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Kothari Industrial Corporation Ltd.

BSE: 509732 Sector: Others
NSE: KOTHARINDL ISIN Code: INE972A01020
BSE 05:30 | 01 Jan Kothari Industrial Corporation Ltd
NSE 05:30 | 01 Jan Kothari Industrial Corporation Ltd

Kothari Industrial Corporation Ltd. (KOTHARINDL) - Director Report

Company director report

Dear Members

Your Directors hereby present their 49th Annual Report on the business and operationstogether with the Audited Accounts of the Company for the year ended March 312019.

SUMMARY OF FINANCIAL RESULTS: Rs. in lakhs
Particulars 2018-19 2017-18
Total Revenue 1926.93 1845.75
Total Expenses 2099.59 1933.62
(Loss) before Depreciation Interest Exceptional Item Tax (172.66) (87.87)
Depreciation 47.18 48.20
Interest 0.56 6.54
Profit/(Loss) before Exceptional Item and Tax (220.40) (142.61)
Exceptional Items(net) (281.51) 110.85
Profit/(Loss) before Tax 61.11 (253.46)
Tax Expenses - -
Profit/(Loss)for the year 61.11 (253.46)
Other Comprehensive Income 54.76 0.83
Total Comprehensive Income 115.87 (252.63)
Earnings per share 0.32 (1.32)

DIVIDEND

In view of the continued losses your Directors are unable to recommend any dividendfor the year ended 31st March 2019.

PERFORMANCE

The turnover for the year 2018-19 is marginally higher than last year. The turnover ofwater soluble fertilizers was increased to Rs.6 crores as compared to Rs.50 lakhs in theprevious financial year. Production of Single Super Phosphate at Ennore factory wasaffected by non-availability of Sulphuric Acid due to closure of its manufacturer inSouth India a common factor affecting all fertilizer manufacturing factories in SouthIndia. This has resulted reduced royalty income for the company.

Further due to the ban on manufacture of NPK Mixtures continued during first half ofthe financial year and was lifted in October 2018 resulting in the manufacture of mixturesonly for a period of five months during the year.

The business plan of traded products of the company would augment the turnover andprofitability of the company for the coming year.

PROSPECTS

With the prospects of favourable monsoon during the balance of the current seasonaugmentation of supplies of traded goods from suppliers and reorientation of the marketingteam it is expected that the company would register better performance during the comingyear.

DIVERSIFICATION

Shareholders are aware at the Extra-ordinary General Meeting held on 26th February2019 the object clause of Memorandum of Association has been expanded to include a largerange of activities which the company can embark upon. The Managing Director is activelyengaged in exploring various avenues for diversification as envisaged in the expandedobject clause and with the assistance of technical and financial experts would considerfeasibility for implementation of some of the diversification plans for which purposeadequate injection of funds would be sought for.

TRANSFER OF PROPERTY

Pursuant to the approval of the shareholders at the Extra-ordinary General Meeting ofthe company held on 26th February 2019 the company since sold two floors of KothariBuildings to M/s.Gemini Iron and Steel Pvt. Ltd. for a consideration of Rs.23 crores whichhas resulted in substantial profit to the company.

The Horse Brand products of the company commend ready acceptability in the market placewhich is an added strength to the company.

SHARE CAPITAL:

The paid up equity share capital as on 31st March 2019 remains unchanged at Rs. 955.54lakhs.

The company has not issued any shares during the year under review.

TRANSFER TO RESERVES

Your company has not transferred any amount to the reserves for the year ended 31stMarch 2019.

MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE:

In terms of provisions of Regulation 34 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as Listing Regulations) the Management Discussion and Analysis Report isappended as Annexure I to this report.

PARTICULARS OF EMPLOYEES:

The details of remuneration of Directors and Employees in accordance with theprovisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedas Annexure II to this report.

A statement showing the remuneration of employees who were in receipt of remunerationas prescribed under Rule 5(2) & Rule 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 form part of this report and will beprovided to any member on a written request to the Company Secretary.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A) Change in Board Constitution

i) Mr. Pradip D Kothari Director will retire at the forthcoming Annual GeneralMeeting. He is eligible for re-election and offers himself accordingly.

ii) Board of Directors had appointed Ms.Thoopjlamudu Arulpathy Rajalaxmi as anAdditional Director under the category of independent director of the Company with effectfrom 11th June 2018 and appointed as Independent Director at the 48th Annual GeneralMeeting held on 26.09.2018

iii) The tenure of Mr. Dilip Machado Machado independent director of the company wouldlapse on 30.03.2020 and is eligible for reappointment. The Board of Directors on the basisof the recommendation of the Nomination and Remuneration Committee has proposed theirreappointment subject to approval of the members of the company at the ensuing AnnualGeneral Meeting for further period of 5 years commencing from 31.03.2020 to 30.03.2025.

B) Details with regards to meeting of Board of Directors and attendance during the yearof the Company

(i) Composition of the Board of Directors as on the date of this Report is mentionedbelow;

Name of the Director Designation Category
Mr. Pradip D Kothari Director/Chairman Non-executive Director
Mr. Rafiq Ahmed Vice Chairman & Managing Director Executive Director
Mr. Gunasekaran Director Independent Director
Mr. Dilip Machadoo Machadoo Director Independent Director
Ms.Thoopjlamudu Arulpathy Rajalaxmi Director Independent Director

(ii) Meeting of Board of Directors and Attendance during the Year:

During the FY 2018-2019 8 meetings of the Board of Directors of the Company were held

i.e. on 30.05.2018 11.06.2018 18.06.2018 14.08.2018 14.11.2018 01.02.201913.02.2019 & 27.02.2019. The gap between two meetings did not exceed 120 days. Theattendance of the members at the Board of Directors meetings was as follows:

Name of Director No. of Board Meetings attended
Mr. Pradip D Kothari 8
Mr. Rafiq Ahmed 7
Mr. Gunasekaran 8
Mr. Dilip Machadoo Machadoo 8
Ms.Thoopjlamudu Arulpathy Rajalaxmi 6

(C) Policy on Directors' Appointment and Remuneration:

The Policy of the Company on Director's Appointment and Remuneration includingcriteria for determining qualifications positive attributes independence of director andother matters provided under Section 178(3) of the Companies Act 2013 adopted by theBoard is appended as Annexure III to this report. We affirm that the Remuneration paid tothe director is as per the terms laid out in the said policy.

(D) Declaration by Independent Directors:

The Company has received necessary declarations from each Independent Director(s) underSection

149(7) of the Companies Act 2013 that they meet the criteria of independence laiddown in Section 149(6) of the Companies Act 2013.

(E) KEY MANAGERIAL PERSONNEL:

The following are Key Managerial Personnel:

Mr. J Rafiq Ahmed Managing Director

Mr. Anil Kumar Padhiali Company Secretary cum Compliance officer

Mr. V. Singravel Chief Financial Officer

COMPOSITION OF BOARD'S COMMITTEES:

Currently the Board has three Committees: the Audit Committee the Nomination andRemuneration Committee and the Stakeholder's Relationship Committee. All Committees areappropriately constituted. Details of the All Committee are listed in the CorporateGovernance Report.

BOARD EVALUATION:

Annual evaluation of the performance of the Board its Committees and of individualdirectors has been made pursuant to the section 134(3) of the Companies Act 2013.

The Nomination and Remuneration Committee ("NRC") reviewed the annualperformance of the individual Directors.

In a separate meeting of Independent Directors performance of non-IndependentDirectors performance of the Board as a whole was evaluated.

VIGIL MECHANISM:

The Company has established a mechanism for Director's and employee's to report theirconcerns relating to fraud malpractice or any other activity or event which is againstthe interest of the Company. The Whistle Blower Policy is in place. Employees can reportto the Management concerned unethical behaviour act or suspected fraud or violation ofthe Company's Code of Conduct Policy. No Employee has been denied access to the AuditCommittee. The Vigil Mechanism policy of the company is available on our website www.kotharis.in.

CORPORATE SOCIAL RESPONSIBILITY:

As per the provision of Section 135 of the Companies Act 2013 all companies having anet worth of Rs.500 crore or more or a turnover of Rs.1000 crore or more or a net profitof Rs.5 crore or more during any financial year are required to constitute a CSR committeeand hence our Company do not meet the criteria as mentioned above and also in view ofcontinued losses the Company has not constitutedany Corporate Social ResponsibilityCommittee and the provisions of Section 135 of the Companies Act 2013 is not applicableto the Company.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:

The Company has in place a Sexual Harassment Policy in line with the requirement of theSexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.All the employees (permanent Contractual temporary Trainees) are covered under thispolicy. During the year under review no complaints were received falling under thecategory of Sexual Harassment of Women.

SECRETARIAL AUDITOR:

Pursuant to provisions of section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Mr.R.Srinivasan Company Secretaries in practice Chennaito conduct the Secretarial Audit of the Company for the 12 months period ended on 31 stMarch 2019. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-IV tothis Report.

Comments of the Board on the Observation/qualification/reservation/adverseremarks/disclosure made:

Observations by Secretarial Auditor Our Reply
As indicated in the previous year 2017-18 Annual Report the Company had convened the Annual General Meetings for FY 2015-16 on 28th September 2017 and for FY 2016-17 on 30th December 2017 for which permissions were not granted by ROC and the company made applications for compounding of offence with NCLT Chennai and the same were pending before them and since there were no hearing for a long time the company had withdrawn the said applications made with NCLT and is presently in the process of filing a fresh application with the Regional Director Ministry of Corporate Affairs Shastri Bhavan Chennai as per new norms prescribed under the Act. Initially the company had filed application for compounding of offence with NCLT and ROC Chennai and the same were pending before them and since there was no hearing for a long time the company had withdrawn the said applications made with NCLT and As per Ordinance Act 2018; Company had filed the 3 GNL-1 forms with ROC MCA Chennai for all 3 years. The physical copies are being submitted to Regional Director MCA and Registrars of Companies MCA Chennai.
As per the terms of the listing agreement the company is required to maintain the shareholders data at a single point with the Registrar & Transfer Agents(RTA) and the company is still in the process of updating the data and to hand over the same to the RTA. The Company had handover the physical shareholders data to the Registrar & Transfer Agents. The process is expected to be completed shortly.

AUDITORS AND STATUTORY AUDITORS REPORT:

At the 48th Annual General Meeting of the company held on 26th September 2018 M/s.Arockiasamy & Raj Chartered Accountants Chennai were re-appointed as StatutoryAuditors for a period of five years. The Independent Auditors' Report on the accounts forthe financial year ended 31st March 2019 does not contain any qualificatory remarks.

PARTICULARS ON CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO:

(i) Energy Conservation: The superphosphate factory is under long lease and the lesseehas taken appropriate steps to ensure energy in a comprehensive manner. The disclosurepertaining to Energy conservation is not applicable to your Company.

(ii) Foreign Exchange Earnings and Outgo: The Company has not earned or spent anyforeign exchange during the year under review. The disclosure pertaining to ForeignExchange Earnings and Outgo is not applicable to your Company.

(iii) Research and Development & Technology Absorption: The Company is not directlyengaged in manufacture. The disclosure pertaining to Research and Development &Technology Absorption is not applicable to your Company.

DIRECTORS' RESPONSIBILITY STATEMENT:

The Directors confirm that:-

a) In the preparation of the Accounts for the Financial Year ended 31st March 2019 theapplicable accounting standards and schedule III of the Companies Act 2013 (including anystatutory modification(s) or re-enactment(s) for the time being in force) have beenfollowed along with the proper explanation relating to material departure;

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 at the end of the Financial Year and of theProfit or Loss of the Company for that period.

c) To the best of their knowledge and information they have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; and

d) They have prepared the annual accounts on a going concern basis.

e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls though adequate are being strengthenedon an ongoing basis quite effective to operate effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.

SUBSIDIARIES ASSOCIATES AND JOINT VENTURES:

Kothari Marine International Limited is a subsidiary of the Company. The subsidiaryCompany is incorporated as on 13/07/2018 with the paid up capital of Rs.1000000/-. TheCompany is holding 99.99 percent shares of that Company and does not have any AssociateCompany nor does it have Joint Venture with any entity. Consolidated Financial statementsare applicable to your Company.

CONSOLIDATION FINANCIAL STATEMENTS:

The Audited Consolidated financial statements of the company for the Financial Yearended 31st March 2019 together with the report of the Independent Auditors form part ofthe Annual Report.

Pursuant to first proviso to subsection (3) of Section 129 read with Rule 5 of theCompanies (Accounts) Rule 2014 a statement containing salient features of financialstatements of subsidiary is annexed as Annexure V. PARTICULARS OF LOANS GUARANTEES ORINVESTMENTS:

The Company has not given any loan or guarantee in terms of Section 186 of theCompanies Act 2013 during the financial year 2018-19.During the year under reviewCompany has made an investment in Kothari Marine International Limited the details ofinvestment is mentioned in notes to the financial statements.

RISK MANAGEMENT

The Company has implemented a risk management policy including identification thereinof elements of risk if any which in the opinion of the Board is adequate. EXTRACT OFANNUAL RETURN:

As required under Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of Annual Return inMGT-9 is annexed with this Report as Annexure - VI.

RELATED PARTY TRANSACTIONS:

During the year under reviewthe company has entered into any contract or arrangementin terms of section 188(1) of Companies Act 2013 have been on arm's length and inordinary course of business and they were not material in nature. Accordingly theparticulars of the transactions as prescribed in Form AOC - 2 is annexed as Annexure-VII.

CORPORATE GOVERNANCE:

The provision of Corporate Governance is not applicable on the Company in terms ofRegulation 15(2) of SEBI (LODR) Regulations At the Company we constantly strive toevolve and follow up on the Corporate Governance guidelines. However as a matter of goodpracticeand best practices a separate section on Corporate Governance is annexed asAnnexure- VIII to this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT:

There are no significant and material orders passed by the Regulators or Court thatwould impact the going concern status of the company.

INTERNAL FINANCIAL CONTROLS:

The Company has a well-placed proper and adequate internal control system whichensures that all assets are safeguarded and protected and that the transactions areauthorized recorded and reported correctly. The Internal Financial Controls withreference to financial statements as designed and implemented by the Company are adequate.This has been endorsed by statutory auditors in their separate report which is annexed.

INTERNAL AUDITOR:

M/s. N. Ganesan Associates Chartered Accountants as the Internal Auditor of theCompany have carried out effective internal audit of the operations and accounts of thecompany during the year.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY:

No material changes and commitments affecting the financial position of the companyoccurred.

LISTING:

The Company is not in arrears of listing fees and most of the formalities have beencompleted for revocation of suspension.

DEPOSITS:

The Company has not accepted any public deposit during the year.

ACKNOWLEDGEMENT:

Your Directors place on record their appreciation of the valuable support and help ofM/s. Gemini Fertilizers both in management and financial matters Financial InstitutionsGovernment authorities Banks and Employees. The cooperation and the forbearance of themembers are gratefully acknowledged.

By Order of the Board of Directors
For KOTHARI INDUSTRIAL CORPORATION LIMITED
Place : Chennai PRADIP D KOTHARI
Date : 10.08.2019 CHAIRMAN

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