|BSE: 500255||Sector: Auto|
|NSE: LML||ISIN Code: INE862A01015|
|BSE 00:00 | 14 May||LML Ltd|
|NSE 05:30 | 01 Jan||LML Ltd|
|BSE: 500255||Sector: Auto|
|NSE: LML||ISIN Code: INE862A01015|
|BSE 00:00 | 14 May||LML Ltd|
|NSE 05:30 | 01 Jan||LML Ltd|
Your Directors have pleasure in presenting the Thirty-Ninth Annual Report together withaudited financial statement for the financial year ended 31st March 2015. Thisreport pertains to financial year that commenced from April 01 2014 and the contentsherein are governed by the relevant provisions/ sections/ rules of Companies Act 2013 andclauses of new amended Listing Agreement effective from 1st October 2014.
This report also includes Management Discussion & Analysis (MD&A) as it hasbeen considered appropriate to do so in order to avoid duplication & overlap betweenDirectors Report and a separate MD&A.
1. Financial Results
In view of loss no amount is proposed to be carried to or transferred to any type ofreserves.
Directors regret their inability in view of the losses to recommend any dividend forthe year.
The Companys operation has been adversely affected for last few years due to adramatic shift in consumer preference from 2-stroke geared scooters to 4-strokemotorcycles and 4-stroke gearless scooters. Companys exports have also been affectedduring the year inter-alia due to turmoil in the African market and economic slow downin developed economies. In domestic market the performance was adversely affected due togeneral economic slowdown during the year. The Company is registered as a sick industrialCompany under the provisions of the Sick Industrial Companies (Special Provisions) Act1985 (SICA). The Company is working on development and industrialization of various newproducts and technology including new generation of 4-stroke - geared scooters gearlessscooters motorcycles and light 3-wheeler cargo vehicle.
Export and Domestic sales performance of your Company was as follows:
Exports were 26184 vehicles during the year as against 34033 units during the previousyear. Companys exports are made to many countries including USA countries in theEuropean Union Africa Latin America Asia etc.
5. Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm:
(a) that in the preparation of the annual accounts the applicable accounting standardshave been followed and that no material departures have been made from the same;
(b) that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of thelosses of the Company for that period;
(c) that they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) that they have prepared the annual accounts on a going concern basis;
(e) that they have laid down the internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
(f) that they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
6. Corporate Governance
As required under Clause 49(X) of the Listing Agreement a detailed Report on CorporateGovernance is enclosed. A certificate from the Auditors of your Company regardingcompliance of the conditions of Corporate Governance as stipulated in Clause 49(XI) of theListing Agreement is attached to Annual Report. The Chairman & Managing Director andChief Financial Officer of the Company have given necessary Certificate to the Board interms of Clause 49 (IX) of the Listing Agreement for the financial year ended 31st March.2015.
7. Audit Committee
The Board of Directors has an Audit Committee with a composition as specified in theSection 177 of the Companies Act 2013 and Clause 49 of the Listing Agreement. The detailsof Audit Committee are specified in Corporate Governance Report. The Board has acceptedrecommendations of the Committee on various matters.
8. Management Discussion and Analysis
(a) Macro-economic Developments and overall review
The world economies are still facing effect of the crisis which started in 2008.Complex forces that effected global activity are still shaping the outlook. The problem ofrecession un-employment industrial slow down and exchange rate swings triggered byactual and expected changes in monetary policies continued with different degrees ofintensity in various countries including those in the European Union.
The Indian economy continues to suffer from anemic sluggishness in manufacturingadversely affecting industrial activity. The current economic environment represents amixed scenario with inflation showing some signs of easing but weak rural demand coupledwith high interest rates are putting pressure on economic growth. Untimely rains anddifficult weather conditions have affected the rural sector adversely. The GDP growth ofIndian economy was approx. 7.4% in FY- 2014-15 compared to 6.9% in FY-2013-14 mostlydriven by some improved economic fundamentals and revision of GDP methodology calculation.The growth estimated for current year of about 8% is due to the expectation that monsoonwill be favourable which itself is uncertain phenomena as agriculture remains vulnerableto monsoon shocks. Over the years the volatility of monsoon outcome has in factincreased undermining the accuracy of forecasting.
Revival of the economy will inter-alia depend upon increase in infrastructureinvestment reduction in interest rates increase in employment etc. so as to give afillip to boost domestic demand.
(b) Two wheeler Industry in India
The Indian automobile market can be divided into various segments viz. motorizedtwo-wheelers (motorcycles geared and gearless (CVT) scooters and mopeds) three wheelerscommercial vehicles (light medium and heavy) passenger cars utility vehicles (UVs) andtractors.
A total of 15.90 million two-wheelers were sold in India in FY- 2014-15 a growth of 7%over the previous year. The slow growth was on account of the overall slowdown in theIndian economy and specially in rural economy and high interest rates. Motorcyclesaccounted for around 67% of the total two wheelers sold and reported nominal growth ofaround 2%. The gearless scooters (CVT) segment did well logging growth rate of around 25%in the earlier part of the year and aggregate share of 28% of the two wheeler market.
The revival of the 2-wheeler industry is highly dependent upon the revival of Indianeconomy and more so the rural economy.
(c) Company Performance
Companys performance during the year was adversely affected inter alia due toglobal recessionary conditions and specially political and economic condition prevailingin African and developed economies as well as week domestic demand.
(d) Opportunities and Threats
LML stands for the highest standards of technical expertise product innovation and hasone of the finest R & D capabilities particularly relating to designing rapidproto-typing CAD - CAM tooling and industrialization. It is harnessing these strengthsand its vast experience in the two-wheeler business coupled with a aggressive businessstrategy for its revival and turnaround. The Company is perhaps the first in the world toobtain Euro III certification for its 2-stroke vehicles and subsequent to restart it hasalso received the upgraded ISO 9001-2008 certification from DNV.
As stated elsewhere in this report the Company has been working for its revivalincluding development of new products including those having state of the art technology.
(f) Performance Review
Due to various reasons and problems the Company could not leverage its richtechnological strengths during the year under review and the sales volume was 38086 unitsin financial year 2014-15 as compared to 51835 units in financial year 2013-14..
(g) Financial Review
Revenues - Gross Sales and Other Income during the year was Rs. 212.58crores as compared to Rs. 273.73 crores in the previous financial year 2013-14.
Operating Profit/Loss The Company reported a net Operating Loss during theyear of Rs 25.46 crores as compared to net operating loss of Rs. 17.76 crore in theprevious financial year 2013-14.
Interest Interest was Rs 43.02 crores during the year as compared to Rs.40.13 crores in the previous financial year 2013-14.
Depreciation Amortization & Impairment of Fixed Assets DepreciationAmortization & Impairment of Fixed Assets during the year was at Rs 12.61crores ascompared to Rs. 14.94 crores in the previous financial year 2013-14.
Loss before tax - The Company reported a loss before tax and exceptional itemsduring the year of Rs 81.09 crores as compared to Rs. 72.83 crores in the previousfinancial year 2013-14.
Share Capital Companys Paid-up Equity Share Capital is Rs. 81.98crores as on 31.03.2015.
(h) Human Resources
Your Company treats human resource a very important asset. Your Company continuouslyinvest in attraction retention and development of talent on an ongoing basis.
Mr. Ram Kumar Srivastava (DIN: 00763948) Director of the Company whose Office isliable to retire by rotation and being eligible offers himself for re-appointment as aDirector of the Company.
Pursuant to the provisions of Section 161(1) of the Companies Act 2013 and theArticles of Association of the Company Mr. Santoshkumar Shivshanker Shukla (DIN:06770309) and Mrs. Ritu Schimar Dhingra (DIN: 01186286) were appointed as AdditionalDirectors (Independent) in the Board meeting held on 23.09.2014 who will hold the Officeuntil the conclusion of the ensuing Annual General Meeting. The Company has receivedrequisite notices in writing from members proposing Mr. Santoshkumar Shivshanker Shuklaand Mrs. Ritu Schimar Dhingra for appointment as Independent Directors.
The Board has recommended to re-appoint Mr. Lalit Kumar Singhania (DIN: 00014318) andMr. Anurag Kumar Singhania (DIN: 00080925) as Whole-time Directors of the Company as perdetails given in annual general meeting notice.
During the year under review no Director has resigned from the Board of Directors Allthe Independent Directors have submitted their declaration of independence as requiredunder section 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as provided in section 149(6) of the Companies Act 2013 and under Clause 49of the Listing Agreement.
10. Whole Time Key Managerial Personnel (KMP)
In pursuance of the compliance of Section 203 of the Companies Act 2013 the followingpersons have been designated as Whole Time Key Managerial Personnel of the Company:-
1. Mr. Deepak Kumar Singhania Chairman & Managing Director
2. Mr. K. C. Agarwal Sr. President (Commercial) & Company Secretary
3. Mr. Mahesh Kumar Kanodia Chief Financial Officer
During the year under review no KMP has resigned from the Company.
11. Extract of Annual Return
Pursuant to section 92(3) of the Companies Act 2013 (the Act) and rule12(1) of the Companies (Management and Administration) Rules 2014 the required extractof Annual Return in prescribed form MGT-9 is attached as Annexure Awith this Board Report.
12. Nomination& Remuneration Policy
The Company has on the recommendations and approval of Nomination & RemunerationCommittee formulated a Nomination & Remuneration Policy which governs Directorsappointment including criteria for determining their qualifications positive attributestheir independence and remuneration for the Directors KMPs and other employees which waspassed by the Board in its meeting held on 8th November 2014. The Nominationand Remuneration Policy is attached as Annexure B with this BoardReport.
13. Particulars of Loan Guarantees or Investments
No loan guarantee or investments were made during the year by the Company underSection 186 of the Companies Act 2013.
14. Related Party Disclosure
Particulars of contracts or arrangements with Related Party referred in Section 188 (1)of the Companies Act 2013 in prescribed form AOC-2 is attached as AnnexureC with this Board Report. As required under Clause 49 the Company hasformulated a policy for dealing with Related Party Transactions. The Policy is availableon the website of the Company (Weblink: http://www.lmlworld.com/Pdf/RPT-Policy.pdf).
15. Material changes and commitments
No material Changes or commitments affecting the financial position of the Companyoccurred between the end of the financial year to which the financial statements relatesand the date of the report.
16. Risk Management Policy
The Company has Risk Management Policy and a Risk Management Committee foridentification of elements of risk if any which meets quarterly and submits its reporton quarter basis to the Board.
17. Annual Evaluation
The Board has carried out the Annual Performance Evaluation of its own its Committeesbased on Performance Evaluation Report submitted by each Committee and individualDirectors based on the Performance Evaluation Report submitted by the Nomination &Remuneration Committee as per Performance Evaluation Policy of the Company.
18. Number of Board Meetings
The details of the number of meetings of the Board held during the Financial Year2014-15 forms part of the Corporate Governance Report.
19. Corporate Social Responsibility
The provision related to Corporate social responsibility under the Companies Act 2013is not applicable to the Company in view of losses.
20. Details of Committees
The details of Committees of the Board forms part of Corporate Governance Report.
21. Whistle Blower Policy
The Company has a Whistle Blower Policy including vigil mechanism to report genuineconcerns of grievances providing direct access to the Chairperson of the Audit Committeein appropriate and exceptional cases. The Whistle Blower Policy has been posted on thewebsite of the Company (www.lmlworld. com) with a weblink:http://www.lmlworld.com/Pdf/LML-Whistle-Blower-Policy.pdf
22. Internal Financial Control
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no material weaknesswas observed by the internal auditor of the Company.
23. Subsidiary/ Associate Companies
As there is no Subsidiary of the Company no policy of determining "material"subsidiaries is formulated by the Company. The Company is a promoter of one AssociateCompany namely M/s VCCL Limited. The Company is not required to prepareconsolidated financial statement as per Notification dated 14.10.2014 issued by Ministryof Corporate Affairs.
Your Company has not accepted any deposits from public in terms of provisions ofCompanies Act 2013
The Company had 2789 employees as on 31.03.2015. As per Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 none of the employeewas in receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout the year orRs. 5.00 Lacs per month for the part of the year. Further none of the employees is inreceipt of remuneration which is in excess of the remuneration drawn by Managing Directoror Whole-time Director or any manager of the Company and holds by himself or along withhis/ her spouse and dependent children not less than 2% of equity shares of the Company.
(a) Pursuant to the Rule 5(1) Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the information required to be disclosed by every Listed Companiesin its Board Report are as follows:-
* The remuneration to all Directors are within permissible limits as approved by MCA.There is no increase in remuneration during the year. Variations are on account ofincrease/ decrease in availment of perquisites.
** Ceased to be Whole-time Director w.e.f. 17.07.2014. Remuneration to him is paid onpro-rata basis.
*** The remuneration to Key Managerial Personnel are as per last year and as persanctions. There is no increase in remuneration during the year. Variations are on accountof payment of arrears.
(b) The Median remuneration of employees of the Company during the financial year wasRs. 49743/-
(c) The percentage increase in the median remuneration of employees in the financialyear was 10.67%
(d) Variations in the market capitalization of the company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the company in comparisonto the rate at which the company came out with the last public offer in case of listedcompanies and in case of unlisted companies the variations in the net worth of thecompany as at the close of the current financial year and previous financial year;Companys market capitalization increased by 26.39% to Rs. 537817139.20 as ofMarch 31 2015 from Rs. 425498620.80 as of March 31 2014. The price earning ratio was(0.66) as of March 31 2015 in comparison to (0.58) as compared to March 31 2014. Theclosing price of the Company equity shares on the NSE and BSE as of March 31 2015 was Rs.6.50 and Rs. 6.56 respectively.
(e) Average percentile increase already made in the salaries of employees other thanthe managerial 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: SinceCompany is a sick industrial company and in view of losses no increase was made in themanagerial remuneration.
(f) The key parameters for any variable component of remuneration availed by thedirectors: No variable component of remuneration was availed by the Directors of theCompany.
(g) The ratio of the remuneration of the highest paid Director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid Directorduring the year:
The highest paid Director in the Company is Mr. R. K. Srivastava with annualremuneration of Rs. 18 Lakhs as per Central Govt. approval. The ratio of remuneration ofemployees receiving in excess to that is as follows:-
(h) It is hereby affirmed that the remuneration paid is as per the Remuneration Policyof the Company.
26. Auditors and their reports
a) Statutory Auditors
M/s. Khandelwal Jain & Co. (FRN 105049W) Chartered Accountants were appointed asStatutory Auditors of the Company for a period of three years and M/s. Parikh & Jain(FRN 001105C) Chartered Accountants were appointed as Statutory Auditors of the Companyfor a period of two years in previous Annual General Meeting held on 23.09.2014. The Boardproposes to members of the Company to ratify their appointment for the financial year 2015 16 pursuant to the provisions of Section 139 of the Companies Act 2013 at theensuing Annual General Meeting of the Company.
In respect of observations made by the Statutory Auditors in their Report yourDirectors wish to state that the respective notes to the accounts are self-explanatory anddo not call for any further comments.
b) Secretarial Auditors
M/s. Adesh Tandon & Co. Practicing Company Secretary (FCS. 2253 CP No. 1121) ofKanpur appointed as Secretarial Auditors of the Company submitted their Secretarial AuditReport for the Financial Year 2014-15 pursuant to the Section 204 of the Companies Act2013 which is being attached herewith as Annexure D
No adverse observations are made by the Secretarial Auditors in their Report.
c) Internal Auditors
Pursuant to Section 138 of the Companies Act 2013 Board has appointed M/s OnkarTandon & Co. Chartered Accountants (FRN 000953C) of Kanpur as an Internal Auditor ofthe Company for the financial year 2015-16 as recommended by the Audit Committee of theCompany.
27. Conservation of Energy
Company continued to envisage and implement energy conservation measures in variousmanufacturing operations leading to savings of quantitative consumption of power fuel& oil etc. Energy conservation during the year under various heads resulted into anestimated saving of Rs. 2.70 lacs (in previous financial year 2013-14: Rs. 2.66 lacs).
28. Pollution Control
Relevant and necessary effiuent treatment plants and other measures for control ofwater air and environmental pollution are in place and steps have been taken to furtherstrengthen and consolidate pollution control measures. No ObjectionCertificates from the U.P. Pollution Control Board are obtained from time to time.
29. Technology Absorption
Requisite information in prescribed form is given in Annexure E tothis report.
30. Foreign Exchange Earnings and Outgo
Your Company earned during the year Foreign Exchange of Rs. 144.57 crores (previousfinancial year Rs. 174.76 crores) while Foreign Exchange outgo during the yearamounted to Rs. 13.09 crores (previous financial year - Rs. 22.73 crores).
31. Stock Exchange Listing
The Equity Shares of the Company are listed on the following Stock Exchanges (withrespective stock codes/ symbol):-
i) BSE Limited (BSE) Mumbai (500255);
ii) National Stock Exchange of India Limited (NSE) Mumbai (LML).
The Equity and Preference Shares of the Company were also listed on the U.P. StockExchange Limited Kanpur. However as per SEBI circular dated May 30th 2012read with circular dated May 22nd 2014 related to Companies exclusively listedon De-recognized/ Non-operational Stock Exchanges U.P. Stock Exchange Limited Kanpur gotde-recognized on account of non fulfillment of the prescribed conditions.
The Company confirms that it has paid the annual listing fee to BSE and NSE.
32. Depository System
SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January 2000notified that trading in Equity Shares of the Company is permitted only in dematerializedform w.e.f. 17th January 2000. Requests received for dematerialization ofshares are processed and confirmation is given to the respective depositories i.e.National Securities Depository Limited (NSDL) and Central Depository Services (India)Limited (CDSL) within the stipulated time. As on 31st March 2015 95.82%equity shares of the Company have been dematerialized.
The Company became a Sick Industrial Company within the meaning of Section 3(1)(o) ofSick Industrial Companies (Special Provisions) Act 1985 (SICA) due to erosion of its networth and the Company was declared a sick industrial company by BIFR on 8thMay 2007. As directed by BIFR the Company has since submitted the updated revivalscheme. In view of this no impact is foreseen on the going concern status of the Companyand the Companys operations in future. The matter is pending before the HonbleBIFR. The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 is not applicable to the Company as there is no woman employee in the Company.
34. Cautionary Statement
The statement in the Directors report and MD&A detailing the Companysobjectives and expectations may contain forward looking statements within themeaning of applicable securities laws and regulations. The actual results inter-alia maydiffer materially from those expressed or implied depending upon changes in global andIndian demand-supply conditions as well as changes in government regulations tax regimeseconomic and market developments movements.
Your Directors take this opportunity to appreciate deeply the valuable co-operationextended by the Central and State Government authorities and are extremely grateful to theFinancial Institutions and Banks for their continued assistance guidance and support.Your Directors are also grateful to all stakeholders including Customers ShareholdersEmployees Vendors Distributors Dealers / Sub-dealers and the general public for theirsupport and confidence reposed in the Management.
ANNEXURE A TO BOARDS REPORT
FORM NO. MGT.9
EXTRACT OF ANNUAL RETURN
as on the financial year ended on 31st March 2015
[Pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of the Companies(Management and Administration) Rules 2014]
I. REGISTRATION AND OTHER DETAILS:
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10 % or more of the total turnover of thecompany shall be stated:-
III. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES -
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)i) Category-wise Share Holding
(ii) Shareholding of Promoters
(iii) Change in Promoters Shareholding (please specify if there is no change):
(iv) Shareholding Pattern of top ten Shareholders (other than Directors Promoters andHolders of GDRs and ADRs):
* Ceased to be in the list of top ten shareholders as on 17.10.2014 12.05.2014 &17.07.2014 respectively. The same is reflected above since the shareholders was one of thetop ten shareholders at the beginning of the year
(v) Shareholding of Directors and Key Managerial Personnel:
Indebtedness of the Company including interest outstanding/accrued but not due forpayment
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director Whole-time Directors and/or Manager:
* Ceased to be Whole-time Director w.e.f. 17.07.2014. Remuneration is paid on pro-ratabasis.
B. Remuneration to other Directors:
** As per IFCI directions Mr Pawan Kumar ceased to be Director of the Company w.e.f.14th February 2015 and Mr Anish Babu Venugopal is appointed in his placetherefrom.
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES
ANNEXURE B TO BOARDS REPORT
NOMINATION AND REMUNERATION & BOARD DIVERSITY POLICY
In compliance with Section 178 of the Companies Act 2013 (Act) read withthe Rules made there under and Clause 49 of the Listing Agreement the policy known asNomination and Remuneration & Board Diversity Policy for inter-aliasetting up the criteria of nomination and policy for remuneration of Directors KeyManagerial Personnel Senior Management Personnel and other employees has been formulatedby the Nomination and Remuneration Committee and approved by the Board ofDirectors of the Company.
For the purpose of this Policy:
Act shall mean the Companies Act 2013;
Board shall mean the Board of Directors of LML Limited;
Committee shall mean the Nomination and RemunerationCommittee (NCR) of the Company constituted and reconstituted by the Board from time totime;
Company shall mean LML Limited;
Directors shall mean the directors of the Company;
Independent Director shall mean a director referred to inSection 149 (6) of the Companies Act 2013;
Key Managerial Personnel (KMP) shall mean the following:
(i) Executive Chairman and / or Managing Director (MD) and/ or Manager
(ii) Whole-time Director (WTD);
(iii) Company Secretary (CS);
(iv) Chief Financial Officer (CFO);
(v) Such other Officer as may be prescribed.
Senior Management Personnel (SMP) shall mean personnel of thecompany who are members of its core management team excluding the Board of Directors. Thiswould also include all members of management one level below the executive directorsincluding the functional heads.
OBJECTIVE & PURPOSE
The objective and purpose of this Policy are as follows:
To lay down criteria and terms and conditions with regard to identifying personswho are qualified to become Directors (Executive and Non-Executive) and persons who may beappointed as Senior Management and Key Managerial personnel and to determine remunerationof Directors Key Managerial Personnel (KMP) and Senior Management Personnel (SMP).
To determine remuneration based on the Companys size and financialposition and trends and practices on remuneration prevailing in peer companies in the autoindustry.
To provide them reward linked directly to their efforts performance dedicationand achievement relating to the Companys operations.
To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
SCOPE OF THE POLICY
The policy shall be applicable to the following in the Company:
Key Managerial Personnel (KMP)
Senior Management Personnel (SMP)
Other employees of the Company
The Nomination and Remuneration Committee will comprise of the following members:-
The Board of the Company may re-constitute / make any changes in the Committee fromtime to time in order to fall in line with the Companys policy and or applicablestatutory requirement as and when necessary.
1. Appointment criteria and qualifications:
1.1 The Committee shall identify and ascertain the integrity and probityqualification expertise and experience for appointment to the position of Directors KMPs& SMPs and accordingly recommend to the Board his/her appointment.
1.2 The Director/ Independent Director/ KMP/ Senior Management Personnel shall beappointed as per the procedure laid down under the provisions of the Companies Act 2013rules made thereunder Listing Agreement or any other enactment for the time being inforce.
1.3 The other employees shall be appointed and removed as per the policy and procedureof the Company.
1.4 Letter of appointment shall be issued based on the basis of the guidelines for thesame under the Companies Act 2013 or the internal policy of the Company.
1.5 The Committee shall determine the suitability of appointment of a person to theBoard of Directors of the Company by ascertaining the fit and proper criteriaof the candidate. The candidate shall at the time of appointment as well as at the timeof renewal of directorship fill in such form as approved by the Committee to enable theCommittee to determine the Fit and Proper Criteria. The indicative form to befilled out is placed as Annexure 1 to this Policy.
1.6 The Company shall not appoint or continue the employment of any person as WholeTime Director who has attained the age of seventy years Provided that appointment of aperson who has attained the age of seventy years may be made by passing a specialresolution in which case the explanatory statement annexed to the notice for such motionshall indicate the justification for appointing such person.
1.7 The potential candidate to be appointed as Director / Independent Director/KMPs/SMPs has not been disqualified under the Companies Act 2013 Rules made there underListing Agreement or any other enactment for the time being in force.
2. Term / Tenure:
2.1 Chairman &Managing Director/Whole-time Director:
The Company shall appoint or re-appoint any person as its Chairman & ManagingDirector Executive Chairman Managing Director or Executive Director for a term notexceeding three years at a time.
No re-appointment shall be made earlier than one year before the expiry of term of theDirector appointed.
2.2 Independent Director
An Independent Director shall hold Office for a term up to five years on the Board ofthe Company and will be eligible for re-appointment on passing of a special resolution bythe Company and disclosure of such appointment in the Boards report.
No Independent Director shall hold Office for more than two consecutive terms but suchIndependent Director shall be eligible for re-appointment in the Company as IndependentDirector after the expiry of three years from the date of cessation as such in theCompany. The Committee shall take into consideration all the applicable provisions of theCompanies Act 2013 and the relevant rules as existing or as may be amended from time totime.
2.3 Key Managerial personnel / Senior management or Other Employees.
The Term/ Tenure of the KMPs/ Senior Management Personnel and other employeesshall be as per the companies prevailing internally policy.
Due to reasons for any disqualification mentioned in the Companies Act 2013 and rulesmade thereunder or under any other applicable Act rules and regulations or any otherreasonable ground the Committee may recommend to the Board for removal of a Director KMPor SMP subject to the provisions and compliance of the Act rules and regulations.
(a) The Director shall retire as per applicable provisions of the Companies Act 2013along with the Rules made thereunder.
(b) The KMPs & SMPs shall retire on attaining the age of 60 (sixty) years or lateras may be so decided by the CMD (Shri Deepak Kumar Singhania) and or WTD (Shri A KSinghania).
(c) Existing KMPs and or SMPs who are of over 60 years of age shall continue in serviceof the Company till such time as may be decided by CMD (Shri Deepak Kumar Singhania) andor WTD (Shri A K Singhania).
(d) Any new appointment of KMP(s) and SMP(s) who are 60 years of age or above can bemade by the CMD (Shri Deepak Kumar Singhania) and or WTD (Shri A K Singhania) and suchperson(s) shall retire as may be decided by the aforesaid CMD / WTD.
5. Diversity on the Board of the Company
The Company aims to enhance the effectiveness of the Board by diversifying it andobtain the benefit out of it by better and improved decision making. In order to ensurethat the Companys board room has appropriate balance of skills experience anddiversity of perspectives that are imperative for the execution of its business strategythe Company shall consider a number of factors including but not limited to skillsindustry experience background race and gender.
The Policy shall conform with the following two principles for achieving diversity onits Board:
Decisions pertaining to recruitment promotion and remuneration of the directorswill be based on their performance and competence; and
For embracing diversity and being inclusive best practices to ensure fairnessand equality shall be adopted and there shall be zero tolerance for unlawfuldiscrimination and harassment of any sort whatsoever.
In order to ensure a balanced composition of executive non-executive and independentdirectors on the Board the Company shall consider candidates from a wide variety ofbackgrounds without discrimination based on the following factors:
Gender - The Company shall not discriminate on the basis of gender in the matterof appointment of director on the Board.
Age - Subject to the applicable provisions of Companies Act 2013 age shall beno bar for appointment of an individual as director on the Board of the Company.
Nationality and ethnicity - The Company shall promote having a board roomcomprising of people from different ethnic backgrounds so that the directors mayefficiently contribute through their knowledge sources and understanding for the benefitof Companys business;
Physical disability - The Company shall not discriminate on the basis of anyimmaterial physical disability of a candidate for appointment on Companys Board ifhe/she is able to efficiently discharge the assigned duties.
Educational qualification - The proposed candidate shall possess desired teambuilding traits that effectively contribute to his/ her position in the Company. TheDirectors of the Company shall have a mix such as of finance legal and managementbackground that taken together provide the Company with considerable experience in arange of activities including varied industries education government banking andinvestment.
In discharging its responsibilities the Committee shall have regard to the followingPolicy objectives :
(a) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors KMPs SMPs and other employees of the quality required torun the Company successfully;
(b) The remuneration to Directors KMPs SMPs & other employees will be by way offixed pay as per current policy of the Company and as per the provisions of Companies Act2013 and rules made there under.
Company will introduce incentive pay as and when feasible depending upon its revival.The payment structure of remuneration will be as follows:
6.1 Non-Executive / Independent Directors :
The Independent Directors will be paid remuneration by way of sitting fee for attendingmeeting of the Board or any Committee thereof provided that such amount shall be subjectto the ceiling of the limit as prescribed under the Companies Act 2013 or Rules madethere under or any other enactment for the time being in force and the same is to beapproved by the Board of Directors as recommended by the Committee.
6.2 Chairman & Managing Director (CMD) / Whole-time Director (WTD) :
The remuneration/ compensation payable to CMD / WTD shall be governed by the provisionsof Companies Act 2013 and Rules made there under or any other enactment for the timebeing in force and will be subject to approval of the Board of Directors shareholders andthe Central Government wherever required and shall be in compliance with Schedule V of theCompanies Act. 2013.
6.3 Key Managerial Personnel (KMP) / Senior Management Personnel (SMP) :
Since the Company is a sick industrial Company registered with the Honble Boardfor Industrial and Financial Reconstruction ("BIFR") under the provisions ofSection 15 (1) of the Sick Industrial Companies (Special Provisions) Act 1985("SICA") the remuneration policy for KMPs & SMPs has been designed toprovide multiple options inter-alia for the purpose of operational convenience andrequirement.
(a) The existing KMPs & SMPs shall be eligible for a monthly fixed remuneration asper the existing terms of employment.
(b) For any appointment of new KMP/SMP the remuneration will be as decided by theBoard on receipt of recommendation by the NRC. However CMD Shri Deepak Kumar Singhaniaand / or WTD Shri Anurag Kumar Singhania may approve the appointment of any newKMP(s)/SMP(s) which shall be done by the Company and such appointment will be intimated tothe Committee for their consideration and recommendation to the Board for theirconfirmation.
(c) Any increment which is beyond the policy of the Company to the existingremuneration / compensation of the KMPs/SMPs will be recommended by the Committee to theBoard for their approval based on performance evaluation.
(d) The CMD and / or WTD shall have power to approve that the Company grants and paysany ex-gratia amount not exceeding 100% of any persons annual remuneration and orupto 50% increase in the persons annual remuneration to KMP(s)/SMP(s) depending upontheir performance.
(e) The said increment and or ex-gratia approved by the CMD / WTD will be intimated tothe Committee at its subsequent meeting.
6.4 Other Employees
The power to decide / determine structure of remuneration for other employees has beendelegated to the HR Department of the Company and which will be made in consultation /consent of CMD Shri Deepak Kumar Singhania and / or WTD Shri Anurag Kumar Singhania.
6.5 Loans / advances
i) The power to give loans & advances to employees including Key Managerial (CSand CFO) / Senior Management Personnel is delegated to Chairman & Managing DirectorShri Deepak Kumar Singhania and / or Whole-time Director Shri Anurag Kumar Singhania andthey may give loans / advances to employees including Key Managerial Personnel (CS andCFO) / Senior Management Personnel on the terms & conditions of the Company asformulated with or without interest as they may deem proper and decide (Annexure 2).
ii) The existing loans & advances to the employees including Key ManagerialPersonnel (CS and CFO) / Senior Management Personnel will continue on the existing terms& conditions or as may be decided by the Chairman & Managing Director Shri DeepakKumar Singhania and / or Whole-time Director Shri Anurag Kumar Singhania.
7.1 Criteria for evaluation of Executive Directors:
(i) The Executive Director(s) shall be evaluated on the basis of targets / Performanceof the Company / any other Criteria as may be given to them by the Board from time totime.
(ii) The Executive Director(s) shall be evaluated by the Independent Directors in theirseparate meeting where the performance of nonindependent director(s) and the Boardas a whole shall be considered
7.2 Criteria for evaluation of Non-Executive Directors:
The performance evaluation of Independent Directors shall be done by the entire Boardof Directors excluding the Director being evaluated.
The Non-Executive Directors shall be evaluated on the basis of the following criteriai.e. whether they :
(a) act objectively and constructively while exercising their duties;
(b) exercise their responsibilities in a bona fide manner in the interest of thecompany;
(c) devote sufficient time and attention to their professional obligations for informedand balanced decision making;
(d) do not abuse their position to the detriment of the company or its shareholders orfor the purpose of gaining direct or indirect personal advantage or advantage for anyassociated person;
(e) refrain from any action that would lead to loss of his independence
(f) inform the Board immediately when they lose their independence
(g) assist the company in implementing the best corporate governance practices.
(h) strive to attend all meetings of the Board of Directors the Committees and thegeneral meetings of the Company;
(i) participate constructively and actively in the committees of the Board in whichthey are chairpersons or members;
(k) keep themselves well informed about the company and the external environment inwhich it operates;
(l) do not to unfairly obstruct the functioning of an otherwise proper Board orcommittee of the Board;
(m) moderate and arbitrate in the interest of the company as a whole in situations ofconflict between management and shareholders interest.
(n) abide by Companys Memorandum and Articles of Association Companies Actrules made thereunder and Listing agreement companys policies and proceduresincluding code of conduct insider trading guidelines etc.
(o) Any other factor that the Independent Director(s) / Board of Directors may considernecessary for such evaluation.
(p) Safeguarded the confidentiality.
7.3 Criteria for evaluating performance of Key Managerial Personnel and SeniorManagement Personnel:
Criteria for evaluating performance of KMPs and Senior Management Personnel shallbe as per the KRAs given to them at the beginning of the year by their respectivereporting heads.
7.4 Criteria for evaluating performance of Other Employees:
The power to decide the criteria for evaluating performance of other employees has beendelegated to HR Department of the Company.
MINUTES OF COMMITTEE MEETING
Proceedings of all meetings must be recorded as minutes and signed by the Chairman ofthe Committee within the prescribed period and the said Minutes of the Committee meetingswill be tabled at the subsequent Board and Committee meeting. The company should preparethe minutes and get it signed in such manner as prescribed in Companies Act 2013 andSecretarial Standards issued by Institute of Company Secretaries of India.
DISCLOSURE OF THIS POLICY
The policy shall be disclosed in the Annual report of the Company as required underCompanies Act 2013 rules made there under and the Listing Agreement as amended fromtime to time and as may be required under any other law for the time being in force.
The Committee as and when required shall assess the adequacy of this Policy and makeany necessary or required amendments to ensure it remains consistent with the Boardsobjectives current law and best practice.
ANNEXURE-1 TO THE POLICY ANNEXED WITH DIRECTORS REPORT
Criteria for determination of the Fit and Proper Criteria.
Name of Company: LML Limited
Declaration and Undertaking
I. Personal details of the Candidate/ Director
a. Full name
b. Date of Birth
c. Educational Qualifications
d. Relevant Background and Experience
e. Permanent Address
f. Present Address
g. E-mail Address/ Telephone Number
h. Permanent Account Number under the Income Tax Act
i. Relevant knowledge and experience
j. Any other information relevant to Directorship of the Company.
II. Relevant Relationships of Candidate/ Director
a. List of Relatives if any who are connected with the Company (w.r.t. the Section2(76) & 2(77) of the Companies Act 2013)
b. List of entities if any in which he/she is considered as being interested [ w.r.t.Section 184 of the Companies Act 2013]
c. Names of other Companies in which he/ she is or has been a member of the boardduring the last 3 years (giving details of period during which such Office was held)
III. Records of professional achievements
a. Relevant Professional achievements
IV Proceedings if any against the Candidate/ Director
a. If the person is a member of a professional association/ body details ofdisciplinary action if any pending or commenced or resulting in conviction in the pastagainst him/her or whether he/she has been banned from entry of at any profession/occupation at any time.
b. Whether the person attracts any of the disqualifications envisaged under Section 164of the Companies Act 2013?
c. Whether the person in case of appointment as Executive Chairman Managing DirectorWhole-time Director attracts any of the disqualification envisaged under Schedule V ofCompanies Act 2013 ?
d. Whether the person at any time come to the adverse notice of a regulator such asSEBI IRDA MCA ?
V. Any other explanation/ information in regard to items I to III and other informationconsidered relevant for judging fit and proper.
1. I confirm that the above information is to the best of my knowledge and belief trueand complete. I undertake to keep the Company fully informed as soon as possible of allevents which take place subsequent to my appointment which are relevant to the informationprovided above.
2. I also undertake to execute the deed of covenant required to be executed by alldirectors of the Company
ANNEXURE-2 TO THE POLICY ANNEXED WITH DIRECTORS REPORT
RULES FOR LOAN / ADVANCE TO THE EMPLOYEES INCLUDING KEY MANAGERIAL PERSONNEL (CS ANDCFO) / SENIOR MANAGEMENT PERSONNEL
1. The employee concerned shall submit an application to the departmental headmentioning the need for the loan applied for.
2. Loan or Advance to the employee shall be sanctioned inter-alia for the followingpurposes (given as an illustration) :-
(a) For meeting medical expenses of self and / or any member of his family;
(b) For meeting expenses for social purposes and / or other obligations including butnot limited to marriage;
(c) For meeting expenses for education of children;
(d) For meeting expenses arising out of death of any member in the family;
(e) For meeting expenses of birth of child;
(f) For meeting other expenses which may be for reasonable purposes.
3. The Departmental Officer after verification of the purpose for which loan isapplied for shall forward the same with his remarks to the Personnel Department.
4. The Personnel Department shall also make preliminary enquiry so as to make sure thatthe purpose for which the advance or loan has been applied for is correct.
5. The Personnel Department shall also make sure that the employees who has applied foradvances or loan is a permanent and regular employee of the Company.
6. The amount and terms of loan / advance given to the employee shall be on the basisas may be decided by Chairman & Managing Director (Mr Deepak Kumar Singhania) /Whole-time Director (Mr Anurag Kumar Singhania).
ANNEXURE C TO BOARDS REPORT
FORM NO. AOC.2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act andRule 8(2) of the 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 arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basis:
2. Details of material contracts or arrangement or transactions at arms lengthbasis
ANNEXURE D TO BOARDS REPORT
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2015
[Pursuant to section 204(1) of the Companies Act 2013 and ruleNo.9 of the Companies (Appointment and Remuneration Personnel) Rules 2014]
C-3 Panki Industrial Estate Site-I
Kanpur-208 022 (U.P.)
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by LML Limited(hereinafter called "the company"). Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.
Based on our verification of the books papers minute books forms and returns filedand other records maintained by "the company" and also the information providedby "the Company" its Officers agents and authorized representatives during theconduct of secretarial audit We hereby report that in our opinion the company hasduring the audit period covering the financial year ended on March 31st 2015complied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter.
We have examined the books papers minute books forms and returns filed and otherrecords maintained by LML Limited for the financial year ended on March 31st2015 according to the provisions of:
i) The Companies Act 2013 (the Act) and the rules made there under
ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade there under;
iii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;
iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings; (Not applicable To The Company during the Audit Period).
v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992.
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009; (Not applicable To The Company during the AuditPeriod)
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 (Not applicable To The Company duringthe Audit Period)
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008; (Not applicable To The Company during the Audit Period)
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009; (Not applicable To The Company during the Audit Period)
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; (Not applicable To The Company during the Audit Period)
vi) I further report that having regard to the compliance systemprevailing in the company and as certified by management and on examination of therelevant documents and records in pursuance thereof on text check basis the Company hascomplied the law applicable specifically to the company i.e. Central Motor Vehicle Rules1989.
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India. (SecretarialStandards although notified are not applicable to the Company during the period underAudit)
(ii) The Listing Agreements entered into by the Company with National Stock Exchangeand Bombay Stock Exchange.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above.
We further report that:-
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members views arecaptured and recorded as part of the minutes.
We further report that:-
There exist systems and processes in the company commensurate with the size andoperations of the company to monitor and ensure compliance with applicable laws rulesregulations and guidelines.
We have relied on the representations made by the company and its Officers for systemsand mechanism formed by the company for compliances under other applicableActs/Laws/Regulations to the company as under:-
(a) The factories Act 1960
(b) Labour laws and other incidental laws related to labour and employees related towages gratuity PF/ESI compensation etc.
(c) Act prescribed under Prevention and Control of Pollution
(d) Act prescribed under Environmental Protection
(e) Acts prescribed under Direct Tax/Indirect Taxes.
We further report that during the audit period there were no instances of:
(i) Public/Right/Preferential issue of shares / debentures/ sweat equity etc.
(ii) Redemption / buy-back of securities.
(iii) Major decisions taken by the members in pursuance to section 180 of the CompaniesAct 2013
(iv) Merger / amalgamation / reconstruction etc.
(v) Foreign technical collaborations
We further report that the Company is a Sick Industrial Company within the meaningof Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act 1985 (SICA) andis in the process of restructuring / revival of its business under the aegis of BIFR andhas submitted updated revival scheme.
ANNEXURE E TO BOARDS REPORT
Form for disclosure of particulars with respect to technology absorption
A. Research & Development (R & D)
1. Specific areas in which R & D carried out by the Company
1.1 Design of 4 Stroke Engines of various displacements;
1.2 Design of new 4-stroke CVT scooters.
1.3 Design of new 4-stroke geared scooters.
2. Benefits derived as a result of the above R & D
Successfully developed & producing a range of 4-stroke geared scooters in125cc-150cc & 200cc category 4- stroke CVT scooters in 125cc & 150cc category and4-stroke motorcycle in 110cc & 150cc. Company is expecting to start industrialization/ production of new 125cc CVT scooter.
3. Future plan of action
3.1 Industrialization of new 4-Stroke vehicles.
3.2 Development of fuel injection vehicles
3.3 Development/ Industrialization of new 4-stroke vehicles.
3.4 Design of electric vehicles including 3-wheelers.
3.5 Design and development of light 3-wheeler for cargo application
3.6 Design of vehicles using alternate fuels (LPG / CNG)
3.7 Design of new generation of scooters and motorcycles
4. Expenditure on R & D
B. Technology Absorption Adaptation and Innovation
5. Efforts in brief made towards technology absorption adaptation andInnovation
5.1 Application of Rapid Prototyping technology for quick & cost effectivevalidation of designs resulting in faster industrialization of new products.
5.2 Use of simulation technology for combustion optimization and valve train analysisof new engines for superior performance in terms of fuel economy emission &reliability.
5.3 Computer Simulation of Vehicle Structural Components Linkage Analysis and StressAnalysis.
5.4 Testing of different vehicle components on test rigs and durability validation.
6. Benefit derived as a result of the above efforts e.g. product improvementcost reduction production development import substitution etc.
Substantive improvement in the product reliability and repeatability.
7. Technology imported
8. If not fully absorbed areas where this has not taken place reasons thereofand future plans of action.