Your Directors are pleased to present the 34th Annual Report together with the auditedfinancial statements of your Company for the financial year ended 31st March 2020.
The Company's financial performance for the year ended on 31st March 2020 is summarizedbelow: Rs ( in Crores)
|Particulars ||Standalone ||Consolidated |
| ||Year ended 31st March 2020 ||Year ended 31st March 2019 ||Year ended 31st March 2020 ||Year ended 31st March 2019 |
|Revenue from Operations ||2572 ||2726 ||2808 ||2956 |
|Profit Before Other Income Exceptional Items Depreciation ||376 ||400 ||416 ||449 |
|Interest and taxes || || || || |
|Profit before Tax ||339 ||373 ||312 ||358 |
|Tax Expense ||60 ||127 ||59 ||129 |
|Profit After Tax (before Minority interest) ||279 ||246 ||253 ||229 |
|Minority Interest ||- ||- ||(2) ||2 |
|Profit After Tax (after Minority interest) ||279 ||246 ||255 ||227 |
FINANCIAL HIGHLIGHTS AND STATE OF AFFAIRS OF THE COMPANY
Kajaria shone as one of the bright stars in an otherwise lackluster ecosystem for thetile sector. Our efforts to swim against the tide arrested our decline our revenuecontracted by about 6% while the Profit before Tax was a lower by 8%. Net profit on theother hand upped by 13% owing to the introduction of the new tax regime which reduced theCompany's tax liability.
The State of Affair of the Company is detailed in the Management Discussion andAnalysis' section which forms part of this report.
The onset of Fiscal 2020-21 has been anything but promising. The pandemic has pausedour fast paced world giving us a much needed breather to rethink our part and to draw thecontours of a sustainable business strategy that encompasses all business stakeholders.
The Government's efforts to infuse liquidity into an otherwise parched business worldhas helped in improving sentiments. Having said that we remain hopeful that demand wouldresurface as we near the festive season. Our optimism rests on the reality that almost allour dealers are back in business. Volumes are definitely resurfacing as every Indian hascome to terms with the coronavirus as any other health issue which is here to stay.They are already doing their bit to move the wheels of the economy. Also we are convincedthat the unrelenting efforts the Indian pharmaceutical world will very soon develop asolution that will neutralize the adversities of this virus infusing fresh confidence intothe Indian populous.
We expect to sail through the subdued first half of the current year comfortably. Thisis owing to our strengths namely our reach range recognition and respect which willallow us to capitalise on opportunities as and when they emerge.
Moreover India's medium-term prospects appear promising for she is now beingincreasingly looked upon as a critical keg in the global supply chain universe. Thissuggests that global majors could consider establishing a base in India in the near term.This when it happens would brighten the prospects for real estate sector and the domestictile industry.
The Board of Directors of the Company had declared Interim Dividend of Rs 3/- (i.e.300%) per equity share for the year ended 31st March 2020 at their meeting held on 10thFebruary 2020 and accordingly during the year 2019-20 the Company had paid the InterimDividend for the year ended 31st March 2020 aggregating to Rs 47.69 crores (excludingCorporate Dividend Tax of Rs 9.80 crores). The said Interim Dividend deemed to be FinalDividend for the financial year ended March 31 2020. In view of same your Directors havenot recommended final dividend for the financial year ended on 31st March 2020.
CONSOLIDATED FINANCIAL STATEMENTS
The Company adopted Indian Accounting Standard (Ind-AS) from 1st April 2016 andaccordingly the Consolidated Financial Statements have been prepared in accordance withthe Accounting Standard notified under Section 133 of the Companies Act 2013 and therelevant rules issued thereunder read with the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations') and the other accountingprinciples generally accepted in India. The Consolidated Financial Statements form part ofthe Annual Report.
During the year under review there are no material changes and commitments affectingthe financial position of the company and also no change in the nature of business of thecompany.
HOLDING SUBSIDIARIES ASSOCIATE JOINT VENTURE COMPANIES AND THEIR PERFORMANCE
During the year under review no new company has become or ceased as subsidiary of theCompany. A report on performance and financial position (Form AOC-1) of each of thesubsidiaries as per the Companies Act 2013 is provided as Annexure-1.
The Authorised Share Capital of the Company is Rs 1291000000 (Rupees One HundredTwenty Nine Crores Ten Lakh only) divided into 520000000 (Fifty Two Crores) EquityShares of Re. 1/- each (Rupee One) aggregating to Rs 520000000 (Rupees Fifty Two CroresOnly) and 7710000 (Seventy Seven Lacs Ten Thousand Only) Redeemable Preference Shares ofRs 100/- each (Rupees One Hundred Only) aggregating to Rs 771000000 (Rupees SeventySeven Crores Ten Lakh Only).
During the year 2019-20 the Company's paid up share capital has been increased byissue of 6900 equity shares of Re. 1/- each pursuant to the Kajaria Ceramics EmployeeStock Option Plan 2015. Accordingly the paid up share capital of the Company as on 31stMarch 2020 was 158957200 equity shares of Re. 1 each.
The Company has not issued shares with differential voting rights or sweat equityshares during the year 2019-20. As on 31st March 2020 none of the Directors of theCompany hold any instruments convertible into equity shares of the Company.
EMPLOYEE STOCK OPTION SCHEME
Kajaria Ceramics Employee Stock Option Plan 2015 (The ESOP Plan 2015') wasapproved by the shareholders of the Company on 7th September 2015 for issue and allotmentof options exercisable into not more than 1062000* equity shares of Re. 1 each(Originally the ESOP Plan 2015 was for 531000 equity shares of Rs 2 each) to eligibleemployees of the Company and its subsidiaries. The ESOP Plan 2015 is administered by theNomination and Remuneration Committee of the Board of Directors of the Company. On 20thOctober 2015 the Nomination and Remuneration Committee of the Company had granted458000* equity shares of Re. 1 each (Stock option') to the employees of theCompany and its subsidiaries. 126000 equity shares of Re. 1 each (29000 equity sharesduring the year 2019-20 44000 equity shares during the year 2018-19 13000 equityshares during the year 2017-18 and 40000 equity shares during the year 2016-17) had beenforfeited due to resignation/death of ESOP Option holders. Details regarding the ESOP Plan2015 are given at Note No. 43 to the financial statements.
During the year under review there are no material changes in the ESOP Plan 2015 andthe same is in compliance with the SEBI (Share Based Employee Benefits) Regulations 2014(ESOP Regulations'). The disclosures under Regulations 14 of ESOP Regulations isuploaded on the Company's website viz.: https://www.kajariaceramics.com/pdf/disclosure_pursuantfitofireg_14_of_sebi_sbebfireg_2014_for_fy_2019_20.pdf
* During the year 2016-17 equity shares of the Company had been sub-divided from Rs 2per share to Rs 1 per share.
TRANSFER TO RESERVES
During the year under review there is no transfer of fund to the Company's GeneralReserve Account.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of the provisions of the Companies Act 2013 the Directors confirm that: i)In the preparation of the annual accounts for the year ended on 31st March 2020 theapplicable accounting standards have been followed and no material departures have beenmade from the same;
ii) Appropriate accounting policies have been selected and applied consistently andjudgments and estimates made are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on 31st March 2020 and of the profit of theCompany for the period ended 31st March 2020;
iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) The annual accounts have been prepared on a going concern basis;
v) The Company is following up the proper Internal financial controls and such internalfinancial controls are adequate and are operating effectively; and
vi) The Company has devised proper systems to ensure the Compliance with the provisionsof all the applicable laws and that such systems are adequate and operating effectively.
The Company has complied with the Corporate Governance requirements as stipulated underthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulation'). A separate section on corporate governance along with acertificate from M/s Chandrasekaran Associates Practicing Company Secretary confirmingthe compliance is annexed and forms part of the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis on matters related to the business performance asstipulated in the Listing Regulations is given as a separate section in the Annual Report.
RELATED PARTY TRANSACTIONS
For all related party transactions prior omnibus approvals of the Audit Committee andthe Board of Directors as may be required under the applicable laws are usually obtainedon yearly basis which are of a foreseen and repetitive nature and such approval is in theinterest of the Company. The transactions entered into pursuant to the omnibus approvalsso granted are placed before the Audit Committee by way of a statement giving details ofall related party transactions for its review. All related party transactions aredisclosed in Note No. 40 to the financial statements. Material related party transactionswith subsidiaries which are at arm's length price are disclosed in Form AOC-2 annexed asAnnexure- 2. The Related Party Transactions Policy is uploaded on the Company's websitei.e. https://www. kajariaceramics.com/pdf/RelatedPartyTransactionPolicy.pdf
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
In terms of provisions of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has formulated aCorporate Social Responsibility Policy (CSR Policy') indicating the activities to beundertaken by the Company. The constitution of the Corporate Social ResponsibilityCommittee (CSR Committee') is disclosed in the Corporate Governance Report.
The Corporate Social Responsibility (CSR') Policy may be accessed on theCompany's website i.e. https://www.kajariaceramics.com/ pdf/CSR_Policy.pdf
Your Company strives to make a difference in the lives of people with a special focuson neighbouring and local areas of the Company's manufacturing locations. Your Company hasimplemented various CSR programmes / projects which made positive impacts mainly in theareas of health sanitation conservation of natural resources social relief promotingsports Welfare of Armed Forces Rural Development and education etc. During the yearunder review the CSR programmes initiated by the Company includes taking steps for SwachhBharat preventive health care constructing sanitation facilities in the schools etc.near the manufacturing facilities contributing to the education and social economicdevelopment of under privileged children and for rural area development. These CSRinitiatives are implemented directly and through various trusts / societies / NGOs. Theseprojects are also in accordance with Schedule VII of the Companies Act 2013.
The Annual Report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure-3 forming part of this Report.The Company has incurred CSR expenditure of Rs 5.98 Crores during the financial year2019-20 being about 76.67% in the required expenditure on CSR. The shortfall was due tonon-identification of appropriate projects/programmes as the Company is looking for along-term projects/programmes which will benefit to the society at large in line with theintend of laws for which CSR provisions have been made in the statute.
SCHEME OF AMALGAMATION
During the year 2019-20 the Board of Directors had adopted a Scheme of Arrangementwhich provides for inter-alia the amalgamation of Kajaria Tiles Private Limited(Formerly known as Kajaria Floera Ceramics Private Limited) wholly-owned subsidiary withthe Company with appointed date as 1st April 2019 (Scheme') and the same was filedbefore the Hon'ble National Company Law Tribunal Chandigarh Bench (NCLT') videapplication dated 26th September 2019 for approval under Sections 230-232 read with otherapplicable provisions of the Companies Act 2013 and the Companies (CompromisesArrangements and Amalgamations) Rules 2016. The Company has received the order dated 3rdFebruary 2020 from the National Company Law Tribunal Chandigarh Bench Chandigarh withrespect to the first motion application filed by the Company. The Company has filed theSecond Motion Application with the National Company Law Tribunal Chandigarh BenchChandigarh.
Your Company understands the importance of various risks faced by it and has adopted aRisk Management Policy which establishes various levels of accountability within theCompany. The Company has also constituted a Risk Management Committee which ensures thatthe Company has appropriate and effective risk management systems which carries out riskidentification assessment and ensures that risk mitigation plans are in place. The RiskManagement Committee identifies from time to time various risks to which the Company issubject to and has accordingly aligned the concerned departments to take the necessarymitigating steps. Risk management has been interlinked with the annual planning exercisewhere each function and business carries out fresh risk identification assessment anddraws up treatment plans.
A Risk Management Policy in terms of provisions of Section 134(3) (n) of the CompaniesAct 2013 is in place and is uploaded on the Company's website i.e.https://www.kajariaceramics.com/pdf/ Risk_Management_Policy.pdf
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company believes in a strong internal control framework which is necessary forbusiness efficiency management effectiveness and safeguarding assets. The Company has awell-defined internal control system in place which is designed to provide reasonableassurance related to operation and financial control. The Management of the Company isresponsible for ensuring that Internal Financial Control has been laid down in the Companyand that controls are adequate and operating adequately.
Internal Audit of the Company's operations are carried out by the Internal Auditors andperiodically covers different areas of business. The audit scope mythology to be usedreporting framework are defined well in advance subject to consideration of the AuditCommittee of the Company. The Internal Auditors evaluates the efficacy and adequacy ofinternal control system its compliance with operating systems and policies of the Companyand accounting procedures at all the locations of the Company. Based on the report of theInternal Auditors process owners undertake corrective action in their respective areasand thereby strengthen the controls. Significant audit observations and corrective actionsthereon are placed before the Audit Committee of the Company. The Internal Audit alsocontinuously evaluates the various processes being followed by the Company and suggestsvalue addition to strengthen such processes and make them more effective.
INTERNAL CONTROLS WITH RESPECT TO FINANCIAL STATEMENTS
The Company has an adequate system of internal financial control in place withreference to financial statements. The Company has policies and procedures in place forensuring proper and efficient conduct of its business the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Chetan Kajaria and Mr. Rishi Kajaria who are liable to retire by rotation haveoffered themselves for re-appointments as the Directors at the ensuing Annual GeneralMeeting (AGM'). The Board recommends for their re-appointments in the ensuing AnnualGeneral Meeting.
The second term of Mr. Raj Kumar Bhargava and Mr. Debi Prasad Bagchi as the IndependentDirectors of the Company have been started from 1st August 2019 as approved by theshareholders of the Company by passing the Special Resolutions on 11th March 2019through Postal Ballot:
The second term of Mr. H. Rathnakar Hegde as the Independent Director of the Companyhas been started from 1st April 2019 as approved by the shareholders of the Company atthe 32nd Annual General Meeting held on 27th August 2018.
The second term of Mrs. Sushmita Singha as the Independent Director of the Companystarted from 30th March 2020 as approved by the shareholders of the Company at the 33rdAnnual General Meeting held on 26th August 2019.
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as prescribed under Section 149(6) of the Companies Act 2013read with Regulations 16(1)(b) & 25(8) of the Listing Regulations and in the opinionof the Board of Directors of the Company all Independent Directors of the Company haveintegrity expertise experience as prescribed under the Companies (Appointment andDisqualification of Directors) Rules 2014 read with the Companies (Accounts) Rules 2014(including amendment thereof ).
All Directors of the Company have also given declarations that they are not debarredfrom holding the office of Director by virtue of any SEBI order or any other suchstatutory authority as required under the Circular dated 20th June 2018 issued by BSELimited and National Stock Exchange of India Limited.
Further there is no change in the composition of Key Managerial Personnel of theCompany.
The Board has on recommendation of the Nomination and Remuneration Committee and inline with the Nomination and Remuneration Policy of the Company carried out an annualperformance evaluation of the Board as a whole its Committees and all Directors includingthe Chairman.
The manner in which the annual performance evaluation has been carried out has beenexplained in the Corporate Governance Report.
NOMINATION AND REMUNERATION POLICY
On the recommendation of the Nomination and Remuneration Committee the Board hasframed a policy for selection and appointment of Directors Senior Management includingKey Managerial Personnel and other Senior Management and their remuneration. TheNomination and Remuneration Policy includes the criteria for determining qualificationpositive attributes independence etc. is placed on the Company's website i.e.https://www.kajariaceramics.com/pdf/Nomination_ Remuneration_Policy.pdf
Details of remuneration under Section 197 of the Companies Act 2013 and read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is stated in Annexure- 4 which forms part of this report.
M/s Walker Chandiok & Co LLP Chartered Accountants (Firm Registration Number001076N/N500013) the Statutory Auditors of the Company has given their report on thefinancial statements of the Company for the financial year ended 31st March 2020 whichforms part of the Annual Report. There is no qualification reservation adverse remarkcomments observations or disclaimer given by the Statutory Auditors in their report.There were no frauds reported by the Statutory Auditors under Section 143(12) of theCompanies Act 2013.
M/s Walker Chandiok & Co LLP Chartered Accountants had been appointed as theStatutory Auditors of the Company at the 31st Annual General Meeting (AGM') of theCompany held on 10th August 2017 for a period of five years effective from theconclusion of the 31st AGM of the Company upto the conclusion of the 36th AGM of theCompany subject to ratification by the shareholders of the Company at each AGM of theCompany.
The shareholders of the Company had at the 32nd AGM of the Company held on 27thAugust 2018 approved that the annual ratification of appointment of M/s Walker Chandiok& Co LLP Chartered Accountants for their remaining term shall be done if sorequired under the Companies Act 2013. The provisions of the Companies Act 2013 nowdoes not require the said annual ratification of the Statutory Auditors of the Company.
M/s Walker Chandiok & Co LLP Chartered Accountants are eligible to continue as theStatutory Auditors of the Company for the remaining term in accordance with the provisionsof the Companies Act 2013 read with rules made thereunder and applicable laws.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 M/sChandrasekaran Associates Company Secretaries Delhi were appointed as the SecretarialAuditors to undertake the Secretarial Audit of the Company for the year ended 31st March2020. The Report of the Secretarial Audit is annexed herewith as Annexure 5.
There are no qualifications reservations adverse remarks comments observations ordisclaimer made by the Secretarial Auditors in their report. There were no frauds reportedby the Secretarial Auditors under Section 143(12) of the Companies Act 2013.
As on 31st March 2020 the Company has one material unlisted subsidiary - JaxxVitrified Private Limited (Jaxx') as per the provisions of Regulation 16(1)(c) ofthe Listing Regulations. Pursuant to the provisions of Regulation 24A of the ListingRegulations Secretarial Audit Report of Jaxx for the year ended 31st March 2020 issuedby Ms. Dhara Patel Company Secretary Ahmedabad forms part of the Directors Report asAnnexure 5A.
Disclosures under the Companies Act 2013 and rules made thereunder: EXTRACT OF ANNUALRETURN
The extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure- 6.
COMPLIANCE OF THE SECRETARIAL STANDARDS
During the year under review the Company has complied with the applicable provisionsof the Secretarial Standard on meetings of the Board of Directors (SS-1') and theSecretarial Standard on General Meetings (SS-2') issued by the Institute of CompanySecretaries of India.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in the Notes Nos. 67 and 38 to theFinancial Statements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013 areprovided in Annexure - 7 to this report.
MEETINGS OF BOARD
The Board of Directors of the Company met 5 (five) times during the financial year2019-20 on 10th May 2019 23rd July 2019 26th August 2019 23rd October 2019 and 10thFebruary 2020. Details of the meetings of the Board of Directors held during thefinancial year 2019-20 and attendance thereof is disclosed in the Corporate GovernanceReport.
The Composition of Audit Committee is disclosed in the Corporate Governance Report. Allthe recommendations made by the Audit Committee were accepted by the Board.
The Company has established a Vigil Mechanism for the Directors and Employees of theCompany by adopting the Whistle Blower Policy to report about the genuine concernsunethical behaviour fraud or violation of Company's Code of Conduct and leakage/suspected leakage of Unpublished Price Sensitive Information with respect to the Company.The Whistle Blower Policy may be accessed on the website of the Company i.e. https://www.kajariaceramics.com/pdf/whistel_blowing_policy.pdf
MAINTENANCE OF COST RECORDS
The Company is not required to maintain of cost records as per sub-section (1) ofSection 148 of the Companies Act 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE _PREVENTION PROHIBITION & REDRESSAL_ ACT2013
The Company has in place a Policy on Prevention of Sexual Harassment at the Workplacein line with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013. This Policy may be accessed on the Company'swebsite i.e. https://www.kajariaceramics.com/pdf/prevention_of_sexual_harassmentfiat_workplace.pdf
Internal Complaints Committee has been set up to redress complaints received regardingsexual harassment. All employees (Permanent Contractual Temporary and Trainees) arecovered under this Policy. The Company has not received any sexual harassment complaintsduring the year 2019-20.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is attached as Annexure- 8 to the Directors Report.
The Company did not invite/accept any deposit within the meaning of Section 73 of theCompanies Act 2013 and the rules made thereunder.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and the Company's operations in future.
Statements in this Director's Report' & Management Discussion andAnalysis' describing the Company's objectives projections estimates expectations orpredictions may be forward looking statements within the meaning of applicable securitieslaws and regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make difference to the Company's operationsincluding raw material/ fuel availability and its prices cyclical demand and pricing inthe Company's principle markets changes in the Government regulations tax regimeseconomic developments within India and the countries in which the Company conductsbusiness and other ancillary factors.
APPRECIATION AND ACKNOWLEDGEMENT
The Directors take this opportunity to express their deep sense of gratitude to theBanks Central and State Governments and their Departments and the Local Authorities fortheir continued guidance and support.
Your Directors would also like to record its appreciation for the support andcooperation your Company has been receiving from its suppliers dealers business partnersand others associated with the Company.
Your Directors place on record their sincere appreciation to the employees at alllevels for their hard work dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled the Company to remain as industry leader.
And to you our shareholders we are deeply grateful for the confidence and faith thatyou have always reposed in us.
| ||For and on behalf of the Board |
| ||Ashok Kajaria |
| ||Chairman & Managing Director |
| ||DIN: 00273877 |
|Place: New Delhi || |
|Date: August 7 2020 || |