TO THE MEMBERS OF
Your directors are pleased to present the 28th Annual Report together withthe Audited Accounts for the year ended on 31st March 2018:
1. FINANCIAL RESULTS (Rs. In lacs)
| ||2017-2018 ||2016-2017 |
|Turnover ||8769.39 ||7909.16 |
|Profit before Finance Charges & Depreciation ||1196.59 ||900.11 |
|Finance Charges ||165.59 ||152.98 |
|Depreciation ||312.69 ||259.43 |
|Profit before Tax ||718.31 ||487.70 |
|Taxes: || || |
|Current Tax ||148.66 ||98.31 |
|Deferred Tax ||36.22 ||67.98 |
|Net Profit/(Loss) after Tax ||533.43 ||321.41 |
2. BUSINESS OPERATIONS
During the year under review your company achieved production of 16653 MT as comparedto 14968 MT in previous year. The turnover of the company has increased to Rs. 8769.39Lakhs during the year 2017-18 as compared to Rs. 7909.16 Lakhs during previous yearrecording a growth of 10.88%. The profitability of the company is Rs. 533.43 Lakhs duringthe year 2017-18 as compared to profit of Rs. 321.41 Lakhs during the previous year.
The operational performance during the year and the future outlook of the Company hasbeen comprehensively covered in the Management Discussion and Analysis Report which isprovided as a separate section in the Annual Report.
Dividend for the year has not been proposed in order to plough back profits for thegrowth of the Company.
4. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of your Company at its meeting held on 30th March2018 on the recommendation of Nomination and Remuneration Committee approved re-apointmentof Mr. Pramod Kumar Kothari as Chairman and Managing Director and Mrs. Kavita Devi Kotharias Whole time Director of the Company w.e.f. 1st April 2018.
During the year under review term of all directors who are liable to retire by rotationis expiring and is placed before shareholder for their approval thus during the periodunder review no director is liable to retire by rotation at the ensuing AGM pursuant toprovisions od section 152 of the Companies Act 2018 read with the Companies (Appointmentand Qualification of Directors) Rules 2014.
The information on the particulars of Directors eligible for appointment andre-appointment in terms of regulation 36 of SEBI (LODR) Regulations 2015 and SecretarialStandard -2 issued by ICSI has been provided in the notes to the notice convening theAnnual General Meeting. Your Directors recommend their re-appointment on the terms andconditions as set out in the notice convening forthcoming AGM.
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 2017-18. Pursuant to Sec.134 (5) of the Companies Act2013 the directors to the best of their knowledge 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 2017-18and 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-' for long term debt facilities andan A3' for the short term debt facilities assigned by SMERA Ratings Limited
Your company has been certified as ISO 9001:2015 on 09.07.2018 or 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 27th AnnualGeneral Meeting till the conclusion of 32nd Annual General Meeting of theCompany to be held in the year 2022.
Ratification of their appointment from Shareholders at ensuing AGM is not required.
The notes on accounts are self-explanatory with regards to auditors' observations.There were no qualifications reservations or adverse remarks made by the Auditors for theyear under review.
B) Secretarial Auditors
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 2017-18 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 it ismentioned that:
1. The company had applied in BSE for listing of 89.05 Lakhs equity shares issuedpreferentially to the promoter/ promoter group in the year 2008-09 & 2009-2010. TheCompany had applied for listing within stipulated time and furnished all requisitedocuments for the listing of the same to the BSE. Regular follow up has been done withBSE but certain queries were raised by the exchange in the year 2012. The Company hasduly provided with the exchange all required clarifications and replies and has even paidthe additional listing fees as demanded by BSE. The matter is pending with BSE for itsnecessary approval. During the year BSE approved the listing of 5905000 shares out of8905000 shares. Listing of remaining 3000000 shares is under process with BSE.
2. The Company has appealed against the order of Income Tax Department before theCommissioner of Income tax Appeals New Delhi within prescribed time limit. However theCompany received the stay order against the demand raised by income tax department fromthe Hon'ble High Court. The Company's management including its tax advisors believes thatits position will likely be upheld in the appellate process whereby it is expected thatthe matter will be decided in favour of the Company and the demand raised will be droppedby the Appellate Authorities.
The Board at its meeting held on 23.05.2018 reappointed M/s V.K. Sharma & CompanyPractising Company Secretaries as Secretarial Auditor for FY 2018-19.
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. 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/policies/whistle_blower_policy.pdf.
11. 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.
12. 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 Six Board meetings Five Audit Committee meetings FourStakeholders Relationship Committee meetings and Three Nomination & RemunerationCommittee meeting were convened and held. Details and attendance of such Board &Committees meetings are mentioned in Corporate Governance Report.
Pursuant to clause VII (1) of Schedule IV of the Companies Act 2013 the IndependentDirectors had a separate meeting on 14.02.2018.
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 - The extracts of Annual Return pursuant to theprovisions of Section 92 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 is furnished in Annexure B' and is attached tothis Report.
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 C'.
The information required pursuant to section 197 read with rule 5(2) & (3) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees 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 notrequired by the Company and accordingly such accounts and records are not prepared.However the cost records for internal control and Strategic Management purposes areprepared by the 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 Nosignificant or material orders were passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Company's operation in future.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORBTION 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 AnnexureD' 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 placed 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: 14.08.2018 ||Chairman & Managing Director |