TO THE MEMBERS
OF KIRLOSKAR OIL ENGINES LIMITED
The Directors are pleased to present the 12th Annual Report together with the AuditedStatement of Accounts for the year ended 31st March 2021 of Kirloskar Oil Engines Limited("KOEL" or the "Company").
1. FINANCIAL RESULTS (STANDALONE)
|Particulars ||2020-21 ||2019-20 |
|Total Income ||2720.40 ||2914.87 |
|Profit before exceptional items and tax ||239.77 ||208.73 |
|Exceptional Items ||(8.37) ||16.49 |
|Profit before tax ||231.40 ||225.22 |
|Tax Expense (Current & Deferred Tax) ||61.66 ||54.84 |
|Net Profit for the Period ||169.74 ||170.38 |
|Other Comprehensive Income ||4.57 ||(1.94) |
|Total Comprehensive Income for the year net of tax ||174.31 ||168.44 |
|Profit Brought Forward ||1192.73 ||1137.61 |
|Profit Available for Appropriation ||1362.47 ||1307.99 |
|Transfer to General Reserve ||- ||- |
|Dividend and dividend distribution tax ||21.69 ||113.32 |
|Balance of the Profit carried forward ||1345.31 ||1192.73 |
2. COMPANY'S FINANCIAL PERFORMANCE
Your Company posted sales of Rs. 2663.62 Crores a decrease of 6% as compared to theprevious year's sales of Rs. 2840.57 Crores. Profit from operations was Rs. 231.40 Croresas against Rs. 225.22 Crores in the previous year.
The Profit After Tax was Rs. 169.74 Crores as against Rs. 170.38 Crores in the previousyear.
The Directors have declared an interim dividend of 75% (Rs. 1.50/- per share) and alsorecommended a final dividend of 125 % (Rs. 2.50/- per share) for the year ended 31st March2021. (Previous Year Interim Dividend 200% Rs. 4 per share).
Total dividend payout for the Financial Year 2020-21 was Rs. 21.69 Crores. The paymentof dividend is subject to deduction of TDS at the applicable tax rate.
The Dividend Distribution Policy of the Company is annexed herewith as Annexure A. Interms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder the Dividend Distribution Policy of theCompany is available on the Company's website(http://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2020/Dividend%20Distribution%20Policv%20-%2025%20Jan%202017.pdf)
4. ALTERATION OF MAIN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE COMPANY
The Members of the Company at the Annual General Meeting held on 28th August 2020 hadapproved the alteration of the Main Object Clause of the Memorandum of Association of theCompany to commence business for the products which are synergistic & naturalextension of existing business portfolio and which would help the Company pursue businessgrowth in energy management / transformation solutions water management solutionsincluding agricultural farm mechanization space.
5. KIRLOSKAR OIL ENGINES LIMITED - EMPLOYEE STOCK OPTION PLAN 2019 (KOEL ESOP 2019) -The Members of the Company at the Annual General Meeting of Kirloskar Oil Engines Limitedheld on 9th August 2019 had passed a resolution for introducing Employees Stock OptionPlan 2019 - (KOEL ESOP 2019) for the benefit of employees of the Company.
The resolution also accorded approval to the Board of Directors to formulate the planas per broad parameters outlined in the resolution either directly or through aNomination and Remuneration Committee.
The Nomination and Remuneration Committee at its meeting held on 5th March 2021approved the grant of 940000 stock options exercisable into 940000 equity shares ofRs. 2/- each of the Company to its specified employees. KOEL ESOP 2019 is in compliancewith the applicable provisions of the Companies Act 2013 and the rules issued thereunderSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014("Employee Benefit Regulations") and other applicable regulations if any.
The disclosures as required under Companies (Share Capital and Debentures) Rules 2014including amendments thereunder and Employee Benefit Regulations as on 31st March 2021 areas under:
|Options granted during the Financial Year 2020-21 ||940000 |
|Options vested during the Financial Year 2020-21 ||Nil |
|Options exercised during the Financial Year 2020-21* ||NA |
|The total number of shares arising as a result of exercise of option during the year 2020-21* ||NA |
|Options lapsed during the year 2020-21 ||Nil |
|Exercise Price (Rs.) ||103.14 |
|Variation of terms of options during the year 2020-21 ||No variation |
|Money realized by exercise of options during the year 2020-21 (Rs.) ||Nil |
|Total number of options in force during the year 2020-21 ||940000 |
|Employee wise details of options granted to : || |
|1. Key Managerial Personnel: || |
|a) Mr. Sanjeev Nimkar Managing Director ||134025 |
|b) Mr. Pawan Kumar Agarwal Chief Financial Officer ||67012 |
|c) Ms. Smita Raichurkar Company Secretary ||5004 |
|2. Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during the year 2020-21 a) Mr. Sanjeev Nimkar b) Mr. Pawan Kumar Agarwal ||134025 67012 |
|3. Identified employees who were granted option during any one year equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant during the year 2020-21. ||Nil |
* Not yet vested
There have been no material changes to the KOEL ESOP 2019 during the Financial Year.
The Certificate from P G Bhagwat LLP Chartered Accountants Pune - (Firm RegistrationNumber 101118W/W100682) Statutory Auditors of the Company confirming that the scheme hasbeen implemented in accordance with the aforesaid regulations and in accordance with theresolution passed by the Members of the Company at its Annual General Meeting held on 9thAugust 2019 would be placed before the Members at the ensuing Annual General Meeting. Acopy of the same will be available for inspection at the Company's website viz.www.koel.co.in.
The disclosures on the scheme details of options granted changes to the scheme ifany are placed on the website of the company as required under Employee BenefitRegulations 2014 read with SEBI Circular No. CIR/CFD/POLICY CELL/2/2015 dated 16th June2015 and can be accessed on the web-link(https://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2021/Employee%20Stock%20
In line with the Indian Accounting Standards ("Ind AS") 102 on 'Share BasedPayments' issued by the Institute of Chartered Accountants of India ("ICAI")your Company has computed the cost of equity settled transactions by using the fair valueof the options at the date of the grant and recognized the same as employee compensationcost over the vesting period.
6. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(the Regulations) including amendments thereunder:
a) Details of Key Financial Ratios of the Company as under:
|Sr. No. ||Particulars ||Ratio as on 31st March 2021 ||Ratio as on 31st March 2020 ||Reason for significant change (more than 25%) |
|i. ||Debtors' Turnover ||7.4 ||7.9 ||- |
|ii. ||Inventory Turnover ||9.4 ||10.5 ||- |
|iii. ||Interest Coverage Ratio ||47.2 ||77.4 ||Higher utilization of working capital credit facilities |
|iv. ||Current Ratio ||1.9 ||2.1 ||- |
|v. ||Debt Equity Ratio ||0.04 ||0.01 ||Higher utilization of working capital credit facilities |
|vi. ||Operating Profit Margin (%) ||7.9% ||6.0% ||Optimization of operating costs |
|Sr. No. ||Particulars ||Ratio as on 31st March 2021 ||Ratio as on 31st March 2020 ||Reason for significant change (more than 25%) |
|vii. ||Net Profit Margin (%) ||6.3% ||5.9% ||- |
Note: The Company did not have any non-current borrowing.
There are no sector specific equivalent ratios for disclosure by the Company.
b) Return on Net Worth:
Details of change in Return on Net Worth as compared to the immediately previousFinancial Year as follows:
|Sr. No. ||Particulars ||As on 31st March 2021 ||As on 31st March 2020 ||% of change ||Reason for significant change more than 25% |
|1 ||Return on Net worth ||8.6% ||9.3% ||(8.1)% ||- |
a) Changes in Composition of the Board of Directors
During the year under review
i. The Members of the Company in the Annual General Meeting held on 28th August 2020had approved the appointment of Mr. Sanjeev Nimkar (DIN 07869394) as a Director and alsoas the Managing Director of the Company with effect from 29th April 2020.
ii. Mr. Mahesh R. Chhabria (DIN 00166049) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.
iii. Ms. Gauri Kirloskar (DIN 03366274) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers herself for re-appointment.
The brief resumes and other details relating to the Directors who are proposed to bere-appointed bas required to be disclosed under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 including amendments thereunder form part of the Noticeof Annual General Meeting.
b) Changes in Key Managerial Personnel
i) The term of re-appointment of Mr. Rajendra R. Deshpande (DIN 00007439) as theManaging Director & Chief Executive Officer of the Company expired on 28th April 2020.Consequent to this he ceased as the Director and Key Managerial Personnel of the Companywith effect from close of working hours of 28th April 2020.
ii) Mr. Nihal G. Kulkarni (DIN 01139147) resigned as the Managing Director of theCompany and his resignation was effective from the close of working hours of 28th April2020. He however continues to hold the office as a Non-Executive Director of the Companywith effect from 29th April 2020. Consequent to this he ceased to be a Key ManagerialPersonnel of the Company with effect from close of working hours of 28th April 2020.
iii) Mr. Sanjeev Nimkar (DIN 07869394) the Managing Director of the Company wasappointed as the Key Managerial Personnel of the Company with effect from 29th April2020.
Other than the above there are no other changes in Key Managerial Personnel of theCompany in the Financial Year 2020-21.
c) Declarations from the Independent Directors
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149 (7)of the Companies Act 2013 & Rules thereof including amendments thereunder andRegulation 16(1)(b) & 25(8) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder.
The Company has also received declarations from all the Independent Directors of theCompany confirming that they have complied with the Code for Independent Directors asprescribed in Schedule IV to the Companies Act 2013 including amendments thereunder. Thesaid Code is available on the Company's website.
All the Independent Directors of the Company have enrolled themselves in the data bankwith the Indian Institute of Corporate Affairs' New Delhi India and eligibleIndependent Directors have also completed the proficiency test.
d) A statement regarding opinion of the Board with regard to Integrity Expertise andExperience (including the proficiency) of the Independent Directors appointed during theyear:
The Members of the Company in the Annual General Meeting held on 28th August 2020 hadapproved the re-appointment of Mr. Pradeep R. Rathi as Independent Director for the secondconsecutive term of 5 years with effect from 7th August 2020.
Other than the above there are no other appointment / re-appointment of IndependentDirectors of the Company in the Financial Year 2020-21.
e) Board Evaluation
The Board of Directors carried out a formal review of the performance and effectivenessof the Board Committees of the Board and of the individual directors including theChairman of the Board for the Financial Year 2020-21.
The performance of the Board was evaluated on the basis of criteria such as the Boardcomposition and structure effectiveness of Board processes participation in organizationstrategy including Long Range Plan and Annual Operating Plan inorganic growth opportunityevaluation Enterprise Risk Management etc.
Using appropriate criteria the performance of the various Committees was separatelyevaluated by the Board.
In a separate meeting of Independent Directors performance of non-independentdirectors performance of the Board as a whole performance of the Chairman taking intoaccount the views of executive directors and non-executive directors was evaluated andinter alia discussed the issues arising out of Committee meetings and Board discussionincluding the quality quantity and timely flow of information between the CompanyManagement and the Board that is necessary for the Board to effectively and reasonablyperform their duties.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as achievementagainst key performance objectives attendance at meetings time devoted for the Companycontribution in the Board process etc.
The Chairman of the Board had a meeting with the Independent Directors. This meetingwas intended to obtain Independent Directors' inputs on effectiveness of the Boardprocesses.
The result of evaluation was satisfactory and meets the requirements of the Company.
f) Nomination and Remuneration Policy
The Board of Directors on the recommendation of the Nomination & RemunerationCommittee has adopted a policy that lays guidelines for selection and appointment ofDirectors Key Managerial Personnel and Senior Management personnel together with theirremuneration. The Nomination and Remuneration Policy is available on the website of theCompany. Web-link (http://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2019/Nomination%20and%20Remuneration%20Policy.pdf)
g) Number of meetings of the Board
During the period under review six (6) Board Meetings were held the details of whichform part of the Report on Corporate Governance.
h) Composition of Audit Committee and other Committees of the Board
The Composition of Committees of the Board viz. Audit Committee Nomination andRemuneration Committee Risk Management Committee and Stakeholders Relationship Committeeforms part of the Report on Corporate Governance.
The Composition of Corporate Social Responsibility Committee forms part of Annexure Bof this report.
During the year under review the Board has accepted all the recommendations given bythe Committees of the Board which are mandatorily required.
8. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the Company has invested in the equity shares of ArkaFincap Limited (earlier known as Kirloskar Capital Limited) and cumulative redeemablepreference shares of La-Gajjar Machineries Private Limited. The details are given in theFinancial Statements. The Company has not granted any Loans and Guarantees covered underSection 186 of the Companies Act 2013 & Rules thereof including amendmentsthereunder.
9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the Financial Year 2020-21were on an arm's length basis and in the ordinary course of business. Hence there are notransactions to be reported in Form AOC-2. None of the related party transactions enteredinto by the Company were materially significant warranting members' approval under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 including amendmentsthereunder. All related party transactions are routinely placed before the Audit Committeefor approval after being duly certified by the Statutory Auditors/Independent CharteredAccountant.
The policy on related party transactions as adopted by the Board is uploaded on theCompany's website.
The disclosures as per IND-AS 24 for transactions with related parties are provided inthe Financial Statements of the Company.
10. RISK MANAGEMENT FRAMEWORK
The Company's risk management process is designed to facilitate identificationevaluation mitigation and review of risks which may affect achievement of the objectives.It is aligned with the strategy deployment processes of the organization.
The risk management process which has been established across the Company addressesmajor types of risks including cyber security which are at enterprise and businesslevel. The risks are reviewed with respect to the likelihood and impact following abalanced bottom-up and top-down approach covering all businesses and functions of theCompany. The review of the risks is done based on changes in the external environmentwhich have a significant bearing on the risks.
The Risk Management Policy developed by the Company guides the risk managementprocesses which is in line with size scale and nature of the Company's operations. Therisk management process works at various levels across the organization. It is an ongoingprocess and forms an integral part of Management focus.
The enterprise risks and mitigation plans thereof are reviewed by the Risk ManagementCommittee Audit Committee and the Board of Directors periodically.
11. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference to theFinancial Statements commensurate with the size scale and complexity of its operations.Details of internal financial control and its adequacy are included in the ManagementDiscussion and Analysis Report which forms part of this Report.
12. CORPORATE SOCIAL RESPONSIBILITY
The Company has always believed in working for the betterment and upliftment ofsociety. Corporate Social Responsibility (CSR) has been practiced and ingrained over theyears in the Company. The focus areas under CSR have remained consistent over the yearsand include Education Health and Hygiene Environment Disaster Management and RuralDevelopment etc. The Company strongly believes in Enriching Lives' of the people inthe communities in which it operates.
The Company has adopted the Corporate Social Responsibility (CSR) Policy which isfurther amended in lines with the Companies (Corporate Social Responsibility Policy)Amendment Rules 2021.
The Composition of CSR Committee of the Board and Report on CSR activities is annexedherewith as Annexure B.
13. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has adopted a Vigil Mechanism / Whistle Blower Policy. The Policy providesa mechanism for employees of the Company and other persons dealing with the Company toreport to the Chairman of the Audit Committee any instance of unethical behaviour actualor suspected fraud or violation of the Company's code of conduct or leakage of UnpublishedPrice Sensitive Information (UPSI) by any person who is in possession of UPSI to anyother person in any manner whatsoever except as otherwise permitted under the SEBI(Prohibition of Insider Trading) Regulations or any other instance.
No person has been denied access to the Audit Committee in this regard. There were nocomplaints filed / pending with the Company during the year.
The Policy is uploaded on the Company's website. Web-link(http://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2019/Whistle%20Blower%20-%20Vigil%20Mechanism.pdf)
14. ANNUAL RETURN
As required under 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 2019-20 is available on the web-link(https://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2021/Annual%20 Return 2019-20KOEL.pdf) and the Annual Return for Financial Year 2020-21 will be made available on thewebsite of the Company once it is filed with the MCA.
15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE AND OUTGO
Information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under section 134 (3)(m) of the Companies Act2013 & Rules thereof including amendments thereunder are provided in Annexure C tothis report.
16. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 including amendments thereunder areannexed in Annexure D of this report.
The particulars of employees pursuant to Section 197(12) of the Companies Act 2013read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 including amendments thereunder forms part of this report. Interms of Section 136 (1) of the Companies Act 2013 & Rules thereof includingamendments thereunder the Directors' Report is being sent to the shareholders withoutthis Annexure. A copy of this annexure will be made available in electronic form to theMembers on request raised by them on the dedicated email id of the Company firstname.lastname@example.org.
17. POLICY ON PREVENTION OF SEXUAL HARRASSMENT
The Company has in place a Policy for prevention of sexual harassment at workplace.This inter alia provides a mechanism for the resolution settlement or prosecution of actsor instances of sexual harassment at work and ensures that all employees are treated withrespect and dignity. The Company has complied with the provisions relating to theconstitution of internal complaints committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
During the year under review the Company continued with awareness module for thispolicy in its employee induction program.
There were no complaints filed / pending with the Company during the year.
During Financial Year 2020-21:
a. There were no public deposits accepted by the Company pursuant to provisions of theCompanies Act 2013 & Rules thereof including amendments thereunder.
b. Neither the Managing Director nor the Whole-time Directors of the Company receivedany remuneration or commission from the subsidiary Companies.
c. There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and / or Board under Section 143(12)of Act & Rules thereof including amendments thereunder.
d. The Company has maintained cost records as specified by the Central Government undersubsection (1) of section 148 of the Companies Act 2013 & Rules thereof includingamendments thereunder.
e. The Company has complied with all applicable mandatory Secretarial Standards issuedby the Institute of Company Secretaries of India New Delhi.
f. To the best of our knowledge the Company has not received any order fromRegulators Courts or Tribunals which may impact the going concern status or theoperations of the Company in future.
g. There have been no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the Financial Statements relate and the date of this report.
19. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS
As on 31st March 2021 the Company had the following three subsidiaries:
a) KOEL Americas Corp. USA ("KOEL Americas")
For the fiscal ended 31st March 2021 the Sales Revenue was $ 3826059 (Rs. 28.24Crores) [Previous Year $2704328]. The Profit after Tax was $ 98769 (Rs. 0.54 Crores)[Previous Year $101756].
The revenue from business in the Financial Year 2020-21 has grown by 49% to US$3812010 as compared to US$ 2549443 in the Financial Year 2019-20. Impact of COVID-19pandemic on revenues was severe in the Quarter 1 of Financial Year 2020-21 but the laterquarter sales had a boost especially in the Agriculture segment.
All the 4 intended engine models certified by Environment Protection Agency (EPA) werecommercially available in the Financial Year 2020-21.
The revenues from Agricultural segment grew by 110% as compared to previous fiscal to $2169901 which covers sales in the Central American region. This is result of increasein demand for agricultural products.
The revenues of industrial segment also grew by 2.5 times as compared to previous yearto $ 879357 which includes sale of FM/UL certified fire pump engines to OEMs in USA andLatin America.
The revenues from Power Generation segment decreased by 50% as compared to previousyear to $ 615338. It is result of lower demand and also due to lock-down condition onaccount of COVID-19 pandemic as there was a delay for developing new generator sets byOEMs. Severe market conditions due to emergence of the COVID-19 pandemic have affected therevenues from countries like Peru Venezuela Argentina Colombia and Caribbean islands.
KOEL Americas continues to stock generator sets and engines in Miami Florida for readystock availability for Latin American as well as the United States of Americasdistributors.
During the year under review KOEL Americas has provided online sales training to theirdistributors and online service training to the technical team. The Company is also usingsocial media campaigns to stay in touch with the market as well as for brand promotion.
KOEL Americas is in the process of developing common rail diesel injection engines toaddress the construction agriculture and industrial segments in North American region.The Company also expects to make natural gas engines commercially viable in the later partof Financial Year 2021-22 and the efforts towards exploring the market for this isprogressing well. This is likely to boost the Company's growth prospectus in the longterm.
The United States of America government has launched a financial assistance program forSmall businesses affected by COVID-19 pandemic called "Corona Virus ReliefOption". Under this relief package a program called "Paycheck ProtectionProgram" (PPP) has been announced. The Company had applied for this relief packagein the first and second draws.
b) La-Gajjar Machineries Private Limited ("LGM")
The Financial Year 2020-21 saw the COVID-19 outbreak challenge that disrupted lives aswell as businesses worldwide. The rapid transmission of the virus across the world hasmeant families communities and businesses must adapt to new ways of living and working.Given the need to manage the business dynamically in the wake of the far-reaching effectsof the COVID-19 pandemic the Company took the prudent decision early in the year to focuson growth and the delivery of underlying operating profit.
For the fiscal year ended 31st March 2021 the Sales Revenue was Rs. 519.83 Crores (PYRs. 467.09 Crores). Net Profit after tax was Rs. 19.53 Crores (PY Rs. 16.21 Crores).
LGM continued to expand its network both in domestic and international markets andgeographies. Varuna' brand continued to expand its footprint in new potentialcountries like Somalia Romania & Bulgaria. LGM is also planning to expand itsdistribution network in South East Asian countries.
LGM continued to focus on quality standards and has developed energy efficient pumpsthat consume less power save electricity and thereby give higher returns on initialinvestment.
In the Financial Year 2019-20 the Board of Directors of LGM had approved the long-termstrategy of consolidation of all the manufacturing facilities of LGM in and aroundAhmedabad Gujarat. In the Financial Year 2020-21 LGM has identified land for thispurpose and is in the process of completing the legal formalities for acquisition of landfor this purpose. The said project will be funded through a combination of long term bankborrowings and internal accruals.
During the Financial Year 2020-21 LGM has incorporated a Wholly Owned Subsidiarynamely Optiqua Pipes and Electricals Private Limited based in Ahmedabad on 19th February2021 with a view to backward integrating and also developing its "alliedproducts" business vertical.
The business of pipes cables & wires of M/s. Optiflex Industries a PartnershipFirm based in Ahmedabad has been transferred (on a slump sale basis as a going concern)to Optiqua Pipes and Electricals Private Limited on 16th April 2021.
c) Arka Fincap Limited (formerly known as Kirloskar Capital Limited - "AFL")
Given the impact of COVID-19 on the economy along with its impact on the financialservices business AFL adopted a cautious and conservative approach in building its booktill the economy shows sign of stabilization.
For the fiscal year ended 31st March 2021 the revenue was Rs. 101.88 Crores (PreviousPeriod 20th April 2019 to 31st March 2020 Rs. 48.44 Crores) and Net Profit after tax wasRs. 16.88 Crores (Previous Period 20th April 2019 to 31st March 2020 Loss Rs. 6.10 Crores)
During the year under review the Company invested Rs. 124.82 Crores towards RightsIssue of AFL increasing the Equity Share Capital to Rs. 651.32 Crores includingsecurities premium.
AFL started its lending business with a focus on three different segments namelyCorporate Real Estate and SME/MSME Lending. During the year AFL did gross disbursementsof more than Rs. 1500 Crores across various industries including Industrial PipesTransportation Cement Power Pharmaceutical Warehousing Logistics Construction etc.and also started venturing into SME/MSME/ Retail segment. With this all three businesssegments have started generating assets for AFL and contribute to the long-term growth ofAFL.
As on 31st March 2021 AFL has Assets Under Management (AUM) of Rs. 1124 Crores. (Ason 31st March 2020 was Rs. 447.54 Crores). There have been no overdues in the portfolio ofAFL.
On the Liability side AFL has established relationships with 16 institutional lendersand raised more than Rs. 750 Crores. As on 31st March 2021 outstanding borrowing was Rs.665.64 Crores. The liquidity position of AFL is comfortable. As on 31st March 2021 AFLhas cash or equivalent assets of Rs. 226.08 Crores which includes fixed deposits withbanks investment in liquid schemes of various MFs and balances lying in current accounts.
AFL continues to have credit rating of AA [-] for its long-term borrowings and A1[+]for its shortterm borrowings by CRISIL Limited. During the year Infomerics Valuation andRating Private Limited also assigned rating of AA[-] for one of its Non ConvertibleDebentures (NCD) issuance.
AFL considers technology as one of the major drivers of growth sustenance andsubsequently to improve operational excellence. Effective collaboration and no disruptionsto the systems and operations ensured no loss of productivity and helped the Company toachieve business goals.
The consolidated financial statements of the Company and its three subsidiariesprepared in accordance with IND-AS 110 issued by Ministry of Corporate Affairs formspart of this Annual Report. A statement containing the salient features of the financialstatements of the subsidiary company is attached to the Financial Statements of theCompany in Form AOC-1.
Pursuant to the provisions of Section 136 of the Companies Act 2013 & Rulesthereof including amendments thereunder the financial statements along with relevantdocuments of the Company and its subsidiaries are available on the Company's website.
The annual accounts of the subsidiaries and related detailed information will beavailable for inspection in electronic form based on the Members' request raised by themon the dedicated email id of the Company at email@example.com.
a) Statutory Auditors
The Members of the Company in their meeting held on 5th August 2016 had re-appointed PG Bhagwat LLP Chartered Accountants Pune (Firm Registration Number 101118W/W100682) asStatutory Auditors of the Company for a second term of 5 consecutive years to hold officefrom Annual General Meeting held on 5th August 2016 till the conclusion of the AnnualGeneral Meeting to be held in the year 2021.
The Board of Directors based on recommendation of the Audit Committee considered andrecommended for approval by the Members of the Company at its forthcoming Annual GeneralMeeting the appointment of G. D. Apte Chartered Accountants Pune (Firm RegistrationNumber 100515W) as Statutory Auditors of the Company for a first term of 5 consecutiveyears to hold office from Annual General Meeting to be held in the year 2021 till theconclusion of the Annual General Meeting to be held in the year 2026.
The Company has received from the proposed new auditors the requisite certificatepursuant to Section 139 of the Companies Act 2013 & Rules thereof includingamendments thereunder.
The Report given by the Auditors on the Standalone and Consolidated financialstatements of the Company for the Financial Year 2020-21 is part of this report. There areno qualifications reservations adverse remarks or disclaimer given by the Auditors intheir report.
b) Cost Auditors
M/s. Parkhi Limaye & Co Cost Accountants (Firm Registration No. 191) carried outthe cost audit during the year. The Board of Directors has appointed M/s. Parkhi Limaye& Co. as Cost Auditors of the Company for the Financial Year 2021-22 as required undersection 148 of the Companies Act 2013 & Rules thereof including amendmentsthereunder.
c) Secretarial Audit Report
The Board of Directors has appointed Mr. Mahesh J. Risbud Practicing Company Secretary[PCS No. 185] to conduct Secretarial Audit of the Company under section 204 of theCompanies Act 2013 & Rules thereof including amendments thereunder.
The Secretarial Audit Report is annexed herewith as Annexure E-1.
There are no adverse remarks / qualifications of Secretarial Auditors in theSecretarial Audit Report for the year ended 31st March 2021.
Mr. Mahesh J. Risbud Practising Company Secretary Pune has submitted the SecretarialCompliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8th February2019 and has also confirmed that the Company has complied with all the applicable SEBIRegulations and circulars / guidelines issued thereunder for the Financial Year 2020-21.
d) Secretarial Audit of Material Unlisted Subsidiary
La-Gajjar Machineries Private Limited (LGM) is a material unlisted subsidiary of theCompany. The Secretarial Audit of LGM for the Financial Year 2020-21 was carried outpursuant to Section 204 of the Companies Act 2013 & Rules thereof includingamendments thereunder read with Regulation 24A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 including amendments thereunder. TheSecretarial Audit Report of LGM has been submitted by Mr. Mahesh J. Risbud PracticingCompany Secretary for the Financial Year 2020-21.
The Secretarial Audit Report is annexed herewith as Annexure E-2.
There are no adverse remarks / qualifications in the Secretarial Audit Report of LGMfor the the Financial Year 2020-21.
21. MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
The Management Discussion & Analysis and the Report on Corporate Governance asrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015including amendments thereunder forms part of this Annual report.
A Certificate from the Statutory Auditors of the Company regarding compliance withconditions of corporate governance as required under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 including amendments thereunder also formspart of this Annual Report.
22. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as required under Regulation 34(2)(f) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 including amendmentsthereunder forms part of this Annual Report.
23. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act 2013 including rules made thereof andamendments thereunder the Directors based on the representations received from theoperating management confirm that:
a) In the preparation of the Annual Accounts the applicable accounting standards havebeen followed and that no material departures have been made from the same;
b) They have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2021 and of the profit of theCompany for the year ended on that date;
c) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding assets of the Company and for preventing and detecting fraud and otherirregularities;
d) They have prepared the annual accounts on a going concern basis;
e) They have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; and
f) They have devised proper systems to ensure compliance with provisions of allapplicable laws and such systems are adequate and operating effectively.
24. CAUTIONARY STATEMENT
Statements in this report particularly those which relate to Management Discussion& Analysis describing the Company's objectives projections estimates andexpectations may constitute "forward looking statements" within the meaning ofapplicable laws and regulations. Actual results may differ materially from those eitherexpressed or implied.
On behalf of the Board of Directors I would like to pay tribute to the followinggroups of people whose support has helped us in one way or other in navigating throughthe difficult year.
I am thankful for the government's approach and measures taken to contain the spread ofCOVID-19 in the country. This has enabled the Country to have a good control on thepandemic and the gradual resumption of social and business activities from June 2020clearing a path for the economy to emerge from a slow-down. The various ministries'advisories guidance and directives for example on infection control and safe managementhave also been important resources to us in implementing health and safety protocols tooperate safely and prevent infections at our plants warehouses and other premises inFinancial Year 2020-21.
I am thankful to our customers for returning and trusting us following the reopening ofthe economy in June 2020. Our top priority of providing quality products and services toall our customers remains unchanged in these difficult times.
Thank you to our employees for their professionalism as they responded and adapted tothe changes to their work and workplace brought about by the pandemic. Our people rose tothe challenge of ensuring the continued delivery of products and services to customers inall circumstances.
On behalf of the Directors I would like to extend our sincere gratitude to ourshareholders investor community bankers and suppliers for their continuous support andcommitment.
I would like to express my appreciation to the Board of Directors for their invaluableguidance wisdom and support in guiding the Company through this rather difficult year. Ilook forward to working with them to drive KOEL to greater heights in coming years.
For and on behalf of the Board of Directors
ATUL C. KIRLOSKAR
Date: 13th May 2021