for the Financial Year 2021-2022
To The Members
The Directors have pleasure in presenting this 28th AnnualReport with the Audited Annual Accounts of the Company for the year ended 31 March 2022.
I. FINANCIAL PERFORMANCE (STANDALONE):
(Rs in Crores)
|Particulars ||2021-2022 ||2020-2021 |
|Total Income ||102.67 ||58.11 |
|Total Expenditure ||22.57 ||25.66 |
|Profit before exceptional items and taxation ||80.10 ||32.45 |
|Profit before taxation ||80.10 ||32.45 |
|Provision for tax (including Deferred Tax) ||19.25 ||5.26 |
|Net Profit ||60.85 ||27.19 |
|Balance of Profit / (Loss) from previous year ||541.66 ||514.30 |
|Less: Re-measurement of defined benefit plans (net of Taxes) ||0.02 ||0.17 |
|Dividend paid on equity shares: || || |
|Final Dividend ||9.71 ||-- |
|Profit available for appropriation ||592.82 ||541.66 |
|Balance carried to Surplus in Statement of Profit and Loss ||592.82 ||541.66 |
Your Directors recommend 100 % dividend i.e. RS 10 per equity shareof RS 10 each (Previous year dividend 100% i.e. RS 10 per equity share of RS 10 each)for the Financial Year ended 31 March 2022.
In terms of Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 including amendments thereunder the Companyhas adopted the Dividend Distribution Policy. Copy of the same is available at the websiteof the Company viz. www.kirloskarindustries.com
III. CLASSIFICATION OF THE COMPANY AS AN UNREGISTERED CORE INVESTMENTCOMPANY (CIC):
The Company is an Unregistered CIC? regulated by the ReserveBank of India (RBI) which cannot access the public funds and is complying with all theregulations required for an Unregistered CIC?.
IV. ALTERATION OF MAIN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OFTHE COMPANY
The members of the Company through a postal ballot on 14 October 2021had approved the alteration of the Main Object Clause of the Memorandum of Association ofthe Company to carry out the activities as a Registered Core Investment Company andaccessing public funds.
V. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A. OPERATIONS OF THE COMPANY:
The Company has seven Wind Energy Generators (WEGs) in Maharashtra witha total installed capacity of 5.6 Megawatt (MW). The WEGs are located at Tirade VillageTal. Akole Dist. Ahmednagar.
The WEGs have generated net wind energy of around
0.82 Crores units of electricity in the period under review as against0.68 Crores units of electricity in the previous year showing an increase of 20% over theprevious year. During the previous year the generation of units from windmills had gonedown due to lower wind speed and motor winding issues related to one of the seven WEGs inoperation. The management had taken corrective steps for improving the monitoring systemof operation and maintenance of WEGs with the help of operation and maintenance serviceprovider resulting in higher unit generation in the current year. During the year underreview and till the date of this Report all WEGs were operational at full capacity.
The Company has obtained Open Access Permission from Maharashtra StateElectric Distribution Company Limited (MSEDCL) and is selling the wind power unitsgenerated to a leading electric power distribution company which has ensured the regularmonthly revenue realisation. All windmills are registered with the National Load DespatchCentre (NLDC) and are eligible for the Renewable Energy Certificates (RECs).
During the year the Company has also sold 8778 RECs which hasresulted in revenue of H 0.88 Crores (previous year H 0.03 Crores). The Company is holding7676 unsold RECs as on 31 March 2022. The REC Trading Exchange was not in operation inquarters 1 and 2 and hence no sale transaction could be done during these quarters.
REAL ESTATE ACTIVITIES:
The Company transferred its Real Estate Business Undertaking atKothrud? on a going concern basis by way of a Slump Sale? to the Companyfor a lump sum consideration of RS 75 Crores by executing the Business Transfer Agreement(BTA) by and between the Company and Wellness Space Developers Private Limited (now knownas Avante Spaces Limited (Avante)) dated 19 December 2020. The said purchase considerationwas required to be paid by Avante on or before 30 June 2021 or such other date asmutually agreed.
In terms of BTA Avante allotted 60000000 Unsecured OptionallyConvertible Debentures of RS 10 each to the Company for a consideration other than cashamounting to H 60 Crores. The balance consideration of RS 15 Crores out of the totalpayable of RS 75 Crores was paid in cash by Avante on 24 June 2021.
Accordingly the entire purchase consideration payable to the Companyunder the BTA was settled by Avante before 30 June 2021.
The Company owns lands and buildings thereon and apartments and officesin Pune New Delhi and Jaipur. The Company has given most of these lands and buildings andoffices on leave and license basis to group and other companies which generated revenue ofH 27.08 Crores (H 25.41 Crores as on 31 March 2021).
The Company is an Unregistered CIC? that continues to investsurplus funds in fixed deposits and liquid funds. These investments stood at RS 11.83Crores (previous year RS 81.60 Crores) as at 31 March 2022.
During the year under review the Company has liquidated mutual fundsand used the proceeds to give loans to Avante Spaces Limited (Avante) a Wholly-OwnedSubsidiary of the Company for the development of its real estate activities.
During the year under review your Company made investments of RS 15Crores in the equity shares of Avante.
The Company also purchased one preference share of KirloskarProprietary Limited at the rate of RS 100.
B. COMPANY PERFORMANCE:
During the period under review your Company earned a total income ofRS 102.67 Crores (previous year RS 58.11 Crores).
During the period under review the Company received a final dividendof RS 45.78 Crores (previous year RS 9.41 Crores) declared by the investee companies forthe Financial Year 2020-2021.
The Company also received an interim dividend of RS 19.92 Crores(previous year RS 15.36 Crores) declared by some of the investee companies during the year2021- 2022. Consequently the total dividend inflow during the fiscal year under reviewwas H 65.70 Crores (previous year H 24.77 Crores).
The Profit Before Tax (PBT) is at RS 80.10 Crores (previous year RS32.45 Crores). The substantial increase in the PBT is mainly due to the receipt of thedividend on its investments at a higher rate.
C. HUMAN RESOURCES:
As on 31 March 2022 the Company had 13 employees (previous year 14employees) on its roll including the Managing Director and the Executive Director.
D. KIRLOSKAR INDUSTRIES LIMITED - EMPLOYEES STOCK APPRECIATION RIGHTSPLAN 2019:
The Kirloskar Industries Limited - Employees Stock AppreciationRights Plan 2019? (KIL ESARP 2019) was introduced in accordance with the SEBIguidelines for the employees of the Company and its subsidiaries. The Company obtainedin-principle approval for the KIL ESARP 2019 from BSE Limited and National Stock Exchangeof India Limited on 3 December 2020 and 19 January 2021 respectively. KIL ESARP 2019 isadministered by the Nomination and Remuneration Committee of the Board of Directors of theCompany.
KIL ESARP 2019 is in compliance with the applicable provisions of theCompanies Act 2013 and its Rules SEBI (Share Based Employees Benefits Regulations2014) read with SEBI (Share Based Employees Benefits and Sweat Equity Regulations 2021)(Employee Benefits Regulations) and other applicable Regulations. A certificate from Mr.Mahesh J. Risbud Practicing Company Secretary (FCS 810 CP 185) Pune SecretarialAuditors of the Company confirming that the KIL ESARP 2019 has been implemented inaccordance with Employees Benefits Regulations and in accordance with the SpecialResolution passed by the Company through Postal Ballot on 29 December 2019 and furtheramended by the Board of Directors in its meeting held on 3 February 2022. A copy of thesame will also be available for inspection at the Company?s Registered Office.
Pursuant to the KIL ESARP 2019 the Company had granted an aggregate of470898 Equity Settled Stock Appreciation Rights (ESARs) at an exercise price of RS 500per ESAR to eligible employees of the Company on 30 January 2020.
Consequent to the Business Transfer Agreement (BTA) dated 19 December2020 executed by and between the Company and Avante Spaces Limited (Avante) a Wholly-Owned Subsidiary of the Company certain employees of the Company were transferred toAvante with effect from 1 January 2021.
Pursuant to KIL ESARP 2019 ESARs granted shall vest after a minimumperiod of 1 year but not later than a maximum period of 4 years from the grant date ofsuch ESARs.
During the year under review the Company had vested 114160 ESARs inthe employees of the Company; employees of Avante who were transferred from the Companyunder the BTA; and in the Non-Executive Director of the Company who is the ManagingDirector of Avante to whom ESARs were granted under the KIL ESARP 2019.
Details of KIL ESARP 2019 as required under Rule 12 (9) of theCompanies (Share Capital and Debentures) Rules 2014 read with Regulation 14 of EmployeesBenefits Regulations as on 31 March 2022 are set out in Annexure I? to thisReport and are available on the Company?s website at www.kirloskarindustries.com.
E. CONCERNS AND THREATS:
The Board of Directors has constituted a Risk Management Committee (theCommittee) to identify the risks mitigate the same and monitor the development anddeployment of risk mitigation action plans for the businesses of the Company.
The Company has deployed a risk management process that includes riskidentification assessment and its treatment mitigation monitoring and reviewingactions. The Company prioritises and manages the risks identified through its RiskRegisters.
The Committee regularly presents the risk assessment and mitigationprocedures adopted to assess the reliability of the risk management structure andefficiency of the process before the Audit Committee and the Board of Directors of theCompany at their respective meetings.
The Committee meets every quarter discusses all the mapped risksevaluates future risks and reviews the mitigation plan for the identified risks for allbusiness segments.
Wind energy generation is largely dependent on natural factors such asthe velocity of wind continuity of the flow etc. and is unpredictable and beyondcontrol. The business is also largely impacted adversely by changes made by the RegulatoryAuthorities in the open access policies.
The market for Renewable Energy Certificates (RECs) continues to besluggish this trend is expected to continue in the current Financial Year.
G. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY:
The Company has in place an adequate internal controls system to ensureoperational efficiency accuracy and promptness in financial reporting and compliancewith various laws and regulations.
The internal controls system is supported by the internal auditprocess. An Internal Auditor has been appointed for this purpose. The Audit Committee ofthe Board reviews the Internal Audit Report and the adequacy and effectiveness of internalcontrols periodically.
H. CAUTIONARY STATEMENT:
Statements in this Report particularly those which relate toManagement Discussion and Analysis describing the Company?s objectives projectionsestimates and expectations may constitute forward-looking statements? withinthe meaning of applicable laws and regulations. Actual results may differ materially fromthose either expressed or implied.
I. SEBI REGULATIONS AND LISTING FEES:
The annual listing fees for the year under review have been paid to theBSE Limited and the National Stock Exchange of India Limited where your Company?sshares are listed.
J. DETAILS OF MATERIAL SUBSIDIARY:
In terms of the provisions of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 Kirloskar FerrousIndustries Limited (KFIL) is a material subsidiary of the Company in which the Companyholds 50.93% of its total shareholding.
During the period under review KFIL has not sold / disposed off andleased assets more than 20% of its assets.
K. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:
Kirloskar Ferrous Industries Limited (KFIL) a listed materialsubsidiary of the Company has acquired a controlling interest and holds 51.25% of theissued subscribed and paid-up equity share capital of ISMT Limited (ISMT) and ISMT hastherefore become a subsidiary of KFIL with effect from 10 March 2022 pursuant to theprovisions of Section 2 (87) (ii) of the Companies Act 2013 (the Act).
Consequently pursuant to the provisions of Section 2(87)(ii) of theAct ISMT has become a subsidiary of the Company with effect from 10 March 2022.
Accordingly the Company has the following subsidiaries as on 31 March2022:
1. Avante Spaces Limited a Wholly-owned Subsidiary Company;
2. Kirloskar Ferrous Industries Limited (KFIL) Subsidiary Company; and
3. ISMT Limited a subsidiary of the Subsidiary Company (a subsidiaryof KFIL).
The Consolidated Financial Statements of the Company and itssubsidiaries prepared in accordance with IND AS 110 issued by the Ministry of CorporateAffairs form part of this Annual Report. A statement containing the salient features ofthe Financial Statement of the subsidiary companies is attached to the FinancialStatements of the Company in Form AOC-1.
Pursuant to the provisions of Section 136 of the Act and its Rulesthereof including amendments thereunder the Financial Statements along with relevantdocuments of the Company and its subsidiaries are available on the Company?swebsite viz. www.kirloskarindustries.com.
The Financial Statements of the subsidiaries and related detailedinformation will be kept for inspection by any member at the Company?s RegisteredOffice and will also be made available to the members on demand at any point of time.
BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANIES:
AVANTE SPACES LIMITED:
During the year under review the name of Wellness SpaceDevelopers Limited? a Wholly-Owned Subsidiary of the Company has been changed toAvante Spaces Limited? (Avante) with effect from 29 June 2021.
The Board of Directors of Avante in its meeting held on 23 July 2021had approved a revised plan in respect of mixed-use development on land parcels bearingSurvey Numbers 13/A 13/B/C/D 156A 156B 156C/2 12/2 and 12/5 at Kothrud Pune ofapproximately 1.8 million sq. ft. leasable area as per the revised Concept DesignDrawings and strategies presented before the Board. This has been done pursuant to theUnified Development Control Regulation notified on 2 December 2020 which has had apositive impact on the project development for Floor Space Index (FSI) and leasable area.
In furtherance of the same Avante has taken various measures for thedevelopment of the land parcels at Kothrud.
The works continued on design project execution and statutory frontsas per the project plan in spite of COVID-19 waves during the year. Commodity prices alsoincreased substantially impacting the project cost. Avante mitigated the impacts by takingvarious measures and it is under control within the overall Project Plan.
During the year Avante has spent RS 119.71 Crores on real estateactivities.
KIRLOSKAR FERROUS INDUSTRIES LIMITED:
Kirloskar Ferrous Industries Limited (KFIL) is in the business ofmanufacture of pig iron and castings and has its manufacturing facilities located atBevinahalli village and Hiriyur in Karnataka and Solapur in Maharashtra.
The Board of Directors of KFIL declared an interim dividend of H 2.50(50%) per equity share on 24 January 2022 and paid on 18 February 2022.
The Board of Directors of KFIL in its meeting held on 17 May 2022 hasalso recommended a final dividend of RS 3 (60%) per equity share for the Financial Yearended 31 March 2022. Accordingly the total dividend (inclusive of interim dividenddeclared and paid) for the Financial Year 2021-2022 is 110%.
KFIL achieved Net Sales of RS 3614.97 Crores as compared to H 2038.08Crores in the previous year. The Profit Before Tax for the year under review stood at RS542.69 Crores as compared to RS 363.19 Crores of the previous year after providing fordepreciation and amortisation.
During the year under review KFIL maintained the leadership positionin the castings business which recorded a growth of 23.60% over previous year withsubstantial capacity utilisation improvement in Foundry Line II at Koppal Plant. Theoperations of the Pig Iron Plant of KFIL at Hiriyur was stabilised and the Sinter projectwas completed as per the timeline. The plant was operational throughout the year andcontributed both in volume growth and value growth of KFIL.
KFIL sold 495555 MT of Pig Iron (includes 150431 MT from HiriyurPlant) valued at H 2201.77 Crores as compared to 313690 MT of Pig Iron valued at RS1067.32 Crores in the previous year.
The demand for all the grades of pig iron was good across the sectorsthroughout the year under review. The average realisation of Pig Iron which was at aroundRS 34000 per MT in the previous year went upto around RS 44400 per MT during the yearunder review.
KFIL sold 114342 MT of castings aggregating to RS 1289.63 Croresduring the financial year 2021-2022 as compared to 92507 MT castings aggregating to RS874.40 Crores in the previous financial year.
The demand for the casting was strong led by the tractor industry inthe first two quarters of the year and later led by the commercial vehicle industry andauto sector.
During the year under review KFIL was successful in increasing saleprices of pig iron with the increase in the input material costs.
During the year under review iron ore prices increased from around H6500 per MT in April 2021 to around RS 8000 per MT by June 2021 and prices remainedrange bound till October 2021. However prices started reducing from November 2021 andtouched around H 6000 per MT by March 2022. The fluctuation in iron ore prices is mainlyattributed to variation in steel production in China.
During the year under review prime coking coal prices which was aroundUSD 135 per MT in the first quarter moved upto USD 430 per MT by January 2022 due toinclement weather and pandemic restrictions resulting in reduced production of coal inAustralia. Further the Russia Ukraine war contributed to increased prices for primecoking coal from USD 430 per MT to around USD 625 per MT by the end of March 2022.
KFIL mitigated the risk of variation in the coking coal prices bystrategic sourcing of coking coal when the prices of coking coal were economical. Furtherduring the year the agreement for conversion of coal to coke helped in mitigating thecoke price fluctuations. Both these strategies Contributed in substantial reduction incoke costs and helped in increasing the profitability of KFIL.
The Coke Oven Plant and the Power Plant were operated throughout theyear at rated capacity which helped KFIL to achieve substantial improvement in costreduction and thereby contributing to the profitability of KFIL.
KFIL continuously worked on improving the casting sales volume growthand quality at both locations of Koppal and Solapur which has resulted increase in thecasting sales growth of 23.60% over the previous year and achieved the total rejection of5.20%.
During the year under review the major raw material alloys andchemicals prices have gone up substantially. KFIL was successful in passing the increasein the input cost to the customers through established price adjustment mechanism.
KFIL continues to focus on increasing the revenue from supply ofcastings in machined condition and around 12% of casting were sold in machined condition.
KFIL worked on optimisation of interest rates by availing creditfacilities at competitive rates and effectively managed the working capital therebyreducing the interest expenses.
KFIL hedged import transactions of input materials by taking forwardcovers to minimize the impact of fluctuations in the forex currencies.
KFIL worked on the optimisation of interest rates by availing creditfacilities at competitive rates and effectively managed the working capital therebyreducing the interest expenses.
KFIL hedged import transactions of input materials by taking forwardcovers to minimize the impact of fluctuations in the forex currencies.
During the year under review KFIL was successful in adding two newcustomers and increase in share of business and adding new products from the currentcustomers and also increased the supply of machined castings.
KFIL has completed the following projects during the year under review:
The Sinter Plant at Hiriyur was commissioned in November 2021and was stabilised by January 2022. This has helped in reducing the coke consumption anddependency on iron ore lumps by replacing with iron ore fines thereby reducing themanufacturing costs and increasing the profitability.
The Company has undertaken various projects for debottleneckingand improving the capacity utilisation and also undertook up-gradation on technology /infrastructure in foundry and machine shop both at Koppal and Solapur units to meet theincreasing demand for castings from the customers.
KFIL has undertaken the following projects during the year underreview:
Setting up of new moulding line at Solapur with contemporarytechnology with a capacity of 40000 MT per annum.
Establishment of Coke Oven Phase II to enhance the coke capacityfrom 2 lakhs MT per annum to 4 lakhs MT per annum and Power Plant (using waste gasgenerated from Coke Oven plant).
Upgradation of Mini Blast Furnace II with Bell-less topequipment.
Installation of Pulvarised Coal Injection into Mini BlastFurnaces with Oxygen enrichment facility.
Expanding machining capacity to add more value.
ISMT Limited (ISMT)
During the year under review KFIL has acquired sole control over ISMTon 10 March 2022 by acquiring 154000000 equity shares of RS 5 each of ISMT (i.e.51.25%) through preferential allotment pursuant to terms of the Share SubscriptionAgreement dated 25 November 2021 executed between KFIL ISMT and certain promotersforming the promoter group of ISMT. Consequent to the aforesaid allotment of equityshares ISMT has become a subsidiary of KFIL with effect from 10 March 2022 pursuant tothe provisions of Section 2 (87) (ii) of the Companies Act 2013 (the Act).
Consequently pursuant to the provisions of Section 2 (87) (ii) of theAct ISMT has become a subsidiary of the Company with effect from 10 March 2022.
ISMT (earlier known as The Indian Seamless Metal Tubes Limited) hasbeen incorporated as a public limited company in the year 1977 and commenced production ofseamless tubes in the year 1980. It has steel production facility at Jejuri in Maharashtraand seamless tube and pipes manufacturing units at Ahmednagar and Baramati in Maharashtra.It also has a captive power plant (presently not in operation) located at Chandrapur inMaharashtra.
The acquistion of ISMT has facilitated KFIL to enter a business segmentof steel manufacturing and seamless tubes. Performance Highlights:
(Rs in Crores)
|Name and Registered Office of ISMT ||Percentage Holding of KFIL ||Particulars ||Consolidated Financials for FY 2021-2022 |
|ISMT Limited ||51.25 ||Total Income ||2182.03 |
|Panama House || ||Total Expenses ||2176.50 |
|Viman Nagar || ||Profit before Exceptional Items and Tax ||5.53 |
|Pune 411014 || ||Exceptional Items ||(2511.36) |
|Maharashtra || ||Profit before Tax ||2516.91 |
|India || ||Tax expenses ||142.83 |
| || ||Profit after Tax ||2347.08 |
| || ||Other Comprehensive Income ||(6.21) |
| || ||Total Comprehensive Income ||2367.87 |
L. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:
Details of significant changes i.e. change of 25% or more ascompared to the immediately previous Financial Year in key financial ratio along withdetailed explanation thereof:
|Sr. Particulars No. ||Ratio as on 31 March 2022 ||Ratio as on 31 March 2021 ||% of Change ||Explanations if any |
|i. Debtors? Turnover (in no of days) ||32 ||6 ||433 ||Refer Note No. 1 |
|ii. Inventory Turnover (in no. of days) ||1 ||2 ||(40) ||Refer Note No. 2 |
|iii. Interest Coverage Ratio ||- ||- ||- ||Refer Note No. 3 |
|iv. Current Ratio ||1.19 ||3.80 ||(69) ||- |
|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 stock obtained in respect of windmill business.
3. The Company does not have any interest cost.
4. The Company does not have any borrowings.
There are no sector-specific equivalent ratios for disclosure by theCompany.
M. RETURN ON NET WORTH:
Details of change in Return on Net Worth as compared to the immediatelyprevious Financial Year as follows:
|Sr. Particulars No. ||Ratio as on 31 March 2022 ||Ratio as on 31 March 2021 ||% of Change ||Explanations if any |
|1. Net worth ||3.77 ||1.92 ||1.85 ||Refer Note No. 1 |
1. Return on Net Worth has increased since net profit has increased inspite of increase in net worth due to a signific increase in fair market value of equityinstruments from 31 March 2021 to 31 March 2022.
VI. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD?S REPORTPURSUANT TO SECTION 134 OF THE COMPANIES ACT 2013 RULE 8 OF THE COMPANIES (ACCOUNTS)RULES 2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014:
1. EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) read with the provision ofSection 134 (3) (a) of the Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules 2014 including amendments thereunder the AnnualReturn filed with the Ministry of Corporate Affairs (MCA) for the Financial Year2020-2021 is available on the website of the Company viz. www. kirloskarindustries.comand the Annual Return for the Financial Year 2021-2022 will be made available on thewebsite of the Company once it is filed with the MCA.
2. NUMBER OF MEETINGS OF THE BOARD:
During the period under review 7 Board Meetings were convened andheld the details of which form part of the Report on Corporate Governance. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.
3. DIRECTORS? RESPONSIBILITY STATEMENT:
Pursuant to the requirements under Section 134 (5) of the CompaniesAct 2013 in respect of Directors? Responsibility Statement your Directors statethat:
a) in the preparation of the Annual Financial Statements for the yearended 31 March 2022 the applicable accounting standards had been followed and there wereno material departures;
b) accounting policies as mentioned in Note No. 2 of the Notes formingpart of the Financial Statements have been selected and applied consistently. Furtherjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31 March 2022 and of theProfit of the Company for the year ended on that date;
c) proper and sufficient care has been taken 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) the Annual Financial Statements have been prepared on a goingconcern basis;
e) proper internal financial controls were in place and that theinternal financial controls were adequate and were operating effectively; and
f) proper systems to ensure compliance with the provisions of allapplicable laws were in place and were adequate and operating effectively.
4. A STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS:
All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149 (7) of the Companies Act 2013and Rules thereunder including amendments thereto and Regulation 16 (1) (b) and 25 (8) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 includingamendments thereto and also confirmed that they have complied with the Code forIndependent Directors prescribed in Schedule IV to the Act.
Further pursuant to Sub-rule (1) and (2) of Rule 6 of the Companies(Appointment and Qualifications of Directors) Rules 2014 and amendments thereto allIndependent Directors confirmed that they have enrolled their name in the data bank withthe Indian Institute of Corporate Affairs New Delhi India within prescribed timeperiod.
In the opinion of the Board each of the Independent Director appointed/ re-appointed during the period under review possess requisite integrity expertise andexperience for acting as an Independent Director of the Company.
The Company has laid down a Code for the Board of Directors and SeniorManagement of the Company (Code of Conduct). The Code of Conduct is available on theCompany?s website viz. www.kirloskarindustries.com.
All the Board Members and Senior Management Personnel of the Companyhave affirmed compliance with the Code of Conduct.
5. COMPANY?S POLICY ON DIRECTORS? APPOINTMENT ANDREMUNERATION:
The Board has on the recommendation of the Nomination and RemunerationCommittee adopted a policy for selection and appointment of Directors Key ManagerialPersonnel and Senior Management Personnel and their remuneration.
The Nomination and Remuneration Policy is available on the website ofthe Company viz. www.kirloskarindustries.com.
a. Statutory Auditors:
Kirtane and Pandit LLP Chartered Accountants (Firm RegistrationNumber 105215W) Pune were appointed as the Statutory Auditors of the Company underSection 139 of the Companies Act 2013 (the Act) to hold office for a term of five yearsfrom the conclusion of the Annual General Meeting (AGM) held on 10 August 2021 till theconclusion of the AGM of the Company to be held in the year 2026.
The Company has received a certificate from the Statutory Auditors tothe effect that they are fulfilling requirements prescribed under the provisions ofSection 141 of the Act.
b. Cost Auditors:
Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated31 December 2014 the Company was not required to audit cost records relating toElectricity Industry (Windmills) for the Financial Year 2021-2022.
c. Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andRegulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company had appointed Mr. Mahesh J. Risbud Practicing Company Secretary (FCS810 CP 185) Pune to undertake the Secretarial Audit of the Company.
The Report of the Secretarial Audit is annexed as AnnexureII? to this Report.
Mr. Mahesh J. Risbud Practising Company Secretary Pune has submittedSecretarial Compliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8February 2019 and has also confirmed that the Company has complied with all applicableSEBI Regulations and circulars / guidelines issued thereunder for the Financial Year2021-2022.
7. MAINTENANCE OF COST RECORDS:
Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated31 December 2014 the Company was not required to maintain cost records relating toElectricity Industry (Windmill) in Form CRA - 1 for the Financial Year 2021-2022.
8. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIALAUDITORS:
There are no qualifications reservations or adverse remarks ordisclaimer made by the Statutory Auditor in their Audit Report or by the PracticingCompany Secretary in the Secretarial Audit Report for the year ended 31 March 2022.
The notes to the Accounts referred to in the Auditors Reports areself-explanatory and therefore no further clarifications are required.
9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OFTHE COMPANIES ACT 2013:
During the period under review your Company has given a loan of RS139.65 Crores to Avante Spaces Limited (Avante) a Wholly Owned Subsidiary Company. YourCompany has not granted any guarantee.
During the period under review the Company has invested of RS 15Crores in equity capital of Avante. The Company also purchased one preference share ofKirloskar Proprietary Limited at the rate of RS 100. The details are given in theFinancial Statements.
10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIESREFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013:
Pursuant to the provisions of Section 134 of the Companies Act 2013read with Rule 8 (2) of the Companies (Accounts) Rules 2014 the particulars of allcontracts or arrangements entered into by the Company with related parties have been doneat arm?s length and are in the ordinary course of business. Hence no particulars arebeing provided in Form AOC - 2. Related party disclosures as per the Indian AccountingStandard 24 (IND AS 24) have been provided in Note No. 45 to the Financial Statements.
None of the related party transactions entered into by the Companywere materially significant warranting members? approval under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 including amendmentsthereunder.
11. STATE OF COMPANY?S AFFAIRS:
Discussion on state of Company?s affairs has been covered in theManagement Discussion and Analysis Report.
12. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:
The particulars of the amounts proposed to be carried to reserves havebeen covered as part of the financial performance of the Company.
13. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF BALANCE SHEETAND THE DATE OF REPORT:
There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the FinancialYear of the Company to which the Financial Statements relate and the date of this Report.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO:
A. Conservation of Energy and Technology Absorption:
The Company has no particulars to report regarding conservation ofenergy and technology absorption as required under Section 134 (3) (m) of the CompaniesAct 2013 read with Rules thereof including amendments 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 andmitigate various risks to key business objectives. Major risks identified aresystematically addressed through risk-mitigating actions on a continuing basis. These arediscussed at the meetings of the Risk Management Committee the Audit Committee and theBoard of Directors of the Company from time to time.
During the year under review the Risk Management
Policy developed by the Company guides the risk management processeswhich are in line with the nature of the Company?s operations.
The risk management process works at various levels across theorganisation. It is an ongoing process and forms an integral part of management focus.
16. CORPORATE SOCIAL RESPONSIBILITY:
The Company has been carrying out Corporate Social Responsibility (CSR)activities. These activities are carried out in terms of Section 135 read with ScheduleVII of the Companies Act 2013 and the Companies (CSR Policy) Rules 2014.
Annual Report on CSR activities includes details about the CSR policydeveloped and implemented by the Company CSR initiatives taken during the year are annexedas Annexure III? to this Report.
17. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Board has carried out a performance evaluation of its own performance and that of itscommittees and individual Directors. Performance evaluation has been carried out as perthe criteria prescribed by the Nomination and Remuneration Committee.
18. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIESASSOCIATES AND JOINT VENTURE COMPANIES:
(Rs in Crores)
|Name and Registered Office of the Subsidiary Company Avante Spaces Limited Office No. 801 8th Floor Cello Platina Fergusson College Road Shivajinagar Pune 411 005 ||% Holding ||Particulars ||2021-2022 Amount |
| ||100 ||Total income ||1.14 |
| || ||Profit / (Loss) before tax ||(4.25) |
| || ||Tax expenses (including deferred tax) ||(0.57) |
| || ||Profit / (Loss) for the year ||(3.68) |
| || ||Other comprehensive income for the year ||(0.22) |
| || ||Total comprehensive income for the period ||(0.16) |
| || ||Profit / (Loss) brought forward from previous year ||(1.02) |
| || ||Final Dividend paid on equity shares ||Nil |
| || ||Tax on above Dividend ||Nil |
| || ||Profit / (Loss) available for appropriation ||(3.68) |
| || ||Transfer to General Reserves ||Nil |
| || ||Balance carried to surplus / (deficit) in the Statement of Profit and Loss ||(4.86) |
(Rs in Crores)
|Name and Registered Office of the Subsidiary Company ||% Holding ||Particulars ||2021-2022 Amount |
|Kirloskar Ferrous Industries Limited 13 Laxmanrao Kirloskar Road Khadki Pune 411 003 ||50.93 ||Total income ||3626.26 |
| || ||Profit before tax ||542.69 |
| || ||Tax expenses ||136.59 |
| || ||Profit for the year ||406.10 |
| || ||Other comprehensive income for the year ||3.41 |
| || ||Total comprehensive income for the period ||409.51 |
| || ||Profit brought forward from previous year ||659.65 |
| || ||Transfer from Share Options ||(2.87) |
| || ||Final Dividend paid on equity shares ||(41.53) |
| || ||Interim dividend paid on equity shares ||(34.67) |
| || ||Transfer to General Reserves ||(5.00) |
| || ||Balance carried to surplus in the Statement of Profit and Loss ||985.09 |
(Rs in Crores)
|Name and Registered Office of the Associate Company ||% Holding ||Particulars ||2021-2022 Amount |
|# Kirloskar Brothers Limited Yamuna S. No. 98/3 to 7 Plot No. 3 Baner Pune 411 045 ||23.91 ||Total income ||2201.60 |
| || ||Total expenditure ||2065.40 |
| || ||Profit before exceptional items and taxation ||136.20 |
| || ||Profit before taxation ||111.10 |
| || ||Provision for tax (including Deferred Tax) ||32.90 |
| || ||Net profit ||78.20 |
| || ||Other comprehensive income ||2.80 |
| || ||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 Reserves ||Not available |
| || ||Balance carried to surplus in the Statement of Profit and Loss ||Not available |
# The Company does not have significant influence on Kirloskar BrothersLimited (KBL) as it does not participate in the management and / or financial decisions ofKBL. As such KBL is not an Associate Company of the Company under the IND AS 24 and assuch its financials are not included in the Consolidated Financial Statements of theCompany. Hence the aforesaid information is obtained from the website of KBL for thequarter and year ended 31 March 2022.
19. CHANGE IN THE NATURE OF BUSINESS IF ANY:
In Financial Year 2021-2022 there was no change in the nature ofbusiness of the Company.
20. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEYMANAGERIAL PERSONNEL:
Directors appointed / re-appointed during the year:
|Name of Director ||Designation ||Terms of Appointment |
|Mr. Atul Kirloskar ||Chairman ||Re-appointed w.e.f. 10 August 2021 subject to retirement by rotation. |
|Mr. Vinesh Kumar Jairath ||Non-Executive Director ||Re-appointed w.e.f. 10 August 2021 subject to retirement by rotation. |
|Ms. Aditi Chirmule ||Executive Director ||The Board of Directors in its meeting held on 30 October 2021 re- appointed Ms. Aditi Chirmule as the Executive Director of the Company for a period of 5 years with effect from 25 January 2022 subject to the approval of the members in the ensuing Annual General Meeting. |
|Mr. D. Sivanandhan ||Independent Director ||Re-appointed w.e.f. 11 May 2022 as an Independent Director to hold office for a second term up to his attaining the age of 75 years i.e. up to 2 February 2026 with effect from11 May 2022 subject to the approval of the members in the ensuing Annual General Meeting. |
Mr. Atul Kirloskar and Mr. Vinesh Kumar Jairath retired by rotation andwere re-appointed in the Annual General Meeting held on 10 August 2021.
Key Managerial Personnel appointed during the year:
During the period under review the Company has not appointed any KeyManagerial Personnel.
Directors and Key Managerial Personnel resigned during the year2021-2022:
During the year under review Mr. Sunil Shah Singh ceased to be anIndependent Director of the Company with effect from 19 October 2021 on completion ofhis tenure as an Independent Director. Mr. Nihal Kulkarni resigned as a Director of theCompany with effect from 9 February 2022.
During the year under review Mr. Umesh Shastry resigned as a ChiefFinancial Officer of the Company with effect from 1 February 2022.
21. DIRECTORS PROPOSED TO BE APPOINTED / RE- APPOINTED AT THE ENSUINGANNUAL GENERAL MEETING:
Mr. Anil Alawani who retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.
The Company has received the requisite disclosure / declaration fromMr. Anil Alawani.
On the recommendation of the Nomination and Remuneration Committee theBoard of Directors of the Company in its meeting held on 26 May 2022 has re-appointed Mr.Mahesh Chhabria as the Managing Director of the Company for a term of 5 years with effectfrom 4 July 2022.
A proposal for his re-appointment as the Managing Director of theCompany with effect from 4 July 2022 for a term of 5 years and remuneration payable tohim for the period effective from 4 July 2022 to 3 July 2025 is being placed before themembers for their approval at the ensuing Annual General Meeting.
On the recommendation of the Nomination and Remuneration Committee theBoard of Directors of the Company in its meeting held on 30 October 2021 has re-appointed Ms. Aditi Chirmule as the Executive Director of the Company for a furtherperiod of 5 consecutive years with effect from 25 January 2022.
A proposal for her re-appointment as the Executive Director of theCompany with effect from 25 January 2022 for a term of 5 years and remuneration payableto her for the period effective from 25 January 2022 to 24 January 2025 is being placedbefore the members for their approval at the ensuing Annual General Meeting.
On the recommendation of the Nomination and Remuneration Committee inaccordance with the provisions of Section 161 of the Companies Act 2013 (the Act) readwith the Articles of Association of the Company the Board of Directors of the Company co-opted Mr. Vijaydipak Varma and Ms. Purvi Sheth as Additional Independent Directors witheffect from 15 October 2021 and 26 May 2022 respectively.
Mr. Vijaydipak Varma and Ms. Purvi Sheth hold office up to the date ofthe ensuing Annual General Meeting of the Company. The Company has received a requisitenotice under Section 160 of the Act in writing from a member signifying intention topropose the appointment of Mr. Vijaydipak Varma and Ms. Purvi Sheth as candidates for theoffice of Directors at the ensuing Annual General Meeting. Mr. Vijaydipak Varma and Ms.Purvi Sheth are eligible for appointment.
In the opinion of the Board of Directors Mr. Vijaydipak Varma and Ms.Purvi Sheth fulfill the conditions specified in the Act and Rules thereunder and alsopossess high integrity repute requisite expertise and experience (including theproficiency) so as to enable the Board to discharge its functions and duties effectivelyand they are independent of the management.
Mr. Vijaydipak Varma is exempted from passing the online proficiencytest pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualificationof Directors) Rules 2014.
Ms. Purvi Sheth has passed online proficiency test pursuant to theprovisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules2014.
The Company has also received requisite disclosures / declarations fromMr. Vijaydipak Varma and Ms. Purvi Sheth under Section 149 of the Act and otherapplicable provisions of the Act and SEBI (Listing Obligations and DisclosureRequirements) 2015 (the Regulations) and its amendments thereunder.
Upon the recommendation of the Nomination and Remuneration Committeethe Board of Directors has sought the approval of the members for the re- appointment ofMr. D. Sivanandhan and Mr. Ashit Parekh as Independent Directors to hold office for asecond term up to 2 February 2026 and 3 July 2027 respectively.
In the opinion of the Board of Directors Mr. D. Sivanandhan and Mr.Ashit Parekh fulfill the conditions specified in the Act and Rules thereunder and alsopossess high integrity repute requisite expertise and experience (including theproficiency) so as to enable the Board to discharge its functions and duties effectivelyand they are independent of the management.
Mr. D. Sivanandhan is exempted from passing the online proficiency testand Mr. Ashit Parekh has passed the online proficiency test.
The Company has also received requisite disclosures / declarations fromMr. D. Sivanandhan and Mr. Ashit Parekh under Section 149 of the Act and other applicableprovisions of the Act and the Regulations and its amendments thereunder.
The brief resumes and other details relating to Directors who areproposed to be appointed / re-appointed as required to be disclosed under Regulation 36(3) of the Regulations form part of the Statement settling out material facts annexed tothe Notice of the Annual General Meeting.
The resolutions seeking approval of the members for the appointment /re-appointment of these Directors have been incorporated in the Notice of the forthcomingAnnual General Meeting of the Company.
22. NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITSSUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:
Kirloskar Ferrous Industries Limited (KFIL) a subsidiary company ofthe Company has acquired a controlling interest and holds 51.25% of the issued subscribedand paid-up equity share capital of ISMT Limited (ISMT) and that ISMT has thereforebecome a subsidiary of KFIL with effect from 10 March 2022 pursuant to the provisions ofSection 2 (87) (ii) of the Companies Act 2013 (the Act).
Consequently pursuant to the provisions of Section 2 (87) (ii) of theAct ISMT has become a subsidiary of the Company with effect from 10 March 2022.
23. DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THECOMPANIES ACT 2013:
24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORSOR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY?S OPERATIONS INFUTURE:
To the best of our knowledge the Company has not received any suchorder from the Regulators Courts or Tribunals during the year which may impact the goingconcern status or the Company?s operation in future.
25. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITHREFERENCE TO THE FINANCIAL STATEMENTS:
The Company has developed a strong two-tier internal control frameworkcomprising entity level controls and process level controls. The entity level controls ofthe Company include elements such as defined Code of Conduct Whistle Blower Policy /Vigil Mechanism rigorous management review and Management Information System (MIS) andstrong internal audit mechanism. The process level controls have been ensured byimplementing appropriate checks and balances to ensure adherence to Company policies andprocedures efficiency in operations and also reduce the risk of frauds. Regularmanagement oversight and rigorous periodic testing of internal controls makes the internalcontrols environment strong at the Company. The Audit Committee along with the Managementoversees results of the internal audit and reviews implementation on a regular basis.
26. COMPOSITION OF THE AUDIT COMMITTEE:
The composition of the Audit Committee has been reported in the Reporton Corporate Governance annexed to this Report.
27. No case of any fraud by any officer or employee of the Company hasbeen reported by any auditor of the Company either to the Audit Committee or the Boardpursuant to the provisions of Section 143 (12) of the Companies Act 2013.
28. Neither any application has been made or any proceeding has beenpending against the Company under the Insolvency and Bankruptcy Code 2016.
VII. INFORMATION FORMING PART OF THE BOARD?S REPORT PURSUANT TORULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014:
The relevant information pursuant to Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed asAnnexure IV? to this Report.
The particulars of top ten employees pursuant to the aforesaid Rulesform part of this Report. In terms of Section 136 (1) of the Companies Act 2013 theBoard?s Report is being sent to the members without this Annexure. The membersinterested in obtaining a copy of this Annexure may write to the Company Secretary at theCompany?s Registered Office.
VIII. VIGIL MECHANISM:
The Company has a Whistle Blower Policy / Vigil Mechanism (the Policy)to deal with instances of fraud unethical behavior etc. The Policy provides a mechanismfor Directors and employees of the Company and other persons dealing with the Company toreport genuine concerns including but not limited to unethical behavior actual orsuspected fraud or violation of the Company?s Code of Conduct for Board of Directorsand Senior Management or ethics policy or leakage of Unpublished Price SensitiveInformation (UPSI) by any person who is in possession of UPSI to any other person inany manner whatsoever except as otherwise permitted under the SEBI (Prohibition ofInsider Trading) Regulations 2015 or any other instance to the Chairman of the AuditCommittee of the Board of Directors of the Company. The Policy is placed on theCompany?s website viz. www.kirloskarindustries.com.
IX. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
During the period under review the Company has complied with theprovisions relating to the constitution of the Internal Committee (the Committee) underthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013.
The Committee comprises four members including one external member.
During the period under review four meetings of the Committee wereheld on 29 April 2021 29 July 2021 20 October 2021 and 5 January 2022.
The Company has in place a Policy for Prevention of Sexual Harassmentat the workplace. This would inter alia provide a mechanism for the resolutionsettlements or prosecution of acts or instances of sexual harassment at the workplace andto ensure that all employees are treated with respect and dignity.
The details of complaints filed disposed off and pending during theFinancial Year pertaining to sexual harassment is provided in the Business ResponsibilityReport of this Report.
X. CASH FLOW:
A Cash Flow Statement for the year ended 31 March 2022 is attached tothe Balance Sheet as a part of the Financial Statements.
XI. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS:
During the period under review the Company has complied with all theapplicable secretarial standards.
XII. CORPORATE GOVERNANCE:
In terms of Regulation 34 (3) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a Report on the Corporate Governance alongwith a Compliance Certificate issued by the Statutory Auditors of the Company is attachedand forms part of the Annual Report.
XIII.REMUNERATION RECEIVED BY THE MANAGING DIRECTOR / EXECUTIVEDIRECTOR FROM SUBSIDIARY COMPANIES:
(Rs in Crores)
|Sr. Name of Director No. ||Designation ||Remuneration received / receivable from Kirloskar Ferrous Industries Limited Subsidiary Company ||Remuneration received / receivable from Avante Spaces Limited Wholly- Owned Subsidiary Company |
|1 Mr. Mahesh Chhabria ||Managing Director ||0.82 ||Nil |
|2 Ms. Aditi Chirmule ||Executive Director ||Nil ||Nil |
XIV. BUSINESS RESPONSIBILITY REPORT:
The SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (the Regulations) mandate the inclusion of the Business Responsibility Report (BRR)as part of the Annual Report for top 1000 listed entities based on market capitalisation.In compliance with the Regulations the Company has integrated BRR disclosures into theAnnual Report.
Your Directors would like to place on record their appreciation of thecontribution made and support provided to the Company by the members employees andbankers during the year under Report.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||ATUL KIRLOSKAR |
| ||CHAIRMAN |
|Pune: 26 May 2022 ||DIN 00007387 |