BOARD'S REPORT Dear Members, Your Directors have pleasure in presenting the 46th Annual Report together with Audited Accounts of the Company for the financial year ended on March 31, 2015 OPERATIONS During the financial year 2014-15 your Company has earned revenue from operations Rs.37159 lacs (Previous year Rs.34894 lacs) recording a growth of approx. 7%. During the year net profit of the Company has been remain under pressure to Rs.38.31 lacs. Supply of fasteners to replacement and original equipment segments, wherein your Company holds a key position, continue to be the area of focus of your Company. In order to meet the increased demand, your Company has sufficient installed capacity. Your Company continue to follow its philosophy to provide the high quality products at the lowest cost, coupled with excellent customer services. The market is witnessing fierce competition. All efforts were made under Total Quality Management, Total Productivity Management and Six Sigma Umbrella to continuously improve the cost, quality, delivery and competitiveness. Your Company's products are well accepted in the market and will seethegrowth in the financial year 22015-16. DIVIDEND Your Directors regretted their inability to recommend any dividend to the members of the Company for the financial year ended on March 31, 2015. CHANGE IN THE NATURE OF THE BUSINESS There was no change in the nature of the business of the Company during the year. The Company has only one subsidiary, namely Indian Fasteners Limited (IFL) and there was no change in the nature of the business of this subsidiary .There were no significant and material orders passed by regulators or court or tribunals impacting the going concern status and the Company's operation in future. There was no material changes and commitments affecting the financial position of the Company occurring between March 31, 2015 and the date of this report. EXTRACT OF ANNUAL RETURN The extract of Annual Return for the financial year 2014-15 as prescribed in the Form MGT-9 is given in the Annexure - 1 forming part of this Report. SUBSIDIARY COMPANY As required under the Listing Agreement entered into with the Stock Exchanges and the Companies Act, 2013, a consolidated financial statements presented by the Company in this report include the financial results of the subsidiary company duly audited by the statutory auditors. The said statement has been prepared pursuant to Section 129(3) read with Rule 5 of Companies (Accounts) Rules, 2014 and in accordance with the relevant accounting standards as prescribed under the Companies Act, 2013.The statement in Form AOC-1 isannexed J^ith this report as Annexure - 2. In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the subsidiary companies on its website at www.lpsindia.com . The Company will make available physical copies of these documents upon request by any shareholder of the Company. These documents shall also be available for inspection at the registered office of the Company during business hours upto the date of ensuing AGM. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013 All the related party transactions are repetitive in nature and are entered on arm's length basis and were in the ordinary course of business and in compliance with the applicable provisions of the Act and the Listing Agreement. All Related party transactions are presented to the Audit Committee and the Board, on a quarterly basis. Omnibus approval is obtained for all the related party transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at the web link: <http://www.lpsindia.com>. The information relating to particulars of contracts or arrangements with related party prepared under Section 188(1) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rule, 2014 is annexed with this Report in Form AOC-2 as Annexure - 3. TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, the unclaimed dividend relating to the financial year 2007-08 is due for remittance on 28.09.2015 to the Investor Education and Protection Fund established by the Central Government. DETAILS OF DEPOSIT AS PROVIDED UNDER CHAPTER V OF THE COMPANIES ACT, 2013 (a) Accepted during the year Your Company has not accepted any deposits within the meaning of Section 2(31), read with section 73 of the Companies Act, 2013 and as such, no amount of principal or interest was outstanding as on the date of the Balance Sheet. However, the Company has outstanding deposits of Rs.7,00,00,002 at the time of commencement of new CompaniesAct i.e. 01.04.2014. The same amount is outstanding for payment as on 31.03.2015 for which the Company has already filed petition before the Hon'ble Company Law Board (CLB) for extension of the repayment of period of deposits beyond 31.03.2015. Consequent to the petition filed with CLB for extension of deposits period beyond 31.03.2015; and the Hon'ble CLB at the hearing take place on 16.07.2015 have passed order for extension of period of deposit as per the original repayment schedule for which the deposits were raised. (b) Remaining unpaid or unclaimed as at the end of the year: None (c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year: None (d) Details of deposit which are not in compliance with the requirement of Chapter V of the Act: As per the Auditor's Report DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGISTRARS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE - None DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS A strong internal control culture is prevalent in the Company. A formalized system of internal controls facilitates effective compliance with Clause 49 of the Listing Agreement. The Internal Auditor monitors the compliance with the objective of providing to the Audit Committee and the Board of Directors an independent and reasonable assurance on the adequacy and effectiveness of the organization's governance processes. CONSOLIDATED FINANCIAL STATEMENTS Pursuant to Section 129(3) and all other applicable provision, if any, of the Companies Act, 2013 and in accordance with the Accounting Standards, AS 21, AS 23 and AS 27, issued by "The Institute of Chartered Accountants of India", the Company has also included as part of this Annual Report, the Audited Consolidated Financial Statements of its subsidiary Company Indian Fasteners Limited, its associate companies J.C. Fasteners Limited, Hanumat Wire Udyog Private Limited, Lakshmi Extrusion Limited and its joint ventures LPS Bossard Private Limited & LPS Bossard Information Systems Private Limited for the financial year 2014-15. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR I. RETIREMENT BY ROTATION In accordance with the Articles of Association of the Company and relevant provisions of the Companies Act, 2013, Mr. Lalit Kumar Jain (DIN: 00061293) and Mr. Dinesh Kumar Jain (DIN:00066363) are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their re-appointment. II. APPOINTMENT Mr. Bhuwan Kumar Chaturvedi, Mr. Rakesh Puri and Mr. Ramesh Chandra Jain were appointed as additional directors by the Board with effect from 13.06.2015, 09.07.2015 & 14.08.2015 respectively in the category of the independent directors to comply with the requirement of Clause 49 of the Listing Agreement. The Company has received notices in writing from the members signifying their candidature for the office of directors of the Company. Mr. Bhuwan Kumar Chaturvedi, Mr. Rakesh Puri and Mr. Ramesh Chandra Jain are independent directors and the Board recommend for their appointments. III. CESSATION During the year, Mr. Bhagwan Das Narang, Independent Director resigned with effect from 26.02.2015. Further due to old age and health reasons Mr. Jamshed Rustomji Desai, Independent Director, had taken the retirement from the Board of the Company with effect from 29.05.2015. The Board placed on record its appreciation for the valuable services rendered by Mr. Narang and Mr. Desai. IV. KEY MANAGERIAL PERSONNEL (KMP) During the year, Mr. Lalit Kumar Jain, Chairman & Managing Director was designated as KMP. In addition to above, Mr. Naveen Kakkar, Company Secretary was designated as KMP and resigned with effect from 29.032015. Mr. Umesh KumarAgarwal was appointed Chief Financial Officer (CFO) designated as KMP. Brief resume of the Directors proposed to be re-appointed/ appointed, nature of their expertise in specific functional areas and names of Companies in which they hold directorships and memberships/ chairmanships of Board/ Committees thereto, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, are provided in the Explanatory Statement attached to the Notice of the ensuing Annual General Meeting of the Company None of the Directors of the Company is disqualified under Section 164 of the Companies Act, 2013. CREDIT RATING The Company has been assigned credit rating as 'BB Stable' by Brickwork Ratings India Private Limited on the basis of financial statements for the financial year 2013-14. COMPANIES WHICH BECAME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES - None AUDITORS AND THEIR REPORT M/s. V.R. Bansal & Associates, Chartered Accountants were appointed as Statutory Auditors of the Company for a term of 3 years at the 45th Annual General Meeting of the members of the Company held on 30.09.2014. Your director request that appointment of the Company's statutory auditors needs to be ratified at the 46th ensuing Annual General Meeting and being eligible offers themselves for reappoint. The Company has received a certificate from the auditors to the effect that their re-appointment if made, would be in accordance with the provisions of Section 141 of the Companies Act, 2013 and who has subjected itself to the peer review process of Institute of Chartered Accountants of India (ICAI) and holds a valid certificate issued by the Peer Review Board of the ICAI. The Board of Directors commends their re-appointment in the ensuing Annual General Meeting by way of ratification pursuant to Section 139 and all other applicable provisions, if any, of the Companies Act, 2013.. Auditor's report and Management reply on the comments/qualification by the Statutory Auditor are annexed to this report. COST AUDITOR'S AND THEIR REPORT M/s. HMVN & Associates the Company's Cost Auditors were appointed for the year 2015-16 and the Company has received certificate from the Cost Auditors to the effect that their appointment is in accordance with the provisions of Section 141 of the Companies Act, 2013. The Company has given necessary intimation to Central Government for the approval of such appointment in Form CRA-2 in terms of the applicable provisions of the Companies Act, 2013 and rules made there under. In terms of the requirements of General Circular No.15/2011, dated 11th April, 2011 issued by the Ministry of Corporate Affairs, Government of India, following are the brief particulars w.r.t. Cost Auditors & Cost Audit Reports: STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6) The Independent directors have submitted their disclosure to the Board that they fulfil all the requirements as to quality for their appointment as an Independent Director under the provisions Section 149(6) of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS,POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS AS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013 The Company has formulated a Nomination and Remuneration Policy as per Annexure - 4. Details are provided in Corporate Governance Report. SECRETARIAL AUDIT AND APPOINTMENT OF THE SECRETARIAL AUDITOR'S The Company has appointed M/s. RMG & Associates, Company Secretaries to hold the office of the Secretarial Auditors and to conduct the Secretarial Audit for the financial year 2014-15.The Secretarial Audit Report in this regard is being attached as Annexure - 5 to this Report and Management reply on the comments / observations by the Secretarial Auditor are annexed to this report PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 - None STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY FOR THE COMPANY INCLUDING IDENTIFICATION THEREIN OF ELEMENTS OF RISK, IF ANY, WHICH IN THE OPINION OF THE BOARD MAY THREATEN THE EXISTENCE OF THE COMPANY 1. In line with the new regulatory requirements, the Company has formally framed a Risk Management Policy to identify and assess the key risk areas and monitor the same. The Board periodically reviews the risks and suggests steps to be taken to control the risks. 2. VIGIL MECHANISM A fair and transparent work culture has been core to the Company. To meet this objective, the Company had laid down the Vigil Mechanism Policy, which was approved by the Audit Committee and Board on 29.05.2014. The policy has been posted at the Company's website at www.lpsindia.com . INSURANCE AND RISK MANAGEMENT The assets of the Company are adequately insured against the loss of fire, riot, earthquake, terrorism, loss of profits, etc. and other risks which considered necessary by the Management. In addition to this coverage, a statutory public liability insurance policy has been takken to cover by Company for providing against the public liability arising out of industrial accident for employees working in plants. Risk management policy is in existence in the Company with effect from 01.10.2014. CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTIONS AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, research & development, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of Companies (Accounts) Rules, 2014 is given as per Annexure - 6 and forms part of the Board's Report. STATEMENT OF FORMAL ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS In compliance with the Companies Act, 2013 and Clause 49 of the Listing Agreement, during the year, Nomination cum Corporate Governance and Remuneration Committee laid down the evaluation criteria for performance evaluation of all the directors. The evaluation of Independent Directors was carried out by the entire Board and that of the Chairman and non-independent Directors, by the independent Directors. This exercise was carried out through structured evaluation process covering various aspects of the Board such as composition of the Board/ Committees, experience, competencies, performance of specific duties etc. Separate exercise was carried out to evaluate the performanceeof individual directors including the Chairman who were evaluated on the parameters such as attendance, contribution at the meeting, independent judgment etc. and was found to be satisfactory. HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION Your Company has complied with all the applicable environmental laws and labour laws. QUALITY MANAGEMENT SYSTEM (a) Company has been continuing its efforts towards ongoing implementation and stabilization of TQM practices through total employee involvement. (b) Company has retained the accreditation of its Quality Health and Safety Management Systems in line with ISO 9001: 2008, TS 16949: 2002, ISO 14001: 2004 and OHSAS 18001:2007. (c) Company has also retained the accreditation of its quality systems for Aviation Industries requirements in line with AS 9100C, NADCAP for Heat treatment facility and NABL certification for the Laboratory and Standard Room. Benefits derived as a result from the above efforts are continuous improvement in productivity, quality, delivery and cost. Customer focused approach Company is open in receiving customer view points and welcomes them to visit the premises. A number of esteemed OEM customers visited the Company site to see our process and system. They appreciated Company's efforts in maintaining and continuously upgrading the process and systems. EMPLOYEES' STOCK OPTION PLAN Your Company had not provided any employee stock option. DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The following is the summary of the complaints received and disposed off during the financial year: 2014-15: (a) No. of complaints received : NIL (b) No. of complaints disposed off : NIL DISCLOSURE AS REQUIRED UNDER SUB RULE 2 OF RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 In accordance with the Companies Act, 2013 read and Rules made there under, the particulars of employees who are drawing remuneration in excess of the limits is given in the Annexure - 7 forming part of this Report. LISTING AND CONFIRMATION OF FEE The securities of your Company are listed at the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Annual Listing fees for the year 2015-16 have been duly paid to the Stock Exchanges. The Company has also paid the annual custody fee for the year 2015-16 to both the depositories namely National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The Shares of the Company are compulsorily tradable in dematerialized form. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that: a. In the preparation of the Annual Accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. Appropriate accounting policies have been selected and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit/ (loss) of the Company for the year under review; c. Proper and sufficient care had taken for the maintenance of adequate accounting records for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; d. The Annual Accounts prepared on a 'going concern' basis; and e. Internal financial controls to be followed by the Company and that such internal finance controls are adequate and were operating effectively. "Internal financial controls" means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information; f. Proper systems devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. NUMBER OF MEETINGS OF THE BOARD It is stated in and forms part of Corporate Governance Report. CORPORATE SOCIAL RESPONSIBILITY The Company has vide resolution dated 29.05.2014 constituted a Corporate Social Responsibility Committee of the Board. As the net worth, turnover and (loss) of the Company as on March 31, 2014 were Rs.74.81 Crores, Rs.348.94 Crores and Rs.28.62 Crores respectively i.e. below the prescribed limits. However, considering the profit of the last financial years the net profit of the Company was Rs.7.37 crores in the financial year 2011-12 i.e. exceeding the limit of Rs.5 crores. Though the Company has constituted the Committee but the spending of CSR activity is not applicable on the profitability for the financial year 2014-15 as there is loss on the basis of average net profit of the Company for last three financial years. The Company does not required to spent any money during current year. The Company has framed a CSR policy in compliance with the provisions of the Companies Act, 2013 and the same is placed on the Company's website i.e. www.lpsindia.com . The CSR committee confirms that the implementation and monitoring of CSR policy is in compliance with CSR objectives and policy of the Company. RIGHT OF MEMBER TO COPIES OF AUDITED FINANCIAL STATEMENT Having regard to the provisions of the first proviso to Section 136(1) of the Act, the annual report is being sent to the members of the Company. The said information is available at the website of the Company and is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to be Company Secretary and the same will be furnished on request. DISCLOSURES RELATED TO REMUNERATION OF DIRECTORS AND KMPs a. Disclosures as per provisions of Schedule V, Part II, Section II (B)(iv) Disclosure in this regard pursuant to above provisions are given in the Corporate Governance Report attached to this report at Clause no.4. b. Ratio of Remuneration of each Director to median remuneration of employees - Ratio of remuneration of Mr. Lalit Kumar Jain to median remuneration of employees during the Financial Year 2014-15 was 10:1. d. Percentage increase in the median remuneration of employees The percentage increase in the median remuneration of employees in the Financial Year 2014-15 was 8%. e. No. of employees of the Company As on 31st March, 2015, your Company had 1091 permanent employees on the rolls of the Company. The same does not include contractual employees. f. Relationship between average increase in remuneration and Company Performance The Company achieved a sales turnover of Rs.372 crores during the Financial Year 2014-15 as compared to Rs.349 crores in the previous year and recorded a net profit of Rs.38.51 lacs (approx.) as against net loss of Rs.(2862) crores (approx.) respectively. The average increase in remuneration of employees of the Company was 8% during the Financial Year 2014-15. g. Comparison of remuneration of KMP against the performance of the Company Considering the performance of the Company, as explained in clause (f) above, the remuneration of KMP, Managing Director and Whole-time Director as explained MGT-9 under Clause VI(A)&(C) are moderate and can be termed as reasonable. Further the remuneration of Mr. Lalit Kumar Jain, CMD as KMP and other Whole-time Directors are as per the approval of Central Government. l. Comparison of the remuneration of each KMP against the performance of the Company Considering the performance of the Company, as explained in clause (f) above, the remuneration of each KMP (including Managing Director and Whole-time Director) as explained in MGT-9 under Clause VI(A)&(C) are moderate and can be termed as reasonable. Further the remuneration of Mr. Lalit Kumar Jain, CMD m. Key parameters of variable component of remuneration availed by Director No variable components were availed by the Directors except the sitting fees during the Financial Year. Other KMP as per the policy of the Company. n. Ratio of Remuneration of highest paid employee if it exceeds remuneration of highest paid Director There was no employee of the Company who had been paid remuneration more than the remuneration paid to Mr. Lalit Kumar Jain, Chairman & Managing Director, Mr. Dinesh Kumar Jain, Vice Chairman & Managing Director and Mr. Vijay Kumar Jain, Joint Managing Director of the Company. o. Policy compliance affirmation The remuneration to Directors and KMP is as per the nomination and remuneration policy of the Company. HUMAN RESOURCE DEVELOPMENT Your Company's Human Resource Management focus continues to be in making available a talent pool, for meeting challenges in the competitive market place, which is increasingly becoming tougher. Development plans have been drawn up for key managers to shoulder higher responsibilities as well as to increase their job effectiveness. Your Company always encourages young personnel with their ideas and views. Management is easily accessible to the employees and their problems are attended promptly. The employer - employee relations remained cordial at all the plants of the Company and peaceful throughout the year. SECRETARIAL STANDARD The Company has complied with the Secretarial Standard issued by the Institute of Companies Secretaries of India applicable w.e.f. 01.07.2015. CORPORATE GOVERNANCE Your Company is committed to good Corporate Governance Practices following to the guidelines prescribed by the SEBI and Stock Exchanges from time to time. The Company has implemented all of its stipulations as applicable to the Company. The report on Corporate Governance stipulated under Clause 49 for the Listing Agreement attached in Annexure - 8 and forming part of the Board's Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached in this annual report and forming part of this Annual Report. ACKNOWLEDGEMENTS Your Directors place on record their appreciation for the overwhelming co-operation and assistance received from the Company's esteemed Shareholders, valued Customers, Suppliers, Business Associates, Bankers, Vendors, various Financial Institutions, the State and Central Government Bodies, Auditors and Legal Advisors for their valuable contribution and continued support and to all the persons who reposed faith and trust in the Company. Your Directors also place on record their appreciation for the committed services rendered by all employees and our colleagues at all levels, without whose wholehearted efforts, the overall performance of the Company would not have been possible. Your Directors also appreciate and value the contribution made by every member of the LPS family across the world. Your support as shareholders is greatly valued. Your Directors thank you and look forward the future with confidence. for and on behalf of the Board of Directors Lalit Kumar Jain Chairman & Managing Director DIN:00061293 Place : New Delhi Dated : August 14, 2015 |