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Keerthi Industries Ltd.

BSE: 518011 Sector: Industrials
NSE: N.A. ISIN Code: INE145L01012
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OPEN 192.50
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VOLUME 5024
52-Week high 214.00
52-Week low 103.00
P/E 8.35
Mkt Cap.(Rs cr) 154
Buy Price 192.50
Buy Qty 42289.00
Sell Price 0.00
Sell Qty 0.00
OPEN 192.50
CLOSE 183.35
VOLUME 5024
52-Week high 214.00
52-Week low 103.00
P/E 8.35
Mkt Cap.(Rs cr) 154
Buy Price 192.50
Buy Qty 42289.00
Sell Price 0.00
Sell Qty 0.00

Keerthi Industries Ltd. (KEERTHIINDUS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their 33rd Annual Report for theFinancial Year 2015-16 together with the Audited Balance Sheet as at 31st March 2016 andthe Profit & Loss Account for the year ended on that date.

1. FINANCIAL RESULTS:

(Rs. In Lakhs)
Particulars 2015-16 2014-15
Net Operational Income 18256.65 15291.54
Other income 118.65 118.63
Profit before interest and depreciation 4253.72 2682.85
Less: Interest 618.01 947.01
Less: Depreciation 823.47 825.82
Profit/(Loss) before taxation 2974.80 1044.32
Less : Provision for taxation including deferred tax liability 973.57 (1093.88)
Less: short provision of earlier years 10.07 251.65
Net Profit/(Loss) after taxation 1991.16 1886.55

2. PERFORMANCE OF THE YEAR UNDER REVIEW:

In the Financial year 2015-16 the Company continued its strong growth momentum due toits ability to satisfy its customers and the rigor in following strong internal processes.Revenue growth in the year remained high.

The Operating profit get increased and thereby increasing the net profit .

The Overall revenue for the year 2015-2016 at Rs 18375.30 Lakhs is higher by 19.24% (Rs15410.17 Lakhs in 2014-2015) operating profit at Rs. 2974.80 Lakhs is higher by 184.86%(Rs. 1044.32 Lakhs in 2014-2015) and the net profit for the year at Rs. 1991.16 Lakhs ishigher by 5.55% (Rs. 1886.55 Lakhs in 2014-2015) Cement Division: Production ofCement and Clinker were 412284 MTS and 402841 MTS respectively during the twelvemonths ended 31st March 2016 as against were 388946 MTS and 372780 MTSrespectively during the previous year ended 31stMarch 2015.

During the year under review 69% of the installed capacity of the Company was utilized.Wind Power: The Company has generated 2817466 units as against 2948120 unitsduring the previous year.

Electronic Division: The Company has produced 2111 sq. mts of Printed CircuitBoards as against 1838 sq. mts during the previous year.

CURRENT YEAR OUTLOOK:

CEMENTDIVISION:

India’s Cement Industry is a vital part of its economy providing employment tomore than a million people directly or indirectly. India is the second largest producerof cement in the world. Some of the recent major government initiatives such asdevelopment of 98 smart cities are expected to provide a major boost to the sector.

Cement demand in India is expected to increase due to government’s push for largeinfrastructure projects leading to 45 million tonnes of cement needed in the next threeto four years. In addition cement production in India is expected to touch 550-600million tonnes (MT) in the next three to four year.

The Company also continues to concentrate on cost reduction measures in all areas ofproduction and distribution to protect and improve its profitability. However exorbitantincrease in input prices and frequent power holidays are the major constraints to sustainin the market.

However with the bifurcation of Andhra

Pradesh into state of Telangana and residuary state of Andhra Pradesh the constructionof new capital and other development measures of both the states as specified in theAndhra

Pradesh Reorganization Act 2013 shall spurt enormous demand for the cement and otherinfrastructure related products. As such the coming year’s performance is estimatedto be good. Despite of few adverse conditions your Directors are hopeful that theperformance of the company would achieve another level of milestone in producing thecement.

ELECTRONICDIVISION:

The improvement shown in the sales turn over of electronics division is satisfactory.Development of prototypes for new customers in the high-end automobile segment was doneduring the year. The division expects to improve its customer base in the automobilesegment in the years to come. Supply of PCBs for Konkurs missile program is completed forthe existing requirements and development of flexi cables for Invar missile program isunderway. The division is exploring further opportunities in the defense sector to improvebusiness in the near future.

The division was identified as one of the potential vendors for developing Gas ElectronMultiplier (GEM) foils by European Organization for Nuclear Research (CERN) for theirCompact Muon Solenoid (CMS) division. Senior Executives of your company visited CERNSwitzerland during the year on CERN’s invitation for discussions. GEM foils areexpected to be developed by electronics division in a time frame of two years. Apart fromtheir present use in scientific experiments at CERN GEMs are likely to find applicationsin medicalimaging and other areas.SUGAR DIVISION:

In view of the adverse market for sugar industry and since there is no progress in thedivision in particular effective steps could not be taken for furtherance of thebusiness.

3. DIRECTORS: a) The Company’s Board of Directors have been constitutedin compliance with the provisions of Companies Act read with the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 ("SEBI (LODR) Regulation". TheComposition of the Board is as under:

1. Smt. J. Triveni

Executive Chairperson & Whole-time Director

2. Sri. J. S. Rao

Managing Director

3. Sri. J. Sivaram Prasad

Non-Executive Director

4. Sri. K. Harishchandra Prasad Independent Director

5. Sri. E. Siva Sankaram Independent Director

6. Sri. Boddu Venkata Subbaiah Independent Director b) In accordance with theprovisions of Companies Act 2013 Sri. J. S. Rao the Managing Director of the Companywould retire by rotation and being eligible offer himself for re-appointment. The Boardof Directors recommends his re-appointment at the ensuing Annual General Meeting. c) Asrequired under Section 134 (3) (d) of the Companies Act 2013 All independent directorshave given declarations to the Company that they meet the criteria of independence as laiddown under section 149 (6) of the Companies Act 2013. d) Other Disclosure BoardEvaluation

Pursuant to Section 178 (2) of the Companies Act 2013 the Nomination and RemunerationCommittee has evaluated the performance of individual Directors in its duly convenedmeeting. Pursuant to Section 134 (3) (p) of the CompaniesAct 2013 and Regulation 4 (2)(f) (ii) (9) of the ("SEBI (LODR) Regulation (erstwhile Clause 49 of the ListingAgreement) the Board has carried out an evaluation of its own performance as well as theevaluation of the Committees of the Board. The manner in which the evaluation has beencarried out has been explained in the Corporate

Governance Report. Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Remuneration Policy is stated in the Corporate Governance Report.

Meetings

During the year Four (4) Board Meetings and Four (4) Audit CommitteeMeetings were convened and held. The details of which are given in the CorporateGovernance Report. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013.

4. DETAILS OF WHOLE-TIME KEY MANAGERIAL PERSONAL (KMP)

During the period under review Sri. J. S. Rao Managing Director Smt. J. TriveniExecutive Chairperson & Whole-time Director Sri. Y. Venkateswara Rao Chief FinancialOfficer and Mr. Rajesh Kumar Yadav Company Secretary & Compliance Officer are theWhole-Time Key Managerial Personal of the Company.

5. DIVIDEND:

In view of inadequate profits Your Directors regret their inability to recommend anydividend on Equity Shares for the year 2015-2016.

6. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY:

During the period under review there are no significant and material orders passed bythe Regulators or Courts or Tribunals which would impact the going concern status and theCompany’s future operations.

7. POSTAL BALLOT

The Company has on 23rd April 2015 approved the following resolutionthrough Postal Ballots.

The details have been discussed in the Corporate Governance Report.

8. DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL fordematerialization. All the Shareholders whose shares are in physical mode are requested todematerialize their share holding through their depository participants so that it willimprove the liquidity of our stock. The Board pleased to inform that in compliance withRegulation 39 of the Listing Regulation (erstwhile clause 5A of the listing agreement)entered with Bombay Stock

Exchange Limited the unclaimed equity shares were dematerialized and the same arelying in the DEMAT suspense account. Shareholders are requested to claim their shares inDEMAT form by submitting their claims to the Company/RTA.

9. DIRECTORS’ RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Companies Act 2013 your directors confirm: (a)That the directors in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures.

(b) That the directors had 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 the company at the end of thefinancial year and of the profit and loss of the Company for that period.

(c) That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and deleting fraud and otherirregularities.

(d) That the directors had prepared the annual accounts on the going concern basis. (e)That the directors had laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively.

(f) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

10. PUBLIC DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 or 74 ofthe Companies Act 2013 and Companies ( Acceptance of Deposits) Rules 2014.

11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.

12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the Internal Audit Charter. To maintain its objectivity and independence the

Internal Auditor reports to the Chairman of the Audit Committee of the Board & tothe Chairperson & Managing Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.

13. INTERNAL FINANCIAL CONTROL:

The Company has in place adequate internal financial control commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.

The Company has adopted accounting policies which are in line with the AccountingStandards and the Act. These are in accordance with generally accepted accountingprinciples in India. The Company has a robust financial closure certification mechanismfor certifying adherence to various accounting policies accuracy of provisions and otherestimates.

14. RELATED PARTY TRANSACTIONS:

All transactions entered by the Company with related party were in the ordinary courseof the business. The Audit Committee granted approval of the same. There were nomaterially significant transactions with Related Parties during the financial year 2015-16which were in conflict with the interest of the Company.

During the year your Company has entered into following Related Party Transactions asper Section 188 (1) of the Companies Act 2013:

Date of transaction Nature of Transactions Amount (In Rs.) Legal Framework Legal Requireme nts Date of Approval obtained
22-07-2015 Purchase of equipments and erection and commissioning services from M/s. Green Secure Systems Pvt. Ltd a Related Party u/s 2 (76) of the Act. Rs. 5.6 Crores plus applicable duties and taxes Listing Agreement and Sec-188 (1) (a) of Companies Act 2013 Board approval and Audit Committee Board Approval 29-05-2015
Audit Committee approval – 08-08- 2015
19-12-2015 Sell of Cement to Executive Chairperson of the Company 70000 Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Audit Committee approval – 13-11- 2015
Board Approval 13-11-2015
16-02-2016 Sell of Cement to Executive Chairperson of the Company 30750 Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Audit Committee approval – 13-11-2015
Board Approval 13-11-2015
*14-02-2016 Appointment of Smt. J. Sarada Govardhini (Related Party) in place of Profit Monthly Salary of Rs. 2.50 Lakhs per month Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (f) of Companies Act 2013 Prior approval of Audit Committee and Board Audit Committee approval – 12-02-2016
Board Approval 12-02-2016
05-03-2016 Sell of Cement to Executive Chairperson of the Company on Arm’s length price 19500 Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Audit Committee approval – 12-02-2016
Board Approval 12-02-2016
22-03-2016 Sell of Cement to Chief Operating Officer of the Company 45000 Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Audit Committee approval – 12-02-2016
Board Approval 12-02-2016

*Smt. J. Sarada Govardhini has been appointed as Chief Operating Officer in accordancewith the provisions of Sec 188 (1) of the Companies Act 2013 for a period of 5 years atproposed remuneration of Rs. 2.50 Lakhs per month upto a maximum of Rs. 4.30 Lakhs permonth which requires prior approval by Ordinary Resolution of Members in the ensuing AGM.The Board recommends the approval of the Shareholders.

15. COST AUDITORS:

Cost Audit records have been maintained by the company for the F.Y.2015-16. Pursuant tothe directives of the Central Government and provisions of Section 148 of the CompaniesAct 2013 qualified Cost Auditors have been appointed to conduct the cost audit for theF.Y.2015-16.

16. AUDITORS:

M/s. K.S. Rao & Co. Chartered Accountants Hyderabad has been appointed for threeconsecutive years i.e. till the conclusion of 34th AGM (Subject to the ratification by theshareholders at each AGM) by the shareholders at the 31st AGM. The Board of Directorsrecommends the ratification of appointment of M/s. K.S. Rao & Co. CharteredAccountants at the ensuing Annual General Meeting.

17. REPLY TO AUDITOR’S COMMENT:

Regarding Auditor’s emphasis matter on confirmation of Sundary Creditors and forLoans and advances the same were subsequently collected adjusted and paid.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

Your Company has duly constituted CSR Committee on 29-05-2014. Your Company hasincurred losses in the last two years out of the three immediately preceding financialyears Hence the requirement in connection with spending of money on specified projectsunder corporate social responsibility rules as envisaged under section 135 (5) of theCompanies Act 2013 are not applicable to the Company in the Financial year 2015-16.However Your Company has been contributing generously for upliftment of poor and needypeople within and immediate vicinity of the factory for their development in educationcultural vocational and philanthropic activities. Moreover your company has beenproviding on job training to students of Engineering collages at free of cost. As a listedcompany necessary measures have been taken to comply with the Listing Regulations ofStock Exchanges. The Annual Report on CSR activities is annexed herewith as: (AnnexureC)

19. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies( Appointment and Remuneration of Managerial Personnel) Rules 2014 the BoardfromSundaryDebtors had appointed M/s VCSR & Associates Company Secretaries inWhole-time Practice to carry out Secretarial Audit for the financial year 2015-2016. TheSecretarial Audit report is annexed herewith as "(Annexure D)"&"( Annexure D1)"

20. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "(AnnexureE )".

21. DISCLOSURE AS PER SECTION 197(12)

Refer "(Annexure F)".

22. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS:

The company continues to accord high priority to health and safety of employees atmanufacturing locations. During the year under review the company conducted safetytraining programmes for increasing disaster preparedness and awareness among all employeesat the plants. Training programmes and mock drills for safety awareness were alsoconducted for all employees at the plants. Safety Day was observed with safety competitionprogrammes with aim to imbibe safety awareness among the employees at the plant.

During the year under review your Company enjoyed cordial relationship with workersand employees at all levels.

23. ADDITIONAL INFORMATION:

Information pursuant to Section 134 (3) (l) & (m) of the Companies Act 2013 isannexed herewith as (Annexure B) which is detailed in Form A and Form B.

24. RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of theListing Regulation the company has constituted a risk management committee on is BoardMeeting held on 29th May 2015. The details of the committee and its terms ofreference are set out in the corporate governance report forming part of the Boardsreport.

At present the company has not identified any element of risk which may threaten theexistence of the company.

25. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS

The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are discussed separately together with the Certificate fromthe Practicing Company Secretary of the Company regarding compliance with the requirementsof Corporate Governance as stipulated SEBI (LODR) Regulations 2015.

26. ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank MID Corporate Branch Somajiguda AndhraBank SCF Branch and Indian Bank Main Branch Koti for theircontinuedsupportduring theyear under review and acknowledge with gratitude the help extended by the Central

Government and Government of Telangana & Andhra Pradesh. Your directors also wishto place on record their appreciation of the services rendered and co-operation extendedby the Workmen Staff Dealers Customers and other concerned.

By Order of the Board of Directors
Sd/-
Place: Hyderabad (J. Triveni)
Date: 28-05-2016 Executive Chairperson
DIN: 00029107

(Annexure B)

Information pursuant to Section 134 (3) (l) of the Companies Act 2013

FORM – A

Form for disclosure of particulars with respect to conservation of energy.

Particulars Current Year Previous year
A. Power and Fuel Consumption: Cement Electronic Division Wind Power Cement Electronic Division Wind Power
1 a) Purchased Units (Nos) 38634720 538195 NIL 37027720 529794 NIL
Amount (Rs..) 239387065 4381312 NIL 228935116 4275501 NIL
Rate/unit (Rs..) 6.20 8.14 NIL 6.18 8.07 NIL
b) Own Generation:
i) Through Diesel Generator 7620 5022 NIL 24894 13091 NIL
Units (Nos.)
Units per Ltr. of Diesel Oil 2.75 3.14 NIL 2.77 2.85 NIL
Cost/Unit (Rs.Rs.) 18.60 17.25 NIL 22.19 21.48 NIL
ii) Through Steam Turbine/ NIL NIL NIL NIL NIL NIL
Generator:
Units (Nos.) NIL NIL NIL NIL NIL NIL
Units per Ltr. Of Fuel Oil Gas NIL NIL NIL NIL NIL NIL
Cost/Unit (Rs.) NIL NIL NIL NIL NIL NIL
2 Coal
Quantity (M.T.) 76250 NIL NIL 68617 NIL NIL
Total Cost (Rs.) 350705136 NIL NIL 374993909 NIL NIL
Average Rate/M.T. (Rs.) 4599 NIL NIL 5465 NIL NIL
3 NIL NIL NIL NIL NIL NIL NIL
4 NIL NIL NIL NIL NIL NIL NIL
B. Consumption per unit production:
Electricity (Units) 93.71 254.92 NIL 95.20 299.59 NIL
Furnace Oil NIL NIL NIL NIL NIL NIL
Coal 0.19 NIL NIL 0.18 NIL NIL
Others (Specify) NIL NIL NIL NIL NIL NIL

FORM – B

Information pursuant to Section 134 (3) (m) of the Companies Act 2013 Form fordisclosure of particulars with respect to Technology Absorption:

Research and Development (R&D):
1. Specific areas in which R&D carried out by the Company NIL
2. Benefits derived as a result of the above R&D NIL
3. Future Plan of Action
4. Expenditure on R&D NIL
a) Capital
b) Recurring
c) Total
d) Total R&D expenditure as a percentage of total turnover

 

Technology absorption adoptation and innovation
1 Efforts in brief made towards innovation NIL
2 Benefits derived as a result of the above efforts e.g. product improvement cost reduction production development import substitution etc. NIL
3 In case of imported technology (Imported during the last 5 years reckoned from the beginning of the financial Year) the following information may be furnished NIL
a) Technology
b) Been imported
c) Year of import
d) Has technology been fully absorbed
e) If not fully absorbed reasons therefore and future plans of action
Foreign Exchange Earnings & Outgo:
i) Activities relating to exports initiatives taken to increase exports development of new export markets for products and services and export plans
1). Total foreign exchange outgo and earned
a) Foreign Exchange Outgo Rs. 707.49 Lakhs
b) Foreign Exchange Earned Rs. 30.01 Lakhs

 

By Order of the Board of Directors
Sd/-
Place: Hyderabad (J. Triveni)
Date: 28-05-2016 Executive Chairperson
DIN: 00029107

(Annexure C)

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the company’s CSR policy including overview ofprojects or programs proposed to be undertaken and a reference to the web-link to the CSRpolicy and projects or programs.

CSR Mission is stated herein below:

CSR Mission

Our aim is to establish its net work throughout the country by next five years byexpanding its market potential with multi products. In so doing to contribute to thesocial and economic development of the communities in which we operate and to providebetter and sustainable way of life for the upliftment of poor and needy people within andimmediate vicinity of the factory.

To pursue these objectives our focus areas are:

Goal area Actions
1 Hunger poverty malnutrition and healthcare The Company will focus on mid-day meal programs in schools across weaker section of society particularly in the State of Telangana and Andhra Pradesh.
The Company will work with Non- profit organizations working in medical or health-related projects such as providing support for cancer treatment cataract surgeries etc of poor peoples.
2 Education The Company s’ focus on education will be on two fronts:
(a) To train students from under privileged backgrounds in its various development centers.
(b) To provide off the job training to various mechanical/electrical engineering students across various colleges in India.
3 Rural Development We believe that the well-being of people living in rural areas ensures sustainable development. We will work with local administrations to achieve community development goals. We will partner with governments and NGOs and support them in improving infrastructure such as constructing roads providing drainage systems and electricity and rehabilitating natural-disaster- affected victims in rural areas.
4 National Heritage Art And Culture The Company will provide donations for protecting national heritage art and culture including temples etc.

Web Link: www.keerthiindustries.com/images/CSRPolicy.pdf

2. Composition of CSR Committee

Name Designation Category
Sri. B. V. Subbaiah Chairman NED (I)
Sri. J. S. Rao Member ED (P)
Sri. K. Harishchandra Member NED (I)
Sri. J. Sivaram Prasad Member NED

The committee has not met any times during the financial year ended March 31 2016 asthe Company was not falling within the ambit of Section 135 (5) of the Companies Act2013.

3. Average net profit of the company for last three financial years:

(Rs. In Lakhs)
Particulars 2012-2013 2013-2014 2014-2015
Average Net Profit
(as per section 198) (2372.98)

4. Prescribed CSR Expenditure (2 % of the amount as in item 3 above): NIL

5. Details of CSR spent during the financial year.

(a) Total amount to be spent for the financial year: Nil

(b) Amount unspent if any : Not Applicable

6. In case the company has failed to spend the two per cent of the average net profitof the last three financial years or any part thereof the company shall provide thereasons for not spending the amount in its Board report : Not Applicable

Sd/- Sd/-
B. V. Subbaiah J. S. Rao
Chairman CSR Committee Managing Director
DIN: 01147062 DIN: 00029090
Place: Hyderabad
Date: 28.05.2016

Annexure D

to the Report of the Board of Directors

MR -3

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31 2016

To

The Members

Keerthi Industries Limited

We have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions of the Acts Rules and regulations as mentioned below and the adherence to goodcorporate practices by Keerthi Industries Limited (herein called ‘theCompany’) for the financial year 2015-16. Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts / statutorycompliancesand expressing my opinion thereon.

verification Based our of the Company’s 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 we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on March 31 2016 complied withthe statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter:

We have examined the books papers minute books forms and returns filed and otherrecords maintained by Keerthi Industries Limited (‘the Company’) for thefinancial year ended on March 31 2016 according to the provisions of:

I. The Companies Act 2013 (the Act) and the rules made thereunder as applicable; II.The Securities Contract (Regulation) Act 1956 (‘SCRA") and the rules madethereunder; III. The Depositories Act 1956 and the Regulations and the Bye-laws framedthereunder; IV. Foreign Exchange Management Act 1999 and the rules and regulations madethereunder;

V. The following Regulations and guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI ACT’):

VI. The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

VII. The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulation 2015;

VIII. The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents)Regulations 1993 regarding the Companies Act and dealing with client;

IX. Employees Provident Fund and Miscellaneous Provisions Act 1952

X. Employees State Insurance Act 1948

XI. Employers Liability Act 1938

XII. Environment Protection Act 1986 and other environmental laws

XIII. Equal Remuneration Act 1976

XIV. Factories Act 1948

XV. Hazardous Wastes (Management and Handling) Rules 1989 and Amendment Rule 2003

XVI. Income Tax Act 1961 and Indirect Tax Laws

XVII. Indian Contract Act 1872

XVIII. Indian Stamp Act 1999

XIX. Industrial Dispute Act 1947

XX. Minimum Wages Act 1948

XXI. Payment of Bonus Act 1965

XXII. Payment of Gratuity Act 1972

XXIII. Payment of Wages Act 1936 and other applicable labour laws

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(erstwhile Listing Agreements);

We report that during the period under review the Company has complied with theprovisions of the Act Rules Regulations Guidelines Standards etc. mentioned above;

We further report that:

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. There were nochanges in the composition of the Board of Directors during the period under review andwere 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 at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

Majority decision is carried through and as informed by the Company there were nodissenting views of members of the Board at any Board / Committee meeting held during thefinancial year.

We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

We further report that during the audit period there were no specific events /actionshaving a major bearing on the Company’s affairs in pursuance of the above referredlaws rules regulations guidelines standards etc.

For VCSR & Associates
Practicing Company Secretaries
Sd/-
Place: Hyderabad Ch Veeranjaneyulu
Date: 28.05.2016 Partner
CP NO. 6392 ACS No. 6121

Note: This report is to be read with our letter of even date which is annexed as‘(Annexure-D1)’ and forms an integral part of this report.

Annexure D1

To

The Members

Keerthi Industries Limited

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices were followed to providea reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

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 VCSR & Associates
Practicing Company Secretaries
Sd/-
Place: Hyderabad Ch Veeranjaneyulu
Date: 28.05.2016 Partner
CP NO. 6392 ACS No. 6121

(Annexure-F)

Particulars as per Rule 5 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year

S. No. Name of the Director Ratio of the remuneration to the median remuneration of the employees.
1. Sri J. S. Rao ( Managing Director) 237:1
2. Sri J. Triveni (Executive Chairperson) 237:1

(ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial

S. No. Name of the Director & KMP % increase in remuneration
1. Sri. J. S. Rao ( Managing Director) 100%
2. Smt. J. Triveni (Executive Chairperson) 100%
3. Sri. Y. Venkateswara Rao (CFO) 13.15%
4. Mr. Rajesh Kumar Yadav (Company Secretary NIL

(iii) The percentage increase in the median remuneration of employees in thefinancialyear

9.52%

(iv) The number of permanent employees on the rolls of company

211

(v) The explanation on the relationship between average increase in remuneration andcompany performance

S. No. *Average increase in remuneration As compared to previous year Increase in Company performance (Net profits after Tax)
1. 15.59% 5.55%

*The Remuneration of Executive Directors not taken into account while calculatingAverage increase in remuneration of employees.

(vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:

(Rs. In Lakhs)
S. No. Remuneration of Key Managerial Personnel Performance of the Company for the year ended 31st March 2016 (Net profits after Tax)
1. 107.58 1991.16

(vii) Variations in the market capitalization of the company price earnings ratio asat the closing date of the current financial year and previous financial year andpercentage increase or decrease in the market quotations of the shares of the company incomparison to the rate at which the company came out with the last public offer in case oflisted companies

S. No. Particular As at 31st March 2015 As at 31st March 2016
Rs. Rs.
1. Market capitalization 287400057 1122343320
2. Market quote (BSE) 35.85 140.00
3. EPS 23.84 22.54

The company has not made any public issue during the year.

(viii) 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 justificationthereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration

There are two whole time Directors viz. Managing Director and Executive Chairpersonand the increase in their remuneration is given above in point no (ii).

(ix) Comparison of remuneration of each of the Key Managerial Personnel against theperformance of the company:

(Rs. In Lakhs)
S. No. Name Key Managerial Personnel Remuneration of Key Managerial Personnel Performance of the Company for the year ended 31st March 2016 (Net profits after Tax)
1. Sri. J. S. Rao ( Managing Director) 48.00 1991.16
2. Smt. J. Triveni (Executive Chairperson) 48.00 1991.16
3. Sri. Y. Venkateswara Rao (CFO) 6.86 1991.16
4. Mr. Rajesh Kumar Yadav (Company Secretary) 4.72 1991.16

(x) The key parameters for any variable component of remuneration availed by thedirectors

Only monthly remuneration subject to the overall limits specified by the Companies Act2013.

(xi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year.

Not Applicable

(xii) Affirmation that the remuneration is as per the remuneration policy of thecompany

The remuneration paid to the Key Managerial personnel is in accordance with theremuneration policy of the Company