TO THE SHAREHOLDERS
1. Your Directors submit their Annual Report together withthe audited accounts forthe year ended 31st March 2017.
2. The results for the year under review are given below :
| ||Rs. lakhs |
| ||2016-2017 ||2015-2016 |
|Total Revenue from continuing operations ||1457.11 ||1226.19 |
|Profit before depreciation ||541.12 ||288.42 |
|Depreciation ||36.91 ||22.55 |
|Profit from operations ||504.21 ||265.87 |
|Profit from discontinued activity ||- ||1244.74 |
|Profit before Tax ||504.21 ||1510.61 |
|Taxation ||(134.71) ||(398.94) |
|Profit after taxation ||369.50 ||1111.67 |
During the year under review revenue from operations at Rs.1457.11 lakhs registered agrowth of 19% and profit from operations before tax at Rs. 504.21 lakhs was 90% higherthan the previous year's profit of Rs. 265.87 lakhs mainly due to improvement in profitfrom warehousing activity and certain segments of treasury operations. Profit after taxatRs. 369.50 lakhs is strictly not comparable with the previous year's figure whichcontained an element of profit from discontinued activity of Rs.1244.74 lakhs.
The Company being in consolidation mode no dividend has been considered for the yearunder review.
4 MANAGEMENT DISCUSSION AND ANALYSIS
4.1 Industry Structure and Developments & Segment-wise Performance
(a) Warehousing business:
During the year under review warehousing business experienced accelerated growth.Lease rentals increased by 38.87 % to Rs. 856.55 lakhs as compared to Rs. 616.82 lakhs inthe previous year. Negotiations for leasing out additional warehousing space were pursuedthroughout the year under review. Upgrading of warehousing facilities such as installationof modern transformer capacity and improvement in the civil engineering/design aspects ofwarehouses coupled with environmental issues were embraced.
(b) Investment and Treasury
In this segment income from mutual fund investments showed improvement over theprevious year. However overall the segment recorded flat growth as the interim dividendson equity share investments received in the previous year impacted the current yearincome. With the general improvement in the stock and bond markets this segment isdisplaying fair amount of resilience for the future.
4.2 Discussions on Financial Performance with Respect to Operational Performance
Total revenue was higher by Rs. 230.92 lakhs compared to the previous year mainly dueto increase in income from warehousing activity.
It is proposed to transfer a sum of Rs. 1000 lakhs (2015-16 - Rs. 1100 lakhs) toGeneral Reserve.
As in the previous year there were no borrowings during the year ended 31st March2017.
During the year under review your Company invested a sum of Rs. 2242.18 lakhs inmutual funds mainly arising from re-investment of mutual fund sales proceeds coupled withoperating cash flows.
Capital Expenditure for the year amounted to Rs. 194.92 lakhs (2015-16 - Rs.1422.35lakhs) and value of assets put into use during the year amounted to Rs. 294.14 lakhs(2015-16 - Rs. 355.08 lakhs).
4.3 Opportunities and Threats
The company continues to target growth in the warehousing and Investment & Treasurysegments. Upon further consolidation the company will explore both organic and inorganicgrowth in related fields.
The reformist and forward looking policies of the government augur well for the growthof both the industrial and services sector. In particular the proposed introduction of theGoods & Services Tax (GST) w.e.f. 1st July 2017 will not only improve GDP growth ofthe country but will also enhance the country's image overseas leading to higher foreigncapital inflows in the years to come. It is expected that with the introduction of GSTyour company's warehousing and treasury segments will experience better opportunities forgrowth.
4.5 Risks and Concerns
Your Directors recognize that there are uncertainties and risks attached to anybusiness. The risks could be external internal or a combination of both. External riskscan be intensification substitution technological obsolescence changes in Governmentpolicy with regard to taxes and levies or economic slowdown adversely impacting demand andprofitability. In an increasingly globalised economy world economic trends would alsoimpact business of the Company. Such risks will be continuously monitored and appropriateaction as stated above taken by the Company to minimize the same. Internal risks compriseoperating risks financial risks and business risk including major equipment breakdownslabour unrest or product obsolescence. The company will take effective steps to deal withsuch risks.
A Risk Management Committee has been constituted to consider appropriate measures inmitigating the risk factors.
Each business segment has been informed to identify and report quarterly to the nexthigher reporting level on any major risks as perceived by them whether they be internalor external risks and simultaneously take immediate steps to minimize the impact thereof.
All aspects of the warehousing and treasury operations are being closely monitored toidentify potential risks at an early stage in order to ensure that appropriate riskmitigation measures are put in place.
4.6 Internal Control Systems and Their Adequacy
The Company has adequate internal control system to ensure protection of assets againstloss from unauthorised use or disposal proper maintenance of accounting records andadherence to Company's policies and procedures. The Company has appointed an InternalAuditor to conduct independent audits and submit periodical reports. An Audit Committee ofthe Board of Directors reviews the Internal Audit reports annual financial statements andinternal control systems to ensure their effectiveness and adequacy.
The Committee also interacts with the Internal/Statutory Auditors from time to time.Apart from this audit reports and follow-up actions are periodically reviewed by the topmanagement and remedial actions taken.
4.7 Material Developments in Human Resources/Industrial RelationFront including Number of People Employed
During the year under review industrial relations within the Company continued to bestable.
The total number of permanent employees was 15 as on 31st March 2017.
5. SUBSIDIARY COMPANY
GKW (Overseas Trading) Limited had made a profit of Rs.0 .03 lakh during the year underreview.
The statement containing the salient features of the financial statement of GKW(Overseas Trading) Limited a wholly owned subsidiary company has been appended hereto asAnnexure I.
The Company has not been carrying on any activity over a considerable period of timeand no new field of activity is envisaged for it in the future.
Under the circumstances the Board of Directors of your Company feel that no usefulpurpose would be served in running this subsidiary as a separate entity and hence theDirectors are evaluating various options in regard to the future for this subsidiary.
6. INFORMATION PURSUANT TO SECTION 134
6.1 The Abstract of the Annual Return as provided underSection 92(3) of the CompaniesAct 2013 for the year ended 31st March 2017 is appended hereto as Annexure II(a).
6.2 Four meetings of the Board of Directors were held during the year under review. Themeetings were held on 11th May 2016 9th August 2016 10th November 2016 and 13thFebruary 2017.
6.3 Directors' Responsibility Statement
Pursuant to provisions of Section 134(5) of the Companies Act 2013 the Directorshereby state that :
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policiesand applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the endfinancial year and of the ofthe profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts ona going concern basis;
(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) the directors had devised proper systems to ensurecompliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively;
6.4 Mr. M.L. Lahoti Mr. N.K. Navalakha Mr. P.S. Lodha and Ms. Surbhi Singhi allIndependent Directors have submitted a statement under Sub-section (6) of Section 149 ofthe Companies Act 2013 on 1st April 2017.
6.5 Particulars as prescribed under Section 197(12) and Rule 5(1) & (2) of theCompanies Management (Appointment and Remuneration of Managerial Personnel) Rules 2014 isappended hereto as Annexure II(b).
6.6 There are no qualifications in the Auditor's Report and the Secretarial AuditReport hence no comments or explanations by the Board are required.
6.7 The particulars of investments under section 186 of the Companies Act 2013 as at31st March 2017 are appended hereto as Annexure III.
6.8 The Company had contracts or arrangements with related parties during the yearunder review and are appended hereto as Annexure III(a). Please also refer to Noteno 26(i)(c) of the financial statements.
6.9 Conservation of Energy
The Company is engaged in warehousing activity and is making judicious use of energyefficient devices wherever possible.
6.10 Research & Development and Technology Absorption and Innovation
The nature of business activity viz. warehousing business and investment & treasuryoperations carried on by the Company does not have any scope for any ResearchDevelopment Technology Absorption and Innovation. However latest developments inmaterials and processes pertaining to warehousing activity are constantly monitored.
6.11 Foreign Exchange Earnings and Out go
Earnings in foreign exchange during the year NIL (2015-2016 - NIL) and out-go wasRs.1.50 lakhs (2015-16 NIL).
6.12 Implementation of Risk Management Policy of the Company
The company has already constituted a risk management committee consisting of memberswho are from the Board of Directors of the Company to consider appropriate measures formitigating the risk factors both internal and external. The company has already adoptedthe procedures for the same including identification thereof.
6.13 Evaluation of Board and Directors' Performance
Formal annual evaluation has been made by the Board of its own performance and that ofits Committee and individual directors on the basis of criteria approved by the Nominationand Remuneration Committee/Board.
7. FAMILARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Independent Directors were fully briefed and familiarized with the operations ofthe Company its business mode and steps envisaged to insulate the Company from the impactof business cycles.
a) Mr. G. Srinivasan who is liable to retire by rotation and being eligible offershimself for re-appointment.
b) Based on the recommendation of the Nomination and Remuneration Committee the Boardof Directors revised the remuneration payable to Mr. J.D. Curravala with effect from 1stApril 2017 and re-appointed him as Managing Director from 11th August 2017 to 31stMarch 2018 subject to the approval of the Shareholders at the 87th Annual GeneralMeeting.
9. KEY MANAGERIAL PERSONNEL
The Board of Directors in its meeting held on 8th May 2014 noted that followingofficials of the Company viz. Mr.J. D. Curravala Managing Director Mr. A. ChakrabartiChief Financial Officer and Mr. J. N. Ghosh Company Secretary are the Key ManagerialPersonnel.
Messrs. Lodha & Co. existing Statutory Auditors were appointed for a period ofthree years by the members of the Company in its Annual General Meeting (AGM) held on 13thAugust 2014. The term of appointment of the above Statutory Auditors will continue tillthe conclusion of the AGM. Since M/s. Lodha & Co. have completed their term asauditors stipulated u/s 139(2) of the Companies Act 2013 they are not eligible forreappointment as Statutory Auditors after conclusion of the said AGM.
The Board of Directors have approved the appointment of Haribhakti & Co. LLPChartered Accountants Bagrodia Niket 1st Floor 19C Sarat Bose Road Kolkata 700 020 asstatutory auditors of the company based on the recommendation of the Audit Committee for aperiod of 5 (five) years from the conclusion of this 87th Annual General Meeting until theconclusion of 92nd Annual General Meeting of the Company subject to ratification of theappointment by the Shareholders at each Annual General Meeting.
11. AUDIT COMMITTEE
The composition and terms of reference of the Audit Committee has been furnished underClause 4 in the Corporate Governance Report forming a part of the Annual Report. There hadbeen no instances where the Board has not accepted the recommendation of the AuditCommittee.
12. SECRETARIAL AUDIT AND APPOINTMENT OF THE SECRETARIAL AUDITORS
The Company appointed Mr. Arup Kumar Roy practicing Company Secretary at 201 SaratBose Road Kolkata 700 029 to hold office of Secretarial Auditors and to conductSecretarial Audit. The Secretarial Audit Report for the year under review is appendedhereto as Annexure IV.
13. COST AUDITORS
Pursuant to the Ministry of Corporate Affairs Notification No.GSR 425(E) dated 30thJune 2014 the Companies (Cost Records and Audit) Rules 2014 are not applicable to theCompany.
14. FIXED DEPOSITS
The Company has not accepted any deposits from the public and as such there are nooutstanding deposits in terms of the Company's (Acceptance of Deposits) Rules 2014.
15. INFORMATION PERTAINING TO LISTING
The Company's equity shares are listed with National Stock Exchange of India Limited.The Annual Listing Fees have been paid to National Stock Exchange of India Limited for theyear 2017-18.
16. CORPORATE GOVERNANCE
The Company has taken adequate steps to ensure compliance of the mandatory provisionsof Corporate Governance as issued by Securities and Exchange Board of India from time totime. A report on Corporate Governance is appended hereto.
17. RELEVANT EXTRACTS OF VARIOUS POLICIES OF THE COMPANY
17.1 Policy on Related Party Transactions
The Policy on Related Party Transactions is appended hereto as Annexure V.
17.2 Policy on Director's Remuneration and KMP
The Company's Nomination and Remuneration Policy on director's remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters in terms of Sub-section (3) of Section 178 of the Companies Act 2013 isappended hereto as Annexure VI.
17.3 Policy and Criteria for Identification Appointment Tenure EvaluationRetirement and Removal of Directors and KMP
An extract of the above Policy on criteria for identification appointment tenureevaluation retirement and removal of Directors and KMP is appended hereto as AnnexureVII.
17.4 Corporate Social Responsibility Policy
Based on the recommendations of the Committee of Corporate Social Responsibility (CSR)the Board has already approved a policy for CSR pursuant to section 135 of the CompaniesAct 2013. However due to carried forward losses as computed under Section 198 of theCompanies Act 2013 the CSR provisions of the said Section are not currently applicableto your Company. However the CSR policy is appended hereto as Annexure VIII.
17.5 Vigil Mechanism
The details of vigil mechanism is appended hereto as Annexure IX.
18. TRANSFER OF PROCEEDS OF SALE OF FRACTIONAL SHARES ON MERGER/DE-MERGER AND ON MERGERISSUE SHARES PAYMENT ACCOUNT ON OPTION TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to Section 125(1) of the Companies Act 2013 the Company had transferred theproceeds of sale of fractional shares amounting to Rs. 58.02 lakhs arising out of mergerof Powmex Steels Limited with the Company demerger of Powmex Steels Division to GraphiteIndia Ltd. and Guest Keen Williams Limited Merger Issue Shares Payment Account on optionon merger of Sankey Wheels Ltd. with the Company to Punjab National Bank Brabourne RoadBranch Kolkata for "Investor Education and Protection Fund" on 5th October2016.
19. Your Directors state that during the year under review there were no reportedcases falling within the purview of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
The Board of Directors would like to thank the Company's customers employeesshareholders bankers financial advisors suppliers and all others associated with theCompany for their continued support.
| ||For and on behalf of the Board || |
|Kolkata ||J D Curravala ||G Srinivasan |
|19th May 2017 ||Managing Director ||Director |