The Directors have pleasure in presenting the 30thAnnual Report and Audited Financial Statements of theCompany for the year ended 31st March 2016. The summarized financial results are given below:
SUMMARISED FINANCIAL RESULTS:
(Rs. In Lakhs)
Sales & other receipts
Gross Profit/(Loss) before depreciations
Less : Depreciation
Profit(Loss) from regular Activities
Profit /(Loss)before and After taxation
Add: Balance carried from earlier year
Balance carried forward to next year
During the year the sales turnover of the Company was Rs. 242.18 lakhs against Rs.156.73 lakhs the sales of the previous year. Due to paucity of working capital facilities from Banks as Company was under rehabilitation process by BIFR, the company is doing only job-work. The rehabilitation scheme has been approved by the BIFR and the rehabilitation process has progressed well.
In view of past losses, your directors are unable to recommend payment of any dividend for the year under review. COURSE OF BUSINESS AND OUTLOOK
The Management''s Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015 is forming a part of this report and gives the state of affairs of the business of the Company. The performance of your Company improved in line with the business engineering work undertaken in the previous year.
HEALTH, SAFETY AND ENVIRONMENT
Top priority continues to be given to environmental protection for all the units of the Company by keeping emission levels to the minimum possible. Adequate Insurance cover has been taken for properties of the Company including Buildings, Plant & Machineries, Stocks and other assets.
The report on Management''s Discussion and Analysis includes observations on health, safety and environment compliances by the Company.
All Plant sites of the Company are environment regulations compliant.
Your Company has not accepted any fixed deposits from the Public under chapter V of the Companies Act, 2013 during the period under review.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN ECHANGE EARNINGS AND OUTGO
Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are set out as follows.
A. INFORMATION OF CONSERVATION ENERGY:
The particulars of additional requirement proposed by the Companies (Amendment) Act, 1988 and the Companies (disclosures of particulars of the report of the Board of Directors) Rules 1988 in respect of the conservation of Energy do not apply to the products of your Company.
B. INFORMATION OF TECHNOLOGY ABSORPTION:
The Company had initially entered into a Technological Collaboration with BAUKU of Germany and the Company has deputed their engineers for training at the collaborator''s plant. The engineers have been trained in process control, production, maintenance and other technology aspects. The Company has absorbed closely guarded technology enabling in to produce wide range of plastic pipes which require much less raw material than any comparable product. This has enabled the Company to produce pipes and tanks for applications such as sewerage schemes, effluent disposal projects, storage tanks for chemicals etc.
INFORMATION OF FOREIGN EXCHANGE EARNED AND OUTGO:
During the year under review your Company has not spent on foreign travel and on import of raw material. SEGMENT REPORTING UNDER ACCOUNTING STANDARDS 17:
Your Company''s main business is Polymer Processing and all other activities of the company revolve around this main business. As such there are no separate reportable segments within the Company and hence, the segment wise reporting as defined in Accounting Standards 17 is not applicable to the Company.
CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There was no change in the nature of business of your Company during the Financial Year ended 31st March, 2016. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION:
No material changes and commitments, affecting the financial position of the Company occurred between the end of the Financial Year of the Company i.e. 31st March, 2016 and the date of this Directors'' Report i.e. 4th August, 2016.
Your Company has always the philosophy of conducting its business with due compliance of laws, rules, regulations and sound internal control systems and procedures. As per Clause ''C'' of Schedule V on Annual Report pursuant to Regulations 34(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has complied with all the provisions of Corporate Governance and a report on corporate governance is annexed hereto and forms part of this report. A certificate from the auditors of the company regarding compliance of conditions of corporate governance has been included in this Annual Report for your information. In future, the Company intends to implement the non-mandatory recommendations, as prescribed in Code of Corporate Governance.
POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION
(Including criteria for determining qualification, positive attributes, independence of a Director, policy relating to remuneration for Directors, Key Managerial Personnel and other employees)
Policy on Directors'' Appointment
Policy on Directors'' appointment is to follow the criteria as laid down under the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Emphasis is given to persons from diverse fields or professions.
Policy on Remuneration
Guiding Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that -
- Remuneration to unionized workmen is based on the periodical settlement with the workmen union.
- Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and Workmen (non Unionized) is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain quality talent.
- For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time.
ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Board of Directors of the Company has initiated and put in place evaluation of its own performance, its committees and individual directors. The results of the evaluation are satisfactory and adequate and meet the requirement of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Soniya P. Sheth retires by rotation and being eligible offers herself for reappointment. Mr. Rajender Sharma has been appointed as additional Director of the Company w.e.f. 01/08/2015. The Company has received a notice in writing from a member proposing his candidature for appointment as an Independent Director. Your Directors recommend that re-appointment of Mr. Rajender Sharma as Independent Director will be in the interest of the Company.
During the year, the Board has noted the appointment of Ms. Soniya P. Sheth as Managing Director and appointment of Mr. Rajender Sharma as Independent Directors of the Company.
DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS
Pursuant to Section 149(7) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in Section 149(6) of the Act and the same has been taken on record by the Board of Directors of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the requirements of Section 134(1)(c) of the Companies Act, 2013 and on the basis of explanation and compliance certificate given by the executives of the Company, and subject to disclosures in the Annual Accounts and also on the basis of discussions with the Statutory Auditors of the Company from time to time, we state as under:
- That in the preparation of the accounts for the financial period ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures;
- That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 period and of the profit or loss of the Company for the period under review;
- That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- That the Directors have prepared the annual accounts for the financial period ended 31st March, 2016 on a ''going concern'' basis.
- The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
- The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
NUMBER OF MEETINGS OF THE BOARD:
Six meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance in the Annual Report.
Composition of Audit Committee of Directors, Nomination and Remuneration Committee of Directors and Stakeholders Relationship/ Grievance Committee of Directors, Number of meetings held of each Committee during the financial year 2015-16 and meetings attended by each member of the Committee as required under the Companies Act, 2013 are provided in Corporate Governance Report forming part of the report.
All the recommendations made by the Audit Committee were accepted by the Board.
PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTY:
There is no transaction with Related Party which requires disclosure under Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.
There was no Material Related party transaction(s) made with the Company''s promoters, Directors, Key Managerial Personnel or their relatives as specified under Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
All Related Party Transactions are placed before the Audit Committee for their prior approval. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website: www.kunststoffeindia.com.
Since all the transaction with Related Parties entered during the Financial Year 2015-16 by the Company, were in its ordinary course of business and on arm''s length basis FORM AOC- 2 is not applicable to the Company.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:
There is no Loan given, investment made, guarantees given and securities provided by the Company to any entity under Section 186 of the Companies Act, 2013.
INTERNAL FINANCIAL CONTROLS
The Company is having in place Internal Financial Controls System. The Internal Financial Controls with reference to the financial statements were adequate and operating effectively.
During the year, Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. A Group Risk Management Policy was reviewed and approved by the Committee.
The Company manages monitors and reports on the principle risks and uncertainties that can impact its ability to achieve its strategic objectives.
The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at the link:www.kunststoffeindia.com.
CORPORATE SOCIAL RESPONSIBILITY:
The Company has already constituted Corporate Social Responsibility Committee. As per Section 135 of the Companies Act, 2013, the Company needs to spend 2% of Average net profit of last three years on CSR activities. The Average net profit of last three years of Company is negative therefore your Company need not require to spend any amount on CSR Activity.
EXTRACT OF ANNUAL RETURN:
Pursuant to the provision of Section 134(3) (a) and 92(3) of the Companies Act, 2013 read along with Rule 12 of the Companies ((Management & Administration) Rules 2014, an extract of Annual Return as of 31st March 2016 in Form No. MGT-9 is annexed herewith as Annexure II to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules should be provided in the Annual Reports. None of the Company''s employees were covered by the disclosure requirement.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure I.
Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Company''s website.
Electronic trading of the Company''s Equity Shares has been made compulsory by the Securities & Exchange Board of India (SEBI) from 30th October, 2000. As on 31st March, 2016, about 76.00 % share holding representing 5242273 Equity Shares of the Company have been dematerialized. Your Company has executed agreements with both NSDL and CDSL for demat of its shares.
AUDITORS AND AUDITORS'' REPORT:
The retiring Auditor, M/s. A.V. Jobanputra & Co., Chartered Accountant, Mumbai, is eligible for re-appointment and has indicated their willingness to act as such. In terms of Section 139 of the Companies Act, 2013, their appointment needs to be confirmed and their remuneration has to be fixed.
The company has received letter from auditor to the effect that his re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for reappointment.
The notes on financial statement referred to in the Auditors'' Report are self explanatory and therefore do not call for any further explanation. The Auditor''s Report does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Companies Act, 2013, read along with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Ms. Kala Agarwal, Company Secretaries (CP No. 5356) as Secretarial Auditor, for the year ending 31st march, 2016. The Secretarial Audit Report contains Qualifications, Reservation and explanations which are self explanatory.
The Secretarial Auditor has submitted its Report in Form No. MR-3 for the Financial Year ended 31st march, 2016 and the same is set out in Annexure III, forming part of this Report.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.
3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Yours Directors place on record their deep appreciation of the continued support received from shareholders and bankers.
On behalf of the Board
For Kunststoffe Industries Limited
Soniya P. Sheth
Place: Mumbai Managing Director
Date: 4th August, 2016
128, Bhaudaji Road,
Mumbai - 400 019