Dear Share Holders
Your Directors are pleased to present the 35th Annual Report of the companyalong with the Audited financial Statements for the financial year ended March 31 2019.
|Particulars ||(2018-19) ||(2017-18) |
|Net Sales ||19044.07 ||17494.48 |
|Other Income ||94.75 ||84.05 |
|Captive Consumption ||424.15 ||352.98 |
|Total Income ||19562.97 ||17931.51 |
|Profit before Depreciation Interest and Taxes ||3220.92 ||2941.66 |
|Depreciation ||912.58 ||817.28 |
|Profit before Interest and Taxes ||2308.34 ||2124.38 |
|Interest and Finance Charges ||1289.73 ||1408.88 |
|Profit before Taxes ||1018.62 ||715.50 |
|Provision for Taxes ||342.07 ||245.03 |
|Profits after Taxes ||676.54 ||470.47 |
The turnover increased by 8.86 % in the year
The Machine Tool Division has posted marginal growth compared to the previousyear primarily lead by the General Purpose machinery division which itself showed agrowth of 7.27% as compared to previous year. GPM Machines export sale has also commencedin considerably higher numbers in comparison to previous financial year. Sale of SPMmachines also registered growth during the year in terms of total sales value. TypicallySPM movement will start once the economy reaches a reasonable uptick unlike the GPMs whichpick up at the start of growth phase itself. Accordingly the company is witnessing somemovement in the SPM division too in the coming years.
The Component division had decreased marginally in comparison to previous year.
The Long term outlook for the industry is optimistic based upon the product innovationas most major global players having a base in India for manufacturing global sourcing andengineering.
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 FinancialYear 2018-2019.
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 himself for re-appointment.
The following Directors are proposed to be re-appointed as Independent Directors of thecompany for the second consecutive term of 5(five) years not liable to retire by rotationas recommended by the Nomination and Remuneration Committee pursuant to the applicableprovisions of Companies act 2013
|1. B.R Mahesh ||- Independent Director |
|2. R. Mohan Reddy ||- Independent director |
The detailed profile of the above directors is given at Notice and Explanatorystatement calling the Annual General 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 StockExchanges the information on the particulars of the Directors seeking re-appointment aregiven in the notice to the AGM.
AUDITORS Statutory Auditors
As per the provisions of Section 139 142 and other applicable provisions if any ofthe Companies Act 2013 (the Act) and the Companies (Audit and Auditors) Rules 2014(including any statutory modification(s) or reenactment 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) hasbeen appointed as Statutory Auditors of the Company for a term of five years fromconclusion 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 2018-19 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 2018-19 as required under Section204 of the Companies Act 2013 and Rule 9 there-under. The Secretarial Audit Report for FY2018-19 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 and returns withRegulatory authorities. However there was some delay filings occurred during the year.Management is taking measures to avoid the delay filings in future.
The Company is regular in complying the regulatory compliances under Relevant Acts /Regulations. Filling of Integrated return under Labour laws was missed inadvertently. Itis not intentional in nature. The Company does not have any mala-fide intention regardingthe same. Regulatory provision shall be conformed in entirety. However the Company will becautious for compliance of the said laws/acts.
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.
INTERNAL COMPLAINT COMMITTEE
The Company has in place a policy for prevention prohibition and redressal againstsexual harassment of women at workplace to protect women employees and enable them toreport sexual harassment at workplace. An Internal Committee has been constitutedconsisting of optimum number of women for the said purpose.
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 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 2019 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 2019 and of the profit of the Company for the financial year; The Directors havetaken proper and sufficient care for their maintenance of adequate accounting records inaccordance with the provisions of the Companies Act for safeguarding the assets of theCompany 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 16th May2018 08th August 2018; 31st August 2018; 22ndSeptember 2018 12th November 2018 and 11th February 2019.
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 has been annexed with this report.
Change in Key Managerial Personnel
There is no change in Key Managerial Personnel during the said financial year 2018-19.
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 Vigil Mechanism:
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 continued 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 |
|M Srinivas ||M Lokeswara Rao |
|(Whole Time Director) ||(Managing Director) |