Kanel Industries Limited
Your directors have pleasure in presenting herewith the 25th Annual Report for the yearended on 31st March 2017 of your Company.
[Amount in Rs.]
|PARTICULARS ||2016-17 ||2015-16 |
|Income from Operation ||661396062 ||255586967 |
|Other Income ||1074 ||35507 |
|Increase/ (Decrease) in stock ||NIL ||NIL |
|Total Income ||661397136 ||255622474 |
|Total Expenditure ||662664299 ||257602831 |
|Profit/ (Loss) before Tax ||-1267164 ||-1995750 |
|Provision for Tax ||NIL ||NIL |
|Tax for Earlier periods ||NIL ||NIL |
|Prior Period Extra Ordinary Items (Net) ||NIL ||NIL |
|Net Profit / (Loss) after Tax ||-16120920 ||-1995750 |
During the under review the Company has made losses of Rs. 16120920 (Previousyears loss of Rs. 1995750) from business. The Company has earned total income Rs.661397136 (Previous years income was Rs. 255622474) and Total expenses is Rs.662664299 (Previous years expense is Rs. 257602831).
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 COMPANIES:
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 31.03.2017 is annexed hereto. The equityshares of the Company are listed on the BSE Ltd. The Company has not paid listing fees forthe year 2017-18 to above stock exchanges in time due to the financial crunch.
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 Companys Equity shares are admitted in the System of Dematerialization byboth the Depositories namely NSDL and CDSL. The Company has signed tripartite Agreementthrough Registrar and Share Transfer Agent Accurate Securities and Registry PrivateLimited. The Investors are advised to take advantage of timely dematerialization of theirsecurities. The ISIN allotted to your Company is INE252C01015. Total Share dematerializedup to 31st March 2017 were 12684204 which constitute 68.89% of total capital. YourDirectors request all the shareholders to dematerialize their shareholding in the companyas early as possible.
DETAILS OF RELATED PARTIES TRANSACTIONS PURSUANT 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 arms length basis. The same werereported to the Board at every meeting and Board took a note of the same and approved.Other details for inter corporate financial transactions or remuneration and otherbenefits paid to directors their relatives key managerial personnel etc. are given inthe notes to the accounts vide note as per requirements of AS 18. The Company hasformulated various other policies 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 Boardand also the performance of the various Committees and the Board the Company has adoptedthe Model Code of Conduct for Independent Directors Key Managerial Personnel asprescribed in Schedule IV to the Companies Act 2013 and also as prescribed in the SEBI(Insider Trading) Regulations. The Company strictly follows the procedure to obtainnecessary timely declarations from each of the directors and key managerial personnel fromtime to time.
Managements Discussion and Analysis:
Managements discussion and perceptions on existing business future outlook ofthe industry future expansion and diversification plans of the Company and future courseof action for the development of the Company are fully explained in a separately inCorporate Governance 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.
During the year Ms. Shilpaben Maganbhai Solanki Independent Director of the Companyhad resigned with effect from 24/01/2017 from the Office of the Director.
The Board of Directors of the Company had appointed Ms. Asha Desai as IndependentAdditional Director of the Company with effect from 22/12/2016
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 a 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 years 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 2016-17 the Board of Directors state:
a) In the preparation of the annual accounts for the financial year ended 31st March2017 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 areadequate and were operating 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 hasproper constitution of the Board of Directors including independent directors inproportion 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 andappointment of independent directors who are persons of reputation in the society haveadequate educational qualification sufficient business experience and have integrity& loyalty towards their duties. d. The Company pays managerial remuneration to itsManaging/Whole Time Directors based upon their qualification experience and pastremuneration received by them from their previous employers and companys financialposition. 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. TheCompany is not paying any commission on net profits to any directors. g. During the yearthe Board has met 5 times during the year. The details of presence of every director ateach meeting of the Board including the meetings of the Committees if any are given inthe 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 every individualdirector 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. Shah Dinesh Dahyalal & Associates were appointed as Statutory Auditors ofyour Company. On expiry of term of M/s. Shah Dinesh Dahyalal & Associates CharteredAccountants the Board at their meeting held on 30th May 2017 had appointed M/s. Suresh I.Patel & Co. Chartered Accountants Ahmedabad (Firm Registration No. 117974W) asStatutory Auditor of the Company in compliance of Section 139 of the Companies Act 2013and Rule 3(7) of Companies (Audit and Auditors) Rules 2014 subject to the approval ofshareholders in the ensuing Annual General Meeting to be held on 30th September 2017.
As per Section 139 of the Companies Act 2013 the Board recommends to appoint M/s.Suresh I. Patel & Co. Chartered Accountants Ahmedabad (Firm Registration No.117974W) as Statutory 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. Suresh I. Patel & Co. Chartered Accountants Ahmedabad (FirmRegistration No. 117974W) that their appointment if made would be in conformity with thelimits specified under 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 2016-17. They have 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.
AUDITORS REPORT AND OBSERVATION:
i) The Company has taken inter corporate loan of Rs NIL [ unsecured ] and unsecuredloans from related parties/ firms of Rs. 94.00 lacs and from Non Related person Rs. NILduring the financial year under audit. Out of Rs.94.00 lacs Unsecured loan taken fromDirectors and their relatives Rs.80.00 lacs have been taken otherwise than by bankaccounts. The Closing Balance at the year end are Rs. 379.00 Lacs in case of relatedparties and firms and from key management person and Rs.23.50 lacs from other parties. Nointerest provided on loan accounts. In absence of formal agreement or supporting otherdocuments we could not comment and could not quantify the non provision of interestthereon.
ii) Company has written off 88.63 lacs Debtors out of the total Rs 393.79 Lacs longoutstanding debtors. Still the company has not made provision for doubtful Debtors of Rs305.16 Lacs Which are long outstanding and as per our opinion these are bad debts tothat extent Current Assets have been overstated and current years Losses and accumulatedlosses have been understated.
iii) The Company was having bank balance of Rs.89.30 lacs with various bank in No-Lienaccounts. As informed by the management banks were not providing bank statements orbalance certificates or any authenticate documents in support of balance with banks. Thebank loans have been settled under OTS in earlier years. After trying for many years forgetting authenticate documents for the balance with banks all balances with No-Lienaccounts have been written off and transferred to Profit & Loss accounts.
iv) The Company has violated provisions of Income Tax Act 1961 by non filing IncomeTax Returns from FY 2008-09 onwards. Proper records are not made available to us for ourverification 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.
v) The Company has not deducted TDS from Professional fees paid / credited on sum of Rs195000/- during the financial year under audit.
vi) As per the information provided by the Management with regards to BIFR statusDelhi High Court has remanded back the company to BIFR in its pending appeal on 19thJanuary 2010 and thereafter in the next hearing held on 29/04/2010 and as per the orderof the Honorable Delhi High-court BIFR had appointed IDBI as OA to inspect the unit andsubmit the report thereon. In the last date of hearing on 29/08/2013 the honorable BIFRhas directed the company to revise and resubmit with OA the DRS with cutoff date as31/03/2013.
The Company had submitted the revised DRS to OA as directed by the Honorable BIFR butin the hearing on 27/03/2014 due to late submission by OA (IDBI) with respect to certainquery of the BIFR the BIFR dismissed the companys reference. Company has filedappeal against the order of BIFR with AAIFR on 19/06/2014 and the appeal was allowed andremanded the matter back to BIFR for considering the DRS for revival of the company by itsorder dated 20/01/2015. In the hearing scheduled on 19/07/2016 the Companys COD wasapproved as 31/03/2016 and company was asked to submit a DRS with COD. The next date ofhearing was fixed as 24/10/2016. Accordingly the company submitted the DRS and in thehearing dated 24/10/2016 the OA asked for some time to examine the scheme but the SICA actwas repealed on 01/12/2016.
vii) 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 there is substantial doubt that it will be ableto continue as a going concern even though the books of accounts of the Company has beenprepared on the assumption of a Going Concern basis. In this situation adjustments may berequired to the recorded assets amounts at current value and classification of liabilitiesis required. The financial statements do not disclose this fact.
viii) The Company has not made compliances within the time as per the Regulations ofSEBI (LODR) Regulations 2015
ix) The Company has not paid the fees to NSDL AND CDSL for E-Voting facility and alsoAnnual Issuer charges in time.
x) The company has not appointed Company Secretary and Chief Financial Officer as perSec 203 of the Companies Act 2013.
MANAGEMENT PERCEPTION :
REFER NOTE - i :
The Company has taken ICDs and unsecured loans from directors / KMPs and theirrelated parties to meet with requirements of day to day Financial needs of the company.All short term borrowings are repayable on demand and non-interest bearing hence as perterms of acceptance 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 management is in process of obtaining the same. Regarding closing balances of nolien bank accounts as the Company has made reference to BIFR there has been non-Cooperation from all the bankers and they are not providing bank account statements.
REFER NOTE - iv :
The Company is in process of filing at all pending returns. Due to operationalfinancial losses in every financial years there is no statutory liability on account ofincome tax on the company.
REFER NOTE - v :
The company accounting all the professional fees which were paid to professionals onaccrual basis.
REFER NOTE - vi :
Observation No. Vii of auditors report is its self is Self Explanatory.
REFER NOTE - vii :
The Company is doing business of trading so that company is accounting his business oftrading on going Concern Basis.
REFER NOTE - viii :
Due to financial Crunch Company has not made Compliances within the time as per theregulations. From the f.y. 2017-18 the Company is regular in filing of Documents with theExchange as per SEBI (LODR) Regulations 2015 within the prescribed time.
REFER NOTE - ix :
Due to Financial Crunch Company has not at all funds to pay the Fees of NSDL AND CDSLhowever the Company is hoping to receive some funds during the year 2017-18 so thatCompany will Step-up and make the payment to NSDL AND CDSL.
REFER NOTE - x :
Due to Financial Crunch in the Company All financial transaction is been done byManaging Director himself personally i.e. Mr. Dhiren Thakker however when the Company willreceive a suitable Funds company will appoint Company Secretary and CFO as per CompaniesAct 2013.
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 : 30TH MAY 2017 ||ON BEHALF OF THE BOARD OF DIRECTORS |
|PLACE : AHMEDABAD ||OF KANEL INDUSTRIES LIMITED |
| ||SD/- |
| ||(DHIREN K THAKKAR) |
| ||CHAIRMAN & MANAGING DIRECTOR |
| ||(DIN: 00610001) |