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GKW Ltd.

BSE: 504704 Sector: Others
NSE: GKWLIMITED ISIN Code: INE528A01020
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GKW Ltd. (GKWLIMITED) - Director Report

Company director report

TO

THE SHAREHOLDERS

1. The Directors have pleasure in presenting their Annual Report together with theaudited statement of accounts of the Company for the year ended 31st March 2019.

2. FINANCIAL RESULTS

The financial statements of the Company for the year ended 31st March 2019 have beenprepared in accordance with the Indian Accounting Standards (Ind AS) notified undersection 133 of the Companies Act 2013 read with Companies (Indian Accounting Standards)Rules 2015 and the Companies (Indian Accounting Standards) Amendment Rules 2016.

The results for the year under review are given below:

Rs. lakhs
2018-2019 2017-2018
Total Income 3072.15 1846.58
Profit before depreciation 2091.01 924.57
Depreciation and Amortization Expense 56.21 48.26
Profit before Tax 2034.80 876.31
Tax Expenses (46.72) (47.47)
Profit after tax and before Other Comprehensive Income 1988.08 828.84
Other Comprehensive Income (net of tax) for the year (11267.67) 24546.24
Total Comprehensive Income for the year (9279.59) 25375.08

During the year under review total income increased by 66% to Rs.3072.15 lakhs. Profitbefore tax at Rs.2034.80 lakhs was 132% higher compared to the previous year mainly dueto increase in dividend income of Rs.1000 lakhs from investment in equity shares andimprovement in profit from warehousing activity. Consequently profit after tax and beforeOther Comprehensive Income was also higher at Rs.1988.08 lakhs.

Other Comprehensive Income recorded a loss of Rs.11267.67 lakhs mainly on account ofrecognition of remeasurement loss on equity share investment held as non currentinvestment as mandated under Ind AS. This notional loss was due to fall in the marketprice of equity shares held by the Company as non current investment. Market price of thesaid shares was substantially higher in the previous year resulting in OtherComprehensive gain of Rs. 24546.24 lakhs.

3. DIVIDEND

The Company being in consolidation mode no dividend has been considered for the yearunder review.

4. MANAGEMENT DISCUSSION AND ANALYSIS

4.1 Industry Structure and Developments & Segment- wise Performance

(a) Warehousing business:

During the year under review the Company's principal business activity viz.warehousing business continued to experience steady growth. Lease rentals increased by23% to Rs.1204.86 lakhs as compared to Rs.979.41 lakhs in the previous year as additionalwarehousing space was leased out to various parties. The Company incurred capitalexpenditure of Rs.195.16 lakhs for refurbishing/re-construction of covered sheds forcreating additional warehousing facilities. In order to cater to the increasing demand forwarehousing space the Company is actively pursuing further expansion of the warehousingarea and related infrastructure such as internal roads lighting etc. in order to developa comprehensive warehousing/logistics hub at Howrah.

(b) Investment and Treasury :

Investment and treasury segment generated income of Rs.1833.66 lakhs during the yearunder review. As stated above there was an increase in dividend income from investmentsin equity shares amounting to Rs.1000 lakhs and in income from mutual funds Rs. 211.97lakhs. There was a gain of Rs.119.85 lakhs on remeasurement of mutual funds/bonds at fairvalue in accordance with Ind AS which was offset by lower interest income of Rs. 114.34lakhs on account of maturity of fixed deposits/ bonds. Profit on sale of currentinvestments decreased by Rs. 173.69 lakhs during the period under review.

(c) Other Comprehensive Income :

The substantial fluctuation in Other Comprehensive Income represents mainly unrealizednotional gain/loss on non current equity investment. In the year under review the OCInotional loss includes Rs. 11168.00 lakhs due to adverse fluctuation in market price ofequity shares as compared to notional gain of Rs.24560.00 lakhs in the previous year.Cumulatively the notional unrealized gain on this account amounted to Rs.15053.20 lakhsas on balance sheet date. Market fluctuations in equity investments is beyond the controlof the Company.

4.2 Discussions on Financial Performance with respect to Operational Performance

Total income was higher by Rs.1225.57 lakhs compared to the previous year mainly due toincrease in dividend income.

It is proposed to transfer a sum of Rs.1050 lakhs (201718 - Rs.500 lakhs) to GeneralReserve.

As in the previous year The Company had no borrowings as on 31st March 2019.

During the year under review your Company invested a sum of Rs.3329.63 lakhs in mutualfunds and Rs.202.15 lakhs in bonds mainly by redeploying Rs.1527.81 lakhs from fixeddeposits maturing and Rs.2003.97 lakhs from operating cash flows.

Capital Expenditure for the year amounted to Rs.256.33 lakhs (2017-18 - Rs.290.45lakhs) and value of assets put into use during the year amounted to Rs.233.65 lakhs(2017-18 - Rs.292.28 lakhs).

4.3 Opportunities and Threats

The successful implementation of GST and emphasis on infrastructure developmentparticularly the road and rail network augurs well for growth opportunities in thewarehousing and logistics areas. Reforms in the banking and financial sectors should leadto improvement in liquidity private sector profitability/ investment and resultantopportunities to your Company in the Investment & Treasury segment. This would help infurther consolidating the financial health of the Company and enable it to pursue growthin these and related fields.

4.4 Outlook

With the introduction of Goods & Services Tax (GST) w.e.f. 151 July2017 the company is expecting significant expansion in the warehousing logistics segment.

4.5 Risks and Concerns

Your Directors recognize that there are uncertainties and risks attached to anybusiness. The risks could be external internal or a combination of both. External riskscan be intensification of competition technological obsolescence changes in Governmentpolicy with regard to taxes and levies or economic slowdown adversely impacting demand andprofitability. In an increasingly globalised economy world economic trends would alsoimpact business of the Company. Such risks will be continuously monitored and appropriateaction will be taken by the Company to minimize the same. Internal risks compriseoperating risks financial risks and business risk including major equipment breakdownslabour unrest or product substitution. The Company will take effective steps to deal withsuch risks.

Each business segment has been informed to identify and report quarterly to the nexthigher reporting level on any major risks as perceived by them whether they be internalor external risks and simultaneously take immediate steps to minimize the impact thereof.

All aspects of the warehousing and treasury operations are being closely monitored toidentify potential risks at an early stage in order to ensure that appropriate riskmitigation measures are put in place.

4.6 Internal Control Systems and Their Adequacy The Company has adequate internalcontrol system to ensure protection of assets against loss from unauthorised use ordisposal proper maintenance of accounting records and adherence to Company's policies andprocedures. The Company has appointed an Internal Auditor to conduct independent auditsand submit periodical reports. An Audit Committee of the Board of Directors reviews theInternal Audit reports annual financial statements and internal control systems to ensuretheir effectiveness and adequacy. The Committee also interacts with the Internal/Statutory Auditors from time to time. Apart from this audit reports and follow-up actionsare periodically reviewed by the top management and remedial actions taken.

4.7 Material Developments in Human Resources/Industrial Relation Front includingNumber of People Employed

During the year under review industrial relations within the Company continued to bestable.

The total number of permanent employees was 15 as on 31st March 2019.

5. SUBSIDIARY COMPANY

GKW (Overseas Trading) Limited wholly owned Subsidiary Company had applied for removalof its name under Section 248(2) of the Companies Act 2013 with the Registrar ofCompanies West Bengal. The Notification [Pursuant to Sub Section (5) of Section 248 ofthe Companies Act 2013 and Rule 9 of the Companies (Removal of Names of Companies fromthe Register of Companies) Rules 2016] was published in The Gazette of India dated 22ndDecember 2018 regarding the Notice of striking off in Form STK -7 dated 6thDecember 2018 pursuant to which the name of the GKW (Overseas Trading) Limited was struckoff the Register of Companies and the said Company has been dissolved.

6. INFORMATION PURSUANT TO SECTION 134

6.1 The Abstract of the Annual Return as provided under Section 92(3) of the CompaniesAct 2013 for the year ended 31st March 2019 is appended hereto as Annexure Iand placed on the website and the web link is www.gkwltd.com.

6.2 Directors' Responsibility Statement

Pursuant to provisions of Section 134(5) of the Companies Act 2013 the Directorshereby state that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively;

6.3 Mr. M.L. Lahoti Mr. N.K. Navalakha and Mr. P.S. Lodha being Independent Directorshave submitted a statement under Sub-section (6) of Section 149 of the Companies Act 2013on 1st April 2019 and Ms. K. Dadoo subject to her appointment being approved by themembers at Annual General Meeting has submitted a statement under Sub-section (6) ofSection 149 of the Companies Act 2013.

6.4 Particulars as prescribed under Section 197(12) and Rule 5(1) & (2) of theCompanies Management (Appointment and Remuneration of Personnel) Rules 2014 is appendedhereto as Annexure II & II (a).

6.5 There are no qualifications in the Auditor's Report and the Secretarial AuditReport hence no comments or explanations by the Board are required.

6.6 The particulars of investments under section 186 of the Companies Act 2013 as at31st March 2019 is provided in Note No 5 and 9 to the Financial Statements.

6.7 The Company had contracts or arrangements with related parties during the yearunder review and are appended hereto as Annexure III. Please also refer to Note no 34 ofthe Financial Statements.

6.8 Conservation of Energy

The Company is engaged in warehousing activity and is making judicious use of energyefficient devices wherever possible.

6.9 Research & Development and Technology Absorption and Innovation

The nature of business activity viz. warehousing business and investment and treasuryoperations carried on by the Company does not have scope for any Research DevelopmentTechnology Absorption and Innovation. However latest developments in materials andprocesses pertaining to warehousing activity are constantly monitored.

6.10 Foreign Exchange Earnings and Outgo

Earnings in foreign exchange during the year NIL (2017-2018 - NIL) and out-go was NIL(2017-18 - Rs.0.85 lakhs).

6.11 Implementation of Risk Management Policy of the Company

The Board of Directors considered appropriate measures for mitigating the risk factorsboth internal and external. The company has already adopted the procedures for the sameincluding identification thereof.

6.12 Evaluation of Board and Directors' Performance Formal annual evaluation has beenmade by the Board of its own performance and that of its Committee Members individualdirectors and Chairman on the basis of criteria approved by the Nomination andRemuneration Committee/Board. Each Independent Director being evaluated did notparticipate in the meeting during the discussions on his/her evaluation.

7. FAMILARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Independent Directors were fully briefed and familiarized with the operations ofthe Company its business mode and steps envisaged to insulate the Company from the impactof business cycles.

8. DIRECTORS

a) Mr. M.L. Lahoti Mr. N.K. Navalakha and Mr. P. S. Lodha were re-appointed asIndependent Directors of the Company from 1st April 2019 upto 5(five)consecutive years not liable to retire by rotation to hold office for the second termpursuant to the provisions of Section 149 and 152 read with Schedule IV and otherapplicable provisions if any of the Companies Act 2013 and Companies (Appointment andQualification of Managerial Personnel) Rules 2014 and Regulation 17(1A) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and continuation ofdirectorship of Mr. Gopal Srinivasan as Non-Executive Director pursuant to Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 liable toretire by rotation after 29th June 2019 in terms of Special Resolutionspassed through Postal Ballot on 26th March 2019.

b) Mr. Gopal Srinivasan who is liable to retire by rotation and being eligible offershimself for re-appointment.

c) Based on the recommendation of the Nomination and Remuneration Committee the Boardof Directors reappointed Mr. Jemi Dorabji Curravala as Managing Director and remunarationpayable to him from 1st April 2019 to 31st July 2019 subject to the approval of theShareholders at the 89th Annual General Meeting.

d) The present tenure of Mr. Jemi Dorabji Curravala as Managing Director will expire on31st July 2019. Based on the recommendation of the Nomination and RemunerationCommittee Mr. Jemi Dorabji Curravala has been appointed as Director designated as"Non Executive Chairman" of the Company from 1st August 2019 by theBoard of Directors in its meeting held on 20th May 2019. Mr. Jemi DorabjiCurravala will be appointed as Director designated as "Non Executive Chairman"from 1st August 2019 to 31st March 2020 pursuant to Regulation17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andSection 152 of the Companies Act 2013 and other applicable provisions of the CompaniesAct 2013 including any statutory modification(s) and/or re- enactment(s) thereof andother applicable laws if any in the Annual General Meeting of the Members of theCompany.

(e) Ms. Kusum Dadoo was appointed as Additional Director on the Board of the company on5th November 2018 who holds office upto the date of the Annual General Meeting.She will be appointed as Independent Director by the Board of Directors subject to theapproval of the shareholders in Annual General Meeting. Based on the recommendation of theNomination and Remuneration Committee on 25th April 2019 Ms. Kusum Dadoo willbe appointed as Independent Director for a period of 5(five) consecutive years from 5thNovember 2018 subject to the approval of the shareholders at the 89th AnnualGeneral Meeting.

f) Ms. Surbhi Singhi Independent Director had resigned from the Board of Directors on26th November 2018 due to preoccupation in various assignments with herpresent engagements.

9. KEY MANAGERIAL PERSONNEL

The Board of Directors in its meeting held on 8th May 2014 noted the Key ManagerialPersons (KMP) and that following officials of the Company viz. Mr. J. D. CurravalaManaging Director Mr. A. Chakrabarti Chief Financial Officer and Mr. J. N. GhoshCompany Secretary are the Key Managerial Personnel.

10. AUDITORS

In the 87th Annual General Meeting held on 2nd August 2017 Haribhakti & Co. LLPChartered Accountants Bagrodia Niket 1st Floor 19C Sarat Bose Road Kolkata 700 020was appointed as statutory auditors of the company for a period of 5 (five) years from theconclusion of 87th Annual General Meeting until the conclusion of 92nd Annual GeneralMeeting. The said auditors continue to be eligible as statutory auditors of the Company.

11. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished underClause 4 in the Corporate Governance Report forming a part of the Annual Report. There hadbeen no instances where the Board has not accepted the recommendation of the AuditCommittee.

12. SECRETARIAL AUDIT AND APPOINTMENT OF THE SECRETARIAL AUDITOR

The Company appointed Mr. Arup Kumar Roy practicing Company Secretary at 201 SaratBose Road Kolkata 700 029 to hold office of Secretarial Auditor and to conductSecretarial Audit. The Secretarial Audit Report for the year under review is appendedhereto as Annexure IV.

13. APPLICABILITY OF SECRETARIAL STANDARDS

The Company has complied with applicable Secretarial Standards of the Institute ofCompany Secretaries of India.

14. PLACING OF ANNUAL RETURN ON THE WEBSITE OF THE COMPANY

The Company has placed its Annual Return on the Website of the Company atwww.gkwltd.com.

15. COST AUDITORS

Pursuant to the Ministry of Corporate Affairs Notification No.GSR 425(E) dated 30thJune 2014 read with Notification No.GSR 725(E) dated 31st July 2018 andNotification No.GSR 1157(E) dated 3rd December 2018 the Companies (CostRecords and Audit) Rules 2014 are not applicable to the Company.

16. FIXED DEPOSITS

The Company has not accepted any deposits from the public and as such there are nooutstanding deposits in terms of the Companies (Acceptance of Deposits) Rules 2014.

17. INFORMATION PERTAINING TO LISTING

The Company's equity shares are listed with National Stock Exchange of India Limited.The Annual Listing Fees have been paid to National Stock Exchange of India Limited for theyear 2019-20.

18. CORPORATE GOVERNANCE

The Company has taken adequate steps to ensure compliance of the mandatory provisionsof Corporate Governance as issued by Securities and Exchange Board of India from time totime. A report on Corporate Governance is appended hereto.

19. VARIOUS POLICIES OF THE COMPANY

19.1 Policy on Related Party Transactions

The Company has implemented Policy on Related Party Transactions.

19.2 Policy on Director's Remuneration and KMP

The Company's Nomination and Remuneration Policy is pertaining to remuneration ofDirectors and also includes criteria for identification appointment tenure evaluationretirement and removal of Directors and KMP in terms of Sub-section (3) of Section 178 ofthe Companies Act 2013.

19.3 Corporate Social Responsibility Policy

Based on the recommendations of the Committee of Corporate Social Responsibility (CSR)the Board has already approved a policy for CSR pursuant to section 135 of the CompaniesAct 2013. However due to carried forward losses as computed under Section 198 of theCompanies Act 2013 the CSR provisions of the said Section are not currently applicableto your Company.

19.4 Vigil Mechanism

The details of vigil mechanism is established by the Company.

The above Policies are available on the Company's web site at www.gkwltd.com.

20. Your Directors state that during the year under review there were no reportedcases falling within the purview of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

ACKNOWLEDGEMENT

The Board of Directors would like to thank the Company's customers employeesshareholders bankers financial advisors suppliers and all others associated with theCompany for their continued support.

For and on behalf of the Board

Kolkata J D Curravala G Srinivasan
20th May 2019 Managing Director Director