Directors' Report Dear Shareowners, The Board of Directors ("Board") is delighted to present their 59th Annual Report on the business and operations of your Company for the Financial Year ended on 30 June 2015. This Report is being presented together with the Audited Annual Accounts for the financial year ended 30 June 2015. FINANCIAL PERSPECTIVE,BUSINESS OUTLOOK & SEGMENTAL REVIEW The Gross revenue from operations of your Company for the year ended 30 June 2015 stood at Rs. 1332.29 Crores as against Rs.1171.94 Crores for the year ended 30 June 2014 and signifies a growth of 13.68% as compared to the revenue generated in the previous year ended on 30 June 2014. The Profit after tax for the year ended 30 June 2015 stood at Rs. 40.18 Crores as compared to Rs. 44.81 Crores in the previous year ended 30 June 2014. The decline in profit after tax by 10.34% is due to inflationery pressure during the year under review DIVIDEND After considering the Company's profitability and overall financial performance, your Directors are pleased to recommend for your consideration a dividend of Re. 1/- per equity share of Rs. 10/- each (10% on the paid-up equity share capital of the Company) for the year ended 30 June 2015. The dividend, if approved would involve a cash outflow of Rs. 3.07 Crores (exclusive of dividend distribution tax of Rs.0.53 Crores). The dividend will be paid in compliance with all applicable provisions. In view of the improved predictability and stability of the Company's operations, the Board intends to maintain similar or better levels of dividend payout over the next few years. However, the actual dividend payout in each year will be subject to the investment requirements of the annual operating plan for the year and any other strategic priorities identified by the Company. SUBSIDIARY Fedders Lloyd Trading FZE, located in Ras Al Khaimah Free Trade Zone, U.A.E. is a wholly owned subsidiary of your Company. There has been no material change in the nature of the business of the subsidiary and there is no Company which has become or ceased to become subsidiary. As prescribed by the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company, the consolidated financial statements along with relevant documents and separate audited accounts of the subsidiary are available on the website of the Company. These documents will be available for inspection during the business hours at the registered office of the Company. A statement containing the salient features of the financial statement of our subsidiary in the prescribed format Form AOC-1 is attached with the financial statements of the Company. CONSOLIDATED FINANCIAL STATEMENTS Pursuant to provisions of Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 and read with Clause 41 of the Listing Agreement executed with the Stock Exchanges, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms a part of this Annual Report. TRANSFERTO RESERVES Your Company proposes to transfer Rs. 50 Crores to the General Reserve out of the amount available for appropriations as per the available financial statements for the year ended 30 June 2015. FIXED DEPOSITS During the year under review, your Company has not invited or accepted/renewed any fixed deposits from public under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. DIRECTORS & KEY MANAGERIAL PERSONNELS Pursuant to the provisions of the Companies Act, 2013 read with the Articles of Association of the Company, Mr. Nemichandra D. Jain, Whole Time Director of the Company will retire at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. The Board recommends his re-appointment. A brief resume of the director seeking re-appointment, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Notice of the ensuing Annual General Meeting. NUMBER OF MEETINGS OF THE BOARD During the year under review, four (4) Board Meetings were held on 27 August 2014, 10 November 2014, 11 February 2015, 08 May 2015 respectively and 12 meetings of Committee of Board of Directors were noted. The detailed strength and attendance record is given under Corporate Governance Report forming part of this Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT In compliance with the provisions of Section 134(5) of the Companies Act, 2013 and save as mentioned elsewhere in this Report, the attached Annual Accounts and the Auditors' Report thereon, which is best to the knowledge and belief, it is hereby confirmed that: a. in the preparation of the annual accounts for the year under review, the applicable accounting standards had been followed. b. the directors had selected such accounting policies and applied them consistently and madejudgments 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 or loss of the Company for that year. c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d. that the directors had prepared the annual accounts on a going concern basis. e. the directors laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. f. The directors had devised proper systems to ensure compliance the provisions of all applicable laws and that such systems were adequate and operating effectively. AUDITORS AND AUDITORS' REPORT STATUTORY AUDITORS Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, M/s. Suresh C. Mathur& Co., Chartered Accountants (ICAI Firm Registration No: 000891N and Membership No. 83540) were appointed as Statutory Auditors of the Company in the 58th Annual General Meeting of the Company held on 30 October, 2014 until the conclusion of the 61st Annual General Meeting, subject to ratification of their appointment at every AGM. The Company has received certificate from the said auditors to the effect that their appointment, if made, would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITORS In compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. Sanjay Chugh, Practicing Company Secretary, to conduct Secretarial Audit for the financial year ended 30 June 2015. The Report of the Secretarial Auditors is annexed to this report and marked as Annexure-1. COST AUDITORS The Board appointed M/s. Jain Sharma & Associates, Cost accountants, as cost auditors of the Company for the financial year 2015-16 at a fee of Rs. 50,000 plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the shareholders at the ensuing annual general meeting. The cost audit report of the financial year 2014-15 would be filed with the Central Government within the prescribed time. CORPORATE GOVERNANCE A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Equity Listing Agreement with the Stock Exchange(s) is annexed herewith and is set out as separate section to this annual report. CORPORATE SOCIAL RESPONSIBILITY Fedders Lloyd has been an early adopter of corporate social responsibility initiatives. Your Company believes that education is the first and foremost right that must be provided to all. Your Company emphasizes on nurturing and educating destitute children. With this view, Lloyd concentrates largely on promoting child education through the initiatives taken by Pandit Kanahaya Lal Punj Trust (PKLP Trust), a philanthropic arm of Lloyd group. In addition, your Company actively participates to promote health care, rural development, community development, environment protection and conservation of natural resources. Details about the CSR policy and initiatives taken by the Company on Corporate Social Responsibility during the year are attached herewith as Annexure-2 and are also available on our website i.e. on www.fedderslloyd.com . The annual report on our CSR activities is appended to the Board's report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT As stipulated by the Clause 49 of the Listing Agreement, a detailed Management and Analysis Report is presented in a separate section forming part of the Annual Report. DISCLOSURE OF INFORMATION WITH REGARDS TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND RESEARCH & DEVELOPMENT In accordance with the requirements of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, a statement showing particulars with respect to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are annexed hereto as Annexure-3 and form part of this report. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The Nomination and Remuneration Committee of the Company approved an Evaluation Policy during the year, which was adopted by the Board of Directors. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board.The Board's performance for the current year was assessed on the basis of participation of directors, quality of information provided/available, quality of discussion and contribution etc. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering the aforesaid aspects of the Board's functioning. The overall performance of the Board and Committee's of the Board was found satisfactory. The overall performance of Chairman, Executive Directors and the Non-executive Directors of the Company is satisfactory. The review of performance was based on the criteria of performance, knowledge, analysis, quality of decision making etc. COMMITTEES OFTHE BOARD Your company has five Committees - Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Committee of Board of Directors. The role and composition of these Committees, including the number of meetings held during the financial year and the related attendance, are provided under Corporate Governance Report which forms part of this annual report. The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, stating that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. SIGNIFICANT AND MATERIAL CHANGES The Company has conducted 2 Postal Ballots during the year under review. The first postal ballot was commenced from 26 September 2014 to 25 October 2014 and results of which were declared on 30 October 2014. The second postal ballot was commenced from 16 June 2015 to 15 July 2015 and results of which were declared on 17 July 2015. The detailed descriptions of the matters transacted through the postal ballot are given under Corporate Governance Report which forms part of this Annual Report. WARRANTS The Company vide its Board Meeting dated 08 May 2015, has proposed to issue 50,00,000 Preferential Warrants convertible into equal number of equity shares to Promoters, persons belonging to promoter category and persons acting in concert which was subject to the shareholders' approval. The respective approval from the shareholders has been duly received by the Company through Postal Ballot results dated 17 July 2015. The Company has allotted the respective convertible warrants to the promoter group entities on 03 August 2015 at the rate of Rs. 75 per warrant on receiving the upfront consideration of 25% of total warrant price amounting to Rs. 9.375 crores from the allottees by complying with the guidelines prescribed by the Companies Act, 2013 read with the Rules framed thereunder, the procedures prescribed by the Listing Agreement entered with the Stock Exchanges, Regulations of SEBI (ICDR) Regulations, 2009 or all other provisions for the time being in force. INTERNAL FINANCIAL CONTROL In accordance with the provisions of Section 134(5)(e) of the Companies Act, 2013, your Company has duly adopted policies and procedures to ensure orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The detailed information pertaining to internal financial control is set out in the Management Discussion & Analysis Report which is attached herewith and forms part of this report. VIGIL MECHANISM In pursuant to the provisions of Section 177 of the Companies Act, 2013, a vigil mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.fedderslloyd.com under investors/policy documents/Vigil Mechanism Policy link. RELATED PARTY TRANSACTIONS Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexed hereto as Annexure 4 and form part of this report. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.fedderslloyd.com under investors/ policy documents/Related Party Policy link. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-5 and form part of this report. PARTICULARS OF LOANS, GUARANTEES OR 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. PARTICULARS OF EMPLOYEES As mandated by the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the Annexure-6 to this report and forms part of this report. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION In accordance with the provisions of Section 178 of the Companies Act, 2013 read with the relevant rules framed thereunder and on the recommendations of the Nomination and Remuneration Committee of the Company, Board of Directors has adopted a policy for determining the qualifications, positive attributes and independence of a director. The policy has been framed for determining the remuneration of directors, key managerial personnel and other employees. DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY Risk management forms an integral part of the management policy. Your Company has formulated a policy and process for risk management. The detailed statement indicating development and implementation of a risk management policy is provided under Management Discussion and Analysis, which forms a part of this report. LISTING OF EQUITY SHARES The Equity Shares of your Company continue to be listed at National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Annual Listing Fees for the year 2015-16 have been paid to these stock exchanges. HEALTH, SAFETY AND ENVIRONMENT (HSE) Your Company has always placed Health, Safety and Environment (HSE) at the very heart of the way of doing its business. Adhering to the highest standards of HSE performance is fundamental to protect the business and our people. During the year, the Company continued its efforts towards preventing incidents and injuries from its business activities by providing a safe and healthy working environment at all manufacturing units/sites owned and / or operated by the Company. The Company achieved this by eliminating or minimizing, so far as is reasonably practicable, the causes of health and safety hazards inherent in its working environment. Your Company believes that its people are its most valuable resources. The Company provides an excellent working environment for them to deliver to their best potential. The Company encourages its employees to upgrade their skills through both internal and external workshops and trainings. The Company believes in providing equal opportunity to everyone and the work-culture is based on merit and performance. During the year, there were no disputes with the employees and the Company. Your Company continues to enjoy cordial relationships with the work force across all units and operations. APPRECIATION Your Directors place on record their appreciation for assistance and co-operation received from various ministries and department of Government of India and other State Governments, financial institutions, banks, shareholders, directors, executives, officers of the Company etc. The management would also like to express great appreciation for the commitment and contribution of its employees at all locations for their tremendous personal efforts, committed services and contribution to the Company's performance. FOR AND ON BEHALF OFTHE BOARD OF DIRECTORS BRIJ RAJ PUNJ CHAIRMAN & MANAGING DIRECTOR PLACE : NEW DELHI DATE : 13 AUGUST 2015 |