Kanel Industries Limited
Your directors have pleasure in presenting herewith the 26th Annual Report for the yearended on 31st March 2018 of your Company.
[Amount in Rs.l
|PARTICULARS ||2017-18 ||2016-17 |
|Income from Operation ||617243758 ||661396062 |
|Other Income ||384929 ||1074 |
|Increase/ (Decrease) in stock ||NIL ||NIL |
|Total Income ||617628687 ||661397136 |
|Total Expenditure ||618540329 ||662664299 |
|Profit/ (Loss) before Tax ||-911642 ||-1267164 |
|Provision for Tax ||NIL ||NIL |
|Tax for Earlier periods ||NIL ||NIL |
|Prior Period Extra Ordinary Items (Net) ||NIL ||NIL |
|Net Profit / (Loss) after Tax ||-911642 ||-16120920 |
During the year under review the Company has made losses of Rs. 911642 compare toprevious year's losses of Rs. 16120920 from business. The Company has earned total incomeRs. 617628687 (Previous year's income was Rs. 661397136) and Total expenses is Rs.618540329 (Previous year's expense is Rs. 662664299).
As our company incurred heavy losses during the year under review and due to theaccumulated losses our directors regret for their inability to declare dividend to themembers.
DETAILS OF THE ASSOCIATES/ JOINT VENTURE / SUBSIDIARIES COMAPANIES
The company does not have holding or subsidiary companies during the year and no othercompany has become holding / subsidiary/ joint venture.
SHARE CAPITAL STRUCTURE:
During the year under review there were no changes in the Authorized IssuedSubscribed and Paid up Share Capital Structure of the Company.
During the year under review your company has neither invited nor accepted any publicdeposit as defined under Section 73 to 76 of the Companies Act 2013.
In conformity with Regulations of SEBI (Listing Obligation and Disclosure Requirement)2015 the Cash Flow Statement for the year ended 31.03.2018 is annexed hereto. The equityshares of the Company are listed on the BSE Ltd.
Your Company practices a culture that is built on core values and ethical governancepractices and is committed to transparency in all its dealings. A Report on CorporateGovernance as per the Regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this Annual Report as an Annexure.
The Company is in process of appointing an independent Chartered Accountant to act asan internal auditor as per suggestion of the auditors in order to strengthen the internalcontrol system for the Company.
DEMATERIALISATION OF SECURITIES:
Your Company's Equity shares are admitted in the System of Dematerialization by boththe Depositories namely NSDL and CDSL. The Company has signed tripartite Agreement throughRegistrar and Share Transfer Agent Accurate Securities and Registry Private Limited. TheInvestors are advised to take advantage of timely dematerialization of their securities.The ISIN allotted to your Company is INE252C01015. Total Share dematerialized up to 31stMarch 2018 were 12695354 which constitute 68.95% of total capital. Your Directorsrequest all the shareholders to dematerialize their shareholding in the company as earlyas possible.
DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188 (1) OF THE COMPANIESACT 2013
The Company is entering into related parties transactions for sale/purchase of goods orservices at preferential prices. However all the transactions in the nature ofsales/purchase of goods or services are made on arm's length basis. The same were reportedto the Board at every meeting and Board took a note of the same and approved. Otherdetails for inter corporate financial transactions or remuneration and other benefits paidto directors their relatives key managerial personnel etc. are given in the notes to theaccounts vide note as per requirements of AS 18. The Company has formulated various otherpolicies Evaluation of Board Performance Policy etc.
As the Company is loss making one the provisions related to CSR is presently notapplicable to the Company.
Regarding Performance Review of each of the member of the Board and also theperformance of the various Committees and the Board the Company has adopted the ModelCode of Conduct for Independent Directors Key Managerial Personnel as prescribed inSchedule IV to the Companies Act 2013 and also as prescribed in the SEBI (InsiderTrading) Regulations. The Company strictly follows the procedure to obtain necessarytimely declarations from each of the directors and key managerial personnel from time totime.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and perceptions on existing business future outlook of theindustry future expansion and diversification plans of the Company and future course ofaction for the development of the Company are fully explained in a separately in CorporateGovernance Report.
Mr. Dhiren K. Thakkar shall retire by rotation at the ensuing Annual General Meeting asper
provisions of Law. He is eligible for reappointment and offers himself forreappointment.
The Board of Directors of the Company had appointed Ms. Asha Desai as IndependentDirector of the Company with effect from 30/09/2017.
DETAILS OF LOANS GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT 2013
During the year under review the Company has not made any inter corporate loansinvestments given any corporate guarantee to any other body corporate subsidiaryassociate or any other company.
DECLARATION BY INDEPENDENT DIRECTORS: (Pursuant to Provisions of section 149(6) OF theCompanies Act 2013)
All the Independent Directors of the Company do hereby declare that:
(1) All the Independent Directors of the Company are neither Managing Director nor aWhole Time Director nor a Manager or a Nominee Director.
(2) All the Independent Directors in the opinion of the Board are persons of integrityand possesses relevant expertise and experience.
(3) Who are or were not a Promoter of the Company or its Holding or subsidiary orassociate company.
(4) Who are or were not related to promoters or directors in the company its holdingsubsidiary or associate company.
(5) Who has or had no pecuniary relationship with the company its holding subsidiaryor associate company or their promoters or directors during the two immediately precedingfinancial years or during the current financial year.
(6) None of whose relatives has or had pecuniary relationship or transaction with thecompany its holding subsidiary or associate company or their promoters or directorsamounting to two per cent or more of its gross turnover or total income or fifty lacsrupees or such higher amount as may be prescribed whichever is lower during the twoimmediately preceding financial years or during the current financial year
(7) Who neither himself nor any of his relatives
(a) Holds or has held the position of key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of threefinancial years immediately preceding the financial year in which I\he is proposed to beappointed.
(b) Is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of
(i) A firm of auditors or company secretaries in practice or cost auditors of thecompany or its holding subsidiary or associate company; OR
(ii) Any legal or a consulting firm that has or had any transaction with the companyits holding subsidiary or associate company amounting to ten per cent or more of thegross turnover of such firm;
(iii) Holds together with his relatives two per cent or more of the total voting powerof the company; OR
(iv) Is a Chief Executive or director by whatever name called or any non-profitorganization that receives twenty five per cent or more of its receipts from the Companyany of its promoters directors or its holding subsidiary or associate company or thatholds two per cent or more of the total voting power of the company; OR
(v) Who possesses such other qualifications as may be prescribed.
DIRECTORS' RESPONSIBILITY STATEMENT:
In terms of section 134 Clause (C) of Sub-Section (3) of the Companies Act 2013 inrelation to financial statements for the year 2017-18 the Board of Directors state:
a) In the preparation of the annual accounts for the financial year ended 31st March2018 as far as possible and to the extent if any accounting standards mentioned by theauditors in their report as not complied with all other applicable accounting standardshave been followed along with proper explanation relating to material departure;
b) The Directors have 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 andprofit and loss account of the Company for that period;
c) The Directors have 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 have prepared the annual accounts on a going concern basis; and
e) The directors in the case of a listed company had laid down internal financialcontrols to be
followed by the company and that such internal financial controls are adequate and wereoperating effectively.
f) The Directors have devised proper systems to ensure compliance with the provisionsof all
applicable laws and that such systems were adequate and operating effectively.
DECLARATION BY BOARD AS PER REQUIREMENT OF SECTION 178 (1)
In compliance with Section 178 (1) as also in compliance with applicable Regulations ofSEBI (LODR) 2015 the Board of Directors does hereby declare that:
a. The Company has proper constitution of the Board of Directors including independentdirectors in proportion as per requirement of SEBI (LODR) 2015.
b. The Company has constituted Nomination and Remuneration Committee StakeholdersRelationship Committee Audit Committee as per requirements of the SEBI (LODR) 2015 andprovisions of the Companies Act 2013.
c. The Company has the policy for selection and appointment of independent directorswho are persons of reputation in the society have adequate educational qualificationsufficient business experience and have integrity & loyalty towards their duties.
d. The Company pays managerial remuneration to its Managing/Whole Time Directors basedupon their qualification experience and past remuneration received by them from theirprevious employers and company's financial position.
e. The Independent Directors are paid sitting fee for attending sitting fees forattending Board and other committee meetings as decided by the Board from time to time.This sitting fee is decided considering the financial position of the company.
f. The Company is not paying any commission on net profits to any directors.
g. During the year the Board has met 6 times during the year. The details of presenceof every director at each meeting of the Board including the meetings of the Committeesif any are given in the reports of the Corporate Governance.
SYSTEM OF PERFORMANCE EVALUATION OF THE BOARD INDEPENDENT DIRECTORS AND COMMITTEES ANDINDIVIDUAL DIRECTORS
1 The Board makes evaluation of the effectiveness and efficiency of everyindividual director committee of directors independent directors and board as a whole.
2 For these purpose the Board makes evaluation twice in a year on a half yearly basis.
3 The performance of individual directors are evaluated by the entire Board excludingthe Director being evaluated on the basis of presence of every directors at a meetingeffective participation in discussion of each of the business of agenda for the meetingsfeedback receives from every directors on draft of the minutes and follow up for actiontaken reports from first line management.
4 Effectiveness and performance of various committees are evaluated on the basis of thescope of work assign to each of the committees the action taken by the committees arereviews and evaluated on the basis of minutes and agenda papers for each of the committeemeetings.
5 The performance of independent directors are evaluated on the basis of theirparticipation at the meetings and post meeting follow up and communication from each ofsuch independent directors.
PARTICULARS OF THE EMPLOYEES
Particulars of the employees as required under provisions of Section 197 (12) of theAct read with Rule 5 of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time are not attached with this reportsince there was no employee who was in receipt of remuneration in excess of Rs. 8 50000per month during the year or Rs. 1.20 Cr. per annum in the aggregate if employed part ofthe year.
M/s. Suresh I. Patel & Co. were appointed as Statutory Auditors of Company. Due tohis unwillingness the Board at their meeting held on 05th September 2018 had recommendedto appoint M/s. Bhagat & Co. Chartered Accountants Ahmedabad (Firm Registration No.127250W) as Statutory Auditor of the Company in compliance of Section 139 of the CompaniesAct 2013 and Rule 3(7) of Companies (Audit and Auditors) Rules 2014 subject to theapproval of shareholders in the ensuing Annual General Meeting to be held on 29thSeptember 2018.
As per Section 139 of the Companies Act 2013 the Board recommends to appoint M/s.Bhagat & Co. Chartered Accountants Ahmedabad (Firm Registration No. 127250W) asStatutory Auditors of the Company at the forthcoming Annual General Meeting.
The Company has obtained a written confirmation under section 139 of the Companies Act2013 from M/s. Bhagat & Co. Chartered Accountants Ahmedabad (Firm Registration No.127250W) that their appointment if made would be in conformity with the limits specifiedunder the Act and that they are not disqualified for their appointment.
The Company has appointed Mr. Chintan K. Patel Practicing Company Secretary as thesecretarial auditor for the financial year 2017-18. They had given their report in theprescribed form MR-3 which is annexed to this report as an ANNEXURE A.
OBSERVATIONS OF THE SECRETARIAL AUDITOR
1. The Company has not made Compliances within the time as per the Regulations of SEBI(LODR) 2015.
2. The Company had not Paid Listing Fees.
3. All the Non-Compliances is due to Severe Fund Crunch.
4. The Company has not appointed Company Secretary and Chief Financial Officer as perSection 203 of the Companies Act 2013.
5. The Company has not appointed Internal Auditors.
6. The Company has not paid the Fees to the NSDL and CDSL for E-voting Facility andalso Annual Issuer Charges in time.
7. The company is not regular in filling various returns with Direct and Indirect taxdepartments and all other necessary departments.
AUDITORS REPORT AND OBSERVATION:
i) The Company has taken inter corporate loan of Rs NIL [ unsecured ] and unsecuredloans from related parties/firms of Rs. 76.00 lacs and from Non Related person Rs.24.21Lacs during the financial year under audit. The Closing Balance at the yearend are Rs.395.33 Lacs in case of related paties and firms and from key management person andRs.449.22 lacs from other parties. No interest provided on loan accounts. In absence offormal agreement or supporting other documents we could not comment and could notquantify the non provision of interest thereon.
Out of total Inter Corporate Loans as above the Company has taken Mortgage Loan of Rs.5 Crore from Adani Enterprises Ltd in earlier years [closing balance at year end is Rs.3.40 Crores]. We are not provided any formal Loan Agreement copy except Mortgage Deedwhich does not contain any repayment terms and interest rate. No interest is provided onsuch Loans. We are unable to comment upon non provision of interest repayment scheduleetc. in absence of any formal agreement with the company and related documents andinformation.
ii) Company has not made provision for doubtful Debtors of Rs 305.15 Lacs Which arelong outstanding and chances for recovery are very less as per our opinion these are baddebts to that extent Current Assets have been overstated and current years Losses andaccumulated losses have been understated.
iii) The Company has violated provisions of Income Tax Act 1961 by non filingIncome Tax Returns from FY 2008-09 onwards. Proper records are not made available to usfor our verification and to compute Income Tax and related statutory liabilities. In thissituation we are unable to comment upon the non provision of statutory liabilities forcurrent year as well as for the earlier years.
iv) The Company has not deducted TDS from Professional fees paid / credited on sum ofRs 2.00 during the financial year under audit.
v) After repealed of SICA Act all matters pending with BIFR court abandoned andcompany is planning to approach NCLT as other alternative option to resolve the pendingmatters. Company got registerd with Industries Commissionerate Gujarat to declare thecompany as sick industrial enterprise to avail relief. Company is preparing DRS to repaythe dues of secured creditors as well as statutory dues.
vi) The Naroda Unit has been inoperative since last many years. Company is doingTrading activities during the year under audit but majority Financial indicators andoperating indicators remained negative and to the date of Audit report and in absence offormal developments for financial support on repeal of SICA all matters pending withBIFR court cancelled and matters came to original status for the resolution there issubstantial doubt that it will be able to continue as a going concern even though thebooks of accounts of the Company has been prepared on the assumption of a Going Concernbasis. In this situation adjustments may be required to the recorded assets amounts atcurrent value and classification of liabilities is required. The financial statements donot disclose this fact.
vii) The company has not paid Listing Fees for Ahmedabad Jaipur and Calcuttal stockexchange.
viii) The company has not submitted quarterly compliances to the Exchange within thetime as per the Regulations of SEBI (LODR) 2015
ix) The company has not appointed Company Secretary and Chief Financial Officer asper Sec 203 of the Companies Act 2013.
REFER NOTE i:
The Company has taken ICD's and unsecured loans from directors / KMPs and their relatedparties to meet with requirements of day to day Financial needs of the company. All shortterm borrowings are repayable on demand and non-interest bearing hence as per terms ofacceptance no interest liabilities is provided.
REFER NOTE ii:
The management is taking active steps for recovery of its debtors. The management ishopeful of its recovery hence no provision is made for doubtful debtors.
REFER NOTE iii:
The Company is in process of filing all pending returns. Due to operational financiallosses in every financial years there is no statutory liability on account of income taxon the company.
REFER NOTE iv:
The company accounts all the professional fees which were paid to professionals onaccrual basis.
REFER NOTE v:
Observation No. V of auditor's report is itself Self Explanatory.
REFER NOTE vi:
The Company is engaged into trading activities as operating a plant or to startmanufacturing requires huge funds and the company is going through fund crunch right now.Hence company is accounting his business of trading on a going Concern Basis.
REFER NOTE vii:
Due to Financial Crunch Company has not paid Fees of Ahmedabad Jaipur & Calcuttastock exchange. Further these exchanges are non-operative now and no trading activitiesare going on there now-a-days.
REFER NOTE viii:
Company had not made Compliances within the time in its first half of the financialyear however thereafter company is regular in filing of Documents with the Exchange as perSEBI (LODR) Regulations 2015 within the prescribed time.
REFER NOTE ix:
Company is in search of a suitable candidate for the post of company secretary and willappoint the same soon. Further board of directors of company has decided to appoint Mr.
Dhiren Thakkar Managing Director of the company as Chief Financial Officer of thecompany as all the financial transaction of the company are done by him only.
The Information required to be disclosed in the report of the Board of Directors as perthe provisions of Section 134 of the Companies Act 2013 and the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules 1988 regarding the conservation ofenergy; technology absorption foreign exchange earnings and outgo are not applicable tothe company. As Company is not manufacturing any product or providing any services.
MATERIAL CHANGES / INFORMATION:
The Bombay Stock Exchange Limited had suspended the trading of Securities of theCompany with effect from February 1 2017 due to non-compliance with provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
The company has made all compliances but could not make timely compliances due to thefact that during such period the Company was in the process of Revival and Rehabilitationbefore the Board for Industrial and Financial Reconstruction (BIFR) and also filed anappeal to Appellate Authority for Industrial and Financial Reconstruction (AAIFR). TheManagement was over occupied in pleadings hearings and preparing the RehabilitationProposals and other related documents thereto. Also within that period the company wasinto losses which put more stress and pressure on the Management of the Company.
The Company had already applied for the Revocation of Suspension in Trading of EquityShares on 26/05/2017 and the application has been already considered by the Exchange at itis at the Final Stage. The Management making continuous efforts to recommence the tradingof shares of the Company soon.
No material other changes have taken place after the closure of the financial year upto the date of this report which may have substantial effect on the business and financialof the Company.
No significant and material orders have been passed by any of the regulators or courtsor tribunals impacting the going concern status and companies operations in future.
Your Directors take this opportunity to acknowledge the trust reposed in your companyby its Shareholders Bankers and Clients .Your directors also keenly appreciate thededication and commitment of all our employees without which the continuing progress ofthe Company would not have been possible.
|DATE: 5th SEPTEMBER 2018 ||ON BEHALF OF THE BOARD OF DIRECTORS |
|PLACE: AHMEDABAD ||OF KANEL INDUSTRIES LIMITED |
| ||SD/- |
| ||(DHIREN K THAKKAR) |
| ||CHAIRMAN & MANAGING DIRECTOR |
| ||(DIN:00610001) |