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Keerthi Industries Ltd.

BSE: 518011 Sector: Industrials
NSE: N.A. ISIN Code: INE145L01012
BSE 00:00 | 02 Aug 151.15 3.50
(2.37%)
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148.00

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152.45

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141.50

NSE 05:30 | 01 Jan Keerthi Industries Ltd
OPEN 148.00
PREVIOUS CLOSE 147.65
VOLUME 3542
52-Week high 160.00
52-Week low 33.30
P/E 5.31
Mkt Cap.(Rs cr) 121
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 148.00
CLOSE 147.65
VOLUME 3542
52-Week high 160.00
52-Week low 33.30
P/E 5.31
Mkt Cap.(Rs cr) 121
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Keerthi Industries Ltd. (KEERTHIINDUS) - Director Report

Company director report

TO THE MEMBERS

Dear Members

Your Directors have pleasure in presenting their 37th Annual Report for the FinancialYear 2019-2020 together with the Audited Balance Sheet as at 31st March 2020 and theProfit & Loss Account for the year ended on that date.

1. FINANCIAL RESULTS: (Rs. In Lakhs)

Particulars 2019-20 2018-19
Net Operational Income 17180.53 18441.11
Other income 258.08 418.30
Profit before interest and depreciation 1797.08 1194.97
Less: Interest 604.50 658.87
Less: Depreciation 1104.16 1069.93
Profit/(Loss) before taxation 88.42 (533.84)
Less: Provision for taxation including deferred tax liability 78.02 (461.56)
Less: short provision of earlier years 42.52 (79.31)
Add" Other Comprehensive Income 0.99 14.75
Total Comprehensive Income/(Loss) (31.13) 21.78

OPERATIONS:

The Overall revenue for the year 2019-2020 at Rs 17438.61 Lakhs is reduced by 7.53%(Rs. 18859.41 Lakhs in 2018-2019). Due to decrease in selling price and volume compare toprevious year. The company ended up with a comprehensive loss of 31.13 lakhs as againstRs.21.78 lakhs profit in the previous year.

Cement Division: Production of Cement and Clinker were 404808 MTS and 455628MTS respectively during the twelve months ended 31st March 2020 as against were 418040MTS and 482444 MTS respectively during the previous year ended 31st March 2019. WindPower: The Company has generated 2681940 units as against 2861641 units during theprevious year. Electronic Division: The Company has produced 2043.69 sq. mts ofPrinted Circuit Boards as against 1869.00 sq. mts during the previous year.

CURRENT YEAR OUTLOOK:

CEMENT DIVISION:

The production of cement in India is expected to reach 410.21 Mn tons by FY 2024expanding at a compound annual growth rate (CAGR) of 3.83% during the FY 2019 - FY 2024period owing to rising demand from the government and housing contractors.

Cement manufacturers in India have seen a significant turn in fortunes with theoutbreak of Covid-19. Companies which had been raising price and pushing volumes from thestart of the year are now staring at supplies coming to a standstill and demand taking ahit. Cement demand which started recovering from the beginning of 2020 has suddenly cameto a standstill since the second half of March'20 in the wake of nationwide lockdown tocombat Covid-19 say analysts. It is not only the lockdown that will impact volumes butexpectations on weak economic growth government cuts in spending on infrastructure andreal estate demand taking a beating will also hit volume growth during FY21.

CRISIL expects cement demand in India to contract by 10-15 per cent in FY21 in the baseline scenario. However an extended vulnerability will deepen the damage for the sector to20-25 per cent. Analysts' channel checks suggest that all-India average cement pricesoftened marginally by 0.5 per cent month-on-month to Rs 310-315 per 50-kg bag in Marchthere was undercutting to the tune of Rs 5-7 per bag being in Tier-II and Tier-III brands.Moving forward with demand under pressure cement prices may take a further hit.

The demand of cement is largely absent cement prices for certain pockets have seen arise. Cement in the Telangana market for instance increased from Rs 325 a bag effectiveApril to Rs 370 effective May in the non-trade segment. Industry executives have alsopointed out it will not be viable to reduce cement prices below pe-lockdown levels asrunning factories at lower utilization will also impact viability.

The demand growth was impacted owing to a slowdown in project execution due to –the general elections and labour unavailability (in Q1 FY2020) monsoons (in Q2 FY2020)and weak execution of government housing and infrastructure projects because of extendedmonsoons (in Q3 FY2020) the report further added. In Q3 FY2020 south India faced muteddemand momentum particularly in Andhra Pradesh and Telangana while demand was moderate inother southern states. In the north and central India also the demand was modest owing toconstruction ban in certain areas harsh winters among others However western India saw amoderate uptick in demand trends driven by infrastructure development and rural spending.In the east the demand picked up substantially towards the end of the quarter driven bygovernment spending on infrastructure and affordable housing segments. At the pan-Indialevel cement prices are higher in the northern southern and western markets by 20-25 percent 5 per cent and by 8 per cent respectively in 11 months FY2020 on year-on-yearbasis.

ELECTRONICS DIVISION:

The Indian electronics market is growing at a fast pace and domestic electronicsmanufacturing units have huge business potential. This is going to create tremendousopportunities for PCB manufacturers. Considering the booming market as well as the recentgovernment policies like ‘Make in India' and ‘Smart Cities' the PCB market inIndia is expected to reach new heights.

The demand growth was impacted due to pandemic outbreak of Nobel Coronavirus.

During the year 2019-20 the segment wise contribution to the total PCB business forElectronics Division given below.

The improvement in the sales comes from Health care and Consumer Electronics andprototypes segment. Prototypes with new types of raw material made a significant share inthe consumer electronics segment. A few of the prototypes are likely to be converted intoregular business in future. We are supporting a few designers for regularly getting theprototype business. Procurement of necessary equipment for making quick turn-aroundprototypes is being planned The division expects to improve its customer base in the yearsto come. The division is exploring further opportunities in the defence sector to improveits business. Vendor approvals from RCI HAL and BHEL have been obtained after theirevaluations. We have now become eligible for participation in the bidding of for tendersfloated by these organisations.

The different types of PCB manufactured by the Indian PCB manufacturers aresingle-side double side and multi-layer types. Keerthi Electronic Division is engaged inmanufacturing flexible rigid flex and multilayer PCBs. Major market comes from healthcareand defense sectors.

Segment-wise contribution to the total PCB business for the year 2019-2020 is givenbelow:

Sl.No. Segment Contribution % of total
(Rs. in Lakhs) contribution
1 Automobile 18.79 2.02
2 Defense 172.04 18.51
3 Health Care 703.26 75.68
4 Consumer Electronics 35.18 3.79
Total 929.27 100

There is a possibility of demand arising out of advances in technology which willpositively impact the market for the advanced-level applications in the company years. Inaddition the recent thrust towards indigenisation in strategic electronics manufacturingis likely to fuel the demand for high grade multi-PCBs.

Demand from healthcare segment is steady and there is an improvement in the demand fromdefence segment. The division expects to improve its customer base in defence in thecoming years. SUGAR DIVISION: There is no progress in the division in particulareffective steps could not be taken for furtherance of the business. OILFIELD AND NATURALGAS

There is no progress in the division in particular effective steps could not be takenfor furtherance of the business.

2. DIRECTORS: a. The Company's Board of Directors have been constituted incompliance with the provisions of Companies Act read with the SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 ("SEBI (LODR) Regulation". TheComposition of the Board is as under:

1. Smt. J. Triveni Executive Chairperson & Whole-time Director
2. Sri. J. S. Rao Managing Director
3. Sri. J. Sivaram Prasad Independent Director
4. Sri. K. Harishchandra Prasad Independent Director
5. Sri. Boddu Venkata Subbaiah Independent Director

b. During the period under review Sri. K. Harishchandra Prasad Independent DirectorSri. B.V. Subbaiah Independent Director has been re-appointed w.e.f. 08th August 2019till 7th August 2024. c. In accordance with the provisions of Companies Act 2013 Sri.J.S. Rao the Managing Director of the Company would retire by rotation and beingeligible offer herself for re-appointment. The Board of Directors recommends herre-appointment at the ensuing Annual General Meeting. d. As required under Section 134 (3)(d) of the Companies Act 2013 All independent directors have given declarations to theCompany that they meet the criteria of independence as laid down under section 149 (6) ofthe Companies Act 2013.

Other Disclosure Board Evaluation

Pursuant to Section 178 (2) of the Companies Act 2013 the Nomination and RemunerationCommittee has evaluated the performance of individual Directors in its duly convenedmeeting. Pursuant to Section 134 (3) (p) of the Companies Act 2013 and Regulation 4 (2)(f) (ii) (9) of the ("SEBI (LODR) Regulation 2015 the Board has carried out anevaluation of its own performance as well as the evaluation of the Committees of theBoard. The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Remuneration Policy is stated in the Corporate Governance Report.

Meetings

During the year FIVE (5) Board Meetings and Four (4) Audit Committee Meetings wereconvened and held. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.

3. DETAILS OF WHOLE-TIME KEY MANAGERIAL PERSONAL (KMP)

Smt. J. Triveni Executive Chairperson & Whole-time Director Sri. J.S. RaoManaging Director Sri. Y. Sadasiva Rao Chief Financial Officer and Ms. Akriti SharmaCompany Secretary & Compliance Officer are the Whole-Time Key Managerial Personal ofthe Company.

4. RESERVE AND SURPLUS

The reserve and surplus of your company stood at Rs. 4713.91 Lakhs as against Rs.4832.03 Lakhs in the previous year.

5. SHARE CAPITAL:

(a) No Change in Authorized Capital:

During the year under review there was no change in the Authorized Capital of theCompany. The Authorized Capital of the Company is Rs. 380000000/- (Rupees Thirty-EightCrores only) divided into 27300000 Equity shares of Rs. 10/- each aggregating Rs.273000000/- and 1070000 9% Cumulative Redeemable Preference Shares of Rs. 100/- eachaggregating Rs. 107000000/-.

(b) Change in Paid up Shares Capital:

Equity Share Capital: During the period under there is no change in the Paid-up EquityShare Capital of the Company. The Paid-up Equity Share Capital is Rs. 80167380/-divided into 8016738 Equity shares of Rs. 10/-.

Preference Share Capital: During the period under review the preference shares of theCompany has been redeemed as under:

Sl.No. 9% Cumulative Redeemable Preference Shares Instalment No Amount (In Rs.)
1 268340 3rd 5000000
2 270100 2nd 9453500
3 500000 3rd and final 17500000

As on 31st March 2020 the paid-up preference share capital is Rs.21287500/-. vTotal Paid-up Share Capital: As on 31st March 2020 Total Paid-up Share Capital of theCompany is Rs.101454880/-.

6. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY:

During the period under review there are no significant and material orders passed bythe Regulators or Courts or Tribunals which would impact the going concern status and theCompany's future operations.

7. DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL fordematerialization. In response to the compliance with SEBI CircularSEBI/HO/MIRSD/DOP1/CIR/P/2018/73 dated April 20 2018 your company had issued 3 (three)reminders to all the Shareholders whose shares are in physical mode and requested them todematerialize their shares. The Board pleased to inform that in compliance with Regulation39 of the SEBI (LODR) Regulation 2015 entered with Bombay Stock Exchange Limited theunclaimed equity shares were dematerialized and the same are lying in the DEMAT suspenseaccount. Shareholders are requested to claim their shares in DEMAT form by submittingtheir claims to the Company / RTA.

8. DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Companies Act 2013 your directors confirm: a.That the directors in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures. b. That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the Company for that period. c. That thedirectors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safe guarding the assets of thecompany and for preventing and deleting fraud and other irregularities. d. That thedirectors had prepared the annual accounts on the going concern basis. e. That thedirectors had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively. f. That thedirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

9. PUBLIC DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 or 74 ofthe Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014.

10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.

18

11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board & to theChairperson & Managing Director.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.

12. INTERNAL FINANCIAL CONTROL:

The Company has in place adequate internal financial control commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.

The Company has adopted accounting policies which are in line with the AccountingStandards and the Act. These are in accordance with generally accepted accountingprinciples in India. The Company has a robust financial closure certification mechanismfor certifying adherence to various accounting policies accuracy of provisions and otherestimates.

13. RELATED PARTY TRANSACTIONS:

All transactions entered by the Company with related party were in the ordinary courseof the business. The Audit Committee granted omnibus approval of the same. There were nomaterially significant transactions with Related Parties during the financial year 2019-20which were in conflict with the interest of the Company.

During the year your Company has entered into following Related Party Transactions asper Section 188 (1) of the Companies Act 2013:

S. No. Nature of Transactions Amount (In Rs.) Legal Framework Legal Requirements Date of prior Approval obtained Date of Contract
1. Sell of Cement to DCS Sporting Pvt. Ltd 40000/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 07-05-2019
2. Sell of Cement to DCS Sporting Pvt. Ltd 50000.64/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 10.06.2019
3. Sell of Cement to DCS Sporting Pvt. Ltd 40000/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 14-08-2019
4. Sell of Cement to DCS Sporting Pvt. Ltd 20000/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 05.12.2019
5. Sell of Cement to DCS Sporting Pvt. Ltd 20000/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 24-01-2020
6. Sell of Cement to DCS Sporting Pvt. Ltd 40000/- Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 Prior approval of Audit Committee and Board Omnibus approval of Audit Committee dated 10-02-2020 Board Approval – 10-02-2020 03-03-2020
TOTAL 210000.64/-

14. COST AUDITORS:

Cost Audit records have been maintained by the company for the F.Y.2019-20. Pursuant tothe directives of the Central Government and provisions of Section 148 of the CompaniesAct 2013 qualified Cost Auditors have been appointed to conduct the cost audit for theF.Y. 2020-2021.

15. AUDITORS:

The Company had on its 34th AGM held on 31st August 2017 appointed M/s. Brahmayyaand Co. as Statutory Auditor for 5 years i.e. to hold office until the conclusion of 39thAGM.

16. ADDITIONAL INFORMATION:

Information pursuant to Section 134 (3) (l) & (m) of the Companies Act 2013 isannexed herewith as (Annexure II) which is detailed in Form A and Form B.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

The Annual Report on CSR activities is annexed herewith as: (Annexure III) 18.SECRETARIAL AUDITOR AND 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 Board hadappointed M/s VCSR & Associates Company Secretaries in Whole-time Practice to carryout Secretarial Audit for the financial year 2019-2020. The Secretarial Audit report isannexed herewith as "(Annexure IV)" & "(Annexure IV.I)" 19.EXTARCT OF ANNUAL RETURN:

The details forming part of the Annual Return in form MGT-9 is annexed herewith as"(Annexure V)"

20. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS:

The company continues to accord high priority to health and safety of employees atmanufacturing locations. During the year under review the company conducted safetytraining programmes for increasing disaster preparedness and awareness among all employeesat the plants. Training programmes and mock drills for safety awareness were alsoconducted for all employees at the plants. Safety Day was observed with safety competitionprogrammes with aim to imbibe safety awareness among the employees at the plant.

During the year under review your Company enjoyed cordial relationship with workersand employees at all levels.

21. RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of theListing Regulation the company has constituted a risk management committee on is BoardMeeting held on 29th May 2015. The details of the committee and its terms of referenceare set out in the corporate governance report forming part of the Boards report. Atpresent the company has not identified any element of risk which may threaten theexistence of the company.

22. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS

The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are discussed separately together with the Certificate fromthe Practicing Company Secretary of the Company regarding compliance with the requirementsof Corporate Governance as stipulated SEBI (LODR) Regulations 2015.

23. ACKNOWLEDGEMENTS:

Your Directors are thankful to Axis Bank Begumpet Branch for their continued supportduring the year under review and acknowledge with gratitude the help extended by theCentral Government and Government of Telangana & Andhra Pradesh. Your directors alsowish to place on record their appreciation of the services rendered and cooperationextended by the Workmen Staff Dealers Customers and other concerned.