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Kernex Microsystems (India) Ltd.

BSE: 532686 Sector: Engineering
NSE: KERNEX ISIN Code: INE202H01019
BSE 00:00 | 06 Jul 201.50 9.55
(4.98%)
OPEN

192.90

HIGH

201.50

LOW

190.00

NSE 00:00 | 06 Jul 200.45 9.50
(4.98%)
OPEN

190.00

HIGH

200.45

LOW

186.05

OPEN 192.90
PREVIOUS CLOSE 191.95
VOLUME 8517
52-Week high 205.65
52-Week low 60.30
P/E
Mkt Cap.(Rs cr) 278
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 192.90
CLOSE 191.95
VOLUME 8517
52-Week high 205.65
52-Week low 60.30
P/E
Mkt Cap.(Rs cr) 278
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kernex Microsystems (India) Ltd. (KERNEX) - Director Report

Company director report

To

The Members

Kernex Microsystems (India) Limited.

Your Directors have pleasure in presenting the Twenty Ninth Annual Report together withthe audited financial statements of your company for the year ended 31 March 2021.

(Rs. in Lakhs)

Particulars 2020-21 2019-20
Sales and Other Income 1740.95 3288.45
Pro t/Loss before Depreciation Finance Cost and Tax 289.35 1103.48
Less:- Finance Cost 91.44 127.72
Less:- Depreciation 155.46 173.08
Less: Exceptional items - -
Pro t/Loss after Depreciation Interest and before tax 42.45 802.68
Tax expense 5.27 (3.39)
Pro t / Loss after Tax 37.18 806.07
Add: Balance brought forward from previous year (3703.25) (4470.41)
Adjustment consequent to revision of useful life of certain assets pursuant to Schedule II of Companies Act 2013 - -
Balance carried forward to Balance sheet (3662.13) (3664.34)
Pro t available for appropriation - -
Earnings Per Share (Rs.)
- Basic 0.30 6.45
- Diluted 0.30 6.45
Appropriations:
Transfer to General Reserve - -
Proposed Dividend - -
Income Tax on proposed Dividend - -
Balance carried to the Balance sheet (3662.13) (3664.34)

2. Subsidiary and Joint Venture details with consolidated financial statement

Your Company has one 100% wholly owned subsidiary Avant Garde Infos ystems Inc In USAand one Joint Venture named KERNEX TCAS JV in India and there were no associate Companiesas of 31 March 2021. There has been no change in the nature of business of subsidiary andJV during the year under review. In accordance with section 129 (3) of the Companies Act2013 the Company has prepared Consolidated financial statements of the Company and the JV& subsidiary in the form and manner as that of its own in compliance with theaccounting standards and the listing regulations of the stock exchanges which forms partof the Annual Report for laying before the Annual General Meeting.

A report on the information about the subsidiary and Joint Venture is annexed as AnnexureA to this report.

3. Material changes and commitments affecting the financial position of thecompany

There have been no material changes and commitments affecting the financial position ofyour Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the Report.

4. Share Capital

There was no change in Share Capital of your Company during the year.

5. Dividend and Reserves

Your company in the absence of distributable profits hence not declared any dividendduring the year. And no amount was transferred to reserves also.

6. Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act 2013 Sri.Sitarama Raju Manthena and Ms. Sreelakshmi Manthena Directors of the company retires byrotation and being eligible offers themselves for re-appointment.

The brief pro les of the Directors who are to be appointed/re-appointed have beenfurnished in the notice convening AGM.

Members are aware that during the year under review Sri. Sitarama Raju Manthena hasbeen appointed as Whole-Time Director of the Company on 02.09.2020 and the same wasapproved by the shareholders of the Company at their 28th Annual General Meeting held on30th September 2020.

7. Declaration by Independent Directors

All the Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149 (6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the rules framed there under. In terms of Section 150 of theAct read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules2014 as amended Independent Directors of the Company have enrolled their names in thedata bank of Independent Directors maintained with the Indian Institute of CorporateAffairs.

8. Nomination and Remuneration Policy of Directors Key Managerial Personnel andother Employees

In terms of section 178 (1) of the Companies Act 2013 the Board on the recommendationof the Nomination and remuneration committee approved the criteria and policy forselection and appointment of directors key managerial persons and their remuneration. Theremuneration policy forms part of the report on corporate governance.

9. Board Evaluation

Pursuant to the provisions contained in the Companies Act 2013 and listing regulationsthe Board has carried out annual performance evaluation of its own members The chairmanof the Board individual directors as well as the evaluation of the working of the AuditNomination and Remuneration committee and other committees. The evaluation was based onthe attendance contribution independence of judgment and preparedness for the meetings

10. Number of Meetings of the Board of Directors

During the financial year 2020-21 the Board of Directors of the Company met 4 times on30/07/2020 02/09/2020 13/11/2020 and 13/02/2021. A separate meeting of the IndependentDirectors of the Company held during the year on 30/01/2021 as required under Section 149(8) read with the Schedule IV (VII) of the Companies Act 2013 and clause 25 (3) ofSecurities Exchange Board of India (Listing obligations and disclosure requirements)Regulations 2015. Further due to covid 19 pandemic the statutory authorities have givena relaxation for the time gap between two meetings. The Company has complied with therelaxations given by the statutory authorities

11. Deposits

During the year your Company has not accepted any deposits within the meaning ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014. No amount on account of principal or interest on deposits from public wasoutstanding as on Balance Sheet date. Further the Company has availed an amount of Rs.5.19 crores as an unsecured loan from Sri. Anji Raju Manthena Director of the Companywhich is exempted from the de nition of Deposit. The outstanding unsecured loan balanceswhich were exempted from the de nition of Deposit as on 31st March 2021 is Rs. 10.60crores.

12. Regulatory / Court Orders

No significant and material orders were passed by the regulators or courts or tribunalsimpacting the going concern status of the Company and its future operations.

13. Disclosure under the sexual harassment of women at workplace (preventionprohibition and redressal) Act 2013

Your Company has put in place a Policy for prevention of Sexual Harassment of Women atthe Workplace in line with the requirements of the Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. Internal ComplaintsCommittee (ICC) of the Company has been constituted to redress complaints regarding sexualharassment.

During the period under review the Company has not received any complaints.

14. Director’s Responsibility Statement

Pursuant to section 134 (3) (c) of the Companies Act 2013 the Directors to the best oftheir knowledge hereby state and con rm that

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures.

b) the Directors had 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 and ofthe loss of the Company for that period

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities

d) the Directors had prepared the annual accounts on a going concern basis and

e) the internal financial controls to be followed by the Company were laid down andsuch financial controls were adequate and were operating effectively

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and were operating effectively

15. Internal Financial Controls

The Company has laid down policies and procedures to be adopted for ensuring theorderly and efficient conduct of its business including adherence to company's policiessafeguarding of its assets prevention and detection of frauds and errors accuracy andcompleteness of the accounting records and timely preparation of reliable financialinformation. An independent audit committee of the Board reviews the adequacy of internalcontrols.

16. Particulars of Loans Guarantees and Investments.

The details of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in notes forming part of the financialstatements.

17. Committees of the Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders' Relationship Committee

4. Risk Management Committee

5. Corporate Social Responsibility Committee

The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance section of thisReport.

18. Corporate Social Responsibility (CSR)

The Company had adopted a Corporate Social Responsibility Policy and constituted a CSRCommittee as per the provisions of Section 135 of the Companies Act 2013. Further theCompany was not required to spend any amount towards CSR as the average three years netprofits of the Company is in negative. Hence the requirement of disclosure under the saidprovisions and rules are not applicable to the Company.

19. Related Party Transactions

All the related party transactions by the Company during the year 2020-21 were on anarms length basis and were in the ordinary course of business and as such the provisionsof section 188 are not attracted. There are no materially significant Related PartyTransactions with Promoters Directors Key Managerial Persons or other designated personsduring the year. The details of the related party transactions entered by the companyduring the year under the provisions of section 188 of the Companies Act 2013 in Form AOC2 is annexed as Annexure B to this report.

20. Vigil Mechanism

Your Company in compliance with the provisions of Section 177 (9) of theCompanies Act 2013 framed a whistle Blower Policy/Vigil Mechanism for reporting illegalor unethical behavior. The employees are free to report violations of applicable laws andregulations and the Code of Conduct. The Audit Committee reviews reports received from theemployees who may also report to the Chairman of the Audit Committee. During the yearunder review no employee was denied access to the Audit Committee. The Directors andsenior management staff are to maintain confidentiality of the reporting and ensure thatthe whistle blowers are not subjected to any kind of discrimination.

21. Familiarization Programs for Independent Directors

The Company familiarizes all the independent directors about their roles rights andresponsibilities in the Company nature of Industry Risk Management Board evaluationprocess and procedures financial controls and management Board effectiveness strategicdirection etc. The Directors also were explained in detail the compliances required fromthem under the Companies Act SEBI (LODR) Regulations 2015 and other relevant regulationsand their af rmation taken with respect to the same. With a view to familiarize with theCompany's operations the Directors also were given detailed presentations giving theorganizational set up of the Company the functioning of various divisions / departmentsthe Company's market share and the markets in which it operates governance and internalcontrol processes and other relevant information pertaining to the Company's business. TheWhole time Director/ CEO also has personal discussions from time to time with theIndependent Directors. The above initiatives help the Directors to understand the Companyits business and the regulatory framework in which the Company operates and equips them toeffectively fulfill their role as Independent Directors of the Company.

22. Annual Return

The Annual Return of the Company as on 31 March 2021 is available on the Company'swebsite and can be accessed at www.kernex.in

23. Risk Management

Your Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis. These arealso discussed at the meetings of the Audit Committee and the Board Your Company has putin place internal control systems and processes to optimize the risk mitigation measuresfor review by the audit Committee and approval by the Board. The executive management isguided from time to time by the Board to improve the risk mitigation measures and initiatetimely action

24. Transfer of unclaimed dividend

There is no Un-claimed dividend to be transferred to IEPF (Investor Education andProtection Fund).

25 . Auditors

Statutory Auditors

M/s P.R.S.V & Co. LLP Chartered Accountants are the statutory auditors of yourCompany and they hold office until the conclusion of the thirtieth AGM to be held in theyear 2022.

Reply to the Comments made in the Statutory Auditors' Report

1. Other financial assets amounting to Rs. 6.00 crores which has been outstanding formore than 3 years has been subject to balance confirmation from the respective party/(s).

The management of Company is con dent of recovering these amounts.

Secretarial Audit

In terms of section 204 of the Companies Act'2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. P S Rao& Associates Company Secretaries to conduct Secretarial Audit for the year 2020-21and their report is annexed as Annexure C to this report.

Reply to the Comments made in the Secretarial Auditors' Report

1. in terms of SEBI Circular No.Cir/ISD/3/2011 the entire shareholding of Promoters/Persons Acting in- Concert (PACs) has not been dematerialized. Therefore the stockexchanges have kept the trading in the shares of the Company under trade-to-trade.

The Company is pursuing the same but unable to fulfill the condition as the promoterswere not responded

INTERNAL AUDITORS:

The Board of Directors based on the recommendation of the Audit Committee has appointedM/s. Thirupathi and Associates. Chartered Accountants Hyderabad as the Internal Auditorsof your Company. The Internal Auditors are submitting their reports on quarterly basis.

26. Conservation of Energy Technology Absorption and Foreign Exchange Earningsand outgo:

The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under section 134 (3) (m) of the Companies Act'2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 is furnished and annexedas Annexure D to this report.

27. Particulars Relating to Remuneration of Directors/Key Managerial Personneland Employees.

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided separately and annexed as Annexure E tothis report.

In terms of Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the Company does not have any employee who is employed throughoutthe financial year and in receipt of remuneration of Rs.102 Lakhs or more or employeeswho are employed for part of the year and in receipt of Rs. 8.50 Lakhs or more per month.

The Company does not have any employee who is employed throughout financial year orpart thereof who was in receipt of remuneration in financial year under review which inaggregate or as the case may be at a rate which in the aggregate is in excess of thatdrawn by the Managing Director or Whole time director and holds by himself or along withhis spouse and dependent children not less than 2% of the equity shares of the Company.

28. Other General Disclosures

No disclosure or reporting is required of the following as:-

a. No equity shares with differential rights as to dividend voting or otherwise wereissued

b. No sweat equity shares were issued

c. No remuneration or commission was received by the Managing Director/Whole-timeDirector of the Company from subsidiary Company.

d. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

29. Corporate Governance Report

Your Company is committed to adhere to the corporate governance requirements.The report on Corporate Governance as stipulated under Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is given separately and annexedas Annexure F to this report.

The requisite certificate from the Practicing Company Secretary confirming compliancewith the conditions of corporate governance is attached.

30. Management Discussion & Analysis (MDA)

Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(2) (e) of the Listing Regulations is presented in a separate sectionforming part of the this report and annexed as Annexure G.

31. Acknowledgements:

Your Directors would like to express their sincere appreciation for the guidanceassistance and cooperation received from the Indian Railways South Central RailwaysRDSO Egyptian Railways Sri Lanka Railways State Bank of India Government authoritiesand members during the year under review. Your Directors also wish to place on recordtheir deep sense of appreciation for the commendable and dedicated contribution of allemployees.

By order of the Board
For Kernex Microsystems (India) Limited
Sd/- Sd/-
M Badari Narayana Raju Sitarama Raju Manthena
Whole-Time Director Whole-Time Director
DIN: 07993925 DIN: 08576273
Place: Hyderabad Place: Hyderabad
Date: 01.08.2021 Date: 01.08.2021

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