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Lakshmi Machine Works Ltd.

BSE: 500252 Sector: Industrials
NSE: LAXMIMACH ISIN Code: INE269B01029
BSE 00:00 | 21 Jan 5049.70 -47.50
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NSE 00:00 | 21 Jan 5052.35 -38.55
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OPEN 5125.70
PREVIOUS CLOSE 5097.20
VOLUME 1139
52-Week high 5346.00
52-Week low 2001.00
P/E 473.71
Mkt Cap.(Rs cr) 5,393
Buy Price 5040.00
Buy Qty 1.00
Sell Price 5135.00
Sell Qty 5.00
OPEN 5125.70
CLOSE 5097.20
VOLUME 1139
52-Week high 5346.00
52-Week low 2001.00
P/E 473.71
Mkt Cap.(Rs cr) 5,393
Buy Price 5040.00
Buy Qty 1.00
Sell Price 5135.00
Sell Qty 5.00

Lakshmi Machine Works Ltd. (LAXMIMACH) - Director Report

Company director report

Dear Shareholders

The Board of Directors of your Company are pleased to present the Annual Report on thebusiness of the Company along with the Standalone summary of financial statements for theyear ended 31st March 2020.

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

The Board has prepared its report based on the standalone financial statements of theCompany and the Annual Report contains a separate section wherein a report on theperformance and financial position of its Wholly Owned Subsidiary Company is presented inForm AOC-1.

Financial Summary/Highlights and transfer to General Reserve

(Rs in Lakhs)

Particulars Current Year 2019-20 Previous Year 2018-19
1 Revenue from Operation 166373.16 274198.32
2 Operating Expenses 154696.84 236847.80
3 Exceptional Items 209.76 3716.75
4 Gross Profit 11466.56 33633.77
5 Depreciation 5025.90 4983.47
6 Profit Before Tax 6440.66 28650.30
7 Provision for Tax 1940.90 9722.32
8 Net Profit after Tax 4499.76 18927.98

Transfer to Reserve

The Company has transferred a sum of Rs 450 Lakhs out of the current year profits tothe General Reserve.

Dividend

The Board recommends a dividend of Rs 10/- per equity share having face value of Rs10/- each (100%)on the equity share capital of Rs 106830000/- for the year ended on31st March 2020 aggregating to Rs 1068.30 Lakhs. As per the Finance Act 2020 membersmay note that the said Dividend is taxable in the hands of shareholders. The totaldividend payout works out to 23.74% of the standalone Net Profit after Tax. The dividendon equity shares is subject to the approval of the shareholders at the ensuing AnnualGeneral Meeting.

The unclaimed Dividend relating to the financial year 2012-13 is due for remittance inSeptember 2020 to the Investor Education and Protection Fund (IEPF) established by theCentral Government.

During the year under review as per the requirements of the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (IEPFRules) 17058 equity shares of Rs 10/- each on which dividend had remained unclaimed for aperiod of 7 years have been transferred to the credit of Demat Account identified by theIEPF Authority. As on date of this report the Company has transferred 42113 Equityshares 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 8thJuly 2016 the Company has formulated a Dividend Distribution Policy which has been dulyapproved by the Board of Directors. A copy of the Dividend Distribution Policy isavailable at the Company website: www.lmwglobal. com and is also annexed herewith asAnnexure 1 forming part of this report.

STATE OF AFFAIRS OPERATIONS

The economic downturn that began in 2018-19 continued through 2019-20 pulling India'sGDP growth to an 11-year low of 5% mainly because of poor show by the manufacturing andconstruction sectors. Volatility in the financial market triggered by a spate of defaultsworsened the country's economic woes with credit squeeze suppressing business activitiesand public consumption.

The subdued economic environment affected the key user industries for LMW such astextiles automobiles and general engineering. Muted growth in the market also hit thedemand. All these had an inevitable impact on the Company's performance during the yearunder review.

Overall the Company's gross turnover decreased by 40.75% from Rs 254620.31 Lakhs in2018-19 to Rs 150863.92 Lakhs in 2019-20; the Profit before exceptional items and Taxstood at Rs 6650.42 Lakhs as against Rs 32367.05 Lakhs in 2018-19 a decrease of 79.45%over the previous year.

The Net Profit after Tax for financial year 2019 -20 was Rs 4499.76 Lakhs as againstRs 18927.98 Lakhs for financial year 2018-19.

The Company however made the best use of this lean market. It moved ahead with itsTQM journey to transform it into an organisational culture. The management broke down theorganisational objectives into divisional goals which were further cascaded to therespective functions – providing complete clarity of what needs to be done to meetthe aspirations of the organisation. This helped identify and plug gaps in the systemsprocesses skill sets and products which have kept LMW ready to take a plunge whenevergreen shoots of revival show up.

TEXTILE MACHINERY DIVISION (TMD)

The Indian spinning industry went through a difficult situation throughout 2019-20.Just when the market was showing some indications of a revival the COVID-19 pandemicbroke out in December 2019 ravaging economies across the world through the next severalmonths.

Overall the financial performance of the Textile Machinery division remained muted atRs 110796.80 Lakhs as against Rs 178765.18 Lakhs registered in 2018-19 a decrease of38% over the previous year.

The team worked through the year to improve its product offering with better features.It also streamlined its systems and processes to enhance man-machine productivity andoptimise cost and time for machine manufacture.

MACHINE TOOL DIVISION (MTD)

Fiscal 2019-20 was one of the worst phases in the history of Indian automotive sectorwith most OEMs reporting month-on-month decline in sales numbers. This has been extremelydamaging for the auto sector clients. The automobile slump forced customers to putbig-ticket purchases on hold.

The division reported a turnover of Rs 28931.93 Lakhs in Financial Year 2019-20 asagainst Rs 60282.30 Lakhs registered in 2018-19 a decrease of 52% over the previousyear.

The Company utilised this slump period in reframing its strategy to de-risk thebusiness from an over-dependence on the auto sector. The team shifted focus on sectorswhere consumption pattern stayed more uniform than that of automobile.

LMW explored segments like aerospace manufacturing medical devices defence powergeneration off-road equipment and electronic hardware. The team customised existingmachines and developed machines for the non-automotive sector applications.

The team institutionalised the Theory of Constraints (ToC) across its supply chainwhich streamlined inventory availability while optimising inventory costs. It also tweakedits business development strategy to ensure that its sales force remains focused ongenerating and capitalising on emerging opportunities.

FOUNDRY DIVISION (FDY)

Lacklustre demand from the TMD and MTD segments – the two internal users ofcastings – dampened its capacity utilisation. The global economic slowdown tooweighed heavily on the performance of the division as exports to global OEMs remainedtepid.

The division reported a turnover of Rs 8822.28 Lakhs in 2019-20 against Rs 13279.98Lakhs in 2018-19 registering a decrease of 34%. Exports accounted for 40% of thedivision's turnover.

The team utilised the dull external environment to strengthen its core functions.Leveraging the ACME principles it implemented multiple initiatives to optimise itsprocessing cycle times. It invested in robotics to replace tedious manual work so that itcould deploy its human capital in value-added operations. The team made an all-out effortto create awareness among global marques with considerable success.

It also worked towards a better environment safety and health parameters to retain theGREENCO Gold Certification it received in 2018-19 with an aim to secure the PlatinumCertification in the short-term.

ADVANCED TECHNOLOGY CENTRE (ATC)

The ATC vertical reported a moderate performance during the year under review as itconsolidated its approach of manufacturing complex parts and sub-assemblies.

Advanced Technology Centre clocked a turnover of Rs 2312.92 Lakhs during the currentfinancial year as against Rs 2292.85 Lakhs achieved in 2018-19. Other income during theperiod under review was B1012.73 Lakhs as against B1163.70 Lakhs in the previous year.

The fiscal 2019-20 was important for ATC as it made considerable headway inestablishing itself as a part of the global aerospace supply chain network. The Companycommenced operations of its composite unit in 2019. Within the same year the Company wasable to secure orders from several domestic players and an international aerospace major.Also in the metallic component segment the team graduated from standard components tomore detailed and complex components and sub-assemblies.

As a strategic initiative the Company created separate cells for key customers with anobjective to improve its delivery commitment. This has ushered in an increased businessvolume which is expected to be delivered over the coming years.

REAL ESTATE ACTIVITY

The Elan Project at Parasakthi Nagar Ganapathy Coimbatore has been promoted by theCompany in association with M/s. Sobha Limited (Developer). Spread over 4.76 acres of landthis project is for construction of 236 residential apartments consisting of 1 BHK 2 BHKand 3 BHK. The Company has a revenue share of 30% in the project. As on date about 207units have been sold resulting in a revenue of Rs 4319 Lakhs for the Company.

The Company is confident of selling the remaining apartments in the near future as theDeveloper is taking adequate steps to sell them.

RENEWABLE ENERGY DIVISION

The Company has a policy of tapping non- conventional and renewable resources of energynamely wind/solar power to augment the sources from which it meets its energyrequirements.

As on 31st March 2020 the Company has installed 28 Wind Energy Generators (WEG) with atotal capacity of 36.80 MW. Cumulatively windmills have generated 731 Lakhs units of powerduring 2019-20.

The Company also has a 10 MW of Solar Power Generating facility. As on 31st March 2020this facility has generated 220 Lakhs units of power.

About 97% of energy demand has been met through renewable energy and thereby helped toreduce the power cost.

EXPORTS

During the year under review the Company has achieved an export turnover as indicatedbelow:

Division FY 2019-20 FY 2018-19
Textile Machinery 25827.02 70675.09
CNC Machine Tools 161.97 210.06
Castings 3490.95 3746.80
Aerospace Parts 1959.99 2154.00
Total Exports 31439.93 76785.95

Export of Textile Machinery as stated above includes exports worth Rs 1013.26 Lakhsmade to the wholly owned subsidiary company LMW Textile Machinery (Suzhou) Co. Ltd.China. Amongst other countries the Company's products are primarily exported to KenyaTurkey 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 carbon footprinttechnology.

2. Developing technology for production of innovative machinery.

3. Developing end-products at optimal cost.

Separate Research and Development units have been established for the development ofTextile Machinery and CNC Machine Tools. Both these facilities have been recognized by theDepartment of Scientific and Industrial Research Government of India as in-house R &D facilities.

During the year under review the Company has filed applications for 9 new patents.

AWARDS

During the year 2019-20 the Company has bagged the following Awards:

1. EEPC Regional Award under category "Star Performer-Large Enterprises" forthe year 2017-18

2. TMMA "Segment Export Award" under the category Textile Machinery Sectorfor the year 2018-19

3. Gargi Huttenes-Albertus Green Foundry Award from Indian Institute of FoundrymenCoimbatore Chapter

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 Rs 1909.61 Lakhs asagainst Rs 11150.80 Lakhs achieved during the previous year. During the year the Companyhas incurred a Net Loss of Rs 1618.51 Lakhs as against a Net Loss of Rs 448.17 Lakhsduring the previous year.

The consolidated financial statements incorporating the financial statements of thewholly owned subsidiary company is attached to the Annual Report as required under theapplicable Accounting Standard(s) 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's websitewww.lmwglobal. com.

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

2. Extracts of Annual Return

As per the requirement of Section 92 of the Companies Act 2013 read with Rule 12 ofthe Companies (Management & Administration) Rules 2014 the extract of Annual Returnin the prescribed Form MGT 9 is annexed hereto as Annexure 2 forming part of the report. Acopy of the Annual Return of the Company in prescribed format is available at theCompany's website www.lmwglobal.com.

3. Number of Meetings of the Board

During the year under review four (4) meetings of the Board of Directors were held.Further details regarding number of meetings of Board of Directors and Committees thereofand the attendance of the Directors in such meetings are provided under the CorporateGovernance Report.

4. Directors' Responsibility Statement

The Directors' based on representation received from the Operating Management confirmthat:

a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. Have selected such accounting policies and applied them consistently and madejudgement 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 maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand 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 are operating effectively.

5. Share Capital

As on 31st March 2020 the authorized issued subscribed and paid-up share capital isas follows:

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

During the year under review there was no change in Capital Structure of the Company.

6. Nomination and Remuneration Committee and Policy

Nomination and Remuneration Committee of Directors has been formed and has beenempowered and authorized to exercise power as entrusted under the provisions of CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(both as amended from time to time). The Company has a policy on Directors' / SeniorManagement appointment and remuneration which specifies criteria for determiningqualification positive attributes for Senior Management and Directors. The policy alsospecifies the criteria for determination of independence of a Director and other mattersprovided under sub-section (3) of Section 178. The Nomination and Remuneration Policy isavailable at the Company's website www. lmwglobal.com.

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 2013and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 so as to qualify themselves to act as Independent Directors Furtherthey have also declared that they are not aware of any circumstance or situation whichexist or may be reasonably anticipated that could impair or impact their ability todischarge their duties with an objective independent judgement and without any externalinfluence.

Pursuant to Companies (Appointment and Qualification of Directors) Rules 2014 theCertificate of Registration as received from all the Independent Directors of the Companywere taken on note by the Board of Directors.

8. Explanation and Comments on Audit Report

The report of Statutory Auditors (appearing elsewhere in this Annual Report) and thatof the Secretarial Auditors (annexed hereto as Annexure 3) are self-explanatory having noadverse comments. Further the Secretarial Compliance Report for the year ended 31stMarch 2020 issued by the Practicing Company Secretary pursuant to Regulation 24A of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been filedwith BSE Limited and the National Stock Exchange of India Limited. A copy of the same isavailable on the Company's website: www.lmwglobal.com. There were no instances of fraudreported by the Auditors to the Central Government or to the Audit Committee of theCompany as indicated 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 of the Company in theshares of other companies is provided under notes to Balance Sheet appearing elsewhere inthis Annual Report. The amount of investment made by the Company does not exceed thelimits 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 transactions of the Company with related parties are at arms' length and havetaken place in the ordinary course of business. None of the transaction with relatedparties are material transactions. Since there are no transactions that are not in arms'length and material in nature disclosure under AOC 2 does not arise. A copy of theRelated Party Transaction Policy is available at the Company's website www. lmwglobal.com.

11. Material Changes

There are no material changes or commitments after closure of the financial year tillthe date of this report.

12. Conservation of Energy Technology Absorption & Foreign Exchange

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

STATEMENT FOR CONSERVATION OF ENERGY

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 also has a photo- voltaic solar power generating facility with installed capacity of 10 MW. The Company uses electricity generated from renewable sources for captive power consumption.
(iii) the capital investment on energy conservation equipment An amount of Rs 35 Lakhs was invested during 2019-20 for replacing 400 watt mercury vapour / fluorescent lamps with 132 watt LED lighting.

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 : Rs 489.92 Lakhs
Revenue Expenditure : Rs 2447.72 Lakhs
Total Expenditure : Rs 2937.64 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:
Rigidity improvement in Turning Centre and Sub- Spindle machines. Development/upgrade in product range to bridge product gap and to redress/ address customer requirements. Improvement in product features
Cost reduction:
Optimisation in design of control panel transformer coolant tank and packing cases
Product development: (Under Progress)
Sub-system - 1 No (20000 rpm spindle)
CNC Turning Centre – 1 No (TSTT)
Horizontal Machining Centre – 1 No (JH40)
(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 Capital Expenditure : Nil
Development Revenue Expenditure : B323.60 Lakhs
Total Expenditure : B323.60 Lakhs

(B3) Technology Absorption – Foundry Division

(i) Efforts made towards technology absorption; Technical Papers/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
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 Nil
Development

FOREIGN EXCHANGE OUTGO AND EARNINGS

Foreign Exchange Earned 31442.28
Foreign Exchange Used 13542.87

13. Risk Management

The Company follows a comprehensive and integrated risk appraisal mitigation andmanagement as stated in its Risk Management Policy. The identified elements of Risk andRisk Mitigation measures are periodically reviewed and revised by the Board of Directors.The Board of Directors have also constituted a Risk Management Committee to oversee theRisk Management process.

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.lmwglobal.com. A report inprescribed format detailing the CSR expenditure for the year 2019-20 is attached herewithas Annexure 4 and forms part of this report.

15. Evaluation of Board's Performance

On the advice of the Board of Directors the Nomination and Remuneration Committee ofthe Board of Directors of the Company have formulated the criteria for the evaluation ofthe performance of each individual Director Board as a whole Committees of the BoardIndependent Directors Non-Independent Directors and the Chairman of the Board based onthe Criteria of evaluation as specified by SEBI Circular SEBI/HO/CFD/CMD/ CIR/P/2017/004dated 5th January 2017. Based on these criteria the performance evaluation process hasbeen undertaken. The Independent Directors of the Company had also convened a separatemeeting for this purpose on 27th January 2020. All the results of evaluation has beencommunicated to the Chairman of the Board of Directors.

16. Additional Information

As per Rule 8(5) of the Companies (Accounts) Rule 2014 the following additionalinformation 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 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 Details regarding the changes in Directors who were appointed or have resigned during the year have been provided elsewhere in this report.
During the year under review consequent upon superannuation of Sri C B Chandrasekar on 31st July 2019 Sri V Senthil was appointed as Chief Financial Officer on 03rd August 2019.
(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 S Pathy Director (DIN: 00013899) who retires by rotation at the ensuing AnnualGeneral Meeting being eligible offers himself for reappointment. The Board recommends hisreappointment in the forthcoming Annual General Meeting.

During the year under review except Sri Basavaraju (DIN: 01252772) IndependentDirector the Shareholders of the Company at their meeting held on 22nd July 2019 havere-appointed Sri Aditya Himatsingka (DIN: 00138970) Dr Mukund Govind Rajan (DIN:00141258) and Justice Smt Chitra Venkataraman (Retd.) (DIN: 07044099) as IndependentDirectors of the Company for another term of 5 consecutive years.

Further consequent upon issue of fresh nomination by Life Insurance Corporation ofIndia ("LIC") Sri V Sathyakumar (DIN: 06477636) was replaced by Sri Anil Gupta(DIN: 08446779) as the new Nominee Director of LIC on the Board of the Company with effectfrom 20th May 2019.

Sri K Soundhar Rajhan (DIN: 07594186) Whole-time Director (designated as Director -Operations) was appointed for a period of three years commencing from 01st November 2017.By considering the performance and other attributes of Sri K Soundhar Rajhan the Board ofDirectors at their meeting held on 25th May 2020 have recommended the reappointment ofSri K Soundhar Rajhan Whole-time Director (designated as Director - Operations) for aperiod of three consecutive years commencing from 1st November 2020.

Your Directors recommend the re-appointment of Sri K Soundhar Rajhan (DIN: 07594186) inthe forthcoming Annual General Meeting.

18. Audit Committee / Whistle Blower Policy

The Audit Committee was formed by the Board of Directors and it consists 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) upto 22nd July 2019

4. Justice Smt Chitra Venkatraman (Non-Executive - Independent) with effect from 22ndJuly 2019

The Board has accepted the recommendations of the Committee and there was no incidenceof deviation from such recommendations during the financial year under review. The Companyhas devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance ofprovisions of Section 177(10) of the Companies Act 2013 and details thereof is availableon the Company's website at www.lmwglobal. com. During the year under review there wereno complaints received under this mechanism.

19. Prevention of Sexual Harassment of Women at the Workplace

The Company has complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. Information regarding the same is also provided inthe Corporate Governance Report forming part of Directors' Report.

20. Listing of Shares

The shares of the Company are listed in BSE Limited Mumbai and the National StockExchange of India Limited Mumbai. Applicable listing fees have been paid up to date. Theshares of the Company have not been suspended from trading at any time during the year bythe concerned Stock Exchanges.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules:

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:

Director Category Ratio
Sri Sanjay Jayavarthanavelu Executive - Chairman and Managing Director 51.64
Sri S Pathy Non-Executive - Non-Independent 1.19
Sri Aditya Himatsingka Non-Executive – Independent 1.19
Dr Mukund Govind Rajan Non-Executive – Independent 1.19
Sri V Sathyakumar/Anil Gupta1 Non-Executive-Non-independent Nominee of LIC 1.19
Justice (Smt) Chitra Venkataraman (Retd.) Non-Executive – Women - Independent 1.19
Sri Arun Alagappan Non-Executive – Independent 1.19
Sri K Soundhar Rajhan Executive- Non-Independent 21.95
Sri Basavaraju2 Non-Executive – Independent Not Applicable

Note: Sitting fees paid to the Directors has not been considered as remuneration.

1Amount paid to Life Insurance Corporation of India (LIC). (LIC replaced the nominationof Sri V Sathyakumar as the nominee Director of LIC with that of Sri Anil Gupta witheffect from 20th May 2019).

2Tenure of Sri Basavaraju Non-Executive Independent Director ended on 5th August2019.

b) The percentage increase in remuneration of each Director Chief Financial OfficerCompany Secretary in the financial year:

Director Category % Change
Sri Sanjay Jayavarthanavelu Executive - Chairman and Managing Director -61.82
Sri S Pathy Non-Executive - Non-Independent Nil
Sri Aditya Himatsingka Non-Executive – Independent Nil
Dr Mukund Govind Rajan Non-Executive – Independent Nil
Sri V Sathyakumar / Sri Anil Gupta1 Non-Executive - Non-independent Nominee of LIC Nil
Justice (Smt) Chitra Venkataraman (Retd.) Non-Executive - Women Independent Nil
Sri Arun Algappan Non-Executive – Independent Nil
Sri K Soundhar Rajhan Executive - Non-Independent -5.38
Sri Basavaraju2 Non-Executive – Independent Not applicable

 

Key Managerial Personnel Category % Change
Sri C B Chandrasekar3 Chief Financial Officer Not applicable
Sri V Senthil3 Chief Financial Officer Not applicable
Sri C R Shivkumaran Company Secretary 4.82

1Amount paid to Life Insurance Corporation of India.

2Tenure of Sri Basavaraju Non-Executive Independent Director ended on 5th August2019.

3Sri C B Chandrasekar retired as Chief Financial Officer on 31st July 2019 and Sri VSenthil was appointed as Chief Financial Officer with effect from 03rd August 2019.

Note: For this purpose Sitting fees paid to the Directors has not been considered asremuneration. The remuneration details are for the year 2019-20 (Previous Year; 2018-19).

c) The Percentage decrease in the median remuneration of employees in the financialyear is: 3.69%

d) The number of permanent employees on the rolls of company: 3185

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: Nil

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

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

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

Table 11 2

Name (Age in Years) Designation Gross Remuneration paid (in Rs ) Qualification Date of Commencement of employment (experience in years) Previous Employment
Sri Sanjay Jayavarthanavelu (51 Years) Chairman and Managing Director 32634204 MBA 3rd June 1994 (25 Years) -
Sri K Soundhar Rajhan (71 Years) Director – Operations 13870017 B.Sc. 9th July 1973 (46 Years) The Kovilpatti Lakshmi Roller Flour Mills Limited

1Employment is contractual. The remuneration includes Company's contribution toprovident fund gratuity and perquisites.

2The remuneration details are for the financial year 2019-20 and all other particularsare as on 31st March 2020. Besides the above there are no other employees in receipt ofRemuneration/Salary for any part of the year at a rate which in the aggregate was notless than Rs 850000/- per month.

Particulars of Top Ten employees in terms of remuneration drawn:

Table 2: Employed for full year 1 2 3 & 4

Name (Age in Years) Designation Gross Remuneration paid (in Rs ) Qualification Date of Commencement of employment (experience in years) Previous Employment
Sreeramachandra Murthy Kaza (53 Years) President – MTD 8635929 B Tech. M Tech. PG Diploma. 14th February 2019 (1 Year) Elgi Equipments Limited
Subramanian A V (66 Years) President – ATC 8581698 B. Tech M. Tech MMS. 17th August 2018 (1 Year) Indian Army
Sankar M (62 Years) President – TMD 8313041 B. Tech. 21st August 1985 (34 Years) Star Marketing Services Limited
Krishna Kumar N (62 Years) Senior Vice President – TQM 7683945 B.E. M.E. 1st July 1983 (36 Years) -
Venugopal V (62 Years) Senior Vice President – Foundry 6852512 BE. ME. MBA. MS. 5th August 1981 (38 Years) -
Senthil V2 (41 Years) Chief Financial Officer 4725065 B.Com. ACA. 23rd January 2015 (5 Years) LMW Textile Machinery (Suzhou) Company Limited
Indraneel Bhattacharya (55 Years) Vice President – MTD – Marketing & Sales 4701778 DME. 8th February 1993 (27 Years) Batliboi & Company Limited
Sundaram T (59 Years) Vice President – SCM 4691605 DME. BE. PGDC. MS. 18th July 1980 (39 Years) -
Arunachalam C (55 Years) Vice President – TMD Global Sales 4676373 B. Tech. MBA. 3rd February 1992 (28 Years) J K Synthetics Limited
Rajasekaran S (52 Years) Vice President – TMD R & D 4314559 DTT. AMIE. M. Tech. DBM. 2nd May 1986 (33 Years) VR Textiles

Notes for Table 2:

1 The remuneration includes Company's contribution to provident funds gratuity andperquisites.

2 Except Sri V Senthil Chief Financial Officer who is the relative (daughter'shusband) of Sri K Soundhar Rajhan Director Operations no other employee is a relative(in terms of the Companies Act 2013) of any other Director of the Company.

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

4 The remuneration details are for the financial year 2019-20 and all other particularsare as on 31st March 2020.

22 Corporate Governance

As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate section on Corporate Governance practices followed by theCompany is provided elsewhere in this Report. A report of the Statutory Auditors of theCompany confirming the compliance of conditions of Corporate Governance as required bySEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed tothis 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 signingPartner were appointed as Statutory 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.S.Krishnamoorthy & Co. Chartered Accountants Coimbatorewith Sri K Raghu as signing partner have consented and confirmed their eligibility anddesire to continue as Statutory Auditors of the Company for the Financial Year 2020-21.

Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 (as amended) the Directors on the recommendation of theAudit Committee have appointed Sri A N Raman Practicing Cost and Management AccountantChennai as the Cost Auditor of the Company for the Financial Year 2020-21. Theremuneration payable to the Cost Auditor is subject to ratification of Shareholders at theensuing Annual General Meeting.

Secretarial Auditor

Pursuant to Provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshave appointed M/s. MDS & Associates Coimbatore Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the financial year 2020-21.

24. Business Responsibility Report

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andamendments made thereto mandates inclusion of the Business Responsibility Report (BRR) aspart of the Annual Report for the top 1000 listed entities based on marketcapitalization. In compliance with the regulation the BRR is enclosed as Annexure 6 andforms part of the Annual Report.

25. Compliance with Secretarial Standards

The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively.

26. Acknowledgments

Your Directors thank all customers' for their continued support and patronage.

The Directors also thank the Company's Bankers Selling Agents Vendors Central andState Governments for their Valuable assistance.

The Directors wish to place on record their appreciation for the cooperation andcontribution made by the employees at all levels towards the progress of the Company.

By order of the Board
Sanjay Jayavarthanavelu
Chairman and
Place: Coimbatore Managing Director
Date: 25th May 2020 (DIN : 00004505)

   

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