The Members of
Kavit Industries Limited
Your Directors are pleased to present the Annual Report and the Company's auditedfinancial statement for the financial year ended March 31 2017.
1. FINANCIAL HIGHLIGHTS AND STATE OF COMPANY' S AFFAIRS:
The financial results of the Company for the accounting year ended on March 31 2017are as follows:
| || || || ||(Rs. in Lakhs) |
|Particulars || |
Year Ended March 31 2017
Year Ended March 31 2016
| ||Standalone ||Consolidated ||Standalone ||Consolidated |
|Turnover ||17753.25 ||17793.50 ||3396.37 ||3396.37 |
|Other Income ||16.13 ||21.11 ||44.26 ||50.60 |
|T otal Revenue ||17769.38 ||17814.62 ||3440.63 ||3446.97 |
|Expenditure ||17636.03 ||17674.78 ||3414.03 ||3419.78 |
|Profit/(Loss) Before Taxes ||133.35 ||139.84 ||26.60 ||27.18 |
|Exceptional Items ||0 ||0 ||0.18 ||0.18 |
|Taxes expenses || || || || |
|Current Tax ||41.44 ||41.44 ||10.32 ||10.56 |
|Deferred Tax ||2.31 ||399.40 ||0 ||0 |
|Profit/(Loss) after Tax available for appropriation ||89.60 ||(301.00) ||16.08 ||16.45 |
2. BUSINESS OVERVIEW:
The Company recorded an exceptional standalone profit of Rs. 89.60 lakh in the FY2016-17 in comparison to Rs. 16.08 lakh in FY 2015-16. The Consolidated Profit before taxfor the year 2017 was recorded at Rs. 139.84 lakh which was almost 5 times higher thanthe profit recorded last year. However due to deferred tax provision on the consolidatedfinancials the Company recorded a loss after tax of Rs. 301.00 lakhs.
No material changes and commitments occurred between the end of the financial year anddate of report which affects financial position.
3. DIVIDEND :
With a view to conserve resources for future projects the Board of Directors do notrecommend any dividend.
4. CAPITAL STRUCTURE :
During the year under review there was no change in the Company's issued subscribedand paid-up equity share capital. The Board in its meeting held on 07.02.2017 hadin-principally approved to raise funds aggregating up to Rs. 25 Crores through issue ofEquity shares or convertible equity warrants on preferential basis to the promoter ornon-promoters as per the provisions of SEBI (ICDR) Regulations
2009. However the implementation of the said proposal is currently stayed due to theoverall business conditions and the fund raising exercise may be revived at an appropriatetime in future.
5. STATUTORY AUDITORS:
M/s. Sheetal Samriya & Associates Chartered Accountants Vadodara bearing (FirmRegistration Number: 011478C) were appointed as the statutory auditors of the Companyin the AGM held on 23.09.2014. Their office as the statutory auditors of the Company issubject to ratification by the members at every Annual General Meeting. Necessary consenthas been obtained from M/s. Sheetal Samriya & Associates under Section 141 of theCompanies Act 2013 for their appointment. The Board proposes the ratification of theirappointment as statutory auditors of the Company at the ensuing AGM to hold office fromthe conclusion of this AGM till the conclusion of the next AGM on such remuneration asmay be mutually agreed upon between the auditors and Chairman of the Company.
The Auditors report and notes on financial statement as referred in their report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remarks.
6. SECRETARIAL AUDITOR :
Pursuant to Section 204 of the Act and rules framed therein the Board of Directors hadappointed Devesh Vimal & Co. Practicing Company Secretaries as a Secretarial Auditorto conduct a Secretarial Audit for the financial year under consideration.
The Report of the Secretarial Auditor in Form MR-3 is annexed to this report as "Annexure-I".
7. INTERNAL AUDITOR :
Pursuant to Section 138 of the Act and rules framed therein the Board of Directors hadappointed Mr. Upendrasinh M. Mahida Chartered Accountants (FRN: 139833W) as the InternalAuditors for conducting Audit for the financial year under consideration.
The internal auditor has not reported any qualifications reservations or adverseopinions during the year under review.
8. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND:
Pursuant to the provisions of Section 125(2) of the Companies Act 2013 there was noamount transferred to Investor Education & Protection Fund.
9. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:
Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 detailed reviewof operations performance and future outlook of the Company is covered under a separateAnnexure to this report as Management Discussion & Analysis Report.
10. SUBSIDIARY COMPANIES:
During the year under review the Company has 5 subsidiary Companies namely KavitInfoline Private Limited Kavit Swachh Organic Food Private Limited Kavit Edible OilLimited Kavit Infra Project Private Limited and Kavit Green Energy Private Limited. Incompliance with the provisions of the Companies Act 2013 the details of subsidiaries andassociate companies in the prescribed Form AOC 1 forms part of the Annual Reportand marked as "Annexure II".
11. DIRECTORS' REPSONSIBILITY STATEMENT:
Pursuant to the requirement of Section 134(5) of the Companies Act 2013 the Directorshereby confirm that:
i. In the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanations relating to material departures as reportedby the Auditors.
ii. The Directors have selected such accounting policies and 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 end of the financial year and ofthe profit and Loss of the Company for the that period;
iii. The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv. The annual accounts are prepared on a going concern basis.
12. CORPORATE GOVERNANCE :
Kavit Industries Limited is committed to maintaining the best standards of CorporateGovernance and has always tried to build the maximum trust with shareholders employeescustomers suppliers and other stakeholders.
Corporate Governance Report for the year under review as stipulated in SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatesection forming part of this Annual report.
13. CONTRACTS AND ARRANGMENTS WITH RELATED PARTIES :
As required by the provisions of the Companies Act 2013; the details regarding theRelated Party Transactions in prescribed Form AOC-2 are attached herewith as "AnnexureIII".
14. DIRECTOR & KEY MANAGERIAL PERSONNEL:
The details of the changes in the Board composition from the beginning of the financialyear are discussed in detail in the Corporate Governance Report.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under Section149(6) of the Companies Act 2013 and regulation 17 of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015.
Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under Section 178(3) of the Companies Act 2013
15. MEETING OF THE BOARD
During the year Twenty Five Board meeting were convened and held on the followingdates: 07/04/2016 16/05/2016 30/05/2016 04/06/2016 14/06/2016 25/06/2016 07/07/201619/07/2016 25/07/2016 13/08/2016 01/09/2016 15/09/2016 26/09/2016 13/10/201621/10/2016 24/10/2016 02/11/2016 07/11/2016 12/11/2016 21/11/2016 06/12/201603/01/2017 07/02/2017 16/02/2017 and 29/03/2017.
16. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS :
The evaluation/ assessment of the Directors KMPs and the SMP of the Company are to beconducted on an annual basis and to satisfy the requirements of the Listing Obligations.
a) Executive Directors :
The following criteria may assist in determining how effective the performances of theDirectors/ KMPs/ SMP have been:
Leadership and stewardship abilities
Contributing to clearly define corporate objectives and plans
Communication of expectations and concerns clearly with subordinates
Obtain adequate relevant and timely information from external sources
Review and approval achievement of strategic and operational plans objectivesbudgets
Regular monitoring of corporate results against projections
Identify monitor and mitigate significant corporate risks
Assess policies structures and procedures
Direct monitor and evaluate KMPs Senior Officials
Review management's succession plan
Assuring appropriate board size composition independence structure
Clearly defining roles and monitoring activities of committees
Review of corporation's ethical conduct
Evaluation on the aforesaid parameters will be conducted by the Independent Directorsfor each of the Executive/ Non-Independent Directors in a separate meeting of theIndependent Directors.
b) Non-Executive Directors :
The Non-Executive Directors shall be evaluated on the basis of the following criteriai.e. whether they:
Act objectively and constructively while exercising their duties;
Exercise their responsibilities in a bona fide manner in the interest of theCompany; devote sufficient time and attention to their professional obligations forinformed and balanced decision making;
Do not abuse their position to the detriment of the Company or its shareholdersor for the purpose of gaining direct or indirect personal advantage or advantage for anyassociated person;
Assist the Company in implementing the best Corporate Governance practices.
Strive to attend all meetings of the Board of Directors and the Committees;
Participate constructively and actively in the Committees of the Board in whichthey are Chairpersons or members;
Strive to attend the general meetings of the Company;
Keep themselves well informed about the Company and the external environment inwhich it operates;
Do not to unfairly obstruct the functioning of an otherwise proper Board orCommittee of the Board;
Moderate and arbitrate in the interest of the Company as a whole in situationsof conflict between management and shareholder's interest.
Abide by Company's Memorandum and Articles of Association Company's policiesand procedures including code of conduct insider trading guidelines etc.
17. REMUNERATION OF DIRECTORS KMP'S AND SMP:-
The guiding principle is that the level and composition of remuneration shall bereasonable and sufficient to attract retain and motivate Directors KMP and other SMP.The Directors KMP and other SMP's salary shall be based and determined on the individualperson's responsibilities and performance and in accordance with the limits as prescribedstatutorily if any.
The Nomination and Remuneration Committee determines individual remuneration packagesfor Directors KMP and SMP of the Company taking into account factors it deems relevantincluding but not limited to market business performance and practices in comparableCompanies having due regard to financial and commercial health of the Company as well asprevailing laws and government/ other guidelines. The Committee consults with the Chairmanof the Board as it deems appropriate. Remuneration of the Chairman is recommended by theCommittee to the Board of the Company. The remuneration should also involve a balancebetween fixed and incentive pay reflecting short and long-term performance objectivesappropriate to the workings of the Company and its goods.
A. Director/ Managing Director:
a. Base Compensation (fixed salaries) :
Must be competitive and reflective of the individual's role responsibility andexperience in relation to performance of day-to-day activities usually reviewed on anannual basis; (includes salary allowances and other statutory/ non-statutory benefitswhich are normal part of remuneration package in line with market practices).
b. Variable salary:
The Nomination and Remuneration Committee may in its discretion structure any portionof remuneration to link rewards to corporate and individual performance fulfillment ofspecified improvement targets or the attainment of certain financial or other objectivesset by the Board. The amount payable is determined by the Committee based on performanceagainst pre-determined financial and nonfinancial metrics.
B. Non-Executive Independent Directors :
The Independent Directors shall not be entitled to any stock option and may receiveremuneration by way of fee for attending meetings of the Board or Committee thereof or forany other purpose as may be decided by the Board and profit related commission as may beapproved by the Members. The sitting fee to the Independent Directors shall not be lessthan the sitting fee payable to other Directors provided that the amount of such feesshall be subject to ceiling/ limits as provided under Companies Act 2013 and rules madethereunder or any other enactment for the time being in force.
The remuneration payable to the Directors shall be as per the Company's policy andshall be valued as per the Income Tax Rules.
C. KMPs/ SMP etc. :
The remuneration payable to the KMP and the SMP shall be as may be decided by the Boardhaving regard to their experience leadership abilities initiative taking abilities andknowledge base and governed by the limits if any prescribed under the Companies Act 2013and rules made thereunder or any other enactment for the time being in force.
The remuneration paid to your Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015 (including any statutory modification(s) orre-enactment(s) for the time being in force). The Nomination and Remuneration Policy asformulated by the Company is uploaded on the company's website www.kavitindustries.in
The information required under Section 197 (12) of the Act read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as AnnexureIV.
18. BOARD DIVERSITY:-
The Board of Directors have optimum combination of Directors from the different areas/fields like Production Management Quality Assurance Finance Sales and MarketingSupply chain Research and Development Human Resources etc. or as may be consideredappropriate.
19. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF THE BALANCESHEET AND THE DATEOF REPORT:
There are no material changes between the date of balance sheet and the date of thisreport that would affect the financial position of the Company.
20. CONSERVATION OF ENERGY TECHNOLOGICAL ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO:
(A) Conservation of energy:
Your Company requires energy for its operations and the Company is making all effortsto conserve energy by monitoring energy costs and periodically reviews of the consumptionof energy. It also takes appropriate steps to reduce the consumption through efficiency inusage and timely maintenance/installation/ up gradation of energy saving devices.
(B) Technology absorption:
Your Company uses latest technology and equipments into the business and has been quitevigilant about the latest technological changes.
(C) Foreign Exchange Earnings and Outgo:
| || ||(Amt. in Rs) |
|PARTICULARS ||2016-17 ||2015-16 |
|Foreign Exchange earned in terms of actual inflows during the year (On ||0 ||0 |
|F.O.B Basis) || || |
|Foreign Exchange outgo during the year in terms of actual outflows ||0 ||0 |
21. LOANS GAURANTEES AND INVESTMENTS BY COMPANY (Section 186)
The Company has proposed to increase the limits for investments Loans and Guaranteesgiven by the Company as prescribed under section 186 of the Companies Act 2013.Resolution to this effect shall be proposed for approval of members through Postal Ballot.
22. EXTRACT OF ANNUAL RETURN: [Section 92 (3)]
As required by the provisions of Section 92(3) of the Companies Act 2013; the extractof Annual Return in prescribed Form MGT-9 is attached herewith as "AnnexureV".
The Company has neither accepted nor renewed any deposits during the year under reviewto which the provisions of the Companies (Acceptance of Deposits) Rules 2014 applies.
24. AUDIT COMMITTEE
The Company has an independent Audit Committee comprising of 3 members as on the dateof this report. All the members of the Audit Committee are financially literate. The termsof reference of the audit committee are elaborated in the corporate governance reportwhich forms part of this Annual Report.
25. DISCLOSURE ON ESTABLISHMENT OF VIGIL MECHANISM :
The Board of Directors of the Company believes in conducting all its affairs in a fairand transparent manner by adopting highest standards of professionalism honestyintegrity and ethical behaviour the directors are committed to comply with the laws andregulations to which it is subject. For this it has put in place systems policies andprocedures to interpret and apply these laws and regulations in the organisationalenvironment. In consonance with the object of the transparency and good governance theboard of directors of the company formulated and adopted "Whistle blower Policy andVigil Mechanism."
The main objective of this policy is to provide a platform to directors and employeesto raise concerns regarding and irregularity misconduct or unethical matters/dealingswithin the company which have a negative bearing on the organisation either financially orotherwise.
26. CORPORATE SOCIAL RESPONSIBILITY (CSR):
Since the Company's net worth does not exceed Rs. 500 crores or Company's turnover doesnot exceed Rs. 1000 crores or the Company's net profit does not exceed Rs. 5 crore forany financial year the provisions of section 135 of the Companies Act 2013 relating toCorporate Social Responsibility activities are not applicable to the Company.
27. OTHER MATTERS:
Following are the other matters to be covered pursuant to Section 134(3) (q) of theCompanies Act 2013 read with Rules made thereunder:
1. Change in nature of business
- There is no change in the nature of the business
2. Details of significant and material orders passed by the Regulators or courts ortribunals impacting the going concern status and company's operations in future.
- There is no significant and material orders passed by the Regulators courts ortribunals
3. Adequacy of Internal Financial Controls with reference to Financial Statements
- There is an adequate system in place for internal financial controls whichcommensurate with the working operations of the Company.
28. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redress thecomplaints received regarding sexual harassment. All employees (Permanent ContractualTemporary trainees) are covered under this Policy.
There were no complaints filed till date under the said policy.
The directors appreciate the professionalism commitment and dedication displayed byemployees at all levels. The directors would like to express their grateful appreciationfor the assistance and co-operation that our company has been receiving from our BankersCustomers Business Associates Central and State Government authorities andShareholders.
| ||By the Order of the Board |
| ||For Kavit Industries Limited |
| ||Sd/- |
| ||Jayesh Thakkar |
|Date: 06.09.2017 ||Managing Director |
|Place: Vadodara ||DIN:01631093 |