Kallam Textiles Ltd.
|BSE: 530201||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE629F01025|
|BSE 09:18 | 23 Sep||17.00||
|NSE 05:30 | 01 Jan||Kallam Textiles Ltd|
Kallam Textiles Ltd. (KALLAMTEXTILES) - Director Report
Company director report
TO THE MEMBERS OF THE KALLAM TEXTILES LTD
(Formerly known as Kallam Spinning Mills Ltd.)
Your directors are pleased to present the 28th Annual Reportof the Company together with the Audited Financial Statements for the financial year ended31st March 2020.
1. FINANCIAL RESULTS :
The standalone financial results for the year ended 31st March 2020 aresummarized below :
Transfers & appropriations from the profit are as detailed below
2. FINANCIAL PERFORMANCE STATE OF COMPANY'S AFFAIRS AND FUTUREOUTLOOK
For the period under review (FY 2019-20) the turnover of the companywas Rs 293.33 Crores as against Rs 312.14 Crores in the previous Financial Year .Theprofit after tax was -12.08 Crore as against 6.65 Crores in the previous financial year
The demand for cotton yam remain sluggish throughout the year due totrade war between US & China on the other hand the International market price of yarnproduct reduced by 10 to 20 rupees per KG while the input cost remain the same as againstFY 2018-19 which impacted our margin and sales
More details are available in Management Discussion & analysisreport placed at Annexure -I to this report
MANAGEMENT DISCUSSION AND ANALYSIS:
Management Discussion & Analysis Report in line with Regulation34(3) read with Schedule-V of the SEB! (LODR) Regulations 2015 is placed at Annexure-Ito this report
3. AMOUNTS TRANSFERRED TO RESERVES
There is no transfer of amount to the reserves for the period underreview
4. EXTRACT OF THE ANNUAL RETURN:
Extract of Annual Return of the Company pursuant to Section 92(3) ofthe Companies Act 2013 read with Companies (Management and Administration) Rules 2014in the prescribed Form MGT-9 is annexed as Annexure II to this Report.
5. NUMBER OF MEETINGS HELD OF THE BOARD:
The Board of Directors met 4 (Four) times during the year 2019-20. Thegap between two consecutive meetings was not exceeded the period of 120 days as prescribedunder the Act.
The details of the Board and Committee Meetings and the attendance ofthe Directors are provided in the Report on Corporate Governance
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL
(i) Directors seeking re-appointment under Retirement by rotation:
Mr. P Venkateswara Reddy (DIN- 00018677) Managing Director who isliable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152of the Companies Act 2013 read with the Companies (Appointment and Qualification ofDirectors) Rules 2014 and the Articles of Association of your Company and being eligiblehas offered himself for reappointment. Appropriate resolution for his re-appointment isbeing placed for your approval at the ensuing AGM.
(ii) Appointment of Directors/ KMP
Mr Suryanarayan Murty was appointed as independent director w.e.f21-09-2019
(iii) Resignation of Directors/KMP
Mr1 Ajeya Kallam the Independent Director of the Company has resignedfrom the Board w.e.f 28-08- 2019
Mr S Pulla Rao.the Independent Director of the Company has Retired fromthe Board w.e.f 26-09- 2019
(vi) Statement on Declaration by the Independent Directors of theCompany.
All the Independent Directors of the Company have given declarationsunder Section 149(7) of the Companies Act 2013 that they meet the criteria of ndependenceas laid down under Section 149(6) of the Companies Act 2013 and Regulation 25 ofSEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The terms andconditions of appointment of the Independent Directors are posted on the website of theCompany www.ksml.in.
(vii) Key Managerial Personnel (KMP):
The following managerial personnel are Key Managerial Personnel (KMP)
I Mr P Venkateswara Reddy as Managing Director
> Mr. GV Krishna Reddy(Joint Managing Director ) as Chief ExecutiveOfficer (CEO)
I Mr. MV Subba Reddy (Whole Time Director) as as Chief FinancialOfficer (CFO); and
> Mr. Nandan Bisoi as Company Secretary w.e.f 29.09.2018
(viii) Performance Evaluation of the Board its Committees and Separatemeeting of Independent Directors:
In compliance with the provisions of the Companies Act 2013 andRegulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the performance evaluation of the Board was carried out during the year underreview. More details are available in the Corporate Governance Report which forms part ofthis report
(ix) Company's policy on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters provided under sub-section (3) of section178;
Your Company has formulated the Nomination and Remuneration Committeein accordance with Section 178 of the Companies Act 2013 and Regulation 19 of the LODRRegulations 2015. The salient aspects covered in the Nomination and Remuneration Policyhas been outlined in the Corporate Governance Report
(x) Managerial Remuneration
The information required under Section 197 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of Directors/ employees of your Company is set out in Annexure -III to thisreport.
7. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND :
Pursuant to the provisions of section 124 of the companies Act 2013the declared dividends which remained un paid or unclaimed for a period of seven yearshave been transferred by the Company to the Investor Education and Protection Fund (IEPF)established by the Central Government.
The details of dividends paid by the Company and respective due datesfor transfer of unclaimed dividend to lEPF.is available in Corporate Governance reportwhich forms part of this report.
Disclosure with respect to Demat Suspense Account / unclaimedsuspense account:
Your Company does not have any Unclaimed Shares
8. COMMITTEES OF THE BOARD:
The Board of Directors has the following Committees:
A. Audit Committee
The Company has an Audit Committee in accordance with the provisions ofsection 177 of the Companies Act 2013 and in accordance with Regulation 18 of SEBI (LODR)Regulations 2015 and as per other applicable laws. All members of the Committee arefinancially literate.
B. Nomination and Remuneration Committee
C. Stakeholders' Relationship Committee
D. Corporate Social Responsibility Committee.
E. Share Transfer Committee
The details of the Committees along with their composition number ofmeetings and attendance at the meetings are provided in the Corporate Governance Report.
9. RISK MANAGEMENT :
The Company has implemented an integrated risk management frameworkthrough which the Board and Audit Committee periodically reviews and assesses significantrisks on a regular basis to ensure that there is a robust system of internal controls inplace. Your Company believes that managing risks helps in maximizing returns. TheCompany's approach to addressing business risks is comprehensive and includesperiodic review of such risks and a framework for mitigating controls and reportingmechanism of such risks. More details on the same are given in the Report on CorporateGovernance.
10. DETAILS OF ADEQUACY INTERNAL FINANCIAL CONTROLS RELATED TOFINANCIAL STATEMENTS
Your Company has put in place adequate internal financial controls withreference to the financial statements and the Company has effective risk- mitigationsystem keeping in view the size and nature of the business. Your company has adoptedaccounting policies which are in line with the Accounting Standards prescribed in theCompanies (Accounting Standards) Rules 2006 and other applicable provisions if any ofthe Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014. Theseare in accordance with generally accepted accounting principles in India. Changes inpolicies if any are timely approved by the Audit Committee in consultation with theStatutory Auditors
The main objective of internal control system and process is to testand review controls appraisal of risks in business processes and benchmarking controlswith best practices in the industry. The Internal Audit function is entrusted to M/sMastanaiah & Co. Chartered Accountants Guntur who submit their reports to the JointManaging Director & CEO and has direct access to the Audit Committee and theyparticipated in the meetings of the Audit Committee of the Board of Directors of yourCompany.
The Audit Committee of the Board of Directors actively reviews theadequacy and effectiveness of the internal control systems and suggests improvements tostrengthen the same. The Audit Committee of the Board of Directors and Statutory Auditorsare periodically apprised of the internal audit findings and corrective actions taken. TheInternal Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence of the Internal Audit functions.
11. VIGIL MECHANISM/WHISTLE BLOWER POLICY:
In accordance with the provisions of Section 177(9) of the CompaniesAct 2013 and the Rules made there under and also SEBI (LODR) Regulations 2015 yourCompany has in place a vigil mechanism termed as Whistle Blower Policy for directors andemployees to report concerns about unethical behavior actual or suspected fraud orviolation of the Company's Code of Conduct or Ethics Policy which also provides foradequate safeguards against victimization of director(s)/employee(s) who avail themechanism and also provide for direct access to the Corporate Governance Officer/Chairmanof the Audit Committee.
The Whistle Blower Policy is also available on your Company'sweblink (http://ksml.in/wp-content/ uploads/2016/10/ksml-whistle-blower-policy.pdf)
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY
The Company has duly complied with the provision of Section 186 of theCompanies Act 2013 and Rules made there under. Details on loans or investment areprovided in financial statements section of this Annual Report. The Company has not givenany guarantees to any body corporate on behalf of a third party.
13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review no transaction of material nature hasbeen entered into by the Company with its Promoters the Directors or or relatives etc.that may have a potential conflict of interests with the Company. All related partytransactions are placed before the Audit Committee and also for approval of Board onquarterly basis. Prior omnibus approval of the Audit Committee is obtained on a yearlybasis for the transactions which are of repetitive nature and entered in the ordinarycourse of business and are on arm's length basis.
A Statement giving details of the transactions entered into with therelated parties pursuant to the omnibus approval so granted is placed before the AuditCommittee and the Board of Directors for their approval/ratification on a quarterly basis.
The Register of Contracts containing transactions in which directorsare interested if any is placed before the Audit Committee/Board regularly. The Board ofDirectors of the Company on the recommendation of the Audit Committee adopted a policyon Related Party Transactions to regulate the transactions between the Company and itsRelated Parties in compliance with the applicable provisions of the Companies Act 2013and the SEBI (LODR) Regulations 2015.
The Policy as approved by the Board is uploaded on the Company'sweblink at http://ksml.in/wp-content/ uploads/2016/10/ksml-related-party-transaction-policy.pdf
The details of the related party transactions as per AccountingStandard- 18 are set out in Notes to Accounts (Note No: - 35) of the Financial Statementsforming part of this report
The details of the Related Party Transactions in prescribed Form AOC-2pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 are annexed as Annexure -IV to this Report.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The information on conservation of energy technology absorption andforeign exchange earnings and outgo as stipulated under Section 134 of the Companies Act2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 is set out herewith as Annexure-V to this report.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the provisions of Section 135 of the Companies Act 2013 and theRules made there under your Company has put in place a Corporate Social ResponsibilityCommittee which comprises of Mr. G.V.Krishna Reddy as Chairman and Mr. Varanasi RamagopalMr M.V.Subba Reddy as members. The Corporate Social Responsibility (CSR) Policyenumerating the CSR activities to be undertaken by the Company in accordance withSchedule VII to the Companies Act 2013 as adopted by the Board is available on thewebsite of the Company weblink:http://ksml.in/wp-content/uploads/2016/10/ksml-csr-policy.pdf
The Annual Report under CSR Activities is annexed to this report as Annexure-VI to this Report.
The details relating to the meetings convened etc. are furnished inthe Report on Corporate Governance.
(i) Statutory Auditors And Their' Report:
M/s. Chevuturi Associates Chartered Accountants (Firm Reg No :000632S) were appointed as the statutory auditors at the Annual General Meeting held onSeptember 29 2017 for a term of five (5) years from the conclusion of the 25th annualgeneral meeting til the conclusion of 30th annual general meeting
(ii) Cost Auditor:
As per the requirement of Central Government and pursuant to Section148 of the Companies Act 2013 read with the Companies (Cost Records and Audit) Rules2014 as amended from time to time your Company has been carrying out audit of costrecords relating to Textile and Power Divisions every year.
The Board of Directors of your Company on the recommendations made bythe Audit Committee at its meeting held on 14th August 2019 had appointed M/s Sairam& Associates Cost Accountant (Membership No. 41948) as the Cost Auditor of yourCompany to carry out audit of cost records relating to Textile and Power Divisions asrequired under the Companies Act 2013 for the financial year 2019-20.
For the financial Year 2020-21 on the recommendation
of the Audit Committee The Board has approved the appointment of M/s.SAIRAM & ASSOCIATES Cost Accountants (Membership No-41948) as Cost Auditor of theCompany to carry out audit of cost records relating to Textile and Power Divisions Asrequired under the Companies Act 2013 at a remuneration of Rs 20000/- plus applicabletaxes and out of pocket expenses if any
Your Company has received consent from M/s. SAIRAM & ASSOCIATESCost Accountant to act as the Cost Auditor to carry out the audit of the cost records forthe financial year 2020-21.a resolution seeking member's approval for theremuneration payable to the Cost Auditor forms part of the Notice convening the AnnualGeneral Meeting for their ratification.
MAINTENANCE OF COST RECORDS:
Cost Audit is applicable to the Company. The Company is required tomaintain cost records as specified by the Central Government under subsection (1) ofSection 148 of the Act and the rules framed there under and accordingly the Company hasmade and maintained such cost accounts and records.
EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATIONRESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE COST AUDITOR IN HIS RE-PORT:
The Cost Auditor's report for the year ended 31.03.2020 does notcontain any qualification reservation or adverse remark or disclaimer in his report
(iii) Secretarial Auditors:
In terms of Section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardof Directors had appointed M/s. K. Srinivasa Rao & Co practicing company secretariesto carry out secretarial audit for FY 2019-20.
The Board of Directors of your Company at its meeting held on31.07.2020 has appointed M/s. K. Srinivasa Rao & Co a firm of Company Secretaries inPractice Guntur (C.P. No: 5178) as Secretarial Auditors to carry out an audit of thesecretarial records for the financial year 2020-21.Your Company has received consent fromM/s.K. Srinivasa Rao & Co to act as the auditor for conducting audit of theSecretarial records for the financial year ending 31st March 2021
The Secretarial Audit Report furnished by M/s. K. Srinivasa Rao &Co for the financial year ended March 31 2020 is annexed to this report as "Annexure-VN".
BOARD'S REPLY ON QUALIFICATIONS OF SECRETARIAL AUDITOR
During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditors have not reported any instances of frauds committed in the Company byits Officers or Employees to the Audit Committee under Section 143(12) of the CompaniesAct 2013.
17. MATERIAL EVENT RECORDED SUBSEQUENT TO THE DATE OF FINANCIALSTATEMENTS
During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditors have not reported any instances of frauds committed by the Company orby its Officers or Employees to the Audit Committee under Section 143(12) of theCompanies Act 2013.
18. CHANGES IN SHARE CAPITAL
During the current year there has been no change occurred in thecapital Structure of the company.
19. DISCLOSURE UNDER SECTION 62 OF THE COMPANIES ACT 2013 AND RULE 14OF SECURITIES EXCHANGE BOARD OF INDIA (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS2014
lin order to create a sense of ownership and participation amongst theemployees of spinning weaving & dyeing divisions to reward long term employee loyaltytowards the Company to motivate the employees with incentives inspire loyalty and rewardopportunities to provide means to enable the Company to attract and retain appropriatehuman talent in the employment of the Company and to achieve sustained growth of theCompany the Board of Directors in its meeting held on 28th May 2018 had Approved KallamTextiles Limited Employee Stock Option Plan- l and ll 2018. The shareholders of theCompany at their Annual General Meeting held on 22nd September 2018 approved the saidplan .as per the approved plan an employees who comply with certain eligibility criteriawould be granted stock options to subscribe a specified number of equity shares of theCompany offered to them at a price to be determined. The proposed plan would be subject toand in conformity with the SEBl Guidelines.
During the year under review there the company has not issued anygrants under the scheme and there have been no changes in the scheme as approved by theShareholders
A description of each ESOP that existed at any time during the yearincluding the general terms and conditions of each ESOP
20. CORPORATE GOVERNANCE:
A report on Corporate Governance in line with Regulation 34 read withSchedule-V of SEBI (LODR) Regulations 2015 is appended and annexed as a separate sectionto this report.
The Statutory Auditors of the Company have issued a certificate onCorporate Governance which is appended to the Corporate Governance Report.
The company has complied with all applicable secretarial standardapplicable to the company for the period under review.
21. DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES
Our Company does not have any material Subsidiary Company in terms ofRegulation 16(1 )(c) of SEBI (LODR) Regulations 2015. Accordingly the financialstatements of our Company are not required to be consolidated in accordance with theapplicable Indian Accounting Standards
Company has neither any Associates nor any Joint Ventures as on March312020
22. PUBLIC DEPOSITS:
During the year under review your Company has not accepted any depositwithin the meaning of Sections 73 and 74 of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).
During the year 2019-20 there is no change in outstanding balances ofunsecured loans from Directors as compared to previous financial year 2018-19. All theDirectors were at the time of giving the money furnished their declaration in writing tothe effect that the amount in not being given out of finds acquired by them by borrowingor accepting loans or deposits from others.
23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There is no material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
24. ENVIRONMENT AND SAFETY:
The Company is conscious of the importance of environmentally clean andsafe operations. The Company's policy requires conduct of operations in such amanner so as to ensure the compliances of environmental regulations and preservation ofnatural resources for future Generations.
25. OBLIGATION OF YOUR COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN ATWORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
To prevent sexual harassment of women at work place The centralgovernment notified "The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal ) Act 2013". Under the said Act every Company is requiredto set up an Internal Complaints Committee to look into complaints relating to sexualharassment at work place of any women employee
Your Director's hereby confirm that they have adopted a policy forprevention of Sexual Harassment of Women at Workplace and have constituted InternalComplaints Committees (ICC) during the year 2019-20 there were no com plaints receivedin this regards
26. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(3)(c) of the Companies Act 2013 (including anystatutory modification(s) or reenactments) for the time being in force) your Directorshereby confirm that:
(a) in the preparation of the annual accounts for the financial yearended 31st March 2020 the applicable Accounting Standards and Schedule III of theCompanies Act 2013 (including any statutory modification(s) or re-enactment(s) for thetime being in force) have been followed and there are no material departures from thesame;
(b) for the financial year ended 31st March 2020 the Directors haveselected 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 your Company as at 31st March 2020 and of the profit and loss of theCompany for the financial year ended 31st March 2020;
(c) proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013(including any statutory modification(s) or re-enactment(s) for the time being in force)for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;
(d) Financial statements have been prepared on a "goingconcern" basis;
(e) proper internal financial controls laid down by the Directors werefollowed by your Company and that such internal financial controls are adequate andoperating effectively; and
(f) proper systems to ensure compliance with the provisions of allapplicable laws were in place and that such systems were adequate and operatingeffectively.
27. APPRECIATIONS AND ACKNOWLEDGEMENTS:
Your Directors sincerely convey their appreciation for the unbelievablecommitment support dedication hard work enthusiasm and significant contribution madeby employees in ensuring sustained growth of the Company