TO THE MEMBERS OF KIRLOSKAR OIL ENGINES LIMITED
The Directors are pleased to present the 11th Annual Report together withthe Audited Statement of Accounts for the year ended 31st March 2020 ofKirloskar Oil Engines Limited ("KOEL" or the "Company").
financial results (standalone)
|Particulars ||2019-20 ||2018-19 |
|Total Income ||2917.69 ||3263.32 |
|Profit before exceptional items and tax ||208.73 ||335.54 |
|Exceptional Items ||16.49 ||- |
|Profit before tax ||225.22 ||335.54 |
|Tax Expense (Current & Deferred Tax) ||54.84 ||110.56 |
|Net Profit for the Period ||170.38 ||224.98 |
|Other Comprehensive Income ||(1.94) ||(0.03) |
|Total Comprehensive Income for the year net of tax ||168.44 ||224.95 |
|Profit Brought Forward ||1137.61 ||999.83 |
|Profit Available for Appropriation ||1307.99 ||1224.81 |
|Transfer to General Reserve ||- ||- |
|Dividend and dividend distribution tax ||113.32 ||87.17 |
|Balance of the Profit carried forward ||1192.73 ||1137.61 |
company's financial performance
Your Company posted sales of Rs. 2841 Crores a decrease of 9% as compared to theprevious year of Rs. 3117 crores. Profit from operations was Rs. 225 Crores as against Rs.336 Crores in the previous year.
The Profit After Tax was Rs. 170 Crores as against Rs. 225 Crores in the previous year.
The Directors have declared an interim dividend of 200% (Rs. 4/- per share) for theyear ended 31st March 2020.
The directors recommend that the interim dividend so declared and paid be the finaldividend for the Financial Year 2019-20. (Previous Year Interim Dividend 125% and FinalDividend 125% Rs. 5 per share).
Total dividend payout for the year was Rs. 94.00 Crores and payment of Rs. 19.32Crores as dividend distribution tax.
The payment of Interim Dividend for Financial Year 2019-20 as declared by the Board ofDirectors of the Company in its meeting held on 6th March 2020 was processed on 27thMarch 2020 for the members of the Company (holding equity shares as on 19th March 2020the Record Date fixed for the purpose of said Interim Dividend) whose bank account detailswere registered with the Company or Registrar and Share
Transfer Agent of the Company viz. Link Intime India Private Limited or the DepositoryParticipant(s) as the case may be.
Consequent to the partial lifting of lockdown on account of COVID-19 and postaldepartment commencing their operations the Dividend Warrant(s) and Demand Draft(s) weredispatched to such members of the Company (who were holding equity shares as on 19th March2020 i.e. the Record Date fixed for the purpose of said Interim Dividend) whose bankaccount details were not updated with the Company or Registrar and Share Transfer Agent ofthe Company viz. Link Intime India Private Limited or the Depository Participant(s) as thecase may be on 1st June 2020 and 11th June 2020 by the permitted modes.
The communication in this regard was filed with BSE Limited and National Stock Exchangeof India Limited on 28th March 2020 2nd June 2020 and 12th June 2020.
The Dividend Distribution Policy of the Company is enclosed in Annexure A. In terms ofRegulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 including amendments thereunder the Dividend Distribution Policy of the Company isavailable on the Company's website(http://koel.kirloskar.com/sites/koel.kirloskar.com/pdfs/2020/Dividend%20Distribution%20Policy%20-%2025%20Jan%202017.pdf)
subsidiary company and consolidated financial statements
As on 31st March 2020 the Company had the following three subsidiaries:
1. KOEL Americas Corp. USA ("KOEL Americas")
For the fiscal year ended 31st March 2020 the Sales Revenue was $2704328 (Rs. 19.21Crs.) [Previous Year $2167916]. The Profit after Tax was $101756 (Rs. 1.04 Crs.)[Previous Year $65999].
At the end of the Financial Year 2019-20 all 3 intended engine families have beencertified by the Environment Protection Agency (EPA). Now all 4 intended engine modelshave been made commercially available. This year initial batches of these engines andaccessories were supplied to the North American distributors which has contributed 1/3rdof Power Generation segment revenue.
$1212154 of the Sales Revenue was from the Power Generation Segment $1144912 fromthe Agricultural Engines Segment and rest from Industrial Engines and FM & UL ListedFire Pump engines.
KOEL Americas had started stocking Generator sets in Miami Florida since previousyear to which the EPA certified engines FM UL certified engines and Spare Parts havealso been added in this year. The Stock and Sale model has been a great success factor asnearly 1/3rd of the total current year's revenue was achieved from sales of this inventorymaintained in Miami.
Shipments for order book in the range of $ 250000 pertaining to this Fiscal Year2019-20 were deferred due to closure of plant and port services in India on account ofCOVID-19. This resulted in a reduction of the sales revenue to that extent. The managementis constantly working in order to ensure a prompt response to the swiftly changingscenario its utmost priorities being the health and safety of our employees and businesspartners their families and the community.
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. KOEL Americas has applied for this reliefpackage the details of which are mentioned in their financial statements.
2. La-Gajjar Machineries Private Limited ("LGM")
For the fiscal year ended 31st March 2020 the Sales Revenue was Rs. 467 Crs. (PY Rs.426.74 Crs.). Net Profit was Rs. 16.43 Crs. (PY Rs. 11.51 Crs.).
During the year under review LGM has leveraged the strengths and expertise of KOEL inareas of customer service Oracle ERP implementation financial restructuring and employeehealth and safety. This collaboration with KOEL will continue to help LGM to further buildon its brand strengths market reach research and development department and capabilitiesto adopt new technologies. This will be beneficial for all stakeholders in the businessviz. customers employees and the suppliers.
Agriculture Demand side Management programme (AgDSM) has been launched by the Ministryof Power last year for the State of Andhra Pradesh through EESL (Energy EfficiencyServices Limited). This programme is launched to save energy in irrigation sector byreplacing old non-efficient pumps with new energy efficient pumps with 5-Star Rating. LGMwas a successful bidder. In the current year 1186 units of submersible pumps and a totalof 13018 units of submersible pumps were supplied and successfully installed withpositive feedback being received from the end customers/farmers.
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.
LGM continued to expand its footprint in the states of Bihar North East RajasthanMaharashtra Madhya Pradesh and Gujarat in Domestic Market.
The Board of Directors of LGM has also approved the proposal for acquisition of land toconsolidate the manufacturing facilities and relocate these facilities in and aroundAhmedabad.
Manufacturing facilities of LGM in Ahmedabad Gujarat were closed on 23rd March 2020following countrywide lockdown announced by the government due to outbreak of COVID-19.
LGM has since obtained required permissions and restarted its place of businessespartially since 28th April 2020. Based on the immediate assessment of the impact ofCOVID-19 on the operations of the LGM and ongoing discussions with customers vendors andservice providers LGM is confident of serving customer orders and obtaining regularsupply of raw materials and logistics services after resumption of operations. The impactassessment of COVID-19 however is a continuing process given the uncertaintiesassociated with its nature and duration. The extent to which the COVID-19 pandemic willimpact LGM's results will depend on future developments which are highly uncertain.
3. Arka Fincap Limited (previously known as Kirloskar Capital Limited -"AFL")
For the fiscal year ended 31st March 2020 the Revenue was Rs. 48.44 Crs. (PreviousPeriod 20th April 2018 to 31st March 2019 Rs. 0.38 Crs.) and Net Profit was Rs. 6.10 Crs.(Previous Period 20th April 2018 to 31st March 2019 Loss Rs. 7.50 Crs.)
During the year under review the name of Kirloskar Capital Limited was changed to ArkaFincap Limited. AFL commenced its business operations in April 2019.
During the year under review the Company invested Rs. 499.50 Crs. towards Rights Issueof AFL.
The Board of Directors of the Company in its meeting held on 6th March 2020 had givenits consent to further invest in the securities of Arka Fincap Limited (earlier known asKirloskar Capital Limited) a wholly owned subsidiary of the Company upto Rs. 250 Crs.
AFL has an experienced management team and has implemented robust processes andsystems. It aims to build a granular portfolio across various segments. It is focused onproviding a better customer experience with the aid of technology.
AFL started its lending business with a focus on three different segments namelyCorporate Real Estate and SME/MSME Lending. During the year AFL did a gross disbursementof Rs. 788 Crores across various industries including Industrial Pipes TransportationCement Power Pharmaceutical Construction etc.
As on 31st March 2020 AFL has an Asset Under Management (AUM) of Rs. 457.32 Crores.
AFL has been assigned credit rating of AA[-] for its long term borrowings and A1[+] forits short term borrowings by CRISIL.
AFL has established relationships with various lenders and received sanctions of Rs.280 Crores from them. Considering the business requirement Rs. 100 Crores has beenutilised and the balance is unavailed as on 31st March 2020. The liquidity position of AFLis comfortable. As on 31st March 2020 AFL has cash or equivalent assets of Rs. 142.3Crores which includes fixed deposits with banks investment in liquid schemes of variousMFs and balances lying in current accounts.
Given the impact of COVID 19 on the economy with its impact on the financial servicesbusiness also AFL has adopted a cautious and conservative approach in building its booktill the economy shows sign of stabilization.
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 subsidiary are available on the Company's website.
The annual accounts of the subsidiary 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 firstname.lastname@example.org.
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 2020 ||Ratio as on 31st March 2019 |
|i. Debtors' Turnover ||7.9 ||9.1 |
|ii. Inventory Turnover ||10.5 ||12.3 |
|iii. Interest Coverage Ratio ||77.4 ||97.4 |
|iv. Current Ratio ||2.1 ||2.8 |
|v. Debt Equity Ratio ||0.01 ||0.01 |
|vi. Operating Profit Margin (%) ||6.0% ||8.7% |
|vii. Net Profit Margin (%) ||5.9% ||7.0% |
Reason for significant change (more than 25%) in the Operating Profit Margin:
Operating Profit for Financial Year 2019-20 has decreased due to lower sales. Furtherin Financial Year
2018-19 government grant income was recognized as extension of eligibility periodunder Packaged Scheme of Incentives (PSI) scheme for 2 years was received.
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 are as follows:
|Sr. No. Particulars ||As on 31st March 2020 ||As on 31st March 2019 ||% of change ||Reason for significant change more than 25% |
|1 Return on Net worth ||9.3% ||12.7% ||-26.5% ||Decrease in Net Profit |
a) Changes in Composition of the Board of Directors
During the year under review
i. The term of appointment of Mr. Pratap G. Pawar (DIN 00018985) as IndependentDirector of the Company was valid till 11th August 2019. Consequent to this he ceased tobe a Director of the Company with effect from 12th August 2019.
ii. In compliance with Section 149 of the Companies Act 2013 & Rules thereofincluding amendments thereunder and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder the Board of Directors of the Companyappointed Mr. Kandathil Mathew Abraham (DIN 05178826) as an Additional Director of theCompany in the capacity of "Non-Executive Independent Director" with effect from10th August 2019. In accordance with Section 161 of the Companies Act 2013 & Rulesthereof including amendments thereunder he will hold office of Director up to date ofensuing Annual General Meeting. The Company has received requisite notice in writing froma member proposing his candidature for the office of Director. The resolution seekingapproval of the Members for the appointment of Mr. Kandathil Mathew Abraham for a term of5 years has been incorporated in the Notice of the forthcoming Annual General Meeting ofthe Company.
iii. Mr. R. Srinivasan (DIN 00043658) tendered his resignation as Independent Directorof the Company due to his pre-occupation with effect from 25th October 2019. Further theCompany has received confirmation from Mr. R. Srinivasan that there is no other materialreason for his resignation other than those mentioned in his resignation letter dated 24thOctober 2019. The said confirmation was filed with BSE Limited and National Stock Exchangeof India Limited on 24th October 2019.
iv. In compliance with Section 149 of the Companies Act 2013 & Rules thereofincluding amendments thereunder and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder the Board of Directors of the Companyappointed Dr. Shalini Sarin (DIN 06604529) as Additional Director of the Company in thecapacity of "Non-Executive Independent Director" with effect from 25th October2019. In accordance with Section 161 of the Companies Act 2013 & Rules thereofincluding amendments thereunder she will hold office of Director up to date of ensuingAnnual General Meeting. The Company has received requisite notice in writing from a memberproposing her candidature for office of Director. The resolution seeking approval of theMembers for the appointment of Dr. Shalini Sarin for a term of 5 years has beenincorporated in the notice of the forthcoming Annual General Meeting of the Company.
v. The term of re-appointment of Mr. Rajendra R. Deshpande (DIN 00007439) as ManagingDirector & Chief Executive Officer of the Company expired on 28th April 2020.Consequent to this he ceased to be the Director and Key Managerial Personnel of theCompany with effect from the close of working hours of 28th April 2020.
vi. Mr. Nihal G. Kulkarni (DIN 01139147) resigned as the Managing Director of theCompany which was effective from close of working hours of 28th April 2020. Consequent tothis he ceased to be a Key Managerial Personnel of the Company with effect from close ofworking hours of 28th April 2020. He continues to hold the office of a Non-ExecutiveNon-Independent Director of the Company with effect from 29th April 2020.
vii. The Board of Directors in its meeting held on 6th March 2020 subject to approvalof members of the Company appointed Mr. Sanjeev Nimkar (DIN 07869394) as an AdditionalDirector and also as the Managing Director of the Company with effect from 29th April2020. He was also appointed as a Key Managerial Personnel of the Company with effect from29th April 2020. In accordance with Section 161 of the Companies Act 2013 & Rulesthereof including amendments thereunder he will hold office of Director up to date ofensuing Annual General Meeting. The Company has received requisite notice in writing froma member proposing his candidature for office of Director. The resolution seeking approvalof the Members for the appointment of Mr. Sanjeev Nimkar for a term of 5 years has beenincorporated in the notice of the forthcoming Annual General Meeting of the Company.
viii. In compliance with Section 149 of the Companies Act 2013 & Rules thereofincluding amendments thereunder and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder the Board of Directors of the Companyre-appointed Mr. Pradeep R. Rathi (DIN 00018577) as "Non-Executive IndependentDirector" with effect from 7th August 2020. The Company has received requisite noticein writing from a member proposing his candidature for office of Director. The resolutionseeking approval of the Members by special resolution for the re-appointment of Mr.Pradeep R. Rathi for a second term of 5 consecutive years has been incorporated in thenotice of the forthcoming Annual General Meeting of the Company.
ix. Mr. Rahul C. Kirloskar (DIN 00007319) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.
x. Mr. Nihal G. Kulkarni (DIN 01139147) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.
The brief resume and other details relating to the Directors who are proposed to beappointed / re-appointed as required to be disclosed under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 including amendments thereunder forms part ofthe Notice of Annual General Meeting.
b) Changes in Key Managerial Personnel
During the year under review
i. Mr. T. Vinodkumar Chief Financial Officer and Key Managerial Personnel of theCompany superannuated from the services of the Company with effect from the close ofworking hours on 6th March 2020. Consequent to this he ceased to be the Chief FinancialOfficer and Key Managerial Personnel of the Company.
ii. The Board of Directors on the recommendation of Nomination & RemunerationCommittee of the Company in its meeting held on 6th March 2020 appointed Mr. Pawan KumarAgarwal as the Chief Financial Officer and Key Managerial Personnel with effect from 7thMarch 2020.
iii. 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 to be the Director and Key Managerial Personnel of theCompany with effect from close of working hours of 28th April 2020.
iv. 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 of a Non-Executive Non-IndependentDirector of the Company with effect from 29th April 2020. Consequent to this he ceased asa Key Managerial Personnel of the Company with effect from close of working hours of 28thApril 2020.
v. The Board of Directors on the recommendation of Nomination & RemunerationCommittee of the Company in its meeting held on 6th March 2020 appointed Mr. SanjeevNimkar (DIN 07869394) as the Managing Director and Key Managerial Personnel of theCompany with effect from 29th April 2020.
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 & Rules thereof includingamendments thereunder. The said 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.
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 Board of Directors considered that Mr. Kandathil Mathew Abraham and Dr. ShaliniSarin possess the requisite expertise and experience (including the proficiency) and theyare persons of high integrity and repute and accordingly approved their appointment asIndependent Director(s) for the first term of 5 years subject to approval of the membersof the Company.
The Board of Directors considered the valuable contributions made by Mr. Pradeep R.Rathi Independent Director and that he possesses the requisite expertise and experience(including the proficiency) and he is a person of high integrity and repute. Accordinglythe Board approved his reappointment as an Independent Director for the second term of 5years subject to approval of the members of the Company.
e) Board Evaluation
The Board of Directors carried out a formal review for the Financial Year 2019-20 forevaluating the performance and effectiveness of the Board Committees of the Board and ofthe individual directors including the Chairman of the Board.
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 and the Chairman of Nomination and Remuneration Committee hadone-on-one meetings with the Directors. These meetings were intended to obtain Directors'inputs on effectiveness of the Board/Committee processes.
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 - linkhttp://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 whichforms 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 Stakeholder Relationship Committeeforms part of the Report on Corporate Governance.
During the year under review the Board has accepted all the recommendations given bythe Committees of the Board which are mandatorily required.
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 Kirloskar ManagementServices Private Limited. The details are given in the Financial Statements. The Companyhas not granted any Loans and Guarantees covered under Section 186 of the Companies Act2013 & Rules thereof including amendments thereunder.
particulars of contracts or arrangements with related parties
All related party transactions that were entered into during the Financial Year 2019-20were 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.
employees stock option plan
During the Annual General Meeting of Kirloskar Oil Engines Limited held on 9th August2019 members of the Company 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. No further action in terms of implementation ofKOEL ESOP 2019 has been taken since its approval at the last AGM held on 9th August 2019.Hence the Company is not required to obtain certificate of auditors of the Companypursuant to Regulation 13 of the Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014.
risk management framework
The Company's risk management process is designed to facilitate identificationevaluation mitigation and review of risks which may affect achievement of objectives. Itis aligned with the strategy deployment processes of the organization.
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. Thepolicy is formulated by the Internal Audit Department (IAD). The risk management processworks at various levels across the organization. It is an ongoing process and forms anintegral part of Management focus.
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 enterprise risks and mitigation plans are reviewed by the Risk ManagementCommittee Audit Committee and Board periodically.
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.
corporate social responsibility
The Company has always believed in working for the betterment and uplift of thesociety. 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 Health Education and Environment. The Company strongly believes inEnriching Lives' of the people in the communities in which it operates.
The Composition of CSR Committee of the Board and Report on CSR activities is annexedherewith as Annexure B.
vigil mechanism / whistle blower policy
The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instances offraud unethical behavior mismanagement instances of leakage of Unpublished PriceSensitive Information etc. The Policy provides a mechanism for employees of the Companyand other persons dealing with the Company to report to the Chairman of the AuditCommittee any instance of unethical behaviour actual or suspected fraud or violation ofthe Company's code of conduct. No person has been denied access to the Audit Committee inthis regard. The Policy is uploaded on the Company's website. There were no complaintsfiled / pending with the Company during the year.
extract of annual return
As required by Rule 12(1) of the Companies (Administration & Management) Rules2014 the extract of the Annual Return as at 31st March 2020 in form MGT 9 is annexedherewith as Annexure C to this report.
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 D tothis report.
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 E 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 email@example.com.
policy on prevention of sexual harrassment
The Company has put 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. There were no complaints filed / pending with the Company during theyear. The Company has complied with the provisions relating to the constitution ofinternal complaints committee under the Sexual Harassment of Women at work place(Prevention Prohibition and Redressal) Act 2013.
During Financial Year 2019-20:
a. There were no public deposits accepted by the Company pursuant to provisions of theCompanies Act 2013 & Rules thereof including amendments thereunder.
b. There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
c. Neither the Managing Director nor the Whole-time Directors of the Company receivedany remuneration or commission from the subsidiary Companies.
d. 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.
e. 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.
f. The Company has complied with all applicable mandatory Secretarial Standards issuedby the Institute of Company Secretaries of India New Delhi.
a) Statutory Auditors
The members of the Company in their meeting held on 5th August 2016 re-appointed M/s.P. G. Bhagwat Chartered Accountants Pune (Firm Registration Number 101118W) 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 Company has received from them the requisite certificate pursuant to Section 139 ofthe Companies Act 2013 & Rules thereof including amendments thereunder.
The Report given by the Auditors on the financial statements of the Company for theFinancial Year 2019-20 forms part of this report. There are no qualificationsreservations adverse remarks or disclaimer given by the Auditors in their 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 2020-21 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 F.
There are no adverse remarks / qualifications of Secretarial Auditors in theSecretarial Audit Report for the year ended 31st March 2020.
Mr. Mahesh J. Risbud Practising Company Secretary Pune has submitted 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 of all applicable SEBIRegulations and circulars / guidelines issued thereunder for the Financial Year 2019-20.
d) Secretarial Audit of Material Subsidiary
La-Gajjar Machineries Private Limited (LGM) is a material subsidiary of the Company.The Secretarial Audit of LGM for the Financial Year 2019-20 was carried out pursuant toSection 204 of the Companies Act 2013 & Rules thereof including amendments thereunderread with Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 including amendments thereunder. The Secretarial Audit Report of LGM hasbeen submitted by Mr. Mahesh J. Risbud Practicing Company Secretary for the FinancialYear 2019-20.
In the said Secretarial Audit Report of LGM it is stated that the Board of Directorshas at its meeting held on 16th January 2020 approved the proposal for acquisition ofland for the purpose of consolidation of all the manufacturing facilities of LGM in andaround Ahmedabad Gujarat which might have a major bearing on the Company's affairs in theyears to come.
There are no adverse remarks / qualifications in the Secretarial Audit Report of LGMfor the the Financial Year 2019-20.
management discussion & analysis and report on corporate governance
The Management Discussion and 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.
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.
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 madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2020 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.
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.
The Directors would like to place on record their appreciation of the contribution madeand support provided to the Company by its shareholders employees bankers suppliers andcustomers.