Directors Report & Management Discussion and analysis
The Members of M K Exim India Limited
Your Directors have pleasure in presenting their 26thAnnual Report and theaudited financial statements for the financial year ended 31stMarch 2018
1 Stand alone Financial Results
The summarized financial results for the financial year ended 31st March 2018 arepresented below:
| || ||Rs. In Lakhs |
|Details ||Financial year ended 31st March 2018 ||Financial year ended 31st March 2017 |
|Income from operations ||1999.00 ||2841.97 |
|Profit before interest depreciation and taxation ||127.48 ||134.20 |
|Finance cost ||62.54 ||64.20 |
|Depreciation ||29.20 ||31.11 |
|Profit before tax ||35.74 ||38.89 |
|Taxation ||11.16 ||27.44 |
|Profit after tax ||24.58 ||11.44 |
|Balance brought forward from previous year ||975.83 ||964.39 |
|Less Dividend || || |
|Disposable surplus available after adjustments ||1000.41 ||975.83 |
|Balance carried to balance sheet ||1000.41 ||975.83 |
The income during the financial year ended 31st March 2018 is Rs. 1999.00 lakhscompared to Rs. 2841.97 lakhs a decrease of about 30%. The decline was due to sluggishglobal textiles market and unhealthy competition in export markets. The profit after taxis Rs. 24.58 lakhs for the year under report compared to Rs. 11.44 lakhs for the financialyear ended 31st March 2017.The sales by way of exports are Rs. 1909.55 lakhs during theyear ended 31st March 2018 compared to Rs. 1914.85 lakhs in the previous year. Exportsales constitute about 95% of the total revenue during the year.
2 Dividend and Reserves
With a view to conserve the resources for the business of the Company the Directors donot recommend dividend for the financial year ended 31st March 2018 and the entire surplusis carried to balance sheet.
The Board does not proposed any amount to carry to any specific reserve
3 Share Capital
The paid up equity share capital of the Company as at 31st March 2018 stood at Rs.718.05 lakhs. During the year under review the Company has not issued shares withdifferential voting rights nor has it granted any stock options or sweat equity. None ofthe directors of the Company hold instruments convertible into equity shares during thefinancial year ended 31st March 2018.
4 Analysis & Review
India is the world's second largest producer of textiles and garments after China. Itis the world's third largest producer of cotton after China and the USA and the secondlargest cotton consumer after China. Indian textile industry currently estimated to beUS$108 billion and expected to reach US$ 209 billion in the year 2021.The industry is thesecond largest employment generator after agriculture by employing 45 million peopledirectly and 60 million people indirectly.
The Indian textile industry presently contributes around 14 percent to industrialproduction and 4 percent to GDP 17 percent to the country's exports and 21 percentemployment. India has abundance of natural resources like cotton jute and silk. Indianproducts are preferred for their fine designing embellishment and craft. From the agesthe Indian fabric designers and weavers are recognized as one of the best in the world. Atpresent industry is growing at 9-10 percent with Indian economy. Indian textile industrycurrently possesses a share of 4.7% in world market of textiles and clothing.
The Indian textile industry is highly fragmented and is being dominated by theunorganized sector and small and medium industries. The changing government policies atthe state and central government levels are posing major challenges to the textileindustry. The tax structure GST (Goods and Service Tax) makes the garments expensive.Another important thereat is raising interest rates and labor wages and workers' salaries.There is higher level of attrition in the garment industry.
Although central government is wooing the foreign investors the investment is coming inthe textile industry. The Indian textile industry has its own limitations such as accessesto latest technology and failures to meet global standards in the highly competitiveexport market. There is fierce competition from China Bangladesh and Sri Lanka in the lowprice garment market. In the global market tariff and non-tariff barriers coupled withquota is posing major challenge to the Indian textile Industry.
The threats to the Company's product includes severe competition both in domestic andinternational markets leading to pricing pressures of finished goods inflation foreignexchange fluctuation volatility in input cost cotton crop interest rates power costetc. Government Policies also play major role in the growth of the Industry.
The implementation of Goods and Service Tax (GST) with effect from July 2017 had mixedimpact on trade & commerce during the last fiscal. The impact of GST is particularlystark in the highly fragmented synthetic textile industry which attracts different GSTrates at different stages of production and sales. Working capital cost has gone up as thebusinesses have to wait for tax refunds to come through. Pending tax refunds have sloweddown fresh investment and resulted into liquidity constraints.
The Company is experiencing pressure on margins due to severe competition from otherlow-cost countries like China. There is also a threat of high inflation rate as the pricesof commodities have been increasing. Textiles being a labour intensive industry risinglabour and skilled human resources costs can put pressure on margins Business Risks
As stated above Export sales constitute about 83% of the total revenue during theyear. Apart from fierce competition from China Korea and Indonesia the volatility ofrupee vis a vis US dollars is a major business risk as all export invoices are issued inUS Dollars. This is sought to be overcome by appropriate forward contracts. Governmentinitiatives
The Indian government has come up with a number of export promotion policies for thetextiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector underthe automatic route.
The Union Ministry of Textiles Government of India along with Energy EfficiencyServices Ltd (EESL) has introduced a technology up-gradation scheme called SAATHI(Sustainable and Accelerated Adoption of Efficient Textile Technologies to Help SmallIndustries) for reviving the power loom sector of India.
The Government of India plans to introduce a mega package for the power loom sectorwhich will include social welfare schemes insurance cover cluster development andup-gradation of obsolete looms along with tax benefits and marketing support which isexpected to improve the status of power loom weavers in the country.
The Directorate General of Foreign Trade (DGFT) has revised rates for incentives underthe Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry -Readymade garments and Made ups - from 2 per cent to 4 per cent.
5 Performance highlights
(a) Share Capital
The Authorised Share Capital of the Company is 100000000/- comprising of 10000000equity shares of Rs. 10/- each. The paid-up capital of the Company is Rs. 71805000/-.
(b) Loan funds
During the year the Secured Loan of the Company was increased by 8.59% i.e. from Rs.426.02 Lakhs to Rs. 462.63 Lakhs the interest cost reduced during the year.
During the year the turnover of the Company has decreased by 26% i.e. from Rs. 2611.27Lakhs to Rs. 1909.55 Lakhs the board is making their possible efforts to improve theperformance of the company during the current financial year.
6 Finance & Accounts
The Company prepares its financial statements in accordance with the requirements ofthe Companies Act 2013 (hereinafter referred as "the Act" or "Act")and the Generally Accepted Accounting Principles (GAPP) as applicable in India. Thefinancial statements have been prepared on historical cost basis in conformity with theIndian Accounting Standards ("Ind AS"). The estimates and judgments relating tothe financial statements are made on a prudent basis so as to reflect in a true and fairmanner the form and substance of transactions and reasonably present the Company's stateof affairs profits and cash flows for the financial year ended 31st March 2018. Companyhas adopted IND-AS during the year 2017-18
7 Corporate Social Responsibilities
Section 135 of the Act and the rules made there under relating to corporate socialresponsibility are not applicable to the Company during the financial year ended 31stMarch 2018.
Kolba Farm Fab Private Limited is the subsidiary of the Company. The sales of thesubsidiary Company were Rs.288.61 Lakhs during the financial year ended 31st March2018compared to Rs. 278.02 lakhs in the previous year. The net profit after tax wasRs.15.34 lakhs during the year under report compared to Rs. 79.62 Lakhs in the previousyear.
The salient features of the financial statement of the subsidiary are given in form AOC1.
9 Consolidated Financial Statement
The consolidated financial statements of the Company are prepared in accordance withthe relevant accounting standards issue by the Institute of Chartered Accountants of Indiaand form an integral part of this report.
Pursuant to section 129(3) of the Act and the relevant rules made thereunder astatement containing salient features of the financial statement of the subsidiary companyis given in form AOC 1 and forms an integral part of this report.
10 Corporate Governance
In terms of Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 provisions of corporate governance contained in Regulations 17 to 2646(2)(b)(i) and paras C D and E of Schedule V to the above SEBI regulations are notapplicable to the Company.
11 Listing of shares in BSE
During the financial year under report the equity shares continued to be listed atBSEWhich has nationwide trading terminals.
12 Extract of Annual Return
The extract of annual return in form MGT 9 as required under section 92 of the Act asat 31st March 2018 is annexed to this report as Annexure A which forms part of thisreport.
13 Key Managerial Personnel
The key managerial personnel of the Company are given below:
|Sr No. ||Name ||Designation |
|1 ||Shri Daya Ram khanchandani ||Non executive Chairman |
|2 ||Shri Manish Murlidhar Dialani ||Managing Director |
|3 ||Smt. Lajwanti M Dialani ||Whole Time Director |
|4 ||Shri Mahaveer Prasad lain ||Chief Financial Officer |
|5 ||Ms. Prakriti Sethi ||Company Secretary |
14 Board of Directors
During the F.Y 2017-18 the following changes took place in composition of board ofdirectors:
Change of designation of Mrs. Lajwanti M Dialani (DIN: 05201148) fromnon-executive directors to Wholetime directors in AGM held on 29/09/2017
Change of designation of Shri Dayaram Khanchandani (DIN:00161546) fromWhole-time Director to nonexecutive director in AGM held on 29/09/2017. Changes incomposition of board of directors after financial ended on 31/03/2018 are as follows:
As recommended by the Nomination and Remuneration Committee and as required under theprovisions of the Companies Act 2013 the Board has appointed Mr. Laxmikant R Patodia (DIN03497821) and Mr. Vishesh M Nihalani (DIN 06786707) as independent directors with effectfrom 20th June 2018. As per the provisions of the Companies Act 2013 IndependentDirectors have been appointed for a period of five years and shall not be liable to retireby rotation. Their appointments require shareholders approval and are included in thenotice. The personal details of these directors are given in the annexure to the notice.As per provisions of the Companies Act 2013 the Company is required to have 2 independentdirectors on its board.
The Independent Directors of your Company have given the certificate of independence toyour Company stating that they meet the criteria of independence as mentioned underSection 149(6) of the Companies Act 2013.
The Independent directors namely Mr. Ashok Patni (DIN 00162153) Mr. Kishor Motiyani(DIN 00161589) and Mr. MurliDhar Menghani (DIN 00157301) resigned from the Board due topersonal commitments and reasons with effect from 20th June 2018
In accordance with provisions of section 152 of the Act Shri Daya Ram Khanchandani (DIN00161546) Non executive Chairman retires by rotation and being eligible offers himselffor reappointment.
15 Number of meetings of the Board
During the year under report the board met 6 times on 30.05.2017 08.08.201721.08.2017 10.11.2017 10.02.2018 07.03.2018
16 Board Evaluation
The performance evaluation of the independent directors was completed. The performanceevaluation of the Chairman and non-independent directors was carried out by theindependent directors and was accepted by the Board. The Board of directors expressedsatisfaction of the evaluation process adopted by the Company
17 Particulars of loans guarantees or investments by the Company
During the year the Company has not given any loan or issued any guarantee inconnection with the loan.
18 Whistle Blower policy/Vigil Mechanism
The Company has in place a mechanism to report genuine concerns or grievances.
19 Policy on director's appointment / remuneration /determining qualifications/positive attributes etc
Company has constituted Nomination and Remuneration Committee and adopted Nominationand Remuneration Policy formulated in compliance with Section 178 of the Companies Act2013 read with rules thereunder and of the SEBI (LODR) Regulations 2015.
The said policy includes criteria for determining qualifications positive attributesindependence of directors and other matters provided. As on 31st march 2018 the board hadsix members two of whom were executive or whole-time directors (including one womandirector) one non executive director and three independent directors.
The said policy of the company on director's appointment and remuneration includingthe criteria for determining qualification positive attribute independence of adirectors and other matters as required under sub section (3) of section 178 of thecompanies act 2013 is available on our website at - http://www.mkexim.com/policy/nomination-remunaration-policy.
20 Related party transactions
All transactions entered with related parties for the financial year ended 31st March2018 were on arm's length basis and in the ordinary course of business under third provisoto section 188(1) of the Act. Hence Details are not given in form AOC 2 as required undersection 134(3) (h) of the Act.
Pursuant to section 188 of the Companies Act 2013 a resolution has been included inthe notice for approval of members for the transactions with M/s. Laaj International andM/s. Square Textiles LLC Dubai UAE in which some directors are interested.
Omnibus approval wherever required was given for transactions of repetitive nature onhalf yearly basis. All related party transactions are placed before the Audit Committeeand the Board of Directors for approval. All related party transactions entered during thefinancial year ended 31st March 2018 are disclosed in the notes to accounts.
21 Significant and material orders passed by the regulators or courts
There are no significant and material orders passed by the regulators or courts againstthe Company during the year. There are also no material development which may impact onthe business of the Company from the end of the financial year and the date of thisreport.
22 Directors responsibility statement
To the best of knowledge and belief and according to the information and explanationobtained by them your directors make the following statement in terms of section 134(3)(c) of the Companies Act 2013:
(a) That in preparation of the annual accounts for the year ended 31st March2018 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
(b) And applied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company asat 31st March 2018 and of the profit of the Company for the year ended on thatdate;
(c) That the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) That the annual accounts have been prepared on a going concern basis.
(e) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
23 Statutory auditors
M/s Vimal Agrawal & Associates Chartered Accountants who are statutory auditorsof the Company hold office upto the 27th annual general meeting. Members of the Companyhad approved the appointment of Vimal Agrawal & Associates Chartered Accountants(FIRM membership number FRN 004187C) as the Statutory Auditors at the 22nd AGM of theCompany which is valid till 27th AGM of the Company. In accordance with the CompaniesAmendment Act 2017 which became effective from 7th May 2018 the appointment ofStatutory Auditors is not required to be ratified at every AGM.
24 Qualification in the auditor's report
With reference to the Statutory auditor's remarks in regard to Ind AS 19 for EmployeesBenefits for provision of gratuity the Directors clarify that the liability for gratuitypayable by the Company is being worked out in consultation with LIC and appropriate policyas advised by LIC will be taken in due course during the current financial year.
25 Cost Audit
The provisions of the Companies (Cost Records and Audit) Rules 2014 are not applicableto the Company's operations.
26 Secretarial Audit Report
As required under section 204 of the Companies Act 2013 the Secretarial Audit Reportfrom Ms. Anshu Parikh Practising Company Secretary (FCS:9785 CP: 10686) is annexed tothis report as Annexure B which forms part of this report. With reference to theobservations of the Secretarial Auditor in her report we clarify as under:
I) With reference to the observation 1 in the report it is submitted that there wassome delay in filing certain forms with ROC. Section 403 of the Companies Act 2013permits companies to file the forms with additional fees if there is delay in filing theforms. The Companies paid additional fees to ROC and the ROC approved these forms.
ii) With reference to the observation in regard to delay in informing the stockexchange of the developments mentioned in Schedule IIIA of SEBI LODR regulations therewere not any material developments mentioned in the said Schedule III A which had anyimpact on the price of the shares or giving rise to any unpublished price sensitiveinformation during the financial year ended 31st March 2018.
iii) With reference to the observations on the appointment of independent directors wesubmit that There is no provision in section 149 nor in the Companies (Appointment andQualifications of Directors) Rules 2014 which says that directors who held the positionprior to commencement of Act 2013 shall be appointed under section 149 for a short periodtaking into account the number of years they were directors prior to commencement of theAct 2013. Neither the said section nor the said rules prescribe any disqualification forappointment if they held the position before 1/4/2014.
iv) Section 149(5) deals with the composition of the Board with independent directorsmentioned in section 149(4). It provides a period of one year from 1/4/14 to achieve thecomposition It has nothing to do with the continuation of the directors after 1/4/14. TheCompany as per its composition of board should have two independent directors. But it had3 independent directors. Thus the Company has complied with the provisions of theCompanies Act 2013 and the relevant rules framed thereunder in regard to appointment ofindependent directors.
27 Internal control systems and their adequacy
The Company has an effective internal control system commensurate with its size andscale of its operations. The internal audit is entrusted to M/s Madhur & AssociatesChartered Accountants.
The Audit Committee reviews the adequacy and effectiveness of the internal controlsystems and suggests improvements wherever required.
28 Environments and Safety
The Company's operations do not pose any environment hazards and are conducted in sucha manner that safety of all concerned and compliances with environmental regulations areensured.
29 Statutory Information A. Conservation of energy:
i. The Company has committed to conserve energy improve energy efficiency throughreduction of wastage and optimum utilisation.
ii. Steps taken for utilizing alternate sources of energy: Nil
iii. Capital investment on energy conservation: Nil
B. Technology Absorption: The Company has no technology agreement and the issue oftechnology absorption does not arise.
C. Foreign exchange earnings and out go.
Foreign exchange earnings: Rs 1902.36 lakhs Foreign Exchange outgo Rs. 0.29 lakhs
30 Details of disclosure pursuant to section 197(12) of the Companies Act 2013 readwith rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are given in Annexure-C which forms part of this report.
31 Material changes and commitments occurred in terms of section 134(3)(l) of thecompanies act 2013
No significant changes and commitment occurred between the date of the balance sheetand the date of the report.
32 Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013
Pursuant to the disclosure requirements under section 134(3) and rules thereof of theCompanies Act 2013 the Company has constituted internal complaint committee as requiredunder provisions of Sexual Harassment of woman at workplace (prevention Prohibition &Redressal) Act 2013.
The Company has not received any complaint of sexual harassment during the year underreview.
33 Risk Management policy
The Company has developed and established a risk management policy/ Plan for theCompany which sets out a framework for identification of elements of Risk if any which inthe opinion of the Board may threaten the existence of the Company and has devised aproper system of risk management and internal compliance and control through its BoardAudit Committee KMP's and other Senior personnel of the Company.
34 Audit Committee
The Audit committee has been constituted to meet the requirements of the provisions ofthe Companies Act 2013 rules and regulations as may be prescribed. The members of theAudit Committee have requisite financial and management expertise.
Composition of the Committee as on 31.03.2018 as follows:-
|S.No ||Name of Members ||Designation |
|1 ||Mr. MurliDhar Menghani ||Chairman |
|2 ||Mr. Ashok Patni ||Members |
|3 ||Mr. Kishor Motiyani ||Members |
During the year under report the committee met 4 times on 30.05.2017 08.08.201710.11.2017 10.02.2018. The recommendations made by the Audit committee during the yearwere accepted by the Board
35 Nomination and remuneration committee and stakeholders committee
The company has complied with section of regulation 178 regarding constitution ofNomination and remuneration committee and stakeholders committee
The Directors wish to place on record their appreciation of the contribution made bythe employees at all levels.
The Directors also to wish to thank the Company's customers and banks for theircontinued support and faith reposed in the Company.
| ||By order of the Board |
|Place : Jaipur ||Daya Ram Khanchandani |
| ||Chairman |
|Date: 24.08.2018 ||DIN:00161546 |