2022-23
(Including Management Discussion & Analysis)
Dear Members,
Your Directors have pleasure in presenting the 52nd Annual
Report on the business and operations of Kinetic Engineering Limited and the
Audited Financial Statements for the financial year ended 31st March 2023.
I. Financial Performance & Business:
Particulars |
31st March, 2023 |
31st March, 2022 |
| Total Revenue |
13,750.93 |
12,435.34 |
Profit/(Loss) before Interest,
Depreciation, Tax and Other Amortizations ("EBIDTA") |
1,599.38 |
1,441.12 |
| Less : Depreciation and Amortization Expenses |
647.62 |
646.68 |
| Finance Cost |
638.69 |
658.40 |
| Tax Expenses Net |
- |
- |
| Profit/(Loss) for the year |
313.07 |
136.04 |
| Other Comprehensive Income |
(5.98) |
18.02 |
| Total comprehensive income/(loss) for the
year |
307.09 |
154.06 |
During the financial year, your Company has achieved net profit of Rs
313.07 lakhs, a 130% jump over the previous years profit. It also achieved revenue
growth of 10.58% at Rs 137.50 cr., compared to last years revenue of Rs. 124.35 cr.
Your company continues to pursue its strategy of adding new strategic
customers & programmes and exports led growth while investing in cost saving
initiatives.
Your company would also like to thank the efforts of all team members
and vision of the management in achieving sustained improved profitability.
New products:
In line with the strategy spelt out last year, the company has taken
decisive steps for its foray into EV space. In view of the rapid pace of change from IC
vehicles to Electric vehicles, the company has created a subsidiary company exclusively
focused on Electric Mobility. The new subsidiary company is evolving its product strategy
and exploring possible tie-ups for critical components in this field. Your company has so
far invested Rs 2.70 cr in the equity capital of the company.
During the course of the last year, the company has developed and
started supplies of chassis for electric moped, other body parts for electric 3wheelers
and also started supplies of its gear boxes for electric 3 wheelers to a reputed
manufacturer. Based on the current projections from various customers in the EV space, the
revenue from EV products of the company potentially will reach around 5% of the annual
revenue in the current financial year.
The other new business that the company had won in the last year from
Carraro and Sonalika have also started ramping up, which will add substantially to the
revenue.
Capital expenditure:
The company has always invested in technologies and equipment to
support revenue growth. In line with this and to cater to the demands of its customers in
the EV space, the company has upgrade its paint shop at a cost of Rs. 1.5 crs. With this
investment your company now has a state-of-the art Paint Shop which can deliver aesthetic
parts for 2wheelers as well as 3 wheelers, duly powder coated & / or fully painted as
per the requirements of the customers.
The company has also been investing in environmentally friendly
technologies which also help in saving costs. Accordingly, the company has invested in
Induction Billet Heaters at its forging plant and also converted its Oil-Fired Normalizing
Furnaces to electrically fired. Both these initiatives will save substantial cost for the
company in months to come.
The company has also invested Rs. 50 Lakhs in created a separate
dedicate cell for one its key customer, which was recently inaugurated at the hands of the
customers senior management personnel. The company has also taken up upgradation of
its shops in calibrated manner as a companywide 5S initiative through an inter-company
competition.
Employee Relations:
The company continues to enjoy warm relationships with its employees. I
am glad to inform you that the company and the workers union have amicably settled
on a long term wage agreement with increased productivity.
Management Discussion and Analysis:
Risks:
Last 2 years have seen unprecedented commodity price increases. Your
company has been successful in passing on the full burden of the commodity price increase
to its customers. However, the prices continue to remain elevated. Any further
geo-political events may upset the stability once again, causing short term impact on the
material costs.
Stubborn inflation in the western world is still not showing any signs
of abating and with increased interest rates the developed economies may slow down. This
may adversely impact the demand from our export customers. The company however, feels any
impact will be short term and may affect the margin in the short term.
Opportunities:
The company sees major opportunities in exploring business in the EV
space. Given your companys legacy and with its current products in the EV space,
your company sees opportunities in partnering with leading players in this space by way of
collaborations/ JVs / technical tie ups.
Your company also sees a large opportunity in utilizing the strength of
its known, established and loved brand name to aggressively tap opportunities.
KEL continues to develop and enhance its export portfolio, and is
looking at extending its current contracts for the next terms. KEL also is exploring more
focus on tractor segment, as a hedge against automobile and is adding various new
customers here. The company is already in discussion with a leading global player in this
field for new business.
With improved profitability and healthier balance sheet, the company
sees opportunities to negotiate better terms with its bankers, suppliers & associates,
which will further improve profitability.
Subsidiary, associates and joint ventures:
The Company has subsidiary in the name as Kinetic Watts and Volts
Limited which was incorporated on 27/09/2022 under the Companies Act, 2013. The Corporate
Identity Number of the company is U34300PN2022PLC215040.
II. Preferential issue to Promoters:
a) On 12 August 2022, the board allotted 2,93,569 Equity Shares @ Rs.
92.50/- per share, amounting to Rs. 2.71 Crore on Preferential Basis to Mr. Ajinkya A
Firodia, Managing Director & Promoter of the company.
b) On 02 November 2022, the board allotted 8,79,310 Equity Shares @ Rs.
116/- per share, amounting to Rs. 10.20 Crore, on Preferential Basis to Micro Age
Instruments Private Limited Promoter of the company.
c) On 12 August 2023 the board approved issue of 22,85,000 Equity
Shares @ Rs. 120/- per share amounting to Rs. 27.42 Crore/- on Preferential Basis to
Promoters of the company.
d) Further on 12 August 2023 the board also approved issue of 80,000,
OCCPS @ Rs. 120/- per share, amounting to Rs. 96 Lakhs to Promoter of the company.
III. Corporate Governance
A Report on Corporate Governance along with a Certificate from the
Statutory Auditors of the Company regarding compliance with the conditions of Corporate
Governance as stipulated under the provision of Listing Regulations, 2015 forms part of
the Annual Report.
Board of Directors
Boards Composition and Independence
As on 31st March 2023, our Board comprised of nine members,
headed by a Non- Executive Chairman, one Executive Director and eight Non-Executive
Directors, where in five are Independent Directors. Two out of nine members are women
directors. The composition of Board is in accordance with the requirements of Listing
Regulations 2015 & Companies Act, 2013.
The Company has received necessary declarations from the Independent
Directors stating that they meet the prescribed criteria for independence. The Company has
designated Mr. Shirish Ratanlal Kotecha as Independent Chairman for Audit Committee,
Nomination and Remuneration Committee and Stakeholders Relationship Committee.
Directors and Key Managerial Personnel (KMP)
Director
Mr. Arun Hastilmal Firodia (DIN: - 00057324), Director of the Company,
retires by rotation at the ensuing Annual General Meeting and being eligible offers
himself for re-appointment.
Key Managerial Personnel (KMP)
During the year under review, there is no change occurred in the Key
Managerial Personnel of the Company.
Declaration given by Independent Directors
The independent directors have submitted a declaration of independence,
stating that they meet the criteria of independence as provided under section 149(6) of
the Act, as amended, and regulation 16 of the SEBI Listing Regulations.
The independent directors have also confirmed compliance with the
provisions of rule 6 of Companies (Appointment and Qualifications of Directors) Rules,
2014, as amended, relating to inclusion of their name in the databank of independent
directors.
The Board took on record the declaration and confirmation submitted by
the independent directors regarding them meeting the prescribed criteria of independence,
after undertaking due assessment of the veracity of the same in terms of the requirements
of regulation 25 of the SEBI Listing Regulations.
Board Meetings
The Board met Seven (7) times during the financial year 2022-23 viz.
10-May-22 , 25-May-22, 12-Aug-22, 30-Aug-22, 14-Nov-22, 14-Feb-23 and 31-Mar-23.
Audit Committee
All the Committee members are Non-Executive Independent Directors. All
the Members of the Committee possess sufficient accounting and financial management
knowledge. The Company Secretary of the Company is the Secretary of the Committees also.
The recommendations of the Audit Committee during the year were accepted by the Board.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Listing
Regulations, 2015, Independent Directors at their discussion, without the participation of
the Non-Independent Directors and Management, evaluated the Boards performance,
Performance of the Chairman and other Non-Independent Directors.
The Board subsequently evaluated its own performance, the working of
its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship
Committee) and Independent Directors (without participation of the relevant Director).
The criteria for performance evaluation have been detailed in the
Corporate Governance Report which forms part of the Annual Report.
Remuneration Policy of the Company
The Remuneration policy of the Company comprising of the appointment
and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the
Company including criteria for determining qualifications, positive attributes,
independence of the Directors and other related matters has been framed by Nomination and
Remuneration Committee and has been briefed in Annexure-III to this Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules
prescribed thereunder and the Listing Regulations, 2015, is implemented through the
Companys Whistle Blower Policy to enable the
Directors and employees of the Company to report genuine concerns, to
provide for adequate safeguards against victimization of persons who use such mechanism
and make provision for direct access to the Chairman of the Audit Committee.
Whistle Blower Policy of the Company is available on the Companys
website at www.kineticindia.com/investors.
Information required under Sexual Harassment of Women at Work place
The Company has in place, the requisite Internal Committee as envisaged
in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013. No complaints on the issues covered by the above Act were received, during the
year.
Contracts or Arrangements with Related Parties
As required under the Listing Regulations, 2015, Related party
transactions are placed before the Audit Committee for approval. At the beginning of the
financial year, prior approval of the Audit Committee is obtained on an omnibus basis for
continual transactions. The corresponding actual transactions then become a subject of
review by the Committee at subsequent meetings.
All related party transactions/arrangements entered into by the Company
during the year, were on an arms length basis and in ordinary course of business.
There were no materially significant related party transactions entered
into by the Company with the Promoters, Directors, Key Managerial Personnel or other
designated persons which could conflict with the interest of the Company as a whole.
Consequently, disclosures in form AOC-2 pursuant to Rule 8 (2) of the Companies (Accounts)
Rules, 2014 are not required.
The policy on Related Party Transactions as approved by the Board is
available on the Companys website at www.kineticindia.com/investors.
Particulars of Loans, Guarantees or Investments under Section 186 of
the Companies Act, 2013
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in Note 4 & 5 of Notes
to the Financial Statements.
Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors,
based on the representations received from the Operating Management, and after due
enquiry, confirm that:
(a) In the preparation of the annual accounts for the Financial Year
ended 31st March, 2023, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
(b) The Directors had in consultation with Statutory Auditors, selected
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 as at 31st March, 2023
(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, 2013 for safeguarding the assets of the Company and for preventing and
detecting fraud and irregularities;
(d) The Directors have prepared the annual accounts on a going concern
basis;
(e) The Directors have laid down adequate Internal Financial Controls
to be followed by the Company and such Internal Financial Controls were operating
effectively during the Financial Year ended 31st March, 2023;
(f) The Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively throughout the Financial Year ended 31st March, 2023.
Share Capital
The paid-up equity share capital as on 31 March 2023 stood at 1,987.65
lakh. During the year under review, there was no public issue, rights issue, bonus issue
nor had the Company issued shares with differential voting rights or granted stock options
or sweat equity.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, there are no employees drawing remuneration in excess
of the limits set out in the said Rules.
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in
Annexure V of the Annual Report.
Having regard to the provisions of Section 136(1) read with its
relevant provision 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 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 without any fee.
IV. Audit and Internal Financial Control
Statutory Auditor
The Board has approved the appointment of M/s Pawan Jain &
Associates (FRN: 0107867W) Chartered Accountants, Pune to hold office for five years until
the conclusion of Annual General Meeting to be held in the calendar year 2027 in
accordance with the provisions of Section 139 of the Companies Act, 2013.
Auditors Report
There are no qualifications, reservations or adverse remarks made by
M/s Pawan Jain & Associates, Statutory Auditors, in their report for the financial
year ended 31st March, 2023.
Pursuant to the provisions of Section 143(12) of the Companies Act,
2013, the statutory auditors have not reported any incident of fraud to the Audit
Committee during the year under review.
Secretarial Audit FY 2022-23
Mr. Dinesh Birla, proprietor of Dinesh Birla and Associates, Practicing
Company Secretaries was appointed by the Board to conduct the audit of the Companys
Secretarial Records in respect of the financial year 2022-23. The report of the
Secretarial Audit appears as in Annexure IV. There are no qualifications, reservations or
adverse remarks in the Report.
Secretarial Auditor FY 2023-24
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Company has appointed Mr. Dinesh Birla, Practicing Company Secretary (Certificate of
Practice No.: 13029) to undertake the Secretarial Audit of the Company for the financial
year 2023-24.
Internal Control System and their adequacy
The Company has adequate internal control system commensurate with its
size and nature of business for ensuring efficiency of operations, adherence to management
policies and protection of companys assets. The Companys Audit Committee periodically
reviews the internal control systems and compliance with Companys policies, procedures
and laws.
V. Other Disclosures Postal Ballot: Nil Deposits:
During the year under review, your Company had not accepted any
deposits within the meaning of provisions of Chapter V Acceptance of Deposits by Companies
of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo: The information pertaining to conservation of energy, technology
absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the
Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is
furnished as Annexure I to this Report.
Extract of Annual Return:
Pursuant to section 134 and section 92 of the Companies Act, 2013 read
with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract
of the Annual Return as on 31st March, 2023 in Form No. MGT- 9 is attached
herewith as Annexure II and forms part of this Report. It is also available on the website
of the Company at www.kineticindia.com.
A copy of the annual return as provided under section 92(3) of the Act,
in the prescribed form, which will be filed with the Registrar of Companies/Ministry of
Corporate Affairs within the Regulatory timelines is hosted on the Companys website
and can be accessed at www.kineticindia.com.
Material changes and commitments between the end of the financial year
and date of report:
There have been no material changes and commitments affecting the
financial position of the Company between the end of financial year and the date of the
Report.
Cautionary Statement
The report contains estimates and expectations, which could be forward
looking. Actual results, however, might differ from estimates and expectations expressed
or implied in this report, as the same are affected by many other uncertainties, including
raw material availability & prices, changes in Government regulations, tax regimes,
economic developments and other incidental factors.
Significant and Material Orders Passed by the Regulators or Courts or
Tribunals impacting the going concern status of the Company
There are no significant and material orders passed by the Regulators
or Courts or Tribunals which would impact the going concern status of the Company.
Acknowledgement
The Directors express their sincere thanks to Central & State
Governments, Financial Institutions, banks who have extended their support in form of
Credit Facilities, suppliers and stakeholders for the support extended to the Company and
also wish to place on record their appreciation of the dedicated services rendered by the
employees of the Company.
|
On behalf of the Board of Directors |
|
For Kinetic Engineering Limited |
|
A. H. Firodia |
Date: 11 August 2023 |
Chairman |
Place: Pune |
(DIN: 00057324) |
+91-9892691696
