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Kirloskar Electric Co Ltd.

BSE: 533193 | NSE: KECL | Series: NA | ISIN: INE134B01017 | SECTOR: Electric Equipment

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

Dear Shareholders,

The directors present the 71st Annual Report of Kirloskar Electric Company Limited (hereinafter referred as “the company” or “KECL”) along with the audited financial statement for the financial year ended March 31, 2018. The consolidated performance of the company and its subsidiaries has been referred to wherever required.

Review of performance and state of company’s affairs:

During the year under report, your company achieved a turnover of Rs. 39,454/- lakhs (previous year Rs. 65,276/- lakhs). The operations have resulted in net loss of Rs. 7,569/- lakhs (previous year net loss was Rs. 1,196/- lakhs).

The financial highlights are as follows; (Rs. In Lakhs)

Standalone

Consolidated

PARTICULARS

2017-18

2016-17

2017-18

2016-17

Revenue from operations

37,913

62,612

37,925

62,614

Other income (net)

1,541

2,664

670

1,660

Total Income

39,454

65,276

38,595

64,274

Total Expense

47,137

68,021

4,7309

69,509

Profit / (Loss) before tax

(7,683)

(2,745)

(8,714)

5,235

Tax Expense

-

(7)

-

(3)

Profit / (Loss) after tax

(7,683)

(2,738)

(8,714)

5,232

Other comprehensive income (Net)

114

1,542

114

1,542

Total comprehensive income / (Loss) for the period

(7,569)

(1,196)

(8,600)

3,690

Note: The above figures are extracted from the audited standalone and consolidated financial statements as per Indian Accounting Standards (Ind AS)

Dividend:

In view of the losses, your directors do not recommend any dividend for the year.

Reserves:

The company has not transferred any amount to the general reserve account during the period under review.

Abridged Annual Report:

In terms of the provisions of regulation 36 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and Section 136 of the Companies Act, 2013, the Board of directors has decided to circulate the abridged annual report containing the salient features of the Balance Sheet and Statement of Profit and Loss account to the shareholders for the financial year ended on March 31, 2018. Full version of the annual report will be available on company''s website www.kirloskar-electric.com and will also be made available to investors upon request.

Fixed deposits:

SL. No.

Particulars

Amount in Lakhs

1.

Accepted during the year

Nil

2.

Remained unpaid or unclaimed at the end of the year.

622.9

3.

Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved

- At the beginning of the year

- Maximum during the year

- At the end of the year

N/A

4.

Details of deposits which are not in compliance with the requirements of Chapter V of the Act

Nil

Subsidiaries, associate companies & joint ventures:

The company has six wholly owned subsidiaries and one associate company.

Reports on the performance and financial position of each of the subsidiary and associate companies have been provided in Form AOC-1 appended to this report.

Directors and Key Managerial Personnel

Mr. Vijay R Kirloskar (DIN: 00031253) has been reappointed as Executive Chairman of the company effective from August 12, 2017 for a period of three (3) years.

Mr. Anand B Hunnur (DIN: 06650798) has been appointed as Managing Director of the company effective from May 26, 2017 for a period of three (3) years.

Mr. Vinayak N Bapat (DIN: 06936639) has resigned from the position of Managing Director, due to personal reason and has ceased to be Managing Director effective from August 11, 2017.

In accordance with the provisions of section 152 of the Companies Act, 2013 and Articles of Association of the company, Mrs. Meena Kirloskar (DIN: 00286774), Non-executive Director being longest in the office, shall retire by rotation and being eligible, offer herself for re-appointment seeking members'' approval and the same has been set forth in the notice of the 71st annual general meeting of the company.

Mr. Soumendra Kumar Mahapatra has resigned from the position of chief financial officer, due to personal reason and has ceased to be chief financial officer effective from August 12, 2017.

Mr. Sanjeev Kumar S has been appointed as the chief financial officer of the company effective from August 10, 2017.

Mr. Chinmoy Patnaik has resigned from the position of Associate Vice President - Legal & Company Secretary, due to personal reason and has ceased to be Associate Vice President - Legal & Company Secretary effective from October 31, 2017.

Ms. K S Swapna Latha has been appointed as Sr. General Manager - Legal & Company Secretary of the company effective from February 12, 2018.

In terms of the provisions of Section 149 (7) of the Companies Act, 2013, the company has received declarations from all the independent directors stating that they continue to meet the criteria of independence as provided under the provisions of Section 149 (6) of the Companies Act, 2013.

Evaluation of Directors, Committees and the Board:

The evaluation process has been explained in the Corporate Governance Report which forms part of the annual report.

Number of meetings of the Board of directors and its committees:

Six meetings of the Board of directors were held during the financial year 2017-18. The composition of Committee and others details are contained in the Corporate Governance Report which forms part of the annual report. The Nomination and remuneration policy and risk management policy has been appended to this report as Annexure I and Annexure II respectively.

Managerial remuneration:

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is disclosed in the Form MGT - 9.

Particulars of employees:

In terms of the provisions of Section 197(12) of the Companies Act, 2013 the names and other particulars of specified employees are set out in annexure to the Board''s report. Having regard to provisions of Section 136(1) of the Companies Act, 2013, the annual report excluding the aforesaid information is being sent to the members of the company. The said information is avaible for inspection on all working days, during business hours at the registered office of the company. Any member interested in obtaining such information may write to Company Secretary and the same will be furnished on request.

Corporate Social Responsibility:

In pursuance of the provisions of the Companies Act, 2013 and CSR Policy of the company, it is required to spend two percent of the average net profits of the company for the three immediately preceding financial years. The company has incurred heavy losses in preceding three financial years and the average net profits for three financial years is in negative, thus the company was not required to spend any money for the CSR activities during the financial year ending March 31, 2018.

Vigil mechanism for Directors and Employees:

The company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the directors and employees to report their concerns about any poor or unacceptable practices or any event of misconduct or violation of company''s code of conduct. The purpose of this policy is to provide a framework to secure whistle blowing. It is to protect the employees who are willing to raise concerns about serious irregularities within the company. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the company has been denied access to the Audit Committee. The policy of Vigil Mechanism is available on the company''s website (URL:http://www.kirloskar-electric.com/images/pdf/investor/policies/Whistle-Blower-Policy.pdf

Prevention of Sexual Harassment at Workplace:

Your company has zero tolerance policy in case of sexual harassment at workplace and committed to provide a healthy environment to each and every employee of the company. The company has in place ‘Policy on sexual harassment Redressal''. In terms of section 22 of the Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act, 2013 read with Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Rules, 2013, we report as follows for the year ended on March 31, 2018;

Sl. No

Particulars

Status

1

No of complaints received in the year

Nil

2

No of complaints disposed off in the year

Nil

3

Cases pending for more than 90 days

Nil

4

No of workshops and awareness programmes conducted in the year

5

5

Nature of action by employer or District office, if any

Nil

Particulars of loans, guarantee, investments and securities:

There was no loan and advance, guarantee or investment made by the company during the year under report.

Particulars of loans, advances, investments as required under the listing regulations:

The details of related party disclosures with respect loans, advance, investment at the year end and maximum outstanding amount thereof during the year as required under (part A of Schedule V of the Listing Regulations have been provided in the notes to the financial statement of company.

Your directors draw attention of the members to note no. 7 & 37(9) of the standalone financial statements which sets out the details of loan and advance, guarantee or investment.

Particulars of contracts or arrangements with related parties:

The particulars of every contract or arrangements entered into by the company with related parties referred to in subsection (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto are disclosed in Form No. AOC -2 appended hereto.

All related party transactions that were entered into during the financial year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (‘the Act'') and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and the provisions of Section 188 of the Companies Act, 2013 are not attracted.

There were no materially significant related party transactions made by the company during the year that would have required Shareholder approval as per provision of Companies Act 2013 read with applicable rules and Regulation 23 of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted along with a statement giving details of all related party transactions is placed before the Audit Committee from time to time.

The Policy on Related Party Transaction is available on the company''s website (URL: http://www.kirloskar-electric.com/ images/pdf/investor/policies/Policy-on-related-party-transactions.pdf

Your directors draw attention of the members to note no. 37(13) to the standalone financials statement which sets out the related party disclosures.

Share Capital:

As at March 31, 2018, the paid up share capital of your company stood at Rs. 664,140,710/- divided into 66,414,071 Equity Shares of Rs. 10/- each.

Disclosure under section 43(a)(ii) of the Companies Act, 2013:

The company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished.

Disclosure under section 54(1)(d) of the Companies Act, 2013:

The company has not issued any sweat equity shares during the financial year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished.

Disclosure under section 62(1)(b) of the Companies Act, 2013:

The company has not issued any equity shares under Employees Stock Option Scheme during the financial year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 and hence no information has been furnished.

Disclosure under section 67(3) of the Companies Act, 2013:

During the financial year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 and hence no information has been furnished.

Secretarial Standards:

The Board confirms the compliance with applicable Secretarial Standards i.e., SS-1 and SS-2 relating to meeting of the Board of directors and General meeting respectively have been duly followed by the company.

Statutory audit:

M/s. Ashok Kumar, Prabhashankar & Co., Chartered Accountants, (Registration no. AAD-7041) were appointed as auditors of the company to hold office from the conclusion of the 70th annual general meeting until the conclusion of the 72nd annual general meeting. The proposed appointment is as per section 139 and 142 of the Companies Act, 2013. Subsequent to amendment of Companies (Amendment) Act, 2017 the company is not required to ratify their appointment.

Internal audit:

The company has appointed M/s. B K Ramadhyani Co. LLP as its internal auditors for 2017-18.

Cost audit:

M/s. Rao, Murthy and Associates, Cost Accountants, were appointed as cost auditors of the company for the financial year ended March 31, 2018. The Board of directors of your company has fixed Rs. 350,000/- (Rupees three lakhs fifty thousand only) as audit fees, which requires ratification by the members of the company in terms of the applicable provisions of the Companies Act, 2013. Accordingly, a resolution seeking members'' approval has been set forth in the notice of the 71st annual general meeting of the company.

Disclosure under section 148(1) of the Companies Act, 2013:

During the period under review, the company has conducted the audit of cost records and maintained the cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013.

Secretarial Audit:

M/s. Swaroop, Ravishankar & Associates, Company Secretaries, were appointed as secretarial auditors for the financial year 2017-18 to conduct secretarial audit in terms of the provisions of Section 204 of the Companies Act, 2013. The audit report is enclosed as Form MR - 3.

Explanations or comments on auditors’ qualifications / adverse remarks / emphasis on matters:

The comments / observations of the auditors are self-explanatory and company''s explanation thereto has been given in the relevant notes to accounts.

Extract of annual return:

According to the provisions of Section 92(3) of the Companies Act, 2013, an extract of the annual return is appended hereto as Form MGT-9, which forms part of this report.

Director’s Responsibility Statement:

We, the directors of your company, confirm, to the best of our knowledge and ability that-

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

(b) we 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 of the company for that period;

(c) we 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) we have prepared the annual accounts on a going concern basis;

(e) we have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively.

(f) we have devised proper systems to ensure compliance with the provisions of all applicable laws to the company and that such systems were adequate and operating effectively

Corporate Governance:

Your company''s corporate governance report for the financial year 2017-18 is appended to this annual report. A certificate on the status of compliance on corporate governance is also appended and forms part of this annual report.

Material changes affecting the company:

There have been no material changes and commitments affecting the financial positions of the company between the end of the financial year and date of this report. There has been no change in the nature of business of the company.

No fraud has been reported by auditors to the Audit Committee of the Board.

Neither the Chairman and nor the Managing Director of the company receive any remuneration or commission form any of its subsidiaries.

Significant and material orders passed by the Regulators or Courts

There were no significant and material orders passed against the company by the regulators or courts or tribunals during financial year 2017-18 impacting the going concern status and company''s operations in future.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure - III, which forms part of this report.

Management Discussion and Analysis:

Management discussion and analysis, is appended hereto as Annexure - IV and forms part of this report.

Details in respect of adequacy of internal financial controls with reference to the financial statement:

Internal Financial Controls:

The company has a robust system of internal financial control, which is in operation. The internal financial controls have been documented, digitized and embedded in the day to day affairs of the business process of the company. The effectiveness of the internal financial controls are obtained through management reviews at regular intervals, assessments, monitoring by the functional experts as well as auditing of the internal control systems by the internal auditors during the course of their audits. We believe that these systems provide better assurance that our internal financial control systems are well designed and are operating effectively.

Acknowledgements:

The Board of directors takes the opportunity to express its sincere appreciation for the continued support and confidence received from the company''s bankers, customers, suppliers, depositors and the shareholders.

The company considers its employees as its most valuable asset. Employees at all levels have put in their best to the services of the company and the Board puts on record the sincere appreciation of their dedication and loyalty.

For and on behalf of the Board of directors,

Kirloskar Electric Company Limited

Vijay R Kirloskar

Place: Hubli Executive Chairman

Date: 08-08-2018 DIN : 00031253

Director’s Report