Your Directors have pleasure in presenting you the Twenty Third Annual Report togetherwith Audited Financial Statements for the year ended 31st March 2016.
FINANCIAL PERFORMANCE OF THE COMPANY
| || ||(Rs. In Lakhs) |
|Particulars ||For the year ended 31/03/2016 ||For the year ended 31/03/2015 |
|Sales & Other Income ||29.52 ||27.13 |
|Profit/(Loss) before interest and Depreciation ||(3.55) ||0.78 |
|Depreciation ||0.82 ||1.15 |
|Net Profit/(Loss) before Tax & Exceptional items ||(4.37) ||(0.37) |
|Exceptional Items & Extra- Ordinary Items ||3.69 ||- |
|Income Tax ||- ||0.10 |
|Net Profit/(Loss) after Tax & Exceptional Items ||(0.68) ||(0.47) |
COMPANY'S PERFORMANCE AND OPERATIONS:
The Aqua Farm situated at Isakapalli is given on lease during July 2013 for sevenyears. Operating in volatile and uncertain environment at that time the company had giventhe farm on long term lease earned agross income of Rs. 29.52 lakhs and incurred amarginal NetLoss of Rs. 0.68 lakhs.
DIVIDEND AND RESERVES
In view of considerable accumulated losses no dividend is declared and not transferredany amount to reserves.
India is second major producer of aquaculture in the world producing 7 per cent of theworld output. Aquaculture sector of the country witnessed boom with increased productionof P. monodon and L. vannamei. Indian quality has been broadly accepted in theInternational market. 70% of marine products exports is farmed shrimps 383000 tonnes ofIndia's shrimp export in 2015 worth Rs.33000 cr. Higher global prices for small sizedshrimps may lead to better production of aquaculture shrimps. Last fiscal the exportremained subdued with a plunge in prices and decline in production due to rains anddiseases. Unlike last year the prices for smaller size shrimps have gone up promptingfarmers to harvest early. India has increased the quality of storages road andtransportation and availability of public cold stores shipment connectivity and theShipping Port infrastructure facilities which are mostly oriented toward the export marketIndia expects huge increase in the marine exports due to increased production of L.vannamei shrimp and diversification of aquaculture to Tilapia and Mangrove crab in 2016.Indian seafood has significant presence in the world seafood in commodity trade. Increasedcommodity diversification has been one of the major strength achieved over the years. Theinternational trade scenario is changing fast and the importers are insisting on stringentquality standards. Introduction of L. vannamei in the culture has improved performance ofthe seafood export industry.Shrimps Black Tiger and Vannamei reimain to be the mostfavourite among the developed countries and earned 3.08 billion US$ to India's economy.Though India has huge Aquaculture resources only 14% of the potential water resources areutilized implying huge potential for the growth ofthis sector.
The company in orderto reduce the losses and having discontinued the farmingoperations the company had given the farm at Iskapally for a long term lease so that itcan be put to better use and to take of the farm's maintenance and other overhead expensesof the company. As there is a considerable improvement in the economy revival thepromoters are exploring opportunities in various fields to revive the fortunes of thecompany. The lessee had considerably improved the infrastructure in farm thereby reducingthe infrastructure maintenance costs to the Company except the statutory compliance costs.
The company does not have any subsidiaries and joint ventures.
PARTICULARS REGARDING ENERGY CONSERVATION etc.:
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure V to this Report.
RETIREMENT BYROTATION OF ANON -EXECUTIVE WOMAN DIRECTOR
In accordahce with the provisions of Section 152 of the Companies Act 2013 read withthe Articles of Association of the Company Smt. Bommidala Anitha (DIN: 00112766)Non-executive Woman Director liable to retire by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers herself for re-appointment as Director. TheBoard recommends her appointment.
Vacancy in the office of Chief Financial Officer:
During the year a casual vacancy in the office of Chief Financial Officer araised dueto sudden death of Mr. A.S. Prasad Chief Financial Officer of the company.
Board and Committee Meetings:
The Board met 5 times during the financial year 2015-16 the details of which are givenin the Corporate Governance Report.
Committees of the Board
The details of all the Committees along with their composition terms of reference andmeetings held during the year are provided in the "Report on CorporateGovernance" forming part ofthis Annual Report.
Board evaluation of its own performance:
In accordance with the provisions of Section 134 of the Act and of the SEBI (LODR)Regulations2015 the Board has carried out an evaluation of its own performance theperformance of Committees of the Board namely Audit Committee Risk Management CommitteeStakeholders Relationship Committee and Nomination and Remuneration Committee and also thedirectors individually. The manner in which the evaluation was carried out and the processadopted has been mentioned in the Corporate Governance Report.
Policy for selection and appointment of Directors Senior Management and theirremuneration:
The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection and appointment of Directors Senior Management and theirremuneration and also framed the criteria for determining experience qualificationspositive attributes and independence of directors.
Declaration Given by Independent Directors:
All the Independent Directors viz. Sri Tunuguntla Rama Krishna (DIN:02324865) and SriNellore Dolendra Prasad (DIN:01816366) have submitted declarations confirming that theycontinued to meet the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 and SEBI (LODR) Regulations 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
During the financial year 2015-16 the Company has not given any guarantees/loan ormade any investments. However during the year the company has repaid Rs. 1.50 Lakhs (Netof receipts and payments) against the interest free loan amount dueofRs.4.35 Lakhs as on31 st March 2015 from Mr. BommidalaRamaKrishna Managing Director.
PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure VII to the Board of Directors report.
AUDITORS AND AUDITOR'S REPORT Statutory Auditors:
The Shareholders at the 22nd Annual Genera] Meeting held on 14th September 2015 haveappointed M/s Garlapati & Co. Chartered Accountants (Firm Regn.No:000892S) asStatutory Auditors of the Company to hold office until the conclusion of 23nd AnnualGeneral Meeting. M/s Garlapati & Co. being eligible has expressed their willingnessto continue as Statutory auditors of the Company and accordingly the company has receiveda letter ftom them to the effect that appointment if made would be within the prescribedlimits under section 141 (3)(g) of the Companies Act 2013 that they are not disqualifiedfor re-appointment and the ratification of their re-appointment is recommended to theShareholders.
EXPLANATION FORAUDITORS EMPHASIS OFMATTER:
(a) Regarding Non- Agriculture Tax there was no demand from the concerned department.However the company had shown the amount as contingent liability under other notes onaccount.
(b) Regarding the preparation of accounts ongoing concern basis the notes inIndependent audit report is self explanatory and the company had given the farm on longterm lease and got steady income and been able to meet its operational expenses.
The Board as required under Sec 138 of Companies Act 2013 in consultation with AuditCommittee had re-appointed M/s. Jonnalagadda & Associates Chartered Accountants(FiimRegn.No:01358S) as internal auditors.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s K. Srinivasa Rao & Co Company Secretaries as the SecretarialAuditors to undertake the Secretarial Audit of the Company. The Report of the SecretarialAudit is given in Annexure-ELI to this Report. There were no qualifications reservationsor adverse remarks given by Secretarial Auditor except non appointment of CompanySecretary which is a non-compliance of Section 203 of the companies Act 2013 andRegulation 6 of SEB1 (LODR) Regulations 2015.
Board Clarification on Secretarial Auditorqualifications:
The Board has made utmost effort for an appointment of the Company Secretary as KMP butnot able to appoint a Company Secretary due to lack of suitability of the Candidate to theprofile of the Company in terms of work location job profile and remuneration.
The Company has put in place amcchanism to identify assess monitor and mitigatevarious risks to its key business objectives. Major risks identified by the business andfunctions are systematically addressed through mitigating actions on a continuing basis.The Company has formulated a Risk Management Policy which is also available on theCompany's website at www.bkvindustrics.com
LNTERNAL FINANCIAL CONTROLS:
The Company has adequate Internal Financial Controls with proper checks to ensure thattransactions are properly authorized recorded and reported apart from safeguarding itsassets. These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis.
The internal auditors of the Company review the controls across the key processes andsubmit reports periodically to the Management and significant observations are alsopresented to the Audit Committee for review. Follow up mechanism is in place to monitorthe implementation of the various recommendations.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:
Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company i.e. (a) net worth of the Company to be '500 crore or more; or (b)turnover of the company to be '1000 crore or more; or (c) net profit of the company to be'5 crore or more. As the Company does not fall under any of the threshold limits givenabove the provisions of Section 135 are not applicable to the Company.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into during the financial year with therelated parties were on aim's length basis and were in the ordinary course of business.Section 188(1) of the Companies Act 2013 exempts related party transactions (hat are inthe ordinary course of business and are on arm's length basis. The Board of Directors andthe Audit Committee have also approved the said related party transactions.
There are no materially significant related party transactions with the promotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. The policy on dealing with RelatedParty Transactions as approved by the Board is available at the investors section of theCompany's website at www.bkvindustries.com
The particulars of contracts/arrangcments entered into by the Company with relatedparties as required to be disclosed are given in AOC-2 as Annexure IV to this Report.
During the year your company followed best corporate governance practices and the samewill be continued in forthcoming years also.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (LODR) 2015 Regulations given in Corporate GovernanceReport form part of this Annual Report.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND:
The company has not declared any dividend till date from inception therefore there wereno funds which were required to be transferred to Investor Education and Protection Fund(IEPF).
Vigil Mechanism & Whistle Blower Policy
The Company has a vigil mechanism and a whistle blower policy. The same has been postedon the Company's website and the details of the same are given in the Coiporate GovernanceReport
EXTRACT OF THE ANNUAL RETURN
The details of the extract of the Annual Return in Form MGT-9 are given in Annexure- VIto this Report.
NEWLISTINGAGREEMENTWITHSTOCKEXCHANGES AS PER SEBI (LODR) REGULATIONS 2015:
The Securities Exchange Board of India (SEBI) on September 2015 issued SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with the aim to consolidate andstreamline the Provisions of the Listing Agreement for different segments of the capitalmarkets to ensure better enforceability. The said Regulations were effective from 1stDecember 2015. Accordingly all listed entities were required to enter into the ListingAgreement within six months from the effective date. The company entered into ListingAgreement with BSE & Kolkata Stock Exchange Limited during 29th February 2016. Assuch the company had complied with the clauses of the Listing Agreement from 1st April2015 to 30th November 2015and complied withNew Regulations prescribed under SEBI ListingRegulations from 1st December 2015 to 31st March 2016.
As per the requirement of SEBI Listing Regulations the Company declares that itssecurities are listed on the Stock Exchanges of Mumbai and Kolkata. The company confirmsthat it has paid annual listing fees to the Stock Exchanges of Mumbai and Kolkata for theyear 2015-2016.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to the provisions contained in Section 134(3) of the Companies Act 2013 yourDirectors to the best of their knowledge and be lief and according to information andexplanations obtained from the management confirm that:
In the preparation of the annual accounts forthc financial year ended March 312016the applicable accounting standards have been followed and there are no materialdepartures from the same;
The Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 312016 and of the cash flows andloss of the Company for the year ended on that date;
The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding theassets of the Company and for preventing and detecting fraud and otherirregularities;
The Directors have prepared the Annual Accounts onagoingconcem basis.
The Directors have laid down proper internal financial controls to be followed by theCompany relevant to its nature of operations and such controls are adequate and operatingeffectively.
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
Your Directors state that no disclosure is required in respect of the following itemsas there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
4. No orders were passed by the Regulators or Courts or Tribunals which impact thegoing concern status and the Company's operations in future.
Material Changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report: No Material Changes andcommitments affecting the financial position of the company occurred for a period whichthe financial statements relate and the date of the report
PREVENTION OFSEXUALHARASSMENT OF WOMEN AT WORK PLACE:
As per requirement of The Sexual Harassment of Women at Workplace (Preventionprohibition & Redresses) Act 2013 and Rules made there under your company hasconstituted internal Complaints Committee (ICC). During the year there was no complaintsreceived under this Act.
Annexure - IV
FORM NO. AOC-2 - Related Party Transactions
[Pursuant to Clause (h) of sub-scction (3) of Section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014 Form for disclosure of particularsof contracts/arrangements entered into by the Company with the related parties referred toin sub-section (1) of Section 188 of the Companies Act 2013 including certain arms-lengthtransactions under third proviso thereto.
1. Details of contracts or arrangements or transactions not at arm's length basis:
There were no transactions with related parties which were not arm's length basis.
2. Details of material contracts or arrangements or transactions at arm's length basis:
Remuneration to the Managing Director and Interest Free Unsecured Loans have beenextended by the Director to the company are the only related party transactions enteredduring the year by the company which are in the nature of ordinary course of business andnot material transactions.
Information to be given under Section 134 read with Rule 8(3) of the Companies(Accounts) Rules 2014
A. CONSERVATION OF ENERGY
|I. The steps taken or impact on conservation of energy ||Not Applicable |
|ii. The steps taken by the Company for utilizing alternate sources of energy ||Not Applicable |
|iii. The capital investment on energy conservation equipment ||NIL Not Applicable |
B. TECHNOLOGY ABSORPTION
|i. The efforts made towards technology absorption ||Not Applicable |
|ii. The benefits derived like product improvement cost reduction product Development or import substitution ||Not Applicable |
|iii. In case of imported technology (imported during the last three years reckoned from the Beginning of the financial year) ||Not Applicable |
|(a) The details of technology imported || |
|(b) The year of import || |
|(c) Whether the technology been fully absorbed || |
|(d) If not fully absorbed areas where absorption || |
|iv. The expenditure incurred on Research and Development ||NIL Not Applicable |
|The employee if employed for a part of the financial year was in the receipt of remuneration for any part of that year at a rate which in the aggregate for not less than Rs.5.00 lacks per month; ||NA ||NA |
|The employee if employed through the financial year or part thereof was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate which in the aggregate is in excess of that drawn by the Managing Director or Whole time Director or Manager and holds by himself or along with his spouse and dependent children not less than 2% of the equity shares of the company Relative to Smt. Bommidala Anitha Director ||NA ||NA |
|Expired on 25-1-16 ||At order of the Board of Directors |
|Place: Guntur || |
|Date: 28.05.2016 ||BOMMIDALA RAMA KRISHNA |
| ||Managing Director |
| ||DIN:00105030 |