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Lakshmi Machine Works Ltd.

BSE: 500252 Sector: Industrials
NSE: LAXMIMACH ISIN Code: INE269B01029
BSE 00:00 | 18 Oct 3629.80 -0.45
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NSE 00:00 | 18 Oct 3624.80 -1.15
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OPEN 3645.05
PREVIOUS CLOSE 3630.25
VOLUME 1073
52-Week high 6431.40
52-Week low 3147.25
P/E 22.50
Mkt Cap.(Rs cr) 3,877
Buy Price 3629.80
Buy Qty 5.00
Sell Price 3629.80
Sell Qty 22.00
OPEN 3645.05
CLOSE 3630.25
VOLUME 1073
52-Week high 6431.40
52-Week low 3147.25
P/E 22.50
Mkt Cap.(Rs cr) 3,877
Buy Price 3629.80
Buy Qty 5.00
Sell Price 3629.80
Sell Qty 22.00

Lakshmi Machine Works Ltd. (LAXMIMACH) - Director Report

Company director report

Dear Shareholders

The Board of Directors of your company are pleased to present theAnnual Report on the business of the Company along with the Standalone summary offinancial statements for the year ended 31st March 2019.

1. The State of Affairs of the Company Dividend and Reserve

The Board has prepared its report based on the standalone financialstatements of the Company and this report contains a separate section wherein a report onthe performance and financial position of its wholly owned subsidiary company is presentedin Form AOC-1.

Financial Summary/Highlights and transfer to General Reserve

( र in Lakhs)

Sl. No. Particulars Current Year 2018-19 Previous Year 2017-18
1 Revenue from Operation 274198.32 266728.50
2 Operating Expenses 236847.80 229334.15
3 Exceptional items 3716.75 402.69
4 Gross Profit 33633.77 36991.66
5 Depreciation 4983.47 7079.53
6 Profit Before Tax 28650.30 29912.13
7 Provisions for Tax 9722.32 8769.84
8 Net Profit after Tax 18927.98 21142.29

Transfer to Reserve:

The Company has transferred a sum of र 1900 Lakhs out of thecurrent year profits to the General Reserve.

Dividend:

The Board recommends a dividend of र35/- per equity share havingface value of र 10/- each (350%) on the equity share capital of र 106830000/-for the year ended on 31st March 2019 aggregating to र 3739.05 Lakhs and to pay adividend tax of र768.75 Lakhs. The total dividend payout works out to 23.82% of thestandalone net profit after tax. The dividend on equity shares is subject to the approvalof the shareholders at the ensuing Annual General Meeting.

The unclaimed Dividend relating to the financial year 2011-12 is duefor remittance in September 2019 to the Investor Education and Protection Fund (IEPF)established by the Central Government.

During the year under review as per the requirements of the InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 (IEPF Rules) 2941 equity shares of र 10/- each on which dividend had remainedunclaimed for a period of 7 years have been transferred to the credit of Demat Accountidentified by the IEPF Authority. As on date of this report the Company has transferred25 135 Equity shares to the credit of Demat Account of IEPF Authority.

As per the requirements of SEBI notification no. SEBI/LAD-NRO/GN/2016-17/008 dated 8th July 2016 the Company has formulated a DividendDistribution Policy which has been duly approved by the Board of Directors. A copy of theDividend Distribution Policy is available at the company website: www.lmwglobal. com andis also annexed herewith as Annexure 1 forming part of this report.

STATE OF AFFAIRS: OPERATIONS

Fiscal 2018-19 belied expectations as India's economic growth slidfor the second consecutive year – Index of Industrial Production (IIP) too declinedover the previous year benchmark. Also while the textile sector remained largely subduedthe automobile and engineering sectors had reported progress for a large part of the year.

This impacted the Company's performance too. While the Textilemachinery Division reported a subdued financial performance the machine tool division andfoundry division reported growth over the previous year.

Overall the Company's gross turnover grew by 2.31% from र248860.11 Lakhs in 2017-18 to र254620.31 Lakhs in 2018-19; the Profit beforeexceptional items and Tax stood at र32367.05 Lakhs as against र30314.82 Lakhs in2017-18 – an increase of 6.77% over the previous year.

The Net Profit after Tax for financial year 2018-19 was र 18927.98Lakhs as against र21142.29 Lakhs for financial year 2017-18. The reduction is onaccount of exceptional items.

More than the financial performance fiscal 2018-19 has emerged as animportant milestone in the Company's journey as it set foot on the TQM way – aphilosophy that promises to transform the organisational culture into one where qualitybecomes a ‘Non-compromise Non-negotiable' ethic.

TEXTILE MACHINERY DIVISION

The prevailing slowdown in the domestic textile sector resulted in apushback by textile companies from creating additional capacities. This impacted thetextile machine ofitake from domestic players. Exports registered growth owing to thefocused efforts of the team on expanding and entrenching their global presence.

Overall the financial performance of the Textile Machinery divisionremained muted. The division reported a turnover of र 178765.18 Lakhs as against र 191907.90 Lakhs registered in 2017-18 a decrease of 6.85 % over the previousyear.

The team leveraged these challenging times to improve its productoffering and strengthen its connect with customers. In addition the team invested itsenergy on upgrading the equipment for improved productivity and superior product quality.

MACHINE TOOL DIVISION

The division improved upon its performance of the previous yearregistering an increase in volumes and growing acceptance of its value-added products bycustomers from the automotive and general engineering sectors.

The division reported a turnover of र60282.30 Lakhs in FinancialYear 2018-19 as against र 43995.30 Lakhs registered in 2017-18 an increase of 37.02% over the previous year.

Even as demand from the user sectors remained healthy the teamcontinued internalizing the Accelerating Competency for Manufacturing Excellence (ACME)philosophy into an operational culture. Moreover it invested its energies in automatingprocesses that would facilitate in improving machine performance and reliability. Furtherthe team leveraged technology for improving its customer service.

The Company continues with its focus on Innovation andemulation/adoption of best of practices in manufacturing. This would enable this divisionto respond positively to any emerging opportunity.

FOUNDRY DIVISION

It was a transformative year for the Foundry division. For theCompany's unit emerged as one among the cleanest foundry units in India; it receivedthe GREENCO certification making it one of the very few foundries in India with thiscertification.

Sustained investment of funds and man-hours in patiently upgradingprocess and products to global benchmarks yielded heartening returns as the divisioncontinued to scale up the performance barometer. The division reported a turnover of र13279.98 Lakhs in 2018-19 against र 9566.56 Lakhs in 2017-18 registering anincrease of 38.82%. Exports accounted for 28% of the division's turnover.

The Company successfully completed the consolidation exercise.Moreover the team worked on benchmarking its processes to global standards which resultedin product approval from leading global brands – these could result in reasonablebusiness in the current year.

Going forward the team is looking to enhance capacity at its operatingunits through line-balancing and de-bottlenecking in keeping with the growing demand fromthe in-house and external customers.

RENEWABLE ENERGY DIVISION

The Company has a policy of tapping non-conventional and renewableresources of energy namely wind/solar power to augment the sources from which it meets itsenergy requirements.

As on 31st March 2019 the Company has installed 28 Wind EnergyGenerators (WEG) with a total capacity of 36.80 MW. Cumulatively wind mills have generated782 Lakhs units of power during 2018-19.

On 17th March 2019 the Company has inaugurated a 10 MW of Solar PowerGenerating facility. As on 31st March 2019 this facility has generated 9 Lakhs units ofpower.

About 84% of renewable energy so generated has been captively consumedby all the divisions of the Company and thereby helped to reduce the power cost.

ADVANCED TECHNOLOGY CENTRE

In less than a decade of being established the Advanced TechnologyCentre (ATC) division has come a long way from making standard components to makingcritical sub-assemblies for leading OEMs in the aerospace sector in India and across theglobe.

Advanced Technology Centre clocked a turnover of र2292.85 Lakhsduring the current financial year as against र3390.35 Lakhs achieved in 2017-18. Jobwork income during the period under review was र 1163.70 Lakhs as against र871.42 Lakhs in the previous year.

Moreover the team developed and delivered critical components toimportant global customers which could result in healthy volumes over the coming years.

To sustain business growth the team made two important investments in2018-19

• Invested in sophisticated machining centers to create thecapability to develop critical components using special alloy metals;

• Invested in a composite facility – this enables thedivision to manufacture a wider range of products.

These initiatives will facilitate in widening the division'sopportunity matrix over the coming years.

REAL ESTATE ACTIVITY

The Elan Project at Parasakthi Nagar Ganapathy Coimbatore promoted bythe Company in association with M/s. Sobha Limited (developer) is progressing. Spread over4.76 acres of land this project is for construction of 236 residential apartmentsconsisting of 1 BHK 2 BHK and 3 BHK. The Company has a revenue share of 30% in theproject. As on date about 175 units have been sold resulting in a revenue of र3495.10Lakhs for the Company.

On account of demand recession in the Realty sector the sale ofapartments has slowed down. However the developer is confident of selling the remainingunits in the near future.

EXPORTS

During the year under review the Company has achieved an exportturnover as indicated below:

( ` in Lakhs)

Division FY 2018 – 19 FY 2017 – 18
Textile Machinery1 70675.09 47695.58
CNC Machine 210.06 68.30
Tools
Castings 3746.80 2782.84
Aerospace Parts 2154.00 1057.58
Total Exports 76785.95 51604.30

1 Includes supplies to turnkey projects

Export of Textile Machinery as stated above includes exports worth र 1971.93 Lakhs made to the wholly owned subsidiary LMW Textile Machinery (Suzhou)Co. Ltd. China. Amongst other countries the Company's products are primarilyexported to Kenya Turkey Bangladesh Pakistan Nepal Indonesia and Vietnam.

RESEARCH AND DEVELOPMENT

The Research and Development efforts of the Company are focused on:

1. Developing eco-friendly sustainable energy efficient low carbonfoot print technology.

2. Developing technology for production of innovative machinery.

3. Developing end-products at optimal cost.

Separate Research and Development units have been established for thedevelopment of Textile Machinery and CNC Machine Tools. Both these facilities have beenrecognized by the Department of Science and Technology Government of India as in-house R& D facilities.

During the year under review the Company has filed applications for 10new patents and LMW Textile Machinery (Suzhou) Company Limited subsidiary of the Companyhas filed 3 new utility model patent applications.

AWARDS

During the year 2018-19 the Company has bagged the following Awards:

1. TMMA Special Export Award 2017-18 - Spinning Machinery Sector

2. EEPC Southern Regional Award 2016-17 Star Performer - LargeEnterprise

3. R&D Award from TMMA – for Draw frame LDF 3

INDUSTRIAL RELATIONS

Relationship with employees was cordial throughout the year.

SUBSIDIARY COMPANY

LMW TEXTILE MACHINERY (SUZHOU) CO. LTD. (LMWTMSCL)

The turnover of the Company during the year under review was र11150.80 Lakhs as against र 14987.35 Lakhs achieved during the previous year. Duringthe year the Company has incurred a Net Loss of र448.17 Lakhs as against a Net Profitof र304.11 Lakhs during the previous year.

The consolidated financial statements incorporating the financialstatements of the wholly owned subsidiary company is attached to the annual report asrequired under the Accounting Standard and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The English translated version of the standalone AnnualFinancial Statements of the wholly owned subsidiary is posted in the Company'swebsite www.lmwglobal.com.

Besides LMWTMSCL the Company does not have any other Joint Venture /Associate Company.

2. Extracts of Annual Return

As per the requirements of Section 92 of the Companies Act 2013 readwith Rule 12 of the Companies (Management & Administration) Rules 2014 the extract ofannual return in the prescribed Form MGT 9 is annexed hereto as Annexure 2 forming part ofthe report. A copy of the Annual Return of the Company in prescribed format is availableat the Company's website www.lmwglobal.com

3. Number of Meetings of the Board

During the year under review four (4) meetings of the Board ofDirectors were held. Further details regarding number of meetings of Board of Directorsand committees thereof and the attendance of the Directors in such meetings are providedunder the Corporate Governance Report.

4. Directors' Responsibility Statement

The Directors' based on representation received from theOperating Management confirm that:

a. In the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures;

b. 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 and loss of the Company for that period;

c. Have taken proper and sufficient care for 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. Have prepared the annual accounts on a going concern basis;

e. Have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f. Have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and are operating effectively.

5. Share Capital and Buy-Back of Shares

In terms of Resolution passed by the Board of Directors at theirmeeting held on 22nd October 2018 and after complying with necessary requirements of SEBI(Buy- Back of Securities) Regulations 2018 the Company had bought back 272504 EquityShares of र 10/- each at an average cost of र5852.47/- aggregating to र15948 Lakhs through Stock Exchanges from the existing shareholders / beneficial ownersexcluding the promoter / promoter group. The Buy-Back commenced on 2nd November 2018 andclosed on 1st January 2019. During the Buy-Back equity shares were bought on the StockExchanges and extinguished in tranches in compliance with the SEBI (Buy-Back ofSecurities) Regulations 2018 and SEBI (Depositories and participants) Regulations 2018.

As on 31st March 2019 the authorized issued subscribed and paid-upshare capital is as follows:

Authorized Share Capital 50000000 Equity Shares of र 10/- each.
Issued Subscribed and Paid-up Equity Share Capital 10683000 Equity Shares of र 10/- each.

6. Nomination and Remuneration Committee and Policy

Nomination and Remuneration Committee of Directors has been formed andhas been empowered and authorized to exercise power as entrusted under the provisions ofCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (both as amended from time to time). The Company has a policy onDirectors' / Senior Management appointment and remuneration which specifies criteriafor determining qualification positive attributes for Senior Management and Directors.The policy also specifies the criteria for determination of independence of a Directorand other matters provided under sub-section (3) of Section 178. The Nomination andRemuneration Policy is available at the Company's website www.lmwglobal.com.

7. Declaration by Independent Directors

The Independent Directors have submitted their disclosures to the Boardthat they fulfill all the requirements as stipulated in Section 149(6) of the CompaniesAct 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 so as to qualify themselves to act as IndependentDirectors under the provisions of the Companies Act 2013 read with the relevant rulesmade thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. Further they have also declared that they are not aware of any circumstance orsituation which exist or may be reasonably anticipated that could impair or impact theirability to discharge their duties with an objective independent judgment and without anyexternal influence.

8. Explanation and Comments on Audit Report

The report of Statutory Auditors (appearing elsewhere in this AnnualReport) and that of the Secretarial Auditors (annexed hereto as Annexure 3) areself-explanatory having no adverse comments. Further the Secretarial Compliance Reportfor the year ended 31st March 2019 issued by the Practicing Company

Secretary pursuant to Regulation 24A of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 has been filed with BSE Limited and theNational Stock Exchange of India Limited. A copy of the same is available on theCompany's website: www.lmwglobal.com. There were no instances of fraud reported bythe Auditors to the Central Government or to the Audit Committee of the Company asindicated under the provisions of Section 143 (12) of the Companies Act 2013.

9. Particulars of Loans/Guarantee/ Investments/Deposits

The Company has no Inter-Corporate Loans/ Guarantees. Investments ofthe Company in the shares of other companies is provided under notes to Balance Sheetappearing elsewhere in this Annual Report. The amount of investment made by the companydoes not exceed the limits as specified in Section 186 of the Companies Act 2013.

The Company has not accepted any Fixed Deposits.

10. Particulars of Contracts with Related Parties

All the transaction of the Company with related parties are atarms' length and have taken place in the ordinary course of business. None of thetransaction with related parties are material transactions. Since there are notransactions that are not in arms' length and material in nature disclosure underAOC 2 does not arise. A copy of the Related Party Transaction Policy is also available atthe Company's website www.lmwglobal.com.

11. Material Changes

There are no material change or commitments after closure of thefinancial year till the date of this report.

12. Conservation of Energy Technology Absorption & ForeignExchange

The disclosure under Rule 8(3) of Companies (Accounts) Rules 2014 areas under:

STATEMENT FOR CONSERVATION OF ENERGY

Sl. No. Particulars Related Disclosures
(A) Conservation of Energy
(i) the steps taken or impact on conservation of energy; sources of energy; Company has invested in energy conservation devices to save power as detailed in point (iii) below.
(ii) the steps taken by the Company for utilizing alternate sources of energy Company has installed windmills with a capacity of 36.80 MW. The Company on 17th March 2019 has inaugurated photo-voltaic solar power generating facility with installed capacity of 10 MW. Uses electricity generated from renewable sources for captive power consumption.
(iii) the capital investment on energy conservation equipment An amount of र46.27 Lakhs invested during 2018- 19 for replacing 400 watt fluorescent lamps with 132 watt LED lighting. Also र 232 Lakhs was saved by purchasing third party power through bidding on energy exchanges. New 10 MW Solar power generating plant is installed at a cost of र 5271 Lakhs.

TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

(B1) Technology Absorption – Textile Machinery Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects
and specializations / skill building exercises
2. In-depth IPR analysis and review
3. Theoretical simulation
(ii) Benefits derived like product improvement cost reduction product development or import substitution; Development of machinery with innovative features resulting in improved performance cost effectiveness localization of content and user- friendliness to the end user.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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) Expenditure incurred on Research and Development Capital Expenditure : र 104.52 Lakhs
Revenue Expenditure : र2201.09 Lakhs
Total Expenditure : र2305.61 Lakhs
B2 Technology Absorption – Machine Tool Division
(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects
and specializations / skill building exercises
2. In-depth IPR analysis and review
3. Theoretical simulation

 

(ii) Benefits derived like product improvement cost reduction product development or import substitution; Product improvement & Cost Reduction Measures like development / improvement of spindles improved shell cover design development of turret was done throughout the year across all the products.
Product development:
4 New products were commercialized during the year namely LL25TM L7 (F) LTV 30M (F) LL20TM L10 & LL30T L7 (CNC Turning Center)
Other product developments:
CNC Turning Centre – 3 number Vertical
Machining Centre – 4 numbers Horizontal
Machining Centre – 3 numbers CNC Vertical
Machining Centre with 5 Axis – 1 number and
CNC Turning Center with in-built automation - 1 number.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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 reason thereof;
(iv) Expenditure incurred on Research and Development Capital Expenditure : Nil
Revenue Expenditure : र341.30 Lakhs
Total Expenditure : र341.30 Lakhs
B3 Technology Absorption – Foundry Division
(i) Efforts made towards technology absorption; Technical guest lectures in various subjects and specializations / skill building exercises
(ii) Benefits derived like product improvement cost reduction product development or import substitution; Implementation of GREENCO Practices.
As a part of the process initiatives are carried out for better energy efficiency water conservation use of renewable energy reduction of greenhouse gas emission material conservation waste management green supply chain life cycle assessment for our foundry units.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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 reason thereof;
(iv) Expenditure incurred on Research and Development Nil

B4 Technology Absorption – Advanced Technology Centre

(i) Efforts made towards technology absorption; Technical guest lectures in various subjects and specializations / skill building exercises
(ii) Benefits derived like product improvement cost reduction product development or import substitution; Manufacture / development of components and sub-assemblies using metal / composite materials.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(e) the details of technology imported;
(f) the year of import;
(g) whether the technology has been fully absorbed;
(h) if not fully absorbed areas where absorption has not taken place and the reason thereof;
(iv) Expenditure incurred on Research and Development Nil

FOREIGN EXCHANGE OUTGO AND EARNINGS:

` ( in Lakhs)
Foreign Exchange Earned 76985.54
Foreign Exchange Used 31464.53

13. Risk Management

The Company follows a comprehensive and integrated risk appraisalmitigation and management process. The identified elements of Risk and Risk Mitigationmeasures are periodically reviewed and revised by the Board of Directors. The Board ofDirectors have also constituted a Risk Management Committee to oversee the Risk Managementprocess.

14. Corporate Social Responsibility (CSR)

The Company has constituted a CSR Committee of Board of Directors andhas adopted a CSR Policy. The same is posted in the Company's websitewww.lmwglobal.com. A report in prescribed format detailing the CSR expenditure for theyear 2018-19 is attached herewith as Annexure 4 and forms part of this report.

15. Evaluation of Board's Performance

On the advice of the Board of Directors the Nomination andRemuneration Committee of the Board of Directors of the Company have formulated thecriteria for the evaluation of the performance of each individual Director Board as awhole Committees of the Board Independent Directors Non-Independent Directors and theChairman of the Board based on the Criteria of evaluation as specified by SEBI CircularSEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2017. Based on these revised criteriathe performance evaluation process has been undertaken. The Independent Directors of theCompany had also convened a separate meeting for this purpose on 4th February 2019. Allthe results of evaluation has been communicated to the Chairman of the Board of Directors.

16. Additional Information

As per Rule 8(5) of the Companies (Accounts) Rule 2014 the followingadditional information is provided:

(i) The financial summary or highlights The financial highlights including State of Affairs of the Company Dividend and Reserve have been provided elsewhere in this report
(ii) The change in the nature of business if any The details of Directors or Key Managerial There is no change in the business line of the Company.
(iii) Personnel who were appointed or have resigned during the year None
(iv) The names of companies which have become or ceased to be its Subsidiaries Joint Ventures or Associate Companies during the year None
(v) The details relating to deposits covered under Chapter V of the Act The Company has not accepted any amount which falls under the purview of Chapter V of the Act.
(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 controls with reference to the Financial Statements Procedures are set to detect and prevent frauds and to protect the organization's resources both physical (eg. machinery and property) and intangible (e.g. reputation or Intellectual property such as trademarks). The financial statements are prepared in accordance with the Indian Accounting Standards issued by the Ministry of Corporate Affairs.
(ix) Maintenance of cost records under sub-section (1) of section 148 of the Companies Act 2013 Pursuant to the provisions of Section 148 (1) of the Companies Act 2013 read with Companies (Cost Records and Audit) Rules 2014 the Company was required to maintain cost records. Accordingly the Company has duly made and maintained the Cost Records as mandated by the Central Government.

17. Directors:

Sri K Soundhar Rajhan (DIN:07594186) Wholetime Director (designated asDirector Operations) who retires by rotation at the ensuing Annual General Meeting beingeligible offers himself for reappointment. The Board recommends his reappointment in theforthcoming Annual General Meeting.

The tenure of Sri Aditya Himatsingka (DIN: 00138970) Dr Mukund GovindRajan (DIN: 00141258) and Sri Basavaraju (DIN: 01252772) Independent Directors of theCompany expires at close of business hours on 5th August 2019. Except for Sri BasavarajuIndependent Director who has been associated as a Director on the Board of the Companysince 2006 initially as a Nominee of Life Insurance Corporation of India and later as anIndependent Director since the commencement of Companies Act 2013 the Board of Directorsat their meeting held on 20th May 2019 have recommended the reappointment of Sri AdityaHimatsingka and Dr Mukund Govind Rajan as Independent Directors for a second term of fiveconsecutive years commencing from close of business hours of 5th August 2019.

Further the tenure of Justice Smt. Chitra Venkataraman (Retd.) (DIN:07044099) as an Independent Director of the Company expires at close of business hours on1st February 2020. The Board of Directors at their meeting held on 20th May 2019 haverecommended the reappointment of Justice Smt. Chitra Venkataraman (Retd.) as anIndependent Woman Director for a second term of five consecutive years commencing fromclose of business hours of 1st February 2020.

Your Directors recommend the re-appointment of Sri Aditya Himatsingka(DIN: 00138970) Dr Mukund Govind Rajan (DIN: 00141258) and Justice Smt. ChitraVenkataraman (Retd.) (DIN: 07044099) in the forthcoming Annual General Meeting.

18. Audit Committee / Whistle Blower Policy

The Audit Committee was formed by the Board of Directors and itconsists of:

1. Dr. Mukund Govind Rajan Chairman (Non-Executive – Independent)

2. Sri Aditya Himatsingka Member (Non-Executive – Independent)

3. Sri Basavaraju Member (Non-Executive – Independent)

The Board has accepted the recommendations of the committee and therewere no incidence of deviation from such recommendations during the financial year underreview. The Company has devised a vigil mechanism in the form of a Whistle Blower Policyin pursuance of provisions of Section 177(10) of the Companies Act 2013 and detailsthereof is available on the Company's website at www.lmwglobal. com During the yearunder review there were no complaints received under this mechanism.

19. Prevention of Sexual Harassment of Women at the Workplace

The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. Information regarding thesame is also provided in the Corporate Governance Report forming part of Directors'Report.

20. Listing of Shares

The shares of the Company are listed in BSE Limited Mumbai and theNational Stock Exchange of India Limited Mumbai. Applicable listing fees have been paidup to date. The shares of the Company have not been suspended from trading at any timeduring the year by the concerned Stock Exchanges.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) and Rule 5(1) of Companies(Appointment and Remuneration of Managerial Personnel) Rules: a) The ratio of theremuneration of each Director to the median employee's remuneration for the financialyear and such other details as prescribed is as given below:

Director Category Ratio
Sri Sanjay Jayavarthanavelu Executive – Chairman and Managing Director 130.30
Sri S Pathy Non-Executive – Non-Independent 1.14
Sri Basavaraju Non-Executive – Independent 1.14
Sri Aditya Himatsingka Non-Executive – Independent 1.14
Dr. Mukund Govind Rajan Non-Executive – Independent 1.14
Sri V Sathyakumar1 Non-Executive – Non-Independent Nominee of LIC 1.14
Justice (Smt) Chitra Venkataraman (Retd) Non-Executive – Independent 1.14
Sri Arun Alagappan Non-Executive – Independent 1.14
Sri K Soundhar Rajhan Executive – Non-Independent 22.35

Note: Sitting fees paid to the Directors has not been considered asremuneration 1Amount paid to Life Insurance Corporation of India.

b) The percentage increase in remuneration of each Director ChiefFinancial Officer Company Secretary in the financial year:

Director Category % Increase
Sri Sanjay Jayavarthanavelu Executive – Chairman and Managing Director -0.06
Sri S Pathy Non-Executive – Non-Independent 50.00
Sri Basavaraju Non-Executive – Independent 50.00
Sri Aditya Himatsingka Non-Executive – Independent 50.00
Dr. Mukund Govind Rajan Non-Executive – Independent 50.00
Sri V Sathyakumar1 Non-Executive – Non-Independent Nominee of LIC 50.00
Justice (Smt) Chitra Venkataraman (Retd) Non-Executive – Independent 50.00
Sri Arun Alagappan Non-Executive –Independent 50.00
Sri K Soundhar Rajhan2 Executive – Non-Independent Not comparable
Key Managerial Personnel Category
Sri C B Chandrasekar Chief Financial Officer 19.46
Sri C R Shivkumaran Company Secretary 19.36

Note: For this purpose Sitting fees paid to the Directors has not beenconsidered as remuneration. The remuneration details are for the year 2018-19 (PreviousYear; 2017-18).

1 Amount paid to Life Insurance Corporation of India.

2 Sri. K Soundhar Rajhan was appointed as Director - Operationson 01st November 2017.

c) The Percentage increase in the median remuneration of employees inthe financial year 1.86%

d) The number of permanent employees on the rolls of company: 3248

e) Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in theManagerial Remuneration: 2.13%

f) Afirmation that the remuneration is as per the remuneration policyof the Company: Yes

g) Particulars of Employees as per [Rule 5(2) and Rule 5(3) ofCompanies (Appointment and Remuneration of Managerial Personnel Rules) 2014]:

Particulars of Employees whose salary is not less than Rupees One Croreand Two Lakhs:

Table 11 2

Name (Age in Years) Designation Gross Remuneration Paid (in `) Qualification Date of commencement of employment (experience in years) Previous Employment
Sri Sanjay Jayavarthanavelu (50 years) Chairman and Managing Director 85477344 MBA. 3rd June 1994 (24 Years) -
Sri K Soundhar Rajhan (70 years) Director Operations 14658764 B.Sc. 9th July 1973 (45 Years) The Kovilpatti Lakshmi Roller Flour Mills Limited

1 Employment is contractual. The remuneration includesCompany's contribution to provident fund gratuity and perquisites.

2 The remuneration details are for the financial year 2018-19 andall other particulars are as on 31st March 2019. Besides the above there are no otheremployees in receipt of Remuneration/Salary for any part of the year at a rate which inthe aggregate was not less than र850000/- per month.

Particulars of Top Ten employees in terms of remuneration drawn:

Table 2: Employed for full year1 2 3 & 4

Name (Age in Years) Designation Gross Remuneration Paid (in `) Qualification Date of commencement of employment (experience in years) Previous Employment
Sri N Krishna Kumar (61 years) Senior Vice President TQM 7724770 BE. ME. 1st July 1983 (35 Years) -
Sri V Venugopal (61 years) Senior Vice President Foundry 6879553 BE. ME. MBA. MS. 5th August 1981 (37 Years) -
Sri C B Chandrasekar (59 Years) Chief Financial Officer 6194417 B Com. ACS. ACMA. 3rd April 1992 (26 Years) Elgi Equipments Limited
Sri A V Subramanian (65 Years) President ATC 5689624 B. Tech M. Tech MMS. 17th August 2018 Indian Army
Sri. M Sankar5 (61 Years) President TMD Operations 5573871 B. Tech. 21st August 1985 (33 Years) Star Marketing Services Limited
Sri T Sundaram (58 Years) Vice President SCM 4682860 DME. BE. PGDC. MS. 18th July 1980 (38 Years) -
Sri C Arunachalam (54 Years) Vice President TMD Global 4682860 B. Tech. MBA. 3rd February 1992 (27 Years) J K Synthetics Limited
Sri Indraneel Bhattacharya (54 Years) Sales Vice President MTD Marketing & Sales 4682860 DME. 8th February 1993 (26 Years) Batliboi & Company Limited
Sri P Ananthan (50 Years) Senior General Manager SCM 4106235 BE. 17th August 1989 (29 Years) -
Sri V Senthil2 (40 Years) Senior General Manager Finance 3944028 B Com. ACA. 23rd January 2015 (4 Years) LMW Textile Machinery (Suzhou) Company Limited
Sri K R Ananthakrishnan (53 Years) Senior General Manager ATC 3594627 BE. 27th October 2017 (1 Year) Maini Precision Products P Ltd
Sri S Rajasekaran (51 Years) Senior General Manager TMD R&D 3560352 DTT. AMIE. M. Tech. DBM. 2nd May 1986 (32 Years) VR Textiles

Notes for Table 2:

1 The remuneration includes Company's contribution toprovident funds gratuity and perquisites.

2 Except Sri V Senthil Senior General Manager Finance who isthe relative (daughter's husband) of Sri K Soundhar Rajhan Director Operations noother employee is a relative (in terms of the Companies Act 2013) of any other Directorof the Company.

3 No employee of the Company is covered by the Rule 5(2) (iii) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 that isemployee holding by himself or with his family shares of 2% or more in the Company anddrawing remuneration in excess of the remuneration paid to Chairman and Managing Director.

4 The remuneration details are for the financial year 2018-19 andall other particulars are as on 31st March 2019.

5 Sri M Sankar was deputed to LMW Textile Machinery (Suzhou)Company Limited and rejoined Company with effect from 12th September 2018.

22. Corporate Governance:

As per Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Corporate Governance practicesfollowed by the Company is provided elsewhere in this Report. A report of the StatutoryAuditors of the Company confirming the compliance of conditions of Corporate Governance asrequired by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isannexed to this report as Annexure 5 and forms a part of the report

23. Auditors

Statutory Auditors

M/s. S. Krishnamoorthy & Co. Chartered Accountants with Sri K.Raghu as signing Partner were appointed as Auditors of the Company from the financial year2016-17 at the AGM held during 2016 for a term of five financial years commencing from2016-17 to 2020-21. M/s. Krishnamoorthy & Co. Chartered Accountants Coimbatore withSri. K. Raghu as signing partner have consented and confirmed their eligibility and desireto continue as Statutory Auditors of the Company for the Financial Year 2019-20.

Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 (as amended) the Directors on therecommendation of the Audit Committee have appointed Sri A. N. Raman Practicing Cost andManagement Accountant Chennai as the Cost Auditor of the Company for the Financial Year2019-20. The remuneration payable to the Cost Auditor is subject to ratification ofShareholders at the ensuing Annual General Meeting.

Secretarial Auditor

PursuanttoProvisionsofSection204oftheCompanies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board ofDirectors have appointed M/s. MDS & Associates Coimbatore Company Secretaries inPractice to undertake the Secretarial Audit of the Company for the financial year 2019-20.

24. Business Responsibility Report

The SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 mandates inclusion of the Business Responsibility Report (BRR) as part of the AnnualReport for the top 500 listed entities based on market capitalization. In compliance withthe regulation the BRR is enclosed as Annexure 6 and forms part of the Annual Report.

25. Compliance with Secretarial Standards

The Directors have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards and that such systems are adequate andoperating effectively.

26. Acknowledgements

Your Directors thank all customers' for their continued supportand patronage.

The Directors also thank the Company's Bankers Selling AgentsVendors Central and State Governments for their Valuable assistance.

The Directors wish to place on record their appreciation for thecooperation and contribution made by the employees at all levels towards the progress ofthe Company.

By order of the Board
Sanjay Jayavarthanavelu
Coimbatore

Chairman and Managing Director

20th May 2019 (DIN: 00004505)