To the members
Your Directors are pleased to present their 41st Annual Report of the Company alongwith the Statements of Accounts for the year ended 31st March 2017.
|Particulars ||2016-2017 ||2015-2016 |
| ||(Rs in Lacs ||(Rs in Lacs) |
|Sale of Goods ||7758.40 ||29296.87 |
|Gross Profit/(Loss) for the year ||(29573.33) ||(8982.44) |
|Less : Depreciation ||198.43 ||219.43 |
|Profit/(Loss) before Tax & Exceptional item ||(29771.75) ||(9201.87) |
|Less: Exceptional item ||- ||(259.32) |
|Profit after Exceptional item ||(29771.75) ||(9461.19) |
|Add: Provision for Income-tax || || |
|For current year- Current Tax ||- ||- |
|Deferred Tax ||- ||- |
|MAT Credit Entitlement ||- ||- |
|For earlier years- Income Tax ||6.51 ||- |
|Profit/(Loss) after Tax ||(29778.27) ||(9461.19) |
|Add: Balance in Profit and Loss Account ||(16534.62) ||(7073.43) |
|Amount available for Appropriation ||(46312.89) ||(16534.62) |
|Appropriation || || |
|a) Transfer to General Reserve ||- ||- |
|b) Proposed Dividend ||- ||- |
|c) Tax on Dividend ||- ||- |
|Balance carried to Balance Sheet ||(46312.89) ||(16534.62) |
|Earnings per share (in Rs.) ||(258.94) ||(82.27) |
|Cash earnings per share (in Rs.) ||(257.22) ||(80.36) |
The Company has an excellent track record of Profitability and was paying dividendconsistently. But since 201415 onwards the Company has incurred loss and in thefinancial year 2016-17 the turnover declined from 293 Crores to 77.58 Crores. Due to lowerturnover by value and volume the company incurred loss of Rs. 297.78 Crores. The reasonsfor non performance of the company and incurrence of such high loss was mainly due to highcost of overhead per unit due to lower volume higher interest expenses due to increase incurrent Assets and inadequate internal Accruals Entry into New segment Appliances resulting into High Stock pileup tough competition in Domestic and International Marketand sluggish economic conditions so recovery from Debtors remains poor.
The company has taken the following steps for Recovery. (i) Cost control and Reductionin after sales service cost and Reduction in Administrative cost.
(ii) During the year the company has discontinued its operation in lighting sources andhome appliances except cooler and geysers. It is focusing on its business of fanmanufacturing. (iii) Shifting the marketing network from Branches setup to distributorshipsetup all over India to reduce the overhead cost and cost of holding up inventories anddebtors.
The Promoter(s) have been extending their financial and technical support to theCompany. Despite the relentless efforts and continued support from all stakeholdersespecially the Promoter(s) the changes in external environment and continued sub -optimal performance has resulted in continuous losses. Further SDR invoked by jointlenders could not be adopted within statutory time.
The year 2016-17 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. 72.24 Croresagainst Rs. 282.61 Crores in the previous year. The Company incurred a Loss before Tax ofRs. 297.72 Crores as against a Loss of Rs. Rs. 94.61 Crores during the Previous Year.
Other income consists of interest received
Profiton sale of long term investments export incentives rent receipt claimsreceived etc.
Financial expenses for the year were to Rs. 54.16 Crores as against Rs. 41.37 Crores inthe Previous Year.
Depreciation was at Rs. 1.98 Crores compared to Rs. 2.19 Crores in the previous year.
EARNING PER SHARE
Earnings Per Share (EPS) stood at Rs.(258.94) compared to EPS of Rs. (82.87) in theprevious year. The cash earned per share stood at (Rs. 257.22) as against (Rs.80.36) inthe previous year.
CASH FLOW ANALYSIS
(Rs. in lacs)
|Source of cash ||2016-17 ||2015-16 |
|Cash from operations ||(19066.99) ||(5044.73) |
|Increase in Borrowings ||-- ||(229.31) |
|Inter Corporate Deposits ||235.12 ||262.23 |
|Proceeds from Preference Shares ||- ||500.00 |
|Interest Income ||208.65 ||--) |
|Sale of Investments ||207.66 ||-- |
|Fixed Deposit redeemed from Bank ||132.08 ||-- |
|Total ||(18283.48) ||(4511.81) |
|Use of Cash ||2016-17 ||2015-16 |
|Net capital expenditure ||109.67 ||139.96 |
|Interest Paid (Net) ||-- ||3154.90 |
|Tax paid ||6.51 ||(37.52) |
|Increase/(Decrease) in Cash & Cash Equivalents ||(491.48) ||(830.06) |
|Increase/(Decrease) in Working Capital ||(17908.18) ||(7198.41) |
|Extra Ordinary Items ||- ||259.32 |
|Total ||(18283.48) ||(4511.81) |
SHARE CAPITAL AND NET WORTH
The paid up Equity Share Capital of the company as on March 31 2017 was Rs. 11.50Crores and paid up Non-Convertible Redeemable Preference share Capital stood of Rs.5.0Crores. The net worth of the Company has reduced to Rs. (342.80) Crores as compared to Rs.(45.02) Crores in the previous year.
EROSION OF NET WORTH
The company's net worth has been fully eroded. However the Management believes that thecompany will be able to generate continue as a going concern. The financial statementshave been prepared under the going concern assumption and hence no adjustments arerequired to the carrying value of assets and liabilities.
The Company employed good human resources practices. The Company is enjoying good andcongenial industrial relations at all of its plants. As on 31st March 2017 the totalpermanent employees were 350.
SAFETY ENVIRONMENT AND POLLUTION CONTROL
The Company continuously works on high safety standards and a clean environment freefrom pollution. The manufacturing process does not generate effluents.
The Plants of your Company located at Hyderabad and Faridabad are presently ISO9001:2008 certified.
The Company is making all out efforts to regain its growth trend with major thrust onconsolidation of product mix reduction in cost and containing of overheads and interestthe Company is quite concerned about the outlook for the Current Year.
RISKS AND CONCERNS
The Indian economy achieved GDP growth of 7.1% in FY'16-17 compared to 7.6 % inFY'15-16. It is expected that the Indian economy will continue resources to be able to togrow 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.
REFERENCE TO BIFR
Based on the Audited Accounts for the year ended 31.03.2016 the net worth of theCompany became negative. Considering the negative net worth the Board of Directors hadreferred the Company to the Board for Industrial and Financial
Reconstruction (BIFR) as required under the First proviso of section 15 (1) of the SickIndustrial Companies (Special Provisions) Act 1985 and the Company is registered withBIFR on 17 August 2016. Meanwhile the Ministry of Finance issued
Notifications S.O. 3568 (E ) & S.O. 3569 (E ) dated 25 November 2016 to the effectthat SICA has been repealed with effect from 1 December 2016 and all the references orinquiry pending before the BIFR and/ or AAIFR shall stand abated.
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 and rules. Your company has adequateinternal control systems in place commensurate with the size scale and complexity of theoperations. The Company has already carried out an audit on internal financial control bythird party. The Statutory Auditors have also commented on the internal financial controlon 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. Mr. Sunil K. KhaitanChairman-cum-Managing Director of the Company retire by rotation and being eligibleoffers himself for reappointment. The Directors recommend his appointment at theforthcoming Annual general Meeting. The details of the Director being recommended forappointment are contained in the accompanied Notice of the forthcoming Annual GeneralMeeting. Mr. M.G. Todi Independent Director resigned from the Board w.e.f 19.09.2016.Mrs. Anjana Sharma Non-Executive Independent Director resigned from the Board w.e.f01.03.2017.
Mr. Ajay Kajaria Non-Executive Independent Director resigned from the Board w.e.f30.03.2017.
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.
LOAN TO DIRECTORS
During the year the Company has not advanced any loan nor given any guarantee norprovided any security in connection with any loan made to any of its Director/s or to anyother person in whom the Director is interested as mentioned in Section 185 of theCompanies Act 2013 read with Rule 10 of the Companies (Meetings of Board and its Powers)Rules 2014.
CHANGE IN KEY MANAGERIAL PERSONNAL
During the year Mr. Amit Choraria resigned as Company Secretary & Complianceofficer of the Company w.e.f 25.05.2016.
Mrs. Debika Chatterjee was appointed as Company Secretary & Compliance officer ofthe Company w.e.f 28.05.2016.
She resigned from her position w.e.f 27.06.2016.
Mr. Ashok Kumar Mishra has been appointed as Company Secretary cum Compliance officerof the company w.e.f . 06.10.2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There orders are no significant passed by the Regulators / Courts which would impactthe going concern 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 Director'sdeclaration regarding compliance to code of conduct and Auditors' Certificate regardingcompliance to conditions of Corporate Governance are made a part of the Annual Report.
AUDITORS REPORT: REPLY TO QUALIFICATION IN AUDITORS REPORT
The Board has duly examined the Statutory Auditor's report to accounts. The reply ofthe management in regard to the qualifications in the auditor's report is as follows. a)Regarding auditor preparation of accounts ongoing concern basis the Management believesthat the Company will be able to generate sufficient resources to be able to continue as agoing concern. Accordingly these financial statements have been prepared under the goingconcern assumption and that no adjustments are required to the carrying value of assetsand liabilities. b) Regarding auditor qualification on balance due to / from creditorsparties to whom advances have been given and certain debtors which are subject toconfirmations the management is however of the view that no materials adjustment willbe required to be made on receipt of confirmations of the parties.
The necessary clarifications wherever necessary have been included in the Notes toAccounts section of the Annual Report.
The Statutory Auditors of the company M/s V. S. Rao & Co. Chartered Accountants(FRN 003157S) and M/s. G. P. Agrawal & Co. Chartered Accountants (FRN 302082E)joint auditors of the Company have already completed more than ten years as StatutoryAuditors of the Company.
In accordance with provisions of Section 139 of the Companies Act 2013 and theCompanies (Audit and Auditors) Rules 2014 from April 01 2017 your Company being aListed Company have to appoint new Auditor for the purpose complying with MandatoryRotation of Auditor. In view of the Mandatory Rotation of Auditor requirement and toensure smooth transition and also to comply with SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 [Listing Regulations'] it is proposed to appointM/s. Bidasaria & Associates Chartered Accountants Kolkata (FRN 315101E) as StatutoryAuditors for a period of 5 continuous years from April 01 2017 to
March312022.Thetenure office their will commence from the conclusion of the 41stAnnual General Meeting till the conclusion of the 46th Annual General Meeting of theCompany however their appointment in 41st Annual General Meeting shall be as per theprocess laid down under the Companies Act 2013 and rules made there under and subsequentratification at every Annual General Meeting.
If appointed in 41st Annual General Meeting M/s. Bidasaria & Associates CharteredAccountants Kolkata (FRN 315101E) shall be responsible for Audit during the fivefinancial 201819 201920 202021 and 202122 as Statutory Auditorsof the Company. As per Regulation 33 of Listing Regulations Limited Review Report has tobe issued by Statutory Auditors and hence Statutory Auditors to be appointed in 41stAnnual
General Meeting for the financial 20172018 is authorised to do the Limited Reviewfor the quarterly or half yearly or such period as may be prescribed from time to time.
M/s. Bidasaria & Associates Chartered Accountants Kolkata (FRN 315101E) hasconfirmed their willingness and eligibility under the provision of the Companies Act 2013to be as statutory auditors of the Company which is subject to shareholders' approval.
NUMBER OF BOARD MEETINGS HELD
The Board of Directors met 4 times during the financial year 2016-17. The dates onwhich the meetings were held are as follows:
May 28th 2016 August 12th 2016 November 21st 2016 ( The original Board meetingscheduled to be held on 14th November 2016 was adjourned due to want of quorum) andFebruary 13th 2017.
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 alsoyears carried2017 18 out annual performanceevaluation of the working of its Audit Nomination and Remuneration as well as stakeholderrelationship committee. The Directors expressed their satisfaction with the evaluationprocess.
DIRECTORS' RESPONSIBILITY STATEMENT year
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your
Company hereby state and confirm that: a) in the preparation of the annual FinancialStatements for the year ended 31st March 2017 the applicable accounting standards havebeen followed along with proper explanation relating to material departures; b) they haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the company at the end of the financial year and of the loss of the companyfor the same period; c) the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities; d) they have prepared the annual accounts on agoing concern basis; e) they have laid down proper internal financial that are adequateand were operating effectively. f) they have devised proper systems to ensure compliancewith the provisions of all applicable laws and these are adequate and are operatingeffectively.
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 onarm's 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 Company's Promoters Directors Management or their relatives which could havehad a potential conflictwith 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.
The Board 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.
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:
|Name ||Designation ||Remuneration FY 2016-17 (Rs.) ||Remuneration FY 2015-16 (Rs.) ||Increase in remuneration from previous year (Rs.) ||Ratio/Times per Median of employee remuneration |
|1. Mr. Sunil Krishna Khaitan ||Chairman and Managing Director ||5196144 ||4358400 ||837744 ||16 times |
|2. Mr. Swapan Das ||CFO (KMP) ||1382100 ||1359791 ||22309 ||4 times |
|3. Mr. Amit Choraria ||CS (KMP) ||210915 Resigned w.e.f 25.05.2016 ||1256148 || |
Joined as CS on 02.02.2015. Resigned as CS w.e.f 25.05.2016 Comparison not possible
|4. Mrs. Debika Chatterjee ||CS (KMP) ||32757 Resigned w.e.f 27.06.2016 ||N.A. || |
Joined as CS on 28.05.2016. Resigned w.e.f 27.06.2016 Comparison not possible
|5. Mr. Ashok Kumar Mishra ||CS (KMP) ||309924 ||N.A. || |
Joined as CS w.e.f 06.10.2016 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 Company's 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.2.09 Lacs |
|c) Total ||: Rs. 2.09 Lacs |
|d) Total R & D Expenditure as a percentage of Total Turnover ||: 0.03 % |
|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 United Arab Emirates Ghana Yemen Uganda Iraq Nepal Bangladesh Sri Lanka etc. |
|2. Total Exchange used and earned ||Efforts are on for increasing exports to the existing customers and for exporting to new countries. |
| ||: Used Rs. 0.79 Lacs |
| ||Earned Rs. 258.11Lacs |
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 theCompany's employees at all levels. The Directors thanks the Company's CustomersDistributors Vendors Investors Bankers and Financial Institutions for their support tothe Company.
| ||On behalf of the Board |
|Kolkata ||Sunil K. Khaitan |
|17th August 2017 || |