for Financial Year 2020-2021
To The Members
The Directors have pleasure in presenting this 27th Annual Report with theAudited Annual Accounts of the Company for the year ended 31 March 2021.
I. FINANCIAL PERFORMANCE (STANDALONE):
(Rs in Crores)
|Particulars ||2020-2021 ||2019-2020 |
|Total Income ||58.11 ||86.09 |
|Total Expenditure ||25.66 ||21.17 |
|Profit before exceptional items and taxation ||32.45 ||64.92 |
|Profit before taxation ||32.45 ||64.92 |
|Provision for tax (including Deferred Tax) ||5.26 ||5.47 |
|Net Profit ||27.19 ||59.45 |
|Balance of Profit / (Loss) from previous year ||514.30 ||486.46 |
|Add: Lapse of ESOP outstanding ||- ||- |
|Less: Re-measurement of defined benefit plans (net of Taxes) ||0.17 ||(0.22) |
|Dividend paid on equity shares: || || |
|Final Dividend for the Financial Year 2019-2020 (2018-2019) ||-- ||20.39 |
|Interim Dividend for the Financial Year 2020-2021 (2019-2020) ||-- ||9.71 |
|Tax on final / interim dividend: || || |
|Final Dividend for the Financial Year 2019-2020 (2018-2019) ||-- ||1.29 |
|Profit available for appropriation ||541.66 ||514.30 |
|Balance carried to Surplus in Statement of Profit and Loss ||541.66 ||514.30 |
Your Directors recommend 100 % dividend i.e. Rs 10 per equity share of Rs 10 each(Previous year dividend 100% i.e. Rs 10 per equity share of Rs 10 each) for theFinancial Year ended 31 March 2021.
III. CLASSIFICATION OF THE COMPANY AS UNREGISTERED CORE INVESTMENT COMPANY (CIC):
The Company is Unregistered CIC' regulated by the Reserve Bank of India (RBI) andis complying with all the regulations required for Unregistered CIC'.
IV. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A. OPERATIONS OF THE COMPANY:
The Company has seven Wind Energy Generators (WEGs) in Maharashtra with total installedcapacity of 5.6 Megawatt (MW). The WEGs are located at Tirade Village Tal. Akole Dist.Ahmednagar.
The WEGs have generated net wind energy of around 0.68 Crores units of electricity inthe period under review as against 0.98 Crores units of electricity in the previous yearshowing decrease of 30% over the previous year. During the period under review thegeneration is lower due to lower wind speed and motor winding issues related to one of theseven machines in operation. These winding issues are currently being addressed.
Further the Company realised lower revenue due to regulatory changes made by theMaharashtra State Electricity Distribution Company Limited (MSEDCL) which affected thebilling rates.
The Company had identified a third-party consumer to sell brown energy for the periodfrom 1 April 2020 to 30 June 2020. However due to the outbreak of COVID-19 plants of theidentified third-party consumer were shut down. To avoid losses the Company sold windgenerated units for this period to MSEDCL. Subsequently the Company sold wind generatedunits to third party consumers for the period from 1 July 2020 to 31 March 2021 as perthe Open Access Permissions received from MSEDCL.
The Company has also sold 271 Renewable Energy Certificates (RECs) which has resultedin revenue of ' 0.03 Crores (previous year ' 0.25 Crores). The Company is holding 7179unsold RECs as on 31 March 2021. The REC Trading Exchange was not in operation in quarters2 3 and 4 and hence no sale transactions could be done during three quarters.
REAL ESTATE ACTIVITIES:
The Company acquired 100% equity share capital of Wellness Space Developers PrivateLimited (WSDPL) on 19 December 2020. Consequently WSDPL became a Wholly Owned Subsidiaryof the Company with effect from 19 December 2020.
To facilitate effective management of the real estate activities of the Company theCompany transferred its Real Estate Business Undertaking at Kothrud' on a goingconcern basis by way of a Slump Sale' to WSDPL Wholly Owned Subsidiary of theCompany for a lump sum consideration of Rs 75 Crores by executing the Business TransferAgreement (BTA) by and between the Company and WSDPL dated 19 December 2020. In terms ofthe BTA the said purchase consideration shall be payable to the Company on or before 30June 2021 or any other date as may be mutually agreed.
Further WSDPL has been converted from a private limited company to a public limitedcompany with effect from 17 March 2021 viz. Wellness Space Developers Limited (WSDL).
The Company owns lands and buildings thereon and apartments and offices in Pune NewDelhi and Jaipur. The Company has given most of these lands and buildings and offices onleave and license basis to group and other companies which generated revenue of Rs 25.41Crores (Rs 27.74 Crores as on 31 March 2020). The revenue reduction was consequent to a10% reduction in the lease rental from July 2020 till 31 March 2021 owing to the COVID-19Pandemic. However from the current Financial Year rentals have been restored to thepre-pandemic rates.
The Company being a CIC continues to invest the surplus funds in fixed deposits andliquid funds. These investments stood at Rs 81.60 Crores (previous year Rs 81.01 Crores)as at 31 March 2021. These surplus funds will be used for the business operations of theCompany as and when required.
During the period under review your Company made an investment of ' 0.015 Crores(10000 equity shares of Rs 10 each acquired at Rs 15 each) in the equity shares ofWellness Space Developers Limited (WSDL). Pursuant to the said investment WSDL is aWholly Owned Subsidiary of the Company as on 31 March 2021.
B. COMPANY PERFORMANCE:
During the period under review your Company earned a total income of Rs 58.11 Crores(previous year Rs 86.09 Crores).
During the period under review the Company received final dividend of Rs 9.41 Crores(previous year Rs 25.40 Crores) declared by the investee companies for the Financial Year2019-2020.
The Company also received interim dividend of Rs 15.36 Crores (previous year Rs 22.94Crores) declared by some of the investee companies during the year 2020-2021.Consequently the total dividend inflow during the fiscal year under review was Rs 24.77Crores (previous year Rs 48.34 Crores).
The Profit Before Tax is lower at Rs 32.45 Crores (previous year Rs 64.92 Crores)mainly due to lower dividend income received lower revenues from windmill business andreduced lease rental income in the year under review.
C. HUMAN RESOURCES:
As on 31 March 2021 the Company had 14 employees (previous year 23 employees) on itsroll including the Managing Director and the Executive Director. During the period underreview 11 employees of the Company were transferred to Wellness Space Developers Limited(WSDL) Wholly Owned Subsidiary of the Company consequent to the Business TransferAgreement executed by and between the Company and WSDL on 19 December 2020.
D. KIRLOSKAR INDUSTRIES LIMITED - EMPLOYEES STOCK APPRECIATION RIGHTS PLAN 2019
Pursuant to the Kirloskar Industries Limited - Employees Stock AppreciationRights Plan 2019' (KIL ESARP 2019) the Company had granted an aggregate of 479898Equity Settled Stock Appreciation Rights (ESARs) at an exercise price of Rs 500 per ESARto eligible employees of the Company on 30 January 2020.
Consequent to the Business Transfer Agreement (BTA) dated 19 December 2020 executed byand between the Company and Wellness Space Developers Private Limited (WSDPL) WhollyOwned Subsidiary of the Company certain employees of the Company were transferred toWSDPL with effect from 1 January 2021.
Pursuant to KIL ESARP 2019 ESARs granted shall vest after a minimum period of 1 yearbut not later than a maximum period of 4 years from the grant date of such ESARs.
On 5 February 2021 the Company had vested 214449 ESARs out of the 470898 ESARsgranted during the previous year in the employees of the Company; employees of WSDL (thenWSDPL) who were transferred from the Company under the BTA; and in the Non - ExecutiveDirector of the Company who is the Managing Director of WSDL to whom ESARs were grantedunder the KIL ESARP 2019.
KIL ESARP 2019 was introduced in accordance with the SEBI guidelines for the employeesof the Company and its subsidiaries. The Company has obtained in-principle approval forthe KIL ESARP 2019 from BSE Limited and National Stock Exchange of India Limited on 3December 2020 and 19 January 2021 respectively. KIL ESARP 2019 is administered by theNomination and Remuneration Committee of the Board of Directors of the Company.
KIL ESARP 2019 is in compliance with the applicable provisions of the Companies Act2013 and its Rules SEBI (Share Based Employees Benefits) Regulations 2014 (EmployeesBenefit Regulations) and other applicable Regulations if any. Accordingly a certificatefrom G. D. Apte & Co. Chartered Accountants Statutory Auditors of the Companyconfirming that the KIL ESARP 2019 has been implemented in accordance with EmployeesBenefits Regulations and in accordance with the Special Resolution passed by the Companythrough Postal Ballot on 29 December 2019 would be placed before the members at theensuing Annual General Meeting. A copy of the same will also be available for theinspection at the Company's Registered Office.
Details of KIL ESARP 2019 as required under Rule 12 (9) of the Companies (ShareCapital and Debentures) Rules 2014 read with Regulation 14 of Employees BenefitsRegulations as on 31 March 2021 are set out in Annexure I' to this Report and areavailable on the Company's website at www.kil.net.in.
E. CONCERNS AND THREATS:
As a practice of good corporate governance the Board of Directors has voluntarilyconstituted a Risk Management Committee (the Committee) to identify the risks mitigatethe same and monitor the development and deployment of risk mitigation action plans forthe businesses of the Company.
Pursuant to the BTA risks associated with the real estate business which weretransferred to Wellness Space Developers Limited (WSDL) are monitored and reviewed by theBoard of WSDL.
The Company has deployed risk management process which includes risk identificationits assessment and its treatment mitigation monitoring and reviewing actions. TheCompany prioritises and manages the risks identified through its Risk Registers.
The Committee regularly presents the risk assessment and mitigation procedures adoptedto assess the reliability of the risk management structure and efficiency of the processbefore the Audit Committee and the Board of Directors of the Company at their respectivemeetings.
The Committee meets every quarter discusses all the mapped risks evaluates futurerisks and reviews the mitigation plan for the identified risks for all business segments.
As members are aware since March 2020 the World has been seeing the impact due toCOVID-19 Pandemic which has in turn affected economic activities in the Country. TheCentral and State Governments have taken various significant measures including nationaland local lock downs besides various other regulatory strictures to contain the virus.
IMPACT ON THE PERFORMANCE OF THE COMPANY DUE TO OUTBREAK OF COVID-19 :
The Company earned a lower property licensing fees during the Financial Year 2020-2021due to the COVID-19 impact.
The recommended protocols and guidelines issued by the Central and State Governments aswell as Regulatory bodies are being completely adhered to.
To ensure safety and wellbeing of the employees the Company continues to followprecautions against COVID-19 which include work from home policy regular communicationwith employees online meetings travel restrictions and health advisories.
The following necessary precautions are also being conducted:
Thermal screening at the entry point.
Sanitisation of materials at the entry point.
Masks for employees and visitors.
Heightened cleaning and sanitisation of the office premises at regularintervals.
Maintaining social distance at all our offices.
G. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY:
The Company has adequate internal controls system to ensure operational efficiencyaccuracy and promptness in financial reporting and compliance of various laws andregulations.
The internal controls system is supported by the internal audit process. An InternalAuditor has been appointed for this purpose. The Audit Committee of the Board reviews theInternal Audit Report and the adequacy and effectiveness of internal controlsperiodically.
H. CAUTIONARY STATEMENT:
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 laws andregulations. Actual results may differ materially from those either expressed or implied.
I. SEBI REGULATIONS AND LISTING FEES:
The annual listing fees for the year under review have been paid to BSE Limited andNational Stock Exchange of India Limited where your Company's shares are listed.
J. DETAILS OF MATERIAL SUBSIDIARY:
In terms of the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (the Regulations) Kirloskar FerrousIndustries Limited (KFIL) is a material subsidiary of the Company in which the Companyholds 51.06% of its total shareholding.
During the period under review KFIL has not sold / disposed off and leased assets morethan 20% of its assets.
K. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:
As on 31 March 2021 the Company has following two subsidiaries i.e.
1. Kirloskar Ferrous Industries Limited (KFIL) and
2. Wellness Space Developers Limited (WSDL).
The Consolidated Financial Statements of the Company and its subsidiaries prepared inaccordance with IND AS 110 issued by the Institute of Chartered Accountants of Indiaforms part of this Annual Report. A statement containing the salient features of theFinancial Statement of the subsidiary companies is attached to the Financial Statements ofthe Company in Form AOC-1.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the FinancialStatements along with relevant documents of the Company and its subsidiaries areavailable on the Company's website viz. www.kil.net.in.
The Financial Statements of the subsidiaries and related detailed information will bekept for inspection by any member at the Company's Registered Office and will also be madeavailable to the members on demand at any point of time.
BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANIES:
KIRLOSKAR FERROUS INDUSTRIES LIMITED:
Kirloskar Ferrous Industries Limited (KFIL) is in the business of manufacturing of ironcastings and has its manufacturing facilities at Bevinahalli village in Karnataka andSolapur in Maharashtra.
The Board of Directors of KFIL declared an interim dividend of Rs 2 (40%) per equityshare on 2 March 2021 and paid out in March 2021.
The Board of Directors of KFIL in its meeting held on 5 May 2021 have also recommendeda final dividend of Rs 3 (60%) per equity share for the Financial Year ended 31 March2021. Accordingly the total dividend (inclusive of interim dividend declared and paid)for the Financial Year 20202021 is 100%.
During the period under review there has been a substantial improvement in theperformance of KFIL both in sales and profit. KFIL achieved net sales of Rs 2038.08Crores (previous year Rs 1849.66 Crores).
The Profit Before Tax (PBT) for the year under review was higher at Rs 363.19 Croresas compared to Rs 156.18 Crores of previous year after providing for depreciation andamortisation.
During the year under review KFIL completed the acquisition of movable and immovableassets relating to the Pig Iron plant of VSL Steels Limited with a capacity of 150000 MTper annum situated at Paramenahally Village Hiriyur Chitradurga District Karnataka inDecember 2020 for a consideration of Rs 135 Crores. After renovation of plant andmachineries manufacturing operations of that plant commenced on 8 February 2021.
During the year under review KFIL sold 313690 MT of Pig Iron (includes 12824 MTfrom the newly acquired Pig Iron Plant) valued at Rs 1067.32 Crores as compared to358146 MT of Pig Iron valued at Rs 1070 Crores in the previous year.
KFIL sold 92507 MT castings aggregating to Rs 874.40 Crores as compared to 78663 MTcastings aggregating to Rs 734.21 Crores in the previous year.
During the year under review KFIL achieved 100 percent capacity utilisation of CokeOven plant which was commissioned in March 2020. Coke consumption reduced during the yearunder review as the coke was produced as per specification required for the furnaces.KFIL also installed conveyors from coke oven plants to mini blast furnaces to reducehandling loss. The 20MW power plant which works on waste heat recovery from coke ovenplant was commissioned in June 2020 and achieved 100 percent capacity utilisation bySeptember 2020. This enabled KFIL to achieve substantial reduction in the power cost onaccount of captive consumption.
KFIL also received the permission from the Government to commence mining operationsafter completing necessary statutory clearances in respect of Kirloskar Bharat Mines. Thepermission so granted was valid to operate the mine upto 5 April 2021. KFIL is now inprocess to obtain renewal of forest agreement beyond 5 April 2021 to recommence themining operations. KFIL extracted 98600 MT of iron ore till 31 March 2021 but was unableto dispatch the same to its plants due to non-availability of road clearance in the forestarea for transportation of mined iron ore.
The demand for Pig Iron from July 2020 onwards was strong from foundries supplyingcastings to tractor steel agriculture pump and auto sector across India.
The demand for the casting was also strong during the year. The demand for the castingfrom the tractor industry was strong and kept on increasing till end of the FinancialYear. The demand from heavy and medium Auto industry started picking up from secondquarter and further improved in second half of the Financial Year. The increased demandfor casting from Tractor Auto and Diesel Engine Industry enabled KFIL to scale upproduction by removing the bottlenecks and optimised load distribution between all threemoulding lines. With such measures KFIL achieved quarterly sale of 30000 metric tons ofcasting in third and fourth quarter of the Financial Year.
During the year under review iron ore prices increased substantially on account oflower availability against strong requirement from the domestic / global iron and steelindustry. China was not interested in export of coke and as such started quoting higherprices which resulted in increased prices in Indian domestic market vis-a-vis exportprices of coking coal from Australia remained subdued due to trade disagreement betweenChina and Australia. Additionally the cost of converted coke was lower and the sellingprice of pig iron was higher resulting in higher margins.
KFIL was able to source coal from Australia at economical prices. The timing of cokeoven plant commissioning followed by subdued prices of coal gave substantial advantage inlower cost of coal to coke conversion as against sourcing of coke from market.
KFIL continuously worked on the improvement of the quality of the casting at both unitsof Koppal and Solapur by reducing rejection rates.
KFIL added machining capacity and ramped up the machining capabilities to meet customerdemand. Consequently the sale of machined castings increased during the year as comparedto previous year and KFIL was able to sell machined castings of around 11.5 percent.
KFIL has undertaken the following projects during the year under review:
Initiated setting up new moulding line with contemporary technology with acapacity of 40000 MT per annum at Solapur plant.
Expanding machining capacity to add more value.
Installation of Bell-less Top equipment for both the Mini Blast Furnaces (MBF)and up- gradation of MBF II and Pulvarised Coal Injection. All these Projects are expectedto be completed in the Financial Year 2022-2023.
WELLNESS SPACE DEVELOPERS LIMITED
As mentioned above Wellness Space Developers Private Limited (WSDPL) is a Wholly OwnedSubsidiary of the Company which acquired the Real Estate Business Undertaking atKothrud' of the Company on a going concern basis by way of slump sale by executing theBusiness Transfer Agreement by and between the Company and WSDPL on 19 December 2020.
Further WSDPL was converted into a public limited company with effect from 17 March2021 and is now called Wellness Space Developers Limited (WSDL).
Subsequent to the business transfer the momentum of work speeded up with the lesseningof the COVID-19 impact. WSDL achieved progress in design and project execution though thetime lines were impacted. The management of WSDL continues to periodically assess theimpact of the pandemic on the business while abiding by the Rules and Regulations enforcedby the Regulatory Authorities.
During the period under review WSDL incurred a Loss Before Tax of Rs 1.04 Crores afterproviding ' 0.23 Crores towards depreciation.
L. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:
Details of significant changes i.e. change of 25% or more as compared to theimmediately previous Financial Year in key financial ratio along with detailedexplanation thereof:
|Sr. No. ||Particulars ||Ratio as on 31 March 2021 ||Ratio as on 31 March 2020 ||% of Change ||Explanations if any |
|i. ||Debtors' Turnover (in no. of days) ||6 ||- ||- ||Refer Note no. 1 |
|ii. ||Inventory Turnover (in no. of days) ||2 ||- ||- ||Refer Note no. 2 |
|iii. ||Interest Coverage Ratio ||- ||- ||- ||Refer Note no. 3 |
|iv. ||Current Ratio ||4.1 ||6.3 ||(34.90%) ||- |
|v. ||Debt Equity Ratio ||- ||- ||- ||Refer Note no. 4 |
1. Debtors relate only to windmill business.
2. Inventory represents number of Renewable Energy Certificates (RECs) in stockobtained in respect of windmill business.
3. The Company does not have any interest cost.
4. The Company does not have any borrowings.
M. RETURN ON NET WORTH:
Details of change in Return on Net Worth as compared to the immediately previousFinancial Year as follows:
|Sr. No. ||Particulars ||Ratio as on 31 March 2021 ||Ratio as on 31 March 2020 ||% of Change ||Explanations if any |
|1 ||Net worth ||1.92% ||7.10% ||(72.91%) ||Refer Note No. 1 |
1. Return on Net Worth has decreased since net profit has decreased and net worth hasincreased due to significant increase in fair market value of equity instruments from 31March 2020 to 31 March 2021.
V. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO SECTION134 OF THE COMPANIES ACT 2013 RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014 AND RULE 5OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:
1. EXTRACT OF ANNUAL RETURN:
In terms of Section 92(3) read with Section 134 (3) (a) of the Companies Act 2013read with Rule 12 of the Companies (Management and Administration) Rules 2014 includingamendments thereunder the Annual Return filed with the Ministry of Corporate Affairs(MCA) for the Financial Year 2019-2020 is available on the website of the Company viz.www.kil.net.in and the Annual Return for the Financial Year 2020-2021 will be madeavailable on the website of the Company once it is filed with the MCA.
2. NUMBER OF MEETINGS OF THE BOARD:
During the period under review 5 Board Meetings were convened and held the details ofwhich form part of the Report on Corporate Governance. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.
3. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirements under Section 134 (5) of the Companies Act 2013 inrespect of Directors' Responsibility Statement your Directors state that:
a) in the preparation of the Annual Financial Statements for the year ended 31 March2021 the applicable accounting standards had been followed and there were no materialdepartures;
b) accounting policies as mentioned in Note No. 2 of the Notes forming part of theFinancial Statements have been selected and applied consistently. Further judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31 March 2021 and of the Profit of theCompany for the year ended on that date;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) the Annual Financial Statements have been prepared on a going concern basis;
e) proper internal financial controls were in place and that the internal financialcontrols were adequate and were operating effectively; and
f) proper systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
4. A STATEMENT ON DECLARATION BY 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 Rulesthereunder including amendments thereto and Regulation 16 (1) (b) and 25 (8) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 including amendmentsthereto and also confirmed that they have complied with the Code for Independent Directorsprescribed in Schedule IV to the Act.
Further pursuant to Sub-rule (1) and (2) of Rule 6 of the Companies (Appointment andQualifications of Directors) Rules 2014 and amendments thereto all Independent Directorsconfirmed that they have enrolled their name in the data bank with the Institute ofCorporate Affairs New Delhi India within prescribed time period.
The Company has laid down a Code for the Board of Directors and Senior Management ofthe Company (Code of Conduct). The Code of Conduct is available on the Company's websiteviz. www.kil.net.in.
All the Board Members and Senior Management Personnel of the Company have affirmedcompliance with the Code of Conduct.
5. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:
The Board has on the recommendation of the Nomination and Remuneration Committeeadopted a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management Personnel and their remuneration.
The Nomination and Remuneration Policy is available on the website of the Companyviz. www.kil.net.in.
a. Statutory Auditors:
G. D. Apte & Co. Chartered Accountants (Firm Registration Number 100515W) Punewho were appointed as the Statutory Auditors of the Company under Section 139 of theCompanies Act 2013 to hold the office for a second term of five years from theconclusion of the Annual General Meeting (AGM) held on 11 August 2016 till the conclusionof the AGM of the Company to be held in the year 2021 will complete their term on theconclusion of the ensuing AGM of the Company.
G. D. Apte & Co. Chartered Accountants hold the office as the Statutory Auditorstill the conclusion of forthcoming AGM of the Company.
On the recommendation of the Audit Committee subject to the approval of the members ofthe Company the Board has approved the appointment of Kirtane and Pandit LLP CharteredAccountants (Firm Registration No. 105215W / W100057) Pune as the Statutory Auditors ofthe Company for a term of 5 consecutive years from the conclusion of the ensuing AGM tobe held on 10 August 2021 till the conclusion of the AGM of the Company to be held inthe year 2026 along with the remuneration payable to Kirtane and Pandit LP CharteredAccountants for the Financial Year 2021-2022 and authorised the Board of Directors toincrease and pay such statutory audit fees as they deem fit for the remaining tenure oftheir appointment.
The Company has received a certificate from Kirtane and Pandit LLLP to the effect thatthe appointment as Statutory Auditor if made will be in accordance with the limitspecified in Section 141 of the Companies Act 2013.
The Board of Directors places on record its appreciation for the services rendered byG. D. Apte & Co. as the Statutory Auditors of the Company.
The necessary resolution seeking your approval to the appointment and remuneration ofKirtane and Pandit LLP as the Statutory Auditors of the Company is appearing in theNotice convening the AGM of the Company.
b. Cost Auditors:
Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated 31 December 2014the Company was not required to audit cost records relating to Electricity Industry(Windmills) for the Financial Year 2020-2021.
c. Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Regulation 24A ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhad appointed Mr. Mahesh J. Risbud Practicing Company Secretary (FCS 810 CP 185) Puneto undertake the Secretarial Audit of the Company.
The Report of the Secretarial Audit is annexed as Annexure II' to this Report.
Mr. Mahesh J. Risbud Practising Company Secretary Pune has submitted SecretarialCompliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February2019 and has also confirmed that the Company has complied with all applicable SEBIRegulations and circulars / guidelines issued thereunder for the Financial Year 20202021.
7. MAINTENANCE OF COST RECORDS:
Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated 31 December 2014the Company was not required to maintain cost records relating to Electricity Industry(Windmill) in Form CRA - 1 for the Financial Year 2020-2021.
8. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:
There are no qualifications reservations or adverse remarks or disclaimer made by theStatutory Auditor in their Audit Report or by the Practicing Company Secretary in theSecretarial Audit Report for the year ended 31 March 2021.
The notes to the Accounts referred to in the Auditors Reports are self-explanatory andtherefore no further clarifications are required.
9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:
During the period under review your Company has given a loan of Rs 15 Crores toWellness Space Developers Limited (WSDL) a Wholly Owned Subsidiary Company. Your Companyhas not granted any guarantee.
During the period under review the Company has invested of ' 0.02 Crores in equitycapital of WSDL.
10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013:
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 the particulars of all contracts orarrangements entered into by the Company with related parties have been done at arm'slength and are in the ordinary course of business. Hence no particulars are beingprovided in Form AOC - 2. Related party disclosures as per the Indian Accounting Standard24 (IND AS 24) have been provided in Note No. 44 to the Financial Statements.
11. STATE OF COMPANY'S AFFAIRS:
Discussion on state of Company's affairs has been covered in the Management Discussionand Analysis Report.
12. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:
The particulars of the amounts proposed to be carried to reserves have been covered aspart of the financial performance of the Company.
13. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF BALANCE SHEET AND THE DATE OFREPORT:
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the Financial Year of the Company towhich the Financial Statements relate and the date of this Report.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
A. Conservation of Energy and Technology Absorption:
The Company has no particulars to report regarding conservation of energy andtechnology absorption as required under Section 134 (3) (m) of the Companies Act 2013read with Rules thereunder.
B. Foreign exchange earnings and outgo:
(Rs in Crores)
|Particulars ||Amount |
|Foreign exchange earnings ||Nil |
|Foreign exchange Outgo ||Nil |
15. RISK MANAGEMENT POLICY:
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified are systematically addressedthrough risk mitigating actions on a continuing basis. These are discussed at the meetingsof the Audit Committee and the Board of Directors of the Company from time to time.
16. CORPORATE SOCIAL RESPONSIBILITY:
The Company has been carrying out Corporate Social Responsibility (CSR) activities.These activities carried out in terms of Section 135 read with Schedule VII of theCompanies Act 2013 and the Companies (CSR Policy) Rules 2014.
Annual Report on CSR activities includes details about the CSR policy developed andimplemented by the Company. CSR initiatives taken during the year is annexed asAnnexure III' to this Report.
17. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out performance evaluation of its own performance and that of its committees andindividual Directors. Performance evaluation has been carried out as per the criteriaprescribed by the Nomination and Remuneration Committee.
18. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES
ASSOCIATES AND JOINT VENTURE COMPANIES:
|Name and Registered Office of the Subsidiary Company ||% Holding ||Particulars ||2020-2021 Amount (Rs in Crores) |
|Kirloskar Ferrous Industries Limited 13 Laxmanrao Kirloskar Road Khadki Pune 411 003 ||51.06 ||Total income ||2040.91 |
|Profit before tax ||363.19 |
|Tax expenses ||61.08 |
|Profit for the year ||302.11 |
|Other comprehensive income for the year ||0.86 |
|Total comprehensive income for the period ||301.25 |
|Profit brought forward from previous year ||390.92 |
|Transfer from Share Options ||0.15 |
|Final Dividend paid on equity shares ||Nil |
|Tax on above Dividend ||NA |
|Interim dividend paid on equity shares ||(27.67) |
|Tax on above Dividend ||NA |
|Profit available for appropriation ||664.65 |
|Transfer to General Reserves ||(5.00) |
|Balance carried to surplus in the Statement of Profit and Loss ||659.65 |
|Name and Registered Office of the Subsidiary Company ||% Holding ||Particulars ||2020-2021 Amount (Rs in Crores) |
|Wellness Space Developers Limited Office No.801 8th Floor Cello Platina Fergusson College Road Shivajinagar Pune 411 005 ||100 ||Total income ||0.20 |
|Profit before tax ||(1.04) |
|Tax expenses (including deferred tax) ||(0.06) |
|Profit for the year ||(0.98) |
|Other comprehensive income for the year ||(0.04) |
|Total comprehensive income for the period ||(0.04) |
|Profit brought forward from previous year ||Nil |
|Final Dividend paid on equity shares ||Nil |
|Tax on above Dividend ||Nil |
|Interim dividend paid on equity shares ||Nil |
|Tax on above Dividend ||Nil |
|Profit available for appropriation ||(0.98) |
|Transfer to General Reserves ||Nil |
|Balance carried to surplus in the Statement of Profit and Loss ||(1.02) |
|Name and Registered Office of the Associate Company ||% Holding ||Particulars ||2020-2021 Amount (Rs in Crores) |
|# Kirloskar Brothers Limited Yamuna S. No. 98/3 to 7 Plot No. 3 Baner Pune 411 045 ||23.91 ||Total income ||1174.50 |
|Total expenditure ||1122.70 |
|Profit before exceptional items and taxation ||51.80 |
|Profit before taxation ||51.80 |
|Provision for tax (including Deferred Tax) ||12.90 |
|Net profit ||38.90 |
|Other comprehensive income ||3.00 |
|Balance of Profit / (Loss) from previous year ||Not available |
|Dividend paid on equity shares ||Not available |
|Tax on above dividend ||Not available |
|Profit available for appropriation ||Not available |
|Transfer to General Reserve ||Not available |
|Balance carried to surplus in the Statement of Profit and Loss ||Not available |
# The Company does not have significant influence on Kirloskar Brothers Limited (KBL)as it does not participate in the management and / or financial decisions of KBL. As suchKBL is not an Associate Company of the Company under the IND AS 24 and as such itsfinancials are not included in the Consolidated Financial Statements of the Company.Hence the aforesaid information is obtained from the website of KBL for the quarter andnine months ended 31 December 2020.
19. CHANGE IN THE NATURE OF BUSINESS IF ANY:
In Financial Year 2020-2021 there was no change in the nature of business of theCompany.
20. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Directors appointed / re-appointed during the year:
|Name of Director ||Designation ||Terms of Appointment |
|Mr. Mahesh Chhabria ||Managing Director ||Re-appointed w.e.f. 27 August 2020 subject to retirement by rotation. |
|Mr. Nihal Kulkarni ||Non-Executive Director ||Re-appointed w.e.f. 27 August 2020 subject to retirement by rotation. |
|Mr. Tejas Deshpande ||Independent Director ||Re-appointed w.e.f. 28 August 2020 as an Independent Director to hold office for a second term of 5 consecutive years with effect from 28 August 2020 |
|Mr. Anil Alawani ||Non-Executive Director ||Continuation of Directorship as a Non-Executive NonIndependent Director after attainment of age of 75 years |
* Mr. Mahesh Chhabria and Mr. Nihal Kulkarni retired by rotation and were re- appointedin the Annual General Meeting held on 27 August 2020.
Key Managerial Personnel appointed during the year:
During the period under review there has been no change in the Key ManagerialPersonnel of the Company.
Directors and Key Managerial Personnel resigned during the year 2020-2021:
During the year under review there has been no change in Directors and Key ManagerialPersonnel of the Company.
21. DIRECTORS PROPOSED TO BE APPOINTED / RE-APPOINTED AT THE ENSUING ANNUAL GENERALMEETING:
Mr. Vinesh Kumar Jairath and Mr. Atul Kirloskar who retire by rotation at the ensuingAnnual General Meeting and being eligible offer themselves for re-appointment.
The Company has also received the requisite disclosures / declarations from Mr. VineshKumar Jairath and Mr. Atul Kirloskar.
The brief resumes and other details relating to Directors who are proposed to beappointed / reappointed as required to be disclosed under Regulation 36 (3) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 form part of theStatement setting out material facts annexed to the Notice of the Annual General Meeting.
The resolutions seeking approval of members for the appointment / re-appointment ofthese Directors have been incorporated in the Notice of the forthcoming Annual GeneralMeeting of the Company.
22. NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:
The Company acquired 100% equity share capital of Wellness Space Developers PrivateLimited (WSDPL) on 19 December 2020. Consequently WSDPL became a Wholly Owned SubsidiaryCompany of the Company. Further WSDPL is converted into public company with effect from17 March 2021.
23. DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THE COMPANIES ACT 2013:
24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
To the best of our knowledge the Company has not received any such order from theRegulators Courts or Tribunals during the year which may impact the going concern statusor the Company's operation in future.
25. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THEFINANCIAL STATEMENTS:
The Company has developed a strong two-tier internal control framework comprisingentity level controls and process level controls. The entity level controls of the Companyinclude elements such as defined Code of Conduct Whistle Blower Policy / Vigil Mechanismrigorous management review and Management Information System (MIS) and strong internalaudit mechanism. The process level controls have been ensured by implementing appropriatechecks and balances to ensure adherence to Company policies and procedures efficiency inoperations and also reduce the risk of frauds.
Regular management oversight and rigorous periodic testing of internal controls makesthe internal controls environment strong at the Company. The Audit Committee along withthe Management oversees results of the internal audit and reviews implementation on aregular basis.
26. COMPOSITION OF THE AUDIT COMMITTEE:
The composition of the Audit Committee has been reported in the Report on CorporateGovernance annexed to this Report.
VI. INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO RULE 5 OF THE COMPANIES(APPOINTMENT AND REMUENRATION OF MANAGERIAL PERSONNEL) RULES 2014:
The relevant information pursuant to Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as Annexure IV' tothis Report.
The particulars of top ten employees pursuant to the aforesaid Rules form part of thisReport. In terms of Section 136 (1) of the Companies Act 2013 the Board's Report isbeing sent to the members without this Annexure. The members interested in obtaining acopy of this Annexure may write to the Company Secretary at the Company's RegisteredOffice.
VII. VIGIL MECHANISM:
The Company has a Whistle Blower Policy / Vigil Mechanism (the Policy) to deal withinstances of fraud unethical behavior etc. The Policy provides a mechanism for Directorsand employees of the Company and other persons dealing with the Company to report genuineconcerns including but not limited to unethical behavior actual or suspected fraud orviolation of the Company's Code of Conduct for Board of Directors and Senior Management orethics policy or leakage of Unpublished Price Sensitive Information (UPSI) by any personwho is in possession of UPSI to any other person in any manner whatsoever except asotherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations 2015 orany other instance to the Chairman of the Audit Committee of the Board of Directors of theCompany. The Policy is placed on the Company's website viz. www.kil.net.in.
VIII. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:
During the period under review the Company has complied with the provisions relatingto the constitution of Internal Committee (the Committee) under the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.
The Committee comprises four members including one external member.
During the period under review four meetings of the Committee were held on 20 May2020 5 August 2020 15 October 2020 and 19 January 2021.
The Company has in place a Policy for Prevention of Sexual Harassment at workplace.This would inter alia provide a mechanism for the resolution settlements or prosecutionof acts or instances of sexual harassment at workplace and to ensure that all employeesare treated with respect and dignity.
The details of complaints filed disposed off and pending during the Financial Yearpertaining to sexual harassment is provided in the Business Responsibility Report of thisReport.
IX. CASH FLOW:
A Cash Flow Statement for the year ended 31 March 2021 is attached to the BalanceSheet as a part of the Financial Statements.
X. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS:
During the period under review the Company has complied with all the applicablesecretarial standards.
XI. CORPORATE GOVERNANCE:
In terms of Regulation 34 (3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Report on the Corporate Governance along with theCompliance Certificate issued by the Statutory Auditors of the Company is attached andforms part of the Annual Report.
XII. REMUNERATION RECEIVED BY THE MANAGING DIRECTOR / EXECUTIVE DIRECTOR FROMSUBSIDIARY COMPANIES:
|Sr. No. ||Name of Director ||Designation ||Remuneration received / receivable from Kirloskar Ferrous Industries Limited Subsidiary Company (Rs in Crores) ||Remuneration received /receivable from Wellness Space Developers Limited Wholly Owned Subsidiary Company (Rs in Crores) |
|1 ||Mr. Mahesh Chhabria ||Managing Director ||0.599 ||Nil |
|2 ||Ms. Aditi Chirmule ||Executive Director ||Nil ||Nil |
XIII. BUSINESS RESPONSIBILITY REPORT (BRR):
The Regulations mandate the inclusion of the BRR as part of the Annual Report for top1000 listed entities based on market capitalisation. In compliance with the Regulationsthe Company has integrated BRR disclosures into the Annual Report.
Your Directors would like to place on record their appreciation of the contributionmade and support provided to the Company by the members employees and bankers during theyear under Report.
| ||For and on behalf of the Board of Directors |
| || |
|Pune: 15 May 2021 ||ATUL KIRLOSKAR |
| ||CHAIRMAN |
| ||DIN 00007387 |