Lokesh Machines Ltd Directors Report.

Dear Share Holders,

Your Directors are pleased to present the 37th Annual Report of the company along with the Audited financial Statements for the financial year ended March 31, 2021.

1. FINANCIAL RESULTS

Rs in Lakhs

Particulars (2020-21) (2019-20)
Net Sales 15,021.45 12,584.07
Other Income 132.17 42.89
Total Income 15,153.62 12,626.96
Total Expenses 14,611.56 13,439.71
Profit before Exceptional items & Taxes 542.06 (812.75)
Tax Expenses
Less: (i) Current Tax 90.50
(ii) Deferred Tax 55.41 (344.33)
Profits/ (Loss) after Taxes 396.15 (468.42)
Earnings Per Equity Share:
Basic 2.21 (2.62)
Diluted 2.21 (2.62)

2. PERFORMANCE REVIEW:

The turnover decreased by 19%, during the year.

3 During the year, the Company recorded Revenue from Operations by way of Net Sales of Rs.15,021.45 Lakhs as compared to Rs.12,584.07 Lakhs in 2019-20, an increase of about 19%.

3 The Machine Tool Division has registered a growth of around 31% in terms of sales value as compared to the previous year; primarily lead by the Special Purpose machinery division which itself showed a sharp growth of around 52.25% as compared to previous year. GPM Machines sale has also shown considerably improved numbers in comparison to previous financial year.

3 The Component division had also shown a marginal increase in comparison to previous year.

3 The overall increase in Turnover and the profit by the Company was due to the marginal growth of the economy especially in Auto sector after reduction of COVID-19 related restrictions. The Company is continuously putting its efforts towards achieving its sales and profit targets and your directors are confident that the same will be achieved in near future despite challenges posed by COVID-19.

3. DIVIDEND

In view of inadequacy of profit, your directors regret that they are unable to recommend any dividend for the financial year ended 31st March, 2021.

4. TRANSFER TO GENERAL RESERVE

The Company does not propose to transfer any amount to General Reserve for the financial year 2020-21.

5. SHARE CAPITAL

The paid-up Equity Share Capital as on 31st March, 2021 was Rs. 1789.68 Lakhs.

6. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The company does not have any Subsidiary company either in India or abroad.

7. CHANGE IN THE NATURE OF BUSINESS

There has been no change in the Nature of Business of the Company

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL a) Composition

The Corporate Governance Report annexed to this Board’s Report contains the composition of the Board of Directors of the Company.

Mr. M. Krishna Swamy, Director of the company retires by rotation at the ensuing Annual General Meeting, and being eligible offer themselves for re-appointment.

The detailed profile of the above directors is given in Notice and Explanatory statement calling the Annual General Meeting.

As required by SEBI (LODR) Regulations, 2015 with the Stock Exchanges, the information on the particulars of the Directors seeking re-appointment is given in the notice to the AGM.

Mr. M. Lokeswara Rao, Managing Director, Mr. V. Sudhakara Reddy, Chief Financial officer, Mr. Matru Prasad Mishra (resigned w.e.f. 27th February, 2021) & Mr. Gurprit Singh (appointed w.e.f. 16th June, 2021) Company Secretary hold the office of Key Managerial Personnel.

The Company has appointed Ms. M. Likhitha (DIN: 08765043) as Non-Executive (Non-Independent) director of the Company w.e.f. 18th June, 2020. She has also been considered as Woman director of the Company w.e.f. 18th June, 2020 under respective sections of Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

The Company has also appointed Mr. Gurprit Singh as Company Secretary and Compliance office w.e.f. 16th June, 2021 in terms of the Companies Act, 2013 read with rule made thereunder and SEBI (LODR) Regulations, 2015

b) Noting of Appreciation of Services:

The Board places on record the appreciation for guidance and valuable services provided by Mr. Matru Prasad Mishra, Company Secretary and Compliance Officer, who resigned from the office with effect from 27th February, 2021 due to personal reasons. The Board also places on record the appreciation for guidance and valuable services during his tenure. The Board wishes him good health, fortune and carrier in the days to come.

Independent Directors

The Independent Directors have fulfilled the criteria of Independence as defined under Section149 (6) and requisite declarations in terms of Section 149(7) of the Companies Act, 2013 have been received. During the year under review a separate meeting of independent directors was held on 28th January 2021. A separate meeting of Independent Directors of the Company, without the attendance of Non-Independent Directors, was held during the year, as required under Schedule IV to the Companies Act, 2013 (Code for Independent Directors) and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All the directors of the Company have disclosed their interest to the Company pursuant to Sec 184(1) of Companies Act, 2013.

9. BOARD MEETINGS

During the year, 6 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached to this report.

10. COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION

AND DISCHARGE OF THEIR DUTIES

The provisions of Section 178(1) of the Companies Act, 2013 relating to constitution of Nomination and Remuneration Committee are applicable to the Company and hence, the Company has devised a policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes,independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013. The said policy is posted on the Company’s website www.lokeshmachines.com.

11. AUDITORS

a) Statutory Auditors

As per the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 ("the Act"), and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force) and pursuant to recommendation of the Audit Committee and the Board of Directors, M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, (ICAI Firm Reg. No.003109S) has been appointed as Statutory Auditors of the Company for a term of five years from conclusion of 33rd Annual General Meeting till the conclusion of 38th Annual General Meeting at such remuneration plus reimbursement of out of-pocket, travelling and living expenses, etc., as may be mutually agreed between the Board of Directors of the Company and the said Auditors.

The Statutory Auditors’ report forms part of the Annual Report. The notes on financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.

There are no specifications, reservations, adverse remarks on disclosure by the statutory auditors in their report. They have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

b) Cost Auditors:

The Board has appointed M/s. DZR & Co, Cost Accountants for conducting the audit of cost records of the Company for various segments for the financial year 2021-22 as recommended by the Audit Committee. As required under section 148 and Rule 14 of the Companies (Audit and Auditors) Rules, 2014 a resolution is being placed at the ensuing AGM for ratification of remuneration payable to said Cost Auditors.

c) Secretarial Auditors:

M/s. L.D. Reddy & Co., Practicing Company Secretaries, were appointed to conduct the Secretarial Audit of the Company for the financial year 2021-22, as required under Section 204 of the Companies Act, 2013 and Rule 9 there-under. The Secretarial Audit Report for FY 2020-21 forms part of this Report as Annexure A, The Secretarial Audit Report in self-explanatory and donot call for any further comments.

The Company has also undertaken an audit for the financial year 2020-21 for all applicable compliances as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with circulars/guidelines issued thereunder. The Annual Secretarial Compliance Report issued by Mr. L. Dhanamjay Reddy, Practising Company Secretary, Hyderabad has been submitted to the Stock Exchanges within the specified time and same is annexed herewith as Annexure A2.

12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

M/s M. V. Narayana Reddy & Co., Chartered Accountants, Ameerpet, Hyderabad have been appointed as Internal Auditors to conduct Internal Audit of the Company for the financial year ended March 31, 2022. The details are provided in the Management Discussion and Analysis Report attached to this report. The Internal Auditors reviews the efficiency and effectiveness of the systems and procedures. The Audit Committee approves and reviews the internal audit plan for the year.

13. SECRETARIAL STANDARDS

The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems were adequate and operating effectively.

14. PREVENTION OF INSIDER TRADING:

As per SEBI (Prohibition of Insider Trading) Regulation, 2015 as amended from time to time, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Mr. Gurprit Singh, Company Secretary as Compliance Officer w.e.f. 16th June, 2021, who is responsible for setting forth procedures and implementation of the code for trading in Company’s securities. During the year under review, there has been due compliance with the said code of conduct for prevention of Insider trading.

15. DIVIDEND DISTRIBUTION POLICY

The Provision relating to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding formulation of Dividend Distribution Policy is not applicable to your Company.

16. BUSINESS RESPONSIBILITY REPORT

The Provision relating to Regulation 34(2)(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time regarding submission of Business Responsibility Report is not applicable to your Company.

17. ANNUAL RETURN

The Annual Return of the Company as on March 31st, 2021 is available on the Company’s website and can be accessed at https://www.lokeshmachines.com/investment-center.php?key=agm

18. INDUSTRIAL RELATIONS

The employee relations have remained cordial throughout the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors wish to place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the financial statements.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed as part of this report as Annexure C. Further details of composition of the Corporate Social Responsibility Committee and other details are provided in the Corporate Governance Report which forms part of this report as Annexure D.

21. INTERNAL COMPLAINT COMMITTEE

The Company has in place a policy for prevention, prohibition and redressal against sexual harassment of women at workplace to protect women employees and enable them to report sexual harassment at workplace. An Internal Committee has been constituted consisting of optimum number of women for the said purpose.

22. PERFORMANCE ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

As required under the provisions of Schedule IV of the Companies Act, 2013 the performance evaluation of independent directors has been done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure, and time schedule for the Performance Evaluation process for the Board, its Committees and Directors.

Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings.

23. LISTING:

The equity shares of the Company are listed with Bombay Stock Exchange Limited (BSE), and National Stock Exchange of India Limited (NSE). There are no arrears on account of payment of listing fees to the said Stock Exchanges

24. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors’ confirm that:

In preparation of annual accounts for the financial year ended 31st March, 2021

a. the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2021 and of the profit of the Company for the financial year;

c. The Directors have taken proper and sufficient care for their maintenance of adequate accounting records in accordance with the provisions of the Companies 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;

e. The directors had 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. 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.

25. OTHER DISCLOSURES:

1. Board Meetings

During the year under review, six Board Meetings were held on 29th July, 2020, 11th August 2020; 02nd September, 2020; 12th November, 2020, 28th January, 2021 and 27th February, 2021.

2. Committees of Board

Your company has the following committees namely:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

The constitution of all the committees is as per the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The details of the Constitution of Committees are mentioned in Corporate Governance Report, which forms part of this Annual Report.

26. CORPORATE GOVERNANCE REPORT

Your Company has complied with the requirements of Regulation 34(3) read with Schedule V of SEBI (LODR), Regulations, 2015 and provisions of the Companies Act, 2013, Report on Corporate Governance including Auditor’s Certificate on compliance with the code of Corporate Governance has been annexed with this report.

27. CERTIFICATE FROM COMPANY SECRETARY IN PRATICE

L. Dhanamjaya Reddy, Practicing Company Secretary has issued a certificate as required under the Listing Regulations confirming that none of the directors on the Board of the Company has been debarred or dis-qualified from being appointed or continuing as director of companies by the SEBI/ Ministry of Corporate Affairs or any such statutory authority. The certificate is enclosed as Annexure D1.

28. NOMINATION AND REMUENRATION POLICY

On the recommendation of the Nomination and Remuneration Committee the Board of Directors has formulated a policy of the Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters and to frame proper systems for identification, ppointment of Directors & KMPs, Payment of Remuneration to them and Evaluation of their performance.

29. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company will be provided as per request.

The Disclosures pertaining to remuneration and other details 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 are provided as Annexure E forming part of the Annual Report.

With regard to the provisions of Section 136(1) read with its relevant provision of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary at cosecy@lokeshmachines.com or can write at the registered office address of the Company.

30. BOARD’S RESPONSE ON AUDITOR’S QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE:

During the year, there were no instances of frauds reported by auditors under Section 143(12) of the Companies Act, 2013.

31. INSURANCE:

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant material orders passed by the Regulators /Courts/ Tribunals which would impact the going concern status of the Company and its future operations

33. MATERIAL CHANGES AND COMMITMENTS

There are no Material changes and commitments affecting the financial position of the Company which occurred between the financial year ended March 31, 2021 to which the financial statements relates and the date of signing of this Report

34. MANAGEMENT DISCUSSION AND ANALYSIS:

A brief note on the Management discussion and analysis for the year is enclosed as Annexure B to this report.

35. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE OUTGO

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) 2014, is enclosed herewith as Annexure F.

36. DEVELOPEMNT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The Company has been addressing various risks impacting the company policy of the company on risk management is provided elsewhere in this Annual Report in Management Discussion and Analysis Report.

The Company has developed and implemented a risk management policy for the company including identification therein of elements of risk, which in the opinion of the Board may threaten the existence of the company.

37. VIGIL MECHANISIM

In pursuant to the provisions of section 177 of the Companies Act, 2013 a Vigil Mechanism for directors and employees to report genuine concerns has been established. All permanent employees of the Company are covered under the Whistle Blower Policy.

38. PUBLIC DEPOSITS:

The Company has not accepted any deposits from the public.

39. RELATED PARTY TRANSACTIONS:

Related party transactions entered during the financial year under review are disclosed in Note No.39 of the Financial Statements of the Company for the financial year ended 31st March, 2021. These transactions entered were at an arm’s length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company.

All transactions entered by the Company with Related parties were in the Ordinary Course of business and Arm’s Length pricing basis. There are no materially significant related party transactions made by the Company during the year. The Audit Committee granted approval at every quarterly held meeting and subsequently as per the recommendation of the Audit Committee it has been ratified by the Board of Directors.

40. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for the support and co-operation extended by the Shareholders, Bankers, Financial Institutions, Government Authorities, Stock Exchanges, Customers, Suppliers and other associates.

Your Directors also wish to place on record their appreciation for the enthusiastic support received from the team of dedicated employees in the activities of your Company.

On behalf of the Board
For Lokesh Machines Limited
Place: Hyderabad Sd/- Sd/-
Date : September 02, 2021 M. Srinivas M Lokeswara Rao
(Whole Time Director) (Managing Director)
(DIN : 00917565) (DIN : 00989447)