lakshmi electrical control systems ltd Directors report

Lakshmi Electrical Control Systems Limited

Registered Office:504, Avinashi Road,

Peelamedu Post, Coimbatore 641004, Tamil Nadu, India.

CIN: L31200TZ1981PLC001124

Tel: +91 422 6616500

Email: investorscell@lecsindia.com

Website: www.lecsindia.com

Board of Directors Report to Shareholders

Dear Shareholders,

The Board of Directors of your Company are pleased to present the Forty Second Annual Report on the business and operations of the Company along with the summary of financial statements for the year ended 31 ^st March 2023.

1. The State of Affairs of the Company Financial summary/highlights

Particulars	Financial Year 2022-2023	Financial Year 2021-2022
	( in Lakhs)	( in Lakhs)
Revenue from operations	36,081.78	25,611.72
Other Income	306.26	299.54
Profit before Interest, Depreciation & amortisation expense and exceptional items	3,019.26	2,327.86
Less: Interest	54.00	42.77
Profit before Depreciation & amortisation expenses and exceptional items	2,965.26	2,285.09
Less: Depreciation & amortisation expense	245.89	220.64
Profit before Exceptional items and Tax	2,719.37	2,064.45
Less: Exceptional item	-	-
Less: Provision for Taxes	726.67	515.72
Profit after Tax	1,992.70	1,548.73

Business and Operations

During the financial year under review, the Company has achieved highest revenue from operations to an extent of 36,081.78Lakhs(previous 25,611.72 lakhs) and has increased by 10,470.06 lakhs over the previous financial year.

The profit before interest and depreciation is 3,019.26 Lakhs as against 2,327.86 Lakhs for the previous financial year. The profit after tax is 1,992.70 Lakhs as against 1,548.73 Lakhs for the previous financial year and has increased by 28.67% compared to the previous financial year.

The main revenue segment of the Company, Electricals achieved highest turnover of 31,180.85 Lakhs (previous financial year 21,697.58 Lakhs). The Plastics segment recorded a turnover of 4,908.69 Lakhs (previous financial year 3,896.50 Lakhs). In both the segments, the Company continues to put its efforts in increasing the productivity levels, reduction of cost and adding new customers. There was a slight increase in generation of electricity by Wind Electric

Generators.

Second Unit

The Board of Directors approved the proposal for establishment of Second Factory Unit at a leased premises near the existing factory at Arasur, Coimbatore to meet the production requirements of the Company which is under process.

Dividend

The Board recommends 220% dividend of 22.00/- (Rupees Twenty Two only) per equity share of the face value of 10/- (Rupees Ten only) each on the equity share capital of Rs 2,45,80,000/- for the financial yearended 31 ^st March 2023. The dividend on equity shares is subject to the approval of the shareholders at the ensuing Annual General Meeting. Dividend will be paid to those equity shareholders whose names appear in the Register of Members as on 17.07.2023 in respect of shares held in physical form and in respect of shares held in dematerialized form, the dividend shall be paid on the basis of the beneficial ownership as per the details furnished by the Depositories for this purpose at the end of business hours on 17.07.2023.

Transfer to Reserves

The Company has not transferred any amount to the General Reserve during the year under review. However, an amount of 1,992.70 lakhs of the current year profits have been carried forward under the head retained earnings.

Share Capital

The paid-up capital of the Company as at March 31, 2023 stood at 245.80 Lakhs. During the financialyear under review, your company had not made any fresh issue of shares.

Industrial Relations

Relationship with employees was cordial throughout the financial year.

2. Annual Return

As per requirements of the Companies Act, 2013 (‘the Act), a copy of the annual return is available on the website of the Company https://www.lecsindia.com/investors/annual-return/

3. Number of Meetings of the Board

Details of number of meetings of the Board of Directors and Committees thereof and the attendance of the Directors in such meetings are provided under the Corporate Governance Report.

4. Directors Responsibility Statement

In terms of Section 134 of the Companies Act, 2013 the Directors, confirm that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same; b. have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; c. have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. have prepared the annual accounts on a going concern basis; to be followed bythecompanyandthatsuchinternalfinancialcontrols. havelaiddowninternal are adequate and were operating effectively; and f. have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

5. No Frauds reported by statutory auditors

There is no instance of frauds reported by the statutory auditors of the Company for the financial sub section (12) of Section 143 of the Companies Act, 2013.

6. Declaration by Independent Directors

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [‘SEBI (LODR) / Listing Regulations] so as to qualify themselves as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules / regulations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [‘SEBI (LODR) / Listing Regulations].

The Independent Directors of the Company have complied with the requirements of the provisions in relation to Independent Directors Databank as stated in the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 and the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended from time to time. The details of the familiarization programme undertaken have been uploaded on the Companys website.

7. Nomination and Remuneration Committee and Policy

As per the provisions of the Companies Act, 2013 and SEBI LODR a Nomination and Remuneration Committee of directors was formed by the Board of Directors consisting of:

1 Sri. Ramesh Rudrappan, Chairman	Non-Executive – Independent
2 Sri. Arun Selvaraj, Member	Non-Executive – Independent
3 Sri. Arjun Balu, Member	Non-Executive – Independent

The said committee has been empowered and authorised to exercise widest powers as entrusted under the provisions of Section 178 of the Companies Act, 2013 and SEBI LODR. The Company has a policy on directors appointment and remuneration including criteria for determining qualification, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178. The policy is available on the Companys website https://www.lecsindia.com/wp-content/themes/lecs/pdf/policies/nomination-and-remuneration-policy.pdf

The salient aspects covered in the Nomination and Remuneration Policy:

The Company believes that the human resources are one of the most important valuable assets of the company. As per the requirement of the provisions of the Companies Act, 2013 and SEBI LODR, to meet and attract the valuable asset and harmonize the payment to Directors, Key Managerial Personnel and other employees of the Company in line with the mission, visions and values of the Company. This policy has been formulated by the Nomination and Remuneration Committee for the Directors, Key Managerial Personnel and Senior Management personnel and approved by the Board of Directors. The objective and purpose of this policy are:

To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors and persons who may be appointed in Senior Management and Key Managerial positions.

To lay down guiding principle for remuneration payable to Executive Directors, Non Executive Directors, Senior Management Personnel and Key Managerial Personnel.

To determine the evaluation of performance of the Members of the Board including Independent Directors.

To recommend remuneration based on the Companys size, financial position, trends and practices on remuneration prevailing in peer companies, if any.

To provide them reward linking to their effort, performance, dedication and achievement in the Companys operations/performance.

To design suitable remuneration package to attract, retain, motivate and promote best caliber directors and employees, create strong performance orientated environment and reward, achievement of meaningful targets over the short and long-term and create competitive advantage.

To determine the criteria for qualifications, positive attributes, and independence of Directors.

To determine whether to extend or continue the term of appointment of Independent Directors.

Devising criteria for board diversity.

Develop succession plan for the Board, Senior Management and Key Managerial Personnel.

8. Auditors Comments

There are no qualifications, reservations or adverse remarks or disclaimers in the reports of Statutory Auditors (appearing elsewhere in the Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 1).

9. Particulars of Loans/Guarantee/Investments

The Company has not given / made any Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, during the year under review. Details of investments made in the earlier years have been disclosed in the notes to the financial statements.

10. Particulars of Contracts with Related Party

The transactions entered by the Company with the related parties during the financial year 2022-23 are in the ordinary course of business and at arms length basis. The particulars of material related party transactions is provided in the form AOC 2 and annexed to the Boards Report as Annexure - 2. The Policy on Related Party is available on the Companys website at https://www.lecsindia.com/wp-content/uploads/2022/05/Related-Party-transaction-Policy_web.pdf

11. Material Changes and Commitments between the end of financial year (March 31, 2023) to which this financial statement relate and the date of this Directors Report.

There were no material changes and commitments affecting the financial position of the Company occurred between the end of financial year (March 31, 2023) to which this financial statement relates . Report and the dateof this

12. Conservation of Energy, Technology Absorption & Foreign Exchange

The disclosures under Rule 8(3) of the Companies (Accounts) Rules, 2014 are as under:

Conservation of Energy

S.No. Particulars	Disclosures
(i) Steps taken or impact on conservation of energy	1. Fluorescent lamp is converted to LED wherever possible.
	2. Conventional Ceiling FAN is converted to BLDC Fan wherever possible
(ii) Steps taken by the company for utilising alternate sources of energy	Wind energy generation power is utilized for Plant captive consumption from August 2016 onwards.
(iii) Capital investment on energy conservation equipments;	-

Technology Absorption

S.No. Particulars	Disclosures
(i) Efforts made towards technology absorption;	The Company has purchased smart meter technology from an external source and developing its variants.
(ii) The benefits derived like product improvement, cost reduction, product development or import substitution;	In-house developmental and operational research activities are carried out on regular basis for other production activities.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):	No technology was imported during the last three years
(a) the details of technology imported;
(b) the year of import;
(c) whether the technology has been fully absorbed;
(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;
(iv) The expenditure incurred on Research and Development	Capital Expenditure: Nil
	Revenue Expenditure: 48.88 Lakhs
	Total Expenditure: 48.88 Lakhs

Foreign Exchange Outgo And Earnings:

Foreign Exchange earned through exports	646.90
Foreign Exchange used	1,388.70

13. Risk Management

The Company follows a comprehensive and integrated risk appraisal, mitigation and management process. The risk management process of the Company is being periodically reviewed for improvement by the Board of Directors.

14. Corporate Social Responsibility (CSR)

The Company has constituted a CSR committee of the Board of Directors and has adopted a CSR Policy. The same is posted in the Companys website https://www.lecsindia.com/wp-content/uploads/2021/12/CSR-Policy_LECS_2021.pdf

The Committee consist of three directors viz., Sri.D.Senthilkumar, Smt.Nethra. J.S.Kumar and Sri.Arun Selvaraj. The meeting of CSR Committee was held on 25^th July 2022. A report in prescribed format detailing the CSR spend for the financial year 2022-23 is attached herewith as Annexure-3 forming a part of this report.

15. Evaluation of Boards Performance

On the advice of the Board of Directors, the Nomination and Remuneration Committee have formulated the criteria for the evaluation of the performance of Board of Individual Directors, Board as a whole, Committees of Directors, Independent Directors, Non-Independent Directors and the Chairperson of the Board. Based on that performance evaluation has been undertaken for the financial year 2022-23. The Independent Directors of the Company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated to the Chairperson of the Board of Directors.

16. Additional Disclosures

As per Rule 8(5) of the Companies (Accounts) Rule, 2014, the following additional information is provided:

S.No Particulars	Disclosures
(i) The financial summary or highlights.	The financial highlights including State of Affairs of the Company is provided in this Annual Report.
(ii) The change in the nature of business, if any.	There is no change in the business line of the company.
(iii) The details of directors or key managerial personnel who were appointed or have resigned during the year.	Sri. N. R. Selvaraj was redesignated as Non-Executive Independent director with effect from 04.08.2022.
	Smt. Nethra. J. S. Kumar was re-appointed as the Managing Director of the Company for a further period of 3 years with effect from 1st April 2022 at the Annual General Meeting held on 6th August 2021.
(iv) Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year.	Board of Directors have formed the opinion on the Independent Director appointed during the financial year 2022-2023 and found that the integrity, expertise and experience (including proficiency) of the Independent Director is satisfactory.
(v) The names of companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year.	Nil
(vi) The details relating to deposits, covered under Chapter V of the Act.	The Company has not accepted deposits.
(vii) The details of deposits which are not in compliance with the requirements of Chapter V of the Act.	Nil
(viii) and material orders passed by Thedetailsofsignificant the regulators or courts or tribunals impacting the going concern status and companys operations in future.	Nil
(ix) The details in respect of adequacy of internal financial controls with reference to the Financial Statements.	The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance.
	The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.
(x) Cost Records	The Company is maintaining the cost records as required under Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014.
(xi) Internal Complaints Committee	As per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has constituted an Internal Complaints Committee. During the financial year 2022-23, no complaint was received before the committee.
(xii) Insolvency and Bankruptcy Code, 2016	No application is made, or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the year under review.
(xiii) Details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.	Not Applicable - there was no instance of one-time settlement with any Bank or Financial Institution.

17. Internal Control systems and their adequacy

Your Company has established adequate internal control procedures, commensurate with the nature of its business and size of its operations. The accounting transactions and operations are audited by the Internal Auditor vis.a.vis the internal controls, policies and procedures and the deviations, if any, are reported and corrective actions are taken appropriately.

18. Board of Directors

Re-appointment of retiring Director:

Sri. Sanjay Jayavarthanavelu, Director who retires by rotation at the ensuing Annual General Meeting, being eligible offers himself for re-appointment. The Board recommends his re-appointment in the forthcoming Annual General Meeting.

Re-designation / Appointment of Independent Director:

Sri. N. R. Selvaraj was redesignated as Non-Executive Independent director with effect from 04.08.2022 at the Annual General Meeting held in the year 2022.

Cessation:

There was no instance of cessation of Directorship of any Director.

Resignation:

There was no incidence of resignation of any Director

19. Composition of Audit Committee

The Audit Committee of the Board of Directors consists of:

1 Sri. N. R. Selvaraj – Chairman*	Non-Executive – Independent
2 Sri Ramesh Rudrappan – Member	Non-Executive – Independent
3 Sri. A.Palaniappan – Member	Non-Executive – Independent

*During the financial year under review Sri. N.R. Selvaraj was appointed as Independent Director of the Company. Subsequently, Sri. N.R. Selvaraj was appointed as Chairman of the Audit Committee and Sri. Ramesh Rudrappan was redesignated as Member with effect from 01^st December 2022. Sri. Arun Selvaraj is not a Member of the Audit Committee with effect from 01^st December 2022.

The Board has accepted the recommendations of the committee during the financial year under review.

20. Vigil Mechanism

The Company has devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section 177(10) of the Companies Act, 2013 and details whereof is available on the Companys website https://www.lecsindia.com/wp-content/uploads/2023/06/WHISTLE-BLOWER-POLICY_2023.pdf . During the year under review, there were no complaints received under this mechanism.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) & rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 : a) The ratio of the remuneration of each director to the median employees remuneration for the financial year and such other details as prescribed is as given below:

Name	Category	Ratio
Smt. Nethra. J.S. Kumar (DIN:00217906)	Executive – Chairperson and Managing Director * (CMD)	1:59.45
Sri. Sanjay Jayavarthanavelu (DIN: 00004505)	Non-Executive – Non Independent	-
Sri. D.Senthilkumar (DIN: 00006172)	Non-Executive – Non Independent	-
Name	Category	Ratio
Sri. Ramesh Rudrappan (DIN: 00008325)	Non-Executive - Independent	-
Sri. A.Palaniappan (DIN:00044022)	Non-Executive - Independent	-
Sri. Arun Selvaraj (DIN: 01829277)	Non-Executive – Independent	-
Sri N.R. Selvaraj (DIN: 00013954)	Non-Executive – Independent	-
Sri Arjun Balu (DIN: 00383184)	Non-Executive – Independent	-

Note: For this purpose, Sitting fees paid to the Directors have not been considered as remuneration. *CMD has drawn salary of 84.00 lakhs and eligible for commission of 51.88 lakhs. b) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

Name	Category	%
Smt. Nethra. J.S. Kumar*	Executive – Chairperson and Managing Director	37.46
Sri. Sanjay Jayavarthanavelu	Non-Executive – Non Independent Director	-
Sri. D.Senthilkumar	Non-Executive – Non Independent Director	-
Sri. Ramesh Rudrappan	Non-Executive – Independent Director	-
Sri. A.Palaniappan	Non-Executive – Independent Director	-
Sri. Arun Selvaraj	Non-Executive – Independent Director	-
Sri N.R. Selvaraj	Non-Executive – Independent Director	-
Sri. Arjun Balu	Non-Executive – Independent Director	-
Sri. A.Thiagarajan*	Chief Financial Officer (CFO)	11.73
Sri. S.Sathyanarayanan*	Company Secretary (CS)	12.64

Note: For the above purpose, sitting fees paid to the Directors have not been considered as remuneration. *The percentage increase is inclusive of Provident Fund and provision for Gratuity. c) The percentage increase / (decrease) in the median remuneration of employees in the financial year: (31.02%) d) The number of permanent employees on the rolls of company: 191 e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the Managerial Remuneration:

Average increase / (decrease) in remuneration is (6.18%) for employees other than Managerial Personnel and KMP while it is 29% for Managerial Personnel (KMP and Senior Management). Smt. Nethra.J.S.Kumar, Chairperson and Managing Director is eligible for commission of 51.88 lakhs for the financial year 2022-23 [for the previous financial year 2021-22 40.05 lakhs commission was paid] f) It is affirmed that the remuneration is as per the remuneration policy of the Company. g) Particulars of Employees as per Rule 5(2) and Rule 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel Rules, 2014) are provided as Annexure-4 to this Report

22. Accounting Treatment

In the preparation of financial statements, no treatment different from that of prescribed accounting standards has been followed.

23. Secretarial Standards

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and such systems are adequate and operating effectively. The Company has adhered with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

24. Corporate Governance

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company, together with a certificate from the Companys Auditors confirming compliance forms an integral part of this Report.

The shares of the Company are listed in BSE Limited, Mumbai. The listing fees is paid up to date and the shares of the Company were not suspended for trading by the Stock Exchange at any time during the financial year under review.

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the applicability of providing the Business Responsibility and Sustainability Report does not arise.

25. Investor Education and Protection Fund

The Company has transferred 2,810 equity shares, in respect of which dividend has not been claimed by the members for seven consecutive years or more to the Investor Education and Protection Fund Authority (IEPF) during the financial year 2022-2023. Details of shares transferred have been uploaded on the website of the Company. The Company also transferred 4,52,676/- of unclaimed dividend out of the dividend declared for the financial year 2014-2015 to IEPF.

26. Auditors Statutory Auditor:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. Subbachar & Srinivasan, Chartered Accountants, the Statutory Auditors of the Company, hold office up to the conclusion of the Annual General Meeting to be held in the year 2026. The Company has received a certificate from the said Auditors that they are eligible to continue and hold office as the Auditors of the Company.

Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. MDS & Associates LLP, Coimbatore, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2023-2024. M/s. MDS & Associates LLP have also carried out an audit as per Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and provided the Annual Secretarial Compliance Report for the financial year 2022-23.

Cost Auditor:

The Board of Directors, on the recommendation of the Audit Committee, has appointed Sri.S.Subbaraman, Cost Accountant in Practice as Cost Auditors to undertake Cost Audit for the financial year 2023-24. Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable for the financial year 2023-24 to the Cost Auditors of the Company is subject to ratification by the shareholders at the ensuing Annual General Meeting. The Board recommends the remuneration for members ratification.

Internal Auditor:

Sri. V.C.Thirupathi, Chartered Accountants, Coimbatore who are the Internal Auditors have carried out internal audit for the financial year 2022-23. Their reports were reviewed by the Audit Committee.

Acknowledgement

Your Directors thank the customers, bankers, vendors, shareholders and other stakeholders for their continued support and patronage. The Directors wish to place on record their appreciation for the cooperation and contribution made by the employees at all levels towards the performance of the Company.

Place : Coimbatore	For and on behalf of the board
Date : May 25, 2023	Nethra. J.S. Kumar
	Chairperson and Managing Director
	DIN : 00217906