The Directors are pleased to present the 37th Annual Report and the Audited Accountsfor the financial year ended March 31 2016.
The financial performance of the Company for the year ended March 31 2016 issummarized below:
(Rs in Lakh)
|Particulars ||Standalone ||Consolidated |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Sales ||18713.98 ||19720.60 ||52180.10 ||48877.25 |
|Less: Excise Duty ||1795.41 ||2015.28 ||1795.41 ||2015.28 |
|Total Sales ||16918.57 ||17705.32 ||50384.69 ||46861.97 |
|Profit before Finance Charges Depreciation Provision for Doubtful Debts Foreign Exchange Variation (net) Exceptional Items and Tax ||(1311.51) ||(775.34) ||1436.77 ||963.85 |
|Less: || || || || |
|- Finance Charges ||4716.44 ||5010.54 ||5351.40 ||5700.17 |
|- Depreciation ||1695.08 ||1715.10 ||7153.00 ||7054.95 |
|Profit before Foreign Exchange Variation Exceptional Items and Taxation ||(7723.03) ||(7500.98) ||(11067.63) ||(11791.27) |
|Provision for Doubtful Debts ||327.18 ||185.32 ||155.33 ||2197.39 |
|Foreign Exchange Variation - Gain / (Loss) ||(405.81) ||(248.32) ||(952.80) ||(241.80) |
|Profit before Exceptional Items and Taxation ||(8456.02) ||(7934.62) ||(11865.10) ||(9835.68) |
|Exceptional Items ||(2934.42) ||(1980.00) ||408.39 || |
|Profit before Tax ||(11390.44) ||(9914.62) ||(12273.49) ||(9835.68) |
|(Less) / Add: Provision for Taxation || || || || |
|- Current Tax || || ||15.94 ||1.00 |
|- Deferred Tax || || ||13.75 ||(62.90) |
|Profit for the year ||(11390.44) ||(9914.62) ||(12303.18) ||(9773.78) |
|Add: Prior period adjustments and Tax adjustments of earlier years ||105.68 ||(1.53) ||105.68 ||(1.53) |
|Minority Interest || || || || |
|Net Profit ||(11496.12) ||(9913.09) ||(12408.86) ||(9772.25) |
|Transitional adjustment on account of Schedule II to Companies Act 2013 ||(4.55) ||(100.88) ||(4.55) ||(101.07) |
|Balance Brought Forward from Previous Years ||(16380.04) ||(6366.07) ||(3887.46) ||5985.86 |
|Balance Available for Appropriation ||(27880.71) ||(16380.04) ||(16300.87) ||(3887.46) |
|Appropriation: || || || || |
|Proposed Dividend || || || || |
|Provision for Dividend Tax || || || || |
|Transfer to Reserves || || || || |
|Balance Carried Forward ||(27880.71) ||(16380.04) ||(16300.87) ||(3887.46) |
|Basic and Diluted Earnings Per Share of Rs 2 each ||(10.73) ||(9.25) ||(11.58) ||(9.12) |
During the financial year 2015-16 the demand for Companys products remainedsubdued. However we witnessed some improvement in demand towards end of the FinancialYear due to CNG cylinders requirements in Northern India for controlling thepollution due to recent ruling by Supreme Court for not registering Diesel Vehicles. TheFinance Charges continued to remain a major contributor to the Net Loss during theFinancial Year.
On Standalone basis for the Financial Year 2015-16 revenues at Rs 18713.98 Lakhswere lower by around 5.10% over the previous year's revenues of Rs 19720.60 Lakhs and NetLoss at
Rs 11496.12 Lakhs saw increase by around 15.97% over the previous year's net loss ofRs 9913.09 Lakhs. The Net Loss for the Financial Year 2015-16 includes provision of Rs2826.47 Lakhs as against previous years provision of Rs 1980.00 made in respect ofthe value of the investments in two Subsidiary Companies. On Consolidated basis revenuesfor Financial Year 2015-16 at
Rs 52180.10 Lakhs were higher by around 6.76% over the previous year's revenues of Rs48877.25 Lakh and Net Loss at
Rs 12408.86 Lakhs saw an increase by around 26.98% over the previous year's Net Lossof Rs 9772.25 Lakhs.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Section 129 of Companies Act 2013 and the Accounting Standard AS-21on Consolidated Financial Statements the Audited Consolidated Financial Statements areprovided in the Annual Report. As a significant part of the Companys business isconducted through its subsidiaries the Directors believe that the consolidated accountsprovide a more accurate representation of the performance of the Company.
SHARE CAPITAL STRUCTURE
During the Financial Year 2015-16 5050000 Equity Shares of
Rs 2/- each were issued on Preferential basis to the Promoter Group of the Company onMarch 31 2016. Accordingly the Paid-Up Share Capital of the Company is Rs 22.44 Croredivided into 112207682 Equity Shares of Rs 2/- each.
INTERNAL FINANCIAL CONTROLS
The Company has adequate internal financial control system commensurate with the sizescale and complexity of its operations. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives. Major risksidentified by the business and functions are systematically addressed through mitigationaction on continuing basis. These are routinely tested and certified by Statutory as wellas Internal Auditors.The Audit observations on internal financial controls areperiodically reported to the Audit Committee.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the financial year 2015-16 as stipulatedunder Regulation 34(2)(e) of the SEBI(Listing obligations and Disclosure Requirements)during
Regulations 2015 is presented in a separate section forming part of the Annual Report
DETAILS OF FRAUD REPORTED BY AUDITORS
There were no frauds reported by the Statutory Auditors under provisions of Section143(12) of the Companies Act 2013 and rules made thereunder.
The Directors have not proposed any dividend for the financial year 2015-16 in view ofthe loss during the year and absence of accumulated profits.
CREDIT RATING FROM CARE RATINGS
In respect of the borrowings of the Company CARE Ratings has during the yeardowngraded the Long Term and Short Term ratings as under:
| || ||Amount || || |
|Sr. No. ||Facility ||(Rs in Crore) ||Rating ||Remarks |
|1. ||Long Term Fund ||254.68 ||CARED ||Reaffirmed |
| ||Based Bank || ||[Single D] || |
| ||Facilities || || || |
| ||(Term Loan) || || || |
|2 ||Long Term Fund ||31.88 ||CAREC ||Revised from |
| ||Based Bank Facilities || ||[Single C] ||CARE C (Single C) to CARE D (Single |
| || || || ||D) and then revised to CARE C (Single C) |
|3 ||Long Term Fund ||103.00 ||CARE C ||Reaffirmed |
| ||Based Bank || ||[Single C] || |
| ||Facilities || || || |
|4 ||Proposed long ||30.00 ||CARE C ||Withdrawn |
| ||Term Fund || ||[Single C] || |
| ||Based Bank || || || |
| ||Facilities || || || |
|5 ||Short Term Bank ||50.92 ||CARE A4 ||Reaffirmed |
| ||Facilities (Non || ||[A Four] || |
| ||Fund Based) || || || |
| ||Total ||470.48 || || |
| || ||(Four Hundred Seventy Crore and Forty Eight Lakhs ) || || |
DEPOSITS UNDER CHAPTER V OF COMPANIES ACT 2013
The Company has not accepted any Deposits from the public within the ambit of Section73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans given guarantees provided and investments made have been dulydisclosed in the financial statement.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of theReport.
As on 31st March 2016 the Company had (a) three wholly owned overseas subsidiarycompanies viz. EKC International FZE in Dubai UAE EKC Industries (Tianjin) Co. Ltd. inChina and EKC Industries (Thailand) Co. Ltd. in Thailand (b) three step down wholly ownedoverseas subsidiary companies viz. EKC Hungary Kft in Hungary CP Industries HoldingsInc. in USA EKC Europe GmbH in Germany and (c) Two Indian subsidiary Companies viz.Calcutta Compressions & Liquefaction Engineering Ltd. and EKC Positron Gas Ltd.
During the year our Company has formed a new Subsidiary Company as EKC Positron GasLtd.
The Current Corporate Structure is as under:
As provided for in section 129(3) of Companies Act 2013 a statement containing thesalient features of the financial statements of the subsidiaries in the prescribed FormAOC-1 is attached to the financial statements of the Company. The financial statements andthe related information of the subsidiaries will be made available to any shareholder ofthe Company and of the subsidiaries who may be interested in obtaining the same at anypoint of time and are also available at the registered offices of the Company and thesubsidiary companies for inspection by any shareholder of the Company and of thesubsidiaries. The Consolidated Financial Statements presented by the Company include thefinancial results of the subsidiary companies. The financial results of the SubsidiaryCompanies are uploaded on the website of the Company and the weblink thereto is http://www.everestkanto.com/subsidiarie.aspx
DIRECTORS AND KEY MANAGERIAL PERSONNEL
CESSATION OF KMP
Mr. Vipin Chandok had resigned from the post of Chief Financial Officer of the Companyw.e.f. August 27 2015
RETIREMENT BY ROTATION
In accordance with the provisions of Section 152(6) of the Companies Act 2013 Mr.Pushkar Khurana (DIN 00040489) will retire by rotation at the ensuing Annual GeneralMeeting of the Company and being eligible offers himself for re-appointment. The Boardrecommends his re-appointment.
APPOINTMENT OF KMP
Mr. Kishore Thakkar has been appointed as the Chief Financial Officer of the Companyunder Section 203(2) of the Companies Act 2013 w.e.f. November 06 2015. Mr. KishoreThakkar is a Fellow Member of the Institute of Chartered Accountants of India and hasrelevant experience in field of Accounts and Finance. Ms. Bhagyashree Kanekar has beenappointed as the Company Secretary and Compliance Officer of the Company under Section203(2) of the Companies Act 2013 w.e.f. August 11 2015. Ms. Bhagyashree Kanekar is anAssociate Member of the Institute of Company Secretaries of India and possesses requisitequalification under Companies (Appointment and Qualification of Secretary) Rules 1988.
APPOINTMENT/CESSATION OF INDEPENDENT DIRECTOR
Mr. Krishen Dev Independent Director of the Company has resigned as the Director ofthe Company w.e.f. February 25 2016 due to personal reasons.
NUMBER OF BOARD MEETINGS DURING THE YEAR
During the year Five meetings of the Board of Directors were held on May 26 2015August 11 2015 November 06 2015 February 11 2016 February 25 2016.
NOMINATION REMUNERATION AND EVALUATION POLICY
The Companys policy on Directors appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under section 178(3) of Companies Act2013 has been specifiedin Nomination Remuneration and Evaluation Policy approved by the Board. The Policy hasbeen posted on the Companys website and the web link thereto is http://www.everestkanto.com/policies.html.
The Board of Directors has adopted a Nomination Remuneration and Evaluation Policywhich inter alia provides for the manner in which annual evaluation will be made by theBoard of its own performance and that of its Committees and individual Directors. TheIndependent Directors in their separate meeting held during the year evaluated thenon-Independent Directors based on the criteria provided in the Policy. The Board ofDirectors in its meetings the year and subsequent thereto evaluated its own performanceand that of the Independent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) of the Companies Act 2013 with respect to DirectorsResponsibility Statement it is hereby confirmed that: i) in the preparation of the annualaccounts for the year ended March 31 2016 the applicable accounting standards have beenfollowed and there are no material departure; ii) the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe company as on 31st March 2016 and of the profit and loss of the company for theperiod ended on that date; iii) the Directors have taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions ofCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; iv) the Directors have prepared the annualaccounts on a going concern basis; v) the Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively; and vi) the Directors have devised proper systemto ensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively.
The details pertaining to composition of the Audit Committee are included in theCorporate Governance Report which forms part of this Report.
At the Annual General Meeting held in 2014 M/s. Walker Chandiok & Co LLPChartered Accountants were appointed as the Statutory Auditors of the Company to holdoffice from the conclusion of that Annual General Meeting till the conclusion of thefourth consecutive Annual General Meeting to be held in the year 2018 subject toratification by the shareholders at every Annual General Meeting. Accordingly theirappointment will be put up for ratification by the shareholders at the ensuing AnnualGeneral Meeting.
M/s. Arun Arora & Co. Chartered Accountants Branch Auditors hold office untilthe conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.The Company has received a letter from M/s. Arun Arora & Co. to the effect that theirre-appointment if made from the conclusion of the ensuing Annual General Meeting untilthe conclusion of next Annual
General Meeting would be within the limits prescribed under Section 141(3)(g) of theCompanies Act 2013 and that they are not disqualified for re-appointment within themeaning of Section 141 of the said Act.
The Board of Directors has appointed Mr. Vinayak B. Kulkarni Cost Accountant(Membership No. 28559) as the Cost Auditor under section 148 of the Companies Act 2013for conducting audit of cost records for the financial year 2016-17. The Cost Auditor willsubmit his Report to the Board for its review and examination which will then be filedwith the Central Government within the prescribed time.
On the recommendation of the Audit Committee the Board of Directors has appointed M/s.V R & Associates Cost Accountant (Firm Registration No. 000516) as the Cost Auditorof the Company for the financial year 2015-16 on a remuneration recommended by the AuditCommittee. As required under the Act the remuneration will be put up for ratification bythe members at the ensuing Annual General Meeting.
On the recommendation of the Audit Committee the Board of Directors has appointed Mr.Vinayak B. Kulkarni Cost Accountant (Membership No. 28559) as the Cost Auditor of theCompany for the financial year 2015-16 on a remuneration recommended by the AuditCommittee. As required under the Act the remuneration will be put up for ratification bythe members at the ensuing Annual General Meeting.
The Board of Directors has appointed Aashish K. Bhatt & Associates PracticingCompany Secretaries as the Secretarial Auditor under section 204 of the Companies Act2013 for conducting Secretarial Audit for the financial year 2015-16. The Report of theSecretarial Auditor forms part of this Report as Annexure 1. There is one adverse remarkin the Secretarial Audit Report.
STATUTORY AUDITORS QUALIFICATIONS EXPLANATION
As regards to the qualification by the Auditors in their Report on the StandaloneAccounts with respect to the Investment by way of share capital of Rs 6925.07 lakhs inEKC Industries (Tianjin) Company Limited a wholly owned subsidiary based in China theCompany is of the considered view based on the assessment of the relevant factors suchas the long term nature of the investment future business prospects in the markets inwhich EKC Industries (Tianjin) Company Limited operates expected appreciation in the fairvalue of the assets of EKC Industries (Tianjin) Company Limited etc. that no provisionfor the diminution in the value of the Investment is required. However on a conservativebasis during the year an aggregate amount of Rs 2000 lakhs (Rs 1500 lakhs for the yearended March 31 2015) has been provided towards such diminution and has been disclosed asan Exceptional Item in the financial results. Considering the expected appreciation in thevalue of the assets and provision of Rs 3500 lakhs already provided the Management doesnot expect diminution in value of investments of more than Rs 1700 lakhs.
As regards to the qualification by the Auditors in their Report on the Consolidated aswell as Standalone Accounts in respect to short term loans and advances and other currentassets include an amount of Rs 1724 lakhs (Rs 1778 lakhs as at Match 31 2015) towardssecured inter-corporate deposit advanced to Hubtown Limited (formerly Akruti City Limited)and accrued interest thereon. The deposit and accrued interest are outstanding for aconsiderable period. These deposits are secured against mortgage rights of anunder-construction commercial property in favour of the Company. The estimated value ofcompleted property would be Rs 1750 lakhs as per the independent valuer's report obtainedby the Company in March 2015. Based on the Company's on-going discussion with HubtownLimited (formerly Akruti City Limited) the Company is confident of recovering theinter-corporate deposit with accrued interest thereon and therefore believes that noprovision for losses on account of non-recoverability of outstanding amounts if any isnecessary at present. The Management does not expect any loss since the outstanding amountis sufficiently secured by way of mortgage of property.
SECRETARIAL AUDITORS QUALIFICATIONS EXPLANATION
The Company has executed Shareholders Agreement with Brightwill Limited and TVGIndia Investment Holdings Limited (hereinafter referred to as "the erstwhileshareholders") on November 02 2006 and November 19 2007 respectively. The clausesof the aforesaid Agreement have been incorporated in the Articles of Association of theCompany as per the requirement of the said Agreements.
As on March 31 2016 the erstwhile shareholders have gradually sold their entireholdings during the year and hence the aforesaid Shareholders Agreement standsredundant. Further on the redundancy of such Agreement one of the Promoters of theCompany has entered into the business of Fire Fighting Equipments during the year endedMarch 31 2016.
However the Company is yet to alter the Articles of Association for removal of theclauses pertaining to the erstwhile shareholders and hence the Secretarial Auditor hasmentioned the same in his report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under section 134(3)(m) of theCompanies Act 2013 are provided in Annexure 2 to this Report.
TRANSACTIONS WITH RELATED PARTIES
None of the transactions with the related parties falls under the scope of Section188(1) of the Companies Act 2013. Information on the transactions with the relatedparties under Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 are given in Annexure 3 in Form AOC-2 and forms the partof this Report.
All compliances with Related Party Transactions as provided in the Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 have beencomplied with.
The Policy on Related Party Transactions framed under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is available on Companys website and weblink thereto is http://www.everestkanto.com/policies.html.
The Company is committed to achieving and maintaining the highest standards ofCorporate Governance and places high emphasis on business ethics. Pursuant to SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Report onCorporate Governance and the Certificate from a practicing Company Secretary on the Reportas stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 form part of the Annual Report.
The Company has adopted a Risk Management Policy which lays down the framework todefine assess monitor and mitigate the business operational financial and other risksassociated with the business of the Company.
CORPORATE SOCIAL RESPONSIBILITY
As the provisions of section 135 of Companies Act 2013 dealing with Corporate SocialResponsibility are not applicable to the Company during the financial year the Companyhas not laid down any policy on Corporate Social Responsibility.
EXTRACT OF ANNUAL RETURN
Pursuant to section 92(3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of the Annual Return of theCompany in the prescribed Form MGT-9 is attached to the Report as Annexure 4.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Rule 5 of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the details are as under:
(a) Ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial year 2015-16:
|Name of Directors ||Designation ||Remuneration of Directors* ||Median remuneration of Employees ||Ratio to median remuneration |
|Mr. P. K. Khurana ||Chairman & Managing Director ||Nil ||199455 ||- |
|Mr. Pushkar Khurana ||Non-Executive Director ||Nil ||199455 ||- |
|Mr. Puneet Khurana ||Non-Executive Director ||Nil ||199455 ||- |
|Mr. Krishen Dev** ||Independent Director ||170000 ||199455 ||0.85 |
|Mr. Mohan Jayakar ||Independent Director ||140000 ||199455 ||0.70 |
|Mr. Naresh Oberoi ||Independent Director ||130000 ||199455 ||0.65 |
|Mr.Sudhindra Rao ||Independent Director ||110000 ||199455 ||0.55 |
|Ms. Uma Acharya ||Independent Director ||100000 ||199455 ||0.50 |
* Remuneration to directors during the financial year (and also in the previousfinancial year) comprises solely of sitting fees for attending the meetings of Board ofDirectors and of the Committees thereof
** Mr. Krishen Dev resigned as Director of the Company on February 25 2016.
(b) Percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year2015-16:
|Director Chief Financial Officer Chief Executive Officer and Company Secretary ||Designation ||% increase in remuneration in financial year |
|Mr. P. K. Khurana ||Chairman & Managing Director ||0.00 |
|Mr. Pushkar Khurana ||Non-Executive Director ||0.00 |
|Mr. Puneet Khurana ||Non-Executive Director ||0.00 |
|Mr. Krishen Dev*** ||Independent Director ||(5.88) |
|Mr. Mohan Jayakar ||Independent Director ||21.42 |
|Mr. Naresh Oberoi ||Independent Director ||(38.46) |
|Mr. Sudhindra Rao ||Independent Director ||0.00 |
|Ms. Uma Acharya ||Independent Director ||0.00 |
|Mr. Kishore Thakkar* ||Chief Finnacial Officer ||0.00 |
|Ms. Bhagyashree ||Company Secretary ||0.00 |
|Kanekar** || || |
* Mr. Kishore Thakkar was appointed as Chief Financial Officer on November 06 2015.
** Ms. Bhagyashree Kanekar was appointed as Company Secretary and Compliance Officer ofthe Company on August 11 2015.
*** Mr. Krishen Dev resigned as Director of the Company on February 25 2016
(c) Percentage increase in the median remuneration of employees in the financial year2015-16: 5.79%
(d) Number of permanent employees on the rolls of Company: 335
(e) Explanation on the relationship between average increase in remuneration andCompany performance:
|Particulars ||Amount |
|Increase in Remuneration in financial year 2015-16 (Rs in Lakhs) ||49.77 |
|Increase / (Decrease) in Revenue (Rs in Lakhs) ||(1651.04) |
|Increase in Remuneration as % of Increase / (Decrease) in Revenue ||*Not Meaningful |
|Increase / (Decrease) in Profit before tax (PBT) (Rs in Lakhs) ||(1475.82) |
|Increase in Remuneration as % of Increase / (Decrease) in PBT ||*Not Meaningful |
* Due to the Decrease in Remuneration and Decrease in Profit before Tax in FY 2014-15the percentage comparison is not meaningful.
(f) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:
|Particulars ||Amount |
|Aggregate remuneration of Key || |
|Managerial Personnel (KMP) in financial year 2015-16 (Rs in Lakhs) ||32.75 |
|Revenue (Rs in Lakhs) ||17501.95 |
|Remuneration of KMP (as % of revenue) ||0.19 |
|Profit before tax (PBT) (Rs in Lakhs) ||(11390.44) |
|Remuneration of KMP (as % of PBT) ||*Not Meaningful |
* In the view of negative profit before tax (PBT).
(g) Variation in the Market Capitalization of the Company and Price Earning Ratio: (Rsin Lakhs)
|Particulars ||At the beginning of the year April 1 2015 ||At the end of the year March 31 2016 |
|Market Capitalization || || |
|NSE (Rs in Lakhs) ||9965.66 ||16775.05 |
|BSE (Rs in Lakhs) ||9944.23 ||16797.49 |
|Price Earning Ratio ||*Not Meaningful ||*Not Meaningful |
* As the EPS of the Company is negative at the beginning of and at the end of thefinancial year ended March 31 2016 the Price Earning Ratio of the Company cannot beascertained.
(h) Percentage increase over decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last publicoffer:
|Particulars ||March 31 2016 ||IPO* ||Adjusted IPO** ||% Change |
|Market Price (BSE) ||Rs 14.97 ||Rs 160 ||Rs 32 ||(53.28) |
|Market Price (NSE) ||Rs 14.95 ||Rs 160 ||Rs 32 ||(53.21) |
* Face value of Rs 10/- per share.
** Face value of Rs 2/- per share after share split.
(i) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration
The average percentile increase in the salaries of employees other than the managerialpersonnel in the Financial Year 2015-16 is 13.57% whereas the percentile increase in themanagerial remuneration* during the year is 25%.
* The managerial remuneration comprises solely of the sitting fees paid to theDirectors for attending the meeting of the Board of Directors and of the Committeesthereof.
(j) Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the Company
|Particulars ||Mr. P. K. Khurana ||Mr. Kishore Thakkar ||Ms.Bhagyashree Kanekar |
| ||Managing Director ||Chief Financial Officer ||Company Secretary |
|Remuneration in ||Nil ||27.00 ||7.00 |
|FY 2015-16 (Rs in Lakhs) || || || |
|Revenue (Rs in Lakhs) ||17501.95 ||17501.95 ||17501.95 |
|Remuneration as % of revenue ||- ||0.15 ||0.04 |
|Profit before tax (PBT) (Rs in Lakhs) ||(11390.44) ||(11390.44) ||(11390.44) |
|Remuneration as % of PBT ||- ||*Not Meaningful ||*Not Meaningful |
(k) Ratio of the remuneration of the highest paid director to that of the employees whoare not directors but receive remuneration in excess of the highest paid director duringthe year.
The remuneration of the two highest paid directors during the financial year 2015-16 isRs 170000 and 140000 respectively (being sitting fees only). As there are 181 employeeswho are not directors but received remuneration during financial year 2015-16 in excess ofRs 170000 the individual ratio in respect of each such employee is not provided herein.However the ratio of the remuneration of the two highest paid directors to the averageremuneration of these 181 employees is 0.49.
(l) Affirmation that the remuneration is as per the remuneration policy of the Company.
The Company affirms remuneration is as per the remuneration policy of the Company.
(m) Name of employee of Company who were employed throughout the financial year or forpart of year was in receipt of remuneration for that year which in the aggregate wasnot less than Sixty Lakh Rupees per financial year or Five Lakh Rupees per month: None.
(n) Name of employee of Company who employed throughout the financial year or partthereof was in receipt of remuneration in that year which in the aggregate or as thecase may be at a rate which in the aggregate is in excess of that drawn by the managingdirector or whole-time director or manager and holds by himself or along with his spouseand dependent children not less than two percent of the equity shares of the Company: None
Following policies are posted on the website of the Company and weblink thereto ishttp://www.everestkanto.com/policies.html. i. Policy on Related Party Transactions ii.Policy on Material Subsidiaries iii. Policy on Board Diversity iv. Policy on NominationRemuneration & Evaluation v. Code of Conduct for Directors & Senior Management vi.Vigil Mechanism vii. Policy on Sexual Harassment at workplace. viii. Policy onPreservation and Archival of documents. ix. Policy on Determination of Materiality ofEvents.
On the SEBI (Prohibition of Insider Trading) Regulations 2015 coming into effect onMay 15 2015 the Company has adopted the Policies on Code of Practices and Procedures forFair Disclosure of Unpublished Price Sensitive Information and Code of Conduct forPrevention of Insider Trading and Code of Corporate Disclosure Practices and Policieswhich have been posted on the website of the Company and the weblink thereto ishttp://www.everestkanto.com/policies.html.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION $REDRESSAL)
Everest Kanto Cylinder Limited is committed and dedicated in providing a healthy andharassment free work environment to every individual of the Company a work environmentthat does not tolerate sexual harassment. We highly respect dignity of everyone involvedat our work place whether they are employees suppliers or our customers. We require allemployees to strictly maintain mutual respect and positive attitude towards each other.
Number of complaints pending as on the beginning of the financial year- Nil Numberof complaints filed during the financial year- Nil Number of complaints pending atthe end of the financial year-
NOMINATION AND REMUNERATION POLICY
For the purpose of selection of any Director Key Managerial Personnel and SeniorManagement Employees Company has formed Nomination and Remuneration Policy.
This Nomination Remuneration and Evaluation Policy applies to the Board of Directors(the Key Managerial Personnel and the Senior Management Personnel of Everest KantoCylinder Limited.
This Policy is in compliance with Section 178 of the Companies Act 2013 read alongwith the applicable Rules thereto and Regulation 19 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
This Nomination Remuneration and Evaluation Policy of the Company is annexed herewithas Annexure 5 to this report.
LISTING OF SECURITIES
The Equity shares of the Company are listed on the Stock Exchanges viz. BSE Limited andNational Stock Exchange of India Limited.
ACKNOWLEDGEMENT AND APPRECIATION
The Board of Directors would like to express its deepest admiration and sinceregratitude for professional guidance rendered to the Company by Mr. Krishen Dev who hasserved as the Distinguished Member on the Board of the Company for more than a decade.
The Directors further would like to express their appreciation for the assistancesupport and co-operation received from the banks Government Authorities customersvendors and members during the year under review. The Directors also wish to place onrecord their deep sense of appreciation for the committed services by the executivesstaff and workers of the Company globally.
For and on behalf of the Board
P. K. Khurana
Chairman & Managing Director
Date: August 11 2016
ANNEXURES TO THE DIRECTORS REPORT
Annexure 1: Secretarial Audit Report
Secretarial Audit Report
[Pursuant to section 204(1) of the Companies Act 2013 and rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014] for the financial yearended 31st March 2015
Everest Kanto Cylinder Limited
I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Everest Kanto Cylinder Limited(hereinafter called "the Company"). Secretarial Audit was conducted in a mannerthat provided me a reasonable basis for evaluating the corporate conducts / statutorycompliances and expressing my opinion thereon.
Based on the verification of Companys books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on March 31 2016 complied with thestatutory provisions listed hereunder and also that the Company has followed proper
Board - processes and have required compliance mechanism in place to the extentin the manner and subject to the reporting made hereinafter.
I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2016according to the provisions of:
i. The Companies Act 2013 (the Act) and the Rules made thereunder;
ii. The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder;
iii. The Depositories Act 1996 and the Regulations and bye-laws framed thereunder;
iv. The Foreign Exchange Management Act 1999 and the rules and regulations madethereunder for compliance in respect of Foreign Direct Investment Overseas DirectInvestment and External Commercial Borrowings;
v. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992 till May 14 2015 and thereafter The Securities and Exchange Board ofIndia (Prohibition of Insider Trading) Regulations 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 and the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 (Not applicable);
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not applicable);
(f) The Securities and Exchange Board of India (Registrars to an issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client(Not applicable);
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not applicable); and
(h) The Securities and Exchange Board of India (Buy Back of Securities) Regulations1998 (Not applicable).
I have also examined compliance with applicable clauses of the following:
i. Secretarial Standards issued by the Institute of the Company Secretaries of Indiaw.e.f 1st July 2015 for General Meetings Board and Committees Meetings (i.e. AuditCommittee Nomination and Remuneration Committee Stakeholders Relationship Committee andCorporate Social Responsibility Committee); and
ii. The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and Listing Agreements entered into by the Company withBSE Limited and National Stock Exchange of India Limited.
During the period under review the Company has complied with the provisions of theAct Rules Regulations and Guidelines mentioned above except for non compete businessclause of Articles of Association of the Company.
I further report based on confirmation received from the Company that there are nospecific applicable laws to the industry where Company operates however generalcompliance system prevails in the Company and on examination of the relevant documents andrecords in pursuance thereof on test-check basis the Company has complied with them.
I further report that :
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non Executive Directors and Independent Directors. The changesin the composition of the Board of Directors that took place during the year under reviewwere carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent atleast seven days in advance or on shorter notice anda system exist for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the meeting.
The decisions at Board Meetings and Committee Meetings are carried out and recorded inthe minutes of the Board of Directors and Committee of the Board accordingly
| ||For Aashish K. Bhatt & Associates |
| ||Company Secretaries |
| ||(ICSI Unique Code S2008MH100200) |
| ||Aashish Bhatt |
| ||Proprietor |
|Place: Mumbai ||ACS No.: 19639 |
|Date: August 11 2016 ||COP No.: 7023 |
This Report is to be read with our letter annexed as Appendix A which forms integralpart of this report.
Everest Kanto Cylinder Limited
My report of even date is to be read along with this letter.
1. The responsibility of maintaining Secretarial record is of the management and basedon my audit I have expressed my opinion on these records.
2. I am of the opinion that the audit practices and process adopted to obtain assuranceabout the correctness of the secretarial records were reasonable for verification on testcheck basis.
3. I have not verified the correctness and appropriateness of financial records andbooks of accounts of the Company.
5. The management is responsible for compliances with corporate and other applicablelaws rules regulations standards etc. My examination was limited to the verification ofprocedure on test basis and wherever required I have obtained the Managementrepresentation about the compliance of laws rules and regulations etc.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
| ||For Aashish K. Bhatt & Associates |
| ||Company Secretaries |
| ||(ICSI Unique Code S2008MH100200) |
| ||Aashish Bhatt |
| ||Proprietor |
|Place: Mumbai ||ACS No.: 19639 |
|Date: August 11 2016 ||COP No.: 7023 |
Annexure 2: Conservation of Energy Technology Absorption and Foreign Exchange andoutgo
Information pursuant to section 134 of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 in respect of conservation of energy and technology absorption:
A. Conservation Of Energy: I. Efficient use of Energy:
The Company has taken various actions to achieve efficiency in energy utilization andusing cleaner fuels for reduction of pollution such as: a. Efficiency in the use ofThermal energy by switching over from liquid fuels like LDO to LPG / Natural Gas. a.Discontinue use of less efficient furnaces operated on LDO as fuel. b. Convert all boilersfrom LDO to Natural Gas by using services of Original Equipment Manufactuer Thermax. c. Minimizing heat losses by improved insulation etc. b. Efficiency in the useof electrical energy by installing power efficient equipment at all the plants/offices c.We have added a small furnace for heat treatment of small cylinders only.
These were hitherto being heat treated in large furnace resulting in loss of energy. d.Furnaces consume large amounts of fuel so it is preferred to ensure they run with highload factor with least number of starts and stops. This is achieved now by sharing thefurnace capacity with output of additional hot spinning machine. e. To improve load factorof the plant and to achieve higher energy efficiency the manufacturing loads arerescheduled for larger batch sizes. For this the some production loads from one plant areshifted to other plant. f. Efforts are made to streamline processes to reduce down times.This ensures uninterrupted production with least idling thereby reducing energyrequirements per cylinder. g. Large power consuming equipment are run in staggered mannerso that peak load on system is reduced resulting in reduced transmission losses. h. Heavyelectrical loads are scheduled equally in all shifts to take advantage of time slabconcessions. i. Successfully developed cascades for use with BIO
METHANE for storage and conveying. The Bio-methane is produced by conversion of biowaste in digesters to produce the gas and organic fertilizers which are very rich. j.Developed industrial cylinders for Hydrogen to be used for Fuel Cell applications.Hydrogen is considered as fuel of the future due to zero pollution it would generate. k.Due to industrial turndown we have cut down on the entire shifts instead of running theplants partially for all the shifts. This has resulted in power savings.
II. Energy Conservation measures undertaken at the Plants:
Following measures are continuously undertaken to conserve energy at the Plants:
1. Installation of larger heat exchangers and making use of cooling tower water inplace of cold water from refrigerated chillers.
2. Installation of VF drive and programmable logic controls for paint booth suctionblower for cyclic speed swings thereby reducing power consumption per cylinder.
3. Installation of automatic power factor control panels with capacitors at variousload centres for keeping the currents at lower level and also for keeping the power factorunder control. Savings will also be made due to the incentive offered for better powerfactor by the electricity companies.
4. Use of High Density Poly Ethylene and FRP (Fibre Glass Reinforced Plastic) pipelines to reduce the pressure losses consequently leading to lower energy requirement.
5. Deployment of distributed pumping stations and cooling towers to save energy.
6. Installation of automatic shut-off devices on air compressors to ensure they shutdown when compressed air demand is low.
7. Installation of energy saving transformer for lighting.
8. Medium bay light fittings in factory sheds at optimum locations in place of high bayfittings which consume more power and give uneven light. Help of special lighting softwarefrom light fittings suppliers was taken for this purpose.
9. Installation of wind driven roof ventilators for ventilation to save electricalenergy.
10. Installation of transparent windows in addition to the transparent roofing sheetsin the side walls of the taller sheds for better ventilation and lighting.
11. Use of boiler in place of usual method of thermic fluid heating for heatingrequirement in surface treatment plant. With steam it is possible to transmit much higherheat per kg of water pumped which leads to major energy saving.
12. Installation of camel back style oven for the painting system to avoid funneling ofair and resultant heat losses.
13. Installation of zero discharge Effluent Treatment Plant with multiple effectevaporators. This reuses steam and reduces energy consumption. Additionally the recoveredwater is reused in the process.
14. Installation of more wind driven roof ventilators as energy saving devices.
15. Installation of more power saving transformers for the lighting load.
III. Impact of measures on reduction of energy consumption and consequent impact onthe cost of production of goods:
The Company continues to draw to benefits in the area of energy conservation throughits wind power projects. The Company had undertaken Wind farm projects at Kandla in thestate of Gujarat and Satara in the state of Maharashtra the brief details of which aregiven in the following table:
a. The wind farm projects as mentioned in the preceding parts have been undertaken inthe states of Gujarat and Maharashtra where the Company is having its own manufacturingfacilities. Considering the present power policy of Governments the Company has directlybenefited in terms of captive consumption of energy generated by aforesaid wind farm andalso from the sale of power generated from these wind mills. b. At Satara the energygenerated is sold to Maharashtra State Electricity Board as per the Governmentspolicy.
IV. The details of energy consumption are given below. These details cover theoperations of the Company's factories at Tarapur Gandhidham and KASEZ
|Particulars ||Current Year ||Previous Year |
|A) Power and Fuel consumption: || || |
|a) Electricity purchased || || |
|Units (kwh in Lakhs) ||96.61 ||123.59 |
|Total Amount (Rs in Lakhs) ||924.17 ||1049.15 |
|Rate per Unit (Rs) ||9.57 ||8.49 |
|b) Oxygen purchased || || |
|Units (Cu.M. in Lakhs) ||3.88 ||4.87 |
|Total Amount (Rs in Lakhs) ||42.78 ||54.76 |
|Rate per Cu.M. (Rs) ||11.03 ||11.24 |
|c) LDO purchased || || |
|Units (Ltrs. in Lakhs) ||5.37 ||7.35 |
|Total Amount (Rs in Lakhs) ||201.38 ||352.42 |
|Rate per Ltr. (Rs) ||37.48 ||47.96 |
|d) LPG purchased || || |
|Units (Kg. in Lakhs) ||7.13 ||8.22 |
|Total Amount (Rs in Lakhs) ||255.66 ||464.31 |
|Rate per Kg. (Rs) ||35.84 ||56.47 |
|B) Consumption per unit of production: || || |
|i. Electricity (kwh / MT) ||827.44 ||1026.92 |
|ii. Oxygen (Cu.M / MT) ||33.21 ||40.48 |
|iii. LDO (Ltr. / MT) ||46.02 ||61.05 |
|iv. LPG (Kg. / MT) ||61.10 ||68.31 |
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:
The Management understands the importance of technology in the business segments itoperates in and lays utmost emphasis on the systems development and the use ofcutting-edge technology available in the industry. The management keeps itself abreastwith technological advancements in the industry and ensures continued and sustainedefforts towards absorption of technology adaptation as well as development of the same tomeet business needs and objectives. The Company has procured the latest equipment and itspersonnel are trained from time to time on the use operation and maintenance of suchhighly sophisticated equipment.
1. Technology Absorption i. Complete process was developed to manufactureJumbo cylinders from High Alloy High Strength Steel pipes without any technicalcollaboration or help from other company. This major step has made EKC the onlymanufacturer in India to make these High Alloy High Strength Jumbo Cylinders from tubes.It has opened up new markets which were hitherto inaccessible. ii. One major landmarkachievement is the qualification received to manufacture cylinders to the US
Department of Transportation ( US DOT). This was achieved under very strict controlsform the officers of the USA federal government department of transportation DOT . Thisqualification would open the USA market which was hitherto most difficult to enter.
2. Technology Adaptation:
We are participating wholeheartedly in the Governments initiative of Make InIndia. Hitherto we have been importing certain raw materials as they were not manufacturedin India. Now one PSU has come forward to manufacture it in India and we shall be theapplication testing partners in that program for defence.
EKC also started the initiative to support Indian tube manufacturers in their effort toproduce tubes for high pressure gas cylinders. This project is on way.
3. Innovation: a. New cylinder models are developed to meet varying needs ofdifferent overseas standards which are much stringent than the standards which we operatedtill now. b. Developed Tube Trailers for storage and transportation of Bio-Methane. c. Forthe first time in India developed Ultra Large Cylinder for Hydrogen working at 300 bar.This is for a prestigious project of Indian Space Research Organization (ISRO). d.Designed Very large capacity storage complex for gases to be stored at very high pressureswhich was not done in the country so far. This project is under implementation.
4. Foreign Exchange earning and outgo:
Total Foreign Exchange used and earned: (Rs in Lakh)
|Particulars ||Current Year ||Previous Year |
|I. Foreign Exchange used ||7509.17 ||8038.39 |
|II. Foreign Exchange earned ||778.96 ||1411.94 |
Annexure 3: Particulars of Contracts or Arrangement with Related Parties Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basis:Nil
2. Details of material contracts or arrangement or transactions* at arms lengthbasis: Nil
* Material Related Party Transaction means a transaction with a Related Party enteredinto individually or with previous transactions during a financial year which exceeds tenpercent of the annual consolidated turnover of the Company as per last audited financialstatements of the Company.
For and on behalf of the
Board of Directors of Everest Kanto Cylinder Limited
P. K. Khurana
Chairman & Managing Director