Your directors have the pleasure in presenting the 70th annual report on the businessand operations of your company together with the audited financial statement (includingthe consolidated financial statement) of your company for the financial year ended March31 2017.
Performance review and the state of company's affairs
During the year under report your company achieved a turnover of Rs 58552.00/- lakhs(previous year Rs 55128.88/- lakhs). The operations have resulted in net loss of Rs2963.19/- lakhs (previous year net loss was Rs 3113.04/- lakhs).
In view of the losses your directors do not recommend any dividend for the year.
The financial highlights are as follows:
| || ||(Rs Lakhs) |
|PARTICULARS ||2016-17 ||2015-16 |
|Total Revenues ||58552.00 ||55128.88 |
|Loss before depreciation and taxes ||1850.70 ||2011.97 |
|Loss before taxes ||2969.96 ||3113.04 |
|Provision for taxes ||6.77 ||- |
|Loss for the year after taxes ||2963.19 ||3113.04 |
|Balance brought forward from previous year (losses) ||9105.97 ||5992.93 |
|Balance carried to balance sheet (losses) ||12069.16 ||9105.97 |
Details in respect of adequacy of internal financial controls with reference to thefinancial statement
The company has a robust system of internal financial control which is in operation.
Details of subsidiary companies
Your company has six wholly owned subsidiaries and one associate company.
Reports on the performance and financial position of each of the subsidiary andassociate companies have been provided in Form AOC-1 appended to this report.
|Particulars ||Amount in Lakhs |
|1. Accepted during the year ||Nil |
|2. Remained unpaid or unclaimed at the end of the year. ||796.20 |
|3. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved ||N/A |
| At the beginning of the year || |
| Maximum during the year || |
| At the end of the year || |
|4. Details of deposits which are not in compliance with the requirements of Chapter V of the Act ||NIL |
Your company had issued 1595890 Compulsorily Convertible Preference Shares (CCPS) ofRs 100/- each to Mr. Vijay R Kirloskar Executive Chairman during the financial year 2014-15. According to the terms of the issue the CCPS were required to be converted intoEquity Shares in two tranches within a period of eighteen months from the date of theissue. In accordance with the terms of the issue the Board of directors at its meetingheld on February 11 2016 approved for the conversion of first tranche aggregating to777485 CCPS. Upon the conversion 2554156 equity shares of Rs 10/- each were issued ata premium of Rs 20.44/- per share to Mr. Vijay R Kirloskar.
Further the Board of directors at its meeting held on September 26 2016 approved forthe conversion of the second tranche aggregating to 818405 CCPS of Rs 100/- each andallotted 2688583 Equity Shares of Rs. 10/- each at a premium of Rs 20.44/- per share toMr. Vijay R Kirloskar.
Pursuant to your approval the company raised funds to a tune of Rs 3688.20 Lakhs fromQualified Institution Buyers (QIB) by allotting 7991765 Equity Shares of Rs 10/- eachissued at a price of Rs 46.15/- per share under chapter VIII of SEBI (Issue of Securitiesand Disclosure Requirements) Regulation 2009. As at March 31 2017 the paid up ShareCapital of your company was Rs 664140710/- divided into 66414071 Equity Shares ofRs 10/- each.
M/s. B.K. Ramadhyani & Co. LLP (registration no. AAD-7041) chartered accountantsand M/s. Sunder & Associates (AF No. 1172) chartered accountants Malaysia are theretiring auditors. M/s. B.K. Ramadhyani & Co. LLP are not eligible for reappointmentin terms of the provisions of Section 139 of the Companies Act 2013. The Board ofdirectors has recommended based on the recommendation of the audit committee M/s. AshokKumar Prabhashankar & Co. chartered accountants to be appointed as auditors of thecompany to hold office from the conclusion of the 70th annual general meeting until theconclusion of the 72nd annual general meeting. The audit committee and the Board haverecommended M/s. Sunder & Associates chartered accountants Malaysia to be appointedas branch auditors of the company to hold office from the conclusion of 70th annualgeneral meeting until the conclusion of 71st annual general meeting of the company toaudit the accounts of the Malaysia sales office and report thereon.
Appropriate resolution seeking members' approval has been set forth in the notice of70th annual general meeting of the company.
The company had appointed M/s. KPMG as its internal auditors for the financial year.
M/s. Rao Murthy and Associates cost accountants were appointed as cost auditors ofthe company for the financial year ended March 31 2017. The Board of directors of yourcompany has fixed Rs 450000/- (Rupees Four Lakhs Fifty Thousand Only) as audit feeswhich requires ratification by the members of the company in terms of the applicableprovisions of the Companies Act 2013. Accordingly a resolution seeking members' approvalhas been set forth in the notice of the 70th annual general meeting of the company. Theaudit committee of the Board has recommended for the appointment of M/s. Rao Murthy andAssociates cost accountants as cost auditors of the company for the financial year2017-18 and the Board of directors has approved their appointment.
M/s. Swaroop Ravishankar & Associates company secretaries were appointed assecretarial auditors for the financial year 2016-17 to conduct secretarial audit in termsof the provisions of Section 204 of the Companies Act 2013. The audit report is enclosedas
Form MR - 3.
Extract of annual return
According to the provisions of Section 92(3) of the Companies Act 2013 an extract ofthe annual return is appended hereto as Form MGT-9 which forms part of thisreport.
Conservation of energy technology absorption and foreign exchange earnings and outgo
The relevant data pertaining to conservation of energy technology absorption and otherdetails are given in the Annexure I which forms part of this report.
Changes in directors and key managerial personnel
Mr. Vijay R Kirloskar has been reappointed as Executive Chairman of the companyeffective from August 12 2017 for a period of three (3) years.
Mr. Anand B Hunnur has been appointed as Managing Director of the company effectivefrom May 26 2017 for a period of three (3) years.
Mr. Shyamanta Bardoloi has been appointed as additional director by the Board ofdirectors at its meeting held on November 14 2016 and his office shall cease at theensuing annual general meeting. Being eligible Board has recommended for the appointmentof Mr. Shyamanta Bardoloi as director liable to retire by rotation.
Mr. Krishnamurthy Ganesh shall retire at the ensuing annual general meeting beingeligible for reappointment seeks reappointment. Suitable resolutions seeking members'approvals to the above appointments are proposed in the notice of 70th annual generalmeeting. Ms. Janaki Kirloskar has resigned from the Board of directors effective fromFebruary 11 2017. Mr. Vinayak N Bapat has resigned from the office of Managing Directorand his office as Managing Director and director of the company shall cease from theclosing hours of August 11 2017.
Mr. Soumendra Kumar Mahapatra has resigned from the position of chief financial officerand he shall ceased to be chief financial officer effective from August 12 2017.
Mr. Sanjeev Kumar S has been appointed as the chief financial officer of the companyeffective from August 10 2017.
In terms of the provisions of Section 149 (7) of the Companies Act 2013 the companyhas received declarations from all the independent directors stating that they continue tomeet the criteria of independence as provided under the provisions of Section 149 (6) ofthe Companies Act 2013.
Your company believes that it is the effectiveness of the Board that contributes to thecompany's performance and long term growth. The criteria for Board evaluation contemplatesevaluation of directors' performances based upon their performances as directors apartfrom their specific role as independent non-executive and executive directors. Thecriteria also specifies that the Board would evaluate each committee's performance basedon the mandate on which the committee has been constituted and the contributions made byeach member of the said committee in effective discharge of their responsibilities.
a. The Board of directors at its meeting held on March 28 2017 evaluated theperformance of independent directors of the company. Those directors who were subject toevaluation did not participate at the meeting. For the purpose a comprehensivequestionnaire was provided to each Board member. Each and every member except the directorbeing evaluated participated discussed and filled in the questionnaire and providedtheir feedback. The results were thereafter compiled and noted.
b. Pursuant to applicable regulations of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 (hereinafter referred as "SEBI LODR") theNomination & Remuneration committee carried out evaluation of every director'sperformance. A comprehensive questionnaire was provided to each committee member forevaluation of every director's performance. Each member of the committee was requested tofill in the questionnaire and provide their feedback. The committee thereafter discussedand completed the evaluation process.
c. A separate meeting of independent directors was also held on March 28 2017 toevaluate the performance of the non independent directors the performance of theChairman the Board of director and its committees. A comprehensive questionnaire wasshared with each member to carry out the evaluation process. The directors filled thequestionnaire and provided their feedback. The evaluation process contained the following;
1. Performance of the Board as a whole & its committees;
2. Performance of the Chairman and the executive directors namely Mr. Vijay RKirloskar Executive Chairman; Mr. Vinayak N Bapat Managing Director & Mr. Anand BHunnur Director Sales;
3. Performance of non-executive non independent directors namely Mr. K GaneshNominee Director; Mrs. Meena Kirloskar director & Mr. Shyamanta Bardoloi director;Based on the review and consideration of the company's progress and performance during theyear the independent directors recorded the contributions made by the non independentdirectors. The directors also reviewed the performance of the chairman after taking intoaccount the views of executive and non-executive directors. The independent directorsplaced on record their appreciation of the leadership of the Chairman.
The independent directors further assessed the quality quantity and timeliness of flowof information between the company and the management and the Board to effectivelydischarge their responsibilities and to perform their duties. They expressed theirsatisfaction on flow of information.
The independent directors acknowledged the fact that the Board was well informed of thecompany's activities. That had enabled the Board to understand all the aspects of thecompany and had helped them to take decisions effectively.
Number of meetings of the Board of directors
Seven meetings of the Board of directors were held during the year 2016-17. Furtherdetails are contained in the Corporate Governance Report appended to this report.
Vigil mechanism for directors and employees
The company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the directors and employees to report their concerns aboutany poor or unacceptable practices or any event of misconduct or violation of company'scode of conduct. The purpose of this policy is to provide a framework to secure whistleblowing. It is to protect the employees who are willing to raise concerns about seriousirregularities within the company. The policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is affirmed that no personnel of the companyhas been denied access to the Audit Committee. The policy of Vigil Mechanism is availableon the company's website(URL:http://www.kirloskar-electric.com/images/pdf/investor/policies/Whistle-Blower-Policy.pdf).
Sexual harassment Policy
Your company has in place an "anti-sexual harassment policy" in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees are covered under this policy.
During the year under review no complaint was reported.
Particulars of contracts or arrangements with related parties
The particulars of every contract or arrangements entered into by the company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arms length transactions under third proviso thereto are disclosed in FormNo. AOC -2 appended hereto. The Policy on Related Party Transaction is available onthe company's website (URL:http://www.kirloskarelectric.com/images/pdf/investor/policies/RPT-policy.pdf).
The information required under Section 197(12) of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is disclosed in the Form MGT 9.
Your company's corporate governance report for the fiscal 2017 is appended to thisannual report. A certificate on the status of compliance on corporate governance is alsoappended and forms part of this annual report.
Management Discussion and Analysis
Management discussion and analysis Nomination and Remuneration policy and RiskManagement Policy are appended hereto as Annexure II III and IV and formspart of this annual report.
Particulars of employees
In terms of the provisions of Section 197 (12) of the Companies Act 2013 the namesand other particulars of specified employees are set out in the annexure to the Board'sReport. Having regard to the provisions of section 136 (1) of the Companies Act 2013 theannual report is being sent to all members of the company excluding the aforesaidinformation. Any member interested in obtaining these particulars may write to theManaging Director at the Registered Office of the company.
Particulars of loans guarantees or investments
There was no loan and guarantee or investment made by the company during the year underreport.
Director's Responsibility Statement
We the directors of your company confirm to the best of our knowledge and abilitythat -
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) we had 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 profitand loss of the company for that period;
(c) we had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities;
(d) we had prepared the annual accounts on a going concern basis; and
(e) we had laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively.
(f) we had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Explanations or comments on auditors' qualifications / adverse remarks / emphasis onmatters:
The comments /observations of the auditors are self-explanatory. Board informs thatthere was no such deposit unpaid according to the provisions of the Companies Act 2013.
With regard to the delay in filling of certain forms with the Ministry of CorporateAffairs Board assures that the company will ensure filing of forms on time in future.
The Board of directors takes the opportunity to express its sincere appreciation forthe continued support and confidence received from the company's bankers customerssuppliers depositors and the shareholders.
The company considers its employees as its most valuable asset. Employees at all levelshave put in their best to the services of the company and the Board puts on record thesincere appreciation of their dedication and loyalty.
| ||For and on behalf of the Board of directors |
| ||Kirloskar Electric Company Limited |
|Place: Bengaluru ||Vijay R. Kirloskar |
|Date: 10.08.2017 ||Executive Chairman |
DISCLOSURE OF PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
A. Conservation of Energy:
a) Energy conservation measures taken: The Company conserves energy by
1. Improving system power factor.
2. Reduction of maximum demand and restricting the maximum demand to billing demand.
3. Monitoring of energy consumption and further requisite follow-up.
4. Optimum utilization of high energy consuming electrical equipments like windingmachines.
5. Air-compressor pressure is maintained at reduced pressure with fixed timing and airleakages arrested.
6. Installation of capacitor panels.
b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy;
1. Implementation of induction brazing processes.
2. Optimization of varnish impregnation process
3. Installation of system to ensure uniform temperature.
4. Energy conservation audit through external audit agency.
c) Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods:
The measures taken by the company have resulted in optimum usage of energy in terms ofunits and reducing costs.
d) Total energy consumption and energy consumption per unit of production
B. Technology Absorption:
1. Research and Development
Research and development is undertaken for the range of all the existing productslowering costs and process improvements indigenization or alternate sourcing ofmaterials and development of energy efficient products.
2. Benefits derived as a result of the above R & D efforts.
a. Process improvement resulting in higher production.
b. Development of in-house skills for manufacture of high precision products.
c. Enhanced design and product capability to achieve customer satisfaction.
d. Product range extension to reach newer markets.
e. Special motors for vehicle application developed.
3. Future plan of action:
To enhance product performance and for better customer satisfaction your company willcontinue in:-
a. Upgrading existing technology.
b. Extending range of its products.
c. Developing new processes.
d. Applying research and value engineering.
|4. Expenditure on R & D: ||(Rs in Lakhs) |
|Capital ||Nil |
|Recurring ||8.79 |
|Total ||8.79 |
|Total R & D Expenditure ||8.79 |
|as a % of total turnover ||0.02% |
5. Technology Absorption Adaptation and Innovation:
a. Efforts made in brief for technology absorption adaptation and innovation.
- In-house training of personnel.
- Indigenization of materials components and processes.
b. Benefits derived as a result of the above efforts
- Quality improvement
- Development of new products
c. Future Plan of Action
- Upgradation of existing technology
- Development of new processes
d. Technology imported during the last 5 years.
- Technology Imported Nil
- Has the technology been fully absorbed? If not fully absorbed areas where this hasnot taken place reasons there for and future plan of action NA
C. Foreign Exchange Earnings and Outgo:
1. Activities relating to export; initiatives to increase exports; development of newexport markets for products and services; and Export Plan; The company has continued tomaintain focus and avail of export opportunities based on economic considerations. Duringthe year the company has exports (FOB Value) worth Rs 3244.18 Lakhs
2. Total foreign exchange used and earned.
| ||(Rs in Lakhs) |
|a) Foreign Exchange earned: || |
|(i) FOB value of goods exported (net) of sales within India eligible for export incentives ||3244.18 |
|(ii) Dividend on shares (net of tax) ||0.00 |
|(iii) Repatriation of Profit ||161.34 |
|(iv) Others (Sale of investment in Kirloskar Kenya Ltd) ||33.44 |
|b) Foreign Exchange Used || |
|Value of imports calculated on the CIF basis. || |
|(i) Raw materials & components and spare parts ||214.98 |
|(ii) Capital Goods ||59.71 |