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Lux Industries Ltd.

BSE: 539542 Sector: Industrials
NSE: LUXIND ISIN Code: INE150G01020
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NSE 09:32 | 23 Nov 1454.40 31.20
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OPEN 1450.00
PREVIOUS CLOSE 1417.45
VOLUME 810
52-Week high 1471.20
52-Week low 649.95
P/E 53.80
Mkt Cap.(Rs cr) 3,677
Buy Price 1454.05
Buy Qty 9.00
Sell Price 1459.80
Sell Qty 25.00
OPEN 1450.00
CLOSE 1417.45
VOLUME 810
52-Week high 1471.20
52-Week low 649.95
P/E 53.80
Mkt Cap.(Rs cr) 3,677
Buy Price 1454.05
Buy Qty 9.00
Sell Price 1459.80
Sell Qty 25.00

Lux Industries Ltd. (LUXIND) - Director Report

Company director report

Your Directors are pleased to present the 22nd Annual Report and the AuditedStatement of Accounts for the financial year ended March 31 2017.

1. Financial Highlights

Particulars For the year ended March 31 2017 For the year ended March 31 2016
Revenue from Operations (Gross) 97156.21 94086.54
Other Income 95.96 29.79
Total Revenue 97252.17 94116.33
Profit before Interest Depreciation and Tax 12051.55 9476.37
Less: Depreciation 708.35 411.89
Less: Finance Cost 1716.28 1196.50
Profit Before Tax 9626.92 7867.98
Tax Expense
(a) Current Tax 3110.00 2769.00
(b) Deferred Tax 232.14 -25.79
(c) Income Taxes for earlier year 0.00 -9.29
Profit after Tax 6284.78 5134.06
Add: Surplus brought forward 15323.85 10732.15
Balance available for appropriation 21608.63 15866.21

2. Operating & Financial Performance

Your company delivered another year of steady performance in the backdrop ofsluggishness in the macro-economic environment. This year the Company's total revenuecrossed the H970 crores mark as against H941.16 crores in the previous year. Profit beforeTax is H96.27 crores as against H78.68 crores in the previous year. The Net Profit aftertax is H62.85 crores as against H51.34 crores for the previous year. The earning per shareis H24.89 against H20.33 in the previous year.

The innerwear industry is expected to grow at 10% during 2017-18. The yarn prices areexpected to remain steady. The topline of the Company is also expected to grow at 10%.With the commencement of operations of the Dankuni Plant at its full capacity the Companyexpects to achieve better efficiency. The Company has its other manufacturing capacitiesat Dhulagarh and Tirupur. The Company has its sales offices almost all over the country.There is no change in the nature of the business of the Company. There was no significantand material order passed by regulators or courts or tribunal impacting the going concernstatus and Company's operation in future. All factories of Company had been workingefficiently during the year. Safety measures and processes have been installed andimproved upon at all plants and work sites.

3. Dividend

Over the years Lux has consistently followed a policy of paying high dividend keepingin mind the cash-generating capacities the expected capital needs of business andstrategic considerations. For Financial Year 2016-17 the Board is pleased to recommend adividend @ 70% (H1.40 /-) on 25253000 Equity Shares of H2/- each. [Previous year thetotal dividend was declared @ 70% i.e. H7/- each (Interim dividend @60% i.e. H6/- each andfinal dividend @10% i.e. H1/- each) on 5050600 per Equity Share of H10/- each]. TheBoard also recommends to pay dividend @ 0.25% i.e. H0.25/- each on 5600000 preferenceshares of H100/- each. Payment of dividend is subject to the approval of the shareholdersin the ensuing Annual General Meeting.

4. Capacity Expansion

During the financial year 2016-17 the Dankuni Plant of your company having an area of 5lakhs square feet has started its Commercial Operation. The same plant has the capacity toproduce 5 lakhs units of finished products a day.

5. Material Changes and Commitments

No material changes and commitments have occurred from the date of close of thefinancial year till the date of this Report which affects the financial position of theCompany.

6. Share Capital

During the year under review the Company has sub divided its equity shares from H10/-each to H2/- each in the ratio of 5 shares of H2/- each for every 1 share of H10/- each.

7. Transfer to Reserves

The Company proposes to transfer a sum of H100.00 lakhs to the General Reserve out ofprofits earned by the Company.

8. Transfer to Investor Education and Protection Fund

During the financial year under review your Company has transferred unpaid/unclaimeddividend amounting to H69494/- for Financial Year 2008-09 to the Investor Education andProtection Fund (IEPF) of the Central Government of India.

Dividend which remains unclaimed which was declared for the year ended March 31 2010at the Annual General Meeting held on September 22 2010 will be transferred to theInvestor Education and Protection Fund (IEPF) of the Central Government by October 2017pursuant to the provisions of the section 124 and 125 of the Companies Act 2013.Thereafter no claim shall lie on the Company for these unclaimed dividends. Shareholderswill have to make their claim with the IEPF Authority following the appropriate rules inthis regard. Equity Shares corresponding to the dividend unclaimed for seven consecutiveyears will also be transferred to the demat account of the IEPF Authority. Individualnotices and necessary newspaper publication has also been made in this regard.

Newspaper Notice dated November 14 2016 and March 31 2017 have also been published toall members concerned reminding them to encash their unclaimed dividend.

List of shareholders whose dividend remained unclaimed till date of AGM held onSeptember 27 2016 have been uploaded on the website of the company www.luxinnerwear.com under heading Investors Section. Shareholders are requested to checktheir unpaid dividend from the list and contact the Registrar & Share Transfer Agentor Company Secretary to encash these unpaid dividends.

9. Fixed Deposits

The Company has not accepted any deposits from the public in terms of Section 73 of theCompanies Act 2013 and rules made there under during the year under review.

10. Particulars of Loans Guarantees or Investments

The Company has not given any new loan during the financial year 2016-17 howevercharged interest on outstanding balance of loan given during the last financial year2015-16 details of the same are given below. Further the Company has not given anyguarantees covered under the provision of section 186 of the Companies Act 2013.

Name Rate of Interest Max amount of Outstanding Purpose
West Bengal 9% 0.40 Loan
Hosiery Park
Infrastructure
Limited
Manamaa 12% 100 Loan
Garments
Jalan & Sons 12% 29.22 Loan

The details of investments made by company are given under the notes to the financialstatements.

11. Internal Control System and their adequacy

The Company has adequate internal control procedures commensurate with its size and thenature of its business for the purchase of inventories fixed assets and with regard tothe sale of goods and services. Details in respect of adequacy of internal financialcontrols with reference to the Financial Statements are stated in Management Discussionand Analysis which forms part of this Report.

12. Corporate Social Responsibility Initiatives

Pursuant to section 135 of the Companies Act 2013 read with rules made there underyour directors have constituted a Corporate Social Responsibility Committee. As part ofits initiatives under "Corporate Social Responsibility" (CSR) the Company hascontributed funds for the schemes relating to eradicating hunger and poverty promotingeducation animal and social welfare and medical aid. The contributions in this regardhave been made to the registered trusts and / or section 8 companies which are undertakingsuch schemes. The CSR Policy may be accessed on the Company's website at the link: http://www.luxinnerwear.com/investor_download_pdf2/20151221073219.pdf.

The Annual Report on CSR activities is annexed herewith as Annexure ‘B'

13. Management Discussion and Analysis Report

Pursuant to Regulation 34(2)(e) of SEBI (Listing Obligations And DisclosuresRequirements) Regulations 2015 Management Discussion and Analysis Report is annexed asAnnexure ‘C' forming part of this Report.

14. Corporate Governance

Your Company is committed to maintain good Corporate Governance practices. Pursuant toRegulation 34(3) read with Part C of Schedule V of SEBI (Listing Obligations AndDisclosures Requirements) Regulations 2015 a separate section on Corporate Governancetogether with a certificate from the Company's Auditor confirming compliance is set out inAnnexure ‘D' and Annexure ‘F' forming part of this report. Further a declarationon the Code of Conduct is given in Annexure ‘E'.

15. CEO and CFO Certification

As required under Part E of Schedule V of SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 the CEO and CFO certification on the accounts of theCompany as given by Sri Pradip Kumar Todi Managing Director and Sri Ajay Kumar PatodiaChief Financial Officer is set out in Annexure ‘E' forming part of this report.

16. Directors & Key Managerial Personnel

Mr. Ashok Kumar Todi Whole Time Director (DIN: 00053599) re-appointed on 27thSeptember 2012 w.e.f. 1st October 2012 whose term expires on 30thSeptember 2017. The Board has approved his re-appointment on

25th May 2017 subject to approval of shareholder for a period of five years witheffect from 1st October 2017 being eligible offers himself for re-appointmentas Whole Time Director.

Mrs. Prabha Devi Todi Director retires by rotation and being eligible offers herselffor re-appointment. The Directors recommend her re-appointment.

Brief resume / details of Mr. Ashok Kumar Todi (DIN: 00053599) and Mrs. Prabha DeviTodi (DIN: 00246219) are furnished in the annexure to the notice of the ensuing AnnualGeneral Meeting as required under the Code of Corporate Governance.

During the year under review Mr. Pankaj Kumar Kedia resigned and ceased to be the VicePresident Finance & Company Secretary of the Company with effect from February 142017.

Mrs. Smita Mishra has been appointed as Company Secretary & Compliance Officer (KeyManagerial Personnel) of the Company with effect from February 14 2017 in compliance withprovision of section 203 of the Companies Act 2013. With her appointment your Companyhas further strengthened the governance framework and is committed to take the governancefunction to greater heights.

Nomination and Remuneration Committee of the Board has recommended the said appointmentto the Board of Directors. The Board has placed on record their deep appreciation for thevaluable contribution made by Mr. Kedia during his tenure of service with the Company.Remuneration and other detail of Mrs. Smita Mishra for the year ended March 31 2017 arementioned in the Extract to the Annual Return in Form MGT-9 which is attached as Annexure‘H'.

Declarations from Independent Directors

All Independent Directors have given declarations under section 149(7) declaring thatthey meet the criteria of independence as laid down under section 149(6) of the CompaniesAct 2013.

Annual Board Evaluation and Familiarisation Program

At the time of appointing a Director a formal letter of appointment is given to him /her which inter alia explains the role function duties and responsibilities expectedof him/her as a Director of the Company. The Director is also explained in detail thevarious compliances required from him/her as a director under various provision ofCompanies Act 2013 and such other rules and regulations.

The Directors are also updated about the financials of the company and new productlaunches. They are also provided with the booklets relating to the business and operationsof the company. They are updated on the changes in relevant corporate laws relating totheir roles and responsibilities as Directors from time to time. During the financialyear under review your Company organized familiarisation programmes for the Directors inaccordance with the requirements of Listing Regulations. The Directors were also providedwith relevant documents reports and internal policies to enable them to familiarise withyour Company's procedures and practices from time to time besides regular briefing bythe members of the senior leadership team.

The details of such familiarisation programs for Independent Directors may be accessedon the company's website:- http://www.luxinnerwear.com/investor_download_pdf2/20170309090816.pdf.

Board Evaluation

Pursuant to the provisions of section 178 of Companies Act 2013 and Regulation 17 19& 20 of SEBI (Listing Obligations And Disclosures Requirements) Regulations 2015 theBoard has carried out an evaluation of its own performance the performance of individualdirectors as well as the working of its Audit Nomination & Remuneration Committees.The manner in which the evaluation has been carried out has been explained in Nomination& Remuneration Policy in the Corporate Governance Report. Further the IndependentDirectors of the Company met once during the year on February 13 2017 to review theperformance of the executive directors Chairman of the Company and performance of theBoard as a whole. Details of separate meeting of Independent Director are given in theCorporate Governance Report.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report. Andalso has been posted on the Company's website:- http://www.luxinnerwear.com/investor_download_pdf2/20151221071320.pdf.

Meetings

Minimum four meetings which are scheduled in advance are held annually. A calendar ofmeetings is prepared and circulated in advance to all the Directors. Any additionalmeeting if any is convened by giving appropriate notice in order to meet therequirements.

During the year five Board Meetings and four Audit

Committee Meetings were convened and held. Details are given in the CorporateGovernance Report. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013 and such other rules and regulations.

17. Director's Responsibility Statement

Pursuant to the requirement under section 134 clause (c) of sub section (3) of theCompanies Act 2013 the directors confirm: a. that in the preparation of the annualaccounts for the year ended March 31 2017 the applicable accounting standards have beenfollowed along with proper explanation relating to material departure if any; b. thatsuch accounting policies as mentioned in the notes to annual accounts have been selectedand applied consistently and judgments and estimates have been made that were reasonableand prudent so as to give a true and fair view of the state of affairs of the Company asat March 31 2017 and of the profit of the Company for the year ended on that date; c.that proper and sufficient care has been 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.that the annual accounts of the Company have been prepared on a ‘going concern'basis; e. that proper internal financial controls are in place and that the financialcontrols are operating effectively; f. that proper systems to ensure compliance with theprovisions of all applicable laws are in place and that such systems were adequate andoperating effectively.

18. Related Party Transactions

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with the PromotersKey Managerial Personnel or other designated persons which may have potential conflictwith interest of the company at large. All the related party transactions are reviewed bythe Audit Committee. The prescribed Form AOC-2 is not applicable to the Company. A policyon related party transactions and dealing with related parties as approved by the Boardhas been posted on the company's website:- http://www.luxinnerwear.com/investor_download_pdf2/20151221073348.pdf.

19. Subsidiaries Associate and Joint Ventures Companies

The Company does not have any subsidiary and associate. There were no joint venturesentered into by the company.

20. Vigil Mechanism

The Company has a vigil mechanism contained in the Whistle Blower Policy in terms ofsection 177 of the Companies Act 2013 to deal with instances of fraud and mismanagementif any. The purpose of this policy is to provide a framework to promote responsible andsecure whistle blowing. It protects employees wishing to raise a concern about seriousirregularities within the Company. A quarterly report with number of complaints if anyreceivedunderthePolicyandtheiroutcomeisplacedbefore the Audit Committee and the Board. Thepolicy on vigil mechanism may be accessed on the company's website:- http://www.luxinnerwear.com/investor_download_pdf2/20151221073425.pdf.

21. Auditor's Report / Secretarial Audit Report

The observation made in the Auditors' Report read together with relevant notes thereonare self explanatory and hence do not call for any further comments under Section 134 ofthe Companies Act 2013.

As required under section 204 (1) of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Mohan Ram Goenka of M/s MR & Associates Practising Company Secretariesto undertake the Secretarial Audit of the Company. The Secretarial Auditor's Report isannexed herewith as Annexure ‘G'.

22. Auditors

M/s Sanjay Modi & Co. Chartered Accountants (Firm Registration No. 322295E)Statutory Auditors of the Company have served the company for over 10 years before theAct was notified and will be completing the maximum number of transitional period (threeyears) at the ensuing AGM and pursuant to section 139 of the Companies Act 2013 and Rulesmade thereunder they are not eligible for re-appointment as Statutory Auditors at theensuing Annual General Meeting and their term of office as Statutory Auditors of theCompany will conclude from the close of ensuing Annual General Meeting of the Company. Onthe recommendation of the Audit Committee the Board of Directors have selected andrecommend M/s S.K. Agarwal & Co. Chartered Accountants (Firm Registration No.306033E) to be the Statutory Auditors of the Company for the next five years. The Membersare requested to consider their appointment as the Statutory Auditors of the Company fromthe conclusion of this Annual General Meeting until the conclusion of the Twenty Seventh(27th) Annual General Meeting of the Company on such remunerations as approved by theBoard of Directors of the Company. The Company has received a certificate from theproposed Auditors to the effect that their appointment if made would be in accordancewith all the conditions prescribed under the Companies Act 2013 and the Companies (Auditand Auditors) Rules 2014.

23. Insider Trading Code

In compliance with the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015 (‘the PIT Regulations') on prevention of insider tradingyour Company had instituted a comprehensive Code of Conduct for regulating monitoring andreporting of trading by Insiders. The said Code lays down guidelines which adviseInsiders on the procedures to be followed and disclosures to be made in dealing with theshares of the Company and cautions them on consequences of non-compliances. Your Companyhas further put in place a Code of practices and procedures of fair disclosures ofunpublished price sensitive information. Both the aforesaid Codes are in line with the PITRegulations. The policy may be accessed on the Company's website:- http://www.luxinnerwear.com/investor_download_pdf2/20170221053822.pdf.

24. Ratings

During FY under review CARE Limited has reaffirmed the following ratings to theCompany:-

Ratings Amount Category Remarks
CARE A+ (Single A plus) 374.25 Long- term Bank Facilities (Revised from CARE A (Single A)
CARE A1+(A One plus) 1.5 Short- term Bank Facilities (Revised from CARE A1 (A One)

25. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure ‘H'.

26. Business Responsibility Report

The Company was ranked 457th by National Stock Exchange out of 500 top listed companiesin India based on market capitalisation as on March 31 2016. Accordingly in compliancewith regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Business Responsibility Report (‘BRR') has been prepared andforms part of the Annual Report as Annexure ‘I'. The Report provides a detailedoverview of initiatives taken by your Company from environmental social and governanceperspectives.

27. Business Risk Management

The Board of the company realizes that risk evaluation and risk mitigation is its vitalresponsibility. Pursuant to section 134 (3) (n) of the Companies Act 2013 &Regulation 21 of SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 the Company has constituted a Risk Management Committee. The details of thecommittee and its terms of reference are set out in the Corporate Governance Reportforming part of the Board's Report. Identifying critical risks and their mitigation invarious departments of the Company is an ongoing process. The Company has not identifiedany material element of risk which may threaten the existence of the Company.

28. Industrial Relation

During the year under review the industrial relations remained cordial and stable. Thedirectors wish to place on record their appreciation for the excellent cooperationreceived from the employees at all levels.

29. Personnel

As on March 31 2017 total number of employees on the records of your Company was 907as against 743 in the previous FY. Your Directors place on record their appreciation forthe significant contribution made by all employees who through their competencededication hard work co-operation and support have enabled the Company to cross newmilestones on a continual basis.

30. Particulars of Employees

The ratio of remuneration of each director to the median of employee's remuneration asrequired under section 197 (12) of the Companies Act 2013 read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedherewith as Annexure ‘J(i)'.

A statement containing the names of top 10 employees in terms of remuneration drawn andevery person employed throughout the year who were in receipt of remuneration in terms ofrule 5(2) and 5(3) of the Companies (Appointment and Remuneration Personnel) Rules 2014 isannexed herewith as Annexure ‘J(ii)'.

31. Prevention of Sexual Harassment at workplace

Your company is committed to provide a work environment which ensures that everyemployee is treated with dignity respect and equality. There is zero tolerance towardssexual harassment. Any act of sexual harassment invites serious disciplinary action. Thecompany has established policy against Sexual Harassment for its employee. The Company hadalso constituted a Prevention of Sexual Harassment Committee. The policy allows anyemployee to freely report any such act and prompt action will be taken thereon. There wereno such incidences during the period under review.

32. Policies approved by Board

During the year the following policies were approved by the board:-

Policy Date of Board Meeting where approved Web link
Dividend Distribution Policy 13.02.2017 https://www.luxinnerwear.com/investor_download_
pdf2/20170227112215.pdf
Business Responsibility policy 10.11.2016 https://www.luxinnerwear.com/investor_download_
pdf2/20170103095135.pdf

33. Annexures forming part of Board Report

The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and form a part of this Report of the Directors:

Annexure Particulars
Annexure - A Conservation of Energy Technology Absorption and Foreign Exchange Earning and Outgo.
Annexure - B Annual Report on Corporate Social Responsibility (CSR) Activities.
Annexure - C Management Discussion and Analysis Report.
Annexure - D Report on Corporate Governance.
Annexure - E Certification by Managing Director and Chief Financial Officer of the Company.
Annexure Particulars
Annexure - F Auditors' Certificate on Corporate Governance.
Annexure - G Secretarial Auditor's Report.
Annexure - H Extract to the Annual Return in Form MGT-9.
Annexure - I Business Responsibility Report (‘BRR').
Annexure - J (i) Details pertaining to remuneration as required under section 197 (12) of the Companies Act 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
(ii) Statement containing the names of top 10 employees as required under section 197(12) of the Companies Act 2013 read with the rule 5(2) and 5(3) of the Companies (Appointment and
Remuneration Personnel) Rules 2014.

34. Conservation of Energy Technology Absorption and Foreign Exchange Earning andOutgo:

The particulars relating to conservation of energy technology absorption and foreignexchange earnings and outgo required to be disclosed under section 134(3) (m) of theCompanies Act 2013 are annexed here to and forms part of this report as Annexure‘A'.

35. Acknowledgement

Your Board wishes to place on record its sincere appreciation for the continuedassistance and support extended to the company by its customers vendors investorsbusiness associates banks government authorities employees and other stakeholders.

For and on behalf of the Board of Directors
Pradip Kumar Todi
Kolkata Managing Director
May 25 2017 DIN:00246268