Fedders Electric & Engineering Ltd.
|BSE: 500139||Sector: Engineering|
|NSE: FEDDERELEC||ISIN Code: INE249C01011|
|BSE 00:00 | 17 Jun||Fedders Electric & Engineering Ltd|
|NSE 05:30 | 01 Jan||Fedders Electric & Engineering Ltd|
|BSE: 500139||Sector: Engineering|
|NSE: FEDDERELEC||ISIN Code: INE249C01011|
|BSE 00:00 | 17 Jun||Fedders Electric & Engineering Ltd|
|NSE 05:30 | 01 Jan||Fedders Electric & Engineering Ltd|
Your Directors are pleased to present the 61st Report of Board of Directorson the business and operations of your Company together with its Audited FinancialStatements for the year ended 31st March 2017.
The financial performance of the Company during the period under review is summarizedbelow:
Note: Since the previous financial year comprised of nine months the figures ofthe year under review and the previous year are not entirely comparable.
STATE OF AFFAIRS AND OPERATIONAL HIGHLIGHTS
During the year under review the Gross Revenue from operations of your Company for theyear ended 31st March 2017 stood at ' 1364.85 Crores as compared to therevenue generated of ' 1041.78 Crores in the previous nine months period ended on 31stMarch 2016. The EBITDA of the Company for the year under review stood at ' 108.93 Croresin comparison to ' 98.06 Crores for the period ending on 31st March 2016. TheProfit after tax ("PAT") for the year ended 31st March 2017 stood at' 20.56 Crores in comparison with the Profit after tax of ' 21.58 Crores earned in theprevious year.
There was no change in the Company's Authorised Share Capital during the year underreview. However the Company had pursuant to the approval of Board of DirectorsShareholders and other regulatory approvals and subsequent upon receipt of 25% of theissue price from the Promoters and Promoters' Group alloted 5000000 warrantsconvertible into equivalent number of equity shares on preferential basis to its Promotersand Promoters' Group on 3rd August 2015 at the issue price of ' 75 perwarrant. The aforesaid warrant holders had applied for exercising their right forconversion of 3200000 warrants into equity shares and had paid balance 75% aggregatingto ' 180000000/-. Consequently the Company had alloted equity shares to the aforesaidholders in 2 (two) Tranches on 30th December 2016 and 13thJanuary 2017 respectively. The remaining 1800000 warrants held by the warrant holderswere forfeited in accordance with the applicable provisions of the Security and ExchangeBoard of India (Issue of Capital and Disclosure Requirements) Regulations 2009.
Accordingly the Company's Paid-up Share Capital stands increased to ' 339697000comprising of 33969700 equity shares of face value of ' 10 each.
Based on the financial performance profitability and cash flow of the Company yourBoard of Directors is pleased to recommend the dividend of ' 1.00 per equity share of facevalue of ' 10.00 each for the year ended 31st March 2017. The dividend onequity shares if approved by the Shareholders at the ensuing Annual General Meeting("AGM") would involve a cash outflow of ' 4.09 Crores including dividend tax of' 0.69 Crore.
TRANSFER TO RESERVES
Your Company proposes to transfer ' 20.00 Crores to the General Reserves out of theamount available for appropriations as per the available financial statements for the yearended 31st March 2017.
During the year under review your Company has not accepted any deposits from publicand as such no amount on account of principal or interest on deposits from public wasoutstanding as on the date of the Balance Sheet.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year under review 5 (five) meetings of the Board of Directors were held.For details of the meetings of the Board please refer to the Corporate Governance Reportwhich forms part of this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Sham Sunder Dhawan will retire by rotation at the ensuing AGM in accordance withthe provisions of Section 152 of the Companies Act 2013 ("Act") and beingeligible has offered himself for re-appointment.
Pursuant to the recommendation of the Nomination and Remuneration Committee the Boardof Directors of the Company in its meeting held on 10th August 2017 hasaccorded their consent for re-appointment of Mr. Brij Raj Punj (DIN: 00080956) as theManaging Director of the Company for a further term of 5 (five) years w.e.f. 24thDecember 2017. Your approval for his re-appointment is being sought in the ensuing AGM asper the Resolution No. 5 of the Notice which forms part of the Annual Report.
Further pursuant to the recommendation of the Nomination and Remuneration Committeethe Board of Directors of the Company in its meeting held on 10th August 2017has accorded their consent for re-appointment of Mr. Sham Sunder Dhawan (DIN: 00528056) asthe Whole-time Director of the Company for a further term of 2 (two) years w.e.f. 26thApril 2018. Your approval for his re-appointment is being sought in the ensuing AGM asper the Resolution No. 6 of the Notice which forms part of the Annual Report.
The Board of Directors of the Company in its meeting held on 9th February2017 pursuant to the recommendation of the Nomination and Remuneration Committee hadappointed Mr. Akhter Aziz Siddiqi (DIN: 07726807) who was associated with the Company asthe Chief Financial Officer as the Whole-time Director of the Company for a term of 2(two) years w.e.f. 9th February 2017 to be designated as the Whole-timeDirector and Chief Financial Officer of the Company. Your approval for his appointment isbeing sought in the ensuing AGM as per the Resolution No. 7 of the Notice which formspart of the Annual Report.
Brief resume(s) of Mr. Brij Raj Punj Mr. Sham Sunder Dhawan and Mr. Akhter AzizSiddiqi Directors proposed to be appointed along with their shareholding in the Companyas stipulated under Secretarial Standard 2 of ICSI and as per the provisions of Regulation36 (3) of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") are appended as anAnnexure to the Notice of the ensuing AGM.
Mr. Pulkit Bhasin (ICSI Membership No. A27686) had been appointed as Company Secretary& Compliance Officer of the Company in place of Ms. Purnima Sharma (ICSI MembershipNo. F7706) with effect from 30th May 2016 in accordance with the Act and theListing Regulations.
All Independent Directors of the Company have given declarations confirming that theymeet the criteria of independence as laid down under section 149(6) of the Act andListing Regulations.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to section 134 (5) of the Act the Board of Directors to the best of theirknowledge and ability confirm that:
a. in the preparation of the annual accounts for the year under review the applicableaccounting standards have been followed and there are no material departures.
b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on 31st March 2017 and of the profitof the Company as on 31st March 2017.
c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
d. they have prepared the annual accounts on a going concern basis.
e. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating effectively.
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
Your Company has 2 (two) subsidiary companies namely Fedders Lloyd Trading FZEincorporated in United Arab Emirates and Fedders Lloyd Nigeria Limited ("FLNL').During the year under review the Company incorporated Fedders Lloyd Nigeria Limited asits new subsidiary company in Nigeria. The consolidated financial statements presented bythe Company include the financial information of Fedders Lloyd Trading FZE only and havebeen prepared in compliance with the applicable Accounting Standards issued by theInstitute of Chartered Accountants of India. The financials of FLNL are not considered forconsolidation as the first financial year of FLNL would end on 31st March2018.
The Company has no Joint Venture or Associate Company. There has been no materialchange in the nature of the business of its subsidiaries.
Pursuant to the provisions of section 129 (3) of the Act a separate statementcontaining the salient features of the financial statements of the Company's subsidiary inform AOC-1 is attached with the financial statements of the Company.
Further pursuant to the provisions of section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited accounts in respect of its subsidiary are available on the website ofthe Company i.e. www.fedderselectric.com . The Company will make these documents availableupon request by any shareholder of the Company.
Pursuant to section 139 of the Act and the rules made thereunder it is mandatory torotate the Statutory Auditors on completion of 2 (two) terms of 5 (five) consecutiveyears. The Rules also lay down the transitional period that can be served by the existingauditors depending on the number of consecutive years for which an audit firm has beenfunctioning as auditor in the same company. The existing auditors M/s. Suresh C. Mathur& Co. Chartered Accountants (ICAI Firm Registration No. 000891N) have served theCompany for over 5 (five) decades before the Act was notified and will be completing themaximum number of transitional period of 3 (three) years at the ensuing 61stAGM.
In order to comply with the provisions of Section 139 of the Act the Board ofDirectors of the Company on the recommendation of the Audit Committee at its meetingheld on 10th August 2017 subject to the approval of the members of theCompany at the forthcoming AGM had appointed M/s. Goel Garg & Co. CharteredAccountants (ICAI Firm Registration No. 000397N) as Statutory Auditors of the Company tohold office for a term of 5 (five) years from the conclusion of forthcoming 61st(Sixty First) AGM upto the conclusion of the 66th (Sixty Sixth) AGM of theCompany subject to ratification of such appointment by the Members at every subsequentAGM.
As required under Section 139 of the Act and Companies (Audit and Auditors) Rules2014 M/s. Goel Garg & Co. Chartered Accountants have confirmed and issued acertificate that their appointment if made as aforesaid will be in accordance within
the limits specified under the Act and they meet the criteria for appointment asspecified under Section 141 of the Act and they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India as required underRegulation 33 of the Listing Regulations.
The Board has duly examined the Auditors' Report to the accounts issued by M/s. SureshC. Mathur & Co. which is selfexplanatory. Clarifications wherever necessary havebeen included in the Notes to Accounts of the financial statements and need no furthercomments.
Mr. Sanjay Chugh Practicing Company Secretary (C.P. No. 3073) was appointed as theSecretarial Auditor of the Company to conduct Secretarial Audit for the year ended 31stMarch 2017 in compliance with the provisions of section 204 of the Act and the relevantrules made thereunder. The Report of the Secretarial Auditor in Form MR-3 is annexed tothis Report and marked as Annexure 1.
Further pursuant to the recommendation of the Audit Committee the Board of Directorsin its meeting held on 30th May 2017 have re-appointed Mr. Sanjay Chugh asSecretarial Auditor of the Company to conduct the Secretarial Audit of the Company for thefinancial year 2017-18.
M/s. Jain Sharma & Associates Cost Accountants (Firm Regn. No. 000270) wereappointed by the Board of Directors as the Cost Auditors of the Company to conduct CostAudit of the Company for the financial year 2016-17.
Further the Board on the recommendation of the Audit Committee has re-appointed M/s.Jain Sharma & Associates as Cost Auditors of the Company for the financial year2017-18 at a fee of ' 206250/- (Rupees Two Lakhs Six Thousand Two Hundred and Fiftyonly) plus applicable taxes subject to its ratification by the shareholders at the ensuingAGM.
Pursuant to the recommendation of the Audit Committee the Board of Directors in itsmeeting held on 9th February 2017 had appointed Mr. Rajeev Kumar BansalChartered Accountant as Internal Auditor to conduct the Internal Audit of the Company forthe year ended 31st March 2017. The Internal Audit Report received from theInternal Auditor was periodically reviewed by the Audit Committee.
Further the Board on the recommendation of the Audit Committee has re-appointed Mr.Rajeev Kumar Bansal as the Internal Auditor of the Company for the financial year 2017-18.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report highlighting the performance and prospectsof the Company's business forms part of the Annual Report.
The Company is committed to maintaining the highest standards of Corporate Governanceand adhering to the disclosure norms as set out by the Securities and Exchange Board ofIndia and other Regulatory Authorities.Your Directors re-affirm their commitment to thecorporate governance standards to the extent they are applicable to the Company. Incompliance with Regulation 34 of the Listing Regulations a detailed Corporate GovernanceReport is annexed to and forms part of the Annual Report.
In terms of the Act and the rules made thereunder and as per the applicable provisionsof the Listing Regulations the Board of Directors on recommendation of the Nominationand Remuneration Committee have evaluated the effectiveness of the Board. Accordinglythe performance evaluation of the Board each Director and the Committees was carried outfor the year ended 31st March 2017. The evaluation of the Directors was basedon various aspects which inter alia included the level of participation in the BoardMeetings understanding of their roles and responsibilities business of the Company alongwith the environment and effectiveness of their contribution.
COMMITTEES OF THE BOARD OF DIRECTORS
Your Company has the following Committees of the Board of Directors:
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders' Relationship Committee;
4. Corporate Social Responsibility Committee; and
5. Committee of Board of Directors.
The role and composition of these Committees including the number of meetings heldduring the year under review and the related attendance are provided under CorporateGovernance Report which forms part of the Annual Report.
MATERIAL AND SIGNIFICANT CHANGES
1. Sale of Brand Name "LLOYD"/ "Lloyd"
Pursuant to the resolution passed by the Shareholders through Postal Ballot on 23rdMarch 2017 and subsequent upon the receipt of approval from statutory and relevantauthorities the Company sold the brand name logo trade mark and any other intellectualproperty rights associated with "LLOYD" and/or "Lloyd" owned by theCompany for a consideration of ' 50.00 Crores to Havells India Limited.
2. Change in Name of the Company
Subsequent upon the aforesaid sale of brand name logo "LLOYD" and/or"Lloyd" the Company was required to change its name by deleting the word"Lloyd" therefrom. Accordingly pursuant to the Resolution passed by theShareholders through Postal Ballot on 23rd March 2017 and subsequent upon thereceipt of approval from the Registrar of Companies Uttar Pradesh ("ROC") thename of the Company has been changed from 'Fedders Lloyd Corporation Limited' to 'FeddersElectric and Engineering Limited' in accordance with the provisions of the Act. TheCompany has also obtained the final approvals with respect to the name change from theStock Exchanges in which the Equity Shares of the Company are listed.
Consequently the Company has also changed the name of its website fromwww.fedderslloyd.com to www.fedderselectric.com.
RELATED PARTY TRANSACTIONS
All the related party transactions are entered on an arm's length basis and are incompliance with the applicable provisions of the Act and Listing Regulations. Pursuant tothe provisions of section 188 of the Act read with rule 8 (2) of the Companies (Accounts)Rules 2014 the details in Form AOC-2 is annexed with this Report as Annexure-2.There are no materially significant related party transactions made by the Company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the Company at large. A statement of all related party transactionsis presented before the Audit Committee on a quarterly basis specifying the nature valueand terms and conditions of the transactions. The Related Party Transactions Policy asapproved by Board on recommendation of the Audit Committee is available on the Company'swebsite.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has effective and reliable Internal Control System commensurate with thesize scale and complexity of its operations. The scope and authority of the InternalAudit function is well defined in the organization and is aligned with the statutoryrequirements. The efficacy of the internal checks and control systems are validated by theStatutory Auditors.
The Audit Committee reviews the internal audit plans adequacy and effectiveness of theinternal control system significant audit observations and monitors the sustainability ofremedial measures.
CORPORATE SOCIAL RESPONSIBILITY
The Company is committed to its stakeholders to conduct business in an economicallysocially and environmentally sustainable manner that is transparent and ethical. The Boardof Directors of the Company has constituted Corporate Social Responsibility("CSR") Committee in compliance with section 135 of the Act. The Company iscommitted to inclusive sustainable development and contributing to building andsustaining economic social and environmental capital and to pursue CSR projects that arereplicable scalable and sustainable with a significant multiplier impact on sustainablelivelihood creation and environmental replenishment. The brief outline of the CSR policyand initiatives taken by the Company on CSR activities during the year under review areprovided in the Annexure-3 of this Report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The CSR policy is available on thewebsite of the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO ANDRESEARCH & DEVELOPMENT
In accordance with the requirements of section 134 (3) (m) of the Act read with rule8(3) of the Companies (Accounts) Rules 2014 a statement showing particulars with respectto Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo areannexed hereto as Annexure-4 and form part of this report.
In accordance with the provisions of the Act and Listing Regulations the Company hasadopted a Whistle Blower Policy as part of Vigil Mechanism to provide appropriate avenuesto the Directors and employees to bring to the attention of the management any issue whichis an actual or suspected fraud or perceived to be in violation of or in conflict with theCode of Conduct of the Company. The details of the Whistle Blower Policy is explained inthe Corporate Governance Report and also available on the website of the Company.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure-5 and form part of this Report.
The details with respect to the resolutions passed by the Shareholders through PostalBallot under section 110 of the Act are given in the Corporate Governance Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to the Financial Statements.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as Annexure6 to this Report.
The Board on the recommendation of the Nomination and Remuneration Committee hasframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration.The Remuneration Policy has been available on thewebsite of the Company i.e. www.fedderselectric.com. This Policy of the Company acts as aguideline for determining inter alia qualification positive attributes and independenceof a Director matters relating to the remuneration appointment removal and evaluationof the performance of the Director Key Managerial Personnel and Senior ManagerialPersonnel.
The Company has identified potential risks and required mitigation measures. Majorrisks identified are systematically addressed through mitigating actions on a continuingbasis. These are discussed at the meetings of the Audit Committee of the Company. TheCompany has approved and adopted Risk Management Policy to enhance control mechanism forrisk evaluation and mitigation and the risk management process.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has always provided a congenial atmosphere for work to all the employeesthat is free from discrimination and harassment including sexual harassment. There were nocases/complaints pertaining to the sexual harassment reported to the Board during the yearunder review.
LISTING OF EQUITY SHARES
The equity shares of your Company are listed on National Stock Exchange of IndiaLimited (NSE) and BSE Limted (BSE). The Annual Listing Fees for the year 2017-18 have beenpaid to these Sock Exchanges.
The Members are requested to note that as on 31st March 2017 97.28% of theCompany's total paid-up share capital representing 33044186 shares are indematerialized form. In view of the numerous advantages offered by the Depository systemas well as to avoid frauds members holding shares in physical mode are advised to availof the facility of dematerialization from National Securities Depository Limited (NSDL)and Central Depository Services (India) Limited (CDSL).
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its future operations.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The Company had declared dividend of ' 1/- per equity share in the financial year2008-09. The unclaimed dividend due for transferring during the year ended 31stMarch 2017 to the Investor Education and Protection Fund ("IEPF") maintainedwith Central Government has been duly transferred. Please refer to the CorporateGovernance Report for due dates of transferring the unclaimed dividend amount to IEPF fordividend declared in subsequent years.
ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND-AS) w.e.f. 1st APRIL 2017
During the year ended 31st March 2017 the Financial Statements of theCompany have been prepared in accordance with the Companies (Accounting Standards) Rules2006. However as per the notifications issued by the Ministry of Corporate Affairs readwith the circulars issued by the Securities and Exchange Board of India the Company ismandatorily required to adopt Indian Accounting Standards (Ind AS) as prescribed underCompanies (Accounting Standards) Rules 2015 for accounting period beginning on or after 1stApril 2017.
Accordingly the Un-audited Financial Results of the Company for the 1stquarter of the current financial year 2017-18 has been prepared in accordance with Ind AS.
HEALTH SAFETY AND ENVIRONMENT
Your Company has complied with all the applicable Health & Safety StandardsEnvironment Laws and Labour laws and has been taking all necessary measures to protect theenvironment and provide workers a safe work environment. Your Company is committed towardsimprovement in Health & Safety as well as Environmental performance by providing aSafe & healthy work environment to all its employees and co-workers.
HUMAN RESOURCE AND INDUSTRIAL RELATIONS
Your Company considers people as its biggest assets and "Believing in People"is at the heart of its human resource strategy. Lot of efforts are put in for talentmanagement strong performance management learning and training initiatives in order toensure that your Company consistently develops inspiring strong and credible leadership.During the year under review your Company continued to have cordial relationship with allits employees and maintained healthy cordial and harmonious industrial relations at alllevels.
Your Directors take this opportunity to thank the Customers Employees FinancialInstitutions Banks Central and State Government Authorities Regulatory AuthoritiesStock Exchanges and all the various stakeholders for their continued cooperation andsupport to the Company who all made our consistent growth possible.
Your Directors also wish to record their appreciation for the continued co-operationand support extended by the Governments of various countries where we have our operations.