Kabsons Industries Ltd Directors Report

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<dhhead>BOARD’S REPORT</dhhead>

To

The Members of KABSONS INDUSTRIES LIMITED

Hyderabad.

Your directors have pleasure in presenting the 32^nd Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March, 2024.

1. Financial Summary: (Rs. in thousands except EPS, unless otherwise stated)

During the year under review, the Company generated a profit of Rs. 33,085.67 thousand before finance costs, depreciation, and exceptional items, compared to a profit of Rs. 14,009.06 thousand in the previous year. This profit includes lease income, which is a major source of revenue for the Company. Your Directors are actively seeking opportunities to improve performance and increase revenue in the coming year.

The Company has been focusing on lease income. In response to recent demand, a new factory shed has been offered for lease starting from April 2023. Additionally, the Company began bottling operations for another party at our Ranchi bottling plant starting in May 2023.

The Company acquired some assets, including plant and machinery and other equipment, from EIIL (which was operating our bottling plant at Rohtak on lease) from April 1, 2023. We are planning to launch a new project focused on supplying aerosol-grade LPG to various industrial customers. Additionally, the Company has completed the necessary repairs and maintenance at this plant and is now awaiting the start of operations

Your directors have not recommended any dividend on Equity Shares for the year under review.

Your Board of Directors does not appropriate any amount to be transferred to General Reserves during the year under review.

(a) Authorized Share Capital

During the year under review, there was no change in authorized share capital of the Company. Authorized share capital of the company as on March 31, 2024 was Rs.18,00,00,000/-, comprising of 1,80,00,000 equity shares of Rs.10/- each.

(b) Paid-up Share Capital

During the year under review, there was no change in paid up share capital of the Company. Paid up share capital of the company as on March 31, 2024 was Rs.17,46,30,000/-, comprising of 1,74,63,000 equity shares of Rs.10/-each.

(c) Buy Back of Securities

The Company has not bought back any of its securities during the year under review.

(d) Sweat Equity

The Company has not issued any Sweat Equity Shares during the year under review.

(e) Bonus Shares

The Company has not issued any bonus shares during the year under review.

(f) Employees Stock Option

The Company has not provided any Stock Option Scheme to the employees.

During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with rules made there under.

There have been no material changes and commitments, affecting the financial position of the Company which occurred during between the end of the financial year to which the financial statements relate and the date of this report.

The Company does not have any Subsidiary, Joint venture or Associate Company

During the year under review, no companies ceased to be its subsidiaries, joint ventures, or associate companies

10. Details of significant and material orders passed by the regulators/ courts/ tribunals impacting the going concern status and the Company’s operations in future.

There is no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations.

11. Related party Transactions:

Related Party Transactions that were entered during the financial year were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseeable and repetitive nature. The particulars of contracts or arrangements with related parties referred to in section 188(1) and applicable rules of the Companies Act, 2013 in Form AOC-2 is provided as Annexure - I to this Report.

The details of the Related Party Transactions are furnished in Note 34.3.5 of the Notes on the Financial Statements attached to this Report. All the related party transactions have been on an arm’s length basis. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the Rules thereunder and the SEBI Listing Regulations. This Policy was considered and approved by the Board has been uploaded on the website of the Company at https://www.kabsons.co.indisclosures sebi-lodr/#1663763229036-eecace0b-f293.

12. Particulars of Loans, Guarantees or Investments

Your Company has not given any Loans / Guarantees and not made any Investments during the FY 2023-24, as specified under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

13. Number of Meetings of the Board

The Board of Directors duly met 4 times during the financial year from 1^st April, 2023 to 31^st March, 2024, the details of which are given in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Companies Act, 2013 and Secretarial Standard -1. Details of these meetings of the Board as well as its committees have been given in the Corporate Governance Report, which forms parts of the Annual Report.

Sub Committees of the Board

Due to change in the composition of the Board of Directors of the Company, Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, and Risk Management Committee were reconstituted. The composition and other details of these committees have been given in the report on the Corporate Governance which forms part of the Annual Report.

14. Directors and Key Managerial Personnel

During the year under review, the following were the ‘Key Managerial Personnel’ of the Company: Sri. Rajiv Kabra – Managing Director Sri. Krishna Murthy Motamarri - Chief Financial Officer; and

Sri.Nagaraju Musinam, Company Secretary and Compliance Officer was resigned on 30.08.2023. Sri. Madhu Thokala – Company Secretary and Compliance Officer was appointed on 14.11.2023.

The Company is well supported by the knowledge and experience of its Directors and Executives. In terms of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Ms. Riha Kabra, Non Executive Director of the Company is liable to retire by rotation and being eligible, has offered herself for re appointment.

Mr. Deepak Khosla was appointed as an additional independent director for five years from 21.08.2024 to 20.08.2029 subject to approval of shareholders.

Shri. Sumit Agarwal was appointed as an Independent Director for 5 years with effect from 12.08.2023 and was regularized in the 31^st AGM held on 27.09.2023.

Shri. Venkata Subba Rao Pinapati was resigned with effect from 13.08.2023.

In the opinion of the Board, the independent director appointed during the year possess requisite integrity, expertise, experience and proficiency.

Based on the confirmations received from Directors, none of the Directors are disqualified from appointment under section 164 of the Companies, Act 2013.

15. Declaration by Independent Directors

The Independent Directors of the Company have submitted their declarations as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as per sub-section (6) of Section 149 of the Act.

16. Familiarization programme for Independent Directors

The Company proactively keeps its directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry.

17. Independent Directors’ Meeting

The Independent Directors met on 13.02.2024, without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Managing Director and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

18. Board Evaluation:

The Board adopted a formal mechanism for evaluating its performance as well as that of its committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc.

19. Secretarial Standards

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

20. Policy on Directors’ Appointment and Remuneration and Other Details

The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178 (3) of the Companies Act, 2013 have been disclosed in the corporate governance report. Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel. A gist of the policy is available in the Corporate Governance Report.

21. Statutory Auditors

M/s. K S Rao & Co., Chartered Accountants, (Firm Registration No.003109S), was appointed as the statutory auditors of the Company, to hold office for the second term of five consecutive years from the conclusion of the 30^th AGM of the Company held on September 23, 2022, till the conclusion of the 35^th AGM to be held in 2027, as required under Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.

Qualification by Statutory Auditor

Information & Explanation in respect of Qualification / Reservation or Adverse remarks contained in Independent Auditors Report under Paras: Basis for Qualified opinion, Emphasis of Matter and Other Matters:

Management View: 1) In view of very limited number of employees currently working with the Company,

compliance with AS-19 Employee Benefits regarding gratuity has not been feasible. However, a provision forgratuity as required under Payment of Gratuity Act has been made.

2) The Company has been putting efforts to settle the outstandign deposits due to dealers and distributors, but no proper response is received. In view of this, the company desided not to provide interest against these deposits.

22. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. B S S & Associates, Practicing Company Secretaries for conducting Secretarial Audit of the Company for the financial year 2023-2024. The Secretarial Audit Report is annexed herewith as Annexure - II.

Qualification by Secretarial Auditor

The Secretarial Auditor’s Report does not contain any qualifications, reservation or adverse remarks during the year review.

23. Internal Auditors

In pursuance of Section 138 of the Companies Act, 2013 read with rules made there under, the Board has appointed Shri. M Krishna Murthy, CFO of the Company as Internal Auditors of the Company to carry out internal auditing of books of accounts periodically.

24. Cost Records and Audit

The Central Government has not prescribed the maintenance of cost records under Section 148 of the Act, for any of the services rendered by the Company.

25. Vigil Mechanism / Whistle Blower Policy

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013 and Regulation 22 of the SEBI Listing Regulations, a Vigil Mechanism / Whistle Blower Policy for directors and employees to report genuine concerns has been established. The Vigil Mechanism / Whistle Blower Policy has been uploaded on the website of the Company at https://www.kabsons.co.in/disclosures-sebi-lodr #1663763229036-eecace0b-f293.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. The policy also provided adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases.

Your Company hereby affirms that during the year no director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received.

26. Management Discussion and Analysis

Management Discussion and Analysis Report for the year under review, as stipulated under SEBI Listing Regulations, is annexed herewith as Annexure III which forms part of this report.

27. Risk Management

The Risk Management Committee duly constituted by the Board had formulated a Risk Management Policy for dealing with different kinds of risks attributable to the operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk Management procedure will be reviewed periodically by the Audit Committee and the Board.

28. Corporate Social Responsibility (CSR) Initiatives:

Section 135 of the Companies Act, 2013 provides the threshold limit for applicability of the CSR to a Company ie.

(a) networth of the Company to be Rs.500 crore or more; or (b) turnover of the company to be Rs. 1,000 crore or more; or (c) net profit of the company to be Rs. 5 crore or more. As the Company does not fall under any of the threshold limits given above, the provisions of section 135 are not applicable to the Company.

29. Annual Return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Annual Return in eform MGT 7 is placed at the company website at https://www.kabsons.co.in/disclosures-sebi-lodr/#1663763349182-b06c706ad5ad.

30. Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors states that: a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. They 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 and loss for that period; c. They 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. They have prepared the annual accounts on a going concern basis; e. They 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. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

31. Information on Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and outgo

Pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 3 of Companies (Accounts) Rules, 2014, these particulars are not relevant to the company’s operations and hence not furnished the same.

32. Company’s Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace

The Company prohibits any form of sexual harassment and any such incidence is immediately investigated and appropriate action taken in the matter against the offending employee(s) based on the nature and the seriousness of the offence. The Company has a policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace (the Policy) and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013"notified by the Government of India vide Gazette Notification dated 24^th April, 2013.

There was no case of sexual harassment reported during the year under review.

33. Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees:

The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in separate annexure forming part of this Report as Annexure – IV.

34. Corporate Governance

The Company is committed to good corporate governance in line with the SEBI (LODR) Regulations, 2015 and Provisions, Rules and Regulations of the Companies Act, 2013. The Company is in compliance with the provisions on corporate governance specified in the SEBI (LODR) Regulations, 2015 with BSE. A certificate of compliance from B S S & Associates, Company Secretaries and the report on Corporate Governance form part of this Directors’ Report as Annexure – V.

35. Details in respect of frauds reported by Auditors under Section 143 (12) other than those which are reportable to the Central Government.

There were no frauds reported by the Statutory Auditors under sub-section 12 of Section 143 of the Companies Act, 2013 along with Rules made there under.

36. Details of application made or any proceeding pending under the Insolvency and bankruptcy code, 2016 during the year

The Company has not made any application under the Insolvency and Bankruptcy Code, 2016, during the year under report.

37. Details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking Loan from the banks or financial institutions along with the reasons thereof

The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

38. Insider Trading

In compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 and to preserve the confidentiality and prevent misuse of unpublished price sensitive information, the Company has adopted a code of conduct to Regulate, Monitor and Report Trading by Insiders (‘Insider Trading Code’) and code of Practices and Procedures for Fair Disclosure of unpublished Price Sensitive Information (‘Code of Fair Disclosure’). The Insider Trading Code is intended to prevent misuse of unpublished price sensitive information by insiders and connected persons and ensure that the Directors and specified persons of the Company and their dependents shall not derive any benefit or assist others to derive any benefit from access to and possession of price sensitive information about the Company, which is not in the public domain, that is to say, insider information. The code of Fair Disclosure ensures that the affairs of the Company are managed in a fair, transparent and ethical manner keeping in view the need and interest of all the Stakeholders.

39. Awards and recognition

The Company has not received any award during the Financial Year.

40. Human resource

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind your Company’s vision. Your Company appreciates the spirit of its dedicated employees.

Acknowledgments

The Directors wish to place on record their gratitude to shareholders and thank the customers, vendors, franchisees, bankers, Department of Explosives and their Officials, Central Excise, Pollution Control Boards and Commercial Tax Departments of respective States, host of other State and Central Government Departments, Security Exchange Board of India and Stock Exchanges at Mumbai, Ahmedabad and Kolkata and others for their continued support to the Company’s growth. The Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, for their sincerity, hard work, solidarity and dedicated support to the Company.

By Order of the Board of Directors of Kabsons Industries Limited Sd/-Rajiv Kabra

Place: Hyderabad

Chairman & Managing Director

Date : 13.08.2024

DIN:00038605