DIRECTORS’ REPORT Dear Shareholders, Your Directors take pleasure in presenting the Sixtieth Annual Report of your Company together with the audited accounts for the year ended 31st March, 2016 CONSOLIDATED FINANCIALS During the year under review, your Company’s consolidated total revenue stood at Rs. 120,922.43 Lakhs as compared to Rs. 117,517.02 Lakhs for the previous year, representing an increase of 2.85 %; profit before tax stood at Rs. 7,777.70 Lakhs for the year under review as compared to Rs. 9391.23 Lakhs (which includes exceptional items of Rs. 660.80 lakhs) for the previous year, profit after tax stood at Rs. 6,486.07 Lakhs as compared to Rs. 7,342.40 Lakhs for the previous year. STANDALONE FINANCIALS During the year under review, the Total Revenue stood at Rs. 109,427.32 Lakhs as compared to Rs. 105,056.16 Lakhs for the previous year, profit before tax stood at Rs. 7,037.34 Lakhs for the year under review as compared to Rs. 7,816.29 Lakhs for the previous year, profit after tax stood at Rs. 5,745.36 Lakhs as compared to Rs. 6,439.60 Lakhs for the previous year. TRANSFER TO RESERVES The Company has transferred an amount of Rs. 4,500 Lakhs to the General Reserve out of the amount available for appropriations and the remaining amount of Rs. 3,867.51 Lakhs has been retained in the Profit and Loss Account. DIVIDEND The Board of Directors of the Company has proposed a final dividend of Rs. 1/- per equity share of face value Rs. 10/- each. Total dividend being Rs. 6/- per equity share (60% on face value of Rs. 10/- each) which includes 1st Interim Dividend of Rs. 2.50 per equity shares of Rs. 10/- each (25%) declared at the Board meeting held on 29th October 2015 and 2nd interim dividend of Rs. 2.50 per equity shares of Rs. 10/- each (25%) declared at the Board meeting held on 15th March 2016. The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting to be held on 14th July, 2016. The total dividend appropriation (excluding dividend tax) for the current year is Rs. 941.78 as against Rs. 1098.74 in the previous year. The Final Dividend, if approved will be paid to the eligible members well within the stipulated time TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND Pursuant to the provisions of Section 205 (c) of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for the year 2007-2008 with the Company for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund. The Company has transferred unclaimed dividend of Rs. 2.68 lakhs for the financial year 2007-2008 to Investor Education and Protection Fund on 25.09.2015. The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 10th September, 2015 (date of last Annual General Meeting) on the website of the Company (www.lgb.co.in), as also on the Ministry of Corporate Affairs website. SHARE CAPITAL The paid up share capital of the Company as at 31st March 2016 aggregates to Rs. 15,69,62,080/- comprising of 15,696,208 equity shares of Rs. 10/- each fully paid up. EXTRACT OF ANNUAL RETURN Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is annexed as Annexure - A. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS Detailed composition of the Board and Board Committees namely Audit Committee, Nomination and Remuneration Committee, CSR Committee, Stakeholders Relationship Committee, number of meetings held during the year under review, attendance of each Director and other related details are set out in the Corporate Governance Report which forms a part of this Report. DIRECTORS’ RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended on 31st March, 2016, the Board of Directors hereby confirms that, (a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; (b) that such accounting policies have been selected and applied consistently and the Directors 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 of the Company for that period; (c) proper and sufficient care was 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) the annual accounts of the Company have been prepared on a going concern basis; (e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; (f) proper system have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. (g) details in respect of frauds reported by auditors under sub Section (12) of Section 143 other than those which are reportable to the Central Government. DECLARATION BY INDEPENDENT DIRECTORS Pursuant to the provisions of Section 149 of the Act, which came into effect from 1st April, 2014, Sri .P .Balasubramanian, Sri. V. Govindarajulu, Sri .P .Shanmugasundaram, Dr.T.Balaji and Sri.R.Vidhya Shankar were appointed as Independent Directors at the Annual General Meeting of the Company held on July 09, 2014. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Directors during the year NOMINATION AND REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters as provided under Section 178(3) of the Companies Act, 2013 have been outlined in the Corporate Governance Report which forms part of this Report. AUDITORS STATUTORY AUDITORS Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, Messrs. Deloitte Haskins & Sells., Chartered Accountants, the Statutory Auditors of the Company, hold office up to the conclusion of the (Sixty First) 61st Annual General Meeting. However, their appointment as Statutory Auditors of the Company is subject to ratification by the Members at every Annual General Meeting. The Company has received a certificate from the said Auditors that they are eligible to hold office as the Auditors of the Company and are not disqualified for being so appointed. Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members. COST AUDITOR Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with notifications/ circulars issued by the Ministry of Corporate Affairs from time to time and as per the recommendation of the Audit Committee, the Board of Directors at their meeting dated 30.04.2016, appointed Dr.G.L.Sankaran, Cost Accountant, as Cost Auditor of the Company for financial year 2016-2017. The Cost Audit Report for the financial year 2015-2016 will be filed within the period stipulated under Companies Act, 2013. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, Mr.M.D.Selvaraj of M/s.MDS & Associates, Company Secretaries were appointed as the Secretarial Auditors of the Company to carry out the Secretarial Audit for the year ended 31st March, 2016. A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as Annexure - B. OBSERVATION OF STATUTORY AUDITOR AND SECRETARIAL AUDITOR IN RESPECT OF THEIR AUDIT REPORTS. The Statutory Auditor report and Secretarial Audit report does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3)(f) of the Companies Act, 2013. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY During the year the Company has invested a sum of US $ 255,000 in overseas subsidiary Company ie. M/s. LGB USA INC. In respect of investment, loan, guarantee given in earlier years please refer notes to standalone financial statements. RELATED PARTY TRANSACTIONS Details of the transactions with Related Parties are provided in the accompanying financial statements. There were no transactions during the year which would require to be reported in Form AOC.2. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31, 2016 AND THE DATE OF THE REPORT 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. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure - C”. RISK MANAGEMENT POLICY The Board of Directors of the Company has formulated a Risk Management Policy which aims at enhancing Shareholder’s value and providing an optimum risk-reward trade off. The risk management approach is based on the clear understanding of the variety of risks that the organization faces, disciplined risk monitoring and measurement and continuous risk assessment and mitigation reserves. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in “Annexure – D” of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the corporate governance report, which forms part of this report. The policy is available on the website of the Company http://www.lgb.co.in/pdf/corporatesocial- responsibility-policy.pdf. BOARD EVALUATION On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors the Company formulated the criteria for the evaluation of the performance of the Board of Directors & its Committees, Independent Directors, Non-Independent Directors and the Managing Director of the Board. Based on that performance valuation 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. FAMILIARIZATION PROGRAMMES The Company had conducted various sessions during the financial year to familiarize Independent Directors with the Company, their roles, responsibilities in the Company, and the technology and the risk management systems of the Company. Further, the Directors are encouraged to attend the training programmes being organized by various regulators/bodies/ institutions on above matters. DIRECTORS AND KEY MANAGERIAL PERSONNEL Pursuant to the provisions of Section 152 of the Companies Act, 2013 Sri.S.Sivakumar & Sri. V. Rajvirdhan Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer the mself for re-appointment. The Board of Directors had on the recommendation of the Nomination and Remuneration Committee reappointed Sri.P.Prabakaran as Deputy Managing Director of the Company for a further period of 3 years with effect from June, 1 2016. The terms and conditions of his appointment, including his remuneration, are subject to the approval of the Shareholders in the ensuing Annual General Meeting. Brief profile of Sri.P.Prabakaran, Sri. V. Rajvirdhan and Sri.S.Sivakumar as required under Regulation 36(3)(a) of SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015 and as per Secretarial Standard is provided in the Notice, attached hereto. At the Board Meeting held on August, 01 2014 Sri.B.Vijayakumar Chairman Cum Managing Director, Sri.P.Prabakaran Deputy Managing Director, Sri.N.Rengaraj Chief Financial Officer and Sri.M.Lakshmi Kanth Joshi General Manager Cum Company Secretary were designated as “Key Managerial Personnel” of the Company pursuant to Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. FIXED DEPOSITS As at 31st March, 2016, fixed deposits accepted by the Company from public and shareholders aggregated to Rs. 2,385.45 Lakhs, which are within the limits prescribed under the Companies Act, 2013 (“2013 Act”) and the rules framed thereunder. With the notification of applicable provisions of the Companies Act, 2013 governing deposits, with effect from 1st April, 2014, approval of shareholders was obtained at the last Annual General Meeting, by way of Special Resolution for inviting/ accepting/ renewing deposits. The provisions of the Companies Act, 2013 also mandate that any Company inviting/ accepting/ renewing deposits is required to obtain Credit Rating from a recognized credit rating agency. Your Company has obtained a credit rating MAA- for its fixed deposit from ICRA DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL. No Significant and Materials orders have been passed by any Regulator or Court or Tribunal which can have an impact on the going concern status and the Company’s operations in future Adequacy of Internal Financial Controls with reference to the Financial Statements The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013 Details pursuant to Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as “Annexure – E” 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 Company maintains all its records in SAP System and the work flow and approvals are routed through SAP. The Company has appointed Internal Auditors to observe the Internal Controls, whether the work flow of organization is being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; and The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Policy to determine Material Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for 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. SUBSIDIARY COMPANIES, JOINT VENTURE AND CONSOLIDATED FINANCIAL STATEMENTS: Your Company has four subsidiaries viz., M/s.BCW V Tech India Private Ltd (Wholly owned Indian Subsidiary), LGB USA INC,. (Direct Overseas Subsidiary), GFM Acquisition LLC and GFM LLC (Step down overseas subsidiaries) in USA. There is One Associate Company Viz., M/s. Renold Chain India Private Limited within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). Statement containing salient features of financial statements of subsidiaries pursuant to Section 129(3) of the Companies Act, 2013 (Act) read with Rule 5 of The Companies (Accounts) Rules,2014 is annexed to this Report as “Annexure F” in the prescribed Form AOC-I. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.lgb.co.in and copy of separate audited financial statements of its subsidiaries will be provided to the shareholders at their request. The Company has laid down policy on Material subsidiary and the same is placed on the website http:// www.lgb.co.in/pdf/policy-on-material-subsidiaries.pdf None of the subsidiaries are material subsidiary as per the provisions of listing agreement. ASSOCIATE COMPANY Your Company has a 25:75 joint venture with M/s.Renold Holding PLC, United Kingdom. under the name of M/s. Renold Chain India Private Limited. This Joint Venture Company is created with an objective to use advanced technology and know-how for production of Industrial Chains. In Financial Year 2015-16, JV achieved sales of Rs. 83.18 Crores (Net of Taxes) against Rs. 89.66 Crores (Net of Taxes) in 2014-15. Growth in sales and margin improvement has resulted in net profit of Rs. 4.86 Crores as against net profit of Rs. 3.74 Crores in 2014-15. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR During the financial year ended 31st March, 2016, no entity became or ceased to be the subsidiary, joint venture or associate of the Company. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the financial year ended 31st March, 2016. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT As required under the Listing Agreement with Stock Exchanges (“Listing Agreement”) a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of Corporate Governance and Management Discussion and Analysis are annexed as ANNEXURE - G AND ANNEXURE - H respectively to this Report. AUDIT COMMITTEE Audit Committee is in existence in accordance with the provisions of Section 177 of the Companies Act, 2013. Kindly refer to the Section on Corporate Governance, under the head, ‘Audit Committee’ for matters relating to the composition, meetings, and functions of the Committee. The Board was accepted the Audit Committee recommendations during the year whenever required, hence no disclosure required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by Board. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has established a Whistle Blower Policy for Directors and employees to report their genuine concern. The details of the same is explained in the Corporate Governance Report. LISTING OF EQUITY SHARES The Securities of your Company are listed with the National Stock Exchange of India Limited and BSE Limited. The Company has paid the Annual Listing Fees to the said stock exchanges for the financial year 2015-2016. INDUSTRIAL RELATIONS Your Company Firmly believes that people are its most valued resource and their efficiency plays a key role in achieving defined goals and building a competitive work environment. Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. In its pursuit to attract, retain and develop best available talents, several programmes are regularly conducted at various levels across the Company. Employee relations continued to be cordial and harmonious across all levels and at all the units of the Company. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE The Company has in place an Anti-Sexual Harassment Policy in line with requirements, inter-alia, of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Compliance Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainee) are covered under this policy. There was no compliant received from any employee during the financial year 2015-16 and hence no complaint is outstanding as on 31.03.2016 for redressal. ACKNOWLEDGEMENT Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, customers, investors, business associates, vendors, regulatory and government authorities, stock exchanges and members during the year under review. Your Directors also sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels thereby contributing largely to the growth and success of the Company. By order of the Board B. VIJAYAKUMAR Chairman cum Managing Director DIN: 00015583 P. PRABAKARAN Deputy Managing Director DIN : 01709564 Place : Coimbatore Date : 30.04.2016 |