The Board of Directors ("Board") have pleasure in presenting the 38th AnnualReport on the business and operations together with Audited Financial Accounts of yourCompany ("the Company") for the Financial Year ended 31 March 2019.
1. FINANCIAL PERFORMANCES STANDALONE & CONSOLIDATED
The highlights of standalone and consolidated financial performance of the Company areas follows:
(र in Lakhs unless otherwise stated)
| ||Standalone || || |
| || |
For the Financial Year 31 March
For the Financial Year 31 March
|Particulars ||2019 ||2018 ||2019 ||2018 |
|Revenue from Operations ||185145.00 ||169119.07 ||185145.00 ||169119.07 |
|Other Income ||2551.88 ||925.43 ||1153.11 ||546.05 |
|Total Income ||187696.88 ||170044.50 ||186298.11 ||169665.12 |
|Total Expenses ||177408.93 ||161252.22 ||177408.93 ||161252.22 |
|Profit before exceptional items income tax and share in profit/loss of associate ||10287.95 ||8792.28 ||8889.19 ||8412.90 |
|Exceptional items ||3620.27 ||- ||3620.27 ||- |
|Profit before share in net profit/(loss) of associate ||- ||- ||12509.45 ||8412.90 |
|Profit/ (Loss) of Associate ||- ||- ||918.65 ||1342.04 |
|Profit Before Tax (PBT) ||13908.22 ||8792.28 ||13428.10 ||9754.94 |
|Tax Expenses ||3168.22 ||2468.59 ||3048.68 ||2618.71 |
|Profit for the Year ||10740.00 ||6323.69 ||10379.42 ||7136.23 |
|Other Comprehensive Income Items that will not be re-classified to profit or loss || || || || |
|- Remeasurement of defined benefit liability/asset ||210.05 ||268.54 ||210.05 ||268.54 |
|- Income Tax relating to above || ||(115.57) || ||(115.57) |
|Net other Comprehensive Income ||210.05 ||152.97 ||210.05 ||152.97 |
|Total Comprehensive Income ||10529.95 ||6170.72 ||10169.37 ||6983.26 |
|Paid-up Equity Share Capital ||934.77 ||934.77 ||934.77 ||934.77 |
|Earning Per Share (EPS) (not annualized) || || || || |
|Basic/Diluted EPS (In `) ||114.89 ||67.65 ||111.04 ||76.34 |
a. COMPANY PERFORMANCE Standalone:
On standalone basis the Company clocked growth of 12% in Revenue from Operations. Forthe Financial Year 2018-19 the profit before tax and exceptional items (PBT) stood atर 10287.95 Lakhs as compared to र 8792.28 Lakhs in the previous year witnessing asignificant growth of 17%. The PBT after exceptional items stood at र 13908.22 Lakhsas compared to र 8792.28 Lakhs in the previous year registering a growth of 58%. TheProfit after Tax (PAT) stood at र 10740 Lakhs as compared to र 6323.69 Lakhsregistering a growth of 70%. The Total Comprehensive Income increased to र 10529.95Lakhs as against र 6170.72 Lakhs in the previous year registering a growth of 71%. TheBasic and Diluted Earnings per share also grew by 70%.
At the consolidate level the Revenue from Operations grew by 12% whereas the Profitbefore tax (PBT) and Profit for the Period stood at र 13428.10 Lakhs and र10379.42 Lakhs respectively showing a significant increase by 38% & 45% respectively.The Total Comprehensive Income stood at र 10169.21 Lakhs leading to an increase by 46%as compared to the Financial Year 2017-2018. The Basic and Diluted Earnings per share grewby 45%. b. Dividend
Based on the Company's performance the Board of Directors are pleased to recommend afinal Dividend @ र 35/- (350%) per equity share of face value of र 10/- each for theFinancial Year 2018-19 which was considered by it in its meeting held on
14 May 2019. This includes special dividend of र 10/- per share on account of gainon sale of land & building.
The proposed Dividend subject to approval of Shareholders in the ensuing AnnualGeneral Meeting ("AGM") would result in appropriation of र 3944.22 Lakhs(including Corporate Dividend Tax of र 672.50 Lakhs) as against र 2591.92 Lakhs inprevious Financial Year 2017-18. The Register of Members and Share Transfer Books shallremain closed from Saturday 17 August 2019 till Friday 23 August 2019.
The said Dividend if approved at the ensuing AGM shall be paid to the eligibleShareholders within the stipulated time period. The Dividend pay-out ratio comes to36.72%.
c. AMOUNT TRANSFER TO RESERVES
A sum of र 1075 Lakhs has been proposed to be transferred to the General Reserve ofthe Company which is an appropriation out of profits of the Company.
d. PERFORMANCE OF ASSOCIATE COMPANY & CONSOLIDATED FINANCIAL STATEMENTS
S.L. Lumax Limited an Associate of the Company was incorporated in the year 1997. YourCompany holds 21.28% in equity share capital of SL Lumax. SL Lumax is based in Chennai andprimarily engaged in manufacturing of Auto Parts which includes auto lamp assemblieschassis mirror and front-end modules (FEM). During Financial Year 2018-19 the Associatesprofit attributable to the Company is र 918.65 Lakhs.
In accordance with the provisions of Companies Act 2013 and Regulation 33 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and applicableAccounting Standards the Audited Consolidated Financial Statement of the Company for theFinancial Year 2018-19 together with the Auditors' Report form part of this AnnualReport.
A report on performance and financial position of Associate Company included in theConsolidated Financial Statement (CFS) is presented in a separate section in this AnnualReport in the prescribed format of AOC-1.
In accordance with Section 136 of the Companies Act 2013 the Financial Statement ofthe Associate Company is available for inspection by the Members at the Registered O3ce ofthe Company during business hours on all days except Saturdays Sundays and publicholidays up to the date of the AGM. Any Member desirous of obtaining a copy of the saidFinancial Statements may write to the Company Secretary at the Registered O3ce of theCompany. The Financial Statements including the CFS and all other documents required tobe attached to this report have been uploaded on the website of the Company atwww.lumaxworld.in/ lumaxindustries.
2. STATE OF COMPANY'S AFFAIRS
The Financial Year 2018-19 turned out to be a roller- coaster period due to multipleconstraints such as high interest rates increasing insurance premiums tight liquidityconditions by NBFC's volatile exchange rate and political uncertainty due to ongoingelections however the Company continued to remain the market leader and a preferredsupplier for Original Equipment Manufacturers (OEM's) in India.
The Company believes in continuous value addition for its customers and therefore putse3orts in innovating and enhancing its product portfolio. The Company continued toreinforce its market position and supplied innovative lighting solutions adheringto high standards of quality and safety. Your Company's products have been preferred formost of the new models introduced in di3erent segments like Passenger Vehicle categoryviz. Toyota Yaris Maruti Ertiga Maruti Wagon R Force Motors Gurkha in Two-WheelerSegment viz. HMSI Aviator Hero MotoCorp Destini 125 Maestro Refresh
& Xpulse Mahindra Jawa and in Commercial Vehicle Segment viz. Piaggio VehiclesApe Mahindra & Mahindra Marazzo which lead to optimum growth both qualitatively andquantitatively.
In order to meet the changing norms the Company continues to maintain its focus onaggressive transition from conventional automotive lighting and towards this end thethoughtful initiatives were also undertaken on its R&D e3orts up-gradation of Plant& Machinery as well as skill set of people.
As the Company navigates through ever-changing business landscape the emphasis on LEDthe future of automotive lighting continued to be at the forefront. In view of this theCompany has initiated building/ upgrading its electronic capabilities to deliverhigh-quality lighting solutions and is in discussions with its suppliers to support itinitiatives with its customers for further business acquisition.
To succeed in the digital era where technologies are changing the ground rules inevery industry the Company undertook several new initiatives for enhancement of itsexisting Information Technology (IT) systems to meet the regulatory and otherorganizational requirements. Your Company made noteworthy developments in the field of ITby implementing Business Analytics module for data visualization in graphs charts &tables. The said module shall also generate fortnightly reports on Inventory Debtors etc.in graphical formats for better comprehension and understanding. In addition theimplementation of Financial Closing Cockpit (FCC) for timely closing of all financialactivities was also undertaken wherein activities are divided in monthly quarterly &yearly tasks with pre-defined timeline and in case of any delays an automated mail istriggered to the concerned teams based on the escalation matrix for timely action. Owingto the IT advancement and this development the Company will be able to minimise errorsand it shall aid in tracking the status of all activities attached against each task forverification by the concerned o3cials of the Company.
Road safety is important and is imperative to prevent deaths and injuries due to roadaccidents there are methods and measures that the govt. takes to change in attitudes andbehaviour ensuring they become responsible drivers passengers pedestrians and cyclists.In view of this it is important for the industry to contribute through enhancing productfeatures that o3er and ensure safety on the road. One of the crucial measures undertakenby the Company was development of VRX from Optis which is a Virtual Simulation Softwarethat simulates all Front lighting lamps like headlamp front fog lamp cornering lampsstatic bending lamps etc. This Simulator can visualize light homogeneity and quality oflight on various road driving condition virtually and provides improved road safety lightperformance with multiple driving experiments under various road conditions.
The in-house R&D and Design centres as also its manufacturing capabilities ensurecontinuous support to its Customers. The Company demonstrated its commitment towardsQuality by ensuring that quality processes are adhered by all the awards received at theICQCC- Singapore by its teams are a proof. The company has won accolades and awards notonly from the customers but also at various industry conventions like ACMA Zonal QCCcompetition National Convention of Quality Control Circle (NCQCC) Kaizen etc.
We continue to uphold the highest standards of Corporate Governance treating them asan ethical requisite rather than a regulatory necessity and continue to base all ouractions on the principles of fairness trust and transparency standing by our core valuesof Respect Integrity Passion and Excellence.
All in all the Company made good progress in all areas in Financial Year 2018-19 andwe are confident going forward we will continue to deliver value to all our customers andstakeholders. Our long-term outlook remains positive and we are confident to outperformthe industry.
A detailed discussion on business performance and future outlook is provided inManagement Discussion and Analysis Report (MDA) which is provided as an Annexure - Ato this Report.
a. CAPACITY EXPANSION & MODERNISATION OF
Your Company is constantly expanding the boundaries of its existing facilities andduring the Year under review the Company has invested
र 5662 Lakhs towards capacity expansion of its manufacturing facilities situated atBawal Bengaluru and Sanand.
Further an expenditure on Research and Development facilities of Chakan and Gurugrammanufacturing units was done to the tune of र 228 Lakhs and investment in modernizationof facilities across various manufacturing facilities amounted to र 3538 Lakhs.
b. TECHNOLOGY INNOVATION AND QUALITY
We are living in a world of rapid socio-economic changes driven by technologyinnovation and quality. We firmly believe that the focus on quality along with developmentin technology is the future of the automotive lighting. Your Company has been fortunate indeveloping and adopting various innovations in the field of technology driven by team oftalented engineer. This has allowed us to stayed ahead in this era of extensivecompetition. The "Zero Defect" initiative continues to remain at the heart oforganization and the new technology and innovative products are well researched anddesigned with no defects thereby leaving no adverse effect on society and environment.
During the year the Company has endeavored to strengthen its technologicalcapabilities and providing indigenous solutions to its customers. Few of such steps takentowards technology advancement was introduction of Robotic technology which has beendeployed on futuristic approach and would perform component extraction material transferand post operation in line with reduction in quantum of human intervention on componentleading to better quality and minimal human e3orts. The other technological upgradationwas installation of Automatic Material Transfer Vehicle (Automated Guided Vehicle-AGV)which moves through the predefined path and transfers the component trolleys from sourceto destination.
At Lumax we are cognizant of the latest trends and constantly equipping ourselves withnew technologies to be able to stay ahead of the curve. In our journey from being"Good to Great" the Company will continue to innovate and develop world classproducts and put thrust and focus on R&D global technology partnerships anddevelopment of advanced technological automotive products.
As an annual practise this year as well the Company celebrated 15th September asInnovation Day towards tribute to Late Shri M. Visvesvaraya the greatest Engineer andBharat Ratna recipient.
c. MANAGEMENT DISCUSSION & ANALYSIS REPORT
As stipulated under the provisions of Regulation 34 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 Management Discussion & AnalysisReport forms an integral part of this Report as an Annexure - A and providesdetails on overall Industry Structure and Developments financial and operationalperformance and other material developments during Financial Year under review.
d. THE CHANGE IN THE NATURE OF BUSINESS IF ANY
During the Financial Year ended 31 March 2019 there was no change in the nature ofbusiness of the Company.
3. GOVERNANCE AND ETHICS
a. CORPORATE GOVERNANCE
The Report on Corporate Governance together with the Auditor's Certificate regardingthe Compliance of conditions of Corporate Governance as stipulated in Regulation 34 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed andforms part of this Annual Report as an
Annexure - B. b. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS
The Board in its meeting held on 31 March 2018 had appointed Mr. Vineet Sahni CEO(DIN: 03616096) as an Additional Director to be designated as CEO & Senior ExecutiveDirector of the Company with effect from 1 April 2018 for a period of 5 years liable toretire by rotation. The said appointment was approved by Shareholders in the AGM dated 18July 2018.
Mr. Vineet Sahni is a B.E. Mechanical from Delhi College of Engineering and PG Diplomain Management from MSPI- Delhi. He has vast experience of successful mergers &acquisitions managing overseas partner relationships setting-up greenfield projectsrich organizational turnarounds establishing strong relationships with OEM's acrosssegments - domestic & global having a 360-degree holistic approach to continuallyenhance stakeholder value.
In accordance with Articles of Association the Board on recommendation of Nominationand Remuneration Committee had appointed Mrs. Ritika Modi (DIN: 00463560) as anAdditional Director to be designated as an Independent Director in its Meeting held on 28July 2018 for a period of 5 years subject to approval of Shareholders of the Company.
Mrs. Ritika Modi is a Diploma holder in Travel and Tourism from Bel Air UniversityLondon and a veteran in travel industry with over 26 years of experience. In her currentrole she is acting as Regional President for UNIGLOBE Travel South Asia. Taking it as herresponsibility to work for those who need help she supports a number of social causes andleads a variety of projects involving child education and environment protection. She alsostarted a non-profit organization which focused on counselling women and supporting themto pursue a career in travel.
Mrs. Ritika Modi holds office up to the date of forthcoming AGM and is eligible forappointment. Based on recommendation of Nomination and Remuneration Committee the Boardof Directors recommends for the approval of Shareholders through an Ordinary Resolution inthe 38th AGM of the Company the appointment of Mrs. Ritika Modi as an IndependentDirector for a term of 5 consecutive years from 28 July 2018 up to 27 July 2023.
The Shareholders may note that Mr. Koji Sawada (DIN: 07582189) was appointed as anExecutive Director liable to retire by rotation for a period of 3 years with effect from9 August 2016 in the AGM dated 22 July 2017. The present tenure of Mr. Koji Sawada shallbe expiring on 8 August 2019.
Accordingly the Board on recommendation of Nomination and Remuneration Committee hasin its Meeting held on 4 February 2019 has approved re-appointment of Mr.Koji Sawada as Executive Director for a further period of 3 years with effect from
8 August 2019 and recommends the same for approval by Shareholders in forthcoming AGM.
Mr. Koji Sawada is a Nominee Director of M/s Stanley Electric Co. Ltd. Japan and isassociated with Lumax since 2008. He is a graduate from Osaka Institute of Technology andpossesses over 31 years of rich experience in Quality Control and Lamp Assembly.
The terms of following Independent Directors shall be expiring on 21 August 2019:
1. Mr. Avinash Parkash Gandhi
2. Mr. Munish Chandra Gupta
3. Mr. Dhiraj Dhar Gupta
4. Mr. Rattan Kapur
The above said Directors were appointed by the Board in its Meeting held on 30 May 2014for a term of 5 years with effect from 22 August 2014.
Accordingly the Board on recommendation of Nomination and Remuneration Committee hasapproved the re-appointment of the above-mentioned Independent Directors in its BoardMeeting dated 4 February 2019 and recommends the same for approval of Shareholders bySpecial Resolution in the forthcoming AGM for a second term of 5 consecutive years from 22August 2019 up to 21 August 2024.
Further as stipulated under the Regulation 17(10) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 an evaluation exercise of Independent Directorswas conducted by the Board and the same has been satisfactorily evaluated and all theIndependent Directors fulfil the criteria regarding their independence from the Managementof the Company.
In view of Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 no listed entity can continue the Directorship of any person as aNon-Executive Director who has attained the age of seventy-five (75) years unless aspecial resolution is passed to that effect. Accordingly the continuation of DirectorshipMr. Avinash Parkash Gandhi and Mr. Munish Chandra Gupta both aged above eighty (80)years for second term of 5 years is also recommended at the forthcoming AGM as SpecialBusiness by way of Special Resolution in compliance of Section 102 of the Companies Act2013.
RETIREMENT BY ROTATION AND SUBSEQUENT RE-APPOINTMENT
In accordance with the Articles of Association of the Company and Section 152 of theCompanies Act 2013 read with the Companies (Appointment and Qualification of Directors)Rules 2014 (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force) Mr. Deepak Jain Chairman and Managing Director (DIN: 00004972) isdue to retire by rotation at the ensuing AGM and being eligible o3er himself forre-appointment. A brief profile of the Directors seeking appointment/ re-appointment isprovided in the Notice of AGM.
A_During the year under review Mrs. Pallavi Dinodia Gupta (DIN: 03570733) IndependentDirector on the Board of the Company ceased to be Director of the Company with effectfrom 28 May 2018. She has contributed immensely to the functioning of the Board and themanagement has also benefitted from her advice and directions. The Board places on recordgratitude for her advice and guidance.
c. NUMBER OF MEETINGS OF BOARD OF DIRECTORS
During the Financial Year 2018-19 the Board of Directors met six (6) times on 28 May2018 28 July 2018 22 October 2018 4 February 2019 15 February 2019 and 20 March 2019.Pursuant to the requirements of Schedule IV to the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 a separate Meeting ofthe Independent Directors of the Company was also held on 18 March 2019 without thepresence of Non-Independent Directors and Members of the management to review theperformance of Non-Independent Directors and the Board as a whole the performance of theChairperson of the CompanytakingintoaccounttheviewsofExecutive Directors Non-ExecutiveNon-Independent Directors and also to assess the quality quantity and timeliness of flowof information between the Company Management and the Board.
d. DIRECTORS RESPONSIBILITY STATEMENT
The Financial Statements have been prepared in accordance with Indian AccountingStandards (Ind-As) which are prescribed under Section 133 of Companies Act 2013 read withRule 3 of the Companies (Indian Accounting Standards) Rules 2015 and Companies (IndianAccounting Standards) Amendment Rules 2016. As required under Section 134(5) of TheCompanies Act 2013 the Directors state:
(i) that in the preparation of the Annual Accounts for the Financial Year ended 31March 2019 the applicable Accounting Standards have been followed and there are nomaterial departures;
(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the profit and loss of the Company for that period;
(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) that the Directors have prepared the Annual Accounts on a "goingconcern" basis.
(v) that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
(vi) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
e. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS
As stipulated under the provisions of Section 149 (6) of Companies Act 2013 andRegulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the requisite declarations have been received from the Independent Directors regardingmeeting the criteria of Independence as laid down under those provisions. In terms ofRegulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Independent Directors have confirmed that they are not aware of anycircumstance or situation which exist or may be reasonably anticipated that could impairor impact their ability to discharge their duties.
f. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
Pursuant to the provisions of section 178(1) of the Companies Act 2013 and Regulation19(4) read with Part D of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of the Company have approved revised Nomination andRemuneration Policy of Directors Key Managerial Personnel (KMP) and Other Employeesincluding criteria for determining qualifications positive attributes independence of aDirector and other matters provided u/s 178(3) to bring it in line with recent amendmentsenforced by statute.
The main features of the Policy are as follows
a. Introduction and Regulatory Framework b. Objective c. Constitution of Nomination andRemuneration Committee d. Role of Nomination & Remuneration Committee e. Appointment/Nomination of Directors f. Remuneration of Directors g. Appointment of Key ManagerialPersonnel and Senior Management Personnel h. Remuneration of Key Managerial Personnel andSenior Management Personnel i. Appointment and Remuneration of Other Employees j.Term/Tenure k. Evaluation of Performance of Board of Directors l. Frequency of BoardEvaluation m. Disclosure n. Administration Review and Amendment of Policy o.Clarification The Company's Policy relating to Appointment of Directors and KMP paymentof Managerial remuneration Directors' qualifications positive attributes independenceof Directors and other related matters is enclosed to this Board Report as an Annexure- C.
The Policy is also available on the website of the Company athttps://www.lumaxworld.in/lumaxindustries/pdf/nomination-and-remuneration-policy-of-directors. pdf.
g. PERFORMANCE EVALUATION OF BOARD COMMITTEE AND DIRECTORS
One of the key responsibilities and role endowed on the Board is to monitor and reviewBoard evaluation and framework.
Accordingly in line with applicable provisions of the Companies Act 2013 and ListingRegulations 2015 the evaluation of the Board as a whole Committees and all the Directorswas conducted as per the internally designed evaluation process approved by theNomination and Remuneration Committee. The evaluation tested key areas of the Board's workincluding strategy business performance risk and governance processes. The evaluationconsiders the balance of skills experience independence and knowledge of the managementand the Board its overall diversity and analysis of the Board and its Directors'functioning.
A The evaluation methodology involves discussion of questionnaires consisting ofcertain parameters such as Evaluation factor Ratings and Comments if any.
A The performance of entire Board is evaluated by all the Directors based on Boardcomposition and quality Board Meetings and procedures Board development Board strategyand risk management etc.
A The performance of the Managing Director and Executive Directors is evaluated by allthe Board Members based on factors such as leadership strategy formulation strategyexecution external relations etc.
A The performance of Non-Executive Director and Independent Directors is evaluated byother Board Members based on criteria like managing relationship Knowledge and skillpersonal attributes etc.
A It also involves self-assessment by all the Directors and evaluation of Committees ofBoard based on Knowledge diligence and participation leadership team and managementrelations committee meetings and procedures respectively.
A Further the assessment of Chairman & Managing Director's performance is done byeach Board Member on similar qualitative parameters.
The feedback of the evaluation exercise and inputs of Directors were collated andpresented to the Board and an action plan to further improve the effectiveness ande3ciency of the Board and Committees is put in place.
The Board as a whole together with each of its Committees was working effectively inperformance of its key functions - Providing strategic guidance to the Company reviewingand guiding business plans ensuring effective monitoring of the management and overseeingrisk management function. The Board is kept well informed at all times through regularcommunication and meets once per quarter and more often as and when need arises.Comprehensive agendas are sent to all the Board Members well in advance to help themprepare and ensure the meetings are productive. The Company makes consistent e3orts tofamiliarize the Board with the overall business performance covering all Businessverticals by way of presenting specific performance of each Plant Product Category andCorporate Function from time to time.
The performance of the Chairman was evaluated satisfactory in the effective and e3cientdischarge of his role and responsibilities for the day to day management of the businesswith reference to the strategy and long-term objectives. The Executive Directors andNon-Executive Directors provided entrepreneurial leadership to the Company within aframework of prudent and effective controls with a balanced focus on policy formulationand development of operational procedures. It was acknowledged that the managementaccorded sufficient insight to the Board in keeping it up-to-date with key businessdevelopments which was essential for each of the individual Directors to maintain andenhance their effectiveness.
h. AUDIT COMMITTEE & COMPOSITION
As at March 31 2019 the Audit Committee of Board comprised of seven (7) Members viz.Mr. Avinash Parkash Gandhi Mr. Munish Chandra Gupta Mr. Dhiraj Dhar Gupta Mr. RattanKapur Mr. Rajeev Kapoor Mr. Deepak Jain and Mr. Tadayoshi Aoki. The details regardingcategory of Members and terms of reference of Audit Committee had been stated in CorporateGovernance Report which forms part as an Annexure - B to this Report.
All the recommendations of Audit Committee made to the Board of Directors were dulyaccepted by it.
i. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
For the Financial Year 2018-19 all the Related Party Transactions entered into by theCompany were in ordinary course of business and at arms-length basis. All Related PartyTransactions which are foreseen and repetitive in nature are placed before the AuditCommittee on a yearly basis for obtaining prior omnibus approval of the Committee.
The transactions entered into pursuant to the omnibus approval are placed before theAudit Committee for review and approval on quarterly basis. All Related Party Transactionsare subjected to independent review by a reputed accounting firm to establish compliancewith the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
There were no materially significant Related Party Transactions entered into by theCompany with Promoters Directors or Key Managerial Personnel which may have a potentialconflict of interest for the Company at large.
However details of Related Party Transactions undertaken by the Company which fallunder the purview of "Materiality" as per SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 are attached in Form AOC-2 as an Annexure -D to this Report.
Further the Shareholder approval on such Material Related Party Transactions has beentaken by way of Postal Ballot dated 15 February 2019. The Company has formulated a policyon Related Party Transactions which is available on the Company's website athttp://www.lumaxworld. in/lumaxindustries/pdf/related-party-transaction-policy.pdf.
j. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established a Vigil Mechanism named Whistle Blower Policy forDirectors employees and business associates to report to the Management concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or ethics in accordance with the provisions of Section 177 (10) of Companies Act2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. During the year the said Policy was amended in line with SEBI(Prohibition of Insider Trading) (Amended) Regulations 2018. This mechanism provides foradequate safeguards against unfair treatment of whistle blower who wishes to raise aconcern and also provides for direct access to the Chairman of the Audit committee inappropriate/ exceptional cases. The Whistle Blower Policy is uploaded on the website ofthe Company www.lumaxworld. in/lumaxindustries. To further strengthen this mechanism theCompany has launched an Employee App which is available for both android and iOS users toreport any instances of financial irregularities breach of Code of Conduct abuse ofauthority unethical / unfair actions concerning Company vendors /suppliers malafidemanipulation of Company records discrimination among employees in an anonymous manner toprovide protection to the employees and who report such unethical practises andirregularities. Any incidents that are reported are investigated and suitable action istaken in line with the Whistle Blower Policy.
k. PARTICULARS OF EMPLOYEES
Information on Particulars of Employees as required under Section 197 of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms an integral part of this Report as an Annexure - E.The information required pursuant to Section 197 of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of your Company is available for inspectionby the Members at the Registered O3ce of the Company during business hours on working days(except Saturday) up to the date of ensuing AGM. If any Member is interested in obtaininga copy thereof such Member may write to the Company Secretary whereupon a copy would besent.
l. COMPLIANCE MANAGEMENT FRAMEWORK
Your Company has a robust and effective framework for monitoring compliances withapplicable laws. The Company has adopted comprehensive Compliance Manual for structuredcontrol over applicable compliances by each of the units of the Company. A separateCorporate Compliance Management Team periodically reviews and monitors compliances byunits and supports in effective implementation of same in a time bound manner. The Boardand Audit Committee along-with Compliance team periodically monitors status of complianceswith applicable laws based on quarterly certification provided by Senior Management.
4. INTERNAL FINANCIAL CONTROLS & ADEQUACY
a. Adequacy of Internal Financial Control with reference to Internal FinancialStatement
The Company has a robust and well embedded system of internal controls in place toensure reliability of financial reporting orderly and e3cient conduct of businesscompliance with policies procedures safeguarding of assets and economical and e3cientuse of resources. Appropriate review and control mechanisms are built in place to ensurethat such control systems are adequate and operate effectively.
Periodical programs of Internal Audits are planned and conducted which are also alignedwith business objectives of the Company. The meetings with Internal Auditors at Boardlevel are conducted wherein the status of audits and management reviews are informed tothe Board.
The Company periodically conducts physical verification of its inventory fixed assetsand Cash on hands and matches it with the books of accounts. Explanations are sought forany variance noticed from the respective functional heads.
The Company has adopted accounting policies which are in line with the IndianAccounting Standards notified under section 133 of the Companies Act 2013 read togetherwith the Companies (Indian Accounting Standard) Rules 2014. Changes in AccountingPolicies if any are approved by the Audit Committee in consultation with the StatutoryAuditors.
The Company get its Standalone and Consolidated Financial Statements reviewed everyquarter by its Statutory Auditors.
The Company uses an established SAP ERP HANA Systems to record day to day transactionsfor accounting and financial reporting. The SAP system is configured to ensure that alltransactions are integrated seamlessly with the underline books of accounts which helpsin obtaining accurate and complete accounting records and timely preparation of reliablefinancial disclosures.
b. RISK MANAGEMENT POLICY
The Company has adopted an enterprise risk management policy and established a riskmanagement framework with an objective of timely identification mitigation and control ofthe risks which may threaten the existence of the Company in accordance with theprovisions of the Companies Act 2013 and SEBI (Listing Obligations and
Disclosure Requirements) Regulations 2015. The Company has also constituted a RiskManagement Committee to review the risk trend exposure potential impact and theirmitigation plans and periodically the key risks are also discussed at the Audit Committee.
Pursuant to the provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 the Company in its 36th Annual GeneralMeeting held on 22 July 2017 approved the appointment of M/s. BSR
& Associates LLP Chartered Accountants (Firm Registration No. 116231W/W-100024) asStatutory Auditors of the Company for an initial term of five (5) years from theconclusion of 36th AGM till the conclusion of 41st AGM to be held in the year 2022.
M/s. BSR & Associates LLP Chartered Accountants have confirmed that they are notdisqualified from continuing as Auditors of the Company. The Auditors have issued anunmodified opinion on the Financial Statements for the Financial Year ended 31 March 2019.
The requirement for annual ratification of Auditors appointment at AGM has been omittedpursuant to Companies Amendment Act 2017 notified on 7 May 2018.
STATUTORY AUDITORS REPORT
The Report given by M/s. BSR & Associates LLP Chartered Accountants on theFinancial Statements of the Company for the year 2018-19 is part of the Annual Report.There has been no qualification reservation adverse remark or disclaimer given by theAuditors in their Report.
In terms of Section 148 (1) of Companies Act 2013 the Company is required to maintaincost records for certain products as specified by the Central Government and accordinglysuch accounts and records are made and maintained in the prescribed manner.
The Board on recommendation of Audit Committee has re-appointed M/s Jitender Navneet& Co. (Firm Registration No. 000119) as the Cost Auditors of the Company in accordancewith Section 148 and other applicable provisions of the Companies Act 2013 for the auditof the cost accounts of the Company for the Financial Year 2018-19.
The remuneration proposed to be paid to the Cost Auditor subject to ratification bythe Members of the Company at the ensuing 38th AGM shall be र 1.75 Lakhs (Rupees oneLakh and seventy- five thousand only) excluding taxes and out of pocket expenses if any.
COST AUDIT REPORT
The Cost Audit Report for the Financial Year 2017-18 has been filed with the CentralGovernment within the stipulated time on 25 August 2018.
DISCLOSURE ON MAINTENANCE OF COST RECORDS AS SPECIFIED BY CENTRAL GOVERNMENT UNDER SUBSECTION (1) OF SECTION 148
The Company is maintaining cost records as stipulated under law.
Pursuant to the provisions of Section 204 of The Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr. Maneesh Gupta Practicing Company Secretary as the Secretarial Auditorof the Company to undertake the Secretarial Audit for the Financial Year 2018-19.
The Company has received consent from Mr. Maneesh Gupta to act as the auditor forconducting audit of the secretarial records for the Financial Year ending 31 March 2019.
ANNUAL SECRETARIAL AUDIT REPORT & ANNUAL SECRETARIAL COMPLIANCE REPORT
The Secretarial Audit Report for the Financial Year ended 31 March 2019 under CompaniesAct 2013 read with Rules made thereunder and Regulation 24A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force) is set out in theAnnexure - F to this Report. There has been no qualification reservation adverseremark or disclaimer given by the Auditors in their Report.
As per recent Circular having No. CIR/CFD/ CMD1/27/2019 issued by Securities andExchange Board of India dated 8 February 2019 read with Regulation 24A of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 all listed entities on annualbasis are required to get a check done by Practising Company Secretary (PCS) on complianceof all applicable SEBI Regulations and circulars/ guidelines issued thereunder and get anAnnual Secretarial Compliance Report issued by a PCS in this regard which is furtherrequired to be submitted to Stock Exchanges within 60 days of the end of theFinancial Year.
The Company has engaged the services of Mr. Maneesh Gupta (CP No. 4982)Practicing Company Secretary and Secretarial Auditor of the Company for providing thiscertification.
Accordingly the Company has complied with the above said provisions and an AnnualSecretarial Compliance Report has been issued to the Company.
In compliance with the provisions of Section 138 of Companies Act 2013 read withCompanies (Accounts) Rules 2014 your Company has appointed M/s Grant Thornton India LLPas an Internal Auditors for the Financial Year 2018-19.
d. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF3SECTION1433OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT:
During the year under review no frauds were reported by Statutory Auditor andSecretarial Auditor against the Company which would need to be mentioned in this Board'sReport.
5. CORPORATE SOCIAL RESPONSIBILITY 3CSR3 POLICY AND INITIATIVES
Your Company's Corporate Social Responsibility (CSR) is to give back to society andcontribute to nation development through its initiatives.
The Company's CSR initiatives are implemented through its CSR arm/ trust LumaxCharitable Foundation ("Foundation") with focus on education empowerment ofgirl chid through education and the healthcare for disadvantaged section of society.During the year your Company's spend on CSR activities is 2.02% of the average netprofits during the three immediately preceding Financial Years.
The Company has constituted a CSR Committee of the Board and also developed &implemented a CSR Policy in accordance with the provisions of the Companies Act 2013. TheCommittee monitors and oversees various CSR initiatives and activities of the Company. Thedetails of CSR Policy is available on the Company's websitehttp://www.lumaxworld.in/lumaxindustries/pdf/ corporate-social-responsibility-policy.pdf.The annual report on Corporate Social Responsibility activities is annexed as an Annexure- G to this Report.
Working towards our endeavor to provide holistic education the Foundation workstowards enrollment of girl child in schools provides learning aids starter kitsexcursion trips and festival celebration and also infrastructure support after assessingthe needs like construction of classrooms science laboratories sanitation facilitiesproviding potable water etc. Inclusive learning opportunities like that of e-learning isprovided at the schools adopted by the Foundation. The Foundation also provides end-to-endcareer counseling that includes aptitude tests orientation sessions one-on-onecounseling sessions etc. for students on the threshold of choosing career optionshelping them choose suitable careers.
The foundation has been operating a charitable Homeopathic clinic organizingspecialized health camps in association with I-Care to conduct eye screening and providecataract surgeries free of cost.
In association with Indian Cancer Society the Foundation has organized several cancerawareness camps and screening camps around our plants. The screening process includesblood profile and physical examination by a surgeon gynecologist and ENT specialist asalso radiology examination.
Constitution of CSR Committee
During the Financial Year 2018-19 the CSR Committee of the Company comprised of four(4) Members namely Mr. Munish Chandra Gupta Mr. Avinash Parkash Gandhi Mr.Deepak Jain and Mr. Anmol Jain. Further the Board of Directors have also adopted theamended CSR Policy of the Company as approved by the Board of Directors in its Meetingheld on 20 March 2019 which is also available on the website of the Company at www.lumaxworld.in/lumaxindustries. The contents of the said policy are as below: a. CSRPhilosophy b. Constitution of CSR Committee c. Role of CSR Committee d. Implementation ofCSR Projects Programs and Activities e. Allocation of Budget f. Lumax domains ofengagement in accordance with Schedule VII g. Monitoring and Review Mechanism h.Management Commitment
The disclosures as per Rule 8 of Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed as an Annexure - G to this Report in the prescribed format.
6. OTHER DISCLOSURES
MATERIAL CHANGES AND COMMITMENTS
During the year under review the Board of Directors of the Company in its Meeting heldon 20 March 2019 had approved the commencement of In- house manufacturing of the PCBbusiness for its captive consumption with effect from 1 April 2019. Accordingly in theMeeting of Board dated 5 April 2019 the Company approved acquiring of assets (includingPlant & Machineries Allied Infrastructures and Capital work in progress) formanufacturing of PCB's for र 2245 Lakhs and an unsold Inventory at र 2394 Lakhsfrom Lumax Auto Technologies Limited.
No other material changes and commitments a3ecting the Financial position of theCompany have occurred between 1 April 2019 and the date on which this Report has beensigned.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans and investments as on March 31 2019 are covered under theprovisions of Section 186 of The Companies Act 2013 is given in the Notes 6 and 7respectively to Financial Statements of the Company. The Company has not given anyguarantees during the Year under review.
INFORMATION ON CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO
One of the several commitments that continued to remain in force throughout theFinancial Year was developing business along with improvement in environmental performanceto maintain a reliable and sustainable future.
During the course of the year the manufacturing units of the Company have continuedtheir efforts to reduce energy consumption in all areas of its operations. Thesemanufacturing units are constantly encouraged to improve operational activities andmaximising production volumes and minimizing consumption of natural resources. Systems andprocesses have been put in place for utilization of alternate sources of energy andmonitoring of energy consumption for all the units.
Disclosure of information regarding Conservation of Energy Research & DevelopmentTechnology
Absorption and Foreign Exchange Earning and Outgo etc. under Section 134(3)(m) of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 is annexed as an Annexure- H to this Report.
EXTRACT OF ANNUAL RETURN
In accordance with the requirement of Section 92 and 134 (3) (a) of The Companies Act2013 read with Rule 12 of The Companies (Management and Administration) Rules 2014 theextract of the Annual Return in Form MGT 9 is annexed to this Report as an Annexure - I.
DETAILS OF FIXED DEPOSITS
During the year under review the Company has neither accepted nor renewed any Depositin terms of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 and any provisions of the said Section are not applicable to yourCompany.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINT VENTURESOR ASSOCIATE COMPANIES DURING THE YEAR
During the Financial Year 2018-19 there were no Companies which became Subsidiary orJoint Venture of the Company neither the Associate Company ceased to be an Associate ofthe Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts /Tribunals which would impact the going concern status of the Company and its futureoperations.
CONSTITUTION OF INTERNAL COMPLAINTS
COMMITTEE (ICC) UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013 (POSH)
As per MCA notification dated 31 July 2018 a "Statement that the Company hascomplied with the provisions related to Constitution of Internal Complaints Committeeunder the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 (POSH)" has to be included in the Board's Report.
In accordance with the above mentioned provisions of POSH Lumax is in compliance withand has adopted the "Prevention of Sexual Harassment at Workplace Policy" andconstituted an Internal Complaints Committee (ICC) for Prohibition Prevention andRedressal of Sexual Harassment of Women at Workplace and matters connected therewith orincidental thereto covering all the related aspects. The constitution of ICC is as per theprovisions of POSH and includes external Members from NGO or those individuals havingrelevant experience.
The Committee meets as and when required and provides a platform for female employeesfor registration of concerns and complaints if any.
During the year under Review i.e. 2018-19 forty (40) meetings and thirteen (13)awareness sessions were held across all manufacturing locations to discuss onstrengthening the safety of employees at workplace. In addition the awareness about thePolicy and the provisions of Prevention of Sexual Harassment Act was also carried out inthe said meetings. Further as per the applicable provisions of POSH your Companycontinues to submit Annual Report to the District Officer consisting of details asstipulated under the said Act.
ENVIRONMENT HEALTH SAFETY
The Company focuses on "Safety Culture Building" by maintaining the"Safety Management System" to reduce the risk of incident and Injuries. Thissystem includes safety rules safety procedures safety training hazard identificationcorrection incident reporting & investigation capturing near miss accidents safetycommunications and safety suggestions.
Safety Management System contributes not only to improve the workplace Safety but italso influence the organization Safety Culture.
Apart from the above the Company also performed below activities in Financial Year2018-19 sincerely:
1. ST/ Duct cleaning for locations where paint material & chemicals are being used.
2. Safety Gemba Audit as per IS 14489-98
3. Regional Safety Meeting at all regions
4. KYT - Kiken Yochi Training (Identifying hazard and taking corrective measures withthe help of actual users)
5. Hazards specific Safety training (Fire Fighting First Aid Electrical SafetyChemical & Machine Safety)
6. Prepared Safety manual for Standard Operating Procedures
7. Identified probable emergency and prepared Emergency Response Manual
8. Performed Comprehensive Inspection of all chemical storage areas according to thecheck point and necessary display system
9. Comprehensive review / surveillance audit done as per ISO 14001 (EnvironmentManagement System)
During the Year the Company also commenced the Fire Risk Assessment Audit for Tier-2Suppliers to reduce the fire related incident and achieved significant OK result it alsodelivered the awareness program to the suppliers related to Fire Safety.
By ensuring all the above zero accident level has been maintained for last threeyears. Induction programs & regular training of employees and the introduction offormal safety management system has contributed us to mitigate future incidents.
In the Financial Year 2018-19 the manufacturing units of the Company situated inChinchwad & Chakan achieved OHSAS - 18001 Certification.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Unpaid Dividend and Shares underlying Unpaid Dividend
Pursuant to the provisions of Section 124(5) the Companies Act 2013 read with theIEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules')(including any statutory modification(s) or re-enactment(s) thereof for the time being inforce) all unpaid or unclaimed Dividends are required to be transferred by the Company tothe IEPF established by the Central Government after the completion of seven (7) yearsfrom the date of transfer to Unclaimed Dividend Account of the Company. Further pursuantto provisions of Section 124(6) the shares in respect of which Dividend has not been paidor claimed by the shareholders for seven (7) consecutive years or more shall also betransferred to the Demat account of IEPF Authority. The said provisions does not apply toshares in respect of which there is a specific Order of Court Tribunal or StatutoryAuthority restraining any transfer of the shares . Accordingly the details relating toamount of Dividend transferred to the IEPF and corresponding shares on which Dividendswere unclaimed for seven (7) consecutive years are provided in the Report on CorporateGovernance which is annexed to this Report as an Annexure - B.
It may be noted that Unclaimed Dividend/Underlying shares for the Financial Year2011-12 declared on 73August 2012 can be claimed by the Members by 11 September 2019. TheNotice as stipulated pursuant to the provisions of Section 124 of Companies Act 2013 readwith IEPF (Accounting Audit Transfer and Refund) Rules 2016 has been published in theNewspaper inviting the attention of the Shareholders to claim their Dividends.
CODE OF CONDUCT TO REGULATE MONITOR AND REPORT TRADING BY DESIGNATED PERSONS (CODE OFCONDUCT)
During the Year in compliance with the Securities and Exchange Board of India(Prohibition of Insider Trading) (Amendment) Regulations 2018 the Company has amended andformulated a comprehensive Code of Conduct for Regulating Monitoring and Reporting ofTrading by Designated Persons. The said Code lays down guidelines which advise DesignatedPersons and Insiders on the procedures to be followed and disclosures to be made indealing with the shares of the Company and cautions them on consequences ofnon-compliances. This Code includes a Policy and Procedure for Inquiry in case of leakageof Unpublished Price Sensitive Information or suspected leakage of Unpublished PriceSensitive Information and is available for reference on the website of the Company i.e.www.lumaxworld.in/lumaxindustries.
CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the Government. During theYear under review Company paid all its statutory dues & presently no undisputed duesare outstanding more than six months. The Company generally ensures payment of all dues toexchequer well within time line as applicable.
The Board of Directors place on record sincere gratitude and appreciation towards allits Stakeholders viz. shareholders employees investors bankers customers suppliersgovernment agencies stock exchanges and depositories auditors legal advisorsconsultants business associates service providers academic partners for their continuedcommitment and support. The Board conveys their deep sense of appreciation towardscontributions made by every member of Lumax Family during the year and express a sincerethanks and gratefulness to its Technical & Financial Collaborator- Stanley ElectricCo. Ltd. for their continued support and patronage throughout the year.
For and on behalf of the Board of Directors Lumax Industries Limited
Sd/- Place: Gurugram
Chairman & Managing Director
Date: 14 May 2019