Your directors have the pleasure of presenting the 69th 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 2016.
Performance review and the state of companys affairs
During the year under report your company achieved a turnover of Rs. 54775/- lakhs(previous year Rs. 51081/- lakhs). The operations have resulted in net loss of Rs.3113/- lakhs (previous year Rs. 12975/- lakhs). In view of the losses your directors donot recommend any dividend for the year.
The Financial Highlights of the company are as follows:
( Rs. Lakhs)
|PARTICULARS ||2015-16 ||2014-15 |
|Total Revenues ||54 775.15 ||51 080.32 |
|Profit before depreciation and taxes ||(5268.22) ||(10590.32) |
|Profit before taxes ||(3113.04) ||(12974.63) |
|Provision for taxes (Incl. Deferred Tax) ||- ||- |
|Profit for the year after taxes ||(3113.04) ||(12974.63) |
|Balance brought forward from previous year ||(5992.93) ||(6284.82) |
|Profit available for appropriation ||- ||696.88 |
|Transfer to general reserve ||- ||- |
|Balance carried to balance sheet ||(9105.97) ||(5992.93) |
Details in respect of adequacy of internal financial controls with reference to thefinancial statement
The company has system of internal financial control which is in operation.
Details of subsidiary companies
Your company has six wholly owned subsidiaries and one associate company.
Report on the performance and financial position of each of the subsidiaries &associate company has been provided in Form AOC-1 appended to this report.
|SL. No. ||Particulars ||Amount in Lakhs |
|1. ||Accepted during the year ||Nil |
|2. ||Remained unpaid or unclaimed at the end of the year. ||2 752 |
|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 || |
| || At the beginning of the year || |
| || Maximum during the year || |
| || At the end of the year ||NA |
|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 year2014 -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 conversion of first tranche aggregating to 777485CCPS. Upon the conversion 2554156 Equity Shares of Rs. 10/- each were issued at apremium of Rs. 20.44/- per share to Mr. Vijay R Kirloskar.
As at March 31 2016 the paid up share capital of the company was Rs. 639177730/-divided into 55733723 Equity Shares of Rs. 10/- each and 818405 CompulsorilyConvertible Preference Share of Rs. 100/- each.
M/s. B.K. Ramadhyani & Co. LLP (LLP registration No. AAD-7041) CharteredAccountants and M/s. Sunder & Associates (AF No. 1172) Chartered AccountantsMalaysia are the retiring auditors. They are eligible for reappointment and havesubmitted written consents along with other documents as required under the applicableprovisions of the Companies Act 2013. The audit committee and the Board have recommendedM/s. B.K. Ramadhyani & Co. LLP Chartered Accountants to be appointed as auditors ofthe company for the financial year ended March 31 2017 and M/s. Sunder & AssociatesChartered Accountants Malaysia as auditors to audit the accounts of the Malaysia salesoffice and report thereon.
The company has appointed M/s. KPMG Ltd. as its internal auditors.
M/s. Rao Murthy and Associates Cost Accountants were appointed as cost auditors ofthe company for the financial year ended March 31 2016. Your company has fixed Rs. 450000/-as audit fees which requires ratification by the members of the company in termsof the applicable provisions of the Companies Act 2013.
The audit committee of the Board and the Board of directors has recommended M/s. RaoMurthy and Associates Cost Accountants for appointment as cost auditors of the companyfor the financial year 2016-17. Appropriate resolution seeking members approval on theproposed appointment including the audit fees payable to them are set forth in the noticeof the 69th annual general meeting of the company.
M/s. Swaroop Ravishankar & Associates Company Secretaries were appointed assecretarial auditor for the financial year ended March 31 2016 to conduct secretarialaudit in terms of the provisions of Section 204 of the Companies Act 2013 and the auditreport is enclosed as 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.
Directors and key managerial personnel
Mrs. Meena Kirloskar director is liable to retire by rotation and being eligibleseeks reappointment. Late Shri A.S. Lakshmanan director passed away on October 13 2015.
Mr. Ram J. Shahaney director has resigned from the Board of directors effective fromMarch 14 2016.
Dr. Ashok Misra director has been appointed as an independent director for a periodof consecutive five years effective from November 5 2015. His appointment is beingproposed for approval of the members at the 69th annual general meeting.
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. Mr. Chinmoy Patnaik has been appointed as Associate VicePresident Legal and Company Secretary effective from November 18 2015.
Your company believes that it is the effectiveness of the Board that contributes to thecompanys performance. The criteria for Board evaluation contemplates evaluation ofdirectors performance based upon their performance as directors apart from theirspecific role as independent non-executive and executive directors. Details on thecommittees of the Board are provided in the corporate governance report attached to thisannual report.
The criteria also specifies that the Board would evaluate each committeesperformance based on the mandate on which the committee has been constituted and thecontributions made by each member of the said committee in effective discharge of theirresponsibilities.
The Board of directors of your company has made annual evaluation of its performanceits committees and directors for the financial year 2015-16.
Number of meetings of the Board of directors
Seven meetings of the Board of directors were held during the year 2015-16. For furtherdetails please refer to the corporate governance 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 ofcompanys code of conduct. The purpose of this policy is to provide a framework tosecure whistle blowing. It is to protect the employees who are willing to blow whistles.The policy provides for adequate safeguards against victimization of employees who availof the mechanism and also provides for direct access to the Chairman of the AuditCommittee. It is affirmed that no personnel of the company has been denied access to theAudit Committee. The policy of Vigil Mechanism is available on the companys website (URL:http://www.kirloskar-electric.com/images/pdf/investor/policies/Whistle-Blower-Policy.pdf).
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 companys 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 companys corporate governance report for the fiscal 2016 is attached 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 is appended hereto as Annexure II andforms part of this report.
Nomination and Remuneration Policy
The company has adopted nomination and remuneration policy which is appended to thisreport as Annexure III. Risk Management Policy
The company has also adopted and implemented a policy on Risk Management which isappended to this report as Annexure IV.
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 theBoards Report. Having regard to the provisions of section 136 (1) of the CompaniesAct 2013 the Annual Report is being sent to all members of the company excluding theaforesaid information. Any member interested in obtaining these particulars may write tothe Company Secretary at the Registered Office of the company.
Particulars of loans guarantees or investments
The details of loans guarantees or investments made during the year are given below: (Rs. In Lakhs)
|Sl. No. ||Companies ||Nature of Transaction ||Loans ||Guarantees ||Investments |
|1. ||KELBUZZ Trading Private Limited ||Investment in Shares ||Nil ||Nil ||Nil |
|2. ||Luxquisite Parkland Private Limited ||Investment in Shares ||Nil ||Nil ||Nil |
|3. ||SLPKG Estate Holdings Private Limited ||Investment in Shares ||Nil ||Nil ||Nil |
|4. ||SKG Terra Promenade Private Limited ||Investment in Shares ||Nil ||Nil ||Nil |
|5 ||Kirsons B.V ||Investment in Shares ||Nil ||Nil ||Nil |
|6. ||Swaki Habitat Private Limited ||Nil ||Nil ||Nil ||1.00 |
|7. ||Kesvik Developers Private Limited ||Nil ||Nil ||Nil ||1.00 |
Directors 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 hadselected 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 profit and loss ofthe company for that period; (c) we had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother 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 andthat such 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 / emphasison matters: A. Auditors Report
The comments /observations of the auditors are self-explanatory and the companysexplanations thereto have been given in relevant notes in the Notes to Accounts on page62.
B. Secretarial Audit Report
In reply to the comments offered by the secretarial auditor we wish to offer responseas under:
Remark/ comment of the auditor
"The company has not filed standalone financials for its subsidiary companies andconsolidated financials for the year." Managements response
The company faced technical issues while uploading the concerned forms on the websiteof the Ministry of Corporate Affairs (MCA). The company raised tickets approached MCAhelp desk number of times and also wrote to Registrar of Companies seeking resolution onthe matter. The company could upload the forms on July 27 2016.
The Board of directors took this opportunity to express its sincere appreciation forthe continued support and confidence received from the companys Bankers customerssuppliers depositors and the shareholders.
The company considers its employees as its most important asset. Employees at alllevels have put in their best to the services of the company and the Board puts on recordthe sincere 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: 12.08.2016 ||Executive Chairman |