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Latteys Industries Ltd.

BSE: 535085 Sector: Engineering
NSE: LATTEYS ISIN Code: INE262Z01015
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Latteys Industries Ltd. (LATTEYS) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the Annual Report and the FinancialStatements for the financial year ended 31st March 2018.

EXTRACT OF ANNUAL RETURN

Attached herewith as Annexure-A.

BOARD MEETINGS

During the financial year ended 31st March 2018 Board of Directors met 18times on

Sr. No. Date of Board Meetings
1 17/04/2017
2 25/05/2017
3 12/06/2017
4 01/07/2017
5 13/07/2017
6 29/08/2017
7 01/09/2017
8 04/09/2017
9 25/09/2017
10 18/10/2017
11 27/10/2017
12 24/11/2017
13 01/01/2018
14 04/01/2018
15 16/01/2018
16 07/02/2018
17 12/03/2018
18 15/03/2018

DIRECTORS' RESPONSIBILTY STATEMENT

Pursuant to the requirements of Section 134(5) of the Companies Act 2013 and on thebasis of explanation and compliance certificate given by the executives of the Company andsubject to disclosures in the annual accounts and also on the basis of discussion with theStatutory Auditors' of the Company from time to time Your Directors confirm that:

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

(b) the directors had 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) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have submitted their declaration to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013read with rules framed thereunder.

POLICY ON DIRECTOR'S APPOINTMENT REMUNERATION INCLUDING CRITERIA FOR DETERMININGQUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration including criteria for determining qualifications positive attributes andother matters provided under sub section (3) of section 178 of the Companies Act 2013. TheCompany's Remuneration Policy for Directors Key Managerial Personnel and other employeesis available on Company's website www.latteysindustries.com

AUDIT COMMITTEE

Brief description and terms of reference

To oversee the Company's Financial Report process internal control systems reviewingthe accounting policies and practices and financial statements audited by the statutoryauditors.

COMPOSITION OF AUDIT COMMITTEE AS ON 31st MARCH 2018

S.N. Name of member Designation
1. SANDEEP KUMAR MANGAL Chairman & Independent Director
2. SACHIN GUPTA Member & Independent Director
3. SAROJ GARG Member & Non -Executive Director

Company has conducted 2(Five) Audit Committee Meeting during the year

Sr. No. Date of Meeting
1 07/02/2018
2 12/03/2018

NOMINATION AND REMUNERATION COMMITTEE Brief description and terms of reference

The objective of Nomination and Remuneration Committee is to assess the remunerationpayable to our Managing Director/Whole Time Directors; sitting fee payable to ourNon-Executive Directors; remuneration policy covering policies on remuneration payable toour senior executives.

COMPOSITION OF NOMINATION AND REMUNERATION COMMITTEE AS ON 31st MARCH 2018

S.N. Name of member Designation
1. SANDEEP KUMAR MANGAL Chairman & Independent Director
2. SACHIN GUPTA Member & Independent Director
3. SAROJ GARG Member & Non -Executive Director

STAKEHOLDER'S RELATIONSHIP COMMITTEE Brief description and Terms of Reference

The Board has delegated the powers to a committee to approve transfer/transmission ofshares and attend to all other matters related thereto

COMPOSITION OF STAKEHOLDER'S RELATIONSHIP COMMITTEE AS ON 31st MARCH 2018

S.N. Name of member Designation
1. SANDEEP KUMAR MANGAL Chairman & Independent Director
2. SACHIN GUPTA Member & Independent Director
3. SAROJGARG Member & Non -Executive Director

CORPORATE GOVERNANCE:

As per Regulation 15 (2) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 para C of Schedule V relating to Corporate Governance Report shall notapply to company listed on SME Exchange. The Company being a company listed on NSE Emerge(SME segment) Platform preparation of corporate governance is not applicable.

AUDITORS

Members of the Company at the AGM held on MONDAY 25TH DAY OF SEPTEMBER 2017 hadapproved the appointment of M/s. Gaurav Ashok Jain & Associates. Chartered Accountantas the Statutory Auditors for a period of 3 (Three) financial years i.e. up to 31 March2020. As required by the provisions of the Companies Act 2013 their appointment shouldbe ratified by members each year at the AGM. Members are requested to ratify theirappointment at the Annual General Meeting.

AUDITORS' REPORT

Auditor's Report is self-explanatory does not require any comments or clarification.

LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

There is no loans and investments as per Section 186 of the Companies Act 2013 hencenot applicable.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Attached herewith in Form AOC-2 as Annexure-B.

FINANCIAL SUMMARY

PARTICULARS 31/03/2018 31/03/2017
Sales 326780003.00 356955883.00
Other income 1284119.00 74132.00
Profit Before Interest & Depreciation 31403793.00 25156601.00
(-)Finance Cost 11009978.00 10073819.00
(-) Depreciation 5662116.00 4860078.00
Profit before tax & Exceptional items 14731699.00 10222704.00
(+)Exceptional Items NIL NIL
Profit Before Tax 14731699.00 10222704.00
(-) Tax Expense 4210015.00 3780314.00
Profit for the year after tax 10521684.00 6442390.00
(+) Surplus brought from previous year 15536246.00 9093856.00
Total surplus Carried to balance sheet 17444191.00 15536246.00
Profit & Loss Appropriation 31/03/2018 31/03/2017
Proposed Dividend 0 0
Dividend Distribution tax 0 0
Transfer to General Reserve 0 0
Closing Balance 0 0
General Reserve
Total Amount as at last year 0 0
Add: Transfer from P&L Appropriation Account 0 0
Closing Balance 0 0

DIVIDEND

Directors have not recommended any dividend.

STATE OF AFFAIRS OF THE COMPANY

Figures stated herein above are self-explanatory about state of affairs of the company.

MATERIAL CHANGES AND COMMITMENTS

There is no material changes in the company's activities since last date of signing ofaccounts and Board of directors are committed for the Best working of the companydepending on the business environment.

MANAGEMENT DISCUSSION & ANALYSIS REPORT:

In terms of the Regulation 34 read with Schedule V of SEBI (LODR) Regulations 2015Management Discussion and Analysis is set out in the Annual Report as Annexure-C.

SECRETARIAL AUDIT REPORT

The Board has appointed Mr. Vickey K. Patel Practicing Company Secretary asSecretarial Auditor to conduct Secretarial Audit of the Company for FY 2017-18 asrequired under Section 204 of the Companies Act 2013. There is no Secretarial AuditQualification for the year under review. The Secretarial Audit Report is given as Annexure-D

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

A statement giving details of conservation of energy technology absorption and foreignexchange earnings and outgo in accordance with Section 134(3) (m) of the Companies Act2013 read with Rule 8(3) of Companies (Accounts) Rules 2014 is given as Annexure-E heretoand forms part of this report.

PERSONNEL

Disclosure pertaining to remuneration and other details as required under section197(12) of the Act read with Rule 5(1) of the companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are given under Annexure-F. Further no employeeof the Company was employed during the year drawing remuneration exceeding the limits asprescribed under Rule 5(2) of the (Appointment and Remuneration of Managerial Personnel)Rules 2014. Hence the information under Rule 5(2) is not applicable.

RISK MANAGEMENT POLICY

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board formally adopted steps forframing implementing and monitoring the risk management plan for the Company by way ofRisk Management Policy. The Board is very vigilant in working and also have properinternal control systems to minimize the operational and business risk. Company alsoencourage Whistle Blower system in the company.

CORPORATE SOCIAL RESPONSIBILITY POLICY

NOT APPLICABLE

PERFORMANCE EVALUATION OF BOARD ITS COMMITTIES AND INDEPENDENT DIRECTORS

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out the annualperformance evaluation of its own performance the Directors individually as well as theevaluation of Committees. Every member of the Board and committees including Independentdirectors are sharing their expert

Knowledge and expertise in the best interest of the company and Board appreciate themwith the word of appreciation at this junction.

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

S.N Name of Director /KMP Designation Date of appointment/Change in Designation Date of resignation
1. JAYESH LAXMANBHAI BHAVSAR Company Secretary (C.S) 27/10/2017 -
2. VIRALBHAI HASMUKHBHAI PATEL Chief Financial Officer (C.F.O) 27/10/2017 -
3. KAPOOR CHAND GARG Chairman & Managing Director 23/11/2017 -
4. PAWAN GARG Whole Time Director 23/11/2017 -
5. SAROJ GARG Non -Executive Director 24/11/2017 -
6. SACHIN GUPTA Additional Independent Director 04/01/2018
7. SANDEEP KUMAR MANGAL Additional Independent Director 04/01/2018 -
8. SACHIN GUPTA Independent Director 08/01/2018 -
9. SANDEEP KUMAR MANGAL Independent Director 08/01/2018 -

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

NOT APPLICABLE

DEPOSITS

During the year your Company has not accepted any deposits under Section 73 of theCompanies Act 2013 and therefore not required to furnish information as per Rule 8(5)(v)and (vi) of the Companies (Accounts) Rules 2014

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In order to ensure that the activities of the Company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behavior the Company has adopted a Vigil mechanism/WhistleBlower Policy. This policy is also posted on the Company's websitewww.latteysindustries.com

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

Board is pleased to inform you that there is no order passed against the company fromany regulator or courts or Tribunals.

ACKNOWLEDGMENT:

The Board of Directors wishes to place on record its appreciation for the commitmentdedication and hard work done by the employees in the Company and the cooperation extendedby Banks Government authorities customers and shareholders of the Company and looksforward to a continued mutual support and co-operation.

For and on behalf of the Board of Directors

For LATTEYS INDUSTRIES LIMITED

KAPOOR CHAND GARG

Chairman & Managing Director

For LATTEYS INDUSTRIES LIMITED

PAWAN GARG

Whole Time Director

Date: 30/08/2018

Place: AHMEDABAD

ANNEXURE-B

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto

1. Details of contracts or arrangements or transactions not at arm's length basis

NIL

2. Details of material contracts or arrangement or transactions at arm's lengthbasis

(a) Name(s) of the related party and nature of relationship KAPOOR CHAND GARG (Chairman & Managing Director of the Company)
(b) Nature of contracts/arrangements/transactions DIRECTOR REMUNERATION
(c) Duration of the contracts / arrangements/transactions As approved by Shareholder of the Company for three years (Shareholders meeting was held on 23.11.2017)
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 1920000/-
(e) Date(s) of approval by the Board if any: 27/10/2017
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship PAWAN GARG (Whole Time Director of the Company)
(b) Nature of contracts/arrangements/transactions DIRECTOR REMUNERATION
(c) Duration of the contracts / arrangements/transactions As approved by Shareholder of the Company for three years (Shareholders meeting was held on 23.11.2017)
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 1920000/-
(e) Date(s) of approval by the Board if any: 27/10/2017
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR CHAND GARG (Chairman & Managing Director)
(b) Nature of contracts/arrangements/transactions LEASING OF PROPERTY
(c) Duration of the contracts / arrangements/transactions Three years
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 900000/-
(e) Date(s) of approval by the Board if any: 27/04/2016
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship PAWAN GARG (Whole Time Director of the Company)
(b) Nature of contracts/arrangements/transactions LEASING OF PROPERTY
(c) Duration of the contracts / arrangements/transactions Three years
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 222000/-
(e) Date(s) of approval by the Board if any: 27/04/2016
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship LATTICE ENGINEERING PRIVATE LIMITED (Common Director)
(b) Nature of contracts/arrangements/transactions Rental Income
(c) Duration of the contracts / arrangements/transactions As per rent agreement dated 22.02.2016 for three years
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 500000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR CHAND GARG (Chairman & Managing Director of the Company)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 111035/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship PAWAN GARG (Whole Time Director of the Company)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 5260/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship SAROJ GARG (Non-Executive Director of the Company)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 16/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship JAWALA PRASAD GARG (Father of Directors)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 268512/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR GARG HUF (Director HUF)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 61754/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship MANGAL SAIN (Father in-law of Directors)
(b) Nature of contracts/arrangements/transactions Interest on Unsecured Loan
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 32854/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR CHAND GARG (Chairman & Managing Director of the Company)
(b) Nature of contracts/arrangements/transactions Loan Taken
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 3100000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship JAWALA PRASAD GARG (Father of Directors)
(b) Nature of contracts/arrangements/transactions Loan Taken
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 875000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship SAROJ GARG (Non-Executive Director of the Company)
(b) Nature of contracts/arrangements/transactions Loan Taken
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 10000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR CHAND GARG (Chairman & Managing Director of the Company)
(b) Nature of contracts/arrangements/transactions Loan repaid
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 2100000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship JAWALA PRASAD GARG (Father of Directors)
(b) Nature of contracts/arrangements/transactions Loan repaid
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 698806/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship KAPOOR GARG HUF (Director HUF)
(b) Nature of contracts/arrangements/transactions Loan repaid
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 4452/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship MANGAL SAIN (Father in-law of Directors)
(b) Nature of contracts/arrangements/transactions Loan repaid
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 363381/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -
(a) Name(s) of the related party and nature of relationship SAROJ GARG (Non-Executive Director of the Company)
(b) Nature of contracts/arrangements/transactions Loan repaid
(c) Duration of the contracts / arrangements/transactions Continuous
(d) Salient terms of the contracts or arrangements or transactions including the value if any: 10000/-
(e) Date(s) of approval by the Board if any: N.A
(f) Amount paid as advances if any: -

ANNEXURE-E

(A) CONSERVATION OF ENERGY:

1. Energy conservation has been an important area for the Company and is continuouslybeing monitored. The adoption of energy conservation measures has helped the Company inreduction of cost and increase in capacity of machine.

2. Continuous monitoring and awareness amongst employees has helped to avoid wastage ofenergy. Conservation of energy is an ongoing process and new areas are continuouslyidentified and suitable investments are made wherever necessary.

3. The total expenditure incurred in Power and Fuel is Rs. 300535 /-

(B) TECHNOLOGY ABSORPTION:

(a) The efforts made towards technology absorption NA
(b) The benefits derived like product improvement cost reduction product development or import substitution NA
(c) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-
(i) the details of technology imported NA
(ii) the year of import NA
(iii) whether the technology been fully absorbed NA
(iv) if not fully absorbed areas where absorption has not taken place and the reasons thereof NA
(d) The expenditure incurred on Research and Development NA

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:

(a) The Foreign Exchange earned during the year NIL
(b) The Foreign Exchange outgo during the year NIL

ANNEXURE-F

PARTICULARS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013 READ WITH RULE 5 OFTHE COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

The ratio of the remuneration of each director to the median employee's remunerationfor the financial year 201718

Name Ratio
KAPOOR CHAND GARG 8 Times
PAWAN GARG 8 Times

The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year2017-18 compared to 201617;

Name % increase in remuneration
KAPOOR CHAND GARG -
PAWAN GARG -

 

The number of permanent employees on the rolls of company 92
The explanation on the relationship between average increase in remuneration and company performance The increase is remuneration is linked to the performance of the company as a whole the performance of the employee and others internal and external factors
Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration No change during the year
Variations in the market capitalisation of the company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year Not Applicable
Affirmation that the remuneration is as per the remuneration policy of the Company We affirm that remuneration is as per the remuneration policy of the company.