Lakshmi Machine Works Ltd Directors Report.

Dear Shareholders,

The Board of Directors of your company are pleased to present the Annual Report on the business of the Company along with the Standalone summary of financial statements for the year ended 31st March, 2019.

1. The State of Affairs of the Company, Dividend and Reserve

The Board has prepared its report based on the standalone financial statements of the Company and this report contains a separate section wherein a report on the performance and financial position of its wholly owned subsidiary company is presented in Form AOC-1.

Financial Summary/Highlights and transfer to General Reserve

( र in Lakhs)

Sl. No. Particulars Current Year 2018-19 Previous Year 2017-18
1 Revenue from Operation 2,74,198.32 2,66,728.50
2 Operating Expenses 2,36,847.80 2,29,334.15
3 Exceptional items 3,716.75 402.69
4 Gross Profit 33,633.77 36,991.66
5 Depreciation 4,983.47 7,079.53
6 Profit Before Tax 28,650.30 29,912.13
7 Provisions for Tax 9,722.32 8,769.84
8 Net Profit after Tax 18,927.98 21,142.29

Transfer to Reserve:

The Company has transferred a sum of र 1,900 Lakhs out of the current year profits to the General Reserve.

Dividend:

The Board recommends a dividend of र35/- per equity share having face value of र 10/- each (350%) on the equity share capital of र 10,68,30,000/- for the year ended on 31st March, 2019 aggregating to र 3,739.05 Lakhs and to pay a dividend tax of र768.75 Lakhs. The total dividend payout works out to 23.82% of the standalone net profit after tax. The dividend on equity shares is subject to the approval of the shareholders at the ensuing Annual General Meeting.

The unclaimed Dividend relating to the financial year 2011-12, is due for remittance in September, 2019 to the Investor Education and Protection Fund (IEPF) established by the Central Government.

During the year under review, as per the requirements of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (IEPF Rules) 2,941 equity shares of र 10/- each on which dividend had remained unclaimed for a period of 7 years have been transferred to the credit of Demat Account identified by the IEPF Authority. As on date of this report, the Company has transferred 25, 135 Equity shares to the credit of Demat Account of IEPF Authority.

As per the requirements of SEBI notification no. SEBI/ LAD-NRO/GN/2016-17/008 dated 8th July, 2016 the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available at the company website: www.lmwglobal. com and is also annexed herewith as Annexure 1 forming part of this report.

STATE OF AFFAIRS: OPERATIONS

Fiscal 2018-19 belied expectations as Indias economic growth slid for the second consecutive year – Index of Industrial Production (IIP) too declined over the previous year benchmark. Also, while the textile sector remained largely subdued, the automobile and engineering sectors had reported progress for a large part of the year.

This impacted the Companys performance too. While the Textile machinery Division reported a subdued financial performance, the machine tool division and foundry division reported growth over the previous year.

Overall, the Companys gross turnover grew by 2.31% from र2,48,860.11 Lakhs in 2017-18 to र2,54,620.31 Lakhs in 2018-19; the Profit before exceptional items and Tax stood at र32,367.05 Lakhs as against र30,314.82 Lakhs in 2017-18 – an increase of 6.77% over the previous year.

The Net Profit after Tax for financial year 2018-19 was र 18,927.98 Lakhs as against र21,142.29 Lakhs for financial year 2017-18. The reduction is on account of exceptional items.

More than the financial performance, fiscal 2018-19 has emerged as an important milestone in the Companys journey as it set foot on the TQM way – a philosophy that promises to transform the organisational culture into one where quality becomes a ‘Non-compromise, Non-negotiable ethic.

TEXTILE MACHINERY DIVISION

The prevailing slowdown in the domestic textile sector resulted in a pushback by textile companies from creating additional capacities. This impacted the textile machine ofitake from domestic players. Exports registered growth owing to the focused efforts of the team on expanding and entrenching their global presence.

Overall, the financial performance of the Textile Machinery division remained muted. The division reported a turnover of र 1,78,765.18 Lakhs as against र 1,91,907.90 Lakhs registered in 2017-18, a decrease of 6.85 % over the previous year.

The team leveraged these challenging times to improve its product offering and strengthen its connect with customers. In addition, the team invested its energy on upgrading the equipment for improved productivity and superior product quality.

MACHINE TOOL DIVISION

The division improved upon its performance of the previous year, registering an increase in volumes and growing acceptance of its value-added products by customers from the automotive and general engineering sectors.

The division reported a turnover of र60,282.30 Lakhs in Financial Year 2018-19 as against र 43,995.30 Lakhs registered in 2017-18, an increase of 37.02 % over the previous year.

Even as demand from the user sectors remained healthy, the team continued internalizing the Accelerating Competency for Manufacturing Excellence (ACME) philosophy into an operational culture. Moreover, it invested its energies in automating processes that would facilitate in improving machine performance and reliability. Further, the team leveraged technology for improving its customer service.

The Company continues with its focus on Innovation and emulation/adoption of best of practices in manufacturing. This would enable this division to respond positively to any emerging opportunity.

FOUNDRY DIVISION

It was a transformative year for the Foundry division. For the Companys unit emerged as one among the cleanest foundry units in India; it received the GREENCO certification making it one of the very few foundries in India with this certification.

Sustained investment of funds and man-hours in patiently upgrading process and products to global benchmarks yielded heartening returns as the division continued to scale up the performance barometer. The division reported a turnover of र 13,279.98 Lakhs in 2018-19 against र 9,566.56 Lakhs in 2017-18, registering an increase of 38.82%. Exports accounted for 28% of the divisions turnover.

The Company successfully completed the consolidation exercise. Moreover, the team worked on benchmarking its processes to global standards which resulted in product approval from leading global brands – these could result in reasonable business in the current year.

Going forward, the team is looking to enhance capacity at its operating units through line-balancing and de-bottlenecking in keeping with the growing demand from the in-house and external customers.

RENEWABLE ENERGY DIVISION

The Company has a policy of tapping non-conventional and renewable resources of energy namely wind/solar power to augment the sources from which it meets its energy requirements.

As on 31st March, 2019 the Company has installed 28 Wind Energy Generators (WEG) with a total capacity of 36.80 MW. Cumulatively wind mills have generated 782 Lakhs units of power during 2018-19.

On 17th March, 2019, the Company has inaugurated a 10 MW of Solar Power Generating facility. As on 31st March, 2019 this facility has generated 9 Lakhs units of power.

About 84% of renewable energy so generated has been captively consumed by all the divisions of the Company and thereby helped to reduce the power cost.

ADVANCED TECHNOLOGY CENTRE

In less than a decade of being established, the Advanced Technology Centre (ATC) division has come a long way from making standard components to making critical sub-assemblies for leading OEMs in the aerospace sector in India and across the globe.

Advanced Technology Centre clocked a turnover of र2,292.85 Lakhs during the current financial year as against र3,390.35 Lakhs achieved in 2017-18. Job work income during the period under review was र 1,163.70 Lakhs as against र 8,71.42 Lakhs in the previous year.

Moreover, the team developed and delivered critical components to important global customers which could result in healthy volumes over the coming years.

To sustain business growth, the team made two important investments in 2018-19

• Invested in sophisticated machining centers to create the capability to develop critical components using special alloy metals;

• Invested in a composite facility – this enables the division to manufacture a wider range of products.

These initiatives will facilitate in widening the divisions opportunity matrix over the coming years.

REAL ESTATE ACTIVITY

The Elan Project at Parasakthi Nagar, Ganapathy, Coimbatore promoted by the Company in association with M/s. Sobha Limited (developer) is progressing. Spread over 4.76 acres of land this project is for construction of 236 residential apartments consisting of 1 BHK, 2 BHK and 3 BHK. The Company has a revenue share of 30% in the project. As on date about 175 units have been sold resulting in a revenue of र3,495.10 Lakhs for the Company.

On account of demand recession in the Realty sector, the sale of apartments has slowed down. However the developer is confident of selling the remaining units in the near future.

EXPORTS

During the year under review the Company has achieved an export turnover as indicated below:

( in Lakhs)

Division FY 2018 – 19 FY 2017 – 18
Textile Machinery1 70,675.09 47,695.58
CNC Machine 210.06 68.30
Tools
Castings 3,746.80 2,782.84
Aerospace Parts 2,154.00 1,057.58
Total Exports 76,785.95 51,604.30

1 Includes supplies to turnkey projects

Export of Textile Machinery as stated above includes exports worth र 1,971.93 Lakhs made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co. Ltd., China. Amongst other countries, the Companys products are primarily exported to Kenya, Turkey, Bangladesh, Pakistan, Nepal, Indonesia and Vietnam.

RESEARCH AND DEVELOPMENT

The Research and Development efforts of the Company are focused on:

1. Developing eco-friendly, sustainable, energy efficient, low carbon foot print technology.

2. Developing technology for production of innovative machinery.

3. Developing end-products at optimal cost.

Separate Research and Development units have been established for the development of Textile Machinery and CNC Machine Tools. Both these facilities have been recognized by the Department of Science and Technology, Government of India as in-house R & D facilities.

During the year under review the Company has filed applications for 10 new patents and LMW Textile Machinery (Suzhou) Company Limited, subsidiary of the Company has filed 3 new utility model patent applications.

AWARDS

During the year 2018-19 the Company has bagged the following Awards:

1. TMMA Special Export Award 2017-18 - Spinning Machinery Sector

2. EEPC Southern Regional Award 2016-17 Star Performer - Large Enterprise

3. R&D Award from TMMA – for Draw frame LDF 3

INDUSTRIAL RELATIONS

Relationship with employees was cordial throughout the year.

SUBSIDIARY COMPANY

LMW TEXTILE MACHINERY (SUZHOU) CO. LTD. (LMWTMSCL)

The turnover of the Company during the year under review was र 11,150.80 Lakhs as against र 14,987.35 Lakhs achieved during the previous year. During the year the Company has incurred a Net Loss of र448.17 Lakhs as against a Net Profit of र304.11 Lakhs during the previous year.

The consolidated financial statements incorporating the financial statements of the wholly owned subsidiary company is attached to the annual report as required under the Accounting Standard and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The English translated version of the standalone Annual Financial Statements of the wholly owned subsidiary is posted in the Companys website www.lmwglobal.com.

Besides LMWTMSCL the Company does not have any other Joint Venture / Associate Company.

2. Extracts of Annual Return

As per the requirements of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management & Administration) Rules, 2014 the extract of annual return in the prescribed Form MGT 9 is annexed hereto as Annexure 2 forming part of the report. A copy of the Annual Return of the Company in prescribed format is available at the Companys website www.lmwglobal.com

3. Number of Meetings of the Board

During the year under review four (4) meetings of the Board of Directors were held. Further details regarding number of meetings of 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

The Directors, based on representation received from the Operating Management, confirm 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. 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 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;

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

5. Share Capital and Buy-Back of Shares

In terms of Resolution passed by the Board of Directors at their meeting held on 22nd October, 2018 and after complying with necessary requirements of SEBI (Buy- Back of Securities) Regulations, 2018, the Company had bought back 2,72,504 Equity Shares of र 10/- each at an average cost of र5,852.47/- aggregating to र 15,948 Lakhs through Stock Exchanges from the existing shareholders / beneficial owners excluding the promoter / promoter group. The Buy-Back commenced on 2nd November, 2018 and closed on 1st January, 2019. During the Buy-Back equity shares were bought on the Stock Exchanges and extinguished in tranches in compliance with the SEBI (Buy-Back of Securities) Regulations, 2018 and SEBI (Depositories and participants) Regulations, 2018.

As on 31st March, 2019, the authorized, issued, subscribed and paid-up share capital is as follows:

Authorized Share Capital 5,00,00,000 Equity Shares of र 10/- each.
Issued, Subscribed and Paid-up Equity Share Capital 1,06,83,000 Equity Shares of र 10/- each.

6. Nomination and Remuneration Committee and Policy

Nomination and Remuneration Committee of Directors has been formed and has been empowered and authorized to exercise power as entrusted under the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 (both as amended from time to time). The Company has a policy on Directors / Senior Management appointment and remuneration which specifies criteria for determining qualification, positive attributes for Senior Management and Directors. The policy also, specifies the criteria for determination of independence of a Director and other matters provided under sub-section (3) of Section 178. The Nomination and Remuneration Policy is available at the Companys website www.lmwglobal.com.

7. 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 so as to qualify themselves to act as Independent Directors under the provisions of the Companies Act, 2013 read with the relevant rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further, they have also declared that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

8. Explanation and Comments on Audit Report

The report of Statutory Auditors (appearing elsewhere in this Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 3) are self-explanatory having no adverse comments. Further, the Secretarial Compliance Report for the year ended 31st March, 2019 issued by the Practicing Company

Secretary pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has been filed with BSE Limited and the National Stock Exchange of India Limited. A copy of the same is available on the Companys website: www.lmwglobal.com. There were no instances of fraud reported by the Auditors to the Central Government or to the Audit Committee of the Company as indicated under the provisions of Section 143 (12) of the Companies Act, 2013.

9. Particulars of Loans/Guarantee/ Investments/Deposits

The Company has no Inter-Corporate Loans/ Guarantees. Investments of the Company in the shares of other companies is provided under notes to Balance Sheet appearing elsewhere in this Annual Report. The amount of investment made by the company does not exceed the limits as specified in Section 186 of the Companies Act, 2013.

The Company has not accepted any Fixed Deposits.

10. Particulars of Contracts with Related Parties

All the transaction of the Company with related parties are at arms length and have taken place in the ordinary course of business. None of the transaction with related parties are material transactions. Since there are no transactions that are not in arms length and material in nature, disclosure under AOC 2 does not arise. A copy of the Related Party Transaction Policy is also available at the Companys website www.lmwglobal.com.

11. Material Changes

There are no material change or commitments after closure of the financial year till the date of this report.

12. Conservation of Energy, Technology Absorption & Foreign Exchange

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

STATEMENT FOR CONSERVATION OF ENERGY

Sl. No. Particulars Related Disclosures
(A) Conservation of Energy
(i) the steps taken or impact on conservation of energy; sources of energy; Company has invested in energy conservation devices to save power as detailed in point (iii) below.
(ii) the steps taken by the Company for utilizing alternate sources of energy Company has installed windmills with a capacity of 36.80 MW. The Company on 17th March, 2019 has inaugurated photo-voltaic solar power generating facility with installed capacity of 10 MW. Uses electricity generated from renewable sources for captive power consumption.
(iii) the capital investment on energy conservation equipment An amount of र46.27 Lakhs invested during 2018- 19 for replacing 400 watt fluorescent lamps with 132 watt LED lighting. Also र 232 Lakhs was saved by purchasing third party power through bidding on energy exchanges. New 10 MW Solar power generating plant is installed at a cost of र 5,271 Lakhs.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

(B1) Technology Absorption – Textile Machinery Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects
and specializations / skill building exercises
2. In-depth IPR analysis and review
3. Theoretical simulation
(ii) Benefits derived like product improvement, cost reduction, product development or import substitution; Development of machinery with innovative features resulting in improved performance, cost effectiveness, localization of content and user- friendliness to the end user.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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) Expenditure incurred on Research and Development Capital Expenditure : र 104.52 Lakhs
Revenue Expenditure : र2,201.09 Lakhs
Total Expenditure : र2,305.61 Lakhs
B2 Technology Absorption – Machine Tool Division
(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects
and specializations / skill building exercises
2. In-depth IPR analysis and review
3. Theoretical simulation

 

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution; Product improvement & Cost Reduction Measures like development / improvement of spindles, improved shell cover design, development of turret was done throughout the year across all the products.
Product development:
4 New products were commercialized during the year, namely LL25TM L7 (F), LTV 30M (F), LL20TM L10 & LL30T L7 (CNC Turning Center)
Other product developments:
CNC Turning Centre – 3 number, Vertical
Machining Centre – 4 numbers, Horizontal
Machining Centre – 3 numbers, CNC Vertical
Machining Centre with 5 Axis – 1 number and
CNC Turning Center with in-built automation - 1 number.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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 reason thereof;
(iv) Expenditure incurred on Research and Development Capital Expenditure : Nil
Revenue Expenditure : र341.30 Lakhs
Total Expenditure : र341.30 Lakhs
B3 Technology Absorption – Foundry Division
(i) Efforts made towards technology absorption; Technical guest lectures in various subjects and specializations / skill building exercises
(ii) Benefits derived like product improvement, cost reduction, product development or import substitution; Implementation of GREENCO Practices.
As a part of the process, initiatives are carried out for better energy efficiency, water conservation, use of renewable energy, reduction of greenhouse gas emission, material conservation, waste management, green supply chain, life cycle assessment for our foundry units.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(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 reason thereof;
(iv) Expenditure incurred on Research and Development Nil

B4 Technology Absorption – Advanced Technology Centre

(i) Efforts made towards technology absorption; Technical guest lectures in various subjects and specializations / skill building exercises
(ii) Benefits derived like product improvement, cost reduction, product development or import substitution; Manufacture / development of components and sub-assemblies using metal / composite materials.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Nil
(e) the details of technology imported;
(f) the year of import;
(g) whether the technology has been fully absorbed;
(h) if not fully absorbed, areas where absorption has not taken place, and the reason thereof;
(iv) Expenditure incurred on Research and Development Nil

FOREIGN EXCHANGE OUTGO AND EARNINGS:

( in Lakhs)
Foreign Exchange Earned 76,985.54
Foreign Exchange Used 31,464.53

13. Risk Management

The Company follows a comprehensive and integrated risk appraisal, mitigation and management process. The identified elements of Risk and Risk Mitigation measures are periodically reviewed and revised by the Board of Directors. The Board of Directors have also constituted a Risk Management Committee to oversee the Risk Management process.

14. Corporate Social Responsibility (CSR)

The Company has constituted a CSR Committee of Board of Directors and has adopted a CSR Policy. The same is posted in the Companys website www.lmwglobal.com. A report in prescribed format detailing the CSR expenditure for the year 2018-19 is attached herewith as Annexure 4 and forms part of this report.

15. Evaluation of Boards Performance

On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors of the Company have formulated the criteria for the evaluation of the performance of each individual Director, Board as a whole, Committees of the Board, Independent Directors, Non-Independent Directors and the Chairman of the Board based on the Criteria of evaluation as specified by SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January, 2017. Based on these revised criteria the performance evaluation process has been undertaken. The Independent Directors of the Company had also convened a separate meeting for this purpose on 4th February, 2019. All the results of evaluation has been communicated to the Chairman of the Board of Directors.

16. Additional Information

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

(i) The financial summary or highlights The financial highlights including State of Affairs of the Company, Dividend and Reserve have been provided elsewhere in this report
(ii) The change in the nature of business, if any The details of Directors or Key Managerial There is no change in the business line of the Company.
(iii) Personnel who were appointed or have resigned during the year None
(iv) The names of companies which have become or ceased to be its Subsidiaries, Joint Ventures or Associate Companies during the year None
(v) The details relating to deposits, covered under Chapter V of the Act The Company has not accepted any amount which falls under the purview of Chapter V of the Act.
(vi) The details of deposits which are not in compliance with the requirements of Chapter V of the Act. Not Applicable
(vii) The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future Nil
(viii) The details in respect of adequacy of internal controls with reference to the Financial Statements Procedures are set to detect and prevent frauds and to protect the organizations resources, both physical (eg., machinery and property) and intangible (e.g., reputation or Intellectual property such as trademarks). The financial statements are prepared in accordance with the Indian Accounting Standards issued by the Ministry of Corporate Affairs.
(ix) Maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 Pursuant to the provisions of Section 148 (1) of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company was required to maintain cost records. Accordingly, the Company has duly made and maintained the Cost Records as mandated by the Central Government.

17. Directors:

Sri K Soundhar Rajhan (DIN:07594186), Wholetime Director (designated as Director Operations) who retires by rotation at the ensuing Annual General Meeting, being eligible offers himself for reappointment. The Board recommends his reappointment in the forthcoming Annual General Meeting.

The tenure of Sri Aditya Himatsingka (DIN: 00138970), Dr Mukund Govind Rajan (DIN: 00141258) and Sri Basavaraju (DIN: 01252772) Independent Directors of the Company expires at close of business hours on 5th August 2019. Except for Sri Basavaraju, Independent Director, who has been associated as a Director on the Board of the Company since 2006, initially as a Nominee of Life Insurance Corporation of India and later as an Independent Director since the commencement of Companies Act, 2013, the Board of Directors at their meeting held on 20th May 2019 have recommended the reappointment of Sri Aditya Himatsingka and Dr Mukund Govind Rajan, as Independent Directors for a second term of five consecutive years commencing from close of business hours of 5th August, 2019.

Further, the tenure of Justice Smt. Chitra Venkataraman (Retd.,) (DIN: 07044099) as an Independent Director of the Company expires at close of business hours on 1st February 2020. The Board of Directors at their meeting held on 20th May 2019 have recommended the reappointment of Justice Smt. Chitra Venkataraman (Retd.,) as an Independent Woman Director for a second term of five consecutive years commencing from close of business hours of 1st February, 2020.

Your Directors recommend the re-appointment of Sri Aditya Himatsingka (DIN: 00138970), Dr Mukund Govind Rajan (DIN: 00141258) and Justice Smt. Chitra Venkataraman (Retd.,) (DIN: 07044099), in the forthcoming Annual General Meeting.

18. Audit Committee / Whistle Blower Policy

The Audit Committee was formed by the Board of Directors and it consists of:

1. Dr. Mukund Govind Rajan, Chairman (Non-Executive – Independent)

2. Sri Aditya Himatsingka, Member (Non-Executive – Independent)

3. Sri Basavaraju, Member (Non-Executive – Independent)

The Board has accepted the recommendations of the committee and there were no incidence of deviation from such recommendations during the financial year under review. 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 thereof is available on the Companys website at www.lmwglobal. com During the year under review, there were no complaints received under this mechanism.

19. Prevention of Sexual Harassment of Women at the Workplace

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Information regarding the same is also provided in the Corporate Governance Report forming part of Directors Report.

20. Listing of Shares

The shares of the Company are listed in BSE Limited, Mumbai and the National Stock Exchange of India Limited, Mumbai. Applicable listing fees have been paid up to date. The shares of the Company have not been suspended from trading at any time during the year by the concerned Stock Exchanges.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules: 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:

Director Category Ratio
Sri Sanjay Jayavarthanavelu Executive – Chairman and Managing Director 130.30
Sri S Pathy Non-Executive – Non-Independent 1.14
Sri Basavaraju Non-Executive – Independent 1.14
Sri Aditya Himatsingka Non-Executive – Independent 1.14
Dr. Mukund Govind Rajan Non-Executive – Independent 1.14
Sri V Sathyakumar1 Non-Executive – Non-Independent, Nominee of LIC 1.14
Justice (Smt) Chitra Venkataraman (Retd) Non-Executive – Independent 1.14
Sri Arun Alagappan Non-Executive – Independent 1.14
Sri K Soundhar Rajhan Executive – Non-Independent 22.35

Note: Sitting fees paid to the Directors has not been considered as remuneration 1Amount paid to Life Insurance Corporation of India.

b) The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary in the financial year:

Director Category % Increase
Sri Sanjay Jayavarthanavelu Executive – Chairman and Managing Director -0.06
Sri S Pathy Non-Executive – Non-Independent 50.00
Sri Basavaraju Non-Executive – Independent 50.00
Sri Aditya Himatsingka Non-Executive – Independent 50.00
Dr. Mukund Govind Rajan Non-Executive – Independent 50.00
Sri V Sathyakumar1 Non-Executive – Non-Independent, Nominee of LIC 50.00
Justice (Smt) Chitra Venkataraman (Retd) Non-Executive – Independent 50.00
Sri Arun Alagappan Non-Executive –Independent 50.00
Sri K Soundhar Rajhan2 Executive – Non-Independent Not comparable
Key Managerial Personnel Category
Sri C B Chandrasekar Chief Financial Officer 19.46
Sri C R Shivkumaran Company Secretary 19.36

Note: For this purpose, Sitting fees paid to the Directors has not been considered as remuneration. The remuneration details are for the year 2018-19 (Previous Year; 2017-18).

1 Amount paid to Life Insurance Corporation of India.

2 Sri. K Soundhar Rajhan was appointed as Director - Operations on 01st November, 2017.

c) The Percentage increase in the median remuneration of employees in the financial year 1.86%

d) The number of permanent employees on the rolls of company: 3,248

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: 2.13%

f) Afirmation that the remuneration is as per the remuneration policy of the Company: Yes

g) Particulars of Employees as per [Rule 5(2) and Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel Rules), 2014]:

Particulars of Employees whose salary is not less than Rupees One Crore and Two Lakhs:

Table 11, 2

Name (Age in Years) Designation Gross Remuneration Paid (in ) Qualification Date of commencement of employment (experience in years) Previous Employment
Sri Sanjay Jayavarthanavelu (50 years) Chairman and Managing Director 8,54,77,344 MBA., 3rd June, 1994 (24 Years) -
Sri K Soundhar Rajhan (70 years) Director Operations 1,46,58,764 B.Sc., 9th July, 1973 (45 Years) The Kovilpatti Lakshmi Roller Flour Mills Limited

1 Employment is contractual. The remuneration includes Companys contribution to provident fund, gratuity and perquisites.

2 The remuneration details are for the financial year 2018-19 and all other particulars are as on 31st March, 2019. Besides the above there are no other employees in receipt of Remuneration/Salary for any part of the year, at a rate which, in the aggregate, was not less than र8,50,000/- per month.

Particulars of Top Ten employees in terms of remuneration drawn:

Table 2: Employed for full year1, 2, 3 & 4

Name (Age in Years) Designation Gross Remuneration Paid (in ) Qualification Date of commencement of employment (experience in years) Previous Employment
Sri N Krishna Kumar (61 years) Senior Vice President, TQM 77,24,770 BE., ME., 1st July, 1983 (35 Years) -
Sri V Venugopal (61 years) Senior Vice President, Foundry 68,79,553 BE., ME., MBA., MS., 5th August, 1981 (37 Years) -
Sri C B Chandrasekar (59 Years) Chief Financial Officer 61,94,417 B Com., ACS., ACMA., 3rd April, 1992 (26 Years) Elgi Equipments Limited
Sri A V Subramanian (65 Years) President, ATC 56,89,624 B. Tech, M. Tech, MMS., 17th August, 2018 Indian Army
Sri. M Sankar5 (61 Years) President, TMD Operations 55,73,871 B. Tech., 21st August, 1985 (33 Years) Star Marketing Services Limited
Sri T Sundaram (58 Years) Vice President, SCM 46,82,860 DME., BE., PGDC., MS., 18th July, 1980 (38 Years) -
Sri C Arunachalam (54 Years) Vice President, TMD Global 46,82,860 B. Tech., MBA., 3rd February, 1992 (27 Years) J K Synthetics Limited
Sri Indraneel Bhattacharya (54 Years) Sales Vice President, MTD Marketing & Sales 46,82,860 DME., 8th February, 1993 (26 Years) Batliboi & Company Limited
Sri P Ananthan (50 Years) Senior General Manager, SCM 41,06,235 BE., 17th August, 1989 (29 Years) -
Sri V Senthil2 (40 Years) Senior General Manager, Finance 39,44,028 B Com., ACA., 23rd January, 2015 (4 Years) LMW Textile Machinery (Suzhou) Company Limited
Sri K R Ananthakrishnan (53 Years) Senior General Manager, ATC 35,94,627 BE., 27th October, 2017 (1 Year) Maini Precision Products P Ltd
Sri S Rajasekaran (51 Years) Senior General Manager, TMD R&D 35,60,352 DTT., AMIE., M. Tech., DBM., 2nd May, 1986 (32 Years) VR Textiles

Notes for Table 2:

1 The remuneration includes Companys contribution to provident funds, gratuity and perquisites.

2 Except Sri V Senthil, Senior General Manager, Finance who is the relative (daughters husband) of Sri K Soundhar Rajhan, Director Operations, no other employee is a relative (in terms of the Companies Act, 2013) of any other Director of the Company.

3 No employee of the Company is covered by the Rule 5(2) (iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, that is employee, holding by himself or with his family, shares of 2% or more in the Company and drawing remuneration in excess of the remuneration paid to Chairman and Managing Director.

4 The remuneration details are for the financial year 2018-19 and all other particulars are as on 31st March, 2019.

5 Sri M Sankar was deputed to LMW Textile Machinery (Suzhou) Company Limited and rejoined Company with effect from 12th September, 2018.

22. Corporate Governance:

As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided elsewhere in this Report. A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report as Annexure 5 and forms a part of the report

23. Auditors

Statutory Auditors

M/s. S. Krishnamoorthy & Co. Chartered Accountants, with Sri K. Raghu as signing Partner were appointed as Auditors of the Company from the financial year 2016-17 at the AGM held during 2016 for a term of five financial years commencing from 2016-17 to 2020-21. M/s. Krishnamoorthy & Co., Chartered Accountants, Coimbatore, with Sri. K. Raghu as signing partner have consented and confirmed their eligibility and desire to continue as Statutory Auditors of the Company for the Financial Year 2019-20.

Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the Directors, on the recommendation of the Audit Committee have appointed Sri A. N. Raman, Practicing Cost and Management Accountant, Chennai, as the Cost Auditor of the Company for the Financial Year 2019-20. The remuneration payable to the Cost Auditor is subject to ratification of Shareholders at the ensuing Annual General Meeting.

Secretarial Auditor

PursuanttoProvisionsofSection204oftheCompanies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed M/s. MDS & Associates, Coimbatore, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2019-20.

24. Business Responsibility Report

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for the top 500 listed entities based on market capitalization. In compliance with the regulation the BRR is enclosed as Annexure 6 and forms part of the Annual Report.

25. Compliance with Secretarial Standards

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

26. Acknowledgements

Your Directors thank all customers for their continued support and patronage.

The Directors also thank the Companys Bankers, Selling Agents, Vendors, Central and State Governments for their Valuable assistance.

The Directors wish to place on record their appreciation for the cooperation and contribution made by the employees at all levels towards the progress of the Company.

By order of the Board
Sanjay Jayavarthanavelu
Coimbatore

Chairman and Managing Director

20th May 2019 (DIN: 00004505)