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Konark Synthetics Ltd.

BSE: 514128 | NSE: | Series: NA | ISIN: INE517D01019 | SECTOR: Textiles - Processing

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2006

Director’s Report

Dear Members, The Directors presents the 31st Annual Report together with the Audited Financial Statements of the Company for the financial year ended on 31st March 2015: FINANCIAL HIGHLIGHTS: (Rs. in Lacs) Particulars For the Year For the Year ended ended 31st March, 2015 31st March, 2014 Total Revenue 11558.22 10714.59 Less: Total Expenses 10648.16 9932.05 Profit before Depreciation & 910.06 782.54 Amortization expenses, Finance Cost and Tax Less: Depreciation and Amortization 408.42 272.51 Expenses Less: Finance Cost 403.40 366.80 Profit before exceptional and 98.24 143.23 extraordinary items and tax Less: Prior Period Expenses 0.48 - Less: Short Provision for Taxation - 0.01 Profit before Exceptional Item & Tax 97.76 143.22 Less: Exceptional Item - - Profit before tax 97.76 143.22 Less: Provision for tax 37.99 34.21 Profit after tax 59.77 109.01 Balance of profit as per last Balance 1137.69 1028.68 Sheet Balance of profit carried to Balance 1098.33 1137.69 Sheet REVIEW OF BUSINESS OPERATIONS: During the year under review, the Company earned total revenue of Rs. 11558.22 Lacs as against Rs. 10714.59 Lacs in the previous year. The revenue out of operations earned to Rs.11414.07 Lacs and other income earned to Rs. 144.15 Lac. The profit before tax was Rs.97.76 Lacs as against Rs. 143.22 Lacs in previous year. The profit after tax was Rs.59.77 Lacs as against Rs. 109.01 Lacs in the previous year. The profit of the Company has been impacted majorly due to change in depreciation policy as per the Schedule II of the Companies Act, 2013. Accordingly, the carrying amount of the fixed assets as on 1st April, 2014 has been depreciated over the remaining revised useful life of the fixed assets. Consequently, an amount of Rs.99.12 Lacs had been reduced from retained earnings in first quarter ended June, 2014. TEXTILE DIVISION: The Primary segment of the Company is Textile and there is no geographic segment as such. During the year under review, the textile division has achieved a consolidated turnover of Rs.15416.97 Lacs only as compared to Rs. 15,625.81 Lacs in the previous year. The Company continues to focus on measures to improve the efficiency of financial performance of this division. The year under review was one of the most challenging years for the textile sector across the world. Despite the extreme difficultly in the business environment, the Company has managed to survive and earned revenue from the operations. Your Directors are optimistic about the future growth of the Company and are putting their best efforts to accelerate the growth speed. POWER DIVISION: The Company has one other segment i.e. Power Generation (Energy) which had started in last quarter of the Financial Year 2011-12 operating through its step down subsidiary company Konark Gujarat PV Private Limited. During the financial year 2014-15, the revenue earned from power generation activity was Rs. 1446.78 Lacs as compared to Rs. 1450.24 Lacs in the previous year. The Company continues to focus on cost reduction measures and improve efficiency to pathway the business in this division. SHARE CAPITAL: There was no change in Share Capital of the Company during the year 2014-15. DIVIDEND: To conserve the resources for future business requirements of the Company, your Directors do not recommend any payment of dividend for the year under review. PUBLIC DEPOSITS: During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. EXTRACTOR ANNUAL RETURN: An extract of Annual Return in Form MGT 9 is appended to this Report as Annexure I. DIRECTORS AND KMP: In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Amitabh Kejriwal, Whole Time Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re- appointment. Mr. Amitabh Kejriwal is proposed to be re-appointed as Whole-Time Director of the Company for a further period of three years w.e.f. 1st April, 2015, subject to the approval of members. Your Board recommends his re- appointment. The Board of Directors of the Company appointed Ms. Kavita Bhat as an Additional (Independent) Director of the Company for a period of five years w.e.f. 31 March, 2015, subject to approval of shareholders at the ensuing Annual General Meeting. The Company has received a notice along with requisite deposit from a member of the Company under Section 160 of Companies Act, 2013 proposing her candidature for the office of Director of the Company. Your Board recommends her appointment. The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered into with the Stock Exchange. As stipulated under the Clause 49 (VIII) (E) of the Listing Agreement, brief resume of the Directors proposed to be appointed/re-appointed are given in the Notice convening 31 Annual General Meeting. Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. Ramniwas Bhawarlal Somany was redisignated as Chief Financial Officer (CFO) of the Company w.e.f. 31 March, 2015 and Mr. Mehnuddin Khan was appointed as Company Secretary & Compliance Officer of the Company w.e.f. 18th August, 2015. ANNUAL PERFORMANCE EVALUATION BYTHE BOARD: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders'' Relationship Committees. The Board has devised questionnaire to evaluate the performances of each of executive and non-executive and Independent Directors. Such questions are prepared considering the business of the Company and the expectations that the Board have from each of the Directors. The evaluation framework for assessing the performance of Directors comprises of the following key areas: i. Attendance of Board Meetings and Board Committee Meetings; ii. Quality of contribution to Board deliberations; iii. Strategic perspectives or inputs regarding future growth of Company and its performance; iv. Providing perspectives and feedback going beyond information provided by the management. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. MEETINGS OF THE BOARD: The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. Atentative annual calendar of the Board and Committee Meetings is informed to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. The Board met ten times during year the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013. DIRECTORS''RESPONSIBILITY STATEMENT: Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134(3)(c)of the Companies Act, 2013 state that: a. in the preparation of the annual accounts, the applicable Accounting Standards (except AS-15) have been followed along with proper explanation relating to material departures, if any; b. the directors 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. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. the directors have prepared the annual accounts on a going concern basis; e. the directors 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. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION: The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for appointment and remuneration of Directors, Senior Management including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Companies Act, 2013. The Remuneration Policy is stated in the Report on Corporate Governance. PARTICULARS OF REMUNERATION: During the year under review, no employee was in receipt of remuneration exceeding the limits as prescribed under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Disclosure with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure IV to this Report. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENT: The Company has 3 Subsidiary Companies and 3 Step-down Subsidiary Companies. During the year, the Board of Directors (''the Board'') reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, a statement containing the salient features of the financial statement of the subsidiaries in the prescribed format AOC-1 is appended as Annexure II to the Board''s report. The statement also provides the details of performance, financial positions of each of the subsidiaries. The Company does not have any Joint Venture / Associate. During the year, no company became or ceased to be the Company''s subsidiary, joint venture or associate company. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.konarkgroup.co.in. These documents will also be available for inspection at the registered office of the Company and of the subsidiary companies during business hours on all working days and during the Annual General Meeting. COMMUTEES OF THE BOARD: During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees. There are currently three Committees of the Board, as follows: 1. Audit Committee 2. Stakeholders'' Relationship Committee 3. Nomination and Remuneration Committee Details of all the Committees along with their charters, composition and meetings held during the year are provided in the Report on Corporate Governance, forming part of this Annual Report. AUDIT COMMITTEE AND ITS COMPOSITION The composition of the Audit Committee is as under and the same has been given in Corporate Governance Report as required under Clause 49 of the Listing Agreement, which is annexed to this report. As on 31st March, 2015, the Audit Committee comprised of Mr. Mahendra Agarwal, Mr. Satish Deshmukh, Independent Directors and Mr. Prakashchand Dalmia, Chairman and Managing Director of the Company. The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Company''s internal control and financial reporting process. Mr. Mahendra Agarwal is the Chairman of Audit Committee of the Company. The Compliance Officer of the Company acts as the Secretary to the Committee. RISKS AND AREAS OF CONCERN: The Company has laid down a well-defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risk. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013 All Related Policy Transactions entered during the year were in Ordinary Course of the Business and on Arm''s Length basis. No Material Related Party Transactions, were entered during the year by your Company as per section 188 of the Companies Act, 2013 which require approval of the member. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act, 2013 in FormAOC-2 is not applicable. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013: The details of loans, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013 during the financial year 2014-15 are given under Notes to Accounts of financial statements. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE: There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on company''s operations in future. WHISTLE BLOWER POLICY: The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2014-15, no employee or director was denied access to the Audit Committee. STATUTORY AUDITORS: M/s. Bhuwania & Agrawal Associates., Chartered Accountants, Mumbai (FRN:101483W), the Statutory Auditors of your Company hold office as such upto the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their re-appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013 and they are not disqualified from being appointed as Auditors. Your Directors recommend the re-appointment of M/s. Bhuwania & Agrawal Associates., Chartered Accountants, Mumbai, as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting up to the conclusion of next Annual General Meeting of the Company and to audit financial statements for the financial year 2015-16. In respect to the remarks made by the Auditors in their Standalone & consolidated reports relating to non-provision of Gratuity mentioned under the heading Emphasis of Matter; your Directors would like to state that as a policy, the Company recognizes expenditure towards Gratuity only as and when liability for payment arises. SECRETARIAL AUDIT REPORT: Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit Report received from M/s. Manish Ghia & Associates, Company Secretaries, Mumbai is appended as Annexure III and forms part of this report. In respect to the Secretarial Auditors'' remarks in their report, the Company would like to state as under: * Non-appointment of Company Secretary: The Company has appointed the Whole-Time Company Secretary at its meeting held on 14th August, 2015. * The annual consolidated financial results and consolidated financial accounts for the quarter and year ended 31st March, 2014 were adopted and submitted to Stock Exchanges on 18th June, 2014. Since, the financials of one of the subsidiary companies was not ready; the annual audited consolidated financial result and consolidated financial accounts were adopted on 18th June, 2014. INTERNALAUDIT: The Company has appointed M/s. Kaushik Shahukar & Co., Chartered Accountants, Mumbai as its Internal Auditor. The Internal Auditor has given his reports on quarterly basis to the Audit Committee. Based on the report of internal audit, management undertakes corrective action in their respective areas and thereby strengthens the controls. REPORT ON CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchange, the following have been made a part of the Annual Report and are annexed to this report: * Management Discussion and Analysis * Corporate Governance Report * Auditors'' Certificate regarding compliance of conditions of Corporate Governance. LISTING OF SECURITIES: The Company''s shares are listed on BSE Limited (BSE). The Company has paid listing fees to BSE Limited for the financial year 2015-2016. INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance for sexual harassment at workplace and 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 thereunder. There was no complaint on sexual harassment during the year under review. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given as in AnnexureV. ACKNOWLEDGEMENT Your Directors take this opportunity to express their sincere appreciation for the assistance and co-operation received from all the Government departments, Banks, Financial Institutions, other business constituents and members during the year under review and also look forward to their continued support in the future. Your Directors also wish to place on record their deep appreciation for the committed services of the employees of the Company. For and on Behalf of the Board of Directors Place: Mumbai Prakashchand Dalmia Date: 14th August, 2015 Chairman & Managing Director

Director’s Report