Your Directors hereby present the 58 Annual Report along with the audited accounts forthe year ended 31 March 2018.
The highlights of the performance of your Company during the scal are given hereunder;
| || ||(Rs. In Million) |
|Particulars ||2017 - 18 ||2016 - 17 |
|Profit before Depreciation Exceptional Items & Tax ||1468.37 ||1251.07 |
|Less : Depreciation ||364.90 ||368.36 |
|Exceptional Items ||27.44 ||368.36 |
|Profit Before Tax ||1076.03 ||882.71 |
|Less: Tax Expense ||307.29 ||198.88 |
|Net Profit ||768.74 ||683.83 |
|Add: Opening Balance in Retained Earnings ||3440.20 ||2952.93 |
|Less : Dividend & Dividend distribution tax paid during the year ||(180.52) ||(180.52) |
|Transfer to General reserve ||- ||- |
|Remeasurement of post-employment benefit obligation net of tax ||13.40 ||(16.42) |
|Add : Other adjustments ||- ||0.38 |
|Closing Balance in Retained Earnings ||4041.82 ||3440.20 |
Review of Business Operations
The Company made operating revenue of Rs.10383 Million as against Rs.9487 Million in2016-17. The details of division wise performance and other operational details arediscussed at length in the Management Discussion and Analysis.
There was no change in the nature of business of the Company during the financial yearended 31 March 2018.
Transfer to reserves
The Company has not transferred any amount to the General Reserve during the year underreview. However an amount of Rs.768.74 million of the current profits has been carriedforward under the head retained earnings.
For the financial year 2017-18 the Board of Directors has recommended a dividend ofRs.1.20/- per share (120%) on the paid-up share capital of 158454508 shares. Subject tothe approval of shareholders an amount of Rs.229.23 Million will be paid as Dividendincluding Dividend Distribution Tax (previous year Rs.190.71 Million).
Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (as amended) the Dividend Distribution Policy of the Company is annexedherewith as Annexure 'A' and can also be accessed on the Company's website at thelink http://www.elgi.com/wp-content/uploads/Dividend-Policy.pdf
The paid-up capital of the Company as at 31/03/2018 stood at Rs.158.45 Million. Duringthe year under review the Company has not made any fresh issue of shares.
Transfer of unclaimed Dividend & Shares to Investor Education and Protection Fund
In terms of Section 124 and 125 of the Companies Act 2013 unclaimed or unpaid Dividendrelating to the Financial Year 2010-11 is due for remittance on 02/09/2018 to the InvestorEducation and Protection Fund established by the Central Government.
Further pursuant to Section 124(6) of the Companies Act 2013 read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 89390 equity shares of Rs.1/- each on which dividend had remained unclaimed for aperiod of 7 years have been transferred to the credit of demat Account identified by theIEPF Authority during the year under review.
Extract of Annual Return
The extract of Annual Return pursuant to the provisions of Section 92 of the CompaniesAct 2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014in form MGT-9 is furnished in Annexure 'B' and is attached to this report.
Board Meetings and its Committees conducted during the period under review
During the year under review 4 (four) Meetings of the Board of Directors 4 (four)Meetings of the Audit Committee 3 (Three) Meetings of the Nomination and RemunerationCommittee 2 (Two) Meetings of the Corporate Social Responsibility Committee and 35Meetings of the Stakeholders Relationship Committee were held. Further details of the samehave been enumerated in the Corporate Governance Report annexed herewith.
Statement on compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively.
Directors' Responsibility Statement
Pursuant to the requirement under Section 134(3)(c) of The Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby con rmed that
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures from those standards;
b. the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
c. the Directors have taken Proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of The Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. the Directors have prepared the annual accounts on a going concern basis;
e. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f. the Directors had devised proper systems to ensure compliance with the provisions ofall the applicable laws and such systems were adequate and operating effectively;
Details in respect of frauds reported by Auditors under Section 143(12) of TheCompanies Act 2013 other than those which are reportable to the Central Government
There were no instances of frauds identified or reported by the Statutory Auditorsduring the course of their audit pursuant to Section 143(12) of The Companies Act 2013.
Declaration of Independent Directors
The Company has received declarations from all the Independent Directors of the Companycon rming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Company's Policy relating to Directors Appointment Payment of Remuneration and othermatters provided under Section 178(3) of the Companies Act 2013
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for xing and revising remuneration of Directors Key Managerial PersonnelSenior Management Personnel and employees of the Company. The Criteria for determiningquali cations positive attributes and independence of Directors and Senior ManagementPersonnel have been stated in Annexure 'C' to this report. The Remuneration policyof the Company is annexed herewith as Annexure 'D' and can also be accessed on theCompany's website at the linkhttp://www.elgi.com/wp-content/uploads/Remuneration-Policy.pdf
Comments on Auditors' Report
There are no quali cations reservations or adverse remarks or disclaimers made by M/s.Price Waterhouse Chartered Accountants LLP Statutory Auditors and Mr. M.D. SelvarajProprietor of MDS & Associates Secretarial Auditor in their respective reports.
Particulars of Loans Guarantees or Investments made under Section 186 of the CompaniesAct 2013
Details of loans given investments made guarantees given and securities providedpursuant to the provisions of Section 186 of the Companies Act 2013 have been given inthe notes to the Financial Statements.
Particulars of contracts or arrangements with Related Parties
All transactions entered into with related parties as defined under the Companies Act2013 and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 during the financial year 2017-18 were in the ordinary course ofbusiness and on an arm's length pricing basis. Since there are no transactions which arenot on arm's length basis and material in nature Form AOC-2 is not being annexed.
The Policy on Related Party Transactions as approved by the Board of Directors of theCompany has been uploaded on the company's website and may be accessed through the link athttp://www.elgi.com/wp-content/uploads/Related-Party-Transactions-Policy.pdf
Material Changes and commitments affecting the financial position of the Company
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year as on 31/03/2018 and thedate of this report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The information on foreign exchange earnings and outgo technology absorptionconservation of energy stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure 'E'.
Risk Management Plan Implementation
The risk assessment and minimization procedures adopted and followed by the company isadequate to the nature and size of the business and that the functioning of the riskmanagement system is adequate and operating effectively.
Details of policy developed and implemented by the Company on its Corporate SocialResponsibility Initiatives
The Board had formed a Corporate Social Responsibility Committee comprising of thefollowing Directors
1. Mr. Jairam Varadaraj
2. Dr. T Balaji Naidu
3. Mr.B.Vijayakumar and
4. Dr. Madhavi Gopinath
The CSR policy of the Company deals with allocation of funds activities identi cationof programs approval implementation monitoring and reporting mechanisms under thepolicy.
As part of its initiatives under CSR for the year 2017-18 the Company has undertakenprojects in the areas of Education Social Development Medical Relief Sports WomenEmpowerment Animal Welfare Cultural Protection etc. These projects are by and large inaccordance with Schedule VII of The Companies Act 2013.
The CSR spend is predominantly directed through a Registered Trust. The Trust expendsthe sums contributed by the Company towards educational and related activities only andalso for having a corpus for undertaking construction of new school building within thenext 5-10 years. The Trust has planned to support construction of a new school buildingwith all modern amenities and aims to be a school of international standards in the yearsto come.
The Trust also expends the funds towards Educational Scholarships Medical Relief tohelp the upliftment of rural people by way of building infrastructure like Schools StreetLights Roads etc to support Special Children's School and also for the Building Corpus.
The Annual Report on CSR activities is annexed herewith as
Annual Evaluation of the Board on its own performance and of the Individual Directors
On the advice of the Board of Directors the Nomination and Remuneration Committee ofthe Board of Directors of the Company formulated the criteria for evaluation of theperformance of the Board of Directors & its committees Independent DirectorsNon-Independent Directors and the Managing Director of the Board. Based on thatperformance evaluation has been undertaken. The Independent Directors of the Company havealso convened a separate meeting for this purpose.
Directors and Key Managerial Personnel
Dr. T. Balaji Naidu Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment. Your Directorsrecommend his re-appointment.
Key Managerial Personnel of the Company as required pursuant to Section 2(51) and 203of the Companies Act 2013 are Mr. Jairam Varadaraj Managing Director Mr. S. SriramChief Financial Officer and Mrs. Vaishnavi P.M Company Secretary.
Report on the performance and financial position of each of the subsidiariesAssociates and Joint Venture Companies included in the Consolidated Financial Statements
The Company has 14 subsidiaries and 2 joint ventures. The statement pursuant to Section129(3) of The Companies Act 2013 containing the salient features of the financialstatements of subsidiary companies forms part of this Annual report.
The Company does not have any material subsidiary whose networth exceeds 20% of theconsolidated networth of the holding Company in the immediately preceding financial yearor has generated 20% of the consolidated income of the Company during the previousfinancial year. The board has approved a policy for determining material subsidiarieswhich has been uploaded on the company's website viz. www.elgi.com
The consolidated financial statements of the Company and its subsidiaries prepared inaccordance with the applicable accounting standards have been annexed to the AnnualReport.
The annual accounts of the subsidiary companies are posted on the website of theCompany viz. www.elgi.com and will also be kept open for inspection by the shareholders atthe registered office of the company. The Company shall also provide the copy of theannual accounts of subsidiary companies to the shareholders upon their request.
During the year the Company did not accept or renew any fixed deposits and no fixeddeposits remain unclaimed with the Company as on 31 March 2018.
Details of significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future
There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and company's operation in future.
Adequacy of Internal Financial Controls with reference to the Financial Statements
The Company has adequate internal control systems to monitor business processesfinancial reporting and compliance with applicable regulations. The systems areperiodically reviewed for identi cation of control de ciencies and formulation of timebound action plans to improve ef ciency at all the levels. The Audit committee of theBoard constantly reviews internal control systems and their adequacy significant riskareas observations made by the internal auditors on control mechanism and the operationsof the Company and recommendations made for corrective action through the internal auditreports. The committee reviews the statutory auditors' report key issues significantprocesses and accounting policies.
The Directors con rm that the Internal Financial Controls (IFC) are adequate withrespect to the operations of the
Company. A report of Auditors pursuant to Section 143(3)(I) of the Companies Act 2013certifying the adequacy of Internal Financial Controls is annexed with the AuditorsReport.
Price Waterhouse Chartered Accountants LLP (FRN : 012754N/N500016) statutory auditorsof the company hold office till the conclusion of 62nd Annual General Meeting of thecompany.
The auditors report to the Standalone and Consolidated Financial Statements for theyear ended March 31 2018 does not contain any quali cation observation or adversecomment.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M.D. Selvaraj FCS of MDS & Associates Company Secretaries in Practiceto undertake the Secretarial Audit of the Company. The report of the Secretarial Auditreport is annexed herewith as Annexure 'G'.
The Board of Directors on the recommendation of the Audit Committee have appointedM/s.STR & Associates Cost Accountants as the Cost Auditors of the Company for thefinancial year 2018-19. Pursuant to Section 148 of the Companies Act 2013 read with Rule14 of the Companies (Accounts) Rules 2014 the remuneration payable for the year 2018-19to the Cost Auditors of the Company is subject to rati cation by the Shareholders at theensuing Annual General Meeting. The Board recommends their remuneration.
Human Resources and Industrial Relations
The Company continues to enjoy cordial relationship with its employees at all levels.The total strength of employees as on 31 March 2018 was 2026. (Including subsidiaries).
Particulars of Employees
Details pursuant to Section 197(12) of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of thisReport as Annexure 'H'.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
The Company has in place a policy on Sexual Harassment of Women at Workplace in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Complaints Committee has been set up toredress complaints received. All employees (permanent contractual temporary trainees)are covered under this policy. No complaints were received from any employee or thirdparties during the financial year 2017-18.
Business Responsibility Reporting
Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015 read with SEBI Circular No. CIR/CFD/CMD/10/2015 dated 4 November 2015the business responsibility report is annexed as Annexure 'I' to this report.
A report on corporate governance is annexed to and forms part of this report. TheCompany has complied with the conditions relating to corporate governance as stipulated inSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.
The Company has an Audit Committee in accordance with the provisions of Section 177 ofthe Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Kindly refer to the Section on Corporate Governanceunder the head 'Audit Committee' for matters relating to the composition meetings andfunctions of the Committee. The Board has accepted the Audit Committee's recommendationsduring the year wherever required and hence no disclosure is required under Section 177(8)of the Companies Act 2013 with respect to rejection of any recommendations of AuditCommittee by Board.
Whistle Blower Policy
The Company has a Whistle Blower policy to deal with unethical or improper practice orviolation of Company's Code of Business Conduct or any complaints regarding accountingauditing internal controls or disclosure practices of the Company. The Policy gives aplatform to the Whistle Blower to report the complaints on the above mentioned practicesto the Managing Director or Director (HR). Although the complainant is not expected toprove the truth of an allegation the complainant aims to demonstrate that there aresufficient grounds for concern and that it is not done as a malicious act against anindividual. The Audit Committee of the Board reviews the
Complaints received redressed objected withdrawn and dismissed for every quarter intheir meeting. During the year there were 24 complaints under this policy and all thecomplaints were solved and closed. The Whistle Blower policy is available in the websiteof the Company at the following addresshttp://www.elgi.com/wp-content/uploads/Whistle-Blower-Policy.pdf
? Your Company adheres strictly to all the statutory and other legal compliances;? YourCompany has in place the regulations for preventing and regulating Insider Trading. Thedesignated employees are required to adhere to the Company's Code of Conduct and BusinessEthics;? Your Company regularly intimates the shareholders (through quarterly newsletters)on the performance of the Company even though it is not mandatory;? Your Company hasconsistently paid Dividend through the years;? Your Company has been prompt and regular inits replies to your queries received by it;? Your Company also replies within thestipulated time to all legal and statutory authorities;? The custodial charges and listingfees are promptly paid by the Company to the depositories and the stock exchanges;? Duringthis year your Company de-matted 144619 shares; with this the total number of sharesdematted as on 31 March 2018 are 156327182 shares which represents 98.66% shares ofthe Company.
Your Directors thank the shareholders customers suppliers bankers and all otherstakeholders for their continued support during the year. Your Directors also place onrecord their appreciation of the contributions made by employees at all levels towards thegrowth of the company.
| || ||For and on behalf of the Board |
| ||Jairam Varadaraj ||N. Mohan Nambiar |
|Place : Coimbatore ||Managing Director ||Director |
|Date : 28/05/2018 ||DIN:00058056 ||DIN:00003660 |
Dividend is the financial return for a shareholder's investment in the company in itsshare capital. Declaration of dividend is one of the most important decisions for thecompany. The company exists for the benefit of its shareholders. It is the company'sendeavour to maximise returns on shareholders' investments. The company has beenmaintaining a dividend policy that balances the dual objectives of appropriately rewardingshareholders through dividends and retaining capital in order to maintain a healthycapital adequacy ratio to support future growth.
This purpose of this policy is to set the guidelines to be followed while deciding theamount of dividend to be paid out to the shareholders. The company needs to adhere to thedividend policy while deciding the proportion of earnings to be distributed and thefrequency of the distribution.
The Company's dividend policy is based on making the minimum explicit while leaving thediscretion for a higher pay-out recommendation to the Board. And at the same time tyingthis minimum to the performance of the company in a given year. Accordingly a minimum of20% of profits available after tax shall be paid as dividend on equity shares includingall taxes. Profits of the standalone operations alone will be considered for therecommendation of dividend. The Board may recommend a buyback of shares in lieu ofdividend in any given year. This would be based on the assessment of the long term outlookin terms of cash requirement for the business. The Board may recommend interim dividenddepending upon the cash flow situation of the company. During periods of losses the Boardwill use its discretion to recommend to distribute dividend from reserves based on theexpected future outlook at those times. The dividend distribution as per recommendationof the Board of Directors shall always be decided at the general meeting of shareholderstaking into account the then current law and other regulations applicable to the company.
PARAMETERS TO BE ADOPTED FOR VARIOUS CLASSES OF SHARES
As far as dividend is concerned all classes of equity shareholders would be treatedequally. In cases other than equity shareholders the dividend would be based on the termson which such shares were issued.
INTERNAL AND EXTERNAL FACTORS THAT WILL BE CONSIDERED FOR DECLARING DIVIDEND
The stated minimum dividend would be recommended by the Board as long as there areprofits made by the company. Any additional dividend over this minimum would be consideredfor recommendation based on funds required for future growth of the company and anyabnormal expenses anticipated in the future for which some provisions have to be made.
HOW RETAINED EARNINGS WILL BE USED
Retained earnings would be used to fund the growth of the Company and thus to enhanceits future value. This funding could be capital expenses for capacity enhancement newproduct development new market development and working capital expenses to support growthin revenue.
Criteria for selection of Non-Executive Directors:
The Non Executive Director shall:-
??have adequate skills background experience and knowledge
??possess industry bias i.e. should be reasonably conversant with and follow thecompressor and automotive industry
??be a person of intellect and integrity
??not be discriminated on the basis of age gender and race
??believe in and be committed to practice the Elgi values
??be capable of working in harmony with other board members and contribute effectivelyin Board and Shareholder meetings
??be in alignment with the Company's objectives and goals
The Board of Directors (the "Board") of Elgi Equipments Limited (the"Company") upon recommendations of the Remuneration Committee has adopted thefollowing policy and procedures with regard to remuneration of the Board members KeyManagerial Personnel Senior Management and Employees as below. The Board may review andamend this policy from time to time. This Policy will be applicable to the Companyeffective 1 October 2014.
1. BACK GROUND
A transparent fair and reasonable process for determining the appropriate remunerationat all levels of the Company is required to ensure that Shareholders remain informed andcon dent in the management of the Company. The Company also understands the importance ofattracting and maintaining competent personnel to manage and grow its business. In thepolicy the following terms are defined as below:-
??"Board" means the Board of Directors of the Company
??"Company" means Elgi Equipments Limited India
??"Directors" means the Directors on the Board of the Company including theManaging Director Independent Directors and Non-Executive Directors
??"Employees" means all other Employees of the Company
??"Independent Directors" shall carry the same meaning as in The CompaniesAct 2013 and the listing agreement that the Company has signed with the stock exchanges
??"Key Managerial Personnel" means the Managing Director Chief FinancialOfficer and Company Secretary of the Company
??"Managing Director" means the person designated as such by the Board andshareholders of the Company and who has substantial powers of management of the Company
??" Nomination and Remuneration Committee" means a committee constitutedamongst Board members as per The Companies Act 2013 and the listing agreement that theCompany has signed with the stock exchanges
??"Senior Management" means the senior managerial personnel directlyreporting to the Managing Director and includes all persons in M5 cadre of the Company
The objectives of this policy are:
(a) to create a transparent system of determining the appropriate level of remunerationthroughout all levels of the Company aimed at attracting retaining and motivating peopleof the quality required to run the Company successfully;
(b) encourage people to perform to their highest level of competence;
(d) allow the Company to compete in each relevant employment market;
(e) to ensure the relationship of remuneration to performance is clear and meetsappropriate performance benchmarks;
(f) provide consistency in remuneration involving a balance between fixed andperformance based remuneration throughout the Company; and
(g) align the performance of the business with the performance of the Board KeyManagerial Personnel Senior Management and other Employees within the Company.
The policy details the types of remuneration to be offered by the Company and factorsto be considered by the Board on the basis of recommendations of the Nomination &Remuneration Committee in determining the appropriate remuneration for the BoardKeyManagerial Personnel Senior Management and all other Employees.
(i) The Managing Director Independent Directors Key Managerial Personnel SeniorManagement and all other Employees will be provided a letter of appointment. This letterof appointment will set out the terms and conditions of the engagement responsibilitiesfor the role and the remuneration package. Independent Directors and other Non ExecutiveDirectors are currently paid only sitting fees as remuneration. However depending on theevolution of business and added responsibilities the Nomination and RemunerationCommittee may recommend to the Board for an increase in their remuneration packagesubject to nal approval of the shareholders. The Managing Director's remuneration will beapproved by the Board as well as the shareholders.
(ii) The Nomination & Remuneration Committee and the Board must approve allcontracts for the Managing Director and Independent Directors. The Nomination andRemuneration Committee shall also formulate a criteria for determining the quali cationspositive attributes and independence of a Director while the Head-Human Resources of theCompany will be responsible for formulating a criteria for all other Employees.
4. FORMS OF REMUNERATION
With the assistance of the Nomination & Remuneration Committee the Board willapprove the forms of remuneration to be offered to the Board members Key ManagerialPersonnel Senior Management and all other Employees which may include:
4.1 Fixed Remuneration
The Board in consultation with the Nomination & Remuneration Committee and theHead-Human Resources will from time to time determine the fixed remuneration level foreach of the above categories. Such remuneration levels will be determined according to therole and responsibilities job size industry standards relevant laws and regulationslabour market conditions and scale of Company's business relating to the position. Thefixed remuneration will reflect the core performance requirements and expectations of theCompany.
4.2 Performance Based Remuneration
In addition to fixed remuneration the Company will implement a system of performancepay for select categories designed to create a strong relationship between performance andremuneration. Performance based remuneration will be linked to specific performancetargets for the concerned individuals and of the Company which will be communicated toall concerned regularly.
4.3 Equity Based Remuneration
To motivate Executives and the Management to pursue the long- term growth and successof the Company the Company may grant equity based remuneration to the Board members KeyManagerial Personnel Senior Management and all other Employees from time to time. In anycase Independent Directors will not be entitled to stock options.
4.4 Joining Bonuses and Termination payments
In rare cases the letters of appointment/employment contract may set out in advancethe entitlement to a bonus or other payment upon joining employment or upon termination ofemployment in respect of Key Managerial Personnel Senior Management or other Employees.The Head-Human Resources is authorised to decide on the same in consultation with theManaging Director.
4.5 Employees Entitlements
The Company will comply with all legal obligations in determining the appropriateentitlement to salary advance long service annual personal and parental leave. TheHead-Human Resources may in consultation with the Managing Director introduce/provide oncertain conditions appropriate interest free salary advances housing loan benefitscredit card policy city grade allowance policy death & PTD benefits policy datacard policy Employees referral policy transfer expenses policy family meet allowancepolicy mediclaim policy personal accident benefit policy superannuation schemeincrement policy laptop policy mobile phone policy subsidized canteen policysuggestions and rewards policy and any other similar policies aimed at motivating andencouraging the Key Managerial Personnel Senior Management and other Employees to performbetter.
5.1 Performance Appraisal
The Managing Director will conduct annual performance appraisals for all Key ManagerialPersonnel other than himself and Senior Management to monitor and review theappropriateness of each remuneration package. The Nomination and Remuneration Committeeshall lay down the evaluation criteria for performance evaluation of Independent Directorswhile the performance evaluation as such of the Independent Directors shall be done by theentire Board (excluding the Director being evaluated). The Independent Directors in theirseparate meeting shall review the performance of non- independent directors and the Boardas a whole. The Head-Human Resources along with the respective department heads will beresponsible for conducting annual performance appraisals for all other Employees.
The Board will be responsible for approving the remuneration strategy for the Board(subject to approval of shareholders wherever and whenever necessary) Key ManagerialPersonnel Senior Management and other Employees. In determining whether to approve therelevant level of remuneration the Board will consider the recommendations from theNomination & Remuneration Committee prevailing market conditions performance by theindividual and the business strategies and objectives of the Company. The Board willreview the contents of and compliance with this Policy on an annual basis.
5.3 Nomination & Remuneration Committee
The Nomination & Remuneration Committee is responsible for the monitoringimplementation and review of this policy. The Nomination & Remuneration Committee willprovide recommendations to the Board as to how to effectively structure and facilitate aremuneration strategy which will meet the needs of the Company.
5.4 Monitoring the Policy
The Head-Human Resources of the Company will monitor the day to day compliance withthis policy.
6. DISCLOSURE & DEVIATION
The Company will disclose this remuneration policy in its Annual Report. To the extentpermitted under applicable law the Board may deviate from this policy in individualcases if justi ed by extraordinary and exceptional circumstances.
Conservation of Energy Technology Absorption and Foreign Exchange Earning andOutgo(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 Steps taken for conservation of energy:
The Company introduced an Internet of Things (IoT) based control system for EnergyManagement for all CNC machines at Air center plant which absorbs 42% of the total energyconsumption of the Company. This Energy Management system controls and optimizes theenergy by sensing the variable and fixed electrical loads and shuts off the drive controlsystem of the machines when there is a delay in the manufacturing process of loading andunloading the components or machine idle time or unde ned time without machine operations.It contributes significantly to optimize the energy consumption at machine shops. The IoThelps a lot to see the past and present energy micro level trend data to identify thegaps; especially if it crosses the energy targets. In each and every manufacturingprocess the cycle time of the components has been defined and if there is a delay in thecycle the machine will stop automatically to optimize the energy consumption.
Similarly the Company has introduced weekly timers to switch off the lights AirHandling Units Fans and Air conditioners as per the set times. This system helps theCompany to save energy. Energy data is being collected and energy base line set for eachof the manufacturing process thus identifying the energy gaps. The Energy ManagementSystem has reduced the Air end manufacturing power cost by 21% and the Overall Power toSale ratio to 16%. There is further scope for optimizing energy by replacing motors andoptimizing the maximum demand for the entire plant. The Energy Management System alsocontributes to carbon emission reduction of 14.8%. During the year the Energy ManagementSystem was certi ed by TUV Nord as having conformed to the standards of ISO 50001:2011 atthe Air center plant.
II Steps taken by the Company for utilizing alternate sources of energy
At present the Company's wind mill generators contribute 15% of the total energyrequirements. The Company is studying a proposal for harnessing solar power at the AirCompressor Plant and has proposed to install a 100 KW Solar Plant in the coming year.
III Capital investment on energy conservation equipment
Rs.15.00 Lakhs were spent during the year for modifying the existing system
B. Technology Absorption:
I Efforts made towards technology absorption
? An algorithm was developed and tested to save energy when multiple compressors are inuse
? In-house software tool developed for electro-magnetic design of motors
II Benefits derived like product improvement cost reduction product development orimport substitution
??Designed and developed a 1200-T3 VOLVO Diesel Engine driven Rotary Air Compressor forwater well application for Brazilian market requiring compliance with Tire-3 emissionnorms.
??Designed and developed an Oil Free air-cooled compressor in the power range between45 to 75 kWOF45A to OF75A for Indian and US markets.
??Designed and developed ELGI Intake valve 102 & 159 and adopted the same in thecompressor packages with capacity between 11kW to 45kW.
??Designed and developed a Heat Recovery system for Oil injected screw compressor of11kW 15kW 18kW 22kW 30kW 37kW 45kW 200kW and 250kW capacities.
??Designed and developed a F2-Alpha project an enhanced version of existing F2 forIndian European and US markets for compressors of 11kW 15kW 18kW& 22kW capacities.
??Designed and developed an Oil ooded air cooled premium compressor for Indian and USmarkets in 90kW 110kW 132kW & 160kW capacities.
??Designed and developed an Oil ooded air cooled compressor for Indian market of 200kW& 250kW capacities.
III Information regarding imported technology (imported during the last three yearsreckoned from the beginning of the financial year)
IV Expenditure incurred on Research & Development
| || ||(Rs. In Million) |
|Expenditure on R&D ||2017-18 ||2016-17 |
|Capital ||42.43 ||12.56 |
|Revenue ||303.71 ||278.67 |
|Total ||346.14 ||291.23 |
|R & D Expenditure as a ||3.4% ||3.3% |
|percentage on turnover* || || |
*Turnover is net of excise duty
C. Foreign Exchange Earnings and Outgo during the year
|Foreign exchange earned ||Rs.1937 million |
|Foreign exchange outgo ||Rs.1055 million |
Statement pursuant to Section 197(12) of the Companies Act 2013 read with TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014
Particulars of Employees
I) Names of top ten employees in terms of remuneration drawn and the name of everyemployee employed who was in receipt of remuneration not less than Rupees One Crore andTwo lakhs per annum or Rupees Eight Lakhs Fifty Thousand per Month .
| || || || || || || ||(Rs.. In Million) |
|Name ||Date of joining ||Designation ||Qualification& Experience ||Age ||% of Share holding ||Remune ration ||Last employed |
|Jairam Varadaraj ||29/05/1992 ||Managing Director ||B.Com. MBA PhD (USA); 29 years ||57 ||8.71% ||12.77 ||- |
|Ramesh Ponnuswami ||07/11/2011 ||Director- ISAAME ||B.E. MBA 25 years ||49 ||- ||12.12 ||EID Parry (I) Limited Cholayil |
|Sriram S ||11/07/2007 ||CFO & Director- COSEA ||B.Sc. FCAFCMA CISA 35 years ||59 ||0.00% ||10.16 ||Private Limited |
|Jayashankar Jayaraman ||02/11/2009 ||Director-HR ||BA(Honours) LLBPGDPM & HR (XLRI); 30 years ||56 ||- ||10.25 ||Watanmal Group |
|Sreeramachandra Murthy K ||10/11/2010 ||Director- Technology & Operations ||M.E. PG Diploma (Finance & Marketing) 29 years ||51 ||- ||9.68 ||Hindustan Motors Limited |
|Jayakanthan R ||07/01/2009 ||Director- Product Systems & Strategy ||B.Com 31 years ||53 ||0.00% ||8.84 ||Kennametal India Limited |
|VenuMadhav K ||31/01/1998 ||VP-Technology ||M.Tech. PhD 22 years ||46 ||- ||8.29 ||Gas Turbine Research Establishment |
|Vijayakumar V.P ||01/10/2012 ||Head-Design ||ME; 25 years ||51 ||- ||7.22 ||Ergoform Consulting Private Limited |
|Salim P.R ||09/03/2009 ||VP-Technology (Group E&E) ||MS; 30 years ||52 ||0.00% ||7.07 ||LG Electronics Limited |
|Raajeshwar M.K ||17/04/2006 ||VP& Head- Industrials (ISA) ||B.EMBA; 25 years ||47 || ||6.24 ||Tega Industries Limited |
1. Nature of employment of Mr. Jairam Varadaraj Managing Director of the Company iscontractual. All other Executives are on the permanent rolls of the Company.
2. Mr. Jairam Varadaraj is related to Mr. Sudarsan Varadaraj as per de nition of"Relative" under Section 2 (77) of The Companies Act 2013. No other employeesmentioned above are related to any Directors of the Company.
3. Remuneration includes salary allowances contribution to Provident Fund and othertaxable perquisites and also performance linked pay paid during the year.
ii) Particulars pursuant to Rule 5 of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
a) The ratio of the remuneration of each Director to the median employee's remunerationfor the financial year is given below:
|Name ||Ratio |
|Mr. Jairam Varadaraj (Managing Director) ||22.0:1 |
|Mr. Sudarsan Varadaraj (Director) ||0.2:1 |
|Dr. T. Balaji Naidu (Director) ||0.3:1 |
|Mr. M. Ramprasad (Director) ||0.7:1 |
|Dr. Ganesh Devaraj (Director) ||0.4:1 |
|Mr. B. Vijayakumar (Director) ||0.3:1 |
|Mr. N. Mohan Nambiar (Director) ||0.4:1 |
|Dr. Madhavi Gopinath (Director) ||0.3:1 |
|Mr. Harjeet Singh Wahan (Director) ||2.7:1 |
Sitting fees paid to the Non-Executive Directors has been considered as remuneration.
b) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:
|Mr. Jairam Varadaraj ||(Managing Director) ||7.00% |
|Mr. S Sriram ||(Chief Financial Officer) ||26.26% |
|Mrs. Vaishnavi PM ||(Company Secretary) ||8.00% |
c) The percentage increase in the median remuneration of employees in the financialyear: 15.07 %
d) The number of permanent employees on the rolls of company:1289 (excludingsubsidiaries)
e) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justi cation thereof and any exceptionalcircumstances for increase in the managerial remuneration:
Average increase in remuneration is 15.07% for Employees and Managerial Personnel
f) Your Directors af rm that the remuneration is as per the remuneration policy of theCompany.
| ||For and on behalf of the Board |
| ||Jairam Varadaraj ||N. Mohan Nambiar |
|Place: Coimbatore ||Managing Director ||Director |
|Date : 28/05/2018 ||DIN:00058056 ||DIN:00003660 |