DIRECTORS' REPORT TO THE MEMBERS Your Directors have pleasure in presenting their 23rd Annual Report, together with the Audited Annual Financial Statements of the Company for the year ended March 31, 2015 REVIEW OF BUSINESS OPERATIONS During the year, your Company's turnover increased to Rs. 21,709.22 millions as against Rs. 17,534.73 millions in FY 2013-14 showing a strong growth of 23.81%. During the year under review, turnover from Cables stood at Rs. 14,079.82 millions as compared to Rs. 12,718.20 millions in FY 2013-14, showing a growth of 10.71%. Stainless Steel Wire Products contributed a turnover of Rs. 1,133.31 millions as compared to Rs. 1,003.06 millions in FY 2013-14, showing a growth of 12.99%. Winding Wires, Flexible & House Wires contributed a turnover of Rs. 3,365.81 millions as compared to Rs. 2,940.68 millions in FY 2013-14, showing a growth of 14.46% and Income from Turnkey Projects also had a great contribution in the total turnover of the Company showing a strong growth of 341.66 % i.e. from Rs. 675.54 millions in FY 2013-14 to Rs. 2,983.62 millions in FY 201415. During the year under review, Profit before Tax stood at Rs. 528.80 millions as compared to Rs. 218.17 millions in the preceding year and Net Profit stood at Rs. 342.50 millions as compared to Rs. 116.01 millions in the preceding year. SUBSIDIARIESJOINT VENTURES OR ASSOCIATE COMPANIES Your Company doesn't have any subsidiary. However during the year (w.e.f.24.06.2014) , your Company has formed aJoint Venture under the name of Joint Venture of M/s KEI Industries Ltd. New Delhi & M/s Brugg Kabel AG, Switzerland ( JV) for the execution of contract awarded by Delhi Metro Rail Corporation Ltd. (DMRC), in which your Company i.e. KEI is the Lead Partner having 75% participation and Brugg Kabel AG being other partner having 25 % participation. This JV is a Jointly Controlled Entity within the meaning of Accounting Standard - 27 on "Financial Reporting of Interests in Joint Ventures" and covered under Associate Company in accordance with Section 2(6) of the Companies Act, 2013. No share capital is invested in the Joint Venture by the respective members of JV. Further, during the financial year ended 31st March, 2015, M/s. KEI International Limited ceased to become Associate Company of KEI (w.e.f. 20th June, 2014). RESERVES During the year, the Board of Directors of your Company has decided not to transfer any amount to the reserves and decided to retain all the profits under surplus account. DIVIDEND & APPROPRIATIONS: Your Directors are pleased to recommend a dividend of Rs. 0.40/- per equity share (i.e. @ 20%) on the Equity Shares of face value of Rs. 2/- each for the Financial Year ended March 31, 2015, subject to the approval of shareholders at the ensuing Annual General Meeting which would result in appropriation of Rs. 37.18 millions (including Corporate Dividend Tax of Rs. 6.29 millions) out of profits of the Company. The dividend if approved by the members at the forthcoming Annual General Meeting, will be paid to: • Those equity shareholders whose names will appear in the register of members on September 16, 2015 and • In respect of shares held in dematerialized form, to those shareholders whose names will be furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as beneficial owners on cut-off date i.e. September 9, 2015. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred between the end of financial year to which this financial statements relates and the date of this Report. CHANGE IN NATURE OF BUSINESS During the year under review, there was no change in the nature of business of the Company. RATING BY CARE Credit Analysis & Research Ltd (CARE) has upgraded / revised the rating assigned to the Long Term Bank Facilities availed by the Company from 'CARE BBB' (Triple B) to 'CARE BBB+' (Triple B Plus) and also upgraded / revised the rating assigned to the Medium Term Instrument i.e. Fixed Deposits Scheme of the Company from 'CARE BBB (FD)' [Triple B (Fixed Deposit)] to 'CARE BBB+ (FD)' [Triple B Plus (Fixed Deposit)]. This rating is applicable to facilities having tenure of more than one year. Facilities with these ratings are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such facilities carry moderate credit risk. Further, CARE has re-afffirmed the rating 'CARE A3+' (A Three plus) assigned to Commercial Paper (CP) and the Short Term Bank Facilities availed by the Company. This rating is applicable to facilities having tenure up to one year. Facilities with this rating are considered to have moderate degree of safety regarding timely payment of financial obligations. CARE has also re-affirmed its rating "CARE CGR 3" to the Corporate Governance practice of the Company. CARE has upgraded / re-affirmed the rating after taking into account KEI's long track record of operations, improved Financial performance, healthy order-book position, strong dealership network, experience of Promoters and their demonstrated financial support, its established market position in cable industry, its wide variety of products, its diversified and reputed clientele as well as technological tie-up with Brugg Kabel AG, (Switzerland) for Extra High Voltage (EHV) cables. UNPAID / UNCLAIMED DIVIDEND Pursuant to the circular issued by Ministry of Corporate Affairs (MCA) with respect to Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with the Companies) Rules, 2012 vide G.S.R. 342 (E) dated May 10, 2012, your Company has uploaded on its website www.kei-ind.com under Investor Relations Section as well as on the Ministry's website the information regarding Unpaid/ Unclaimed Dividend amount lying with the Company as on 19th September, 2014 (date of last Annual General Meeting). TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) During the year under review, your Company has transferred unclaimed/unpaid dividend in respect of financial year 2006-07 to the Investor Education and Protection Fund (IEPF) established by the Central Government, pursuant to the provisions of Section 205A of the Companies Act, 1956. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) a) Composition i) During the year under review, no change has occurred in the total strength of Board of Directors of the Company. The Company has 7 Directors with an Executive Chairman. Of the 7 Directors, 2 are Executive Directors and 5 are Non-Executive Directors including one Woman Director and 4 Independent Directors. The Composition of the Board is in conformity with Section 149 of the Companies Act, 2013 and clause 49 of the Listing Agreements entered into with the Stock Exchanges. ii) None of the Director on the Board is a director in more than 10 public Companies or a member of more than 10 Committees or a Chairman of more than 5 Committees across all the companies in which he/ she is a Director. Necessary disclosures regarding Committee positions in other Public Limited Companies as on 31st March, 2015 have been made by all the Directors of the Company. iii) None of the Whole-time Key Managerial Personnel (KMP) of the Company holding office in any other Company as a Key Managerial Personnel. Further, none of the Directors/KMP of the Company is disqualified under any of the provisions of Companies Act, 2013 and clause 49 of the Listing Agreement. b) Change in Director(s) and Key Managerial Personnel a. As per Section 152 of the Companies Act, 2013 and other applicable provisions of the Act, Mr. Rajeev Gupta (holding DIN:00128865), Director of the Company, who retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Further, based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company in its Meeting held on 28th May, 2015 has re-appointed Mr. Rajeev Gupta (holding DIN: 00128865) as Whole-time- Director of the Company (designated as Executive Director (Finance) & CFO) for a further term of 5 (Five) years w.e.f. 1st June, 2015 to 31st May, 2020 in accordance with the provisions of Section 196 and197 of the Companies Act, 2013 read Schedule V and rules made thereunder and other applicable provisions of the Companies Act, 2013, if any. His re-appointment requires the approval of the shareholders at the ensuing Annual General Meeting. b. During the year, Mr. Anil Gupta, Chairman-cum-Managing Director, Mr. Kishore Kunal, Company Secretary and Mr. Rajeev Gupta, Executive Director (Finance) and CFO of the Company were designated as Key Managerial Personnel of the Company in accordance with the provisions of Section 203 of the Companies Act, 2013 and rules made thereunder. The details of Director being recommended for re-appointment as required in clause 49 of the Listing Agreement is contained in the accompanying Notice convening ensuing Annual General Meeting of the Company. Appropriate Resolution(s) seeking shareholders' approval are also included in the Notice. c) Declaration by Independent Directors All the Independent Directors of the Company have given their declaration for the FY 2014-15 that they continue to meet all the criteria as specified under Section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement in respect of their position as an "Independent Director" in the Company. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors of the Company duly met 6 (Six) times during the financial year from 1st April, 2014 to 31st March, 2015 on 15th May, 2014, 08th August, 2014, 06th November, 2014, 24th November, 2014, 22nd December, 2014 and 10th February, 2015. Further, during the year, a separate meeting of the Independent Directors of the Company was also held on 10th February, 2015 to discuss and review the performance of all other non- Independent Directors, Chairperson of the Company and the Board as a whole and for reviewing and assessing the matters as prescribed under Schedule IV of Companies Act, 2013 and clause 49 of the Listing Agreement. CHANGE IN CAPITAL STRUCTURE During the financial year under review, the paid-up share capital of the Company has increased from 73,737,438 equity shares of face value of Rs. 2/- each to 77,237,438 equity shares of face value of Rs. 2/- each, pursuant to allotment of 35,00,000 (Thirty Five Lakhs) equity shares of face value of Rs. 2/- each to promoters' group entity upon conversion of Share Warrants, in the Share Capital of the Company and the same has been listed with NSE, BSE and CSE. FORMAL ANNUAL EVALUATION As the ultimate responsibility for sound governance and prudential management of a Company lies with its Board, it is imperative that the Board remains continually proactive and effective. An important way to achieve this is through an objective stock taking by the Board of its own performance. The Companies Act, 2013 not only mandates Board and Directors evaluation, but also requires the evaluation to be formal, regularised and transparent. SEBI has also revised the Equity Listing Agreement, to bring the requirements on this subject in line with the Act. In accordance with the provisions of Companies Act, 2013 and clause 49 of the Listing Agreement and on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on 28th May, 2015 undertook an annual evaluation of its own performance, its Committees and all the individual Directors. Directors were evaluated on aspects such as attendance, contribution at Board/Committee meetings and guidance/ support to the management outside Board/Committee meetings. The Committees of the Board were assessed on the degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings. The performance evaluation of the Independent Directors was carried out by the whole Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board, its Committees and the Directors. It was further acknowledged that every individual Member and Committee of the Board contribute its best in the overall growth of the organisation. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134 (3)(c) of the Companies Act, 2013 in respect of Directors' Responsibility Statement, the Directors to the best of their knowledge hereby state and 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; (e) the directors had laid down internal financial controls to be followed by the company and 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. NOMINATION AND REMUNERATION POLICY Pursuant to Section 178 of the Companies Act, 2013, on recommendation of the Nomination & Remuneration Committee, the Board of Directors of the Company at its meeting held on 08th August, 2014 had approved the policy on selection and appointment of Directors, Senior Management and other employees of the Company and their remuneration, positive attributes, Directors' qualifications, Independence of Directors and other related matters. The detailed Nomination & Remuneration Policy is annexed as Annexure A and forms part of this Report and is also available on the website of the Company at www.kei-ind.com under Investor Relations Section. EXTRACT OF ANNUAL RETURN Pursuant to Section 134(3)(a) of the Companies Act, 2013 the extract of the Annual Return in Form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed herewith as Annexure B and forms part of this Report. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY The Company has well defined Enterprise-wide Risk Management (ERM) framework in place for identifying risks and opportunities that may have a bearing on the organization's objectives, assessing them in terms of likelihood and magnitude of impact and determining a response strategy. The primary objective of ERM function is to implement a framework that augments risk response decisions and reduce surprises. ERM programme involves risk identification, assessment and risk mitigation planning for strategic, operational, financial and compliance related risks across various levels of the organization. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested by Statutory as well as Internal Auditors and cover all offices, factories and key business areas. Significant audit observations and follow up actions thereon are reported to the Audit Committee. FIXED DEPOSITS During the year, your Company repaid all the outstanding fixed deposits aggregating to Rs. 42.48 millions as per the provisions of the Companies Act, 2013 and obtained fresh approval from the shareholders at the 22nd Annual General Meeting of the Company held on 19th September, 2014 in accordance with Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and other applicable provisions, if any making the Company eligible to invite/accept/renew/receive money by way of unsecured or secured deposit, or in any other form, from public and/or members of the Company. As on 31st March, 2015 fixed deposit aggregating to Rs. 4.70 millions are outstanding. There are no fixed deposits remaining unpaid or unclaimed as at the end of the year. LISTING OF SHARES The shares of the Company are listed at National Stock Exchange of India Limited (NSE), BSE Limited (BSE) and The Calcutta Stock Exchange Limited (CSE). The Company has also paid its up-to-date listing fees to all the stock exchanges. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE During the year, there was no significant and material order passed by any Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status and future operations of the Company. ADEQUACY OF INTERNAL FINANCIAL CONTROL In the opinion of the Board, your Company has in place an adequate system of internal control commensurate with its size and nature of business. This system provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies. The Board has appointed M/S Pawan Shubham & Co., Chartered Accountants as Internal Auditors of the Company and its audit reports are submitted directly to Audit Committee of Board which reviews and approves performance of internal audit function and ensures the necessary checks and balances that may need to be built into the control system. HUMAN RESOURCES Company's industrial relations continued to be harmonious during the period under review. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES During the financial year, the Company has not entered into any materially significant related party contracts/ arrangements or transactions with the Company's promoters, Directors, management or their relatives, which could have had a potential conflict with the interests of the Company. All the contracts/arrangements or transactions entered into by the Company with Related party(ies) are in conformity with the provisions of Companies Act, 2013, clause 49 of the Listing Agreement and on an arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013 and clause 49 of Listing Agreement. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) ofthe Companies Act, 2013 in Form AOC 2 is not applicable. The Company presents a statement of all related party contracts / arrangements or transactions entered into by the Company before the Audit Committee for its consideration and review on quarterly basis. Further, the Policy on materiality of Related Party Transactions as formed and approved by the Audit Committee and the Board of Directors as per clause 49 of the Listing Agreement is available on the website of the Company at www.kei-ind.com under Investor Relations Section. POLICY ON MATERIAL SUBSIDIARY In line with the requirements of clause 49 of Listing Agreement, the Company has formulated a Policy for determining 'material subsidiaries' which is available on the website of the Company at www.kei-ind.com under Investor Relations Section. AUDIT COMMITTEE Pursuant to the provisions of Section 177 of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of the Board and its Powers) Rules, 2014 and clause 49 of the Listing Agreement, the composition of the Audit Committee is as under: Mr. Kishore Kunal, Company Secretary & Compliance Officer of the Company acts as Secretary to the Committee. Further, the Board has not denied any recommendation of Audit Committee during the Financial Year. VIGIL MECHANISM/ WHISTLE BLOWER POLICY In terms of the provisions of Section 177(9) & (10) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of the Board and its Powers) Rules, 2014 and as per clause 49 of the Listing Agreement, the Company has established a Vigil Mechanism/ Whistle Blower Mechanism and overseas through the Audit Committee, the genuine concerns expressed by the employees and Directors of the Company. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co-employees and the Company. During the year under review, no personnel has been denied access to the Audit Committee. Further, the Vigil Mechanism/ Whistle Blower Policy have been uploaded on the website of the Company at www.kei-ind.com under Investor Relations Section. SHARES a. BUY BACK OF SECURITIES During the year under review, the Company has not bought back any of its securities. b. SWEAT EQUITY During the year under review, the Company has not issued any Sweat Equity Shares. c. BONUS SHARES During the year under review, no Bonus Shares were issued by the Company. d. EMPLOYEES STOCK OPTION PLAN During the year under review, the Company has not issued shares / provided any Employee Stock Option to the employees. AUDITORS a) Statutory Auditors: M/s. Jagdish Chand & Co., Chartered Accountants (Firm Registration Number: 000129N), auditors of the Company will retire at the conclusion of the ensuing AGM of the Company and are recommended for re-appointment based on consent and certificate furnished by them under Section 139, 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. Statutory Auditors' Report The observations/comments of Statutory Auditors in their Report are self explanatory and therefore do not call for any further clarification / comment. b) Cost Auditor: Your Board of Directors has re-appointed M/s. Chander & Associates, Cost Accountants (Membership No.: M/9455) as Cost Auditor of the Company to conduct audit of Cost Records maintained by the Company for the financial year 2015-16 in accordance with Section 148 and the Companies (Cost Records and Audit) Rules, 2014 after obtaining his consent and certificate under Section 139, 141 and 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. Further, the Cost Audit Report for the FY 2013-14 was filed on October 17, 2014 (before due date). c) Secretarial Auditors The Board of Directors has re-appointed Mr. Baldev Singh Kashtwal, Practicing Company Secretary (Membership No. FCS-3616 & CP No. 3169), Partner, M/s. RSM & Co., Company Secretaries as Secretarial Auditors of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding rules made there under for conducting Secretarial Audit of the Company for the financial year 2015-16. Secretarial Audit Report The Secretarial Audit Report for the FY 2014-15 as submitted by Secretarial Auditors in Form MR-3 is annexed to this Report as Annexure - C. There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report. CORPORATE SOCIAL RESPONSIBILITY Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has adopted the CSR Policy as approved by the Corporate Social Responsibility Committee and the same is available on the website of the Company at www.kei-ind.com under Investor Relations Section. The Annual Report on Company's CSR activities of the Company as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure-D and forms part of this report. LOAN(S), GUARANTEE(S) OR INVESTMENT(S) During the year, your Company has duly complied with the provisions of Section 186 of the Companies Act, 2013 and no loan was granted by the Company under Section 186 of the Companies Act, 2013. The particulars of Corporate Guarantees provided and investment made by the Company during the year are as follows: PREVENTION OF SEXUAL HARASSMENT Your Company has always believed in providing a safe and harassment free workplace for every individual working in the Company. Your Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. In accordance with "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" and in order to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, your Company has constituted an Internal Complaint Committee and adopted a policy on Prevention of Sexual Harassment at Workplace. The policy aims to provide the effective enforcement of basic human right of gender equality and guarantee against sexual harassment and abuse. During the year, there was no complaint lodged with the Internal Complaint Committee, formed under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". REMUNERATION OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) /EMPLOYEES The information required under Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure E and forms part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and Outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure F and forms part of this Report. CORPORATE GOVERNANCE Your Directors are pleased to report that your Company strives to ensure that best corporate governance practices are identified, adopted and consistently followed. Your Company believes that good governance is the basis for sustainable growth of the business and for enhancement of stakeholder's value. Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate Section titled Report on Corporate Governance has been included in this Annual Report and the certificate of M/s Jagdish Chand & Co., Chartered Accountants, the statutory auditors of the Company certifying compliance with the conditions of corporate governance as stipulated in clause 49 of the Listing Agreement with stock exchanges is obtained and annexed with the report on corporate governance. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section and forms part of this Annual Report. APPRECIATIONS Your Directors place on record their sincere appreciation for significant contribution made by employees of the Company at each level, through their dedication, hard work and commitment. The Board places on record its appreciation for the continued co-operation and support extended to the Company by various Banks, Stock Exchanges, NSDL and CDSL. The Board wishes to express its grateful appreciation for the assistance and co-operation received from Vendors, Customers Consultants, Banks, Financial Institutions, Central and State Government bodies, Dealers, and other Business Associates. The Board deeply acknowledges the trust and confidence placed by the consumers of the Company and, above all, the shareholders. FOR AND ON BEHALF OF THE BOARD (ANIL GUPTA ) Chairman-cum-Managing Director DIN: 00006422 Place: New Delhi Date : August 6, 2015 |