Lakshmi Electrical Control Systems Limited
Registered Office:504 Avinashi Road Peelamedu Post Coimbatore - 641004 Tamil Nadu.
Tel: +91 422 6616500
Email: firstname.lastname@example.org Website: www.lecsindia.com
Board of Directors Rs Report to Shareholders
The Board of Directors of your Company are pleased to present the Thirty Ninth AnnualReport on the business and operations of the Company along with the summary of financialstatements for the year ended 31st March 2020.
1. The State of Affairs of the Company
|Particulars ||Financial Year ||Financial Year |
| ||2019-2020 ||2018-2019 |
| ||(Rs in Lakhs) ||(Rs in Lakhs) |
|Revenue from operations ||1 1322.30 ||19082.27 |
|Other Income ||329.77 ||412.56 |
|Profit before Interest and Depreciation & amortisation expense ||317.81 ||1517.80 |
|Less: Interest ||2.93 ||1.37 |
|Profit before Depreciation & amortization expense ||314.88 ||1516.43 |
|Less: Depreciation & amortisation expense ||223.12 ||211.82 |
|Profit before Tax ||91.76 ||1304.61 |
|Less: Exceptional item ||- ||- |
|Less: Provision for Taxes ||48.88 ||284.01 |
|Profit after Tax ||42.88 ||1020.60 |
The Board recommends 5% dividend of Rs 0.50/- per equity share of the face value of Rs10/- (Rupees Ten only) each on the equity share capital of Rs 24580000/- for thefinancial year ended on 31st March 2020. The dividend on equity shares is subject to theapproval of the shareholders at the ensuing Annual General Meeting. Dividend will be paidto those equity shareholders whose names appear in the Register of Members as on 07thAugust 2020 in respect of shares held in physical form and in respect of shares held indematerialized form the dividend shall be paid on the basis of the beneficial ownershipas per the details furnished by the Depositories for this purpose at the end of businesshours on 07th August 2020.
The paid-up capital of the Company as at March 312020 stood at Rs. 245.80 Lakhs.During the financial year under review your company had not made any fresh issue ofshares.
Business and Operations
During the year under review the Company's revenue from operations (net of GST) hasdecreased by Rs 7759.97 lakhs over the previous financial year and recorded a revenue ofRs 11322.30 lakhs for the financial year ended 31st March 2020.
The profit before interest and depreciation & amortisation is Rs 31 7.81 Lakhs asagainst Rs 151 7.80 Lakhs for the previous financial year. The profit after tax hasdecreased by 95.80% compared to the previous financial year.
Relationship with employees was cordial throughout the financial year.
2. Registered Office
The registered office of the Company was shifted from Rs 34-A Kamaraj Road Coimbatore- 641018 Rs to '504 Avinashi Road Peelamedu Post Coimbatore - 641004 Rs with effectfrom 07th February 2020.
3. 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.The sameis available on the website of the Company www.lecsindia.com
4. 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.
5. Directors Rs 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.
6. 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.
7. 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 [SEBI (LODR)].
8. Nomination and Remuneration Committee and Policy
As per the requirements of the provisions of the Companies Act 2013 and SEBI LODR aNomination and Remuneration Committee of directors was formed by the Board of Directorsconsisting 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 and SEBI LODR.The Company has a policy on directors Rs appointment and remuneration including criteriafor determining qualification positive attributes independence of a director and othermatters provided under sub-section (3) of section 1 78. The policy is available on theCompany's website www.lecsindia.com.
The salient aspects covered in the Nomination and Remuneration Policy:
The Company believes that the human resources are one of the most important valuableassets of the company. As per the requirement of the provisions of the Companies Act 2013and SEBI Regulations to meet and attract the valuable asset and harmonize the payment toDirectors Key Managerial Personnel and other employees of the Company in line with themission visions and values of the Company. This policy has been formulated by theNomination and Remuneration Committee for the Directors Key Managerial Personnel andSenior Management personnel and approved by the Board of Directors.
The objective and purpose of this policy are:
To lay down criteria and terms and conditions with regard to identifying personswho are qualified to become Directors and persons who may be appointed in SeniorManagement and Key Managerial positions.
To lay down guiding principle for remuneration payable to Executive DirectorsNon- Executive Directors Senior Management Personnel and Key Managerial Personnel.
To determine the evaluation of performance of the Members of the Board includingIndependent Directors.
To recommend remuneration based on the Company's size financial positiontrends and practices on remuneration prevailing in peer companies
To provide them reward linking to their effort performance dedication andachievement in the Company's operations/ performance.
To design suitable remuneration package to attract retain motivate and promotebest caliber directors and employees create strong performance orientated environment andreward achievement of meaningful targets over the short and longterm and createcompetitive advantage.
To Determine the criteria for qualifications positive attributes andindependence of Directors.
To determine whether to extend or continue the term of appointment ofIndependent Directors.
Devising criteria for board diversity.
Develop succession plan for the Board Senior Management and Key ManagerialPersonnel.
9. 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).
10. Particulars of Loans/Guarantee/I nvestments
The Company has not given / made any Loans Guarantees and Investments covered underthe provisions of Section 186 of the Companies Act 2013 during the year under review.Details of investments made in the earlier years have been disclosed in the notes to thefinancial statements.
11. Particulars of Contracts with Related Party
The transactions entered by the Company with the related parties during the financialyear 2019-20 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 Rs Report as Annexure 3.The Policy on Related Party is available onthe Company's website at www.lecsindia.com
12. Material Changes and Commitments between the end of financial year (March 31 2020)to which this financial statements relate and the date of this Directors Rs Report.
Due to outbreak of COVID 19 pandemic and based on the directives of the Government ofIndia Government of Tamil Nadu the operations of the Company was suspended on 24th March2020 and resumed on 07th May 2020 in phased manner with minimal workforce by followingrequisite precautions/ guidelines. This has impacted the turnover and profitability of theCompany.
13. Conservation of Energy Technology Absorption & Foreign Exchange
The disclosures under Rule 8(3) of the Companies (Accounts) Rules 2014 are as under:
Conservation of Energy
|Particulars ||Disclosures |
|(i) Steps taken or impact on conservation of energy ||I. Eliminated unwanted power consumption using electro mechanical design changes and reduced idle power consumption using timer systems in the machines wherever possible. |
| ||II. IOT based incoming power supply and energy monitoring system implemented. |
| ||III. In the lighting system Auto OFF and ON system / lighting censor system instal led to conserve the energy wherever possible. |
|(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; ||- |
|Particulars ||Disclosures |
|(i) Efforts made towards technology absorption; ||No technology or knowhow is brought from external bodies or imported. |
|(ii) The benefits derived like product improvement cost reduction product development or import substitution; ||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 0.18 Lakhs |
|Revenue Expenditure: Rs 41.21 Lakhs |
|Total Expenditure: Rs 41.39 Lakhs |
Foreign Exchange Outgo and Earnings
|Foreign Exchange earned through exports ||27.10 |
|Foreign Exchange used ||376.47 |
14. 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.
15. 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 Rs viz. Sri.D.Senthilkumar Smt.Nethra J.S.Kumar and Sri.ArunSelvaraj. CSR Committee meeting was held on 5th August 2019. A report in prescribed formatdetailing the CSR spend for the financial year 2019-20 is attached herewith as Annexure 4forming a part of this report.
16. 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.
17. Additional Disclosures:
As per Rule 8(5) of the Companies (Accounts) Rule 2014 the following additionalinformation is provided:
|Particulars ||Disclosures |
|(i) The financial summary or highlights. ||The financial highlights including State of Affairs of the Company is provided in this Annual 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. ||During the year under review the members had appointed/ re-appointed the following directors at the Annual General Meeting of the Company held on 7th August 2019 |
| ||a. Sri.N.R.Selvaraj was appointed as a Director (Non-Executive Non-Independent) of the Company |
| ||b. Sri.N.Suryakumar was re-appointed as an Independent Director of the Company for a second term of 2 consecutive years with effect from 9th August 2019 |
| ||c. Sri.Ramesh Rudrappan was re-appointed as an Independent Director of the Company for a second term of 5 consecutive years with effect from 9th August 2019 |
| ||d. Sri.Arun Selvaraj was re-appointed as an Independent Director of the Company for a second term of 5 consecutive years with effect from 9th August 2019. |
| ||e. Sri. A. Palaniappan was re-appointed as an Independent Director of the Company for a second term of 5 consecutive years with effect from 9th August 2019. |
|(iv) Statement regarding opinion of the Board with regard to integrity expertise and experience (including the proficiency) of the independent directors appointed during the year ||Board of Directors have evaluated the Independent Directors re-appointed during the year 2019-20 and found that the integrity expertise and experience (including proficiency) of the Independent Directors is satisfactory. |
|(v) The names of companies which have become or ceased to be its Subsidiaries joint ventures or associate companies during the year. ||Nil |
|(vi) The details relating to deposits covered under Chapter V of the Act. ||The Company has not accepted deposits. |
|(vii) The details of deposits which are not in compliance with the requirements of Chapter V of the Act. ||Nil |
|(viii) 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 |
|(ix) 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. |
|(x) Cost Records ||The Company is maintaining the cost records as required under Section 148 of the Companies Act 2013 read with Companies (Cost Records and Audit) Rules 2014. |
|(xi) Internal Complaints Committee ||As per the provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 the Company has constituted an Internal Complaints Committee. During the financial year 2019-20 no complaint was received before the committee. |
18. 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.
19. Board of Directors Re-appointment of retiring directors:
Sri. Sanjay Jayavarthanavelu Director who retires by rotation at the ensuing AnnualGeneral Meeting being eligible offers himself for re-appointment. The Board recommendshis re-appointment in the forthcoming Annual General Meeting.
There was no incidence of resignation of any Director.
20. 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.
21. 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.
22. Overall Maximum Remuneration
Particulars pursuant to Section 197(12) & rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 :
a) The ratio of the remuneration of each director to the median employee's remunerationfor the financial year and such other details as prescribed is as given below:
|Name ||Category ||Ratio |
|Smt. Nethra J.S.Kumar (DIN:0021 7906) ||Executive - Chairperson and Managing Director * (CMD) ||- |
|Sri. N.Suryakumar (DIN:00008316) ||Non-Executive - Independent ||- |
|Sri. Sanjay Jayavarthanavelu (DIN: 00004505) ||Non-Executive - Non Independent ||- |
|Sri. D.Senthilkumar (DIN: 000061 72) ||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 ||- |
|Sri N.R. Selvaraj (DIN: 00013954) ||Non-Executive - Non Independent ||- |
Note: For this purpose Sitting fees paid to the Directors have not been considered asremuneration. CMD has not drawn salary and commission for the financial year 2019-20.
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 ||- |
|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 N.R. Selvaraj ||Non-Executive - Non Independent Director ||- |
|Sri. A.Thiagarajan* ||Chief Financial Officer (CFO) ||22.28 |
|Sri. S.Sathyanarayanan* ||Company Secretary (CS) ||9.64 |
Note: For the above purpose Sitting fees paid to the Directors have not beenconsidered as remuneration.
*The percentage increase is inclusive of Provident Fund and provision for Gratuity.
**CMD has not drawn salary and commission for the financial year 2019-20.
c) The percentage increase in the median remuneration of employees in the financialyear: 9.15%
d) The number of permanent employees on the rolls of company: 235
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 6.97% for employees other than Managerial Personneland KMP while it is (52.34%) 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 the Companies(Appointment & Remuneration of Managerial Personnel Rules 2014) are provided asAnnexure 5 to this Report.
23. Accounting Treatment
In the preparation of financial statements no treatment different from that ofprescribed accounting standards has been followed.
24. Secretarial Standards
The Company has adhered with the applicable Secretarial Standards issued by TheInstitute of Company Secretaries of India.
25. 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 are listed in BSE Limited Mumbai. The listing fees is paidup to date and the shares of the Company were not suspended for trading by the StockExchange at any time during the financial year under review.
26. Investor Education and Protection Fund
The Company has transferred the equity shares and dividend in respect of whichdividend has not been claimed by the members for seven consecutive years or more to theInvestor Education and Protection Fund Authority (IEPF) during the financial year2019-2020. Details of shares transferred have been uploaded on the website of the Company.
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 continue and hold office as the Auditors ofthe Company.
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 are being recommended for re-appointment for secondterm of five years from the financial year 2021-22 and to hold office up to the conclusionof the Annual General Meeting to be held in the year 2026. The Company has received acertificate from the said Auditors that they are eligible to continue and hold office asthe Auditors of the Company. The Audit Committee has approved and the Board of Directorsare recommending their appointment for the shareholders Rs approval.
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 2020-2021.
The Board of Directors on the recommendation of the Audit Committee has appointedSri.S.Subbaraman Cost Accountant in Practice as Cost Auditors to undertake Cost Audit forthe financial years 2019-20 & 2020-21. Pursuant to Section 148 of the Companies Act2013 read with Rule 14 of the Companies (Accounts) Rules 2014 the remuneration payablefor the financial year 2019-20 & 2020-21 to the Cost Auditors of the Company issubject to ratification by the shareholders at the ensuing Annual General Meeting. TheBoard recommends their remuneration for members Rs ratification.
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 : June 03 2020 ||Chairperson and Managing Director |
|(DIN: 00217906) |