BOARD OF DIRECTORS' The Board has prepared its report based on the standalone financial statements of the Company and this report contains a separate section wherein a report on the performance and financial position of its wholly owned subsidiary company is presented in Form AOC- Transfer to Reserve: The Company has transferred a sum of Rs.2,200 Lakhs out of the current year profits to the General Reserve Dividend: The Board recommends a dividend of Rs.40/- per equity share of Rs.10 each (400%) on the equity share capital of Rs.11,26,65,040/- for the year ended on 31st March, 2016 aggregating to Rs.4,506.60 Lakhs and to pay a dividend tax of C917.54 Lakhs. The total dividend payout works out to 24.66% of the standalone net profit. The dividend on equity shares is subject to the approval of the shareholders at the Annual General Meeting. The unclaimed Dividend relating to the financial year 2008-09, is due for remittance in August, 2016 to the Investor Education and Protection Fund established by the Central Government. State of Affairs:OPERATIONS During the year under review, the Company has achieved a turnover of Rs.2,46,676.34 Lakhs (2014-15: C2,31,257.78 Lakhs) resulting in a Net Profit of Rs.32,821.32 Lakhs before tax (2014-15: Rs.28,799.93 Lakhs). During the year under review the turnover has increased by 6.67% over the previous year and the profit has increased by 13.96% over the same period last year. Favourable input costs for the products of the Company have resulted in improved performance. TEXTILE MACHINERY DIVISION The Textile Machinery Division of the Company, during the year under review, has recorded a turnover of Rs.2,19,374.36 Lakhs as against Rs.2,03,671.77 Lakhs achieved during the last year, recording an increase of 7.71% over the previous year Textiles being a basic necessity product, the Indian Textile industry has benefitted from growth in demand for textile products in India and from across the globe. Equally, Government's emphasis to modernize and develop various segments of the textile value chain has presented the Indian Spinning Industry with opportunities to grow further. During the year under review demand for textile machinery has moderately increased because of new projects being set up and modernisation/capacity addition by existing players. The Government under its Make in India initiative has rightly focused its efforts on further development of the Textiles sector. Schemes such as Amended Technology Upgradation Fund Scheme, Focus Market/Product Scheme, Integrated Textile Parks/Clusters will augur well for the further development of the Indian textile industry. Besides a number of State Governments in India have policies in place to promote the industry. The Government is also making a determined effort to ensure that the industry in India moves up the textile value chain by setting up/upgrading textile research institutions. These measures are expected to boost investment activity across the textile value chain and in turn have the effect of boosting the demand for textile spinning machinery. The Company has over the years developed suitable expertise in Innovation and is continuously investing its efforts to build its presence in countries having a sizeable textile spinning industry. Internally the Company has undertaken various measures aimed at boosting productivity and for optimization of overall cost. These initiatives would enable the Company to respond positively to any developing market opportunity. MACHINE TOOL DIVISION Turnover of the Machine Tool Division during the year under review was Rs.19,393.62 Lakhs as against Rs.20,829.70 Lakhs recorded during the last year showing a decrease of 6.89% over the previous year. Factory output figures have continuously contracted during a major part of 2015-16 before stabilising in the closing months. This is a pointer to lower demand for machine tools. The Company has been able to launch new machines/ variants to existing machinery during 2015-16. The new variants are well received in the market and this would result in substantial business for the Company in the years to come. The Government's flagship programmes like Make in India and Smart City initiatives provide the basis for future growth for the machine tool industry in India. These measures are expected to increase the demand for capital goods and machine tools. The Indian machine tool industry needs to scale up its presence by developing the capability to manufacture cost effective value added products. The Company continues with its focus on Innovation and emulation/adoption of best of practices in manufacturing. This would enable this division to respond positively to any emerging opportunity. FOUNDRY DIVISION Foundry Division has achieved a turnover of Rs.6,597.97 Lakhs as against Rs.5,627.23 Lakhs recorded during the previous year showing an increase of 17.25% over the previous year. The export turnover constitutes 21.78% of the division's turnover. Given the impetus placed on infrastructure development across the country and towards growth of manufacturing within the country, the Indian foundry industry can look forward to increased demand for its products during 2016-17. The Company has consistently focused its energy and efforts at prevention of scrap/rejection, as waste elimination improves productivity and offers better revenue realization. Also the Company is looking at options like consolidation of foundry units, modernisation of machinery to cut/optimize operational costs. All these measures are expected to provide your Company's products with enhanced cost competitiveness. WIND ENERGY DIVISION The Company has a policy of tapping non-conventional and renewable resources of energy namely wind power to meet with its energy requirements. As on 31st March, 2016 the Company has installed 28 WEGs with a total capacity of 36.80 MW. This division has generated 595 lakh units of power during 2015-16. The entire wind power generated has been captively consumed by the manufacturing units within the Company and thereby helped to reduce the power cost. ADVANCED TECHNOLOGY CENTRE Advanced Technology Centre has achieved a turnover of Rs.1,310.39 Lakhs during the current financial year as against Rs.1,129.07 Lakhs achieved during the same period last year. Job work income earned during the year amounted to Rs.1,045 Lakhs as against Rs.1,124.24 Lakhs during the same period last year. During the year under review this division has been able to secure orders from a number of international Tier II aerospace companies. The Company has invested in facilities necessary to meet with special requirements of clients and has obtained all the necessary quality certification. With the growth of the civil aviation sector and defence procurement within the country, this division can expect increased order bookings and execution during 2016-17. REAL ESTATE ACTIVITY The Élan Project at Parasakthi Nagar, Ganapathy, Coimbatore promoted by LMW in association with M/s Sobha Limited is progressing. Spread over 4.76 acres of land this project is for construction of 236 residential apartments consisting of 1 BHK, 2 BHK & 3 BHK. Your Company has a revenue share of 30% in the project. RESEARCH AND DEVELOPMENT The Research and Development efforts of the Company are focused on: 1. Developing eco-friendly, sustainable, energy efficient, low carbon foot print technologies. 2. Developing technology for production of innovative machinery. 3. Developing end-products at optimal cost. Separate Research and Development units have been established for the development of textile machinery and CNC Machine Tools. Both these facilities have been recognised by the Department of Science and Technology, Government of India as in-house R&D facilities. During the year under review the Company has filed applications for 4 new patents. AWARDS During the year 2015-16 the Company has bagged the following Awards: 1. EEPC Regional Export Award (Star Performer - Large Enterprise) for outstanding export performance during the year 2013-14 2. TMMA Segment Export Award under the category of Textile Machinery for the year 2014-15. 3. TMMA R&D Award for Card LC363 for the year 2014-15. INDUSTRIAL RELATIONS Relationship with employees was cordial throughout the year. SUBSIDIARY COMPANY LMW TEXTILE MACHINERY (SUZHOU) CO.LTD. (LMWTMSCL) The turnover of the Company during the year under review was Rs.16,150.09 Lakhs as against Rs.13,624.17 Lakhs achieved during the previous year. During the year the Company has earned a net profit of Rs.495.07 Lakhs (Previous Year: Rs.1,264 Lakhs). The consolidated financial statements incorporating the financial statements of the above wholly owned subsidiary company is attached to the annual report as required under the Accounting Standard and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The standalone Annual financial Statements of the wholly owned subsidiary is posted in the Company's website www.lakshmimach.com 2. Extracts of Annual Return As per the 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 The Directors, based on the representations received from the Operating Management, confirm that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 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. Nomination and Remuneration Committee and Policy Nomination and Remuneration Committee of Directors has been formed consisting of: 1. Justice Smt Chitra Venkataraman (Retd.), Chairperson (Non-Executive - Independent) 2. Sri S. Pathy, Member (Non-Executive - Non-Independent) 3. Sri Basavaraju, Member (Non-Executive - Independent) The said committee has been empowered and authorised to exercise 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 Nomination and Remuneration Policy is available at Company website www.lakshmimach.com 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 to act as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. 7. Explanation & Comments on Audit Report The report of Statutory Auditors (appearing elsewhere in this Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 2) are self-explanatory having no adverse comments. The Statutory Auditors have not reported any fraud to the Government. 8. Particulars of Loans/Guarantee/Investments The Company has no Inter-Corporate Loans/Guarantees. Investments of the Company in the shares of other companies is provided under notes to Balance Sheet appearing elsewhere in this Annual Report. The Company has not accepted any Fixed Deposits. 9. Particulars of Contracts with Related Parties All the transaction of the Company with related parties are at arms length and have taken place in the ordinary course of business. None of the related party transactions are material transactions. 10. Material Changes There is no material change or commitments after closure of the financial year till the date of this report. 12. Risk Management The Company follows a comprehensive and integrated risk appraisal, mitigation and management process. The identified elements of Risk and Risk Mitigation measures are periodically reviewed and revised by the Board of Directors. 13. Corporate Social Responsibility 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.lakshmimach.com A report in prescribed format detailing the CSR spent for the year 2015-16 is attached herewith as Annexure 3 and forms part of this report. 14. 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 each individual Directors, Board of Directors, Independent Directors, Non-Independent Directors and the Chairman 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 of evaluation has been communicated to the Chairman of the Board of Directors 16. Change in Directorate Sri R. Rajendran served as Director Finance (Executive Non-Independent) till 1st February, 2016. He is now a Director (Non-Executive - Non-Independent) on the Board and will hold the position until the conclusion of the ensuing Annual General Meeting. Though being eligible for re-appointment Sri R. Rajendran has chosen not to seek re-election. Sri M.V. Subbiah, Director, retired on 5th August, 2015. 17. Composition of Audit Committee The Audit Committee was formed by the Board of Directors and it consists of: 1. Dr. Mukund Govind Rajan, Chairman (Non-Executive - Independent) 2. Sri Aditya Himatsingka, Member (Non-Executive - Independent) 3. Sri Basavaraju, Member (Non-Executive - Independent) The Board has accepted the recommendations of the committee and there were no incidences of deviation from such recommendations during the financial year under review. 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.lakshmimach.com During the year under review, there were no complaints received under this mechanism. 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 by the committee 18. Listing of Shares The shares of the Company are listed in Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, Mumbai. Applicable listing fees have been paid up to date. The shares of the Company have not been suspended from trading at any time during the year by the concerned Stock Exchanges. 19. Report of Statutory Auditors on compliance of conditions of Corporate Governance A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report as Annexure 4 and forms a part of the report. 21Comments 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. 22. Corporate Governance As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided elsewhere in this Report. A certificate confirming the compliance of conditions of Corporate Governance issued by the Statutory Auditors of the Company is attached hereto as Annexure 4 and forms part of this report. 23. Auditors Statutory Auditors The Company's Auditors, M/s. M.S. Jagannathan & Visvanathan, Chartered Accountants, Coimbatore and M/s. Subbachar & Srinivasan, Chartered Accountants, Coimbatore hold office till the conclusion of the ensuing Annual General Meeting to be held on 5th August, 2016. M/s. Subbachar & Srinivasan, Chartered Accountants, Coimbatore have consented and confirmed their eligibility and desire to continue as statutory auditors of the Company for the Financial Year 2016-17 while M/s. M.S. Jagannathan & Visvanathan, Chartered Accountants, Coimbatore will retire at the ensuing AGM and will not seek reappointment. M/s S. Krishnamoorthy & Co. Chartered Accountants, with Sri. K. Raghu as Signing Partner is appointed as Auditors of the Company subject to shareholders' approval, to hold office as Auditors for a term of five financial years commencing from 2016-17 to 2020-21 and to hold office from the conclusion of this AGM and till conclusion of AGM to be held in 2020-21. Cost Auditor: Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Directors, on the recommendation of the Audit Committee have appointed Sri A. N. Raman, Practicing Cost and Management Accountant, as the Cost Auditor of the Company for the financial year 2016-17. 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, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2016-17. 24. Acknowledgements Your Directors thank all customers' for their continued support and patronage. The Directors also thank the Company's Bankers, Selling Agents, Vendors, Central and State Government for their valuable assistance. 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 Sanjay Jayavarthanavelu Chairman and Managing Director (DIN No. 00004505) Place: Coimbatore Date: 16th June, 2016 |