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Kiri Industries

BSE: 532967|NSE: KIRIINDUS|ISIN: INE415I01015|SECTOR: Dyes & Pigments
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Directors Report Year End : Mar '18    Mar 17

Director''s Report

To,

The Members

Kiri Industries Limited

Your Directors have pleasure in presenting their 20th Annual Report together with Audited Accounts of the Company for the financial year ended on March 31, 2018.

- Standalone Performance:

The highlights of Company''s financial performance, for the year ended March 31, 2018 are as under:

(Rs. In Crore)

Particulars

2017-18

2016-17

Total Revenue

904.59

1035.52

Earning Before Finance Cost, Depreciation and Tax

133.41

129.57

Less: Finance Cost

1.65

8.03

Depreciation

25.05

22.18

Earning before taxation

106.71

99.36

Less: Current Tax

22.77

--

Deferred Tax

4.17

5.14

Add: Other Comprehensive Income

0.69

(0.65)

Add: Adjustment of excess tax provision

(22.77)

--

Earnings After Tax

102.60

94.15

- Highlights of Operations

? Total Revenue:

During the year under review, the revenues of the Company decreased by 13.00%. The Company has reported turnover of Rs. 904.59 Crore for the financial year 2018 as compared to Rs. 1035.52 Crore financial year 2017. The major reason for reduction in the revenues has been due to unavoidable shut down of certain plant(s) for certain modifications for enduring product mix and repairs and maintenance required to manufacture certain other products.

- Earning before Interest, Depreciation and Tax (EBIDTA):

During the year under review, Earning(s) before Interest, Depreciation and Tax has increased by 3% from Rs.129.57 Crore to Rs.133.41 Crore. The increase in EBIDTA is mainly on account of increase in gross margins which have increased by around 6% as compared to previous year.

- Total Expense:

During the financial year 2018, the company has achieved a reduction in total expense of around 15%, a reduction of Rs.138.28 Crore from Rs.936.16 Crore to Rs.797.88 Crore as compared to previous financial year. Finance cost reduced by 80% from Rs.8.03 Crore to Rs.1.65 Crore, on account of reduction of debts of the Company.

- Earnings After Tax:

During the financial year 2018, earning after tax (EAT) has increased by around 9%. Earning after Tax (EAT) is increased to Rs.102.60 Crore as compared to Rs. 94.15 Crore of the previous financial year ended March 31, 2017. Improvement in gross margins by around 6% and reduction in finance cost are the two major factors for increase in EAT of the Company.

- Highlights of Consolidated Performance

The highlights of Company''s consolidated financial performance, for the year ended March 31, 2018 are as under:

(Rs. In Crore)

Particulars

2017-18

2016-17

Total Revenue

1136.76

1200.73

Earning Before Finance Cost, Depreciation and Tax

182.52

161.43

Less: Finance Cost

3.48

9.11

Depreciation

34.07

29.10

Earning Before Taxation

144.97

123.20

Less: Current Tax

37.62

8.36

Deferred Tax

3.45

4.49

Add: Adjustment of excess tax provision

(22.77)

0.84

Earnings After Tax

126.67

109.51

Add: Other Comprehensive Income

0.72

(0.19)

Add: Share of Profit from Associate

231.35

156.11

Earnings After Tax for the year

358.09

265.60

- Highlights of Operations

- Total Revenue:

During the year under review, the total revenue reduced by 5% to Rs.1136.76 Crore from Rs.1200.73 Crore as compared to the previous financial year ended March 31, 2017. The consolidated revenues have decreased mainly on account of reduction in prices of key dyes intermediates and due to unavoidable shut down of certain plant(s) for certain modifications for enduring product mix and repairs and maintenance required to manufacture certain other products.

- Earnings before Interest, Depreciation and Tax (EBIDTA):

During the year under review, improvement in gross margins and control over operational costs as compared to previous year have enhanced Earnings before Interest, Depreciation and Tax by 13% to Rs.182.52 Crore from Rs.161.43 Crore.

- Finance Cost:

During the year under review, the Finance Costs has substantially reduced by around 62% amounting to Rs.3.48 Crore from Rs.9.11 Crore as compared to the previous financial year on account of reduction of high cost debt of the parent company.

- Total Expense:

During the year under review, the consolidated total expenditure has decreased by 8% to Rs.991.79 Crore as compared to Rs.1077.53 Crore of the previous financial year. The reduction in operational costs and finance cost have been provided instrumental in reduction of total consolidated expenditure.

- Earnings After Tax:

During the year under review, the earnings after tax before share of profit from associates & OCI is increased to Rs.126.67 Crore, as compared to Rs.109.51 Crore of previous financial year ended March 31, 2017. Consolidated EAT has been increased substantially by 16% as compared to previous financial year.

- Transfer to Reserves

Appropriations to general reserve for the financial year ended March 31, 2018 as per standalone and consolidated financial statements are as under:

(Rs. In Crore)

Particulars

Standalone

Consolidated

Net profit for the year

102.60

358.09

Balance of Reserve at the beginning of the year

228.89

867.25

Transfer to General Reserve

-

-

Balance of Reserve at the end of the year

416.09

1309.88

- Dividend

Dividend on Cumulative Redeemable Preference Shares:

Your Directors have recommended dividend @ 0.15% on 43,33,500 Cumulative Redeemable Preference Shares (Preference Shares) of Rs.10.00 each for the year ended March 31, 2018. The aggregate amount of the dividend on 43,33,500 Preference Shares is Rs. 78,235/-, including dividend distribution tax amounting to Rs. 13,233/-.

Dividend on Equity Shares:

Your directors are unable to declare any dividend on the equity shares of the Company pursuant to the proviso under section 123(1) of the Companies Act, 2013 as the carried over previous losses are not set off against the profit of the current financial year. Accordingly the profit realized during the current financial year are proposed to be utilized to meet envisaged capital expenditure and repayment of outstanding debts of the Company.

Transfer of Unclaimed Dividend to Investor Education and Protection Fund:

During the year 2017-18, unclaimed dividend for financial year 2009-10 of Rs. 81,266/- was transferred to the Investor Education and Protection Fund (IEPF), as required under the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

- Subsidiaries and Consolidated Financial Statements

The Company had prepared Consolidated Financial Statements in accordance with the Indian Accounting Standards (Ind AS). The Company has also presented financial statements as per Schedule III to the Companies Act, 2013. Except where otherwise stated, the accounting policies are consistently applied.

The Board reviewed the affairs of the Company''s subsidiaries during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary/Associates and Joint Venture, which form part of this Annual Report. A statement containing salient features of the financial statements of the subsidiary / joint venture / associate companies in Form AOC-1 is provided as Annexure A, which forms part of the Directors Report of the Company.

In accordance with third proviso to Section 136 of the Companies Act, 2013, the Annual Report of your Company, contains inter alia the audited standalone and consolidated financial statements.

- Listing Fees

The Equity Shares of your Company are listed and actively traded on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company had paid Annual Listing fees to both the stock exchanges for the Financial Year 2018-19 within the stipulated time.

- Directors

During the year under review, there is no change in composition of Board of Directors of the Company.

Mr. Pravin Kiri, Whole Time Director of the Company, retires at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. A brief profile of Mr. Pravin Kiri as required under Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is annexed to the Notice of AGM of the Company.

- Declaration of Independent Directors

During the year under review, all the Independent Directors have given their declarations stating that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. In opinion of the Board, they fulfill the conditions of independence as specified in the Companies Act, 2013 and Rules made thereunder.

- Board Meetings as well as separate Meeting of Independent Directors:

During the year, the Board met 5 (Five) times on May 25, 2017, August 25, 2017, September 21, 2017, November 27, 2017 and February 13, 2018. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.

Pursuant to the requirements of Schedule IV to the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate Meeting of the Independent Directors of the Company was held on March 30, 2018.

- Statutory Auditors:

M/s. Pramodkumar Dad & Associates, Chartered Accountants were appointed as Statutory Auditors of the Company at the 19th Annual General Meeting of the Company for a term of 5 (Five) consecutive years and they shall hold the office upto 24th Annual General Meeting of the Company to be held in year 2022. They have confirmed that they are not disqualified for continuing as Auditors of the Company.

The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation, adverse remark or disclaimer.

- Cost Auditors:

The Audit Committee of the Company at their meeting held on May 25, 2017 has recommended to the Board of Directors, for appointment and fixing of remuneration of M/s. V. H. Savaliya & Associates, Cost Accountants, for audit of cost records of the Company for the financial year 2017-18. The Board of Directors of the Company at their meeting held on May 25, 2017 has appointed M/s. V. H. Savaliya & Associates as Cost Auditors of the Company.

The Cost Audit Report for the financial year 2017-18, issued by M/s. V. H. Savaliya & Associates, Cost Accountants does not contain any qualification, reservation or adverse remark.

- Secretarial Auditors:

I n compliance of the provision of section 204 of the Companies Act, 2013, other applicable provisions of the Companies Act, 2013, the Companies (Appointment and Remuneration of Managerial Personnel), Rules 2014 and other applicable rules framed there under (subject to modification or re-enactment thereof from time to time), the Board of Directors at their meeting held on August 25, 2017 has appointed M/s Kashyap R. Mehta & Associates, Practicing Company Secretary, Ahmedabad as Secretarial Auditor for conducting Secretarial Audit of the Company for the year 2017-18. The secretarial audit report is attached herewith as Annexure - B.

Certain remarks in the secretarial audit report do not have material impact on financial performance of the Company. The views of the Management on each such remark are given hereunder:

1. Ownership of an agricultural land intended for industrial purpose will be transferred in the name of the company upon receiving necessary approval for conversion into non agriculture land.

The land is acquired for future expansion of the Company. Since a Company cannot hold agriculture land, it is initially acquired in the name of Chairman of the Company, and the same would be transferred in the name of the Company after its conversion into non-agricultural land.

2. During the year under review, the Company has received a show cause notice from Securities and Exchange Board of India (SEBI) dated August 04,

2017 regarding delayed disclosure to BSE and nondisclosure to NSE under Regulation 13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992 in respect of acquisition of 19,48,968 shares by Ms. Anupama M. Kiri, Promoter on 19th December, 2014. Based on our analysis of documents provided by the Company for audit, we observe that while the Company had made disclosure to both the exchanges, there was a delay of one (1) day in respect of making such a disclosure. The Company made a settlement application dated December 18, 2017 to SEBI and a subsequent offer dated May 30, 2018 proposing to pay Rs. 2,88,682 towards settlement terms and offered to undertake to comply with direction(s) which may be issued by SEBI. The matter is under consideration at the relevant forum at SEBI.

There was delay of 1 day in disclosure under Regulation 13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992 in respect of acquisition of 19,48,968 shares by Ms. Anupama M. Kiri, Promoter on 19th December, 2014, to buy mental piece, the company do not want to fight with regulators hence filed settlement application with SEBI and the matter wants to settle by payment of Rs. 2,88,682 towards consent fees.

3. The Company has filed all due ECB-2 returns for the financial year under review in respect of FCCB with some delays for certain months. Revision of drawdown dates for FCCB has been intimated directly in the relevant ECB-2 returns.

There was some delay in filing of ECB-2 returns for reporting under Foreign Exchange Management Act 1999 and ECB guideline with respect to reporting of Foreign Currency Convertible Bonds (FCCBs) which do not have material impact on financial performance of the Company.

- Details in respect of frauds reported by Auditors other than those which are reportable to the Central Government:

During the year under review, the Statutory Auditors, Cost Auditors or Secretarial Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors as prescribed under Section 143(12) of the Companies Act, 2013 and rules made thereunder.

- Vigil Mechanism process:

As per the provisions of Section 177 of the Companies Act, 2013 (the Act) and Regulation 22 of the Listing Regulations, the Company has devised a vigil mechanism named Whistle Blower Policy for escalating system of ethical concerns etc and to deal with instances of fraud and mismanagement, if any. The details of the Whistle Blower Policy are available on the website of the Company at www.kiriindustries.com.

- Related Party Transactions:

During the year under review, all the related party transactions are entered on arm''s length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which requires the approval of the shareholders. Therefore, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. The details of the transactions with Related Party are provided in the Company''s audited financial statements in accordance with the Accounting Standards.

All Related Party Transactions are placed before the Audit Committee and the Board in every quarter. Omnibus approval is obtained for the transactions which are forecasted and are repetitive in nature. An abridged policy on related party transactions is available on the website of the Company i.e. www.kiriindustries.com.

- Material Subsidiaries Policy:

Your Company has also implemented Material Subsidiary Policy as per the requirements under regulation 16 of the Listing Regulations for determining the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. The said policy available on the website of the Company i.e. www.kiriindustries.com.

- Code of Conduct for Directors and Senior Managerial Persons:

In terms of provisions of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company have laid down a Code of Conduct for all Board Members and Senior Management Personnel of the Company. The Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code. The Managing Director of the Company has given a declaration to the Company that all the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code. The said Code of Conduct has been available on the website of the Company at www.kiriindustries.com

- Code for Prevention of Insider Trading:

The Company has adopted a Code of Conduct for Prevention of Insider Trading, approved by the Board of Directors, inter alia, prohibits trading in securities of the Company by Directors and employees while in possession of unpublished price sensitive information in relation to the Company. The said code is available on the website of the Company at www.kiriindustries.com.

- Prevention of Sexual Harassment at Workplaces:

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The said policy is available on the website of the Company at www.kiriindustries.com. The Company has an Internal Complaint Committees in compliance with the above mentioned Act and Rules. During the financial year 2017-18, no complaint in this regard was received by the Company.

- Public Deposits:

During the year under review, the Company has not accepted any deposits from public within the meaning of provisions of Section 73 of the Companies Act, 2013 and other applicable provisions of the Act, the Companies (Acceptance of Deposits by Companies) Rules, 2014 and other applicable rules framed there under (subject to modification or re-enactment thereof from time to time).

- Changes In Capital Structure:

Allotment of Equity Shares:

During the year under review, the Board of Directors of the Company at their meeting held on November 27, 2017 has allotted 24,00,000 Equity Shares upon conversion of warrants issued on preferential basis to Equinaire Chemtech LLP, Promoter Group of Company. Therefore, issued and paid up equity share capital has been increased from Rs.27.84 Crore to Rs.30.24 Crore.

During the year under review, the Company has not issued shares with differential voting rights and sweat equity shares.

- Employee Stock Option Scheme

In order to motivate, incentivize and reward employees, your Company has instituted employee stock options plan. The Board of Directors and Nomination and Remuneration Committee administers this plan. The stock option plan is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (Employee Benefits Regulations) and there have been no material changes to this plan during the financial year. Disclosures on ESOP plan, details of options granted, shares transferred to employee through Kiri Employee Stock Option Trust (ESOP Trust) upon exercise, etc. as required under the Employee Benefits Regulations read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 are available on the Company''s website at www.kiriindustries.com.

No employee was issued stock option during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant. Kiri Employee Stock Option Trust is an ESOP Trust set up by your Company pursuant to approval by the shareholders at their Annual General Meeting held on 26th September, 2014, the ESOP Trust is authorized to transfer shares from the Trust account to employees on exercise of vested options.

The Company has received a certificate from the statutory auditors of the Company that the scheme has been implemented in accordance with the SEBI Regulations and the resolutions passed by the shareholders. The certificate would be placed at the ensuing AGM for inspection by the members.

- Directors Responsibility Statement:

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 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 the 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 for the year ended March 31, 2018 on a ''going concern'' basis;

e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

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.

- Composition of Committees:

Currently, the board has Five Committees: Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and Risk Management Committee.

- Audit Committee

As required under section 177 (8) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the composition of the Audit Committee is mentioned herein below:

During the year all the recommendations made by the Audit Committee were accepted by the Board. A

Name of Members

Designation

Mr. Keyoor Bakshi

Chairman to the Committee

Mr. Manish Kiri

Member

Mr. Mukesh Desai

Member

Mrs. Veena Padia

Member

Name of Members

Designation

Mrs. Veena Padia

Chairman to the Committee

Mr. Pravin Kiri

Member

Mr. Manish Kiri

Member

Mr. Mukesh Desai

Member

detailed note on the composition of the board and other committees is provided in the corporate governance report

which is forming part of this annual report.

- Corporate Social Responsibility:

Pursuant to Section 135 of Companies Act, 2013, the Company has constituted Corporate Social Responsibility Committee (CSR Committee) comprising of following members:

Your Company has always been committed to the cause of social service and has repeatedly channelized its resources and activities, which positively affects the society socially, ethically and also environmentally. Your Company has taken up various Corporate Social Responsibility (CSR) initiatives and enhanced value in the society.

Your Company has formulated CSR Policy which encompasses its philosophy and guides its sustained efforts for undertaking and supporting socially useful programs for the welfare & sustainable development of the society.

In compliance of Section 135 of the Companies Act, 2013, the Company shall in every financial year utilize at least 2% of average net profit of last three years towards CSR activities. The Annual Report on CSR containing particulars as specified under Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is set out in Annexure C of this report. For other details regarding the CSR Committee, please refer to the corporate governance report.

The CSR policy is available on the website of the Company i.e. www.kiriindutries.com.

- Nomination and Remuneration Policy for Directors, Key Managerial Personnel and Other Employees

As prescribed under section 178 of the Companies Act, 2013 (the Act), your Company has adopted Nomination and Remuneration policy of Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and the same is available on the website of the Company i.e. www.kiriindustries.com. The relevant information as per Regulation 19 of the SEBI (LODR), Regulations, 2015 is available in the Corporate Governance report.

- Board Evaluation:

The Nomination and Remuneration Committee and the Board of Directors of the Company had laid down the process and criteria for annual performance evaluation of the Board, its Committees and individual Directors. The Board of Directors have carried out an evaluation of its own performance, its Committees and that of its individual Directors in compliance with the provisions of the Act and Listing Regulations.

The evaluation process covered aspects such as Board structure and composition, frequency of Board Meetings, participation in the long term strategic planning, contribution to and monitoring of corporate governance practices and the fulfilment of Directors'' obligation and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings. The Board at its meeting reviewed the performance of the Board as a whole, its Committees and individual Directors, taking into account feedback of the Nomination and Remuneration Committee and the Independent Directors which included the evaluation of the Chairman and Non- Independent Directors of the Company.

- Familiarisation Programme for Directors:

The Company believes that a Board, which is adequately informed/familiarised with the Company and its affairs, can contribute significantly to effectively discharge its fiduciary duty as director of the company and that fulfils stakeholders'' aspirations and societal expectations. In this regard, the Directors of the Company are updated on changes / developments in the domestic / global industry scenario in the sector which affect the business of the Company, to enable them to take well informed and timely decisions. The details of such familiarization programmes have been disclosed on the Company''s website i.e. www.kiriindustries.com.

- Details of Loans, Investments, Guarantees:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the Financial Statements of the Company for the year ended March 31, 2018.

- Extract of annual return:

I n accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return is annexed to this report as Annexure D. The said annual return is also available on website of the Company i.e. www.kiriindustries.com.

- Conservation of energy, research and development, technology absorptions and foreign exchange earnings and outgo:

The relevant information on conservation of energy, technology absorption, foreign exchange earnings & outgo as required to be disclosed in term of Section 134(3)(m) of the Companies Act, 2013 together with the Companies (Accounts of Companies) Rules, 2014 is annexed to this report as Annexure E.

- Risk Management:

The Company has a Risk Management framework in place to identify, assess, monitor and mitigate various risks to the business. This framework seeks to minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The framework also defines the risk management approach across the company at various levels. Risk Management Committee reviews the process of risk management. The details of the Committee and its terms of reference are provided in the Corporate Governance Report forming part of the Board''s Report. The Risk Management policy of the Company is available on website of the Company www. kiriindustries.com.

- Internal Control Systems and their Adequacy:

The Company has an Internal Control System, commensurate with the size and nature of its business operations. The Company has appointed an external audit firm for internal audit of the Company. The Internal Auditor reviews the adequacy of internal control system in the Company, its compliance with operating systems and laid down policies and procedures. Based on the report of internal auditor the account department undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee on quarterly basis.

- Particulars of Employees:

A Statement pursuant to section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment & remuneration of Managerial Personnel) Rules, 2014 have been attached hereto as Annexure F.

- Human Resouce Development:

The Company believes that Human Resources play a vital role in achieving its corporate goal. Hence, the Company continues to invest on hiring the best talent from other industries, developing and retaining the available talent to ensure a sustainable talent supply within the organization. The Company provides various opportunities to the employees to develop their skills to take up higher responsibilities in the organization.

- Corporate Governance & Management Discussion and Analysis Report:

As prescribed under Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on corporate governance practices implemented by the Company, along with the Compliance Certificate from the Statutory Auditors regarding compliance of conditions of corporate governance as stipulated in SEBI (LODR) Regulations, 2015 is attached to this Annual report.

The Management Discussion and Analysis Report on the Industry and business operations of the Company, as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in a separate section and forms an integral part of this Report.

- Significant and Material orders passed by the Regulators or Courts:

During the financial year under review, no significant or material orders were passed by the Regulatory/ Statutory

Authorities or the Courts which would impact the going concern status of the Company and its future operations.

- Material Changes:

During the year under review, there has been no material changes and commitments affecting the financial position of the Company.

- Updates on court case in Singapore:

The Company is holding 37.57% stake in DyStar Global Holdings (Singapore) Pte. Ltd. (DyStar). On certain issues which are detailed below, the Company felt aggrieved and hence, has filed Minority oppression suit in June 2015 in Singapore High Court against Senda International Capital Limited (Senda /Majority Shareholder in DyStar), DyStar and nominated directors by Senda on DyStar Board for certain minority oppression acts by Senda and their nominated directors on Board of DyStar. The Company has filed suit because of below mentioned major oppressive acts by Senda:

- Legitimate expectation of Kiri under Share Subscription and Shareholders Agreement (SSSA) with regard to DyStar be Board Managed Company, Senda alone can not control board of DyStar.

- Related Party Transactions with Longsheng related entities that only benefit to them at expenses of DyStar.

- Payment of Special Incentives of US$ 2 million to Mr. Ruan Weixiang, Chairman of DyStar Board without approval of DyStar Board and without commercial justification.

- Exploitation of DyStar Patent.

- Payment of Fees to Longsheng for alleged service provided by Longsheng without approval of Board of DyStar.

- Denying Kiri for Dividend which is only benefit to Kiri for its investment in DyStar.

- Exclude Kiri''s Directors from Management of DyStar by instructing DyStar Management not to provide information to Kiri.

- Payment of Special Incentive and Bonus to DyStar Management.

- DyStar''s purchases from Kiri has stopped despite Kiri being a preferred supplier under the SSSA.

- Blocked proposed sale of Kiri''s stake in DyStar to the State General Reserve Fund (SGRF) by Senda.

- The refusal to carry outan IPO for DyStar.

Later on the said suit has been Transfer to Singapore International Commercial Court (SICC) as Suit No 4 of 2017.

DyStar has filed suit no. 3 of 2017 and Senda had raised following issue in their counter claim:

- The Company, Mr. Manish Kiri, Mr. Pravin Kiri have breached their contractual obligation under SSSA with regard to compete with DyStar, Solicit customers of DyStar, disclosure of Confidential Information of DyStar.

- Mr. Manish Kiri and Mr. Amit Mukherjee (Kiri''s Nominated Directors on DyStar Board) have breached their fiduciary duties as Directors of DyStar and their harassing and disruptive conduct is harmful to the DyStar.

- Claim against Kiri for payment of Euro 1.7 Milllions for Process Technology Development fees and SG$ 443,813 for audit costs.

The Singapore International Commercial Court (SICC) has released its judgment on July 3, 2018 in the legal suit filed by the Company and also for the legal suit filed by DyStar for payment of certain outstanding amounts and breaches of agreed non-compete provisions.

The Singapore Court has found Senda committed numerous acts of minority oppression against the Company and has ordered a buy-out of KIL''s 37.57% stake in DyStar. The Court has further ordered that the losses caused to DyStar by Senda''s oppressive acts be written back into DyStar''s value determining fair value of the Company''s share.

A significant proportion of DyStar''s claims in its legal suit for amounts outstanding and non-compete provisions and Senda''s counterclaims in legal suit filed by the Company, were dismissed. The Court only awarded judgment for DyStar against the Company in respect of the sums of EUR 1.7 million and S3,813 (comprising monies due and owing in respect of Process Technology

Development fees and audit costs, respectively), and damages to be assessed for a breach of non-complete clause in the Share Subscription and Shareholders Agreement (SSSA) executed by the Parties. The court has dismissed all the claims and counterclaims against Mr. Pravin Kiri, Mr. Manish Kiri, Mr. Amitava Mukherjee (the Company''s nominated director on DyStar Board).

The Court has ordered parties to attend a case management conference for the fixing of timelines for further submissions on matters relating to the valuation of Company''s stake in DyStar. The case management conference fixed on August 16, 2018 for the following matters:

- Whether the valuation of Kiri''s shareholding should be undertaken by (A) the court, (B) a valuer appointed by the court or the parties, or (C) some other method and (if so) what method;

- Whether a discount should be factored into the valuation of Kiri''s shareholding given that Kiri is a minority shareholder;

- How (if at all) the court''s rulings allowing part of DyStar''s claims in Suit 3 and Senda''s counterclaims in Suit 4 may affect the valuation of Kiri''s shareholding;

- Any other questions relevant to the valuation of Kiri''s shareholding; and

- The appropriate order for costs.

Further, on August 1, 2018 and August 3, 2018, Senda and DyStar have respectively preferred an appeal before the Court of Appeals, Singapore.

- Acknowledgement:

The Board takes this opportunity to sincerely thank all its stakeholders namely, shareholders, customers, suppliers/ contractors, bankers, employees, Government agencies, local authorities for their un-stinted support and co-operation during the year.

For and on behalf of Board of Directors

Date: August 10, 2018 Pravin Kiri

Place : Ahmedabad Chairman

Source : Dion Global Solutions Limited
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