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Asian Electronics Ltd.

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Asian Electronics Ltd. Accounting Policy

Information relating to Corporate Governance

. Company's philosophy on Code of Governance:

The Company believes in implementing and observing good Corporate Governance practices. The Company's Corporate Governance philosophy is based on values such as transparency, professionalism and accountability. The Company emphasizes the need for full transparency and accountability in all its transactions, in order to protect the interests of its stakeholders. The Board considers itself as a Trustee of its Shareholders and acknowledges its responsibilities towards them for safeguarding and enhancing their wealth

The Company has adopted a Code of Conduct for the Members of the Board and Senior Management Personnel in compliance with the provisions of Clause 49 of the Listing Agreement.

A copy of the Code of Conduct is available on the website of the Company www. aelgroup. com.

All the Members of the Board and the Senior Management Personnel of the Company have affirmed compliance to the Code of Conduct as on 31st March, 2013, and a declaration to that effect signed by the Executive Chairman is attached and forms part of this Report.

I. Board of Directors (Board)

The Board as on 31st March, 2013 comprises of 6 Directors of which 3 are independent. The number of Non-Executive Directors is more than 50% of the total number of Directors. The Company is in compliance with the clause 49 of the listing agreement pertaining to composition of the Board.

The Non-Executive Directors are eminent professionals with experience in over all management, finance and law, who bring a wide range of skills and experience to the Board.

None of the Directors on the Board is member of more than 10 committees and chairman of more than 5 committees (as specified in clause 49), across all the companies in which he is a Director. The necessary disclosure regarding committee positions have been made by the Directors.

a. Composition of the Board

III. Committee of Directors :

Good Corporate Governance requires that the Non-Executive Directors of the Company are more actively involved in providing guidance to full time management on policy matters as well in the monitoring of actions carried out by operating management. This involvement is formalised and institutionalised through constitution of designated committees of the Board. The Committees are intended to provide periodical and regular exchange of information and ideas between the Non-Executive Directors and the operating management.

The Board has accordingly constituted Committees at its meeting held on 27th January, 2000 which comply with the requirements of clause 49 of the Listing Agreement with the Stock Exchanges and the applicable provisions of the Companies (Amendment) Act, 2000. The said Committees were reconstituted from time to time by Resolutions passed by the Board of Directors of the Company.

(A) Audit Committee:-

The Audit Committee comprises of experts specializing in accounting / financial management. The Chairman of the Audit Committee is a Non-executive and Independent Director.

As on 1st April, 2012, the Audit Committee comprised of the following Directors:

(1) Mr. D.G. Prasad, Chairman

(2) Dr. Deepak Divan, Member

(3) Mr. Rajesh Mehta, Member

During the year, the Audit Committee was reconstituted on three occasions as detailed below:

On 4th August 2012 Mr. Suresh Sharma was appointed as Chairman of the Audit Committee in place of Mr. D.G. Prasad, who ceased to be a member of the Committee due to resignation w.e.f. 8th May, 2012.

On 29th November 2012 Mr. D.B. Shah was appointed as Chairman of the Audit Committee in place of Mr. Suresh Shah who ceased to be a member of the Committee w.e.f. 16th November, 2012 due to resignation. Mr. Jim Mitropoulos was also appointed as member of the Committee in place of Mr. Deepak Divan, who ceased to be a member of the Committee w.e.f. 29th November, 2012.

On 6th March, 2013 Mr. Hardik Shah was appointed as member of the Audit Committee in place of Mr. Jim Mitropoulos who ceased to be a member of the Committee we.f. 1st January, 2013 due to resignation.

The present composition of the Audit Committee is as follows:

(1) Mr. D. B. Shah

(2) Mr. Hardik Shah

(3) Mr. Rajesh Mehta

Mr. D.B. Shah is the Chairman of the Audit Committee. Mr. Dhananjay Dumbre, Asst. Company Secretary acts as secretary to the Audit Committee.

The role and terms of reference to the Audit Committee cover the areas mentioned under Clause 49 of the Listing Agreement as amended from time to time and Section 292A of the Companies Act, 1956. The Audit Committee met five times during the year 2012-2013 on 7th May, 2012, 4th August, 2012, 29th November, 2012, 21st December, 2012 and 14th February, 2013.

ceased to be the member of the committee we.f. 1st January, 2013 due to resignation.

f) Appointed as member of the Committee w.e.f. 6th March,

2013

The meetings were also attended by Executive Chairman — Mr. Arun B. Shah, Executive Director & Jt. Chief Executive Officer (Manufacturing Operations) — Mr. Neelakanta Iyer, Chief Financial Officer — Mr. Sadanand Sahasrabudhe, DGM (Accounts) — Mr. Krishnaraj Kapadia and Mr. Naman Shah as special invitees. The Secretary — Mr. Dhananjay

Dumbre attended the Meetings held on 4th August, 2012, 29th

November, 2012, 21st December, 2012 and 14th February, 2013.

The Statutory Auditors were invited to the meetings.

(B) Executive Committee:-

The Executive Committee of the Board of Directors as on 1st April, 2012 comprised of the following Directors:

Mr. Arun B. Shah, Chairman

Mr. D.G. Prasad, Member

During the year, the Executive Committee was reconstituted on two occasions as detailed below:

On 4th August, 2012 Mr. Suresh Sharma was appointed as member of the Executive Committee in place of Mr. D.G. Prasad, who ceased to be a member of the Committee due to resignation w.e.f. 8th May, 2012. Mr. Neelakanta Iyer was also appointed as member of the Executive Committee w.e.f. 8th

May, 2012.

Mr. Suresh Sharma ceased to be a member of the Executive Committee w.e.f. 16th November, 2012 due to resignation. In view of the same Mr. D.B. Shah was appointed as member and chairman of the Executive Committee w.e.f. 29th November,

2012.

The present composition of the Executive Committee is as follows:

(1) Mr. D. B. Shah

(2) Mr. Arun B. Shah

(3) Mr. Neelakanta Iyer

Mr. D.B. Shah is the Chairman of the Executive Committee. Mr. Dhananjay Dumbre, Asst. Company Secretary acts as secretary to the Executive Committee.

This Committee deals with matters like banking operation, authorisation to employees in respect of Excise, Sales Tax, Tender submission etc. as also some matters specifically delegated by the Board from time to time.

The Executive Committee met three times during the year

2012-2013 on 23rd April, 2012, 24th August, 2012 and 12th October, 2012.

a) Ceased to be the Chairman of the Committee w.e.f. 29th November, 2012, but continued as member of the committee.

b) Ceased to be the member of the Committee w.e.f. 8th

May, 2012.

c) Appointed as the member of the Committee w.e.f. 8th May, 2012 and ceased to be member of the Committee w.e.f. 16th November, 2012.

d) Appointed as the member of the Committee w.e.f. 8th

May, 2012.

e) Appointed as member and Chairman of the Committee w.e.f. 29th November, 2012

Mr. Dhananjay Dumbre, Asst. Company Secretary acted as Secretary to the Executive Committee from 18th June, 2012, attended the meetings of the Committee held on 24th August, 2012 and 12th October, 2012.

(C) Committee for Transfer of Shares:-

The Committee for Transfer of Shares as on 1st April, 2012 comprised of the following Directors:

Mr. Arun B. Shah, Chairman

Mr. Rajesh Mehta, Member

There was no change in composition of members of the Committee during the year under review.

Mr. Dhananjay Dumbre, Asst. Company Secretary acted as Secretary to the Committee from 18th June, 2012.

During the year under review, 14 meetings were held on 16th April, 2012, 30th April, 2012, 15th May, 2012, 31st May, 2012,

15th June, 2012, 30th June, 2012, 16th July, 2012, 1st October,

2012, 16th October, 2012, 30th November, 2012, 31st December, 2012, 31st January, 2013, 28th February, 2013 and 30th March,

2013.

The attendance of each Transfer Committee Members is as under:

The Secretary: Mr. Dhananjay Dumbre attended all the meetings held on and after 18th June, 2012.

(D) Shareholders' / Investors' Grievances Committee

(a) The Shareholders' / Investors' Grievances Committee as on 1st April, 2012 comprised of the following Directors:

1) Mr. D.G. Prasad, Chairman

2) Mr. Arun B. Shah, Member

Consequent to cessation of Mr. D.G. Prasad as a Director of the Company w.e.f. 8th May, 2012, the Committee was reconstituted and Mr. Suresh Sharma was appointed as Chairman of the Committee w.e.f. 4th August, 2012.

On 16th November, 2012 Mr. Suresh Sharma ceased to be the chairman of the Committee due to resignation, In view of the same Mr. D. B. Shah was appointed as member and chairman of the committee w.e.f. 29th November, 2012.

The present composition of the Shareholders' / Investors' Grievances Committee is as follows:

Mr. D. B. Shah, Chairman

Mr. Arun Shah, Member

During the year under review, the Shareholders' / Investors' Grievances Committee met once on 6th March,

2013.

This meeting was attended by both members Mr. D.B. Shah and Mr. Arun B. Shah. The meeting was also attended by Compliance officer Mr. Dhananjay Dumbre.

(b) Number of shareholder complaints / requests received during the year:

During the year under review, total 21 investor's complaints / requests were received.

All the complaints / requests received during the year ended 31st March, 2013 were solved within time to the satisfaction of the investors / shareholders and no complaints were pending as on 31st March, 2013 for more than 30 days. All the shares received for transfer / transmission have been transferred / transmitted and no transfer is pending as on 31st March, 2013.

(E) Remuneration Committee

Matters of remuneration of Executive Directors are considered by the Board of Directors of the Company, where the interested Executive Director(s) do not participate or vote. The terms of remuneration of Executive Directors are approved by the shareholders at the Annual General Meeting Therefore, no separate remuneration committee has been constituted.

The Board of Directors decides the remuneration of nonexecutive Directors which consist of sitting fees as well as commission based on net profits of the Company.

REMUNERATION OF DIRECTORS FOR 2012-2013

(F) Compensation Committee

The Compensation Committee as on 1st April, 2012 comprised of the following Directors:

1) Mr. D. G. Prasad, Chairman

2) Mr. Arun B. Shah, Member

3) Mr. Deepak Divan, Member

Consequent to cessation of Mr. D.G. Prasad as a Director of the Company w.e.f. 8th May, 2012, the Committee was reconstituted and Mr. Suresh Sharma was appointed as Chairman of the Committee w.e.f. 4th August, 2012.

On 16th November, 2012 Mr. Suresh Sharma ceased to be the chairman of the Committee due to resignation, In view of the same, Mr. D. B. Shah was appointed as member and chairman of the committee w.e.f. 29th November, 2012. On the same date, Mr. Neelakanta Iyer was also appointed as member in place of Mr. Deepak Diwan who conveyed his intention to retire from membership of the committee.

The present composition of the Compensation Committee is as follows:

1) Mr. D.B. Shah, Chairman

2) Mr. Arun B. Shah, Member

3) Mr. Neelakanta Iyer, Member

During the year under review, Compensation Committee met once on 21st December, 2012.

This meeting was attended by Mr. D.B. Shah, Mr. Arun B. Shah and Mr. Neelakanta Iyer. The meeting was also attended by secretary to the Committee Mr. Dhananjay Dumbre.

VI. Disclosures

(i) Related party transactions:

A full disclosure of related party transactions, as per the Accounting Standard 18 issued by the Institute of Chartered Accountants of India has been given under Note 47 of the Annual Accounts.

All related party transactions have been entered into in the ordinary course of business and were placed periodically before the Audit Committee in summary form. There were no material individual transactions with related parties which were not in the normal course of business and required to be placed before the Audit Committee and that may have potential conflict with the interest of the Company at large. All individual transactions with related parties or others were on an arm's length basis.

(ii) All mandatory Accounting Standards have been followed in preparation of financial statements and no deviation has been made in following the same.

(iii) (a) All pecuniary relationship or transactions of the Non-

executive Directors vis-a-vis the Company have been disclosed hereinabove.

(b) The Company has two Whole time Directors on the Board whose appointment and remuneration have been fixed by the Board in terms of Resolution passed by the members. The remuneration paid / payable is mentioned earlier in this report.

(c) The number of shares held by each Director is mentioned in Item No. II (a) above.

(iv) (a) Management Discussion and Analysis forms part of

the Annual Report to the shareholders and it includes discussions on matters as required under the provisions of Clause 49 of the Listing Agreement with Stock Exchanges.

(b) There were no material financial & commercial transactions by Senior Management as defined in Clause 49 of the Listing Agreement where they have personal interest that may have a potential conflict with the interests of the Company at large requiring disclosure by them to the Board of Directors of the Company.

(v) There was no non-compliance during the last three years by the Company on any matter related to Capital Market. However, the Securities and Exchange Board of India (SEBI) vide its

letter No. CFD/DCR/RC/TO/ 13060/04 dated 21st July,

2004 had alleged violation of regulations 6 and 8 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 by the Company. SEBI had intimated willingness to consider Company's request for consent order, if the Company is willing to pay an amount of Rs.1,75,000/- as penalty for the alleged violation of Takeover Regulations. The Company had made submissions to SEBI vide its letter dated 24th September, 2004, explaining the fact and requesting them in any case to take lenient view and condone the alleged delay on the part of the Company and its Officers in compliance of the SEBI Takeover Regulations and also requested for personal hearing in the matter. As of date, the Company has not received any response from SEBI.

VII. Means of Communication

a. The quarterly/ half yearly and annual Financial Results of the Company are forwarded to the Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. and published in leading national newspapers. Besides the same is also displayed on the corporate website : wwwaelgroup.com <http://wwwaelgroup.com>

b. The Company also electronically files documents such as full version of Annual Report, Quarterly Financial Statements, Corporate Governance Report, Shareholding Pattern Statement and other prescribed information with CorpFiling website in compliance with Clause 52 of the Listing Agreement.

c. The Company has made presentations to various Institutional Investors/ Analysts during the year.

d. Management Discussion & Analysis is covered elsewhere in the Directors' Report to Members.

The Company has its own web site viz. www.aelgroup.com <http://www.aelgroup.com> and all the vital information relating to the Company and its products is displayed on the website. The shareholders can also post their queries to the designated email Id Secdept@ aelgroup.com <http://aelgroup.com>

VIII. Management Discussion and Analysis Report

Management Discussion & Analysis forms part of the Directors' Report.

IX. Shareholder Information

1. Annual General Meeting

Date

Time

12th August, 2013

4.30 p.m.

Victoria Memorial School for Blind, 73,Tardeo Road, Opposite Film Centre,

Tardeo, Mumbai 400 034

2012-2013

6th August, 2013 to

12th August, 2013

Not applicable

The shares are listed on

2. Financial Year

3. Book closure date

4. Dividend payment date

5. Listing of equity shares

1)

Bombay Stock Exchange Ltd. (BSE), Phiroze Jeejeebhoy Towers, Dalal Street,

Mumbai - 400 001

and

(2)

National Stock

6. Stock Code

Exchange of India Ltd. (NSE),"Exchange Plaza", Bandra-Kurla Complex, Bandra (E),

Mumbai - 400 051.

Annual listing fee for

the year2012-2013 (as

applicable) has been paid by the Company to BSE

and NSE .

BSE Scrip Code 503940

NSE Trading symbol:

ASIANELEC

7. Registrars & : The Company was handling share Transfer Agents transfer and other allied matters in-

house. Link Intime India Pvt. Ltd. were the connectivity agent for Demat of Company's shares. Securities and Exchange Board of India (SEBI) by

its Circular dated 27-12-2002, directed

that all share registry work in terms of both, physical and electronic segments should be maintained at a single point either in-house or with a SEBI registered Registrar & Transfer Agent. In compliance with this directive, the Company has appointed Link Intime India Pvt. Ltd. as Registrar and Transfer

Agent with effect from 1.2.2003.

8. Share Transfer : Transfer requests received in physical System forms are presently processed by the

R & T Agent and Share Certificates are returned within a period of 30 days from the date of receipt. The Company obtains from a Company Secretary in Practice half yearly certificate of compliance with the share transfer formalities as required under Clause 47 (C) of the Listing Agreement with Stock Exchanges and files a copy of the Certificate with Stock Exchanges.

11. Dematerialisation of shares

During the previous years and the year under review 3,92,25,919(98.97%) shares were held in demat form.

ISIN No. INE441A01026

2. Plant Locations

Company's Plants are located at Works

Plot No.68, MIDC Industrial Area, Satpur, Nashik - 422 007. DTA Unit

Plot No. 2, Survey No. 1B/2C Near Octroi Naka, Vilholi, Nashik — 422 010.

EOU

Survey No. 15, Plot No. 1, Mumbai-Agra Road, Near Octroi Naka, Vilholi, Nashik — 422 010.

Solan Unit

Hadbast No. 932, Khasra No.228, Village Jakhroda, P.O. Partha, Panchayat — Narayani Tehsil Kasauli, Dist. Solan Himachal Pradesh.

Silvassa Unit

Survey No. 113/6, Tirrupati Industrial Estate Near 66 KV Road,

Amli, Silvassa — 396 230.

3. Address for correspondence

The Company's Registered Office is situated at 107, 1st Floor, Sumer Kendra Bldg, Behind Mahindra Towers, Worli, Mumbai - 400018, Tel: (91-22) 66104887, Fax: (91-22) 66104888, E-mail: jp@aelgroup.com <mailto:jp@aelgroup.com> and secdept@aelgroup.com <mailto:secdept@aelgroup.com> Website: www.aelgroup.com <http://www.aelgroup.com>

The secretarial department of the Company is located at Registered office as mentioned herein above.

Shareholder correspondence may be directed to:

Link Intime India Pvt. Ltd.,

Unit : Asian Electronics Limited

C-13, Pannalal Silk Mills Compound,

L.B.S. Marg, Bhandup (West), Mumbai — 400 078.

Tel.: 25963838, Fax: 25946979, E-mail: helpline@linkintime.co.in <mailto:helpline@linkintime.co.in>

Shareholders holding shares in electronic mode should address their correspondence to their respective Depository Participants.

14. Transfer of unclaimed dividend amount to Investor Education & Protection Fund

During the year under review, the Company has credited Rs. 3,13,734/- to the Investor Education & Protection Fund pursuant to Section 205 C of the Companies Act, 1956 read with the Investor Education & Protection Fund (Awareness & Protection of Investors) Rules, 2001.

15. Compliance Certificate of Auditors

Certificate from the Auditors of the Company, M/s. Sorab S. Engineer & Co. confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is annexed to the Directors' Report forming part of the Annual Report.

This certificate has been forwarded to Stock Exchanges where the shares of the Company are listed.

16. Secretarial Audit

The Secretarial Audit Report confirming that the total issued capital of the Company is in agreement with the total number of shares in physical form and the dematerialised shares held with NSDL and CDSL is placed before the Board on quarterly basis. A copy of the Audit Report is submitted to the Stock Exchanges where the shares of the Company are listed.

17. Non-Mandatory Requirements

1. The Board

(a) The Company has got an Executive Chairman.

(b) At present there is no policy fixing the tenure of independent Directors. However, no independent Directors' tenure exceeds in aggregate a period of nine years.

2. Remuneration Committee

As on 31st March, 2013, the Company has two Whole-time Directors on the Board whose appointment and remuneration have been fixed by the Board in terms of Resolution passed by the members.

In view of this, no Remuneration Committee is constituted for the purpose.

3. Shareholders' Rights

Half yearly financial results including summary of the significant events in last six months are presently not being sent to shareholders of the Company.

4. Audit Qualifications

As regards qualification as contained in the Audit Report dated May 30, 2013 please refer to the responses given by the Management in Director's Report.

5. Training of Board Members

There is no formal policy at present for training of the Board Members of the Company as the members of the Board are eminent and experienced professional persons.

6. Mechanism for evaluating non-executive board members

There is no formal mechanism existing at present for performance evaluation of non-executive directors.

7. Whistle Blower Policy

The Employees of the Company are encouraged to report to the management any unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy, which may have come to their notice. In exceptional cases, employees can have direct access to the Chairman of the Audit Committee. However, the Company has not, so far, established any formal whistle blower policy.

The above report has been placed before the Board at its meeting held on May 30, 2013 and the same was approved.

Declaration by the CEO under Clause 49 of the Listing Agreement on Compliance of the Company's Code of Conduct

Asian Electronics Ltd.,

107, Sumer Kendra, 1st Floor,

Behind Mahindra Towers,

P.B. Marg, Worli, Mumbai - 400 018.

The Company has framed a specific Code of Conduct for the members of the Board of Directors and the Senior Management Personnel of the Board of Directors and Senior Management Personnel of the Company pursuant to Clause 49 of the Listing Agreement with Stock Exchanges to further strengthen corporate governance practices in the Company.

All the members of the Board and Senior Management Personnel of the Company have affirmed due observance of the said Code of Conduct in so far as it is applicable to them and there is no non-compliance thereof during the year ended 31st March, 2013.

Place: Mumbai Arun B. Shah

Date: 9th July, 2013 Executive Chairman