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Kanco Enterprises Ltd.

BSE: 590084 Sector: Industrials
NSE: N.A. ISIN Code: INE248D01011
BSE 00:00 | 04 Mar Kanco Enterprises Ltd
NSE 05:30 | 01 Jan Kanco Enterprises Ltd
OPEN 1.66
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Mkt Cap.(Rs cr) 3
Buy Price 1.67
Buy Qty 15.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1.66
CLOSE 1.66
52-Week high 1.66
52-Week low 0.00
Mkt Cap.(Rs cr) 3
Buy Price 1.67
Buy Qty 15.00
Sell Price 0.00
Sell Qty 0.00

Kanco Enterprises Ltd. (KANCOENTERP) - Director Report

Company director report

Directors’ Report

Dear Members

The Directors of the Company present their 27th Annual Report and Company’sAudited Financial Statement for the year ended 31st March 2018.

Your Company’s financial performance was as follows: Rs. /Lakhs
Particulars 31st March 2018 31st March 2017
Profit before Interest Depreciation and Tax (102.40) (140.69)
Less: Interest - 967.08
Gross Profit/ (Loss) for the Year (102.40) (1107.77)
Less: Depreciation 5.03 266.82
Profit/(Loss) Before Tax (107.43) (1374.59)
Less : Provision for Tax - -
Profit / (Loss) After taxation (107.43) (1374.59)
Depreciation transferred on account of change in useful life of Property - -
Plant and Equipment
Balance Brought Forward from last Account (11051.26) (9676.67)
Balance Carried to Balance Sheet (11158.69) (11051.26)

Results of Operations and the State of the Company’s Affairs

The Company was forced to suspend manufacturing operations from 30th September 2015 inview of large scale resignations of staff and workmen at the Company's factory situated at"Kanco Overseas" Village: Walthera Taluka: Dholka Ahmedabad – 387810. Dueto further deterioration in the industry scenario since then it has not been possible torevive operations.

The current period operations have resulted in a net loss of 107.43 Lakhs.

One Time Settlement with the secured lenders

State Bank of India and IDBI Bank limited are the Company’s bankers. In view ofthe suspension of operations and due to cash losses in the past the company’saccount with the lenders had become a Non-performing Asset. The Company had proposedNegotiated settlement against all outstanding dues to the bankers which has been acceptedby the bankers. The Company will meet its payment obligations partly through sale ofassets and partly through raising additional finance. In the best interest of thestakeholders the Board of Directors of the Company at their meeting held on 7th April2018 decided to sell / transfer / dispose of its textile unit either in whole or in partcomprising of all tangible assets accessories or any item or parts directly or indirectlyrelated with it in whole or in part pertaining to the said unit on an "as is whereis" basis and the same was approved by the members of the Company at theextraordinary general meeting held on 16th May 2018. The net proceeds from the sale ofthe Textile Unit will be utilized to repay the lenders.


During the year under review the long term borrowings and short term borrowings of theCompany stands at Rs. 434.35 Lakhs and Rs. 4417.00 Lakhs respectively as on 31st March2018.


The Directors of your Company do not recommend any dividend for the period underreview.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form No. MGT-9 asrequired under Section 92 of the Companies Act 2013 is annexed herewith marked asAnnexure A to this report.


Mr. Susanta Banerjee (DIN:01173116) Director of the Company retires by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Subject to the approval of the Members at the ensuing Annual General Meeting the Boardhas proposed to appoint Ms. Tabassum as an Independent Director of the Company to holdoffice for five consecutive years from the conclusion of 27th Annual General Meeting tillthe Annual General Meeting for the Financial Year ended 31st March 2023 not liable toretire by rotation.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under Section149(6) of the Companies Act 2013 read with rules as amended and Regulation 16(b) of theSEBI (Listing Obligations and Disclosures Requirements) Regulations 2015. During the yearunder review Mr. Umang Kanoria (DIN: 00081108) was reappointed as the Managing Directorof the Company for a period of five years with effect from 1st January 2018 to 31stDecember 2022 at Nil remuneration. Ms. Puja Borar tendered her resignation from thedirectorship of the Company with effect from 6th February 2018 due to her preoccupationand inability to devote time to discharge her responsibilities. The Board of Directors intheir meeting took note of the same and placed their appreciation of the valuablecontribution made by her.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015 and on the recommendation of theNomination and Remuneration Committee of the Company a structured questionnaire wasprepared after taking into consideration the various aspects of the Boards’functioning composition of the Board and its Committees culture execution andperformance of specific duties obligations and governance. On the basis of the Policy forPerformance evaluation of Independent Directors Board Committees and other IndividualDirectors the evaluation of performance of various committees of the Board IndividualDirectors and the Board as a whole were carried. The Nomination and Remuneration Committeealso reviewed its implementation of the said policy and its compliance. The Board ofDirectors expressed their satisfaction with the evaluation process.

Policy on Directors’ Appointment Remuneration etc

Pursuant to Section 178(3) of the Companies Act 2013 Nomination and RemunerationCommittee formulated the criteria for identification and selection of the suitablecandidates for various positions in senior management and also candidates who arequalified to be appointed as Director on the Board of the Company. The Committee alsorecommended a policy relating to the remuneration for the directors key managerialpersonnel and other senior management personnel and a process by which the performance ofthe directors could be evaluated and the details of this policy are given in the CorporateGovernance Report. The policy can be viewed at

Key Managerial Personnel

The following persons are the Key Managerial Personnel (KMP) of the Company incompliance with the provisions of Section 203 of the Companies Act 2013:

a) Mr. U. Kanoria (DIN:00081108) Chairman and Managing Director

b) Ms. Sohini Shukla Company Secretary (w. e.f 15th May 2017)

c) Mr. S. V. Tewary Chief Financial Officer

Number of Meetings of the Board

Five meetings of the Board of Directors were held during the year under review.

Audit Committee

The Audit Committee comprises of Independent Directors namely Ms. Zohra Tabassum(Chairperson) and Mr. Krishna Kumar Gupta and Mr. Susanta Banerjee Non-ExecutiveDirector. All the recommendations made by the Audit Committee were accepted by the Board.

Directors' Responsibility Statement

The Directors hereby confirms that

a) in the preparation of the Annual Accounts for the year ended 31st March 2018 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

b) they had selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2018 and of the loss of theCompany for the year ended on that date;

c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d) they had not prepared the annual accounts on a going concern basis;

e) they had laid down internal financial control to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively; and

f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Statutory Auditors

Messrs. B. R. Shah & Associates Chartered Accountants (Registration No. 129053W)Statutory Auditors of the Company shall hold office till the conclusion of the ensuingAnnual General Meeting and are eligible for re-appointment. They have expressed theirwillingness to continue as Statutory Auditors of the Company if so appointed by theMembers. The Company has received the consent and certificate from Messrs. B. R. Shah& Associates Chartered Accountants to the effect that their re-appointment if madewould be within the limits prescribed under Section 141 of the Companies Act 2013 readwith rules and that they are not disqualified for reappointment within the meaning ofSection 141 of the Companies Act 2013 as amended. They have also confirmed that they holda valid peer review certificate as prescribed under regulation 33(1)(d) of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.

Statutory Auditors’ Report

The Auditors’ have qualified their Report and the explanation in this regard formspart of the Directors’ Report. The Statement on Impact of Audit Qualification asstipulated in Regulation 33(3)(d) is annexed herewith marked as Annexure B to this report.

Qualified Opinion

(a) As referred to in note no. 19.1 (a) (ii) of financial statements during the yearended September 30 2012 the Company has not accounted for Foreign Exchange loss of Rs.117881338/- arising out of Cancellation of Forward Contract and disclosed the same ascontingent liability. On account of this accumulated loss as at March 31 2018 is lowerby the said amount. The loss above does not include interest if any.

During the year ended September 30 2012 State Bank of India (SBI) has unilaterallycancelled the forward contracts and debited Rs. 117881338/- being the losses onaccount of foreign exchange difference excluding interest if any into our cash creditaccount without any authorization from us. The Company is not in agreement with the actiontaken by the SBI and has lodged its objection with SBI. The Company’s proposal forOne Time Settlement (OTS) with SBI and IDBI has been accepted for Rs. 2375 lacs videtheir letters dated 23-02-2018 and 07-02-2018 respectively. The negotiated settlement istowards settlement of all dues of Principal interest and any other amounts outstandingand payable to the bankers. On completion of the payment of negotiated settlement amountthese liabilities which are appearing as contingent liability will be extinguished.

(b) As referred in note no. 10 (iv) & (v) Company has stopped repaying Secured loanand interest thereon to State Bank of India and IDBI bank since 2011-2012. Till March 312017 Interest charged on borrowing from State Bank of India has been accounted as perlast agreed rate of 2011-2012 and actual interest debited by IDBI has been accounted.

We have been explained that the Company has no information about any change in the rateof interest so impact if any of the same in statement of profit and loss and Reserveand Surplus is not determinable. The Company has not booked interest on the said loans ofRs. 109446574/- for the year 2017-18 on account of acceptance of OTS proposal of thecompany by bankers.

The Company’s proposal for negotiated settlement with SBI & IDBI has beenaccepted by them. The Company is in process of making payments as per the negotiated termsand conditions. Considering this no provision of interest on the said loans for the year2017-18 has been made in the accounts for the current year.

(c) As referred in note no. 10 (i)(D) balance of secured loan and Interest thereon fromState bank of India and IDBI Bank are as per books of accounts and subject to confirmationby lenders. Both SBI and IDBI have neither sent any statement of accounts nor issued anybalance confirmation and therefore the management is unable to get the confirmation.

(d) As referred in note no. 13 the company has not made provision for interest fordelayed in payment to vendors during the previous periods as per agreed terms withvendors. Also trade Payables are subject to confirmations. Consequently we were unable todetermine whether any adjustments to these amounts were necessary.

As per the understanding reached with vendors the Company has decided not to provideany interest on delayed payment due to financial constraints and closure of operation andduring the year no such bill for interest has been raised by the vendors. Further nolegal action has also been taken by the vendors for not providing interest on delayedpayment. The trade payable has been reduced from Rs. 4452624/- in March 2017 to Rs.552625/- in March 2018.

(e) As referred in note no. 10(i)(F) the company has not provided interest on unsecuredinter-corporate loan of Rs. 135642766/- from related party and unsecured loan of Rs.15000000/- received from non-related party. Amount of the interest for the current yearon the said loan as per last agreed rate with the parties is Rs. 12357929/- (P.Y. Rs.11117238/-).

The Company has shut down its operation in September 2015 and lenders have recalledthe loan and the loan accounts have been declared NPA. The Company is facing acuteliquidity crunch and therefore unable to make any payment to its lenders at the moment andtherefore no interest has been provided on unsecured loans.

(f) As referred to in note 2 the Company has not provided depreciation of Rs.6192397/- on Building and Plant & Equipment in absence of active use of premises atfactory location.

The Company has shut down its operations in September 2015 in view thereofdepreciation on factory building Plant and Equipment for the year has not been provided.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Asit Kumar Labh Practicing Company Secretary to undertake the SecretarialAudit of the Company. The Report of the Secretarial Auditor is annexed herewith marked asAnnexure C to this report.

The Secretarial Auditor has submitted his report with observation the explanation towhich is as under:

(a) The Company has entered into a One Time Settlement (OTS) with the lender Banks viz.SBI and IDBI against their total dues to be payable within 30th November 2018 as per theterms and conditions of OTS. The Company’s proposal for One Time Settlement (OTS)with SBI and IDBI has been accepted for Rs. 2375 lacs vide their letters dated 23-02-2018and 07-02-2018 respectively. The negotiated settlement is towards settlement of all duesof Principal interest and any other amounts outstanding and payable to the bankers. Oncompletion of the payment of negotiated settlement amount liabilities which are appearingas Secured Loans will be extinguished. (b) Trading Permission at BSE is suspended for theCompany w.e.f. 15.11.2017 The shares of the Company were permitted to be traded as per theMOU signed between The Calcutta Stock Exchange Limited and The Bombay Stock ExchangeLimited. The Company has no say in the matter.

(c) The Company’s operation has been shut down since 30.09.2015.

The Company was forced to suspend manufacturing operations from 30th September 2015 inview of large scale resignations of staff and workmen at the Company's factory situated at"Kanco Overseas" Village: Walthera Taluka: Dholka Ahmedabad – 387810. Dueto further deterioration in the industry scenario since then it has not been possible torevive operations.

Particulars of Loans Guarantees or Investments by Company

The Company has not made any investments. The Company has neither given any loan &guarantee nor provided any security during the year under review.

Contracts and Arrangements with Related Parties

The Company has not entered into any contracts/arrangements with related parties asdefined under section 188 of the Companies Act 2013 during the year under review.

Material Changes and commitments occurred between the end of the Financial Year underReview and the date of this report.

No material changes and commitments have occurred between the end of the financial yearunder review and the date of this report.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

A statement pursuant to Section 134(3) (m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 on conservation of energy technologyabsorption foreign exchange earnings and outgo is annexed herewith marked as Annexure Dto this report.

Management Discussion and Analysis

Management Discussion and Analysis Report for the period under review as stipulatedunder Regulation 34(3) read with Schedule V of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed herewithmarked as Annexure E to this report.

Corporate Governance

The report on Corporate Governance in accordance with Regulation 34(3) read withSchedule V of the SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 approved by the Board together with a Certificate from Mr. Asit Kumar LabhPracticing Company Secretary regarding compliance with the conditions of CorporateGovernance is annexed herewith marked as Annexure F to this report.

Risk Management

As per requirement of Section 134(3) (n) of the Companies Act 2013 the Board ofDirectors in its meeting held on 9th May 2014 has approved the Risk Management Policy.The Board envisaged the following elements of risks which may threaten the existence ofthe Company-

Market Related Risk

The price of raw material and finished goods of KEL are volatile in nature and goesthrough many ups and downs. KEL has decided that: -

a) The inventory level of raw material i.e. cotton stock will always be maintained at amaximum level of three months and minimum level of ten days. The exception for keepingstock at minimum level of ten days is during month of October and November during whichnew cotton crop comes in.

b) KEL cannot enter into more than three months forward sale without permission ofBoard of Directors.

c) Board of Directors has to be intimated if finished goods inventory touches two monthproduction figure.

d) The senior management of KEL gathers information from research report conducted byvarious agencies report published by Chambers/Association representing the IndustryStatistics published by Ministry of Textiles Government Policies and regulationsaffecting the Industry to arrive at appropriate decision to mitigate the risks on accountof volatility in prices of raw materials and finished goods.

Risk due to Fraud

KEL has installed adequate internal control measures to minimise the occurrence offraud and internal audit is also conducted at regular intervals by an external agency.

Risk of Doubtful and Bad Debt

The credit worthiness of sundry debtors is checked by the senior management to fix thecredit period if any to be given.

The background check of new party is also carried out before deciding on the creditperiod.


During the period under review the Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.

Material Orders Passed by the Regulators /Courts/ Tribunals

There are no significant and material orders passed by the regulators or courts ortribunals.

Internal Controls

The Company has an effective Internal Control system with reference to FinancialStatements. The Audit Committee of the Board of Directors reviews the adequacy andeffectiveness of the Internal Control System. The Company’s Internal Control Systemis commensurate with its size scale and complexities of its operations.

Vigil Mechanism

The Company has a Vigil Mechanism/Whistle Blower policy to report genuine concerns andgrievances. Protected disclosures can be made by a whistle blower through an email ordedicated telephone line or a letter to the Chairman of the Audit Committee. The policycan be viewed at PDF

Stock Exchange

The Company’s equity shares are listed at the Calcutta Stock Exchange Limited(Scrip Code-21381 & 10021381). Listing Fees for the financial year 2018-2019 has beenpaid.

During the year under review the Bombay Stock Exchange Limited had discontinued thetrading permission of the company’s equity shares on its platform with effect fromthe close of business hours of 14th November 2017 due to procedural reasons vide Noticeno. 20171024-10 dated 24th October 2017.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

No complaints have been received during the period under review by the respectiveInternal Complaints Committee.

Details pertaining to remuneration as required under section 197(12) of the CompaniesAct 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year April 2017 to March 2018 ratio of theremuneration of each Director to the median remuneration of the employees of the Companyfor the financial year April 2017 to March 2018:

Name of Director / KMP and Designation Remuneration of Director/ KMP for F.Y April 2017 to March 2018 % increase in Remuneration in the F.Y April 2017 to March 2018 Ratio of remuneration of each Director to median remuneration of employees
1. Mr. Umang Kanoria Managing Director 17.15 (24.98%) 16.23
2. Mr. Susanta Banerjee Non-Executive Director 0.50 66.66% 0.47
3. Mr. Krishna Kumar Gupta Independent Director 0.40 33.33% 0.28
4. Ms. Puja Borar(resigned w.e.f 6th February 2018) Independent Director 0.30 (33.33%) 0.28
5. Mr. S. V Tewary Chief Financial Officer (refer note) 20.47 1.04% 19.39
6. Ms. Sohini Shukla Company Secretary (w.e.f. 15th May 2017) (refer note) 1.05 Please refer Note Below 1.00

ii) The median remuneration of employees of the Company during the financial year wasRs. 105581/-iii) the percentage increase in median remuneration of the employees of theCompany 19.40%. (The figure is not comparable in view of Majority of the employees havingresigned from services of the company)

iv) Number of permanent employees on the rolls of the Company - 8

v) Average percentile increase already made in the last financial year

a) In the salaries of employees other than the managerial personnel - N.A

b) Percentile increase in the managerial remuneration - NIL

c) Justification for such increase in remuneration & exceptional circumstances forincrease in the managerial remuneration – N.A.

There has been no increase in the salaries of employees during the year. vi) Keyparameters for any variable component of remuneration availed by the directors Rs. Nil forperiod under review. vii) It is hereby affirmed that the remuneration paid to thedirectors key managerial personnel and other employees is as per the remuneration policyof the company.

# Details not given as Ms. Sohini Shukla was not employed in the previous period.

B. Disclosures pertaining to remuneration and other particulars as prescribed underthe provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are annexed herewith marked asAnnexure G to this report.


Your Directors place on record their appreciation for the cooperation and supportextended by the Employees Banks/ Financial Institutions and all other business partners.

For and on behalf of the Board of Directors
U. Kanoria
Place: Kolkata Chairman & Managing Director
Dated: 26th May 2018 DIN: 00081108