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Directors Report of Lakshmi Machine Works Ltd.

Mar 31, 2017

Board of Directors'' Report to shareholders

Dear Shareholders,

The Board of Directors of your company are pleased to present the Annual Report on the business of the Company along with the standalone summary financial statements for the year ended 31st March, 2017.

1. The State of Affairs of the Company, Dividend and Reserve

The Board has prepared its report based on the standalone financial statements of the Company and this report contains a separate section wherein a report on the performance and financial position of its wholly owned subsidiary company is presented in Form AOC-1.

Financial summary/highlights and transfer to General Reserve (Rs,in Lakhs)

Sl No

Particulars

Current Year 2016-17

Previous Year 2015-16

1

Revenue from Operations (including Excise Duty)

2,52,285.96

2,85,138.78

2

Operating Expenses

2,18,181.42

2,44,030.83

3

Gross Profit

34,104.54

41,107.95

4

Depreciation

7,473.26

8,289.11

5

Profit Before Tax

26,631.28

32,818.84

6

Provisions for Tax

7,570.87

10,806.46

7

Net Profit after Tax

19,060.41

22,012.38

Transition to Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated February

16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For the Company, Ind AS is applicable from April 1, 2016, with a transition date of April 1, 2015.

The following are the areas which had an impact on account of transition to Ind AS:

- Expected credit loss model for provisioning on trade receivables

- Fair valuation of investments in equity instruments

- Employee costs pertaining to defined benefit obligations

- Revenue recognition

- Recognition of dividend liability and related taxes

- Deferred taxes

The reconciliations and descriptions of the effect of the transition from IGAAP to Ind AS have been provided in the notes to accounts in the standalone and consolidated financial statements.

Transfer to Reserve:

The Company has transferred a sum of Rs,1,900 Lakhs out of the current year profits to the General Reserve.

Dividend:

The Board recommends a dividend of Rs,35/- per equity share of Rs,10/- each (350%) on the equity share capital of Rs,10,95,55,040/- for the year ended on 31st March, 2017 aggregating to ''3,834.43 Lakhs and to pay a dividend tax of ''780.69 Lakhs. The total dividend payout works out to 24.21% of the standalone net profit. The dividend on equity shares is subject to the approval of the shareholders at the Annual General Meeting.

The unclaimed Dividend relating to the financial year 2009-10, is due for remittance in August, 2017 to the Investor Education and Protection Fund established by the Central Government.

As per the requirements of SEBI notification no. SEBI/ LAD-NRO/GN/2016-17/008 dated 8th July, 2016, the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available at the company website: www.lakshmimach.com

State of Affairs: OPERATIONS

During the year under review, the Company has achieved a turnover of Rs, 2,35,587.87 Lakhs (2015-16: Rs,2,69,150.44 Lakhs) resulting in a Net Profit of Rs, 26,631.28 Lakhs before tax (2015-16: Rs,32,818.14 Lakhs). During the year under review the turnover has decreased by 12% over the previous year and consequently the profit has also decreased by19 % over the same period last year. Unfavorable market conditions in India and abroad has resulted in reduced demand for the Textile machinery of the Company.

TEXTILE MACHINERY DIVISION

The Textile Machinery Division of the Company, during the year under review, has recorded a turnover of Rs, 1,96,334.74 Lakhs as against Rs,2,38,916.71 Lakhs achieved during the last year, recording a decrease of 18% over the previous year.

THE INDIAN TEXTILE INDUSTRY

Textiles being a basic necessity product, the Indian Textile industry has benefitted from growth in demand for textile products in India and from across the globe. Equally, Government''s emphasis to modernize and develop various segments of the textile value chain has presented the Indian Spinning Industry with opportunities to grow further.

During the year under review demand for textile machinery decelerated as the spinning sector - the key user of your Company’s products remained adversely impacted by factors such as:

- Fluctuation in raw material availability and price

- Overall sentiment of financial institutions/banks for lending to spinning sector had remained negative for major part of the year under review. However this perception has undergone a marginal positive change towards the close of the financial year.

- Yarn exports have reduced consequent to a fall in China''s demand for the commodity.

Despite this aberration, the government’s thrust on strengthening the growth momentum of the textile industry remained unwavering primarily due to the sector’s role in contributing to economic growth and providing employment. The Government has taken important steps in this direction like:

- The government has notified the Amended Technology Up gradation Fund Scheme (A-TUFS) to provide a one-time capital subsidy for investments in employment-and technology intensive segments of the textile sector, a move aimed at promoting exports and import substitution.

-A ''6,000-crore special package for textiles and apparel sector was rolled out in June 2016, which is expected to create one crore new jobs in three years, attract investments of US$11 billion and generate US$30 billion in exports.

In addition, the Government is working on unveiling the National Textile Policy in the FY18. The policy aims to achieve US$300 billion (over Rs,20 Lakh crore) worth of textile exports by 2024-25 and create an additional 35 million jobs. This policy holds the potential to infuse fresh momentum into the sector as it could make Indian garments more competitive in international markets by reducing the cost of production.

These measures are expected to catalyze investment across the textile value chain cascading to an increase in demand for textile spinning machinery.

As a de-risking initiative, the Company remains focused on widening its global presence by strengthening its presence in existing geographies and entering new textile hubs across the world.

Internally the Company has undertaken various measures aimed at boosting productivity and controlling overall cost. These initiatives would enable the Company to respond positively to any developing market opportunity.

MACHINE TOOL DIVISION

Turnover of the Machine Tool Division during the year under review was ''31,885.59 Lakhs as against ''21,553.94 Lakhs recorded during the last year showing an increase of 48% over the previous year.

Factory output improved significantly owing to improved systems and processes aligned to global-best practices. The Company partnered with renowned Japanese consultants for system and process realignment which improved the accuracy and efficiency of mother machines. In addition, the Company worked on improving assembling efficiencies by implementing solutions to the manufacturing excellence drive findings.

The Company launched new machines and variants which offer efficient and accurate operations to customers. The Company also launched machines targeting the tools and dies sector -widening its opportunity canvass.

The Government''s flagship programmes like Make in India, its thrust on raising India’s ranking in the World Bank’s Ease of Doing Business list and the increasing focus on localising defence equipment manufacture provide optimism for the healthy growth of the machine tool industry in India over the coming years.

The Company continues with its focus on Innovation and emulation/adoption of best of practices in manufacturing. This would enable this division to respond positively to any emerging opportunity.

FOUNDRY DIVISION

Foundry Division has achieved a turnover of Rs,5937.31 Lakhs as against Rs,7258.60 Lakhs recorded during the previous year showing a decrease of 18% over the previous year. The export turnover constitutes 24% of the division''s turnover.

During the year under review, the Company consolidated operations of its foundry units catering to its Textile Machinery Division. In addition to this, standard operating procedures aligned with global best-practices has been created, this is expected to facilitate increase in productivity, controlling costs, improving quality and reducing environment pollution. All of this is expected to enhance its global competitiveness.

The Government’s thrust on the infrastructure sector, the ‘Make in India’ initiative and increasing defense partnerships (leading to growing defence offset programmes), demand for castings is expected to increase over the coming years.

WIND ENERGY DIVISION

The Company has a policy of tapping non-conventional and renewable resources of energy namely wind power to meet with its energy requirements.

As on 31st March, 2017 the Company has installed 28 WEGs with a total capacity of 36.80 MW. This division has generated 937 Lakh units of power during 2016-17. About 88% of the wind power generated has been captively consumed by the manufacturing units within the Company and thereby helped to reduce the power cost.

ADVANCED TECHNOLOGY CENTRE

Advanced Technology Centre has achieved a turnover of Rs,1,430.23 Lakhs during the current financial year as against Rs,1,421.19 Lakhs achieved during the same period last year.

Job work income earned during the year amounted to Rs,1,264.87 Lakhs as against Rs,1,045.30 Lakhs during the same period last year.

The division has made significant progress in establishing its credibility in the global aerospace sector. Besides receiving prestigious orders from national and international aerospace OEMs, this division is also emerging as a key partner for OEMs in their future development plans. To strengthen business prospects, the Company is focusing on moving up the value-chain by graduating from components to sub-assemblies. The Company expects to generate increasing business as it focuses on increasing man-machine capabilities to widen its opportunity canvass.

REAL ESTATE ACTIVITY

The Elan Project at Parasakthi Nagar, Ganapathy, Coimbatore promoted by LMW in association with M/s Sobha Limited is progressing. Spread over 4.76 acres of land this project is for construction of 236 residential apartments consisting of 1 BHK,

2 BHK and 3 BHK. Your Company has a revenue share of 30% in the project. As on date about 67 units have been sold resulting in a revenue of Rs,1,141.89 Lakhs for the Company.

RESEARCH AND DEVELOPMENT

EXPORTS

During the year under review the Company has achieved an export turnover as indicated below: Rs, in Lakhs

Sl No

Division

FY 2016-17

FY 2015-16

1

Textile Machinery

32,623.80

52,932.65

2

CNC Machine Tools

96.09

184.23

3

Castings

1,508.04

1,436.71

4

Aerospace Parts

425.93

1,310.05

Total Exports

34,653.86

55,863.64

Export of Textile Machinery as stated above includes exports worth Rs,2,130.08 Lakhs made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co., Ltd, China. Amongst other countries, the Company''s products are primarily exported to Turkey, Bangladesh, Pakistan, Nepal, Indonesia, Vietnam and China.

The Research and Development efforts of the Company are focused on:

1. Developing eco-friendly, sustainable, energy efficient, low carbon foot print technology.

2. Developing technology for production of innovative machinery.

3. Developing end-products at optimal cost.

Separate Research and Development units have been established for the development of Textile Machinery and CNC Machine Tools. Both these facilities have been recognized by the Department of Science and Technology, Government of India as in-house R&D facilities.

During the year under review the Company has filed applications for 5 new patents.

AWARDS

During the year 2016-17 the Company has bagged the following Awards:

1. Star Performer Award for the year 2014-15 at the 47th EEPC India National Award.

2. Star Performer Award for the year 2015-16 at the 48th EEPC India National Award.

3. TMMA’s APEX Export Award for Textile Machinery & Parts during 2015-16.

INDUSTRIAL RELATIONS

Relationship with employees was cordial throughout the year. SUBSIDIARY COMPANY

LMW TEXTILE MACHINERY (SUZHOU) CO. LTD. (LMWTMSCL)

The turnover of the Company during the year under review was Rs,8,803.43 Lakhs as against Rs,16,150.09 Lakhs achieved during the previous year. During the year the Company has incurred a net loss of Rs,703.49 Lakhs (Previous Year Profit: Rs,640.72 Lakhs).

The consolidated financial statements incorporating the financial statements of the wholly owned subsidiary company is attached to the annual report as required under the Accounting Standard and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The standalone Annual financial Statements of the wholly owned subsidiary is posted in the Company''s website www.lakshmimach.com.

2. Extracts of Annual Return

As per the requirements of the Companies Act, 2013, the extract of annual return in the prescribed Form MGT 9 is annexed hereto as Annexure 1 forming part of the report.

3. Number of Meetings of the Board

Details of number of meetings of Board of Directors and committees thereof and the attendance of the Directors in such meetings are provided under the Corporate Governance Report.

4. Directors'' Responsibility Statement

The Directors'', based on representation received from the Operating Management, confirm that:

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

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

c. have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. have prepared the annual accounts on a going concern basis; and

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

f. have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

5. Nomination and Remuneration Committee and Policy

Nomination and Remuneration Committee of Directors has been formed consisting of:

1. Justice Smt Chitra Venkataraman (Retd.), Chairperson (Non Executive — Independent)

2. Sri S. Pathy, Member (Non-Executive — Non-Independent)

3. Sri Basavaraju, Member (Non-Executive — Independent)

The said committee has been empowered and authorized to exercise power as entrusted under the provisions of Section 178 of the Companies Act, 2013. The Company has a policy on Directors'' appointment and remuneration including criteria for determining qualification, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178. The Nomination and Remuneration Policy is available at Company website www.lakshmimach.com.

6. Declaration by Independent Directors

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to act as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

7. Explanation and Comments on Audit Report

The report of Statutory Auditors (appearing elsewhere in this Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure 2) are self-explanatory having no adverse comments. There were no instances of fraud reported by the Statutory Auditors to the Central Government or to the Audit Committee of the Company as indicated under the provisions of Section 143(12) of the Companies Act 2013.

8. Particulars of Loans/Guarantee/Investments

The Company has no Inter-Corporate Loans. The Company has extended a Bank Guarantee of USD 3.5 million to secure a loan to be availed by its wholly owned subsidiary company LMW Textile Machinery (Suzhou) Company Limited, China. Investments of the Company in the shares of other companies is provided under notes to Balance Sheet appearing elsewhere in this Annual Report. The Company has not accepted any Fixed Deposits.

9. Particulars of Contracts with Related Parties

All the transaction of the Company with related parties are at arms’ length and have taken place in the ordinary course of business. None of the related party transactions are material transactions.

10. Material Changes

There is no material change or commitments after closure of the financial year till the date of this report.

11. Buyback of Shares:

In terms of the Resolution passed by the Board of Directors at their meeting held on 26th October, 2016 and after receiving necessary comments from Securities and Exchange Board of India (SEBI) and after complying with necessary requirements, the offer of the Company to buyback 3,11,000 equity shares of face value of ''10/- each on a proportionate basis from all the existing shareholders/beneficiary owners excluding the promoter/promoter group at a price of ''4,450/- per equity share for an aggregate maximum amount of Rs,13,839.50 Lakhs remained open from 13th December, 2016 to 26th December, 2016. Shares offered in the buyback was more than the offer size and hence the Company bought back the intended 3,11,000 equity shares, which were extinguished on 6th January, 2017.

As a result the issued and paid-up share capital of the Company as on 31st March, 2017 reduced to 1,09,55,504 equity shares of Rs,10 each.

12. Conservation of Energy, Technology Absorption & Foreign Exchange

The disclosures under Rule 8(3) of Companies (Accounts) Rules, 2014 are as under:

STATEMENT FOR CONSERVATION OF ENERGY Sl No Particulars Related Disclosures

(A) Conservation of Energy

(i) the steps taken or impact on conservation of energy; Company has invested in energy conservation devices to save sources of energy; power as detailed in point (iii) below.

(ii) the steps taken by the Company for utilising alternate Company has installed windmills with a capacity of 36.80 MW. sources of energy Uses electricity generated in windmills for captive consumption.

(iii) the capital investment on energy conservation Investment during 2016-17 for replacement of furnace equipments transformers, harmonic filters, replacement with LED lighting

and merging of HT connections was Rs,223 Lakhs

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

(B1) Technology Absorption - Textile Machinery Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects and

specialisations and skill building exercises

2. In-depth IPR analysis and review

3. Theoretical simulation

(ii) Benefits derived like product improvement, cost Development of machinery with innovative features resulting reduction, product development or import substitution; in improved performance and cost effectiveness to end user.

Enhancement of overall knowledge base.

(iii) In case of imported technology (imported during the last NIL three years reckoned from the beginning of the financial year):

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology has been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;

(iv) Expenditure incurred on Research and Development Capital Expenditure: Rs, 359.44 Lakhs

Revenue Expenditure: '' 1,933.51 Lakhs Total Expenditure: '' 2,292.95 Lakhs

(B2) Technology Absorption - Machine Tool Division

(i) Efforts made towards technology absorption; 1. Technical guest lectures in various subjects and specializations and skill building exercises

2. In-depth IPR analysis and review

3. Theoretical simulation

(ii) Benefits derived like product improvement, cost Product improvement: reduction, product development or import substitution; Measures like coolant through Spindle feature, direct drive spindle motor system, increased compactness of machine for space saving. Cost reduction:

Indigenization of Components and sub-assemblies, standardization of LM guides, ball screws, spindle and axis bearings.

Product development:

2 Machining Centres and 2 Turning Centre’s are under development.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

(a) the details of technology imported; Design & Drawing of LH63 Horizontal machining center from

PROTIDEA - Italy

(b) the year of import; 2013-14

(c) whether the technology has been fully absorbed; Yes

(d) if not fully absorbed, areas where absorption has not Not applicable taken place, and the reasons thereof;

(iv) Expenditure incurred on Research and Development Capital Expenditure: Nil

Revenue Expenditure: Rs,224.56 Lakhs Total Expenditure: Rs,224.56 Lakhs

13. Risk Management

The Company follows a comprehensive and integrated risk appraisal, mitigation and management process. The identified elements of Risk and Risk Mitigation measures are periodically reviewed and revised by the Board of Directors.

14. Corporate Social Responsibility (CSR)

The Company has constituted a CSR committee of Board of Directors and has adopted a CSR Policy. The same is posted in the Company''s website www.lakshmimach.com. A report in prescribed format detailing the CSR spent for the year 2016-17 is attached herewith as Annexure 3 and forms part of this report.

15. Evaluation of Board''s Performance

On the advice of the Board of Directors, the Nomination and Remuneration Committee of Board of Directors of the Company have formulated the criteria for the evaluation of the performance of each individual Director, Board of Directors'', Committees of the Board, Independent Directors, Non-Independent Directors and the Chairman of the Board based on the criteria of evaluation as specified by SEBI Circular SEBI/ HO/CFD/CMD/CIR/P/2017/004 dated 5th January, 2017. Based on this revised criteria the performance evaluation process has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose on 6th February,

2017. All the results of evaluation has been communicated to the Chairman of the Board of Directors.

16. Additional Information

As per Rule 8(5) of the Companies (Accounts) Rule, 2014, the following additional information is provided:

(i) The financial summary or highlights The financial highlights including State of Affairs of the

Company, Dividend and Reserve have been provided in this report

(ii) The change in the nature of business, if any There is no change in the business line of the Company.

(iii) The details of Directors or key managerial personnel who Sri Arun Alagappan (DIN:00291361) was appointed as Additional were appointed or have resigned during the year Director of the Company by the Board of Directors at their meeting held on 26th October, 2016, to hold office until the conclusion of the Annual General Meeting to be held on 7th August, 2017. If approved by the shareholders at this meeting Sri Arun Alagappan will be appointed to the office of Independent Director of the Company for a fixed term of 5 years commencing from 26th October, 2016.

Sri C R Shivkumaran was appointed as the Company Secretary of the Company with effect from 4th November, 2016 by the Board of Directors at their meeting held on 26th October, 2016 consequent to the superannuation of Sri K Duraisami.

(iv) The names of companies which have become or ceased to None be its Subsidiaries, joint ventures or associate companies during the year

(v) The details relating to deposits, covered under Chapter V The Company has not accepted deposits of the Act

(vi) The details of deposits which are not in compliance with Not Applicable the requirements of Chapter V of the Act.

(vii) The details of significant and material orders passed by Nil the regulators or courts or tribunals impacting the going concern status and company''s operations in future

(viii) The details in respect of adequacy of internal controls Procedures are set to detect and prevent frauds and to protect with reference to the Financial Statements. the organization’s resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or Intellectual property such as trademarks). The financial statements are prepared in accordance with the Indian Accounting Standards issued by the Institute of Chartered Accountants of India.

17. Re-appointment of retiring Directors:

Sri. V. Sathyakumar (DIN: 06477636), Nominee Director of LIC, who retires by rotation at the ensuing Annual General Meeting, being eligible offers himself for reappointment. The Board recommends his reappointment in the forthcoming Annual General Meeting.

Sri Arun Alagappan (DIN: 00291361) was appointed as Additional Director (Independent) by the Board of Directors on 26th October, 2016 to hold office upto the next Annual General Meeting. A notice has been received along with the requisite deposit of ''1,00,000/- from a member signifying his intention to propose the candidature of Sri Arun Alagappan for the office of Independent Director of the Company for a period of five years commencing from 26th October, 2016. A resolution is being moved at the ensuing Annual General Meeting for his appointment as Independent Director.

18. Composition of Audit Committee

The Audit Committee was formed by the Board of Directors and it consists of:

1. Dr. Mukund Govind Rajan, Chairman (Non-Executive — Independent)

2. Sri Aditya Himatsingka, Member (Non-Executive — Independent)

3. Sri Basavaraju, Member (Non-Executive — Independent)

The Board has accepted the recommendations of the committee and there were no incidences of deviation from such recommendations during the financial year under review. The Company has devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section 177(10) of the Companies Act, 2013 and details thereof is available on the Company''s website at www.lakshmimach.com During the year under review, there were no complaints received under this mechanism.

As per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has constituted an Internal Complaints Committee. During the year 2016-17, no complaint was received by the committee.

19. Listing of Shares

The shares of the Company are listed in Bombay Stock Exchange Limited, Mumbai and the National Stock Exchange of India Limited, Mumbai. Applicable listing fees have been paid up to date. The shares of the Company have not been suspended from trading at any time during the year by the concerned Stock Exchanges.

20. Report of Statutory Auditors on compliance of conditions of Corporate Governance

A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report as Annexure 4 and forms a part of the report.

21. Overall Maximum Remuneration

Particulars pursuant to Section 197(12) and rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules:

a) The ratio of the remuneration of each Director to the median employee''s remuneration for the financial year and such other details as prescribed is as given below:

Director

Category

Ratio

Sri Sanjay Jayavarthanavelu

Executive — Chairman and Managing Director

141.55:1

Sri S Pathy

Non-Executive — Non-Independent

0.92:1

Sri Basavaraju

Non-Executive - Independent

0.92:1

Sri Aditya Himatsingka

Non-Executive - Independent

0.92:1

Dr. Mukund Govind Rajan

Non-Executive - Independent

0.92:1

Sri V Sathyakumar1

Non-Executive — Non-Independent, Nominee of LIC

0.92:1

Justice (Smt) Chitra Venkataraman (Retd)

Non-Executive — Independent

0.92:1

Sri Arun Alagappan2

Non-Executive - Independent

0.40:1

Sri R Rajendran3

Non-Executive - Non Independent

0.32:1

Note: For this purpose, Sitting fees paid to the Directors has not been considered as remuneration ''Amount paid to Life Insurance Corporation of India.

2Sri Arun Alagappan - From 26.10.2016 to 31.03.2017 3Sri R Rajendran - From 01.04.2016 to 05.08.2016

b) The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary in the financial year:

Director

Category

% Increase

Sri Sanjay Jayavarthanavelu

Executive — Chairman and Managing Director

-14.53

Sri S Pathy

Non-Executive — Non-Independent

-

Sri Basavaraju

Non-Executive - Independent

-

Sri Aditya Himatsingka

Non-Executive - Independent

-

Dr. Mukund Govind Rajan

Non-Executive - Independent

-

Sri V Sathyakumar1

Non-Executive — Non-Independent, Nominee of LIC

-

Justice (Smt) Chitra Venkataraman (Retd)

Non-Executive — Independent

-

Sri Arun Alagappan2

Non-Executive - Independent

NA

Sri R Rajendran3

Non-Executive - Non Independent

NA

Sri C B Chandrasekar4

Chief Financial Officer

NA

Sri C R Shivkumaran5

Company Secretary

NA

Note: For this purpose, Sitting fees paid to the Directors has not been considered as remuneration.

1Amount paid to Life Insurance Corporation of India.

2Sri Arun Alagappan - From 26.10.2016 to 31.03.2017 3Sri R Rajendran - From 01.04.2016 to 05.08.2016

4Sri C B Chandrasekar- Chief Financial Officer for part of the financial year 2015-16, hence not comparable 5Sri C R Shivkumaran - Appointed as Company Secretary with effect from 04.11.2016

c) The percentage increase in the median remuneration of employees in the financial year: 2.38%

d) The number of permanent employees on the rolls of company: 3,400

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:

The increase in remuneration is 1.21% for employees other than Managerial Personnel and KMP while it has decreased by 13.37% for Managerial Personnel including KMP.

f) Affirmation that the remuneration is as per the remuneration policy of the Company:

Yes.

g) Particulars of Employees as per [Rule 5(2) and Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel Rules), 2014]:

Particulars of Employees whose salary is not less than Rupees One Crore and Two Lakhs:

Table 1:

Name (Age in Years)

Designation

Gross

Remuneration Paid (in '')

Qualification

Date of commencement of employment (experience in Years)

Previous

Employment

Sri Sanjay Jayavarthanavelu (48 years)*

Chairman and

Managing

Director

7,68,99,813

MBA

3rd June, 1994 (22 years)

-

Particulars of Top Ten employees in terms of remuneration drawn: Table 2:

Name (Age in Years)

Designation

Gross

Remuneration Paid (in '')

Qualification

Date of

commencement of employment (experience in Years)

Previous

Employment

Sri K Soundhar Rajhan (68 years)

President - MTD, Foundry and ATC

70,12,020

B.Sc.,

9th July, 1973 (43 years)

The Kovilpatti Lakshmi Roller Flour Mills Limited

Sri N Krishna Kumar (59 years)

Senior Vice President - Manufacturing, TMD

58,05,624

BE.,ME.,

1st July, 1983 (33 years)

-

Sri V Venugopal (59 years)

Senior Vice President - TQM

57,12,957

BE., ME., MBA., MS.,

5th August, 1981 (35 years)

-

Sri C B Chandrasekar (58 years)

Chief Financial Officer

47,56,412

BCom., ACS., ACMA.,

3rd April, 1992 (25 years)

Elgi Equipments Limited

Sri V Vijayasekaran (52 years)

Senior General Manager - Operations, ATC

37,68,420

BE., ME.

5th February, 2010 (7 years)

Trusted Aerospace Private Limited

Sri P Ananthan (48 years)

Senior General Manager - SCM (MTD, Foundry and ATC)

35,95,694

BE.,

17th August, 1989 (27 years)

-

Sri C Arunachalam (52 years)

Senior General Manager - Sales Global, TMD

35,07,149

B. Tech., MBA.,

3rd February, 1992 (25 years)

J K Synthetics Limited

Sri V Senthil (38 years)

Senior General Manager - Finance

34,55,913

BCom., ACA.,

23rd January, 2015 (2 years)

LMW Textile Machinery (Suzhou) Company Limited

Sri T Sundaram (56 years)

Senior General Manager - SCM, TMD

34,50,174

DME., BE., PGDC., MS.,

18th July, 1980 (36 years)

-

Sri Indraneel Bhattacharya (52 years)

Senior General Manager - Marketing & Sales, MTD

34,50,174

DME.,

8th February, 1993 (24 years)

Batliboi & Company Limited

Sri G Rajeswaran (56 years)

Senior General Manager - SCM, TMD

34,50,174

DME., BE.,

1st July, 1997 (19 years)

Lakshmi Precision Tools Limited

Sri G Mani (62 years)

Senior General Manager - Global Services

33,98,063

DME., BE.,

1st July, 1975 (41 years)

-

Notes for Table 1 & 2:

1. The remuneration includes Company''s contribution to provident fund, gratuity and perquisites.

2. *Employment is contractual.

3. No employee is relative (in terms of the Companies Act, 2013) of any Director of the Company. Further no employee of the Company is covered by the Rule 5(2)(iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014, that is employee, holding by himself or with his family, shares of 2% or more in the Company and drawing remuneration in excess of the Chairman a Managing Director.

4. The remuneration details are for the year 2016-17 and all other particulars are as on 31st March, 2017.

22. Comments U/S 232(2)(c) and Schedule V Part II Section II

Since the Company does not belong to the specified class of the companies, the above cited provisions of the Companies Act, 2013 is not applicable to the Company.

23. Corporate Governance:

As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided elsewhere in this Report. A certificate confirming the compliance of conditions of Corporate Governance issued by the Statutory Auditors of the Company is attached hereto as Annexure 4 and forms part of this report.

24. Auditors Statutory Auditors

One of the Company’s Joint Auditors M/s. Subbachar & Srinivasan, Chartered Accountants, Coimbatore hold office till the conclusion of the ensuing Annual General Meeting to be held on 7th August, 2017. M/s. Subbachar & Srinivasan will retire at the ensuing AGM.

M/s S. Krishnamoorthy & Co. Chartered Accountants, with Sri.

K. Raghu as signing Partner was appointed as Auditors of the Company from the financial year 2016-17 at the AGM held during 2016 for a term of five financial years commencing from 2016-17 to 2020-21 and to hold office till conclusion of AGM to be held in 2020-21. M/s. Krishnamoorthy & Co., Chartered Accountants, Coimbatore, with Sri. K. Raghu as signing partner have consented and confirmed their eligibility and desire to continue as Statutory Auditors of the Company for the Financial Year 2017-18 subject to ratification by the shareholders at the ensuing AGM.

Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Directors, on the recommendation of the Audit Committee have appointed Sri A. N. Raman, Practicing Cost and Management Accountant, as the Cost Auditor of the Company for the financial year 2017-18.

Secretarial Auditor

Pursuant to 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/s. MDS Associates, Coimbatore, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2017-18.

25. Business Responsibility Report

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for the top 500 listed entities based on market capitalization. In compliance with the regulation the BRR is enclosed as Annexure 5 and forms part of the Annual Report.

26. Acknowledgements

Your Directors thank all customers'' for their continued support and patronage.

The Directors also thank the Company''s Bankers, Selling Agents, Vendors, Central and State Governments for their valuable assistance.

The Directors wish to place on record their appreciation for the cooperation and contribution made by the employees at all levels towards the progress of the Company.

On behalf of the Board

Sanjay Jayavarthanavelu

Place: Coimbatore Chairman and Managing Director

Date: 22nd May, 2017 (DIN No. 00004505)


Mar 31, 2014

Dear Members,

The Company enjoys the support of committed and well satisfied human capital. Compensation packages offered by the Company, best of class methods in Recruitment, Training, Motivation, and Performance Appraisal, attract and retain the best in talent. These practices enable the Company to keep the attrition rate well below the industry average. The Balanced Scorecard System is in place and it measures the performance of every employee. The Company had 3,495 employees at the end of the financial year as on 31 st March, 2014.

Financial Performance (Rs. in Lakhs)

Particulars 2013-14 2012-13

Gross profit before interest, depreciation, tax 36,313.30 28,841.03

Interest 0.00 0.00

Depreciation 10,251.22 11,772.06

Provision for Taxation 7,692.84 5,321.02

Net profit 18,369.24 11,747.95

Earnings per share (Amout in Rs.) 163.04 104.27

Your Directors have pleasure in presenting the Annual Report together with the audited accounts of your Company for the financial year ended 31st March, 2014.

Financial Results Rs. in Lakhs

2013-14 2012-13

Gross Profit 36,313.30 28,841.03

Depreciation 10,251.22 11,772.06

Prof it Before Tax 26,062.08 17,068.97

Provision for Income Tax - Current Tax 8,794.70 6,000.00

- Deferred Tax (Net) (1,025.76) (1,181.98)

- Prior year taxes paid (76.10) 503.00

Prof it After Tax 18,369.24 11,747.95

(Add)/Less: Investment Fluctuation Reserve (1,556.75) 144.94

Balance brought forward 88,465.08 80,698.32

BALANCE AVAILABLE FOR APPROPRIATION 1,08,391.07 92,301.33

APPROPRIATIONS:

Proposed dividend 3,379.95 2,253.30

Dividend Tax 574.42 382.95

Transfer to General Reserve 1,850.00 1,200.00

Surplus carried to Balance Sheet 1,02,586.70 88,465.08

TOTAL 1,08,391.07 92,301.33

Dividend

Your Directors have recommended payment of a dividend of Rs.30/- per equity share of Rs.10 each (300 %) for the financial year 2013-14 on the equity share capital of Rs.11,26,65,040 amounting to Rs.3,379.95 Lakhs and to pay a Dividend Tax of Rs.574.42 Lakhs.

The dividend, if approved by the shareholders, will be paid to those members or their mandates whose name appear on the Register of Members on 6th August, 2014 for those holding shares on physical form and for those holding shares on dematerialised form dividend will be paid as per the details of beneficial ownership furnished by the depositories, as at the end of business hours on 31st July, 2014.

Operations

During the year under review, your Company has recorded a turnover of ^2,16,518.1 5 Lakhs (2012-13: Rs.1,86,432.75 Lakhs) resulting in a Net Profit of Rs.26,062.08 Lakhs before tax (2012-13: Rs.17,068.97 Lakhs).

Increase in demand for textile machinery in domestic and international markets, stability in commodity prices, favourable foreign exchange rates and other input costs have contributed to the increased turnover and profits respectively.

Textile Machinery Division

The Textile Machinery division of your Company during 2013-14 has recorded a turnover of n,92,941.08 Lakhs as against Rs.1,62,879.57 Lakhs achieved during the previous year. The turnover for the current year marks an increase of 18.46% over the previous year.

After minimal growth during the previous year, 2013-14 saw demand increase for Indian textile products from traditional markets abroad and for high quality Indian yarn from China. During the same period increased domestic consumption of textile products within India was also seen. All of these factors have revived the fortunes of the Indian textile and apparel industry during 2013-14.

India''s globalising textile trade has now exposed the industry to competition wherein manufacturers have to ensure quality and also be cost competitive in the final product that they deliver to the end user. This has made the Indian textile industry to embrace technology and modernise. The drive towards modernization has also invariably helped Indian spinners to develop capacities that are agile to varying market demands.

On the other hand, proactive government initiatives to boost the textile

sector like extension of TUFS during the 12th Five Year Plan Period (2012- 2017), initiatives to optimise the operational costs of textile industry, rationalization of taxes on textile products, allocation of funds for setting up of 21 additional integrated textile parks, etc., have led to the onset of a right kind of atmosphere needed for the industry to modernise rapidly.

Globally the demand for niche textile products like functional clothing is picking up rapidly. India is already a big player in production of conventional yarn and currently the shift is also happening rapidly towards the setting up of capacities to offer niche products. This is expected to spur further modernization and capacity building.

India''s growing population has been a key driver of textile consumption growth in the country. Changing lifestyle, rising incomes and increasing demand for quality products are set to fuel the demand for apparel.

All of these developments augur well for the Textile Machinery Division of your Company. Augmentation of internal capacity through initiatives under the Accelerated Competency for Manufacturing Excellence Programme (ACME) has helped this division to free up capacity, minimise waste and re-focus its efforts on core strength.

Machine Tool Division

Turnover of the Machine Tool Division during the year under review is Rs.16,376.91 Lakhs as against Rs.14,442.64 recorded during the last year. The turnover of the Machine Tool Division has registered an increase of 13.39% over the previous year.

The Machine Tool industry globally is moving towards provision of machinery with increased automation. Demand for machine tools in India comes from industries such as automobiles, consumer durables, aerospace, defence, power and power transmission, oil & gas, infrastructure etc. Machine tool manufacturers have started to develop capabilities to cater to this demand.

During the year under review your Company has launched several new machines/variants of existing machinery like Special Pickup Spindle VTL; LVS-25 besides other tooled up and automated solutions. This has enabled your Company to grow positively in the market that otherwise faced a downward trend.

With the expected revival of economic activity in India during 2014- 15, the demand for modern machine tools is expected to pick up considerably. Over the years the Machine Tool Division of your Company has strategically invested in modernizing its capacity and capability. This will enable this division to cater to any demand that may arise in future.

Implementation of ACME initiatives has enabled this division to further free up capacity and eliminate waste.

Foundry Division

Your Company''s Foundry Division is catering to the internal casting requirements of the Textile and Machine Tool Divisions while a portion of the capacity is utilised for booking outside orders. This has resulted in a turnover of Rs.6,726.76 Lakhs as against Rs.9,053.32 Lakhs recorded during

the previous year showing a decrease of 25.70% over the previous year. The export turnover constitutes 60.33% of the division''s turnover.

The foundry industry is closely tied in with the performance of the infrastructure industry across the globe. Reduction in this division''s turnover is reflective of economic slowdown in India and of sluggish economic activity in North America and Europe.

Government plans to boost infrastructure spending across India during 2014-15 is expected to revive the fortunes of this industry. Certain bottlenecks like non-availability of quality iron ore in adequate quantity, disruption in power supply etc. have to be removed to make the Indian Foundry Industry cost competitive.

Your Company''s foundry division meanwhile has focused its efforts on identifying and eliminating wastethrough theACME programme. These measures will contribute further towards product cost competitiveness.

Advanced Technology Centre

This division has achieved a turnover of Rs.473.40 Lakhs during 2013- 14 as against the turnover of Rs.57.21 Lakhs during the previous year. Being the second year of commercial operation this division has shown a good improvement. This division has received orders from leading international Tier II aerospace product suppliers from USA, France, Canada and Netherlands.

To meet with the increasing requirements, necessary facilities have been established for special chemical milling process, non-conventional machining operation which is used mainly in manufacture of aircraft wings and outer structures. In India, next to HAL, LMW is the only Company to have such a facility.

This division has received suitable quality certification to enable it to qualify for supplying to international orders. With the civil aviation industry expected to expand rapidly in future, this division is well placed to capitalise on market opportunities.

Wind Energy Division

As responsible Corporate citizen, your Company continues to tap the non- conventional and renewable resources of energy namely Wind Power. In an era of acute power shortage, wind energy occupies the center stage in the energy policy of your Company. So far your Company has installed 28 wind mills with a total installed capacity of 36.85 MW. During the year under review the division has generated 855 lakh units as against 945 lakh units generated last year.

Real Estate Activity

During the year under review your Company has entered into a joint development agreement with M/s Sobha Developers Limited for construction of residential apartments. The project is named as ''Elan'' and is situated at Parasakthinagar, Ganapathy, Coimbatore. The project is spread over 4.76 acres of land for construction of 236 residential apartments consisting of 1 BHK, 2 BHK&3 BHK. The project is estimated to be completed by 2016.

Exports

Your Company''s efforts to increase exports has yielded good results during 2013-14. During the year under review, your Company has achieved an export turnover of Rs.47,559.06 Lakhs as against Rs.23,111.33 Lakhs made during the year 2012-13. The details are as below.

(Rs. in Lakhs)

SNo: DIVISIONS FY20I3-I4 FY2012-13

1. Textile Machinery* 43,001.24 16,531.50

2. CNC Machine Tools 26.23 -

3. Castings 4,058.19 6,522.62

4. Aerospace Parts 473.40 57.21

Total Exports 47,559.06 23,111.33

* Exports of Textile Machinery as stated above includes exports worth Rs.4,738.24 Lakhs made to the wholly owned subsidiary LMW Textile Machinery (Suzhou) Co., Ltd, China.

Your Company has opened non trading liaison offices in Bangladesh, Vietnam, Indonesia and Turkey and has appointed agents for export of machinery and castings. Our new products are well received in these markets .Our export volume and also our market share in these countries has also increased. It is expected that the export front will do better in the years to come.

Research and Development

Your Company''s research and development activities are tuned to:

1. Develop eco-friendly, sustainable, energy efficient, low carbon foot print technologies,

2. Development of technologies for production of innovative machinery, and

3. Development of machines at affordable cost.

To achieve this separate R&D units have been established for the development of textile machinery and CNC Machine Tools. Both the R&D facilities have been recognised by the Department of Science and Technology, Government of India as in-house R&D facilities.

During the year under review your Company has filed applications for 5 new patents and one design registration.

Awards

During 2013-14 your Company has bagged the following Awards:

1) R&D Awards for the year 2012-13 given by Textile Machinery Manufacturers Association.

2) Central Excise Award for making the highest payment of excise duty and service tax in Coimbatore and an award for being the leading exporter in Coimbatore for the year 2013-14.

Directorate

Sri V.Sathya Kumar.Nominee Director of LIC is liable to retire by rotation at the ensuing Annual General Meeting, being eligible, offers himself for reappointment .

In order to com ply with the provisions of Section 149 read with Schedule IV of the Companies Act, 2013 and Clause 49 of the Listing Agreements entered into with Stock Exchanges Sri MV Subbiah, Sri Basavaraju,

Sri Aditya Himatsingka and Dr Mukund Govind Rajan are proposed to be appointed as Independent Directors. The said Directors have consented to act as independent Directors and in respect of whom nominations with required deposit have been received from members.

A brief profile of the Director retiring by rotation and seeking re- election, to be provided as per Clause-49 of the Listing Agreement is annexed to the Notice of Annual General Meeting.

Industrial Relations

Relationship with employees remained cordial throughout the year.

Wholly Owned Subsidiary Company

LMW TEXTILE MACHINERY (SUZHOU) CO.LTD. (LMWTMSCL)

Turnover of the Company during the year under review was Rs.14,340.86 Lakhs as against Rs.15,285.93 Lakhs during the previous year. During the year under review this Company has earned a net profit of Rs.998.79 Lakhs (Previous Year :Rs.1,315.06 Lakhs).

The consolidated financial results incorporating the financial statements of the above subsidiary company is attached to the Annual Report as required under the Accounting Standard and the Listing Agreement.

Fixed Deposits

The Company has not accepted any fixed deposits.

Listing

Your Company''s shares are listed in Madras Stock Exchange Limited, Chennai, Bombay Stock Exchange Limited, Mumbai and the National Stock Exchange of India Limited, Mumbai. Respective listing fees for the above Stock Exchanges up to the year 2014-1 5 have been paid.

Auditors

The retiring Auditors M/s M S Jagannathan & Visvanathan and M/s Subbachar & Srinivasan, Joint Auditors of the Company, being eligible

for reappointment, have consented to act as Joint Auditors of the I Company if appointed and necessary certificate pursuant to Section 139 of the Companies Act, 2013 has been received from them.

Information Pursuant to Section 217 of the Companies Act, 1956.

Information in accordance with Clause(e) of sub-section 217 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 Director''s Report for the year ended 31st March, 2014 is given in Annexure-I of this Report.

Information in accordance with Sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of Directors'' Report for the year ended 31st March, 2014 is given in Annexure - II of this Report.

Additional Disclosures

Management Discussion and Analysis Report, Corporate Governance Report, Segment Report and Related Party Disclosures are provided elsewhere in the Annual Report and forms a part of this Report as required under the Listing Agreement entered into with the Stock Exchanges.

Directors'' Responsibility Statement

In compliance of Section-217(2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

-All applicableAccounting Standards have been followed in preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Annual Accounts of your Company have been prepared on a going concern basis.

General

Your Directors thank the customers'' for their continued support and patronage.

Your Directors also thank the Company''s bankers, Selling Agents, vendors, Central and State Government for their valuable assistance.

Your Directors wish to place on record their appreciation for the co- operation and contribution made by the employees at all levels towards the progress of the Company.

On Behalf of the Board

Place: Coimbatore Sanjay Jayavarthanavelu

Date : 23rd May, 2014 Chairman And Managing Director


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting the Annual Report together with the audited accounts of your Company for the financial year ended 31st March, 2013.

FINANCIAL RESULTS Rs.in Lakhs

2012-13 2011-12

Gross Profit 28,841.03 33,734.69

Depreciation 11,772.06 11,395.29

Profit Before Tax 17,068.97 22,339.40

Provision for Income Tax - Current Tax 6,000.00 7,500.00

- Deferred Tax (Net) (1,181.98) (473.36)

- Prior year taxes paid 503.00 1,611.00

Profit After Tax 11,747.95 13,701.76

(Add)/Less : Investment Fluctuation Reserve 144.94 2,004.53

Balance brought forward 80,698.32 76,948.20

BALANCE AVAILABLE FOR APPROPRIATION 92,301.33 88,645.43

APPROPRIATIONS:

Proposed dividend 2,253.30 5,633.26

Dividend Tax 382.95 913.85

Transfer to General Reserve 1,200.00 1,400.00

Surplus carried to Balance Sheet 88,465.08 80,698.32

TOTAL 92,301.33 88,645.43

Note: The figures for the year 2012-13 in this report are inclusive of the operations of LMW Machinery Limited merged with the Company effective from 01.04.2012. Hence the figures of 2012-13 and 2011-12 are not strictly comparable.

DIVIDEND

Your Directors have recommended payment of a dividend of Rs.20/- per equity share of Rs.10 each (200 %) for the financial year 2012-13 on the equity share capital of Rs.11,26,65,040 amounting to Rs.2253.30 lakhs and to pay a Dividend Tax of Rs.382.95 lakhs.

The dividend, if approved by the shareholders, will be paid to those members or their mandates whose name appear on the Register of Members on 5th August, 2013 for those holding shares in physical form and for those holding shares in dematerialised form dividend will be paid as per the details of beneficial ownership furnished by the depositories, as at the end of business hours on 31st July, 2013.

OPERATIONS

During the year under review, your Company has recorded a turnover of Rs.1,86,432.75 Lakhs (2011-12: Rs.2,07,249.19 Lakhs) resulting in a Net Profit of Rs.17,068.97 Lakhs before tax (2011-12: Rs.22,339.40 Lakhs).

During the year under review the turnover has decreased by 10.04% over the previous year and consequently the profit has decreased by 23.59%. Increase in commodity prices, power & fuel expenses and under absorption of fixed costs has affected the profitability.

TEXTILE MACHINERY DIVISION

The Textile Machinery Division of your Company, during the year under review, has recorded a turnover of Rs.1,62,879.57 Lakhs as against Rs.1,75,329.51 Lakhs achieved during previous year. This represents a decrease of 7.10% over the previous year.

The Indian Textile Industry has experienced difficult conditions during 2012-13. Traditional markets for Indian textiles namely, USA and Europe are yet to recover from the effects of global financial crisis. More worrying is the fact that these important markets show no signs of any improvement in their economic status despite economic stimulus measures. Within India, all round industrial slow down and a growing inflation has affected growth in domestic demand. Acute power shortage, non availability of trained manpower and lack of clarity in Government policies and support has added to further woes.

In view of the prevailing uncertainty, Textile mills in India and abroad preferred to defer their capacity addition/modernisation plans resulting in lower growth. High cost of self generated power, increase in commodity prices and under utilisation of capacity has contributed to the down trend.

However, the second half of the year under review witnessed an increased demand for yarn from China due to a change in the Yarn Import Policy of that country. As China meets with nearly 40% of the global garment requirements, exports of yarn from India are likely to increase in the near future. During the year despite the odds, stable cotton prices and increased yarn exports to china has improved the profitability of many textile mills in India.

The Union Budget for 2013-14 has given an impetus to the Indian Textile Industry in the form of continuation of the Technology Upgradation Fund Scheme during the 12th Five Year Plan period, removal of excise duty for readymade garments, sanction of additional funds for textile parks, extension of interest subvention schemes, inclusion of textiles under the Focus Product Scheme etc. These measures are expected to aid the recovery and growth of the Indian Textile Industry. Also it is encouraging to note that various State Governments in India have announced attractive schemes for establishment of Textile Spinning units as green field projects.

MACHINE TOOL DIVISION

During the year under review, this division has achieved a turnover of t14,442.64 Lakhs as against the turnover of t22,749.17 Lakhs recorded during the previous year showing a decrease of 36.51 % over last year.

Decline in turnover is due to the slowdown of industrial activity in the country particularly in the automotive, infrastructure, heavy engineering and construction industries. Competition from low cost unorganised Machine Tool manufacturers, import of second hand machinery and stiff competition from high tech overseas Machine Tool manufacturers have also led to a fall in volume.

During the year under review, this division has introduced 10 new machines/variants of the existing product range. New products were displayed at exhibitions like IMTEX-2013, Bangalore, AMTEX -13 New Delhi and ACMEE-13 at Chennai and were well received. It is expected that when economic activity picks up in India, demand for these new products alongwith existing products is set to increase.

FOUNDRY DIVISION

Foundry Division has achieved a turnover of t9,053.32 Lakhs as against t9,170.07 Lakhs recorded during the previous year showing a marginal decrease of 1.27% over the previous year. This Division has exported castings worth t6,522.62 Lakhs as against t5,247.70 Lakhs made during the previous year. The export turnover constitutes 72.05% of the division''s turnover. The growth in exports is mainly on account of growing demand for locomotive castings due to the growth of railway locomotive business in North America and Europe.

Commencement of infrastructure projects like metro rail in major cities of the country, constant growth of renewal energy segment, setting up of factories and/or International Procurement Offices (IPO) in India by MNCs manufacturing OE equipments, will give fillip to Foundry industry in India.

WIND ENERGY DIVISION

As a responsible corporate citizen, your Company continues to tap the non conventional and renewable resources of energy namely Wind Power. In an era of acute power shortage, wind energy occupies the centre stage in the energy policy of your Company. So far your Company has installed 28 wind mills with a total installed capacity of 36.80 MW. During the year under review this division has generated 945 lakh units as against 647 lakh units during the previous year.

ADVANCED TECHNOLOGY CENTRE

Your Company has established the Advanced Technology Centre to manufacture and supply high precision parts and components required for the Aerospace Industry. For this purpose, your Company has created infrastructure and capabilities that are accredited with the AS 9100 Rev B certification and the NADCAP approvals.

During the year under review this division has commenced commercial production and has achieved a maiden turnover of t57.21 Lakhs. Product supply agreements have been concluded with leading original equipment manufacturers / sourcing intermediaries. A number of products are currently under customer validation process. These products are expected to bring more volume of business for this division in the years to come.

REAL ESTATE ACTIVITY

Directorate of Town and Country Planning has already approved the Real Estate project of your Company. Now, few more approvals are awaited and on receipt of the same the real estate project will be launched at an appropriate time.

EXPORTS

During the year under review, your Company has achieved an export turnover as indicated below:

Export Rs. in Lakhs

Sl. No Division FY 2012-13 FY 2011-12

1 Textile Machinery * 16,531.50 26,876.87

2 CNC Machine Tools - 24.94

3 Castings 6,522.62 5,247.70

4 Aerospace Parts 57.21 0.44

Total Exports 23,111.33 32,149.95

*Export of Textile Machinery as stated above includes exports worth t5,282.01 Lakhs made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co., Ltd, China.

RESEARCH AND DEVELOPMENT

Your Company is well aware of the fact that it is operating in a buyers market. The R&D activities of your Company are tuned in to maximise customers'' profitability. Your Company makes use of Voice of Customer platform as the basis for R&D activity. The entire R&D effort within LMW is a consistent endeavour to offer world class products that are competitively priced.

Your Company has established separate R&D units for development of Textile Machinery and CNC Machine Tools. Both the R&D facilities have been recognised by the Department of Science and Technology, Government of India as in house R&D units. Besides in house efforts, your company also enters into agreement with renowned technology suppliers, developers / institutes across the world to upgrade / source contemporary / futuristic technology.

AWARDS

During the year 2012-13 your Company has bagged the following Awards:

1) Star Performer Award for 2011-12 from Engineering Export Promotion Council of India.

2) Apex Export Award from the Textile Machinery Manufacturers Association of India.

3) Award for Research and Development from Textile Machinery Manufacturers Association of India.

DIRECTORATE

Sri R Venkatrangappan, Non Executive Chairman has relinquished his office of Director and Chairman of Board of Directors in your Company with effect from 15th October, 2012.Board placed on record the services rendered by Sri R Venkatrangappan.

The Board of Directors at their meeting held on 29th October, 2012 has elected Sri Sanjay Jayavarthanavelu, Managing Director as Chairman of the Board of Directors and he was re-designated as Chairman and Managing Director of your Company.

Sri S Pathy and Sri Aditya Himatsingka, Directors are liable to retire by rotation at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment.

Sri R Satagopan, Director is also liable to retire by rotation at the ensuing Annual General Meeting, though eligible for re- appointment, he does not offer himself for re-appointment. Board placed on record the services rendered by Sri R Satagopan.

During the year under review, Life Insurance Corporation of India has withdrawn Sri Basavaraju from the Board of your Company and has nominated, in his place, Sri V Sathyakumar as its nominee.

The Board of Directors at their meeting held on 25th January, 2013 have appointed Sri Basavaraju (ex-Nominee Director of LIC) as Additional Director, considering his experience and expertise, to hold office up to the ensuing Annual General Meeting. A nomination has been received, under section 257 of the Companies Act, 1956 from one of the members of the Company, with requisite deposit, for the election of Sri Basavaraju as Director of the Company .

A brief profile of the Directors retiring by rotation and seeking re-election, to be provided as per Clause-49 of the Listing Agreement is annexed to the Notice of Annual General Meeting.

INDUSTRIAL RELATIONS

Relationship with employees remained cordial throughout the year.

MERGER OF LMW MACHINERY LIMITED

With the acquisition of the 50% stake held by Rieter Machine Works Limited in the erstwhile joint venture company Rieter- LMW Machinery Limited (RLM), RLM became a wholly owned subsidiary of your Company effective from 16th August, 2011. The name of the said company has been changed to "LMW Machinery Limited" (LMWML) with effect from 2nd September, 2011 and was functioning as a separate company. LMWML has surrendered its 100% EOU license and has filed an IEM to manufacture and sell textile machinery in India and abroad.

As LMW and LMWML were pursuing the same line of business Management felt that it was appropriate to merge LMWML with LMW to achieve synergy in operations and to reduce overhead expenses. A petition to this effect, was filed before the Hon''ble High Court of Judicature at Madras praying for the merger of LMWML with LMW. The Hon''ble High Court of Judicature at Madras by an order dated 26th April, 2013 under CP No:33/2013 has approved the merger of LMWML with LMW effective from 1st April, 2012.

The standalone financial statements of your Company for the year 2012-13 include the performance of the erstwhile LMWML also.

WHOLLY OWNED SUBSIDIARY COMPANY

LMW Textile Machinery (Suzhou) Co. Ltd. (LMWTMSCL)

The turnover of the company during the year under review was t15,285.93 Lakhs as against t15,860.53 Lakhs during the previous year. During the year under review this company has earned a net profit of 11,315.06 Lakhs (Previous Year : t93.51 Lakhs).

The consolidated financial results incorporating the financial statements of the above subsidiary company is attached to the annual report as required under the Accounting Standard and the Listing Agreement.

FIXED DEPOSITS

The Company has not accepted any fixed deposits.

LISTING

Your Company''s shares are listed in Madras Stock Exchange Limited, Chennai, Bombay Stock Exchange Limited, Mumbai and the National Stock Exchange of India Limited, Mumbai. The respective listing fees for the above Stock Exchanges up to the year 2013-14 have been paid.

AUDITORS

The retiring Auditors M/s M S Jagannathan & Visvanathan and M/s Subbachar & Srinivasan, Joint Auditors of the Company, being eligible for reappointment, have consented to act as Joint Auditors of the Company, if appointed and necessary certificate pursuant to Section 224(1B) of the Companies Act, 1956 has been received from them.

Sri A.N. Raman ,Practicing Cost and Management Accountant, Chennai has been appointed as Cost Auditor of the Company for the financial year 2013-14

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.

Information in accordance with Clause (e) of sub-section 217 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 Director''s Report for the year ended 31st March, 2013 is given in Annexure-I of this Report.

Information in accordance with Sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of Directors'' Report for the year ended 31st March, 2013 is given in Annexure - II of this Report.

ADDITIONAL DISCLOSURES

Management Discussion and Analysis Report, Corporate Governance Report, Segment Report and Related Party Disclosures are provided elsewhere in the Annual Report and forms a part of this Report as required under the Listing Agreement entered into with the Stock Exchanges.

DIRECTORS'' RESPONSIBILITY STATEMENT

In compliance of Section-217 (2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

- All applicable Accounting Standards have been followed in preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Annual Accounts of your Company have been prepared on a going concern basis.

GENERAL

Your Directors thank the customers'' for their continued support and patronage.

Your Directors also thank the Company''s Bankers and Selling Agents for their valuable assistance.

Your Directors wish to place on record their appreciation for the co-operation and contribution made by the employees at all levels towards the progress of the Company.

On Behalf of the Board

Place: Coimbatore Sanjay Jayavarthanavelu

Date : 22-May-2013 Chairman and Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the Annual Report together with the audited accounts of your Company for the financial year ended 31 st March, 2012.

Financial results Rs.in Lakhs

2011-12 2010-11

Gross Profit 33,734.69 34,195.06

Depreciation 11,395.29 10,410.84

Profit Before Tax 22,339.40 23,784.22

Provision for Income Tax - Current Tax 7,500.00 8,100.00

- Deferred Tax (473.36) (548.97)

- Prior year taxes paid 1,611.00 (364.78)

Profit After Tax 13,701.76 16,597.97

(Add)/Less: Investment Fluctuation Reserve 2,004.53 (255.89)

Balance brought forward 76,948.20 65,722.60

BALANCE AVAILABLE FOR APPROPRIATION 88,645.43 82,576.46 APPROPRIATIONS:

Proposed Dividend 5,633.25 3,379.95

Dividend Tax 913.85 548.31

Transfer to General Reserve 1,400.00 1,700.00

Surplus carried to Balance Sheet 80,698.33 76,948.20

TOTAL 88,645.43 82,576.46

Golden jubilee year

Your Company was incorporated on 14th September, 1962 and received the Certificate of Incorporation from the Registrar of Companies, Madras on that date. Your Company is commemorating the Golden Jubilee Year from 14th September, 2011.

Dividend

Your Directors have recommended payment of a normal dividend of Rs25 per share (250 %) for the financial year 2011 -12 and a Golden Jubilee year dividend of Rs25 per share (250%) in the aggregate Rs50 (500%) per equity share of Rs10 each on the equity share capital of Rs11,26,65,040 amounting to 56,33,25,200 and to pay a Dividend Tax of Rs9,13,85,431.

The dividend, if approved by the shareholders, will be paid to those members or their mandates whose name appear on the Register of Members on 6th August, 2012 for those holding shares on physical form and as per the details furnished by the depositories, for this purpose, as at the end of business hours on 31st July, 2012 for those holding shares on dematerialized form.

Operations

During the year under review, your Company has achieved a turnover of X2,07,249.19 Lakhs (2010 -11: Rs1,77,331.17 Lakhs) resulting in a Net Profit of Rs22,339.40 Lakhs before tax (2010-11: Rs23,784.22 Lakhs). During the year under review the turnover has increased by 16.87% over the previous year however the profit has decreased by 6.07%. In spite of rise in turnover, the increase in commodity prices, power and fuel expenses and depreciation of the Indian Rupee against US Dollar has impacted profitability.

Textile machinery division

The Textile Machinery Division of your Company, during the year under review, has recorded a turnover of Rs1,75,329.51 Lakhs as against Rs1,51,813.21 Lakhs achieved during the last year, recording an increase of 1 5.49% over the previous year.

The buoyancy in demand for Textile Machinery experienced during 2010-

11 has slowed down in 2011 -12. During the year under review the Indian Textile Industry was affected by external factors like the Euro Zone Crisis and concerns relating to low growth in demand from the US market. Demand generation in the domestic market too was affected by the uncertain economic environment. The high rate of inflation has eroded the disposable income and has hampered demand growth in the domestic market.

The Indian Textile Industry was also affected by volatile cotton prices; high cost of inventory carried forward, high interest rates, withdrawal of export incentives and levy of additional excise duty on readymade garments. The financial gains realized during 2010-11 were negated by the first quarter of 2011 -12. Imposition of restriction on the cotton yarn export and the high cost of working capital forced many mills to dump yarn, made out of expensive cotton, in the domestic market at very low prices resulting in huge losses. Many textile units also closed/suspended operations or experienced lower capacity utilization due to power shortage and issues relating to environmental concerns.

The uncertain and unpredictable Government policy on cotton and yarn export is posing a threat to the new entrants. It also made the existing players to defer their investment proposals for capacity expansion or modernization. Only large integrated textile companies who have sufficient internal accruals or arrangements with banks / financial institutions were able to proceed with their investment programmes.

The budget for the year 2012-13 too has failed to cheer the Indian textile industry, which has been bogged down by many issues. However, extension of relief for R&D activities and testing laboratories, exemption of expenditure on skill development in manufacturing sector, allocation of Rs1,000 crores for National Skill Development Programmes and allocation of Rs2,914 crores for TUF scheme were hailed as steps in the right direction.

In the current market scenario, your Company aims to strengthen the existing product lines by presenting new value added products with high level of automation. Despite stiff competition from multinational companies, your Company has retained its market position through its ability to provide comprehensive spinning solutions, prompt after-sale services and commitment to enhance the bottom line of its customers.

The step to allow 100% Foreign Direct Investment in textile sector and retail sector and the commitment to establish more textile parks by the government is expected to bring moderate growth in business to this division in the coming years.

Machine tool division

Turnover of the Machine Tool Division during the year under review was Rs22,749.17 Lakhs as against Rs18,434.52 Lakhs recorded during the last year showing an increase of 23.40% over the previous year.

Moderation in the growth of automobile and auto ancillary industry has not affected the demand for machine tools. The emerging demand from aerospace, defense, power, railway engineering, heavy engineering, infrastructure and construction has given a new lease of life to this division. Growth of unorganized manufacturers offering low cost machine tools, continuous expansion of capacity by the organized sector and the stiff competition from overseas machine tool manufacturers are throwing a challenge to this division. Improved and sustained efforts of your Company for enhancing the technological competencies and cost competitiveness are expected to yield good results in the near future.

Foundry division

Foundry division has achieved a turnover of Rs9,170.07 Lakhs as against Rs7,083.44 Lakhs recorded during the previous year showing an increase of 29% over the previous year. This division has exported castings worth Rs5,247.70 Lakhs as against Rs2,913.70 Lakhs made during the previous year. The export turnover constitutes 57% of the division's turnover. The growth in exports is mainly on account of growing demand for locomotive castings due to the growth of railway locomotive businesses in North America and Europe.

Your Company has installed additional high pressure molding lines, which would enable this division to take up the manufacture of large volume of small weight castings.

Though the products of this division are well accepted by the global market resulting in a good order book position, shortage of power, non- availability of trained workforce and other production constraints prevent this division from achieving full capacity utilization.

Wind energy division

During March 2012 your Company has installed five additional, high capacity Wind Energy Generators (WEG) with a total capacity of 8.85 MW at an investment of Rs6,007 Lakhs.

As on 31st March, 2012 your Company has installed 28 WEGs with a total capacity of 36.80 MW. This division has generated 647 lakh units of power during 2011 -12. The entire wind power generated has been captively consumed by the manufacturing units of your Company and thereby has helped to reduce the power cost.

Advanced technology centre

This division has been established to provide parts and components required for the aerospace industry. With this end in view, your Company has created world-class infrastructure. To ensure high precision and accuracy in quality your Company is aligned to the AS 9100 Rev B certified organization.

This division has commenced trial production and some of the products are in the process of validation at customers' end. Also, marketing arrangements have been entered with original equipment manufacturers as well. This is expected to bring more volume of business for this division in the near future.

Real estate activity

Your Company has received the DTCP approval for its maiden housing project to be undertaken in about five acres of land situated in Ganapathy, Coimbatore. It is proposed to commence the project during the current financial year.

Exports

During the year under review, your Company has achieved an export turnover as indicated below:

Export turnover Rs. in Lakhs

Si. Division FY 2011-12 FY 2010-11 Increase % No 1 Textile Machinery* 26,876.87 22,227.68 21

2 CNC Machine Tools 24.94 - 100

3 Castings 5,247.70 2,913.70 80

4 Aerospace Parts 0.44 - 100

Total Exports 32,149.95 25,141.38 -

* Export of Textile Machinery as stated above includes exports made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co., Ltd, China.

Research and development

Your Company views its customers as partners in business and does what it needs to enhance their competitive strength. The voice of the customer is actively pursued within R&D whereby customer requirements are actively blended into future product offering. It is also a consistent Endeavour on the part of your Company to offer solutions that offer value for money proposition to buyers. Your Company not only develops technology indigenously but also looks around to source technology that can further add value to customers. For design and development of high- tech machines your Company is associating with renowned institutes worldwide.

The R&D activities resulted in new products offered to the customer.

Awards

During the year 2011-12 your Company has bagged the following

Awards:

- Silver Shield for "Star Performer - Large Enterprise 2009-10 EEPC Regional Award" from Engineering Export Promotion Council for the highest exports.

- Apex Export Award for the year 2010-11 from Textile Machinery Manufacturers Association India for the highest exports.

- R&D Award for the new Card LC 333 and Comber LK 64 for the year 2009-10 from Textile Machinery Manufacturers Association India.

- R&D Award for the new Ring Frame LR 9 for the year 2010-11 from Textile Machinery Manufacturers Association India.

Directorate

Sri. M.V. Subbiah, Director and Sri. Basavaraju, Nominee Director of LIC are due to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. A brief profile of the Directors retiring by rotation and seeking re-election, to be provided as per clause 49 of the listing agreement is annexed to the notice of Annual General meeting.

Industrial relations

Relationship with the employees was cordial throughout the year.

Subsidiary companies

1. LMW Machinery Limited (LMWML)

The 50% shares held by Rieter Machine Works Limited in the erstwhile joint venture Company Rieter - LMW Machinery Limited was acquired by your Company, consequently it became the wholly owned subsidiary of your Company effective from 16th August, 2011. The name of the said Company has been changed to 'LMW Machinery Limited' with effect from 2nd September, 2011.

During the year under review this Company had recorded a turnover of Rs13,764.25 Lakhs as against Rs17,348.94 Lakhs for the previous year and earned a net profit before tax of Rs948.61 Lakhs as against Rs1,695.23 Lakhs recorded during the previous year. The reduction in the turnover and profits is due to the stoppage of operations for preparation of the factory for the manufacture of complete ring frames instead of sections for ring frame assemblies as manufactured earlier.

2. LMW Textile Machinery (Suzhou) Co., Ltd. (LMWTMSCL)

The turnover of the Company during the year under review was Rs1 5,860.53 Lakhs by sale of 304 machines as against Rs11,221.18 Lakhs achieved by sale of 255 machines during the previous year. As on 31 st March, 2012 the Company has received orders for 294 machines worth Rs1 5,405 Lakhs and the same are under execution. During the year the Company has earned a net profit of Rs93.51 Lakhs (Previous Year Net Loss: Rs1,271.40 Lakhs).

The consolidated financial results incorporating the financial statements of the above subsidiary companies are attached to the annual report as required under the Accounting Standard and the listing agreement.

Fixed deposits

The Company has not accepted any fixed deposits.

Listing

Your Company's shares are listed in Madras Stock Exchange Limited, Chennai, Bombay Stock Exchange Limited, Mumbai and the National Stock Exchange of India Limited, Mumbai. The respective listing fees for the above Stock Exchanges up to the year 2012-13 have been paid.

Auditors

The retiring Auditors M/s M.S. Jagannathan & Visvanathan and M/s Subbachar & Srinivasan, Joint Auditors of the Company, being eligible for reappointment, have consented to act as Joint Auditors of the Company, if appointed and necessary certificate pursuant to Section 224(1 B) of the Companies Act, 1956 has been received from them.

Information pursuant to Section 217 of the Companies Act, 1956.

Information in accordance with Clause (e) of sub-section 217 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 Director's Report for the year ended 31st March, 2012 is given in Annexure-I of this Report.

Information in accordance with Sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of Directors' Report for the year ended 31 st March, 2012 is given in Annexure - II of this Report.

Additional disclosures

Management Discussion and Analysis Report, Corporate Governance Report, Segment report, and Related Party Disclosures provided elsewhere in the Annual Report forms a part of this Report as required under the Listing Agreement entered into with the Stock Exchanges.

Directors' responsibility statement

In compliance of Section-217 (2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

- All applicable Accounting Standards have been followed in the preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Annual Accounts of your Company have been prepared on a going concern basis.

General

Your Directors thank the customers' for their continued support and patronage.

Your Directors also thank the Company's Bankers and Selling Agents for their valuable assistance.

Your Directors wish to place on record their appreciation for the co- operation and contribution made by the employees at all levels towards the progress of the Company.

On Behalf of the Board

Place: Coimbatore R. Venkatrangappan

Date: 23rd May, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 48th Annual Report of your Company together with the audited accounts for the year ended 31st March, 2011.

Financial Results (in Rupees)

YEARS 2010-11 2009-10

Gross Profit 3,432,685,837 2,463,827,001

Depreciation 1,041,083,505 958,206,666

Profit Before Tax 2,391,602,332 1,505,620,335

Provision for Income Tax - Current Tax 810,000,000 590,000,000

-Wealth Tax 164,370 147,833

- Deferred Tax (Net) (54,896,885) (140,245,732)

Prior year taxes (23,459,613) 8,878,744

Profit After Tax 1,659,794,460 1,046,839,490

Add: Investment Fluctuation Reserve 25,588,704 607,808,970

Balance brought forward I 6,572,260,081 5,243,968,357

Balance Available For Appropriation 8,257,643,245 6,898,616,817

Appropriations:

Proposed dividend 337,995,120 185,538,750

Dividend Tax 54,831,258 30,817,986

Transfer to General Reserve 170,000,000 110,000,000

Surplus carried to Balance Sheet 7,694,816,867 6,572,260,081

Total 8,257,643,245 6,898,616,817

Dividend

Your Directors have recommended payment of dividend at Rs. 30/- per equity share of Rs. 10/- each (300 %) on the reduced equity share capital of Rs.112,665,040/- for the year ended 31st March, 2011 aggregating to Rs. 337,995,120/- and to pay a Dividend Tax of Rs. 54,831,258.

The dividend, if approved by the shareholders, will be paid to those members or their mandates whose name appear on the Register of Members on 10th August, 2011 for those holding shares on physical form and as per the details furnished by the depositories as at the end of business hours on 1st August, 2011 for those holding shares on Dematerialised form.

Operations

During the year under review, your Company has recorded a turnover of Rs 177331.17 lakhs (2009-10 Rs. 113690.44 lakhs) resulting in a Net Profit of Rs 23916.02 lakhs before tax (2009 -10 Rs.15056.20 lakhs). During the year under review the turnover has increased by 56% and profit by 59% respectively over the previous year due to good demand for Textile Spinning Machinery and CNC Machine Tools.

Textile Machinery Division

The Textile Machinery Division of your Company, during the year under review, has recorded a turnover of Rs. 151,813.21 lakhs as against Rs.96,473.42 lakhs achieved during the last year recording an increase of 57% over the previous year.

Financial year 2010-11 started on a

positive note with demand having picked up substantially for the Textile Spinning Machinery manufactured by your Company. The increasing trend was seen throughout the year due to good performance of Textile Spinning Mills which benefited on account of sustained domestic demand for yarn; moderate input costs and a good yarn price realisation. Such favourable conditions made the Textile Spinning Mills to embark with their expansion and modernisation programmes during the period under review. Equally the export market remained encouraging throughout 2010-11. The buoyancy in the spinning sector has resulted in a good demand for Textile Spinning Machinery manufactured by your Company. Apart from the robust external demand, prompt delivery of machinery within a reasonable lead time to customers, efficient after sale service, launch of a new cost-efficient, state of the art Ring Frame model during the year enabled your Company to achieve this increased turnover.

Though the year under review was favourable, perceivable threats for the Textile Spinning Industry are also foreseen. Frequent changes in the cotton and yarn export policy by the government; infrastructure bottleneck like acute power shortage is creating an unpredictable future for the Textile sector. The wide fluctuation of cotton and yarn prices always affects the performance of the Spinning sector and in turn defers their plans for expansion. The US and Europe, traditionally the large buyers of Textile products are still struggling to recover from the after- effects of global economic melt down. Also, the levy of additional Excise Duty on branded garments by the Government in the Union Budget for 2010-11 has added further to the woes of the Textile sector.

Though the Union Budget of 2010-11 did not provide any sops to the Textile sector, announcements such as allowing of 100% Foreign Direct Investment in Textiles, commitment to quickly disburse funds under the Technology Upgradation Fund Scheme and the steps taken by the Apparel Export Promotion Council to encourage overseas investment in Indian Textile Industry provide good hope for the Textile sector.

The recent announcement for revival of Technology Upgradation Fund Scheme is expected to give a fillip to the demand for machinery.

The Global players are establishing their manufacturing facilities in India to take a share in the market and your Company has to meet the competition.

Machine Tool Division

Turnover of the Machine Tool Division during the year under review was Rs 18,434.52 lakhs as against Rs.9,480.65 lakhs recorded d uring the last year showing an increase of 94% over the previous year.

The Machine Tool Division of your Company has witnessed a strong demand growth during the year under review. With India becoming a major auto manufacturing hub in Asia, the auto and related ancillary industries have contributed strongly to the demand growth within the Machine Tool sector. Also huge investments are taking place in Construction, Railways, and Defence sectors across the country. Additionally, fast growth rates recorded by emerging industries like Aerospace, Civil Aviation, Tool Room and Farm Equipments provide huge business opportunity for your Company within the Machine Tool industry. It has to be noted that the current trend within the Machine Tool Industry is on buying more of standard machinery with tooled up solutions. There is a huge business opportunity in this area which your Company is technologically competent to take complete advantage of.

Your Company had manufactured 1,081 machines during the year under review which is the highest number in the history of this division. Your Company's precision machine tool LH55 is an import substitution for the Horizontal Machining Centres imported by OEMs and Tier One high end customers.

To cater generally to the growing demand for CNC Machine Tools in the country, your Company has entered into technology tie ups for developing high precision machinery range that result in value addition to the customers.

Foundry Division

Foundry Division has recorded a turnover of Rs 7,083.44 lakhs as against Rs.7,736.37 lakhs recorded during the previous year showing a decrease of 8% over the previous year. This Division has exported castings worth Rs 2,913.70 lakhs accounting for about 41% of the turnover. Though the division has a huge order book, decline in turnover is mainly attributable to the lower capacity utilisation due to shortage of power and trained workforce.

During the year, your Company has taken necessary steps to overcome the acute power shortage and as well is doing the needful to re-position the division's capabilities by concentrating on high tech heavy castings. Demand for the products of this division is likely to be strong in future with the development of metro rail projects across multiple cities in India, enhanced demand for turbo/traction parts for Indian Railway retrofit projects and also with a greater emphasis being placed on Wind Energy Projects.

Wind Mill Division

It is the continuous endeavor of your Company to tap non conventional, renewable, clean resources for energy. In this regard, Wind Energy occupies a centre stage in the energy policy of your Company.

As on 31st March 2011, your Company has installed 23 numbers of high capacity Wind Energy Generators with a total installed capacity of 27.95 MW. During the year under review this division has generated 689 lakh units as against the 728 lakh units generated in the previous year. Out of the 689 lakh units 29 lakh units were sold to TNEB and 660 lakh units were adjusted against the power drawn from TNEB for captive consumption.

The wind power generated by the Company meets a major portion of its power requirements and thereby brings about appreciable savings in the energy cost.

Advanced Technology Centre

This division is focussing on the manufacture of parts, components and accessories required by the Aerospace industry, and also intended for undertaking job work to meet the Defence sector requirements and is currently at an advanced stage of completion in one of our existing factory premises. In this regard, arrangements have been made with leading original equipment manufacturers/intermediaries for sourcing business. This division is expected to commence commercial production during the financial year 2011-12.

Real Estate Division

This division is about to start work on its maiden project. The process of seeking statutory approvals in this regard is currently underway. Initially, about five acres of land situated at Ganapathy, Coimbatore will be developed into a residential project consisting of flats.

Exports

During the year under review, the Company has achieved an export turnover as indicated below:

a. Textile Machinery Rs. 22,227.68 lakhs (previous year Rs.3,998.88 lakhs)

b. Castings Rs 2,913.70 lakhs (previous year Rs.3,427.77 lakhs)

Total Rs 25,141.38 lakhs (previous year Rs.7,426.65 lakhs)

Export of Textile Machinery includes exports worth Rs 9,147.62 lakhs made to the wholly owned subsidiary, LMW Textile Machinery (Suzhou) Co., Ltd, China.

Research and Development

Your Company views its customers as partners in business and does what it takes to enhance their competitive strength. The Voice of Customer is actively pursued within Research and Development whereby customer requirements are actively blended into future product offering. It is also a consistent endeavour on the part of your Company to offer solutions that offer value for money proposition to buyers. Your Company not only develops technology indigenously but also looks around to source technology that can further add value to customers. For design and development of high-tech machines your Company is associating itself with renowned institutes world- wide.

The end result of Research and Development activities are seen in the numerous product launches made by your Company both in the Textile Machinery Division and in the Machine Tool Division.

Awards

During the year your Company has received the "Silver Shield for Star Performer-Large Enterprise 2008-09 EEPC Regional Award" from the Engineering Export Promotion Council.

Directorate

Dr D Jayavarthanavelu Chairman and Managing Director passed away on 11th June, 2010, after a brief illness.

Dr. D. Jayavarthanavelu has done yeoman services to the cause of Textile Industry for over five decades. He was a person of clear perception, progressive outlook who always worked towards developing, upgrading existing business with technological sophistication in tune with the needs of the Industry. It goes without saying that the industrialization of Coimbatore Region is associated with his efforts and endeavours. He was dynamic, a visionary, and a philanthropist who maintained his stand by gentle persuasion. He also had the rare gift of expressing in few words.

Dr. D. Jayavarthanavelu was the personification of purposeful industrialist. By his passing away, a good leader always a great source of help and encouragement, a wise counsel whose indomitable courage; instrumental in solving many issues has been lost. His valuable guidance and contribution to the Company is being placed on record.

Justice Sri G Ramanujam (Retd.) Director and Justice Sri S Natarajan (Retd.) Director are liable to retire by rotation at the ensuing Annual General Meeting. Though eligible for reappointment, they do not seek re-appointment.

Sri Aditya Himatsingka, Dr. Mukund Govind Rajan and Sri R.Rajendran the Additional Directors appointed by the board during the year will hold office upto the ensuing Annual General Meeting. Nominations with necessary deposit have been received from members of the company for all the three Additional Directors for election as Directors of the Company.

Industrial Relations

Relationship with the employees was cordial throughout the year.

Joint Venture: Rieter- LMW Machinery Limited (RLM)

During the year under review the Company recorded a Turnover (Provisional) of Rs. 17,150.14 lakhs (turnover of Rs.6, 349.16 lakhs during 2009-10) resulting in a Net Profit (Provisional) of Rs 991.57 lakhs (Net Loss of Rs.237.27 lakhs during 2009-10).

The increase in turnover is due to the increased demand for Textile Machinery by the Joint Venture partner.

Your Company has entered into an MOU with the Joint Venture Partner, Rieter Machine Works Limited, Switzerland for the purchase of the 50 % share held by them in RLM. After the purchase of the shares, the JV Company, RLM will become a wholly owned subsidiary of your Company. The take over will be effective from 1st July, 2011.

Subsidiary: LMW Textile Machinery (Suzhou) Co. Ltd. (LMWTMSCL)

Your Company has established a wholly owned subsidiary in China under the name LMW Textile Machinery (Suzhou) Co Ltd, for the manufacture of Textile Spinning Machinery. This project is located in the Wujiang Economic Zone, Jiangsu Province in the Peoples Republic of China. This wholly owned subsidiary of your Company has commenced production from the first quarter of 2010.

The turnover of the company during the year under review was Rs. 11,221.18 lakhs. As on 31st March, 2011 the company has received orders for 339 machines worth Rs. 16, 300.00 lakhs and the same is under execution. The consolidated financial result incorporating the financial statements of the subsidiary company is attached with the balance sheet of your Company.

Fixed Deposits

The Company has not accepted any fixed deposits.

Listing

Your Company's shares are listed in the Bombay Stock Exchange Limited, Mumbai, and the National Stock Exchange of India Limited, Mumbai and the respective listing fees have been paid.

As approved by the shareholders through a special resolution at the Annual General Meeting held in July, 2009 an application was made to the Madras Stock Exchange for the voluntary de-listing of the shares in September, 2009. The Madras Stock Exchange Limited has informed that they are restarting the trading facilities and have advised us to reconsider the delisting proposal. In view of the benefits to shareholders your Directors have decided to withdraw the delisting application and continue with the listing in Madras Stock Exchange Limited.

Buy Back of Shares

As approved by the shareholders by a special resolution through postal ballot, your Company had announced a Buy back of shares by Tender method. The scheme was kept open between 9th Feb, 2011 to 24th Feb, 2011. The Company has bought back 11,02,746 shares at the rate of Rs 2045/- per share. Consequent to the buy back and extinguishment of shares bought back the paid up share capital of the Company is reduced from Rs 12,36,92,500 to Rs 11,26,65,040 with effect from 9th March, 2011.

Auditors

M/s M S Jagannathan & Visvanathan and M/s Subbachar & Srinivasan, Joint Auditors of the Company are to retire at the ensuing Annual General Meeting. Being eligible for reappointment have consented to act as Joint Auditors of the Company if appointed and necessary certificate pursuant to Section 224(1 B) of the Companies Act, 1956 has been received from them.

Information pursuant to Section 217 of the Companies Act, 1956.

Information in accordance with Clause (e) of section 217 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 Director's Report for the year ended 31st March, 2011 is given in Annexure-I of this Report.

Information in accordance with Sub- section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of Directors' Report for the year ended 31 st March, 2011 is given in Annexure - II of this Report.

Additional Disclosures

Management Discussion and Analysis Report, Corporate Governance Report, Segment report, and Related Party Disclosures provided elsewhere in the Annual Report forms a part of this Report as required under the Listing Agreement entered into with the Stock Exchanges.

Directors' Responsibility Statement

In compliance of Section-217 (2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

- All applicable Accounting Standards have been followed in preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- The Annual Accounts of your Company have been prepared on a going concern basis.

General

Details of Production, Licensed and Installed capacity are annexed to the Balance Sheet as required by Law.

Your Directors thank the customers' for their support and patronage.

Your Directors thank the Company's bankers and Selling Agents for their valuable assistance.

Your Directors record their appreciation of the co-operation and contribution made by the employees at all levels towards the progress of the Company.

On Behalf of the Board

R. Venkatrangappan

Chairman

Place: Coimbatore

Date: 20th May, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Forty-seventh Annual Report of your Company together with the audited accounts for the year ended 31stMarch, 2010.

FINANCIAL RESULTS : Rupees YEARS 2009-10 2008-09 Gross Profit 2,463,827,001 2,717,883,681 Depreciation 958,206,666 1,176,172,742 Profit Before Tax 1,505,620,335 1,541,710,939 Provision for Income Tax - Current Tax 590,000,000 520,000,000 - Wealth Tax 147,833 165,920 - Deferred Tax (Net) (140,245,732) (3,599,138) - Fringe Benefit Tax 0 11,784,000 - Prior year taxes paid 8,878,744 (55,988,513) Profit After Tax 1,046,839,490 1,069,348,670 Add/Less : Investment Fluctuation Reserve 607,808,970 (363,191,190) Balance brought forward 5,243,968,357 4,874,881,938 BALANCE AVAILABLE FOR APPROPRIATION 6,898,616,817 5,581,039,418 APPROPRIATIONS: Proposed dividend 185,538,750 185,538,750 Dividend Tax 30,817,986 31,532,311 Transfer to General Reserve 110,000,000 120,000,000 Surplus carried to Balance Sheet 6,572,260,081 5,243,968,357 TOTAL 6,898,616,817 5,581,039,418

DIVIDEND

Your Directors have recommended payment of dividend at Rs.15/- per equity share of Rs.10/- each (150 %) on the equity share capital of Rs. 123,692,500/- for the year ended 31sMarch, 2010 aggregating to Rs. 185,538,750/- and to pay a Dividend Tax of Rs.30,817,986/-. The dividend if approved by the shareholders will be paid to those members or their mandatees whose name appear on the Register of Members on 28th July, 2010 for those holding shares on physical form and as per the details furnished by the depositories as at the end of business hours on 15"1 July, 2010 for those holding shares on Dematerialized form.

OPERATIONS

During the year under review, your Company has recorded a turnover of Rs. 113690.44 lakhs (2008-09 Rs.133801.39 lakhs) resulting in a Net Profit of Rs. 15056.20 lakhs before tax (2008-09 Rs. 15417.11 lakhs). During the year under review the turnover has declined by 15 % and profit by 2 % respectively over the previous year due to continuation of the recessionary trend that had prevailed in the Textile Sector till the first half of the financial year under review.

TEXTILE MACHINERY DIVISION

The Textile Machinery Division of your Company, during the year under review, has recorded a turnover of Rs. 96473.42 lakhs as against Rs. 117997.54 lakhs

achieved during the last year recording a decline of 18 % over the previous year.

During the first half of Financial Year 2009 -10, the Indian Textile Industry was passing through critical times due to the slow down and lack of new orders from domestic market as well as export orders from US and Europe as a result of the Global Financial Meltdown. Lack of sufficient orders for products along with infrastructure bottlenecks like power shortage have forced the textile mills to shelve investment plans for expansion and/or modernization. Those who had already placed orders for machinery sought delivery postponement or order downsizing. Hence, performance of this Division was affected during the first half of the financial year 2009-10.

However during the second half of the financial year 2009-10, revival of local demand for textile products happened due to a series of economic stimulus measures announced by the Government. Around the same time, similar measures announced across the world led to a revival of global demand as well. Demand pick-up enhanced the confidence of the Indian Textile Spinning Industry to renew plans for investment aimed at modernization and or expansion.

With the Textile Industry being the second largest provider of employment after agriculture in India, Government is showing a keen interest in the development of this sector by inviting Foreign Direct Investment. Leading global textile brands, who were hitherto brand lenders in India have started to announce plans for establishment of their manufacturing facilities locally. This key development is expected to spur the demand for textile machinery in India in the nearfuture.

In order to capitalize on the demand for textile machinery in India, Multinational Companies have started to setup their operations in India. This development will throw a stiff competition in the market.

MACHINE TOOL DIVISION

Turnover of the Machine Tool Division during the year under review was Rs.9480.65 lakhs as against Rs.7331.48 lakhs recorded during the last year showing an increase of 29 % overthe previous year.

Machine Tool Division has also seen a demand pick up during the year under review. The Machine Tool

industry in India is expected to grow at the rate of 35% to 40% in the year 2010-11. High growth logged in the automobile and auto component industry, manufacturing and general engineering sector have contributed to this growth.

Your Company has developed eight new prototype machines out of which four machines were commercialized during 2009-10. By continuous Research and Development, your Company is providing improved machinery to suit varied needs of the customer at affordable prices. Responsive after sale services, reduction in customer complaints, reduction in Mean Time to Repair (MTTR) have all enabled this division to get repeat orders from existing customers. Also, during 2009-10 this division had 54% of its turnover come from new clients. As a result of which your Company was able to increase its market share.

As India is fast emerging as an automobile hub with a number of multi-national automobile companies establishing their production facilities locally and also with similar growth happening in the Tool Room Industry, Farm Equipments, Aerospace and Civil Aviation Industry, this sector is expected to have a promising growth in the years to come.

FOUNDRY DIVISION

Foundry Division has recorded a turnover of Rs. 7736.37 lakhs as against Rs.8472.37 lakhs recorded during the previous year showing a decrease of 9% over the previous year. This Division has exported castings worth Rs. 3427.77 lakhs accounting for about 44 % of the turnover.

As the division is engaged in the manufacture of heavy castings, mainly for exports, the global economic recession particularly in the US market, has affected its performance. Further, the power shortage has also resulted in lower capacity utilisation.

The lean manufacturing programme was introduced in this division, to enable value stream mapping that will lead to a continuous performance improvement in the foundry process. Also, internal augmentation in the heavy moulding area has been made to meet future customer needs.

Focussed approach is being made by offering new

products for core industries like power, infrastructure, transportation and defence. This is likely to boost the sales of this division in future.

WIND ENERGY DIVISION

So far your Company has installed 23 Wind Energy Generators with a total installed capacity of 27.95 MW. During the year under review this division has generated 728 lakh units as against the 623 lakh units generated in the previous year. Out of the 728 lakh units 328 lakh units were sold to TNEB and 400 lakh units were adjusted against the power drawn from the TNEB for captive consumption.

The wind power generated by the Company meets a major portion of its power requirements and there by brings about appreciable savings in the energy cost.

ADVANCED TECHNOLOGY CENTRE

In order to utilize the companys engineering capabilities a new Advanced Technology Centre was established during the year to take up manufacture and supply of parts, components and accessories for the aerospace industry, and also to undertake job work for civil and defence sectors. Establishment of essential manufacturing infrastructure for this division is under progress and is expected to commence commercial production shortly.

REAL ESTATE DIVISION

Your Company owns vacant lands in Coimbatore Urban area which can be developed for realty.

The Board of Directors of your Company have approved for the foray in to the real estate business. This division will be engaged in the construction and sale of residential apartments / villas / houses / commercial complexes.

EXPORTS

During the year under review, the Company has achieved an export turnover as indicated below:

a. Textile Machinery: Rs. 3998.88 lakhs (previous year Rs.5775.66 lakhs)

b. Castings :Rs. 3427.77 lakhs (previous year Rs.3940.34 lakhs) Total Rs. 7426.65 lakhs (previous year Rs.9715.99 lakhs)

The fall in export turnover is mainly due to the global economic slow down.

Revival of economic activity in South East Asia and the gradual recovery of the US economy are expected to revive export orders forthe Companys products.

RESEARCH AND DEVELOPMENT

It is an established policy of your Company to carry out customer focussed research and development based on the voice of customer. R&D is always aimed at providing user friendly, power saving and high productivity machinery at affordable cost to enhance the competitive strength of the customer. To achieve this end in view, your company has entered into technology transfer arrangements with leading manufacturers and research institutes.

As a result of a focussed research and development activity, Textile Machinery Division of your Company has developed and commercialized the longest ring frame with 1632 spindles and has introduced high performance Roving Frame. These machines were well received in the market.

R&D activity is being carried out vigorously in the Machine Tool Division and a number of new machine tool variants were commercialized. For design and development of high-tech machines your Company is associating with renowned Institutes worldwide.

AWARDS

During the year your Company has received the Regional level "Star Performer in Product Group for 2007-08" award from the Engineering Export Promotion Council.

DIRECTORATE

Sri S Pathy and Sri R Satagopan, Directors will retire by rotation at the ensuing Annual General Meeting, being eligible, offer themselves for re-appointment.

INDUSTRIAL RELATIONS

Relationship with the employees was cordial throughout the year.

JOINT VENTURE: RIETER - LMW MACHINERY LIMITED

During the year under review the Company recorded a turnover of Rs. 6349.16 lakhs (turnover of Rs. 9263 lakhs during 2008-09) resulting in a Net Loss of Rs. 237.27 lakhs (Net Loss of Rs. 859.96 lakhs during 2008-09). The reduction in turnover and the resultant loss was mainly on account of poor off-take of textile machinery globally.

SUBSIDIARY: LMW TEXTILE MACHINERY (SUZHOU)CO.LTD.

Your Company has established a wholly owned subsidiary LMW Textile Machinery (Suzhou) Co Ltd, to establish a green field project in China for the manufacture of textile spinning machinery. The project is situated in the Wujiang Economic Zone, Jiangsu Province in the Peoples Republic of China.

The Company has commenced commercial production during the first quarter of 2010. The company has received orders for 150 machines worth USD 16.60 million and the same is under execution. The subsidiary companys stand alone result is attached elsewhere in the Annual Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposits.

LISTING

Your Companys shares are listed in the Bombay Stock Exchange Limited, Mumbai, and the National Stock Exchange of India Limited, Mumbai and the respective listing fees has been paid.

As approved by the shareholders by a special resolution at the Annual General Meeting held in July, 2009 an application was made to the Madras Stock Exchange Limited for the voluntary de-listing of the shares in September, 2009. The Madras stock Exchange Limited is yet to confirm the de-listing.

AUDITORS

Your Companys Auditors M/s M S Jagannathan & Visvanathan and M/s Subbachar & Srinivasan are to retire at the ensuing Annual General Meeting. They are eligible for reappointment and have consented to act as Auditors of the Company, if appointed and necessary

certificate pursuant to Section 224(1 B) of the Companies Act, 1956 has been received from them.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.

Information in accordance with Clause (e) of sub- section 217 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, 2010 is given in Annexure-I of this Report.

Information in accordance with Sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of Directors Report for the year ended 31st March, 2010 is given in Annexure - II of this Report.

ADDITIONAL DISCLOSURES

Management Discussion and Analysis Report, Corporate Governance Report, Segment report, and Related Party Disclosures provided elsewhere in the Annual Report forms a part of this Report as required underthe Listing Agreement entered into with the Stock Exchanges.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance of Section-217 (2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

- All applicable Accounting Standards have been followed in the preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31s1 March, 2010 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Annual Accounts of your Company have been prepared on a going concern basis.

GENERAL

Details of Production, Licensed and Installed capacity are annexed to the Balance Sheet as required by Law.

Your Directors thank the customers for their support and patronage.

Your Directors thank the Companys bankers and Selling Agents for their valuable assistance.

Your Directors record their appreciation of the co- operation and contribution made by the employees at all levels towards the progress of the Company.

On Behalf of the Board Place: Chennai Dr D Jayavarthanavelu Date : 24lh May, 2010 Chairman and Managing Director

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