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Directors Report of Elgi Equipments Ltd.

Mar 31, 2016

Dear Shareholders,

The Directors hereby present the 56th Annual Report along with the audited accounts for the year ended 31st March 2016.

Financial Results

The highlights of the performance of your Company during the fiscal are given hereunder;

(Rs. In Million)

Particulars 2015-16 2014-15

Profit before Depreciation, Exceptional, Items & Tax 1351.91 978.09 Less : Depreciation 360.53 291.36

Exceptional Items 551.76 912.29 - 291.36

Profit before Tax 439.62 686.73

Less : Provision for Tax (Net of Tax Expenses) 201.80 130.52

Net Profit 237.82 556.21

Add : Opening Balance in P & L Account 3458.39 3144.54

Other additions (Net) 10.08 3.95

Amount available for appropriations 3706.29 3704.70

The Directors recommended the following Appropriations:

Dividend 158.45 158.45

Dividend Tax 32.26 32.26

Transfer to General Reserve 23.80 55.60

Profit carried forward 3491.78 3458.39

Review of Business Operations

The Company ended with net sales of Rs. 8691 Million as against Rs. 7759 Million in 2014-15. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis section.

Transfer to reserves

An amount of Rs. 23.80 Million has been transferred to General Reserve in the year 2015-16 as against Rs. 55.60 Million in the year 2014-15.

Dividend

For the financial year 2015-16, the Board of Directors has recommended a dividend of Rs. 1/- per share (100%) on the paid up share capital of Rs. 15,84,54,508. Subject to the approval of shareholders, an amount of Rs. 190.71 Million will be paid as dividend including Dividend Distribution Tax (previous year Rs. 190.71 Million).

Share Capital

The paid-up capital of the Company as at 31.03.2016 stood at Rs. 158.45 Million. During the year under review the Company has not made any fresh issue of shares.

Transfer of unclaimed Dividend to Investor Education and Protection Fund

In terms of Section 205(A) and 205(B) of the Companies Act, 1956, any unclaimed or unpaid Dividend relating to the Financial Year 2008-09 is due for remittance on 06.09.2016 to the Investor Education and Protection Fund established by the Central Government.

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in form MGT-9 is furnished in Annexure ''A'' and is attached to this report.

Board Meetings and its Committees conducted during the period under review

During the year under review, 4 Meetings of the Board of Directors, 4 Meetings of the Audit Committee, 2 Meetings of the Nomination and Remuneration Committee, 2 Meetings of the Corporate Social Responsibility and 36 Meetings of the Stakeholders Relationship Committee were held. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Director''s Responsibility Statement, it is hereby confirmed that -

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from those standards.

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) the Directors have taken Proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;

Details in respect of frauds reported by Auditors under Section 143(12) of the Companies Act, 2013 other than those which are reportable to the Central Government

There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of the Companies Act, 2013.

Declaration of Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Regulation 25 of the SEBI (LODR) Regulations, 2015.

Company''s Policy relating to Directors Appointment, Payment of Remuneration and other matters provided under Section 178(3) of the Companies Act, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Criteria for determining qualifications, positive attributes, and independence of Directors and Senior Management Personnel has been stated in Annexure ''B'' to this report. The Remuneration policy of the Company is annexed herewith as Annexure ''C'' and can also be accessed on the Company''s website at the link http://www.elgi.com/ wp-content/uploads/Remuneration-policy.pdf.

Comments on Auditors'' Report:

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.RJC Associates, Statutory Auditors and M r. M.D. Selvaraj, Proprietor of MDS & Associates, Secretarial Auditor in their report.

Particulars of loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013

Details of loans given, investments made, guarantees given and securities provided pursuant to the provisions of Section 186 of the Companies Act, 2013 have been given in the notes to the Financial Statements.

Particulars of contracts or arrangements with Related Parties

All transactions entered into with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 during the financial year 2015-16 were in the ordinary course of business and on an arm''s length pricing basis. Since there are no transactions which are not on arm''s length basis and material in nature Form AOC-2 is not being annexed.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the company''s website and may be accessed through the link at http://www.elgi.com/ wp-content/uploads/Related-Party-Transactions-Policy.pdf.

Material changes and commitments affecting the financial position of the Company:

Consequent to the Company''s decision to restructure its China (Shanghai and Zhejiang) operations by closing down Elgi Compressors Trading (Shanghai) Co Limited and continue to carry on Trading operations in Elgi Compressors Zhejiang Limited, the Company has written down the value of the investments, advances and receivables relating to Chinese operations to an extent of Rs. 551.76 Million, accounting it as an exceptional item to the Statement of Profit and Loss. Details of exceptional items have been given in the notes to Financial Statements.

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

The information on foreign exchange earnings and outgo, technology absorption, conservation of energy stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure ''D''.

Risk Management Plan Implementation

The Company has formed a committee comprising of senior management, one level below the Managing Director, to take stock of all risks affecting the Company, the existing controls and mitigation measures. The Board has taken note of the high level risks, the controls currently in place and the mitigating measures to be undertaken and accordingly provided certain suggestions for mitigating the risks.

Details of policy developed and implemented by the Company on its Corporate Social Responsibility Initiatives

The Board had formed a Corporate Social Responsibility Committee comprising of 1. Mr. Jairam Varadaraj, 2. Dr. T Balaji Naidu 3. Mr. B.Vijayakumar and 4. D r. Madhavi Gopinath. The CSR policy of the Company deals with allocation of funds, activities, identification of programs, approval, implementation, monitoring and reporting mechanisms under the policy.

As part of its initiatives under CSR for the year 2015-16, the Company has undertaken projects in the areas of Education, Social development, Medical relief, Sports, Women empowerment, animal welfare, Cultural protection etc. These projects are by and large in accordance with Schedule VII of the Companies Act, 2013.

The CSR spend is predominantly directed through a Registered Trust. The Trust expends the sums contributed by the Company towards educational and related activities only and also for having a corpus for undertaking construction of new school building within the next 5-10 years. The Trust has a proven track record of over three years in involvement in educational activities and supports a full fledged school. The Trust has planned to support construction of a new school building with all modern amenities and aims to be a school of international standards in the years to come. Hence, the Company should continue to significantly contribute to the Trust.

The Trust also expends the funds towards Educational Scholarships, Medical Relief, to help the upliftment of rural people by way of building infrastructure like Schools, Street Lights, Roads etc, to support Special Children''s School and also for the Building Corpus.

The Annual Report on CSR activities is annexed herewith as Annexure ''E''.

Annual Evaluation of the Board on its own performance and of the Individual Directors

On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors of the Company formulated a criteria for evaluation of the performance of the Board of Directors & its committees, Independent Directors, Non–Independent Directors and the Managing Director of the Board. Based on that, performance evaluation has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose.

Directors and Key Managerial Personnel

Mr. Sudarsan Varadaraj, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment.

Key Managerial Personnel of the Company as required pursuant to Section 2(51) and 203 of the Companies Act, 2013 are Mr. Jairam Varadaraj, Managing Director, M r. S. Sriram, Chief Financial Officer and Mrs. Vaishnavi P.M, Company Secretary.

Report on the performance and financial position of each of the subsidiaries, associates and Joint Venture companies included in the Consolidated financial Statements

The Company has 15 subsidiaries and a joint venture Company. This includes Ergo Design Private Limited, an independent industrial design studio which was acquired during the year. Ergo Design Private Limited caters to the needs of the Company to a large extent. The acquisition was done in order that the Company has better control over the Intellectual Property rights created by Ergo Design Private Limited using the Company''s inputs. The Company''s Wholly Owned Subsidiary Belair SAS has been handed over to the French Judicial System for legal redressal on 26th April, 2016. The statement pursuant to Section 129 (3) of the Companies Act, 2013, containing the salient features of the financial statements of subsidiary companies, forms part of this Annual report.

The Company does not have any material subsidiary whose net worth exceeds 20% of the consolidated net worth of the holding Company in the immediately preceding financial year or has generated 20% of the consolidated income of the Company during the previous financial year. The board has approved a policy for determining material subsidiaries, which has been uploaded on the company''s website viz. www.elgi.com.

The annual accounts of the subsidiary companies are kept for inspection by the shareholders at the registered office of the company. The Company shall provide the copy of the annual accounts of subsidiary companies to the shareholders upon their request.

Fixed Deposits

During the year, the Company did not accept or renew any fixed deposits and no fixed deposits remained unclaimed with the Company as on 31st March 2016.

Details of significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations in future

There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and company''s operation in future.

Adequacy of Internal Financial Controls with reference to the Financial Statements

The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels. The Audit committee of the Board constantly reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the Company and recommendations made for corrective action through the internal audit reports. The committee reviews the statutory auditors'' report, key issues, significant processes and accounting policies.

The Directors confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3)(i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors Report.

Change in the nature of Business, if any

There was no change in the nature of business of the Company during the financial year ended 31st March, 2016.

Auditors

Statutory Auditors

M/s. RJC Associates, were appointed as the Statutory Auditors of the company, at the Annual General Meeting held on 25th September, 2014, for a period of three years subject to ratification by the Shareholders at every consequent Annual General Meeting. The Company has received a letter pursuant to Section 139 and 141 of the Companies Act, 2013 from them to the effect that they are eligible to continue as the Statutory Auditors of the Company.

Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M r. M.D.Selvaraj, M/s. MDS & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit report is annexed herewith as Annexure ''F''.

Cost Auditors

The Board of Directors at their meeting held on 31st July 2015 have appointed M/s. STR & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16. Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable to the Cost Auditors of the Company is subject to the ratification by the Shareholders at the Annual General Meeting. The Board recommends their remuneration.

Human Resources and Industrial Relations

The Company continues to enjoy cordial relationships with its employees at all levels. The total strength of employees as on 31st March, 2016 was 2000.

Particulars of Employees

Details pursuant to Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report as Annexure ''G''.

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

The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints received from any employee or third parties during the financial year 2015-16.

Corporate Governance

A report on corporate governance is annexed and forms part of this report. The Company has complied with the conditions relating to corporate governance as stipulated in Regulation 27 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Audit Committee

Audit Committee is in existence in accordance with the provisions of Section 177 of the Companies Act, 2013. Kindly refer to the Section on Corporate Governance, under the head, ''Audit Committee'' for matters relating to the composition, meetings, and functions of the Committee. The Board has accepted the Audit Committee recommendations during the year whenever required and hence no disclosure is required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by Board.

Whistle Blower Policy

The Company has a Whistle Blower policy to deal with unethical or improper practice or violation of Company''s Code of Business Conduct or any complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. The Policy gives a platform to the Whistle Blower to report the complaints on the above mentioned practices to the Managing Director or Director (HR). Although the complainant is not expected to prove the truth of an allegation, the complainant aims to demonstrate that there are sufficient grounds for concern and that it is not done as a malicious act against an individual. The Audit Committee of the Board reviews the Complaints received, redressed, objected, withdrawn and dismissed for, every quarter in their meeting. The Whistle Blower policy is available in the website of the Company at the following address http://www.elgi.com/ wp-content/uploads/Elgi-Whistle-Blower-Policy.pdf

Shareholders Initiatives

- Your Company adheres strictly to all the statutory and other legal compliances;

- Your Company has in place the regulations for preventing and regulating Insider Trading as has adhered to the Code of Conduct and Business Ethics by which the shareholder is treated on par with an employee on the availability of information about the Company;

- Your Company regularly intimates the shareholders (through quarterly news letters) on the performance of the company, even though it is not mandatory;

- Your Company has consistently paid dividend throughout the years;

- Your Company has been prompt and regular in its replies to your queries received by them;

- Your Company also replies within the stipulated time to all legal and statutory authorities;

- The custodial charges and listing fees are promptly paid by the Company to the depositories and the stock exchanges;

- During this year, your Company dematted 806836 shares; with this, the total number of shares dematted as on 31st March 2016 are 15,60,89,143 shares, which represents 98.51% shares of the Company

Acknowledgement

Your Directors thank the shareholders, customers, suppliers, bankers and all stakeholders for their continued support during the year. Your Directors also place on record their appreciation of the contributions made by employees at all levels towards the growth of the company.

For and on behalf of the Board

Jairam Varadaraj N. Mohan Nambiar

Place : Coimbatore Managing Director Director

Date : 27/05/2016 DIN: 00058056 DIN: 00003660


Mar 31, 2015

DearShareholders,

The Directors hereby present the 55th Annual Report along with the audited accounts for theyear ended 31st March, 2015.

Financial Results

The highlights ofthe performance ofyour Company during thefiscal are given hereunder;

(Rs In Million) Particulars 2014-15 2013-14

Profit before Depreciation & Tax 978.09 1266.20

Less:Depreciation 291.36 177.60

ProfitBeforeTax 686.73 1088.60

Less:ProvisionforTax(NetofDeferredTax) 130.52 305.95

Net Profit 556.21 782.65

Add:OpeningBalanceinP&LAccount 3148.49 2625.57

Amountavailableforappropriations 3704.70 3408.22

The Directors recommended the following Appropriations:

Dividend 158.45 158.45

Dividend Tax 32.26 26.93

TransfertoGeneralReserve 55.60 78.30

Profit carried forward 3458.39 3144.54

Amountadjusted after depreciation, net ofdeferred tax adjusted as per schedule II ofthe Companies Act, 2013 and provision fortax on Dividend in respect ofpreviousyearwritten back.

Review of Business Operations

The Company ended with net sales ofRs. 7759 Million as against Rs. 8283 Million in 2013-14. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis section.

Transfer to Reserves

An amount ofRs. 55.60 million has been transferred to General Reserve in theyear 2014-15 as againstRs.78.30 million in theyear 2013-14.

Dividend

For the financial year 2014-15, the Board of Directors has recommended a dividend ofRs. 1/- per share (100%) on the paid up share capital ofRs. 15,84,54,508. Subject to the approval of shareholders, an amount of Rs.190.71 Million will be paid as dividend including Dividend Distribution Tax (previous year Rs.185.38Million).

Share Capital

The paid-up capital of the Company as at 31.03.2015 stood at Rs. 158.45 Million. During the year under review the Company has not madeanyfresh issueofshares.

Transfer of unclaimed Dividend to Investor Education and Protection Fund

In terms of Section 205(a) and 205(b) of the Companies Act, 1956, any unclaimed or unpaid Dividend relating to the Financial Year 2007-08 is due for remittance on 14.08.2015 to the Investor Education and Protection Fund established by the Central Government.

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92 ofthe Companies Act, 2013 read with Rule 12 ofthe Companies (Management and Administration) Rules, 2014, in form MGT-9 is furnished in AnnexureA and is attached to this report.

Board Meetings and its Committees conducted during the period under review

During the year under review, 5 Meetings of the Board of Directors, 4 Meetings ofthe Audit Committee, 5 Meetings of the Nomination and Remuneration Committee, 1 Meeting of the Corporate Social Responsibility Committee and 22 Meetings of the Stakeholders Relationship Committee were held. Further details ofthe same have been enumerated in the Corporate Governance Report annexed herewith.

Directors''Responsibility Statement

The Directors confirm that -

(a) In the preparation ofthe annual accounts, the applicable accounting standards have been followed and there are no material departures from those standards.

(b) 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 profit of the Company for that period;

(c) they have taken Proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they 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) they had devised proper systems to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;

Declaration of Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

Company''s Policy Relating to Directors Appointment, Payment of Remuneration and other matters provided under Section 178(3) of the Companies Act, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Criteria for selection of Non-Executive Directors has been stated in Annexure B to this report. The Remuneration policy of the Company is annexed herewith as Annexure C and can also be accessed on the Company''s website at the link http://www.elgi.com/wp- content/uploads/Remuneration-policy.pdf.

Comments on Auditors'' Report:

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.RJC Associates, Statutory Auditors and Mr. M.D. Selvaraj, proprietor of MDS & Associates, Secretarial Auditor in their report

Particulars of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013

Details of loans given, investments made, guarantees given and securities provided pursuant to the provisions of Section 186 ofthe Companies Act, 2013 have been given in the notes tothe Financial Statements.

Particulars of contracts or arrangements with Related Parties

All transactions entered into with related parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year 2014-15 were in the ordinary course of business and on an arm''s length pricing basis. Since there are no transactions which are not on arm''s length basis and material nature Form AOC-2 not being annexed.

The Policy on Related Party Transactions as approved by the Board of Directors ofthe Company has been uploaded on the Company''s website and may be accessed through the link at http://www.elgi.com/wp-content/uploads/Related-Party- Transactions-Policy.pdf.

Material changes and commitments affecting the financial position of the Company:

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year as on 31.03.2015 and the date of this report.

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

The information on foreign exchange earnings and outgo, technology absorption, conservation of energy stipulated under Section 134(3)(m) ofthe Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure D.

Risk Management Plan Implementation

The Company has operationalized a Risk Management Plan to systematically manage and regularly review its risk profile at a strategic and operational level. So far, Company has identified Legal and Financial Risks as the main threat to its business. The risk profile may expand in future; the Company may develop a seperate plan to manage them. The Risk Management Plan is governed by a Risk Management Committee comprising of members of the Senior Management. This Committee will advice the respective functions on the development of best practice risk management systems, oversight of professional independent advice on key risk and control issues and regular audit reviews of business functions and risk management process. TheCompany will endeavor to create a riskawareness culture and providetraining and support in the areas of riskand compliance on an ongoing basis.

Details of policy developed and implemented by the Company on Its Corporate Social Responsibility Initiatives

The Board has formed a Corporate Social Responsibility Committee comprising of 1. Mr. Jairam Varadaraj, 2. Dr.T. Balaji Naidu 3. Mr. B. Vijayakumar and 4. Dr. Madhavi Gopinath. The Committee at its meeting held on 29th October, 2014, recommended a CSR policy for adoption by the Company. The CSR policy deals with allocation of funds, activities, identification of programmes, approval, implementation, monitoring and reporting mechanismsforCSRactivities.

As part of its initiatives under CSR, the Company has undertaken projects in the areas of Education, Social development, Medical relief, Sports, Women empowerment, animal welfare, Cultural protection etc. These projects are by and large in accordance with Schedule VII of the Companies Act, 2013.

The CSR spend is predominantly directed through a registered trust. The trust expends the sums contributed by the Company towards educational and related activities only and also for having a corpus for undertaking construction of new school building within the next 5-10 years.The trust has a proven track record of over three years in involvement in educational activities as it runs a full fledged school comprising of 1500 students and has earned a good reputation over time. The trust has medium term plans to construct a new school building with all modern amenities and aims to be a school of international standards in the years to come. Hence, the Company should continue to significantly contribute to the trust.

The trust also expends the funds towards Educational Scholarships, Medical Relief, to help the upliftment of rural people by way of building infrastructure like Schools, Street Lights, Roads etc, to support Special Children''s School and also forthe Building Corpus.

The Annual Report on CSR activities is annexed herewith as Annexure E.

Annual Evaluation of the Board on its own performance and of the Individual Directors

On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors the Company formulated the criteria for the evaluation of the performance of the Board of Directors & its Committees, Independent Directors, Non-Independent Directors and the Managing Director of the Board. Based on that performance evaluation has been undertaken.The Independent Directors of the Company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated.

Directors and Key Managerial Personnel

During theyear under review, the Members have approved the appointment of Mr. N. Mohan Nambiar, Mr. B. Vijayakumar, Mr. M. Ramprasad and Dr. Ganesh Devaraj as the Independent Directors ofthe Company for a period offive years.

The Board of Directors have re-appointed Mr. Jairam Varadaraj as Managing Director of the Company for a period of 5 years with effect from 01.04.2016 on the terms and conditions as set out in the notice convening the Annual General Meeting. Necessary resolution in this regard has been included in the Agenda ofthe Notice convening the Annual General Meeting for the approval of the members.

Dr.T. Balaji Naidu, Director ofthe Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himselffor re-appointment.

Dr. Madhavi Gopinath & Mr. Harjeet Singh Wahan were appointed as Additional Directors ofthe Company with effect from 25.09.2014 and 01.04.2015 respectively and they shall hold office upto the date of this Annual General Meeting. Accordingly necessary resolutions proposing the appointment of Dr. Madhavi Gopinath & Mr. Harjeet Singh Wahan as Directors ofthe Company has been included in the Agenda ofthe Notice convening the Annual General Meeting for the approval of the members.

Your Directors recommend their appointment / re-appointment.

Further, during the year under review, Mr. R. Syam Kumar resigned from his post as the Company Secretary of the Company with effect from 29.05.2014 and Ms. Vaishnavi PM was appointed as the Company Secretary & Compliance Officer of the Company with effect from 01.08.2014. Mr.S. Sriram istheChief Financial Officer oftheCompany.

Report on the performance and financial position of each of the Subsidiaries, Associates and Joint Venture Companies included in the Consolidated Financial Statements

The Company has 14 Subsidiaries. The statement pursuant to Section 129 (3) of the Companies Act, 2013, containing the salient features of the financial statements of Subsidiary Companies, forms part of this Annual Report.

The Company does not have any Material Subsidiary whose individual transactions exceeds 20% of the annual consolidated net worth ofthe holding Company as per the last audited financial statements ofthe company. The Board has approved a policy for determining material subsidiaries which has been uploaded on the Company''s website viz. www.elgi.com.

The annual accounts ofthe Subsidiary Companies are posted on the website oftheCompany viz. www.elgi.com and kept for inspection by the shareholders at the Registered Office ofthe Company. The Company shall provide the copy of the annual accounts of Subsidiary Companies to the shareholders upon their request.

Fixed Deposits

During the year, the Company did not accept or renew any fixed deposits and no fixed deposits remained unclaimed with the Company as on 31st March, 2015.

Details of significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operation in future

There is no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operation in future.

Internal controlsystemsandtheiradequacy

The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels. The Audit Committee of the Board constantly reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the Company and recommendations made for corrective action through the internal audit reports. The Committee reviews the statutory auditors'' report, key issues, significant processes and accounting policies.

Auditors

Statutory Auditors

M/s. RJC Associates, Chartered Accountants, Coimbatore were appointed as the Statutory Auditors of the Company for a period of 3 years at the last Annual General Meeting held on 25th September 2014 as required under the provisions of Section 139 of the Companies Act, 2013. The Company has obtained written confirmation from the Auditors pursuant to Section 139 of the Companies Act, 2013 that their appointment if made would be in conformity with the provisions of the Companies Act, 2013. Members are requested to ratify theirappointment.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M.D.Selvaraj, MDS & Associates, Company Secretary in practice to undertake the Secretarial Audit of the Company. The report ofthe Secretarial Audit report is annexed herewith as Annexure F.

Human Resources and Industrial Relations

The Company continues to enjoy cordial relationship with its employees at all levels. The total strength of employees as on 31st March, 2015 was 1,980.

Particulars of Employees

Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to AnnexureG attached to this report.

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

The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Compliant Committee has been set up to redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2014-15.

Corporate Governance

A report on Corporate Governance is annexed and forms part ofthis report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

Whistle Blower Policy

The Company has a Whistle Blower policy to deal with unethical or improper practice or violation of Company''s Code of Business Conduct or any complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. The Policy gives a platform to the Whistle Blower to report the complaints on the above mentioned practices to the Managing Director or Director (HR). Although the complainant is not expected to prove the truth of an allegation, the complainant aims to demonstrate that there are sufficient grounds for concern and is not done as a malicious act against

an individual. The Audit Committee of the Board reviews the Complaints received, redressed, objected, withdrawn and dismissed for, every quarter in their meeting. The Whistle Blower policy is available in the website of the Company at the following address http://www.elgi.com/wp- content/uploads/Elgi-Whistle-Blower-Policy.pdf

Shareholders Initiatives

- Your Company adheres strictly to all the statutory and otherlegal compliances;

- Your Company has in place the regulations for preventing and regulating Insider Trading as has adhered to the Code of Conduct and Business Ethics by which the shareholder is treated as par with an employee on availability of information abouttheCompany;

- Your Company regularly intimates the shareholders (through quarterly news letters) on the performance of the Company, even though it is not mandatory;

- Your Company has consistently paid dividend throughout theseyears;

- Your Company has been prompt and regular in its replies to your queries received by them;

- Your Company also replies within the stipulated time to all legal and statutory authorities;

- The custodial charges and listing fees promptly paid by the Company to the depositories and the stockexchanges;

- Duringthisyear,your Companydematted6,66,712shares. With this, the total number of shares dematted as on 31st March 2015 are 15,52,82,307 shares, which represents 98% shares of the Company

Acknowledgement

Your Directors thank the shareholders, customers, suppliers and bankers for their continued support during the year. Your Directors also place on record their appreciation of the contributions made by employees at all levels towards the growth oftheCompany.

Forandon behalf ofthe Board

JAIRAMVARADARAJ N. MOHAN NAMBIAR Place : Coimbatore Managing Director Director Date : 29/05/2015 DIN:00058056 DIN:00003660


Mar 31, 2014

Dear Shareholders,

The Directors are pleased to present the 54th Annual Report of the Company along with the audited accounts for the year ended 31st March 2014.

Financial results

The highlights of the performance of your Company during thefiscal are given hereunder; (Rs.. In Million)

Particulars 2013-14 2012-13

Profit before Depreciation & Tax 1266.20 1113.37

Less: Depreciation 177.60 142.70

Profit before Tax 1088.60 970.67

Less: Provision for Tax (Net of Deferred Tax) 305.95 258.03

Net Profit 782.65 712.64

Add: Opening Balance in P&L Account 2625.57 2169.61

Amount available for Appropriations 3408.22 2882.25 The Directors recommend the following Appropriations

Dividend 158.45 158.45

Dividend Tax 26.93 26.93

Transfer to General Reserve 78.30 71.30

Profit carried forward 3144.54 2625.57



Dividend

For the financial year 2013-14, the Board of Directors had recommended dividend of Re. 1/- per share (100 %) on the paid up share capital ofRs..15,84,54,508. Subject to the approval of shareholders, an amount ofRs..185.38 Million will be paid as dividend including Dividend Distribution Tax (previous year Rs..185.38 Million).

Review of Operations

The company ended with net sales of Rs.. 8283 million as against Rs.. 8165 million in 2012-13. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis.

Subsidiary Companies

The Government of India vide its Circular No. 2/2011 dated 08/02/2011 granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the Balance Sheet and Profit & Loss Account and other documents of its subsidiaries and hence the same have not been attached. However the Financial Statements of ATS Elgi Limited, one of the subsidiaries, is furnished with this report.

As required under the Listing Agreement with the Stock Exchanges, a Consolidated Financial Statement of the Company and all its subsidiaries is attached. The Consolidated Financial Statements have been prepared in accordance with the relevant Accounting Standards as prescribed under Section 211 (3C)of the Companies Act, 1956. A Statement containing brief financial details of the Company''s subsidiaries for the financial year ended March, 2014 is included in the Annual Report.

The annual accounts of the subsidiaries and their related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/ its subsidiaries at the registered office of the Company.

Future Plans

a. Domestic

The regime change in the Government at the centre, has improved market sentiments. Investments by business are expected to improve in the coming days, leading to increased

demand for the Company''s products in the coming years. Global Economic indicators are also showing progress, and economic recovery is visible in certain high income economies. The Company expects a positive growth in Exports that will helpaugmentsales.

b. International

Gaining significant market share in developed market requires substantial effort nevertheless, the Company visualises strong growth in international business as the Company''s range of products has been well received in the global markets. This positive momentum is likely to continue in thefuture.

Capital Expenditureand funding

The Capital Expenditure incurred and funded for the year is Rs.. 917.23 Million, of whichRs.. 584.30 Million pertain to plant and machinery through internal accruals.

Shareholder initiatives

1. Your company adheres strictly to all the statutory and other legal compliances.

2. Your company has in place regulations for preventing and regulating insider trading and has adhered to a code of conduct and business ethics by which the shareholder is treated at par with an employee on availability of information aboutthecompany.

3. Your company regularly intimates the shareholders (through quarterly newsletters) on the performance of the company, even though it is not mandatory;

4. Your company has consistently paid dividend throughout theseyears.

5. Your company has been prompt and regular in its replies to yourqueries received by them.

6. Your company also replies within the stipulated time to all legal and statutory authorities.

7. The custodial charges and listing fees promptly paid by your company to the depositories and stockexchanges.

8. During this year, the Company dematted 4,31,487 shares. With this, the total numbers of shares dematted as on 31st March 2014 are 15,46,15,595 Shares which represent 97.58% of the shares of the Company.

Directors:

Sudarsan Varadaraj, Director of the Company retires at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Dr. Ganesh Devaraj retires at the ensuing Annual General Meeting and the Directors have proposed to appoint him as Independent Director.

M. Ram Prasad, B. Vijayakumar and N. Mohan Nambiar are being appointed as Independent Directors for 5 consecutive years as per the provisions of Section 149 of the Companies Act, 2013.

Your Directors recommend their appointment / re- appointment

Directors''Responsibility Statement

The Board of Directors confirm

i. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relatingto material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimate 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 or loss of the company for that period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts on a going concern basis.

Statutory Auditorsandtheirappointment

M/s.RJC Associates, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company. Your Board recommends their reappointment as the Statutory Auditors of the Company for a term of three years.

Cost Audit

Dr. G.L Sankaran, Cost Accountant has been appointed as Cost Auditor for the financial year 2013-14. Cost Audit report for the year ended 31-03-2013 has been filed on 13-09-2013.

Human Resources and Industrial Relations

The Company continues to enjoy the cordial relationship with its employees at all levels. The total strength of employees as on31stMarch,2014 was2033.

Other Information

The statement showing the particulars of technology absorption pursuant to section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is given in the annexure forming part of this report.

The statement showing the particulars of names and other particulars of employees pursuant to section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, is given in the annexure forming part of this report.

Corporate Governance

A Report on Corporate Governance together with a Practicing Company Secretary''s Certificate on Compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided elsewhere in the Annual Report.

Acknowledgements

Your Directors take this opportunity to place on record their appreciation on dedication and commitment of employees at all levels in maintaining the sustained growth of your Company. Your Directors thank and express their gratitude for the support and co-operation received from Governments, stakeholders including analysts, producers, vendors, financial institutions, banks, investors, service providers..

For and on behalf ofthe Board

Place : Coimbatore JAIRAMVARADARAJ N.MOHAN NAMBIAR Date : 29/05/2014 Managing Director Director


Mar 31, 2013

Dear Shareholders,

The Directors are pleased to present the 53rd Annual Report of the Company along with the audited accounts for the year ended 31st March, 2013.

Financial results

The highlights of the performance of your Company during the fiscal are given hereunder;

(Rs. In Million)

Particulars 2012-13 2011-12

Profit before Depreciation and Tax 1113.37 1175.55

Less: Depreciation 142.70 118.23

Profit before Tax 970.67 1057.32

Less: Provision for Tax (Net of Deferred Tax) 258.03 297.09

Net Profit 712.64 760.23

Add: Opening Balance in P & L Account 2169.61 1669.64

Amount available for Appropriations 2882.25 2429.87

The Directors recommend the following Appropriations

Dividend 158.45 158.45

Dividend Tax 26.93 25.71

Transfer to General Reserve 71.30 76.10

Profit carried to Balance Sheet 2625.57 2169.61

Dividend

For the financial year 2012-13, the Board of Directors had recommended dividend of Rs.1/- per share (100 %) on the paid up share capital of Rs.15,84,54,508. Subject to the approval of shareholders, an amount of Rs.185.38 Million will be paid as dividend including Dividend Distribution Tax (previous year Rs.184.16 Million).

Review of Operations

During the year under review, the Company recorded net sales of Rs. 8165 million as against Rs. 7948 million with an increase of 3%. The details of division wise performance with other operational details are discussed at length in the Management Discussion and Analysis.

Subsidiary Companies

The Government of India vide its Circular No. 2/2011 dated 08/02/2011 granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the Balance Sheet and Statement of Profit & Loss and other documents of its subsidiaries and hence the same have not been attached. However the Financial Statements of ATS Elgi Limited, one of the subsidiaries, is furnished with this report.

As required under the Listing Agreement with the Stock Exchanges, Consolidated Financial Statements of the Company and all its subsidiaries is attached. The Consolidated Financial Statements have been prepared in accordance with the relevant Accounting Standards as prescribed under Section 211(3C) of the Companies Act, 1956. A Statement containing brief financial details of the Company''s subsidiaries for the financial year ended 31st March, 2013 is included in the Annual Report.

The annual accounts of the subsidiaries and their related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/ its subsidiaries at the registered office of the Company.

Future Plans

a. Domestic

The current state of economy in India remaining unpredictable, indications suggest that macro conditions will improve in the coming year. While the Company continues to remain cautious, signs of improvement are foreseen in some segments pointing to a better than average performance in the ensuing year.

b. International

The Company achieved significant milestones during the year by acquiring 100% stake in M/s. Rotair Spa, Italy and M/s. Patton''s Inc, USA. With these acquisitions, ELGI has notable presence in the identified strategic markets. The Company is poised for a significant growth.

Capital Expenditure and funding

The Capital Expenditure incurred and funded for the year is Rs.847.45 Million, of which Rs. 289.12 Million pertain to plant and machinery through internal accruals.

Shareholder initiatives

1. Your Company adheres strictly to all the statutory and other legal compliances.

2. Your Company has in place regulations for preventing and regulating insider trading and has adhered to a code of conduct and business ethics by which the shareholder is treated at par with an employee on availability of information about the Company.

3. Your Company regularly intimates the shareholders (through quarterly newsletters) on the performance of the Company, even though it is not mandatory.

4. Your Company has consistently paid dividend through out these years.

5. Your Company has been prompt and regular in its replies to your queries received by them.

6. Your Company also replies within the stipulated time to all legal and statutory authorities.

7. The custodial charges and listing fees promptly paid by your Company to the depositories and stock exchanges.

8. During this year, the Company dematted 1,45,776 shares. With this, the total number of shares dematted as on 31st March 2013 are 15,41,84,708 Shares which represent 97.31 % of the shares of the Company.

Fixed Deposits

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

Directors

In accordance with the provisions of Articles of Association of the Company Mr. B. Vijayakumar and Mr. N. Mohan Nambiar, Directors of the Company retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company.

None of your retiring directors are disqualified from being reappointed.

Directors'' Responsibility Statement The Board of Directors confirm

i. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the Directors had selected such accounting policies and applied them consistently and made judgements and estimate 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 or loss of the Company for that period;

iii. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts on a going concern basis.

Statutory Auditors and their appointment

M/s. RJC Associates, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company. Your Board recommends their reappointment as the Statutory Auditors of the Company.

Cost Auditor

Approval of the Government of India through the Ministry of Company Affairs was granted for the appointment of Dr. G.L. Sankaran as the Cost Auditor of your Company for the financial year ended 31st March 2013.

Secretarial Audit

A qualified Practicing Company Secretary carries out a Share Capital Audit on a quarterly basis to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.

The Company has complied with all the provisions of listing agreement in the current year.

Human Resources and Industrial Relations

The Company continues to enjoy cordial relations with its employees at all levels. The total strength of employees (including all Subsidiaries) as on 31st March, 2013 was 2057.

Other Information

The statement showing the particulars of technology absorption pursuant to Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is given in the Annexure forming part of this report.

The statement showing the particulars of names and other particulars of employees pursuant to section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, is given in the annexure forming part of this report.

Corporate Governance

A Report on Corporate Governance together with Practising Company Secretary''s Certificate on compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided elsewhere in the Annual Report.

Acknowledgements

Your Directors take this opportunity to place on record their appreciation for the dedication and commitment of employees at all levels in maintaining the sustained growth of your Company. Your Directors thank and express their gratitude for the support and co-operation received from Governments, stakeholders including analysts, producers, vendors, financial institutions, banks, investors, and service providers.

For and on behalf of the Board

Place : Coimbatore JAIRAM VARADARAJ N. MOHAN NAMBIAR

Date : 09/05/2013 Managing Director Director


Mar 31, 2012

The Directors are pleased to present the 52nd Annual Report of the Company along with the audited accounts for the year ended 31st March 2012.

Financial Results

The highlights of the performance of your Company during the fiscal are given hereunder;

(Rs.In Million)

Particulars 2011-12 2010-11

Profit before Depreciation, Tax and Extraordinary Items 1175.55 1338.33

Less: Depreciation 118.23 102.69

Profit before Tax and Extraordinary Items 1057.32 1235.64

Less: Provision for Tax (Incl. of Deferred Tax) 297.09 420.20

Profit before Extraordinary Items 760.23 815.44

Less: Extraordinary Items 0.00 1.54

Net Profit after Extraordinary Items 760.23 813.90

Add: Opening Balance in P&L Account 1669.64 1121.90

Amount available for Appropriations 2429.87 1935.80

The Directors recommend the following Appropriations

Dividend 158.45 158.45

Dividend Tax 25.71 25.71

Transfer to General Reserve 76.10 82.00

Profit carried to Balance Sheet 2169.61 1669.64

(Previous year's figures have been regrouped or rearranged wherever necessary)

Dividend

For the financial year 2011-12, the Board of Directors had recommended dividend of Re. 1/- per share (100 %). Subject to the approval of shareholders, an amount of Rs. 184.16 Million will be paid as dividend including Dividend Distribution Tax like previous year.

Review of Operations

The company ended with net sales of Rs. 7948 million as against Rs. 7758 million an increase of 2% over the last year. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis Report given elsewhere in this report.

Subsidiary Companies

The Government of India vide its Circular No. 2/2011 dated 08/02/2011 granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the Balance Sheet and Statement of Profit & Loss and other documents of its subsidiaries and hence the same have not been attached. However the Financial Statements of ATS Elgi Limited, one of the subsidiaries, is furnished with this report.

As required under the Listing Agreement with the Stock Exchanges, a Consolidated Financial Statement of the Company and all its subsidiaries is attached. The Consolidated Financial Statements have been prepared in accordance with the relevant Accounting Standards as prescribed under Section 211(3C)of the Companies Act, 1956. A Statement containing brief financial details of the Company's subsidiaries for the financial year ended March, 2012 is included in the Annual Report.

The annual accounts of the subsidiaries and their related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/ its subsidiaries at the registered office of the Company.

Future Plans

The overall sentiment in the market across geographies is weak and sluggish. The Company's initiative in the international markets is expected to yield results during the year. Focus on international business will continue as a de-risking strategy from India's economic cycle.

Bulk of the investment in the new unit will be made during the financial year 2012-13. The new foundry being built to meet the internal needs of the company, is also expected to commence operations by the end of the financial year.

Capital Expenditure and Funding

The Capital Expenditure incurred and funded for the year is Rs.. 365.34 million, of which Rs.. 303.60 million pertain to plant and machinery through internal accruals.

Shareholder Initiatives

1. Your company adheres strictly to all the statutory and other legal compliances.

2. Your company has in place regulations for preventing and regulating insider trading and has adhered to a code of conduct and business ethics by which the shareholder is treated at par with an employee on availability of information about the company.

3. Your company regularly intimates the shareholders (through quarterly newsletters) on the performance of the company, even though it is not mandatory;

4. Your company has consistently paid dividend throughout these years, with no long term debts.

5. Your company has been prompt and regular in its replies to your queries received by them.

6. Your company also replies within the stipulated time to all legal and statutory authorities.

7. The custodial charges and listing fees are promptly paid by your company to the depositories and stock exchanges.

8. During this year, the Company dematted 1,70,51,878 shares. With this, the total numbers of shares dematted as on 31st March 2012 are 15,40,38,932 Shares which represent 97 % of the shares of the Company.

Fixed Deposits :

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet

Directors:

In accordance with the provisions of Articles of Association of the Company Dr. T. Balaji Naidu and Sri. M. Ramprasad, Directors of the Company retire at the ensuing Annual General

Meeting and are being eligible offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company.

None of your directors are disqualified from being reappointed.

Directors' Responsibility Statement

The Board of Directors confirm

i. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the Directors had selected such accounting policies and applied them consistently and made Judgements and estimate 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 or loss of the company for that period;

iii. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts on a going concern basis.

Statutory Auditors and their appointment

M/s.RJC Associates, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company. Your Board recommends their reappointment as the Statutory Auditors of the Company.

Cost Auditor

The Central Government has approved the appointment of Dr. G.L Sankaran as Cost Auditor for conducting cost audit for the year 2011-12.

Secretarial Audit

A qualified Practicing Company Secretary carries out a Share Capital audit on a quarterly basis to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL

The Company has complied with all the provisions of listing agreement in the current year.

Human Resources and Industrial Relations

The Company continues to enjoy the cordial relationship with its employees at all levels. The total strength of employees as on 31st March, 2012 was 1738 .

Other Information

The statement showing the particulars of technology absorption pursuant to section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is given in the annexure forming part of this report.

The statement showing the particulars of names and other particulars of employees pursuant to section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, is given in the annexure forming part of this report.

Corporate Governance

A Report on Corporate Governance together with a Practicing Company Secretary's Certificate on Compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided elsewhere in the Annual Report.

Acknowledgements

Your Directors take this opportunity to place on record their appreciation for the dedication and commitment of employees at all levels in maintaining the sustained growth of your Company. Your Directors thank and express their gratitude for the support and co-operation received from Governments, stakeholders including analysts, producers, vendors, financial institutions, banks, investors, service providers..

For and On behalf of the Board

Place : Coimbatore DR. JAIRAM VARADARAJ N. MOHAN NAMBIAR

Date : 14/05/2012 Managing Director Director


Mar 31, 2011

The Directors are pleased to present the 51st Annual Report of the Company along with the audited accounts for the year ended 31st March 2011.

Financial Results

The highlights of the performance of your Company during the fiscal are given under; (Rs. In Million)

Particulars 2010-11 2009-10

Profit before Depreciation, Tax and 1378.64 1041.63

Non Recurring Items Less: Depreciation 102.69 99.36

Profit before Tax and Non Recurring Items 1275.95 942.27

Less: Provision for Tax (Net of Deferred Tax) 420.20 330.41

Profit before Non Recurring Items 855.75 611.86

Less: Non Recurring Items (Net) 41.84 60.07

Net Profit after Non Recurring Items (Net of prior year adjustments) 813.91 551.79

Add: Opening Balance in P&L Account 1121.90 1085.55

Transfer on Amalgamation and prior year adjustment (0.01) (290.09)

Amount available for Appropriations 1935.80 1347.25

The Directors recommend the following Appropriations Dividend 158.45 144.75

Dividend Tax 25.71 24.60

Transfer to General Reserve 82.00 56.00

Profit carried to Balance Sheet 1669.64 1121.90

(Previous years Figures have been regrouped or rearranged wherever necessary)

Allotment of Equity Shares:

In accordance with the Scheme of Amalgamation sanctioned by the Honble High Court of Judicature at Madras, the Company allotted 7,62,600 equity shares of Re. 1/- each to the shareholders of Elgi Industrial Products Limited (Erstwhile Elgi Finance Limited) on 8.11.2010.

On 18.12.2010, the Company allotted 7,89,35,454 equity shares of Re.1/- each as bonus shares at the ratio of 1:1 to its existing shareholders.

To commemorate the Golden Jubilee Year (2010), the Company has also allotted equity shares of Re.1/- each to the employees under Employees Stock Purchase Scheme (ESPS) on 21.02.2011.

Pursuant to clause 19.1 of Securities Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, the details of issue furnished below:

a. No. of equity shares issued : 5,83,600

b. Issue price Re.1/- per share

c. Aggregate sum of consideration: Rs.5,83,600/-

d. Details of shares allotted to Senior Managerial Personnel who are reporting to Managing Director:

Name Shares

Sri. Harjeet Singh 700

Sri. Satish Kini 550

Sri. Sriram Srinivas 150

Sri. V T Govindarajan 150

Sri. K. Sreenivasa Rao 200

Total 1750

e. 5% of shares issued to any

one employee : NIL

f. 1% of issued capital allotted

to any one employee : NIL

g. Diluted EPS on issuance of shares

under ESPS : Rs. 5.14

As on today, after the issue of additional equity shares as mentioned above, the paid up share capital of the company is Rs.15,84,54,508 consisting of 15,84,54,508 equity shares of Re.1/- each which are listed in Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Dividend

For the financial year 2010-11, the Board of Directors had recommended dividend of Re. 1/- per share (100 %) on the expanded paid up share capital of Rs.15,84,54,508. Subject to the approval of shareholders, an amount of Rs. 184.16 million will be paid as dividend including Dividend Distribution Tax (previous year Rs.169.35 million).

Review of Operations

The net sales for 2010-11 was Rs. 7738 million as against Rs. 5812 million in the previous financial year showing an increase of 33%. The details of division wise performance and other operational details are discussed in the Management Discussion and Anaysis Report, given elsewhere in this report.

The growth in compressors business was predominantly contributed by industrial segment and the construction & mining segments. The domestic market had shown strong recovery at par with the countrys economic growth. The exports had slower recovery and the companys subsidiaries in China and France have performed in line with the projections.

Subsidiary Companies

The Government of India vide its Circular No. 2/2011 dated 08/02/2011 granted general exemption under Section 212(8) of the Companies Act, 1956 from attaching the Balance Sheet and Profit & Loss Account and other documents of its subsidiaries and hence the same have not been attached. However, the Financial Statements of ATS Elgi Ltd, one of the subsidiaries, is furnished with this report.

As required under the Listing Agreement with the Stock Exchanges, a Consolidated Financial Statement of the Company and all its subsidiaries is attached. The Consolidate Financial Statements have been prepared in accordance with the relevant Accounting Standards as prescribed under Section 211(3C) of the Companies Act, 1956. ("Act"). A statement containing brief financia details of the Companys subsidiaries for the financia year ended March 31, 2011 is included in the Annua Report.

The annual accounts of the subsidiaries and their related detailed information will be made available to any member of the Company /its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company / its subsidiaries at the Registered office of the Company.

Future Plans

The company is poised for growth in specific segments in 2011-12 despite some of segments including water well experiencing downward cyclical trend. Our focus will continue on industrial applications and high potential oriented international markets. The pressure on margin is likely to accelerate as input costs continue to rise and incurring of additional expenses in developing international markets.

Capital Expenditure and funding

The Capital Expenditure incurred and funded for the year is Rs.151.17 million, of which Rs. 83.07 million pertain to plant and machinery through interna accruals.

Shareholder initiatives

1. Your company adheres strictly to all the statutory and other legal compliances.

2. Your company has in place regulations for preventing and regulating insider trading and has adhered to a code of conduct and business ethics by which the shareholder is treated at par with an employee on availability of information about the company.

3. Your company regularly intimates the shareholders (through quarterly newsletters) on the performance of the company, even though it is not mandatory;

4. Your company has consistently paid dividend throughout these years, with nil long term debts.

5. Your company has been prompt and regular in its replies to your queries received by them.

6. Your company also replies within the stipulated time to all legal and statutory authorities.

7. The custodial charges and listing fees are promptly paid by your company to the depositories and stock exchanges.

8. During this year, the Company dematted 3,06,433 shares. With this, the total numbers of shares dematted as on 31st March 2011 are 13,69,87,054 Shares which represent 86.45% of the shares of the Company.

Fixed Deposits :

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet

Directors:

In accordance with the provisions of Articles of Association of the Company Dr. Ganesh Devaraj and Sri. Sudarsan Varadaraj, Directors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company. The Board has reappointed Dr. Jairam Vardaraj, as Managing Director for five years from 01.04.2011 subject to the approval of the shareholders.

None of your directors are disqualified from being reappointed.

Directors Responsibility Statement

The Board of Directors confirm

I. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimate 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 of the company for that period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv that the Directors had prepared the annual accounts on a going concern basis.

Statutory Auditors and their appointment

M/s.RJC Associates, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company. Your Board recommends their reappointment as the Statutory Auditors of the Company.

Cost Auditor

Approval of the Government of India through the Ministry of Company Affairs was granted for the appointment of Dr. G.L.Sankaran as the cost auditor of your company for the financial year ended 31st March 2011. Cost Audit Report for the financial year 2009-10 was filed by the Company on 23-9-2010. The due date for filing the same was 30-9-2010

Secretarial Audit

A qualified Practicing Company Secretary carries out a secretarial audit on a quarterly basis to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.

The Company has complied with all the provisions of listing agreement in the current year.

Human Resources and Industrial Relations

The Company continues to enjoy the cordia relationship with its employees at all levels. The total strength of employees as on 31st March, 2011 was 1604.

Other Information

The statement showing the particulars of technology absorption pursuant to section 217(1 )(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is given in the annexure forming part of this report.

The statement showing the particulars of names and other particulars of employees pursuant to section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, is given in the annexure forming part of this report.

Corporate Governance

A Report on Corporate Governance together with a Practicing Company Secretarys Certificate on Compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided elsewhere in the Annual Report.

Acknowledgements

Your Directors take this opportunity to place on record their appreciation the dedication and commitment of employees at all levels in maintaining the sustained growth of your Company. Your Directors thank and express their gratitude for the support and co-operation received from Governments, stakeholders including analysts, producers, vendors, financial institutions, banks, investors, service providers..

Annexure to the Directors Report

I. Statement containing particulars pursuant to section 217 (1) (e) of the companies act 1956 read with the companies (disclosure of particulars in the report of Board of Directors) rules, 1988 and forming part of the Directors Report for the year ended 31st march 2011.

A. Energy Conservation

- For improving fuel efficiency some of the old generators have been replaced.

- Savings in diesel consumption by installing variable frequency drive for testing the higher horse power compressors.

- Effective power management by contracting electricity with TNEB resulted in cost savings.

- Developed indigenous spares for imported machines saving substantial costs.

- Optimized airconditioning facilities .

B. Technology Absorption

1. An Innovative concept of "Bleed Airend" was developed. European & Chinese patents have been obtained. Patents for India and US have been applied for.

2. Encapsulated version of the airends that covers the range of 30kW to 75kW have been developed. Commercial production of this product will commence in 2011-12.

3. First "oil-free" compressor has been developed and supplied to the market.

4. The R & D team developed an "acoustic impedance test rig" for evaluation of "absorption properties of noise dampening materials" and to "tune" the intake and exhaust to minimizing noise.

5. Compressor for an Auxiliary Power Unit for a Diesel Locomotive has been successfully developed. It will enter production from Jul2011.

6. Electric Powered 75kW trolley mounted compressor has been successfully developed and received well in the market.

7. Oil free 100CFM reciprocating compressor has entered commercial production.

EXPENDITURE ON R&D 2010-2011 2009-2010

Capital 21.39 6.37

Revenue 158.31 81.00

Total 179.70 87.37

R&D Expenditure as a 2.32 1.50

Percentage of Turnover

For and On behalf of the Board

Dr. JAIRAM VARADARAJ N. MOHAN NAMBIAR

Managing Director Director

Place : Coimbatore

Date : 28/04/2011.






Mar 31, 2010

The Directors are pleased to present the 50th Annual Report of the Company along with the audited accounts for the year ended 31st March 2010.

FINANCIAL RESULTS

The performance of the Company is summarized in the financial statements given below: (Rs In Million)

Particulars 2009-10 2008-09

Profit before Depreciation, Tax and Non Recurring Items 1034.23 712.16

Less: Depreciation 91.96 79.52

Profit before Tax and Non Recurring Items 942.27 632.64

Less: Provision for Tax (Net of Deferred Tax) 330.41 235.20

Profit before Non Recurring Items 611.86 397.44

Less: Non Recurring Items (Net) 60.07 0.00

Net Profit after Non Recurring Items (Net of prior year adjustments) 551.79 397.44

Add: Opening Balance in P&L Account 1085.55 826.25

Transfer on Amalgamation and prior year adjustment (290.09) (2.74)

Amount available for Appropriations 1347.25 1220.95 The Directors recommend the following Appropriations

Dividend 144.75 81.54

Dividend Tax 24.60 13.86

Transfer to General Reserve 56.00 40.00

Profit carried to Balance Sheet 1121.90 1085.55

Issue of Additional Shares and Change in Share Capital consequent to the Scheme of Amalgamation.

The Scheme of Amalgamation under Section 391 and 394 of the Companies Act, 1956 was sanctioned by the Honble High Court of judicature at Madras vide its order dated 24/09/2010 and was filed with the Registrar of Companies, Coimbatore on 04/10/2010.

As per the Scheme, Elgi Industrial Products Limited (Formerly known as Elgi Finance Limited) has been merged with the Company. In accordance with the exchange ratio specified in the Scheme, 7,62,600 equity shares of Re. 1/- each of Elgi Equipments Limited are being allotted to the shareholders of Elgi Industrial Products Limited. The Authorised Share Capital and the paid up share capital of the Company are being increased to Rs. 300 million and 78.94 million respectively consequent to the above Scheme of Amalgamation.

Additional Shares of 7,62,600 equity shares to be allotted as per the Scheme of Amalgamation will be listed in the Bombay Stock Exchange Limited and National Stock Exchanges Limited

Conversion of partly paid-up shares into fully paid- up shares

During the financial year the final call money of Rs. 12.75 per share consisting of 85 paise on face value and Rs. 11.90 on share premium on 1,81,74,240 partly paid-up shares was called up for converting fully paid- up shares of Re. 1/-each

Dividend

The Board of Directors have declared and paid an interim dividend of 200% on the paid up share capital of 78.16 million pre merger of the Company during the financial year 2009-10. The outflow (excl.taxes) was Rs. 144.75 million as against a total of Rs. 81.54 million paid for the previous financial year2008-09

The interim dividends paid shall be the final dividend for financial year ended 31-03-2010.

Fixed Deposit

The company has not accepted any public deposits and hence there were no unclaimed deposits as on 31-03-2010

Review of Operations

The company ended with net sales of Rs.5811.55 million as against Rs. 4811.86 million an increase of 20.78 %. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis Report, given elsewhere in this report.

Subsidiary companies

a. The Company has been exempted from publishing the audited financial results of its wholly owned subsidiary companies, M/s. Adisons Precision Instruments Manufacturing Co. Ltd , M/s. Elgi Equipments (Zhejiang) Ltd., M/s. Elgi Compressors Trading (Shanghai) Co. Ltd., M/s. Elgi Gulf (FZE) along with this annual report, for the year 2009-10, vide letter No. 47/79/2010-CL-lII, dated 24/02/2010 from the Government of India, Ministry of Company Affairs.

b. The Company has been exempted from publishing the audited financial results of its wholly owned subsidiary company, M/s.SABelair along with this annual report, for the year 2009-10, vide letter No. 47/79/2010-CL-lll, dated 07/05/2010 from the Government of India, Ministry of Company Affairs.

The annual accounts of the above subsidiary companies are available for inspection by any shareholder, at the registered office of the holding and subsidiary companies.

c. The Annual Report of the wholly owned Subsidiary

Company M/s. ATS ELGI Limited for the year 2009-10 and the information specified in Section 212 of the Companies Act, 1956 is given separately in this report.

Future Plans

a. Domestic

The Compressor business registered 21% growth over the previous year on the backdrop of significant economic recovery in the domestic market. The Companys focus would be on the sustenance of this momentum and drive the organization in fully aligning to service and after sales market.

b. International

Exports market started recovering from the recessionary trend only during the second half of the financial year. The recovery is sporadic and slow. Operations at China is stabilizing and expected to pick up during the coming year. Procedural formalities for establishing the Brazil outfit were complete and the company will be targeting to expand its business significantly.

The company achieved a significant milestone during the year by acquiring a French Compressor company M/s. SA Belair as a wholly owned subsidiary which will be a gateway for spreading the business into Europe.

Capital Expenditure and funding

The Capital Expenditure incurred and funded for the year is Rs. 121.07 million, of which Rs. 63.03 million pertain to plant and machinery.

Shareholder initiatives

1. Your company adheres strictly to all the statutory and other legal compliances.

2. Your company has been one of the first to implement any initiatives for shareholder benefit directed from SEBI. On occurrence of any event, which has a bearing on the share price or otherwise, your company intimates the stock exchanges, within the stipulated period.

3. Your company has in place regulations for preventing and regulating insider trading and has adhered to a code of conduct and business ethics by which the shareholder is treated at par with an employee on availability of information about the company.

4. Your company regularly intimates the shareholders (through quarterly newsletters) on the performance of the company, even though it is not mandatory;

5. Your company has consistently paid dividend throughout these years, with nil long term debts.

6. Your company has been prompt and regular in its replies to your queries received by them.

7. Your company also replies within the stipulated time to all legal and statutory authorities.

8. The custodial charges paid by your company to both NSDL and CDSL for the FY 2010-11 amounts to Rs. 1,10,194/-.

9. During this year, the Company dematted 2,11,520 shares. With this, the total numbers of shares dematted as on 31st March 2010 are 6,77,75,947 Shares which represent 86.70% of the shares of the Company.

Directors

Your Directors record their profound grief on the sad demise of our Chairman Sri.L.G.Varadarajulu on 19th May 2010. The contribution of Shri.L.G.Varadarajulu to our Company has been immense. He touched the lives of all those who came in contact with him. We pledge to follow the path he has set out for us, and to abide by the high principles and ethics he believed in.

In accordance with the provisions of Articles of Association of the Company Sri. B. Vijayakumar and Sri. N. Mohan Nambiar, Independent Directors of the Company retire at the ensuing Annual General Meeting and are being eligible offer themselves for reappointment. Your Board recommends their reappointment as Directors of your Company.

None of your directors are disqualified from being reappointed.

Directors Responsibility Statement

The Board of Directors confirm

i. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimate 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 of the company for that period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that the Directors had prepared the annual accounts on a going concern basis.

Statutory Auditors and their appointment

M/s.RJC Associates, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company. Your Board recommends their reappointment as the Statutory Auditors of the Company.

Cost Auditor

Approval of the Government of India through the Ministry of Company Affairs was granted for the appointment of Dr. G.L.Sankaran as the cost auditor of your company for the financial year ended 31st March 2010.

Human Resources and Industrial Relations

The Company continues to enjoy the cordial relationship with its employees at all levels. The total strength of employees as on 31st March, 2010 was 1658

Other Information

The statement showing the particulars of technology absorption pursuant to section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, is given in the annexure forming part of this report.

Corporate Governance

A Report on Corporate Governance together with a

Practicing Company Secretarys Certificate on Compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided elsewhere in the Annual Report.

Acknowledgements

Your Directors take this opportunity to place on record their appreciation of the dedication and commitment of employees at all levels in maintaining the sustained growth of your Company. Your Directors thank and express their gratitude for the support and co-operation received from Central and State Governments, stakeholders including vendors, financial institutions, banks, investors, service providers as well as regulatory and governmental authorities.

The Board also thanks the employees for their dedicated and sincere service.

For and On behalf of the Board

DR. JAIRAM VARADARAJ N. MOHAN NAMBIAR

Managing Director Director

Place : Coimbatore

Date : 28/10/2010

 
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