Lumax Auto Technologies Ltd Directors Report.
Your Directors with immense pleasure present the 38th Annual Report of Lumax Auto Technologies Limited ("Company") on the business and operations together with Audited Balance Sheet and Statement of Profit & Loss of your Company for the year ended March 31, 2019.
We have established our position in the industry as one of the prominent leaders and are the preferred supplier for all major OEMs. We have a diverse basket of products offering. The below mentioned performance itself speaks volumes of the initiatives Company has taken to strengthen the profitability.
The Key highlights of Financial Performance of your Company for the year along with previous year figures are as follows:
I. FINANCIAL PERFORMANCE
(र in Lakhs)
|For the year ended March 31, 2019||For the year ended March 31, 2018||For the year ended March 31, 2019||For the year ended March 31, 2018|
|Continued Operations||Overall Operations*||Continued Operations||Overall Operations*||Continued Operations||Overall Operations*||Continued Operations||Overall Operations*|
|Revenue from Operations (Net of Excise)||65,232.03||82,377.15||49,753.72||59,593.28||118,697.87||135,842.99||101,307.52||111,147.08|
|Profit before tax, share in net profit/(loss) of associates, exceptional items||4,587.54||6,345.96||3,059.00||4,283.51||9,387.34||11,145.76||7,650.46||8,874.96|
|Profit / (loss) of associates||-||-||-||-||(25.44)||(25.44)||(61.53)||(61.53)|
|Profit before exceptional items and tax||4,587.54||6,345.96||3,059.00||4,283.51||9,361.90||11,120.32||7,588.93||8,813.43|
|Profit before Tax||4,587.54||6,345.96||2,831.50||4,056.01||8,758.79||10,517.21||7,361.43||8,585.93|
|Profit for the year||3,279.27||4,545.27||2,040.01||2,921.77||5,623.05||6,889.05||4,829.47||5,711.23|
|Profit for the year attributable to -|
|a) Owners of Lumax Auto||3,279.27||4,545.27||2,040.01||2,921.77||5,322.78||6,588.78||3,992.61||4,874.37|
|b) Non- controlling interests||-||-||-||-||300.27||300.27||836.86||836.86|
|Other Comprehensive Income||(1,785.93)||(1,785.93)||4,060.13||4,060.13||(1,729.89)||(1,729.89)||4,062.27||4,062.27|
|Other Comprehensive Income attributable to -|
|a) Owners of Lumax Auto Technologies Limited||(1,785.93)||(1,785.93)||4,060.13||4,060.13||(1,734.82)||(1,734.82)||4,059.02||4,059.02|
|b) Non- controlling interests||-||-||-||-||4.93||4.93||3.25||3.25|
|Total Comprehensive Income for the year||1,493.34||2,759.34||6,100.14||6,981.90||3,893.16||5,159.16||8,891.74||9,773.50|
|Total Comprehensive Income for the year attributable to -|
|a) Owners of Lumax Auto Technologies Limited||1,493.34||2,759.34||6,100.14||6,981.90||3,587.96||4,853.96||8,051.63||8,933.39|
|b) Non- controlling interests||-||-||-||-||305.20||305.20||840.11||840.11|
|Paid-up Equity Share Capital (Equity shares of र 2 each)||1,363.15||1,363.15||1,363.15||1,363.15||1,363.15||1,363.15||1,363.15||1,363.15|
|Earnings Per Share Basic & Diluted EPS (in )||4.81||6.67||2.99||4.29||7.81||9.67||5.86||7.15|
* Includes discontinued business. The Company in its Board meeting held on March 16, 2019 has decided to discontinue the PCB Business w.e.f. April 01, 2019.
A. COMPANY PERFORMANCE STANDALONE :
On Standalone Basis, the Company registered growth of 38% higher than the Industry growth and achieved Revenue of र 82,377.15 Lakhs for the Financial Year 2018-19. The Profit before Tax (PBT) and exceptional items stood at र 6,345.96 Lakhs witnessing a significant growth of 48%. The Profit after Tax (PAT) was recorded at र 4,545.27 Lakhs registering the growth at 56%. The Basic and Diluted Earnings per share also grew by 56%.
The Companys Board of Directors in their meeting held on December 21, 2018 had approved the Merger of Lumax DK Auto Industries Limited, a wholly owned subsidiary (Transferor Company) with Lumax Auto Technologies Limited (Transferee Company) w.e.f. appointed date i.e. April 01, 2018. The above approval is subject to the approval of Jurisdictional Honble Company Law Tribunal, respective shareholders and creditors and such other regulatory and statutory approval(s) as may be required. Pending such approvals no adjustments have been carried in respect of above.
On Consolidated Basis, the Company achieved growth of 22% from Revenue which stood at र 135,842.99 Lakhs for the Financial Year 2018-19. The Profit before Tax (PBT) & exceptional items stood at र 11,120.32 Lakhs witnessing a significant growth of 26%. The Profit after tax (PAT) & Minority Interest was recorded at र 6,588.78 Lakhs registering the growth by 35%. The Basic and Diluted Earnings per share also grew by 35%.
Your Company maintained its commitment in delivering long-term sustainable growth and attractive dividend to its shareholders. The Board of Directors at their Meeting held on May 18, 2019 had recommended Dividend of र 3/- (150%) per equity share of Face Value of र 2/-, subject to the approval of the Shareholders at the ensuing Annual General Meeting.
The total amount of Dividend proposed to be distributed, amounts to र 2,406.00 Lakhs (Including Dividend distribution Tax) as against र 1,410.01 Lakhs in the previous year. The Dividend pay - out ratio comes to 52.93%.
C. SUBSIDIARIES AND ASSOCIATE COMPANIES & CONSOLIDATED FINANCIAL STATEMENTS
As per Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "Listing Regulations"), applicable provisions of the Companies Act, 2013 and Ind AS 110, the Audited Consolidated Financial Statements are provided in the Annual Report of the Company.
As on March 31, 2019, the Company comprised of Nine (9) Subsidiaries; seven (7) being direct subsidiaries & two (2) are step-down Subsidiary and two (2) Associate Companies. The details of the Subsidiaries and Associates along with highlights of their performance are as follows:
Lumax DK Auto Industries Limited (LDK)
LDK, a 100% subsidiary of the Company is engaged in manufacturing of lights and plastic modules. The Revenue of the Company stood at र 31,642.09 Lakhs for the financial year 2018-19.
The Companys Board of Directors in their meeting held on December 21, 2018 had approved the Merger of Lumax DK Auto Industries Limited, a wholly owned subsidiary (Transferor Company) with Lumax Auto Technologies Limited (Transferee Company) w.e.f. appointed date i.e. April 01, 2018. The above approval is subject to the approval of Jurisdictional Honble Company Law Tribunal, respective shareholders and creditors and such other regulatory and statutory approval(s) as may be required.
Lumax Management Services Private Limited (LMS)
LMS, a 100% subsidiary of the Company is a full time service provider in form of Corporate Services to its Group Companies. The Revenue of the Company Stood at र 2,960.97 Lakhs for the financial year 2018-19.
Lumax Integrated Ventures Private Limited (LIVE)
LIVE, a 100% subsidiary of the Company. The Company was established for manufacturing of Non-Automotive Parts. LIVE has two (2) Subsidaries Lumax Energy Solutions Private Limited and Velomax Mobility Private Limited. A Consolidated turnover of the LIVE for the Financial Year 2018 -19 stands for र 11.89 Lakhs.
Lumax Mannoh Allied Technologies Limited (LMAT)
LMAT, a 55% subsidiary formed in collaboration with Mannoh Industrial Co., Limited Japan. The entity manufactures gear shifters and enjoys a market leadership position in India. The Revenue of the Company stood at र 14,346.03 Lakhs for the financial year 2018-19.
Lumax Cornaglia Auto Technologies Private Limited (LCAT)
LCAT, a 50% subsidiary formed in collabration with Cornaglia S.p.A. Italy. The entity manufactures air intake systems as well as other plastics injection blow moulded parts. The revenue of the Company stood at र 4,443.62 Lakhs for the financial year 2018-19. The Company is in process of setting-up the new plants for manufacturing of Urea Tank for Commercial Vehicles.
Lumax Gill Austem Auto Technologies Private Limited (LGAT)
LGAT, a 50:50 Joint Venture between Lumax Auto Technologies Limited and Gill-Austem LLP, USA, having management control of LATL. The JV Company manufactures seat structures. The Company became subsidiary w.e.f April 01, 2018 and current year Revenue stood at र 3,661.28 Lakhs.
Lumax FAE Technologies Private Limited (Lumax FAE)
Lumax FAE, a 51% subsidiary between Lumax Auto Technologies Limited and FAE, Spain to manufacture Oxygen Sensors. The commercial production is expected to start in Q4 2020.
Lumax Ituran Telematics Private Limited (Lumax Ituran)
Lumax Ituran is a 50:50 Joint Venture between Lumax Auto Technologies Limited and Ituran Location and Controls Limited, Israel. During the year the Company has generated business enquries from OEMs to implement track & trace devices with additional features for future models.
Sipal Enginering Private Limited (SIPAL)
SIPAL is a an Associate Company of Lumax Integrated Ventures Private Limited (LIVE). LIVE holds 45% equity in SIPAL.
In accordance with the provisions of Section 129(3) of the Companies Act, 2013 a report on performance and financial position of Subsidiaries, Associate Companies is presented in this Annual Report in the prescribed format AOC-1 as a part of Financial Statements.
Further, in accordance with the provisions of Section 136 (1) of the Companies Act, 2013, the Audited Financial Statements, including the Consolidated Financial Statements and related information and audited accounts of subsidiaries and associates are available on the website of the Company i.e. www. lumaxworld.in/lumaxautotech and the same shall also be made available for inspection at registered office of the Company during the working hours.
II. STATE OF COMPANYS AFFAIRS
During the year under review, the Company underwent a series of important developments and changes influencing its operations, business activities, corporate governance practices etc. however, it continued to reinforce its position in the market and derived sustainable benefit due to its strong foundation and its deeper integration with its subsidiaries and joint ventures.
A. CHANGE IN CAPITAL STRUCTURE
The Board of Directors in its Meeting held on March 23, 2018 approved the Sub-Division of One (1) Equity Share having face value of र 10/- each fully paid-up into Five (5) Equity Shares having face value of र 2/- each followed by approval of Shareholders sought by way of Postal Ballot, the results of which were declared on May 08, 2018.
Post the approval of above proposal by Shareholders the Issued, Subscribed and Paid up Equity Share Capital of the Company would remain same i.e. र 13,63,15,410/- (Rupees Thirteen Crores Sixty Three Lakhs Fifteen Thousand Four Hundred Ten only) divided into 6,81,57,705 (Six Crores Eighty- One Lakhs Fifty Seven Thousand Seven Hundred Five only) Equity Shares of र 2/- each.
B. AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF The Company
In order to give effect to the above proposal of Sub- Division of Equity Shares of the Company, the Board in its Board Meeting dated March 23, 2018 also approved the proposal for Amendment of Memorandum and Articles of Association of the Company (MOA & AOA). Accordingly, the following changes were made to the existing MOA & AOA of the Company:
1. Alteration of Capital Clause - V of the Memorandum of Association of the Company.
2. Alteration of Article 4 (a) Share Capital in Articles of Association of the Company.
The above amendments were also approved by Shareholders through Postal Ballot, the results of which were declared on May 08, 2018.
Further, registered office of the Company has been shifted from Pune, Maharashtra to Delhi, Accordingly, the following change was made to the existing MOA of the Company:
1. Alteration of Situation Clause II : The registered office of the Company will be situated in the State of Delhi
C. SHIFTING OF REGISTERED OFFICE FROM PUNE TO NEW DELHI
The registered office has been shifted from Plot No. 70, Sector 10, PCNTDA Bhosari, Pune-411026, Maharashtra to 2nd Floor, Harbans Bhawan-II, Commercial Complex, Nangal Raya, New Delhi-110046, India w.e.f. May 08, 2019.
D. CAPACITY & FACILITY EXPANSION
During Financial year 2018-19, the Company has commenced commercial production at the newly set up Unit situated at Aurangabad for Robotic Chassis.
E. QUALITY INITIATIVES
Your Company strives to be a supplier of choice across all its customers and is always committed to develop and design new products, in line with its strategy towards delivering competitive advantage to the customers. In the said perspective, Total Productive Maintenance (TPM) has been successfully implemented across all plants of the Company to create a culture and environment which continuously improves quality, cost and delivery parameters. Companys K-76 plant has received Quality Gold award from Bajaj Auto Limited for maintaining PPM below 1000 in last 24 months. The various plants of the Company also received awards for Quality initiatives in various forums of Quality Circle Forum of India (QCFI) and BAVA / KAIZEN Competition, ACMA Kaizen Competition etc. Quality Control Circle (QCC) is an integral part ensuring quality across all processes. By implementing these various initiatives, improvement of Quality is willingly carried out by employees in true spirit, resulting in minimizing rejection and cost cutting.
F. MANAGEMENT DISCUSSION & ANALYSIS REPORT
Pursuant to the provisions of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion & Analysis Report is annexed as part of this report separately as an Annexure A.
G. CHANGE IN THE NATURE OF BUSINESS, IF ANY
Pursuant to the decision taken in Board of Directors meeting held on March 16, 2019, the Company has sold plant & machinery and relevant stocks relating to PCB business in April, 2019 (discontinued operations).
The Company has entered into a 50:50 Joint Venture with JOPP, Germany in the month of April, 2019 for design, development and production of Gear Shift Towers, AMT Kits, Control Housings and AGS-Sensors.
III. GOVERNANCE AND ETHICS A. CORPORATE GOVERNANCE
The report on Corporate Governance together with the Auditors Certificate regarding the Compliance of conditions of Corporate Governance as stipulated in Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms part of this Annual Report as an
B. DIRECTORS & KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR
On recommendation of the Nomination and Remuneration Committee, The Company in its Board Meeting held on July 28, 2018 has appointed Mr. Arun Kumar Malhotra and Mr. Kanchan Kumar Gandhi. Mr. Avinash Parkash Gandhi was appointed on the Board Meeting held on November 12, 2018.
Mr. Arun Kumar Malhotra (DIN: 00132951) was appointed as an Additional Director and designated as an Independent Directors for a period of five years not liable to retire by rotation with effect from July 28, 2018 which is subject to his regular appointment at the ensuing Annual General Meeting (AGM).
Mr. Arun Kumar Malhotra, is a B.E. Mechanical & MBA by qualification. He is an Indian Automotive sector veteran, his past assignment was as the Managing Director of Nissan India and thereafter as Senior Corporate Advisor at Nissan India. He has over 30 years of experience with organization like Escorts, Bajaj Auto limited and Maruti Suzuki India Limited.
Mr. Kanchan Kumar Gandhi (DIN: 08165876) was appointed as an Additional Director and designated as an Independent Director for a period of 5 years, not liable to retire by rotation, with effect from July 28, 2018 which is subject to his regular appointment at the ensuing Annual General Meeting (AGM).
Mr. Kanchan Kumar Gandhi is a B.E. Mechanical by qualification. He is associated with SIAM for the last 18 years and currently is Principal Advisor. He is members of various government policy committees including expert committee on Auto Fuel Vision and Policy 2025, Air Quality Monitoring, Emission inventory and preparing policy documents for issues confronting the Indian Automobile Industry.
Mr. Avinash Parkash Gandhi (DIN: 00161107) was appointed as an Additional Director and designated as an Independent Director for a period of 5 years, not liable to retire by rotation, with effect from November 12, 2018 which is subject to his regular appointment at the ensuing Annual General Meeting (AGM). Mr. Avinash Parkash Gandhi is a Mechanical Engineer. He has held top leadership positions in prestigious organisations having over 40 years of experience. His last assignment was as President at Hyundai Motors India Limited, prior to that he was Chief Executive -R & D at Escorts Limited and at Telco before that, holding various senior positions in the area of manufacturing operations.
The resolutions for above said appointments are duly contained in the Notice of Annual General Meeting.
In accordance with the Articles of Association of the Company and Section 152 of The Companies Act, 2013, Mr. Sanjay Mehta (DIN: 06434661), Director of the Company will retire by rotation at the ensuing AGM and being eligible has offered himself for re-appointment. The Board recommends his reappointment.
Mr. Dhiraj Dhar Gupta (DIN: 01089718), Independent Director on the Board of the Company, ceased to be Director of the Company with effect from July 28, 2018. The Board of Directors place on record its appreciation towards his contributions during his tenure as an Independent Director of the Company.
C. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS
In compliance with the provisions of Section 149 (6) of The Companies Act, 2013 requisite declarations have been received from the Independent Directors regarding meeting the criteria of Independence.
D. NUMBER OF BOARD MEETINGS AND COMMITTEES OF BOARD
The Board of Directors met nine (9) times during the Financial Year under review viz. May 28, 2018, July 28, 2018, November 12, 2018, December 21, 2018, January 30, 2019, February 9, 2019, February 20, 2019, February 28, 2019 & March 16, 2019. The maximum gap between any 2 meetings did not exceed 120 days.
A separate Meeting of Independent Directors was also conducted on March 25, 2019, without the presence of Non- Independent Directors and Management. The details on Attendance during the Board Meetings and other Committee Meetings of Board of Directors are provided in Corporate Governance Report which forms part of the Boards Report
E. BOARD DIVERSITY AND POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Company believes that building a diverse and inclusive culture is integral to its success. A diverse
Board will be able to leverage different skills qualifications professional experiences perspectives and backgrounds which is necessary for achieving sustainable and balanced development. The Board has adopted a policy on Nomination, Remuneration and Board Diversity which sets out the criteria for determining qualifications, positive attributes and independence of a Director.
The main features of the Policy are as follows
3. Applicability & Accountability
4. Responsibility of Nomination & Remuneration Committee
5. Matters relating to appointment and remuneration of Directors
6. Remuneration to Independent Directors
7. Remuneration to other Employees
8. Term & Tenure
The Companys Policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters is enclosed to this Board Report as an
F. PERFORMANCE EVALUATION OF BOARD, COMMITTEE AND DIRECTORS
In accordance with applicable provisions of the Act and Listing Regulations, the evaluation of the Board as a whole, committees and all the Directors was conducted, as per the internally designed evaluation process approved by the Board. The evaluation tested key areas of the Boards work including strategy, business performance, risk and governance processes. The evaluation considers the balance of skills, experience, independence and knowledge of the management and the Board, its overall diversity, and analysis of the Board and its Directors functioning.
The evaluation methodology involves completion of questionnaires consisting of certain parameters such as Evaluation factor, Ratings and Comments, if any.
The performance of entire Board is evaluated by all the Directors based on Board composition and quality, Board meetings and procedures, Board development, Board strategy and risk management etc.
The performance of the Managing Director and Executive Directors is evaluated by all the Board Members based on factors such as leadership, strategy formulation, strategy execution, external relations etc.
The performance of Non- Executive Director and Independent Directors is evaluated by other Board Members based on criteria like managing relationship, Knowledge and skill, personal attributes etc.
It also involves self-assessment by all the directors and evaluation of Committees of Board based on Knowledge, diligence and participation, leadership team and management relations, committee meetings and procedures respectively.
Further, the assessment of Chairmans performance is done by each Board Members on similar qualitative parameters.
The feedback of the evaluation exercise and inputs of directors were collated and presented to the Board and an action plan to further improve the effectiveness and efficiency of the Board and Committees is put in place.
The Board as a whole together with each of its Committees was working effectively in performance of its key functions- Providing strategic guidance to the Company, reviewing and guiding business plans, ensuring effective monitoring of the management and overseeing risk management function. The Board is kept well informed at all times through regular communication and meets once per quarter and more often as and when the need arises. Comprehensive agendas are sent to all the Board Members well in advance to help them prepare and keep the meetings productive. The Company makes consistent efforts to familiarize the Board with the overall business performance covering all Business verticals, by way of presenting specific performance of each Plant, Product Category and Corporate Function from time to time.
The performance of the Chairman was evaluated satisfactory in the effective and efficient discharge of his role and responsibilities for the day to day management of the business, with reference to the strategy and long term objectives.
The Executive Directors and Non-executive Directors provided entrepreneurial leadership to the Company within a framework of prudent and effective controls, with a balanced focus on policy formulation and development of operational procedures. It was acknowledged that the management accorded sufficient insight to the Board in keeping it up-to-date with key business developments which was essential for each of the individual Directors to maintain and enhance their effectiveness.
G. RELATED PARTY TRANSACTION AND POLICY
All contracts/arrangements/transactions entered by the Company with Related Parties were in ordinary course of business and at arms length basis.
All transactions with related parties were reviewed and approved by the Audit Committee and are in accordance with the Policy on Related Party Transactions formulated by the Company. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the provisions of The Companies Act, 2013 and (Listing Regulations).
The details of the related party transactions as per IND AS - 24 are set out in Notes to the Financial Statements of the Company. The Company has formulated a policy on Related Party Transactions, which is available on the Companys website at http://www.lumaxworld.in/lumaxautotech/related-party-transaction-policy.pdf.
There were no materially significant related party transactions entered into, by the Company with Promoters, Directors or Key Managerial Personnel, which may have a potential conflict of interest for the Company, at large.
Form AOC - 2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in the Annexure D of this report.
H. COMPLIANCE MANAGEMENT FRAMEWORK
For monitoring and ensuring compliance with applicable laws by the Company and for establishing adequate management control over the compliances of all acts, laws, rules, regulations and regulatory requirements, the Company has adopted comprehensive Compliance Manual for structured control over applicable compliances by each of the units of the Company.
The Company has a practice of obtaining a Statutory Compliance Report on a monthly basis from various functional heads of respective units for compliance with laws applicable to the respective function. A consolidated report on compliance with applicable laws is presented to the Board every quarter. To take care of the continuously evolving compliance scenario, the Company is constantly striving to strengthen the reporting system.
A separate corporate compliance management team periodically reviews and monitors compliances by units and supports effective implementation of the same in a time bound manner. The Board and Audit Committee along with Compliance team periodically monitors status of compliances with applicable laws based on quarterly certification provided by senior management.
I. VIGIL MECHANISM-WHISTLE BLOWER POLICY
The Company has established a vigil mechanism named Whistle Blower Policy, for directors, employees and business associates to report to the management, concerns about unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct or ethics policy, in accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The mechanism provides for adequate safeguards against unfair treatment of whistle blower who wishes to raise a concern and also provides for direct access to the Chairman of the Audit committee in appropriate/ exceptional cases.
The Whistle Blower Policy is uploaded on the website of the Company. To further strengthen this mechanism, the Company has launched an Employee App which is available for both android and iOS users to facilitate easy expression of their opinions/suggestions/complaints.
J. SECRETARIAL STANDARDS
The Board of Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively, have been duly followed by the Company.
K. DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Directors state:
(i) that in the preparation of the Annual Accounts for the Financial Year ended March 31, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to material departures in the Auditor Report and Notes to Accounts;
(ii) that 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 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;
(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the Annual Accounts on a "going concern" basis.
(v) that 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.
(vi) that 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.
L. PARTICULARS OF EMPLOYEES
Information on Particulars of Employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms an integral part of this report as Annexure E. The information required pursuant to section 197 of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company is available for inspection by the members at the registered office of the Company during business hours on working days up to the date of ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.
M. AUDIT COMMITTEE & COMPOSITION
The composition of the Audit Committee is in alignment with provisions of Section 177 of the Companies Act, 2013 read with the Rules framed thereunder and Regulation 18 of the Listing Regulations. The members of the Audit Committee are financially literate and having experience of Financial Management.
The Audit Committee comprises of Mr. Arun Kumar Malhotra as Chairman, Mr. Roop Salotra, Mr. Milap Jain, Mr. Avinash Parkash Gandhi and Mr. Anmol Jain as Director. Ms. Swapnal Patane acted as Secretary to the Audit Committee till March 09, 2019.
The Audit Committee of the Company reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters. It also supervises the Companys internal control processed, financial Reporting and vigil mechanism.
All the recommendations made by the Audit Committee were accepted by the Board of Directors of the Company
IV. INTERNAL FINANCIAL CONTROLS AND ADEQUACY
A. Adequacy of Internal Financial Control with Reference to Internal Financial Statement
The Company has a comprehensive internal control system to provide reasonable assurance about the achievement of its objective, reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. Appropriate review and control mechanisms are built in place to ensure that such control systems are adequate and are operating effectively.
The monitoring and reporting of financial transactions is supported by a web-based system SAP Hana which helps in obtaining accurate and complete accounting records and timely preparation of reliable financial disclosures at all levels of the organization.
B. RISK MANAGEMENT POLICY
The Company has adopted an enterprise risk management policy and established a risk management framework with an objective of timely identification, mitigation and control of the risks, which may threaten the existence of the Company, in accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Company has also constituted an internal Risk Management Committee to review the risk trend, exposure, potential impact and their mitigation plans, and periodically the key risks are also discussed at the Audit Committee.
The members in their meeting held on July 23, 2014 had appointed M/s S.R. Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company for a period of 5 consecutive years in terms of the provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, to hold the office of Auditors till the conclusion of the sixth consecutive Annual General Meeting of the Company to be held in the Year 2019.
The Board of Directors in their meeting held on May 18, 2019 recommended for the re-appointment of M/s S. R. Batlibai & Co. LLP, Chartered Accountants as a Statutory Auditors of the Company for the next 5 years subject to approval at the ensuing Annual General Meeting.
The Report given by the Statutory Auditors on the financial statement of the Company is part of this Annual Report. The Auditor Report does not contain any qualification, reservation, adverse remark or disclaimer.
The Board has re-appointed M/s Jitender, Navneet & Co. as the Cost Auditors of the Company in accordance with Section 148 and other applicable provisions, if any, of the Companies Act, 2013, for the audit of the cost accounts of the Company for the Financial Year 2018-19.
The Cost Audit Report for the Financial Year 2017-18 has been filed with the Central Government within the stipulated time on August 27, 2018.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. I.U. Thakur, Practicing Company Secretary as the Secretarial Auditor of the Company to undertake the Secretarial Audit for the financial year 2018-19.
The Report of the Secretarial Auditor in the prescribed Form MR-3 is annexed herewith as an Annexure F. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.
In compliance with the provisions of Section 138 of Companies Act, 2013, read with Companies (Accounts) Rules, 2014, your Company has appointed M/s Deloitte Haskins & Sells LLP as Internal Auditors for the Financial Year 2018-19.
D. Details in Respect of Frauds Reported by Auditors under sub-section (12) of section 143 of The Companies Act, 2013 other than those which are Reportable to the Central Government:
There were no frauds which were reported by Auditors for the year under review.
V. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND INITIATIVES
Your Company is committed to grow and operate in a socially sustainable manner and continue to give back to society. A well-outlined CSR program creates social and environmental value thus impacting and improving the lives of communities. The key focus areas of your Company have been Education and Healthcare for disadvantaged sections of the society. The Companys focus areas are largely covered under Schedule VII of the Companies Act, 2013. During the year, the Company continued its support to the existing schools by way of support on career counsellings, integrating students in schools providing books and learning aids, mid meals enhancing holistic education opportunities. Under its healthcare initiatives, the Company is focusing on preventive healthcare by continuously organising health check-up camps, lending financial support to hospitals for juvenile diabetes, cataract operations.
The Company has constituted a CSR Committee of the Board and also developed & implemented a CSR Policy in accordance with the provisions of Companies Act, 2013. The Committee monitors and oversees various CSR initiatives and activities of the Company. The details of CSR policy is available on the Companys website http://www.lumaxworld.in/lumaxautotech/downloads/ CSR-policy-28-05-2015.pdf. The detailed Report on CSR activities is annexed herewith as Annexure - G.
CONSTITUTION OF CSR COMMITTEE-
During the Financial Year 2018-19, the Company has constituted CSR Committee of the Board of Directors which comprised of Three (3) Members namely, Mr. Roop Salotra, Mr. Dhanesh Kumar Jain, Mr. Deepak Jain. Further, the Board of Directors have also adopted the CSR Policy of the Company as approved by the Corporate Social Responsibility Committee which is also available on the website of the Company at www.lumaxworld.in/ lumaxautotech
The contents of the said policy are as below:
2. Policy Guidelines
4. Areas Covered
5. CSR Committee & Responsibility
6. Board Responsibility
9. Management Commitment
The disclosures as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as an Annexure G to this Report in the prescribed format.
VI. OTHER STATUTORY DISCLOSURES AS REQUIRED UNDER SECTION 134 OF COMPANIES ACT, 2013
Names of Companies which have become or ceased to be its Subsidiaries, Joint Ventures or Associate Companies during the Year
During Financial year 2018-19 Lumax Gill-Austem Auto Technologies Private Limited has become subsidiary of the Company w.e.f. April 01, 2018 due to exercise of casting vote in favour of Chairman.
A. EXTRACT OF ANNUAL RETURN
In accordance with the requirement of Section 92 of Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the annual return in Form MGT 9 is annexed as an Annexure - H.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Transfer of Unpaid Dividend
Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, read with the IEPF 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 IEPF established by the Central Government, after the completion of seven (7) years. Consequently, your Company has transferred र 150,036/- during the year to the Investor Education and Protection Fund, lying with it for a period of seven years pertaining to year 2010-11.
Transfer of Shares underlying Unpaid Dividend
Further, pursuant to provisions of Section 124(6), the shares in respect of which Dividend has not been paid or claimed by the Shareholders for seven (7) consecutive years or more shall also be transferred to the Demat account of IEPF Authority. During the year no share underlying Unpaid Dividend have been transferred as per the requirement of IEPF Rules.
It may be noted that Unclaimed Dividend/Underlying shares for the Financial Year 2011-12 can be claimed by the Members by October 27, 2019. The Notice as stipulated pursuant to the provisions of Section 124 of Companies Act, 2013 read with IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 will be published in the Newspaper inviting the attention of the Shareholders to claim their Dividends.
B. FIXED DEPOSITS
During the year under review, the Company has not accepted any Deposit under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
It is further stated that the Company does not have any deposits which are not in compliance with the requirements of Chapter V of The Companies Act, 2013.
C. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments covered under the provisions of section 186 of Companies Act, 2013 are given in the Notes to financial statements.
D. MATERIAL CHANGES AND COMMITMENTS
The Company has dispose Plant & Machinery and relevant stock of PCB Business in month of April 2019, pursuant to decision taken in its Board meeting date March 16, 2019.
E. INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Disclosure of information regarding Conservation of Energy, Research & Development, Technology Absorption and Foreign Exchange Earning and Outgo etc. under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed separately as Annexure I.
F. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed by the Regulators / Courts / Tribunals, which would impact the going concern status of the Company and its future operations.
G. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
In accordance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has adopted the "Prevention of Sexual Harassment at Workplace Policy" and constituted an Internal Complaints Committee (ICC) for Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the related aspects.
The Committee meets as and when required, however minimum one meeting is ensured during the Financial Year to discuss strengthening safety of employees at workplace and also to resolve/ address related issues, if any reported during the year.
During the year under Review i.e. 2018-19 Eleven (11) Meetings of ICC across all plant locations were held. Further, as per the applicable provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 your Company continues to submit Annual Report to the District Officer consisting of details as stipulated under the said Act.
H. ENVIRONMENT HEALTH & SAFETY
The Company focus on "Safety Culture Building" by maintaining the "Safety Management System" to reduce the risk of incident and Injuries. This system includes safety rules, safety procedures, safety training, hazard identification, correction, incident reporting and investigation, capturing near miss accidents, safety communications and safety suggestions. Safety Management System contribute, not only to improve the workplace Safety, but it also influence the organization Safety Culture.
Apart from the above, your Company has also performed below activities in Financial Year 2018-19 sincerely:
1. Safety Gemba Audit as per IS 14489-98
2. Regional Safety Meeting at all regions
3. KYT - Kiken Yochi Training (Identifying hazard and taking corrective measures with the help of actual users)
4. Hazards specific Safety training (Fire Fighting, First Aid, Electrical Safety, Chemical & Machine Safety)
5. Prepared Safety manual for Standard Operating Procedures
6. Identified probable emergency and prepared Emergency Response Manual
7. Comprehensive review / surveillance audit done as per ISO 14001 (Environment Management System)
In year 2018-19, Fire Risk Assessment audit was started for our Tier-2 Suppliers to reduce fire related incidents. Fire safety awareness programmes were conducted at Tier-2 suppliers.
By ensuring all the above, zero accident level is maintained for last three years. Induction programme & regular training of employees and the introduction of formal safety management system help us to mitigate future incidents.
I. CONTRIBUTION TO EXCHEQUER
The Company is a regular payer of taxes and other duties to the Government. During the year under review, Company paid all its statutory dues & presently no dues are outstanding more than six months. The Company ensures payment of all dues to exchequer well within timeline as applicable.
It is our belief that we have a leadership team with the right experience and skills to take us into the next decade of growth. We continue to build our skills and add appropriate resources, which will help the Company deliver solid results in the years to come. Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by its highly valued customers, Joint Venture Partners, all the shareholders, financial institutions & Banks, various Government Agencies.
Your Directors also wish to place on record their sincere thanks and appreciation for the continuing support and unstinting efforts of vendors, dealers, business associates and employees in ensuring an excellent all around operational performance.
|For and on behalf of the Board of Directors of|
|Lumax Auto Technologies Limited|
|Dhanesh Kumar Jain|
|Dated: May 18, 2019||DIN:00085848|
Annexure - I Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Information as per Section 134(3)(m) of the Companies Act, 2013 and forming part of Directors Report for the year ended March 31, 2019
A. CONSERVATION OF ENERGY
Though the Company does not come under the category of power intensive unit, adequate measures have been taken for energy conservation and thereby to reduce energy cost.
(a) Energy Conservation Measures taken and their Impact.
a. Continuous saving of energy by replacing inefficient light by efficient LED light.
The Company had cautiously focused on replacement of inefficient light by LED light in Shop Floors, Office Premises, Street Lights etc. which resultantly reduced energy consumption.
b. Energy conservation by improving overall efficiency of Plants
The Company initiated working on re-design of utility equipment Cooling tower Fan metal blade replaced with FRP Blade the same is resulted into saving of energy consumption.
c. Reduction in energy consumption of process machinery power controlling by making changes in technology and by adopting upgraded technology.
The Company commenced technology up gradation for power controlling & adopted new technology for process machine for Surface treatment and Moulding machine. The Company further has replaced moulding machine with servo motor.
(b) Step taken by the Company for utilizing alternate source of energy
The Company has initiated activity of installation of solar power system with capacity of 250 -300 KVA in its different plants located at PCNTDA, Pune and B-14, Aurangabad in Maharashtra and Bengluru in Karnataka, which will help in energy conservation and reduction of overall cost of energy. Further proposal of installation of solar street lights also in consideration for plants of the Company.
It is difficult to quantify the impact of individual energy reduction measures on the Cost of Production of Goods. The above measures of energy reduction will reduce overall cost of energy.
B. TECHNOLOGY ABSORPTION
The Company does not have any imported technology and hence the details required to be given for the imported technology are not applicable.
As a trend in the Auto Industries is changing from import in technology to provide and develop local competency, the Company has taken various initiatives to improve local technical capabilities.
RESEARCH & DEVELOPMENT
a) Expenditure on Research & Development
|(र in Lakhs)|
|(iii) Total R & D Expenditure as a percentage of Total Turnover (Continued Operations)||0.10|
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows during the year is र 787.66 Lakhs and the Foreign Exchange outgo during the year in terms of actual outflows is र 7,005.80 Lakhs.