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Lakshmi Machine Works

BSE: 500252|NSE: LAXMIMACH|ISIN: INE269B01029|SECTOR: Textiles - Machinery
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Directors Report Year End : Mar '17    Mar 16

Board of Directors'' Report to shareholders

Dear Shareholders,

The Board of Directors of your company are pleased to present the Annual Report on the business of the Company along with the standalone summary financial statements for the year ended 31st March, 2017.

1. The State of Affairs of the Company, Dividend and Reserve

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-1.

Financial summary/highlights and transfer to General Reserve (Rs,in Lakhs)

Sl No

Particulars

Current Year 2016-17

Previous Year 2015-16

1

Revenue from Operations (including Excise Duty)

2,52,285.96

2,85,138.78

2

Operating Expenses

2,18,181.42

2,44,030.83

3

Gross Profit

34,104.54

41,107.95

4

Depreciation

7,473.26

8,289.11

5

Profit Before Tax

26,631.28

32,818.84

6

Provisions for Tax

7,570.87

10,806.46

7

Net Profit after Tax

19,060.41

22,012.38

Transition to Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated February

16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For the Company, Ind AS is applicable from April 1, 2016, with a transition date of April 1, 2015.

The following are the areas which had an impact on account of transition to Ind AS:

- Expected credit loss model for provisioning on trade receivables

- Fair valuation of investments in equity instruments

- Employee costs pertaining to defined benefit obligations

- Revenue recognition

- Recognition of dividend liability and related taxes

- Deferred taxes

The reconciliations and descriptions of the effect of the transition from IGAAP to Ind AS have been provided in the notes to accounts in the standalone and consolidated financial statements.

Transfer to Reserve:

The Company has transferred a sum of Rs,1,900 Lakhs out of the current year profits to the General Reserve.

Dividend:

The Board recommends a dividend of Rs,35/- per equity share of Rs,10/- each (350%) on the equity share capital of Rs,10,95,55,040/- for the year ended on 31st March, 2017 aggregating to ''3,834.43 Lakhs and to pay a dividend tax of ''780.69 Lakhs. The total dividend payout works out to 24.21% 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 2009-10, is due for remittance in August, 2017 to the Investor Education and Protection Fund established by the Central Government.

As per the requirements of SEBI notification no. SEBI/ LAD-NRO/GN/2016-17/008 dated 8th July, 2016, the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available at the company website: www.lakshmimach.com

State of Affairs: OPERATIONS

During the year under review, the Company has achieved a turnover of Rs, 2,35,587.87 Lakhs (2015-16: Rs,2,69,150.44 Lakhs) resulting in a Net Profit of Rs, 26,631.28 Lakhs before tax (2015-16: Rs,32,818.14 Lakhs). During the year under review the turnover has decreased by 12% over the previous year and consequently the profit has also decreased by19 % over the same period last year. Unfavorable market conditions in India and abroad has resulted in reduced demand for the Textile machinery of the Company.

TEXTILE MACHINERY DIVISION

The Textile Machinery Division of the Company, during the year under review, has recorded a turnover of Rs, 1,96,334.74 Lakhs as against Rs,2,38,916.71 Lakhs achieved during the last year, recording a decrease of 18% over the previous year.

THE INDIAN TEXTILE INDUSTRY

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 decelerated as the spinning sector - the key user of your Company’s products remained adversely impacted by factors such as:

- Fluctuation in raw material availability and price

- Overall sentiment of financial institutions/banks for lending to spinning sector had remained negative for major part of the year under review. However this perception has undergone a marginal positive change towards the close of the financial year.

- Yarn exports have reduced consequent to a fall in China''s demand for the commodity.

Despite this aberration, the government’s thrust on strengthening the growth momentum of the textile industry remained unwavering primarily due to the sector’s role in contributing to economic growth and providing employment. The Government has taken important steps in this direction like:

- The government has notified the Amended Technology Up gradation Fund Scheme (A-TUFS) to provide a one-time capital subsidy for investments in employment-and technology intensive segments of the textile sector, a move aimed at promoting exports and import substitution.

-A ''6,000-crore special package for textiles and apparel sector was rolled out in June 2016, which is expected to create one crore new jobs in three years, attract investments of US billion and generate US billion in exports.

In addition, the Government is working on unveiling the National Textile Policy in the FY18. The policy aims to achieve US0 billion (over Rs,20 Lakh crore) worth of textile exports by 2024-25 and create an additional 35 million jobs. This policy holds the potential to infuse fresh momentum into the sector as it could make Indian garments more competitive in international markets by reducing the cost of production.

These measures are expected to catalyze investment across the textile value chain cascading to an increase in demand for textile spinning machinery.

As a de-risking initiative, the Company remains focused on widening its global presence by strengthening its presence in existing geographies and entering new textile hubs across the world.

Internally the Company has undertaken various measures aimed at boosting productivity and controlling 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 ''31,885.59 Lakhs as against ''21,553.94 Lakhs recorded during the last year showing an increase of 48% over the previous year.

Factory output improved significantly owing to improved systems and processes aligned to global-best practices. The Company partnered with renowned Japanese consultants for system and process realignment which improved the accuracy and efficiency of mother machines. In addition, the Company worked on improving assembling efficiencies by implementing solutions to the manufacturing excellence drive findings.

The Company launched new machines and variants which offer efficient and accurate operations to customers. The Company also launched machines targeting the tools and dies sector -widening its opportunity canvass.

The Government''s flagship programmes like Make in India, its thrust on raising India’s ranking in the World Bank’s Ease of Doing Business list and the increasing focus on localising defence equipment manufacture provide optimism for the healthy growth of the machine tool industry in India over the coming years.

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,5937.31 Lakhs as against Rs,7258.60 Lakhs recorded during the previous year showing a decrease of 18% over the previous year. The export turnover constitutes 24% of the division''s turnover.

During the year under review, the Company consolidated operations of its foundry units catering to its Textile Machinery Division. In addition to this, standard operating procedures aligned with global best-practices has been created, this is expected to facilitate increase in productivity, controlling costs, improving quality and reducing environment pollution. All of this is expected to enhance its global competitiveness.

The Government’s thrust on the infrastructure sector, the ‘Make in India’ initiative and increasing defense partnerships (leading to growing defence offset programmes), demand for castings is expected to increase over the coming years.

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, 2017 the Company has installed 28 WEGs with a total capacity of 36.80 MW. This division has generated 937 Lakh units of power during 2016-17. About 88% of the 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,1,430.23 Lakhs during the current financial year as against Rs,1,421.19 Lakhs achieved during the same period last year.

Job work income earned during the year amounted to Rs,1,264.87 Lakhs as against Rs,1,045.30 Lakhs during the same period last year.

The division has made significant progress in establishing its credibility in the global aerospace sector. Besides receiving prestigious orders from national and international aerospace OEMs, this division is also emerging as a key partner for OEMs in their future development plans. To strengthen business prospects, the Company is focusing on moving up the value-chain by graduating from components to sub-assemblies. The Company expects to generate increasing business as it focuses on increasing man-machine capabilities to widen its opportunity canvass.

REAL ESTATE ACTIVITY

The Elan 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 and 3 BHK. Your Company has a revenue share of 30% in the project. As on date about 67 units have been sold resulting in a revenue of Rs,1,141.89 Lakhs for the Company.

RESEARCH AND DEVELOPMENT

EXPORTS

During the year under review the Company has achieved an export turnover as indicated below: Rs, in Lakhs

Sl No

Division

FY 2016-17

FY 2015-16

1

Textile Machinery

32,623.80

52,932.65

2

CNC Machine Tools

96.09

184.23

3

Castings

1,508.04

1,436.71

4

Aerospace Parts

425.93

1,310.05

Total Exports

34,653.86

55,863.64

Export of Textile Machinery as stated above includes exports worth Rs,2,130.08 Lakhs made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co., Ltd, China. Amongst other countries, the Company''s products are primarily exported to Turkey, Bangladesh, Pakistan, Nepal, Indonesia, Vietnam and China.

The Research and Development efforts of the Company are focused on:

1. Developing eco-friendly, sustainable, energy efficient, low carbon foot print technology.

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 recognized 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 5 new patents.

AWARDS

During the year 2016-17 the Company has bagged the following Awards:

1. Star Performer Award for the year 2014-15 at the 47th EEPC India National Award.

2. Star Performer Award for the year 2015-16 at the 48th EEPC India National Award.

3. TMMA’s APEX Export Award for Textile Machinery & Parts during 2015-16.

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,8,803.43 Lakhs as against Rs,16,150.09 Lakhs achieved during the previous year. During the year the Company has incurred a net loss of Rs,703.49 Lakhs (Previous Year Profit: Rs,640.72 Lakhs).

The consolidated financial statements incorporating the financial statements of the 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 representation 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 the 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 authorized 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 and 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. There were no instances of fraud reported by the Statutory Auditors to the Central Government or to the Audit Committee of the Company as indicated under the provisions of Section 143(12) of the Companies Act 2013.

8. Particulars of Loans/Guarantee/Investments

The Company has no Inter-Corporate Loans. The Company has extended a Bank Guarantee of USD 3.5 million to secure a loan to be availed by its wholly owned subsidiary company LMW Textile Machinery (Suzhou) Company Limited, China. 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.

11. Buyback of Shares:

In terms of the Resolution passed by the Board of Directors at their meeting held on 26th October, 2016 and after receiving necessary comments from Securities and Exchange Board of India (SEBI) and after complying with necessary requirements, the offer of the Company to buyback 3,11,000 equity shares of face value of ''10/- each on a proportionate basis from all the existing shareholders/beneficiary owners excluding the promoter/promoter group at a price of ''4,450/- per equity share for an aggregate maximum amount of Rs,13,839.50 Lakhs remained open from 13th December, 2016 to 26th December, 2016. Shares offered in the buyback was more than the offer size and hence the Company bought back the intended 3,11,000 equity shares, which were extinguished on 6th January, 2017.

As a result the issued and paid-up share capital of the Company as on 31st March, 2017 reduced to 1,09,55,504 equity shares of Rs,10 each.

12. Conservation of Energy, Technology Absorption & Foreign Exchange

The disclosures under Rule 8(3) of Companies (Accounts) Rules, 2014 are as under:

STATEMENT FOR CONSERVATION OF ENERGY Sl No Particulars Related Disclosures

(A) Conservation of Energy

(i) the steps taken or impact on conservation of energy; Company has invested in energy conservation devices to save sources of energy; power as detailed in point (iii) below.

(ii) the steps taken by the Company for utilising alternate Company has installed windmills with a capacity of 36.80 MW. sources of energy Uses electricity generated in windmills for captive consumption.

(iii) the capital investment on energy conservation Investment during 2016-17 for replacement of furnace equipments transformers, harmonic filters, replacement with LED lighting

and merging of HT connections was Rs,223 Lakhs

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

(B1) Technology Absorption - Textile Machinery Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects and

specialisations and skill building exercises

2. In-depth IPR analysis and review

3. Theoretical simulation

(ii) Benefits derived like product improvement, cost Development of machinery with innovative features resulting reduction, product development or import substitution; in improved performance and cost effectiveness to end user.

Enhancement of overall knowledge base.

(iii) In case of imported technology (imported during the last NIL three years reckoned from the beginning of the financial year):

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology has been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;

(iv) Expenditure incurred on Research and Development Capital Expenditure: Rs, 359.44 Lakhs

Revenue Expenditure: '' 1,933.51 Lakhs Total Expenditure: '' 2,292.95 Lakhs

(B2) Technology Absorption - Machine Tool Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects and specializations and skill building exercises

2. In-depth IPR analysis and review

3. Theoretical simulation

(ii) Benefits derived like product improvement, cost Product improvement: reduction, product development or import substitution; Measures like coolant through Spindle feature, direct drive spindle motor system, increased compactness of machine for space saving. Cost reduction:

Indigenization of Components and sub-assemblies, standardization of LM guides, ball screws, spindle and axis bearings.

Product development:

2 Machining Centres and 2 Turning Centre’s are under development.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

(a) the details of technology imported; Design & Drawing of LH63 Horizontal machining center from

PROTIDEA - Italy

(b) the year of import; 2013-14

(c) whether the technology has been fully absorbed; Yes

(d) if not fully absorbed, areas where absorption has not Not applicable taken place, and the reasons thereof;

(iv) Expenditure incurred on Research and Development Capital Expenditure: Nil

Revenue Expenditure: Rs,224.56 Lakhs Total Expenditure: Rs,224.56 Lakhs

13. 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.

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.lakshmimach.com. A report in prescribed format detailing the CSR spent for the year 2016-17 is attached herewith as Annexure 3 and forms 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 each individual Director, Board of Directors'', Committees of the Board, Independent Directors, Non-Independent Directors and the Chairman of the Board based on the criteria of evaluation as specified by SEBI Circular SEBI/ HO/CFD/CMD/CIR/P/2017/004 dated 5th January, 2017. Based on this revised criteria the performance evaluation process has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose on 6th February,

2017. All the results of evaluation has been communicated to the Chairman of the Board of Directors.

16. Additional Information

As per Rule 8(5) of the Companies (Accounts) Rule, 2014, the following additional information is provided:

(i) The financial summary or highlights The financial highlights including State of Affairs of the

Company, Dividend and Reserve have been provided in this report

(ii) The change in the nature of business, if any There is no change in the business line of the Company.

(iii) The details of Directors or key managerial personnel who Sri Arun Alagappan (DIN:00291361) was appointed as Additional were appointed or have resigned during the year Director of the Company by the Board of Directors at their meeting held on 26th October, 2016, to hold office until the conclusion of the Annual General Meeting to be held on 7th August, 2017. If approved by the shareholders at this meeting Sri Arun Alagappan will be appointed to the office of Independent Director of the Company for a fixed term of 5 years commencing from 26th October, 2016.

Sri C R Shivkumaran was appointed as the Company Secretary of the Company with effect from 4th November, 2016 by the Board of Directors at their meeting held on 26th October, 2016 consequent to the superannuation of Sri K Duraisami.

(iv) The names of companies which have become or ceased to None be its Subsidiaries, joint ventures or associate companies during the year

(v) The details relating to deposits, covered under Chapter V The Company has not accepted deposits of the Act

(vi) The details of deposits which are not in compliance with Not Applicable the requirements of Chapter V of the Act.

(vii) The details of significant and material orders passed by Nil the regulators or courts or tribunals impacting the going concern status and company''s operations in future

(viii) The details in respect of adequacy of internal controls Procedures are set to detect and prevent frauds and to protect with reference to the Financial Statements. the organization’s resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or Intellectual property such as trademarks). The financial statements are prepared in accordance with the Indian Accounting Standards issued by the Institute of Chartered Accountants of India.

17. Re-appointment of retiring Directors:

Sri. V. Sathyakumar (DIN: 06477636), Nominee Director of LIC, who retires by rotation at the ensuing Annual General Meeting, being eligible offers himself for reappointment. The Board recommends his reappointment in the forthcoming Annual General Meeting.

Sri Arun Alagappan (DIN: 00291361) was appointed as Additional Director (Independent) by the Board of Directors on 26th October, 2016 to hold office upto the next Annual General Meeting. A notice has been received along with the requisite deposit of ''1,00,000/- from a member signifying his intention to propose the candidature of Sri Arun Alagappan for the office of Independent Director of the Company for a period of five years commencing from 26th October, 2016. A resolution is being moved at the ensuing Annual General Meeting for his appointment as Independent Director.

18. 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 thereof 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 2016-17, no complaint was received by the committee.

19. Listing of Shares

The shares of the Company are listed in Bombay Stock Exchange Limited, Mumbai 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.

20. 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.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) and rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules:

a) The ratio of the remuneration of each Director to the median employee''s remuneration for the financial year and such other details as prescribed is as given below:

Director

Category

Ratio

Sri Sanjay Jayavarthanavelu

Executive — Chairman and Managing Director

141.55:1

Sri S Pathy

Non-Executive — Non-Independent

0.92:1

Sri Basavaraju

Non-Executive - Independent

0.92:1

Sri Aditya Himatsingka

Non-Executive - Independent

0.92:1

Dr. Mukund Govind Rajan

Non-Executive - Independent

0.92:1

Sri V Sathyakumar1

Non-Executive — Non-Independent, Nominee of LIC

0.92:1

Justice (Smt) Chitra Venkataraman (Retd)

Non-Executive — Independent

0.92:1

Sri Arun Alagappan2

Non-Executive - Independent

0.40:1

Sri R Rajendran3

Non-Executive - Non Independent

0.32:1

Note: For this purpose, Sitting fees paid to the Directors has not been considered as remuneration ''Amount paid to Life Insurance Corporation of India.

2Sri Arun Alagappan - From 26.10.2016 to 31.03.2017 3Sri R Rajendran - From 01.04.2016 to 05.08.2016

b) The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary in the financial year:

Director

Category

% Increase

Sri Sanjay Jayavarthanavelu

Executive — Chairman and Managing Director

-14.53

Sri S Pathy

Non-Executive — Non-Independent

-

Sri Basavaraju

Non-Executive - Independent

-

Sri Aditya Himatsingka

Non-Executive - Independent

-

Dr. Mukund Govind Rajan

Non-Executive - Independent

-

Sri V Sathyakumar1

Non-Executive — Non-Independent, Nominee of LIC

-

Justice (Smt) Chitra Venkataraman (Retd)

Non-Executive — Independent

-

Sri Arun Alagappan2

Non-Executive - Independent

NA

Sri R Rajendran3

Non-Executive - Non Independent

NA

Sri C B Chandrasekar4

Chief Financial Officer

NA

Sri C R Shivkumaran5

Company Secretary

NA

Note: For this purpose, Sitting fees paid to the Directors has not been considered as remuneration.

1Amount paid to Life Insurance Corporation of India.

2Sri Arun Alagappan - From 26.10.2016 to 31.03.2017 3Sri R Rajendran - From 01.04.2016 to 05.08.2016

4Sri C B Chandrasekar- Chief Financial Officer for part of the financial year 2015-16, hence not comparable 5Sri C R Shivkumaran - Appointed as Company Secretary with effect from 04.11.2016

c) The percentage increase in the median remuneration of employees in the financial year: 2.38%

d) The number of permanent employees on the rolls of company: 3,400

e) 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:

The increase in remuneration is 1.21% for employees other than Managerial Personnel and KMP while it has decreased by 13.37% for Managerial Personnel including KMP.

f) Affirmation that the remuneration is as per the remuneration policy of the Company:

Yes.

g) Particulars of Employees as per [Rule 5(2) and Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel Rules), 2014]:

Particulars of Employees whose salary is not less than Rupees One Crore and Two Lakhs:

Table 1:

Name (Age in Years)

Designation

Gross

Remuneration Paid (in '')

Qualification

Date of commencement of employment (experience in Years)

Previous

Employment

Sri Sanjay Jayavarthanavelu (48 years)*

Chairman and

Managing

Director

7,68,99,813

MBA

3rd June, 1994 (22 years)

-

Particulars of Top Ten employees in terms of remuneration drawn: Table 2:

Name (Age in Years)

Designation

Gross

Remuneration Paid (in '')

Qualification

Date of

commencement of employment (experience in Years)

Previous

Employment

Sri K Soundhar Rajhan (68 years)

President - MTD, Foundry and ATC

70,12,020

B.Sc.,

9th July, 1973 (43 years)

The Kovilpatti Lakshmi Roller Flour Mills Limited

Sri N Krishna Kumar (59 years)

Senior Vice President - Manufacturing, TMD

58,05,624

BE.,ME.,

1st July, 1983 (33 years)

-

Sri V Venugopal (59 years)

Senior Vice President - TQM

57,12,957

BE., ME., MBA., MS.,

5th August, 1981 (35 years)

-

Sri C B Chandrasekar (58 years)

Chief Financial Officer

47,56,412

BCom., ACS., ACMA.,

3rd April, 1992 (25 years)

Elgi Equipments Limited

Sri V Vijayasekaran (52 years)

Senior General Manager - Operations, ATC

37,68,420

BE., ME.

5th February, 2010 (7 years)

Trusted Aerospace Private Limited

Sri P Ananthan (48 years)

Senior General Manager - SCM (MTD, Foundry and ATC)

35,95,694

BE.,

17th August, 1989 (27 years)

-

Sri C Arunachalam (52 years)

Senior General Manager - Sales Global, TMD

35,07,149

B. Tech., MBA.,

3rd February, 1992 (25 years)

J K Synthetics Limited

Sri V Senthil (38 years)

Senior General Manager - Finance

34,55,913

BCom., ACA.,

23rd January, 2015 (2 years)

LMW Textile Machinery (Suzhou) Company Limited

Sri T Sundaram (56 years)

Senior General Manager - SCM, TMD

34,50,174

DME., BE., PGDC., MS.,

18th July, 1980 (36 years)

-

Sri Indraneel Bhattacharya (52 years)

Senior General Manager - Marketing & Sales, MTD

34,50,174

DME.,

8th February, 1993 (24 years)

Batliboi & Company Limited

Sri G Rajeswaran (56 years)

Senior General Manager - SCM, TMD

34,50,174

DME., BE.,

1st July, 1997 (19 years)

Lakshmi Precision Tools Limited

Sri G Mani (62 years)

Senior General Manager - Global Services

33,98,063

DME., BE.,

1st July, 1975 (41 years)

-

Notes for Table 1 & 2:

1. The remuneration includes Company''s contribution to provident fund, gratuity and perquisites.

2. *Employment is contractual.

3. No employee is relative (in terms of the Companies Act, 2013) of any Director of the Company. Further no employee of the Company is covered by the Rule 5(2)(iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014, that is employee, holding by himself or with his family, shares of 2% or more in the Company and drawing remuneration in excess of the Chairman a Managing Director.

4. The remuneration details are for the year 2016-17 and all other particulars are as on 31st March, 2017.

22. 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.

23. 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.

24. Auditors Statutory Auditors

One of the Company’s Joint Auditors M/s. Subbachar & Srinivasan, Chartered Accountants, Coimbatore hold office till the conclusion of the ensuing Annual General Meeting to be held on 7th August, 2017. M/s. Subbachar & Srinivasan will retire at the ensuing AGM.

M/s S. Krishnamoorthy & Co. Chartered Accountants, with Sri.

K. Raghu as signing Partner was appointed as Auditors of the Company from the financial year 2016-17 at the AGM held during 2016 for a term of five financial years commencing from 2016-17 to 2020-21 and to hold office till conclusion of AGM to be held in 2020-21. M/s. Krishnamoorthy & Co., Chartered Accountants, Coimbatore, with Sri. K. Raghu as signing partner have consented and confirmed their eligibility and desire to continue as Statutory Auditors of the Company for the Financial Year 2017-18 subject to ratification by the shareholders at the ensuing AGM.

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 2017-18.

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 2017-18.

25. Business Responsibility Report

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for the top 500 listed entities based on market capitalization. In compliance with the regulation the BRR is enclosed as Annexure 5 and forms part of the Annual Report.

26. 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 Governments 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

Place: Coimbatore Chairman and Managing Director

Date: 22nd May, 2017 (DIN No. 00004505)

Source : Dion Global Solutions Limited
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