AFFLUENCE

DIRECTORS’ REPORT

INCLUDING MANAGEMENT DISCUSSION & ANALYSIS REPORT

TO THE MEMBERS

KHAITAN (INDIA) LIMITED

 Your Directors present their Seventy ninth Annual Report together with the Audited Accounts for the year ended 31st March, 2016.

 DIVIDEND

In view of loss, Directors do not recommend any dividend for the year.

 MANAGEMENT DISCUSSION & ANALYSIS REPORT

OPERATIONS

Performance of all the Divisions are as under:-

 Marketing Division:

The Company has earned royalty of Rs. 309.94 lacs compared to the last year’s Rs. 407.28 lacs.

 Sugar Division:

The crushing of sugarcane was only 0.75 lacs quintals compared to last year’s 5.92 lacs quintals. The Sugar Mill could start only at fake end of the sugar season and could operate only for 15 days with very low recovery. The reason for the same was the adverse financial health of the Company as the overhauling work could not be taken up. Further due to flood that erupts during May, 2015 had extensively damaged standing Sugarcane crop.

 The Crushing Operations for the season 2015-16 started on 16th March, 2016 which was continued for 15 days compared to the last year’s 71 days. Performance of the Sugar Division compared to last year is as under:-

 Agriculture Division:

It is fact that all agriculture products are wholly dependent on nature. There was heavy rain and the total area was under flood which had damaged the standing Sugarcane Crop extensively. Further due to late running of Sugar Mill, the Sugarcane dried up and supply of Sugarcane from captive farms were less compared to last year. 

 INDUSTRIAL STRUCTURE

As stated last year that the Sugar Industry passed from a very pathetic situation for last   4-5 years. It was sustaining losses consecutively in last 4-5 years which has jeopardized the financial health of the industry. One of the main factors behind the sever losses were very low ex-mill prices. The mills were unable to recover even the cost of production which causes huge losses. Further due to heavy stock of sugar with mills for last 6 years in a row the situation was worsen which increased the outstanding of cane growers. This adverse acute financial position did not permit the overhauling of mills even in spite of best efforts of the management. Due to certain measures taken by Central Government the ex-Mills prices were marginally improved but still it was below the cost of production. This had huge adverse impact on the financial health of the Sugar industry.

 Internal Control Systems: The Company has adequate system of internal control to safeguard company’s assets. All the transactions are properly authorised, recorded and reported to the management. The Company also has adequate budgetary control system and actual performance is monitored by the management consistently.

 Human Resources: The Company believes that its employees are a vital resource in the current business environment. The Company is enjoying good and congenial industrial relations at all the Divisions of the Company. As on 31st March, 2016 the total permanent employees were 40 Nos.

 WHISTLE BLOWER POLICY:

To ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adopting high standards of professionalism, honesty, integrity, the company has adopted a vigil mechanism policy. This policy is explained in corporate Governance and also posted on company’s website.

 DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The company has been addressing various risks impacting the company and the policy of the Company on Risk Management has been established. The Risk Management policy has been uploaded on the website of the company.

 DIRECTORS AND COMMITTEES

In accordance with the provisions of the Companies Act, 2013 Mr. Sunil K. Khaitan (DIN 00127698) and Mrs. Sulekha Dutta (DIN 07114240) retire by rotation and being eligible offer themselves for reappointment.

 BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the listing agreement the Board has carried out annual performance evaluation of its own performance, the directors individually as well as evaluates the working of its Audit, Nomination & Remuneration and Stakeholders Committee. The method of evaluation has carried out been explained in Corporate Governance Report.

REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL (KMP) / EMPLOYEES

The information required pursuant to Section 197 read with Rules of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 in respect of employees of the Company and Directors is furnished here under.

 REMUNERATION POLICY

The Board has on the recommendations of Nomination & Remuneration Committee framed a policy of selection/appointment of Directors, Senior Management, personal and their remunerations. The remuneration policy is stated in Corporate Governance Report.

 MEETINGS

During the year, four (4) Board meetings and one independent directors’ meeting were held. The provisions of the Companies Act, 2013 and of listing agreement were adhered to while considering the time gap between two meetings.

 DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and accessing to the information and explanation obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013.

1.      That in the preparation of the Annual Accounts, the applicable accounting Standards had been followed except AS-22.

2.      That 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 loss of the company for the period.

3.      That the Directors have taken proper and sufficient care for preventing and detecting fraud and other irregularities.

4.      That the annual financial statements have been prepared on a going concern basis.

5.      That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

 RELATED PARTY TRANSACTIONS

There were no contracts or arrangements entered into by the company in accordance with the provisions of Section 188 of the Companies Act, 2013. However, there were no material related party transactions in terms of clause 49 of the listing agreement. All material related party transactions that were entered into during the financial year were on an arm length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the company with promoters, Directors, Key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All related party transaction are placed before the Audit Committee as also the Board for approval.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. Name of the Directors has any pecuniary relationship or transactions vis-à-vis the company.

 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATOR OR COURTS

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.

 DEPOSITS

The Company had not accepted / renewed any deposit during the year under review and there was no outstanding deposits.

 AUDITORS

STATUTORY AUDITORS

M/s O. P. Sharma & Associates, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment.

 SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 the company had appointed M/s N K & Associates (CP No 3725) Company Secretaries to undertake the Secretarial Audit of the company. The Secretarial Audit Report is annexed herewith as ‘Annexure 1’.

 INTERNAL AUDITORS

M/s S. Mandal & Co. (FR No.314188E) Chartered Accountants performs the duties of internal auditors of the company and their report was reviewed by the Audit Committee.

 COST AUDITORS

Your Board has appointed M/s A B & Co. (Reg. No.00256) qualified Cost Accountants to carry out Cost Audit of the Cost Accounts maintained by the Company in respect of Sugar Division. This appointment has to be made within 6 months from beginning of financial year. As such an application has already been forwarded to the Central Government to approve the appointment for the current financial year.

 CHANGE IN DIRECTORS AND KEY MANAGERAL PERSONNEL

During the year Mr. M. K. Jalan resigned from Directorship of the Company. The Board noted its appreciation for his guidance during his tenure as Director.

 Corporate Governance Report

As per Clause 49 of the Listing Agreement annexed to the said report a separate report on Corporate Governance as a part of the Annual Report and the Auditors’ Certificate on compliance is annexed to the said report.

 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGOING

The information on conservations of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m)  of  the Companies Act, 2013 read  with  Rule 8  of   the  companies  ( Accounts )  Rules 2014   is  annexed  herewith as ‘Annexure 2.’

 EXTRACT OF ANNUAL RETURN

The details for forming part of the extract of Annual Return in Form MGT 9 is annexed as Annexure ‘3’.

 PARTICULARS OF EMPLOYEES

The information required pursuant to section 197 read with Rule 5 of the companies (Appointment and Remuneration of Managerial Personals) Rule 2014 in request of employees of the Company is as follows:-

The company has one Executive Director who has been paid Rs. 8.87 lacs and to Company Secretary Rs. 1.42 lacs.

Due to financial constraints no increase was made in salary/wages except increase in VDA as per Agreement with the unions. Rs. 1.40 lac was paid as sitting fees to the Directors.

The particulars of the employees who are covered by the provisions contained in Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personal) Rule 2014 are (a) Employed throughout the year – NIL (b) Employed part of the year – NIL.

The remuneration paid to all key managerial Personnel was in accordance with remuneration policy adopted by the company.

IMPAIRMENT OF ASSETS

Due to financial constraints and to reduce the liability of the Company to some extent your directors have to undertaken impairment of company’s land through sale/long term lease.

 FINANCIAL VIABILITY OF COMPANY

Although the Ex-Mill prices have been increased but still it did not cover even cost of production. Due to unsatisfactory condition of sugar industry for last 4-5 years specially 2014-15 which has jeopardized the financial position of the company and effected the operation of sugar mill. However the company is exploring various avenues for revival of the company.

 Due to measurable financial condition the company could not pay the various dues, i.e. service tax, gratuity wags to the workers etc. and other dues.

 Deferred Tax Assets represent brought forward balance for earlier years which shall be written off in due course.

 The company is taking steps to get the balance confirmation from debtors /creditors, loans deposits etc.

The Company in taking all necessary steps to fulfill the requirement of Environment (Protection) Act, 1986, the Water (Prevention) & control of pollution) Act, 1974 & the Air (Prevention & Control of Pollution) Act, 1981.   

 AcknowledgementS

Well supported from all quarters and therefore your directors wish to place on record their sincere appreciation for the support and co-operation from Employees, supplies, Government of West Bengal, cane growers, depositors and the shareholders.

 For and on behalf of the Board

 Kolkata                                                                                              

The 6th June, 2016                                                             Sunil Krishna Khaitan, Chairman

(DIN 00127698)

FORM NO MGT-9

EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31.03.2016

[Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rule 214

i.  REGISTRATION AND OTHER DETAILS:

ii) PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the company shall be stated :-

iii) PARTICULARS OF HOLDNG, SUBSIDIARY AND ASSOCIATE COMPANIES:-

iv) SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i)                     Category-wise Share Holding

ii)Shareholding of Promoters

iii)Change in Promoters’ Shareholding (Please specify, if there is no change)

IV) Shareholding Pattern of top ten Shareholders

(Other than Directors, Promoters and Holders of GDRs and ADRs)

V) Shareholding of Directors and Key Managerial Personnel

V) INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

VI) REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole Time Directors and/or Manager

B. Remuneration to Managing Director, Whole Time Directors and/or Manager

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD

VII PENALTIES /PUNISHMENT/ COMPOUNDING OF OFFENCES

Your Directors present their Seventy ninth Annual Report together with the Audited Accounts for the year ended 31st March, 2016. FINANCIAL RESULTS2015-20162014-2015 Sales & Operating Income were Profit/Loss for the year was From which is deducted/added Depreciation Income Tax relating to earlier year 912.21 (579.57) (176.05) (0.01)2664.98 (371.60) (177.47) (9.65) Leaving a Balance of To which is added : - Profit/Loss Brought Forward from previous year(755.83) (1410.17)(558.72) (851.45) Making an available Surplus/Deficit of Which is Carried Forward to Next Year (2166.00) (1410.17) DIVIDEND In view of loss, Directors do not recommend any dividend for the year. MANAGEMENT DISCUSSION & ANALYSIS REPORT OPERATIONS Performance of all the Divisions are as under:- Marketing Division: The Company has earned royalty of 309.94 lacs compared to the last year’s Rs. 407.28 lacs. Sugar Division: The crushing of sugarcane was only 0.75 lacs quintals compared to last year’s 5.92 lacs quintals. The Sugar Mill could start only at fake end of the sugar season and could operate only for 15 days with very low recovery. The reason for the same was the adverse financial health of the Company as the overhauling work could not be taken up. Further due to flood that erupts during May, 2015 had extensively damaged standing Sugarcane crop. The Crushing Operations for the season 2015-16 started on 16th March, 2016 which was continued for 15 days compared to the last year’s 71 days. Performance of the Sugar Division compared to last year is as under:- DETAILS2015-20162014-2015 Start of Crushing Season16.03.201612-12-2014 Close of Crushing Season30.03201620-02-2015 Cane Crushed (in lacs Qtls)0.755.93 Recovery (%)6.638.35 Sugar Production (in Qtls)498049504 Agriculture Division: It is fact that all agriculture products are wholly dependent on nature. There was heavy rain and the total area was under flood which had damaged the standing Sugarcane Crop extensively. Further due to late running of Sugar Mill, the Sugarcane dried up and supply of Sugarcane from captive farms were less compared to last year. INDUSTRIAL STRUCTURE As stated last year that the Sugar Industry passed from a very pathetic situation for last 4-5 years. It was sustaining losses consecutively in last 4-5 years which has jeopardized the financial health of the industry. One of the main factors behind the sever losses were very low ex-mill prices. The mills were unable to recover even the cost of production which causes huge losses. Further due to heavy stock of sugar with mills for last 6 years in a row the situation was worsen which increased the outstanding of cane growers. This adverse acute financial position did not permit the overhauling of mills even in spite of best efforts of the management. Due to certain measures taken by Central Government the ex-Mills prices were marginally improved but still it was below the cost of production. This had huge adverse impact on the financial health of the Sugar industry. Internal Control Systems: The Company has adequate system of internal control to safeguard company’s assets. All the transactions are properly authorised, recorded and reported to the management. The Company also has adequate budgetary control system and actual performance is monitored by the management consistently. Human Resources: The Company believes that its employees are a vital resource in the current business environment. The Company is enjoying good and congenial industrial relations at all the Divisions of the Company. As on 31st March, 2016 the total permanent employees were 40 Nos.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGOING The information on conservations of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the companies ( Accounts ) Rules 2014 is annexed herewith as ‘Annexure 2.’

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGOING The information on conservations of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the companies ( Accounts ) Rules 2014 is annexed herewith as ‘Annexure 2.’

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGOING The information on conservations of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the companies ( Accounts ) Rules 2014 is annexed herewith as ‘Annexure 2.’

DIRECTORS’ RESPONSIBILITY STATEMENT To the best of their knowledge and belief and accessing to the information and explanation obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013. 1. That in the preparation of the Annual Accounts, the applicable accounting Standards had been followed except AS-22. 2. That 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 loss of the company for the period. 3. That the Directors have taken proper and sufficient care for preventing and detecting fraud and other irregularities. 4. That the annual financial statements have been prepared on a going concern basis. 5. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.