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Kesoram Industries Ltd.

BSE: 502937 Sector: Industrials
NSE: KESORAMIND ISIN Code: INE087A01019
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VOLUME 11356
52-Week high 90.18
52-Week low 44.80
P/E 48.75
Mkt Cap.(Rs cr) 1,192
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 47.75
CLOSE 48.15
VOLUME 11356
52-Week high 90.18
52-Week low 44.80
P/E 48.75
Mkt Cap.(Rs cr) 1,192
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kesoram Industries Ltd. (KESORAMIND) - Director Report

Company director report

FOR THE YEAR ENDED 31ST MARCH 2022

The Board presents the Company's One Hundred and Third Annual Report together with theAudited Statement of Accounts of the Company for the year ended 31st March 2022.

FINANCIAL RESULTS (STANDALONE)

Rs/ Crores

Particulars 31st March 2022 31st March 2021
Total Income 3577.71 2517.43
Profit before Interest Depreciation Tax and other Amortizations ("EBIDTA") 586.80 496.74
Less: Depreciation and Amortization Expenses 90.73 96.21
Finance Costs 481.70 245.81
Profit before Exceptional Items and Tax 14.37 154.72
Exceptional Items (154.25) (294.83)
(Loss) before Tax (139.88) (140.11)
Tax Expenses Credit – Net 9.87 307.05
Total Profit / (Loss) for the year (130.01) 166.94
Other Comprehensive Income (net of tax expense)
Re-measurement of Post-employment Benefit Obligations 4.55 0.52
Fair valuation of Equity Investments (3.58) 7.90
Total Comprehensive Income / (Loss) for the year (129.04) 175.36

GENERAL REVIEW OF COMPANY'S OPERATIONAL AND FINACIAL PERFORMANCE

• Standalone Income comprising Revenue from Operations and other income for theyear was R3577.71 Crores 42.12 % higher compared to R2517.43 Crores in 2021.

• Standalone Loss before Tax for the year was R139.88 Crores 0.16 % lowercompared to R140.11 Crores in 2021.

• Standalone Profit/ (Loss) after Tax for the year was (R130.01) Crores 177.88 %lower compared to R166.94 Crores in 2021.

• Cement production increased by 38.92% from 5.37 Million Tonnes in 2021 to 7.46Million tonnes in 2022.

• Cement Sales Volume increased by 36.40% from 5.44 Million Tonnes in 2021 to 7.42Million tonnes in 2022.

• No material changes or commitments have occurred between the end of thefinancial year and the date of this Report which affect the Financial Statements of theCompany with respect to the reporting year.

• The thrust on public spending and implementation of big ticket investments ininfrastructure projects augur well for improving the cement demand in current financialyear.

DIVIDEND

No dividend is proposed in view of the loss during the year and non-availability of anycarry forward surplus. In terms of the provisions of Regulation 43A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended (‘the ListingRegulations') the Company has formulated a Dividend Distribution Policy and it isavailable on Company's website linkwww.kesocorp.com/DOCS/pdf/mgc/dividend-distribution-policy-final.pdf.

TRANSFER TO RESERVE

No profit has been transferred to General Reserve.

SHARE CAPITAL

During the year under review the Company has issued and allotted 79997755 partlypaid-up Equity Shares of RS 5/- each of the Company on rights basis in the ratio of133:274 Equity Shares held to eligible equity shareholders of the Company at an issueprice of RS 50/- per Rights Equity Share (including a premium of RS 40/- per Rights EquityShare) pursuant to the Letter of Offer dated 13th September 2021.

On 20th November 2021 the Board approved the making of the first and final call of RS25/- (including premium of RS 20/-) per partly paid-up equity shares of RS 5 each issuedby the Company on rights basis.

Pursuant to the first and final call the Fund Raising Committee ("FRC")duly authorized by the Board on 14th January 2022 21st February 2022 and 6th April2022 approved the conversion of 76935064 2277758 and 422638 partly paid-up EquityShares of RS 5 each to fully paid-up equity shares of RS 10 each respectively. The processof calling final call money of rest 362295 partly paid-up shares and its conversion intofully paid-up share is under process. The converted shares rank pari passu with theexisting fully paid-up Equity Shares of the Company. The paid-up Equity Share Capital ason 31st March 2022 stood at RS 2444166295/- consisted of 244024163 paid-up EquityShares of RS 10 each and 784933 paid-up Equity Shares of RS 5 each. The Preference ShareCapital as on 31st March 2022 stood at RS 4489719500/-.

STATUS OF EXISTING DEBENTURES

Total Secured Listed Non-Convertible Debentures and Secured Optionally ConvertibleDebentures of the Company at amortised cost as on 31st March 2022 are RS 1463.53 Croresand RS 138.49 Crores respectively.

The Company has repaid face value of RS 55 Crores worth of Secured Non-ConvertibleDebentures and RS 309.33 Crores worth of Secured Optionally Convertible Debentures duringthe financial year ended 31st March 2022.

FINANCIAL LIQUIDITY

Standalone cash and cash equivalent as on 31st March 2022 stood at RS 118.97 Croresvis-?-vis RS 90.95 Crores in the previous year.

DEPOSITS

During the year under review the Company did not accept any Deposit within the meaningof Section 73 of the Companies Act 2013 ("the Act"). The Compliances asrequired under Chapter V of the Act is not applicable.

MANAGEMENT DISCUSSION & ANALYSIS BUSINESS RESPONSIBILITY REPORT AND CORPORATEGOVERNANCE

Management Discussion & Analysis Business Responsibility Report and the Report onCorporate Governance for the year under review as stipulated under the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") are attached as Annexures I II & III respectively to thisAnnual Report.

CREDIT RATING

The details of credit ratings obtained by the Company and any revision thereto aredisclosed in the Corporate Governance Report which forms part of the Annual Report.

RISK MANAGEMENT FRAMEWORK

The Company has a structured Risk Management framework designed to identify assess andmitigate risks appropriately. The Risk Management Committee has been entrusted with theresponsibility to oversee and approve the Company's risk management framework and tosuggest all possible measures to achieve prudent balance between risk and reward inongoing business activities.

The approach of Risk Management is defined across the Company at various levels with aperiodical review to maintain its contemporariness so as to effectively address theemerging challenges in a dynamic business environment.

GOING CONCERN STATUS

No significant or material orders have been passed by the Regulators or Courts orTribunals which impact or influence the Company's going concern status and / or its futureoperations.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Company's Internal Financial Control Systems commensurate with the nature of itsbusiness the size and complexity of its operations and such internal financial controlswith reference to the financial statements are adequate.

The Internal Audit is performed by an external independent firm which reports itsfindings to the Audit Committee periodically. Internal Audit provides assurance to theBoard on effectiveness of internal financial control functioning and quality throughcontinuous monitoring and operational testing by the internal audit function.

EVALUATION OF BOARD PERFORMANCE

The Board evaluated the effectiveness of its functioning of the Committees and ofindividual Directors pursuant to the provisions of the Act and the SEBI ListingRegulations.

The Independent Directors carried out annual performance evaluation of the Chairpersonthe Non-Independent Directors and the Board as a whole in the separate meeting of theIndependent Directors taking into account the views of the Executive Directors and otherNon-Executive Directors.

Care for society

Emphasis has been to care for the society around us. We organise

1. Water Distibution

2. Distribution of Umbrella's and Caps to protect from the harsh weather

The performance of the Board its Committees and each Board Member individually wasevaluated by the Board based on the policy on performance evaluation specified by theNomination and Remuneration Committee.

NUMBER OF BOARD MEETINGS

During the year five Board Meetings were convened and held. The particulars of themeetings held and attended by each Director are detailed in the Report on CorporateGovernance.

AUDIT COMMITTEE

The Audit Committee comprises Kashi Prasad Khandelwal (Chairman) Sudip Banerjee LeeSeow Chuan and Jikyeong Kang. Padmalochanan Radhakrishnan Whole-time Director & CEOSuresh Sharma CFO and Observers representating Debenture Holders are permanent inviteesto the Meetings. The Company Secretary acts as Secretary to the Committee.

During the year all the recommendations of the Audit Committee were accepted by theBoard.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises Kashi Prasad Khandelwal (Chairman)Lee Seow Chuan and Jikyeong Kang.

The Company's Nomination and Remuneration Policy prepared in conformity with therequirements of Section 178(3) of the Act is available on company's website linkwww.kesocorp.com/DOCS/pdf/mgc/nomination-and-remuneration-policy.pdf. All recommendationsof the Nomination and Remuneration Committee made during the year were accepted by theBoard and there were no instances of any disagreement between the Committee and the Board.

CORPORATE SOCIAL RESPONSIBILITY

The Company continued to ensure and focus on several social responsibility programsduring the year even though the expenditure is not mandated during the year under review.The Company continues its endeavor to improve the lives of the people by takinginitiatives in the areas of education health hygiene empowerment and communitydevelopment. The Company organised Pulse Polio Camps plantation of trees facilitatingvaccination centres during the year.

The Company's CSR Policy is available on linkwww.kesocorp.com/DOCS/pdf/mgc/kesoram-CSR-Policy-27042015.pdf. The CSR Committee of theBoard consists of Manjushree Khaitan (Chairman) Kashi Prasad Khandelwal and PadmalochananRadhakrishnan as Members.

The Annual Report on CSR activities is annexed herewith and given in Annexure IV tothis Report.

RELATED PARTY TRANSACTIONS

All related party transactions/arrangements/contracts entered into by the Companyduring the financial year were approved by the Audit Committee and were at arm's lengthbasis and in the ordinary course of business in compliance with the applicable provisionsof the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.During the year under review the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions or which arerequired to be reported in Form No. AOC-2 in terms of Section 134(3) (h) read with Section188 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014.

There were no materially significant related party transactions entered into by theCompany which could have potential conflict with the interest of the Company at large.

The Company's Related Party Transactions Policy appears on its website linkwww.kesocorp.com/DOCS/pdf/mgc/related-party-transactions-policy.pdf. Details of relatedparty transactions entered into by the Company in terms of Ind AS-24 have been disclosedin the notes to the standalone / consolidated financial statements forming part of thisAnnual Report.

SUBSIDIARY ASSOCIATE AND JOINT VENTURE COMPANY

The Company had a wholly-owned subsidiary Cygnet Industries Limited("Cygnet") and a Joint Venture Company Gondkhari Coal Mining Limited("Gondkhari") as on 31st March 2022. The Financial Statements of Cygnet as at31st March 2022 have been consolidated with the Financial Statements of the Company. TheConsolidated Financial Statements of the Company in respect of the year is a part of thisAnnual Report. Cygnet achieved Revenue from Operations of RS 71.85 Crores during thefinancial yeaRs 2021-22 as compared to RS 237.56 Crores in the previous financial yeaRs2020-21. Cygnet posted negative Earnings before Interest Depreciation Taxation andAmortisations (EBITDA) (before exceptional items) of RS 28.92 Crores during the financialyear compared to negative EBITDA of RS 16.36 Crores in previous financial year. During theyear under review the factory of Cygnet was under temporary suspension from 22nd June2021 till 22nd December 2021 amid 2nd wave of Covid-19.

The subsidiary also implemented a ‘Workers Separation Scheme' during the yearunder review where permanent workers were converted into casual workers. Total 439employees have availed the scheme during the year amounting to RS 22.35 Crores which hasbeen charged under Exceptional Items in its Statement of Profit and Loss. Under theagreement with Futamura Chemical Co. Ltd. Cygnet is acting as an agent for the coatedfilms and is looking for good avenues and growth for the transparent paper market in theyears to come. The Board has proposed to demerge rayon transparent paper and chemicalsbusiness (‘the Business') carried out by the Company directly and through its whollyowned subsidiary Cygnet into Cygnet. All assets and liabilities which include HindusthanHeavy Chemicals unit of the Company the Kesoram Rayon brand investments and receivablespertaining to the Business shall stand transferred to Cygnet on a going concern basis.

Gondkhari the Special Purpose Vehicle ("SPV") was incorporated in 2009 as aJoint Venture between the Company and two other corporate entities for developing andworking a coal block in the State of Maharashtra lost its sub-structure once the SupremeCourt de-allocated the coal block that was originally allocated in 2014. As a result theSPV has become defunct leading to full provision by the Company against its portion of theinvestment in Gondkhari.

A Statement containing the salient features of the financial statements of thewholly-owned subsidiary and the Joint Venture Company as per section 129(3) of the Act inForm AOC-1 appears in Annexure V of this Annual Report.

The financial statement of Cygnet as required is available on the website of theCompany www.kesorcorp.com. The Policy on material subsidiaries is also available on theCompany's website www.kesocorp.com.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Inter corporate financial exposures as at the year end appears under Note Nos. 56 7and 8 to the Financial Statements. The Company has not given any loan and guarantee ormade any investment during the year under review except as disclosed in the FinancialStatements.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Fraud and corruption free culture has always been at the Company's core. In view of thepotential risk of fraud corruption and unethical behavior that could adversely impact theCompany's operation performance and reputation the Company has established a robustWhistle Blower Policy in accordance with the provisions of the Act and the ListingRegulations. The policy is available on the website of the Company atwww.kesocorp.com/DOCS/pdf/mgc/whistle-blower.pdf. There was no fraud reported by theAuditors of the Company under Section 143(12) of the Companies Act 2013 to the AuditCommittee or the Board of Directors during the year under review. Therefore no detail isrequired to be disclosed under Section 134(3)(ca) of the Act.

STATUTORY AUDITOR AND THEIR REPORT

Shareholders at the Company's Ninety Eighth Annual General Meeting appointed Messrs.Deloitte Haskins & Sells Chartered Accountants Auditors of the Company for a periodof five years from the conclusion of that Annual General Meeting. The Report of theStatutory Auditors for the year ended 31st March 2022 forms part of this Annual Report.The said report does not contain any qualification reservation adverse remark ordisclaimer. The observations of the Auditors are self-explanatory.

COST AUDITOR

In terms of the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors of theCompany as per the recommendation of Audit Committee approved the appointment of Mani& Co. Cost Accountants to audit the cost accounting records maintained by theCompany for the financial year ended 31st March 2022 and 31st March 2023 at a totalremuneration of RS 4.11 lakhs and RS 4.97 lakhs respectively excluding tax andreimbursement of out of pocket expenses. A resolution to this effect has to be ratified bythe Members of the Company and accordingly forms part of the Notice convening the AGM.

SECRETARIAL AUDITOR AND SECRETARIAL STANDARDS

In terms of Section 204 of the Companies Act 2013 and the rules made thereunder theBoard had appointed Ritu Bajaj Practising Company Secretary as Secretarial Auditor of theCompany to conduct Secretarial Audit for the Financial YeaRs 2021-22 and their report isannexed to this report as an Annexure VI. The Secretarial Audit Report does notcarry any qualification reservation or adverse remark. The Secretarial Audit Report ofWholly Owned Subsidiary is available on the Company's website www.kesocorp.com.

The Company has complied with the applicable Secretarial Standards formulated by theInstitute of Company Secretaries of India and notified by the Central Government forimplementation.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other particulars as prescribed under theprovisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are set out in Annexure VII andforms part of this Report. None of the employees listed in the said Annexure is related toany Director of the Company.

As per the provisions of the second proviso to Section 136(1) of the Act and as per MCAcirculars the Annual Report are being sent to the Members excluding the aforesaidinformation. Any Member interested in obtaining such information may request to theCompany by e-mail at corporate@kesoram.net.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder.The policy is available atwww.kesocorp.com/DOCS/pdf/mgc/policy-on-prevention-of-sexual-harassment-at-workplace.pdf.The Company has in place requisite Internal Committee(s) to redress and resolve anycomplaints arising under the said Act. No complaints on the issues covered by the aboveAct were received during the year.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) the Act and based upon representations from the Managementthe Directors to the best of its knowledge and belief states that:

(a) in the preparation of the Annual Accounts applicable accounting standards has beenfollowed along with proper explanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and suchjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financial yearended 31st March 2022 and of the profit of the Company for that period;

(c) proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

(d) the Annual Accounts have been prepared on a going concern basis;

(e) internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and operating effectively; and

(f) proper systems have been devised to ensure compliance by the Company with theprovisions of applicable laws and that such systems were adequate and working effectively.

CODE OF CONDUCT

The Company has laid down a robust Code of Business Conduct and ethics which is basedon the principles of ethics integrity and transparency.

DIRECTORS

In accordance with the provisions of the Act and the Articles of Association of theCompany Manjushree Khaitan (DIN: 00055898) Director retires by rotation at the ensuingAnnual General Meeting and being eligible offers herself for re-appointment.

The Board of Directors based on the performance evaluation and as per therecommendation of the Nomination and Remuneration Committee ("NRC") hascommended the appointment of Satish Narain Jajoo (DIN: 07524333) as a Non-ExecutiveIndependent Director for a period of 5 years from the date of ensuing 103rd Annual GeneralMeeting and a resolution seeking shareholders' approval for his appointment forms part ofthe 103rd AGM Notice.

Mangala Radhakrishna Prabhu (DIN: 06450659) was appointed as a Non-ExecutiveIndependent Director on the Board of Company effective from 14th May 2021 for a term of 5years and subsequently regularized at the Annual General Meeting held on 23rd July 2021.

Jikyeong Kang (DIN: 08045661) was appointed as Independent Director on 10th January2018. However she has been re-designated as a Non-Executive Director (Non-Independent) ofthe Company w.e.f. 11th April 2022 and a resolution seeking shareholders' approval forher appointment forms part of the 103rd AGM Notice.

Padmalochanan Radhakrishnan (DIN: 08284551) is currently serving as a Whole-timeDirector and Chief Executive Officer of the Company upto 7th August 2022. The Nominationand Remuneration Committee and the Board of Directors recommends his re-appointment for afurther period of 3 years w.e.f. 8th August 2022 and a resolution seeking shareholders'approval for the same forms part of the 103rd AGM Notice.

The Company has received declarations from all Independent Directors confirming thatthey meet the relevant independence criteria as laid down in Section 149(6) of the Act aswell as the Regulation 16(1)(b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and that they have registered themselves in theIndependent Directors' Databank and requirement of online self-proficiency test iscomplied with.

Brief profiles of Directors being appointed / re-appointed at the forthcoming OneHundred and Third Annual General Meeting have been given in the Corporate GovernanceReport annexed to this.

KEY MANAGERIAL PERSONNEL
The following persons functioned as Key Managerial Personnel during the year:
P. Radhakrishnan Whole time Director & Chief Executive Officer
Suresh Sharma Chief Financial Officer (till 11th April 2022)
Rohit Shah Chief Financial Officer (w.e.f. 12th April 2022)
Akash Ghuwalewala Company Secretary (till 14th June 2021)
Raghuram Nath Company Secretary (w.e.f. 15th June 2021)

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO

The particulars relating to conservation of energy technology absorption and foreignexchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013read with Rule 8 of The Companies (Accounts) Rules 2014 are provided in Annexure VIIIto this Report.

MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT

There has been no material change between the end of the Financial Year and the date ofthis Report.

ANNUAL RETURN

The Annual Return as required under Section 92 and Section 134 of the Companies Act2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014 isavailable on the Company's website www.kesocorp.com.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the year underreview.

PROCEEDING PENDING UNDER INSOLVENCY AND BANKRUPTCY CODE 2016

There is no proceeding pending under the Insolvency and Bankruptcy Code 2016 duringthe year under review.

ONE-TIME SETTLEMENT WITH THE BANKS OR FINANCIAL INSTITUTIONS

There was no instance of onetime settlement with any Bank or Financial Institutionduring the year under review.

ANNEXURES FORMING PART OF THIS REPORT

Annexure Particulars

I Management Discussion & Analysis

II Business Responsibility Report

III Report on Corporate Governance

IV Report on Corporate Social Responsibility (CSR) activities

V AOC – 1

VI Secretarial Audit Report

VII Disclosures pertaining to remuneration and other particulars as prescribed underthe provisions of Section 197 of the Companies Act 2013

VIII Conservation of energy technology absorption foreign exchange earning and outgo

APPRECIATION

The Board takes this opportunity to express their deep sense of gratitude to itsdebenture investors and places on record the valuable inputs given in the meetings by theObservers representing the Debenture Holders. Additionally the Board appreciates andthanks the Central and State Governments and the local authorities for their continuedco-operation and support. We on behalf of the Board would also like to place on recordtheir sincere appreciation for the commitment hard work and high engagement level ofevery employee and worker of the Company. We thank the various stakeholders of the Companyincluding customers dealers suppliers transporters advisors local community etc. fortheir continued committed engagement with the Company. The overwhelming response to theRights issue reflects the trust and confidence reposed on the Board by you the Members ofthe Company. We value the same.

For and on behalf of the Board
Manjushree Khaitan
Chairman
Place: Kolkata P. Radhakrishnan
Date: 11th April 2022 Whole-time Director & CEO

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