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DIRECTOR'S REPORT

Kkalpana lndustries (India) Ltd.

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Market Cap. (₹) 154.75 Cr. P/BV 0.49 Book Value (₹) 33.77
52 Week High/Low (₹) 36/13 FV/ML 2/1 P/E(X) 5.95
Bookclosure 27/09/2019 EPS (₹) 2.77 Div Yield (%) 1.46
Year End :2018-03 

Dear Members,

On behalf of the Board of Directors, it is our pleasure to present the 33rd Annual Report on the affairs of the Company together with the Audited Statement of Accounts for the year ended March 31, 2018.

Summarized Financial Results

( Rs. In Lacs)

Standalone

Consolidated

2017-18

2016-2017

2017-18

2016-17

Net Turnover and other Income

177593.69

214789.61

176740.2

214789.99

Profit before Depreciation, Interest & Tax

10943.41

10444.27

10780.36

10422.47

Less : Depreciation

1725.66

1313.95

1732.91

1314.79

Interest

5767.92

5398.4

5767.94

5398.50

Profit before Tax

3449.83

3731.92

3279.51

3709.18

Less: Exceptional Item

Less : Provision for Tax

1252.59

1104.09

1252.59

1104.02

Profit After Tax

2197.24

2627.83

2026.91

2605.16

Add: Profit brought forward from previous year.

15947.02

13319.20

15978.32

13372.81

Less: Impact of depreciation as per schedule II of Companies Act, 2013

0

0

0

0

Amount Available for Appropriation

18144.27

15947.03

18022.70

15978.32

Appropriation

Proposed final dividend on Equity Shares

0

0

0

0

Corporate Dividend Tax

0

0

0

0

Transfer to General Reserve

0

0

0

0

Surplus carried to Balance Sheet

18144.27

15947.03

18022.70

15978.32

Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated 16th February, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. IndAS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014. For your Company, Ind AS became applicable from 1st April, 2017 and the financials for Financial Year 2017-18 have been prepared accordingly.

Goods and Service Tax

Changes across IT systems, supply chain and operations have been made keeping in mind the sweeping changes that GST brought in. The Government had announced to go live on GST w.e.f. 01st July, 2017 and your company has adequately adapted to this transformative reform.

Industrial Scenario

The countries GDP growth for the year ended 31st March, 2018 has been 6.60% with 7.3% growth projected for the Financial Year 2018-19. India will be reversing 2 year declining GDP growth

The benefit of reforms such as recently implemented GST and Government’s endeavor to ease bureaucratic control will propel India’s future growth. Your company is confident of getting new customers because of high quality of your company’s output against the competitors.

Further, robust foreign exchange inflow attracted by liberalized regulation and the Government’s efforts to improve the ease of doing business will further bolster the Indian economy.

Operations and State of Company’s Affairs

During the year under review, your Company achieved total revenue of Rs. 1775.94 Crores as against total revenue of Rs. 2147.90 Crores in the previous financial year. The Profit after Tax is Rs. 21.97 Crores as against Rs. 26.28 Crores in the previous year.

Future Prospects

Your company is making continuous endeavor to enter into new areas of global markets. The high standard of research and development will ensure cost reduction and cost control which primarily affects the bottom line of any company.

Dividend

Your directors have pleasure in recommending payment of dividend @ 12% (Rs. 0.24p per equity share of face value Rs. 2/- each) to the equity shareholders of the Company for the Financial Year ended 31st March, 2018. The total outgo (excluding taxes as applicable) will be Rs. 225.78 lacs.

Transfer of Amount to Investor Education and Protection Fund

Dividend for the financial year ended 31st March, 2011, which remains unpaid or unclaimed for a period of seven years, will be due for transfer to Investor Education and Protection Fund (IEPF) on 18th December, 2018. Members who have not yet enchased their dividend warrants for the financial year ended 31st March, 2011 or any subsequent financial years, are requested to lodge their claims without any delay.

Pursuant to the provisions of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e.23.09.2017), with the Ministry of Corporate Affairs.

Share Capital

There is no change in the Share Capital of the Company. As on 31st March, 2018, the paid up equity share capital of the company stood at Rs. 1881.46 lacs divided into 94072930 equity shares of face value Rs. 2/- each.

Fixed Deposits

Your Company has not accepted any deposits from public and /or shareholders during the year under review, within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and accordingly as of 31st March, 2018, there were no unpaid fixed deposits with the Company.

Transfer to General Reserve

The Company proposes not to transfer any funds out of its total profit of Rs. 21.79 Crore for the financial year to the General Reserve.

Research and Development

Your Company recognizes that Research & Development plays a critical role in supporting current operations as well as future growth. Your Company has focused its attention on development of Products that have wide industrial applications, particularly in cable, piping, packaging and footwear industries.

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Rajesh Kothari (DIN -02168932), Whole Time Director of the Company, retires by rotation at the forthcoming Annual General Meeting and being eligible, has offered himself for re-appointment.

Further, the Board, on recommendation of Nomination & Remuneration Committee, at its meeting held on 30th May, 2018, approved the reappointment of Dr. Pranab Ranjan Mukherjee as Whole Time Director for a period of one year w.e.f 01st October, 2018 , subject to the approval of the members. Accordingly, approval of the members is sought for reappointments of Dr. Pranab Ranjan Mukherjee at the forthcoming AGM.

Further, Mr. Samir Kumar Dutta (DIN: 07824452) was also appointed as the Non Executive Independent Director of the Company, w.e.f. 21st June, 2017, by the members of the Company, at the Annual General Meeting of the Company held on 23rd September, 2017. He will attain the age of 75 years in December, 2018. As per Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, members of the company are required to pass special resolution to enable the concerned Non Executive Director to continue in office. The Board of Directors of your company have sought approval from members as maybe observed from Item No. 7 of the Notice convening this Annual General Meeting.

Further, the Board, on recommendation of Nomination & Remuneration Committee, at its meeting held on 30th May, 2018, designated Mr. Narrindra Suranna (DIN: 00060127), Chairman and Managing Director of the Company as also the CEO of the Company.

Ms. Tanvi Panday (ACS-31176) was also appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 01st June, 2017 pursuant to resignation of Mr. A.B. Chakrabarty (FCS-7184) from the said post.

None of the Independent Directors are due for reappointment.

Committees of the Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders’ Relationship Committee

4. Corporate Social Responsibility Committee

The details of the Committees along with their composition, number of meetings and attendance at the meeting are provided in the Corporate Governance Report.

Declaration by Independent Directors

The Company has received necessary declarations from each independent Director of the Company, pursuant to provisions of Section 149(7), confirming that they meet the criteria of Independence as prescribed both under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Familiarization Programme for Independent Directors

The Company had organized a familiarization programme for the Independent Directors as per the requirement of the Companies Act, 2013 and Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All independent directors inducted into the Board attended the orientation programme. The Company has familiarized the Independent Director with the company, their roles, rights, responsibilities in the company, nature of the Industry in which the company operates and business model of the company through various programmes. Further, at the time of the appointment of an Independent Director, the company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities. The format of the letter of appointment is available under the head draft letter of appointment on our website (www.kkalpanagroup.com/investor-relations.php)

Policy on Director’s appointment and remuneration

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As of 31st March, 2018, the Board had 6 members, 3 of whom were executive and 3 were independent directors.

The Company’s Policy for selection and appointment of Directors and their remuneration is based on its Nomination and Remuneration policy which, inter alia, deals with the manner of selection of the Directors and such other matters as provided under section 178(3) of the Act and 19(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The policy of the Company on directors’ appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under section 178(3) of Companies Act, 2013 is available on our website under the head Policy at www. kkalpanagroup.com/investor-relations.php.

There has been no change in the policy since last fiscal. We affirm that the remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

Board meetings

The Board met Six times during the financial year under review, the details of which are given in the Corporate Governance Report which is annexed and forms a part of this report. The intervening gap between two consecutive Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Directors’ Responsibility Statement

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively ; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors & Audit

The Statutory Auditors of the Company, M/s. B.Mukherjee & Co, Chartered Accountants, Kolkata (Firm Registration No.302096E), were appointed as Statutory Auditors of the Company, at the Annual General Meeting of the Company held on 23rd September, 2017, for a period of 5 consecutive years, subject to ratification by members of the Company at every subsequent Annual General Meeting. However, as per the recent amendment of Section 139 of the Companies Act, 2013, which have been made effective from 07th May, 2018, ratification of the appointment of the auditor is no longer required. Hence the same is not proposed at the ensuing Annual General Meeting.

Further, the Auditors have confirmed that they have undergone the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the ‘Peer Review Board’ of ICAI. The Auditors’ Report on the accounts for the year ended 31st March, 2018 does not contain any qualification, adverse remark or observation.

Internal Auditors

The Board of Directors of your Company has re-appointed M/s. DKD & Associates, Chartered Accountants, Kolkata (Firm Registration No.322657E) as Internal Auditors pursuant to the provisions of Section 138 of the Companies Act, 2013 for the financial year 2018-2019.

Cost Auditors

Pursuant to section 148 of the Companies Act, 2013 and subject to notification of rules thereunder, the board of directors, on the recommendation of the audit committee, has appointed M/s. D. Sabyasachi & Co. (Membership N0. 00369), Cost Accountants, Kolkata, as the Cost Auditors of the Company for the financial year 2018-19. M/s. D. Sabyasachi & Co. have confirmed that their appointment is within the prescribed limits and they are free from any disqualifications as provided in section 141 of the Companies Act, 2013.

Secretarial Audit

The Board had appointed Mr. Ashok Kumar Daga (Membership No.-FCS- 2699, C.O.P No. 2948), Practicing Company Secretary, to conduct Secretarial Audit for the Financial Year 2017-18. The report of the Secretarial Auditors for the Financial Year 2017-18 in Form MR-3 is annexed herewith as Annexure 1 to this report. The report is self-explanatory and does not call for any further comments.

Policies

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All applicable policies are available under the head Policy on the Company’s website:www.kkkalpanagroup.com/investor-relations.php. The policies are reviewed periodically by the Board and updated based on need and new compliance requirement.

Corporate Social Responsibility (CSR)

The Company has a Corporate Social Responsibility Committee, constitution of which is detailed in the Corporate Governance Report forming part of this Report. In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy which is available under the head policy at: http://www.kkalpanagroup.com/investor-relations.php. The Annual Report on CSR expenditures for the FY 2017-18 is annexed herewith and forms part of this report and marked as Annexure - 2.

Related party transactions

Your Company has formulated Policy on Related Party Transaction (RPT) which is available on Company’s website www.kkalpanagroup.com. There were no transactions that required disclosure under section 134(3)(h) of the Act, in Form AOC-2, and hence your company has not provided any details of such related party transactions. Further, there are no material related party transactions during the year under review with the Promoters, Directors or any Key managerial Personnel which may have a potential conflict of interest with the Company at large.

Subsidiaries/ Joint Ventures / Associate Companies

M/s. Plastic Processors & Exporter Private Limited had become a Subsidiary of the Company during the financial year 2016-17 and M/s Kkalpana Plastick Limited is the Associate company of your company. The financial position of these two companies is given in Form AOC- 1 and forms part of the report as ‘Annexure - 3’.

Your company holds 90% of equity in the paid up capital of M/s Plastic Processors and Exporter Private Limited and holds 36.23% of equity in the paid up capital of M/s Kkalpana Plastick Limited.

Performance of Subsidiaries, Associates and Joint Venture Companies and their contribution to the overall performance of the Company during the period

Name of the Entity

Share in Profit and Loss

Particulars

PAT (Rs. In lacs)

As a % age of Profit or Loss

Amount (Rs. In Lacs)

Kkalpana Plastick Limited- Associate Company

11.95

36.23%

4.33

Plastic Processors and Exporter Pvt Ltd - Subsidiary Company

(423.98)

90.00%

(381.58)

Change in nature of Business, if any

There has been no change in the nature of business of the Company. Your Company continues to be one of the leading manufacturers of Polymer compound in the Country.

Material changes and commitments affecting the financial position of the Company

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of the report. Particulars of Loans, Guarantees and Investments

The Company has not given loans, guarantees or made investments exceeding sixty per cent of the aggregate of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more, as prescribed in Section 186 of the Companies Act, 2013.

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the financial statement (please refer to Note 8 and 9 to the financial statement).

Risk Management Policy

In terms of requirement of the Companies Act, 2013, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically.

Significant and material orders passed by the regulators

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the company’s operations:

Disclosure as per Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has in place Internal Complaints Committee (ICC) which has been setup to redress complaints regarding Sexual Harassment. The following is the summary of Sexual Harassment complaints received and disposed off during the year under review:

No. of Complaints at the beginning of the Financial Year (i.e. 01.04.2017) - Nil

No. of Complaints received during the Financial Year (i.e. 2017-18) - Nil

No. of Complaints disposed off during the Financial Year (i.e. 2017-18) - Nil

No. of pending at the end of the Financial Year (i.e. 31.03.2018) - Nil

All employees (permanent, contractual, temporary & trainees) are covered under the captioned Act. Your directors are proud to state that working atmosphere of your company is very healthy for male and female employees/ workers.

Board Evaluation

The Company has devised a policy for performance evaluation of Independent Directors and the Board, which includes criteria for performance evaluation of the non-executive and executive Directors.

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the formal annual evaluation was carried out for the Board’s own performance, its committees & Individual Directors.

A structured performance evaluation form was prepared after taking into consideration inputs received from the Directors and on the basis of the evaluation criteria laid down by Nomination and Remuneration Committee, covering various aspects of the Board’s functioning including adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out for the evaluation of individual Directors (both Executive and Non -executive/ Independent Directors), Board Committees and the Chairman. The Directors evaluation was broadly based on parameters such as, meeting the expectation of stakeholders, guidance and review of corporate strategy, risks, participation and attendance at Board / Committee meetings, interpersonal skills. The performance evaluation of the Chairman of the Company was undertaken by the Independent Directors taking into account the views of Executive Directors and Non -Executive Directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company’s management and the Board. The directors expressed overall satisfaction on the evaluation process. Based on the feedback of the Board Evaluation Process, appropriate measures were taken to further improve the process and other aspects.

Particulars of Employees

None of the employees, employed during the year, was in receipt of remuneration, in aggregate of Rupees 1,02,00,000 or more per annum for the financial year 2017-18, or Rs. 8,50,000 or more per month for any part of the Financial Year, as set out in the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Therefore, no such details have been provided as required under section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of managerial Personnel) Rules, 2014.

The ratio of remuneration of each Director to the median employee’s remuneration and other details in accordance with sub-section 12 of Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this report and is marked as ‘Annexure 4’

Extract of Annual Return

Pursuant to the provisions of section 92(3) and 134(3)(a) of the Companies Act, 2013 (‘the Act’) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is annexed and is marked as ‘Annexure 5’.

Vigil mechanism

Pursuant to the requirement of the Section 177(9) of the Companies Act, 2013, the Company has established vigil mechanism which also incorporates a whistle blower policy in terms of the SEBI Listing Regulations. Protected disclosures can be made by a whistle blower through an e mail or phone or letter to the chairman of Audit Committee.

Internal financial controls

The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of your Company.

Green Initiatives in Corporate Governance

Ministry of Corporate Affairs has permitted companies to send electronic copies of Annual Report, notices, etc. to the registered E-mail addresses of shareholders. Your Company has accordingly arranged to send the electronic copies of these documents to shareholders whose email addresses are registered with the Company/ Depository Participant(s), wherever applicable. In case any shareholder would like to receive physical copies of these documents, the same shall be forwarded upon receipt of written request from the shareholder. For members who have not registered their e-mail addresses, physical copies are sent in permitted mode.

Human Resources and Industrial Relations

The Industrial relations of the Company with its personnel has continued to be cordial and amicable. Your Directors acknowledge and appreciate the efforts and dedication of employees to the Company. Your directors wish to place on record the co-operation received from the Staff and Workers, at all levels and at all units.

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo.

Your Company has directed its efforts to reduce energy costs by focusing on energy savings through the best optimization of operations on day to day basis. The Company has used fuels in appropriate mix to attain maximum savings.

As required under Companies (Accounts) Rules, 2014, the particulars of energy conservation, Technology Absorption and Foreign Exchange Earnings and outgo is given in the prescribed format as an Annexure to the Report and marked as Annexure ‘6’.

Management’s Discussion and Analysis Report

In accordance with Regulation 34 (e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 , the Management’s Discussion and Analysis Report for the year under review, is presented in a separate section forming part of the Annual Report and marked as Annexure ‘7’.

Corporate Governance

The Company is committed to good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2018, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report. The requisite Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance is annexed to this Report and marked as Annexure ‘8’

Compliance with applicable Secretarial Standards

Your company has complied with the applicable provisions of Secretarial Standard-1, Secretarial Standard-2 and Secretarial Standard-3 issued by the Institute of Company Secretaries of India.

Acknowledgement

Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company.

Your Directors also wish to place on record their appreciation to all of the Company’s employees and workers at all level for their enormous personal efforts as well as their collective contribution to the Company’s performance.

For and on behalf of the Board of Directors

Narrindra Suranna

(DIN:00060127)

Chairman & Managing Director

Place: Kolkata

Date: 30.05.2018

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