Your Directors hereby present their 48th Annual Report on the business and operationstogether with the Audited Accounts of the Company for the year ended March 31 2018.
Summary of Financial Results :
(Rupees in Lakhs)
| ||2017-18 ||2016-17 |
|Total Revenue ||1845.75 ||3440.25 |
|Total Expenses ||1933.62 ||3281.81 |
|(Loss) before DepreciationInterest Exceptional Item and Tax ||(87.87) ||158.44 |
|Depreciation ||48.20 ||411.23 |
|Interest ||6.54 ||317.15 |
|(Loss) beforeExceptional Item and Tax ||(142.61) ||(569.94) |
|Exceptional Items(net) ||(110.85) || |
|(Loss) before Tax ||(253.46) ||(569.94) |
|Tax Expenses ||- ||- |
|(Loss) for the year ||(253.46) ||(569.94) |
|Other Comprehensive Income ||0.83 || |
|Loss carried to Balance Sheet ||(252.63) ||(569.94) |
|Earnings per share ||(1.32) ||(2.98) |
In the preparation of the accountsthe company has mandatorily adopted "IndAS" with effect from 1st April 2017 and the comparative figures for the previous yearhave been modified accordingly. The significant accounting policies have also beenredrafted to make them "IndAS" compliant.
In view of the continued losses your Directors are unable to recommend any dividendfor the year ended 31st March 2018.
The significant reduction in the turnover during the year under review had been largelydue to stoppage of production of mixtures during the year due to Government policy. It isexpected that based on representation the State Government would likely to revise itspolicy thereby facilitating resumption of production of NPK Mixtures in line with otherneighbouring states.
The company is well poised to augment sales of Water Soluble Fertilizers various AgroProducts Micro Bio Products etc. through its vast network of dealers.
ACTION PLAN :
With a view to expanding the operations of the company the Vice Chairman and ManagingDirector has undertaken the following initiatives:
(a) A senior retired executive of a leading fertilizer company has joined theorganization during the year and he has been assigned to revamp the dealers network moreparticularly in the states of Andhra Pradesh & Karnataka. Further his expertise wouldbe utilized for manufacture of various new inputs for agro farming. His joining theorganization would ensure significant expansion of the companys operations.
(b) With an objective of creating Pan-India image of the company the Managing Directorhas established a business association with the Government of Qatar and its rulerfollowing which there is a distinct possibility of company being able to impor tsignificant quantities of Urea particularly for industrial use for which credit facilitiesare being lined up. This development augurs well for the growth strategy of the company.The Managing Director has also visited other countries including the United Kingdom andthe United States to explore possibilities of overseas collaboration; the benefit of whichwill be reflected in the years going forward.
The above strategic planning thanks to the strenuous efforts of the Managing Directorwould open vistas of opportunity for the company and benefit of all stakeholders.
The paid up equity share capital as on 31st March 2018 remains unchanged at Rs.955.54lakhs.
The company has not issued any shares during the year under review.
TRANSFER TO RESERVES
Your Company proposes not to transfer any sum to the general reserve of the Company
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:
Details under Section 197(12) Of the Companies Act 2013 Read With Rule 5(1) Of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014:
(i) No remuneration was received by any directors in the company during the financialyear 2017-18. So the ratio of remuneration of each director to the median remuneration ofthe employees of the company for the financial year 2017-18 is not applicable.
(ii) There is no percentage increase in remuneration of each director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear.
No remuneration received by the director so the question of percentage increasein remuneration of each director doesnt arise.
The Chief Financial Officer has been appointed on 01.08.2017 so there is noincrease of remuneration of CFO in the financial year.
There is no Chief Executive Officer in the financial year so the question ofpercentage increase in remuneration of CEO doesnt arise.
Company secretary of the Company has been appointed on 19.03.2018 so there isno increase in remuneration of CS in the financial year.
(iii) The percentage increases in the median remuneration of employees in the financialyear: 7.18%
(iv) There were 50permanent employees on the rolls of the Company as on 31.03.2018.
(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
Average percentage increase in the salaries of employees other than the ManagerialPersonnel in the last financial year is 6.69% and there is no percentile increase in themanagerial remuneration. The comparison between average percentile increase already madein the salaries of employees other than the managerial personnel in the last financialyear with the percentile increase in the managerial remuneration is not applicable.
(vi) It is hereby affirmed that the remuneration paid is as per the remuneration policyof the Company.
There are no employees who were in receipt of remuneration in excess of the ceilingprescribed in the Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
Further as on 31st March 2018 the Company had 50 employees and the Disclosure withrespect to details of the Top 10 employees as on 31st March 2018 in pursuance to Rule5(2)& Rule 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are attached herewith as
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
A) Change in Board Constitution
(i) Mrs. Surekha Pradip Kothari Non-executive Non-Independent Director of the Companyresigned from the Board w.e.f August 28 2017.
(ii) Mr. J Rafiq Ahmed was appointed as an Additioal Director with effect from21-04-2017 and he has been appointed as Managing Director of the company for a period offive years and the same has been confirmed by the shareholder at 47th AGM held on30-12-2017.
(iii) Company has appointed Ms.Thoopjlamudu Arulpathy Rajalaxmi as an AdditionalDirector under the category of Independent director of the Company with effect from 11thJune 2018 to hold office as such until the conclusion of ensuing Annual General Meetingof the Company.
B) Details with regards to meeting of Board of Directors and attendance during theyear of 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 & ||Executive Director |
| ||Managing Director || |
|Mr.Gunasekaran ||Director ||Independent Director |
|Mr.Dilip Machadoo Machadoo ||Director ||Independent Director |
|Ms.Thoopjlamudu Arulpathy Rajalaxmi ||Additional Director ||Independent Director |
(ii) Meeting of Board of Directors and Attendance during the Year:
During the FY 2017 2018 10 meetings of the Board of Directors of the Company were heldi.e. on 05.04.2017 21.04.2017 10.05.2017 31.05.2017 28.08.2017 28.09.201702.12.2017 06.01.2018 21.02.2018 and 12.03.2018. The gap between two meetings did notexceed 120 days. The attendance of the members at the Board of Directors meetings was asfollows:
|Name of Director ||No. of Board Meetings attended |
|Mr. Pradip D Kothari ||10 |
|Mr. Rafiq Ahmed ||9 |
|Mr.Gunasekaran ||10 |
|Ms. Surekha P Kothari ||4 |
|Mr. Dilip Machadoo Machadoo ||10 |
|Ms. Thoopjlamudu Arulpathy Rajalaxmi ||Nil |
Ms.ThoopjlamuduArulpathyRajalaxmi appointed as Additional Director under thecategory of Independent Director w.e.f 11th June 2018.
Ms.SurekhaP Kothari has resigned w.e.f 28.08.2017 from the Board of Directors.
(C) Policy on Directors Appointment and Remuneration:
The current policy is to have an appropriate mix of executive non executive andindependent directors to maintain the independence of the Board and separate itsfunctions of governance and management. As on 31st March 2018 the Board consist of fiveMembers one of whom is an Executive Director one of whom is Non-Executive Director andthe three others are Independent
Directors. The Board periodically evaluates the need for change in its composition andsize. The Policy of the Company on Directors 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 Remunerationpaid to the 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 independencelaid down in Section 149(6) of the Companies Act 2013.
(E) KEY MANAGERIAL PERSONNEL:
Mr.J Rafiq Ahmed Managing Director of the company was appointed for a period of fiveyears at the last Annual General Meeting.
Mr. Anil Kumar Padhiali was appointed as Company Secretary cum Compliance officer andKMP of the Company from March 19 2018.
Mr.V.Singravel was appointed as Chief Financial Officer and KMP of the Company fromAugust 01 2017.
COMPOSITION OF BOARDS COMMITTEES:
Your company has three Committees: Viz. the Audit Committee the Nomination andRemuneration Committee and the Stakeholders Relationship Committee. All Committeesare appropriately constituted. Details of the All Committee are listed in the CorporateGovernance Report.
The Board of Directors has carried out an Annual Evaluation of its "ownperformance" "Board committees" and "Individual Directors"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.
The Company has established a mechanism for Directors and employees toreport their concerns relating to fraud malpractice or any other activity or event whichis against the interest of the Company. The Whistle Blower Policy is in place. Employeescan report to the Management concerned unethical behaviour act or suspected fraud orviolation of the Companys Code of Conduct Policy. No Employee has been denied accessto the Audit Committee. The Vigil Mechanism policy of the company is available on ourwebsite 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 the Company has notconstituted any Corporate Social Responsibility Committee; and has not developed andimplemented any Corporate Social Responsibility initiatives and the provisions of Section135 of the Companies Act 2013 is not applicable to the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has in place an Anti Sexual Harassment Policy in line with the requirementof the Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act2013. All the employees (permanent Contractual temporary Trainees) are covered underthis policy. During the year under review no complaints were received falling under thecategory of Sexual Harassment of Women.
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 Secretary in Practice Chennai toconduct the Secretarial Audit of the Company for the 12 months period ended on 31st March2018. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-IV tothis Report.
Comments of the Board on the qualification/reservation/adverse remarks/disclosure made:
|Observations by Secretarial Auditor ||Our Reply |
|1) The Company had convened the Annual General Meeting for FY 2015-16 on 28th September 2017 and has made an application for compounding of offence with NCLT Chennai and is pending before them. ||The company has filed application for compounding of offence with NCLT and ROC Chennai and the same is pending before them. The Company is confident of getting a favourable order from NCLT. |
|2) The Annual General Meeting for FY 2016-17 was held on 30th December 2017 after a delay of three months for which permission was not granted by ROC and a similar application is being made. ||The company is in the process of filing the compounding application. The Company made an application to get extension of three months for convening the AGM but unexpectedly the ROC not allowed extension of time. |
| ||However the Company convened the AGM immediately. Company also is in the process of filling the compounding application with NCLT. |
|3) 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. ||The same is in the process of handing over the physical shareholders data to the Registrar & Transfer Agents. |
|4) The Company had not transferred an amount of Rs.6.98 Lakhs to the Investor Education and Protection Fund set up by the Ministry of Corporate Affairs relating to previous years. ||The matter is sub-juiced before the High Court. |
|5) Mrs.Surekha P Kothari who was a Director on the Board of the company resigned on 28th August 2017 and the causual vacancy thus caused by her resignation is to be filledup. ||The Board of Directors had appointed a women director namely Ms.Thoopjlamudu Arulpathy Rajalaxmi at their meeting held on 11th June 2018. |
At the 46th Annual General Meeting of the company held on 28th September 2017M/s.Arockiasamy& Raj Chartered Accountants Chennai were appointed as StatutoryAuditors upto the conclusion of ensuing Annual General Meeting. The audit report on theBoard minutes doesnot contain any qualificatory remark.
Now Board has recommended to the shareholders for reappointment of M/s.Arockiasamy& Raj Chartered Accountants Chennai as Statutory Auditors of theCompany to hold office from the conclusion of this Annual General Meeting of the Companyuntil the conclusion of the 53rd Annual General Meeting of the Company to be held in theyear 2023.
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
(ii) Foreign Exchange Earnings and Outgo: The Company has not earned or spent anyforeign exchange during the year under review.
(iii) Research and Development & Technology Absorption: The Company is not directlyengaged in manufacture.
DIRECTORS RESPONSIBILITY STATEMENT:
The Directors confirm that:-
a) In the preparation of the Accounts for the Financial Year ended 31st March 2018 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 Loss forthat 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 that such systems are adequate.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURES:
Your Company does not have any Subsidiary/Associate Company nor does it have JointVenture with any entity. Consolidated Financial statements are not applicable to yourCompany.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
During the year under review details of Loans Guarantee and Investments covered underthe Provisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements.
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 OF ANNUAL 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 V. RELATED PARTY TRANSACTIONS:
During the year under review the contracts or arrangements with related partiesreferred to in section 188 of Companies Act 2013 have been on arms 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-VI
Corporate governance is an ethically driven business process that is committed tovalues aimed at enhancing an organizations brand and reputation. This is ensured bytaking ethical business decisions and conducting business with a firm commitment tovalues while meeting stakeholders1 expectations. At Kothari
Industrial Corporation Limited it is imperative that our company affairs are managedin a fair and transparent manner. This is vital to gain and retain the trust of ourstakeholders. The Company is committed to maintain the highest standards of corporategovernance and adhere to the corporate governance requirements set out by SEBI. TheCompany has also implemented several best corporate governance practices as prevalentglobally.
The provision of Corporate Governance is not applicable on the Company in terms ofRegulation 15(2) of SEBI (LODR) Regulations 2015. 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 as Annexure-VII 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.
M/s.N.Ganesan Associates Chartered Accountants as the Internal Auditor of the Companyhave carried out effective internal audit of the operations and accounts of the companyduring 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.
Certain formalities are to be completed for getting the shares re-listed;the Company isactively completing such formalities.
The Company has not accepted any public deposit during the year.
Your Directors place on record their appreciation of the valuable support and help ofM/s.Gemini Fertilizers both in management and financial matters Government authoritiesBanks and Employees. The cooperation and the forbearance of the members are gratefullyacknowledged.
| ||(By Order of the Board of Directors) |
| ||For KOTHARI INDUSTRIAL CORPORATION LIMITED |
|Place: Chennai ||PRADIP D KOTHARI |
|Date : 11.06.2018 ||CHAIRMAN |