The Board of Directors ("Board") of Kapston Facilities Management Limited("Kapston" or "Company") with immense pleasure present their Report onthe business and operations of your company together with the audited financial statementsfor the financial year ended March 31 2021.
1. FINANCIAL HIGHLIGHTS
The Company's performance during the financial year ended March 31 2021 is summarizedin the following table
| || ||(Rs. in Lakhs) |
| || ||Standalone |
|Particulars ||2020-21 ||2019-20 |
|Revenue from Operations ||21303.86 ||21339.27 |
|EBIDTA ||1691.4 ||1753.78 |
|Less: Finance Costs ||519.66 ||443.50 |
|Less: Depreciation and amortization expenses ||357.02 ||256.71 |
|Profit before prior period items ||814.72 ||1053.57 |
|Prior period items ||- ||- |
|Profit before tax ||814.72 ||1053.57 |
|Less: Current Tax ||157.94 ||160.96 |
|Add: Deferred Tax Asset ||14.99 ||-171.41 |
|Profit Available for appropriations/Loss ||641.78 ||1064.02 |
|Basic Earnings per Share ( Rs.) ||6.33 ||10.49 |
|Diluted Earnings per Share ( Rs.) ||6.33 ||10.49 |
|Paid up share capital (face value of INR10 each) ||1014.40 ||1014.40 |
|Reserves and Surplus ||540.35 ||2760.86 |
Note: The above changes in the financial highlights for the year2019-20 is due to theapplicability of IND AS from theyear2020-21 and the reconciliation carried out underprevious GAAP and INDAS.
2. STATE OF AFFAIRS/ COMPANY'S PERFORMANCE
The Company is primarily engaged in providing manpower for private security servicesFacilities Management Services and staffing solutions in various parts of the country. Aspart of empowering the unemployed sector the Company has in partnership with variouscentral & state level government bodies undertaken training and development programsfor the "Unemployed Youth".
Your Company's revenue from operations for the financial year ending March 31 2021stood as Rs. 21303.86 lakhs compared to Rs. 21339.27 lakhs during the previous financialyear. The Company has achieved EBIDTA (including other income) of Rs. 1691.4 lakhs duringthe financial year 2021 as against that of EBIDTA of Rs. 1753.78 lakhs for the previousfinancial year 2020. The profit before tax for the financial year under review is Rs.814.72 lakhs as against Rs. 1053.57 lakhs for the previous financial year2020. Profitafter tax was positively impacted by the tax benefits availed under Section 80JJAA of theIncome Tax Act 1961 and deferred tax benefits.
Your Directors express their satisfaction on the overall financial performance and theprogress made on different areas by the Company during the year under review.
3. CHANGE IN NAME OF THE COMPANY
During the year under review there was no change in the name of the Company.
4. CHANGE IN NATURE OF THE BUSINESS
During the year under review the Company has altered its Memorandum or Association bya special resolution passed by its members through postal ballot including e-voting toinclude the main object" To carry on the business of technical legal financial andmanagement consultants advisers innovators software designer marketers manpowercontractors administrators agents recruitment and placement consultancy serviceproviders impart training in various fields areas and subjects including but not limitedto vocational training through any form viz. classroom electronic media or training bycorrespondence and to carry on the business of all types of manpower suppliers executionand operation of all activities pertaining or relating to contract employees or ofemployee leasing by offering services from time to time for outsourcing administration ofemployees and all administrative activities related thereto and to enter intocollaborations joint venture agreements and to do all other incidental things and actsnecessary for the attainment of the main object."
The Company has ventured into a new line of business of providing staffing services/Manpower Supply with effect from March 172021.
During the year under review the Company has declared and paid an interim dividend ofRs. 1/- per equity share for the Financial Year 2020-21 and considering the same asdividend for the FY 2020-21 the directors did not recommend final dividend.
6. TRANSFER TO RESERVES
No amount has been transferred to reserves and the profit for the year has beenretained in the profit and loss account.
7. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The provisions of Section 124 of Companies Act 2013 are not applicable as the Companyhas not completed 7years from declaration of dividend.
8. SHARE CAPITAL
The paid up share capital of your Company is Rs. 101440610/- (Rupees Ten CroreFourteen Lakhs Forty Thousand Six Hundred Ten Rupees Only) divided into 10144061 equityshares of Rs. 10/- each. There was no change in the share capital structure during theperiod under review.
LISTING OF EQUITY SHARES
The securities of the Company are listed on National Stock Exchange of India Limited(NSE). Further the Company has no equity shares carrying differential rights.
MIGRATION TO THE MAIN BOARD OF NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
During theyear under review theShareholders have approved (through postal ballotincluding e-voting) migration of Company's equity shares from SME Platform of NSE Emergeto Main Board of NSE. Accordingly the Company has made application to Stock Exchange andthe same was approved vide it's letter dated 22nd May2020 with effect from 27th May2020.
Accordingly the Company got listed its shares on theMain Board of "National StockExchange of India Limited" with effect from 27th May 2020.
9. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
During the year under review your Company has not made any investment given any loanor guarantee falling within the provisions of section 186 of the Companies Act 2013 andthe rules made thereunder.
10. PUBLIC DEPOSITS
During the financial year under review your company has not accepted any depositsfalling within the provisions of Section 73 of Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014.
11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
During the financial year under review all transactions with the related parties are incompliance with the provisions of section 188 of the Companies Act 2013 and the detailsall the related party transactions have been disclosed in the Financial Statements asrequired by the applicable accounting standards. Further there are no transactions as perSection 188(1) of the Companies Act 2013 therefore disclosure as per the provision ofSection 134 (Form AOC-2) is not applicable.
12. RISK MANAGEMENT
Risk management is the process of identification assessment and prioritization ofrisks followed by coordinated efforts to minimize monitor and mitigate/control theprobability and/or impact of unfortunate events to maximize the realization ofopportunities. The company has initiated a process of preparing a comprehensive riskassessment and minimization procedure. These procedures are meant to ensure that executivemanagement controls risk by way of a defined framework. The major risks are beingidentified by the company and its mitigation process/measures being formulated in areas ofoperations recruitment financial processes and reporting human resources and statutorycompliance.
13. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY FROMTHE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT
There are no material changes and commitment affecting financial position of thecompany during the financial year 2020-21.
14. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT.2013
Your Company has always provided a safe and harassment-free workplace for everyindividual working in its premises through various policies and practices. The Companyalways endeavors to create an environment that is free from discrimination and harassmentincluding sexual harassment. Your company has been actively involved in ensuring that theclients and all the employees are aware of the provisions of the POSH Act and rightsthereunder.
The company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal)Act 2013. The policy on prevention of sexual harassment is available on the website ofthe company at https://www.kapstonfm. com/images/PDF/Policy-for-prevention-of-Sexual-Harassment.pdf.
Internal Complaint Committee has been set up to redress complaints received regardingsexual harassment. During the year under review the Company has not received any SexualHarassment Complaints detailed information about the same has been given in the CorporateGovernance Report enclosed as Annexure II.
15. NUMBER OF BOARD MEETINGS DURING THE YEAR
During the financial year six meetings of the board were held in compliance with theprovisions of the Companies Act 2013 SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and Secretarial Standards on Board Meeting.
16. COMMITTEES OF THE BOARD
As on March 31 2021 the Board constituted the Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee and StakeholderRelationship Committee. A detailed note on the composition of the Board and its committeesis provided in the Corporate Governance Report. In addition the Board constitutes othercommittees to perform specific rolesand responsibilities as may bespecified by the Boardfrom time to time.
17. CORPORATE GOVERNANCE
Your company will continue to uphold the true spirit of Corporate Governance andimplement the best governance practices. A report on Corporate Governance pursuant to theprovisions of Corporate Governance Code stipulated under SEBI (Listing Obligations andDisclosure Requirements)
Regulations 2015 forms part of the Annual Report. Full details of the various boardcommittees are also provided therein along with Auditors' Certificate regarding complianceof conditions of corporate governance is enclosed as Annexure I.
18. Covid 19 Impact
During the year under review the operations of the company were impacted due tolockdowns imposed by the state and central government. While the revenue from SecurityServices increased based on our market expansions and new customer acquisitions therevenue from soft services were impacted as facilities services in most of the officesacross the country remained under partial closure.
19. POLICY ON DIRECTORS'APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Nomination and Remuneration Committee has adopted a policy as per Section 178(3) ofthe Companies Act 2013 for determination of remuneration and the manner of selection ofthe Board of Directors CS and CFO&Managing Director and their remuneration.
Criteria for selection of Non-Executive Director
> The Non-Executive Directors shall be of high integrity with relevant expertise andexperience in the fields of Service Industry Manufacturing Marketing Finance andTaxation Law governance and general management.
> In case of appointment of Independent Directors the committee shall satisfyitself with regard to the criteria of independence of the directors vis-a-vis the companyso us to enable the board to discharge its function and duties effectively.
> The committee shall ensure thatthe candidate identified for appointment as adirector is not disqualified for appointment under Section 164 of the Companies Act 2013.
> The committee shall consider the following attributes whilst recommending to theboard the candidature for appointment as director:
Qualification expertise and experience of the directors in their respectivefields;
Personal professional or business standing;
* Diversity of the Board.
* In case of re-appointment of NonExecutive Directors the Board shall take intoconsideration the performance evaluation of the Directors and his engagement level.
The Non-Executive Directors shall not be entitled to receive remuneration except by wayof sitting fees reimbursement of expenses for participation in the board/committeemeetings and commission. The Independent Director of the company shall not be entitled toparticipate in the Stock Option Scheme of the company. The aggregate commission paid tothe Non-Executive Directors is within the statutory limit of the company.
Criteria for selection/appointment of Managing Director Executive Director CS and CFO
For the purpose of selection of the Managing Director Executive Director CS and CFOthe Committee shall identify persons of integrity who possess relevant expertiseexperience and leadership qualities required for the position.
The Committee will also ensure that the incumbent fulfils such other criteria withregard to age and other qualifications as laid down under Companies Act2013 or otherapplicable laws.
Remuneration to Managing Director and Executive Director
At the time of appointment or re-appointment the Executive Director andManaging Director shall be paid such remuneration as may be mutually agreed between theCompany (which includes the Committee and the Board of Directors) and the ExecutiveDirector/ Managing Director within the overall limits prescribed underthe Companies Act2013.
The remuneration shall be subject to the approval of the members of the Companyin General Meeting in compliance with the provisions of the Companies Act 2013.
Remuneration Policy for the Senior Management Employees including CFO & CS
In determining the remuneration of Senior Management Employees the committee shallensure/consider the following:
The relationship between remuneration and performance benchmark;
The balance between fixed and variable pay reflecting short and long-termperformance appropriate to the working of the company and its goals as mutually agreed.
The policy relating to remuneration of Directors Key Managerial Personnel SeniorManagement and other employees is available on the website of the Companyhttps://kapstonfm.com/images/PDF/ Nomination%20and%20Remuneration%20Policy. pdf
20. BOARD EVALUATION AND ASSESSMENT
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual Directors pursuantto the provisions of the Sections134178 and Schedule IV of the Companies Act 2013. A structured questionnaire wasprepared after taking into consideration inputs received from the Directors coveringvarious aspects of the Board's functioning such as adequacy of the composition of theBoard and its Committees execution and performance of specific duties by the Board ofDirectors independence ethics and values attendance and contribution at meetings etc.
The performances of the Independent Directors were evaluated by the Board after seekinginputs from all the Directors on the effectiveness and contribution of the IndependentDirectors.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee members based on the criteria such as the composition of Committeeseffectiveness of Committee meetings etc.
The Board reviewed the performance of the individual Directors on the basis of thecontribution of the individual Director
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated
taking into account the views of executive directors and non-executive directors. TheIndependent Directors also assessed the quality frequency and timeliness of flow ofinformation between the Board and the management that is necessary for effectiveperformance.
21. DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR REDESIGNATED
During the year under review
Mr. Nageswara Rao Koripalli (DIN 08734786) has been appointed as an IndependentDirector for a term from April 29 2020 to April 28 2025
Mr. Srikanth Kodali (DIN: 02464623) has been reappointed as a Managing Directorfor a term of 3 years with effect from 29th January 2021.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Associations of the Company Mr. Srikanth Kodali (DIN: 02464623) ManagingDirector retires by rotation at the ensuing Annual General Meeting (AGM) and beingeligible offers himself for reappointment. The Board has recommended his re-appointment.
Key Managerial Personnel
Mr.Srikanth Kodali Managing Director Mr.Brendon Thomas Pereira Chief FinancialOfficer Ms. Amreen Gulnaaz Company Secretary and Compliance Officer are Key ManagerialPersonnel of the Company in accordance with the provisions of Section(s)2(51) and 203 ofthe Companies Act2013 read with the Companies (Appointment and Remuneration of ManagingPersonnel) Rules2014. There has been no change in the Key Managerial Personnel during theFY 2020-21. However Mr.Amreen Gulnaaz Company Secretary and Compliance Officer hasresigned w.e.f. June 15 2021 and Ms. Kinkeri Vyshali has been appointed as the CompanySecretary and Compliance Officer of the company w.e.f 09th August 2021.
22. DECLARATION BY THE INDEPENDENT DIRECTORS
During the year under review the Independent Directors of the company have submittedtheir disclosures to the board that they fulfil all the requirements as stipulated inSection 149(6) of the Companies Act 2013 so as to qualify themselves to be appointed asIndependent Directors under the provisions of the Companies Act 2013 and the relevantrules.
23. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
i. In preparation of the annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;
(I; 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 March31 2021 and of the profit and loss of the company for that period;
iii. The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
iv. The directors have prepared the annual accounts on a going concern basis;
v. The directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively;
vi. The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Further there are no more qualifications reservations or adverse remarks made by thestatutory auditor/secretarial auditor in their respective reports.
24. EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3) (a) of the Companies Act 2013 an extract of theAnnual Return of the company for the financial year ended
March 312021 is enclosed as Annexure II.
The extract of the Annual Return of the company is also hosted on the company's websiteat https:// www.kapstonfm.com/investors.html.
25. CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors constituted Corporate Social Responsibility (CSR) Committee inaccordance with the provisions of section 135 of the Companies Act 2013 the Board onrecommendation of CSR Committee and in compliance with the policy on Corporate SocialResponsibility invested the CSR Fund for Combating COVID-19 by donating to Prime MinisterNational Relief Fund and State Fund under the Disaster management Act and on otheractivities as specified in Schedule VII of the Companies Act 2013. The Annual
Report on CSR activities is enclosed as Annexure III to this Annual Report.
26. PARTICULARS OF EMPLOYEES
The information required under section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is presented in a separate section forming part of this Annual Report as Annexure IV.
27. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulatedin SEBI Listing Regulations is presented in a separate section forming part of this annualreport.
28. STATUTORY AUDITORS
M/S NSVR and Associates LLP Chartered Accountants (Firm Registration No.0008801S/S200060) Hyderabad was appointed as Statutory Auditor of the Company at the 10th AnnualGeneral Meeting held on September 28 2018 till the conclusion of 14th Annual GeneralMeeting. They have confirmed their eligibility for the financial year 2021-22 underSection 141 of the Companies Act 2013 and the Rules framed thereunder.
29. SECRETARIAL AUDITOR
Mr. D. S Rao Practising Company Secretary Hyderabad was appointed as SecretarialAuditor of the Company for the financial year 2020-21.
The Board has re-appointed Mr. D.S Rao Practising Company Secretary Hyderabad asSecretarial Auditor of the Company for the financial year 2021-22.
30. INTERNAL AUDITOR
Ms. Sravanthi Karuturi Chartered Accountant Hyderabad was appointed as InternalAuditor of the Company for the financial year 2020-21.
The Board has re-appointed Ms. Sravanthi Karuturi Chartered Accountant Hyderabad asInternal Auditor of the Company for the financial year 2021-22.
31. AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT
The Statutory Auditors' Report and Secretarial Auditors' Report do not contain anyqualifications reservations or adverse remarks.
During the year the statutory auditors and secretarial auditor have not reported anyinstances of frauds committed in the Company by its officers or employees to the AuditCommittee under section 143(12) of the Companies Act 2013.The report of the secretarialauditor is given as an annexure which forms part of this report as Annexure V.
32. INTERNAL FINANCIAL CONTROL
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. Based on the audit reports your company undertakescorrective action in their respective areas and strengthen the controls.
The Board of Directors of the Company have adopted various policies like Related PartyTransactions policy Whistle Blower Policy code of conduct for regulating monitoring andreporting insider trading and such other procedures for ensuring the orderly and efficientconduct of its business for safeguarding its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations2015 the Board has approved the code of conduct for prohibition of insider trading andthe same is being implemented by the Company. The board has appointed Kinkeri VyshaliCompany Secretary as the Compliance Officer under the code.
33. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the financial year under review there were no significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andcompany's operations in the future.
34. VIGIL MECHANISM
In pursuance to the provisions of Section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished. The Policy on vigil mechanism i.ewhistle blower policy may beaccessed on theCompany's website at www.kapstonfm.com. The policy provides for a framework and processfor the employees and directors to report genuine concerns or grievances about leakage ofunpublished price sensitive information (UPSI) illegal and unethical behaviour to theChairman of the Audit Committee.
35. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION
Considering the nature of activities of the Company the provisions of Section 134(m)of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014relating to conservation of energy Research and Development Technology Absorption arenot applicable to the Company.
36. FOREIGN EXCHANGE EARN INGS AN D OUTGO
During the financial year under review there is no foreign exchange earnings and outgo.
37. OTHER DISCLOSURES
The Company does not have any subsidiary or group or associate companytherefore standalone financial statement is presented.
The Company is not required to maintain cost records as per the provisions ofSection 148 of the Companies Act 2013.
Various policies as approved by the Board of Directors in accordance with theprovisions of Companies Act 2013 and SEBI (LODR) Regulations 2015 is hosted on thecompany's website at https:// kapstonfm.com/investors. html
Your directors place on record their gratitude to the Central Government various StateGovernments and Company's Bankers and advisors for the valuable advice guidanceassistance cooperation and encouragement they have extended to the Company from time totime. The Directors also take this opportunity to thank the company's customers suppliersand shareholders for their consistent support to the Company.
We place on record our appreciation for the contribution made by our employees at alllevels. Our consistent growth was made possible by their hard work solidaritycooperation and support.
| ||On behalf of the Board of Directors |
| ||Sd/- |
| ||Dr. Chereddi Ramachandra Naidu |
|Place: Hyderabad ||Executive Chairman |
|Date: August 09 2021 ||DIN: 02096757 |