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DIRECTOR'S REPORT

Fedders Electric and Engineering Ltd.

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Market Cap. (₹) 15.63 Cr. P/BV -0.38 Book Value (₹) -12.21
52 Week High/Low (₹) 0/0 FV/ML 10/1 P/E(X) 0.00
Bookclosure 22/09/2017 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2016-03 

Dear Shareholders,

The Directors are pleased to present the 60th Report of Board of Directors on the business and operations of your Company together with its Audited Financial Statements for the nine months period ended 31st March, 2016.

FINANCIAL PERFORMANCE

The financial performance of your Company for the nine months period ended 31st March, 2016 is summarized below:

(Rs.in Crores)

Particulars

As at

31st March, 2016

As at 30th June, 2015

Gross Revenue from operations

1041.78

1332.29

Profits before Interest, Tax, Depreciation and Amortization (EBITDA)

98.06

136.43

Finance Cost

49.04

64.25

Depreciation & Amortization

9.74

12.72

Profit before Tax

39.28

59.46

Tax Expenses:

Current Tax

13.35

15.25

Deferred Tax

4.35

4.03

Profit after Tax

21.58

40.18

Balance brought forward from previous year

13.43

26.86

Total available for appropriations

35.01

67.04

(Less) Appropriations:

Proposed Dividend

2.31

3.08

Provision for Tax on dividend

0.48

0.53

Provision for Tax on dividend for previous year

0

0

Depreciation adjustment

0

0

Transferred to General Reserve

25.00

50.00

Balance Carried forward to Balance Sheet

7.22

13.43

Earnings Per Share (Rs.)

7.01

13.06

Note: Due to change in the Company's financial year from "1st July to 30th June" to "1st April to 31st March", the period under review comprises of nine months. Henceforth, figures are not entirely comparable.

STATE OF AFFAIRS AND OPERATIONAL HIGHLIGHTS

During the period under review, the Gross Revenue from operations of your Company stood at Rs.1041.78 Crores and Profit after tax for the period ended 31st March, 2016 stood at Rs.21.58 Crores.

SHARE CAPITAL

There was no change in the Company's share capital during the period under review. The Company's paid up share capital stood at Rs.30,76,97,000 comprising of equity shares of face value of Rs.10/- each as at 31st March, 2016.

However, the Company has issued and allotted 50,00,000 Convertible Warrants on preferential basis to its promoter group entities on 3rd August, 2015 which are convertible into equal number of equity shares upon exercising the right of conversion by the promoter group entities. No holder of Convertible Warrant exercised the option of conversion as on 31st March, 2016.

DIVIDEND

Based on the financial performance, profitability and cash flow of the Company, your Board of Directors are pleased to recommended the dividend of Rs.0.75 (Seventy Five Paise) per equity share of Rs.10/- each for the nine months period ended 31st March 2016. The dividend on equity shares, if approved by the members would involve a cash outflow of Rs.2.79 Crores including dividend tax of Rs.0.48 Crore.

TRANSFER TO RESERVES

Your Company proposes to transfer Rs.25.00 Crores to the General Reserve out of the amount available for appropriations as per the financial statements for the period ended 31st March, 2016.

DEPOSITS

During the period under review, your Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the period under review, 3 (three) meetings of the Board of Directors were held. For details of the meetings of the board, please refer to the Corporate Governance Report, which forms part of the Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Nemichandra D. Jain (DIN:03589109) resigned from the office of Director of the Company w.e.f. 28th December, 2015. The Board places on record its appreciation for his continuous support, guidance and contribution during his tenure as Whole-time Director on the Board of Directors of the Company.

Ms. Purnima Sharma (ICSI Membership No. F7706) has resigned from the office of Company Secretary of the Company w.e.f. 30th May, 2016. The Board places on record its appreciation for the services rendered by Ms. Purnima Sharma during her tenure with the Company.

Pursuant to the recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company in their meeting held on 12th February, 2016 had accorded their consent for re-appointment of Mr. Sham Sunder Dhawan (DIN: 00528056) as the Whole-time Director of the Company for a further term of two years w.e.f. 26th April, 2016. Your approval for his re-appointment is being sought in the forthcoming AGM as per the Resolution No. 5 of the Notice, which forms part of the Annual Report.

Mr. Sham Sunder Dhawan will retire by rotation at the ensuing AGM in accordance with the provisions of Section 152 of the Companies Act, 2013 and being eligible, has offered himself for re-appointment. Brief resume of Mr. Sham Sunder Dhawan, along with the shareholding in the Company, as stipulated under Secretarial Standard 2 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations”), is appended as an Annexure to the Notice of the ensuing AGM.

Mr. Pulkit Bhasin (ICSI Membership No. A27686) has been appointed as Company Secretary & Compliance Officer of the Company with effect from 30th May, 2016 in accordance with the provisions of the Companies Act, 2013 ("Act”) and Listing Regulations.

All Independent Directors of the Company have given declarations confirming that they meet the criteria of independence as laid down under section 149(6) of the Act and Listing Regulations.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

a. in the preparation of the annual accounts for the period under review, the applicable accounting standards have been followed and there are no material departures.

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2016 and of the profit of the Company as on 31st March, 2016.

c. 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. they have prepared the annual accounts on a going concern basis.

e. they have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and operating effectively.

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

SUBSIDIARY COMPANY

Your Company has one wholly owned subsidiary company namely Fedders Lloyd Trading FZE incorporated in United Arab Emirates. The consolidated financial statements presented by the Company include the financial information of its subsidiary and have been prepared in compliance with applicable Accounting Standards issued by the Institute of Chartered Accountants of India.

The Company has no Joint Venture or Associate Company within the meaning of Companies Act, 2013. There is no Company which has become or ceased to be the subsidiary of the Company during the period under review. There has been no material change in the nature of the business of the subsidiary.

Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a separate statement containing the salient features of the financial statements of the Company's subsidiary in Form AOC-1 is attached with the financial statements of the Company.

Further, pursuant to the provisions of section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiary, are available on the website of the Company. The Company will make these documents available upon request by any shareholder of the Company.

STATUTORY AUDITORS

In terms of the provisions of Section 139 of the Companies Act, 2013 read with relevant rules made there under, M/s. Suresh C. Mathur & Co., Chartered Accountants (Firm Regn. No. 000891N) were appointed as the Company's Statutory Auditors from the conclusion of the 58th Annual General Meeting (AGM) till the conclusion of 61st AGM of the Company. The said appointment is subject to ratification by the members at every AGM held during this tenure. The Company has received a consent and certificate from the Auditors confirming their eligibility for ratification of their appointment at the ensuing AGM. The Board, on the recommendation of the Audit Committee, recommends for ratification by the members, the appointment of M/s. Suresh C. Mathur & Co., Chartered Accountants, as the Company's Statutory Auditors from the conclusion of the ensuing AGM till the conclusion of 61st AGM.

The Board has duly examined the Auditors' Report to the accounts, which is self-explanatory. Clarifications, wherever necessary, have been included in the Notes to Accounts of the financial statements and need no further comments.

SECRETARIAL AUDITORS

Mr. Sanjay Chugh, Practicing Company Secretary (C.P. No. 3073) was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit for the period ended 31st March, 2016 in compliance with the provisions of Section 204 of the Companies act, 2013 and the relevant rules made there under. The Report of the Secretarial Auditor is annexed to this report and marked as Annexure-1.

COST AUDITORS

The Board, on the recommendation of the Audit Committee, has appointed M/s. Jain Sharma & Associates, Cost Accountants (Firm Regn. No. 000270), as cost auditors of the Company for the financial year 2016-17 at a fee of Rs.2,06,250/- (Rupees Two Lakh Six Thousand Two Hundred and Fifty Only) plus applicable taxes subject to its ratification by the shareholders at the ensuing annual general meeting.

INTERNAL AUDITORS

Pursuant to the recommendation of Audit Committee, the Board of Directors in its meeting held on 13th August, 2015 had appointed M/s. Vivek Rag & Associates, Chartered Accountants as Internal Auditors of the Company to conduct the internal audit of the period ended 31st March, 2016. The Internal Audit Reports received from the Internal Auditors were reviewed by the Audit Committee from time to time.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report, highlighting the performance and prospects of the Company's business, forms part of the Annual Report.

CORPORATE GOVERNANCE

The Company is committed towards maintaining the highest standards of Corporate Governance and adhering to the disclosure norms as set out by Securities and Exchange Board of India. Your Directors re-affirm their commitment to the corporate governance standards to the extent they are applicable to the Company. In compliance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, a detailed Corporate Governance Report is annexed to and forms part of the Annual Report.

BOARD EVALUATION

In terms of provisions of the Act read with Rules issued there under and as per the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors, on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board. Accordingly, the performance evaluation of the Board, each Director and the Committees was carried out for the period ended ended 31st March, 2016. The evaluation of the Directors was based on various aspects which, inter alia, included the level of participation in the Board Meetings, understanding of their roles and responsibilities, business of the Company along with the environment and effectiveness of their contribution.

COMMITTEES OF THE BOARD OF DIRECTORS

Your Company has following Committees of Board of Directors:

1. Audit Committee;

2. Nomination and remuneration Committee;

3. Stakeholders' relationship Committee;

4. Corporate Social responsibility Committee; and

5. Committee of Board of Directors.

The role and composition of these Committees, including the number of meetings held during the period under review and the related attendance, are provided under Corporate Governance Report which forms part of the Annual Report.

MATERIAL AND SIGNIFICANT CHANGES

During the period under review, the Company has shifted its registered office from C-4, Gautam Budh Nagar, Part-II, Noida, Uttar Pradesh to 6 and 6/1, UPSIDC Industrial Area, Sikandrabad, District Bulandshahr, Uttar Pradesh-203205.

RELATED PARTY TRANSACTIONS

All the related party transactions are entered on an arm's length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure requirements), regulations, 2015. Pursuant to the provisions of Section 188 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the prescribed format in Form AOC-2 is annexed with this report as Annexure-2. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions for its approval. The Related Party Transactions Policy as approved by Board, on recommendation of the Audit Committee, is uploaded on the company's website.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has effective and reliable Internal Control System commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is well defined in the organization and is aligned with the statutory requirements. The efficacy of the internal checks and control systems are validated by Statutory Auditors.

The Audit Committee of the Board reviews the internal audit plans, adequacy and effectiveness of the internal control system, significant audit observations and monitors the sustainability of remedial measures.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical. The Board of Directors of the Company has constituted Corporate Social Responsibility ("CSR”) Committee in compliance with Section 135 of the Companies Act, 2013. The Company is committed to inclusive, sustainable development and contributing to building and sustaining economic, social and environmental capital and to pursue CSR projects that are replicable, scalable and sustainable with a significant multiplier impact on sustainable livelihood creation and environmental replenishment. The brief outline of the CSR policy and initiatives taken by the Company on CSR activities during the period under review are provided in the Annexure-3 of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR policy is available on the website of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND RESEARCH & DEVELOPMENT

In accordance with the requirements of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, a statement showing particulars with respect to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is annexed hereto as Annexure-4 and forms part of this report.

VIGIL MECHANISM

In accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Company has adopted a Whistle Blower Policy, as part of vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is an actual or suspected fraud or perceived to be in violation of or in conflict with the Code of Conduct of the Company. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also uploaded on the website of the Company.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-5 and forms part of this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-6 to this Report.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration and the same has been uploaded on the website of the Company i.e. www.fedderslloyd.com. Remuneration Policy of the Company acts as a guideline for determining, inter alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and Senior Management Personnel.

RISK MANAGEMENT

The Company has identified potential risks and required mitigation measures. Major risks identified are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee of the Company. The Company has approved and adopted Risk Management Policy to enhance control mechanism for risk evaluation and mitigation and the risk management process.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always provided a congenial atmosphere for work to all the employees that is free from discrimination and harassment including sexual harassment. There were no cases/complaints pertaining to the sexual harassment reported to the Board during the period under review.

LISTING OF EQUITY SHARES

The Equity Shares of your Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Annual Listing Fees for the year 2016-17 have been paid to these stock exchanges.

LISTING AGREEMENT

The Securities and Exchange Board of India ("SEBI”), on 2nd September, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective from 1st December, 2015. Accordingly, all listed companies were required to enter into the Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited in December, 2015.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its future operations.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The Company had not declared any dividend in the financial year 2007-08. Therefore, no unclaimed dividend was due for transfer to Investor Education and Protection Fund ("IEPF") maintained with Central Government during the nine months period ended 31st March, 2016. However, the Company has been regular in transferring the unclaimed dividend to IEPF as when it becomes due for transfer.

HEALTH, SAFETY AND ENVIRONMENT

Your Company has complied with all the applicable Health & Safety Standards, Environment Laws and labour laws and has been taking all necessary measures to protect the environment and provide workers a safe work environment. Your Company is committed for continual improvement in Health & Safety as well as Environmental performance by providing a Safety & healthy work environment to all its employees and co-workers.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Your Company considers people as its biggest assets and "Believing in People” is at the heart of its human resource strategy. Lot of efforts are put in for talent management, strong performance management, learning and training initiatives in order to ensure that your Company consistently develops inspiring strong and credible leadership. During the period under review, your Company continued to have cordial relationship with all its employees and maintained healthy, cordial and harmonious industrial relations at all levels.

ACKNOWLEDGMENTS

Your Directors take this opportunity to thank the customers, employees, financial institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company who all made our consistent growth possible.

Your Directors also wish to record their appreciation for the continued co-operation and support extended by the governments of various countries where we have our operations.

For and on behalf of the Board of Directors

Brij Raj Punj

Place: New Delhi Chairman & Managing Director

Date: 30th May, 2016 (DIN: 00080956)

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