The Members of KABSONS INDUSTRIES LIMITED
Your Directors hereby present the 25th Annual Report and Accounts of theCompany for the year ended 31st March 2017.
| ||Year Ended 31.03.2017 ||Year Ended 31.03.2016 |
|1) Sales Other Income & Exceptional items ||773.13 ||167.29 |
|2) Profit before Interest and Depreciation ||411.08 ||(1.28) |
|3) Depreciation ||10.88 ||9.53 |
|4) (Loss) Profit after Financial Charges and Depreciation ||400.20 ||(10.81) |
DISCUSSION ON FINANCIAL PERFORMANCE:
During the year under consideration the Company has generated profit of Rs.411.08Lakhs before interest and depreciation as against a loss of Rs.1.28 Lakhs during theprevious year which includes lease income and lease income is the major source of revenueto the Company. Your Directors are hopeful of better performance with increased revenue inthe next year.
The Company has been focusing on Lease income or starting Gas business on its own brandas per business opportunities exists reviewing the situation from time to time keepingthis in view our Company had launched our LPG Cylinders in Domestic and Commercial Gassegment at our Palej (Gujarat) bottling plant through Distributor network from the monthof August - 2016 and our Company is also making efforts to give bottling assistance tothird party at this plant being the biggest plant among others and hope to get bottlingcontract from them.
LIQUEFIED PETROLEUM GAS (LPG) INDUSTRY OVERVIEW
Most of the LPG volume is handled by PSU's for domestic supplies. The Government ofIndia already started steps not to pass on the monthly subsidy to the Customers who'stotal income is Rs.10 Lakhs or more and in addition to this it is also decided that thedifference in price of subsidized domestic cylinders and non subsidized cylinders will begradually abolished by increasing the price of subsidized cylinders so as to match withnormal price of the cylinder.
All the Plants of our Company are operational either by our own or third party bottlingor on leasing out. In view of this the financial results for the year are moreencouraging when compare to that of previous year and would be better for the coming yearsfrom 2017-18 onwards.
The Following is the Financial Performance of your Company:
| ||2016-17 ||2015-16 ||Inc/(Dec) % |
|INCOME: || || || |
|Sales ||250.24 ||58.64 ||326.74 |
|Other Income ||158.65 ||136.13 ||16.54 |
|Exceptional item ||364.24 ||0 ||100.00 |
|Total ||773.13 ||194.77 ||296.95 |
|Manufacturing Expenses ||235.32 ||55.54 ||-323.69 |
|Staff cost ||51.22 ||42.39 ||-20.83 |
|Other Expenses ||75.51 ||70.65 ||-6.88 |
|Exceptional Item ||0 ||27.48 ||100.00 |
|Depreciation ||10.88 ||9.53 ||-14.17 |
|Total: ||372.93 ||205.59 ||-81.40 |
|(Loss) / Profit ||400.20 ||(10.82) ||3798.71 |
Material changes and commitments if any affecting the financial position of the Companyoccurred between the end of the financial year to which this Financial Statements relateand the date of the report
There have been no material changes and commitments affecting the financial positionof the Company which occurred during between the end of the financial year to which thefinancial statements relate and the date of this report.
Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Company's operations in future
There are no significant material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations.
Authorized Share Capital
During the year under review there was no change in authorized share capital of theCompany. Authorized share capital of the company as on March 31 2017 was Rs.180000000comprising of 18000000 equity shares of Rs. 10.00 each.
Paid-up Share Capital
During the year under review there was no change in paid up share capital of theCompany. Paid up share capital of the company as on March 31 2017 was Rs.174630000comprising of 17463000 equity shares of Rs.10 each.
Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
The Company has not issued any Sweat Equity Shares during the year under review.
The Company has not issued any bonus shares during the year under review.
Employees Stock Option
The Company has not provided any Stock Option Scheme to the employees.
Your Directors have not recommended any dividend on Equity Shares for the year underreview.
Transfers to Reserves
Your Board of Directors does not appropriate any amount to be transferred to GeneralReserves during the year under review.
During the year under review your Company has not accepted any fixed deposits withinthe meaning of Section 73 of the Companies Act 2013 read with rules made there under.
Particulars of Contracts & Arrangements with Related Parties
All transactions entered by the Company with Related Parties were in the Ordinarycourse of Business and are at Arm's Length pricing basis. The Audit Committee grantedapprovals for the transactions and the same were reviewed by the Committee and the Boardof Directors.
There were no materially significant transactions with Related Parties during thefinancial year 2016-17 which were in conflict with the interest of the Company. Thedetails of contracts and arrangements with related parties as referred to in Section188(1) of the Companies Act 2013 were given as Annexure -1 to the Board's Report in formNo: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies(Accounts) Rules 2014.
Related party Transactions:
The details of the Related Party Transactions are furnished in Note 25.2 of the Noteson the Financial Statements attached to this Report.
All the related party transactions have been on an arm's length basis.
Particulars of Loans Guarantees or Investments
Pursuant to section 186 of Companies Act 2013 and Schedule V of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("Listing Regulations")the Company neither has directly or indirectlygiven any loan to its Directors nor extended any guarantee or provided any security inconnection with any loan taken by them. Further the Company has neither given anyintercorporate loan / advance nor made any investments in other companies during thefinancial year 2016-17. Number of Board Meetings held
The Board of Directors duly met 4 times during the financial year from 1stApril 2016 to 31st March 2017 the details of which are given in theCorporate Governance Report. The maximum interval between any two meetings did not exceed120 days as prescribed in the Companies Act 2013 and Secretarial Standard -1. Directorsand Key Managerial Personnel
In terms of Section 152 of the Companies Act 2013 Mr. Rajiv Kabra Executive Directorwould retire by rotation at the forthcoming AGM and is eligible for re-appointment. Mr.Rajiv Kabra has offered himself for re-appointment.
Based on the confirmations received from Directors none of the Directors aredisqualified from appointment under Section 164 of the Companies Act 2013.
Company Secretary and Compliance Officer
During the year Mr. Rakhal Panigrahi Company Secretary KMP and Compliance Officer ofthe Company resigned from the services of the Company. The resignation was effective from13th February 2017. Consequent to Mr. Rakhal Panigrahi resignation the Boardappointed Mr. Nagaraju Musinam as the Company Secretary KMP and Compliance Officer of theCompany. The appointment was effective from 13th February 2017.
Declaration by Independent Directors
The Independent Directors of the Company have submitted their declarations as requiredunder Section 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as per sub-section (6) of Section 149 of the Act.
Familiarization programme for Independent Directors
The Company proactively keeps its Directors informed of the activities of the Companyits management and operations and provides an overall industry perspective as well asissues being faced by the industry. Independent Directors' Meeting
The Independent Directors met on 13.02.2017 without the attendance of Non-IndependentDirectors and members of the Management. The Independent Directors reviewed theperformance of Non-Independent Directors and the Board as a whole; the performance of theChairman of the Company taking into account the views of Executive Director andNon-Executive Directors and assessed the quality quantity and timeliness of flow ofinformation between the Company Management and the Board that is necessary for the Boardto effectively and reasonably perform their duties.
The Board adopted a formal mechanism for evaluating its performance as well as that ofits Committees and individual Directors including the Chairman of the Board. The exercisewas carried out through a structured evaluation process covering various aspects of theBoard functioning such as composition of the Board & committees experience &competencies performance of specific duties & obligations contribution at themeetings and otherwise independent judgment governance issues etc.
Directors Responsibility Statement as required under Section 134(5) of the CompaniesAct 2013:
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Board ofDirectors states that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss for that period;
c) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis;
e) They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively and
f) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Nomination and Remuneration policy
In compliance to the provisions of Section 178 of the Companies Act 2013 andRegulation 19 of the SEBI (LODR) Regulations 2015 entered into with the Stock Exchangesthe Nomination and Remuneration Committee has recommended to the Board a Nomination andRemuneration policy with respect to appointment / nomination and remuneration payable forthe Directors Key Managerial Personnel and senior level employees of the Company. Thesaid policy has been adopted by the Board and the same will form part of the Annual Reportas Annexure - II to the Board's Report.
In terms of the provisions of Section 139(1) of Companies Act 2013 (the"Act") no listed company can appoint or re-appoint an audit firm as auditor formore than two terms of five consecutive years. The Act further prescribes as per section139(2) that the Company shall comply with requirements within a period not later than thedate of First AGM held after three years from the commence of this Act.
M/s. Brahmayya & Company Chartered Accountants (Firm Registration No.000513S)Statutory Auditors of the Company have completed two consecutive terms of five years each.In terms of their appointment made at the 22nd AgM held on 30thSeptember 2014 they shall hold office of the auditors up to the conclusion of the 25thAGM. Your company's Board placed on record its appreciation and gratitude to M/s.Brahmayya & Company the retiring Statutory Auditors for their long association withthe Company and also thanked Mr.D Seetharamaiah Mr. S S R Koteswara Rao and Mr.K ShravanPartners of M/s. Brahmayya & Company for their invaluable guidance rendered to thecompany.
Based on the recommendations of the Audit Committee and subject to the approval of theshareholders it is proposed to appoint M/s. K S Rao & Associates (Firm RegistrationNo.003109S) Chartered Accountants as Statutory Auditors of the Company for a period of 5years commencing from the conclusion of 25th AGM till the conclusion of the 30thAGM. M/s. K S Rao & Associates Chartered Accountants have consented to the saidappointment and confirmed that their appointment if made would be within the limitsspecified under Section 141 (3)(g) of the Act.
Qualification by Statutory Auditor
Information & Explanation in respect of Qualification / Reservation or Adverseremarks contained in Independent Auditors Report under Paras: Basis for Qualified opinionEmphasis of Matter and Other Matters:
A) In view of very limited strength of employees presently working with the Companythe requirements of AS-15 Employee Benefits in respect of gratuity could not be compliedwith. However provision for gratuity as required under Payment of Gratuity Act has beenprovided for.
B) Previous year Current Liabilities exceeded its Current Assets and net worth wascompletely eroded but financial statements were prepared on going concern basis inspite ofthreat to going concern basis. During the year Current Assets exceeded the CurrentLiabilities and net worth becomes positive and there is no threat to going concern basis.
C) Interest for the year Rs.633691/- on deposits of distributors/dealers has not beenprovided in view of company's adverse financial position and will be negotiated for waiverresulting to understatement of Loss by that amount and understatement of currentliabilities by Rs.10341550/-
D) The company could not get confirmation of balances in respect of Trade Receivablesand Trade Payables other than due from/to related parties as most of them are very old andpresently no transactions are being taken place with them.
This report form part of the Annual Report.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors has appointedM/s. B S S & Associates Practicing Company Secretaries for conducting SecretarialAudit of the Company for the financial year 2016-2017. The Secretarial Audit Report isannexed herewith as Annexure - III.
Qualification by Secretarial Auditor
The Secretarial Auditor's Report does not contain any qualifications reservation oradverse remarks during the year under review.
In pursuance of Section 138 of the Companies Act 2013 read with rules made thereunder the Board has appointed Mr. M Krishna Murthy CFO of the Company as InternalAuditors of the Company to carry out internal auditing of books of accounts periodically.
Internal financial control and its adequacy
The Board of your Company has laid down internal fi-nancial controls which comply withthe provisions of the Companies Act 2013 and Listing Regulations with Stock Exchange andthat such internal -financial controls are adequate and operating effectively. YourCompany has adopted policies and procedures for ensuring the orderly and efficient conductof its business including adherence to the Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial disclosures.
Vigil Mechanism / Whistle Blower Policy
Pursuant to Section 177(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 22 of the SEBI (LODR)Regulations 2015 the Board has adopted Whistle Blower Policy. This policy aims forconducting the affairs in a fair and transparent manner by adopting highest standards ofprofessionalism honesty integrity and ethical behavior.
A mechanism has been established for employees to report concerns about unethicalbehavior actual or suspected fraud or violation of Code of Conduct and Ethics. The policyalso provided adequate safeguards against the victimization of employees who avail of themechanism and allows direct access to the Chairman of the Audit Committee in exceptionalcases.
Your Company hereby affirms that during the year no Director / employee have beendenied access to the Chairman of the Audit Committee and that no complaints were received.
Management Discussion and Analysis
In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the ManagementDiscussion and Analysis given below discusses the key issues concerning the business andcarried on by the Company.
Management of Risks
There is considerable pressure to keep up the realization from the services in view ofhighly competitive market.
The Composition of the Audit Committee is provided in the Corporate Governance Reportforming part of this report. All the recommendations made by the Audit Committee wereaccepted by the Board.
The Risk Management Committee duly constituted by the Board had formulated a RiskManagement Policy for dealing with different kinds of risks attributable to the operationsof the Company. Risk Management Policy of the Company outlines different kinds of risksand risk mitigating measures to be adopted by the Board. The Company has adequate internalcontrol systems and procedures to combat the risk. The Risk Management procedure will bereviewed periodically by the Audit Committee and the Board.
Corporate Social Responsibility (CSR) Initiatives:
Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company ie. (a) networth of the Company to be Rs.500 crore or more; or (b)turnover of the company to be Rs. 1000 crore or more; or (c) net profit of the company tobe Rs. 5 crore or more. As the Company does not fall under any of the threshold limitsgiven above the provisions of section 135 are not applicable to the Company. Extract ofAnnual Return
In accordance with the provisions of Section 134(3(a) of the Companies Act 2013 anextract of the Annual Return in Form MGT-9 is appended as Annexure - IV to the Board'sReport.
Information on Conservation of Energy Technology Absorption & Foreign ExchangeEarnings and outgo
Pursuant to the provisions of Section 134 (3) (m) of the Companies Act 2013 read withRule 3 of Companies (Accounts) Rules 2014 these particulars are not relevant to theCompany's operations and hence not furnished the same.
Company's Policy on Prohibition Prevention and Redressal of Sexual Harassment of Womenat Workplace
The Company prohibits any form of sexual harassment and any such incidence isimmediately investigated and appropriate action taken in the matter against the offendingemployee(s) based on the nature and the seriousness of the offence. The Company has apolicy on Prohibition Prevention and Redressal of Sexual Harassment of Women at Workplace(the Policy) and matters connected therewith or incidental thereto covering all theaspects as contained under the "The Sexual Harassment of Women at Workplace(Prohibition Prevention and Redressal) Act 2013" notified by the Government ofIndia vide Gazette Notification dated 24thApril 2013.
There was no case of sexual harassment reported during the year under review.
Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees:
The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in separate annexure forming part of this Report as Annexure - V.
The Company is committed to good corporate governance in line with the SEBI (LODR)Regulations 2015 and Provisions Rules and Regulations of the Companies Act 2013. TheCompany is in compliance with the provisions on corporate governance specified in the SEBI(LODR) Regulations 2015 with BSE. A certificate of compliance from Mr. Sompally Srikantha practicing Company Secretary and the report on Corporate Governance form part of thisDirectors' Report as Annexure - VI.
Disclosures as per the SEBI (LODR) Regulations 2015 Cash flow statement
In due compliance of the SEBI (LODR) Regulations 2015 and in accordance with therequirements prescribed by SEBI the cash flow statement is prepared and is appended tothis Annual Report.
Company's equity shares are presently listed in the Stock exchanges of Mumbai (BSE)and other 2 stock exchanges at Ahmedabad and Kolkata.
There is an outstanding Listing Fee of Rs.20025/- and Rs.164420/- to Ahmedabad StockExchange Ltd and The Calcutta Stock Association Ltd respectively.
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effective 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 Limited during February 2016.
We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 mandated the formulation of certain policiesfor all listed companies. The policies are reviewed periodically by the Board and updatedbased on need and new compliance requirement.
i) Whistleblower Policy (Policy on vigil mechanism)
The Company has adopted the whistleblower mechanism for directors and employees toreport concerns about unethical behavior actual or suspected fraud or violation of theCompany's code of conduct and ethics. There has been no change to the Whistleblower Policyadopted by the Company during fiscal 2016.
ii) Policy for Determining Materiality for Disclosures
This policy applies to disclosures of material events affecting Kabsons. This policy isin addition to the Company's corporate policy statement on investor relations which dealswith the dissemination of unpublished price- sensitive information.
iii) Policy on Document Retention
The policy deals with the retention and preservation of corporate records of theCompany.
Share transfer agency
The Company has appointed M/s XL Softech Systems Ltd #3 Sagar Society Road No.2Banjarahills Hyderabad - 500034 as its share transfer agency for handling both physicaland electronic transfers.
Code of conduct
The Company has adopted Code of Conduct for the Board and for the Senior levelemployees of the Company and they are complying with the said code. A declaration by theExecutive Director to this effect is furnished in Annexure - VII to the Board's Report.
Awards and recognition
The Company has not received any award during the Financial Year.
The Directors wish to place on record their gratitude to shareholders and thank thecustomers vendors franchisees bankers Department of Explosives and their OfficialsCentral Excise Pollution Control Boards and Commercial Tax Departments of respectiveStates host of other State and Central Government Departments Security Exchange Board ofIndia and Stock Exchanges at Mumbai Ahmedabad and Kolkata and others for their continuedsupport to the Company's growth. The Directors also wish to place on record theirappreciation for the contribution made by the employees at all levels for theirsincerity hard work solidarity and dedicated support to the Company.
By Order of the Board of Directors
For Kabsons Industries Limited
Place : Hyderabad
Date : 14-08-2017