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Kalyani Forge Ltd.

BSE: 513509 Sector: Engineering
NSE: KALYANIFRG ISIN Code: INE314G01014
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VOLUME 80
52-Week high 239.90
52-Week low 124.10
P/E 104.55
Mkt Cap.(Rs cr) 75
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OPEN 203.00
CLOSE 207.00
VOLUME 80
52-Week high 239.90
52-Week low 124.10
P/E 104.55
Mkt Cap.(Rs cr) 75
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kalyani Forge Ltd. (KALYANIFRG) - Director Report

Company director report

The Board of Directors of your Company is pleased to present the 42nd Annual Reporttogether with the Audited Statement of Accounts of Kalyani Forge Limited ("theCompany") for the year ended March 31 2021.

Financial Performance:

The summarized standalone results of your Company are given below.

Rs in lakhs

Particulars Financial Year ended 31st March 2021 Standalone
31-03-2021 31-03-2020
Total income from operations (net) 18078.36 20094.85
Profit/(loss) before Exceptional Items and Tax (207.24) (812.92)
Exceptional Items and Tax Expenses (31.21) (120.40)
Net Profit/ (Loss) After Tax (176.03) (692.52)
Balance of Profit from Previous Year 8194.36 9138.70
Total Comprehensive income for the year 19.43 (76.62)
IND AS adjustments – reversal of proposed dividend and tax thereon (36.38) (175.15)
Balance at the end of reporting period 8001.38 8194.36

Summary of Operations:

During the year the net revenue from operations of your Company for FY 2020-21decreased by 10.03% to Rs. 18078.36 Lakhs against Rs. 20094.85 Lakhs for the FY 2019-20your Company's Profit after tax stood at Rs. (176.03) Lakhs as against profit of Rs.(692.52) Lakhs last Year.

Change in the nature of business if any:

There is no change in the nature of the business of the Company during the year.

COVID 19 :

It has been a difficult year for everybody. The Country has encountered the second waveof GLOBAL PANDEMIC COVID-19. As a Company we are in far better place as compared to theFinancial Year 2020. The modern science and the pharmaceutical industry have delivered atunmatched speed; humanity is not as helpless as when the pandemic first struck. Yourbusiness performance in the year gone by is also a reflection of that innate resilienceand adaptability. Considering the continuous impact of GLOBAL PANDEMIC COVID-19 yourCompany coped up with the situation and performed in the second half of the Financial Year2021.

Reserves:

The Company has not transferred any amount to General Reserves for the year underreview.

Dividend:

Your Directors are pleased to recommend for approval of members a dividend of Re.01.50/- per equity share (15%) at the face value of Rs.10/- per share for the Year ended31st March 2021.

Capital/ Finance:

During the year the Company has not issued/allotted equity or preference shares. As on31st March 2021 the issued subscribed and paid up share capital of your Company is atRs.36380000/- comprising 3638000 equity shares of Rs.10/- each.

Fixed Deposits:

Your Company has not accepted any deposits from public Therefore details relating todeposits covered under Chapter V of the Companies Act 2013 are not applicable to theCompany.

Material Events Occurring after Balance Sheet Date

There were no material changes and commitments affecting the financial position of yourCompany between the end of the Financial Year and the date of this report.

Extract of Annual Return:

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act the Annual in FormMGT -7 as on March 31 2021 is available on the Company's websitehttps://www.kalyaniforge.co.in/investors/annual-reports

Transfer of Amounts to Investor Education and Protection Fund:

Pursuant to the provisions of the Investor Education Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 thedeclared dividends which are unpaid or unclaimed for a period of seven (7) years and theshares thereof shall be transferred by the Company to the Investor Education andProtection Fund (IEPF) established by the Central Government.

Accordingly during the year the Company has transferred the unpaid or unclaimeddividend amount for a period of seven (7) years from the date they became due for payment.

Details of Board meetings:

During the year five meetings of Board of Directors were held details of which aregiven below:

Date of the Meeting No. of Directors attended the Meeting
July 30 2020 3
August 17 2020 6
September 15 2020 6
November 10 2020 6
February 11 2021 6

Committees of Board:

The composition of the Committees of the Board of Directors has been detailed in theCorporate Governance annexure to this report.

Declaration by Independent directors:

Mr. Pradip P. Nadkarni Mr. Abhijit Sen & Mr. Adit Rathi are Independent Directorson the Board of your Company. In the opinion of the Board and as confirmed by theseDirectors they fulfil the conditions specified in section 149 of the Companies Act 2013and the Rules made thereunder about their status as Independent Directors of the Company.

Directors and Key Managerial Personnel:

Mr. V G. Kalyani (DIN : 02268846) Non- Executive Directors retires by rotation at theforthcoming Annual iraj General Meeting and being eligible offers herself forre-appointment.

Pursuant to the provisions of section 149 of the Companies Act 2013 (‘theAct") the independent directors have submitted declarations that each of them meetthe criteria of independence as provided in section 149(6) of the act along with rulesframed thereunder and regulation 16(1)(b) of the SEBI Listing Regulations.

There has no change in the circumstances affecting their status as Independentdirectors of the Company. During the year under review the Board Appointed Mr. RohanDeshpande as Company Secretary and Compliance Officer w.e.f August 4 2020.

Mr. A vinash S. Khare retired from the Company as Chief Financial Officer of theCompany w.e.f. November 10 2020. The Board places on record its appreciation for hisinvaluable contribution and guidance during his tenure with the Company.

The Board at its meeting held on November 10 2020 appointed Mr. Amol G Khutwad as theChief Financial Officer Designate of the Company w.e.f. November 11 2020.

Tenure of First term of 5 Years of Mr. Abhijit Sen (DIN: 00002593) IndependentDirector is completed on February 1 2021 and he has offered himself for reappointmentfurther it was recommended by the Board of Directors of the Company through circularresolution passed as on February 2 2021 to re-appoint him for the further period of 05years subject to the approval of Shareholders of the Company in the ensuing Annual

General Meeting.

The Company appointed Mr. Adit Rathi as an Additional Director (Non- ExecutiveIndependent Director) by the Board of Directors of the Company through Circular Resolutionpassed as on April 14 2021 for further period of 5 years subject to approval ofShareholders of the Company in ensuing Annual General Meeting. Further Mr. VishwasChitrao Independent Director has completed his tenure as an Independent Director ofKalyani Forge Limited on the close of business hours on 15 April 2021 where after heceases to be the Independent Director of the Company. The Board places on records itsappreciation for his invaluable contribution and guidance during his tenure with theCompany.

Formal Annual Evaluation:

SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 mandatesthat the Board shall monitor and review the Board evaluation framework. Also theCompanies Act 2013 states that a formal annual evaluation needs to be made by the Boardof its own performance and that of its Committees and individual Directors. In additionSchedule IV of the Companies Act 2013 states that the performance evaluation ofIndependent Directors shall be done by the entire Board of Directors excluding theDirector being evaluated. In pursuance of above the Company has devised a Policy forperformance evaluation of Independent Directors Board Committees and other individualDirectors which includes criteria for performance evaluation of the Non- ExecutiveDirectors and Executive Director.

The Company commenced with the review of the best practices prevalent in the industryand evaluation of Board members. On the basis of review and the Policy for performanceevaluation of Independent Directors Board Committees and other individual Directors aprocess of evaluation was followed by the Board for its own performance and that of itsCommittees and individual Directors.

At a Separate meeting of Independent Directors held on March 30 2021 performanceevaluation of Chairperson Non- Independent Directors and the Board of Directors wascarried out by Independent Directors which has also reviewed the adequacy of the flow ofinformation between the Company Management and Board.

The detailed programme for familiarisation of Independent Directors with the Companytheir roles rights and responsibilities in the Company nature of business AOP businessmodel of the Company etc. was undertaken by the Company.

A formal evaluation of the performance of the Board it's Committees the Chairman andthe individual Directors was carried out. Led by the Nomination & RemunerationCommittee the evaluation was carried out using individual questionnaires. As part of theevaluation process the performance of Non-Independent Directors the Chairman and theBoard was conducted by the Independent Directors. The performance evaluation of therespective Committees and that of Independent and Non-Independent Directors was done bythe Board excluding the Director being evaluated.

Company's policy on appointment and remuneration:

The policies relating to selection of Directors and determining Directors independenceand Remuneration Policy for Directors Key Managerial Personnel and other employees isattached herewith and marked as Annexure 1 you may also find policy on appointmentand remuneration on companies website: https://www.kalyaniforge.co.in/investors/corporate-information/

Highlights on Company's policy on Sexual Harassment:

As per "SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013" the highlights of the policy adopted by the company isattached herewith marked as.

Annexure 2 Holding Subsidiaries Associates or Joint Venture Companies:

During the period under review the Company does not have any holding SubsidiaryAssociates or Joint Venture company.

Statutory Auditors their Report and Notes to Financial Statements:

The Statutory Auditors M/s K.S. Aiyar & Co. Chartered Accountants Mumbai havingFirm Registration No 100186W holds office until the conclusion of the ensuing AnnualGeneral Meeting and is eligible for reappointment.

Your Company has received confirmation from the Auditors to the effect that theirre-appointment if made will be in accordance with the limits specified under theCompanies Act 2013 and the firm satisfies the criteria specified in Section 141 of theCompanies Act 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014. YBoard is of the opinion that continuation of M/s K.S. Aiyar & Co. CharteredAccountants as Statutory our Auditors for their consecutive 2nd term of 5 years for FY2021-22 to FY 2025-26 will be in the best interests of the Company and therefore Membersare requested to consider their re-appointment as Statutory Auditors of the Company fromthe conclusion of ensuing Annual General Meeting till conclusion of the Annual GeneralMeeting held in respect of FY 2025-26 at remuneration be decided by the Board.

Internal financial controls:

The internal financial controls with reference to the Financial Statements arecommensurate with the size and nature of business of the Company.

Cost Audit:

As per the Cost Audit Orders Cost Audit is applicable to the Company's forgingbusiness for the FY 2020-21.

In view of the same and in terms of the provisions of Section 148 and all otherapplicable provisions of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 M/s. R.C.K & Co Cost Accountants (Firm Registration No.002587) Mr. Rahul Chincholkar Patner (F-27063) have been appointed as Cost Auditors toconduct the audit of cost records of your company for the financial year 2021-22. Theremuneration proposed to be paid to them requires ratification of the shareholders of theCompany.

In view of this your ratification for payment of remuneration to Cost Auditors isbeing sought at the ensuing Annual General Meeting.

In accordance with the provisions of Section 148(1) of the Act read with the Companies(Cost Records and Audit) Rules 2014 the Company has maintained cost accounts andrecords.

Secretarial Audit:

In terms of Section 204 of the Companies Act 2013 and Rules made thereunder Mr. NitinPrabhune (Membership No. FCS 6707) Company Secretary in practice has been appointed asSecretarial Auditor of the  Company. The report of the Secretarial Auditors isenclosed as Annexure 3 to this report. The Directors have noted the observationsgiven in Secretarial Audit Report and necessary actions have been taken by the Board.

Secretarial Standards

The company has complied with the revised Secretarial Standards on meetings of theBoard of directors (SS-1) and Secretarial Standards on general meetings (SS-2).

Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the regulators and courts whichwould impact the going concern status of the company

Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial statements. (ReferNote 3 of the Financial Statements)

Material Changes and Commitments

There have been no material changes and commitments affecting the financial positionof the company which have occurred between the end of the financial year and the date ofthis report.

Human Resources:

Your Company treats its "human resources" as one of its most importantassets.

Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company's thrust is on the promotion of talent internally through jobrotation and job enlargement.

Related Party Transactions:

All contracts/ arrangement/ transactions entered by the Company during the FinancialYear with related party were in the ordinary course of business and on arm's length basis.Such transaction forms part of the notes to the financial statements provided in theAnnual Report.

During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions which is available onthe Company's Website: https://www.kalyaniforge.co.in/investors/ corporate-information/

The summary of related party transaction in Form AOC-2 is enclosed Annexure 4.

Risk Management Policy:

In terms of the requirement of the Companies Act 2013 the Company has developed andimplemented the Risk  Management Policy and the Audit Committee of the Board reviewsthe same periodically. The detailed Risk  Management Policy is available on Company'swebsite. Highlights of the same are enclosed in Annexure 5.

Management Discussion and Analysis:

Management Discussion and Analysis comprising an overview of the financial resultsoperations / performance and the future prospects of the Company form part of this AnnualReport.

Corporate Social Responsibility (CSR):

The Company has adopted the CSR policy pursuant to Sec 135 of the Companies Act 2013.The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules2014 is enclosed as Annexure 6. You may also find the Corporate SocialResponsibility Policy on Companys website: https://www.kalyaniforge.co.in/investors/corporate-information/

Highlights of Corporate Social Responsibility Policy:

The Company proposes to undertake CSR projects and programmes in respect of theactivities stated below with a preference to implement these projects and programme in theareas in which it operates:

- Eradicating hunger poverty and malnutrition promoting health care includingpreventive health care and sanitation and making available safe drinking water;

- Promoting education including special education and employment enhancing vocationskills especially among children women elderly and the differently abled and livelihoodenhancement projects.

- Promoting gender equality empowering women setting-up homes and hostels for womenand orphans; setting up old age homes day care centres and such other facilities forsenior citizens and measures for reducing inequalities faced by socially and economicallybackward groups.

- Ensuring environmental sustainability ecological balance protection of flora andfauna animal welfare agroforestry conservation of natural resources and maintainingquality of soil air and water.

- Protection of national heritage art and culture including restoration of buildingsand sites historical importance and works of art; setting-up public libraries promotionand development of traditional arts and handicrafts.

- Measures for the benefit of armed forces veterans war widows and their dependents.

- Training to promote rural sports nationally recognised sports Paralympics Sportsand Olympic Sports.

- Contribution to the Prime Minister's National Relief Fund or any other fund set up bythe Central Government or the State Governments for socio-economic development and reliefand funds for the welfare of the Scheduled Castes the Scheduled Tribes other backwardclasses minorities and women.

- Contributions or funds provided to technology incubators located within academicinstitutions which are approved by the Central Government.

- Rural development Projects.

Particulars of Employees:

Pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 statement of particulars of employees is annexed as Annexure 7.

Details of establishment of vigil mechanism for directors and employees:

The details of establishment of vigil mechanism for directors and employees to reportgenuine concerns are to be disclosed.

Highlights of Whistle Blower Policy are enclosed in Annexure 8.

Corporate Governance Certificate

The Compliance certificate from the Auditors regarding compliance of conditions ofcorporate governance as stipulated in SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed with the report.

Details of conservation of energy technology absorption foreign exchange earnings andoutgo

The Company in its continuous endeavour to conserve energy has adopted variousinnovative measures to reduce waste and to achieve optimum utilization of energy resultinginto good earning of Power Factor incentive from MSEB and in turn resulting into reductionof power cost.

(a) Conservation of energy

(i) the steps taken or impact on conservation of energy The Company in its continuous endeavor to conserve energy has adopted various innovative measures to reduce waste and to achieve optimum
(ii) the steps taken by the company for utilizing alternate sources of energy utilization of energy resulting into good earning of Power Factor incentive from MSEB and in turn resulting into reduction of power cost.
(iii) the capital investment on energy conservation equipment -

(b) Technology absorption

(i) the efforts technology absorption made towards • Productivity improvement in both forged and machined components together with competitive quality.
(ii) the benefits derived like product improvement cost reduction product development or import substitution • Process technology improvements to achieve competitive advantage in the business.
• Successful commercial scale up of forged and machined parts.
Capability building for attracting new customers.
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- the details of technology imported the year of import; whether the technology been fully absorbed if not fully absorbed areas where absorption has not taken place and the reasons thereof -
(iv) the expenditure incurred on Research and Development -

Total energy consumption and energy consumption per unit of production as per Form– A of the Annexure to the Rules is as given below:

Sr. No. Description 2020-21 2019-20
1) POWER AND FUEL CONSUMPTION
I) Electricity
a) Purchased Units (KWH) 16656410 17235952
Total Amount (In. Rs) 169201132 178239621
Rate/Unit (Rs) 10.16 10.34
b) Own Generation
i) Through Diesel Generator 36111 14094
ii) Through Steam Generator (KWH)
II) Coal
III) Fuel Oil (FO + CBFS)
Quantity (Ltrs.) 625000 942420
Total Amount ( In Rs.) 23112768 28044203
Average Rate /Litre (Rs.)- FO+CBFS 37 30
2) CONSUMPTION PER UNIT OF PRODUCTION
Product : high quality closed tolerance die forgings 9110 10047
Unit : M.T. 1832 1717
Electricity (KWH/M.T.) 0.07 0.09
Fuel Oil (KL/M.T.) - -
Coal - -

Research & Development (R&D) :

I) Specific Areas of Research & Development-

Development of new products both in the area of forging as well as Machined componentsfor Domestic & Export sales:

1) During the year 2020-21 Company made significant achievements in the area ofproduct Development. The Company developed variety of products as per the specificrequirements of the customers such as Machined Tripods Machined Outer races Machined ArmFront Suspension LH and RH Inner and Outer Chain Links Fracture Connecting Rod AssemblyMachined Nozzle Rings Forged stub axles etc.

2) Introduced and established Induction Hardening technology for Inner and outer Hubs.

3) Die Locks introduced for Warm and hot forging components to reduce die setup timeand to improve forging quality.

4) Introduced W303 Die material for Male & Female Tripot Dies to improve die lifeby VAVE Approach.

5) Procurement of equipment's for the research and development activity.

The Company has obtained the approval u/s 35(2AB) of the Income Tax Act 1961 in Form3CM from Department of Scientific and Industrial Research vide order no.TU/IV-15(1737)/35(2AB)/3CM/ (1499)/2019 dated 29.11.2019.

Company has disclosed the Capital and Revenue Expenditures on R&D in the AnnualReport of earlier years along with the respective heads of accounts according to thenature of expenses. The Company has spent Rs. 26266405/- (Revenue Expenditure Rs.26266405/- & Capital Expenditure Rs.Nil) during the current financial year. Duringthe previous years Company had spent Rs. 45592870/- (Revenue ExpenditureRs.22814332/- & Capital Expenditure Rs.22778538/-) in FY 2018-19 and Rs.24010950/- (Revenue Expenditure Rs. 22238181/- & Capital ExpenditureRs.1772769/-) in FY 2019-20.

II) Future Plan of Action:

1) Introduce Spline Rolling technology for Outer Races.

2) Introduction of Water base lubrication for Tulips (Warm Forging parts) to maintaincleaner environment.

3) Bell Forging with Internal negative tracks (New Technology).

4) VMC 5 Axis for Warm & Cold forging parts Die manufacturing.

5) Fully Automation for Connecting Rod Machining and Assembly to improve Quality andProductivity.

6) Research & Development in Single Minute Exchange of Dies (SMED) project.

7) Focused development of variety of warm and cold forging and machined premiumcomponents.

8) Planning to commence activities in bigger size forgings.

9) W360 Die Material Selection for Increasing the Life of small Con Rod Forging Dies byVAVE Approach.

10) Research & Development on die weld over lays for increasing die life of complexprofile parts.

11) Optimization of input material to improve maximum forging yield ratio.

The company has budgeted Rs. 27000000 for the above activities during the nextfinancial year.

(c) Foreign exchange earnings and Outgo:

During the year the total foreign exchange used was Rs. 41165692.87 and the totalforeign exchange earned was Rs. 189231761.44.

(d) Technology Absorption Adaptation and Innovation:

Through In-house Research and Development activities Company has developed Outer raceforgings for driveline assemblies with internal tracks by warm and cold forging method.With the help of fracture split technology the Company is now moving towards adoption oftechnology for critical automotive connecting rods for the overseas markets.

Directors' Responsibility Statement:

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 your Directors confirm 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; and

(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.

(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.

Acknowledgement:

Your Directors place on record their appreciation for employees at all levels who havecontributed to the growth and performance of your Company.

Your Directors also thank the clients vendors bankers shareholders and advisers ofthe Company for their continued support. Your Directors also thank the Central and StateGovernments and other statutory authorities for their continued support.

For and on behalf of the Board
Rohini G. Kalyani
Place : Pune Executive Chairperson
Date : June 10 2021 (DIN : 00519565)

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