Board of Directors' Report to Shareholders
The Board of Directors of your Company are pleased to present the Thirty Seventh AnnualReport on the business and commercial operations of the Company along with the summary offinancial statements for the year ended 31st March 2018.
1. The State of Affairs of the Company Financial summary/highlights
|Particulars ||Financial Year ||Financial Year |
| ||2017-2018 ||2016-2017 |
| ||( Rs. in Lakhs) ||( Rs. in Lakhs) |
|Revenue from Operations ||19446.78 ||18028.59 |
|Other Income ||314.59 ||371.47 |
|Profit before Interest and Depreciation and amortisation expenses ||1868.33 ||1555.01 |
|Less Interest ||5.47 ||0.50 |
|Profit before Depreciation & Amortization expense ||1862.86 ||1554.51 |
|Less : Depreciation & Amortisation expense ||207.86 ||201.93 |
|Profit Before Tax ||1655.00 ||1352.58 |
|Less : Exceptional Item ||- ||84.48 |
|Less: Provision for Taxes ||480.92 ||388.03 |
|Profit after tax ||1174.08 ||880.07 |
The Ministry of Corporate Affairs (MCA) has notified the Indian Accounting Standards(Ind AS) applicable to certain classes of companies and Ind AS has replaced the existingIndian GAAP prescribed under Section 133 of the Companies Act 2013 read with Rule 7 ofthe Companies (Accounts) Rules 2014 for such class of Companies. The Company has adoptedInd AS for the first time and is applicable from April 1 2017.
The Board recommends a 100% dividend of Rs. 10/- (Rupees Ten only) per equity share ofthe face value of Rs. 10/- (Rupees Ten only) each on the equity share capital of Rs.24580000/- for the financial year ended on 31st March 2018. The dividend on equityshares is subject to the approval of the shareholders at the ensuing Annual GeneralMeeting. Dividend will be paid to those equity shareholders whose names appear in theRegister of Members as on 01st August 2018 in respect of shares held in physical form andin respect of shares held in dematerialized form the dividend shall be paid on the basisof the beneficial ownership as per the details furnished by the Depositories for thispurpose at the end of business hours on 01st August 2018.
Business and Operations
During the year under review the Company has achieved a revenue from operations of Rs.19446.78 Lakhs as against Rs. 18028.59 Lakhs for the previous year.
The profit before interest and depreciation is Rs. 1868.33 Lakhs as against Rs.1555.01 Lakhs for the previous year. The profit before tax is Rs. 1655.00 Lakhs asagainst Rs. 1268.10 Lakhs during the previous year.
During the year under review the turnover has increased by 7.86% over the previous yearand the profit before tax has increased by 22.36 % over the same period last year.
Relationship with employees was cordial throughout the financial year.
2. Extracts of Annual Return
As per requirements of the Companies Act 2013 the extract of annual return in theprescribed Form MGT 9 is annexed hereto as Annexure 1 forming part of the report.
3. Number of Meetings of the Board
Details of number of meetings of Board of Directors and Committees thereof and theattendance of the Directors in such meetings are provided under the Corporate GovernanceReport.
4. Directors' Responsibility Statement
In terms of Section 134 of the Companies Act 2013 the Directors confirm that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures from the same;
b. 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 at the end of the financial year and of the profitand loss of the company for that period;
c. have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities;
d. have prepared the annual accounts on a going concern basis;
e. have laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively; and
f. have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
5. No Frauds reported by statutory auditors
There is no instance of frauds reported by the statutory auditors of the Company forthe financial year under review under sub Section (12) of Section 143 of the CompaniesAct 2013.
6. Declaration by Independent Directors
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves as Independent Directors under the provisions of the CompaniesAct 2013 and the relevant rules of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
7. Nomination and Remuneration Committee and Policy
As per the requirements of the provisions of the Companies Act 2013 a Nomination andRemuneration Committee of directors was formed by the Board of Directors consisting of:
1. Sri. N.Suryakumar Chairman (Non-Executive Independent)
2. Sri. Ramesh Rudrappan Member (Non-Executive Independent)
3. Sri. Arun Selvaraj Member (Non-Executive Independent)
The said committee has been empowered and authorised to exercise widest powers asentrusted under the provisions of Section 178 of the Companies Act 2013. The Company hasa policy on directors' appointment and remuneration including criteria for determiningqualification positive attributes independence of a director and other matters providedunder subsection (3) of section 178. The salient aspects covered in the Nomination andRemuneration Policy has been outlined in the Corporate Governance Report and the policy isavailable on the Company's website: www.lecsindia.com.
8. Auditors Comments
There are no adverse comments in the reports of Statutory Auditors (appearing elsewherein the Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 2).
9. Particulars of Loans/Guarantee/Investments
The Company has not given any Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013.
10. Particulars of Contracts with Related Party
The transactions entered by the Company with the related parties during the financialyear 2017-18 are in the ordinary course of business and at arm's length basis. Theparticulars of material related party transactions is provided in the form AOC 2 andannexed to the Boards' Report as Annexure 3.
11. Material Changes and Commitments
There were no material changes and commitments affecting the financial position of theCompany occurred between the end of financial year (March 31 2018) to which thisfinancial statements relate and the date of this Report.
12. Conservation of Energy Technology Absorption & Foreign Exchange
The disclosures under Rule 8(3) of Companies (Accounts) Rules 2014 are as under:
Conservation of Energy
|Sl Particulars ||Disclosures |
|No. || |
|(i) Steps taken or impact on conservation of energy ||I. In the lighting system LED and Induction Lamps are introduced for new requirements and it continues. |
| ||II. Subsequently the existing lamps are replaced with suitable LED lamps with optimum solution when it called for repair / replacement and it continues. |
| ||III. Energy efficient super fans are introduced for new requirements and the existing fans are replaced with the same when it called for repair / replacement and it continues. |
|(ii) Steps taken by the company for utilising alternate sources of energy ||Wind energy generation power is utilized for Plant captive consumption from August 2016 onwards. |
|(iii) Capital investment on energy conservation equipments; ||Energy efficient automated vacuum blower loader system is developed and used. Optimum capacity hot air dryers are used to produce better quality products & to conserve energy. |
| ||Redundant Hyd. Power pack is retrofitted with optimum solution. |
|Technology Absorption || |
|Sl Particulars ||Disclosures |
|No. || |
|(i) Efforts made towards technology absorption; (ii) The benefits derived like product improvement cost reduction product development or import substitution; ||No technology or knowhow is brought from external bodies or imported. In house developmental and operational research activities are carried out on regular basis. |
|(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): ||No technology was imported during the last three years. |
|(a) the details of technology imported; || |
|(b) the year of import || |
|(c) whether the technology has been fully absorbed || |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; || |
|(iv) The expenditure incurred on Research and Development ||Capital Expenditure: Rs. 12.37 Lakhs |
| ||Revenue Expenditure: Rs. 36.52 Lakhs |
| ||Total Expenditure: Rs. 48.89 Lakhs |
|Foreign Exchange Outgo and Earnings || |
| ||Rs. in Lakhs |
|Foreign Exchange earned through exports ||8.54 |
|Foreign Exchange used ||925.32 |
13. Risk Management
The Company follows a comprehensive and integrated risk appraisal mitigation andmanagement process. The risk management process of the Company is being periodicallyreviewed for improvement by the Board of Directors.
14. Corporate Social Responsibility (CSR):
The Company has constituted a CSR committee of Board of Directors and has adopted a CSRPolicy. The same is posted in the Company's website www.lecsindia.com. The Committeeconsist of three directors' viz. Sri. D.Senthilkumar Smt. Nethra J.S.Kumar and Sri. ArunSelvaraj. CSR Committee Meeting was held on 28.07.2017. A report in prescribed formatdetailing the CSR spend for the financial year 2017-18 is attached herewith as Annexure 4forming a part of this report.
15. Evaluation of Board's Performance:
On the advice of the Board of Directors the Nomination and Remuneration Committee ofBoard of Directors of the Company have formulated the criteria for the evaluation of theperformance of Board of Individual Directors Board as a whole Committees of DirectorsIndependent Directors Non-Independent Directors and the Chairperson of the Board. Basedon that performance evaluation has been undertaken. The Independent Directors of thecompany have also convened a separate meeting for this purpose. All the results andevaluation has been communicated to the Chairperson of the Board of Directors.
16. Additional Disclosures:
As per Rule 8(5) of the Companies (Accounts) Rule 2014 the following additionalinformation is provided:
|S.No Particulars ||Disclosures |
|(i) The financial summary or highlights. ||The financial highlights including State of Affairs of the Company is provided in this Report. |
|(ii) The change in the nature of business if any. ||There is no change in the business line of the company. |
|(iii) The details of directors or key managerial personnel who were appointed or have resigned during the year. ||Sri. B.K.Ravi Kumar Chief Financial Officer has resigned and relieved with effect from 16 th December 2017. |
| ||The Board of Directors have appointed Sri. A.Thiagarajan as Chief Financial Officer of the Company with effect from 31st January 2018. |
|(iv) The names of companies which have become or ceased to be its Subsidiaries joint ventures or associate companies during the year. ||Nil |
|(v) The details relating to deposits covered under Chapter V of the Act. ||The company has not accepted deposits. |
|(vi) The details of deposits which are not in compliance with the requirements of Chapter V of the Act. ||Not Applicable. |
|(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. ||Nil |
|(viii) The details in respect of adequacy of internal financial controls with reference to the Financial Statements. ||The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance. |
| ||The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report. |
17. Internal Control systems and their Adequacy
Your Company has established adequate internal control procedures commensurate withthe nature of its business and size of its operations.
The accounting transactions and operations are audited by the Internal Auditorvis.a.vis the internal controls policies and procedures and the deviations if any arereported and corrective actions are taken appropriately.
18. Re-appointment of retiring directors
Sri. Sanjay Jayavarthanavelu Director (DIN: 00004505) who retires by rotation at theensuing Annual General Meeting being eligible offers himself for re-appointment. TheBoard recommends his re-appointment in the forthcoming Annual General Meeting.
19. Non-executive Directors
Sri. N. Suryakumar (DIN: 00008316) presently aged 78 years was appointed as anIndependent Director of the Company for a period of five consecutive years with effectfrom 08th August 2014 by obtaining the approval of the shareholders at the Annual GeneralMeeting held on 08th August 2014. In order to ensure compliance with new Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015which is effective from 01st April 2019 a subject is included in the Notice of theensuing Annual General Meeting for seeking approval of the members.
20. Resignation of Director
There was no incidence of resignation of any Director.
21. Composition of Audit Committee
The Audit Committee was formed by the Board of Directors and consists of:
|1 Sri. N.Suryakumar - Chairman ||(Non - Executive - Independent) |
|2 Sri. A.Palaniappan - Member ||(Non - Executive - Independent) |
|3 Sri. Ramesh Rudrappan - Member ||(Non - Executive - Independent) |
The Board has accepted the recommendations of the committee during the financial yearunder review.
22. Vigil Mechanism
The Company has devised a vigil mechanism in the form of a Whistle Blower Policy inpursuance of provisions of Section 177(10) of the Companies Act 2013 and details whereofis available on the company's website: www.lecsindia.com During the year under reviewthere were no complaints received under this mechanism.
23. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
As per the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has constituted an Internal ComplaintsCommittee. During the financial year 2017-18 no complaint was received before thecommittee.
24. Overall Maximum Remuneration
Particulars pursuant to Section 197(12) & rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 : a) The ratio of the remuneration ofeach director to the median employee's remuneration for the financial year and such otherdetails as prescribed is as given below:
|Name ||Category ||Ratio |
|Smt. Nethra J.S.Kumar (DIN:00217906) ||Executive - Chairperson and Managing Director ||1:21.55 |
|Sri. N.Suryakumar (DIN:00008316) ||Non-Executive - Independent ||- |
|Sri. Sanjay Jayavarthanavelu (DIN: 00004505) ||Non-Executive - Non Independent ||- |
|Sri. D.Senthilkumar (DIN: 00006172) ||Non-Executive - Non Independent ||- |
|Sri. Ramesh Rudrappan (DIN: 00008325) ||Non-Executive - Independent ||- |
|Sri. A.Palaniappan (DIN:00044022) ||Non-Executive - Independent ||- |
|Sri. Arun Selvaraj (DIN: 01829277) ||Non-Executive - Independent ||- |
Note: For this purpose Sitting fees paid to the Directors have not been considered asremuneration.
b) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:
|Name ||Category ||% |
|Smt. Nethra J.S.Kumar ||Executive Chairperson and Managing Director ||7.49 |
|Sri. N.Suryakumar ||Non-Executive Independent Director ||- |
|Sri.Sanjay Jayavarthanavelu ||Non-Executive Non Independent Director ||- |
|Sri. D.Senthilkumar ||Non-Executive Non Independent Director ||- |
|Sri. Ramesh Rudrappan ||Non-Executive Independent Director ||- |
|Sri. A.Palaniappan ||Non-Executive Independent Director ||- |
|Sri. Arun Selvaraj ||Non-Executive Independent Director ||- |
|Sri. A.Thiagarajan * ||Chief Financial Officer (CFO) ||- |
|Sri. S.Sathyanarayanan* * ||Company Secretary (CS) ||34.74 |
Note: For the above purpose Sitting fees paid to the Directors have not beenconsidered as remuneration.
*The present CFO was appointed during the financial year 2017-18. Percentage increasein remuneration is not comparable and hence not provided.
**The percentage increase is inclusive of Provident Fund and provision for Gratuity .c) The percentage increase in the median remuneration of employees in the financial year:2.17% d) The number of permanent employees on the rolls of company: 212
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 justification thereof and point out if thereare any exceptional circumstances for increase in the Managerial Remuneration:
Average increase in remuneration is 3.89% for employees other than Managerial Personneland KMP while it is 12.53% for Managerial Personnel (KMP and Senior Management).
f) It is affirmed that the remuneration is as per the remuneration policy of theCompany.
g) Particulars of Employees as per Rule 5(2) and Rule 5(3) of Companies (Appointment& Remuneration of Managerial Personnel Rules 2014) are provided as Annexure 5 to thisReport.
25. Accounting Treatment
In the preparation of financial statements no treatment different from that ofprescribed accounting standards has been followed.
26. Secretarial Standards
The Company has adhered with the applicable Secretarial Standards issued by TheInstitute of Company Secretaries of India.
27. Corporate Governance:
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate section on Corporate Governance practices followed by the Company together witha certificate from the Company's Auditors confirming compliance forms an integral part ofthis Report.
The shares of the Company is listed in BSE Limited Mumbai. The listing fees is paid upto date and the shares of the Company were not suspended for trading by the Stock Exchangeat any time during the financial year under review.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s. Subbachar & Srinivasan Chartered Accountantsthe Statutory Auditors of the Company hold office up to the conclusion of the AnnualGeneral Meeting to be held in the year 2021. The Company has received a certificate fromthe said Auditors that they are eligible to hold office as the Auditors of the Company.The Ministry of Corporate Affairs vide their notification dated 07th May 2018 has amendedthe Section 139 of the Companies Act 2013 by omitting the necessity of ratification ofthe appointment of the Statutory Auditors by members of the Company at every subsequentAnnual General Meeting. In order to align with the amended Section 139 the relevantsubject matter is included in the Notice of the ensuing Annual General Meeting for seekingapproval of the members.
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 Coimbatore Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the financial year 2018-2019.
Your Directors thank the customers bankers vendors shareholders and otherstakeholders for their continued support and patronage.
The Directors wish to place on record their appreciation for the cooperation andcontribution made by the employees at all levels towards the performance of the Company.
| ||For and on behalf of the Board |
|Place : Coimbatore ||Nethra J.S. Kumar |
|Date : May 21 2018 ||Chairperson and Managing Director |
| ||(DIN: 00217906) |