Dear Share Holders
Your Directors are pleased to present the 34th Annual Report of the company along withthe Audited financial Statements for the financial year ended March 31 2018.
| || || |
Rs in Lakhs
|Particulars ||(2017-18) ||(2016-17) |
|Net Sales ||17494.48 ||13177.82 |
|Other Income ||84.05 ||35.19 |
|Captive Consumption ||352.98 ||1107.24 |
|Total Income ||17931.51 ||14320.24 |
|Profit before Depreciation Interest and Taxes ||2941.66 ||2815.38 |
|Depreciation ||817.28 ||818.11 |
|Profit before Interest and Taxes ||2124.38 ||1997.27 |
|Interest and Finance Charges ||1408.88 ||1666.12 |
|Profit before Taxes ||715.50 ||331.15 |
|Provision for Taxes ||245.03 ||120.12 |
|Profits after Taxes ||470.47 ||211.03 |
The turnover increased by 32.75 % in the year
The Machine Tool Division has posted significant growth compared to the previous yearprimarily lead by the General Purpose machinery division which itself showed a growth of46.72% as compared to previous year. GPM Machines export sale has also restarted this yearwith a marginal sale which is expected to be considerably higher in the coming year.Typically SPM movement will start once the economy reaches a reasonable uptick unlike theGPMs which pick up at the start of growth phase itself.
Accordingly the company is witnessing some movement in the SPM division too in thecoming years. The Component division also had a marginal growth driven by an increased offtake from the Connecting Rod business.
The current market conditions are showing signs of rapid recovery and our capacityutilization is at an increased level today.
Your directors are confident of putting in an improved performance over the previousyear.
1. The CNC machines division is expected to post substantial growth with improvingmarket conditions. While the current capacity utilization is at its peak the company ismaking significant improvements in productivity improvement and further increase incapacity utilization thus squeezing the assets to the maximum. With Europe showing signsof recovery and situation in Russia easing there would certainly be an uptick in theExport performance as well.
2. The SPM order book reflects a reasonable growth. Almost all the orders are from theexisting customers only for capacity expansion and not for any new products.
3. On the component division front the Connecting Rod production is in stabilizationmode. With a reasonable monsoons prediction the Tractor industry in particular and theAuto sector in general are expected to do well and thereby help us increase the overallrevenues.
The Company proposes to retain profits of the current year for company's future plansand developments.
Hence your directors have not recommended dividend for the Financial Year 2017-2018.
TRANSFER TO GENERAL RESERVE
The Company does not propose to transfer any amount to General Reserve.
Mr. M. Krishna Swamy Director of the company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer themselves for re-appointment.
The following Directors are proposed to be re-appointed as Directors of the companyunder Companies act 2013
|1. Mullapudi Lokeswara Rao ||- Managing Director |
|2. Bollineni Kishore Babu ||- Whole time director |
|3. Mullapudi Srinivas ||- Whole time director |
|4. Mullapudi Srikrishna ||- Whole time director |
The detailed profile of the above directors is given at Notice calling the AnnualGeneral Meeting.
All Independent Directors have given declaration that they meet the criteria ofindependence as laid under section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations 2015. A separate meeting of Independent Directors of the Company without theattendance of Non-Independent Directors was held during the year as required underSchedule IV to the Companies Act 2013 (Code for Independent Directors) and Regulation 25of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. All thedirectors of the Company have disclosed their interest to the Company pursuant to Sec184(1) of Companies Act 2013.
As required by SEBI (LODR) Regulations 2015 with the Stock Exchanges the informationon the particulars of the Directors seeking re-appointment are given in the notice to theAGM.
AUDITORS Statutory Auditors
The provisions of Section 139 142 and other applicable provisions if any of theCompanies Act 2013 (the Act) and the Companies (Audit and Auditors) Rules 2014(including any statutory modification(s) or re-enactment thereof for the time being inforce) and pursuant to recommendation of the Audit Committee and the Board of DirectorsM/s. K.S.Rao & Co. Chartered Accountants Hyderabad (ICAI Firm Regn. No.003109S) beand are hereby appointed as Statutory Auditors of the Company for a term of five yearsfrom conclusion of 33rd Annual General Meeting till the conclusion of 38thAnnual General Meeting at such remuneration plus reimbursement of out of-pockettravelling and living expenses etc. as may be mutually agreed between the Board ofDirectors of the Company and the said Auditors."
The Board has appointed M/s. DZR&Co Cost Accountants for conducting the audit ofcost records of the Company for various segments for the financial year 2017-18 asrecommended by the Audit Committee. As required under section 148 and Rule 14 of theCompanies (Audit and Auditors) Rules 2014 a resolution is being placed at the ensuing AGMfor ratification of remuneration payable to said Cost Auditors.
M/s. L.D. Reddy & Co. Practicing Company Secretaries was appointed to conduct theSecretarial Audit of the Company for the financial year 2017-18 as required under Section204 of the Companies Act 2013 and Rule 9 there-under. The secretarial audit report for FY2017-18 forms part of this Report as Annexure.
Reply to the observations of Secretarial auditor:
Your company is law abiding entity and filed the necessary forms & returns withthe authorities. However there was some delay filings occured during the year. Managementis taking measures to avoid the delay filings in future.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE OUTGO
Information required under section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) 2014 is enclosed herewith as Rules Annexure .
DEVELOPEMNT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
The Company has been addressing various risks impacting the company policy of thecompany on risk management is provided elsewhere in this Annual Report in ManagementDiscussion and Analysis.
The Company has developed and implemented a risk management policy for the companyincluding identification therein of elements of risk which in the opinion of the Boardmay threaten the existence of the company.
NOMINATION AND REMUENRATION POLICY
On the recommendation of the Nomination and Remuneration Committee the Board ofDirectors has formulated a policy of the Company on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters and to frame proper systems foridentification appointment of Directors & KMPs Payment of Remuneration to them andEvaluation of their performance.
FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS
As required under the provisions of Schedule IV of the Companies Act 2013 theperformance evaluation of independent directors has been done by the entire Board ofDirectors excluding the director being evaluated. The evaluation of all the directors andthe Board as a whole was conducted based on the criteria and framework adopted by theBoard. The Board approved the evaluation results as collated by the nomination andremuneration committee.
None of the independent directors are due for re-appointment
The equity shares of the Company are listed with Bombay Stock Exchange Limited (BSE)and National Stock Exchange of India Limited (NSE). There are no arrears on account ofpayment of listing fees to the said Stock Exchanges
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors' confirm that:
In preparation of annual accounts for the financial year ended 31st March 2018 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;
The Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give true and fairview of the state of affairs of the Company at the end of the financial year ended 31stMarch 2018 and of the profit of the Company for the financial year;
The Directors have taken proper and sufficient care for their maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
i. The Directors had prepared the annual accounts on a going concern' basis;
ii. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
iii. The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
During the year under review Six Board Meetings were held on 30th May2017 31st August 2017; 13th Sep 2017; 13th December2017 27th December 2017 and 9th February 2018.
Committees of Board
Your company has the following committees namely:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
The constitution of all the committees is as per the Companies Act 2013 and SEBI(LODR) Regulations 2015. The details of the Constitution of Committees are mentioned inCorporate Governance Report which forms part of this Annual Report.
Corporate Governance Report
Your Company has complied with the requirements of Regulation 34(3) read with ScheduleV of SEBI (LODR) Regulations 2015 and provisions of the Companies Act 2013 Report onCorporate Governance including Auditor's Certificate on compliance with the code ofCorporate Governance.
Change in Key Managerial Personnel
Mr. D. Raghavendrarao regisned from the office of Company Secretary with effect fromclose of business hours of 18th October 2017 and the Board has appointed Mr.Matru Prasad Mishra as the Company Secretary of the Company with effect from 14thDecember 2017.
Board's response on Auditor's qualification reservation or adverse remarl ordisclaimer made:
During the year there were no instances of frauds reported by auditors under Section143(12) of the Companies Act 2013.
Management Discussion and Analysis
A brief note on the Management discussion and analysis for the year is enclosed asAnnexure to this report
In pursuant to the provisions of section 177 of the Companies Act 2013 a VigilMechanism for directors and employees to report genuine concerns has been established. Allpermanent employees of the Company are covered under the Whistle Blower Policy.
Your Directors wish to place on record their appreciation for the support andco-operation extended by the Shareholders Bankers Financial Institutions GovernmentAuthorities Stock Exchanges Customers Suppliers and other associates.
Your Directors also wish to place on record their appreciation for the enthusiasticsupport received from the team of dedicated employees in the activities of your Company.
| ||On behalf of the Board |
| ||For Lokesh Machines Limited |
|B Kishore Babu ||M Lokeswara Rao |
|(Executive Director) ||(Managing Director) |