17 in XBRL format.

Mr. K Suryanarayanan who was appointed as Cost Auditor for the financial year 2017-18 will be submitting his report within the time limit applicable under the Companies (Cost Record and Audit) Rules 2014.

The Board has re-appointed Mr. K Suryanarayanan as cost auditor for the financial year 2018-19 also and a remuneration of Rs.2.75 lacs has been fixed for the audit. The ratification of his remuneration is included as an item in the Notice of the Annual General Meeting as required under Section 148 (3) of the Companies Act 201 3 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014.

(iii) Secretarial Auditor & the Secretarial Audit Report

Ms. B Chandra, Practicing Company Secretary was appointed as Secretarial Auditor by the Board of Directors for the financial year 201 718 whose report is annexed to this report. Ms. B Chandra, Practicing Company Secretary was re-appointed as Secretarial Auditor for carrying out the secretarial audit for the financial year 2018-19.

(iv) Qualification/reservation/adverse remark in Audit Report

There were no qualification / reservation / adverse remark in the Auditor’s Report or in the Secretarial Audit Report.

16. Particulars of contracts or arrangements with related parties

The Audit Committee accords omnibus approval to Related Party Transactions which are foreseen and repetitive in nature. The Audit Committee reviews, on a quarterly basis, the details of the Related Party Transaction entered pursuant to the aforementioned omnibus approval.

Consequent to the application of Indian Accounting Standards (IND AS), your Company’s transactions with TVS Motor Company Limited had become a material related party transaction. Further, your Company envisages that transactions with certain other related parties may become material in the future taking into consideration the overall trajectory in two/ three wheeler business. Approval of the shareholders is being sought under Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 201 5 for the material Related Party Transactions and the proposal along with detailed explanatory statement is given as part of the Notice to Shareholders for the ensuing Annual General Meeting.

All the existing and proposed transactions with related parties are in the ordinary course of business and on arm’s length basis and the details of ‘material’ related party transactions are disclosed in form AOC-2 which is annexed to forms part of this report.

The Company has a policy on Related Party Transactions and the same is displayed on the Company’s website viz., www.indianippon.com.

17. Particulars of loans, guarantees or investments u/s 186:

The company has not given any loans or guarantee as specified under Section 186 of the Companies Act 2013.

The details of investments are given in Note no 5 on Accounts for the financial year 2017-18. The same is within the prescribed limits under provisions of Section 186 of the Companies Act 2013.

18. Prevention of sexual harassment of women at workplace:

As per the requirements of the Sexual Harassment of women at workplace (Prevention, Prohibition & Redressal) Act 2013 and Rules made thereunder, your Company has constituted Internal Complaints Committee. During the year under review, your Company has not received any complaints of sexual harassment from any of the women employees of the Company.

19. Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year to which the financial statements relate and the date of the report.

20 . Acknowledgements

Your Directors wish to place on record their appreciation for the good work of all the employees of the Company.

Your Directors also acknowledge the continued support received from Lucas TVS Limited, Lucas Indian Service Ltd, Mahle Electric Drives Japan Corporation and also wish to thank the Governments at the Centre and in the States of Tamil Nadu, Haryana, Maharashtra and Puducherry, Bank of Baroda, ICICI Bank Ltd, Axis Bank Ltd, and SIPCOT for the assistance rendered by them from time to time.

For and on behalf of the Board of Directors

Place : Chennai T K BALAJI

Date : 8th May 2018 DIN No.:00002010

Chairman