To the Members
Your Directors have pleasure in presenting their Forty-first Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended March31 2018. This report is being presented along with the audited financial statements forthe year
|1. Financial Performance: || || |
| || || |
(` in lacs except per share data)
| ||2017-18 ||2016-17 |
|Operating Profit ||1868.87 ||1569.31 |
|Less: || || |
|1) Interest ||255.19 ||236.41 |
|2) Depreciation ||493.15 ||440.97 |
| ||748.34 ||677.38 |
|Profit for the year before taxation ||1120.53 ||891.93 |
|Less : Provision for taxation - Current Tax ||390.00 ||201.79 |
| ||(24.84) ||106.28 |
|- Deferred Tax ||365.16 ||308.07 |
|Profit for the year ||755.37 ||583.86 |
|Other Comprehensive Income || || |
|Re-measurements of post-employment || || |
|benefit obligations (net of tax) ||17.00 ||(5.24) |
|Profit for the year available for appropriation ||772.37 ||578.62 |
2. Company Affairs:
(Management discussion and analysis report / Operations reports of Company'sperformance):
The operations for the year 2017-18 have resulted in a net profit of Rs.772.37 lakhsafter charging depreciation interest tax and comprehensive income as against Rs.578.62lakhs for the corresponding period of the previous year.
A. Explosives Division
The sale of Explosives for the year under review was 39854 MT valued at Rs.15588lakhs as against 40825 MT valued at Rs.16731 lakhs of the previous year. The Salesturnover in Explosives decreased by 2% in quantity terms. During the year the turnover inregard to traded goods and export of finished goods in Explosives sector was Rs.1282lakhs as against Rs.1391 lakhs for the corresponding period of the previous year. Thesale of Detonating Fuse and related products during the year under review was valued atRs.1225 lacs as against Rs.1136 lacs for the corresponding period of the previous year.
B. Perlite Division
The sale of Perlite and Perlite based products for the year under review were 9490 MTvalued at Rs.1821 lakhs as against 6.519 MT valued at Rs.1434 lakhs for thecorresponding period of the previous year which resulted in increase of 46% in quantityterms and 27% increase in value terms. The increase in sales was due to manufacture of thenew product viz. Filter Aid product in the new project which was commissioned atVishwasnagar Unit during the 4th quarter of the previous year.
The turnover of service contracts and special products during the year under review wasRs.489 lakhs as against Rs.940 lakhs for the corresponding period of the previous year.
3. Basic Earnings Per Share
Basic earnings per share increased by 17.15% i.e. Rs.171.51 lacs.
4. Risk Management Report:
The combination of policies and processes concerned to the operations of the Companyare adequately adopted for the anticipated risks associated with the Company's business.The Senior Management of the Company periodically reviews the risk management framework soas to effectively address the emerging challenges in a dynamic business environment.
The Directors have recommended a Dividend of Rs. 2.50 per share of Rs.10/- each(25%) on the paid-up Equity Capital of the Company.
6. Business Focus and Highlights (A) EXPOSIVES DIVISION
There was marginal reduction of value and quantity in explosives sector. The Coalsectors had already finalized orders at aggressive prices which the Company did notaccept. However the Company's products are well accepted in other segments of businessand the non-coal segment of business contributed to improve margins. In regard to D Fuseand related products the demand was consistent and the improved capacity utilization wasachieved.
(B) PERLITE DIVISION
The sale of Expanded Perlite products including Filter Aid showed significant growthduring the year under review.
(C) INDUSTRIAL RELATIONS
The industrial relations during the year under review were cordial and there were noindustrial disputes.
(D) OUTLOOK FOR 2018-19.
During the current financial year 2018-19 on account of stiff competition on pricesale of Explosives to Public Sector Units is expected to be under pressure. The Company isexpected to consolidate its growth in the segment of packaged Emulsion Explosives andExplosives accessories on account of consistent product quality and service. Volume growthis expected in Perlite Filter Aid segment as the product is being accepted by and large byall consumers. Your Company will continue to make all efforts for optimizing the overallperformance.
(E) CAUTIONARY STATEMENT
The statements expressions information given in this Management Discussions andAnalysis Report describing the Company's objectives projections estimates expectationsor predictions may be deemed to be as "forward looking statements". Actualresults might substantially or materially different from those expressed or implied.Important developments that could affect the Company's operations included demand supplyconditions changes in Government global economic scenario and such other developmentsdifferent from Company's comprehension.
7. General Reserve
The Company proposes to transfer a sum of Rs. 600 Lacs to General Reserve.
The Company has not received any deposits during the financial year 2017-18.
The quality function at KEL has been at the forefront of enabling delivery and supportfunctions in differentiation optimization and de-risking. While we continue to complywith international standards such as an ISO 9001 & 14001 OHSAS 18001 our qualityand engineering departments drove change initiatives for productivity improvements.
The Company is in the process of expansion at Vishwasnagar Garamsur and other Units.
11. Related Party Transactions
The Company has entered in to related party transactions which are in arms-length basisas mentioned in Annexure I to this report.
12. Board Committees
The Company has following Committees of the Board: a) Audit Committee; b) StakeholdersRelationship Committee; c) Committee of Directors (Share Transfer Committee); d)Independent Directors Committee; e) Corporate Social Responsibility Committee; and f)Nomination and Remuneration Committee
The composition of each of the above Committees their respective role andresponsibility is as detailed in the Report of Corporate Governance.
13. Particulars of Loans Guarantees or Investments
The Company has not given any loans guarantees and has not made any investments inother entities.
14. Directors a. Re-appointment
Shri Ashok V. Chowgule [DIN 00018970] retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for re-appointment. Pursuant to Section 149 of theCompanies Act 2013 the office of independent directors are not liable to retire byrotation and they shall hold office for a term upto five consecutive years from the datethey were appointed as Independent Directors by the Members in the General Meeting.
b. Board Evaluation
The Board has reviewed and evaluated the performance of all individual directors andthe independent directors have reviewed and evaluated the performances of ChairmanManaging Director and non-independent Directors during the year at their meeting held on25th January 2018. They found that none of the board members have contravenedany of the statutory provisions of Companies Act 2013 and its relevant rulesregulations guidelines etc. applicable to them in exercise of their duties andresponsibilities.
c. Declaration by Independent Directors
A declaration from Independent Directors as required in sub-section (6) & (7) ofSection 149 of the Companies Act 2013 is obtained and the same are placed before theBoard for noting . An independent director shall hold office for a term up to fiveconsecutive years on the Board of a Company but shall be eligible for reappointment fornext five years.
d. Policy on Director's appointment and remuneration
As per Section 178 of the Companies Act 2013 the Company was required to constitute aNomination and Remuneration Committee for the purpose of identifying qualified persons forappointment of Directors and Senior/ Key Managerial Personnel in future and to fix theirremuneration and other allowances. Currently the Company has an agreement with theManaging Director of the Company for a period of 5 years with effect from 29thApril 2014.
e. Number of meetings of the board
During the year five meetings of Board of Directors were held i.e. on 18thMay 2017 21st July 2017 3rd November 2017 and on 25thJanuary 2018. These meetings were held as per the provision of section 173 of theCompanies Act 2013.
f. Vigil Mechanism/Whistle Blower Policy
The Company has established a Whistle Blower Policy for Directors and employees toreport their genuine concern. The details of the same have been explained in the CorporateGovernance Report and the same was inserted in the website of the Company.
A. Statutory Auditors and Auditors' Report
M/s.Khimji Kunverji & Co. Chartered Accountants (FRN105146W) have been appointedas Statutory Auditors of the Company for a period of five years effective from theconclusion of Fortieth Annual General Meeting till the conclusion of 45thAnnual General Meeting at the Board meeting of the Company held on 18th May2017.
B. Cost Auditors
Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Companies(Audit & Auditors) Rules 2014 Shri Vikas Vinayak Deodhar Practising Cost AccountantMembership No.3813 the Cost Auditor appointed by the Company to conduct audit of thecost records of the Company for the financial year 2017-18.
C. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Shri Swaroop S.C.P.No.9997 Partner M/s Swaroop Ravishankar and Associates Practising CompanySecretaries have been appointed for conducting the Secretarial Audit for the year ended31st March 2018 and their report is annexed as Annexure-5 to this report.
16. Key Managerial Personnel A. Managing Director
Pursuant to section 203 of the Companies Act the Company has entered into an agreementwith the Managing Director of the Company for a period of 5 years with effect 29thApril 2014.
B. Chief Financial Officer and Company Secretary
Pursuant to section 203 of the Companies Act the Company has appointed Chief FinancialOfficer and Company Secretary with effect 1st March 2015.
17. Extract of Annual Return
The extract of annual return in Form No. MGT 9 is annexed as Annexure-6 to thisreport.
18. Secretarial Standards
The Company has complied with all applicable Secretarial Standards.
19. Investor Education and Protection Fund (IEPF)
Pursuant to applicable provisions of Companies Act read with the IEPF Authority(Accounting Audit Transfer and Refund) rules 2016 all unpaid and unclaimed dividendsare required to be transferred by the Company to the IEPF established by the Government ofIndia after the completion of 7 years. Further according to the rules the shares on whichthe dividend has not been paid are claimed by the shareholders for 7 consecutive years ormore shall be transferred to the demat account of the IEPF authority. Accordingly thecompany has transferred the unclaimed and unpaid dividends of Rs.168450/- during theyear for 2009-2010. Further corresponding shares shall be transferred as per therequirements of the IEPF rules. The details are available on our website.
20. Significant and material orders.
The Company has sufficient orders on hand for Explosives and Perlite products forsustaining current level of operations
21. Internal Financial Control
The Company has effective systems and procedures of internal financial control forensuring orderly and efficient conduct of its business safeguarding its assetsprevention and detection of frauds and errors accuracy and completeness of accountingrecords and timely preparation of reliable financial information. These systems areperiodically reviewed by the Audit Committee of the Board of Directors. The AuditCommittee and the Board have ensured that the said system is adequate considering thenature of business and size of transactions.
22. Committees of the Board
A detailed note on the Board and its Committees is provided under the CorporateGovernance Report in this Annual Report. The composition of the Committees andcompliances as per the applicable provisions of the Act and Rules are as follows:
|Name of the Committee ||Composition of the Committee ||Highlights of duties responsibilities and activities |
|1. Audit Committee ||a) Shri Harish Jagtiani ||All the recommendations made by the Audit Committee during the year were accepted by the Board. |
| ||b) Ms.Arati Saran || |
| ||c) Shri Kaiyoze Beji Billimoria || |
| ||d) Shri Santosh L. Chowgule ||The Company has adopted the Whistle Blower mechanism for Directors and all employees to report concerns about unethical behavior actual or suspected fraud or violation of the Company's Code of Business Conduct and Ethics. The Whistle Blower Policy is appended as Annexure-4 to the Board's Report. |
| || ||In accordance with the listing requirements the Company has formulated policies on Related Party Transactions and Material Subsidiaries. The policies including the Whistle Blower Policy are available on our website. |
|2. Nominationand ||a) Ms. Arati Saran ||The Committee oversees and administers executive compensation operating under a written charter adopted by the Board of Directors. |
|Remuneration ||b) Shri H.C.Asher || |
|Committee ||c) Shri Harish Jagtiani || |
| ||d) Shri Kaiyoze Beji Billimoria ||The Committee has designed and continuously reviews the compensation programme for Managing and senior executives to align both short-term and long-term compensation with business objectives and to link compensation with the achievement of measurable performancegoals. |
| || ||The Committee structures compensation to ensure that it is competitive in the global markets in which the Company operates in order to attract and retain the best talent. In the future the Committee plans to use a combination of stock options restricted stock units and performance-based stocks to align senior employee compensation with shareholder value. |
| || ||The Nomination and Remuneration Committee has framed the Nomination and Remuneration policy. A copy of the policy is appended as Annexure-3 to the Board'sReport. |
|3. Corporate Social ||a) Shri Harish Jagtiani ||The Board has laid out the Company's policy on Corporate Social Responsibility (CSR) and the CSR activities of the Company are carried out as per the instructions of the committee. |
|Responsibility ||b) Shri Umaji V. Chowgule || |
| ||c) Shri Kaiyoze Beji Billimoria || |
| ||d) Shri Santosh L. Chowgule || |
| || ||During the year the Company has allocated 2% of its average net profits for the three immediately preceding financial years on CSR activitiestovarious beneficiaries. |
| || ||Financial data pertaining to the Company's CSR activities to various beneficiaries for 2017- 18 is as appended under the prescribed format in Annexure- 7 to the Board's Report. |
| || ||The contents of the CSR policy are available on our website |
|4. Stakeholders ||a) Ms. Arati Saran ||The Committee reviews and ensures redressal of investor grievances. |
|Relationship ||b) Shri H.C.Asher || |
|Committee ||c) Shri Kaiyoze Beji Billimoria ||The Committee noted that all the grievances of the investorshavebeenresolvedduringtheyear. |
| ||d) Shri Harish Jagtiani || |
| ||e) Shri Santosh L. Chowgule || |
|5. Committee of Directors ||a) Shri Ashok V. Chowgule ||The Committee shall overview the process of share transfers transmissions etc. during the period and shall note the same as to delay or approvals in time. |
| ||b) Shri Umaji V. Chowgule || |
|(Share Transfer ||c) Shri Santosh L. Chowgule || |
|Committee) || || |
|6. Independent ||a) Shri Harish Jagtiani ||The Committee shall review the performance of the Non-Independent Directors of the Company. |
|Directors ||b) Shri H.C.Asher || |
|Committee ||c) Ms.Arati Saran ||The review is pursuant to provisions of Part VIII of Schedule IV. |
| ||d) Shri Kaiyoze Beji Billimoria || |
23. Risk Management Policy
The Company has implemented a risk management policy for the Company includingidentification therein of elements of risk if any and the same has been inserted in thewebsite of the Company.
24. Corporate Governance
The Corporate Governance certificate received from M/s.Khimji Kunverji & Co.Chartered Accountants Mumbai (FRN105146W) regarding compliance of conditions of corporategovernance as stipulated in Regulation 34(3) read with Schedule V (C ) of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed with the report.
25. Director's Responsibility Statement
Your Company's Directors make the following statement in terms of sub-section (5) ofSection 134 of the Companies Act 2013 which is to the best of their knowledge and beliefand according to the information and explanations received from them are noted by theBoard: I. The financial statements have been prepared in conformity with the applicableAccounting Standards and requirements of the Companies Act 2013 ("the Act") tothe extent applicable to the Company; on the historical cost convention; as a goingconcern and on the accrual basis. There are no material departures in the adoption of theapplicable Accounting Standards.
II. The Board of Directors have 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 of the Company for that period.
III. The Board of Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities. The Board of Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively. IV. The Board of Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively. V. The financial statements have been audited by M/s.KhimjiKunverji & Co. Chartered Accountants Mumbai the Company's Auditors.
26. Particulars of Employees
The total number of employees of the company as on March 31 2018 was 237 as against223 as on March 31 2017.
27. Particulars of loans guarantees or investments under section 186
During the year the company has not sanctioned any loans given securities and made anyinvestments as prescribed under section 186 of the Companies Act 2013.
28. Conservation of energy research and development technology absorption foreignexchange and outgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
I. CONSERVATION OF ENERGY (FORM A')
This is not applicable to Explosives Industry.
II. ABSORPTION OF RESEARCH AND DEVELOPMENT (FORM B') A. Specific areas in whichR&D is carried out by the Company.
I. Cost reduction.
II. Product and Technology Development for Explosives. III. Technical Services tomonitor use of Explosives by Customers. IV. Development of value added Explosive products.
V. Development of improved and more efficient equipment. VI. Refinements andDevelopments in Packaging.
VII. Product Development in relation to application of Explosives and Perlite.
B. Benefits derived as a result of the above R & D:
I. Introduction of products for difficult blasting conditions.
II. Setting up of production facilities with indigenous Plant Equipment for Bulk andPackaged Explosives. III. Higher efficiency in use of Explosives to Customers.
IV. Higher efficiency in manufacturing process. V. Reduction in cost of production.
VI. Entry into Export market.
VII. New applications of our Explosives.
VIII. Application of perlite concrete for cryogenic tanks.
IX. Development of Air Decking system for blasting in boreholes. X. Export of PerliteConcrete Insulation Blocks.
XI. Overseas Contracts deploying Mobile Perlite Expanders.
C. Future Plan of Action:
I. Continue development work on Explosives. II. Evaluate other systems for SMS.
III. Develop site applications using perlite. IV. Explore new products fordiversification.
D. Expenditure on R & D:
I. Capital - Nil.
II. Recurring Rs.26.98 lacs. III. Total Rs.26.98 lacs.
IV. Total R & D expenditure as a % total turnover 0.13%
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION
1. Efforts in brief made towards technology absorption adaptation and innovation:Strict Monitoring of emulsion explosives and making necessary improvements to meet thefield requirements.
2. Benefits derived as a result of the above efforts e.g. product improvement costreduction product development import substitution etc. Emulsion products with fullyindigenous equipment have been produced and supplied. These products have been wellaccepted by customers for use in difficult strata conditions. Safety standards have beenmaintained both during manufacture and usage based on periodic feedback.
3. In case of imported technology (imported during the last five years reckoned fromthe beginning of the financial year) following information may be furnished.
|(a) ||Technology imported : || |
|(b) ||Year of import: || |
|(c) ||Has the technology been fully absorbed? ||Not Applicable |
|(d) ||If not fully absorbed areas where this has not taken place reasons there for and future plan of action || |
III. FOREIGN EXCHANGE EARNING AND OUTGO
|a. Activities relating to exports etc ||The Company has exported goods worth Rs.1392 lacs (C & F) during the year |
|b. Total Foreign exchange used and earned ||The Company has used Foreign Exchange amounting to Rs.46.54 lacs and earned Rs.942 lacs during the year. |
29. Corporate Social Responsibility (CSR)
The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 the Company was required to spend a sum of Rs.14.71 lacs towards CorporateSocial Responsibility Policy and accordingly the Company has spent the same.
30. Green initiatives
Electronic copies of the annual report 2017-18 and the notice of the 41st AnnualGeneral Meeting are sent to all members whose e-mail addresses are registered with theCompany/Depository Participants. For members who have not registered their e-mailaddresses physical copies are sent in the permitted mode.
Your Directors place on record their thanks to the Canara Bank and State Bank of Indiafor their unstinted co-operation and timely assistance. Your Directors would like to makea special mention of the support extended by the various Departments of Government ofIndia the State Government agencies the Tax Authorities including the Customs and ExciseDepartments Department of Industrial Policy and promotion Ministry of Corporate AffairsSecurities and Exchange Board of India and others and look forward to their continuedsupport in all future endeavours. The Directors acknowledge the support and co-operationextended by valued customers of the Company. Your Directors also place on record theirappreciation for the dedicated services rendered by the employees at all levels during theyear under review.
| ||For and on behalf of the Board of Directors |
|Place : Mumbai ||Ashok V Chowgule |
|Date : 18th May 2018 ||Chairman |