To the Members
Your Board of Directors (Board') is pleased to present the Fourteenth AnnualReport of your Company Kaya Limited for the year ended March 31 2017 (the yearunder review' the year' or FY17').
In line with the requirements of the Companies Act 2013 this report covers thefinancial results and other developments during April 1 2016 to March 31 2017 in respectof Kaya Limited (Kaya') and Kaya Consolidated comprising Kaya its Subsidiaries andJoint Venture. The consolidated entity has been referred to as Kaya Group' orYour Group' in this report.
FINANCIAL RESULTS AN OVERVIEW
| ||Rs. Crore |
|Consolidated Summary Financials for the Group ||Year ended March 31 |
| ||2017 ||2016 |
|Revenue from Operations ||410.25 ||369.90 |
|Operating EBIDTA ||10.09 ||13.38 |
|Profit before Tax and Exceptional Items ||(0.17) ||8.86 |
|Exceptional Items - Income / (expense) (net) || || |
|Profit after Tax ||(0.17) ||8.86 |
| ||Rs. Crore |
|Kaya Limited Financials ||Year ended March 31 |
| ||2017 ||2016 |
|Revenue from Operations ||193.91 ||185.32 |
|Profit before Tax ||(17.76) ||(8.62) |
|Less : Provision for Tax for the current year || || |
|Profit after Tax for the current year ||(17.76) ||(8.62) |
|Add : Surplus brought forward ||(63.86) ||(55.24) |
|Profit available for Appropriation ||(81.62) ||(63.86) |
|Appropriations: || || |
|Surplus carried forward ||(81.62) ||(63.86) |
REVIEW OF OPERATIONS
During FY17 Kaya Limited posted revenue from operations of INR 410.25 Crores a growthof 11% over the previous year. The business reported Loss before Tax and exception of INR0.17 Crores (0.04% of Net Revenue) as compared to Rs. 8.86 Crores (2% of Net Revenue) overlast year.
TRANSFER TO RESERVES
There is no amount proposed to be transferred to general reserve this year due tounavailability of profits.
The Directors have recommended no dividend for the year ended March 31 2017.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis forming a part of this Annual Report inter aliacovers the following:
Industry structure and development
Opportunities and Threats
Segment-wise or product-wise performance
Risks and Concerns
Internal control systems and their adequacy
Discussion on financial performance with respect to operational performance
Material Developments in Human Resources/ Industrial Relations front includingnumber of people employed.
CORPORATE SOCIAL RESPONSIBILTY ("CSR")
The statutory provisions of Section 135 of the Companies Act 2013 read with Companies(Corporate Social Responsibility Policy) Rules 2014 are not applicable to the Company ason March 31 2017. Hence your company is not required to adopt the CSR Policy forFY16-17.
However as a good Corporate Governance initiative the Board of Directors hadconstituted the CSR Committee. Once the said statutory provisions are applicable to theCompany the CSR Committee shall recommend to the Board of Directors the CSR Policy andamount of expenditure to be incurred for the purpose. The Composition of the Committee islaid down in the Corporate Governance Report forming part of this Annual Report.
The Company did not accept any public deposits during the year 2016-17.
SUBSIDIARIES/ JOINT VENTURE
The below mentioned companies are the subsidiaries of Kaya as on date of this Report:
1. KME Holdings Pte. Ltd
2. Kaya Middle East DMCC
3. Kaya Middle East FZE
4. Iris Medical Centre LLC (w.e.f. January 18 2016)
5. Minal Medical Centre Dubai
6. Minal Specialized Clinic Dermatology Sharjah
Kaya Middle East DMCC a foreign subsidiary of Kaya Limited had entered into anAgreement dated September 8 2016 for acquisition of 75% beneficialinterest inMinal Medical Centre Dubai and Minal Specialized Clinic Dermatology Sharjah. Thisacquisition has further strengthened our network of clinics in the UAE region.
Kaya Middle East DMCC had entered into a Joint Venture Agreement ("JV")dated January 28 2016 with Al Beda Medical Services K.S.C.C. Kuwait ("AlBeda") to set up and operate dermatology clinic. The interest of Al Beda and KayaMiddle East DMCC in the JV is in ratio of 51% and 49% respectively.
Pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act 2013read with Rule 5 8 of Companies (Accounts) Rules 2014 and other applicable provisionsif any a statement covering the salient features of the financial statements of oursubsidiaries joint venture in the prescribed format AOC-1 is annexed to this report as AnnexureI.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements formingpart of this Annual Report.
RELATED PARTY TRANSACTIONS
All transactions with the related parties entered into during the financial year2016-17 were at arm's length and in the ordinary course of business and in accordance withthe provisions of Companies Act 2013 and the Rules made thereunder. Accordingly nodisclosure is made in respect of the Related Party Transactions in the prescribed FormAOC-2 in terms of Section 134 of the Companies Act 2013.
All transactions with related parties are placed before the Audit Committee forapproval. Prior omnibus approval is obtained for Related Party transactions which are ofrepetitive nature. The Audit Committee reviews all transactions entered into pursuant tothe omnibus approval so granted on a quarterly basis.
The Board approved Policy on Related Party Transactions is uploaded on the website ofthe Company at www.kaya.in
DIRECTOR'S RESPONSIBILITY STATEMENT
To the best of their knowledge and information and based on the information andexplanations provided to them by the Company your Directors make the following statementin terms of Section 134(3)(c) of the Companies Act 2013 ("the Act"):
that in the preparation of the annual financial statements for the year endedMarch 31 2017 the applicable accounting standards have been followed and there are nomaterial departures from the same;
that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of your Company as at March 31 2017 andof the profit and loss of your Company for the said period;
that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
that the annual accounts have been prepared on a going concern' basis;
that proper internal financial controls to be followed by the Company were laiddown and such internal financial controls are adequate and were operating effectively;
that proper systems to ensure compliance with the provisions of all applicablelaws were devised and that such systems were adequate and operating effectively.
A separate section on corporate governance practices followed by the Company togetherwith a certificate from the Statutory Auditors confirming compliance thereto is annexed tothis Annual Report.
Mr. Harsh Mariwala has been on the Board of your Company since its incorporation i.e.March 27 2003. He was designated as the Chairman and Managing Director of the Company fora term of 5 (five) years without remuneration with effect from November 1 2011. Sincethe agreement with Mr. Harsh Mariwala was effective till October 31 2016 the Board ofDirectors recommended the re-appointment of Mr. Harsh Mariwala as the Chairman andManaging Director of the Company for another term of 5 (five) years ending on October 312021. The shareholders at the Annual General Meeting held on August 4 2016 approved thesaid re-appointment.
Director Retiring by Rotation
As per Section 152 and other applicable provisions of the Companies Act 2013 Mr.Rajen Mariwala being liable to retire by rotation at the ensuing Annual General Meeting ofthe Company has offered himself for re-appointment.
During the year under review there was no change in the Independent Directors of theCompany.
The Company has received declarations from the Independent Directors affirming thatthey meet the criteria of independence as provided in Section 149(6) of the Companies Act2013 and declaration under Regulation 26 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 has been received from each Independent Director listingthe Companies in which he is a Director/ Member stating his Committee Chairmanships andMemberships.
MEETINGS OF THE BOARD OF DIRECTORS IN THE FINANCIAL YEAR 2016-2017
The Board of Directors of the Company ("the Board'') met 8 times during the yearto deliberate on various matters. Details of the meetings held are laid down in theCorporate Governance Report forming part of this Annual Report.
KEY MANAGERIAL PERSONNEL ("KMP'S")
During the year under review Mr. Subramanian S. resigned as Chief Executive Officer -Kaya India and Mr. Rajiv Nair was appointed as the Chief Executive Officer Kaya Indiaeffective from December 16 2016.
Mr. Dharmendar Jain Chief Financial Officer of the Company tendered his resignationon March 6 2017 and continued his services as Chief Financial Officer of the Company uptoApril 21 2017.
The following is the list of Key Managerial Personnel of the Company as on date:
Mr. Harsh Mariwala is the Chairman and Managing Director;
Mr. Rajiv Nair is the Chief Executive Officer - Kaya India;
Ms. Almas Badar is the Company Secretary and Compliance Officer.
POLICY ON NOMINATION AND REMUNERATION
The Nomination and Remuneration Policy ("NR Policy") of the Company interalia covers the following aspects:
1. framework in relation to appointment removal and remuneration of Directors and KeyManagerial Personnel;
2. evaluation of the performance of Independent Directors and the Board;
3. to preserve Board diversity and assist the Board in ensuring that plan is in placefor orderly succession for appointments to the Board;
4. to ensure a transparent board nomination process with the diversity of thoughtexperience knowledge perspective and gender in the Board.
The Board approved Policy on Nomination and Remuneration is annexed as Annexure II.
PERFORMANCE EVALUATION OF DIRECTORS BOARD AND ITS COMMITTEES
A formal evaluation of the performance of the Board and its Committees and theindividual Directors was carried out for the year 2016-17. The details of which have beenprovided in the Corporate Governance Report forming part of this Annual Report.
DISCLOSURE RELATING TO REMUNERATION
The disclosure on the details of remuneration to Directors and other employees pursuantto Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure III.
Details of employee remuneration as required under provisions of Section 197 of theCompanies Act 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 shall be made available on the website of the Company 21days prior to the date of meeting of forthcoming Annual General Meeting. This informationis also available for inspection by the members at the Registered Officeof the Companyduring business hours on working days of the Company up to the date of the ensuing AnnualGeneral Meeting. Any member desirous of obtaining a copy of the said annexure may write tothe Company Secretary of your Company.
COMPOSITION OF THE AUDIT AND RISK MANAGEMENT COMMITTEE
The composition and the detailed terms of reference of the Committee are stated in theCorporate Governance Report forming part of this Annual Report.
The Company has a robust Risk Management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage.
INTERNAL FINANCIAL CONTROLS
The Company practices adequate internal controls with reference to financial statementswhich are also monitored by the internal auditors. Significant audit observations andfollow up actions thereon Audit Committee reviews adequacy and effectiveness of theCompany's internal control environment and monitors the implementation of auditrecommendations including those relating to strengthening of the Company's riskmanagement policies and systems.
We have embodied the mechanism in the Code of Conduct of the Company for employees toreport concerns about unethical behaviour actual or suspected fraud or violation of ourCode of Conduct. This mechanism also provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provide for direct accessto the Chairman of the Audit Committee in exceptional cases and no personnel have beendenied access to the Audit Committee. The Board and its Audit Committee are informedperiodically on the cases reported if any and the status of resolution of such cases.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and Rules made thereunder your company hasconstituted an Internal Committee and during the year under review the Committee receivedno complaints on sexual harassment.
EMPLOYEES' STOCK OPTION SCHEME
During the year under review the Board of Directors of the Company through a circularresolution passed on June 28 2016 had approved the introduction and implementation ofKaya Employee Stock Option Plan 2016 ("Kaya ESOP 2016" or "the Plan")for employees of the Company and its subsidiaries and the same was approved by theshareholders at the Annual General Meeting held on August 4 2016. Under the plan StockOptions shall be granted to eligible employees by the Nomination and RemunerationCommittee through various Schemes to be notified at a later date under the Plan. The totalnumber of options granted in aggregate under the Plan shall not exceed 2% of the paid-upequity capital of the Company. Moreover the Nomination and Remuneration Committee of theBoard of Directors through a circular resolution passed on August 23 2016 had approvedthe Kaya ESOP 2016 - Scheme I to grant 253893 stock options to the eligible employees ofthe Company and its Subsidiaries.
Previously Company had formulated and implemented Kaya Limited Employees Stock OptionScheme 2014 and Kaya Limited Employees Stock Option Scheme 2014 KME for grant ofoptions to employees of the Company and its subsidiaries respectively. The Members of theCompany at its Extra Ordinary General Meeting held on September 26 2014 approved the saidSchemes. The Company had successfully passed the requisite resolutions to sanction therevision in number of options granted and exercise price due to the merger of Marico KayaEnterprises Limited with the Company. Vesting Date for the options granted under KayaLimited Employees Stock Option Scheme 2014 and Kaya Limited Employees Stock OptionScheme 2014 KME was March 31 2016 and March 31 2017 respectively.
Additional information on ESOS in terms of section 62(1) (b) of the Companies Act 2013read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules 2014 andapplicable provisions of the SEBI (Share Based Employee Benefits) Regulations 2014 isannexed to this Report asAnnexure IV and shall be made available on the website ofthe Company. Link: www.kaya.in
DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There were no significant/ material orders passed by the regulators or courts ortribunals impacting the going concern status of your Company and its operations in future.
At the Thirteenth Annual General Meeting of the Company held on August 4 2016 theshareholders had approved the appointment of M/s. Price Waterhouse Chartered Accountantsas Statutory Auditors of the Company for a period of 1 year to hold office from theconclusion of the Thirteenth Annual General Meeting until the conclusion of the FourteenthAnnual General Meeting.
M/s. Price Waterhouse Chartered Accountants were appointed as the Statutory Auditorsof the Company on April 30 2007 and their term will expire at the ensuing Annual GeneralMeeting in accordance with Section 139(2) of the Companies Act 2013. The Board places onrecord its appreciation for the contribution of M/s. Price Waterhouse CharteredAccountants during their tenure as the Statutory Auditors of the Company.
Consequently the Board of Directors recommends the appointment of M/s. B S R & Co.LLP Chartered Accountants as the Statutory Auditors of the Company to hold office fromthe conclusion of the Fourteenth Annual General Meeting till the conclusion of NineteenthAnnual General Meeting of the Company subject to approval of and ratification asapplicable by the shareholders at Annual General Meeting/s.
M/s. Ernst & Young LLP a Chartered Accountant Firm has been associated with yourCompany as its internal auditor partnering your Company in the area of risk management andinternal control systems.
Pursuant to Section 204 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 your company appointed Amita Desai& Co. Practicing Company Secretaries Mumbai to conduct the Secretarial Audit ofyour Company. The Secretarial Audit Report for FY16-17 is enclosed as Annexure V tothis report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark.
The Auditors' Report does not contain any qualification reservation or adverse remarkor disclaimer by M/s. Price Waterhouse Chartered Accountants.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of energy
The information of Conservation of Energy as required under Section 134(3) (m) of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 is not applicable to thebusiness segment in which your Company operates.
No technology has been developed and/or imported by way of foreign collaboration.
Foreign exchange earnings and Outgo
The details of Foreign Exchange Earnings and Outgo for the year under review are asfollows:
| ||2015 2016 ||2016 2017 |
|Foreign exchange earnings and Outgo ||(Rs. in Crores) ||(Rs. in Crores) |
|1. The Foreign Exchange earned in terms of actual inflows during the year. ||2.44 ||5.17 |
|2. The Foreign Exchange outgo during the year in terms of actual outflows. ||15.15 ||7.74 |
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of the Section 92 of the Companies Act 2013 (the Act'') read with Rule 12 of the Companies (Management and Administration) Rules 2014the extract of Annual Return of the Company for the financial year ended March 31 2017 isgiven in Annexure VI to this report.
The Board takes this opportunity to thank all its employees for their dedicated serviceand firm commitment to the goals of the Company. The Board also wishes to place on recordits sincere appreciation for the wholehearted support received from shareholders bankersall other business associates and customers. We look forward to continued support of allthese partners in progress.
| ||On behalf of the Board of Directors |
|Place : Mumbai ||Harsh Mariwala |
|Date : May 3 2017 ||Chairman & Managing Director |