Your Directors hereby present the 61st Annual Report along with the auditedaccounts for the year ended 31st March 2021.
The highlights of the performance of your Company during the fiscal are givenhereunder:
(` In Million)
|Particulars ||2020 - 21 ||2019 - 20 |
|Profit before depreciation exceptional items & tax ||1755.21 ||1644.45 |
|Less : Depreciation ||353.29 ||366.52 |
|: Exceptional items || || |
|Profit Before Tax ||1401.92 ||1277.93 |
|Less: Provision for tax (Net of tax expenses) ||351.02 ||273.69 |
|Net Profit ||1050.90 ||1004.24 |
|Add: Opening balance in retained earnings ||5184.71 ||4677.91 |
|Less : Dividend & dividend distribution tax paid during the year || ||(497.42) |
| || || |
|: Transfer to general reserve || || |
|: Remeasurement of post-employment benefit obligation net of tax ||9.74 ||(0.02) |
|: Transfer to retained earnings of gain on FVOCI equity instruments ||2.13 || |
|Add : Other adjustments || || |
|Closing balance in P&L account ||6247.48 ||5184.71 |
Review of Business Operations
The Company realized an operating revenue of ` 11001 Million as against ` 10811Million in 2019-20. The details of division wise performance and other operational detailsare discussed at length in the Management Discussion and Analysis section.
There was no change in the nature of business of the Company during thefinancial year ended 31st March 2021.
Transfer to reserves
The Company has not transferred any amount to the General Reserve during the year underreview. However an amount of ` 1050.90 million of the current profits has been carriedforward under the head retained earnings.
For the financial year 2020-21 the Board of Directors at their meeting held on 21stMay 2021 has recommended a dividend of ` 0.80/- per share (80%) on the paid-up sharecapital of 316909016 equity shares. Subject to the approval of shareholders an amountof ` 253.52 million will be paid as dividend after deducting applicable taxes. (PreviousYear ` 261.45 million)
Pursuant to Regulation 43A of The SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (as amended) the Dividend Distribution Policy of theCompany can be accessed on the Companys website at the linkhttps://www.elgi.com/in/wp-content/uploads/2020/02/ Dividend-Policy.pdf.
The paid-up share capital of the Company as at 31/03/2021 stood at ` 316909016/-divided into 316909016 equity shares of ` 1/- each.
During the year under review pursuant to the resolution passed by the members throughPostal Ballot on 18th September 2020 the Board of Directors of theCompany at their meeting held on 28th September 2020 has issued and allotted158454508 equity shares of ` 1/- each as bonus equity shares in the proportionof 1 (one) equity share for every 1 (One) existing equity share held by the members bycapitalizing the securities premium account of the Company in compliance with theprovisions of the Companies Act 2013 and SEBI (Issue of Capital and DisclosureRequirements) Regulations 2018.
Transfer of Unclaimed Dividend/Shares to Investor Education and Protection Fund
In terms of Sections 124 and 125 of The Companies Act 2013 unclaimed or unpaidDividend relating to the financial year 2013-14 is due for remittance 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 121859 equity shares of ` 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. Further the Company has alsotransferred 429106 bonus equity shares of ` 1/- each which were allotted during the yearunder review to the credit of demat account identified by the IEPF Authority inrespect of shares which have already been transferred to the Investor Education andProtection Fund.
The Annual Return of the Company for the financial year 2020-21 as required underSection 92(3) of the Companies Act 2013 is available on the website of the Company andcan be accessed on the Companys website at the link"https://www.elgi.com/in/financials/".
Board Meetings and its Committees conducted during the period under review
During the year under review 6 (six) Meetings of the Board of Directors 5 (five)Meetings of the Audit Committee 2 (two) Meetings of the Nomination and RemunerationCommittee 2 (two) Meetings of the Corporate Social Responsibility Committee 1 (one)meeting of the Risk Management Committee 1 (one) meeting of the Compensation Committeeand 13 (Thirteen) Meetings of the Stakeholders Relationship Committee were held. Furtherthe details of the same have been enumerated in the Corporate Governance Report annexedherewith.
Statement on compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and 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 confirmed 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 Act2013.
Declaration of Independent Directors
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Companys Policy relating to Directors Appointment Payment of Remuneration andother matters 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 fixing and revising remuneration of Directors Key ManagerialPersonnel Senior Management Personnel and other employees of the Company. Theremuneration policy and criteria for determining qualifications positive attributes andindependence of Directors and Senior Management Personnel have been stated in AnnexureA to this report. The Remuneration policy of the Company can be accessedon the Companys website at the link https://www.elgi.com/in/wp-content/uploads/2019/05/Remuneration-Policy.pdf.
Comments on Auditors Report
There are no qualifications reservations or adverse remarks or disclaimers made byM/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 2020-21 were in the ordinary course ofbusiness and on an arms length pricing basis. The particulars of contract andarrangement entered into with related parties referred in Section 188(1) of the CompaniesAct 2013 which are material in nature are disclosed in the prescribed Form No. AOC-2 andannexed herewith as Annexure B to this report.
The Policy on Related Party Transactions as approved by the Board of Directors of theCompany has been uploaded on the Companys website and may be accessed through thelink at https://www.elgi.com/in/wp-content/uploads/2019/05/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 have occurred between the end of the financial year as on 31/03/2021 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 AnnexureC.
Risk management plan implementation
Pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (the "SEBI LODR") the Company hasconstituted a Risk Management Committee (RMC) consisting of Board members and seniorexecutives of the Company. The Company has in place a Risk Management framework toidentify evaluate business risks and challenges across the Company both at corporatelevel as also separately for each subsidiary.
The top 10 risks for the Company have been mapped by the operating management (withadditional support of external guidance) after extensive deliberations on the nature ofthe risk being a gross or a net risk and thereafter in a prioritized manner presented tothe Board for their inputs on risk mitigation/management efforts. Based on this frameworka Risk Management policy has been adopted.
The RMC engages in the Risk Management process and has set out a review process so asto report to the Board the progress on the initiatives for the major risks of each of thebusinesses that the Company is into. The The RMC reviewed the top 10 risks at its meetingheld on 29th June 2020 in the year under review. The results of the mitigationmeasures implemented by the Company will be visible in the below table that shows thecomparative position on 29th June 2020 vis-a-vis 20th May 2021.
|Risk Category ||Risk Summary ||Position as on 29/06/2020 ||Risk Response /Mitigation actions Position as on 20/05/2021 |
|1 Compliance Risks ||The Companys business is subject to legal and regulatory requirements globally; non-compliance could result in severe consequences ||The Company has developed and implemented a process and a software tool to capture and report all applicable compliances in the Companys geographies globally. ||The Company has developed and implemented a process and a software tool to capture and report all applicable compliances in the Companys geographies globally. |
| || || |
The Company revisits the compliance checklist periodically and updates them to cover latest legal developments and changes in laws using external consultants help. Proof of compliance collected from the respective process owners.
Proof of compliance collected periodically from the respective process owners globally. Further the Company revisits the compliance checklist periodically and updates them to cover latest legal developments and changes in laws using external consultants help.
|2 Human Resource Risks ||Recruiting and retaining strong talent is key to achieving the Companys aspirations; any gaps in these efforts could impact the achievement of revenue and profitability targets. || |
Competency framework has been developed and rolled out. This is expected to secure access to people with the right expertise in the geographies the Company operates in. The Company also actively monitors and implements its plans on talent development and attrition in key roles across the globe.
The talent acquisition model is driven by a strong selection process partnering with specialized search firms industry contacts. Global competency framework has been developed and rolled out. Access to people with the right expertise in the geographies the Company operates in is ensured with the above.
| || ||From a compensation perspective salaries and other conditions are benchmarked to the market and linked to business priorities ||The Company also actively monitors and implements its plans on talent development and attrition in key roles across the globe. From a retention perspective employee compensation and benefits are benchmarked to the market periodically. |
|3 Economic & Market Risks ||Our global operations are subject to economic and market risks in the geographies we operate in. ||India is still a high growth market over a long term and the Companys relatively diversified portfolio may mitigate this risk to a certain extent. ||India is still a high growth market over a long term and the Companys relatively diversified geographical presence will mitigate this risk to a certain extent. |
| || ||Well-diversified sales to customers in multiple countries and industries. Sales of spare parts and services are relatively stable in comparison to equipment sales ||Broad product portfolio serving very diverse industry segments mitigates the risks further. Sales of spare parts and services driven by growing installed base offers sustainable revenue opportunities. |
|4 ||Acquisitions joint ventures and investments could be unsuccessful or consume management time and resources which could adversely affect our operating results || |
The Company selects its acquisitions mostly after its own previous experience of dealing with this on a channel level; also as a standard practice detailed due diligence is performed with the help of external experts in the legal financial and tax areas to fully understand and factor the risks in both making a decision on the deals as well as arriving at the acquisition price
|The Company selects its acquisitions strategically and carefully basis its own previous experience and learnings. As a standard practice detailed due diligence is performed with the help of external experts in the legal financial and tax areas to fully understand and factor the risks in both making a decision on the deals as well as arriving at the acquisition price. |
| || ||The integration of the acquired Company is achieved through a judicious mix of centralization and decentralization approach. The Company also ensures that appropriate resources are invested to make the acquisition successful. ||The integration of the acquired Company is achieved through a judicious mix of centralization and decentralization approach. The Company also ensures that appropriate resources are invested to make the acquisition successful. |
|5 Strategic Risk ||Business continuity could be severely affected due to natural disasters or unexpected events like COVID 19 pandemic ||Insurance policies taken by the Company mitigate the risks to a certain extent but these can be revisited to strengthen the scope as required. ||Insurance policies taken by the Company mitigates the risks to a certain extent and this is periodically reviewed to strengthen the scope as required. |
| || || |
The Company has responded swiftly and effectively by managing its costs and cash flows to largely overcome the sales compression caused by COVID-19. The Company has a disaster management plan in place and continues to refine it regularly to meet the changing requirements.
|The Company has responded swiftly and effectively by managing its costs and cash flows to largely overcome the sales compression caused by COVID-19. The Company has a disaster management plan in place and continues to refine it regularly to meet the changing requirements. |
|6 Supply Chain Risks ||Disruptions in supplies due to concentration of manufacturing facilities in a single location and reliance on one or few suppliers present risks to business stability || |
The Company is exploring responsestomanufacturing concentration including strategic stocking in various parts of India and the world. Actions would be undertaken on widening the supplier base and develop a global network of suppliers to prevent supplier dependency.
|The Company is exploring responses to manufacturing concentration including strategic stocking in various parts of India and the world in the short to mid-term and having assembly operations in global regions in the mid to long-term. |
| || || ||There is a continuous focus on widening the supplier base and develop a global network of suppliers to prevent supplier dependency. Strategic selective backward integration approach to manufacturing is ensuring that most critical parts are moved in-house. |
|7 Information Technology Risks ||Cyber security risks could disrupt the Companys technology systems infrastructure and networks. Gaps in data protection could result in non-compliance of applicable regulations ||Availability has been improved by adopting Cloud technologies for some of the critical systems. Emails are scanned and quarantined if risk is detected. Multi-factor authentication is being implemented for minimizing cyber risks due to password hacks. || |
Reliability in continuously enhanced by adopting and moving systematically critical systems to the Cloud. Up-to-date technology is deployed to ensure Emails are scanned and quarantined if risk is detected. Multi-factor authentication is implemented for minimizing cyber risks due to password hacks.
|8 Financial Risks ||Exchange rate fluctuations in the various currencies that Company deals in could adversely affect the Companys financial performance ||To minimize fluctuation risks the Company has a strong hedging process and policy in place. The Company also continuously monitors the exchange rates relevant for its geographies and takes suitable actions to offset negative changes by adjusting selling prices and costs. || |
To minimize fluctuation risks the Company has a strong hedging process and policy in place besides leveraging the natural edge that is available. The Company also continuously monitors the exchange rates relevant for its geographies and takes suitable actions to offset adverse changes by adjusting selling prices and costs.
| || || ||The Company is working closely with its bankers to understand the regulatory changes in the banking system with reference to managing exchange risks and leverage them suitably. |
|9 Environmental Risks ||Global climate change and related regulations can negatively impact our business ||The Company expects to focus more on EPSAC and OFSAC machines for its future growth gradually reducing the impact of DPSAC on its overall portfolio. Environmental factors and regulatory changes happening globally would be closely monitored to effect appropriate actions to align our products with these requirements. || |
The Company expects to focus more on EPSAC and OFSAC machines for its future growth gradually reducing the impact of DPSAC on its overall portfolio. Environmental factors and regulatory changes happening globally are closely monitored to effect appropriate actions to align our products with these requirements.
| || || ||The Companys operation are constantly upgraded to adopt to green manufacturing. |
|10 Strategic Risks ||The Companys large dependence on India makes it susceptible to the economic fortunes of a single geography ||The Companys CK2 aspiration makes it a goal to diversify and reduce the business concentration in India. The Company believes that it now has assembled the infrastructure and resources overseas to implement this aspiration over the next few years. || |
The Companys CK2 aspiration makes it a goal to diversify and reduce the business concentration in India. The Company believes that it now has assembled the infrastructure and resources overseas to implement this aspiration and the revenue mix is steadily shifting more favorably.
| || || ||The Companys strategic plan for the mid- term and the strategic initiatives are aligned to this goal to diversify the revenue mix. |
It was also decided by the RMC at its meeting on 20th May 2021 thatthe above top 10 risks will be revisited and refined during the course of the financialyear 2021-22 as appropriate.
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. Ms. ArunaThangaraj
The CSR policy of the Company deals with allocation of funds activitiesidentification of programs approval implementation monitoring and reporting mechanismsunder the policy.
As part of its initiatives under CSR for the year 2020-21 the Company has undertakenprojects in the areas of Education Social Development Medical Relief Sports etc. Theseprojects are in accordance with Schedule VII of the Companies Act 2013.
The CSR spend is predominantly directed through Registered Trusts. The Trusts expendthe sums contributed by the Company towards educational and related activities. The Trustsalso expend the funds towards:
i) Giving education assistance to the poor & bright students to pursue collegeeducation of both Arts and Technical courses.
ii) Supporting school children whose parents are either poor or deceased to perusestudies from LKG to 12th STD.
iii) Supporting medical assistance to the poor patients through the recognisedhospitals.
iv) Supporting AMRIT school for special children Coimbatore
v) Supporting ELGI Matriculation Higher Secondary school Vellalore a village situatedin the suburb of Coimbatore.
vi) Supporting CanKids a non-profit organization involved in helping cancer afflictedchildren.
vii. Supporting Coimbatore Cancer Foundation
The Annual Report on CSR activities undertaken by the Company during thefinancial year is set out in Annexure D to this report in the format prescribedunder the Companies (Corporate Social Responsibility Policy) Rules 2014.
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 that criteriaperformance evaluation has been undertaken. The Independent Directors of the Company havealso convened a separate meeting for this purpose.
Statement regarding opinion of the Board with regard to integrity expertise andexperience (including the proficiency) of the Independent Directors appointed during theyear
The Board of Directors have evaluated the Independent Directors during the year 2020-21and opined that the integrity expertise and experience (including proficiency) of theIndependent Directors is satisfactory.
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.
During the year under review Mr. Anvar Jay Varadaraj was appointed as an AdditionalDirector (Non-Executive) of the Company with effect from 1st April 2020 andwas subsequently appointed as a Non-Executive Director of the Company by the members atthe 60th Annual General Meeting held on 14th August 2020. Duringthe year under review pursuant to the approval granted by the Board of Directors &the members of the Company Mr. Jairam Varadaraj was re-appointed as the Managing Directorof the Company for a period of 5 years with effect from 1st April 2021. TheBoard of Directors of the Company on the recommendation of the Nomination andRemuneration Committee have proposed to appoint Mr.Anvar Jay Varadaraj (DIN: 07273942) asan Executive Director of the Company for a period of 5 years with effect from 2ndAugust 2021 on the terms and conditions as set out in the notice convening the 61stAnnual General Meeting. Necessary resolution in this regard has been included in theAgenda of the Notice convening the Annual General Meeting for the approval of the members.The Board recommends his appointment. Mr.Ragunathan Gunabooshanam resigned as the ChiefFinancial Officer of the Company with effect from 22nd October 2020 andMr.Jayakanthan R was appointed as the Chief Financial Officer of the Company with effectfrom 23rd October 2020.
The Company has appointed Mr.Ragunathan K (ACS No.62397) as a Company Secretary andCompliance Officer of the Company with effect from 29th June 2020. KeyManagerial Personnel of the Company as required pursuant to Section 2(51) and 203 of theCompanies Act 2013 are Mr.Jairam Varadaraj Managing Director and Mr. Jayakanthan RChief Financial Officer and Mr.Ragunathan K Company Secretary.
Subsidiaries Joint Ventures and Associate Companies
The highlights of performance of subsidiaries associates and joint venture companiesand their contribution to the overall performance of the company during the period reviewhave been disclosed in the Management Discussion and Analysis Report The Company has 24subsidiaries and 7 joint venture / associate entities. 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 followingCompanies have become subsidiaries/joint ventures during the year under review and as ondate of this report:
a. Compressed Air Solutions of Texas LLC (Joint Venture)
b. PLA Holding Company LLC (Joint Venture)
c. Pattons of California LLC (Joint Venture)
d. Elgi Compressors Nordics (Subsidiary)
e. Elgi Compressors Eastern Europe sp. z.o.o. (Subsidiary)
f. Elgi Compressors France SAS (Subsidiary)
g. Elgi Compressors UK and Ireland Limited (Subsidiary)
h. G3 Industrial Solutions LLC (Joint Venture)
i. ELGI COMPRESSORS (M) SDN. BHD (Subsidiary)*
*During the year 2020-21 Elgi Compressors (M) SDN.BHD was incorporated but no capitalinfusion was made During the year the shareholding of Rotair SPA (1%) and ElgiCompressors Italy SRL (99%) in the step down subsidiary Elgi Compressors Europe SRL weretransferred to the Company in an attempt to restructure the European Subsidiaries so thatElgi Compressors Europe SRL is seen as the centre point of all European operations.
The Company has also initiated the procedure for winding up of the subsidiary viz. ElgiEquipments (Zhejiang) Limited commencing from 27th May 2020. As of 31/03/2021the Company has three material subsidiaries ATS Elgi Limited Rotair SPA and Pattons Incwhose net worth exceeds 10% of the consolidated net worth of the holding Company in theimmediately preceding financial year or has generated 10% of the consolidated income ofthe Company during the previous financial year. The Board has approved a policy fordetermining material subsidiaries which has been uploaded on the Companys websiteviz. www.elgi.com. The consolidated financial statements of the Company and itssubsidiaries prepared in accordance with the applicable accounting standards have beenannexed to the Annual Report. The annual accounts of the subsidiary Companies areposted on the website of the Company viz. www.elgi.com and will also be kept openfor inspection by the shareholders at the registered office of the Company. The Companywill also provide a copy of the annual accounts of subsidiary Companies to theshareholders upon their request.
Since the Company has not accepted any fixed deposit covered under Chapter V of theCompanies Act 2013 there are no deposits remaining unclaimed or unpaid as on 31stMarch 2021 and accordingly the question of default in repayment of deposits or paymentof interest thereon during the year does not arise.
Details of significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Companys operations in future
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Companys operations 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 identification of control deficiencies and formulation of timebound action plans to improve efficiency 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 issuessignificant processes and accounting policies. The Directors confirm that the InternalFinancial Controls (IFC) are adequate with respect to the operations of the Company. Areport of Auditors pursuant to Section 143(3) (i) of the Companies Act 2013 certifyingthe adequacy of Internal Financial Controls is annexed with the Auditors Report.
M/s. Price Waterhouse Chartered Accountants LLP (FRN 012754N/N500016) CharteredAccountants Chennai were appointed as the Statutory Auditors of the Company for a periodof 5 years at the 57th Annual General Meeting of the Company held on 28 July2017. The Company has received a certificate from M/s. Price Waterhouse CharteredAccountants LLP confirming that they are not disqualified from continuing asstatutory auditors of the Company.
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 M/s. MDS & Associates Company Secretaries in Practice to undertake thesecretarial audit of the Company. The report of the secretarial auditor is annexedherewith as Annexure E. In accordance with Regulation 24 A of the SEBI(Listing Obligations & Disclosure Requirements) 2015 the Company carried outSecretarial Audit of its material unlisted subsidiary M/s.ATS Elgi Limited also throughM/s. MDS & Associates Company Secretaries in Practice. The report of the secretarialauditor is annexed herewith as Annexure E-1.
The Board of Directors on the recommendation of the Audit Committee has appointed M/s.STR & Associates Cost Accountants as the Cost Auditors of the Company for thefinancial year 2021-22. The scope of audit was as follows: Verification of cost recordsmaintained by the Company.
Reconciliation of cost records with that of financial records.
Verification of material consumption overhead recovery rates allocation ofproduction administration selling and distribution overheads between various divisionsand the basis for cost allocation.
Verification of Quantity reconciliation and Costing Profit &Loss statement.
The total turnover that was subject of audit was INR 10811 Million.
Pursuant to Section 148 of the Companies Act 2013 read with Rule 14 of the Companies(Accounts) Rules 2014 the remuneration payable for the year 2021-22 to the Cost Auditorsof the Company is subject to ratification by the shareholders at the ensuing AnnualGeneral Meeting. The remuneration of ` 300000/- (Rupees Three Lakhs Only) to the CostAuditors is commensurate with the size of the Company work involved and scope of audit.The Board recommends their remuneration for members ratification.
Maintenance of cost records under sub-section (1) of Section 148 of the Companies Act2013
Pursuant to the provisions of Section 148(1) of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 the Company was required to maintain costrecords. Accordingly the Company has duly made and maintained the cost records asmandated by the Central Government.
Details of application made or any proceeding pending under the Insolvency andBankruptcy Code 2016 during the year
No applications have been made and no proceedings are pending against the Company underthe Insolvency and Bankruptcy Code 2016.
Details of difference between amount of the valuation done at the time of one timesettlement and the valuation done while taking loan from the Banks or FinancialInstitutions along with the reasons thereof.
The disclosure under this clause is not applicable as the Company has not undertakenany one-time settlement with the banks or financial institutions.
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 31st March 2021 was 2142. (Includingsubsidiaries).
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 F.
Elgi Equipments Limited Employee Stock Option Plan 2019
The Company has implemented the Elgi Equipments Limited Employee Stock Option Plan 2019(Elgi ESOP 2019) to enable the Company and its subsidiaries to attract retain and rewardappropriate human talent in its employment and to create a sense of ownership andparticipation amongst the employees. The Compensation Committee administers and monitorsthe Employees Stock Option Plan of the Company through the Elgi Equipments LimitedEmployee Stock Option Trust. The compensation committee has during the year under reviewissued 153800 options (against the 160600 options already granted during 2019-20 toeligible employees) at a grant price of Rs.100.035 per share after considering the BonusIssue @ 1:1 issued during the year in accordance with the ESOP Scheme of the Company.Since Mr Ragunathan Gunabooshanam the erstwhile Chief Financial Officer resigned witheffect from 22nd October 2020 the 6800 options granted to him wereforfeited. Total number of options issued under ESOP after reckoning for bonus issue nowstands at 307600. No options were granted to the Directors.
The disclosure pursuant to the provisions of Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 is given as Annexure Gto this report.
The Company has received a Certificate from the Statutory Auditors of the Company thatthe above referred Scheme had been implemented in accordance with the SEBI (Share BasedEmployee Benefits) Regulations 2014 and the resolutions passed by the members in thisregard.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
The Company has in place a policy for prevention of Sexual Harassment of Women atWorkplace in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The Company has complied with thestatutory provisions relating to the constitution of the Internal Complaints Committee.All employees (permanent contractual temporary trainees) are covered under thispolicy.
a. Number of complaints filed during the financial year : NIL
b. Number of complaints disposed of during the financial year : NIL
c. Number of complaints pending as on end of the financial year : NIL
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 4thNovember 2015 the business responsibility report is annexed as Annexure Hto 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 constituted an Audit Committee in accordance with the provisions ofSection 177 of the Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Kindly refer to the Section on CorporateGovernance under the head Audit Committee for matters relating to thecomposition meetings and functions of the Committee. The Board has accepted the AuditCommittees recommendations during the year wherever required and hence no disclosureis required under Section 177(8) of The Companies Act 2013 with respect to rejection ofany recommendations of Audit Committee by Board.
Whistle Blower Policy
The Company has a Whistle Blower policy to deal with unethical or improper practice orviolation of Companys Code of Business Conduct or any complaints regardingaccounting auditing internal controls or disclosure practices of the Company. The Policygives a platform to the Whistle Blower to report the complaints on the above-mentionedpractices to the Managing Director or Director (HR). Although the complainant is notexpected to prove the truth of an allegation the complainant aims to demonstrate thatthere are sufficient grounds for concern and that it is not done as a malicious actagainst an individual. The Audit Committee of the Board reviews the Complaints receivedredressed objected withdrawn and dismissed for every quarter in their meeting. Duringthe year there were no complaints under this policy. The Whistle Blower policy isavailable on the website of the Company at the following addresshttps://www.elgi.com/in/wp-content/uploads/2019/10/ Whistle-Blower-Policy.pdf.
Your Company adheres strictly to all the statutory and other legal compliances.
Your Company has in place the regulations for preventing and regulating InsiderTrading. The designated persons are required to adhere to the Companys Code ofConduct and Business Ethics Your Company regularly intimates the shareholders (throughquarterly communique) on the performance of the Company even though it is not mandatory.
Your Company has consistently paid Dividend through the years.
Your Company has been prompt and regular in its replies to your queries received byit.
Your Company also replies within the stipulated time to all legal and statutoryauthorities.
The custodial charges and listing fees are promptly paid by the Company to thedepositories and the stock exchanges.
During this year your Company de-matted 309285 shares; with this the totalnumber of shares de- matted as on 31st March 2021 are 314583101 shareswhich represents 99.26% shares of the 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 |
|Managing Director ||Director |
|DIN: 00003361 ||DIN: 00003660 |
|Place: Charlotte North Carolina USA ||Place: Coimbatore |