Your Directors submit the 33nd Annual Report of the company along with theAudited financial Statements for the financial year ended March 31 2017.
Rs in Lakhs
|Particulars ||(2016-17) ||(2015-16) |
|Net Sales ||13177.81 ||12107.33 |
|Other Income ||35.18 ||90.87 |
|Captive Consumption ||1107.24 ||1139.61 |
|Total Income ||14320.23 ||13337.81 |
|Profit before Depreciation Interest and Taxes ||1189.33 ||2628.81 |
|Depreciation ||818.49 ||740.83 |
|Profit before Interest and Taxes ||2007.82 ||1887.98 |
|Interest and Finance Charges ||1664.06 ||1535.87 |
|Profit before Taxes ||343.76 ||352.11 |
|Provision for Taxes ||124.28 ||138.30 |
|Profits after Taxes ||219.48 ||213.81 |
The turnover increased by 8.32 % in the year
The General Purpose machinery division could post a higher sale domestically andalso the Connecting Rod sales revenue increased compared to the previous year The job workrevenue slightly decreased compared to the previous year
There was a Decrease in the SPM sale due to the protracted recessionarycondition and as no major project was taking off at our regular SPM customers. TypicallySPM movement will start once the economy reaches a reasonable uptick unlike the GPMs whichpick up at the start of growth phase itself.
The current market conditions are showing signs of recovery but not at a comfortablepace. There is still an air of cautious optimisum and customers are conservative in theirgrowth plans.
However your directors are confident of putting in an improved performance over theprevious year.
1) The SPM order book reflects a reasonable growth. Almost all the orders are from theexisting customers only for capacity expansion and not for any new products.
2. The CNC machines division is expected to post substantial growth with improvingmarket conditions. The delivery lead times of these machines is less than 3 months andhence any improvement in the market brings in an immediate demand. However since rest ofEurope and Russia continues to be in a state ofrecession the exports could be same aslast year. However we hope for some improvement in the coming quarter which could reflectin increased export dispatches in the last quarter.
3. On the component division front the Connecting Rod production is in a rampup mode.With a reasonable monsoons prediction the Tractor industry in particular and the Autosector in general are expected to do well and thereby help us increase the overallrevenues.
The Company proposes to retain profits of the current year for company's future plansand developments. Hence your directors have not recommended dividend for the FinancialYear 2016-2017.
TRANSFER TO GENERAL RESERVE
The Company does not propose to transfer any amount to General Reserve.
Mr. M. Krishna Swamy Director of the company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer themselves for re-appointment.
All Independent Directors have given declaration that they meet the criteria ofindependence as laid under section 149(6) of the Companies Act 2013 and Listing Agreement.
The provisions of Section 139 142 and other applicable provisions if any of theCompanies Act 2013 (the Act) and the Companies (Audit and Auditors ) Rules 2014(including any statutory modification(s) or re-enactment thereof for the time being inforce) and pursuant to recommendation of the Audit Committee and the Board of DirectorsM/s. K.S.Rao & Co. Chartered Accountants Hyderabad (ICAI Firm Regn. No.003109S) beand are hereby appointed as Statutory Auditors of the Company in place of M/s. Brahmayya& Co. Hyderabad (ICAI Firm Regn. No.000513S) whose tenure expires at this AnnualGeneral Meeting at such remuneration plus reimbursement of outof-pocket travelling andliving expenses etc. as may be mutually agreed between the Board of Directors of theCompany and the said Auditors."
The Board has appointed M/s. DZR&Co Cost Accountants for conducting the audit ofcost records of the Company for various segments for the financial year 2017-18 asrecommended by the Audit Committee. As required under section 148 and Rule 14 of theCompanies (Audit and Auditors) Rules 2014 a resolution is being placed at the ensuing AGMfor ratification of remuneration payable to said Cost Auditors.
M/s. S Chidambaram Practicing Company Secretaries was appointed to conduct theSecretarial Audit of the Company for the financial year 2016-17 as required under Section204 of the Companies Act 2013 and Rule 9 there-under. The secretarial audit report for FY2016-17 forms part of this Report as Annexure- C.
Reply to the observations of Secretarial auditor:
Your company is law abiding entity and filed the necessary forms & returns withthe authorities. However there were few non-compliance's which the management ensures tocomply the same in time in future.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE OUTGO
Information required under section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) 2014 is enclosed herewith as Rules Annexure - A
DEVELOPEMNT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
The Company has been addressing various risks impacting the company policy of thecompany on risk management is provided elsewhere in this Annual Report in ManagementDiscussion and Analysis.
The Company has developed and implemented a risk management policy for the companyincluding identification therein of elements of risk which in the opinion of the Boardmay threaten the existence of the company.
NOMINATION AND REMUENRATION POLICY
On the recommendation of the Nomination and Remuneration Committee the Board ofDirectors has formulated a policy of the Company on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters and to frame proper systems foridentification appointment of Directors & KMPs Payment of Remuneration to them andEvaluation of their performance.
FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS
As required under the provisions of Schedule IV of the Companies Act 2013 theperformance evaluation of independent directors has been done by the entire Board ofDirectors excluding the director being evaluated. The evaluation of all the directors andthe Board as a whole was conducted based on the criteria and framework adopted by theBoard. The Board approved the evaluation results as collated by the nomination andremuneration committee.
None of the independent directors are due for re-appointment
The equity shares of the Company are listed with Bombay Stock Exchange Limited (BSE)and National Stock Exchange of India Limited (NSE). There are no arrears on account ofpayment of listing fees to the said Stock Exchanges
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors' confirm that:
In preparation of annual accounts for the financial year ended 31st March 2017 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures; The Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give true and fair view of the state of affairs of the Company at the end of thefinancial year ended 31st March 2017 and of the profit and loss of the Company for thefinancial year; The Directors have taken proper and sufficient care for their maintenanceof adequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; i. The Directors had prepared the annual accounts on a goingconcern' basis; ii. The directors had laid down internal financial controls to be followedby the company and that such internal financial controls are adequate and were operatingeffectively; and iii. The directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
OTHER DISCLOSURES: Board Meetings
During the year under review Eight Board Meetings were held on 11th May 2016; 28thMay 2016; 28th June 2016; 12th August 2016; 20th Sep 2016; 05th November 2016 27thJanuary 2017 and 14th February 2017.
Committees of Board
Your company has the following committees namely:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
The constitution of all the committees are as per the Companies Act 2013 and ListingAgreement with Stock Exchanges. The details of the Constitution are mentioned in CorporateGovernance Report which forms part of this Annual Report.
Corporate Governance Report
Your Company has complied with the requirements of the Listing Agreement entered withthe Stock Exchanges and provisions of the Companies Act 2013 Report on CorporateGovernance including Auditor's Certificate on compliance with the code of CorporateGovernance.
Management Discussion and Analysis
A brief note on the Management discussion and analysis for the year is enclosed asAnnexure B to this report
In pursuant to the provisions of section 177 of the Companies Act 2013 and the ListingAgreement a Vigil Mechanism for directors and employees to report genuine concerns hasbeen established.
Your Directors wish to place on record their appreciation for the support andco-operation extended by the Shareholders Bankers Financial Institutions GovernmentAuthorities Stock Exchanges Customers Suppliers and other associates. Your Directorsalso wish to place on record their appreciation for the enthusiastic support received fromthe team of dedicated employees in the activities of your Company.
|On behalf of the Board || |
|For Lokesh Machines Limited || |
|B Kishore Babu ||M Lokeswara Rao |
|(Executive Director) ||(Managing Director) |