KRBL Limited 5190 Lahori Gate
Delhi - 110 006
Your Directors are delighted to present the 27th (Twenty Seventh) Annual Report onCompany's Business Operations along with the Standalone and Consolidated Audited FinancialStatements for the financial year ended 31 March 2020.
1. RESULTS OF OUR OPERATIONS
The Company's financial performance for the year under review has been encouraging. Keyaspects of Consolidated and Standalone Financial Performance of the Company for thecurrent financial year 2019-20 along with the previous financial year 2018-19 aretabulated below:
(Rs in lacs except as stated)
|Particulars || |
| ||Year Ended 31 March 2020 ||Year Ended 31 March 2019 ||Year Ended 31 March 2020 ||Year Ended 31 March 2019 |
|Revenue from operations ||449902 ||412049 ||449864 ||411957 |
|Other income ||2251 ||1515 ||2226 ||1490 |
|Total Income ||452153 ||413564 ||452090 ||413447 |
|Operating expenditure ||362866 ||327061 ||362687 ||326929 |
|Earnings before Interest Tax Depreciation and Amortization (EBITDA) ||89287 ||86503 ||89403 ||86518 |
|Finance costs ||6244 ||6758 ||6244 ||6756 |
|Depreciation and amortisation expenses ||7288 ||6446 ||7282 ||6438 |
|Profit before Tax (PBT) ||75755 ||73299 ||75877 ||73324 |
|Tax expense: || || || || |
|Current tax ||20021 ||23016 ||20021 ||23016 |
|Deferred tax charge ||(85) ||1471 ||(85) ||1471 |
|MAT credit entitlement ||- ||(1490) ||- ||(1490) |
|Profit for the year ||55819 ||50302 ||55941 ||50327 |
|Other comprehensive(loss)/income ||(685) ||95 ||(789) ||4 |
|Total comprehensive income for the year ||55134 ||50397 ||55152 ||50331 |
|Earning per share (Face Value of Rs 1 each) || || || || |
|i) Basic (In Rs) ||23.71 ||21.37 ||23.76 ||21.38 |
|ii) Diluted (In Rs) ||23.71 ||21.37 ||23.76 ||21.38 |
2. STATE OF COMPANY AFFAIRS
Pushed by strong shift in consumer preference towards branded basmati rice in theDomestic as well as Export Market and despite the challenging business environment KRBLreported exceptional numbers during the financial year 2019-20. The Company performedextremely well and the highlights of the performance on consolidated basis are as under:
Company's Revenue from Operations increased by 9% to Rs 449902 lacs (31 March2019'412049 lacs).
Company is able to maintain its strong Earnings before Interest TaxDepreciation and Amortisation (EBITDA) and the same increased by 3% to Rs 89287 lacs (31March 2019'86503 lacs).
Company's Profit before Tax (PBT) increased by 3% to Rs 75755 lacs (31 March2019'73299 lacs).
Company's Profit after Tax (PAT) increased by 11% to Rs 55819 lacs (31 March2019'50302 lacs).
Company's Return on Capital Employed (ROCE) stands at 23%.
Net Worth of the Company increased by 15% to Rs 312764 lacs (31 March2019'272670 lacs).
Market Capitalization of the Company stands at Rs 320836 lacs as on 31 March2020.
11% CAGR growth in Net Sales and 15% CAGR growth in EBITDA over the last decade.
Earning per Equity Share (EPS) increased to Rs 23.71 (31 March 2019'21.37).
Dividend paid by the Company on the profits earned in FY 2019-20 is 280% (i.e.Rs 2.80 per equity share of face value of Rs 1 each) as compared to Dividend of 250% (i.e.Rs 2.50 per equity share of face value of Rs 1 each for FY 2018-19).
Considering the strong financial position of the Company the Board of Directors of theCompany vide resolution by circulation dated 27 February 2020 considered and declared anInterim Dividend @ 280% i.e. Rs 2.80 per equity share of face value of Rs 1 each for thefinancial year 2019-20. The Dividend was paid in accordance with the Dividend DistributionPolicy of the Company framed pursuant to Regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (hereinafter referred to as "SEBI ListingRegulations"). The Interim Dividend declared by the Board of Directors shall beconsidered as total dividend for the year ended 31 March 2020. The Dividend DistributionPolicy of the Company may be accessed on the Company's website at the weblinkhttp://www.krblrice.com/policy-guidelines/ REVISED_DIVIDEND_DISTRIBUTION_POLICY.pdf
The details of dividend declared by the Company for the financial year 2019-20 ascompared to financial year 2018-19 are as below:
(Amount in Rs lacs)
|Particulars of Dividend || |
Total Dividend Declared (Excluding Dividend Distribution Tax)
| ||31 March 2020 ||31 March 2019 |
|Interim Dividend on 235389892 equity shares of Rs 1 each @ Rs 2.80 per equity share ||6591 || |
|Final Dividend on 235389892 equity shares of Rs 1 each @ Rs 2.50 per equity share || ||5885 |
4. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR
During the financial year ended 31 March 2020 no entity became or ceased to be theSubsidiary Joint Venture or Associate of the Company.
5. TRANSFER TO RESERVES
In view of the robust financial strength the Company has voluntarily transferred Rs7500 lacs (31 March 2019 Rs 7000 lacs) from retained earnings to general reserve and anamount of Rs 248763 lacs has been carried over to the Balance Sheet.
6. SHARE CAPITAL
The paid up Equity Share Capital of the Company as on 31 March 2020 was Rs 2354 lacs.There has been no change in the Equity Share Capital of the Company during the financialyear. Further the Company has no other type of securities except equity shares formingpart of Equity Share Capital.
7. TRANSFER OF UNCLAIMED DIVIDEND/ SHARES TO INVESTOR EDUCATION & PROTECTION FUND
Pursuant to the provisions of Section 124 and 125 of the Companies Act 2013 read withRule 6 of the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 (as amended from time to time) (IEPF Rules) alldividend which were unpaid or unclaimed for seven consecutive years or more are liable tobe transferred to the Investors Education and Protection Fund (IEPF) Authority.Accordingly the Company during the financial year 2019-20 has transferred an amountaggregating to Rs 411628 (including an excess transfer up Rs 30.40 due to round off andexcess credit given by bank) to the Investor Education and Protection Fund. This amountwas lying unclaimed with the Company for a period of seven years after declaration ofdividend for the financial year 2011-12.
Further pursuant to the provisions of Section 124(6) of the Companies Act 2013 readwith Rule 6 of the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 (as amended from time to time) during the financial year2019-20 the Company has transferred 6180 equity shares which belongs to total 37shareholders whose dividend has not been paid or claimed for seven consecutive years ormore to the demat account of IEPF Authority i.e. INVESTOR EDUCATION AND PROTECTION FUNDAUTHORITY MINISTRY OF CORPORATE AFFAIRS bearing DP ID IN300708 and Client ID 10656671being maintained with NSDL. Before transferring the above mentioned shares the Companyhas published the newspaper advertisement and also sent individual letters to theshareholders concerned who have not claimed or encashed their dividend for seven or moreconsecutive years to claim the same. Subsequent to that the Company during the financialyear 2019-20 has transferred final dividend pertaining to financial year 2018-19 @ Rs 2.50per equity share on 62070 equity shares aggregating to Rs 155175 and Interim Dividendpertaining to financial year 2019-20 @ Rs 2.80 per equity share on 62700 equity sharesaggregating to Rs 175560 total of both aggregating to Rs 330735 to the InvestorEducation and Protection Fund.
8. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statement relatesand till the date of this Report.
9. CHANGE IN THE NATURE OF BUSINESS IF ANY
There is no change in the nature of business of the Company during the financial year2019-20.
10. SEGMENT REPORTING
A separate reportable segment forms part of notes to the financial statements.
11. CASH FLOW STATEMENT
The Cash Flow Statement for the financial year ended 31 March 2020 prepared inaccordance with Ind AS 7 Statement of Cash Flows' is attached and forming part ofthe financial statements of the Company.
12. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25(7) of the SEBI Listing Regulations the Company familiarizesits Directors about their role and responsibilities at the time of their appointmentthrough a formal letter of appointment. Presentations are regularly made at the meetingsof the Board and its various Committees on the relevant subjects. All efforts are made tokeep Independent Directors aware. The familiarization of Independent Directors may beaccessed on the Company website at the weblink http://www.krblrice.com/Familarization-Programs-for-Independent-Directors.pdf
13. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS
The Company has two Subsidiaries viz. KRBL DMCC Group (Comprises of a step downWholly Owned Subsidiary) and K B Exports Private Limited. There is no Associate Companywithin the meaning of Section 2(6) of the Companies Act 2013. Further there has been nomaterial change in the nature of business of the Subsidiaries during the financial year2019-20.
The Consolidated Financial Statements of the Company for the financial year 2019-20 areprepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules issued thereunder applicable Indian Accounting Standards (Ind-As) and SEBIListing Regulations. The Consolidated Financial Statements have been prepared byconsolidating the audited Financial Statements of the Company and its Subsidiaries.Further pursuant to the proviso of sub section (3) of section 129 of the Companies Act2013 read with Companies (Accounts) Rules 2014 a separate statement containing thesalient features of the financial statements of Subsidiaries in the prescribed form AOC-1is attached as 'Annexure 1' and forms part of this report.
The Financial Statements of the Subsidiary Companies and related information is alsoavailable for inspection by the members at the Registered Office/ Corporate Office of theCompany during business hours on all days except Sunday and holiday upto the date ofAnnual General Meeting ("AGM") as required under Section 136 of the CompaniesAct 2013. Any member desirous of obtaining a copy of the said financial statements maywrite to the Company Secretary at the Registered Office/ Corporate Office of the Company.The Financial Statements including the Consolidated Financial Statements FinancialStatements of Subsidiaries and all other documents are also available on the Company'swebsite www.krblrice.com under the link Investor Relations.
14. BOARD OF DIRECTORS Board Composition
As on 31 March 2020 the Company's Board has a strength of 10 (Ten) Directors including2 (Two) Woman Director. The Chairman of the Board is an Executive Director. Thecomposition of the Board is as below:
|Category ||Number of Directors ||% of Total Number of Directors |
|Executive Directors ||4 ||40 |
|Independent Non-Executive Directors ||6 ||60 |
The detailed section on Board of Directors' is given in the Report onCorporate Governance' forming part of the Annual Report.
During the year the Company had appointed Ms. Priyanka Sardana as an AdditionalDirector under the category of Independent Non-Executive pursuant to the recommendation ofNomination and Remuneration Committee and approval of the Board of Directors videResolution by Circulation dated 23 September 2019 and 25 September 2019 respectivelytaking into consideration her integrity expertise and experience for a period of 5(Five) consecutive years from 25 September 2019 to 24 September 2024 subject to theapproval of the members by way of Ordinary Resolution in the ensuing AGM of the Company interms of section 161 of the Companies Act 2013.
Pursuant to the provisions of Section 149(13) of the Companies Act 2013 and Articlesof Association of the Company all Directors except Independent Directors are liable toretire by rotation. The Independent Directors of Company holds office for 5 (Five)consecutive years from 14 September 2019 to 13 September 2024 (except Mr. Alok Sabharwalwho hold the office for 5 (Five) consecutive years w.e.f. 11 August 2016).
Declaration by Independent Directors
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of Companies Act 2013 andRegulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board theIndependent Directors fulfil the criteria of independence specified in Section 149(6) ofCompanies Act 2013 and Regulation 16(1) (b) of the SEBI Listing Regulations. TheIndependent Directors have also confirmed that they have complied with the Company's Codeof Business Conduct & Ethics laid down for the Board of Directors Senior ManagementPersonnel and Other Employees.
Retirement by rotation and subsequent re-appointment
Pursuant to the provisions of Section 152 of the Companies Act 2013 and Article 126 ofthe Articles of the Association of the Company two-thirds of the total number ofdirectors shall be liable to retire by rotation and out of the two-thirds rotationaldirectors one-third of such directors shall retire from office every year. The directorsto retire by rotation at every Annual General Meeting (AGM) shall be those who have beenlongest in office since their last appointment.
Accordingly Mr. Anil Kumar Mittal (DIN: 00030100) Chairman & Managing Director ofthe Company being longest in the office amongst the Directors liable to retire byrotation retire from the Board by rotation this year and being eligible has offered hiscandidature for reappointment. This shall not constitute a break in his office as theChairman & Managing Director of the Company.
Brief Resume of the Directors being appointed/re-appointed
As required under Regulation 36(3) of the SEBI Listing Regulations the brief resume ofthe Directors being re-appointed the nature of their expertise in specific functionalareas names of Companies in which they have held Directorships Committee Memberships/Chairmanships their shareholding etc. are forming part of the Notice calling AGM of theCompany.
The Ordinary Resolutions for the above re-appointment is included in the Notice callingAGM of the Company. The Board recommends the re-appointment of Mr. Anil Kumar Mittal &Ms. Priyanka Sardana at the ensuing AGM of the Company.
15. AUDIT COMMITTEE
In compliance with the provisions of Section 177 of the Companies Act 2013 andRegulation 18 of the SEBI Listing Regulations as on 31 March 2020 the Audit Committee ofKRBL Limited comprises of following 5 (Five) Members 4 (Four) Members are IndependentNon-Executive Directors and 1 (One) is Executive Director:
|Name ||Designation ||Category |
|Mr. Devendra Kumar Agarwal ||Chairman ||Independent NonExecutive Director |
|Mr. Anoop Kumar Gupta ||Member ||Executive & Joint Managing Director |
|Mr. Ashwani Dua ||Member ||Independent NonExecutive Director |
|Mr. Shyam Arora ||Member ||Independent NonExecutive Director |
|Mr. Vinod Ahuja ||Member ||Independent NonExecutive Director |
The recommendation made by the Audit Committee from time to time was accepted by theBoard of Directors. The details of the terms of reference meetings held during the yearand attendance of Audit Committee Members at such meetings etc. are provided in the Reporton Corporate Governance forming part of this Annual Report.
16. KEY MANAGERIAL PERSONNELS
The details of Key Managerial Personnels (KMPs) of the Company in accordance with theprovisions of Section 2(51) and Section 203 of the Companies Act 2013 read with rulesframed thereunder are as follows:
|S.No. ||Name of KMPs ||Designation |
|1. ||Mr. Anil Kumar Mittal ||Chairman & Managing Director |
|2. ||Mr. Arun Kumar Gupta ||Joint Managing Director |
|3. ||Mr. Anoop Kumar Gupta ||Joint Managing Director |
|4. ||Ms. Priyanka Mittal ||Whole Time Director |
|5. ||Mr. Rakesh Mehrotra ||Chief Financial Officer |
|6. ||Mr. Raman Sapra ||Company Secretary |
There is no change (appointment or cessation) in the office of KMPs during the year.
17. POLICY ON REMUNERATION OF DIRECTORS KMPs SENIOR MANAGEMENT PERSONNEL AND OTHEREMPLOYEES
The remuneration paid to the Executive Directors is in accordance with the Nominationand Remuneration Policy of KRBL Limited formulated in accordance with Section 134(3)(e)and Section 178(3) of the Companies Act 2013 read with Regulation 19 of SEBI ListingRegulations (including any statutory modification(s) or re-enactment(s) for the time beingin force). The salient aspects covered in the Nomination and Remuneration Policy have beenoutlined below:
i) To identify and ascertain the integrity qualification expertise and experience ofthe person for appointment as Director KMP or at Senior Management level and recommend tothe Board his / her appointment.
ii) To formulate the criteria for determining qualifications positive attributes andindependence of a Director and recommend to the Board a policy relating to theremuneration for the Directors Key Managerial Personnel Senior Management Personnel ofthe Company.
iii) To formulate the criteria for evaluation of performance of Independent Directorsand the Board of Directors.
iv) To evaluate the performance of the Members of the Board and provide necessaryreport to the Board for further evaluation of the Board and to determine whether to extendor continue the term of appointment of the Independent Director on the basis of thereport of performance evaluation of Independent Directors.
v) To recommend to the Board on all remuneration in whatever form payable to theDirectors Key Managerial Personnel and Senior Management.
vi) To develop a succession plan for the Board and to regularly review the plan.
vii) To assist the Board in fulfilling responsibilities.
The Nomination and Remuneration policy of KRBL Limited is available on the website ofthe Company at the weblink http://www.krblrice.com/policy-guidelines/nomination-renumeration-policy.pdf
18. NUMBER OF MEETINGS OF THE BOARD
During the Financial Year 2019-20 4 (Four) Meetings of the Board of Directors wereheld on 15 May 2019 01 August 2019 04 November 2019 and 28 January 2020. For detailsthereof kindly refer to the section Board Meetings and Procedures - Details of BoardMeetings held and attended by the Directors during the financial year 2019-20' in theReport on Corporate Governance forming part of this Annual Report.
19. PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
As the ultimate responsibility for sound governance and prudential management of aCompany lies with its Board its imperative that the Board remains continually energizedproactive and effective.
The Board evaluated the effectiveness of its functioning and that of the Committees andof individual Directors by seeking their inputs on various aspects of CorporateGovernance.
The aspects covered in the evaluation included the contribution to and monitoring ofcorporate governance practices participation in the long-term strategic planning and thefulfillment of Directors' obligations and fiduciary responsibilities including but notlimited to active participation at the Board and Committee Meetings.
The Companies Act 2013 not only mandates Board as a whole and Director Evaluation butalso requires the evaluation to be formal regular and transparent. Subsequently SEBIListing Regulations have also contained the provisions regarding requirement ofperformance evaluation of Independent Directors by the entire Board of Directors.
In accordance with the framework as recommended by the Nomination and RemunerationCommittee and approved by the Board of Directors the Board in its Meeting held on 28January 2020 had carried out the performance evaluation process.
The Independent Directors of the Company met separately without the presence ofNon-Independent Directors and inter-alia reviewed the performance of the Members ofManagement Non-Independent Directors Board as a whole performance of the Chairman ofthe Company and the Committees taking into consideration the views of Executive andNon-Executive Directors.
In compliance with the provisions of SEBI Listing Regulations the Board of Directorshas also carried out evaluation of every Independent Director's performance during thefinancial year.
The Board Members had submitted to Nomination and Remuneration Committee theirresponse in the form of scaling from 5 (Excellent) to 1 (Performance Needs Improvement)for evaluating the entire Board respective Committees of which they are Members and oftheir peer Board Members including Chairman of the Board.
The Nomination and Remuneration Committee has also carried out evaluation of everyDirector's performance.
The Directors expressed their satisfaction with the evaluation process.
It was further acknowledged that every individual Member and Committee of the Boardcontributed its best in the overall growth to the organization.
20. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement the Directors confirm:
i) that in the preparation of the Annual Accounts for the financial year ended 31 March2020 the applicable Indian Accounting Standards (Ind AS) have been followed and thatthere are no material departures;
ii) that appropriate accounting policies have been selected and applied consistentlyand judgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs as at 31 March 2020 and of the profit of theCompany for the financial year ended 31 March 2020;
iii) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) that the Annual Financial Statements for the financial year ended 31 March 2020have been prepared on a going concern basis;
v) that they had laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and
vi) that they had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
21. OPERATIONS PERFORMANCE AND FUTURE OUTLOOK OF THE COMPANY
A detailed review of operations and performance and future outlook of the Company isgiven separately under the head Management Discussion and Analysis' Report pursuantto Regulation 34 read with Part B of Schedule V of SEBI Listing Regulations and the sameis annexed and forms part of this Annual Report.
22. ENERGY CONSERVATION RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
Pursuant to provisions of Section 134(3)(m) of the Companies Act 2013 read with rulesframed thereunder the details of activities in the nature of Energy ConservationResearch and Development Technology Absorption and Foreign Exchange Earnings and Outgo isattached as 'Annexure 2' and forms part of this report.
23. PARTICULARS OF REMUNERATION OF DIRECTORS AND KMPs
A statement containing the details of the Remuneration of Directors and KMPs asrequired under Section 197(12) of the Companies Act 2013 read with rules framedthereunder is attached as 'Annexure 3' and forms part of this Report.
24. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 read with rulesframed thereunder an extract of the Annual Return in Form MGT-9 is attached as 'Annexure4' and forms part of this Report. The same is also available on the Company's websitehttp://www.krblrice. com under the link Investor Relations.
25. AUDITORS AND AUDITORS' REPORT
I) STATUTORY AUDITORS
In terms of the provisions of Section 139 of the Companies Act 2013 M/s. WalkerChandiok & Co LLP Chartered Accountants (Firm Registration No. 001076N/N500013) wereappointed as the Statutory Auditors of the Company by the shareholders in the 25th AGM ofthe Company held on 20 August 2018 for a period of 5 years i.e. to hold office till theconclusion of the 30th AGM to be held in the calendar year 2023. The requirement to placethe matter relating to ratification of appointment by shareholders at every AGM has beendone away by the Companies (Amendment) Act 2017 w.e.f. 07 May 2018.
The notes on financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.
During the financial year no instances of fraud have been reported by the StatutoryAuditors under Section 143(12) of Companies Act 2013 read with rules framed thereundereither to the Company or to the Central Government.
II) COST AUDITORS
As per Section 148 of the Companies Act 2013 read with notification issued by Ministryof Corporate Affairs regarding the Cost Audit of energy segment the Company is requiredto have the audit of its Cost Records pertaining to power segment by a Cost Accountant inPractice. In this connection considering the recommendation of Audit Committee the Boardof Directors had approved the re-appointment of M/s. HMVN & Associates CostAccountants having their office at 1011 Pearls Best Heights-II C-09 Netaji SubhashPlace Pitampura Delhi-110 034 as Cost Auditors of the Company to conduct the Cost Auditfor the financial year 2020-21.
As required under the provisions of Companies Act 2013 a resolution seeking membersapproval for the remuneration payable to the Cost Auditors for the financial year 2020-21forms part of the Notice convening the AGM of the Company.
The Company is maintaining the requisite cost records pertaining to power segment whoseturnover for the financial year 2019-20 is Rs 11371 lacs (excluding inter-unit sale).
Further the Cost Audit Report for the financial year 2018-19 has been filed withMinistry of Corporate Affairs.
III) SECRETARIAL AUDITORS
As required under Section 204(1) of the Companies Act 2013 read with rules framedthereunder the Company has appointed M/s. DMK Associates Company Secretaries havingtheir office at 31/36 Basement Old Rajender Nagar Delhi-110 060 to conduct theSecretarial Audit for the financial year 2020-21.
The Secretarial Audit Report submitted by M/s DMK Associates in the prescribed formMR-3 is attached as Annexure 5' and forms part of this Report.
As per the observations given by the Secretarial Auditors the explanation to the sameare as below:
a) As per section 135 of the Companies Act 2013 the eligible amount required to bespent by the Company is Rs 1302 lacs during the financial year 2019-20 however as perinformation provided the Company has spent Rs 188 lacs. The Reason for not spending theprescribed 2% amount under CSR is given in 'Annexure 6' under Annual Report on CSRActivities forms part of this Report.
b) In accordance with the provisions of Regulation 17(1)(a) of SEBI(LODR) 2015 theCompany was required to appoint one Independent Woman Director with effect from 01 April2019 whereas the Company has appointed Independent Woman Director on 25 September 2019.There was a slight delay in the appointment of Woman Independent Director on the Boardwhich was duly filled by the Company w.e.f. 25 September 2019 by appointment of Ms.Priyanka Sardana as a Woman Independent Director since the Company was looking for thebest suitable person who possesses relevant knowledge and experience in the field of itsoperations and can positively contribute to the functioning of the Company.
c) It is observed that certain statutory requirements of general laws applicable on theCompany's units located at Alipur Delhi have not been complied with. Onlygrading/sorting/packing of rice activity are done at the said unit and the unit has noproduction capacity.
The Company is taking all necessary steps to comply with the observations of theSecretarial Auditors as mentioned in the Secretarial Audit Report.
IV) INTERNAL AUDITORS
The Company has appointed M/s. S S Kothari Mehta & Co. Chartered Accountantshaving their office at plot N. 68 Okhla Industrial Area Phase -III New Delhi-110 020as the Internal Auditor of the Company to focus on Internal Audit functions of theCompany. The independence of the audit and compliance is ensured by direct reporting ofInteral Audit Team to the Audit Committee of the Company.
26. CORPORATE GOVERNANCE
At KRBL Limited it is our firm belief that the quintessence of Good CorporateGovernance lies in the phrase Your Company'. It is Your Company' because itbelongs to you- the Stakeholders. The Chairman and Directors are Your' fiduciariesand trustees.
Your Company has evolved and followed the corporate governance guidelines and bestpractices sincerely to not just boost long-term shareholder value but also respectminority rights. We consider it our inherent responsibility to disclose timely andaccurate information regarding our financials and performance as well as the leadershipand governance of the Company.
Your Company is devoted to benchmarking itself with global standards for providing GoodCorporate Governance. The Companies Act 2013 and SEBI Listing Regulations havestrengthened the governance regime in the Country. Your Company is in compliance with thegovernance requirements provided under SEBI Listing Regulations.
The Board has also evolved and implemented a Code of Conduct based on the principles ofGood Corporate Governance and best management practices being followed globally. The Codeis available on the Company's website at the weblink:http://www.krblrice.com/codes/Code-of- Business-Conduct-and-Ethics.pdf A separate sectiontitled Report on Corporate Governance' has been included in this Annual Report alongwith Secretarial Auditors Certificate on Corporate Governance.
The Company has also adopted the below mentioned policies and codes in line withcorporate governance requirements:
Policy on Preservation of Documents and Archival.
Policy on Sexual Harassment (Policy on POSH).
Nomination and Remuneration Policy.
Vigil Mechanism (Whistle Blower Policy).
Corporate Social Responsibility Policy.
Dividend Distribution Policy.
Policy for Determination of Materiality.
Policy on Related Party Transactions.
Policy for Determining Material Subsidiaries.
Policy on Board Diversity.
Code of Practice and Procedure for Fair Disclosure of Unpublished PriceSensitive Information.
Code of Conduct to Regulate Monitor and Report Trading by Insiders.
Code of Business Conduct and Ethics for the Board of Directors SeniorManagement Personnel and Other Employees.
All the above mentioned policies and codes are available on the Company's websitewww.krblrice.com under the link Investor Relations.
27. CORPORATE SOCIAL RESPONSIBILITY (CSR)
KRBL Limited believes sustained growth of business lies on triple bottom line that isgrowth of people around our operation protection of environment where we operate andprofit from our business. We understand wellbeing of the community around our businesswhich helps in growth of business and hence we value people around our operationallocations and promote inclusive growth.
We endeavour to serve the society and achieve excellence. We continue to remain focusedon improving the quality of life and engaging communities through ensuring environmentsustainability promoting healthcare promoting education and many more activities.
Pursuant to Section 135 of the Companies Act 2013 read with rules framed thereunderthe Company is having in place the Corporate Social Responsibility (cSr) Committee underthe chairmanship of Mr. Anil Kumar Mittal Chairman & Managing Director. The otherMembers of the Committee are Mr. Anoop Kumar Gupta Joint Managing Director Ms. PriyankaMittal Whole Time Director and Mr. Ashwani Dua Mr. Alok Sabharwal Mr. Vinod AhujaIndependent NonExecutive Directors. Mr. Alok Sabharwal and Mr. Vinod Ahuja IndependentNon-Executive Directors were appointed as a member of CSR Committee of the Company duringthe year.
The Company's policy on CSR envisages expenditure in areas falling within the purviewof Schedule VII of the Companies Act 2013. The detailed CSR policy is available on theCompany's website at the weblink http://www.krblrice.com/policy-guidelines/policy-corporate-social-responsibility.pdf
The Annual Report on CSR activities is attached as 'Annexure 6' which forms part ofthis report.
28. BUSINESS RESPONSIBILITY REPORT (BRR)
Fulfilment of Environmental Social and Governance responsibilities is part of KRBL'sbusiness culture. KRBL Limited is fortunate to be among the top 500 listed entities andfinds itself within the ambit of SEBI Listing Regulations which mandate the inclusion of
the Business Responsibility Report (BRR) as part of the Annual Report for the top 500listed entities based on market capitalization. In compliance with SEBI ListingRegulations the BRR disclosures are integrated into the Annual Report and aimed atdescribing KRBL's initiatives in discharging responsibilities from an EnvironmentalSocial and Governance perspective. The BRR is attached as 'Annexure 7' and forms part ofthis report.
29. INTERNAL FINANCIAL CONTROL (IFC) SYSTEM AND THEIR ADEQUACY
Pursuant to the provisions of Section 134(5)(e) of the Companies Act 2013 the termInternal Financial Control (IFC) means the policies and procedures adopted by the Companyfor ensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
The Company has an internal control system commensurate with the size scale andcomplexity of its operations. The Company has in place adequate controls procedures andpolicies ensuring orderly and efficient conduct of its business including adherence tothe Company's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of accounting records and timely preparation of reliablefinancial information. Further Audit Committee interacts with the Statutory AuditorsInternal Auditors and Management in dealing with matters within its terms of reference.During the year under review such controls were assessed and no reportable materialweakness in the design or operations were observed. Accordingly the Board is of theopinion that the Company's internal financial controls were adequate and effective duringFinancial Year 2019-20.
Kindly refer Statutory Auditors Report on internal financial controls forming part ofthe Financial Statements for the Auditors opinion.
30. RISK MANAGEMENT
The Board of Directors of the Company has constituted a Risk Management Committee toframe implement and monitor the Risk Management Plan for the Company and ensuring itseffectiveness. The purpose of this Committee shall be to assist the Board in fulfillingits corporate governance oversight responsibilities with regards to the identificationevaluation and mitigation of operational strategic and external environmental risks. TheCommittee has overall responsibility for monitoring and approving the risk policies andassociated practices of the Company. The Company is having a Risk Management Policy inplace.
During the financial year 2019-20 the Company is holding various ratings which are asfollows:
ICRA: In August 2019 "ICRA" has reviewed and reaffirmed [ICRA] AA-@(pronounced as ICRA double A minus under rating watch with negative implications) ratingfor Fund Based Working Capital Limits and Term Loans Limits and [ICRA] A1+@ (pronounced asICRA A One Plus under rating watch with negative implications) for Non-Fund Based Limitsof KRBL Limited.
ICRA: In August 2019 and November 2019 "ICRA" has also reviewed andreaffirmed [ICRA] A1+@ (pronounced as ICRA A One Plus under rating watch with negativeimplications) rating for Commercial Paper (CP) programme of KRBL Limited.
CARE: In August 2019 and November 2019 "CARE" has given the [CARE] A1+ (pronounced as CARE A One Plus; under rating watch with negative implications) ratingfor Commercial Paper (CP) of KRBL Limited.
32. DISCLOSURE ON DEPOSITS UNDER CHAPTER V
The Company has neither accepted nor renewed any Deposits during the Financial Year2019-20 in terms of Chapter V of the Companies Act 2013. Further the Company is nothaving any Unpaid or Unclaimed Deposits at the end of the Financial Year.
33. PARTICULARS OF EMPLOYEE
During the year under review no Employees whether employed for the whole or part ofthe year was drawing remuneration exceeding the limits as laid down under Section 197(12)of the Companies Act 2013 read with rules framed thereunder.
The particulars regarding the remuneration of Directors and KMPs as per Section 197 ofthe Companies Act 2013 read with rules framed thereunder is attached as "Annexure3" forms part of the Directors' Report. However as per the provisions of Section 136of Companies Act 2013 the report and accounts are being sent to the members and othersentitled thereto excluding the information on Employees' remuneration particulars. Thesaid information is open for inspection and any Member interested in obtaining the samemay write to the Company Secretary at the Registered Office/Corporate Office of theCompany.
34. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company is committed to provide a protective environment at workplace for all itswoman employees. To ensure that every woman employee is treated with dignity and respectand as mandated under "The Sexual Harassment of Woman at Workplace (PreventionProhibition and Redressal) Act 2013" the Company has in place a formal policy onprevention of Sexual Harassment at work place (Policy on POSH) and the Company has alsoConstituted the Internal Complaint Committee in compliance with the requirement of theAct. The policy is available on Company's website at the weblink:http://www.krblrice.com/policy-guidelines/SEXUAL%20 HARASSMENT%20POLICY.pdf
The Company has not received any Complaints on Sexual Harassment during the financialyear. The Internal Complaints Committees of the Company has also submitted its AnnualReport on Sexual Harassment to Mr. Anoop Kumar Gupta Joint Managing Director and also toConcerned District Officers where the Committee locates declaring that no Complaints werereceived during the financial year.
35. DEPOSITORY SYSTEM
The Company's shares are compulsorily tradable in electronic form. As on 31 March 2020almost 99.92% of the Company's Paid-up Equity Share Capital representing 235209530Equity Shares are in dematerialized form with both the Depositories.
The Company has established connectivity with both Depositories viz. NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL). In view of the numerous advantages offered by the Depository System membersholding Shares in physical mode are requested to avail of the dematerialization facilitywith either of the Depositories.
The Company has appointed M/s. Alankit Assignments Limited a Category-I SEBIregistered RTA as its Registrar and Share Transfer Agent across physical and electronicalternative.
36. CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES
During the year under review there was no change in Capital Structure and Listing ofShares. The Company's shares are listed and actively traded on the below mentioned StockExchanges:-
I. National Stock Exchange of India Limited (NSE)
"Exchange Plaza" C-1 Block G
Bandra (East) Mumbai-400 051
II. BSE Limited (BSE)
Phiroze Jeejeebhoy Towers
37. PARTICULARS OF LOAN(S) GUARANTEE(S) OR INVESTMENT(S) UNDER SECTION 186 OF THECOMPANIES ACT 2013
During the financial year ended 31 March 2020 the Company has neither made anyinvestment(s) nor given any loan(s) or guarantee(s) or provided any security as prescribedunder Section 186 of the Companies Act 2013.
38. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188(1) OF THECOMPANIES ACT 2013
During the financial year 2019-20 the Company has entered into transactions withRelated Parties. The transactions as entered into by the Company with the Related Partieswere in the ordinary course of business and on arm's length basis and in accordance withthe provisions of the Companies Act 2013 read with the rules framed thereunder and SEBIListing Regulations. Further there were no transactions with Related Parties whichqualify as Material Transactions under the SEBI Listing Regulations.
The Audit Committee of KRBL Limited has considered approved and recommended to Boardfor Omnibus Approval and criteria for Omnibus Approval for entering into transactions withRelated Parties for the financial year 2019-20 which was further approved by the Board.The transactions entered pursuant to the Omnibus Approval so granted and statement givingdetails of all transactions with Related Parties are placed before the Audit Committee fortheir review on a periodic basis. The details of the Related Party Transactions as perIndian Accounting Standard Ind AS 24 are set out in Note 40 to the Financial Statementsforming part of this report.
Further pursuant to the provisions of Section 188 of the Companies Act 2013 read withrules framed thereunder the disclosure of particulars of contracts/arrangements withRelated Parties in Form AOC-2 is attached as 'Annexure 8' and forms part of this Report.
The Company has also adopted a Policy on Related Party Transactions the same is alsoavailable on the Company's website at the weblink http://www.krblrice.com/policy-guidelines/Policy-on-Related-Party-Transactions.pdf
39. DISCLOSURE ON VIGIL MECHANISM (WHISTLE BLOWER POLICY)
Pursuant to the provisions of Section 177 of the Companies Act 2013 and Regulation 22of SEBI Listing Regulations the Company has established a mechanism called VigilMechanism (Whistle Blower Policy)' for Directors and Employees to report unethicalbehavior actual or suspected fraud or violation of the Company's code of conduct orethics policy and provides safeguards against victimization of Employees who avail themechanism. The policy permits all the Directors and Employees to report their concernsdirectly to the Chairman of the Audit Committee of the Company.
The Vigil Mechanism (Whistle Blower Policy)' as approved by the Board is uploaded onthe Company's website at the weblink http://www.krblrice.com/policy-guidelines/Vigil-Mechanism-(Whistle-Blower%20Policy).pdf
40. ENVIRONMENT HEALTH AND SAFETY
The Company continues to focus on employee well-being developing safe and efficientproducts and minimizing the environmental impact of our operations on society. The Companyis conducting its operations in such a manner so as to ensure safety of all concernedcompliances of environmental regulations and preservation of natural resources.
For safety and protection of Employees the Company has formulated and implemented apolicy on prevention of Sexual Harassment at the Workplace with a mechanism of lodgingcomplaints.
41. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERNS STATUS AND COMPANY'S OPERATIONS IN FUTURE
No significant and material order has been passed by the regulators courts tribunalsimpacting the going concern status and Company's operations in future.
42. DISCLOSURE ON INCOME TAX DEMAND
The Company had received demand notices under Section 153A/143(3) of the Income-taxAct 1961 with respect to assessment year 2010-11 to 2016-17 amounting to Rs 75744 lacsand interest thereon Rs 51176 lacs against which Company had filed appeals with CIT(Appeals) New Delhi.
During the year ended 31 March 2020 CIT (Appeals) granted partial relief on certainmatters in favor of the Company vide orders dated 11 March 2020 and correspondinglyincome tax demand has been reduced by Rs 69612 lacs and interest thereon by Rs 47424lacs respectively. The Company has filed appeals before Income Tax Appellate Tribunal(ITATRs) New Delhi on 18 June 2020 for remaining matters confirmed by CIT(Appeals)in respect of income tax demand of Rs 6132 lacs and interest thereupon of Rs 3752 lacs.The management based on legal assessment is confident that it has a favorable case andthe remaining demand shall also be deleted at the ITAT level.
43. INDUSTRIAL RELATIONS
The Company has maintained healthy cordial and harmonious industrial relations at alllevels. Despite severe competition the enthusiasm and unstinting efforts of the Employeeshave enabled the Company to remain at the forefront of the Industry. It has taken varioussteps to improve productivity across organization.
The Company is continuously receiving co-operation and unstinted support from theDistributors Retailers Stockist
Suppliers and others associated with the Company as its Trading Partners. The Directorswish to place on record their appreciation for the same and the Company will continue itsendeavor to build and nurture strong links with trade based on mutuality respect andco-operation with each other and consistent with consumer interest.
44. SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards - 1 and SecretarialStandards - 2 issued by the Institute of Company Secretaries of India and approved by theCentral Government.
45. CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
Pursuant to the Regulation 9 of SEBI (Prohibition of Insider Trading) Regulations2015 KRBL Limited is having the Code of Conduct to Regulate Monitor and Report Tradingby Insiders. The said Code is available on the website of the Company at the weblinkwww.krblrice.com/codes/Code- of-Conduct-to-Regulate-Monitor-and-Report-Trading-by-Insiders.pdf
46. IMPACT OF COVID-19
KRBL's business is considered an Essential Services' as per the Ministry of HomeAffairs (MHA). This classification has helped the Company to operate all its factoriesoptimally. Being an essential food Company and simultaneous cooperation from localAdministration and Government we managed to overcome the obstacles and were able tostreamline the process.
The Company has taken conscious decision through balance uninterrupted operations andensuring a safe working environment. The Company has put in place strict standardoperating procedures for COVID-19. To ensure this majority of the staff has been asked toreport to work at their locations. Further the Company has also made necessaryarrangements to ensure that the remaining staff were safe and comfortable at work. TheCompany regularly conducted awareness programs for its Employees.
It is our strong belief that caring for our business constituents has ensured oursuccess in the past and will do so in future. The Board acknowledges with gratitude theco-operation and assistance provided to the Company by its Bankers FinancialInstitutions Government as well as Non-Government Agencies. The Board wishes to place onrecord its appreciation to the contribution made by Employees of the Company during thefinancial year under review. The Company has achieved impressive growth through thecompetence hard work solidarity cooperation and support of Employees at all levels.Your Directors gives their sincere gratitude to the Customers Clients Vendors and otherBusiness associates for their continued support in the Company's growth.
The Board also takes this opportunity to express its deep gratitude for the continuedco-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
| ||Anil Kumar Mittal |
|Place: Noida Uttar Pradesh ||Chairman & Managing Director |
|Date: 11 August 2020 ||DIN-00030100 |