Kirloskar Electric Company Ltd.
|BSE: 533193||Sector: Engineering|
|NSE: KECL||ISIN Code: INE134B01017|
|BSE 00:00 | 30 Jul||18.95||
|NSE 00:00 | 30 Jul||18.95||
|Mkt Cap.(Rs cr)||126|
|Mkt Cap.(Rs cr)||125.85|
Kirloskar Electric Company Ltd. (KECL) - Director Report
Company director report
The Directors present the 73rd Annual Report of KirloskarElectric Company Limited (hereinafter referred as "the Company" or"KECL") along with the audited financial statement for the financial year endedMarch 31 2020. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.
Review of performance and state of Company's affairs:
During the year under report your Company achieved a total turnover ofRs. 31869/- Lakhs (previous year Rs. 35659/- Lakhs). The operations have resulted in netloss of Rs. 8711/- Lakhs (previous year net loss was Rs 6732/- Lakhs).
The financial summary and highlights are as follows:
( Rs In Lakhs)
Note: The above figures are extracted from the audited standalone andconsolidated financial statements as per Indian Accounting Standards (Ind AS)
In view of the losses the Board of Directors of your Company has notrecommended any Dividend for the year under review.
Transfer to Reserves:
In view of the losses the Board of Directors of your Company has nottransferred any amount to the Reserves for the year under review.
Change in the nature of business:
There was no change in nature of the business of the Company during thefinancial year ended on March 31 2020.
As at March 31 2020 the paid up share capital of your Company stoodat Rs 664140710/- divided into 66414071 Equity Shares of Rs 10/- each.
Disclosure under section 43(a)(ii) of the companies act 2013:
The Company has not issued any shares with differential rights andhence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4)of the Companies (Share Capital and Debenture) Rules 2014 has been furnished.
Disclosure under section 54(1)(d) of the companies act 2013:
The Company has not issued any sweat equity shares during the financialyear under review and hence no information as per provisions of Section 54(1)(d) of theAct read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules 2014 hasbeen furnished.
Disclosure under section 62(1)(b) of the companies act 2013:
The Company has not issued any equity shares under Employees StockOption Scheme during the financial year under review and hence no information as perprovisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (ShareCapital and Debenture) Rules 2014 has been furnished.
Disclosure under section 67(3) of the companies act 2013:
During the financial year under review there were no instances ofnon-exercising of voting rights in respect of shares purchased directly by employees undera scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (ShareCapital and Debentures) Rules 2014 and hence no information has been furnished.
Transfer to Investor Education and Protection Fund:
As required under the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 ("IEPF Rules") during theyear 2019-20 matured deposits for the financial years 2009-10 and 2010-11 amounting to Rs170000/ - (Rupees One Lakh and Seventy Thousand Only) was transferred to the InvestorEducation and Protection Fund ("IEPF").
Subsidiaries associate companies & joint ventures:
The Company has four wholly owned subsidiaries and an associateCompany.
During the Financial year 2019-20 two of the wholly owned subsidiariesof the Company i.e. Swaki Habitat Private Limited (CIN: U70100KA2015PTC079374) and KesvikDevelopers Private Limited (CIN: U70100KA2015PTC079459) with paid up capital of Rs100.000/- each have applied for strike off with the Registrar of CompaniesKarnataka.
However reports on the performance and financial position of each ofthe subsidiary and associate companies have been provided in Form AOC-1 appended to thisreport.
During the period under review the company has entered into jointventure agreement with Electrodrive Powertrain Solutions Private Limited to float aproject of setting up a separate entity for undertaking design and development and supplyof electric motors required for all types of electrical vehicles. However due to changein market dynamics and pandemic Covid-19 the said JV is kept on hold indefinitely
Directors and Key Managerial Personnel:
In accordance with the provisions of section 152 of the Companies Act2013 and Articles of Association of the Company Mrs. Meena Kirloskar (DIN: 00286774) aNon-executive Director being longest in the office shall retire by rotation and beingeligible has offered herself for re-appointment seeking members' approval has beenset forth in the notice of the 73rd Annual General Meeting of the Company.
Due to personal reasons Mr. Anand Balaramacharya Hunnur (DIN: 06650798)Managing Director of the Company has resigned from the position of Managing Director witheffect from the close of office hours on May 31 2019.
Mr. Ganesh Krishnamurthy (DIN: 05160176) nominee of Life InsuranceCorporation of India has resigned from the directorship due to personal reason witheffect from the close of office hours on July 11 2019.
Subject to the approval of members of the Company the ExecutiveChairman of the Company Mr. Vijay Ravindra Kirloskar (DIN: 00031253) whose appointmentterm of three years ends on Augus 11 2020 has been reappointed as the Executive Chairmanof the Company for a period of three years beginning from Augus 12 2020 up to Augus 112023.
Dr. Ashok Misra whose appointment term of 5 years as IndependentDirector on the Board of Directors of the Company with effect from November 05 2015 comesto an end on November 04 2020 has made himself available for reappointment of second termof 5 years for the period beginning from November 05 2020 upto November 04 2025.
Subject to approval of members of the Company Mr. Sanjeev KumarShivappa (DIN: 08673340) has been appointed as Director (Finance) & Chief FinancialOfficer of the Company for a term of three years effective from February 14 2020 uptoFebruary 13 2023
Subject to approval of members of the Company Mr. Ravi Ghai (DIN:08715119) has been appointed as Nominee Director nominated by Asset Reconstruction CompanyLimited (ARCIL) as their representative with effect from June 27 2020.
In terms of the provisions of Section 149(7) of the Companies Act2013 the company has received declarations from all the independent directors statingthat they continue to meet the criteria of independence as provided under the provisionsof Section 149 (6) of the Companies Act 2013.
All independent directors have registered their names in theIndependent Director's Databank. In the opinion of the Board the independentdirectors so appointed / re-appointed possess the requisite expertise experience andproficiency and are of integrity.
Evaluation of Directors Committees and the Board:
The evaluation process has been explained in the Corporate GovernanceReport which forms part of the annual report.
Number of meetings of the Board of Directors and its committees:
Eight meetings of the Board of Directors were held during the financialyear 2019-20. The composition of Committee and others details are contained in theCorporate Governance Report which forms part of the annual report. The Nomination andremuneration policy and risk management policy has been appended to this report asAnnexure-I and Annexure-II respectively.
The information required under Section 197(12) of the Companies Act2013 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is disclosed in the Annexure A & is also available inForm MGT 9.
Particulars of employees:
In terms of the provisions of Section 197 (12) of the Companies Act2013 read with rules 5(2) & 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended a statement showing disclosures pertainingto remuneration and also the names and other particulars of the employees drawingremuneration in excess of limits set out in the said rules are provided in the Annexure-Ato the Board's Report which forms part of the annual report.
According to the provisions of Section 134(3)(a) copy of Annual Returni.e. Form MGT-7 for the year ended March 31 2019 has been placed on the Company'swebsite: https://kirloskarelectric.com/investors/investors-information/financial.html andin accordance with the provisions of Section 92(3) of the Companies Act 2013 the extractof the Annual Return in Form MGT-9 has been annexed to this report as Form MGT-9.
Director's Responsibility Statement:
We the Directors of your Company confirm to the best of ourknowledge and ability that:-
(a) in the preparation of the annual accounts the applicableaccounting standards have been followed and there are no material discrepancy or materialdepartures;
(b) we 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 / loss of the Company for that period;
(c) we have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;(d) we have prepared the annual accounts on a going concern basis;
(e) we have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and operating effectively.
(f) we have devised proper systems to ensure compliance with theprovisions of all applicable laws to the Company and that such systems were adequate andoperating effectively.
Particulars of loans guarantee investments and securities:
There were no loans and advance guarantee or investment made by theCompany during the year under report.
Particulars of loans advances investments as required under thelisting regulations:
The details of related party disclosures with respect to loansadvances investment at the year end and maximum outstanding amount thereof during theyear as required (under part A of Schedule V of the Listing Regulations) have beenprovided in the notes to the financial statement of Company.
Particulars of contracts or arrangements with related parties:
The particulars of every contract or arrangements entered into by theCompany with related parties referred to in subsection (1) of section 188 of the CompaniesAct 2013 including certain arms length transactions under third proviso thereto aredisclosed in Form No. AOC -2 appended hereto.
All related party transactions that were entered into during thefinancial year were on an arm's length basis and in the ordinary course of businessand were in compliance with the applicable provisions of the Companies Act 2013(the Act') and SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 as amended from time to time and the provisions of Section 188 of theCompanies Act 2013 are not attracted.
There were no materially significant Related Party Transactions made bythe Company during the year that would have required Shareholder approval as per provisionof Companies AcRs. 2013 read with applicable rules and Regulation 23 of SEBI (ListingObligations and Disclosures Requirements) Regulations 2015.
All related party transactions are placed before the Audit Committeefor approval. Prior Omnibus approval of the Audit Committee is obtained for thetransactions which are of foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted along with a statement giving details of allrelated party transactions is placed before the Audit Committee from time to time.
The Policy on Related Party Transaction is available on theCompany's website:-
Your directors draw attention of the members to note no. 37(12) to thestandalone financials statement which sets out the related party disclosures
Corporate Social Responsibility:
In terms of section 135 of the Companies Act 2013 the Company hasconstituted CSR Committee and the CSR Policy of the Company wherein the Company isrequired to spend two percent of the average net profits of the Company for the threeimmediately preceding financial years. The Company has incurred heavy losses in precedingthree financial years and the average net profits for three financial years is innegative thus the Company was not required to spend any money for the CSR activitiesduring the financial year ending March 31 2020.
The policy can be accessed at the following URL:https://www.kirloskarelectric.com/investors/investors-information/policies.html
During the preceding three years the Company has not made any profitand hence not required to spend any amount on the CSR. During the year the Companyhas contributed RS. 1000000 to Chief Minister for flood affected in Karnataka.
Conservation of energy technology absorption and foreign exchangeearnings and outgo:
The relevant data pertaining to conservation of energy technologyabsorption and other details are given in the Annexure - III which forms part of thisreport.
Vigil mechanism for Directors and Employees:
The Company has adopted a Whistle Blower Policy establishing vigilmechanism to provide a formal procedural course to the directors and employees to reporttheir concerns about any poor or unacceptable practices or any event of misconduct orviolation of Company's code of conduct. The purpose of this policy is to provide aframework to secure whistle blowing incidents and to protect the employees who are willingto raise concerns about serious irregularities within the Company. The policy provides foradequate safeguards against victimization of employees who avail of the mechanism and alsoprovides for direct access to the Chairman of the Audit Committee. It is affirmed that nopersonnel of the Company has been denied access to the Audit Committee. The policy ofVigil Mechanism is available on the Company's website :-(URL:https://www.kirloskarelectric.com/images/pdf/investor/policies/Whistle-Blower-Policy.pdf
Material Changes affecting the Company:
There have been no material changes and commitments affecting thefinancial positions of the Company between the end of the financial year and date of thisreport. There has been no change in the nature of business of the Company. COVID-19
In the last month of FY 2019-20 the Coronavirus (COVID-19) pandemicdeveloped rapidly into a global crisis forcing governments to enforce lockdowns of alleconomic activities. In many countries businesses are being forced to cease or limittheir operations for long or indefinite periods of time. Measures taken to contain thespread of the virus has resulted in an economic slowdown. COVID-19 is significantlyimpacting business operations of the companies by way of interruption in productionsupply chain disruption unavailability of personnel closure / lockdown of productionfacilities etc.
The Ministry of Home Affairs Government of India on March 24 2020notified the first ever nationwide lockdown in India to contain the outbreak of Covid-19.Towards the end of the quarter ended March 2020 the operations were disrupted at certainmanufacturing facilities of the Company.
In view of the outbreak of the pandemic the Company undertook timelyand essential measures to ensure the safety and well-being of all its employees andworkers at all its plant locations various branch offices and the corporate office. TheCompany observed all the government advisories and guidelines thoroughly and in goodfaith. As of March 31 2020 work from home' was enabled to enable employees towork remotely and securely. This response has reinforced customer confidence in theCompany and many of them have expressed their appreciation and gratitude for keeping theirbusinesses running under most challenging conditions.
No fraud has been reported by auditors to the Audit Committee of theBoard.
Neither the Executive Chairman and nor whole time Directors of theCompany receive any remuneration or commission form any of its subsidiaries.
Significant and Material orders passed by the Regulators or Courts:
There were no significant and material orders passed against theCompany by the regulators or courts or tribunals during financial year 2019-20 impactingthe going concern status and Company's operations in future.
M/s. K N Prabhashankar & Co. (Formerly known as Ashok KumarPrabhashankar & Co.) chartered accountants (Firm Registration no. AAD-7041) werere-appointed as auditors of the Company to hold office from the conclusion of the 72ndAnnual General Meeting until the conclusion of the 77th Annual GeneralMeeting
M/s. Sundar and Associates (AF no. 1172) Chartered AccountantsMalaysia were reappointed as the auditors for conducting audit of sales office at KualaLumpur and to hold the office from the conclusion of 72nd Annual GeneralMeeting until the conclusion of 73rd Annual General Meeting of the Company.Based on the recommendation of the Audit Committee the Board of Directors of the Companyhas propose to appoint M/s. Sundar and Associates (AF no. 1172) Chartered AccountantsMalaysia as auditors for conducting audit of sales office at Kuala Lumpur and to hold theoffice from the conclusion of 73rd Annual General Meeting until the conclusionof 74th Annual General Meeting of the Company subject to the approval of themembers of the Company.
The Company has appointed M/s. Avanza Management Consulting LLPChartered Accountants (LLP Registration no. AAE-9087) Bengaluru as its internal auditorsfor 2019-20.
M/s. Rao Murthy and Associates Cost Accountants (Firm Registrationno. 000065) were appointed as cost auditors of the Company for the financial yearended March 31 2020. The Board of Directors of your Company has fixed RS. 450000/-(Rupees Four Lakhs Fifty Thousand only) as audit fees which requires ratification by themembers of the Company in terms of the applicable provisions of the Companies Act 2013.Accordingly a resolution seeking members' approval has been set forth in the noticeof the 72nd Annual General Meeting of the Company.
Disclosure under section 148(1) of the Companies Act 2013:
During the period under review the Company has conducted the audit ofcost records and maintained the cost records as specified by the Central Government undersection 148(1) of the Companies Act 2013.
M/s. JKS & Co. Company Secretaries Bengaluru were appointed assecretarial auditors of the Company for the financial year 2019-20 to conduct secretarialaudit in terms of the provisions of Section 204 of the Companies Act 2013. The auditreport is enclosed as Form MR - 3.
Explanations or comments on auditors' qualifications / adverseremarks / emphasis on matters:
The comments / observations of the statutory auditor areself-explanatory and Company's explanation thereto has been given in the relevantnotes to accounts.
Comments to the observations of the Secretarial Auditors:
The Secretarial Auditor in their Report have mentioned that "TheBoard of Directors of the Company is duly constituted with proper balance of ExecutiveDirectors Non-Executive Directors and Independent Directors with one exception thatretirement of director at the annual general meeting was not in terms of Section 152 ofthe Companies Act 2013".
We wish to clarify that your Company's Board is consisting ofeight Directors and six among them are Independent Directors. Pursuant to the provisionsof section 149 of the Companies Act 2013 Independent Directors are not liable to retireby rotation. Out of other two directors 2/3rd shall be liable to retire by rotation i.e.one director and 1/3rd of one i.e. again one director shall retire at the AGM every yearand if eligible offer himself / herself for re-appointment. Accordingly Mrs. MeenaKirloskar was reappointed at the AGM held during the year 2019 for the purpose ofcompliance of Section 152 of the Companies Act 2013. Hence Board of Directors of yourCompany is confident that there is sufficient compliance under Section 152 of theCompanies Act 2013.
The Company complies with applicable mandatory Secretarial standardsissued by the Institute of Company Secretaries of India.
Management Discussion and Analysis:
Management discussion and analysis is appended hereto as Annexure IV and forms part of this report.
Details in respect of adequacy of internal financial controls withreference to the financial statement:
Internal Financial Controls:
Your Company has Systems and internal Audits in place to have controlson all processes. System driven controls also ensure ease of monitoring and consistency ofoperations and Compliances. Your Company is under SAP ERP which ensures that there isreasonable assurance about the financial and accounting records and controls. To safeguardassets of the Company against damage/loss and accounting records are reliable forpreparing financial statement the records are verified by Internal Auditors. Internalcontrols are evaluated by the internal auditors and supported by management reviews. Allaudit observations and follow up actions thereon are initiated for resolution by therespective functions.
Your Company's corporate governance report for the financial year2019-20 is appended to this annual report. A certificate on the status of compliance oncorporate governance is also appended and forms part of this annual report.
Prevention of Sexual Harassment at Workplace:
Your Company has zero tolerance policy in case of sexual harassment atworkplace and committed to provide a healthy environment to each and every employee of theCompany. The Company has in place Policy on sexual harassment Redressal.
In terms of section 22 of the Sexual Harassment of Women at workplace(Prevention Prohibition and Redressal) Act 2013 read with Sexual Harassment of Women atWork Place (Prevention Prohibition and Redressal) Rules 2013 we report as follows forthe year ended on March 31 2020:
Participation and voting aRs. 73rd AGM
Pursuant to Circular nos. 14/2020 17/2020 & 20/2020 dated April08 2020 April 13 2020 & May 05 2020 respectively issued by Ministry of CorporateAffairs and Circular SEBI/HO/CFD/CMDI/CIR/P/2020/79 dated May 12 2020 issued by SEBI the73rd AGM of the Company will be held VC/OAVM. Electronic copy of the AnnualReport for the year ended March 31 2020 and Notice of the AGM are being sent to all themembers whose email IDs are registered with the Company / Depository Participants(s) forcommunication purposes. A copy of the notice of the AGM and annual report are alsoavailable for download from the website of the Company at www.kirloskarelectric.com. Anymember may request hard copy of the Annual Report by writting to the Company.
The Board of Directors takes the opportunity to express its sincereappreciation for the continued support and confidence received from the Company'sbankers customers suppliers depositors and the shareholders.
The Company considers its employees as its most valuable resources.Employees at all levels have put in their best to the services of the Company and theBoard puts on record the sincere appreciation of their dedication and loyalty.