DIRECTORS
To,
The Members,
The Directors present the Nineteenth Annual Report, together with the Audited Statement
of Accounts for the financial year ended on 30th September, 2013.
Standalone Financial Performance
The standalone financial performance of the Company for the year 2012-13 as compared to
the previous year is briefly highlighted hereunder.
(Rs. in Crore)
| Particulars |
2012-13 |
2011-12 |
|
(01.07.2012 to 30.09.2013) |
(01.07.2011 to 30.06.2012) |
| Gross Turnover |
463.91 |
932.36 |
| Total Income |
526.16 |
1,014.72 |
| Profit/(Loss) Before Interest, Depreciation and Tax |
(53.32) |
269.21 |
| Interest and Financial Expenses |
285.61 |
162.72 |
| Depreciation |
59.49 |
45.56 |
| Profit/(Loss) Before Tax |
(398.12) |
60.93 |
| Net Profit /(Loss) Profit after Tax |
(362.46) |
24.20 |
| Add: Balance brought forward from last year |
206.90 |
182.69 |
| Balance Carried to Balance Sheet |
(155.56) |
206.90 |
Operations
During the year under review, the Company clocked a Gross Turnover of Rs. 463.91 Crore,
on standalone basis, for the financial year ended on 30th September, 2013 as
compared to turnover of Rs. 932.36 Crore achieved in the previous year, showing a
declining trend. Net Loss incurred during the period under review remained at Rs. 362.46
Crore compared to net profit of Rs. 24.20 Crore in the previous year ended on 30th
June, 2012.
Whereas Gross Turnover, clocked on consolidated basis, for the financial year ended on
30th September 2013 remained at Rs. 597.26 Crore compared to Rs. 1,082.08 Crore
achieved in the previous year. The bottom-line for the year ended on 30th
September, 2013 stood at Rs. 372.95 against the consolidated profit of Rs. 36.70 Crore in
the previous year ended 30th June, 2012.
As you are aware, Company is engaged in the business of manufacturing and exporting
fibre reinforced composite products for major industrial sectors such as aerospace,
defence, chemical processing etc. However, like most Indian companies, in recent months,
due to global slowdown, overseas customers have cut down their requirements and deferred
future plans, resulting in decrease in demand for the products. Due to this sudden and
unprecedented setback in business, the Company is facing severe cash flow crisis. In spite
of all these constraints, Company is taking effective steps to keep the Company in motion.
Moreover, Company’s all grade of aerospace grade carbon fiber is certified by
Centre for Military Airworthiness and Certification ("CEMILAC") for aeronautical
application for use by important organizations of Government of India such as Hindustan
Aeronautics Limited ("HAL"), Vikram Sarabhai Space Centre ("VSSC"),
Bhabha Atomic Research Centre ("BARC"), Indian Space Research Organization
("ISRO"), Defense Research and Development Organization ("DRDO"),
In the meantime, the Company is working with various advisors to identify investors to
infuse money into the Company and/or provide strategic realignment of Company’s
structure, and thus to consolidate the Company’s endeavors.
Board of Directors
- The Export-Import Bank of India, Mumbai nominated Mr. David Rasquinha, as its nominee
on the Company’s Board of Directors with effect from 07th January, 2013.
However, upon withdrawal of his nomination from Board of the Company, he ceased to be
director of the Board w.e.f., 31st December, 2013.
- Mr. Tushar Patel resigned as a Director of the Company w.e.f., 12th
April, 2013. The Board places on record its sincere appreciation for the valuable
contribution made by Mr. Tushar Patel during his tenure as Director of the Company.
- With great sorrow, we report that Mr. Navin Patel, the Non- Executive Director of the
Company, passed away on 12th April, 2013, for heavenly abode. The Board places
on record its sincere appreciation for the valuable contribution made by Mr. Navin Patel
during his tenure as Director of the Company.
- The Board of Directors at its meeting held on 01st June, 2013, has subject
to the approval of the members at the ensuing Annual General Meeting, re-appointed Mr.
Kalpesh Patel as the Managing Director designated as Chairman and Managing Director of the
Company w.e.f., 01st August, 2013 for a further period of 3 years,
without any remuneration.
- Mr. Kaushik Bhatt, the non-executive director of the Company will retire by rotation
at the ensuing Annual General Meeting, and being eligible offer himself for
re-appointment.
- Mr. Mahendra Patel resigned as a Director and Executive Director of the Company w.e.f.,
02nd June, 2013. The Board places on record its sincere appreciation for the
valuable contribution made by Mr. Mahendra Patel during his tenure as Director of the
Company.
- Capt. Manoj Gaur was appointed as an additional Director of the Company with effect
from 14th August, 2013 by the Board of Directors of the Company. Pursuant to
provisions of Section 161(1) of the Companies Act, 2013, he hold office only upto the date
of the forthcoming annual general meeting of the Company. The Company has received a
notice along with a requisite deposit under Section 257 of the Companies Act, 1956, from a
Member signifying his intention to propose the appointment of Capt. Manoj Gaur as a
Director of the Company.
- Mr. Tushar Desai was appointed as an additional Director of the Company with effect
from 15th October, 2013 by the Board of Directors of the Company by way of
circular resolution. Pursuant to provisions of Section 161(1) of the Companies Act, 2013,
he hold office only upto the date of the forthcoming annual general meeting of the
Company. The Company has received a notice along with a requisite deposit under Section
257 of the Companies Act, 1956, from a Member signifying his intention to propose the
appointment of Mr. Tushar Desai as a Director of the Company.
Brief details pursuant to Clause 49 of the Listing Agreement, about the above directors
seeking appointment/reappointment are given in the Annexure-I appended to the Notice
convening the Annual General Meeting.
Directors’ Responsibility Statement
Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, with
respect to Directors’ Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the Annual Accounts for the year 2012-13, the applicable
Accounting Standards have been followed by the Company;
b) 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 as at 30th September, 2013 and
of the Loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 1956 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts of the Company on a ‘going
concern’ basis.
Wholly Owned & Overseas subsidiary and Joint Venture Companies
a) Wholly Owned domestic Subsidiary Companies
The Company has nine wholly owned Indian subsidiaries viz.
Kemrock Renewable Energy Limited; Kemrock Hi-Performance Composites Limited; Kemrock
Infratech Limited; Kemrock Advanced Composites Limited; Kemrock Advance Reinforcements
Limited; Kemrock Filament Windings Limited; Kemrock Speciality Polymers Limited and
Kemrock Aerospace India Pvt. Ltd. These subsidiaries are yet to commence their business.
During the year under report, the Company has acquired further 51% equity shares in
Kemrock Resins Private Limited. The 51:49 Joint Venture between "GP Chemicals
International Holding S.a.r.l" and "Kemrock Industries and Exports Limited"
set up under the name of "Georgia-Pacific Kemrock International Private Limited"
(entity) has been discontinued w.e.f., 12th March, 2013, with the mutual
agreement of both the partners. The said entity, now being a wholly owned subsidiary of
the Company, has been renamed as "Kemrock Resins Private Limited".
b) Wholly Owned Overseas Subsidiary Companies
The Company has two wholly owned overseas subsidiaries viz., Kemrock UK Limited,
in UK and Kemrock International FZE, in DAFZA, Dubai. These subsidiaries are engaged in
the business of international marketing in the fields of composite products and its parts
and components including related materials like glass fiber, technical fabric, resins,
polymers and chemicals.
Besides, the Company continues to hold 80% stake in Top Glass S.p.A., Italy, which is
one of the chief and highly qualified producers of Pultruded Composite Profiles, situated
20 kms. North east of Milano, Italy.
As required by Accounting Standard AS21 on Consolidated Financial Statements, the
audited Consolidated Financial Statements of the Company and its Subsidiaries are
attached.
In accordance with the General Circular No: 2/2011 issued by Government of India,
Ministry of Corporate Affairs, dated 8th February, 2011, the Balance Sheet,
Statement of Profit & Loss and other documents of the Subsidiary companies are not
being attached with the Balance Sheet of the Company.
The Annual Accounts of the subsidiary Companies and the related detailed information
shall be made available to shareholders of the holding and subsidiary Companies seeking
such information at any point. The Annual Accounts of the subsidiary Companies shall be
kept for inspection by any shareholders at registered office of the holding company and of
the subsidiary companies concerned. A Statement containing prescribed particulars of the
Company’s subsidiaries are given in Annexure- II appended to this report.
Corporate Governance & Management Discussion & Analysis
The Corporate Governance Report, pursuant to Clause 49 of the Listing Agreement with
the Stock Exchanges, is separately given under the head titled as "Corporate
Governance Report", which forms part of this Annual Report. A certificate of the
statutory auditors of the Company regarding compliance with the Corporate Governance
requirements as stipulated in Clause 49 of the Listing Agreement is annexed to this Report
as Annexure-B forming part of the report.
The Management Discussion and Analysis forming part of this Report is separately given
under the head titled as "Management Discussion and Analysis".
Change in Financial year
The Board of Directors of the Company at their meeting held on 24th June,
2013, have approved and resolved to extend the financial year of the Company by 3
(three) months viz., the financial year 2012-13 (01st July, 2012 to 30th
June, 2013) has been extended upto 30th September, 2013 comprising of 15
months.
Non-payment of interest on FCCBs
Due to global meltdown and devaluation of rupee, the company is facing severe financial
crisis and hence the Company could not make the payment of first installment of interest
with respect to Foreign Currency Convertible Bonds (US$ 100,000,000 5.5% Convertible Bonds
due 2017) which was due on 21st June, 2013. However, the Company is making
efforts to fulfil its obligations.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars required under Section 217(1)(e) of the Companies Act, 1956, read with
the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules,
1988, are set out in Annexure-A to this report.
Particulars of Employees
As required under the provisions of Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars of
employees are set out in Annexure and forms part of this report. However, having regard to
the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Annual Report is
being sent to all shareholders and others entitled thereto excluding aforesaid particulars
(Annexure). Any member interested in obtaining such particulars may write to the Company
Secretary at the Registered Office of the Company.
Health, Safety and Environmental (HSE)
Company had focused on continued training and awareness regarding Health, Safety &
Environmental improvements for entire cross section of employees with emphasis on shop
floor employees. This resulted in avoiding any major unsafe incident and also reportable
fire throughout the year. Company continues to have mutual aid arrangement with
neighboring industries and our fire protection network had helped to reduce damage
substantially during major unsafe incidents in nearby some of the industries. Company has
in totality satisfied all specified statutory compliances including solid, liquid and
gaseous effluents. Company has prepared and updated disaster management plan and also
reviewed risk assessment of the entire site engaging services of outside agency and
implemented recommendation including reemphasizing awareness at some of the critical
locations.
Company had applied for amendment in the environmental clearance due to some of the
subsequent changes and amendment in the environmental clearance is received.
Our Company has successfully completed the trials for installation of effluent R.O.
Plant, as an effort in achieving zero waste water discharge and hence reducing the
consumption of raw water.
Some of the required changes and modifications including installation of barometric
condensers are implemented to improve efficiency of Multiple Effect Evaporation system.
Recognition to In-House R&D Unit
Our R&D Center at Kemrock designs and develops various products in the field of
thermosetting resins for various Composites Applications. Kemrock R&D team is
dedicated, well qualified and experienced in the field of Composites and provides
guidelines constantly, based on extensive research, in obtaining various approvals of
products manufactured at Kemrock site, which profoundly helps in the development and
growth of the organization. The technologies and formulations researched and developed by
the team meet the business challenges and opportunities domestically and globally. It also
provides technical support services whenever required. The R&D Center is working in
the areas of developing new products, cost reduction in existing products, quality
upgradation and import raw-material substitution. We developed the 11 new products during
the period of July 2012 to September, 2013.
The Department of Scientific and Industrial Research, Ministry of Science and
Technology, Government of India, has recognized the Company’s In-house R & D unit
vide letter dated 23rd August, 2012 recognizing the efforts made by your
Company in Research & Development Activities.
Public Deposits
The Company has not accepted any deposits from the Public within the meaning of Section
58A of the Companies Act, 1956, and as such, no amount on account of principal or interest
thereon was outstanding on the date of Balance Sheet.
Corporate Social Responsibility
Kemrock Industries and Exports Limited (KIEL) -
- continues its association with Industrial Training Institute (ITI) Jabugam as
Industry partner under Public Private Partnership to improve ITI as Centre of Excellence;
- continues to render necessary facilities and support to primary school located in
village Asoj situated opposite its premises;
- provides fire, fighter facilities to nearby villages;
- is associated with CSM-Gujarat skill enhancement society to improve skill levels of
Engineers and Technicians of Gujarat;
- is associated with reputed nearby Institutes such as ITM Universe; &
- Contributes in nearby villages of Vadodara city during various festivals etc.
Auditors
During the year M/s. Talati & Talati, Chartered Accountants, Ahmedabad, tendered
their resignation effective 12th August, 2013, resulting into a casual vacancy
in the office of Statutory Auditors of the Company as envisaged by Section 224(6) of the
Companies Act, 1956 ("Act"). Subsequently, Board of Directors of the Company at
their meeting held on 14th August, 2013, has appointed M/s. R. A. Amin &
Co., Chartered Accountants, Vadodara, as the Statutory Auditors of the Company to fill the
casual vacancy caused by the resignation of M/s. Talati & Talati, Chartered
Accountants, subject to approval of members at Extraordinary General Meeting.
Subsequently, the members, at the Extraordinary General Meeting held on 10th September,
2013 had appointed M/s. R. A. Amin & Co., as Auditors of the Company to hold office up
to conclusion of ensuing Annual General Meeting of the Company.
M/s. R. A. Amin & Co., Chartered Accountants, the existing Auditors of the Company,
will retire at the conclusion of the ensuing Annual General Meeting of the Company. The
Shareholders of the Company are requested to appoint the auditors and fix their
remuneration. The Company has received certificate from the Auditors to the effect that
their appointment, if made, would be within the limits prescribed under Section 224(1B) of
the Companies Act, 1956.
Acknowledgment
Your Directors take this opportunity to express their gratitude to the Banks, Central
and State Governments and their departments and the local authorities for their support.
The Directors also place on record its sincere appreciation to customers, vendors,
joint venture partners/subsidiaries, business associates and technology partners of the
Company.
Besides, the Directors place on record their sincere appreciation to the Shareholders,
Clients, Regulatory Authorities, Stock Exchanges and Depositories for their continued
support and assistance and look forward to have such support in all future endeavors.
Board sincerely appreciate and acknowledge the concerted efforts of employees at all
levels.
|
For and on behalf of the Board of Directors of |
|
Kemrock Industries and Exports Limited |
| Date: 16th January, 2014 |
|
| Reg. Off.: Vill. Asoj |
|
| Vadodara-Halol Express Way |
Kalpesh Patel |
| Tal. Waghodia, Dist. Vadodara-391 510 |
Chairman & Managing Director |
‘Annexure – A’ to the Directors’ Report
Statement regarding Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo for the year ended on 30th September, 2013 as required under
Section 217(1)(e) of the Companies Act, 1956, which forms part of the Directors Report.
A. CONSERVATION OF ENERGY:
(a) Energy conservation measures taken:
Conversion of 2TPH steam Boiler from wood fire to Natural Gas is completed. This will
help to save Electricity, improve productivity and quality of resin, and improve
environment.
(b) Additional Investments and proposals, if any, being implemented for reduction of
consumption of energy:
Operation of cooling tower fan Motor of chiller converted by Variable frequency Drive
(VFD) to reduce the consumption of power of cooling tower fan motor.
(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and
consequent impact on cost of production of goods:
Implementation of above measures helped to improve productivity and quality of resin.
(d) Total energy consumption and energy consumption per unit of production as per
Form-A of the Annexure in respect of industries specified in the Schedule thereto is as
under:
FORM – A (see Rule 2)
Form for Disclosure of Particulars with respect to Conservation of Energy
(a) Power and fuel consumption
| Sr. No. |
Particulars |
Unit |
Year ended |
|
|
|
2012-13 |
2011-12 |
| 1. |
(a) Electricity Purchased |
|
|
|
|
Unit |
KWH |
8,884,785 |
17,997,700 |
|
Total amount |
Rupees |
83,502,350/- |
131,784,923/- |
|
Rate/Unit |
Rs./ KWH |
9.40/- |
7.32/- |
|
(b) Own Generation |
|
|
|
|
i) Through diesel generator |
|
|
|
|
Unit |
KWH |
48,644.0 |
122,234 |
|
Units per ltr. of diesel oil |
KWH |
3.00 |
3.0 |
|
Cost / unit |
Rs./KWH |
16.00 |
14.32 |
|
ii) Through steam turbine generator |
|
|
|
|
Units |
|
|
|
|
Units per ltr. of diesel oil/gas |
N. A. |
N. A. |
N.A. |
|
Cost / units |
|
|
|
| 2. |
Coal (specify quality and where used) |
|
|
|
|
Quantity (tonnes) |
N.A. |
N.A. |
N. A. |
|
Total cost |
|
|
|
|
Average rate |
|
|
|
| 3. |
Furnace oil |
|
|
|
|
Quantity (K. Ltrs.) |
KL |
|
|
|
Total amount |
Rs. |
— |
— |
|
Average rate |
Rs./Ltrs |
|
|
| 4. |
Wood Consumption-(Resin and Composite Section) |
|
|
|
|
Quantity (MT) |
Rs. |
1,603.00 |
5,986.67 MT |
|
Total Amount |
Rs./Ltrs |
5,610,500 |
17,750,476.55 |
|
Average Rate |
MT |
3,500/MT |
2,965/MT |
|
Briquettes Consumption - Resin Sec |
|
|
|
|
Quantity (MT) |
MT |
46.00 |
274.16 MT |
|
Total Amount |
Rs. |
2,02,400 |
11,17,202 |
|
Average Rate |
MT |
4,400/MT |
4,075 /MT |
| 5. |
Others/internal generation (CNG) |
|
|
|
|
Quantity |
M3- |
50,622NM3 |
335,600NM3 |
|
Total cost |
Rs. |
1,902,773.59 |
10,739,200 |
|
Rate/unit |
Rs./NM3 |
Rs.37 |
Rs.32 |
(b) Consumption per unit of production
The products of the Company are manufactured in different shapes and sizes and hence,
consumption per unit of production is not ascertainable.
B. TECHNOLOGY ABSORPTION:
(e) Efforts made in technology absorption as per Form-B (Disclosure of particulars with
respect to Technology Absorption) are as under:
FORM – B (See Rule 2)
Form for Disclosure of Particulars with respect to Technology Absorption
[a] Research and Development (R&D):
1. Specific areas in which R&D carried out by the Company:
Development of thermosetting resin such as Unsaturated Polyesters, Epoxy and Phenolic
Resins for composites applications.
2. Benefits derived as a result of the above R&D:
More than 10 products developed, such as epoxy resin and hardener for powder coating
resin system, and high performance vinyl ester for making GRP pipes and successfully
commercialize in field of thermosetting resin. Commissioned in house Phenolic and UPR
resins system for Prepreg which are highly cost effective and as per international
quality. Metha acrylate adhesive for very high peel strength, Food grade Urea formaldehyde
Resin successively developed and commercialized.
3. Future plan of action:
Based on Internal and Market requirement, R & D shall design and develop the
products in the area of composites. Varieties of Prepregs are developed in-house during
the year, which have been qualified by various global laboratories for the specialty
applications like, Windmill blade and Railway interiors and exteriors.
| 4. Expenditure on R&D: |
|
|
| a) Capital |
: |
Rs. NIL |
| b) Recurring |
: |
Rs. 45 Lacs |
| c) Total |
: |
Rs. 45 Lacs |
d) Total R & D expenditure as a Percentage of Total Turnover : 0.09%
[b] Technology Absorption, Adaptation & Innovation:
1. Efforts, in brief, made towards technology absorption, adaptation and
innovation :
Kemrock has focused for use of in house resins and fabrics for manufacture of wind
turbine blade, railway coach interior and exterior laminates/Prepregs instead of sourcing
from outside companies at higher cost. This requires testing and approval of our in house
resins and fabrics including laminate/ Prepregs preparation and testing at approved
laboratory of our major important customers and getting confirmation regarding acceptance
of quality of our in house resins and fabrics.
2. Benefits derived as a result of the above efforts, e.g. product improvement,
cost reduction, product development, import substitution etc.:
a) Carbon fiber was retested by government approved laboratories and submitted to
CEMILAC and they confirm use of carbon fiber produced at Kemrock for various aeronautical
applications. Further, Kemrock has taken up conversion of carbon fiber produced for
different value added products such as drive shaft for cooling tower, rods etc. This will
help to achieve better value addition of carbon fiber produced at Kemrock.
b) Approval of in house resins and fabrics produced at Kemrock for manufacture of wind
mill blades and railway division will help to reduce manufacturing cost of wind mill
blades and various projects of railway division. Further, this also will help to achieve
higher sales realization of resins by selling to other manufacturers.
3. In case of imported technology (imported during the last 5 years reckoned
form the beginning of the financial year), following information may be furnished:
| a) Technology imported |
: |
N. A. |
| b) Year of import |
: |
N. A. |
| c) Has technology been fully absorbed? |
: |
N. A. |
| d) If not fully absorbed, areas where this has not taken place reasons therefore and
future plans of action |
: |
N. A. |
[c] Foreign Exchange Earning and Outgo:
a) Activities relating to exports; initiatives taken to increase exports; development
of new export market for products and services; and export plans:
The Company always strives to maintain its focus and presence in the global market
being an export oriented unit. The Company has a good network for marketing and export
activities and it avails and explores export opportunities based on economic
considerations, international market analysis and embarking on new product applications.
b) Total Foreign Exchange Used:
|
(Rs. in Lacs) |
| Raw Material |
18,176.58 |
| Component & Spares Parts |
14.01 |
| Chemicals |
830.47 |
| Capital Goods |
4.71 |
| Total Foreign Exchange Earned: |
|
| Export of Goods on FOB Basis: |
25,791.30 |
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