Your Directors have pleasure in presenting 27th Annual Report together with the AuditedAnnual Accounts for the year ended 31st March 2018.
I. FINANCIAL PERFORMANCE
The financial results of the Company for the financial year 2017-2018 as compared withthe previous year are as follows -
| || |
(Rupees in Lakhs)
| ||2017-2018 ||2016-2017 |
|Total Income ||172903 ||128210 |
|Profit before tax ||5442 ||12109 |
|Tax Expenses ||1642 ||3326 |
|Profit for the year ||3800 ||8783 |
|Other comprehensive income for the year ||(61) ||25 |
|Total comprehensive income for the period ||3739 ||8808 |
|Profit brought forward from previous year ||27508 ||19200 |
|Dividend paid on equity shares for the FY 2016-2017 ||(2403) ||- |
|Tax on above Dividend for the FY 2016-2017 ||(489) ||- |
|Profit available for appropriation ||28355 ||28008 |
|Transfer to General Reserves ||500 ||500 |
|Balance carried to Surplus in Statement of Profit and Loss ||27855 ||27508 |
For the year under review your Directors have recommended a dividend of 25 percent(`1.25 per equity share). Dividend will be recognized as liability when approved by themembers at the forthcoming Annual General Meeting as per new accounting standard.
II. MANAGEMENT DISCUSSION AND ANALYSIS
A. Economy and Industry Overview Global Economy and outlook:
The world economy has strengthened as lingering fragilities related to the globalfinancial crisis subside. In 2017 global economic growth reached 3 percent the highestgrowth rate since 2011. The improved global economic situation provides an opportunity forcountries to focus policy towards longer-term issues such as low carbon economic growthreducing inequalities economic diversification and eliminating deep-rooted barriers thathinder development.
The World Bank has forecast a growth of 3.1 percent this year based on broad-basedrecovery was underway across the world. The forecast was 0.2 percentage point higher thanits earlier projections.
During the first Quarter April to June 2017 GDP growth of India fell to 5.7 percent -its lowest growth in three years. Two major decisions on economic policy had a severeimpact on 2017. First was the demonetisation in November 2016 and second related to theimplementation of Goods and Service Tax (GST). GST implementation resulted in manybusiness entities slowing down their business in
June 2017 to minimise the stocks and inventories as on 1st July 2017.
However in the second quarter the GST growth made a sharp rebound to 6.3 percentalthough the agricultural growth remained mute. Overall growth for financial
6.60 percent per annum.
The trade deficit for FY 2017-2018 was estimated at US$ 87.17 billion as compared toUS$47.70 billion in the corresponding period last year. Oil imports during FY 2017-2018were valued at US$ 109.11 billion which was 25.47 percent higher than the oil imports ofUS$ 86.96 billion in the corresponding period last year.
Foreign exchange reserves in India stood at US$ 424.361 billion at the end of 30thMarch 2018. India is projected to grow at 7.5 percent in 2018-2019 largely on the back ofstrong domestic factors and policy initiatives.
Rupee opened at a level of ` 64.7483 against US Dollar on 3rd April 2017 and closed at`65.1700 as on 28th March 2018. Rupee experienced some volatility in December 2017 andalso after announcement of long term capital tax in the budget. Sensex which was at29737.73 on 3rd April 2017 closed at 32968.68 on 28th March 2018 registering a gain of10.86 percent for FY 2017-2018. After opening on a strong footing on optimistic buying byparticipants the Sensex gathered momentum to touch an all-time high of 36443.98 duringthe year.
India was the world's third-largest steel producer in 2017. The growth in the Indiansteel sector has been driven by domestic availability of raw materials such as iron oreand cost-effective labour. Consequently the steel sector has been a major contributor toIndia's manufacturing output.
The Indian steel industry is very modern with state-of-the-art steel mills. It hasalways strived for continuous modernisation and up-gradation of older plants and higherenergy efficiency levels. India's crude steel production for FY 2017-2018 grew to 102.243million tonnes as compared to
97.385 million tonnes up by 5 percent on year to year basis.
Steel industry and its associated mining and metallurgy sectors have seen a number ofmajor investments and developments in the recent past.
Iron ore Mines:
The Supreme Court in April 2013 had directed the Karnataka Government to cancel 51C-category mining leases for illegal mining.
On 13th September 2017 the Supreme Court had allowed the Karnataka Government toorganise an e-auction for the 'C' category of mines that are economically viable. 7 of 51'C' category mines have been auctioned so far.
The Supreme Court (SC) on 14th December 2017 increased the cap on the production ofiron ore from 30 million tonnes per annum to 35 million tonnes per annum for the A'and B' category mines in Karnataka.
As per the recommendations of CEC overall cap in Karnataka for A and B category minesincreased to 35 mmtpa. As far as C-category mines are concerned the SC after consideringthe submissions that C-category mines may become operational only after 18 months and manyA and B mines will expire around 2020 has refused to grant any separate allocation forC-category mines at this stage. Further State Government has issued the Notificationinviting Tender for 8 iron ore mines on 30th January 2018. As per the Corrigendum issuedby the Government of Karnataka the auction for the iron ore mines has been postponed to alater date. Your Company will participate in the auction to secure a mine which have goodquality iron ore and available at economically reasonable prices.
Coke prices have been largely volatile during the year and have been hovering aroundCIF US$ 400 per MT during the greater part of the year. This has been due to closure ofcoke oven plants in China arising from pollution concerns and also due to disruption ofsupply of coal from Australia due to cyclone Debbie and congestion at port.
The Indian auto industry is one of the largest in the world. The industry accounts for7.1 percent of the country's Gross Domestic Product (GDP).
In order to keep up with the growing demand several auto makers have started investingheavily in various segments of the industry during the last few months. The industry hasattracted Foreign Direct Investment (FDI) in the sector.
The Indian automotive industry produced a total of 29075605 vehicles including thepassenger vehicles commercial vehicles three-wheeler two-wheeler in FY 2017-2018 asagainst 25330967 in FY 2016-2017 registering a growth of 14.78 percent over the sameperiod last year. The overall industry registered positive sales figures in the period.
The commercial vehicle segment grew by 19.94 percent in FY 2017-2018 as compared to thesame period last year. The Medium and Heavy Commercial Vehicles (M&HCV) grew by 12.48percent and light commercial vehicles grew by 25.42 percent in FY 2017-2018 over the sameperiod last year. The commercial vehicles sector has bounced back strongly after setbacksfrom demonetization and the BS-IV transition in 2017.
Auto Industry outlook:
The automobile industry is supported by various factors such as availability of skilledlabour at low cost robust R and D centres and low cost steel production. The industryalso provides great opportunities for investment and direct and indirect employment toskilled and unskilled labour.
The Indian automotive aftermarket is estimated to grow at around 10-15 percent to reach
US$ 16.5 billion by 2021. It has the potential to generate revenue create additionaljobs and contribute over 12 percent to India's Gross Domestic Product.
The Government of India encourages foreign investment in the automobile sector andallows 100 percent FDI under the automatic route. Some of the recent initiatives taken bythe Government of India are -
The Ministry of Heavy Industries Government of India has shortlisted 11 cities in thecountry for introduction of electric vehicles (EVs) in their public transport systemsunder the FAME (Faster
Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme.
The Government is planning to set up a committee to develop an institutionalframework on large-scale adoption of electric vehicles in India as a viable clean energymode especially for shared mass transport to help bring down pollution level in majorcities.
A cyclical recovery in the global economy with the world growth projected over 3percent in 2018 bank recapitalization rural revival will also give a fillip to the autosector.
Overall 2018-2019 is expected to bring positive sentiments back into the market andrev up overall vehicle sales.
The drivers for the replacement demand in the CV segment especially in higher tonnagecategories are i) warehouse consolidation post the goods and service tax (GST)implementation ii) the likelihood of an announcement of the vehicle scrappage policy andiii) the possibility of overloading bans in certain states. Moreover the Government ofIndia's emphasis on infrastructure development would drive demand for higher tonnagevehicles. The automobile and auto-ancillary industry is equipping itself to adopt theBharat Stage (BS-VI) fuel emission norms proposed to be implemented from 1st April 2020.
Tractor industry :
Tractor sales in India reached a record high in 2017 as farmer sentiment improved withthe return of generous rains. The withdrawal of large-denomination banknotes fromcirculation hit villages through the start of 2017. But after that shock the demand fortractors continued steady growth and the tractor industry has recorded growth of 22percent with total volumes sales of 7.11 lakh units tractors in
FY 2017-2018 as compared to 5.83 lakh units in FY 2016-2017.
A good monsoon reduction in bank interest cost healthy farm production and increasinguse of tractors for non-farm applications farm loan waivers by several States have aidedthe growth in tractor sales.
Tractor industry Outlook:
The all-time high volumes would be riding on improved farm sentiments on the back oftwo consecutive normal south-west monsoons. Long-term annual growth for the Industryestimated at 8 to 9 percent with the long-term industry drivers for the industry continueto remain intact.
The Government remains committed towards rural development and agri-mechanisation acritical component in improving the state of agriculture in the country. This coupled withother factors such as increasing rural wages and scarcity of farm labour is likely to aidgrowth in industry volumes over the long term.
However the growth rate of tractor industry could moderate in FY 2019 primarily dueto the strong base built over the last two years (FY 2017 and FY 2018) along withuncertainty over rainfall.
Demand for tractors from non-agricultural sectors especially of higher tonnage inconstruction and infrastructure is likely to grow.
Crude oil prices:
Prices of Brent crude oil rose 18 percent in 2017 to $67.02 per barrel in December2017 a 30-month high. Higher oil prices are likely to widen the fiscal and currentaccount deficits.
B. Company Performance
Your Company achieved net sales of ` 172387 Lakhs (previous year ` 127676 Lakhs). Theprofitbefore tax for the year under review stood at ` 5442 Lakhs as compared to ` 12109Lakhs of the previous year after providing for depreciation and amortisation.
C. Operational Performance
Your Company sold 306303 MT of pig iron valued at ` 87687 Lakhs during FY 2017-2018as compared to 253495 MT of pig iron valued at ` 66548 Lakhs in the previous year. YourCompany sold 82922 MT castings aggregating to ` 71909 Lakhs during FY 2017-2018 ascompared to 65892 MT castings aggregating to ` 58295 Lakhs in the previous year. Thefirst quarter of the year under review was a challenging one on many fronts. Commodityprices namely pig iron decreased substantially and this created huge swing inprofitability. Coke price were as low as US$ 117 Per MT during Quarter 1 of FY 2016-2017whereas during quarter 1 of the financial year 2017-2018 price of coke had risen to alevel of US$ 322 Per MT. Iron ore prices also went up by ` 1000 Per MT. This resulted inan increase in input cost without much increase in selling price resulting in erosion ofprofit. In addition there was a delay in passing on the cost increases to certain OEMsresulting in pressure on the margin.
However from second quarter onwards situation changed with the Company importing coaland getting the same converted to coke by entering into arrangement with certain domesticcoke manufacturers.
With above arrangements your Company has been able to mitigate coke price variationchallenge. The prices of imported Coke from China reached a level of around $ 400 per MTand Iron ore fines rose to a level of ` 3537 per MT during the year under review. Eventhough there has been an increase in mining activity output of iron ore has not beenmatching with demand. Shortfall in iron ore has resulted in increase in iron ore prices.However Company has been able to reduce iron ore cost through procurement of iron orefrom beneficiation plants and also procuring certain quantity of iron ore from Goa.
During the year under review the operation of one mini blast furnace was suspendedtemporarily from
12th July 2017 to 15th August 2017 owing to market condition. This resulted in loweroutput of pig iron production and consequently affected the profit.
There has been an increase in demand for castings from OEMs in line with growth inautomobile and tractor industries. Also Company has started the supply of machinedcastings in small way which is expected to pick up on a larger scale with theinstallation of more machine shops. This will facilitate improvement in top line and isalso a step towards becoming a preferred customer for the supply of castings to OEMs.
During the year under review rupee has been generally operating in the range as highas ` 65.75 and low as ` 63.30 to a dollar giving mix results for the price paid on theimport of coke and coal.
The Company has been able to strategically reduce financing cost of working capital byavailing facility at very competitive rates during the year under review.
Your Company has undertaken the following projects during the year under review:
1) Company is working on more value added products to secure increased orders formachined castings from its customers by setting proper machining facilities withappropriate machines. Machine shops will be commissioned progressively in a phased mannerbased on order positions.
2) Installed fettling facilities for superior casting finish at Solapur Plant.
3) Railway siding project is expected to be completed in FY 2018-2019. Completion ofthis project will facilitate inward movement of raw materials and outward movement of pigiron resulting in reduction in cost of transportation and handling losses.
4) 11 MW solar power plant at Solapur under installation is expected to reduce thepower cost of the foundry at Solapur and will meet entire power requirement of thefoundry.
5) Finalised the supplier for the equipment supply for coke oven project with acapacity of two lakh ton per annum. Company is in discussions with an equipment supplierfor procurement and installation of 20 MW power plant. The project is expected to becompleted in FY 2019-2020.
D. Cost Control
Your Company adopted the following measures to reduce cost:
Strategically sourced raw material and consumables.
Improvement projects through Kaizens involvement of cross functional teams to bringcost reductions.
Improved operational efficiencies and cost control measures at both Koppal and SolapurPlant.
Improved the quality of the castings to bring down the rejections in castings.
E. Concerns and Threats
Demand for the auto and tractors have a direct impact on the performance of yourCompany and any adverse market condition for these sectors will result into reducedcapacity utilisation and profitability.
Fluctuation in the price of raw material such as coke and coal and shortage of qualityiron ore supply in domestic market will have impact on production and consequently onprofit.
Further depreciation of Rupee vis-a-vis US dollar can lead to an increase in price ofcoke and in the price of crude oil resulting in increased input costs thereby puttingpressure on profitability.
F. Prospects for the Current Year
1. Company proposes to participate again in e-auction of iron ore mines in Karnataka asand when the State Government invites the tender for participation in e-auction for ironore mines.
2. Supply more machined castings to increase value of sales.
3. Commissioning of the railway siding near to factory premises.
4. Setting up coal injection to one mini blast furnace to affect materials namely coke.
5. Setting up of 2 lakh ton capacity coke oven plant and 20 MW power plant. This willfurther help in reducing the cost of raw material as well as reducing the power cost.
6. More usage of concentrated iron ore in sinter plant to reduce input cost ofmaterials.
7. Reduction in cycle time for development of casting and also introduce proto typemachined castings within shortest period of time.
Statements in this report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute "forward looking statements" within the meaning of applicable lawsand regulations. Actual results may differ materially from those either expressed orimplied.
G. Internal Control Systems and their adequacy
The Company has a proper and adequate system of controls in order to ensure that allassets are safeguarded against loss from unauthorised use or disposal. All transactionsare properly checked verified recorded and reported correctly. Regular Internal Auditchecks are carried out to ensure that the responsibilities are executed effectively andthat proper and adequate systems are in place.
H. Safety Health and Environment
Your Company believes in "Safety First" and is committed to provide"Safe Workplace" by addressing safety health and environment related issues byemphasizing safety culture in the organisation. Employees are regularly trained to updatetheir awareness and skills. New employees are being given intensive safety inductiontraining and on job training. On completion "Safety Passport" related to theirwork area is issued authorizing the person to enter the plant / department. All thestatutory requirements related to safety health and environment are being complied with.As a proactive approach the periodical internal safety audit and external audit areconducted by safety experts and
National Safety Council and other agencies engaged to identify unsafe conditions /unsafe acts if any and to recommend remedial safety measures / actions. Safety PerformanceManagement System developed through risk identification; Safety Operating Procedure weredeveloped emphasizing on engineering controls through an External Safety Consultant."Near Miss Reporting" and recording of "First Aid Injuries" has beenpracticed to take corrective action to achieve a goal of zero accidents. Your Company ishaving well equipped "Occupational Health Centre" with a full-time Doctor andqualified paramedical staffs. The pre-employment health check-up of the employeesconducted and also regular health checkups conducted on annual basis during thecontinuance of the employment. The Company has provided well equipped two ambulances whichare available at all times to fulfill the requirement of employees during emergencies aswell as for neighboring community.
Your Company is certified for Quality Management Systems under ISO TS 16949:2009Environmental Management System under ISO 14001:2004 and also certified for OccupationalHealth and Safety Assessment Series (OHSAS 18001:2007) by Indian Register Quality Systems(IRQS). All the three systems are in the process of up-gradation.
Requirements of environmental acts and regulations are complied with. Monitoring andanalysis of water stack emissions and ambient air quality etc. are undertakenperiodically to verify whether the level of environmental parameters are maintained wellwithin the specified limits. Sewage Treatment Plant (STP) with 250 KLD (kilo liters perday) capacity is operated to treat domestic wastewater with extended biological aerationsystem. Sludge generated from STP is being used as manure for garden and treatedwastewater is used for gardening.
For effective suppression of dust emissions jet type fixed sprinklers are provided.
Under ISO: 14001 and OHSAS: 18001 the following management programs have been taken-upand completed during FY2017-2018 at its plant at Koppal.
1. Dust extraction system has been installed and commissioned in Foundry (Sand PlantSand cooler and Shake out Area).
2. As a part of environmental improvement project the existing 250 meters of porousfence (mesh) of 12 meters height has been extended by another 126 meters in northernboundary to prevent the fugitive dust emission.
3. Construction of around 146 meters of concrete roads near Foundry service road andweigh bridge-1 to prevent dust emission due to vehicular movement; till date total of1821 meters concrete road has been completed.
4. Ambient Air Monitoring Quality System (AAMQS) has been connected to CentralPollution Control Board as per the KSPCB requirement.
5. Plantation of around 10000 tree saplings in and around the plant premises toincrease the green belt area which comes to a total of around 148000.
6. Tractor mounted water tanker with capacity of 5000 KL has been provided round theclock in the plant premises attached to security department to tackle unexpected fireincidents.
I. Social Responsibility
In order to align the Mission and Values of your organization viz. "To be apreferred Employer and responsible neighbor" your Company has taken followingmeasures as a part of its Corporate Social Responsibility. The Company focuses on RuralEducation Health and Hygiene Infrastructure Environment facilities in the localvicinity of the plant. Major activities undertaken during the year are as follows: RuralEducation
Coaching classes were arranged for 145 students of 10th standard of 2017-2018 batch ofBevinahalli Lingadahalli Shahapur and Hitnal Schools.
Provided 2000 school bags and note books to the students of Government Higher Primary
Schools of neighboring villages.
Financial assistance was given to Government Higher Primary School of Bevinahalli forproviding educational tour for children.
Provided 200 writing desks and benches to Government Higher Primary School and nearbyschools.
Constructed compound wall of 148 meters at Government Higher Primary SchoolLingadahalli
Scholarship provided to the students of neighbouring villages who scored 80percent and above in SSLC and PUC examination.
Sponsored for Yog Camp' in Hitnal village in association with Patanjali YogaSamiti Hospet.
268 people participated.
Health and Hygiene
Implemented Kirloskar WaSH initiatives at Koppal and Solapur (clean and BeautifulSchool). Koppal Plant covered 13 schools and 7800 students were benefitted while SolapurPlant covered 5 schools and 4500 students were benefitted.
Organised Multispecialty Free Health Checkup Camp' involving specialist doctorsat Lingadahalli village. 5 cases were identified and referred for higher treatment withfinancial support
Arranged visit of specialist doctors to Bevinahalli village once a week and visit byCompany medical officer twice a week. The Company also provided free medicines.
Provided motorized tricycles for physically challenged persons.
Financial support was given for taking higher medical treatment in genuinecases.
Constructed storm water drain at Bevinahalli village.
Provided RO Water to Gopinath Memorial high School Hospet.
Extended portable drinking water stations at Gavisiddeshwara Cart festival for 5 days.This facility was used by large number of persons.
Provided dust bins to various schools in the villages for segregation of dry andwet waste.
Extended support for construction of individual toilet blocks (200 Nos.) foreach house in
Lingadahalli Bevinahalli and Shahapur Villages in coordination with Gram Panchyatunder
"Swatchh Bharat Mission". Environment
Provided tree guards at schools in Kukanoor and Koppal.
Vasundhara International Film Festival was organized at Hampi University forinauguration at Hospet and Valedictory Programme was organised at factory premises atKoppal and Solapur in order to bring awareness among people to take care of theenvironment under the theme "Save
River - Save Life". Awareness program was also organised at various schools andcolleges.
J. Human Resource
Your Company considers human resource to be an important and valuable asset for theorganization.
Therefore it constantly strives to attract and retain best "Talents" for thepresent and future business needs.
The Company has taken-up the following initiatives-
To develop future leaders Company has organized Management Development Programmes(MDP) on various topics. The training programme was also organized for Senior Leadershipteam
In order to enhance competencies and skills of employees training programmes onbehavioral and technical skills were organized on a continuous basis by engaging internalexpertise and external faculties.
In order to enhance safety culture "Behavioural Based Safety" Trainingprogrammes were conducted.
Training Programme on Structured Problem Solving Technique' was organizedfor employees.
Performance of employees is monitored through an effective performance managementsystem on quarterly basis.
Communication meet by top management with managerialstaffon the BusinessScenario' and AOP / LRP as well as sharing knowledge with young professionals wasorganised.
The talented employees are continuously recognized and are motivated throughrewards and recognition.
Conducted skill development programmes for apprentices / trainees on fitter andelectrical by inviting experts from industrial training institutes.
Initiated monthly Swachh Abhiyan' at Company premises to eliminate waste and tokeep the area clean and aesthetic for better working atmosphere by adopting 5S concepts.
Training Programme on Wellness' and Stress Management' was organized byexternal faculty for employees as well as for family members.
Training programme on 5'S was organized on an continuous basis foremployees.
As on 31st March 2018 the total number of salaried employees stood at 1301. TheEmployer - Employee relations was cordial throughout the year.
Wage negotiation and settlement for Koppal Plant was concluded during the year underreview. Recognition / Awards received by the Company during the year under review:
1. Global collaboration award by Daimler India.
2. Indywood Built in India excellence award.
3. Mahindra Supplier Excellence award Vienna 2017.
4. Industrial Safety and health award given by National Safety Council Karnatakachapter.
5. Commendation certificate for significant achievement issued by CII Exim Bank.
6. CSR Award for Health & Hygiene' and Community Development' by ET CSRLeadership
III. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT
TO SECTION 134 OF THE COMPANIES ACT 2013 RULE 8 OF THE COMPANIES (ACCOUNTS) RULES2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL)RULES 2014
1. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 are annexedherewith as Annexure "A".
2. NUMBER OF MEETINGS OF THE BOARD
During the financialyear 2017-2018 six Board Meetings were convened and held thedetails of which are given in Clause 2(b) of the Corporate Governance Report.
3. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) of the Companies Act 2013 in respectof Directors'
Responsibility Statement your Directors state that: a) in the preparation of theannual accounts for the year ended 31st March 2018 the applicable accounting standardshad been followed and there were no material departures; b) accounting policies asmentioned in Note 2 of the Notes forming part of the Financial Statements have beenselected and applied consistently. Further judgments and estimates made are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company asat 31st March 2018 and of the profit of the Company for the year ended on that date; c)proper and sufficientcare has been taken for in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) the annual financial sta tements have beenprepared on a going concern basis; e) proper internal financial controls were laid downand such internal financial controls were adequate and were operating effectively; and f)proper systems to ensure compliance with the provisions of all applicable laws were inplace and such systems were adequate and operating effectively.
4. STATEMENT ON DECLARATION BY THE INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations 2015.
5. NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors KMPs and Senior ManagementPersonnel and their remuneration. The policy is annexed herewith as Annexure"B".
6. EXPLANATION OR COMMENTS ON AUDITORS' REPORT AND SECRETARIAL AUDIT REPORT
There are no qualifications reservations or adverse remarks or disclaimer made by thestatutory auditors in their audit report or by the practicing company secretary in thesecretarial audit report.
7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THECOMPANIES ACT 2013
The Company has granted loans aggregating to ` 20304120 during the year ended 31stMarch
2018. These primarily consist of loans to employees as per the policies of the Companyand loans to suppliers in the normal course of business of the Company. The closingbalances of these loans are disclosed under the schedule of Loans and Advances in thefinancial statements. The Company has not given any guarantees or made any investmentsduring the year which would be covered by
Section 186 of the Companies Act 2013.
8. RELATED PARTY TRANSACTIONS
Pursuant to Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 the particulars of contracts or arrangements entered into by theCompany with Related Parties have been done at arm's length and are in the ordinary courseof business. Hence no particulars are being provided in Form AOC-2.
9. STATE OF COMPANY'S AFFAIRS
Discussion on state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis.
10. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES
Particulars of the amounts proposed to be carried to reserves have been covered as partof the financial performance of the Company.
11. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY
There are no adverse material changes or commitments occurring after 31st March 2018which may affect the financial position of the Company or may require disclosure.
12. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure"C".
13. RISK MANAGEMENT POLICY
The process of risk management at Company encompasses risk identificationclassification and evaluation. The Company identifies strategic operational and financialrisks that the Company faces. The Company deploys mitigation activities and plans forcurrent and future risks that the Company may face.
The Company has set up a Risk Review Team (Team') to review the risks faced bythe Company and monitor the development and deployment of risk mitigation action plans.The Team reports to the Board of Directors and the Audit Committee who provide oversightfor the risk management framework in the Company.
The Directors have reviewed progress on the risk management activities in the currentyear.
14. CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES
The Company has been carrying out Corporate Social Responsibility (CSR) activities.These activities are carried out in terms of Section 135 read with Schedule VII of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules2014. Annual Report on CSR activities includes details about the CSR policy developed andimplemented by the Company. CSR initiatives taken during the year is annexed herewith asAnnexure "D".
15. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of the SEBI(Listing
Obligations and Disclosure Requirements) Regulations 2015 the Board has carried outan annual performance evaluation of its own performance the Directors individually aswell as the evaluation of the working of its Audit Nomination and Remuneration and otherstatutory committees. Performance evaluation has been carried out as per the Nominationand Remuneration Policy.
16. CHANGE IN THE NATURE OF BUSINESS
During the year under review there has been no change in the nature of business of theCompany.
17. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL
Mr. A. N. Alawani retires by rotation and being eligible offers himself forre-appointment. In compliance with Section 149 of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors has recommended the reappointment of Mr. A. R. Jamenis as an IndependentDirector officefor a theCompanytohold second term of two consecutive years upto12th August 2020. The Company has received requisite notice in writing from a Memberproposing his candidature for the seeking approval of the Members by a special resolutionfor reappointment of Mr. A. R. Jamenis for a second term of two consecutive years upto12th August 2020 has been incorporated in the Notice of ensuing Annual General Meeting.
Directors appointed during the FY 2017-2018
Mr. Mahesh R. Chhabria was appointed as an Additional Director of the Company witheffect from
3rd November 2017.
Key Managerial Personnel (KMP) appointed during the FY 2017-2018
There was no change in the Key Managerial Personnel during the FY 2017-2018.
18. NAMES OF THE COMPANIES WHICH HAVE BECOME/ CEASED TO BE SUBSIDIARIES JOINT VENTURESOR ASSOCIATE COMPANIES DURING THE YEAR
The Company did not have any subsidiaries associates or joint ventures during theyear.
The Company has not accepted deposits under Chapter V of the Companies Act 2013.
20. SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING
GOING CONCERN AND COMPANY'S OPERATIONS
To the best of our knowledge the Company has not received any such orders fromRegulators Courts or Tribunals during the year which may impact the going concern statusor the Company's operations in future.
21. INTERNAL FINANCIAL CONTROLS
The Company has deployed controls including defined code of conduct whistle blowerpolicy management review and MIS mechanisms internal audit mechanism. The process levelcontrols have been instituted through Company policies and procedures and continuousmonitoring of operations.
There is regular management oversight of the internal controls environment at Company.The Audit Committee along with Management oversees results of the internal audit andreviews implementation on a periodic basis.
22. INFORMATION FORMING PART OF THE DIRECTORS' REPORT PURSUANT TO
RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014
|Sr. ||Information Required ||Input |
|No. || || |
|1 ||The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year ||Please refer Annexure 'E-1' |
|2 ||The percentage increase in remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or year; Managerifanyinthefinancial ||Please refer Annexure 'E-2' |
|3 ||The percentage increase in the median remuneration of employees in the financial year ||27 percent |
|4 ||The number of permanent employees on the rolls of Company ||1301 |
|5 ||Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||Percentage increase in salaries of managerial personnel at 50th percentile: 7.5 percent Percentage increase in salaries of Non-managerial personnel at 50th percentile: 8 percent |
| || ||(Note: Percentage increase in salaries of Non- managerial personnel is in the range 1 percent to 60.33 percent) |
| || ||The salary increases are a function of various factors like individual performance vis--vis individual Key Performance Indicators (KPIs) industry trends economic situation future growth prospects etc. |
| || ||besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration. |
|6 ||Affirmation that The remuneration paid to the Directors is as per the the remuneration is as per the remuneration policy of the Company. |
| || ||Remuneration policy of the Company. |
|7 ||Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee who- ||Please refer Annexure F' |
| ||(i) if employed throughout the financial year was in receipt of remuneration for that year which in the aggregate was not less than one Crore and Two Lakh Rupees; || |
| ||(ii) if employed for a part of the financial year was in receipt of remuneration for any part of that year at a rate which in the aggregate was not less than Eight Lakh and Fifty Thousand Rupees per month; || |
|Sr. ||Information Required ||Input |
|No. || || |
|(iii) ||if employed throughout the financial year or part thereof was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate which in the aggregate is in excess of that drawn by the Managing Director or Whole-Time Director or Manager and holds by himself or along with his spouse and dependent children not less than two percent of the equity shares of the Company. || |
IV. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy. Thepolicy has provided a mechanism for Directors Employees and other persons dealing withthe Company to report to the Chairman of the Audit Committee any instance of unethicalbehaviour actual or suspected fraud or violation of the Code of Conduct of the Company.
The details of the policy has been uploaded at the website of the Company viz.www.kfil.com .
V. COMPOSITION OF AUDIT COMMITTEE
The composition of the Audit Committee has been mentioned in the Corporate GovernanceReport annexed to this report.
VI. EMPLOYEE STOCK OPTIONS SCHEME (ESOS):
Your Company has instituted a stock option scheme in order to motivate incentivize andreward employees. This plan is called KFIL Employee Stock Option Scheme 2017 (hereinafterreferred as KFIL ESOS 2017' or Scheme'). Your Company views employee stockoptions as an instrument that would enable the employees to share the value they createfor the Company and align individual objectives of the employees with the objectives ofthe Company. The Board of Directors of your Company and the Nomination and RemunerationCommittee of the Company are authorised to administer the said scheme pursuant to theprovisions of the Scheme.
The Nomination and Remuneration Committee at its meeting held on 3rd November 2017approved the grant of 1765000 stock options exercisable into 1765000 Equity Shares ofthe Company pursuant to the approval of the shareholders received at the Annual GeneralMeeting held on 3rd August 2017. KFIL ESOS 2017 is in compliance with the applicableprovisions of the Companies Act 2013 and its rules Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 ("Employee BenefitsRegulations") and other applicable regulations if any. The certificate from M/s.Kirtane & Pandit LLP Chartered Accountants Statutory Company confirming that thescheme has been implemented in accordance with the aforesaid regulations and in accordancewith the resolution passed by the Members of the Company at their
Annual General Meeting held on 3rd August 2017 would be placed before the Members atthe ensuing Annual General Meeting. A copy of the same will also be available forinspection at the Company's registered office.
There have been no material changes to the KFIL ESOS 2017 during the financial year.The
Disclosures on the scheme details of options granted shares allotted upon exerciseetc. as required under Employee Benefits Regulations are enclosed herewith as Annexure No.H and are available on the Company's website at www.kfil.com .
No employee has been granted stock options equal to or exceeding 1% of the issuedcapital of your Company (excluding convertible shares and warrants).
In line with the Indian Accounting Standards ("Ind AS") 102 on 'Share BasedPayments' issued by the Institute of Chartered Accountants of India ("ICAI")your Company has computed the cost of equity-settled transactions by using the fair valueof the options at the date of the grant and recognized the same as employee compensationcost over the vesting period.
1. Statutory Auditors
At the 25th Annual General Meeting held on 28th July 2016 M/s. Kirtane & PanditLLP Chartered Accountants [Firm Registration No.: 105215W/W100057] were appointed asStatutory Auditors of the Company to hold office till the conclusion of the 30th AnnualGeneral Meeting to be held in the year 2021. In terms of the first proviso to Section 139of the Companies Act 2013 the appointment of the Statutory Auditors shall be placed forratification at every Annual General Meeting. Accordingly the appointment of M/s. Kirtane& Pandit LLP Chartered Accountants as Statutory Auditors of the Company will beplaced for ratification by the Members in the ensuing Annual General Meeting. In thisregard the Company has received a certificate the Auditors to the effect that if theirappointment is ratified it would be in accordance with the provisions of Section 141 ofthe Companies Act 2013.
2. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M. J. Risbud Practicing Company Secretary to undertake the SecretarialAudit of the Company. The Secretarial Audit Report is annexed herewith as Annexure"G".
3. Cost Auditor
The Board of Directors at its meeting held on 3rd May 2018 has appointed M/s. ParkhiLimaye and Co Cost Accountants as the Cost Auditors of the Company to conduct the auditof cost records maintained by the Company for the financial year ending 31st March 2019.
VIII. CORPORATE GOVERNANCE
The Company conforms to the norms of Corporate Governance as envisaged in the ListingRegulations with the BSE Limited. Pursuant to Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a Report on the CorporateGovernance and the Auditors Certificate on Corporate Governance are annexed to thisreport.
IX. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
During the year under review there were no cases filed pursuant to the aforesaid Act.
Your Directors wish to place on record their appreciation towards the contribution ofall the employees of the Company and their gratitude to the Company's valued customersbankers vendors and members for their continued support and confidence in the Company.
| ||For and on behalf of the Board of Directors |
| ||ATUL C. KIRLOSKAR |
| ||Chairman |
|Pune : 3rd May 2018 ||DIN : 00007387 |