DIRECTORS' REPORT To The Members of KABSONS INDUSTRIES LIMITED, Your Directors hereby present the 23rd Annual Report and Accounts of the Company for the year ended 31st March, 2015. DISCUSSION ON FINANCIAL PERFORMANCE: During the year under consideration the Company got a profit of Rs.48.16 Lakhs before interest and depreciation as against profit of Rs.33.59 Lakhs during the previous year, which includes lease income and lease income is the major source of revenue to the Company. BUSINESS REVIEW The Company has been focusing on Lease incomes so as to utilize the existing assets. There exists a mismatch of capacity in terms of availability in certain markets and demand in other markets. Consequently, there are very few plants where the servicing operations are viable for the operations of the Company. This situation is not going to change too much in the near future. LIQUEFIED PETROLEUM GAS (LPG) INDUSTRY OVERVIEW Most of the LPG volume is handled by PSU’s for domestic supplies. With such large scale penetration on the part of the PSU’s at a substantially lower than market price, effect the prospects of the private sector, operating in the same segment and recently the PSU’s started limiting the supply of cylinders to 12 numbers in a year to consumers. OUT LOOK: Your Company is concentrating on leasing out the bottling plants wherever opportunities are available. Material changes and commitments if any affecting the financial position of the Company occurred between the end of the financial year to which this Financial Statements relate and the date of the report There have been no material changes and commitments, affecting the financial position of the Company which occurred during between the end of the financial year to which the financial statements relate and the date of this report. Details of significant and material orders passed by the regulators/ courts/ tribunals impacting the going concern status and the Company's operations in future There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations. Share Capital: Authorized Share Capital During the year under review, there was no change in authorized share capital of the Company. Authorized share capital of the company as on March 31, 2015 was Rs.18,00,00,000.00, comprising of 1,80,00,000 equity shares of Rs.10.00 each. Paid-up Share Capital During the year under review, there was no change in paid up share capital of the Company. Paid up share capital of the company as on March 31, 2015 was Rs.17,46,30,000.00, comprising of 1,74,63,000 equity shares of Rs.10 each. Buy Back of Securities The Company has not bought back any of its securities during the year under review. Sweat Equity The Company has not issued any Sweat Equity Shares during the year under review. Bonus Shares The Company has not issued any bonus shares during the year under review. Employees Stock Option The Company has not provided any Stock Option Scheme to the employees. Dividend Your Directors have not recommended any dividend on Equity Shares for the year under review. Transfers to Reserves Your Board of Directors does not appropriate any amount to be transferred to General Reserves during the year under review. Fixed Deposits During the year under review, your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013 read with rules made there under. Particulars of Contracts & Arrangements with Related Parties All transactions entered by the Company with Related Parties were in the Ordinary course of Business and are at Arm's Length pricing basis. The Audit Committee granted approvals for the transactions and the same were reviewed by the Committee and the Board of Directors. There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. The details of contracts and arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 were given as Annexure -1 to the Board's Report in form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014. Related party Transactions: The details of the Related Party Transactions are furnished in Note 25.2 of the Notes on the Financial Statements attached to this Report. All the related party transactions have been on an arm's length basis. Particulars of Loans, Guarantees or Investments During the financial year 2014-15 the Company neither has, directly or indirectly, given any loan to its Directors nor extended any guarantee or provided any security in connection with any loan taken by them. Further, the Company has neither given any inter-corporate loan / advance nor made any investments in other companies. Number of Board Meetings held The Board of Directors duly met 4 times during the financial year from 1st April, 2014 to 31st March, 2015, the details of which are given in the Corporate Governance Report. Directors and Key Managerial Personnel In terms of Section 152 of the Companies Act, 2013, Mr. Rajiv Kabra, Executive Director would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Mr. Rajiv Kabra has offered himself for re-appointment. Mr. P.V Subba Rao (DIN: 02299552), Mr. Y S Sarma (DIN: 06422198) and Smt. Mangal Rathi (DIN: 06966755) were appointed as an independent Directors by the Members at the last Annual General Meeting (AGM) held on September 30, 2014.. Mr. Y S Sarma ceased to be Director on the Board of the Company with effect from 23.06.2015 consequent to his death. The Board of Directors places on record of its appreciation for the valuable services rendered by Mr. Y S Sarma during his tenure as Director. Based on the confirmations received from Directors, none of the Directors are disqualified from appointment under Section 164 of the Companies Act 2013. There was no other appointment or cessation of appointment of key managerial personnel during the financial year. Declaration by Independent Directors The Independent Directors of the Company have submitted their declarations as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as per sub-section (6) of Section 149 of the Act. Familiarization programme for Independent Directors The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. Independent Directors' Meeting The Independent Directors met on 14.02.2015, without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Executive Director and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. Board Evaluation: The Board adopted a formal mechanism for evaluating its performance as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc. Directors Responsibility Statement as required under Section 134(5) of the Companies Act, 2013: Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors states that: (a) In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) They have 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 for that period; (c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) They have prepared the annual accounts on a going concern basis; (e) They have 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) They have 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 In compliance to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Nomination and Remuneration Committee has recommended to the Board a Nomination and Remuneration policy with respect to appointment / nomination and remuneration payable for the Directors, Key Managerial Personnel and senior level employees of the Company. The said policy has been adopted by the Board and the same will form part of the Annual Report as Annexure - II to the Board's Report. Auditors Statutory Auditors At the Annual General Meeting held on September 30, 2014, M/s. Brahmayya & Co, Chartered Accountants (Firm Reg. No: 000513S), were appointed as Statutory Auditors of the Company to hold office for a period of three years i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of M/s. Brahmayya & Co, Chartered Accountants, as statutory auditors of the Company is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Act. The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Qualification by Statutory Auditor Information & Explanation in respect of Qualification / Reservation or Adverse remarks contained in Independent Auditors Report under Paras: Basis for Qualified opinion, Emphasis of Matter and Other Matters: A) In view of very limited strength of employees, presently working with the Company, the requirements of AS-15 Employee Benefits in respect of gratuity could not be complied with. However provision for gratuity as required under Payment of Gratuity Act has been provided for. B) Inspite of continues erosion of networth, position of excess of current liabilities over current assets and uncertainty associated with operations of the company, the Accounts of the Company are prepared on going concern basis. C) Interest for the year Rs. 6,33,691/- on deposits of distributors/dealers has not been provided in view of company's adverse financial position and will be negotiated for waiver resulting to overstatement of profit by that amount and understatement of current liabilities by Rs.90,74,188/- D) The company could not get confirmation of balances in respect of Trade Receivables and Trade Payables other than due from/to related parties as most of them are very old and presently no transactions are being taken place with them. This report form part of the Annual Report. Secretarial Auditors Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. B S S & Associates, Practicing Company Secretaries for conducting Secretarial Audit of the Company for the financial year 2014-2015. The Secretarial Audit Report is annexed herewith as Annexure - III. Qualification by Secretarial Auditor The Secretarial Auditor's Report does not contain any qualifications, reservation or adverse remarks except non compliance of Section 203 of the Companies Act, 2013 in respect of appointment of Company Secretary as Key Managerial Person. The Board has made utmost effort for appointment of the Company Secretary as KMP but has not been able to appoint a Company secretary due to lack of suitability of the candidate to the profile of the Company in terms of Job profile and remuneration. Internal Auditors In pursuance of Section 138 of the Companies Act, 2013 read with rules made there under, the Board has appointed Mr. M Krishna Murthy, CFO of the Company as Internal Auditors of the Company to carry out internal auditing of books of accounts periodically. Internal Control Systems The Company has a well-established system of internal control in operations which complies with the relevant provisions of 'Internal Control' under the Company's Auditor's Report Order 2013 and as prescribed under revised Clause 49 of the Listing Agreement with Stock Exchanges. Internal Audit department put in place and adequate controls are continuously reviewed and risks of inaccurate financial reporting and fraud, if any, are dealt with immediately and eliminated. The status of implementation of recommended solutions are regularly reviewed and presented to the Audit Committee of the Board. Vigil Mechanism / Whistle Blower Policy Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board has adopted Whistle Blower Policy. This policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. The policy also provided adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases. Your Company hereby affirms that during the year no Director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received. Management Discussion and Analysis The Management Discussion and Analysis given below discusses the key issues concerning the business and carried on by the Company. Management of Risks There is considerable pressure to keep up the realization from the services in view of highly competitive market. Audit Committee The Composition of the Audit Committee is provided in the Corporate Governance Report forming part of this report. All the recommendations made by the Audit Committee were accepted by the Board. Risk Management The Risk Management Committee duly constituted by the Board had formulated a Risk Management Policy for dealing with different kinds of risks attributable to the operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk Management procedure will be reviewed periodically by the Audit Committee and the Board. Corporate Social Responsibility (CSR) Initiatives: Section 135 of the Companies Act, 2013 provides the threshold limit for applicability of the CSR to a Company ie. (a) network of the Company to be ' 500 crore or more; or (b) turnover of the company to be ' 1,000 crore or more; or (c) net profit of the company to be ' 5 crore or more. As the Company does not fall under any of the threshold limits given above, the provisions of section 135 are not applicable to the Company. Extract of Annual Return In accordance with the provisions of Section 134(3(a) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is appended as Annexure - IV to the Board's Report. Information on Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and outgo Pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 3 of Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo is appended hereto as Annexure - V and forms part of the Board's Report. Company's Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace The Company prohibits any form of sexual harassment and any such incidence is immediately investigated and appropriate action taken in the matter against the offending employee(s) based on the nature and the seriousness of the offence. The Company has a policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace (the Policy) and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" notified by the Government of India vide Gazette Notification dated 23rd April, 2013. There was no case of sexual harassment reported during the year under review. Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees: The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in separate annexure forming part of this Report as Annexure - VI. A statement containing names of employees employed throughout the financial year and in receipt of remuneration of Rs.60 lacs or more, employees employed for part of the year and in receipt of Rs.5 lac or more per month, pursuant to Rule 5(2) The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as Annexure - VII to this Report. Corporate Governance The Company is committed to good corporate governance in line with the Listing Agreement and Provisions, Rules and Regulations of the Companies Act, 2013. The Company is in compliance with the provisions on corporate governance specified in the Listing Agreement with BSE. A certificate of compliance from Mr. Sompally Srikanth, a practicing Company Secretary and the report on Corporate Governance form part of this Directors' Report as Annexure - VIII. Disclosures as per the Listing Agreement & SEBI Regulations Cash flow statement In due compliance of the listing agreements and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report. Stock exchanges Company's equity shares are originally listed in the Stock exchanges of Mumbai (BSE), and other five stock exchanges at Ahmedabad, New Delhi, Kolkata, Chennai and Hyderabad(Regional Stock Exchange). The Board considered that continued listing on all stock exchanges was not necessary and therefore decided to de-list from Ahmedabad, New Delhi, Kolkata, Chennai and Hyderebad stock exchanges in pursuance of special resolution passed in the 11th Annual General Meeting held on 24th September, 2003. However SEBI had de recognised the Hyderabad Stock exchange, Madras Stock Exchange Limited and The Delhi Stock Exchange Association Limited. There is an outstanding Listing Fee of Rs.92,278/-, Rs.3,15,763/- and Rs.1,46,897/- to Madras Stock Exchange Ltd, Delhi Stock Exchange Association Ltd and The Calcutta Stock Association Ltd respectively and our Company's shares were suspended for trading from 3rd February, 2003 due to non-payment of re-instatement fee and presently in-principle approval is received from BSE Ltd for revocation of suspension of our Company's shares. Share transfer agency The Company has appointed M/s XL Softech Systems Ltd, #3, Sagar Society, Road No.2, Banjarahills, Hyderabad - 500034 as its share transfer agency for handling both physical and electronic transfers. Code of conduct The Company has adopted Code of Conduct for the Board and for the Senior level employees of the Company and they are complying with the said code. A declaration by the Managing Director to this effect is furnished in Annexure - VIII to the Board's Report. Acknowledgments The Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers, Department of Explosives and their Officials, Central Excise, Pollution Contro Boards and Commercial Tax Departments of respective States, host of other State and Central Government Departments, Security Exchange Board of India and Stock Exchanges at Mumbai, Ahmedabad, Chennai, Delhi and Kolkata and others for their continued support to the Company's growth. The Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, for their sincerity, hard work, solidarity and dedicated support to the Company. By Order of the Board For Kabsons Industries Limited Sd/- Rajiv Kabra Place : Hyderabad Date : 13.08.2015 |