Fedders Electric & Engineering Ltd Directors Report.

Dear Shareholders,

Your Directors are pleased to present the 61st Report of Board of Directors on the business and operations of your Company together with its Audited Financial Statements for the year ended 31st March, 2017.

FINANCIAL PERFORMANCE

The financial performance of the Company during the period under review is summarized below:

Particulars For the year ended 31st March, 2017 For the nine months period ended 31st March, 2016
Gross Revenue from Operations 1,364.85 1,041.78
Total Expenses 1,247.40 936.95
Earnings before Interest, Taxes and Depreciation & Amortisation (EBITDA) 108.93 98.06
Finance Costs 64.86 49.04
Depreciation & Amortisation 12.92 9.74
Profit before Tax 31.15 39.28
Tax Expenses:
Current Tax 8.55 13.35
Deferred Tax 2.04 4.35
Profit after Tax 20.56 21.58
Balance brought forward from previous year 7.23 13.42
Total available for Appropriations 27.79 34.99
(Less) Appropriations:
Proposed Dividend 3.40 2.30
Provision for Tax on Dividend 0.69 0.47
Transferred to General Reserve 20.00 25.00
Balance carried forward to Balance Sheet 3.70 7.23
Earnings Per Share (?)
1. Basic 6.05 7.03
2. Diluted 6.05 6.04

Note: Since the previous financial year comprised of nine months, the figures of the year under review and the previous year are not entirely comparable.

STATE OF AFFAIRS AND OPERATIONAL HIGHLIGHTS

During the year under review, the Gross Revenue from operations of your Company for the year ended 31st March, 2017 stood at 1,364.85 Crores as compared to the revenue generated of 1,041.78 Crores in the previous nine months period ended on 31st March, 2016. The EBITDA of the Company for the year under review stood at 108.93 Crores in comparison to 98.06 Crores for the period ending on 31st March, 2016. The Profit after tax ("PAT") for the year ended 31st March, 2017 stood at 20.56 Crores in comparison with the Profit after tax of 21.58 Crores earned in the previous year.

SHARE CAPITAL

There was no change in the Companys Authorised Share Capital during the year under review. However, the Company had, pursuant to the approval of Board of Directors, Shareholders and other regulatory approvals and subsequent upon receipt of 25% of the issue price from the Promoters and Promoters Group, alloted 50,00,000 warrants convertible into equivalent number of equity shares on preferential basis to its Promoters and Promoters Group on 3rd August, 2015 at the issue price of 75 per warrant. The aforesaid warrant holders had applied for exercising their right for conversion of 32,00,000 warrants into equity shares and had paid balance 75% aggregating to 18,00,00,000/-. Consequently, the Company had alloted equity shares to the aforesaid holders in 2 (two) Tranches, on 30th December, 2016 and 13th January, 2017 respectively. The remaining 18,00,000 warrants held by the warrant holders were forfeited in accordance with the applicable provisions of the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Accordingly, the Companys Paid-up Share Capital stands increased to 33,96,97,000 comprising of 3,39,69,700 equity shares of face value of 10 each.

DIVIDEND

Based on the financial performance, profitability and cash flow of the Company, your Board of Directors is pleased to recommend the dividend of 1.00 per equity share of face value of 10.00 each for the year ended 31st March 2017. The dividend on equity shares, if approved by the Shareholders at the ensuing Annual General Meeting ("AGM"), would involve a cash outflow of 4.09 Crores including dividend tax of 0.69 Crore.

TRANSFER TO RESERVES

Your Company proposes to transfer 20.00 Crores to the General Reserves out of the amount available for appropriations as per the available financial statements for the year ended 31st March, 2017.

DEPOSITS

During the year under review, your Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review, 5 (five) meetings of the Board of Directors were held. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Sham Sunder Dhawan will retire by rotation at the ensuing AGM in accordance with the provisions of Section 152 of the Companies Act, 2013 ("Act") and being eligible, has offered himself for re-appointment.

Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company in its meeting held on 10th August, 2017 has accorded their consent for re-appointment of Mr. Brij Raj Punj (DIN: 00080956) as the Managing Director of the Company for a further term of 5 (five) years w.e.f. 24th December, 2017. Your approval for his re-appointment is being sought in the ensuing AGM as per the Resolution No. 5 of the Notice, which forms part of the Annual Report.

Further, pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company in its meeting held on 10th August, 2017 has accorded their consent for re-appointment of Mr. Sham Sunder Dhawan (DIN: 00528056) as the Whole-time Director of the Company for a further term of 2 (two) years w.e.f. 26th April, 2018. Your approval for his re-appointment is being sought in the ensuing AGM as per the Resolution No. 6 of the Notice, which forms part of the Annual Report.

The Board of Directors of the Company in its meeting held on 9th February, 2017, pursuant to the recommendation of the Nomination and Remuneration Committee, had appointed Mr. Akhter Aziz Siddiqi (DIN: 07726807), who was associated with the Company as the Chief Financial Officer, as the Whole-time Director of the Company for a term of 2 (two) years w.e.f. 9th February, 2017 to be designated as the Whole-time Director and Chief Financial Officer of the Company. Your approval for his appointment is being sought in the ensuing AGM as per the Resolution No. 7 of the Notice, which forms part of the Annual Report.

Brief resume(s) of Mr. Brij Raj Punj, Mr. Sham Sunder Dhawan and Mr. Akhter Aziz Siddiqi, Directors proposed to be appointed, along with their shareholding in the Company, as stipulated under Secretarial Standard 2 of ICSI and as per the provisions of Regulation 36 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), are appended as an Annexure to the Notice of the ensuing AGM.

Mr. Pulkit Bhasin (ICSI Membership No. A27686) had been appointed as Company Secretary & Compliance Officer of the Company in place of Ms. Purnima Sharma (ICSI Membership No. F7706) with effect from 30th May, 2016 in accordance with the Act and the Listing Regulations.

All Independent Directors of the Company have given declarations confirming that they meet the criteria of independence as laid down under section 149(6) of the Act, and Listing Regulations.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 134 (5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

a. in the preparation of the annual accounts for the year under review, the applicable accounting standards have been followed and there are no material departures.

b. they 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 as on 31st March, 2017 and of the profit of the Company as on 31st March, 2017.

c. they 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. they have prepared the annual accounts on a going concern basis.

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively.

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

SUBSIDIARIES

Your Company has 2 (two) subsidiary companies namely Fedders Lloyd Trading FZE incorporated in United Arab Emirates and Fedders Lloyd Nigeria Limited ("FLNL). During the year under review, the Company incorporated Fedders Lloyd Nigeria Limited as its new subsidiary company in Nigeria. The consolidated financial statements presented by the Company include the financial information of Fedders Lloyd Trading FZE only and have been prepared in compliance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India. The financials of FLNL are not considered for consolidation as the first financial year of FLNL would end on 31st March, 2018.

The Company has no Joint Venture or Associate Company. There has been no material change in the nature of the business of its subsidiaries.

Pursuant to the provisions of section 129 (3) of the Act, a separate statement containing the salient features of the financial statements of the Companys subsidiary in form AOC-1 is attached with the financial statements of the Company.

Further, pursuant to the provisions of section 136 of the Act the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of its subsidiary, are available on the website of the Company i.e. www.fedderselectric.com . The Company will make these documents available upon request by any shareholder of the Company.

STATUTORY AUDITORS

Pursuant to section 139 of the Act and the rules made thereunder, it is mandatory to rotate the Statutory Auditors on completion of 2 (two) terms of 5 (five) consecutive years. The Rules also lay down the transitional period that can be served by the existing auditors depending on the number of consecutive years for which an audit firm has been functioning as auditor in the same company. The existing auditors, M/s. Suresh C. Mathur & Co., Chartered Accountants (ICAI Firm Registration No. 000891N) have served the Company for over 5 (five) decades before the Act was notified and will be completing the maximum number of transitional period of 3 (three) years at the ensuing 61st AGM.

In order to comply with the provisions of Section 139 of the Act, the Board of Directors of the Company, on the recommendation of the Audit Committee, at its meeting held on 10th August, 2017, subject to the approval of the members of the Company at the forthcoming AGM, had appointed M/s. Goel Garg & Co., Chartered Accountants (ICAI Firm Registration No. 000397N), as Statutory Auditors of the Company to hold office for a term of 5 (five) years from the conclusion of forthcoming 61st (Sixty First) AGM upto the conclusion of the 66th (Sixty Sixth) AGM of the Company, subject to ratification of such appointment by the Members at every subsequent AGM.

As required under Section 139 of the Act and Companies (Audit and Auditors) Rules, 2014, M/s. Goel Garg & Co., Chartered Accountants have confirmed and issued a certificate that their appointment, if made as aforesaid, will be in accordance within

the limits specified under the Act and they meet the criteria for appointment as specified under Section 141 of the Act and they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India as required under Regulation 33 of the Listing Regulations.

The Board has duly examined the Auditors Report to the accounts issued by M/s. Suresh C. Mathur & Co., which is selfexplanatory. Clarifications, wherever necessary, have been included in the Notes to Accounts of the financial statements and need no further comments.

SECRETARIAL AUDITORS

Mr. Sanjay Chugh, Practicing Company Secretary (C.P. No. 3073) was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit for the year ended 31st March, 2017 in compliance with the provisions of section 204 of the Act and the relevant rules made thereunder. The Report of the Secretarial Auditor in Form MR-3 is annexed to this Report and marked as Annexure 1.

Further, pursuant to the recommendation of the Audit Committee, the Board of Directors in its meeting held on 30th May, 2017 have re-appointed Mr. Sanjay Chugh, as Secretarial Auditor of the Company to conduct the Secretarial Audit of the Company for the financial year 2017-18.

COST AUDITORS

M/s. Jain Sharma & Associates, Cost Accountants (Firm Regn. No. 000270) were appointed by the Board of Directors as the Cost Auditors of the Company to conduct Cost Audit of the Company for the financial year 2016-17.

Further, the Board, on the recommendation of the Audit Committee, has re-appointed M/s. Jain Sharma & Associates, as Cost Auditors of the Company for the financial year 2017-18 at a fee of 2,06,250/- (Rupees Two Lakhs Six Thousand Two Hundred and Fifty only) plus applicable taxes subject to its ratification by the shareholders at the ensuing AGM.

INTERNAL AUDITOR

Pursuant to the recommendation of the Audit Committee, the Board of Directors in its meeting held on 9th February, 2017 had appointed Mr. Rajeev Kumar Bansal, Chartered Accountant as Internal Auditor to conduct the Internal Audit of the Company for the year ended 31st March, 2017. The Internal Audit Report received from the Internal Auditor was periodically reviewed by the Audit Committee.

Further the Board, on the recommendation of the Audit Committee, has re-appointed Mr. Rajeev Kumar Bansal as the Internal Auditor of the Company for the financial year 2017-18.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Managements Discussion and Analysis Report, highlighting the performance and prospects of the Companys business, forms part of the Annual Report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the disclosure norms as set out by the Securities and Exchange Board of India and other Regulatory Authorities.Your Directors re-affirm their commitment to the corporate governance standards to the extent they are applicable to the Company. In compliance with Regulation 34 of the Listing Regulations, a detailed Corporate Governance Report is annexed to and forms part of the Annual Report.

BOARD EVALUATION

In terms of the Act and the rules made thereunder and as per the applicable provisions of the Listing Regulations, the Board of Directors, on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board. Accordingly, the performance evaluation of the Board, each Director and the Committees was carried out for the year ended 31st March, 2017. The evaluation of the Directors was based on various aspects which, inter alia, included the level of participation in the Board Meetings, understanding of their roles and responsibilities, business of the Company along with the environment and effectiveness of their contribution.

COMMITTEES OF THE BOARD OF DIRECTORS

Your Company has the following Committees of the Board of Directors:

1. Audit Committee;

2. Nomination and Remuneration Committee;

3. Stakeholders Relationship Committee;

4. Corporate Social Responsibility Committee; and

5. Committee of Board of Directors.

The role and composition of these Committees, including the number of meetings held during the year under review and the related attendance, are provided under Corporate Governance Report which forms part of the Annual Report.

MATERIAL AND SIGNIFICANT CHANGES

1. Sale of Brand Name "LLOYD"/ "Lloyd"

Pursuant to the resolution passed by the Shareholders through Postal Ballot on 23rd March, 2017 and subsequent upon the receipt of approval from statutory and relevant authorities, the Company sold the brand name, logo, trade mark and any other intellectual property rights associated with "LLOYD" and/or "Lloyd" owned by the Company for a consideration of 50.00 Crores to Havells India Limited.

2. Change in Name of the Company

Subsequent upon the aforesaid sale of brand name, logo "LLOYD" and/or "Lloyd", the Company was required to change its name by deleting the word "Lloyd" therefrom. Accordingly, pursuant to the Resolution passed by the Shareholders through Postal Ballot on 23rd March, 2017 and subsequent upon the receipt of approval from the Registrar of Companies, Uttar Pradesh ("ROC"), the name of the Company has been changed from Fedders Lloyd Corporation Limited to Fedders Electric and Engineering Limited in accordance with the provisions of the Act. The Company has also obtained the final approvals with respect to the name change from the Stock Exchanges in which the Equity Shares of the Company are listed.

Consequently, the Company has also changed the name of its website from www.fedderslloyd.com to www.fedderselectric.com.

RELATED PARTY TRANSACTIONS

All the related party transactions are entered on an arms length basis and are in compliance with the applicable provisions of the Act and Listing Regulations. Pursuant to the provisions of section 188 of the Act read with rule 8 (2) of the Companies (Accounts) Rules, 2014, the details in Form AOC-2 is annexed with this Report as Annexure-2. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by Board, on recommendation of the Audit Committee, is available on the Companys website.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has effective and reliable Internal Control System commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is well defined in the organization and is aligned with the statutory requirements. The efficacy of the internal checks and control systems are validated by the Statutory Auditors.

The Audit Committee reviews the internal audit plans, adequacy and effectiveness of the internal control system, significant audit observations and monitors the sustainability of remedial measures.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical. The Board of Directors of the Company has constituted Corporate Social Responsibility ("CSR") Committee in compliance with section 135 of the Act. The Company is committed to inclusive, sustainable development and contributing to building and sustaining economic, social and environmental capital and to pursue CSR projects that are replicable, scalable and sustainable with a significant multiplier impact on sustainable livelihood creation and environmental replenishment. The brief outline of the CSR policy and initiatives taken by the Company on CSR activities during the year under review are provided in the Annexure-3 of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR policy is available on the website of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND RESEARCH & DEVELOPMENT

In accordance with the requirements of section 134 (3) (m) of the Act read with rule 8(3) of the Companies (Accounts) Rules, 2014, a statement showing particulars with respect to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are annexed hereto as Annexure-4 and form part of this report.

VIGIL MECHANISM

In accordance with the provisions of the Act and Listing Regulations, the Company has adopted a Whistle Blower Policy, as part of Vigil Mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is an actual or suspected fraud or perceived to be in violation of or in conflict with the Code of Conduct of the Company. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also available on the website of the Company.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-5 and form part of this Report.

POSTAL BALLOT

The details with respect to the resolutions passed by the Shareholders through Postal Ballot under section 110 of the Act are given in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure 6 to this Report.

REMUNERATION POLICY

The Board, on the recommendation of the Nomination and Remuneration Committee, has framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration.The Remuneration Policy has been available on the website of the Company i.e. www.fedderselectric.com. This Policy of the Company acts as a guideline for determining, inter alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and Senior Managerial Personnel.

RISK MANAGEMENT

The Company has identified potential risks and required mitigation measures. Major risks identified are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee of the Company. The Company has approved and adopted Risk Management Policy to enhance control mechanism for risk evaluation and mitigation and the risk management process.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always provided a congenial atmosphere for work to all the employees, that is free from discrimination and harassment including sexual harassment. There were no cases/complaints pertaining to the sexual harassment reported to the Board during the year under review.

LISTING OF EQUITY SHARES

The equity shares of your Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limted (BSE). The Annual Listing Fees for the year 2017-18 have been paid to these Sock Exchanges.

DEPOSITORY SYSTEM

The Members are requested to note that as on 31st March, 2017, 97.28% of the Companys total paid-up share capital representing 3,30,44,186 shares are in dematerialized form. In view of the numerous advantages offered by the Depository system as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its future operations.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The Company had declared dividend of 1/- per equity share in the financial year 2008-09. The unclaimed dividend due for transferring during the year ended 31st March, 2017, to the Investor Education and Protection Fund ("IEPF") maintained with Central Government, has been duly transferred. Please refer to the Corporate Governance Report for due dates of transferring the unclaimed dividend amount to IEPF for dividend declared in subsequent years.

ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND-AS) w.e.f. 1st APRIL, 2017

During the year ended 31st March, 2017, the Financial Statements of the Company have been prepared in accordance with the Companies (Accounting Standards) Rules, 2006. However, as per the notifications issued by the Ministry of Corporate Affairs read with the circulars issued by the Securities and Exchange Board of India, the Company is mandatorily required to adopt Indian Accounting Standards (Ind AS) as prescribed under Companies (Accounting Standards) Rules, 2015 for accounting period beginning on or after 1st April, 2017.

Accordingly, the Un-audited Financial Results of the Company for the 1st quarter of the current financial year 2017-18 has been prepared in accordance with Ind AS.

HEALTH, SAFETY AND ENVIRONMENT

Your Company has complied with all the applicable Health & Safety Standards, Environment Laws and Labour laws and has been taking all necessary measures to protect the environment and provide workers a safe work environment. Your Company is committed towards improvement in Health & Safety as well as Environmental performance by providing a Safe & healthy work environment to all its employees and co-workers.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Your Company considers people as its biggest assets and "Believing in People" is at the heart of its human resource strategy. Lot of efforts are put in for talent management, strong performance management, learning and training initiatives in order to ensure that your Company consistently develops inspiring strong and credible leadership. During the year under review, your Company continued to have cordial relationship with all its employees and maintained healthy, cordial and harmonious industrial relations at all levels.

ACKNOWLEDGMENTS

Your Directors take this opportunity to thank the Customers, Employees, Financial Institutions, Banks, Central and State Government Authorities, Regulatory Authorities, Stock Exchanges and all the various stakeholders for their continued cooperation and support to the Company who all made our consistent growth possible.

Your Directors also wish to record their appreciation for the continued co-operation and support extended by the Governments of various countries where we have our operations.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
MR. SHAM SUNDER DHAWAN MR. AKHTER AZIZ SIDDIQI
PLACE: NEW DELHI WHOLE-TIME DIRECTOR WHOLE-TIME DIRECTOR & CFO
DATE: 10th AUGUST, 2017 DIN:00528056 DIN:07726807