Your Directors have pleasure in presenting you the Twenty Fifth Annual Report togetherwith Audited Financial Statements for the year ended 31st March 2018.
FINANCIAL PERFORMANCE OFTHE COMPANY
(Rs in Lakhs)
|Particulars ||For the year ended 31/03/2018 ||For the year ended 31/03/2017 |
|Sales & Other Income ||33.45 ||30.32 |
|Profit/(Loss) before interest and Depreciation ||2.20 ||1.28 |
|Less: Finance Cost ||0.86 ||0.47 |
|Less: Depreciation and Amortisation expenses ||1.04 ||1.29 |
|Profit before Exceptional items& Taxes ||0.30 ||(0.48) |
|Exceptional Items ||- ||- |
|Profit after Exceptional Items & Taxes ||0.30 ||(0.48) |
|Less: Tax expenses ||- ||- |
|Profit / (Loss) after tax ||0.30 ||(0.48) |
|Other Comprehensive Income / (Loss) || || |
|(Includes Revaluation Gain on Free Hold Land Rs. 65.19 Lakhs) || || |
|Total Comprehensive lncome/(Loss) attributable to the owners of the company ||66.34 ||(0.74) |
|Less: Appropriations ||- ||- |
|Closing Balance (Including Other Comprehensive Income) for the year ||66.34 ||(0.74) |
RESULTS OF OPERATIONS AND STATE OF COMPANY AFFAIRS:
The Aqua Farm situated at Isakapalli was given on lease during July 2013 for sevenyears. Operating in volatile and uncertain environment at that time the company had giventhe farm on long term lease earned a gross income of Rs. 33.45 lakhs including OtherIncome and earned a Net Profit of Rs. 66.34 lakhs (Including Gain on Revaluation of Rs.65.19 lakhs considered under Other Comprehensive Income). Company is awaiting theoperating lease to get completed to consider the operations.
DIVIDEND AND RESERVES
In view of considerable accumulated losses and marginal income no dividend is declaredand not transferred any amount to reserves.
The company does not have any subsidiary.
PARTICULARS REGARDING ENERGY CONSERVATION etc.:
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure V to this Report.
CHANGES AMONG DIRECTORS AND KEY MANAGERIAL PERSONNEL
Re-Appointment of Non-Executive Director in 24th Annual General Meeting
During the year Smt. Bommidala Anitha (DIN: 00112766) Nonexecutive Woman Director wasre-appointed as Director in 24'"Annual General Meeting.
Re-appointment of Independent Directors Sri Nellore Delendra Prasad and Sri TunuguntlaRama Krishna
During the year the shareholders of the company re-appointed Sri Nellore DolendraPrasad and Sri Tunuguntla Rama Krishna as Independent Directors of the company for secondterm with a tenure of 5 years at their Annual General Meeting held on 06-09- 2017.
Retire by Rotation
In accordance with the provisions of Section 152 of the Companies Act 2013 read withthe Articles of Association of the Company Smt. Bommidala Anitha (DIN: 00112766)Nonexecutive Woman Director liable to retire by rotation at the forthcoming Annual GeneralMeeting and being eligible offers herself for re-appointment as Director. The Boardrecommends her appointment. A brief resume of her and other relevant information have beenfurnished in the notice convening the AGM.
Board and Committee Meetings
The Board met 4 times during the financial year 2017-18 the details of which are givenin the Corporate Governance Report.
Committees of the Board
The details of all the Committees along with their composition terms of reference andmeetings held during the year are provided in the "Report on CorporateGovernance" forming part of this Annual Report.
Board evaluation of its own performance:
In accordance with the provisions of Section 134 of the Act and of the SEBI (LODR)Regulations2015 the Board has carried out an evaluation of its own performance theperformance of Committees of the Board namely Audit Committee Risk ManagementCommittee Stakeholders Relationship Committee and Nomination and Remuneration Committeeand also the directors individually. The manner in which the evaluation was carried outand the process adopted has been mentioned in the Corporate Governance Report.
Policy for selection and appointment of Directors Senior Management and theirremuneration:
The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection and appointment of Directors Senior Management and theirremuneration and also framed the criteria for determining experience qualificationspositive attributes and independence of directors.
Declaration Given by Independent Directors:
All the Independent Directors viz. Sri Tunuguntla Rama Krishna (DIN:02324865) and SriNellore Dolendra Prasad (DIN:01816366) have submitted declarations confirming that theycontinued to meet the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 and SEBI (LODR) Regulations 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT2013.
During the financial year 2017-18 the Company has not given any guarantees/loan ormade any investments. However during the year the company has repaid an amount of Rs.5.00Lakhs due as on 31st March 2017 but received Rs.10.55 Lakhs interest free loan duringthe yearout of which Rs.5.30 Lakhs was repaid to Mr. Bommidala Rama Krishna ManagingDirector leaving a balance of Rs.5.25 lakhs payable as at 3181 March 2018.
PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure VII to the Board of Directors report.
AUDITORS AND AUDITOR'S REPORT
M/s. Kurapati Subba Rao & Co. Chartered Accountants (Firm Regn.No:001618S) wasappointed as Statutory Auditors of your Company at the Annual General Meeting held on06*September 2017 for a term of five consecutive years. As per the provisions of Section139 of the Companies Act 2013 the appointment of Auditors is required to be ratified byMembers at every Annual General Meeting.
But in accordance with the Companies Amendment Act 2017 enforced on 7th May 2018 bythe Ministry of Corporate Affairs the appointment of Statutory Auditors is not requiredto be ratified at
every Annual General Meeting. The Report given by the Auditors on the financialstatement of the Company is part of this Report. There has been no qualificationreservation adverse remark or disclaimer given by the Auditors in their Report.
Fraud reported by the Auditor under Section 143(12): Nil
EXPLANATION FOR AUDITORS EMPHASIS OF MATTER:
Regarding the preparation of accounts ongoing concern basis the notes in Independentaudit report is self-explanatory and the company had given the farm on long term lease andgot steady income and been able to meet its operational expenses.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s K. Srinivasa Rao & Co Company Secretaries as the SecretarialAuditors to undertake the Secretarial Audit of the Company. The Report of the SecretarialAudit is given in Annexure-lll to this Report. There were no qualifications reservationsor adverse remarks given by Secretarial Auditor except the following:
1. Noncompliance of section 203 of the Companies Act 2013 and regulation 6 ofSEBI(LODR) Regulations 2015 in respect of nonappointment of the Company Secretary.
2. Noncompliance of section 203 regarding non-appointment of CFO by the board with in aperiod of six months from the date i.e 25.01.2016of such vacancy.
Board Clarification on Secretarial Auditor qualifications:
The Board has made utmost effort from time to time for appointment of the CompanySecretary & Chief Financial Officer as KMPs but not able to appoint them due to lackof suitable Candidates to the profile of the Company in terms of work location jobprofile and remuneration and we hope that the positions are to be filled in the nearfuture.
The Company has put in place a mechanism to identify assess monitor and mitigatevarious risks to its key business objectives. Major risks identified by the business andfunctions are systematically addressed through mitigating actions on a continuing basis.The Company has formulated a Risk Management Policy which is also available on theCompany's website atwww.bkvindustries.com
INTERNAL FINANCIAL CONTROLS:
The Company has adequate Internal Financial Controls with proper checks to ensure thattransactions are properly authorized recorded and reported apart from safeguarding itsassets. These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis.
The internal auditors of the Company review the controls across the key processes andsubmits reports periodically to the Management and significant observations are alsopresented to the Audit Committee for review. Follow up mechanism is in place to monitorthe implementation of the various recommendations.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:
Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company i.e. (a) net worth of the Company to be '500 crore or more; or (b)turnover of the company to be '1000 crore or more; or (c) net profit of the company to be'5 crore or more. As the Company does not fall under any of the threshold limits givenabove the provisions of Section 135 are not applicable to the Company.
All contracts/arrangements/transactions entered into during the financial year with therelated parties were on arm's length basis and were in the ordinary course of business.Section 188(1) of the Companies Act 2013 exempts related party transactions that are inthe ordinary course of business and are on arm's length basis. The Board of Directors andthe Audit Committee have also approved the said related party transactions.
There are no materially significant related party transactions with the promotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. The policy on dealing with RelatedParty Transactions as approved by the Board is available at the investors section of theCompany's website at www.bkvindustries.com
The particulars of contracts/arrangements entered into by the Company with relatedparties as required to be disclosed are given in AOC-2 as Annexure IV to this Report.
During the year your company followed best corporate governance practices and the samewill also be continued in forthcoming years.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (LODR) 2015 Regulations given in Corporate GovernanceReport which is the part of this Annual Report.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND:
The company has not declared any dividend till date from inception therefore there wereno funds which were required to be transferred to Investor Education and Protection Fund(IEPF).
EXTRACT OFTHE ANNUAL RETURN
The details of the extract of the Annual Return in Form MGT-9 are given in Annexure- VIto this Report.
Vigil Mechanism &Whistle Blower Policy
The Company has a vigil mechanism and a whistle blower policy. The same has been postedon the Company's website and the details of the same are given in the Corporate GovernanceReport.
As per the requirement of SEBI Listing Regulations the Company declares that itssecurities are listed on the Stock Exchanges of Mumbai& Kolkata. The company confirmsthat it has paid annual listing fees to the Stock Exchange of Mumbai for the Year 2017-18.However in the case of Kolkata Stock Exchange the shares are listed under"suspension" without any intimation to the Company though company had sent allthe resolutions for delisting in 2007 & 2014 and in view of clarification to bereceived from Culcutta Stock Exchange no listing fees paid for 2017-18.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to the provisions contained in Section 134(3) of the Companies Act 2013 yourDirectors to the best of their knowledge and belief and according to information andexplanations obtained from the management confirm that:
i) In the preparation of the annual accounts for the financial year ended March312018 the applicable accounting standards have been followed and there are no materialdepartures from the same;
ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfai r view of the state of affairs of the Company as at March 312018 and of the cashflows and profit of the Company for the year ended on that date;
iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv) The Directors have prepared the Annual Accounts on a going concern basis.
v) The Directors have laid down proper internal financial controls to be followed bythe Company relevant to its nature of operations and such controls are adequate andoperating effectively.
vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Your Directors state that no disclosure is required in respect of the following itemsas there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
4. No orders were passed by the Regulators or Courts or Tribunals which impact thegoing concern status and the Company's operations in future.
Material Changes and commitments if any affecting the financial position of thecompany which has occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report:
No Material Changes and commitments affecting the financial position of the companyoccurred for a period which the financial statements relate and the date of the report.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
As per requirement of The Sexual Harassment of Women at Workplace (Preventionprohibition & Redresses) Act 2013 and Rules made there under your company hasconstituted internal Complaints Committee (ICC). During the year there was no complaintsreceived underthis Act.
CHANGES INTHE NATURE OFTHE BUSINESS
There was no change in the nature of the business of the Company during the financialyear ended 3181 March 2018
DELISTING OF SHARES:
Company's Ordinary Equity shares are originally listed in the Stock Exchanges of Mumbai(BSE) and four other Stock Exchanges at New Delhi Kolkata Chennai and Hyderabad. Theshares of the company are compulsorily traded in dematerialized form. The Board consideredthat continued listing on all stock exchanges was not necessary and therefore decided tode-list from Delhi Kolkata & Chennai stock exchanges in pursuance of specialresolutions passed in the 14th Annual General Meeting held on 28th September 2007 &2181 Annual General Meeting held on 13th September 2014. However the company wasinformed by Madras Stock Exchange Limited Hyderabad Stock Exchange Limited The DelhiStock Exchange Association Limited that SEBI had de-recognized the above Stock Exchanges.The Kolkata Stock Exchange Limited is yet to notify to the company about derecognition bySEBI.
PERSONAL RELATIONS AND APPRECIATION:
The Directors gratefully acknowledge all stakeholders of the Company viz. lesseemembers employees stock exchanges and banks for their support during the year. Yourdirectors hereby place on record their appreciation for the services rendered by the staffof the Company for their hard work dedication and commitment.
|By order of the Board of Directors |
|For BKV Industries Limited |
|BOMMIDALA RAMA KRISHNA |
|Managing Director |
|Place: Guntur |
|Date: 29.05.2018 |