The Members of M K Exim India Limited
Your Directors have pleasure in presenting their 28th Annual Report and theaudited financial statements for the financial year ended 31st March 2020.
1 Stand alone Financial Results
The summarized financial results for the financial year ended 31st March 2020 arepresented below:
Rs. in Lakhs
|Details ||Financial year ended 31st March 2020 ||Financial year ended 31st March 2019 |
|Income from operations ||5070.29 ||2520.78 |
|Profit before interest depreciation and taxation ||361.79 ||124.95 |
|Finance cost ||27.60 ||39.86 |
|Depreciation ||26.38 ||24.13 |
|Profit before tax ||307.81 ||60.95 |
|Taxation ||122.47 ||25.24 |
|Profit after tax ||185.34 ||35.71 |
|Balance brought forward from previous year ||1036.13 ||1000.42 |
|Less Dividend ||- ||- |
|Disposable surplus available after adjustments ||1221.47 ||1036.13 |
|Balance carried to balance sheet ||1221.47 ||1036.13 |
The income during the financial year ended 31st March 2020 is Rs. 5070.29 lakhscompared to Rs. 2520.78 lakhs a increase of about 101%. The increase was due to goodglobal textiles market and healthy competition in export markets. The Company's newdivision of distributorship of cosmetics (FMCG) products contributed a revenue Rs. 1988.02lakhs during the year. The profit after tax is Rs. 185.34 lakhs for the year under reportcompared to Rs. 35.71 lakhs for the financial year ended 31st March 2019 a increase ofabout 419%. The sales by way of exports are Rs. 2883.45 lakhs during the year ended 31stMarch 2020 compared to Rs. 2366.79 lakhs in the previous year. Export sales constituteabout 57% of the total revenue during the year.
2 Dividend Distribution & Transfer to reserves
With a view to conserve the resources for the business of the Company the Directors donot recommend dividend for the financial year ended 31 st March 2020. Further due touncertain conditions in global and domestic economy arising out of COVID-19 pandemic thedirectors thought it prudential to conserve the resources of the Company. The Board ofDirectors has decided to retain the entire amount of profit for Financial Year 2019-20 inthe statement of profit and loss and does not proposed any amount to carry to any specificreserve
3 Share Capital
The paid up equity share capital of the Company as at 31st March 2020 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 31 st March 2020.
4 Impact of Global Crisis: COVID-19
In March 2020 the World Health Organisation (WHO) declared COVID-19 a global pandemic.Consequent to this Government of India declared nation-wide lockdown on March 242020which has impacted normal business operations of the Company. The Company has assessed theimpact of this pandemic on its business operations and has considered all relevantinternal and external information available up to the date of this report to determinethe impact on the Company's revenue from operations for foreseeable future and therecoverability and carrying value of certain assets such as property plant and equipmentinvestments inventories trade receivables and MAT credit. The impact of COVID-19pandemic on the overall economic environment being uncertain may affect the underlyingassumptions and estimates used to prepare Company's financial results which may differfrom that considered as at the date of approval of the financials results. As thesituation is unprecedented while the lockdown is gradually lifting the Company isclosely monitoring the situation as it evolves in the future. The Company has resumed itsbusiness activities in line with guideline issued by the Government authorities takingsteps to strengthen liquidity position and initiating cost restructuring exercises. TheCompany does not anticipate any challenges in its ability to continue as going concern ormeeting its financial obligations.
5 Analysis & Review
India continues to be one of the fastest growing emerging economies in the world. Aslowdown in the manufacturing and construction sector has lately affected GDP growth -slightly below 5% in the current fiscal. An impending revival in demand positiveconsumption pattern and rising disposable income makes India the most sought afterinvestment destinations. Already the fifth largest economy in the world India is supposedto take its place among the world's top three economic powers in the next 10-15 years. Thepandemic has undoubtedly affected India but with the right economic stimulus and thegradual opening up of the lockdown the situation can be expected to improve. Interstatemovement of goods is gradually picking up and retail financial transactions are showing ahealthy trend.
India's textiles industry goes back several centuries and is among the oldestindustries in the country. It accounts for 14% of the industry output and is one of thelargest contributors to the economy accounting for ~2% of the GDP. After agriculture itis the second largest generator of income employing close to 40 million people andcontributing 10% to the country's manufacturing owing to its labourintensive nature. Theindustry is vertically integrated with almost all sub-sectors and is thus integral to theeconomy.
India is the second largest producer and exporter of textiles after China and fourthlargest producer and exporter of apparel after China Bangladesh and Vietnam. The textilesand apparel industry constitutes -11% of the total exports of the country.
However one factor affecting India's textile trade is currency fluctuation thatremains a challenge for the industry. Exports have been a core feature of India's textilesector. Indian textiles and apparel exports were estimated at $35.5 billion in 2019 and isexpected to grow at a CAGR of 11% over the next decade to reach $100 billion by 2029.Exports of both man-made textile and readymade garments have seen a major boost.
A major factor behind the robustness of India's textile industry is its strongproduction base with a wide range of fibres and yarns. India is among the top producers ofjute and silk and beyond its natural fibres such as cotton jute silk and wool; andsynthetic its manmade fibres such as polyester viscose nylon and acrylic have alsocreated a niche for themselves in the market.
The Fast-moving Consumer Goods (FMCG) sector is the 4th largest sector of the Indianeconomy. During FY2019-20 the sector witnessed growth of 7.2% as per AC Nielsen which isalmost half of the 14% growth reported in FY2018-19. The FMCG sector saw a sharp slowdownduring the year on account of moderation in economic activity low farm incomes and weakrural wage growth liquidity crunch in the system high unemployment levels anddowntrading across categories. By March 2020 the sectoral growth dropped to 3.3% in valueterms and 0.5% in volume terms. The Corona virus pandemic has further impacted the sectorsince March 2020 due to restrictions on movement of goods supply side bottlenecks andimpact on consumption. Consumers have been stocking up essential products such as packagedfoods staples tea coffee milk detergents and other products of daily usage. Duringthis phase demand has also surged for health and hygiene products as these aspects cameinto sharp focus. There was a surge in demand for hygiene products like sanitizers anddisinfectants in addition to immunity building OTC and healthcare products. Howeverdiscretionary and nonessential items have seen weak demand as the focus during thelockdown has been on food and hygiene.
We also expect the industry to undergo recalibration of the supply chain anddistribution network with channels like e-commerce and Direct to Consumer gainingsalience. Local kirana (grocery) stores have seen resurgence as proximity and availabilityof products came into prominence. These retail outlets may become more organizeddigitally enabled and serviced directly. Recently India's Top 12 consumer goodscompanies have partnered with the government to convert millions of neighbourhood kiranastores into sanitised and safe retail outlets selling daily essentials. These kiranas willbe called Suraksha Stores and linked to the government's Aarogya Setu app. The companiesin addition to registering these outlets as Suraksha Stores will help the kirana staffimplement safety norms such as social distancing and sanitisation and supply themsanitisers masks and gloves. The government is targeting to bring 1 million stores underthis category in the first phase. This is the one of the several steps that FMCG companiesare taking to push demand and ensure that retail shelves remain stocked in the eventualityof the lockdown and its impact on trade channels persisting.
6 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 decreased by 7.04% i.e. from Rs.369.28 Lakhs to Rs. 343.28 Lakhs the interest cost reduced during the year.
During the year the turnover of the Company has increased by 106% i.e. from Rs.2366.79 Lakhs to Rs. 4871.46 Lakhs the board is making their possible efforts to improvethe performance of the company during the current financial year.
7 Finance& Accounts
The Company prepares its financial statements in accordance with the requirements ofthe Companies Act 2013(hereinafter referred as "the Act" or "Act") andthe Generally Accepted Accounting Principles (GAPP) as applicable in India. The financialstatements have been prepared on historical cost basis in conformity with the IndianAccounting Standards ("Ind AS"). The estimates and judgments relating to thefinancial 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 2020.
8 Corporate Social Responsibilities
Section 13 5 of the Act and the rules made there under relating to corporate socialresponsibility are not applicable to the Company during the financial year ended 31 stMarch 2020.
Kolba Farm Fab Private Limited is the subsidiary of the Company. The sales of thesubsidiary Company were Rs. 417.88 Lakhs during the financial year ended 31st March 2020compared to Rs. 357.11 Lakhs in the previous year. The net profit after tax was Rs. 39.04Lakhs during the year under report compared to Rs. 14.93 Lakhs in the previous year. Thesalient features of the financial statement of the subsidiary are given in form AOC 1.
10 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.
11 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 were notapplicable to the Company.
12 Listing of shares in BSE
During the financial year under report the equity shares continued to be listed atBSE Which has nationwide trading terminals.
13 Extract of Annual Return
The extract of annual return in form MGT 9 as required under section 92 of the Act asat 31 st March 2020 is annexed to this report as Annexure A which forms part of thisreport.
14 Key Managerial Personnel
The key managerial personnel of the Company are given below:
|Sr No. ||Name ||Designation |
|1 ||Shri Murli Wadhumal Dialani ||Chairman and Whole Time Director |
|2 ||Shri Manish Murli Dialani ||Managing Director |
|3 ||Smt. Lajwanti M Dialani ||Whole Time Director |
|4 ||Shri Mahaveer Prasad Jain ||Chief Financial Officer |
|5 ||Smt. Prakriti Sethi ||Company Secretary |
15 Board of Directors
During the F.Y 2019-20 the following changes tookplace in composition of board ofdirectors:
Miss Priya Murlidhar Makhija (DIN: 07109712) was appointed as Independent Director at27th AGM held on 28.09.2019 for period of 5 years w.e.f 11.04.2019. Miss PriyaMurlidhar Makhija was appointed as additional independent Director on 11.04.2019considering her integrity expertise and experience.
Mr. Murli Wadhumal Dialani (DIN: 08267828) was appointed as Whole Time Director anddesignated as Chairman at 27th AGM held on 28.09.2019 for period of 5 yearsfrom date of 27th AGM.
Mr. Manish Murlidhar Dialani was re-appointed as Managing Director of the Company at27th AGM held on 28.09.2019 for period of 5 years from date of 27th AGM
Pursuant to the provisions of Section 149 of the Act the independent directors havesubmitted declarations that each of them meet the criteria of independence as provided inSection 149(6) of the Act along with Rules framed thereunder and Regulation 16(l)(b) ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI Listing Regulations"). There has been nochange in the circumstances affecting their status as independent directors of theCompany.
16 Number of meetings of the Board
During the year under review the board met 7 times on 11.04.2019 30.05.201910.08.2019 24.08.2019 12.11.2019 25.11.2019 and 11.02.2020. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013 and theListing Regulations.
17 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
18 Prevention of Insider Trading
The Company has adopted a Code of Conduct for prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires preclearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company's shares by the Directors and the designated employeeswhile in possession of unpublished price sensitive information in relation to the Companyand during the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Board Directors and the designated employees haveconfirmed compliance with the Code. The Companies Code of Conduct is available oncompanies Website.
19 Particulars of loans guarantees or investments by the Company
During the year the Company has not given any loan or issued any guarantee providedany security or made any investment/subscription purchase or otherwise the securities ofany otherbody corporate.
20 Whistle Blower policy/Vigil Mechanism
The Company has a Whistle Blower Policy and has established the necessary vigilmechanism for directors and employees to report concerns about unethical behavior. Noperson has been denied access to the Chairman of the Audit Committee. The said policy hasbeen uploaded on the website of the Company.
21 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 policyincludes criteria for determining qualifications positive attributes independence ofdirectors and other matters provided. During the reporting period the board had threemembers consisting of non-executive and independent directors.
The said policy is 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 athttp://www.mkexim.com/policy/nomination- remunaration-policy.
22 Related party transactions
All transactions entered with related parties for the financial year ended 31st March2020 were on arm's length basis and in the ordinary course of business under third provisoto section 188( 1) of the Act.
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 31 st March 2020 are disclosed in the notes to accounts.
23 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.
24 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 March2020 the applicable accounting standards have been followed and that there were nomaterial departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2020 and ofthe profit of the Company for the year ended on that date;
(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 agoing concern basis
(e) that proper internal financial controls were laid down and that such internalfinancial controls were adequate and were operating effectively; and
(f) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
25 Statutory auditors
The statutory auditors of the Company M/s Rishabh Agrawal & Associates CharteredAccountants (FRN: 018142C) were appointed as auditors of the Company in the AGM held on28.09.2019 for the period of 5 years i.e. till the 32nd AGM held in the year2024.
The Company's office in Mumbai handles the distribution business of cosmetics.Considering the volume of business the Board of Directors at the meeting held on 26thAugust 2020 has decided to designate the Mumbai Office as the Branch Office under section2(14) of the Companies Act 2013. Hence a resolution for appointment of branch auditor isincluded in the agm notice.
26 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.
The Company has already made provisions in the financial statements and would meet thegratuity liability as and when arises. The auditors observation has no impact on thebalance sheet as at 31st March 2020 and the profit and loss account for theperiod ended 31st March 2020. The observation relates to the funding of theprovisions
27 Cost Audit
The company is not required to maintain cost record as specified by the CentralGovernment under section 148(1) of the Companies Act 2013. The provisions of theCompanies (Cost Records and Audit) Rules 2014 are not applicable to the Company'soperations.
28 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 the observations of the Secretarial Auditor in her report we clarifythat (I) On the appointment of statutory auditor it is submitted that the auditors fulfilthe qualifications under section 141 of the Companies Act 2013 and is not disqualifiedunder that section. The Company has taken the certificate of eligibility of the auditorbefore his appointment. We are informed that the Statutory Auditor being eligible is underprocess of peer review by Institute of Chartered Accountants of India.
(ii) The delay in disclosure/intimation under mentioned regulations of LODR wereunintentionally due to unavoidable circumstances/for the reasons beyond control. TheCompany has complied with said regulations. The delays of compliances are ofadministrative in nature and the interests of investors are not prejudicially affected
(iii) Due to COVID pandemic break out in the month of March 2020 and due to completelock-down throughout the country till May 2020 with extended lock-down and miserablecondition in Mumbai Maharashtra the Statutory Auditors could not conduct audit of Mumbaioffice of the company by reaching out there even till end of June 2020. In order toconduct and complete the audit of Mumbai office of the Company the Board of Directors onrecommendation of Audit Committee appointed M/s Mohit Shah and Associates CharteredAccountants (FRN: 125874W) for conducting audit of books of accounts of Mumbai office ofthe Company for the F. Y. 2019-20 being matter of urgency.
(iv) The Mumbai office handles distribution business of cosmetics. Considering thevolume of business the Board of Directors at the meeting held on 26th August 2020 hasdesignated the Mumbai Office as a Branch office under section 2( 14) of the Companies Act2013.
29 Internal control systems and their adequacy
The Company's internal controls are commensurate with its size and the nature of itsoperations. These have been designed to provide reasonable assurance with regard torecording and providing reliable financial and operational information complying withapplicable statutes safeguarding assets from unauthorized use executing transactionswith proper authorization and ensuring compliance with corporate policies. The company hasa well-defined delegation of power with authority limits for approving contracts as wellas expenditure. Processes for formulating and reviewing annual and long term businessplans have been laid down.
M/s Rishabh Agrawal & Associates the statutory auditors of the company have auditedthe financial statements included in this annual report and have issued an attestationreport on our internal control over financial reporting (as defined in section 143 ofCompanies Act 2013).
The internal audit is entrusted to M/s Madhur & Associates Chartered Accountants.The Audit Committee reviews the adequacy and effectiveness of the internal control systemsand suggests improvements wherever required.
30 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.
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
32 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.2877.44 lakhs
Foreign Exchange outgo: NIL
33 Remuneration details
Details of disclosure pursuant to section 197(12) of the Companies Act 2013 read withrule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are given in Annexure-C which forms part of this report.
34 Material changes and commitments occurred in terms of section 134(3)(1) of thecompanies act 2013
No significant changes and commitment occurred between the date of the balance sheetand the date of the report.
35 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.
36 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.
37 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 during F.Y 2019-20 asfollows:-
|S.No ||Name of Members ||Designation |
|1 ||Mr. Laxmikant R Patodia ||Chairman |
|2 ||Mr. Vishesh M Nihalani ||Member |
|3 ||Ms. Priya Makhija ||Member |
|4 ||Mr. Murli Wadhumal Dialani ||Member |
During the year under report the committee met 5 times on 11.04.2019 30.05.201910.08.2019 12.11.2019 and 11.02.2020. The recommendations made by the Audit committeeduring the year were accepted by the Board.
38 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.
39 Independent Directors' Declaration
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 2013 read with Regulations of theListing Regulations that he/she meets the criteria of independence as laid out in Section149(6) of the Companies Act 2013 and Regulations of the Listing Regulations.
40 Change in nature of Business
The Company has diversified its business and has started the Distributorship ofCosmetics (FMCG) products consisting of personal care and personal hygiene products ofinternationally reputed brands pan India during the reporting period.
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 |
| ||Murli Wadhumal Dialani |
|Place: Jaipur ||Chairman |
|Dated: 26th August 2020 ||DIN: 08267828 |