BOARD OF DIRECTORS' REPORT TO SHAREHOLDERS Dear Shareholders, The Board of Directors of your Company are pleased to present the Thirty Fifth Annual Report on the business and commercial operations of the Company alongwith the standalone summary financial statements for the year ended 31st March, 2016. Dividend: The Board recommends a dividend of Rs. 8/- (Rupees Eight only) per equity share of the face value of Rs.10 (Rupees Ten only) each (80%) on the equity share capital of Rs. 2,45,80,000/- for the year ended on 31st March, 2016 aggregating to Rs. 1,96,64,000/- (Rupees One Crore Ninety Six Lakhs Sixty Four Thousand only) and to pay a dividend tax of Rs. 40,03,128/- (Rupees Forty Lakhs Three Thousand One Hundred Twenty Eight only). The total dividend payout works out to 27.52% of the net profit for the standalone results. The dividend on equity shares is subject to the approval of the shareholders at the Annual General Meeting. In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2008-09, is due for remittance on 30th August, 2016 to the Investor Education and Protection Fund established by the Central Government. Transfer to reserves : Your Company proposes to transfer Rs. 1,00,00,000/- (Rupees One Crore only) to the General Reserve Business and operations During the year under review, the Company has achieved a turnover of Rs. 18,704 Lakhs as against Rs. 18,209 Lakhs for the previous year. The profit before interest and depreciation was Rs. 1,546 lakhs as against Rs. 1,374 lakhs for the previous year. The profit before tax was Rs. 1,310.20 lakhs as against Rs. 1,230.69 lakhs during the previous year. During the year under review the turnover has increased by 2.72 % over the previous year and the profit before tax has increased by 6.46 % over the same period last year INDUSTRIAL RELATIONS Relationship with employees was cordial throughout the year. 2. Extracts of Annual Return As per requirements of the Companies Act, 2013, the extract of annual return in the prescribed Form MGT 9 is annexed hereto as Annexure 1 forming part of the report. 3. Number of Meetings of the Board Details of number of meetings of Board of Directors and committees thereof and the attendance of the Directors in such meetings are provided under the Corporate Governance Report. 4. Directors' Responsibility Statement In terms of Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same; b. have 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 affairs of the company at the end of the financial year and of the profit and loss of the company for that period; c. have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. have prepared the annual accounts on a going concern basis; and e. have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; f. have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 5. No Frauds reported by statutory auditors There is no instance of frauds reported by the statutory auditors of the Company for the financial year under review under sub Section (12) of Section 143 of the Companies Act, 2013. 6. Declaration by Independent Directors The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. 7. Nomination and Remuneration Committee and Policy As per the requirements of the provisions of the Companies Act, 2013, a Nomination and Remuneration Committee of directors was formed by the Board of Directors consisting of: 1. Sri. N. Suryakumar, Chairman (Non-Executive - Independent) 2. Sri. Ramesh Rudrappan, Member (Non-Executive - Independent) 3. Sri. Arun Selvaraj, Member (Non-Executive - Independent) The said committee has been empowered and authorised to exercise widest power as entrusted under the provisions of Section 178 of the Companies Act, 2013. The Company has a policy on directors' appointment and remuneration including criteria for determining qualification, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178. The salient aspects covered in the Nomination and Remuneration Policy have been outlined in the Corporate Governance Report and the policy is available on the company's website at www.lecsindia.com 8. Auditors Comments There are no adverse comments in the reports of Statutory Auditors (appearing elsewhere in the Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 2). 9. Particulars of Loans/Guarantee/Investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements 10. Particulars of Contracts with Related Party The material related party transactions during the financial year is provided in Form AOC-2 and annexed to the Boards' Report as Annexure 3. 11. Material Changes and Commitments There were no material changes and commitments affecting the financial position of the Company occurred between the end of financial year (March 31, 2016) to which this financial statements relate and the date of this Report. 12. Conservation of Energy, Technology Absorption & Foreign Exchange The disclosures under Rule 8(3) of Companies (Accounts) Rules, 2014 are as under: 14. Corporate Social Responsibility (CSR): The Company has constituted a CSR committee of Board of Directors and has adopted a CSR Policy. The same is posted in the company's website www.lecsindia.com A report in prescribed format detailing the CSR spend for the year 2015-16 is attached herewith as Annexure 4 forming a part of this report. 15. Evaluation of Board's Performance: On the advice of the Board of Directors, the Nomination and Remuneration Committee of Board of Directors of the Company have formulated the criteria for the evaluation of the performance of Board of Individual Directors, Board as a whole, Committees of Directors, Independent Directors, Non-Independent Directors and the Chairperson of the Board. Based on that performance evaluation has been undertaken. The Independent Directors of the company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated to the Chairperson of the Board of Directors. 17. Internal Control systems and their Adequacy: Your Company has established adequate internal control procedures, commensurate with the nature of its business and size of its operations. The accounting transactions and operations are audited by the Internal Auditor vis.a.vis the internal controls, policies and procedures and the deviations, if any, are reported and corrective actions are taken appropriately. 18. Re-appointment of retiring directors: Sri. Sanjay Jayavarthanavelu, Director, who retires by rotation at the ensuing Annual General Meeting, being eligible offers himself for re-appointment. The Board recommends his re-appointment in the forthcoming Annual General Meeting. 19. Resignation of Director There was no incidence of resignation of Director. 21. Vigil Mechanism: The Company has devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section 177(10) of the Companies Act, 2013 and details whereof is available on the company's website at www.lecsindia.com. During the year under review, there were no complaints received under this mechanism. 22. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressai) Act, 2013: As per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has constituted an Internal Complaints Committee. During the year 201516, no complaint was received before the committee. 23. Overall Maximum Remuneration Particulars pursuant to Section 197(12) & rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules: a) The percentage increase in the median remuneration of employees in the financial year: 30.17% b) The number of permanent employees on the rolls of company: 241 c) The explanation on the relationship between average increase in remuneration and company performance: Company’s PAT has grown from Rs.823.58 Lakhs during 2014-15 to Rs.859.90 Lakhs during2015-16, an increase of 4.41% against which the average increase in remuneration is 17.15%; and this increase is aligned with the Remuneration Policy of the Company. h) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the Managerial Remuneration: Average increase in remuneration is 17.54% for employees other than Managerial Personnel and KMP while it is 5.68% for Managerial Personnel (KMP and Senior Management). i) The Key Parameters for any variable component of the remuneration availed by the Directors: The remuneration of Chairperson and Managing Director consists of a Commission paid at the rate of 4%. Besides the above there are no variable components in Managerial Remuneration. j) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Nil k) Affirmation that the remuneration is as per the remuneration pol icy of the Company: Yes ote: 1. The remuneration includes Commission Rs. 9,92,937/-, Company’s Contribution to provident fund Rs. 7,20,000/-, Gratuity contribution – Rs. 2,88,000/- and excludes Leave entitlement Rs. 4,98,992/-. Employment is contractual. 2. The above mentioned employee is not relative (in terms of the Companies Act, 2013) of any director of the Company except Sri. D.Senthil Kumar, Director and Sri. Sanjay Jayavarthanavelu, Director. Further no employee of the Company is covered by the Rule 5(2)(iii) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, that is employee holding by himself or with this family shares of 2% or more in the Company and drawing remuneration in excess of the Managing Director. 3. The remuneration details are for the year 2015-16 and all other particulars are as on 31st March, 2016. 24. Comments u/s 232(2)(c) and Schedule V Part II Section II Since the Company does not belong to the specified class of the companies, the above cited provisions of the Companies Act, 2013 is not applicable to the Company. 25. Corporate Governance: As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and erstwhile Clause 49 of the Listing Agreement for part of the financial year, a separate section on Corporate Governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report. The shares of the Company is listed in BSE Limited, Mumbai. The listing fees is paid up to date and the shares of the Company were not suspended for trading by the Stock Exchange at any time during the year under review. 26. Auditors: Statutory Auditors: The Company's Auditors, M/s N.R.Doraiswami & Co, Chartered Accountants hold the office till the conclusion of the ensuing Annual General Meeting. As per provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the present statutory auditors of the Company who have completed a period of 10 years as on 1st April, 2014 are not eligible for re-appointment after the period of 3 years from the commencement of the Companies Act, 2013. In order to ensure smooth transition, it is proposed to appoint one more Auditor as a joint Statutory Auditor for the financial year 2016-17 and the said auditor will continue as a Statutory Auditor of the Company for a term of five years. It is proposed to appoint M/s. Subbachar & Srinivasan, Chartered Accountants as Statutory Auditor for a term of five years commencing from the financial year 2016-17 who will retire at the conclusion of the Annual General Meeting to be held in the year 2021. For the financial year 2016-17, M/s N.R.Doraiswami & Co, Chartered Accountants and M/s. Subbachar & Srinivasan, Chartered Accountants will be the joint Statutory Auditors. M/s N.R.Doraiswami & Co, Chartered Accountants will retire at the Annual General Meeting to be held in the year 2017. The auditors have consented and confirmed their eligibility for appointment as statutory auditors of the Company. Secretarial Auditor: Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. MDS & Associates, Coimbatore, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2016-17 27. Acknowledgements Your Directors thank the Customers, Bankers, Vendors, Shareholders and other Stakeholders for their continued support and patronage. The Directors wish to place on record their appreciation for the cooperation and contribution made by the employees at all levels towards the progress of the Company. On behalf of the Board Nethra J.S. Kumar Chairperson and Managing Director (DIN : 00217906) Place : Coimbatore Date : July 1, 2016 |