ECE Industries Ltd Directors Report.

TO THE SHAREHOLDERS

Dear Shareholders,

We have pleasure in presenting the Seventy Third Annual Report with Audited Accounts of the Company for the year ended 31st March, 2019.

FINANCIAL RESULTS

(Rs. in Lakh)

Particulars 31.03.2019 31.03.2018
Turnover (Gross) 25,271.39 26,579.13
Profit/(Loss) before Depreciation, Exceptional Items & Tax 512.01 5,267.92
Gain/(Loss) from Exceptional items (880.95) 1,169.44
(368.94) 6,437.36
Less: Depreciation 169.38 177.29
Profit/(Loss) before Tax (538.32) 6,260.07
Provision for:
(i) Current Income Tax (1.45) 365.08
(ii) Tax / MAT Charge / (Credit) for earlier years - (73.92)
(iii) Deferred Tax Charge/(Credit) (450.27) 340.77
Profit for the year (86.60) 5,628.14

IND AS - IFRS CONVERGED STANDARDS

Your Company has already adopted Indian Accounting Standards ("IND-AS") with effect from 1st April, 2017. Your Company has accordingly prepared IND-AS financials for the year ended 31st March, 2019 along with comparable figures as on 31st March, 2018.

REVIEW OF PERFORMANCE

The sales turnover for the current year is Rs.25,271.39 Lakh against Rs.26,579.13 Lakh in the previous year. The total gross profit / (loss) for the year ended 31st March, 2019 comes to Rs.(86.60) Lakh (Previous Year Rs.5,628.14 lakh).

In view of the current order booking position in hand, the Company is expecting increased revenue as well as the improved profitability in current fiscal.

DIVIDEND

We recommend payment of Dividend for the year 2018-19 @ Rs. 2.50 per share (25%), which will be paid after obtaining your approval in the Annual General Meeting.

SHARE CAPITAL

During the year ended 31st March, 2019, there is no change in the issued and subscribed share capital of your Company. The number of equity shares outstanding as on 31st March, 2019 are 72,88,645 of Rs.10/- each.

VOLUNTARY DELISTING

Your Company has applied earlier to National Stock Exchange of India Limited (NSE) for voluntary delisting of its equity shares in terms of SEBI (Delisting of Equity Shares) Regulations, 2009 after providing an exit opportunity to the public shareholders and filed the final application for delisting which was pending with NSE for disposal. The NSE vide its letter dated April 24, 2019 has approved the delisting and the equity shares of the Company has been successfully delisted from NSE w.e.f. May 17,2019.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are set out in a separate statement attached hereto and forming part of the report. (Annexure-I)

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to applicable provisions of the Companies Act, 2013 ("the Act") read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("The Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government, after completion of seven years. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the Members for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. The Company had sent individual notices and also advertised in the newspapers seeking action from the Members who have not claimed their dividends for seven consecutive years or more. Accordingly, the Company has transferred such unpaid or unclaimed dividends and corresponding shares upto the financial year 2010-11.

Members/claimants whose shares, unclaimed dividend, have been transferred to the IEPF Demat Account or the Fund, as the case may be, may claim the shares or apply for refund by making an application to the IEPF Authority in Form IEPF-5 (available on http://www.iepf.gov.in) along with requisite fee as decided by the IEPF Authority from time to time. The Member/claimant can file only one consolidated claim in a Financial Year as per the IEPF Rules.

Members are requested to ensure that they claim the dividends and shares referred above, before they are transferred to the said Fund. Due dates for Transfer of Unclaimed Dividend to IEPF are provided in the Notes to the Notice.

Details of shares/shareholders in respect of which dividend has not been claimed, are provided on our website. The shareholders are therefore requested to verify their records and claim their dividends of all the last seven years, if not claimed.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

(including criteria for determining qualification, positive attributes, independence of a Director, policy relating to remuneration for Directors, Key Managerial Personnel and other employees)

• Policy on Directors Appointment

Policy on Directors appointment is to follow the criteria as laid down under the Companies Act, 2013 and good corporate practices. Emphasis is given to persons from diverse fields and professions.

• Policy on Remuneration

Guiding Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that -

> Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and Workmen is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain quality talent.

> For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors of the Company has initiated and put in place evaluation of its own performance, its committees and individual directors. The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in the aforesaid section.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors of your company state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS

During the year 2018-19, Mr. Sakate Khaitan, Director of the Company is retiring by rotation and being eligible offer himself for re-appointment.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

There were six meetings of the Board of Directors and one meeting of the Independent Directors held during the year ended on 31st March, 2019.

DETAILS OF COMMITTEE OF DIRECTORS

The Company has duly constituted the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship/Grievance Committee of Directors in terms of the provisions of Companies Act, 2013. During the financial year 2018-19, the desired no. of meeting of the Committee(s) were held and attended by each member of the Committee as required under the Companies Act, 2013 and rules made thereunder.

The recommendation by the Audit Committee as and when made to Board has been accepted by it.

KEY MANAGERIAL PERSONNEL

Your Company has designated Mr. Prakash Kumar Mohta, the Managing Director, Mr. Rajat Sharma, CFO and Mr. Piyush Agarwal, Company Secretary as the Key Managerial Personnel.

PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTY

There is no transaction with Related Party which requires disclosure under Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.

LOANS, INVESTMENT AND GUARANTEES BY THE COMPANY

There is no loan given, guarantee given or security provided by the Company to any entity during the year ended 31st March, 2019. Further, the investments made by the Company are within the limits and in conformity with the provisions as specified under Section 186 of the Companies Act, 2013.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public as well as employees during the financial year ended 31st March, 2019.

RISK MANAGEMENT

Your Directors periodically discuss and monitors the risk management plans as well as evaluated various risks and that there is no element of risk identified that may threaten the existence of the Company. There is an adequate risk management infrastructure in place capable of addressing those risks.

A detailed report on significant risks and mitigation is forming part of Managements Discussion and Analysis.

CONSTITUTION OF INTERNAL COMPLAINTS COMMITTEE

Your Company has constituted a Centralized Internal Complaints Committee in terms of the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year, the Company does not fall in the ambit of the provisions of Section 135 of Companies Act, 2013 relating to applicability of Corporate Social Responsibility.

ANALYSIS OF REMUNERATION

Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014, a disclosure on remuneration related information of employees, Key Managerial Personnel and Directors is annexed herewith and forming part of the report. (Annexure - II)

PARTICULARS OF EMPLOYEES

As per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, the details of employees are enclosed as Annexure- III

STATUTORY AUDITORS

The auditors M/s VSD & Associates, Chartered Accountants (Firm Regn. No.008723N), was appointed earlier as the Statutory Auditors of the Company for a term of 5 (five) years to hold office upto the conclusion of 73rd Annual General Meeting (AGM) whose term of office will expire at the conclusion of ensuing AGM of the Company. M/s VSD & Associates, Chartered Accountants is eligible and offer themselves for re-appointment for further term of (5) five years as in terms of the provisions of Companies Act, 2013 and rules made thereunder.

Upon recommendations of Audit Committee, your Directors has recommended reappointing M/s VSD & Associates, Chartered Accountants for further term of 5 (five) to hold office from the conclusion of ensuing AGM upto the conclusion of 78th AGM of the Company in the calendar year of 2024.

COST AUDITORS

Your Company has appointed M/s. K.L. Jaisingh & Co., Cost Accountants as the Cost Auditors for conducting the audit of cost account records for the products Power Transformers and Elevators for the financial year ended 31st March, 2020.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report for the year ended 31st March, 2019 in prescribed form duly audited by the Practicing Company Secretary, M/s. PTM & Co. is annexed herewith and forming part of the report. (Annexure-IV)

INTERNAL AUDIT

The Company continued to engage reputed firms of Chartered Accountants as the internal auditors at its units. Their scope of work and plan for audit is discussed and reviewed by the Audit Committee. The report submitted by them is regularly reviewed and suitable corrective action taken on an ongoing basis to improve efficiency in operations.

INSURANCE

Adequate insurance cover has been taken for properties of the company including buildings, plant and machineries and stocks against fire, earthquake and other risks as considered necessary.

EJCTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014, the extract of annual return is annexed herewith and forming part of the report. (Annexure - V)

ACKNOWLEDGEMENTS

Your Directors place on record their thanks for the dedicated services rendered by all the employees of the company in its factories and offices and also acknowledge the co-operation, assistance and support extended by the Companys bankers and stakeholders.

For and on Behalf of the Board of Directors
Place : Kolkata (Prakash Kumar Mohta) (Mahendra Kumar Jajoo)
Dated : 29th July, 2019 Managing Director Director
DIN: 00191299 DIN: 00006504

ANNEXURE TO DIRECTORS REPORT

(Annexure -1)

Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.

A. Conservation of Energy

In Transformer manufacturing, by using Vapour Phase Drying method with latest technology process, the consumption of energy is being substantially brought down. Energy conservation has been further improved by refurbishing of existing vacuum pumps and crane motors. Power factor of electricity supply also has been kept high by suitably rearranging the load which helps energy conservation.

The Company is continuously engaged in the process of energy conservation in manufacturing process and promotion of energy efficient elevators. Gearless lifts which save considerable energy had been introduced in the market and show an increasing trend in sales, LED lights in our lifts is now standard and variable voltage variable frequency drives that reduce starting currents and save energy are a constant across all our offerings. Last year, the Company has upgraded the welding machines both Spot & MIG with the latest available technology. The factory lightning is now migrating to use energy efficient LED lights & fixtures for both internal & external usage.

B. Technology Absorption

Efforts made in technology absorption as per Form-B are furnished below:

Form-B

(Form for disclosure of Particulars with respect of Technology Absorption)

1. Research and Development (R&D)

In the case of High Voltage windings of Transformers, with a view to get ideal impulse distribution, fully interleaved windings has been introduced enhancing the surge withstand characteristics. Moreover, the windings are designed to mount the Fibre Optic sensors which indicate the Hot Spot temperature of the windings continuously, protecting the transformer from damage due to abnormal temperature rise. Further, the design of transformers has been made suitable for mounting the state of the art components like maintenance free breather, on line Dissolved Gas Analyser, On line Drying equipment etc.

In elevator manufacturing, the Company has developed usage of most energy efficient permanent magnet synchronous motor for all its gearless lifts. Development of all permutations of lifts upto 2.0mps speed is complete. Home lifts specially designed without pits have been deployed successfully and further enhancements on the same are ongoing. Value engineering on old designs is currently underway to look at optimization and standardization to enhance value. Gl based pre-coated car panels were released to the market successfully which replace MS based powder coating.

2. Technology Absorption, Adaptation & Renovation

In transformer manufacturing, the Company is installing Vapour Phase Drying system which is the most advanced drying technology for Power Transformers. By this method, a clean and dust free transformer with a high degree of dryness enhancing the reliability and service life of the transformers is manufactured. The substantial reduction in drying time in this method helps to increase rate of production of transformers.

In elevators, Integrated Drive Technology is extended for Geared Segment, thereby having advantage in field for troubleshooting and ease of maintenance. Plug and Play harness for field introduced for parallel communication controllers that will give added advantages in terms of productivity for laying the wiring and commissioning of elevators, lower no of breakdowns, reducing chances of errors in field. Controller harness will benefit in factory for productivity. In house design for displays has been completed which will reduce dependency on imports, better control on inventory. Lean methodology is being implemented on the shop floor to improve our productivity and all ensure all wastes are reduced across processes. ERP has been successfully deployed across the sales and operations and is currently under development for MRP, production and finance that will enable complete integration across the division and bring in efficiency and real time data controls.

C. Foreign Exchange Earnings & Outgo

During the year under review, foreign exchange earnings was Nil and foreign exchange outgo was Rs.398.61 lakh.

ANNEXURETO DIRECTORS REPORT

(Annexure - II)

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014.

(i) The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2018-19 and the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2018-19 are as under:

Sr. No. Name of Director/KMP and Designation Remuneration of Director/KMP for Financial Year 2018-19 (Rs. in Lakh) % increase in Remuneration in the Financial Year 2018-19 Ratio of remuneration of each Director/KMP to median remuneration of employee
1 Mr. Prakash Kumar Mohta (Managing Director) 262.16 17.95 84.30:1
2 Mr. Mahendra Kumar Jajoo (Director) 0.55 " 0.18:1
3 Mr. Sakate Khaitan (Director) 0.05 - 0.02:1
4 Mrs. Moulishree Gani (Director) 0.10 100 0.03:1
5 Mr. Shiban Ganju (Director) 0.46 4.55 0.15:1
6 Mr. Yogesh D. Korani (Director) 0.20 100 0.06:1
7 Mr. Rajat Sharma (Chief Financial Officer) 44.84 10.47 14.42:1
8 Mr. Piyush Agarwal (Company Secretary) 10.57 9.76 3.40:1

(ii) The median remuneration of employees of the Company during the financial year was Rs.3.11 lacs.

(iii) In the financial year, there was an increase of 11.47% in the median remuneration of employees, calculated after induction of new appointments also.

(iv) There were 526 permanent employees on the rolls of Company as on March 31, 2019.

(v) Average percentage increase made in the salaries of employees other than the key managerial personnel in the financial year i.e. 2018-19 was 9.69% (calculated after induction of new appointments also) whereas the increase in the key managerial remuneration for the same financial year was 16.54%.

(vi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year - Not Applicable; and

(vii) It is hereby affirmed that the remuneration to Directors, Key Managerial Personnel and other Employees is paid as per Remuneration Policy of the Company.

ANNEXURE TO DIRECTORS REPORT

(Annexure - III)

STATEMENT CONTAINING INFORMATION AS PER SECTION 197(12) READ WITH RULES 5(2) AND 5(3) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014.

Name, Designation, Remuneration Received (Rs. In lakh), Nature of Employment, Qualification, Experience (Years), Date of Commencement of Employment, Age (Years), Last Employment held, Equity Share held in the Company (Percentage).

(a) Employed throughout the financial year and was in receipt of remuneration for the year in aggregate of not less than Rs.1,02,00,000.

1. Mr. Manish Sikka, President (Elevator Division), Rs.132.91 lakh, Non-Contractual, B.E. (Electronics) & PGDBM, 26 years, 01^)7/2015,48 years, Matrix Management Consultants Pvt. Ltd., Nil.

(b) Employed for a part of the financial year and was in receipt of remuneration at a rate in aggregate not less than Rs. 8,50,000/- per month.

NIL

(c) Employed throughout the financial year or part thereof, was in receipt of remuneration in the year which, in the aggregate or at a rate which in the aggregate was in excess of that drawn by the Whole-time Director / Managing Director and holds by himself or alongwith his spouse and dependent children, not less than 2% of the equity shares of the company.

NIL

NOTES:

1. Remuneration includes salaries, house rent allowance, personal allowance, ex-gratia, performance allowance, leave travel assistance, encashment of leave, medical expenses / allowances, accident insurance premium, Companys Contribution to Provident & Superannuation Funds and the monetary value of perquisites calculated in accordance with the provisions of the Income-tax Act,1961 and the Rules made there under and excludes provision for retiring gratuity for which separate figure is not available.

2. The above employee is not relative of any Director of the Company.