To the members
Your Directors present the 40th Annual Report together with the Audited FinancialStatements of the Company for the year ended 31st March 2016.
| ||2015-2016 ||2014-2015 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Sale of Goods ||29296.87 ||43559.22 |
|or the year f GrossProfit/(Loss) ||(8982.44) ||(4530.03) |
|Less : Depreciation ||219.43 ||295.89 |
|Profit/(Loss) before Tax & Exceptional item ||(9201.87) ||(4825.92) |
|Less : Exceptional Item ||(259.32) ||- |
|Profit/(Loss) after Exceptional item ||(9461.19) ||(4825.92) |
|Add: Provision for Income-tax || || |
|For Current Year- Current tax ||- ||- |
|Deferred tax ||- ||(3.40) |
|MAT Credit Entitlement ||- ||- |
|For earlier years- Income Tax ||- ||(62.41) |
|Profit/(Loss) after Tax ||(9461.19) ||(4891.73) |
|Add: Balance in Profit and Loss Account ||(7073.43) ||(2181.70) |
|Amount available for Appropriation ||(16534.62) ||(7073.43) |
|Appropriation || || |
|a) Transfer to General Reserve ||- ||- |
|b) Proposed Dividend ||- ||- |
|c) Tax on Dividend ||- ||- |
|Balance carried to Balance Sheet ||(16534.62) ||(7073.43) |
|Earnings per share (in Rs.) ||(82.27) ||(42.54) |
|Cash earnings per share (in Rs.) ||(80.36) ||(39.96) |
Khaitan Electricals Limited is one of the Indias Leading Fan manufacturers withinterests in Home Appliances Lightings and pump business having its corporate headquarters in Kolkata.
Your Company prepares its financial statements in compliance with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.
The year 2015-16 was a tough year and the Company witnessed a sharp drop in Turnoverand Margins. Due to de-growth in business volumes overheads and finance cost could not beabsorbed which affected the bottom line. The Net Sales for the year was Rs.282.61 Croresagainst Rs.430.00 Crores in the previous year. The Company incurred a Loss before Tax ofRs. 94.61 Crores as against a Loss of Rs. Rs.48.26 Crores during the Previous Year. Theloss of Rs.94.61 Crores includes provision on Closing Stock (old and defective) along withprovisions against Bad & Doubtful Debts and Advances of Rs.43.50 Crores.
Other income consists of interest received export incentives rent receipt cashdiscount claims received etc.
Financial expenses for the year were to Rs.41.37 Crores as against Rs.41.73 Crores inthe Previous Year.
Depreciation was at Rs.2.19 Crores compared to Rs.2.96 Crores in the previous year.
EARNING PER SHARE
Earnings Per Share (EPS) stood at (Rs. 82.87) compared to EPS of (Rs.42.54) in theprevious year. The cash earned per share stood at (Rs. 80.36) as against (Rs.39.96) in theprevious year.
|CASH FLOW ANALYSIS || ||(Rs. in lacs) |
|Source of cash ||2015-16 ||2013-14 |
|Cash from operations ||(5044.73) ||(895.92) |
|Increase in Borrowings ||(229.31) ||3860.13 |
|Inter Corporate Deposits ||262.23 ||(403.57) |
|Proceeds from Preference Shares ||500.00 ||-- |
|Total ||(4511.81) ||2560.64 |
|Use of Cash ||2015-16 ||2013-14 |
|Net capital expenditure ||139.96 ||170.74 |
|Interest Paid (Net) ||3154.90 ||3180.37 |
|Tax paid ||(37.52) ||81.36 |
|Increase/(Decrease) in Cash & Cash Equivalents ||(830.06) ||(390.45) |
|Increase/(Decrease) in Working Capital ||(7198.41) ||(481.38) |
|Extra Ordinary Items ||259.32 ||-- |
|Total ||(4511.81) ||2560.64 |
SHARE CAPITAL AND NET WORTH
The paid up Equity Share Capital as on March 31 2016 was Rs.11.50 Crores. During theyear under review the company has issued 500000 Non-Convertible Redeemable Preferenceshares of Rs. 100 each. The net worth of the Company has reduced to Rs. (45.02) Crores ascompared to Rs.44.59 Crores in the previous year.
SICK COMPANY AS PER SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT 1985 (SICA)
As per the audited accounts of the Company the company has eroded 100% of its networth i.e. it has become sick industrial company within the meaning of Section 3(o) ofSick Industrial Companies (Special Provisions) Act 1985. Therefore the Company will haveto file reference with Board for Industrial and Financial Reconstruction (BIFR) asrequired by Section 15 of the said Act.
The Company employed good human resources practices. The Company is enjoying good andcongenial industrial relations at all of its plants. As on 31st March 2016 the totalpermanent employees were 468.
SAFETY ENVIRONMENT AND POLLUTION CONTROL
The Company continuously works on high safety standards and a clean environment freefrom pollution. The manufacturing processdoesnotgenerate
The Plants of your Company located at Hyderabad and Faridabad are presently
ISO 9001:2008 certified.
The present market scenario does not appear to be very encouraging. Though the Companyis making all out efforts to regain its growth trend with major thrust on consolidation ofproduct mix reduction in cost and containing of overheads and interest the Company isquite concerned about the outlook for the Current Year.
EXPECTED IMPACT OF GOODS AND SERVICE TAX (GST) ON THE COMPANY
GST reform is believed to transform India into a single market. It is expected thatimplementation of the GST law will have a positive impact on the Company due to followingreasons: a. The Company will be able to close down depots in at least 7 states acrossIndia thereby saving cost of rent Carrying and Forwarding Agents and other Overheads asgoods can be supplied freely from the depots at nearby states. b. There will be economy offreight as goods will be able to reach the destination using the shortest route. c.Further this will help the company to face challenges from the unorganized sector as dueto GST the increase in cost of goods to the final attributable to tax impact is expectedto reduce by 50% thereby bringing the customers from the unorganized sector back to theorganized sector.
RISKS AND CONCERNS
The Indian economy achieved GDP growth of 7.6% in FY15-16 compared to 7.2 % inFY14-15. It is expected that the Indian economy will continue to grow at 7% to 8%.Manufacturing sectors continued to languish.
Wild currency fluctuations affect metal prices and may cause pressure on margins. Nothreat is witnessed from imports. Though the Company is realigning its products tomitigate the impact of rising cost the steep rise in input cost is a major cause ofconcern.
With no sign of improvement in overall economic scenario and stability in input costthe company looks forward to year 2016-17 with caution.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company remains committed to maintain its internal control system and procedures toprovide reasonable assurances for efficient conduct of business and security of itsassets. The Company has an elaborate budgetary control system and actual performance isconsistently monitored by the Management. The Company has a well defined organizationalstructure authority levels and internal guidelines andcustomer rules.
Your company has adequate internal control systems in place commensurate with thesize scale and complexity of the operations. The Company has already carried out an auditon internal financial control by third party. The Statutory Auditors have also commentedon the internal financial control on financial Reporting in their report.
The Company had not accepted / renewed any Deposit during the year under review andthere was no outstanding Deposit.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of section 125 of the Companies Act 2013 dividends whichremained unpaid or unclaimed for a period of 7 years have been transferred by the companyto the Investor Education and Protection Fund.
All independent directors have given declaration that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The tenure ofappointment of Mr. Sunil K. Khaitan as Chairman & Managing Director is due to end on31.10.2016. The Board recommend his reappointment in the forthcoming Annual GeneralMeeting. Mr. Sajjan Dabriwal Director of the Company retire by rotation and beingeligible offer himself for reappointment. The Directors recommend his appointment at theforthcoming Annual General Meeting.
The details of the Director being recommended for appointment are contained in theaccompanied Notice of the forthcoming Annual General Meeting. Mr. Sajjan Dabriwal wasDeputy Managing
Director of the Company till 31st March 2016. He is Non-Executive Director w.e.f 1stApril 2016. Mr. Biswajit Choudhuri resigned from Directorship of the Company w.e.f 30thDecember 2015.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186
Particulars of loans given investments made guarantees given and securities providedare provided in the Financial Statement.
CHANGE IN KEY MANAGERIAL PERSONNAL
Mr. Sajjan Dabriwal resigned from the position of Deputy Managing Director of theCompany with effect from 1st April 2016. Mr. Sunil Sureka resigned from the position ofChief Financial Officer (CFO) of the Company with effect from 04.11.2015. Mr. Swapan Dashas been appointed as Chief Financial Officer (CFO) of the Company with effect from12.02.2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS material ordersThere are no significant passed by the Regulators / Courts which would impact the goingconcern status of the Company and its future operations.
Pursuant to Regulation 27 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Corporate Governance Report Chairman and Managing Directorsdeclaration regarding compliance to code of conduct and Auditors Certificateregarding compliance to conditions of Corporate Governance are made a part of the AnnualReport.
The Board has duly examined the statutory auditors report to accounts andclarifications wherever necessary have been included in the Notes to Accounts section ofthe Annual Report.
M/s. V. S. Rao & Co. Chartered Accountants and M/s. G. P. Agrawal & Co.Chartered Accountants joint auditors of the Company retire at the conclusion of theensuing Annual General Meeting. In terms of the Companies Act 2013 ("the newAct") and the Rules framed there under it is proposed to appoint them as
Joint Auditors of the Company to hold office from the conclusion of the ensuing AnnualGeneral Meeting until the conclusion of the 41st Annual General Meeting of the Company tobe held in the Year 2017 (subject to ratification of their appointment by the Members atevery Annual General Meeting held after the ensuing Annual General Meeting).
As required under the provisions of section 139(1) of the new Act the Company hasreceived a written consent from M/s. V. S. Rao & Co. Chartered Accountants and M/s.G. P. Agrawal & Co. Chartered Accountants to their appointment and a Certificate tothe effect that their reappointment if made would be in accordance with the new Act andthe Rules framed there under and that they satisfy the criteria provided in section 141 ofthe new Act.
The Board commends their re-appointment as statutory auditors. The Notes on Financialstatements referred to in the Auditors Report are self-explanatory and do not callfor any further comments.
NUMBER OF BOARD MEETINGS HELD
The Board of Directors met 4 times during the financial year 2015-16. The dates onwhich the meetings were held are as follows:
29th May 2015 13th August 2015 9th November 2015 and 12th February 2016.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate exercise was carried out toevaluate the performance of individual Directors including the Chairman of the Board whowere evaluated on parameters such as level of engagement and contribution and independenceof judgment thereby safeguarding the interest of the Company. The performance evaluationof the Independent Directors was carried out by the entire Board. The performanceevaluation of the Chairman and the Non Independent Directors was carried out by theIndependent Directors. The board also carried out annual performance evaluation of theworking of its Audit Nomination and Remuneration as well as stakeholder relationshipcommittee. The Directors expressed their satisfaction with the evaluation process.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:
a) in the preparation of the annual Financial Statements for the year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the loss ofthe company for the same period;
c) the directors have taken proper and sufficient care 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;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down proper internal financial controls (IFC) in the company that areadequate and were operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.
SECRETERIAL AUDIT REPORT
According to the provision of section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit Report submitted by Company Secretary in Practice is enclosed as a partof this report.
The Board has framed a policy for selection and appointment of Directors SeniorManagement and their remuneration. The Remuneration Policy has been uploaded on thewebsite of the Company at www. khaitan.com.
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.khaitan.com.
DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY
The Company has been addressing various risks impacting the Company and the policy ofthe Company on risk management has been established. The Risk Management Policy has beenuploaded on the website of the Company at www.khaitan.com.
RELATED PARTY TRANSACTIONS
All transactions entered with related parties during the year under review were onarms length basis and in the ordinary course of business and that the provisions ofSection 188 of the Companies Act 2013 are not attracted. Thus disclosure in form AOC 2 is not required. There were no materially significant related party transactionswith the Companys Promoters Directors Management or their relatives which couldhave had a potential conflict with the interests of the Company.
Transactions with related parties entered by the Company in the normal course ofbusiness are periodically placed before the Audit Committee for its omnibus approval. TheBoard of Directors of the Company has on the recommendation of the Risk and AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the Rulesthere under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. This Policy was considered and approved by the Board and has been uploaded on thewebsite of the Company at www.khaitan. com.
CORPORATE SOCIAL RESPONSIBILITY
As there has been carry forward losses provisions of section 135 of the Companies Act2013 pertaining to Corporate Social Responsibility are not applicable to the Company.
REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The CompaniesAppointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company and Directors is furnished hereunder:
|S. No ||Name ||Designation ||Remuneration FY 2015-16 (Rs.) ||Remuneration FY 2014-15 (Rs.) ||Increase in remuneration from previous year (Rs.) ||Ratio/Times per Median of employee remuneration |
| || ||Chairman and || || || || |
|1. ||Mr. Sunil Krishna Khaitan ||Managing Director Deputy ||4358400 ||4615250 ||(256850) ||16 times |
|2. ||Mr. Sajjan Dabriwal ||Managing Director ||3255311 ||3254607 ||704 ||12 times |
| || || ||717177 ||278771 ||Joined as CFO on 02.02.2015 and left on 04.11.2015 Comparison || |
|3. ||Mr. Sunil Sureka ||CFO (KMP) ||(Resigned w.e.f 04.11.2015) ||(Joined w.e.f. 02.02.2015) || ||not possible |
| || || ||1359791 || ||Joined as CFO on 12.02.2016 || |
|4. ||Mr. Swapan Das ||CFO (KMP) ||(Joined w.e.f. 12.02.2016) ||N.A. ||Comparison not possible Joined as CS on || |
|5. ||Mr. Amit Choraria ||CS (KMP) ||1256148 ||191748(Joined w.e.f. ||02.02.2015. ||4 times |
| || || || ||02.02.2015) ||Comparison not possible || |
Information as required under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 is set out as under:
|A. Conservation of Energy ||: The Companys energy requirement is not large and the power consumption is in conformity with the industry norms. Hence no special measures were taken. |
|B. Technology Absorption || |
|1. Specific areas in which R & D carried out by the Company ||: Development of new models/products/ processes improvement in the quality and productivity of the existing products. |
|2. Benefits derived as a result of the above R & D ||: Improvement in quality and productivity of the products. |
|3. Future Plan of Action ||: To design and develop new as well as low-cost models of fans high speed fans and power-efficient motors. |
|4. Expenditure on R & D || |
|a) Capital ||: Nil |
|b) Recurring ||: Rs.15.45 Lacs |
|c) Total ||: Rs. 15.45 Lacs |
|d) Total R & D Expenditure ||: 0.05 % |
|as a percentage of Total Turnover || |
|C. Foreign Exchange Earning and Outgo || |
|1. Activities relating to Exports initiatives taken to increase exports development of new export markets for products and services and export plans. ||: The Company export its products to various Middle East Countries Nigeria Ghana Yemen Uganda Iraq Nepal Bangladesh Sri Lanka etc. Efforts are on for increasing exports to the existing customers and for exporting to new countries. |
|2. Total Exchange used and earned ||: Used Rs. 0.41 Lacs |
| ||Earned Rs. 417.76 Lacs |
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith.
Relations with the employees remained cordial and harmonious. Your Directors wish toplace on record their sincere appreciation for the dedicated services rendered by theCompanys employees at all levels. The Directors thanks the Companys CustomersDistributors Vendors Investors Bankers and Financial Institutions for their support tothe Company.
| ||On behalf of the Board |
|Kolkata ||Sunil K. Khaitan |
|28th May 2016 ||Chairman |
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31st March 2016
[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]
Khaitan Electricals Limited CIN: L31909AP1975PLC001949
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Khaitan Electricals Limited(hereinafter called the company). Secretarial Audit was conducted in a manner thatprovided me a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing my opinion thereon.
Based on our verification of the companys 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 financialyear ended on
31st March 2016 complied with the statutory provisions listed hereunder and also thatthe Company has proper Board processes and compliance-mechanism in place to the extent inthe manner and subject to the reporting made hereinafter:
1. We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31st March 2016according to the provisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder; (iii) The Depositories Act 1996 and the Regulations and Bye-laws framedthere under;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings; - Not Applicable
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):-
a) SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015(SEBI LODR) which came into effect from December 1 2015;
b) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
c) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;
d) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009; - Not Applicable;
e) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999; - Not applicable;
f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008; - Not applicable;
g) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
h) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009; Not Applicable;
i) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; - Not Applicable.
2. We have relied on certifications/representations made by the officers of the Companyand mechanisms formed by the Company for compliances under other applicable Acts Laws andRegulations to the Company. Major laws applicable to the Company are as follows
1) Factories Act 1948;
2) The Legal Metrology Act 2009 read with the Legal Metrology (Packaged Commodity)Rules 2011;
3) The Indian Copyright Act 1957;
4) The Patents Act 1970;
5) The Trade Marks Act 1999;
6) Acts prescribed under Environment Protection Act;
7) Acts prescribed under Prevention and Control of Pollution;
8) Acts prescribed under Direct Tax and Indirect Tax;
9) Labour Welfare Acts;
10) Labour laws and other incidental laws related to labour and employees appointed bythe Company.
3. 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. SEBI LODR guidelines and the erstwhile Listing Agreements entered into by theCompany with Stock Exchange(s) as applicable.
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. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried 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 carriedthrough while the dissenting members views are captured and recorded as part of theminutes.
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 the company has i. re-classified theauthorised share capital of the company by passing a resolution in the General meeting ofthe Company; ii. made preferential issue of 500000 9% non convertible non cumulative redeemable Preference Shares of Rs.100 each on 9th November 2015.
| ||Signature |
| ||Savita Jyoti Associates |
|Date: 27th May 2016 ||Practicing Company Secretary |
|Place: Hyderabad ||FCS No.3738: C P No.:1796 |
P.S. This report is to be read along with or letter of even date which is annexed asAnnexure A and forms an integral part of this report.
Khaitan Electricals Limited
Our report of even date is to be read along with this letter.
1. Maintenance of Secretarial records 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 secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we follow provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andbooks of accounts of the company.
4. Wherever required we have obtained the management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provision of corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited toverification of procedures on test basis.
6. The secretarial Audit Report is neither an assurance as to the future viability ofthe company nor the efficacy or effectiveness with which the management has conducted theaffairs of the company.
| ||Signature |
| ||Savita Jyoti Associates |
|Date: 27th May 2016 ||Practicing Company Secretary |
|Place: Hyderabad ||FCS No.3738: C P No.:1796 |