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LGB Forge Ltd.

BSE: 533007 Sector: Engineering
NSE: LGBFORGE ISIN Code: INE201J01017
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OPEN 3.83
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VOLUME 40000
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Buy Price 0.00
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OPEN 3.83
CLOSE 3.83
VOLUME 40000
52-Week high 8.30
52-Week low 3.36
P/E
Mkt Cap.(Rs cr) 57
Buy Price 0.00
Buy Qty 0.00
Sell Price 3.80
Sell Qty 2305.00

LGB Forge Ltd. (LGBFORGE) - Director Report

Company director report

Dear Shareholders

Your Directors take pleasure in presenting the Eleventh Annual Report of your Companytogether with the audited accounts for the year ended on 31st March 2017.

FINANCIAL RESULTS

The summary of the financial performance of the Company for the year ended 31st March2017 as compared to the previous year is as below

Particulars 31.03.2017 31.03.2016
(Rs. in Lakhs) (Rs. in Lakhs)
Gross Income 8435.06 8917.53
Profit / (Loss) before interest depreciation & Tax (96.89) 279.23
Less:
Interest 265.67 374.82
Depreciation 226.01 349.71
Add : Exceptional Items 388.04 211.55
Profit /(Loss) Before Tax (200.53) (233.75)
Profit/(Loss) After Tax (200.53) (233.75)
Add : Balance brought forward (4362.52) (4128.77)
Amount transferred to Balance Sheet (4563.05) (4362.52)

PERFORMANCE OF THE COMPANY

During the year under review your Company's Gross Income is Rs. 8435.06 Lakhs[Previous Year: Rs. 8917.53 Lakhs]. Gross Profit / (Loss) before interest depreciationand tax amounted to Rs. (96.89) Lakhs [Previous YearRs. (279.23) Lakhs]. The Net profit/(Loss) stood at Rs. (200.53) Lakhs [Previous Year Net Profit/(Loss)Rs. (233.75) Lakhs].

AMOUNT TRANSFERRED TO RESERVES.

The Company has not transferred any amount to reserves during the year due to lossincurred to the Company and hence no information as per the provisions of Section 134 (3)(j) of the Companies Act 2013 has been furnished.

DIVIDEND

In view of the losses current and accumulated your Directors regret their inabilityto recommend dividend for the year 2016-2017.

FIXED DEPOSITS.

During the year the Company did not accept or renew any fixed deposits and no fixeddeposits remained unclaimed with the Company as on 31st March 2017.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3) (a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2017 made under theprovisions of Section 92(3) of the Act is attached in prescribed form (MGT-9) asAnnexure-A which forms part of this Report.

DISCLOSURE UNDER SECTION 134(3) (l) OF THE COMPANIES ACT WITH RESPECT TO MATERIALCHANGES AFTER THE DATE OF FINANCIAL REPORT.

There were no material changes and commitments affecting the financial position of theCompany occurred between the end of financial year to which this financial statementsrelate and the date of this Report.

INTERNAL CONTROL SYSTEMS AND COMPLIANCE FRAMEWORK

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Internal Auditors and the management monitors andevaluates the efficacy and adequacy of the internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. Audit observations of Internal Auditors and corrective actions thereon arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the Internal Auditor reports to the Audit Committee.

The Company has in place adequate internal financial controls commensurate with sizescale and complexity of its operations. The Company has policies and procedures in placefor ensuring proper and efficient conduct of its business the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and timely preparation of reliable financial information.

DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL.

No Significant and Materials orders have been passed by any Regulator or Court orTribunal which can have an impact on the going concern status and the Company's operationsin future.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.

All Contracts/arrangements/transactions entered by the Company during the financialyear with related parties were on an arm's length basis. During the year the Company hadnot entered into any contract/arrangement/ transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions. Hence the requirement for furnishing of details under Section134(3)(h) in prescribed Form No.AOC-2 is not applicable.

PARTICULARS OF LOAN GUARANTEE AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013.

The Company has not provided any loan Guarantee and made investments under Section 186of the Companies Act 2013 hence no information as per provisions of Section 134 (3) (g)of the Companies Act 2013 has been furnished.

DISCLOSURE REGARDING ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS.

The Company has not issued any equity shares with differential rights during the yearunder review and hence no information as per provisions of Rule 4(4) of the

Companies (Share Capital and Debenture) Rules 2014 has been furnished.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

The Company has not granted any Employees Stock Options Scheme during the year underreview and hence no information required to be furnished as per the provisions of Rule12(9) of the Companies (Share Capital and Debentures) Rules 2014.

DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES.

The Company has not issued any Sweat Equity Shares during the year under review andhence no information required to be furnished as per the provisions of Rule 8(13) of theCompanies (Share Capital and Debentures) Rules 2014.

DISCLOSURES IN RESPECT OF VOTING RIGHTS NOT DIRECTLY EXERCISED BY EMPLOYEES

There are no shares held by trustees for the benefit of employees and hence nodisclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules 2014has been furnished.

DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES.

The Company has no Subsidiary Joint Venture or Associate Companies during the yearunder review and hence no information required to be furnished as per the provisions ofRule 8 (5)(iv) of the Companies (Accounts) Rules 2014.

SHARE CAPITAL

The Paid-up share capital of the Company as at 31st March 2017 stood at Rs.1500.02 lakhs. During the year under review the Company has not made any fresh issue ofshares.

CHANGE IN NATURE OF BUSINESS IF ANY.

There was no change in the nature of the business of the Company during the year underreview.

MATTERS RELATING TO DIRECTORS AND KEY MANAGERIAL PERSONNEL RETIREMENT BY ROTATION

In accordance with the provisions of Section 152(6) and as per the Articles ofAssociation of the Company Mr. B.Vijayakumar (DIN: 00015583) retires at the ensuingAnnual General Meeting and being eligible seeks re-appointment. The Board recommends hisreappointment.

APPOINTMENTS / RESIGNATION OF DIRECTORS / KMP.

During the year under review the following changes occurred in the Directors and KeyManagerial Personnel.

_ None of the Independent Directors retires at the ensuing Annual General Meeting.

_ Sri. Rajiv Parthasarathy Director of the Company has resigned with effect from 01stNovember 2016. The Board of Directors has placed on record their sincere appreciation andgratitute for contribution made by him during his tenure as Director

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to the provisions of sub-Section (7) of Section 149 of the Companies Act2013 the Company has received individual declarations from all the Independent Directorsconfirming that they fulfill the criteria of independence as specified in Section 149(6)of the Companies Act 2013

DISCLOSURE RELATING TO BOARD COMMITTEES AND POLICIES

NUMBER OF BOARD MEETINGS

The Board of Directors met 4 times during the financial year ended on 31st March 2017in accordance with the provisions of the Companies Act 2013 and rules made there under.The details of Board Meeting Dates and Particulars of Directors Attendance are given inthe Corporate Governance Report has been enclosed with this report. All the Directorsactively participated in the meetings and contributed valuable inputs on the mattersbrought before the Board of Directors from time to time.

Additionally during the financial year ended 31st March 2017 the IndependentDirectors held a separate meeting in compliance with the requirement of Schedule IV of theCompanies Act 2013 and Regulation 25(3) of the SEBI (LODR) Regulations 2015.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended on 31st March 2017 the Board ofDirectors hereby confirms that

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures.

(b) that such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company at the end of the financial yearand of the loss of the company for that period;

(c) proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets 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 andthat such internal financial controls are adequate and were operating effectively;

(f) proper system have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

NOMINATION AND REMUNERATION COMMITTEE AND REMUNERATION POLICY.

A Nomination and Remuneration Committee is in existence in accordance with theprovisions of sub-Section (3) of Section 178 of the Companies Act 2013. The Board has onrecommendation of the Nomination and Remuneration Committee framed a policy for selectionand appointment of Directors Senior Management and their remuneration. Kindly refer theCorporate Governance Report for matters relating to constitution meetings and functionsof the Committee and remuneration policy formulated by this committee.

AUDIT COMMITTEE

Audit Committee is in existence in accordance with the provisions of Section 177 of theCompanies Act 2013. Kindly refer to the Section on Corporate Governance under the head‘Audit Committee' for matters relating to the composition meetings and functions ofthe Committee. The Board has accepted the Audit Committee recommendations during the yearwhenever required hence no disclosure required under section 177(8) of the Companies Act2013 with respect to rejection of any recommendations of Audit Committee by Board.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Pursuant to Section 177(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 22 of the SEBI (LODR)Regulations 2015 the Board of Directors had approved the policy on VigilMechanism/Whistle Blower for Directors and employees of the Company.

The Whistle Blower Policy is disclosed on the website of the Company atwww.lgbforge.co.in.

Your Company hereby affirms that no complaints were received during the year underreview.

STAKEHOLDER RELATIONSHIP COMMITTEE

Kindly refer to the details on Corporate Governance under the head ‘StakeholderRelationship Committee' for matters relating to the composition meetings and functionsof the Committee.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

According to Section 135 of the Companies Act 2013 no requirement for our Company toconstitute the CSR Committee and for framing the CSR Policy. Hence the requirement tofurnish the details under Section 134(3)(o) of the Companies Act 2013 does not arise.

EVALUATION OF BOARD COMMITTEES AND DIRECTORS.

Regulation 17 of the SEBI (LODR) Regulations 2015 mandates that the Board shallmonitor and review the Board evaluation framework. The Companies Act 2013 states that aformal annual evaluation needs to be made by the Board of its own performance and that ofits committees and individual Directors. Independent Directors at a separate meetingevaluated performance of the Non-Independent Directors Board as whole and of the Chairmanof the Board. The manner in which the evaluation has been carried out has been detailed inthe Corporate Governance Report.

FAMILIARIZATION PROGRAMMES

The Company has conducted various sessions during the financial year to familiarizeIndependent Directors with the Company their roles responsibility in the Company and thetechnology and risk management systems of the Company.

Directors are encouraged to attend the training programmes being organized by variousregulators/ bodies/ institutions on above matters.

RISK MANAGEMENT

The Company is not required to form a Risk Management Committee. The Company hasdeveloped and implemented a Risk Management procedures for identifying the risk associatedwith businesses of the Company and measures to be taken by including identification ofelements of risk and measures to control them.

AUDITORS AND THEIR REPORTS

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s. Haribhakti & Co LLP Chartered Accountants(ICAI Firm Registration No. 103523W/W100048) the Statutory Auditors of the Company holdoffice upto the conclusion of the (Thirteenth) 13th Annual General Meeting.However their appointment as Statutory Auditors of the Company is subject to ratificationby the Members at every Annual General Meeting. The Company has received a certificatefrom the said Auditors that they are eligible to hold office as the Auditors of theCompany and are not disqualified for being so appointed.

Necessary resolution for ratification of appointment of the said Auditors is includedin the Notice of Annual General Meeting for seeking approval of members.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Sri. P. Eswaramoorthy B.Sc FCS (Membership No. FCS 6510 and CP.No.7069)Company Secretary in Practice to undertake the Secretarial Audit of the Company. TheSecretarial Audit report (in Form No. MR.3) for the financial year 2016-17 is attached asAnnexure- B which forms part of this Report.

INTERNAL AUDITOR

Pursuant to the Provisions of Section 138 of the Companies Act 2013 and rules madethere under Sri.M.P.Gopalakrishnan Chartered Accountant was appointed as an InternalAuditor of the Company for the financial year 2016-17.

OBSERVATION OF STATUTORY AUDITOR AND SECRETARIAL AUDITOR IN RESPECT OF THEIR AUDITREPORTS.

The Statutory Audit report and Secretarial Audit report does not contain any adverseobservation or qualification requiring explanation or comments from the Board underSection 134(3)(f) of the Companies Act 2013.

OTHER DISCLOSURES

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO.

The information relating to Conservation of energy technology absorption foreignexchange earnings and outgo pursuant to section 134(3)(m) of the Act read with Rule 8(3)of the Companies (Accounts) Rules 2014 is attached as "Annexure C" which formpart of this Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

The Information as required under the provisions of the Section 197(12) of theCompanies Act 2013 and Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are set out in the "Annexure D" which formspart of this report.

Further

_ None of the employees of the Company was in receipt of remuneration in excess of thelimits prescribed under Section 134 of the Companies Act 2013.

_ As on 31st March 2017 there were 355 Permanent employees of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT.

The Management Discussion and Analysis Report of the operations of your Company isprovided in a separate Section of this Annual Report and forms part of the Report.

CORPORATE GOVERNANCE

As per Regulation 27 of the SEBI (LODR) Regulations 2015 a report on CorporateGovernance together with the Auditor Certificate regarding compliance of the conditions ofCorporate Governance is forms part of this Report.

DISCLOSURE UNDER SEXUAL HARASSEMENT OF WOMAN AT WORK PLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013.

The Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal)Act 2013 (the ‘Said Act') has been made effective from December 9 2013. This Act isto provide protection against Sexual harassment and for matters connected therewith andincidental threto. The Company has constituted an Internal Compliant Committee (ICC) asrequired by the said Act. The Company is strongly opposed to sexual harassment andemployees are made aware about consequences of such acts and about the constitution ofICC.

During the year under review no complaints were filed with the committee under theprovisions of the said Act.

UNCLAIMED AND UNPAID DIVIDENDS

The Company had not paid any dividend so far and hence the question of unclaimed andunpaid dividend does not arise.

LISTING

The Securities of your Company are listed with the National Stock Exchange of IndiaLimited and BSE Limited and pursuant to Regulation 14 of the SEBI (LODR) Regulations2015 the Annual Listing fees for the year 2017-2018 have been paid to them well beforethe due date i.e. April 302017.

INDUSTRIAL RELATIONS

Your Company firmly believes that people are its most valued resource and theirefficiency plays a key role in achieving defined goals and building a competitive workenvironment. Many initiatives have been taken to support business through organizationalefficiency process change support and various employee engagement programmes which hashelped the Organization achieve higher productivity levels. In its pursuit to attractretain and develop best available talents several programmes are regularly conducted atvarious levels across the Company. Employee relations continued to be cordial andharmonious across all levels and at all the units of the Company.

ACKNOWLEDGEMENT

The Directors place on record their sincere appreciation of the customers suppliersand investors for the support extended. We also gratefully acknowledge the continuedassistance and co-operation extended by Government authorities financial institutions andbanks to the Company.

The Directors wish hereby to place on record their appreciation of the efficient andloyal services rendered by each and every employee without whom the growth of the Companyis unattainable. Your Directors look forward to the long term future with confidence

By Order of the Board
K. KARTHIK P. SHANMUGASUNDARAM
Coimbatore Executive Director Director
06.05.2017 DIN: 06846794 DIN: 00119411

ANNEXURE-‘C'

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO[Section 134(3)(m) of The Companies Act 2013 read with Rule 8(3) of The Companies(Accounts) Rules 2014] A. CONSERVATION OF ENERGY

(i) the steps taken or impact on conservation of energy

Steps have been initiated to ensure the better power consumption. Results are expectedin next financial year.

(ii) the steps taken by the Company for utilising alternate sources of energy

No alternate source of energy was used during the financial year under review.

(i) the capital investment on energy conservation equipment

No specific investment made during the financial year on energy conservation equipment.

(B) TECHNOLOGY ABSORPTION

(i) the efforts made towards technology absorption

In house research and development activities is being continued.

(ii) the benefits derived like product improvement cost reduction product developmentor import substitution

Continuous value engineering activities is currently being undertaken for improvingprofitability.

(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)

a. the details of technology imported : b. the year of import : c. Whether thetechnology been fully absorbed:} NIL d. If not fully absorbed areas where has nottaken place and reasons thereof;

(iv) the expenditure incurred on Research and Development

Research and development expenditure during the year amounts to Rs. 28.00 Lakhs.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO
Foreign Exchange earnings : Rs. 212.47 Lakhs
Foreign Exchange used : Rs. 10.92 Lakhs

 

By Order of the Board
K. KARTHIK P. SHANMUGASUNDARAM
Coimbatore Executive Director Director
06.05.2017 DIN: 06846794 DIN: 00119411

Annexure - D

I Disclosure under Section197(12) and Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014

1. Ratio of remuneration of each director to the median remuneration of the employeesof the Company for the financial year ended 31st March 2017 Rs. in Lakhs

Sl. No Director Category Ratio % Increase/ (decrease) in remuneration in the FY 2016-17
1 Sri.B.Vijayakumar Non-Executive Promoter - NA
2 Sri.V.Rajvirdhan Non-Executive Promoter - NA
3 Sri.Rajiv Parthasarathy* Non-Executive Promoter - NA
4 Sri K.Karthik Executive Director 4.67 : 1 0
5 Sri.K.N.V Ramani Non-Executive -Independent - NA
6 Sri.P.Shanmugasundaram Non- Executive Independent - NA
7 Sri.P.V.Ramakrishnan Non-Executive Independent - NA
8 Sri.Harsha Lakshmikanth Non- Executive Independent - NA
9 Ms.Aishwarya Rao Non- Executive Independent - NA
10. Sri.R.Ramakrishnan Chief Financial Officer - NIL
11. Sri.R.Ponmanikandan Company Secretary - NIL

* Resigned with effect from 1st November 2016

Note : For this purpose sitting fees paid to the Directors have not been considered asRemuneration

2. Percentage increase in the median remuneration of employees in the financial year. 9.59%
3. Number of permanent employees on the rolls of Company as on 31st March 2017. 355
4. Average Percentile increase already made in the salaries of employees other than Managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase of managerial remuneration. Not Applicable. Since there is no increase of Managerial remuneration in the last financial year.
5. Affirmation that the remuneration is as per the remuneration policy of the company Your Directors affirm that the remuneration is as per the remuneration policy of the Company.

II Statement containing the particulars of employees in accordance with Rule5(2) of theCompanies (Appointment and remuneration of Managerial Personnel) Rules 2014:

Details of Top ten employees in terms of gross remuneration paid during the year ended31st March 2017.

Name(s) Designation(s) Remuneration Rs. Qualifi- cation Experience (Years) Joining Date Age (Years) Last Employment
K. Lokeshwar Chief Operating Officer 1316988 DME 29 14/11/2013 53 IM AMIS Forging Pvt Ltd. Chennai
K. Karthik Executive Director 1000080 BE MPIB 19 04/04/2013 42 Technocast Foundry Coimbatore
C. Balasubrmania moorthy DGM-Operations 900000 MBA 35 23/01/2015 59 Agarwal Fasteners Pvt Ltd. Mumbai
R.Thomas Violet Senior Manager - Operations 863988 DME 21 19/01/2015 41 Azad Engineering Hyderabad
R.Ramakrishnan Chief Financial Officer 760008 B.Sc. 28 12/01/2015 52 Lakshmi Technology & Engineering Coimbatore
B.Bharath Manager-QAD 719988 BE 16 02/03/2016 38 TAFE MADURAI
G.Sivagnanam Manager - HRD 695940 MBA 20 12/08/2013 41 Primero Intimates Pvt Ltd. Coimbatore
K.Manian Manager-PED 689988 BE 14 20/05/2015 38 EL FORGE Ltd. APPUR Chennai
D.Magudeeswaran Senior Manager - Marketing 669936 BE 14 01/04/2013 35 Rane Brake Lining Ltd. Chennai
K.Selvaganapathy Manager-QAD 660996 BE 16 15/05/2015 35 Accurate steel Forgings (INDIA) Ltd. Chennai

Notes :

1. None of the employees employed for part of the financial year 2016-17 were inreceipt of remuneration for any part of that financial year at a rate which inaggregate was not less than Rs. 8.50 Lakhs per month

By Order of the Board
K. KARTHIK P. SHANMUGASUNDARAM
Coimbatore Executive Director Director
06.05.2017 DIN: 06846794 DIN: 00119411