Your Directors submit the 32nd Annual Report of the company along with the Auditedfinancial Statements for the financial year ended March 312016.
Rs in Lakhs
|Particulars ||(2015-16) ||(2014-15) |
|Net Sales ||12107.33 ||11814.24 |
|Other Income ||90.87 ||128.12 |
|Captive Consumption ||1139.61 ||128.75 |
|Total Income ||13337.81 ||12071.12 |
|Profit before Depreciation Interest and Taxes ||2628.81 ||2939.24 |
|Depreciation ||740.83 ||867.90 |
|Profit before Interest and Taxes ||1887.98 ||2071.34 |
|Interest and Finance Charges ||1535.87 ||1817.78 |
|Profit before Taxes ||352.11 ||253.56 |
|Provision for Taxes ||138.30 ||178.95 |
|Profits after Taxes ||213.81 ||74.61 |
The turnover increased by 2.48% and The Earnings per Share increased from Rs. 0.63 inthe previous year to Rs 1.45 in the year under report.
The General Purpose machinery division could post a marginally higher saledomestically and could more or less hold on to the export sales.
There was a substantial fall 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 job work revenue increased compared to the previous year due to start of newprojects in the last quarter.
The New Connecting Rod Manufacturing line had commenced production in the secondhalf of last year further adding to the Component Division revenues.
The current market conditions are showign 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 performnce 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 teh market brings in an immediate demand. However since rest ofEurope and Russia continues to be in a state of recession 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 industryin particular and the Autosector in general are expected to do well and thereby help us increase the overallrevenues.
Your Directors are pleased to recommend for approval of the Members a dividend of 5% onequity shares of the company for the financial year 2015-16 amounting to Rs 0.50/- perequity share.
The dividend on the equity shares if declared as above would involve an outflow ofRs.7932867/- towards dividend and Rs. 1615132 /- towards dividend tax resulting in atotal outflow of Rs. 9547999./-.
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.
Revision in the remuneration of Directors re-appointed as on 28-09-2015 as follows :
|1. Mullapudi Lokeswararao ||- Managing Director |
|2. Bollineni Kishore Babu ||- Whole Time Director |
|3. Mullapudi Srinivas ||- Whole Time Director |
|4. Mullapudi Srikrishna ||- Whole Time Director |
|5. A. Vijay Kumar ||- Independent Director |
The detailed profile of the above directors are given at Notice calling the AnnualGeneral Meeting.
All Independent Directors have given declaration that they meet the criteria ofindependence as laid under section 149(6) of the Companies Act 2013.
AUDITORS Statutory Auditors
At the the Annual General Meeting(AGM) held on September 30 2014 M/s. Brahmayya &Co Chartered Accountants were appointed as Statutory Auditor of the Company to holdoffice till the conclusion of the Annual General Meeting to be held in the calendar year2017. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditor shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of M/s. Brahmayya & Co Chartered Accountantsas statutory auditors of the Company is placed for ratification by the shareholders. Inthis regard the Company has received a certificate from the auditors to the effect thatif they are reappointed it would be in accordance with the provisions of Section 141 ofthe Companies Act 2013.
Cost 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 2016-17 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 2015-16 as required under Section204 of the Companies.Act 2013 and Rule 9 there-under. The secretarial audit report for FY2015-16 forms part of this Report as Ann6xure- C.
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
DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
The Company has been addressing various risks impacting the company policy of thecompany on risk management 4is 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 REMUNERATION 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.
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 confirmthat:
In preparation of annual accounts for the financial year ended 31st March 2016 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;
The Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give true and fairview of the state of affairs of the Company at the end of the financial year ended 31 stMarch 2016 and of the profit and loss of the Company for the financial year;
The Directors have taken proper and sufficient care for their maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
i. The Directors had prepared the annual accounts on a going concern basis;
ii. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and '
iii. The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
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-compliances which the managementensures to comply the same in time in future.
Board Meetings ;
During the year under review six Board Meetings were held on 11th May 2015; 30th May2015;12th June 2015; 14th August 2015; 14th November 2015 and 13th February 2016.
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.
Independent Directors Declaration
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013.
Evaulation of Boards Performance
Pursuant to the provisions of the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations (including any statutory modifications orre-enactments for the time being in force) the processof valuation of the annualperformance of the Directors / Borad / Committees was carriout out. The criteria appliedin the evaluation process are detailed in the Corporate Governance rport which forms partof this report. Corporate Governance Report
Your Company has complied with the requirements of Regulation 34 of the SEBI (LODR)Regulations 2015 entered with the Stock Exchanges and provisions of the Companies Act2013 Report on Corporate Governance including Auditors Certificate on compliancewith the code of Corporate Governance.
Management Discussion and Analysis
A brief note on the Management discussion and analysis for the year is enclosedas'Annexure B to this report Vigil Mechanism:
In pursuant to the provisions of section 177 of the Companies Act 2013 a VigilMechanism for directors and employees to report genuine concerns has been 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 Directors also wish to place on record their appreciation for the enthusiasticsupport received from the 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) |
i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Name of the Director ||Ratio to Median remuneration |
|M Lokeswararao ||18.17 |
|B Kishore Babu ||8.58 |
|M Srikrishna ||8.58 |
|M Srinivas ||8.58 |
ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;
|Name of the Director/Chief Financial Officer/Chief Executive Officer /Company Secretary/Manager ||Percentage of increase in remuneration |
|M Lokeswararao || |
|B Kishore Babu || |
|M Srikrishna ||' |
|M Srinivas || |
|V Sudhakara Reddv || |
|D Raghavendrarao || |
iii) The percentage increase in the median remuneration of employees in the financialyear; 5%
iv) The number of permanent employees on the rolls of company; 363
v) The explanation on the relationship between average increase in remuneration andcompany performance;
On an average employees received an annual increase of 5%. The individual incrementsvaried from 5% to 15% based on individual performance
In order to ensure that remuneration reflects Company performance the performance payis also linked to organization performance apart from an individuals performance.
vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company;
|Aggregate remuneration of key Managerial Personnel(KMP) in FY 2016 (Rs. Lakhs) ||125.08 |
|Total Revenue (Rs.Lakhs) ||12198.20 |
|Remuneration of KMP(as % of revenue) ||1.03% |
|Profit before Tax (PBT) (Rs.Lakhs) ||352.11 |
|Remuneration of KMP(as % of PBT) ||35.72% |
vii) Variations in the market capitalisation of the company price earnings ratio as atthe closing date of the current financial year and previous financial year:
|Particulars ||March 312016 ||March 312015 ||% Change |
|Market Capitalisation (Rs. Lakhs) ||1101098439 ||835606530 ||31.78% |
|Price Earning Ratio ||108.53 ||112.62 ||(4.09) |
Percentage increase over decrease in the market quotations of the shares of the companyin comparison to the rate at which the company came out with the last public offer:
|Particulars ||March 312016 ||IPO Price ||% Change |
|Market Price (BSE) ||74.85 ||140 ||(53.46%) |
|Market Price (NSE) ||75.00 ||140 ||(53.57%) |
viii) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;
ix) Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the company;
| ||Mr M Lokeswara rao ||Mr.B. Kishore Babu ||Mr. M. Srinivas ||Mr. M. Sriktishna ||Mr. V. Sudhakara Reddy ||Mr. D. Raghavendrarao |
|Remuneration in FY 15 (Rs. Lakhs) ||42.22 ||21.22 ||21.22 ||21.22 ||15.00 ||4.20 |
|Total Revenue (Rs. Lakhs) ||12198.20 ||12198.20 ||12198.20 ||12198.20 ||12198.20 ||12198.20 |
|Remuneration as % of Revenue ||0.34 ||0.17 ||0.17 ||0.17 ||0.12 ||0.03 |
|Profit Before Tax(PBT) (Rs. Lakhs) ||352.11 ||352.11 ||352.11 ||352.11 ||352.11 ||352.11 |
|Remuneration (as % of PBT) ||12.00 ||6.00 ||6.00 ||6.00 ||4.26 ||1.19 |
x) The key parameters for any variable component of remuneration availed by thedirectors;
xi) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year;
xii) Affirmation that the remuneration is as per the remuneration policy of thecompany:
The Company affirms that the remuneration is as per the remuneration policy of theCompany. SUBSIDIARY COMPANY:
The company does not have any Subsidiary company either in India or abroad.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of the Loans guarantees and investments covered under Section 186 of theCompanies Act 2013 are given in the notes to the financial statements pertaining to theyear under review.
The Company has not accepted any deposits from the public.
RELATED PARTY TRANSACTIONS:
Related party transactions entered during the financial year under review are disclosedin Note No.27 of the Financial Statements of the Company for the financial year ended 31stMarch 2015. These transactions entered were at an arms length basis and in theordinary course of business. There were no materially significant related partytransactions with the Companys Promoters Directors Management or their relativeswhich could have had a potential conflict with the interests of the Company.