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Directors Report of LML Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Thirty-Ninth Annual Report together with audited financial statement for the financial year ended 31st March, 2015. This report pertains to financial year that commenced from April 01, 2014 and the contents herein are governed by the relevant provisions/ sections/ rules of Companies Act, 2013 and clauses of new amended Listing Agreement effective from 1st October, 2014.

This report also includes Management Discussion & Analysis (MD&A) as it has been considered appropriate to do so, in order to avoid duplication & overlap between Directors Report and a separate MD&A.

1. Financial Results

(Rs. In crores)

Year Ended Year Ended Particulars 31.03.2015 31.03.2014

Gross Sales and Other Income 212.58 273.73

Profit before Interest, Depreciation, Exceptional Items & Taxation (25.46) (17.76)

Interest 43.02 40.13

Cash Loss 68.48 57.89

Depreciation, Amortizations & Impairment of Fixed Assets 12.61 14.94

Loss before Taxation 81.09 72.83

Provision for Taxation: - Current Tax - -

Exceptional Items - -

Net Profit/ (Loss) (81.09) (72.83)

Production (Nos.) 35205 54013

Sales (Nos.) 38086 51835

In view of loss, no amount is proposed to be carried to or transferred to any type of reserves.

2. Dividend

Directors regret their inability, in view of the losses, to recommend any dividend for the year.

3. Operations

The Company's operation has been adversely affected for last few years due to a dramatic shift in consumer preference from 2-stroke geared scooters to 4-stroke motorcycles and 4-stroke gearless scooters. Company's exports have also been affected during the year, inter-alia, due to turmoil in the African market and economic slow down in developed economies. In domestic market, the performance was adversely affected due to general economic slowdown during the year. The Company is registered as a sick industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Company is working on development and industrialization of various new products and technology, including new generation of 4-stroke - geared scooters, gearless scooters, motorcycles and light 3-wheeler cargo vehicle.

Export and Domestic sales performance of your Company was as follows:

Year Ended Year Ended

Particulars 31.03.2015 31.03.2014 (Nos.) (Nos.)

Scooters - Export 26,184 34,033

- Domestic 11,902 17,802

Total 38,086 51,835

4. Exports

Exports were 26184 vehicles during the year as against 34033 units during the previous year. Company's exports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.

5. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm:

(a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

(c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

6. Corporate Governance

As required under Clause 49(X) of the Listing Agreement, a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49(XI) of the Listing Agreement is attached to Annual Report. The Chairman & Managing Director and Chief Financial Officer of the Company have given necessary Certificate to the Board in terms of Clause 49 (IX) of the Listing Agreement for the financial year ended 31st March. 2015.

7. Audit Committee

The Board of Directors has an Audit Committee with a composition as specified in the Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The details of Audit Committee are specified in Corporate Governance Report. The Board has accepted recommendations of the Committee on various matters.

9. Directorate

Mr. Ram Kumar Srivastava (DIN: 00763948), Director of the Company whose office is liable to retire by rotation and being eligible, offers himself for re-appointment as a Director of the Company.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Santoshkumar Shivshanker Shukla (DIN: 06770309) and Mrs. Ritu Schimar Dhingra (DIN: 01186286) were appointed as Additional Directors (Independent) in the Board meeting held on 23.09.2014 who will hold the office until the conclusion of the ensuing Annual General Meeting. The Company has received requisite notices in writing from members proposing Mr. Santoshkumar Shivshanker Shukla and Mrs. Ritu Schimar Dhingra for appointment as Independent Directors.

The Board has recommended to re-appoint Mr. Lalit Kumar Singhania (DIN: 00014318) and Mr. Anurag Kumar Singhania (DIN: 00080925) as Whole-time Directors of the Company as per details given in annual general meeting notice.

During the year under review, no Director has resigned from the Board of Directors

All the Independent Directors have submitted their declaration of independence, as required under section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement.

10. Whole Time Key Managerial Personnel (KMP)

In pursuance of the compliance of Section 203 of the Companies Act, 2013 the following persons have been designated as Whole Time Key Managerial Personnel of the Company:-

1. Mr. Deepak Kumar Singhania - Chairman & Managing Director

2. Mr. K. C. Agarwal - Sr. President (Commercial) & Company Secretary

3. Mr. Mahesh Kumar Kanodia - Chief Financial Officer

During the year under review, no KMP has resigned from the Company.

11. Extract of Annual Return

Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, the required extract of Annual Return in prescribed form MGT-9 is attached as Annexure 'A' with this Board Report.

12. Nomination& Remuneration Policy

The Company has, on the recommendations and approval of Nomination & Remuneration Committee, formulated a Nomination & Remuneration Policy which governs Directors' appointment including criteria for determining their qualifications, positive attributes, their independence and remuneration for the Directors, KMPs and other employees which was passed by the Board in its meeting held on 8th November, 2014. The Nomination and Remuneration Policy is attached as Annexure 'B' with this Board Report.

13. Particulars of Loan, Guarantees or Investments

No loan, guarantee or investments were made during the year by the Company under Section 186 of the Companies Act, 2013.

14. Related Party Disclosure

Particulars of contracts or arrangements with Related Party referred in Section 188 (1) of the Companies Act, 2013 in prescribed form AOC-2 is attached as Annexure 'C' with this Board Report. As required under Clause 49, the Company has formulated a policy for dealing with Related Party Transactions. The Policy is available on the website of the Company (Weblink: http://www.lmlworld.com/Pdf/RPT-Policy.pdf).

15. Material changes and commitments

No material Changes or commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relates and the date of the report.

16. Risk Management Policy

The Company has Risk Management Policy and a Risk Management Committee for identification of elements of risk, if any, which meets quarterly and submits its report, on quarter basis, to the Board.

17. Annual Evaluation

The Board has carried out the Annual Performance Evaluation of its own, its Committees based on Performance Evaluation Report submitted by each Committee and individual Directors based on the Performance Evaluation Report submitted by the Nomination & Remuneration Committee, as per Performance Evaluation Policy of the Company.

18. Number of Board Meetings

The details of the number of meetings of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance Report.

19. Corporate Social Responsibility

The provision related to Corporate social responsibility under the Companies Act, 2013 is not applicable to the Company in view of losses.

20. Details of Committees

The details of Committees of the Board forms part of Corporate Governance Report.

21. Whistle Blower Policy

The Company has a Whistle Blower Policy, including vigil mechanism to report genuine concerns of grievances, providing direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases. The Whistle Blower Policy has been posted on the website of the Company (www.lmlworld. com) with a weblink: http://www.lmlworld.com/Pdf/LML-Whistle- Blower-Policy.pdf

22. Internal Financial Control

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no material weakness was observed by the internal auditor of the Company.

23. Subsidiary/ Associate Companies

As there is no Subsidiary of the Company, no policy of determining "material" subsidiaries is formulated by the Company. The Company is a promoter of one Associate Company namely - M/s VCCL Limited. The Company is not required to prepare consolidated financial statement as per Notification dated 14.10.2014 issued by Ministry of Corporate Affairs.

24. Deposits

Your Company has not accepted any deposits from public in terms of provisions of Companies Act, 2013

25. Personnel

The Company had 2789 employees as on 31.03.2015. As per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employee was in receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout the year or Rs. 5.00 Lacs per month for the part of the year. Further, none of the employees is in receipt of remuneration which is in excess of the remuneration drawn by Managing Director or Whole-time Director or any manager of the Company and holds by himself or along with his/ her spouse and dependent children, not less than 2% of equity shares of the Company.

(a) Pursuant to the Rule 5(1 ) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the information required to be disclosed by every Listed Companies in its Board Report are as follows:-

Name of Director/ Remuneration of % age increase in KMP and Designation Directors/ KMPs for remuneration in FY FY 2014-15 2014-15



Lalit Kumar Singhania - 9,51,333 (20.64) Whole-time Director *

Deepak Kumar 17,75,492 (8.69) Singhania - Chairman & Managing Director *

Anurag Kumar Singhania - 9,83,957 4.23 Whole-time Director *

Ram Kumar Srivastava - 18,00,000 Nil Whole-time Director

Sanjeev Shriya - ** 1,89,198 Nil Non-Executive Director

Khushahal Chand Agarwal 41,85,669 7.66 - Sr. President (Comml.) & Company Secretary ***

Mahesh Kumar Kanodia - 21,92,864 4.10 Chief Financial Officer ***

Name of Director/ Ratio of Remuneration Comparison of KMP and Designation of each Director / the to the median remunerationof remuneration of the KMP against employee the performance of the company

Lalit Kumar Singhania - 19.13 Whole-time Director *

Deepak Kumar 35.71 Singhania - Chairman & Managing Director *

Anurag Kumar Singhania - 19.79 Loss before and Whole-time Director * after tax of the Company Ram Kumar Srivastava - 36.20 increased by Whole-time Director 12% in fY 2014 -15.

Sanjeev Shriya - ** 12.86

Non-Executive Director

Khushahal Chand Agarwal N.A. - Sr. President (Comml.) & Company Secretary ***

Mahesh Kumar Kanodia - N.A. Chief Financial Officer ***

* The remuneration to all Directors are within permissible limits as approved by MCA. There is no increase in remuneration during the year.

Variations are on account of increase/ decrease in availment of perquisites.

** Ceased to be Whole-time Director w.e.f. 17.07.2014. Remuneration to him is paid on pro-rata basis.

*** The remuneration to Key Managerial Personnel are as per last year and as per sanctions. There is no increase in remuneration during the year. Variations are on account of payment of arrears.

(b) The Median remuneration of employees of the Company during the financial year was Rs. 49,743/-

(c) The percentage increase in the median remuneration of employees in the financial year was 10.67%

(d) Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year;

Company's market capitalization increased by 26.39% to Rs. 53,78,17,139.20 as of March 31, 2015 from Rs. 42,54,98,620.80 as of March 31, 2014. The price earning ratio was (0.66) as of March 31, 2015 in comparison to (0.58) as compared to March 31, 2014. The closing price of the Company equity shares on the NSE and BSE as of March 31,2015 was Rs. 6.50 and Rs. 6.56 respectively.

(e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Since Company is a sick industrial company and in view of losses, no increase was made in the managerial remuneration.

(f) The key parameters for any variable component of remuneration availed by the directors: No variable component of remuneration was availed by the Directors of the Company.

(g) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year:

The highest paid Director in the Company is Mr. R. K. Srivastava with annual remuneration of Rs. 18 Lakhs as per Central Govt. approval. The ratio of remuneration of employees receiving in excess to that is as follows:-

Ratio to highest S.No. Name of Employees paid Director

1 MR SUNIL KUMAR PANDE 1.08

2 MR KANU GOPAL BISWAS 1.09

3 MR RAVINDRA KUMAR 1.11

4 MR PRABODH NATHURAM VERMA 1.11

5 MR S K MAHAJAN 1.16

6 MR AJAY KUMAR GOYAL 1.20

7 MR SUMIT CHATTERJEE 1.21

8 MR MAHESH KUMAR KANODIA 1.22

9 MR G N SRIVASTAVA 1.22

10 MR VIPIN CHAUDHARY 1.50

11 MR GIRISH R MARATHE 1.85

12 MR P P S CHOUDHARY 2.06

13 MR ASHOKE KUMAR SINHA 2.27

14 MR KHUSHAHAL CHAND AGARWAL 2.33

(h) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy of the Company.

26. Auditors and their reports

a) Statutory Auditors

M/s. Khandelwal Jain & Co. (FRN 105049W), Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of three years and M/s. Parikh & Jain (FRN 001105C), Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of two years in previous Annual General Meeting held on 23.09.2014. The Board proposes to members of the Company to ratify their appointment for the financial year 2015 - 16, pursuant to the provisions of Section 139 of the Companies Act, 2013, at the ensuing Annual General Meeting of the Company.

In respect of observations made by the Statutory Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory and do not call for any further comments.

b) Secretarial Auditors

M/s. Adesh Tandon & Co., Practicing Company Secretary (FCS. 2253, CP No. 1121) of Kanpur, appointed as Secretarial Auditors of the Company submitted their Secretarial Audit Report, for the Financial Year 2014-15, pursuant to the Section 204 of the Companies Act, 2013 which is being attached herewith as Annexure - 'D'

No adverse observations are made by the Secretarial Auditors in their Report.

c) Internal Auditors

Pursuant to Section 138 of the Companies Act, 2013, Board has appointed M/s Onkar Tandon & Co., Chartered Accountants (FRN 000953C) of Kanpur as an Internal Auditor of the Company for the financial year 2015-16 as recommended by the Audit Committee of the Company.

27. Conservation of Energy

Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel & oil etc. Energy conservation during the year under various heads resulted into an estimated saving of Rs. 2.70 lacs (in previous financial year 2013-14: Rs. 2.66 lacs).

28. Pollution Control

Relevant and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. 'No Objection Certificates' from the U.P. Pollution Control Board are obtained from time to time.

29. Technology Absorption

Requisite information in prescribed form is given in Annexure 'E' to this report.

30. Foreign Exchange Earnings and Outgo

Your Company earned during the year Foreign Exchange of Rs. 144.57 crores (previous financial year - Rs. 174.76 crores) while Foreign Exchange outgo during the year amounted to Rs. 13.09 crores (previous financial year - Rs. 22.73 crores).

31. Stock Exchange Listing

The Equity Shares of the Company are listed on the following Stock Exchanges (with respective stock codes/ symbol):-

i) BSE Limited (BSE), Mumbai (500255);

ii) National Stock Exchange of India Limited (NSE), Mumbai (LML).

The Equity and Preference Shares of the Company were also listed on the U.P. Stock Exchange Limited, Kanpur. However, as per SEBI circular dated May 30th 2012 read with circular dated May 22nd 2014 related to Companies exclusively listed on De-recognized/ Non-operational Stock Exchanges, U.P. Stock Exchange Limited, Kanpur got de-recognized on account of non fulfillment of the prescribed conditions.

The Company confirms that it has paid the annual listing fee to BSE and NSE.

32. Depository System

SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January, 2000 notified that trading in Equity Shares of the Company is permitted only in dematerialized form w.e.f. 17th January, 2000. Requests received for dematerialization of shares are processed and confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) within the stipulated time. As on 31st March, 2015, 95.82% equity shares of the Company have been dematerialized.

33. General

The Company became a Sick Industrial Company within the meaning of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company was declared a sick industrial company by BIFR on 8th May, 2007. As directed by BIFR, the Company has since submitted the updated revival scheme. In view of this, no impact is foreseen on the going concern status of the Company and the Company's operations in future. The matter is pending before the Hon'ble BIFR. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable to the Company, as there is no woman employee in the Company.

34. Cautionary Statement

The statement in the Director's report and MD&A, detailing the Company's objectives and expectations, may contain 'forward looking statements' within the meaning of applicable securities laws and regulations. The actual results inter-alia may differ materially from those expressed or implied, depending upon changes in global and Indian demand-supply conditions as well as changes in government regulations, tax regimes, economic and market developments, movements.

35. Acknowledgement

Your Directors take this opportunity to appreciate deeply the valuable co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stake- holders, including Customers, Shareholders, Employees, Vendors, Distributors, Dealers / Sub-dealers, and the general public for their support and confidence reposed in the Management.

For and on behalf of Board of Directors LML Limited

Deepak Kumar Singhania Chairman & Managing Director DIN:00012037

Place : Gurgaon Dated : 29.05.2015


Mar 31, 2014

Dear members,

The Directors have pleasure in presenting the Thirty-Eighth Annual Report together with audited Statement of Accounts for the twelve months ended 31st March, 2014. Since this report pertains to Financial Year that commenced prior to April 01, 2014, the contents herein are governed by the relevant provisions/sections/rules of Companies Act, 1956 in compliance with General Circular No. 8/2014 dated 04/04/2014 issued by MCA.

This report also includes Management Discussion & Analysis (MD&A) as it has been considered appropriate to do so, in order to avoid duplication & overlap between Directors Report and a separate MD&A.

1. Financial Results

(Rs. In crores) Year Year Particulars Ended Ended 31.03.2014 31.03.2013

Gross Sales and Other Income 273.73 255.90

Profit before Interest, (17.76) (16.18) Depreciation, Exceptional Items & Taxation

Interest 40.13 36.26

Cash Loss 57.89 52.44

Depreciation,Amortisations & Impairment of F.A. 14.94 13.01

Loss before Taxation 72.83 65.45

Provision for Taxation: - Current Tax - -

Exceptional Items - -

Net Loss 72.83 65.45

Production (Nos.) 54013 51241

Sales (Nos.) 51835 54668

2. Dividend

Directors regret their inability, in view of the losses, to recommend any dividend for the year.

3. Operations

The Company''s two-wheeler manufacturing activity has been set up for the manufacture of 2-stroke metal body geared scooters. Due to a dramatic shift in consumer preference from 2-stroke geared scooters to 4-stroke motorcycles and 4-stroke gearless scooters, the Company''s performance has been adversely affected, and the Company has been passing through difficult times for last few years. Further, workmen of the Company resorted to an illegal strike and with a view to protect life and property, the Company was constrained to declare a lockout on 7th March, 2006. Consequent to withdrawal of strike by the workmen, the Company resumed its operations from 13.4.2007 in a very small way with skeletal staff and very limited resources. Since the net worth of the Company got fully eroded due to losses, it has been registered as a sick industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Since re-start of operations, Company has introduced 4-stroke metal bodied geared scooter and has developed 4-stroke gearless (CVT) scooter and commenced its export and is planning to make a soft introduction of the same in select areas of the domestic market in a phased manner. The Company is working on development and industrialization of various new products and technology, including new generation 4-stoke geared scooters, 4-stroke gearless scooter (CVT), 4-stroke motorcycles and light three- wheeler cargo vehicle.

Export and Domestic sales performance of your Company was as follows:



Year Ended Year Ended Particulars 31.03.2014 31.03.2013 (Nos.) (Nos.)

Scooters -Export 34,033 33,721 - Domestic 17,802 20,947

Total : 51,835 54,668

Exports

Exports were 34033 vehicles during the year as against 33721 units during the previous year. Company''s exports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.

4. Directors'' Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

5. Corporate Governance

As required under Clause 49 of the Listing Agreement, a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as the Board in terms of Clause 49 (V) of the Listing Agreement with Stock Exchange(s) for the financial year ended 31st March. 2014.

6. Directorate

Mr. Lalit Kumar Singhania & Mr. Sanjeev Shriya, Directors of the Company, whose office is liable to retire by rotation and being eligible, offers himself for re-appointment as a Director of the Company. The official terms of Mr. Sanjeev Shriya as a Whole Time Director of the Company is expiring on 17.07.2014.

The Company has received requisite notices in writing from members proposing Mr. S.K. Aggarwal, Mr. Shiromani Sharma & Dr. V.K. Agnihotri for appointment as Independent Directors.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajendra Kumar Jain was appointed as an additional Director (Independent) in the Board meeting held on 24.05.2014 who will hold the position until the conclusion of the ensuing AGM. The Company has received requisite notices in writing from members proposing Mr. Rajendra Kumar Jain for appointment as Independent Director.

The Board has also subject to your approval re- appointed Mr. Deepak Kumar Singhania as the Chairman & Managing Director, Mr. Anurag Kumar Singhania and Mr. R. K. Srivastava as Whole-time Directors of the Company as per details given in AGM Notice.

All the Independent Directors have submitted the declaration of their independence, as required under section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement.

7. Whole Time Key Management Personnel

In pursuance of the compliance of Section 203 of the Companies Act, 2013 the following persons have been designated as Whole Time Key Managerial Personnel of the Company:-

1. Mr. Deepak Kumar Singhania - Chairman & Managing Director

2. Mr. K. C. Agarwal - Company Secretary

3. Mr. Mahesh Kumar Kanodia - Chief Financial Officer

10. Personnel

The Company had 2814 employees as on 31.03.2014. None of the employee was in receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout the year or Rs. 5.00 Lacs per month for the part of the year.

8. Audits & Auditors

a) Statutory Auditors M/s. Khandelwal Jain & Co. (FRN 105049W) and M/s. Parikh & Jain (FRN 001105C), Chartered Accountants, Statutory Auditors of the Company, are retiring at the ensuing AGM of the Company and, being eligible, offer themselves for re-appointment.

In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self- explanatory and do not call for any further comments.

b) Secretarial Auditors

M/s. Adesh Tandon & Co., Practicing Company Secretary (FCS-2253 CP No. 1121) of Kanpur has been appointed as Secretarial Auditors of the Company as recommended by the Audit Committee of the Company, to give Secretarial Audit Report for the financial year 2014-15 pursuant to the Section 204 of the Companies Act, 2013.

c) Internal Auditors

Pursuant to Section 138 of the Companies Act, 2013, Board has appointed M/s Onkar Tandon & Co., Chartered Accountants, (FRN 000953C) of Kanpur as an Internal Auditor of the Company for the financial year 2014-15 as recommended by the Audit Committee of the Company.

d) Cost Auditors

Pursuant to Section 233B of the Companies Act, 1956 and as per requirements of the Central Government, audit of Cost Accounts, relating to motor vehicles was carried out for the Financial Year 2012-13 by M/s. J K Kabra & Co., Cost Accountants.

As per the draft Companies (Cost Accounting Records) Rules, 2013 issued by the Ministry of Corporate Affairs, the company is not required to appoint the cost auditor. The final rules is yet to be notified by the Central Government and on the basis of the final rules only Board will consider the appointment of the cost auditor for the financial year 2014-2015.

9. Conservation of Energy

Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel and oil etc. Energy conservation during the year under various heads resulted into an estimated saving of Rs. 2.66 lacs (previous financial year 2012-13 Rs. 2.18 lacs.

10. Pollution Control

Relevant and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. ‘No Objection Certificates'' from the U.P. Pollution Control Board are obtained from time to time.

11. Technology Absorption

Requisite information in prescribed form is given in Annexure-A to this report.

12. Foreign Exchange Earnings and Outgo

Your Company earned during the year Foreign Exchange of Rs. 174.76 crores (previous financial year Rs. 142.51 crores).

Foreign Exchange outgo during the year amounted to Rs. 22.73 crores (previous financial year - Rs. 16.97 crores).

13. Stock Exchange Listing

The Equity Shares of the Company are listed on the following Stock Exchanges (with respective stock codes/ symbol):-

(i) U.P. Stock Exchange Limited, Kanpur (L00004);

(ii) BSE Limited, Mumbai (500255);

(iii) National Stock Exchange of India Limited, Mumbai (LML)

The Preference Shares of the Company are listed on the U.P. Stock Exchange Limited, Kanpur. However as per SEBI circular dated May 30th 2012 read with circular dated May 22nd 2014 related to compulsory de- recognition and exit of the stock exchanges, U.P. Stock Exchange Limited, Kanpur might get de-recognized on account of non-fulfillment of the prescribed conditions. The Company confirms that it has paid the annual listing fee to the above Stock Exchanges.

14. Depository System

SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January, 2000 notified that trading in Equity Shares of the Company is permitted only in dematerialized form w.e.f. 17th January, 2000. Requests received for dematerialization of shares are processed and confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) within the stipulated time. As on 31st March, 2014, 95.82% equity shares of the Company have been dematerialized.

15. Acknowledgement

Your Directors take this opportunity to appreciate deeply the valuable co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stake- holders, including Customers, Shareholders, Employees, Vendors, Distributors, Dealers / Sub- dealers, and the general public for their support and confidence reposed in the Management.



For and on behalf of Board of Directors LML Limited

Deepak Kumar Singhania Chairman & Managing Director DIN No.: 00012037

Place : Gurgaon Dated : 24-05-2014


Mar 31, 2013

To, The Members

The Directors have pleasure in presenting the Thirty-Seventh Annual Report together with audited Statement of Accounts for the twelve months ended 31st March, 2013. This report also includes Management Discussion & Analysis (MD&A) as it has been considered appropriate to do so, in order to avoid duplication & overlap between Directors Report and a separate MD&A.

1. WORKING RESULTS

(Rs. in crores unless otherwise stated)

Year Ended Year Ended particulars 31.03.2013 31.03.2012

Gross Sales and Other Income 255.90 326.40

Profit before Interest,

Depreciation & Taxation (16.18) 3.09

Interest 36,26 34.06

Cash Loss 52.44 30.97

Depreciation 13.01 14.23

Loss before Taxation 65.45 45.20

Provision for Taxation:

- Current Tax

Net Loss 65.45 45.20

Production (Nos.) 51241 76635

Sales (Nos.) 54668 75583

Directors regret their inability, in view of the losses, to recommend any dividend for the year.

2. Operations

Company has been passing through difficult times for last few years, which has adversely affected its operations. The situation was further aggravated due to the illegal strike of the workmen of the Company and with a view to protect life and property the Company had to declare a lockout on 7th March, 2006 which pursuant to the withdrawal of the strike was withdrawn on 13.4.2007 and the operations resumed in a small way. Due to losses the net worth of the Company got fully eroded, it is registered as a sick industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Company is working on the development and industrialization of various new products and technologies including but not limited to new generation 4 stroke geared scooters, 4-stroke gearless scooters (CVT), 4-stroke motorcycles and light 3-wheeler for cargo application. Production and export of 4-stroke gearless (CVT) scooters commenced during the year. Company is preparing for soft launch of its 4-stroke motorcycle "Freedom" during the current year.

Company has also emerged as one of the largest exporter of scooters in its category in the country, and also launched its vehicles in select locations in the domestic market. Company has commenced work for the revamping of its dealer network for launch its products in other locations in a phased manner. Export and Domestic sales performance of your Company was as follows :

3. Exports

Exports were 33721 vehicles during the year as against 44435 units during the previous year. Company''s exports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.

4. Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

5. Corporate Governance

As required under Clause 49 of the Listing Agreement, a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is attached to Annual Report. The Chairman & Managing Director and Executive Director (Comml.) & Company Secretary of the Company have given necessary Certificate to the Board in terms of Clause 49 (V) of the Listing Agreement with Stock Exchange(s) for the financial year ended 31st March, 2013.

6. Directorate

Mr. Anurag Kumar Singhania and Mr. Satinder Kumar Aggarwal retire by rotation and, being eligible, offer themselves for re- appointment.

Directors recommend their re-appointment as Directors of the Company.

Mr. Sridhar Srinivasan appointed as an Additional Director by the Board of Directors of the Company ceased to be a Director w.e.f. 29.4.2013. The Board of Directors on 24th May, 2013 appointed Dr. Vivek Kumar Agnihotri as an Additional Director (Independent) and has also re-appointed Mr. Sanjeev Shriya & Mr. Ram Kumar Srivastava as Whole-time Director of the Company as per details given in AGM Notice.

7. Personnel

The Company had 2971 employees as on 31.03.2013. None of the employee was in receipt of remuneration of Rs. 60.00 lacs or more per annum throughout the year or Rs. 5.00 lacs per month for the part of the year.

8. Audits & Auditors

M/s. Khandelwal Jain & Co. and M/s. Parikh & Jain, Statutory Auditors of the Company, are retiring at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment.

In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory and do not call for any further comments.

Pursuant to Section 233 B of the Companies Act, 1956 and as per requirements of the Central Government, audit of Cost Accounts, relating to motor vehicles was carried out for the Financial Year 2011-12. Subject to approval of Central Government M/s. J K Kabra & Co., Cost Accountants, have been re-appointed for the F.Y. 2012-13. Company has to appoint Cost Auditor within 90 days from the date of commencement of each Financial Year. Subject to approval of Central Government, M/s J K Kabra & Co., Cost Accountants have been re-appointed for the F.Y. 2013-14.

9. Conservation of Energy

Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel and oil etc. Energy conservation during the year under various heads resulted into an estimated saving of Rs. 2.18 lacs (previous year 2011-12 Rs. 1.38 lacs.

10. Pollution Control

Relevant and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. ''No Objection Certificates'' from the U.P. Pollution Control Board are obtained from time to time.

11. Technology Absorption

Requisite information in prescribed form is given in Annexure-A to this report.

12. Foreign Exchange Earnings and Outgo

Your Company earned during the year Foreign Exchange of Rs. 142.51 crores (previous year- Rs. 162.36 crores). Foreign Exchange outgo during the year amounted to Rs. 16.97crores (previous year - Rs. 16.78 crores).

13. Stock Exchange Listing

The Equity Shares of the Company are listed on the following

Stock Exchanges:-

(i) U.P. Stock Exchange Limited, Kanpur.

(ii) BSE Limited, Mumbai.

(iii) National Stock Exchange of India Limited, Mumbai.

The preference shares of the Company are listed on the U.P.

Stock Exchange Limited, Kanpur.

The Company confirms that it has paid the annual listing fee to the above Stock Exchanges.

14. Depository System

SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January, 2000 notified that trading in Equity Shares of the Company is permitted only in dematerialized form w.e.f. 17th January, 2000. Requests received for dematerialization of shares are processed and confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) within the stipulated time. As on 31st March, 2013, 95.77% equity shares of the Company have been dematerialized.

15. Acknowledgement

Your Directors take this opportunity to appreciate deeply the valuable co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stake-holders, including Customers, Shareholders, Employees, Vendors, Distributors, Dealers / Sub-dealers, and the general public for their support and confidence reposed in the Management.

For and on behalf of Board of Directors

LML Limited

Place : Gurgaon Deepak Kumar Singhania

Dated : 24-05-2013 Chairman & Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the Thirty-Sixth Annual Report together with audited Statement of Accounts for the twelve months ended 31st March, 2012.

This report also includes Management Discussion & Analysis (MD&A) as it has been considered appropriate to do so, in order to avoid duplication & overlap between Directors Report and a separate MD&A.

1. Working Results

(Rs. in crores unless otherwise stated)

Particulars Year Ended Period Ended 31.03.2012 31.03.2011 (12 Months) (18 Months)

Gross Sales and Other Income 326.40 389.13

Profit before Interest,

Depreciation, Exceptional Items & Taxation 3.09 0.45

Interest 34.06 44.08

Cash Loss 30.97 43.63

Depreciation & Amortisations 14.23 24.65

Loss before Taxation 45.20 68.28

Provision for Taxation :

Current Tax -

Exceptional Items 31.26

Net Loss 45.20 99.54

Production (Nos.) 76635 99675

Sales (Nos.) 75583 98773

Directors regret their inability, in view of the losses, to recommend any dividend for the year.

2. Operations

Company has been passing through difficult time and facing problems for last few years, which has adversely affected its operations. The workmen of the Company had resorted to an illegal strike and with a view to protect life and property the Company had to declare a lockout on 7th March, 2006. Since the Company's net worth became negative, it filed reference before the Hon'bie Board for Industrial and Financial Reconstruction (BIFR) where it is registered and declared as a sick industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Company restarted its operations in April, 2007 and has taken several steps for its turn around, and has submitted its revival scheme to Hon'ble BIFR.

Company has emerged as one of the largest exporter of scooters in the country, and also launched its vehicles in select locations in the domestic market. Company is getting good response in the export and domestic markets, for its new 4-stroke geared scooters developed by the Company and is taking steps to launch its vehicles in other locations in a phased manner. Company is working on other new products including 4-stroke gearless scooters, motorcycles, and light three wheeier for cargo application.

Export and Domestic sales performance of your Company was as follows :

Particulars Year Ended Period ended Annualised 31.03.2012 31.03.2011 for year (12 Months) (18 Months) ended (Nos.) (Nos.) 31.03.2011

Scooters Export 44435 57774 38516

Domestic 31148 40999 27332

Total : 75583 98773 65848

3. Exports

Exports were 44435 vehicles during the year as against 38516 units (annualized) during the previous period. Company's exports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.

4. Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act. 1956, the Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

5. Corporate Governance

As required under Clause 49 of the Listing Agreement., a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is attached to Annual Report. The Chairman & Managing Director and Executive Director (Comml.) & Company Secretary of the Company have given necessary Certificate to the Board in terms of Clause 49 (V) of the Listing Agreement with Stock Exchange(s) for the financial year ended 31st March. 2012.

6. Management Discussion And Analysis

(a) Macro-economic Developments and overall review The economic turbulence in Europe, along with other events has resulted in global economic slowdown during 2011-12. When this happens so quickly after a recession the last one being in 2008-09 it was not easy to deal with. The entire world, especially Europe, is treading with caution and working on devising solution to the problems on hand. India's rapid growth over the last two decades and its growing economic integration with the world, cannot be insulated from such global situations.

Managing growth and price stability are the major challenges of macroeconomic policymaking. In 2011-12, India found itself in the heart of these conflicting demands. The Indian economy is estimated to grow by 6.9% in 2011-12, after having grown at around 8.4% in each of the two preceding years. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 200809) primarily due to deceleration in industrial growth, more specifically in private investment. Rising cost of credit and weak domestic business sentiment, added to this decline. The growth is estimated to be 2.5% in agriculture, 3.9% in industry and 9.4% in services.

The headline inflation remained high for most part of the year. Monetary policy remained tight during the year to control inflation. It was only in December, 2011 that it somewhat started moderating. Considering the current scenario, India's GDP growth in 2012-13 is targeted to be around 6.5%.

(b) Two wheeler Industry in India.

Financial Year 2012 was a difficult year for the Indian auto industry. As interest rates remained high and fuel prices rose, demand took a hit. High commodity prices also fuelled input costs with the result that the operating margins came under pressure. As per Society of Indian Automobile Manufacturers (SIAM), the overall sales growth rate recorded for April March, 2012 was still reasonably healthy at 14% year on year; mopeds, motorcycles and scooters grew by 11%, 12% and 25% respectively during the fiscal.

Exports registered a healthy growth rate of 27% during the fiscal outperforming the domestic market.

Domestic

Industry Structure 2009-10 2010-11 (April 2010 March 2011) (April 09- March 10)

Sale in Mn. Sale in Growth % Over Category Share Mn. 2009-10 % of 10-11

Scooters 1.460 2.058 41 17

Motorcycles 7.340 9.014 23 77

Mopeds 0.570 0.697 22 6

Total 9.370 11.769 26 100

Industry Structure 2011-12 (April 2011 March 2012)

Sale in Growth % Over Category Share Mn. 2010-11 % of 11-12

Scooters 2.563 25 19

Motorcycles 10.096 12 75

Mopeds 0.777 11 6

Total 13.436 14 100

Export

Industry Structure 2009-10 2010-11 (April 2010 March 2011) (April 09- March 10)

Sale in Mn. Sale in Growth % Over Category Share Mn. 2009-10 % of 10-11

Scooters 0.030 0.051 70 3

Motorcycles 1.100 1.475 34 96

Mopeds 0.010 0.006 40 0

Total 1.140 1.532 34 100

Industry Structure 2011-12 (April 2011 March 2012)

Sale in Growth % Over Category Share Mn. 2010-11 % of 11-12

Scooters 0.091 78 5

Motorcycles 1.847 25 95

Mopeds 0.009 50 0

Total 1.947 27 100

(c) Company Performance

Inspite of severe difficulties and problems, Company recorded good performance. It is working on its revival plan based both on domestic and export markets and new products.

(d) Opportunities and Threats

LML stands for the highest standards of technical expertise, product innovation and has one of the finest R & D capabilities, particularly relating to designing, rapid prototyping, CAD CAM, tooling and industrialization. It is harnessing these strengths and its vast experience in the two-wheeler business coupled with a aggressive business strategy for its revival and turnaround. The Company is perhaps the first in the world to obtain Euro III certification for its 2-stroke vehicles and subsequent to restart, it has also received the upgraded ISO 9001-2008 certification from DNV.

(e) Outlook

As stated elsewhere in this report the Company has been working for its revival including development of new products having state of the art technology including 4-stroke and fuel injection.

(f) Performance Review

Due to various reasons and problems the Company could not leverage its rich technological strengths during the year under review and the sales volume could only be increased from 65848 units (annualized) in financial year 2009-11 (18 Months -Total 98773 units) to 75583 units in 2011-12 (12 months).

(g) Financial Review:

Revenues Gross Sales and Other Income during the year increased to Rs. 326.40 crores as compared to Rs. 259.42 crores (annualized) in the previous period (18 Months -Total Rs. 389.13 crores).

Operating losses The Company took various actions to reduce costs pursuant to the restart in April '07. The Company reported a net operating Profit of Rs 3.09 crores as compared to net operating profit of Rs. 0.45 crore in the previous period (annualized Rs. 0.3 crore). [

Interest-Interest was Rs 34.06 crores as compared to Rs. 1 44.08 crores in the previous period (annualized Rs. 29.39 crores).

Depreciation & Amortisation Depreciation and Amortisation for the year was at Rs. 14.23 crores as compared to Rs. 24.65 crores in the previous period (annualized Rs.16.43 crores).

Loss before tax The Company reported a loss before tax and exceptional items of Rs 45.20 crores as compared to Rs. 68.28 crores in the previous period (annualized Rs. 45.52 crores).

Share Capital Company's Paid-up Equity Share Capital is Rs. 81,98,43,200 as on 31.03.2012.

(i) Cautionary Statement

The MD&A, detailing the Company's objectives and expectations, may contain 'forward looking statements' within the meaning of applicable securities laws and regulations. The actual results inter-alia may differ materially from those expressed or implied, depending upon changes in global and Indian demand-supply conditions as well as changes in government regulations, tax regimes, economic and market developments, movements.

7. Directorate

Mr. Sanjeev Shriya and Mr. Shiromani Sharma retire by rotation and, being eligible, offer themselves for re-appointment. Directors recommend their reappointment as Director of the Company.

Board of Directors also reappointed Mr. Lalit Kumar Singhania & Mr. Anurag Kumar Singhania as Whole-time Director and Mr. Deepak Kumar Singhania as Chairman & Managing Director of the Company as per details given in AGM Notice.

8. Personnel

The Company had 3010 employees as on 31.03.2012. None of the employee was in receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout the year or Rs. 5.00 Lacs per month for the part of the year.

9. Audits & Auditors

M/s. Khandelwal Jain & Co. and M/s. Parikh & Jain, Auditors of the Company, are retiring at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for reappointment.

In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory and do not call for any further comments.

Pursuant to Section 233 B of the Companies Act, 1956 and as per requirements of the Central Government, audit of Cost Accounts, relating to motor vehicles was carried out for the Financial Year 2009-11. Subject to approval of Central Government M/s. J K Kabra & Co., Cost Accountants, have been reappointed for the F.Y. 2011-12.

Company has to appoint Cost Auditor within 90 days from the date of commencement of each Financial Year. Subject to approval of Central Government, M/s J K Kabra & Co., Cost Accountants have been re-appointed for the F.Y. 2012-13.

10. Conservation of Energy

Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel and oil etc. Energy conservation during the year (12 month) under various heads resulted into an estimated saving of Rs. 1.38 lacs (previous period Rs. 1.76 lacs (18 month).

11. Pollution Control

Relevant and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. 'No Objection Certificates' from the U.P. Pollution Control Board are obtained from time to time.

12. Technology Absorption

Requisite information in prescribed form is given in Annexure-A to this report.

13. Foreign Exchange Earnings and Outgo

Your Company earned during the year (12 months) Foreign Exchange of Rs. 162.36 crores (previous period Rs. 187.72 crores (18 month), (annualized Rs. 125.14 crores) Foreign Exchange outgo during the year (12 months) amounted to Rs. 16.78 crores (previous period Rs. 15.48 crores (18 months) (annualized Rs. 10.32 crores).

14. Stock Exchange Listing

The Equity Shares of the Company are listed on the following Stock Exchanges

(i) U.P. Stock Exchange Ltd. , Kanpur.

(ii) BSE Limited, Mumbai.

(iii) National Stock Exchange of India Ltd., Mumbai.

The Company confirms that it has paid the annual listing fee to the above Stock Exchanges.

15. Depository System

SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January, 2000 notified that trading in Equity Shares of the Company is permitted only in dematerialized form w.e.f. 17th January, 2000. Requests received for dematerialization of shares are processed and confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) within the stipulated time. As on 31st March, 2012, 95.73% equity shares of the Company have been dematerialized.

16. Acknowledgement

Your Directors take this opportunity to appreciate deeply the valuable co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stake-holders, including Customers, Shareholders, Employees, Vendors, Dealers / Sub-dealers, and the gen- eral public for their support and confidence reposed in the Management.

For and on behalf of Board of Directors

LML Limited

Place : Gurgaon Deepak Kumar Singhania

Dated : 07.07.2012 Chairman & Managing Director


Sep 30, 2009

The Directors have pleasure in presenting the Thirty-fourth Annual Report together with audited Statement of Accounts for the twelve months ended 30th September, 2009.

This report also includes Management Discussion & Analysis (MD&A) as it has been considered appropriate to do so, in order to avoid duplication & overlap between Directors Report and a separate MD&A.

1. Working Results

(Rs. in crores)

Particulars Year Year ended ended 30.09.2009 30.09.2008

Gross Sales and Other Income 173.96 119.10

Loss/(Profit) before Interest,

Depreciation, Exceptional Items

& Taxation (4.55) 14.15

Interest 25.35 22.61

Cash Loss 20.80 36.76

Depreciation & Amortisations 17.49 20.40

Loss before Taxation 38.29 57.16

Provision for Taxation

- Current Tax (FBT) 0.16 0.35

Exceptional Items 13.17 -

Net Loss 51.62 57.51

Production (Nos.) 46300 34328

Sales (Nos.) 43798 34711

Directors regret their inability, in view of the losses, to recom mend any dividend for the year.

2. Operations

Members are aware of the difficulties and problems which the Company has been facing for the last few years. The restructuring of the Company could not get completed when the Company in 2005, in spite of best efforts, was unable to obtain, unexpectedly, fresh working capital facilities of Rs 80 crores which had an adverse and cascading effect on the Company and it could not take various actions including but not limited to introduction of new range of vehicles, reduction in costs, lowering of breakeven point etc. The resultant situation led to increase in losses, erosion of liquidity and since the Companys net worth became negative, it filed reference before the Honble Board for Industrial and Financial Reconstruction (BIFR) where it is registered and declared as a sick industrial Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Pursuant to the restart of operations in April 2007 the Company is working proactively for its revival and turnaround. The Com- pany has taken several measures and actions including but not limited to those in areas of cost reduction, product development, brand building and exports. The Company has emerged as the largest exporter of scooters in the country and also launched its scooters in select locations in the domestic market. The Directors are pleased to state that the new 4-stroke scooter developed by the Company was successfully launched in select location of the domestic market. The product received good response. The Company is taking steps for increasing its penetration in the markets and expects, barring unforeseen circumstances, to be able to launch scooters in other locations in a phased way. Work in respect of other new products including light 3-wheeler for cargo application, vehicles powered by alternate fuel like LPG/CNG and Or technologies like fuel injection, 4- stroke gearless scooter, is progressing. Export and Domestic sales performance of your Company was as follows :

Particulars Year Year ended ended 30.09.2009 30.09.2008 (Nos.) (Nos.)

Scooters - Export 26554 18136

- Domestic 17244 16575

43798 34711

3. Exports

Exports were 26554 vehicles during the year under report as against 18136 units during the previous year. Companys ex- ports are made to many countries including USA, countries in the European Union, Africa, Latin America, Asia etc.

4. Directors Responsibility Statement -

Pursuant to Section 217(2AA) of the Companies Act, 1956, the. Directors confirm :

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) that they have selected such accounting policies and applied them consistently and made judgmenfsand 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 profits/losses of the Com- pany for that period;

c) that they have taken proper and sufficient care for the main- tenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguard- ing the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

5. Corporate Governance

As required under Clause 49 of the Listing Agreement, a detailed Report on Corporate Governance is enclosed. A certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is attached to this Report. The Chairman & Managing Director and Executive Director (Comml.) & Company Secretary of the Company have given necessary Cer tificate to the Board in terms of Clause 49(V) of the Listing Agreement with Stock Exchange(s) for the financial year ended 30th September, 2009.



6. Management Discussion And Analysis

(a) Macro-economic Developments and overall review

The global economy is showing tentative signs of recovery signaling, albeit hesitantly, the winding down of the global recession. The recovery is widely perceived to remain slow and gradual, with receding but significant downside risks.

In India average economic growth of 8.8% recorded during the five year period 2003-08. However, Information available on various lead indicators of economic activity during the last quartet (July 09 to Sept 2009) suggest that because of deficient monsoon, kharif output may be adversely affected. The industrial sector has started exhibiting recovery with 10.4 per cent growth in August 2009 and 5.8 percent growth during April-August 2009, as against 1.7 per cent and 4.8 per cent during the corresponding period of previous years respectively.

The recovery in industrial growth has been broad based with acceleration in growth of all the three sectors viz; mining, electricity and manufacturing. The industrial Sector, particularly manufacturing, bore the burn of external shock. Manufacturing value added, which was already showing down since the beginning of 2007- 08, registered 7.4 percent positive growth in July 2009 and 10.2 percent in August.

While there has been an improvement in Indian Industry, Particularly the manufacturing sector, the adverse impact of the fall in kharif production due to rain fall deficiency will act as a drag on the overall growth of the economy. In the current financial year, the major policy challenges for the government will come from the rather sharp rise in infla- tion and deteriorating public finances. The balance of pay- ments situation may also require policy attention despite a narrowing of the current account deficit and a consider- able capita account surplus because of the appreciation of the rupee.

(b) Two wheeler Industry in India.

Two-wheeler sales also came under intense pressure in the last financial year due to the sudden slowdown in lending to this segment by big private finance companies. This, coupled with weak consumer sentiment, has seen the segment report a meager very low growth during 2008-09. While mopeds and scooters grew by 13.95 percent and 14.68 percent respectively, motorcycle sales were particularly badly hit, growing just 2.61 percent. The export of Scooters grew 50 percent and motorcycle exports grew 7.78 percent.

The industry seems to be poised for some fundamental changes in growth and shift(s) in the segments.

Domestic

Industries 2008-09 (Oct.-Sept.) 2007-08 (Oct.-Sept.) Structure

Sales Growth Category Sales Growth Category in mn. % share % in mn. % share %

Scooters 1.25 14.68 15.57 1.09 5.83 14.25

Motorcycles 6.29 2.61 78.33 6.13 -0.33 80.13

Mopeds 0.49 13.95 6.10 0.43 7.5 5.62

Total 8.03 4.97 100.00 7.651 0.92 100.00

Export

Industries 2008-09 (Oct.-Sept.) 2007-08 (Oct.-Sept.) Structure

Sales Growth Category Sales Growth Category in mn. % share % in mn. % share %

Scooters 0.03 50.00 3.00 0.02 -33.33 2.15

Motorcycles 0.97 7.78 97.00 0.90 40.63 96.77

Mopeds - -100.00 - 0.01 -66.67 1.08

Total 1 7.531 100.00 0.931 32.86 100.00

From the pattern which seems to be emerging in the market and also based on views of experts there seems to be a shift in consumer preference from motorcycles to scooters on account of various reasons including but not limited to safety and convenience and this could lead to redefining and realigning of the market. Lack of consumer finance and high interest rates have adversely impacted the industry which did receive some relief in the form of excise duty reduction from the Government.

(c) Company Performance

Pursuant to the restart, the Company has been able to achieve a commendable performance seen in the light of severe difficulties and problems it has faced and is working on its revival.

(d) Opportunities and Threats

LML stands for the highest standards of technical expertise, product innovation and has one of the. finest R&D capabilities, particularly relating to designing, rapid prototyping, CAD CAM, tooling and production. It is harnessing these strengths and its vast experience in the two-wheeler business to create a healthy and aggressive business strategy for its revival and turnaround. The Company is perhaps the first in the world to obtain Euro III certification for its 2-stroke vehicles and subsequent to restart it has also received the upgraded ISO 9001-2008 certification from DNV.

(e) Outlook

As stated elsewhere in this report the Company has been working for its revival including development of new prod- ucts having state of the art technology, fuel injection, 4- stroke technology and alternate fuels like CNG/LPG.

(f) Performance Review

Due to various reasons and problems the Company could not leverage its rich technological strengths during the year under review and the sales volume could only be increased from 34711 in financial year 2007-08 to 43798 in 2008-09.

(g) Financial Review:

Revenues : Gross Sales during the year amounted to Rs. 161.62 crores compared with Rs. 112.60crores in the previous year.

Operating losses - The Company took various actions to reduce costs pursuant to the restart in April 07. The Company reported a net operating Profit of Rs.4.55 crores as compared 1o loss of Rs. 14.15 crores in the previous year. Interest - Interest was Rs 25.35.crores as compared to Rs. 22.61 crores in the previous year. Depreciation & Amortisation - Depreciation & Amortisa- tion for the year was at Rs. 17.49 crores as compared to Rs. 20.40 crores in the previous year Loss before tax- The Company reported a loss before Jax and exceptional items of Rs 38.29 crores as compared to Rs. 57.16 crores in the previous year. Share Capital - During the year under review outstanding 1,000 FCCBs (Series B - due 2010) of US $ 1000 each, were converted into 16,31,657/- Equity Shares of Rs. 10/- each at a premium of Rs.16.66, consequently Companys Paid-up Equity Share Capital increased to Rs: 819843200 as on 30-09-2009. (i) Cautionary Statement

The MD&A, detailing the Companys objectives and expectations, may contain forward looking statements within the meaning of applicable securities laws and regulations. The actual results may differ materially from those expressed or implied, depending upon changes in global and Indian demand supply conditions as well as changes in government regulations, tax regimes, economic and market developments, movements.

7. Directorate

a) Mr. R. K Srivastava and Mr. Shiromani Sharma retire by rotation and, being eligible, offer themselves for re-appointment.

Directors recommend their reappointment as Director of the company.

b) During the financial year nomination of Mr. Gautam Meour was withdrawn from the Board w.e.f. 31/07/2009 and in his place Mr. S.K Bhandari has been nominated as a Director by IFCI on the same date.

c) During the financial year nomination of Mr. Kulwant Singh was withdrawn by IDBI (SASF) from the Board w.e.f. 11/02/2009.

8. Personnel

The workmen of the Company had resorted to an illegal strike and with a view to preserve life and property, the Company had to declare a lockout on 7th March 2006. Pursuant to signing of the Tripartite Agreement between the Company and the registered and recognized trade union - Lohia Machines (LML) Karmchari Sangh and Labour Department of Government of Uttar Padesh, the strike by workmen was withdrawn and the lockout was subsequently lifted and operations restarted. The Company had 3008 employees as on 30.09.2009 out of which one employee was in receipt of remuneration of Rs. 24.00 lacs or more per annum for throughout the year and two were in receipt for the part of year. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed there under, the name and other particulars of the employee is set out in the annexure to the Directors report. In terms of the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors Report is being sent to all the shareholders of the Company, excluding the annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company. A copy of the said Annexure is also available for inspection at the Registered Office of the Company during working hours.

9. Audits & Auditors

M/s. Khandelwal Jain & Co. and M/s. Parikh & Jain, Auditors of the Company, are retiring at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re- appointment.

In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory and do not call for any further comments.

Pursuant to Section 233 B of the Companies Act, 1956 and as per requirements of the Central Government, an audit of Cost Accounts, relating to motor vehicles was carried out for the previous year. Subject to approval of Central Government M/s. J K Kabra & Co., Cost Accountants, have been re-appointed to audit the Cost Accounts relating tp the F. Y. 2009-10.

10. Conservation of Energy

Company continued to envisage and implement energy conservation measures in various manufacturing operations leading to savings of quantitative consumption of power, fuel and oil etc. Energy conservation during the year under various heads resulted into an estimated saving of Rs. 1.31 lacs (previous period Rs. 0.46 lacs)

11. Pollution Control

Relevant.and necessary effluent treatment plants and other measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. No Objection Certificates from the U.P. Pollution Control Board are obtained from time to time.

12. Technology Absorption

Requisite information in prescribed form is given in Annexure-A to this report.

13. Foreign Exchange Earnings and Outgo

Your Company earned Foreign Exchange of Rs 95.98 crores (previous period Rs. 55.24 crores). Foreign Exchange outgo amounted to Rs. 6.39 crores (previogs period Rs. 2.59 crores).

14. Stock Exchange Listing

The Equity Shares of the Company are listed at the following

Stock Exchanges:-

(i) The U.P. Stock Exchange Association Ltd., Kanpur

(ii) The Bombay Stock Exchange Limited, Mumbai

(iii) National Stock Exchange of India Ltd., Mumbai

The Company confirms that it has paid the annual listing fee to the above Stock Exchanges.

15. Depository System

Trading in Equity Shares of the Company is permitted only in dematerialized form w e.f. 17th January, 2000. All requests for dematerialization of shares are processed and the confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (In- dia) Limited (CDSL) within the stipulated time, iipto 30th September, 2009, 83.80% equity shares of the Company have been dematerialized.

16. Acknowledgement

Your Directors take this opportunity to appreciate deeply the valu- able co-operation extended by the Central and State Government authorities and are extremely grateful to the Financial Institutions and Banks for their continued assistance, guidance and support. Your Directors are also grateful to all stakeholders, including Customers, Shareholders, Employees, Vendors, Dealers / Sub-dealers, and the generalpublic for their support and confidence reposed in the Management.

For and on behalf of Board of Directors Place : Gurgaon DEEPAK SINGHANIA

Dated : 30.12.2009 Chairman & Managing Director

 
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