Orient Electric Ltd Directors Report.

Dear Members,

Your Directors take pleasure in presenting the Annual Report on business and operations of your Company along with audited financial statements for the financial year ended March 31, 2021.

Companys Financial Performance

Key highlights of the financial performance of your Company for the financial year 2020-21 is summarised below:

( Rs in crores)
Particulars 2020-21 2019-20
Revenue from operations 2032.60 2,061.82
Other Income 6.27 4.09
Total Revenue 2038.87 2,065.91
Expenses
Operating Expenditure 1813.09 1,885.40
Depreciation and Amortization Expense 43.15 40.12
Total Expenses 1856.24 1,925.52
Profit Before Finance Cost and Tax 182.63 140.39
Finance Costs 20.73 26.12
Profit Before Tax (PBT) 161.90 114.27
Tax 42.16 35.65
Profit After Tax (PAT) 119.74 78.62
Comprehensive Income / (Losses) (0.40) (0.11)
Total comprehensive Income for the year 119.34 78.51
Dividend 26.52 24.40
Corporate Dividend Tax NA 5.02
Transfer to General Reserve 15.00 15.00
Balance carried to Balance Sheet 434.44 338.17
Earnings per Share (Basic) (in Rs) 5.64 3.71

Performance Overview

The onset of the pandemic since March20 significantly disrupted the business activities in the first half of the financial year and posed high risks of health and wellness for people. After 5-weeks of complete lockdown, cautious and gradual resumption of sales and manufacturing operations happened from May20 onwards, abiding by all preventive measures and unlocking guidelines prescribed by the government. Your Company quickly responded to the situation by allowing work from home for all support teams. Partitions were made in the factory assembly lines for distancing of work force. Sales and service teams were encouraged to maximise use of digital platforms to connect with their customers. Clearly defined SOPs were put in place to ensure hygiene and employee safety.

The new normal encouraged the team to re-imagine the workstyle, processes, and organisation structure. The team responded with high agility and adaptability, thus quickly embracing digital ways of working, connecting business partners through social networking media and online video calls, continuous website updates with open and proximate retailer information, strong digital communication, providing Orient Call Centre support and attending to critical customer service calls. The Company also took several cost control measures without compromising on long term strategies, competency building and employee health. The Company experienced high growth in the year from B2C retail and e-commerce channels. Besides, Tier 2 and Tier 3 markets also saw a noticeable spike more pronounced for the economy products. Overall, all the segments of the Company registered good growth year-on-year across all product lines.

As the business activity rebounded from middle of 2nd quarter of the financial year 2020-21 with pent-up demand and rural upsurge, home appliances and lighting segments found renewed traction with consumers largely remaining home bound.

The financial statements for the financial year ended March 31, 2021, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs. The Revenue from operation was Rs 2,032.60 crores as against Rs 2,061.82 crores in the previous year showing a decrease of 1.42%. Earnings before Interest, Depreciation and Tax increased by 24.89% at Rs 225.25 crores as against Rs 180.36 crores in the previous year. Depreciation was higher by 7.55% at Rs 43.15 crores, as against Rs 40.12 crores during the previous year due to progressive capitalization and accounting of leased assets (Rights of Use Assets) under IND AS 116. The net Finance Cost, without considering accounting of lease assets under IND AS 116, reduced by 23.85% at Rs 16.09 crores, as against Rs 21.13 crores during the previous year. Profit Before Tax was Rs 161.90 crores as against Rs 114.27 crores in the previous year showing an increase of 41.69%. Profit After Tax (post comprehensive income / loss) was Rs 119.34 crores as against Rs 78.51 crores in the previous year showing an increase of 52.01%.

Transfer to General Reserve

The Company has transferred an amount of Rs 15 crores to the General Reserve of the Company during the financial year ended March 31, 2021.

Dividend

During the financial year, your Company paid an interim dividend of Rs 0.75 (75%) per share of face value of Rs 1 each. Your Directors are pleased to recommend a final dividend of Rs 1.25 per share of the face value of Rs 1 each on the Share Capital thereby making the total dividend for the financial year 2020-21 to Rs 2.00 (200%) per share of face value of Rs 1 each. Payment of final Dividend is subject to approval of shareholders at the ensuing Annual General Meeting (‘AGM) and if approved would be payable to those shareholders whose names appear in the Register of Members as on the close of business hour on previous day of Book Closure commencement date i.e. July 22, 2021.

The Register of Members and Share Transfer Books of the Company will remain closed from Friday, July 23, 2021 to Thursday, July 29, 2021, both days inclusive, for determining the entitlement of the shareholders to the final dividend for the financial year ended March 31, 2021 and for annual book closure.

In terms of the provisions of the Income Tax Act, 1961, as amended by the Finance Act, 2020, dividend paid or distributed by a company on or after April 01, 2020 is taxable in the hands of the shareholders. The tax shall be deducted at the rates prescribed under the Income Tax Act, 1961, as amended, which varies based upon the category and residential status of the shareholder. In accordance with the new provisions, the Company deducted tax at source (‘TDS) at the applicable rates from the payment of final dividend for the financial year 2019-20 and interim dividend for financial year 2020-21 that were paid during the financial year 2020-21. Shareholders are requested to update their residential status, KYC and PAN numbers with their depository participants, in case of shares held in demat mode and with the Registrar and Share Transfer Agent of the Company, in case the shares are held in physical mode for determining the applicable rate of TDS.

The dividend pay-out is in accordance with the Companys Dividend Distribution Policy.

Details of dividend(s) declared/ paid by the Company during the last three financial years:

Dividend Percentage
Type of Dividend Financial Year 2020-21 Financial Year 2019-20 Financial Year 2018-19
Interim Dividend 75% 65% 50%
Final Dividend 125%* 50% 50%
Total 200% 115% 100%

 

*Final Dividend for the financial year 2020-21, is subject to approval by shareholders in the ensuing AGM and will be paid to the entitled shareholders as on book closure date within stipulated timeline post approval by the shareholders at the AGM.

Dividend Distribution Policy

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations), the Company has adopted a Dividend Distribution Policy to determine the distribution of dividends in accordance with the provisions of applicable laws. The Dividend Distribution Policy is available on the Companys website and can be accessed at the following weblink: https:// www.orientelectric.com/images/investors/dividend-distribution-Policy.pdf

Particulars of Loans, Guarantees and Investments

Company has not given any loans, provided any guarantees / security or made investments that are covered under the provisions of Section 186 of the Companies Act, 2013 (‘Act) during the financial year ended March 31, 2021.

Deposits

Company has not accepted any deposits from the public under Chapter V of the Act, during the financial year 2020-21 and as such, no amount on account of principal or interest on deposits from public was outstanding as on March 31, 2021.

Holding, Subsidiary and Joint Venture Companies

During the financial year 2020-21, the Company had no holding, subsidiary or joint venture company.

Dubai Office: The Company continues to maintain representative office (Branch Office) in Dubai Multi Commodity Centre, free trade zone of Dubai, for facilitating business in the Middle East and Africa for its products and also engaging in active business development of new geographies in the international markets.

Material Changes During and After the Year - Impact of Covid 19

There was no material change during the year under review. Further, there are no material changes and commitments affecting the financial position of the Company that occurred after the close of the financial year under review till the date of this Report. However, the global spread of COVID-19 pandemic and the country wide lockdown affected the business operations in the early part of the year. The business however has well managed and risk was mitigated with pent-up demand, effective inventory and working capital management coupled with introduction of new ways of working.

By staying true to its purpose and its values, the top-most priority for the Company was to ensure the safety of its employees. The Company has taken several measures to ensure their well-being including leveraging the power of technology to enable them to work from home. For those employees working in sales offices and manufacturing locations, their safety has been ensured by stringent use of protective gear, abiding by social distancing norms and taking all safety precautions.

Standing by its core commitment, the Company has been navigating through these unprecedented times by building stronger and deeper relationships with consumers and its partners and also supporting them at the times of crisis through extended terms and timely payments.

Detailed information on the impact of COVID 19 has been included under the Management Discussion & Analysis Report forming an integral part of this Annual Report for the financial year 2020-21.

Awards & Accolades

For the 2nd consecutive year, your Company has been certified as "Great Place To Work" in March 2021, for a period of one year starting from March 2021 to February 2022 by Great Place to Work Institute, the global authority in workplace culture assessment and people management practices. Receiving this Award reflects our unwavering commitment in creating and fostering a high performance, people centric culture.

Your Company improved its rating by moving from ‘Fortune India Next500 companies to "Fortune India 500" companies. Your Company has also been conferred with ET Best Brand 2020 during the financial year 2020-21.

Directors and Key Managerial Personnel

Mr. Desh Deepak Khetrapal, Non-Executive Director and Vice-Chairman of the Company, is liable to retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Board of Directors, on the recommendation of the Nomination and Remuneration Committee, recommends the re-appointment of Mr. Desh Deepak Khetrapal as a Non-Executive Director, liable to retire by rotation, at the ensuing AGM of the Company. Further, as per the terms of appointment, Non-Executive and Non-Independent Directors are only liable to retire by rotation. Brief profile of Mr. Desh Deepak Khetrapal and other requirements as per the provisions of the Act and Rules made thereunder, Secretarial Standard issued by the Institute of Company Secretaries of India and Listing Regulations are provided in the Notice to the AGM.

During the year under review, there was no change in the Board of Directors and Key Managerial Personnel of the Company.

Performance Evaluation

The Nomination and Remuneration Policy of the Company empowers the Nomination and Remuneration Committee to formulate a process for effective evaluation of the performance of Individual Directors, Committees of the Board and the Board as a whole. Nomination and Remuneration Committee annually reviews the implementation of performance evaluation criteria.

The Board formally assesses the performance of its own, committees of the Board and individual Directors. The Boards performance evaluation is based on parameters which, inter alia, include deciding long term strategy, rating the composition and mix of Board members, discharging of governance and fiduciary duties, handling critical and dissenting suggestions, etc. Performance of committees are, inter-alia, based on composition of the committee, knowledge of, and participation by, the committee members etc.

The parameters for the performance evaluation of the Directors include contribution made at the Board meetings, attendance, instances of sharing best and next practices, domain knowledge, vision, strategy, engagement with senior management, etc.

The Independent Directors, at their separate meeting, review the performance of Non-Independent Directors, the Board as a whole and the Chairperson of the Company after taking into account the views of Executive Director and Non-Executive Directors, the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Director being evaluated is not present during the discussion.

The Performance Evaluation exercise for the financial year 2020-21 was completed under the supervision of Nomination and Remuneration Committee. On completion of Performance Evaluation exercise, it was concluded that the Executive, Non-Executive and Independent Directors are meeting all the criteria, devoting sufficient time in the matters being placed for discussion before the Board or Committees thereof. The Board as a whole and all the Committees of the Board are discharging their responsibilities effectively. The Board members were satisfied about the adequacy of Board processes and the high leadership skills of the Chairman.

Declaration by Independent Directors

The Independent Directors have confirmed that they meet the criteria of independence laid down under Section 149(6) of the Act and Regulation 16 (1)(b) of the Listing Regulations and 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. Names of all the Independent Directors of the Company are registered with the Independent Directors Databank being maintained by the Indian Institute of Corporate Affairs. Requisite confirmations as per Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, have been received from the Independent Directors in this regard.

The Board of Directors have taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same and is of the opinion that all the Independent Directors of the Company have required integrity, experience and expertise.

Familiarization Programme for Independent Directors

The Management of the Company keeps regularly updating the Independent Directors about the Companys policies, strategies, market conditions, new product launches, rankings, e_cacies of internal financial controls, internal and external risks along with mitigation plans, compliance and governance structure and other material information relevant for them to have a clear understanding of their roles, rights and responsibilities for the purpose of contributing significantly towards the growth of the Company. They are given full opportunity to interact with senior management personnel and are provided with all the documents required and/ or sought by them to have a good understanding of the Company, its business model and various operations and the industry of which it is a part. Besides, regulatory changes are briefed to the Board in advance and wherever required expert advice is additionally arranged to provide comfort and appropriate guidance to the Directors.

The details of the familiarization program are provided in the Corporate Governance Report forming an integral part of the Annual Report for the financial year 2020-21.

The initiatives undertaken by the Company in this respect has also been disclosed on the website of the Company and can be accessed through the following weblink: https:// www.orientelectric.com/images/investors/familiarisation-programme.pdf

Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained, in terms of Section 134 of the Act, your Directors state that: a. In the preparation of the Annual Accounts for the financial year ended March 31, 2021, 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 a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. The Directors have prepared these Annual Accounts on a going concern basis; e. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and f. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Particulars of Directors and Employees

Information required pursuant to Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as Annexure A to this Report.

Board of Directors and its Committees

As on March 31, 2021 the Board of Orient Electric has six Directors comprising of Executive, Non-Executive and Independent Directors, including one Independent Woman Director.

During the year under review six meetings of the Board of Directors were held. The gap between the two consecutive meetings did not exceed the limits prescribed under the Act and Listing Regulations.

The Board of Directors of your Company has constituted following Committees as per requirements specified under the Act and the Listing Regulations:

1. Audit Committee;

2. Risk Management Committee;

3. Nomination and Remuneration Committee;

4. Stakeholders Relationship Committee; and

5. Corporate Social Responsibility Committee

During the year under review all recommendations made by these committees were accepted by the Board of Directors. Details on the composition of the Board of Directors and Committees thereof, terms of reference of the Committees, and attendance of Directors in the Board and Committee meetings are provided in the Corporate Governance Report, forming an integral part of this Annual Report.

Audit Committee

The Audit Committee comprises of three Independent Directors and one Non-Executive Non-Independent Director viz. Mr. TCA Ranganathan, Mr. K Pradeep Chandra and Mrs. Alka Marezban Bharucha, being Independent Directors and Mr. Desh Deepak Khetrapal being Non-Executive Non-Independent Director. Mr. Rakesh Khanna, Managing Director & CEO is a permanent invitee to the Audit Committee. Mr. Saibal Sengupta, Chief Financial Officer and Mr. Hitesh Kumar Jain, Company Secretary also attends the Audit Committee meetings. Further details relating to the Audit Committee are provided in the Report on Corporate Governance, forming an integral part of the Annual Report for the financial year 2020-21. During the year under review, all recommendations made by the Audit Committee were accepted by the Board of Directors.

Meeting of Independent Directors

Pursuant to the provisions of Schedule IV of the Act and the Rules made thereunder a meeting of the Independent Directors of the Company was held on October 27, 2020 without the presence of Non-Independent Directors and members of the Management wherein the Independent Directors discussed, among other matters, the flow of information to the Board of Directors, leadership strengths and weaknesses, governance, compliance and performance of the executive and non-executive members of the Board, including the Chairman.

Share Capital

During the year under review, no new shares were issued by the Company, therefore there was no change in the Authorised, Issued and Paid-Up Share Capital of the Company.

Orient Electric Employee Stock Option Scheme - 2019

The Company had introduced ‘Orient Electric Employee Stock Option Scheme-2019 (‘ESOP Scheme - 2019) in the

financial year 2018-19, as part of its Long-Term Incentive Programme in line with growth objective of the Company and with the intention to attract, motivate and retain high quality talent at the senior level. The ESOP Scheme - 2019 is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (‘ESOP Regulations) and Listing Regulations.

During the year under review there was no change in the ESOP Scheme 2019. No new stock option was granted and no stock option, granted earlier, vested during the financial year 2020-21 M/s S.R. Batliboi & Co. LLP, Statutory Auditor of the Company, certifies annually that the Companys ESOP Scheme - 2019 has been implemented in accordance with the ESOP Regulations, and the resolutions passed by the members for the ESOP Scheme – 2019. Said certificate from the Statutory Auditors of the Company shall be available for inspection by the members at the ensuing AGM. Information required under the Act and as per Regulation 14 of the ESOP Regulations read with SEBI Circular CIR/CFD/ POLICYCELL/2/2015 dated June 16, 2015 is available on the Companys website and can be accessed at the Web-link: https://www.orientelectric.com/images/investors/ESOS-2019-disclosure-31Mar21.pdf

Further details on ESOPs are provided in the notes to accounts of the financial statements for the financial year 2020-21, forming an integral part of this Annual Report.

Auditors

Statutory Auditors

In accordance with Section 139 of the Act and the Rules made thereunder, M/s S.R. Batliboi & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 301003E/ E300005) were appointed as the Statutory Auditor of the Company to hold the office for a term of five years from the conclusion of the first AGM till the conclusion of sixth AGM of the Company to be held in the calendar year 2022, at a remuneration as may be approved by the Board. Pursuant to the amendment made by the Companies (Amendment) Act, 2017, the requirement of yearly ratification by shareholders of appointment of Statutory Auditors has been done away with. Accordingly, the ratification of their appointment is not being recommended to the shareholders of the Company at the ensuing AGM.

There is no qualification, reservation or adverse remark in the Audit Report on the financials of the Company for the financial year ended March 31, 2021. Auditors Report is self-explanatory and therefore, does not require further comments and explanation.

The Auditors Report for the financial year ended March 31, 2021 on the financial statements of the Company forms an integral part of this Annual Report.

Cost Auditor

The Company has maintained cost records for certain products as specified by the Central Government under Section 148(1) of the Act. The Board of Directors of the Company, on the recommendations made by the Audit Committee, have approved the appointment of Mr. Somnath Mukherjee, Cost Accountant in Practice (M. No. – 5343) as the Cost Auditor of the Company to conduct the audit of cost records for the financial year 2021-22. Mr. Somnath Mukherjee, being eligible, have consented to act as the Cost Auditor of the Company for the financial year 2021-22. Mr. Somnath Mukherjee, has further certified that his appointment is within the limits as prescribed under Section 141(3)(g) of the Act and that he is not disqualified from such appointment within the meaning of the said Act.

The remuneration proposed to be paid to Mr. Somnath Mukherjee, subject to ratification by the shareholders of the Company at the ensuing AGM, has been set out in the Notice of ensuing AGM.

Secretarial Auditor

The Board of Directors of the Company have appointed M/s A. K. Labh & Co., Practicing Company Secretaries, (Certificate of Practice No. 3238), as the Secretarial Auditor to conduct audit of the secretarial records for the financial year 2021–22, pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. As per Sections 139 and 141 of the Act and relevant rules prescribed thereunder, Company has received consent from M/s A. K. Labh & Co., to act as the Secretarial Auditor for conducting audit of the secretarial records for the financial year ending March 31, 2022, confirming that their appointment is within the limits laid down by the Act and Rules made thereunder and they are not disqualified for being appointed as Secretarial Auditors under the provisions of applicable laws.

The Secretarial Audit Report for the financial year ended March 31, 2021 under Act, read with Rules made thereunder and Regulation 24A of the Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) is annexed with this report as Annexure B.

Pursuant to the requirements of the SEBI Circular dated February 8, 2019, the Secretarial Compliance Report for the financial year ended March 31, 2021, in relation to compliance of all applicable SEBI Regulations and circulars / guidelines issued thereunder, issued by Mr. A. K. Labh (C.P. No. 3238),

Practicing Company Secretary, has been submitted to the Stock Exchanges within the prescribed time limit.

There is no qualification, observation or adverse remark in the Secretarial Audit Report and Annual Secretarial Compliance Report and the same are self-explanatory and do not call for any further comments.

Reporting by Auditors under Section 143(12) of the Act

During the financial year 2020-21, the Statutory Auditors, Secretarial Auditor and Cost Auditor of the Company, pursuant to the provisions of Section 143(12) of the Act including rules made thereunder, have confirmed that they have not come across any event indicating commitment of any fraud by the officers or employees of the Company thus, no reporting under the said provision was required.

Business Responsibility Report

Your Company is mindful of the needs of the communities and works to make a positive difference and create maximum value for the society. It has been conducting business in a way that delivers long-term economic value that benefits the society as well. Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting aspirational targets and improving economic performance to ensure business continuity and rapid growth. Your Company is committed to leverage ‘Alternative Thinking to build competitive advantage through customer centricity, innovation, good governance and inclusive human development while being sensitive to the environment.

As stipulated under Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective forms an integral part of this Annual Report for the financial year 2020-21.

Corporate Governance

Your Company has a rich legacy of ethical governance practices. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. Your Company always places emphasis on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisations corporate governance philosophy is directly linked to its performance.

The Company is committed to adopt and adhere the established world-class corporate governance practices. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and to the society at large, and strives to serve their interests, resulting in creation of value for all stakeholders.

A Report on Corporate Governance along with a Certificate from the Statutory Auditors regarding compliance with respect to Corporate Governance as stipulated under Schedule V of Listing Regulations forms an integral part of the Annual Report for the financial year 2020-21.

Management Discussion and Analysis Report

A detailed analysis of your Companys performance is discussed in the Management Discussion and Analysis Report, as per Regulation 34 of the Listing Regulations, for the year under review, forming an integral part of the Annual Report for the financial year 2020-21.

Corporate Social Responsibility

Your Company is at the forefront of Corporate Social Responsibility (‘CSR) and sustainability initiatives and practices. Your Company believes in making lasting impact towards creating a just, equitable, human and sustainable society. Your Company continues to focus its CSR initiatives to drive positive and sustainable change in building resilient communities. Your Company has been involved with social initiatives and engages in various activities in the fields of education, healthcare and communities.

The COVID-19 crisis has been testing the worlds capability to respond to a pandemic at a time when the world is already grappling with acute inequalities based on gender, class, access to livelihood opportunities, amongst others. With the socio-economic impacts of the pandemic hitting hard particularly the vulnerable and marginalised groups, there was a need for businesses to step up to support communities in need. Swiftly responding to this, your Company extended its support to the efforts of the Government by contributing Rs 3 crores to the ‘Prime Ministers Citizen Assistance and Relief in Emergency Situations Fund (‘PM CARES Fund). By contributing to PM CARES Fund your Company intended to help in enabling the dedicated medical and service fraternity in the frontline of the battle against the pandemic and in mitigating its wide-ranging human impact, particularly on the most disadvantaged section of our society. Further during the year under review, one of the horrifying cyclone ‘Amphan wreaked havoc all across West Bengal and Odisha. Because of the immediate need which arose due to catastrophe of cyclone Amphan, your Company decided to contribute an amount of Rs 25 lacs for this cause to West Bengal State Disaster Management Authority.

During the year under review, your Company proactively spent Rs 3.25 crores on CSR activities, against the minimum required amount of Rs 2.22 crores. The detailed Annual Report on the CSR activities, pursuant to Sections 134(3)(o), 135(4) of the Act and Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014 containing salient features of Companys CSR policy and activities undertaken during the financial year 2020-21, is annexed herewith as Annexure C. Pursuant to the provisions of the Section 135 of the Act read with Rules made thereunder and Schedule VII thereto the Company has a CSR Policy in place, which is duly being implemented. The CSR Policy of the Company can be accessed at the Companys website through the following Weblink: https://www.orientelectric.com/images/investors/ corporate-social-responsibility-policy.pdf

The terms of reference of CSR committee framed in accordance with Section 135 of the Act along with its composition details and number of meeting held during the financial year under review, is provided in the Corporate Governance Report which forms an integral part of this Annual Report for the financial year 2020-21.

Risk Management

Your Company operates in a constantly evolving environment which exposes it to different risks. The Company has adopted an Enterprise Risk Management (‘ERM) framework and adopted an enterprise risk management policy based on globally recognized standards to provide a holistic view of aggregated risk exposures as well as to facilitate more informed decisions. Through this framework, the Company is able to identify, assess, mitigate and monitor overall and functional exposure to controllable and non-controllable risks.

The ERM framework is administered by the Risk Management Committee, which is also reviewed by the Audit Committee and the Board. The objective of the ERM framework is to enable and support achievement of business objectives through risk-intelligent assessment apart from placing significant focus on constantly identifying and mitigating risks for the business. The ERM Framework covers various categories of risks including, inter alia, information security and cyber security risks, effectiveness of the controls that have been implemented to prevent such risks and continuous improvement of the systems and processes to mitigate such risks.

The ERM framework is structured and involves both bottom-up and top-down approaches, addressing strategic, operational and financial objectives, of the Company and across individual businesses/functions. Operational management has ownership, responsibility and accountability for identifying, assessing, managing and mitigating risks. Senior management monitors and facilitates the implementation of an effective ERM framework along with the development of policies, processes and controls to mitigate risks and issues. As an independent function, Chief Risk Officer of the Company assures the Risk Management Committee, Audit Committee and the Board of Directors on the effectiveness of the ERM framework in the Company. The Risk Management Committee of the Company has been entrusted by the Board with the responsibility of reviewing the risk management process in the Company and ensuring that the risks are brought within acceptable limits. Mitigation plans to significant risks are well integrated with functional and business plans and are reviewed on a regular basis by the management.

The Company endeavours to continuously sharpen its Risk Management systems and processes in line with rapidly changing business environment. The Company, through its risk management process, aims to contain the risks within its risk appetite.

Details of Risk Management Committee is provided in the Corporate Governance Report which forms an integral part of this Annual Report.

Internal Financial Controls

Internal financial control over financial reporting have been designed to provide reasonable assurance with regards to recording and providing reliable financial information and complying with applicable accounting standards. These controls are reviewed periodically, and the Company continuously tries to automate these controls to increase its reliability.

The Company uses an established ERP system to record day to day transactions for accounting and financial reporting. The ERP system is configured to ensure all transactions are integrated seamlessly with the underlying books of account.

Company has completed the upgradation of its core ERP system to the latest SAP S/4 HANA version with assistance of expert consulting partners. All key internal controls over financial reporting were thoroughly tested along with the core functionalities before migrating to the new system. The Company has a well-defined and documented delegation of authority with specified limits for approval of expenditure, both capital and revenue. The Company has workflows to ensure adherence to the delegation of authority. The Company has a commercial manual which lays down certain principles and procedures that are to be followed in all commercial transactions across the Company. The Company periodically tracks all amendments to Accounting Standards and makes changes to the underlying systems, processes, and financial controls to ensure adherence to the same. All resultant changes to the policy and impact on financials are disclosed after due validation with the Audit Committee.

Corporate accounts function is actively involved in designing large process changes as well as validating changes to IT systems that have a bearing on the books of account. The Company gets its financial statements audited every quarter by its Statutory Auditors.

Digitisation

With the aim to improve business efficiency and process improvements, Company in the previous financial year had launched its ambitious digitisation project "eWings". Under this project, during the financial year 2020-21, the Company successfully launched a plethora of digital enablement mainly Sales Force Automation, Employee Engagement Modules, Customer Onboarding, Vendor Onboarding, Collection Management System, Management Approval Workflow, Digital Generation of e-Invoicing and e-way bill which is integrated with GST portal of Government of India. A string of other enablement is in progress and shall be launched soon.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act), the Company has formulated a Policy on Prevention of Sexual Harassment at Workplace (‘POSH Policy) for prevention, prohibition and redressal of sexual harassment at workplace and constituted Internal Complaints Committees (‘ICC), across India where the offices of the Company are located and has the required number of employees, to consider and resolve all sexual harassment complaints reported by women.

At Orient Electric, the goal has been to create an open and safe workplace where every employee feels empowered to contribute to the best of their abilities, irrespective of gender, sexual preferences or any other classification that has no bearing on the employees work output.

The constitution of the ICC is as per the POSH Act, and the committee includes external member with relevant experience. Investigations are conducted in accordance with the POSH Act and the POSH Policy. A senior woman employee presides over every case for ensuring just and fair investigation.

The Company periodically conducts sessions for employees across the organization to build awareness about the POSH Policy and the provisions of POSH Act.

One complaint under POSH Policy was received by ICC during the calendar year 2020 which was properly investigated in accordance with the procedures prescribed and adequate steps were taken to resolve. The details of the complaint pertaining to sexual harassment that was filed and disposed off are provided in Corporate Governance Report for the financial year 2020-21. No complaint was pending at the end of calendar year 2020.

Vigil Mechanism / Whistle Blower Policy

The Vigil Mechanism as envisaged in the Act, the Rules prescribed thereunder and the Listing Regulations are captured in the Companys Whistle Blower Policy to enable all the stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and also to provide for direct access to the Chairman of the Audit Committee. All employees shall be protected from any adverse action for reporting any unacceptable or improper practice and/or any unethical practice, fraud, or violation of any law, rule, or regulation. Awareness of the Policy among the employees of the Company is created through sessions, posters and mailers, portraying the mechanism followed under the Policy. The Company Secretary is the ‘Designated Officer under the Whistle Blower Policy of the Company and his contact details are provided in the policy.

Furthermore, employees are free to communicate their complaints directly to the Chairman of the Audit Committee, as stated in the policy. The Company has also provided a dedicated e-mail address for reporting such concerns. Alternatively, the Whistle Blower can also send written communications to the Company in a sealed envelope marked as ‘Protective Disclosure. All cases registered under the Policy are investigated by the Whistle Blower Committee formed under the Policy and corrective actions are taken, wherever necessary. All these cases along with the investigation reports are placed before the Audit Committee and the Board for their review. The policy is available on the internal employee portal as well as on the Companys website and can be accessed through the following weblink https://www.orientelectric.com/images/investors/whistle-blower-policy.pdf

During the financial year 2020-21, three complaints were received under the Whistle Blower Policy of the Company. The Whistle Blower Committee, comprising of senior managerial personnel, including Managing Director & CEO, investigated the matters in accordance with the procedures prescribed and adequate steps were taken to resolve them, which includes taking necessary disciplinary actions against the employees, who were found to be guilty. As on March 31, 2021, no complaint was pending to be attended to / resolved. Report prepared by the Whistle Blower Committee along with status update on complaints received were placed before the Audit Committee and Board of Directors of the Company.

Further details on whistle blower policy, complaints received thereunder during the year are available in the Report on Corporate Governance that forms an integral part of this Annual Report.

Nomination And Remuneration Policy

The Nomination & Remuneration policy adopted by the Company lays down the criteria for selection of Directors on the Board and payment of remuneration to Directors and Senior Management. It also lays down to have an appropriate mix of Executive, Non-Executive and Independent Directors to maintain the independence of the Board and separate its functions of governance and management. The policy of the Company on Nomination & Remuneration, including the criteria for determining qualifications, positive attributes, independence of a Director and other matters, as required under Section 178(3) of the Act and Listing Regulations, is available on the website of the Company and can be accessed through the following weblink: https://www.orientelectric.com/images/investors/ nomination-remuneration-policy.pdf

The Company afirms that the remuneration paid to the Directors of the Company during and for the financial year 2020-21 is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

Related Party Transactions

All contracts/ arrangements/ transactions entered into by the Company during the financial year under review with related parties were in the ordinary course of business and on an arms length basis. During the year under review, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Suitable disclosures as required by the Indian Accounting Standards have been made in the notes to the financial statements for the financial year 2020-21. A declaration in Form AOC-2, as required under Sections 134(3)(h) and 188(1) of the Act is enclosed as Annexure D.

The policy on related party transactions as approved by the Board is uploaded on the Companys website and can be accessed at the following Weblink: https://www.orientelectric.com/images/investors/related-party-policy.pdf

Compliance With Secretarial Standards

During the year under review your Company has complied with the respective mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

Particulars required under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure E, forming part of this report.

Change in the Nature of Business of the Company

During the year under review, there is no change in the nature of the business operations of the Company.

Investor Education and Protection Fund

In accordance with the applicable provisions of the Act read with Investor Education and Protection Fund (Accounting, Audit, Transfer, and Refund) Rules, 2016 (‘IEPF Rules), all unclaimed dividends are required to be transferred to the Investor Education and Protection Fund (‘IEPF) after completion of seven consecutive years. Further, according to IEPF Rules, the shares on which dividend has not been claimed by the shareholders for seven consecutive years or more shall be transferred to the demat account of the Investor Education and Protection Fund Authority ("IEPF Authority").

During the year under review no share of the Company was liable to be transferred to the demat account of IEPF Authority pursuant to Section 124(6) of the Act read with IEPF Rules.

During the financial year 2020-21, the Company has transferred Rs 6,96,547.50 to IEPF as dividend amount on unclaimed shares transferred earlier to IEPF Authority. The Company has appointed a Nodal Officer under the provisions of IEPF Regulations, the details of which are available on the Companys website and can be accessed through the following link https://www.orientelectric.com/ investors/investors-contact. The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on March 31, 2020 on the Company website, which can be accessed through the following link https:// www.orientelectric.com/images/investors/unclaimed-unpaid-dividend-31-mar-20.pdf . The details of unpaid and unclaimed amounts lying with the Company as March 31, 2021 will also be available on the website of the Company within 60 days of the AGM.

Details of dividend amount so far remitted to IEPF are as follows

Financial Year Type of Dividend Dividend declared on Amount Transferred to IEPF
(In Rs)
2017-18 Interim Dividend February 12, 2018 2,78,619.00
2017-18 Final Dividend July 16, 2018 2,78,619.00
2018-19 Interim Dividend January 28, 2019 2,78,619.00
2018-19 Final Dividend July 16, 2019 2,78,619.00
2019-20 Interim Dividend January 28, 2020 3,62,204.70
2019-20 Final Dividend August 07, 2020 2,78,619.00
2020-21 Interim Divided January 29, 2021 4,17,928.50
Total 21,73,228.20

Investor Relations

Your Company continuously strives for excellence in its investor relations engagement with International and Domestic investors. Your Company always believes in leading from the front with emerging best practices in investor relations and building a relationship of mutual understanding with investor/analysts. Keeping this objective in mind, the Company, during the year under review, participated in various investor / analyst interactions / conference calls. In all such meetings nothing was discussed about the Company which was not already disclosed in the public domain. Your Company ensures that critical information about the Company is promptly disseminated to all the investors by uploading the same on the websites of the National Stock Exchange of India Limited, BSE Limited and the Company.

Registrar and Share Transfer Agent

M/s. Kfin Technologies Private Limited (erstwhile Karvy Fintech Private Limited) is the Registrar and Share Transfer Agent ("RTA") of the Company.

Annual Return

Pursuant to the provisions of Section 134(3)(a) and 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return of the Company is available on the website of the Company and can be accessed through the following link https://www.orientelectric.com/images/investors/Annual-Return-31-Mar-2021.pdf

Significant and Material Orders Passed by any Regulators or Court

During the year under review no regulator or court has passed any materially significant orders impacting either the going concern status of the Company or its future operations.

Further, during the year under review, as per available information, no application against the Company was filed in any court in India under the Insolvency and Bankruptcy Code, 2016 nor any proceedings thereunder is pending as on March 31, 2021.

Appreciations and Acknowledgements

Your Directors wish to extend their sincere thanks to the employees of the Company at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader.

The Board places on record its appreciation for the support and co-operation that your Company has been receiving from its suppliers, distributors, retailers and others associated with it as its business partners. It will be your Companys endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for, and co-operation with, each other, consistent with consumer interests. Your Directors also take this opportunity to thank central and state governments, as well as government agencies, banks, customers, shareholders, vendors, and other related organisations that have helped in your Companys progress, as partners, through their continued support and cooperation.

For and on behalf of the Board of Directors
For Orient Electric Limited
London Chandra Kant Birla
May 12, 2021 Chairman
DIN:00118473