As on: Apr 20, 2024 08:23 AM
Dear Shareholders,
The Board of Directors of your Company are pleased to present the Annual Report on the Business of the Company along with the Standalone summary of Financial Statements for the year ended 31st March 2023.
1. The State of Affairs of the Company, Dividend and Reserve
The Board has prepared its report based on the Standalone Financial Statements of the Company and the Annual Report contains a separate section wherein a report on the Performance and Financial position of its Wholly Owned Subsidiary Companies are presented in Form AOC-1.
Financial summary/highlights and transfer to General Reserve
(Cin Lakhs)
The Company's Gross Turnover is at C 4,45,669.24 Lakhs during the year compared to C3,01,676.48 Lakhs in the previous year.
Transfer to Reserve:
The Company has transferred a sum of C 3,500.00 Lakhs out of the current year profits to the General Reserve.
Dividend:
The Board recommends a dividend of C 98.50/- per Equity Share having a face value of C 10/- each (985%) on the Equity Share Capital of C 10,68,30,000/- for the year ended on 31st March 2023 aggregating to C10,522.76 Lakhs. As per Finance Act, 2020, the Dividend is taxable in the hands of the Shareholders. Dividend on Equity Shares is subject to the approval of the Shareholders at the ensuing Annual General Meeting.
The Unclaimed Dividend relating to the Financial Year 2015-16, is due for transfer during September 2023 to the Investor Education and Protection Fund (IEPF) established by the Central Government.
During the year under review, as per the requirements of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (IEPF Rules) 449 Equity Shares of C10/- each on which Dividend had remained Unclaimed for a period of 7 years has been transferred to the credit of the Demat Account identified by the IEPF Authority. As on 31st March 2023, 55,466 Equity Shares of the Company were in the credit of the Demat Account of the IEPF Authority.
As per the requirements of SEBI notification no. SEBI/LAD-NRO/ GN/2016-17/008 dated 08th July 2016 the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available on the Company's website:
STATE OF AFFAIRS OPERATIONS
A detailed overview of the global and Indian economy has been provided in the Management, Discussion and Analysis Report. Also, the state of affairs of each division during the year under review has been provided in detail within the same report.
Overall, the Company's gross turnover increased by 47.73% from C3,01,676.48 Lakhs in 2021-22 to C4,45,669.24 Lakhs in 2022-23; the Profit before exceptional items and Tax stood at C48,541.15 Lakhs in FY 2022-23 as against C25,411.63 Lakhs in FY 2021-22.
The Net Profit after Tax for Financial Year 2022-23 was C35,021.55 Lakhs as against C17,967.61 Lakhs for the FY 2021-22.
FOUNDRY DIVISION (FDY)
The Foundry Division reported a turnover of C 9,570.84 Lakhs in 2022-23 as against C7,769.05 Lakhs registered in 2021-22, an increase of 23%. Exports accounted for 23% of the division's turnover.
TEXTILE MACHINERY DIVISION (TMD)
During the year under review, the Textile Machinery Division had a turnover of C3,48,698.67 Lakhs in 2022-23 as against C2,20,898.96 Lakhs registered in 2021-22, an increase of 58% over the previous year.
MACHINE TOOL DIVISION (MTD)
The Machine Tool Division reported a turnover of C77,918.64 Lakhs in 2022-23 as against C69,092.17 Lakhs registered in 2021-22, an increase of 13% over the previous year.
During the year under review, the second unit of Machine Tool Division commenced operations.
ADVANCED TECHNOLOGY CENTRE (ATC)
Advanced Technology Centre had a turnover of C 9,481.09 Lakhs in 2022-23 as against C 3,916.30 Lakhs achieved in 2021-22. Other income during the period under review was C1,593.84 Lakhs as against C 913.08 Lakhs in the previous year.
RENEWABLE ENERGY DIVISION
The Company has a policy of tapping renewable resources for power generation. The Company has the necessary infrastructure in place to generate wind and solar power. This helps the Company to meet its energy requirements mainly from sustainable sources.
As on 31st March 2023 the Company had 28 Wind Energy Generators (WEG) with a total power generation capacity of 36.80 MW. Cumulatively, windmills have generated 734.64 Lakh units of power during 2022-23.
The Company also has a 10 MW of Solar Power Generating facility. As on 31st March 2023 this facility has generated 206.44 Lakh units of power.
About 76.14% of energy demand of the Company has been met through renewable energy and thereby has helped the Company to reduce its power cost and its carbon footprint.
OTHER DEVELOPMENTS
The Company has entered into a Joint Development Agreement with M/s Sobha Limited to develop residential villas on Company's land measuring 5.09 acres located at Ganapathy, Coimbatore. The Company will have a revenue share of 40% in the proposed project.
EXPORTS
The export turnover of the Company during the year under review is as follows: C
( in Lakhs)
Export of Textile Machinery as stated above includes exports worth C 20,720.66 Lakhs made to its Wholly Owned Subsidiary Companies, LMW Textile Machinery (Suzhou) Co. Ltd., China and LMW Middle East FZE, United Arab Emirates. Amongst other countries, the Company's products are primarily exported to countries in Asia and Africa.
RESEARCH AND DEVELOPMENT
The Research and Development efforts of the Company are focused on:
1. Developing eco-friendly, sustainable, energy efficient, low carbon footprint technology.
2. Developing technology for production of innovative machinery.
3. Developing end-products at optimal cost.
Separate Research and Development units have been established for the development of Textile Machinery and CNC Machine Tools. Both these facilities have been recognised by the Department of Science and Technology, Government of India as in-house R & D facilities.
During the year under review, the Company has filed applications for 10 new patents in India. Further 34 patent applications were filed in overseas countries for which applications were already filed by the Company in India. Also, during the period under review, the Company has filed an application for an Industrial Design.
AWARDS
Some of the important awards bagged by the Company during the Financial Year 2022-23:
• Textile Machinery Manufacturers' Association (TMMA) - Research and Development award 2021-22 in Textile Machinery sector for innovation in Speed frame LF4280 SX
• TMMA - Research and Development award 2021-22 in Textile Machinery sector for innovation in Comber LK69 S
• Par Excellence award for Foundry Division from Quality Circle Forum of India
• GreenCo Platinum certification for Foundry Division from Confederation of Indian Industry
• Star performer award from EEPC India Southern Region
• Apex Export Award for the year 2021-22 from TMMA
INDUSTRIAL RELATIONS
Relationship with employees was cordial throughout the year.
SUBSIDIARY COMPANIES
I. LMW TEXTILE MACHINERY (SUZHOU) CO. LTD., CHINA
The turnover of the Company during the year under review was C27,221.88 Lakhs as against C 22,176.20 Lakhs achieved during the previous year. During the year, the Company has achieved a net profit of C2,376.29 Lakhs as against a net profit of C196.90 Lakhs during the previous year.
II. LMW AEROSPACE INDUSTRIES LIMITED, INDIA
As on date of this report, the Company is yet to commence operations.
III. LMW MIDDLE EAST FZE, UNITED ARAB EMIRATES
The turnover of the Company during the year under review was C12,049.11 Lakhs. During the year, the Company has achieved a net profit of C812.47 Lakhs.
The Consolidated Financial Statements incorporating the Financial Statements of the Wholly Owned Subsidiary Companies are attached to the Annual Report as required under the applicable Indian Accounting Standard(s) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The English translated version of the Standalone Annual Financial Statements of LMW Textile Machinery (Suzhou) Co. Ltd, Wholly Owned Subsidiary Company is posted on the Company's website along with the Annual Financial Statements of other Wholly Owned Subsidiary Companies, namely, LMW Aerospace Industries Limited and LMW Middle East FZE. Besides LMW Textile Machinery (Suzhou) Co. Ltd., LMW Aerospace Industries Limited and LMW Middle East FZE, the Company does not have any other Joint Venture / Associate Company.
2. Annual Return
As per the requirements of Section 92 of the Companies Act, 2014, read with Rule 12 of the Companies (Management & Administration) Rules 2014, the Annual Return in the prescribed Form is available on the Company's website
3. Number of Meetings of the Board
During the year under review four (4) Meetings of the Board of Directors were held. Further details regarding number of Meetings of Board of Directors and Committees thereof and the attendance of the Directors at such Meetings are provided under the Corporate Governance Report.
4. Directors' Responsibility Statement
The Directors', based on representation received from the Operating Management, confirm that:
a. In preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
b. Have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit and Loss of the Company for the period;
c. Have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. Have prepared the annual accounts on a going concern basis;
e. Have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and
f. Have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and are operating effectively.
5. Share Capital
As on 31st March 2023, the authorised, issued, subscribed and paid-up Share Capital is as follows :
During the year under review, there were no changes in the Capital Structure of the Company.
6. Nomination and Remuneration Committee and Policy
Nomination and Remuneration Committee of Directors has been formed and has been empowered and authorised to exercise power as entrusted under the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 (both as amended from time to time). The Company has a policy on Directors' / Senior Management appointment and remuneration which specifies criteria for determining the qualification, positive attributes for Senior Management and Directors. The policy also specifies the criteria for determination of independence of a Director and other matters provided under sub-section (3) of Section 178 of the Companies Act, 2013. The Nomination and Remuneration Policy is available at the Company's website
7. Declaration by Independent Directors
The Independent Directors have submitted their disclosures to the Board indicating that they comply with all the requirements that are stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 so as to qualify themselves to act as Independent Directors in the Company. Further, they have also declared that they are not aware of any circumstance or situation, which exists 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.
The Independent Directors of the Company have complied with the requirements of the provisions in relation to the Independent Directors Databank as stated in the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 and the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended from time to time.
8. Explanation and Comments on Audit Report
The report of the Statutory Auditor (appearing elsewhere in this Annual Report) and that of the Secretarial Auditor (annexed hereto as Annexure 1) are self-explanatory having no adverse comments. Further, the Secretarial Compliance Report for the financial year ended on 31st March 2023 will be filed with the Stock Exchanges in which the
Company's equity shares are listed. There were no instances of fraud reported by the Auditor to the Central Government or to the Audit Committee of the Company as indicated under the provisions of Section 143 (12) of the Companies Act, 2013.
9. Particulars of Loans / Guarantee / Investments / Deposits
The Company has no Inter-Corporate Loans / Guarantees. Investments of the Company in the Shares of other Companies is provided under notes to Balance Sheet appearing elsewhere in this Annual Report. The amount of investment made by the Company does not exceed the limits as specified in Section 186 of the Companies Act, 2013. The Company has not accepted any Fixed Deposits.
10. Particulars of Contracts with Related Parties
All the transactions of the Company with its Related Parties are at arms' length and have taken place in the ordinary course of Business. Pursuant to Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had obtained the approval of the Shareholders to enter into material related party transactions with two of its related parties.
The particulars of Material Related Party Transactions which are at arms' length basis is provided in Form AOC-2 and the same is annexed to the Boards' Report as Annexure -2.
For the Financial Year 2023-24, approval of Shareholders is being sought to enter into material related party transactions with Lakshmi Electrical Control Systems Limited.
A copy of the Related Party Transaction Policy of the Company is available on the Company's website
11. Material Changes
There are no Material Changes or Commitments after closure of the Financial Year till the date of this report.
12. Scheme of Arrangement
The Board of Directors of the Company had approved the Scheme of Arrangement between the Company and LMW Aerospace Industries Limited. The Scheme inter-alia had provided for transfer of Advanced Technology Centre Business undertaking of the Company into LMW Aerospace
Industries Limited, a Wholly Owned Subsidiary Company, on a going concern basis through slump sale on terms and conditions as detailed in the Scheme. A copy of the Scheme and other related documents are available on the Company's website The matter is now pending before the Honourable National Company Law Tribunal, Chennai Bench.
13. Conservation of Energy, Technology Absorption and Foreign Exchange
The disclosure under Rule 8(3) of Companies (Accounts) Rules, 2014 are as under:
STATEMENT FOR CONSERVATION OF ENERGY
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
(B1) Technology Absorption - Foundry Division
(B3) Technology Absorption - Machine Tool Division
FOREIGN EXCHANGE OUTGO AND EARNINGS:
( C in Lakhs)
14. Risk Management
The Company follows a comprehensive and integrated risk appraisal, mitigation and management as stated in its Risk Management Policy. The identified elements of Risk and Risk Mitigation measures are periodically reviewed and revised by the Board of Directors. The Board of Directors have also constituted a Risk Management Committee to oversee the Risk Management process.
15. Corporate Social Responsibility (CSR)
The Company has constituted a CSR Committee of the Board of Directors and has adopted a CSR Policy. The same is posted in the Company's website A report in the prescribed format detailing the CSR expenditure for the year
2022-23 is attached herewith as Annexure 3 and forms a part of this report.
16. Evaluation of Board's Performance
On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors of the Company have formulated the criteria for evaluation of the performance of each individual Director, Board as a whole, Committees of the Board, Independent Directors, Non-Independent Directors and the Chairman of the Board based on the criteria of evaluation as specified by SEBI Circular SEBI/HO/CFD/ CMD/CIR/P/2017/004 dated 05th January 2017. Based on these criteria the performance evaluation process has been undertaken. The Independent Directors of the Company had also convened a separate Meeting for this purpose on 01st February 2023. The results from this evaluation process have been communicated to the Chairman of the Board of Directors.
17. Additional Information
As per Rule 8(5) of the Companies (Accounts) Rules, 2014 the following additional information is provided:
18. Directors
The Board of Directors at their Meeting held on 11th May 2022 had appointed:
a. Sri Jaidev Jayavarthanavelu (DIN: 07654117) as an additional Non-Executive and Non-Independent Director.
b. Sri Aroon Raman (DIN: 00201205) as an additional Non-Executive and Independent Director to hold office for a period of 5 Years. Subsequently, the appointments were approved by the Shareholders at their Meeting held on 25th July 2022.
Sri K Soundhar Rajhan (DIN: 07594186), who retires by rotation at the ensuing Annual General Meeting, being eligible does not offer himself for reappointment. The Board of Directors have resolved not to fill the vacancy so caused. Also, the Board of Directors at their meeting held on 24th May 2023 have recommended to the Shareholders for the appointment of Sri Jaidev Jayavarthanavelu (DIN: 07654117) as Whole-time Director of the Company for a period of five years commencing from 7th August 2023.
19. Audit Committee / Whistle Blower Policy
The Audit Committee was formed by the Board of Directors and it consists of:
1. Dr Mukund Govind Rajan,
Chairman (Non- Executive - Independent)
2. Sri Aditya Himatsingka,
Member (Non-Executive - Independent)
3. Justice (Smt) Chitra Venkataraman (Retd.),
The Board has accepted the recommendations of the Audit Committee and there were no incidence of deviation from such recommendations during the Financial Year under review. The Company has devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section 177(10) of the Companies Act, 2013 and details thereof is available on the Company's website at During the year under review, there were no complaints received under this mechanism.
20. Prevention of Sexual Harassment of Women at the Workplace
The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Information regarding the same is also provided in the Corporate Governance Report forming part of Directors' Report.
21. Listing of Shares
The Shares of the Company are listed on BSE Limited and on the National Stock Exchange of India Limited. Applicable listing fees have been paid up to date. The Shares of the Company have not been suspended from trading at any time during the year by the concerned Stock Exchanges.
22. Overall Maximum Remuneration
Particulars pursuant to Section 197(12) and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules:
a. The ratio of the remuneration of each Director to the median employee's remuneration for the Financial Year and such other details as prescribed is as given below:
Note: Sitting Fees paid to the Directors is not considered as remuneration.
1
b. The percentage increase in remuneration of each Director, Chief Financial Officer and the Company Secretary in the Financial Year:
*% increase in remuneration after considering the leave encashment availed during the previous financial year is (14.77).
Note : For this purpose, Sitting fees paid to the Directors is not considered as remuneration. The remuneration details are for the year 2022-23 (Previous Year: 2021-22).
c. The Percentage increase in the median remuneration of employees in the Financial Year : 5.55%
d. The number of permanent employees on the rolls of Company : 3,418
e. Average percentile increase in the salaries of employees other than the managerial personnel in the last Financial
Year is 17%. Average percentile increase in the managerial remuneration is 110% on account of increase in profit linked remuneration.
f. Affirmation that the remuneration is as per the remuneration policy of the Company: Yes
g. Particulars of Employees as per [Rule 5(2) and Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel Rules), 2014]:
Particulars of Employees whose salary is not less than Rupees One Crore and Two Lakhs: Table 1 1, 2 & 3
2
3
Details of employees in receipt of Remuneration / Salary for any part of the year, at a rate which, in the aggregate, was not less than C8,50,000/- per month: Table 2 1, 2 & 3
Particulars of Top Ten employees in terms of remuneration drawn: Table 3 1,2,3 & 4
4
23. Corporate Governance
As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided elsewhere in this Report. A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report as Annexure 4 and forms a part of the report.
24. Auditors
Statutory Auditor
Consequent to the approval of the Shareholders at their Annual General Meetings held during 2021 & 2022 respectively, M/s S Krishnamoorthy & Co., Chartered Accountants, with Sri B Krishnamoorthi / or Smt V Indira as signing partners were appointed as Statutory Auditors of the Company for a second term of five Financial Years commencing from 2021-22 and to hold office until conclusion of the Annual General Meeting to be held during 2026.
M/s S Krishnamoorthy & Co., Chartered Accountants, Coimbatore, with Sri B Krishnamoorthi or Smt V Indira as signing partner have consented and confirmed their eligibility and desire to continue as Statutory Auditors of the Company for the Financial Year 2023-24.
Cost Auditor
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the Directors, on the recommendation of the Audit Committee have appointed Sri A N Raman, Practicing Cost Accountant, Chennai, as the Cost Auditor of the Company for the Financial Year 2023-24. The remuneration payable to the Cost Auditor is subject to ratification of Shareholders at the ensuing Annual General Meeting.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed Sri M D Selvaraj of M/s MDS & Associates LLP, Coimbatore, Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year 2023-24.
25. Business Responsibility and Sustainability Report
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with relevant SEBI Circulars, a new reporting requirement on ESG Parameters were prescribed under "Business Responsibility and Sustainability Reporting" ("BRSR"). The BRSR seeks disclosure on the performance of the Company against the nine principles of the "National Guidelines on Responsible Business Conduct"(‘NGRBCs').
As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1,000 listed companies by market capitalisation. The BRSR of the Company is annexed as Annexure 5 and forms an integral part of the Annual Report
26. Compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and is operating effectively.
27. Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code National Company Law Tribunal (NCLT) has intimated the Company that an Application under Section 9 of Insolvency and Bankruptcy Code, 2016 has been filed on 5th May 2023 before the NCLT- Chennai Bench against the Company and the matter shall be listed before the bench subject to scrutiny. Company has taken necessary legal steps in this regard.
28. Details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof Not applicable
29. Acknowledgements
Your Directors thank all customers for their continued support and patronage.
The Directors also thank the Company's Bankers, Selling Agents, Vendors, Central and State Governments for their valuable assistance.
The Directors wish to place on record their appreciation for the cooperation and contribution made by the employees at all levels towards the progress of the Company.
By order of the Board