To,
The Members
Your Directors have pleasure in presenting the Fortieth Annual
Report together with audited financial statement for the financial year ended 31st March, 2016. This report pertains to financial year that commenced from April 01, 2015 and the contents herein are governed by the relevant provisions/ sections/ rules of Companies Act, 2013 and Regulations of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
This report also includes Management Discussion & Analysis (MD&A).
1. Financial Results
In view of loss, no amount is proposed to be carried to or transferred to any type of reserves.
2. Dividend
Directors regret their inability, in view of the losses, to recommend any dividend for the year.
3. Operations
The Company’s operations during last few years have been adversely affected due to a dramatic shift in consumer preference from 2-stroke geared scooters to 4-stroke motorcycles and 4-stroke gearless scooters. The situation was further aggravated during the year due to general economic slowdown in the Indian economy. The turmoil in the African market and economic slow down in developed economies has adversely affected the Company’s export during the year. The Company is registered as a Sick Industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Company has temporarily suspended production activity (of 2-wheeler) w.e.f. 6th May, 2016 to enable it to carry out maintenance work which is overdue for long, check adequacy / suitability of the present facility for taking up the manufacturing light three wheeler and to realign the plant & machinery and other work / activity for the same, if so, required and this is likely to take about 3 months’ time. The Company is working on development and industrialization of various new products and technology, including new generation 4-stroke – two wheelers and light 3-wheeler vehicle. Barring unforeseen circumstances, it is expected to launch light 3 wheeler vehicle during FY 2016-17.
Export and Domestic sales performance of your Company was as follows:
4. Exports
Exports were 8688 vehicles during the year as against 26184 units during the previous year. Company’s exports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.
5. Directors’ Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the
Directors confirm:
a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;
b) that they 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 losses of the Company for that period;
c) that theyhavetakenproperandsufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis;
e) that they have laid down the internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
f) that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
6. Corporate Governance
As required under Regulations 34(3) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Schedule V (E) of the SEBI (LODR) Regulations, 2015 is annexed. The Chairman & Managing Director and Chief Financial Officer of the Company have given necessary Certificate to the Board in terms of Regulations 17 (8) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 for the financial year ended 31st March. 2016.
7. Audit Committee
The Board of Directors has an Audit Committee with a composition as specified in the Section 177 of the Companies Act, 2013 and Regulations 18 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details of Audit Committee are specified in Corporate Governance Report which forms part of this Annual Report. The Board has accepted recommendations of the Committee on all matters.
8. Management Discussion and Analysis
(a) Macro-economic Developments and overall review
The world economies are still not out of the adverse effect of the financial crises which started in 2008.
Due to the persistent slow growth in advanced economies and continuing headwinds for emerging market, significant downside risks remain and events that make those risks more salient may well trigger renewed financial turbulence, impairing confidence and demand in a self confirming negative feedback loop. In addition there are signs of several stresses of non-economic origin related to geopolitical conflicts, political discord, terrorism, refugee flows or global epidemics in some countries and regions which threaten economic activity.
The Indian economy continues to suffer due to continuous monsoon deficit for last two years coupled with un-seasonal rain which has adversely affected rural demand. As per the latest forecast, the monsoon in the current year is expected to be normal which may help in recovery and growth of economy. However, a number of factors could impinge upon the growth outlook for 2016-17, like slow investment recovery, low capacity utilisation in industrial sector, slow revival of private investment and tepid global output and trade growth, dragging down net exports.
(b) Two wheeler Industry in India
Two-wheeler industry struggled during the year. The rural economy is a big market for two-wheelers. Farm incomes reduced and rural demand took a hit as poor monsoons wreaked havoc on crop production which impacted demand for two-wheelers. Exports growth was also subdued because of currency problems in markets like Africa and Asia. However, with expected revival of Indian economy, the demand for two-wheeler is likely to pick up.
Domestic Sales
Export Sales
(c) Company Performance
Company’s performance during the year was adversely affected inter alia due to global recessionary conditions and specially political and economic condition prevailing in African and developed economies as well as weak domestic demand.
(d) Opportunities and Threats
LML stands for the highest standards of technical expertise, product innovation and has one of the finest R & D capabilities, particularly relating to designing, rapid proto-typing, CAD - CAM, tooling and industrialization. It is harnessing these strengths and its vast experience coupled with a aggressive business strategy for its revival and turnaround.
(e) Outlook
As stated elsewhere in this report the Company has been working for its revival including development of new products including those having state of the art technology.
(f) Performance Review
Due to various reasons and problems the Company could not leverage its rich technological strengths during the year under review and the sales volume was 12913 units in financial year 2015-16 as compared to 38086 units in financial year 2014-15..
(g) Financial Review
Revenues - Gross Sales and Other Income during the year was Rs. 160.32 crores as compared to Rs. 212.58 crores in the previous financial year 2014-15.
Operating Profit/Loss– The Company reported a net Operating Loss during the year of Rs 21.68 crores as compared to net operating loss of Rs. 25.46 crore in the previous financial year 2014-15.
Interest – Interest was Rs 47.33 crores during the year as compared to Rs. 43.02 crores in the previous financial year 2014-15.
Depreciation, Amortization & Impairment of Fixed Assets – Depreciation, Amortization & Impairment of Fixed Assets during the year was at Rs 9.35 crores as compared to Rs. 12.61 crores in the previous financial year 2014-15.
Loss before tax - The Company reported a loss before tax and exceptional items during the year of Rs 78.36 crores as compared to Rs. 81.09 crores in the previous financial year 2014-15.
Share Capital – Company’s Paid-up Equity Share Capital is Rs. 81.98 crores as on 31.03.2016.
(h) Human Resources
Your Company treats human resource a very important asset. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis.
9. Directorate
Mr Sanjeev Shriya (DIN: 00014402) and Mr Anurag Kumar Singhania (DIN: 00080925) Directors of the Company are liable to retire by rotation and being eligible, offer themselves for re-appointment as Directors of the Company. The Nomination & Remuneration Committee and Board have recommended to re-appoint Mr. Deepak Kumar Singhania (DIN-00012037) as Chairman & Managing
Director and Mr. Ram Kumar Srivastava (DIN: 00763948) as Whole-time Director of the Company as per details given in annual general meeting notice.
During the year under review, no Director has been appointed or resigned from the Board of Directors All the Independent Directors have submitted their declaration of independence, as required under section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013 and under Regulations 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
10. Whole Time Key Managerial Personnel (KMP)
In pursuance of the compliance of Section 203 of the Companies Act, 2013 the following persons have been designated as Whole Time Key Managerial Personnel of the Company:-
1. Mr. Deepak Kumar Singhania – Chairman & Managing Director
2. Mr. K. C. Agarwal – Sr. President (Commercial) & Company Secretary
3. Mr. Mahesh Kumar Kanodia – Chief Financial Officer
During the year under review, no KMP has resigned from the Company.
11. Extract of Annual Return
Pursuant to section 92(3) of the Companies Act, 2013 (‘the Act’) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, the required extract of Annual Return in prescribed form MGT-9 is attached as Annexure ’A’ with this Board Report.
12. Nomination & Remuneration Policy
The Company has, on the recommendations and approval of Nomination & Remuneration Committee, formulated a Nomination & Remuneration Policy which governs Directors’ appointment including criteria for determining their qualifications, positive attributes, their independence and remuneration for the Directors, KMPs and other employees which was passed by the Board in its meeting held on 8th November, 2014. The Nomination and Remuneration Policy is attached as Annexure ‘B’ with this Board Report.
13. Particulars of Loan, Guarantees or Investments
No loan, guarantee or investments were made during the year by the Company under Section 186 of the Companies Act, 2013.
14. Related Party Disclosure
Particulars of contracts or arrangements with Related Party referred in Section 188 (1) of the Companies Act, 2013 in prescribed form AOC-2 is attached as Annexure ‘C’ with this Board Report. As required under Regulations 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated a policy for dealing with Related Party Transactions. The Policy is available on the website of the Company www.lmlworld.com) ( with a Weblink :http://www.lmlworld.com/Pdf/RPT-Policy.pdf
15. Material changes and commitments
No material Changes or commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relates and the date of the report.
16. Risk Management Policy
The Board has established a Risk Management Policy which formalizes the Company’s approach to overview and manage material business risks. Risks and effectiveness of their management are internally reviewed and reported regularly to the Board. There are adequate systems and procedures in place to identify, assess, monitor and manage risks.
17. Annual Evaluation
The Board has carried out the Annual Performance Evaluation of its own, its Committees and individual Directors based on the Performance Evaluation Report submitted by the Nomination & Remuneration Committee, as per Performance Evaluation Policy of the Company, and Performance Evaluation of non-Independent Directors, Chairman and the Board as a whole done by the Independent Directors in their separate meeting during the year.
18. Number of Board Meetings
The details of the number of meetings of the Board held during the Financial Year 2015-16 along with attendance details of each director forms part of the Corporate Governance Report which forms part of this Annual Report.
19. Corporate Social Responsibility
The provision related to Corporate social responsibility under the Companies Act, 2013 is not applicable to the Company in view of losses and negative net- worth and turnover being below prescribed amount.
20. Details of Committees
The details of Committees of the Board forms part of Corporate Governance Report which forms part of this Annual Report.
21. Whistle Blower Policy
The Company has a Whistle Blower Policy, including vigil mechanism to report genuine concerns of grievances, providing direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases. The Whistle Blower Policy has been posted on the website of the Company www.lmlworld.com) ( with a weblink: http://www. lmlworld.com/Pdf/LML-Whistle-Blower-Policy.pdf During the year , no matter has been reported to the Audit Committee
22. Internal Financial Control
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no material weakness was observed by the internal auditor of the Company.
23. Subsidiary/ Associate Companies
There is no Subsidiary of the Company. However, policy of determining "material" subsidiaries formulated by the Company is placed on the web-site of the Company www. ( lmlworld.com) . The Company is a promoter of one Associate Company namely – M/s VCCL Limited. The consolidated financial statement of VCCL Limited is enclosed as part of this Report.
There are no companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year.
Statement pursuant to Section 129(3) of the Companies Act, 2013 related to Associate Company in prescribed form AOC-1 is attached as Annexure ‘D’ with this Board Report.
24. Deposits
Your Company has not accepted any deposits from public in terms of provisions of Companies Act, 2013.
25. Personnel
The Company had 2558 employees as on 31.03.2016. As per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employee was in receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout the year or Rs. 5.00 Lacs per month for the part of the year. Further, none of the employees is in receipt of remuneration which is in excess of the remuneration drawn by Managing Director or Whole-time Director or any manager of the Company and who also holds by himself or along with his/ her spouse and dependent children, not less than 2% of equity shares of the Company.
a. Pursuant to the Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the information required to be disclosed by every Listed Companies in its Board Report are as follows:-
* The remuneration to all Directors are within permissible limits as approved by MCA. There is no increase in rem- -uneration during the year Variations are on account of increase/decrease in availment of perquisites.
** The remuneration to Key Managerial Personnel are as per last year and as per sanctions. There is no increase in remuneration during the year. Variations are on account of Increase / decrease in availment of perquisites.
b. The Median remuneration of employees of the
Company during the financial year was Rs. 25942.
c. The percentage decrease in the median remuneration of employees in the financial year was 47.85.
d. Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year; Company’s market capitalization increased by 9.75% to Rs. 59,02,87,104 as of March 31, 2016 from Rs. 53,78,17,139 as of March 31, 2015. The price earning ratio was (0.75) as of March 31, 2016 in comparison to (0.66) as compared to March 31, 2015. The closing price of the Company equity shares on the NSE and BSE as of March 31, 2016 was Rs. 7.20 and Rs. 7.20 respectively.
e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Since Company is a Sick Industrial company and in view of losses, no increase was made in the managerial remuneration.
f. The key parameters for any variable component of remuneration availed by the directors: No variable component of remuneration was availed by the Directors of the Company.
g. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year:
The highest paid Director in the Company is Mr. R. K. Srivastava with annual remuneration of Rs. 18 Lakhs as per Central Govt. approval. The ratio of remuneration of employees receiving in excess to that is as follows:-
h. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy of the Company.
26. Auditors and their reports
a) Statutory Auditors
M/s. Khandelwal Jain & Co. (FRN 105049W), Chartered Accountants, were appointed as Statutory Auditor of the Company for a period of three years and M/s. Parikh & Jain (FRN 001105C), Chartered Accountants, were appointed as Statutory Auditor of the Company for a period of two years in previous Annual General Meeting held on 23.09.2014. The Board proposes to members of the Company to ratify the appointment of M/s Khandelwal Jain & Co. (FRN 105049W), Chartered Accountants for the financial year 2016-17, pursuant to the provisions of Section 139 of the Companies Act, 2013, at the ensuing Annual General Meeting of the Company. M/s Parikh & Jain (FRN 001105C) are not eligible for re-appointment.
In respect of observations made by the Statutory Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory and do not call for any further comments.
b) Secretarial Auditors
M/s. Adesh Tandon & Ass., Practicing Company Secretary (FCS. 2253, CP No. 1121) of Kanpur, reappointed as Secretarial Auditors of the Company for the FY 2016-17 and submitted their Secretarial Audit Report for the Financial Year 2015-16, pursuant to the Section 204 of the Companies Act, 2013 which is being attached herewith as Annexure – ‘E’ No adverse observations are made by the Secretarial Auditors in their Report.
c) Internal Auditors
Pursuant to Section 138 of the Companies Act, 2013, Board has appointed M/s Onkar Tandon & Co., Chartered Accountants (FRN 000953C) of Kanpur as Internal Auditor of the Company for the financial year 2016-17 as recommended by the Audit Committee of the Company.
d) Cost Auditors
As per the Companies (Cost Accounting Records) Rules, 2013 issued by the Ministry of Corporate Affairs, the Company is not required to appoint the Cost Auditor.
27. Conservation of Energy
Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel & oil etc. Energy conservation during the year under various heads resulted into an estimated saving of Rs. 3.30 lacs (in previous financial year 2014-15: Rs. 2.70 lacs).
28. Pollution Control
Relevant and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. ‘No Objection Certificates’ from the U.P. Pollution Control Board are obtained from time to time.
29. Technology Absorption
Requisite information in prescribed form is given in Annexure ‘F’ to this report.
30. Foreign Exchange Earnings and Outgo
Your Company earned during the year Foreign Exchange of Rs. 127.09 crores (previous financial year Rs. 144.57 crores) while Foreign Exchange outgo during the year amounted to Rs. 4.12 crores (previous financial year - Rs. 13.09 crores)
31. Stock Exchange Listing
The Equity Shares of the Company are listed on the following Stock Exchanges (with respective scrip codes/ symbol):-
(i) BSE Limited (BSE), Mumbai (500255);
(ii) National Stock Exchange of India Limited (NSE), Mumbai (LML).
The Equity and Preference Shares of the Company were also listed on the U.P. Stock Exchange Limited, Kanpur. However, as per SEBI circular dated May 30th 2012 read with circular dated May 22nd 2014 related to Companies exclusively listed on De-recognized/ Non-operational Stock Exchanges, U.P. Stock Exchange Limited, Kanpur got de-recognized on account of non fulfillment of the prescribed conditions.
The Company confirms that it has paid the annual listing fee to BSE and NSE.
32. Depository System
SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January, 2000 notified that trading in Equity Shares of the Company is permitted only in dematerialized form w.e.f. 17 th January, 2000. Requests received for dematerialization of shares are processed and confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) within the stipulated time. As on 31st March, 2016, 95.91% equity shares of the Company have been dematerialized.
33. General
The Company became a Sick Industrial Company within the meaning of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company was declared a Sick Industrial company by BIFR on 8th May, 2007. The Company is working for its revival under the aegis of BIFR. In view of this, no impact is foreseen on the going concern status of the Company and the Company’s operations in future. The matter is pending before the Hon’ble BIFR.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable to the Company, as there is no woman employee in the Company.
34. Cautionary Statement
The statement in the Director’s report and MD&A, detailing the Company’s objectives and expectations, may contain ‘forward looking statements’ within the meaning of applicable securities laws and regulations. The actual results inter-alia may differ materially from those expressed or implied, depending upon changes in global and Indian demand-supply conditions as well as changes in government regulations, tax regimes, economic and market developments, movements.
35. Other disclosures
(i) Statutory Auditors of the Company has not reported any incident relating to fraud during the financial year to the Audit Committee or Board of Directors under section 143(12) of the Companies Act 2013 (ii) No significant and material orders has been passed by the Regulators or courts or tribunals impacting the going concern status and Company’s operations in future.
.
36. Acknowledgement
Your Directors take this opportunity to appreciate deeply the valuable co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stake-holders, including Customers, Shareholders, Employees, Vendors, Distributors, Dealers / Sub-dealers, and the general public for their support and confidence reposed in the Management.
ANNEXURE ‘B’ TO BOARDS’ REPORT
NOMINATION AND REMUNERATION & BOARD DIVERSITY POLICY INTRODUCTION
In compliance with Section 178 of the Companies Act, 2013 (‘Act’) read with the Rules made there under and Regulation 19 of the SEBI (LODR) Regulations, 2015, the policy known as ‘Nomination and Remuneration & Board Diversity Policy’ for inter-alia setting up the criteria of nomination and policy for remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees has been formulated by the ‘Nomination and Remuneration Committee’ and approved by the Board of Directors of the Company.
Definitions
For the purpose of this Policy:
• ‘Act’ shall mean the Companies Act, 2013;
• ‘Board’ shall mean the Board of Directors of LML Limited;
• ‘Committee’ shall mean the Nomination and Remuneration Committee (NCR) of the Company, constituted and reconstituted by the Board from time to time;
• ‘Company’ shall mean LML Limited;
• ‘Directors’ shall mean the directors of the Company;
• ‘Independent Director’ shall mean a director referred to in Section 149 (6) of the Companies Act, 2013;
• ‘Key Managerial Personnel (KMP)’ shall mean the following:
(i) Executive Chairman and / or Managing Director (MD) and/or Manager
(ii)Whole-time Director (WTD);
(iii) Company Secretary (CS);
(iv) Chief Financial Officer (CFO);
(v) Such other officer as may be prescribed.
• ‘Senior Management Personnel (SMP)’ shall mean personnel of the company who are members of its core management team excluding the Board of Directors. This would also include all members of management one level below the executive directors including the functional heads.
OBJECTIVE & PURPOSE
The objective and purpose of this Policy are as follows:
• To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed as Senior Management and Key Managerial personnel and to determine remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP).
• To determine remuneration based on the Company’s size and financial position and trends and practices on remuneration prevailing in peer companies in the auto industry.
• To provide them reward linked directly to their efforts, performance, dedication and achievement relating to the Company’s operations.
• To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.
SCOPE OF THE POLICY
The policy shall be applicable to the following in the Company:
• Directors
• Key Managerial Personnel (KMP)
• Senior Management Personnel (SMP)
• Other employees of the Company
CONSTITUTION
The Nomination and Remuneration Committee will comprise of the following members:-
The Board of the Company may re-constitute / make any changes in the Committee from time to time in order to fall in line with the Company’s policy and or applicable statutory requirement as and when necessary.
1. Appointment criteria and qualifications:
A. General
1.1 The Committee shall identify and ascertain the integrity and probity, qualification, expertise and experience for appointment to the position of Directors, KMPs & SMPs and accordingly recommend to the Board his/her appointment.
1.2 The Director/ Independent Director/ KMP/ Senior Management Personnel shall be appointed as per the procedure laid down under the provisions of the Companies Act, 2013, rules made thereunder, Listing Agreement or any other enactment for the time being in force.
1.3 The other employees shall be appointed and removed as per the policy and procedure of the Company.
1.4 Letter of appointment shall be issued based on the basis of the guidelines for the same under the Companies Act, 2013 or the internal policy of the Company.
B. Directors
1.5 The Committee shall determine the suitability of appointment of a person to the Board of Directors of the Company by ascertaining the ‘fit and proper criteria’ of the candidate. The candidate shall, at the time of appointment, as well as at the time of renewal of directorship, fill in such form as approved by the Committee to enable the Committee to determine the ‘Fit and Proper Criteria’. The indicative form to be filled out is placed as (Annexure 1) to this Policy.
1.6 The Company shall not appoint or continue the employment of any person as Whole Time Director who has attained the age of seventy years, Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person.
1.7 The potential candidate to be appointed as Director / Independent Director/KMPs/ SMPs has not been disqualified under the Companies Act, 2013, Rules made there under, Listing Agreement or any other enactment for the time being in force.
2. Term / Tenure:
2.1 Chairman &Managing Director/Whole-time Director:
The Company shall appoint or re-appoint any person as its Chairman & Managing Director, Executive Chairman, Managing Director or Executive Director for a term not exceeding three years at a time.
No re-appointment shall be made earlier than one year before the expiry of term of the Director appointed.
2.2 Independent Director
An Independent Director shall hold office for a term up to five years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Board’s report.
No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for re-appointment in the Company as Independent Director after the expiry of three years from the date of cessation as such in the Company. The Committee shall take into consideration all the applicable provisions of the Companies Act, 2013 and the relevant rules, as existing or as may be amended from time to time.
2.3 Key Managerial personnel / Senior management or Other Employees.
The Term/ Tenure of the KMP’s/ Senior Management Personnel and other employees shall be as per the companies prevailing internally policy.
2 Removal
3 Removal
Due to reasons for any disqualification mentioned in the
Companies Act, 2013 and rules made thereunder or under any other applicable Act, rules and regulations, or any other reasonable ground, the Committee may recommend to the Board for removal of a Director, KMP or SMP subject to the provisions and compliance of the Act, rules and regulations.
4 Retirement
(a) The Director shall retire as per applicable provisions of the Companies Act, 2013 along with the Rules made thereunder.
(b) The KMPs & SMPs shall retire on attaining the age of 60 (sixty) years or later as may be so decided by the CMD (Shri Deepak Kumar Singhania) and or WTD (Shri A K Singhania
(c) Existing KMPs and or SMPs who are of over 60 years of age shall continue in service of the Company till such time as may be decided by CMD (Shri Deepak Kumar Singhania) and or WTD (Shri A K Singhania).
(d) Any new appointment of KMP(s) and SMP(s) who are 60 years of age or above can be made by the CMD (Shri Deepak Kumar Singhania) and or WTD (Shri A K Singhania) and such person(s) shall retire as may be decided by the aforesaid CMD / WTD.
5 Diversity on the Board of the Company
The Company aims to enhance the effectiveness of the Board by diversifying it and obtain the benefit out of it by better and improved decision making. In order to ensure that the Company’s board room has appropriate balance of skills, experience and diversity of perspectives that are imperative for the execution of its business strategy, the Company shall consider a number of factors, including but not limited to skills, industry experience, background, race and gender.
The Policy shall conform with the following two principles for achieving diversity on its Board:
• Decisions pertaining to recruitment, promotion and remuneration of the directors will be based on their performance and competence; and
• For embracing diversity and being inclusive, best practices to ensure fairness and equality shall be adopted and there shall be zero tolerance for unlawful discrimination and harassment of any sort whatsoever. In order to ensure a balanced composition of executive, non-executive and independent directors on the Board, the Company shall consider candidates from a wide variety of backgrounds, without discrimination based on the following factors:
• Gender- The Company shall not discriminate on the basis of gender in the matter of appointment of director on the Board. Age- Subject to the applicable provisions of Companies Act, 2013, age shall be no bar for appointment of an individual as director on the Board of the Company.
• Nationality and ethnicity- The Company shall promote having a board room comprising of people from different ethnic backgrounds so that the directors may efficiently contribute through their knowledge, sources and understanding for the benefit of Company’s business;
• Physical disability- The Company shall not discriminate on the basis of any immaterial physical disability of a candidate for appointment on Company’s Board, if he/she is able to efficiently discharge the assigned duties.
• Educational qualification- The proposed candidate shall possess desired team building traits that effectively contribute to his/ her position in the Company. The Directors of the Company shall have a mix such as of finance, legal and management background, that taken together, provide the Company with considerable experience in a range of activities including varied industries, education, government, banking, and investment.
6 Remuneration
In discharging its responsibilities the Committee shall have regard to the following Policy objectives :
(a) The level and composition of remuneration is sufficient to attract,reasonable retain and and motivate Directors, KMPs, SMPs and other employees of the quality, required to run the Company successfully;
(b) The remuneration to Directors, KMPs SMPs & other employees will be by way of fixed pay as per current policy of the Company and as per the provisions of Companies Act, 2013 and rules made there under. Company will introduce incentive pay as and when feasible depending upon its revival.
The payment structure of remuneration will be as follows:
6.1 Non-Executive / Independent Directors :
The Independent Directors will be paid remuneration by way of sitting fee for attending meeting of the Board or any Committee thereof, provided that such amount shall be subject to the ceiling of the limit as prescribed under the Companies Act, 2013 or Rules made there under or any other enactment for the time being in force and the same is to be approved by the Board of Directors as recommended by the Committee.
6.2 Chairman & Managing Director (CMD) / Whole-time Director (WTD) :
The remuneration/ compensation payable to CMD / WTD shall be governed by the provisions of Companies Act, 2013 and Rules made there under or any other enactment for the time being in force and will be subject to approval of the Board of Directors, shareholders and the Central Government wherever required and shall be in compliance with Schedule V of the Companies Act. 2013.
6.3 Key Managerial Personnel (KMP)/Senior Management Personnel (SMP):
Since the Company is a sick industrial Company registered with the Hon’ble Board for Industrial and Financial Reconstruction ("BIFR") under the provisions of Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), the remuneration policy for KMPs & SMPs has been designed to provide multiple options inter-alia for the purpose of operational convenience and requirement.
(a) The existing KMPs & SMPs shall be eligible for a monthly fixed remuneration as per the existing terms of employment.
(b) For any appointment of new KMP/SMP, the remuneration will be as decided by the Board on receipt of recommendation by the NRC. However, CMD, Shri Deepak Kumar Singhania and / or WTD, Shri Anurag Kumar Singhania, may approve the appointment of any new KMP(s)/SMP(s) which shall be done by the Company and such appointment will be intimated to the Committee for their consideration and recommendation to the Board for their confirmation.
(c) Any increment which is beyond the policy of the Company to the existing remuneration / compensation of the KMPs/SMPs will be recommended by the Committee to the Board for their approval based on performance evaluation.
(d) The CMD and / or WTD shall have power to approve that the Company grants and pays any ex-gratia amount not exceeding 100% of any person’s annual remuneration and or upto 50% increase in the person’s annual remuneration to KMP(s)/SMP(s) depending upon their performance.
(e) The said increment and or ex-gratia approved by the CMD / WTD will be intimated to the Committee at its subsequent meeting.
6.4 Other Employees
The power to decide / determine structure of remuneration for other employees has been delegated to the HR Department of the Company and which will be made in consultation / consent of CMD, Shri Deepak Kumar Singhania and / or WTD, Shri Anurag Kumar Singhania.
6.5 Loans / advances
i) The power to give loans & advances to employees, including Key Managerial (CS and CFO) / Senior Management Personnel is delegated to Chairman & Managing Director, Shri Deepak Kumar Singhania and / or Whole-time Director, Shri Anurag Kumar Singhania and they may give loans / advances to employees, including Key Managerial Personnel (CS and CFO) / Senior Management Personnel on the terms & conditions of the Company as formulated with or without interest as they may deem proper and decide (Annexure – 2).
ii) The existing loans & advances to the employees including Key Managerial Personnel (CS and CFO) / Senior Management Personnel will continue on the existing terms & conditions or as may be decided by the Chairman & Managing Director, Shri Deepak Kumar Singhania and / or Whole-time Director, Shri Anurag Kumar Singhania.
6 Evaluation
7 Evaluation
7.1 Criteria for evaluation of Executive Directors:
(i) The Executive Director(s) shall be evaluated on the basis of targets / Performance of the Company / any other Criteria as may be given to them by the Board from time to time.
(ii) The Executive Director(s) shall be evaluated by the Independent Directors in their separate meeting where the performance of non–independent director(s) and the Board as a whole shall be considered
7.2 Criteria for evaluation of Non-Executive Directors:
The performance evaluation of Independent Directors shall be done by the entire Board of Directors excluding the Director being evaluated.
The Non-Executive Directors shall be evaluated on the basis of the following criteria i.e. whether they :
(a) act objectively and constructively while exercising their duties;
(b) exercise their responsibilities in a bona fide manner in the interest of the company; sufficient time
(c) devote and attention to their professional obligations for informed and balanced decision making;
(d) do not abuse their position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;
(e) refrain from any action that would lead to loss of his independence
(f) inform the Board immediately when they lose their independence,
(g) assist the company in implementing the best corporate governance practices.
(h) strive to attend all meetings of the Board of Directors, the Committees and the general meetings of the Company;
(i) participate constructively and actively in the committees of the Board in which they are chairpersons or members;
(k) keep themselves well informed about the company and the external environment in which it operates;
(l) do not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;
(m) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest.
(n) abide by Company’s Memorandum and Articles of Association, Companies Act, rules made thereunder and Listing agreement, company’s policies and procedures including code of conduct, insider trading guidelines etc.
(o) Any other factor that the Independent Director(s) / Board of Directors may consider necessary for such evaluation.
(p) Safeguarded the confidentiality.
7.3 Criteria for evaluating performance of Key Managerial Personnel and Senior Management Personnel:
Criteria for evaluating performance of KMP’s and Senior Management Personnel shall be as per the KRA’s given to them at the beginning of the year by their respective reporting heads.
7.4 Criteria for evaluating performance of Other Employees:
The power to decide the criteria for evaluating performance of other employees has been delegated to HR Department of the Company.
MINUTES OF COMMITTEE MEETING
Proceedings of all meetings must be recorded as minutes and signed by the Chairman of the Committee within the prescribed period, and the said Minutes of the Committee meetings will be tabled at the subsequent Board and Committee meeting. The company should prepare the minutes and get it signed in such manner as prescribed in Companies Act, 2013 and Secretarial Standards issued by Institute of Company Secretaries of India.
DISCLOSURE OF THIS POLICY
The policy shall be disclosed in the Annual report of the Company, as required under Companies Act, 2013, rules made there under and the Listing Agreement, as amended from time to time and as may be required under any other law for the time being in force.
REVIEW
The Committee as and when required shall assess the adequacy of this Policy and make any necessary or required amendments to ensure it remains consistent with the Board’s objectives, current law and best practice.
ANNEXURE-1 TO THE POLICY ANNEXED WITH BOARDS’ REPOR
Criteria for determination of the ‘Fit and Proper Criteria’. Name of Company: LML Limited
Declaration and Undertaking
I. Personal details of the Candidate/ Director
a. Full name
b. Date of Birth
c. Educational Qualifications
d. Relevant Background and Experience
e. Permanent Address
f. Present Address
g. E-mail Address/ Telephone Number
h. Permanent Account Number under the Income Tax Act
i. Relevant knowledge and experience
j. Any other information relevant to Directorship of the Company.
II. Relevant Relationships of Candidate/ Director
a. List of Relatives if any who are connected with the Company (w.r.t. the Section 2(76) & 2(77) of the Companies Act, 2013)
b. List of entities, if any, in which he/ she is considered as being interested [ w.r.t. Section 184 of the Companies Act, 2013]
c. Names of other Companies in which he/ she is or has been a member of the board during the last 3 years (giving details of period during which such office was held)
III. Records of professional achievements
a. Relevant Professional achievements
IV. Proceedings, if any, against the Candidate/ Director
a. If the person is a member of a professional association/ body, details of disciplinary action, if any, pending or commenced or resulting in conviction in the past against him/her or whether he/ she has been banned from entry of at any profession/ occupation at any time.
b. Whether the person attracts any of the disqualifications envisaged under Section 164 of the Companies Act 2013?
c. Whether the person in case of appointment as Executive Chairman, Managing Director, Whole-time Director attracts any of the disqualification envisaged under Schedule V of Companies Act, 2013 ?
d. Whether the person at any time come to the adverse notice of a regulator such as SEBI, IRDA, MCA ?
V. Any other explanation/ information in regard to items I to III and other information considered relevant for judging fit and proper.
Undertaking
1. I confirm that the above information is to the best of my knowledge and belief true and complete. I undertake to keep the Company fully informed, as soon as possible, of all events which take place subsequent to my appointment which are relevant to the information provided above.
2. I also undertake to execute the deed of covenant required to be executed by all directors of the Company.