Kothari Products Ltd.
|BSE: 530299||Sector: Others|
|NSE: KOTHARIPRO||ISIN Code: INE823A01017|
|BSE 00:00 | 06 Feb||114.20||
|NSE 00:00 | 06 Feb||113.50||
|Mkt Cap.(Rs cr)||341|
|Mkt Cap.(Rs cr)||340.77|
Kothari Products Ltd. (KOTHARIPRO) - Director Report
Company director report
TO THE MEMBERS:
The Board of Directors of your Company presents herewith its 37thAnnual Report and Audited Accounts for the financial year ended 31st March2021. The report also includes the Management Discussion and Analysis Report in accordancewith the guidelines of Corporate Governance.
FINANCIAL PERFORMANCE & STATE OF COMPANY'S AFFAIRS:-
(Amount in Rs. Lacs)
2021 IN RETROSPECT
Your Directors are to report that the Company's sales turnover duringthe year under review has decreased to Rs.170707 Lacs from Rs.238505 Lacs during theprevious financial year registering decrease of 28.42%. Similarly the Company has incurredloss before depreciation & tax during the year of Rs.61 Lacs as against profit beforeDepreciation &Tax of Rs.5295 Lacs in the previous year. The aforesaid loss isprimarily due to decrease in other income. Similarly the Company has incurred loss afterTax of Rs.508 Lacs as against profit after tax of Rs.3403 Lacs during the previous year.
The Company's export during the year under review has decreased toRs.154012 Lacs as compared to Rs.222825 Lacs during the previous year resulting indecrease of 30.88%.
To conserve the resources for future purpose the Board of Directors ofyour company does not recommend any dividend for the financial year 2020-21.
CHANGES IN SHARE CAPITAL
During the year under review there were no changes in the Share Capitalof the Company.
ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTSSWEAT EQUITY ESOS ETC.
During the year the Company has not issued any shares with differentialrights sweat equity ESOS etc.
CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY
During the year under review there was no change in the nature ofbusiness of the Company.
"It has been more than a year now since the world has beenfighting the COVID - 19 pandemic and the struggle has continued unabated which hasdeleterious effects on the world economy. Occurrence of more potent 2nd wave in thecountry and 3rd wave in different parts of the world and virus mutations has createddownside risks to the global economic out look. However the Company continued itsoperations during sporadic lock downs and disruptions. Although there was a marginalupside in domestic trade but the international trade has fallen significantly due to fallin demand and supply and logistic restrictions in different countries.
Similarly in the real estate sector the Company has stake incommercial as well as residential spaces along with its subsidiaries/ associates. Some ofthe projects continued to be stalled and in commercial spaces occupancy is also adverselyimpacted. This may lead to some reassessment of growth estimates for FY 2021 - 2022.
During the current fiscal stimulus packages by Govt of India and manyother developed countries dilution of lock downs and massive vaccination programsundertaken by various Governments has resulted in boost of confidence which in turn shallboost the overall demand for exports and domestic trade/ economic activities."
SUBSIDIARIES AND ASSOCIATES
The Company has as on 31st March 2021 four subsidiaries namely KPLExports Ltd. & Adyashakti Realtors Ltd. as its Wholly Owned Subsidiary Companies andKothari Products Singapore Pte. Ltd. & Pinehills (Singapore) Pte. Ltd. (A wholly ownedsubsidiary of Kothari Products Singapore Pte. Ltd.) as its Subsidiary Companies. Furtherthe Company also has as on 31st March 2021 six associate Companies as mentioned in thenotes of the Financial Statements of the Company. The prescribed salient features of thefinancial statements of the aforesaid subsidiary companies and associates Companies as persub section 3 of section 129 of the Act have been disclosed in a separate statementattached to the consolidated Financial Statements which form part of this Annual Report.The statement reflects the performance and financial position of each of the subsidiariesand associates as required by Rule 8(1) of the Companies (Accounts) Rules 2014.TheCompany hereby undertakes that the Annual Accounts of the subsidiary companies and theirrelated detailed information shall be made available to the shareowners of the holding andsubsidiary companies seeking such information at any point of time and shall also beplaced on the website of the holding Company. The Annual Accounts of the subsidiarycompanies shall also be kept for inspection by any shareowner at the Registered Office ofthe holding company and of the subsidiary companies concerned.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES & ASSOCIATES
The highlights of performance of subsidiaries & associates duringthe year under review and their contribution to the overall performance of the Company arementioned in the form AOC-1 and Statement of Additional Informations as per schedule IIIto the Companies Act 2013 of the aforesaid subsidiaries & associates appended to theConsolidated Financial Statements accompanying this report.
AMALGAMATION OF ADYASHAKTI REALTORS LTD. WITH THE COMPANY
During the year 2019-20 the members of the Company had approved theScheme of Amalgamation of its wholly owned subsidiary company i.e. M/s Adyashakti RealtorsLimited ( "The transferor Company") with the Company ( " The TransfereeCompany") in the Extra-Ordinary General Meeting of members of the Company held on12th February 2020. Further the Creditors of the Company had also given their writtenconsent approving the aforesaid scheme. The Company had filed the aforesaid approvedscheme of amalgamation with the concerned Regulatory Authorities and the approval from theaforesaid authorities is awaited. Once the approval for the aforesaid amalgamation isreceived from the regulatory authorities the financials of the transferor company will bemerged with the financials of the transferee Company w.e.f. the appointed date of 1stApril2019.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Sri Mitesh Kothari Executive Director of the Company retires byrotation at the ensuing Annual General Meeting and being eligible has offered himself forre-appointment. Further the tenures of Sri Deepak Kothari & Sri Mitesh KothariTheChairman & Managing Director and Executive Director of the company respectively isupto 12th October 2021 & 30th September 2021.
Accordingly The Board of Directors of your Company has at its meetingheld on 29th June 2021 proposed to reappoint them on their respective posts subject toyour approval in the ensuing Annual General Meeting for which necessary resolutions havebeen incorporated in the notice of the aforesaid meeting.
There is no other change in the Key Managerial Personnel during theyear.
NUMBER OF THE BOARD MEETINGS
The Company held Five Board Meetings during the year 2020-21 and thedetails of aforesaid meetings are given in the Corporate Governance Report.
The Company neither accepted any Deposits from the public nor there isany outstanding amount of deposit during the financial year 2020-21 hence the particularsrelating to the aforesaid are not applicable.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Sec.134(3)(c) read with Sec. 134(5) of the CompaniesAct 2013 your Directors confirm:
(i) That in the preparation of the annual accounts for the year ended31st March 2021 the applicable accounting standards have been followed;
(ii) that the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the company at the end ofthe financial year and of the profit of the company for the year under review;
(iii) that the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts for the yearunder review on a going concern basis.
(v) the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate andoperating effectively.
(vi) the Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.
COMMITTEES OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and provisions ofSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 the Company hasconstituted following committees:-
1. Audit Committee.
2. Stakeholders Relationship Committee.
3. Nomination & Remuneration Committee.
4. Corporate Social Responsibility Committee.
5. Risk Management Committee.
The Composition Scope and Powers of the aforementioned Committeestogether with details of their meetings held during the period under review forms part ofthe Corporate Governance Report.
ANNUAL REPORT ON CSR ACTIVITIES
As required by the Companies (Corporate Social Responsibility Policy)Rules 2014 the annual report on CSR activities undertaken by the Company during the yearunder review is attached as 'Annexure-1' to this Directors Report.
DETAILS OF VIGIL MECHANISM
Pursuant to Section 177 of The Companies Act 2013 the Board hasadopted a Whistle Blower Policy to promote reporting of any unethical or improper practiceor violation of the Company's Code of Conduct or complaints regarding accountingauditing internal controls or disclosure practices of the Company. It gives a platform tothe Whistle blower to report any unethical or improper practice (not necessary violationof law) and to define processes for receiving and investigating complaints. The Companyhas appointed Sri Anurag Tandon Chief Financial Officer as its Vigilance Officer and hisaddress is Kothari Products Limited C/62 VibgyorTower 9th Floor Bandra Kurla ComplexBandra East Mumbai E-mail Id:- firstname.lastname@example.org. The company has assigned theemail ID- email@example.com or firstname.lastname@example.org email@example.com on which anyone can report or send written complaint to theVigilance Officer Chairman &
Managing Director and the Chairman of the Audit Committee. Theconfidentiality of those reporting violations is maintained and they are not subjected toany discriminatory practice. The aforesaid policy has been posted by company on itswebsite under link "Investor Section".
POLICIES OF THE COMPANY
Pursuant to the provisions of the Companies Act 2013 and provisions ofSEBI (Listing Obligations & Disclosure Requirement) Regulations 2015 the Company hasframed following Policies:-
1. Corporate Social Responsibility Policy.
2. Nomination & Remuneration policy.
3. Risk Management Policy.
4. Whistle Blower Policy/Vigil Mechanism.
5. Policy on Material Subsidiaries.
6. Policy on Related Party Transactions.
7. Policy determining materiality of events/information.
8. Policy on code of Practices and Procedures for fair disclosure ofInsider Trading.
9. Policy on Code of Business conduct & ethics.
10. Policy on Preservation of Documents.
The details of the aforesaid policies are mentioned in the CorporateGovernance Report and copies of the aforesaid policies are placed on the website of theCompany. However as required by section 178 of the Companies Act 2013 the RemunerationPolicy developed by the Company is attached herewith as "Annexure-2".
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of the Companies Act 2013 read with theIEPF Authority (Accounting Audit Transfer & Refund) Rules 2016 all dividendsremaining unpaid/unclaimed for a period of 7 years from the date of their transfers arerequired to be transferred by the Company to the IEPF established by the Government ofIndia. Accordingly all unpaid or unclaimed dividends upto the Financial Year 2012-13 havealready been transferred and for the Financial Year 2013-14 will be transferred by theCompany by October 2021 to the aforesaid fund. Further as per the aforesaid provisionsall relevant shares corresponding to the aforesaid unpaid/unclaimed dividends uptoFinancial year 2012-13 have also been transferred to the demat account of the IEPFauthority as per the details mentioned below the details of the aforesaid shares are alsoavailable under the heads "Investor's Section" on the website of the company:-
DECLARATION BY INDEPENDENT DIRECTORS
Sri Pramod KumarTandon Sri Vikas Chaturvedi and Dr. Avinash Gupta areIndependent Directors on the Board of the Company. All the above named IndependentDirectors have given their respective declarations under Section 149(6) of the CompaniesAct 2013 and the Rules made thereunder. In the opinion of the Board the IndependentDirectors fulfill the conditions relating to their status as Independent Directors asspecified in Section 1 49 of the Companies Act 2013 and the Rules made thereunder. STATUTORYAUDITOR AND AUDITORS' REPORT
M/s Rajiv Mehrotra & Associates & M/s. G M Kapadia & Co.Auditors of the Company have carried out the Audit of the Company and have submittedAuditor's Report attached with the Financial Statements of the Company accompanying thisReport. (The aforesaid report does not contain any qualification reservation or adverseremarks which need explanation in the Director's Report. Further the Auditors have notobserved any fraud to be reported under Section 143(12) of The Companies Act 2013.)
SECRETARIAL AUDIT & ITS REPORT
As required by section 204 of The Companies Act 2013 M/s Adesh Tandon& Associates Practicing Company Secretary of Kanpur was appointed as the SecretarialAuditor of the Company and he has carried out the Secretarial Audit of the Company and hassubmitted his Report which is annexed to this report as 'Annexure-3'. The aforesaidreport does not contain any qualification reservation or adverse remarks which needexplanation in the Director's Report.
LOANS GUARANTEES O R INVESTMENTS
The details of the Loans guarantees and investments covered undersec.186 of the Companies Act 2013 form part of the financial statements accompanying thisReport.
STOCK EXCHANGE LISTING & COMPLIANCE
The Shares of the Company are presently listed at Bombay Stock ExchangeLtd. Mumbai & National Stock Exchange of India Ltd. Mumbai and the Company isregularly complying with all the provisions of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015.
CORPORATE GOVERNANCE REPORT
A detailed Corporate Governance Report that also contains disclosuresas per Section 134 and 177 of the Companies Act 2013 is attached and forms part of thisAnnual Report.
A certificate from the secretarial auditors of the Company regardingcompliance with the conditions of Corporate Governance as required under SEBI (ListingObligations & Disclosures Requirement) Regulations 2015 is part of this AnnualReport.
Pursuant to provisions of the Companies Act 2013 & SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Board has carried out anAnnual performance evaluation of its own performance its committees and the Directorsindividually.
The evaluation of non-independent Directors Chairman and the Board asa whole was done at a separate meeting held by independent Directors. The performanceevaluation of independent Directors was done by the entire board excluding Directorsbeing evaluated.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE(PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti-sexual Harassment Policy in line withthe requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013.
An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment if any. All employees (PermanentContractualTemporaryTrainees) are covered under this policy. There were no complaintreceived from any employee during the financial year 2020-21 and hence no complaint isoutstanding as on 31.03.2021 for redressal.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
The information as required under SEBI (Listing Obligations &Disclosures Requirements) Regulations 2015 is as under:-
a) INDUSTRY STRUCTURE AND DEVELOPMENTS
The optimism about economic recovery led by swift pace of vaccinationrelaxation of lockdown restrictions and sustained accommodative monetary policy coupledwith upward revision in global growth forecast by World Bank have established positivityand driven market globally. However the spread of more transmissible versions ofCovid-19 surge in Covid-19 cases and the associated lockdowns in some regions dampenedthe sentiments and added further uncertainty to the prospect of economic recovery. Alsothe distribution and deployment of vaccine in developing countries is a precondition toeconomic recovery. Apart from Covid-19 the world economy also cautious with emerginginflation supply bottlenecks and prosand cons of the decision regarding Global MinimumTax.
The second wave in India is witnessing a much higher caseload with newpeaks of daily cases daily deaths and positivity rates and presents a challenge toongoing economic recovery. The policy response as has been the global experienceincludes localized micro-containment measures state specific movement restrictionsmobilization of health supplies and ramping up of health infrastructure. However thereare reasons to expect a muted economic impact as compared to the firsts wave.
b) OPPORTUNITIES & THREATS
Following the outbreak of the second wave of Covid -19 pandemic and itsspread across the country the direct outlay has been focused on the rural districts andincreased health spending with a foresight of a possible third wave of the pandemichitting the country. Recognizing vaccination as the crucial pillar to the 'Test TrackTreat and Covid Appropriate Behaviour' strategy the access to vaccines has beenderegulated and opened to all individuals above the age of 18 years.
With the initiative of Atmanirbhar package announced last year therehave also been some structural reforms-oriented measures targeted at various sectors.However the relief measures for the businesses in the nature of credit guarantee schemeannounced previous year have been severely affected by the pandemic and unable to achieveits goal. Also the prospects for the export sector are not projected to see animprovement owning to uncertainties around the world due to continuing Covid 19 pandemic.
As the Company deals in international trade it is exposed to foreigncurrency risks but the risk is minimized to the great extent by natural hedging. Companyalso has in house treasury with well-defined hedging policy through which company monitorsits currency exposure on continuous basis and employs various hedging tools like forwardcover options etc.
Company does have comprehensive risk management system in place whichincludes internal controls which are commensurate to the size and nature of the inherentrisks of company's businesses. These Risk Management system and processes enable thecompany in identifying and managing the risks appropriately.
c) SEGMENT-WISE PERFORMANCE
In trading division company's emphasis is on consolidation anddiversification instead of expansion. The revenue of the Trading division during the yearunder review has been Rs. 171313 Lacs as compared to Rs. 250047 Lacs during the previousyear and that of the Real Estate etc. has been Rs. 5010 Lacs as compared to Rs. 1729 Lacsduring the previous year. The profit before tax and interest from both the aforesaiddivision isat Rs. -1718 Lacs and Rs 4736 Lacs respectively as compared to previous yearfigures of Rs. 8752 Lacs & Rs. -86 Lacs respectively.
The global outlook remains uncertain with major risks around the pathof pandemic and the possibility of financial stress amid large debt loads. Controlling thepandemic at the global level will require more equitable vaccine distribution especiallyfor low-income countries. However with some positivity like swift vaccination programease out in lockdown measures by various countries to boost their economies and experiencefrom last one year to operate economic activity with Covid-19 the business around theglobe pick- up gradually and your company would also perform well in international trade.
Businesses in India also started to resume gradually after second waveof Covid-19 and your Company is also scaling up the activities slowly and cautiouslyalthough with the stable government at the center and "Atmanirbhar Bharat"initiative we expect improvement in domestic trade and real estate business in future.
The period of crisis and uncertainty in the markets is expected to takeits own time and largely depends upon the pandemic situation to subside in due courseupon which your company will be able to tide over properly and shall also embark uponother trade prospects including diversification.
e) RISKS AND CONCERNS:
These aspects have been mentioned under the Heading "Opportunitiesand Threats".
f) DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE COMPAREDTO THE IMMEDIATE PREVIOUS FINANCIAL YEAR)
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal financial control systems& other internal control procedures commensurate with the size of the Company and thenature of its business for the import & export of commodities minerals etc. purchaseof assets and with regard to the sale of goods to ensure proper recording of financial& operational information and compliance of various statutory compliances.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONALPERFORMANCE
These discussions have been enumerated under the headings"Financial Performance" "2021 in Retrospect" & "Segment wisePerformance" of this Report.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT
Human Resource is the most important element of any organization. OurCore Values are discipline trust integrity and work style. Core Values are establishedto align all the people in the organization in the direction of achieving stated goals allthroughout the organization. The Company is taking sufficient steps for employeeengagement and motivation. This has resulted in reduction of employee turnover. YourCompany focuses on recruiting and retaining the best talent in the industry. MoreoverCompany provides them proper induction training and knowledge upgradation for theindividual as well as organizational growth. The Company continues to maintain its recordof cordial and harmonious industrial relations without any interruption in work. Furtheras on 31st March 2021 the Company had 45 employees on its roll.
The Company has in place a Risk Management framework to identifyEvaluate & Monitor Business Risks & Challenges across the Company. The Company hasdeveloped and implemented a Risk Management Policy for the Company includingidentification therein of elements of risk if any which in the opinion of the Board maythreaten the existence of the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO
The information required under Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of The Companies (Accounts) Rules 2014 is as under:-
[A] CONSERVATION OF ENERGY
a) Energy Conservation Measures taken: - The Company has taken allmeasures for conservation of energy most economically.
b) The steps taken by the Company for utilizing alternate source ofenergy:- As the Company does not have any manufacturing facility no such steps have beentaken by the Company.
c) The capital Investments on energy conservation equipments: - As theCompany does not have any manufacturing facility no such investment has been made by theCompany
[B] TECHNOLOGY ABSORPTION:
Since there is no manufacturing activity in the Company hence theinformation prescribed under this heading is not applicable to the Company.
[C] FOREIGN EXCHANGE EARNINGS AND OUTGO:
(Amount in Lacs)
Cordial and harmonious industrial relations prevailed throughout theyear.
PARTICULARS OF EMPLOYEES:
The information as specified in Sec.197 (12) of the Companies Act 2013read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended is attached herewith as 'Annexure-4' to this Report.Further the information required under Sec.197 (12) of the Companies Act 2013 read withRule 5(2) & 5(3) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended form part of this Report. However as per Section 136 ofThe Companies Act 2013 the Annual report and Accounts are being sent to the membersexcluding the statement containing the
names and other details of top ten employees in terms of remunerationdrawn as required u/s 197 (12) of the Act read with Rule 5(2) & 5(3) of the Companies(Appointment and Remuneration of Managerial personnel) Rules 2014. However the aforesaidstatement is open for inspection at the Registered Office of the Company. Any shareholderinterested in obtaining a copy of the same may write to the Company Secretary.
ANNUAL RETURN & ITSWEBLINK
The Annual Return of the Company for the year ended 31st March 2021has been placed on the Company's web-site http://www.kothariproducts.in. The address ofweb link for aforesaid Annual Return (MGT-7) ishttp://www.kothariproducts.in/downloads/KPL_MGT-7.pdf.
PARTICULARS OF CONTRACTS O R ARRANGEMENTS WITH RELATED PARTIES
The particulars of contracts or arrangements with related partiesreferred to in Section 188(1) of the Companies Act 2013 have been enclosed with thereport in the prescribed format AOC-2 as 'Annexure-5'.
SECRETARIAL AUDIT & ITS REPORT OF MATE RIAL SUBS IDARY - M/S KPLEXPORTS LIMITED
M/s KPL Exports Limited is the only Material Unlisted Subsidiary of thecompany as per the SEBI (Listing Obligation and Disclosure Requirements) Regulations2015. The Secretarial Audit of the aforesaid Subsidiary has been carried out by Mrs.Niyati Kedia Practicing Company Secretary of Kanpur and she has submitted her report onthe same which is annexed to this report as 'Annexure-6'.
SIGNIFICANT AND MATE RAILROADERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS
There are no significant material orders passed by the regulators orcourts or tribunals which would impact the going concern status of the Company and itsfuture operations.
CASH FLOW STATEMENT
In conformity with the Regulation 34 (2) (c) of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Cash Flow Statement forthe year ended 31st March 2021 is forming part of this Annual Report.
MATERIAL CHANGES & COMMITMENTS AFFECTING FINANCIAL POSITION OF THECOMPANY OCCURRING AFTER BALANCE SHEET DATE
There have been no material changes and commitments which have occurredbetween the end of Financial Year and the date of this report which can have impactionfinancial position of the Company.
Maintenance of cost records as specified by the Central Governmentunder Section 148(1) of the Companies Act 2013 is not required by the Company.
COMPLIANCE WITH SECRETARIAL STANDARDS
The applicable secretarial standards issued under section 118 of theCompanies Act 2013 have been complied with.
Your Directors wish to place on record their sincere appreciation forthe continued co-operation and support extended by various Government DepartmentsBankers Dealers & suppliers and also acknowledge and appreciate the contribution madeby the employees.
The Board also wishes to place on record its gratitude to the valuedcustomers members and investors for their continued support and confidence in theCompany.