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Keltech Energies Ltd.

BSE: 506528 Sector: Industrials
NSE: N.A. ISIN Code: INE881E01017
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OPEN 1295.00
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VOLUME 21
52-Week high 2169.00
52-Week low 570.00
P/E 22.86
Mkt Cap.(Rs cr) 133
Buy Price 1293.00
Buy Qty 1.00
Sell Price 1328.00
Sell Qty 2.00

Keltech Energies Ltd. (KELTECHENERGIES) - Director Report

Company director report

To the Member's

Your Directors have pleasure in presenting their Fortieth Annual Report on the businessand operations of the Company and the accounts for the Financial Year ended March 312017. This report is being presented along with the audited financial statements for theyear

1. Financial Performance:

(Rs. in lacs except per share data)

2016-17 2015-16
Operating Profit 1569.31 1362.86
Less:
1) Interest 236.41 190.58
2) Depreciation 440.97 677.38 386.40 576.98
Profit for the year before taxation 891.93 785.88
Less : Provision for taxation - Current Tax 201.79 227.83
- Deferred Tax
Profit for the year 106.28 308.07 51.11 278.94
Other Comprehensive Income 583.86 506.94
Re-measurements of post-employment benefit obligations (net of tax) (5.24) (12.07)
Profit for the year available for appropriation 578.62 494.87

2. Company Affairs:

(MANAGEMENT DISCUSSION AND ANALYSIS REPORT / OPERATIONS REPORTS OF COMPANY'SPERFORMANCE):

The operations for the year 2016-17 have resulted in a net profit of Rs.578.62 lakhsafter charging depreciation interest tax and comprehensive income as against Rs.494.87lakhs for the corresponding period of the previous year.

A. Explosives Division

The sale of Explosives for the year under review was 40825 MT valued at Rs.16731lakhs as against 38770 MT valued at Rs.15473 lakhs of the previous year. The Salesturnover in Explosives increased by 5% in quantity terms. During the year the turnover inregard to traded goods and export of finished goods in Explosives sector was Rs.1391lakhs as against Rs.991 lakhs for the corresponding period of the previous year.

The sale of Detonating Fuse and related products during the year under review wasvalued at Rs.1136 lacs as against Rs.1129 lacs during the corresponding period of theprevious year. The increase was mainly due to higher sales of Detonating Fuse products.

B. Perlite Division

The sale of Perlite and Perlite based products for the year under review were 6519 MTvalued at Rs.1434 lakhs as against 6.789 MT valued at Rs.1286 lakhs for thecorresponding period of the previous year resulted in reduction of 4% in quantity termsand 12% increase in value terms.

The turnover of services contracts and special products during the year under reviewwas Rs.489 lakhs as against Rs.940 lakhs for the corresponding period of the previousyear.

3. Dividend

The Directors have recommended a Dividend of Rs.2.50 per share of Rs.10/- each (25%) onthe paid-up Equity Capital of the Company.

4. Business Focus and Highlights

(A) EXPOSIVES DIVISION

The Explosives Sector witnessed growth during the year under review. The Coal sectorshad already finalized orders at aggressive prices which the Company did not accept.However the Company's products are well accepted in other segments of business and thenon-coal segment of business contributed to increased turn-over.

In regard to D Fuse and related products the demand was consistent and the licensedcapacity utilization was achieved.

(B) PERLITE DIVISION

The domestic market sale of Expanded Perlite products was satisfactory during the yearunder review. A Plant for manufacture of a new product viz. Filter Aid in collaborationwith a Japanese Company Product was commissioned at Vishwasnagar Unit and the commercialproduction commenced during the fourth quarter of the current year.

(C) INDUSTRIAL RELATIONS

The industrial relations during the year under review were cordial and there were noindustrial disputes.

(D) OUTLOOK FOR 2017-18.

During the current financial year 2017-18 on account of stiff competition coupled theExplosives Division is expected to be under pressure and expects growth in Perlite basedbusiness. The Explosives Accessories Divisions are showing encouraging performance. TheCompany will consolidate its growth in the new segment of business of Emulsion Explosives.

Steps are taken for addition of balancing equipment in Explosives and additional plantsfor increase in capacity which is expected to materialize in 2017-18.

Your Company will continue to make all efforts for optimizing the overall performance.

(E) CAUTIONARY STATEMENT

The statements expressions information given in this Management Discussions andAnalysis Report describing the Company's objectives projections estimates expectationsor predictions may be deemed to be as "forward looking statements". Actualresults might substantially or materially different from those expressed or implied.Important developments that could affect the Company's operations included demand supplyconditions changes in Government global economic scenario and such other developmentsdifferent from Company's comprehension.

5. General Reserve:

The Company proposes to transfer a sum of Rs. 350 lacs to General Reserve.

6. Deposits

The Company has not received any deposits during the financial year 2016-17.

7. Quality

The Products of the Company are of high quality and have obtained requiredcertifications and this shall be driving force for better sales.

8. Infrastructure

The Company is in the process of expansion at Viswasnagar Garamsur and other Units.

9. Related Party Transactions

The Company has entered in to related party transactions which are in arms-length basisas mentioned in Annexure I to this report.

10. Board Committees

The Company has following Committees of the Board: a) Audit Committee; b) StakeholdersRelationship Committee; c) Committee of Directors (Share Transfer Committee); d)Independent Directors Committee; e) Corporate Social Responsibility Committee; and f)Nomination and Remuneration Committee

The composition of each of the above Committees their respective role andresponsibility is as detailed in the Report of Corporate Governance.

11. Particulars of Loans Guarantees or Investments

The Company has not given any loans guarantees and has not made any investments inother entities.

12. Directors a. Re-appointment

Shri Umaji V. Chowgule [DIN 00018993] retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for re-appointment.

Pursuant to Section 149 of the Companies Act 2013 the office of independent directorsare not liable to retire by rotation and they shall hold office for a term upto fiveconsecutive years from the date they were appointed as Independent Directors by theMembers in the General Meeting.

b. Board Evaluation

The Board has reviewed and evaluated the performance of all individual Directors andthe Independent Directors have reviewed and evaluated the performances of ChairmanManaging Director and Non-Independent Directors during the year at their meeting held on23rd January 2017. They found that none of the board members have contravenedany of the statutory provisions of Companies Act 2013 and its relevant rulesregulations guidelines etc. applicable to them in exercise of their duties andresponsibilities.

c. Declaration by Independent Directors

A declaration from Independent Directors as required in sub-section (6) & (7) ofSection 149 of the Companies Act 2013 is obtained and the same are placed beforethe Board for noting . An independent director shall hold office for a term up to fiveconsecutive years on the Board of a Company but shall be eligible for reappointment fornext five years.

d. Policy on Director's appointment and remuneration

As per Section 178 of the Companies Act 2013 the Company was required to constitute aNomination and Remuneration Committee for the purpose of identifying qualified persons forappointment of Directors and Senior/ Key Managerial Personnel in future and to fix theirremuneration and other allowances. Currently the Company has an agreement with theManaging Director of the Company for a period of 5 years with effect 29thApril 2014.

e. Number of meetings of the board

During the year five meetings of Board of Directors were held i.e. on 20thMay 2016 20th July 2016 26th August 2016 26thNovember 2016 and on 23rd January 2017. These meetings were held as per theprovision of section 173 of the Companies Act 2013.

f. Vigil Mechanism/Whistle Blower Policy

The Company has established a Whistle Blower Policy for Directors and employees toreport their genuine concern. The details of the same have been explained in the CorporateGovernance Report and the same was inserted in the website of the Company.

13. Auditors

A. Statutory Auditors and Auditors' Report

M/s. Haribhakti & Co. LLP Statutory Auditors (FRN 103523W) of the Company havebeen holding office as Auditors for a term of more than 30 years. The said auditors wereappointed at the 37th Annual General Meeting of the Company held on 25th July2014 for a period of three consecutive years till the conclusion of the 40thAnnual General Meeting.

M/s. Khimji Kunverji & Co Chartered Accountants (FRN 105146W) have been appointedas Statutory Auditors of the Company for a period of five years effective from theconclusion of Fortieth Annual General Meeting till the conclusion of Fortyfifth AnnualGeneral Meeting at the Board meeting of the Company held on 18th May 2017.

B. Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Companies(Audit & Auditors) Rules 2014 Shri Vikas Vinayak Deodhar Practising Cost AccountantMembership No.3813 the Cost Auditor appointed by the Company to conduct audit of thecost records of the Company for the financial year 2016-17.

C. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Shri. Swaroop S.C.P.No. 9997 Partner M/s Swaroop Ravishankar and Associates Practising CompanySecretaries have been appointed for conducting the Secretarial. Audit for the year ended31st March 2017 and their report is annexed as Annexure 5 to this report.

14. Key Managerial Personnel A. Managing Director

Pursuant to section 203 of the Companies Act the Company has entered into an agreementwith the Managing Director of the Company for a period of 5 years with effect 29thApril 2014.

B. Chief Financial Officer and Company Secretary

Pursuant to section 203 of the Companies Act the Company has appointed Chief FinancialOfficer and Company Secretary with effect 1st March 2015.

15. Extract of Annual Return

The extract of annual return in Form No. MGT – 9 is annexed as Annexure 6 to thisreport.

16. Significant and material orders.

The Company has sufficient orders on hand for Explosives and Perlite products forsustaining current level of operations

17. Internal Financial Control

The Company has effective systems and procedures of internal financial control forensuring orderly and efficient conduct of its business safeguarding its assetsprevention and detection of frauds and errors accuracy and completeness of accountingrecords and timely preparation of reliable financial information. These systems areperiodically reviewed by the Audit Committee of the Board of Directors. The AuditCommittee and the Board have ensured that the said system is adequate considering thenature of business and size of transactions.

18. Committees of the Board

A detailed note on the Board and its Committees is provided under the CorporateGovernance Report in this Annual Report. The composition of the Committees andcompliances as per the applicable provisions of the Act and Rules are as follows:

Name of the Committee Composition of the Committee Highlights of duties responsibilities and activities
1. Audit Committee a) Shri Harish Jagtiani All the recommendations made by the Audit Committee during the year were accepted by the Board.
b) Ms.Arati Saran
c) Shri Kaiyoze Beji Billimoria
d) Shri Santosh L. Chowgule The Company has adopted the Whistle Blower Mechanism for Directors and all employees to report concerns about unethical behavior actual or suspected fraud or violation of the Company's Code of Business Conduct and Ethics. The Whistle Blower Policy is appended as Annexure-4 to the Board's Report.
In accordance with the listing requirements the Company has formulated policies on Related Party Transactions and Material Subsidiaries.The policies including the Whistle Blower Policy are available on our website.
2. Nomination and Remuneration Committee a) Ms. Arati Saran The Committee oversees and administers executive compensation operating under a written charter adopted by the Board of Directors.
b) Shri H.C.Asher
c) Shri Harish Jagtiani
d) Shri Kaiyoze Beji Billimoria The Committee has designed and continuously reviews the compensation programme for Managing Director and senior executives to align both short-term and long-term compensation with businessobjectivesand to link compensation with the achievement of measurable performance goals.
e) Shri Santosh L. Chowgule The Committee structures compensation to ensure that it is competitive in the global markets in which the Company operates in order to attract and retain the best talent. In the future the Committee plans to use a combination of stock options restricted stock units and performance- based stocks to align senior employee compensation with shareholder value. The Nomination and Remuneration Committee has framed the Nomination and Remuneration policy. A copy of the policy is appended as Annexure-3 to the Board's Report.
3. Corporate Social Responsibility a) Shri Harish Jagtiani The Board has laid out the Company's policy on Corporate Social Responsibility (CSR) and the CSR activities of the Company are carried out as per the instructions of the committee.
b) Shri Umaji V. Chowgule During the year the Company has allocated 2% of its average net profits for the three immediately preceding financial years on CSR activities to various beneficiaries.
c) Shri Kaiyoze Beji Billimoria Financial data pertaining to the Company's CSR activities to various beneficiaries for 2016-17 is as appended under the prescribed format in Annexure- 7 to the Board's Report.
d) Shri Santosh L. Chowgule The contents of the CSR policy are available on our website
4. Stakeholders Relationship Committee a) Ms. Arati Saran The Committee reviews and ensures redressal of investor grievances.
b) Shri H.C.Asher
c) Shri Kaiyoze Beji Billimoria The Committee noted that all the grievances of the investors have been resolved during the year.
d) Shri Harish Jagtiani
e) Shri Santosh L. Chowgule
5. Committee of Directors (Share Transfer Committee) a) Shri Ashok V. Chowgule The Committee shall overview the process of share transfers transmissions etc. during the period and shall note the same as to delay or approvals in time.
b) Shri Umaji V. Chowgule
c) Shri Santosh L. Chowgule
6. Independent Directors Committee a) Shri Harish Jagtiani The Committee shall review the performance of the Non-Independent Directors of the Company.
b) Shri H.C.Asher The review is pursuant to provisions of Part VIII of Schedule IV.
c) Ms.Arati Saran
d) Shri Kaiyoze Beji Billimoria

19. Risk Management Policy

The Company has formed a Risk Management Committee and implemented a risk managementpolicy for the Company including identification therein of elements of risk if any andthe same has been inserted in the website of the Company.

20. Corporate Governance

The Corporate Governance certificate received from M/s. Haribhakti & Company LLPChartered Accountants Mumbai (FRN 103523W) regarding compliance of conditions ofcorporate governance as stipulated in Regulation 34(3) read with Schedule V (C) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed with the report.

21. Director's Responsibility Statement

Your Company's Directors make the following statement in terms of sub-section (5) ofSection 134 of the Companies Act 2013 which is to the best of their knowledge and beliefand according to the information and explanations received from them are noted by theBoard.

I. The financial statements have been prepared in conformity with the applicableAccounting Standards and requirements of the Companies Act 2013 ("the Act") tothe extent applicable to the Company; on the historical cost convention; as a goingconcern and on the accrual basis. There are no material departures in the adoption of theapplicable Accounting Standards.

II. The Board of 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 the Company at the end of thefinancial year and of the profit of the Company for that period.

III. The Board of Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities. The Board of Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively.

IV. The Board of Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

V. The financial statements have been audited by M/s. Haribhakti & Company LLPChartered Accountants Mumbai the Company's Auditors.

22. Particulars of Employees

The total number of employees of the company as on March 31 2017 was 223 as against236 as on March 31 2016.

23. Particulars of loans guarantees or investments under section 186

During the year the company has not sanctioned any loans given securities and made anyinvestments as prescribed under section 186 of the Companies Act 2013.

24. Conservation of energy research and development technology absorption foreignexchange and outgo

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

I. CONSERVATION OF ENERGY (FORM ‘A')

This is not applicable to Explosives Industry.

II. ABSORPTION OF RESEARCH AND DEVELOPMENT (FORM ‘B')

A. Specific areas in which R&D is carried out by the Company.

I. Cost reduction.

II. Product and Technology Development for Explosives.

III. Technical Services to monitor use of Explosives by Customers.

IV. Development of value added Explosive products.

V. Development of improved and more efficient equipment.

VI. Refinements and Developments in Packaging.

VII. Product Development in relation to application of Explosives and Perlite.

B. Benefits derived as a result of the above R & D:

I. Introduction of products for difficult blasting conditions.

II. Setting up of production facilities with indigenous Plant Equipment for Bulk andPackaged Explosives.

III. Higher efficiency in use of Explosives to Customers.

IV. Higher efficiency in manufacturing process.

V. Reduction in cost of production.

VI. Entry into Export market.

VII. New applications of our Explosives.

VIII. Application of perlite concrete for cryogenic tanks.

IX. Development of Air Decking system for blasting in boreholes.

X. Export of Perlite Concrete Insulation Blocks.

XI. Overseas Contracts deploying Mobile Perlite Expanders.

C. Future Plan of Action:

I. Continue development work on Explosives.

II. Evaluate other systems for SMS.

III. Develop site applications using perlite.

IV. Explore new products for diversification.

D. Expenditure on R & D:

I. Capital - Nil.

II. Recurring – Rs.24.07 lacs.

III. Total – Rs.24.07 lacs.

IV. Total R & D expenditure as a % total turnover – 0.11%

TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

1. Efforts in brief made towards technology absorption adaptation and innovation:Strict Monitoring of emulsion explosives and making necessary improvements to meet thefield requirements.

2. Benefits derived as a result of the above efforts e.g. product improvement costreduction product development import substitution etc.

Emulsion products with fully indigenous equipment have been produced and supplied.These products have been well accepted by customers for use in difficult strataconditions.

Safety standards have been maintained both during manufacture and usage based onperiodic feedback.

3. In case of imported technology (imported during the last five years reckoned fromthe beginning of the financial year) following information may be furnished.

(a) Technology imported :
(b) Year of import:
(c) Has the technology been fully absorbed? Not Applicable
(d) If not fully absorbed areas where this has not taken place reasons there for and future plan of action

III. FOREIGN EXCHANGE EARNING AND OUTGO

a. Activities relating to exports etc The Company has exported goods worth Rs.1592 lacs (C & F) during the year
b. Total Foreign exchange used and earned The Company has used Foreign Exchange amounting to Rs.63.78 lacs and earned Rs.1592 lacs during the year.

25. Corporate Social Responsibility (CSR)

The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 the Company was required to spend a sum of Rs.13.56 lacs towards CorporateSocial Responsibility Policy and accordingly the Company has spent the same.

26. Acknowledgments

Your Directors place on record their thanks to the Canara Bank for their unstintedco-operation and timely assistance. Your Directors would like to make a special mention ofthe support extended by the various Departments of Government of India the StateGovernment agencies the Tax Authorities including the Customs and Excise DepartmentsDepartment of Industrial Policy and promotion Ministry of Corporate Affairs Securitiesand Exchange Board of India and others and look forward to their continued support in allfuture endeavours. The Directors acknowledge the support and co-operation extended byvalued customers of the Company. Your Directors also place on record their appreciationfor the dedicated services rendered by the employees at all levels during the year underreview.

For and on behalf of the Board of Directors
Place : Mumbai Ashok V Chowgule
Date : 18th May 2017 Chairman

Annexure 1 PARTICULARS OF CONTRACTS/ARRANGEMENTS MADE WITH THE RELATED PARTIES (AOC-2)

{Pursuant to Clause (h) of Sub-section (3) of Section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014}

This Form pertains to the disclosure of particulars of contracts/arrangements enteredinto by the Company with the related parties referred to in Sub-section (1) of Section 188of the Companies Act 2013 including certain arm's length transactions under third provisothereto.

Details of contracts or arrangements or transactions not at arm's length basis

There were no contracts or arrangements or transactions entered during the year endedMarch 31 2017 which were not at arm's length basis Details of material contracts orarrangements transactions at arm's length basis The details of material contracts orarrangements or transactions at arm's length basis for the year ended March 31 2017 areas follows:

Name(s) of the related party Nature of relationship Nature of contracts/ arrangements/ transactions Duration of the contracts/ arrangements/ transactions Salient terms of the contracts or arrangements or transactions including the value if any Date(s) of approval by the Board if any Amount paid as advances if any
(a) (b) ( c) (d) ( e) (f) (g)
Chowgule Brothers Private Ltd. Group concern Service Contract Running contract Electricity charges paid to Kolkata Office 17-10-2014 Rs. 0.17 lacs
Chowgule & Company Private Ltd. Promoter Unsecured loan 5 years from 1.1.2016 For setting up of Emulsion Project at Garamsur Unit. 27-01-2012 Rs. 183.00 lacs
Chowgule & Company Private Ltd. Promoter Unsecured loan 5 years from 1.1.2016 Interest paid 27-01-2012 Rs. 68.91 lacs
Chowgule & Company Private Ltd. Promoter Lease Agreements 5 years from 1.5.2013 (Blore office) Rent for Bangalore Chennai Delhi Office premises. 17-05-2013 (Blore Office) Rs. 24.70 lacs
3 years from1.9.2014 (Chennai Office) 17-10-2014 (Chennai Office)
3 years from 1.8.2016 (Delhi Office) 26-08-2016 (Delhi Office)
Chowgule & Company Private Ltd. Promoter Sales Contract Running Contract Sale of Expanded Perlite. 22-01-2016. Rs. 2.35 lacs
Chowgule Charitable Trust Group concern Contribution for CSR activity. Per annum Contribution for CSR activity under the provisions of Companies Act 2013. 22-01-2016. Rs. 11.03 lacs
Chowgule Charitable Trust. Group concern Donation Per annum Donation 22-01-2016. Rs. 33.80 lacs

Annexure - 2

PARTICULARS OF EMPLOYEES

Information as per Rule 5(1) of Chapter XIII Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 The remuneration and perquisites provided to ouremployees including that of the Management are at par with the Industry standards. Thenomination and remuneration committee constantly review the compensation of employeesincluding that of Management to align both the short term and long term businessobjectives of the Company and to link compensation with the achievement of measurableperformance goals.

The Remuneration paid on comparison with Median Remuneration of Employees [MRE] duringfiscal year 2017 and % increase in MRE from fiscal year 2016 is as under;

Name of the Director Remuneration per annum Median Remuneration of Employees [MRE] % of Increase in MRE since 2016 The number of permanent employees on the rolls of Company as on 31 March 2017
1 Santosh L Chowgule 2957800.00 352800.80 4.57 223

Annexure - 3 NOMINATION AND REMUNERATION POLICY

Our policy on the appointment and remuneration of Directors and Key ManagerialPersonnel provides a framework based on which our human resources management aligns theirrecruitment plans for the strategic growth of the Company. The Nomination and Remunerationpolicy is provided herewith pursuant to Section 178(4) of the Companies Act 2013 andRegulation 19 of SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015.The policy is also available on the Company's website.

Annexure-4 WHISTLE BLOWER POLICY/VIGIL MECHANISM

As part of our Corporate Governance practice the Company has adopted the WhistleBlower policy that covers our directors and employees. The Policy is also available on theCompany's website.