TO THE MEMBERS OF
Your directors are pleased to present the 29th Annual Report together withthe Audited Accounts for the year ended on 31st March 2019:
1. FINANCIAL RESULTS
(Rs. In lacs)
| ||2018-19 ||2017-2018 |
|Turnover ||9619.85 ||8769.39 |
|Profit before Finance Charges & Depreciation (PBDIT) ||1784.32 ||1196.59 |
|Finance Charges ||169.42 ||165.59 |
|Depreciation ||365.34 ||312.69 |
|Profit before Tax (PBT) ||1249.56 ||718.31 |
|Taxes: || || |
|Current Tax ||272.00 ||148.66 |
|Deferred Tax ||106.45 ||36.22 |
|Net Profit/ (Loss) after Tax (PAT) ||871.11 ||533.43 |
2. BUSINESS OPERATIONS
During the year under review your company achieved production of 18340 MT as comparedto 16683 MT in previous year. The turnover of the company has increased to Rs. 9619.85Lakhs during the year 2018-19 as compared to Rs. 8769.39 Lakhs during previous yearrecording a growth of 9.70%. The profitability of the company is Rs. 871.11 Lakhs duringthe year 2018-19 as compared to profit of Rs. 533.43 Lakhs during the previous yearrecording 63% increase in profitability. The operational performance during the year andthe future outlook of the Company has been comprehensively covered in the ManagementDiscussion and Analysis Report which is provided as a separate section in the AnnualReport.
Your Directors have decided to plough back the earnings in the growth of business andhas decided not to recommend any Dividend for the year.
4. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and pursuant to Section152(6) the directors excluding the Independent Directors being Executive Directors arenow made liable to retire by rotation at every Annual General Meeting. Thus Mrs. KavitaDevi Kothari (DIN: 00120415) Whole Time Director of the Company retire by rotation andbeing eligible offers herself for reappointment. Though such determination of office byretirement and then re-appointment would not constitute a break in her tenure of serviceas the Whole Time Director of the Company.
Brief resume of Mrs. Kavita Devi Kothari nature of her expertise in specificfunctional areas and the name of the public companies in which she holds the Directorshipas stipulated under SEBI (LODR) Regulations is given in the notice convening the AnnualGeneral Meeting. The Board recommends her appointment as such.
Mr. Prasanna Kumar Pagaria was appointed as an Independent Director on the Board of theCompany pursuant to the provisions of section 149 of the Act read with Companies(Appointment and Qualification of Directors) Rules 2014 for a period of 5 years fromSeptember 29 2014 upto September 28 2019. The Nomination and Remuneration Committee ofthe Board on the basis of the report of performance evaluation of Mr. Prasanna KumarPagaria which was satisfactory has recommended the reappointment of Mr. Prasanna KumarPagaria as Independent Director for a second term of five (5) years on the Board of theCompany with effect from September 29 2019 to September 28 2024. The Board is of theview that the continued association of Mr. Prasanna Kumar Pagaria would benefit theCompany given his knowledge experience performance and contribution to Board processes.The resolution pertaining to re-appointment of Mr. Prasanna Kumar Pagaria as anIndependent Director is set out in Item no. 3 of the Notice of the 29th Annual GeneralMeeting.
The Board of Director's (Board) has on the recommendation of Nomination andRemuneration Committee (NRC') and in accordance with provisions of the Act andListing Regulations proposes the appointment of Mr. Piyush Kumar Goel as Director and NonExecutive Independent Director of the Company in place of Mr. Ratan Lal Dudheria as histerm of 5 years expires on 28.09.19. The resolution pertaining to appointment of Mr.Piyush Kumar Goel as Director & Non Executive Independent Director is set out in Itemno. 4 of the Notice of the AGM.
The Board of Directors (Board') has on the recommendation of Nomination &Remuneration Committee (NRC') and in accordance with provisions of the Act andListing Regulations appointed Mr. Hemendra patsingh Dugar as Additional IndependentDirector for a tenure of 5 years on November 14 2018 subject to the approval of membersat the forthcoming 29th Annual General Meeting (AGM') of the Company. The resolutionpertaining to appointment of Mr. Hemendra patsingh Dugar as Director & Non-ExecutiveIndependent Director is set out in Item no. 5 of the Notice of the AGM.
The Board of Directors place on records its sincere appreciation for the servicesguidance and support given by Mr. Ratan Lal dudheria and Mr. Kapil Dev Puri during theirtenure.
The Independent Directors have submitted their declaration that they fulfill therequirements as stipulated in Section 149(6) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as applicable.
5. DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the company work performed by the internal statutory andsecretarial auditors and the reviews performed by the Board and its committees the Boardis of the opinion that the company's internal financial controls were adequate andeffective during the financial year 2018-19.
Pursuant to Sec.134 (5) of the Companies Act 2013 the directors to the best of theirknowledge and ability hereby report:
i. that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
ii. that the directors have selected accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year 2018-19and of the profit of the company for the year;
iii. that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;
iv. that the directors have prepared the annual accounts on a going concern basis;
v. that the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
vi. that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
6. CREDIT RATING
Your company's domestic credit rating is BBB/Stable' for long term debtfacilities and an A3' for the short term debt facilities assigned by Acuite RatingsLimited.
Also your company's domestic credit rating by CRISIL is BBB-/Stable' for longterm debt facilities and an A3' for the short term debt facilities.
Your company has been certified as ISO 9001:2015 on 09.07.2018 for its qualitymanagement systems employed at every level of the organization.
8. AUDITORS AND AUDITOR'S REPORT A) Statutory Auditors
In terms of the provisions of the section 139 of the Companies Act 2013 theshareholders have appointed M/s Kothari Kuldeep and Co. Chartered Accountants asStatutory Auditor of the Company for a term of five year from the conclusion of 27thAnnual General Meeting till the conclusion of 32nd Annual General Meeting ofthe Company to be held in the year 2022. The notes on accounts are self-explanatory withregards to auditors' observations. There were no qualifications reservations or adverseremarks made by the Auditors for the year under review.
B) Secretarial Auditors and Secretarial Standards
The Board had appointed M/s V.K. Sharma & Company Practising Company Secretariesas Secretarial Auditor to conduct the secretarial audit of the company for the financialyear 2018-19 pursuant to the provisions of Section 204 of the Companies Act 2013. TheReport of the Secretarial Auditor forms part of the Board's Report as AnnexureA'.
"In respect of observations made by the Secretarial Auditors in their Report itis mentioned that:
1. The company had applied in BSE for listing of 8905000 equity shares issuedpreferentially to the promoter/ promoter group in the year 2008-09. The Company hadapplied for listing within stipulated time and furnished all requisite documents for thelisting of the same to the BSE. Regular follow up has been done with BSE but certainqueries were raised by the exchange in the year 2012. The Company has duly provided withthe exchange all required clarifications and replies and has even paid the additionallisting fees as demanded by BSE. BSE approved the listing of 5905000 shares out of8905000 shares. Listing of remaining 3000000 shares is under process with BSE.
The Company had applied for delisting of its shares from Calcutta Stock Exchange andcompleted all formalities in June 2000. However the delisting permission is still awaited.The Company is doing follow up for delisting permission. The Company has appealed againstthe order of Income Tax Department before the Commissioner of Income tax Appeals NewDelhi within prescribed time limit. However the Company received the Stay Order for thedemand raised by Income Tax department from the Hon'ble High Court of Delhi.
The Company's management including its tax advisors believes that its position willlikely be upheld in the appellate process whereby it is expected that the matter will bedecided in favour of the Company and the demand raised will be dropped by the AppellateAuthorities.
The appointment of retiring director has been clubbed with Managing Director'sreappointment.
The Corporate Governance Report was filed with BSE in prescribed time in XBRL form.However due to some technical error the acknowledgement was not generated from BSEportal. And after communication from BSE the report was filed on 29.10.2018.
The Board at its meeting held on 30.05.2019 reappointed M/s V.K. Sharma & CompanyPractising Company Secretaries as Secretarial Auditor for FY 2019-20.
During the Year the Company has complied with the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.
9. CORPORATE GOVERNANCE
The Company is complying with SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as applicable with regard to Corporate Governance and reports to thateffect are being regularly filed with the Stock Exchanges. A report on CorporateGovernance practices and the Certificate from the Auditors on compliance of the mandatoryrequirements thereof are made a part of the Annual report.
10. CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the requirements of Section 135 of Act your Company has constituteda Corporate Social Responsibility Committee. The composition and terms of reference of theCorporate Social Responsibility Committee are provided in the Corporate Governance Report.The Corporate Social Responsibility Committee has formulated and recommended to the Boarda Corporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company which has been approved by the Board. The CSR Policy may beaccessed on the Company's website at the link The Company has identified five focus areasof engagement which are as under:
Capacity building skill development training and employment generation.
Promotion of education art culture and sports.
Preventive health care and Sanitation
Eradicating Hunger & Poverty
The Company would also undertake other need-based initiatives in compliance withSchedule VII to the Act. During the Year the Company has spent Rs. 11.10 lakhs on CSRactivities. The financial data pertaining to the Company's CSR activities for thefinancial year 2018-19 is attached in the prescribed format in Annexure-B to theBoard's Report.
11. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
The Management's Discussion and Analysis Report for the Year under review asstipulated under regulation 34(2)(e) of Listing Regulations is presented in a separatesection forming part of the Annual Report.
12. VIGIL MECHANISM
A comprehensive Vigil mechanism/Whistle Blower Policy has already been adopted by theCompany which provides adequate safeguards against victimization of employees andDirectors who express their concerns. The Company has also provided direct access to thechairman of the Audit Committee on reporting issues concerning the interests of employees.The policy as approved by the Board is uploaded on the Company's website athttp://www.kothariyeast.in/financial/Whistle%20Blower%20 Policy%20_KFBL.pdf
13. RISK MANAGEMENT POLICY OF THE COMPANY
Your company has adopted a Risk management policy to identify and categorize variousrisks implement measures to minimize impact of these risks where it is deemed necessaryand possible and a process to monitor them on a regular basis.
14. REMUNERATION POLICY AND BOARD EVALUATION
The Board has adopted a Remuneration Policy as recommended by the Nomination &Remuneration Committee. It provides for the criteria for determining QualificationsPositive Attributes & Independence of the Directors defining the criteria of theremuneration of the KMP's and Senior managerial personnel along with their roles andresponsibilities. The aim is to ensure that the company attracts and retains competentpeople.
The Board has carried out an Annual Performance Evaluation of its own performance andthe Directors individually. The Disclosures relating to the same are provided in theCorporate Governance Report.
a) Number of Board & Committee Meetings:
During the year under review Four Board meetings Four Audit Committee meetings FourStakeholders Relationship Committee meetings One Nomination & Remuneration Committeemeeting and Two Corporate Social Responsibility Committee meetings were convened and held.Further details are mentioned in Corporate Governance Report. Pursuant to clause VII (1)of Schedule IV of the Companies Act 2013 the Independent Directors had a separatemeeting on 14.02.2019.
b) Deposits The Company has not accepted any deposit from public during theyear under review.
c) Share Capital - There was no change in the Company's share capital during theyear under review.
d) Audit Committee The Company has duly constituted an Audit Committeewhose detailed composition and powers are provided in the Corporate Governance Report.There were no recommendations of the Audit Committee which have not been accepted by theBoard during the financial year.
e) Extract of Annual Return - Pursuant to Sections 92 & 134(3) of the Act andRule 12 of the Companies (Management and Administration) Rules 2014 the extract ofAnnual Return in Form MGT-9 is provided in Annexure-C to this Report.
The extracts of the Annual Return of the Company can also be accessed on the Company'swebsite at kothariyeast.in/ financial/annual_report/MGT-9%2018-19.pdf
f) Disclosure pertaining to Managerial Remuneration - Disclosures pertaining toremuneration and other details as required under Section 197(12) of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided as per Annexure D'. The information required pursuant to section197 read with rule 5(2) & (3) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 in respect of employees will be provided upon request.
g) Related Party Transactions There were no materially significanttransactions with the related parties during the financial year that may have potentialconflict with interest of the Company at large. Disclosures relating to the same areprovided separately in the Corporate Governance Report.
h) Particulars of Loans Guarantees or Investments under Section 186 Detailsof Loans Guarantees or Investments under Section 186 of the Companies Act 2013 are givenin the accompanying Financial Statements.
i) Cost Account and Records- Maintenance of cost records as specified by thecentral government under sub section (1) of section 148 of the Companies Act 2013 is notapplicable to Company and accordingly such accounts and records are not prepared. Howeverthe cost records for internal control and Strategic Management purposes are prepared bythe Company.
j) Prevention of Sexual Harassment The Company has complied with provisionsrelating to the constitution of internal complaints committee under the Sexual Harassmentof Women at workplace (Prevention Prohibition and Redressal ) Act 2013.
k) Significant and Material Orders Passed by the Regulators or Courts Noorder was passed by the Regulators or Courts or Tribunals which impact the going concernstatus and Company's operation in future.
l) Internal Financial Controls - The Company has in place adequate internalfinancial controls with reference to financial statements. During the Year such controlswere tested and no reportable material weakness in the design or operation was observed.
16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in AnnexureE' and is attached to this report.
Your Board of Directors is thankful to all the Shareholders for their constant faithreposed in the company. They also place on record their sincere appreciation for thewholehearted devotion and co-operation extended by the employees at all levels which hasbeen a source of strength to the company.
The Directors also wish to thank and deeply acknowledge the continued support guidanceand co-operation of the Customers Auditors Legal Advisers consultants Bankers (PunjabNational Bank as the main Banker) Dealers Vendors and other stakeholders of the Company.
| ||For and on behalf of the Board |
|Place: New Delhi ||Pramod Kumar Kothari |
|Date: 12.08.2019 ||Chairman & Managing Director |