Kalyani Forge Director Discussions


The Board of Directors of your Company are pleased to present the 44th Annual Report together with the Audited Statement of Accounts of Kalyani Forge Limited ("the Company") for the year ended March 31, 2023.

Financial Performance:

The summarized standalone results of your Company are given below:

Particulars

Financial Year ended 31st March, 2023 Standalone

31-03-2023 31-03-2022
Total income from operations (net) 26,667.38 24,650.21
Profit/(loss) before Exceptional Items and Tax 688.70 402.12
Exceptional Items and Tax Expenses 327.87 88.86
Net Profit/ (Loss) After Tax for the Year 360.84 313.26
Balance of Profit from Previous Year(Retained Earnings plus Other Comprehensive Income) 8529.94 8,001.38
Other Comprehensive income for the year 2.32 15.85
Dividend Amount Paid (109.14) (54.57)
Balance of Total at the end of reporting period includes Retained Earnings and Other Comprehensive Income 8783.96 8275.92

Summary of Operations:

During the year, the net revenue from operations of your Company for FY 2022-23 increased to Rs. 26,667.38 Lakhs against Rs. 24,650.21 Lakhs for the FY 2021-22. Your Companys Profit after tax stood at Rs. 360.84 Lakhs as against profit of Rs. 313.26 Lakhs for FY 2021-22.

Change in the nature of business, if any:

There is no change in the nature of the business of the Company during the year.

Reserves:

The Company has not transferred any amount to General Reserves for the year under review.

Dividend:

Your Directors are pleased to recommend for approval of members a dividend of Rs. 3.00 per equity share (30%) at the face value of Rs.10/- per share for the Year ended 31st March, 2023.

Capital/Finance:

During the year, the Company has not issued/allotted equity or preference shares. As on 31st March, 2023, the issued, subscribed and paid-up share capital of your Company is at Rs.3,63,80,000/-, comprising 36,38,000 equity shares of Rs.10/- each.

Fixed Deposits:

Your Company has not accepted any deposits from public, Therefore, details relating to deposits covered under Chapter V of the Companies Act, 2013 are not applicable to the Company.

Material Events Occurring after Balance Sheet Date:

There were no material changes, events and commitments affecting the financial position of your Company between the end of the Financial Year and the date of this report.

Annual Return:

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual return in Form MGT -7 as on March 31, 2023 will be placed on the Companys website available at the following link.

https://www.kalyaniforge.co.in/investors/annual-reports/

Transfer of Amounts to Investor Education and Protection Fund:

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the declared dividends, which are unpaid or unclaimed for a period of seven (7) years and the shares thereof, shall be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government.

Details of Board meetings:

The Board met Four times during year from 1st April 2022 to 31st March 2023. The intervening gap between the meetings was within the period prescribed under Act.

Composition of Board and its attendance:

The composition of the Board of Directors as on 31 March 2023 and attendance of members in the meetings held during the financial year 2022-23 are as under:

Name of the Director Designation Category No. of meetings attended
Mrs. Rohini G. Kalyani Chairperson of the Board Executive Chairperson 4
Mr. Gaurishankar N. Kalyani Member of the Board Non – Executive & Non Independent Director 4
Mr. Viraj G. Kalyani Member of the Board Executive Director 4
Mr. Abhijit Sen Member of the Board Non – Executive & Independent Director 4
Mr. Pradip P. Nadkarni Member of the Board Non – Executive & Independent Director 4
Mr. Adit Rathi Member of the Board Non – Executive & Independent Director 3

Committees of Board

The composition of the Committees of the Board of Directors has been detailed in the Corporate Governance annexure to this report.

Declaration by Independent directors:

Pursuant to the provisions of section 149 of the Companies Act, 2013 (‘the Act"), Mr. Pradip P. Nadkarni, Mr. Abhijit Sen & Mr. Adit Rathi are the independent directors and have submitted declarations that each of them meet the criteria of independence as provided in section 149(6) of the act along with rules framed thereunder and regulation 16(1)(b) of the SEBI Listing Regulations. There has no change in the circumstances affecting their status as independent directors of the Company.

Directors and Key Managerial Personnel:

As per the provisions of Companies Act 2013, Mr. Gaurishankar Kalyani who retired by rotation were reappointed at the Annual General Meeting of the Company held on 18th August 2022.

Mr. Rohan M. Deshpande, resigned from the Company as the Company Secretary and Compliance Officer of the Company w.e.f. 13th November,

2022. The Board places same on record.

The Board at its meeting held on 14th November, 2022 appointed Mr. Aniruddha Hublikar as the Company Secretary and Compliance Officer of the Company w.e.f. 14th November, 2022.

Formal Annual Evaluation:

SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. Also, the Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its Committees and individual Directors. In addition, Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

In pursuance of above, the Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non- Executive Directors and Executive Director.

The Company commenced with the review of the best practices prevalent in the industry and evaluation of Board members. On the basis of review and the Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its committees and individual Directors.

At a Separate meeting of Independent Directors held on March 10, 2023, performance evaluation of Chairperson, Non- Independent Directors, and the Board of Directors was carried out by Independent Directors which has also reviewed the adequacy of the flow of information between the Company Management and Board.

The detailed programme for familiarization of Independent Directors with the Company, their roles, rights and responsibilities in the Company, nature of business, business model of the Company, etc. was undertaken by the Company.

A formal evaluation of the performance of the Board, its Committees, the Chairman and the individual Directors was carried out. Led by the Nomination & Remuneration Committee, the evaluation was carried out using individual questionnaires. As part of the evaluation process, the performance of Non-Independent Directors, the Chairman and the Board was conducted by the Independent Directors. The performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated.

Companys policy on appointment and remuneration:

The policies relating to selection of Directors and determining Directors independence and Remuneration Policy for Directors, Key Managerial

Personnel and other employees is attached herewith and marked as Annexure 1. You may also find policy on appointment and remuneration at the companys website: https://www.kalyaniforge.co.in/investors/corporate-information/

Highlights on Companys policy on Sexual Harassment:

As per "Sexual Harassment of Woman At Workplace (Prevention, Prohibition and Redressal) Act, 2013", the highlights of the policy adopted by the company is attached herewith marked as. Annexure 2.

Holding, Subsidiaries, Associates or Joint Venture Companies:

During the period under review the Company does not have any holding, Subsidiary, Associates or Joint Venture company.

Statutory Auditors, their Report and Notes to Financial Statements:

The Statutory Auditors M/s K.S. Aiyar & Co. Chartered Accountants, Mumbai, having Firm Registration No 100186W, were reappointed in 42nd Annual General Meeting, held on August 14, 2021, as Statutory Auditors of the Company for Second Term of consecutive 5 years, till the conclusion of the 47th Annual General Meeting of the Company to be held in the calendar year 2026. The Companies Act, 2013 was amended to remove the provisions related to ratification of the Appointment Auditors and therefore there is no requirement of ratification of Appointment of Auditors of the Company.

The Notes to the financial statements referred in the Auditors Report are self-explanatory. In the Statutory Auditors Report there are following qualifications to which suitable and sufficient comments are provided by the Board of Directors. under Section 134 of the Companies Act, 2013. The Auditors Report is enclosed with the financial statements n this Annual Report.

Qualificationsby the Statutory Auditors:

1. The Company is in the process of updating inventory records in Materials Module (MM Module) of SAP ERP system and refining its stock valuation process by updating the standard rates of material, labour and overheads based on the current prevailing rates and relevant data. Presently, the inventories have been valued as per the values as appearing in Finance Module (FI Module) of SAP ERP which is not matching with the Materials Module (MM Module) of SAP ERP. As the said process is not completed as at year end, consequential financial impact, if any, arising on updating of the inventory records and its valuation will have to be given in the books of accounts after its completion. Management has carried out a physical verification of inventory as at 31st March, 2023 and discrepancies of Rs.641.37. (Net of provision made already made as per management estimate and judgment) have been observed.

2. Trade Receivables include certain old and disputed receivables of Rs. 641.33 Lakhs

Management comments with respect to Auditors qualifications are as follows:

With reference to qualification no. 1 regarding inventory accounting, the Company has completed a -ercise using updated rates for materials and overheads this exercise increases inventory value compared to the not been updated due to operational constraints) by at least Rs. 5 crores. The reflection of results of this exercise in SAP will be completed by Q1 of FY 2024 to bring the records completely up to date and incorporating residual shortfall, if any.

With reference to qualification no. 2 regarding trade receivables, in Q4 of FY 23, the Company has written off -tomer accounts amounting to Rs. 1.2 crores based on clear reconciliation exercises with its customers. It has utilized existing provisions taken during previous quarters of FY 2023 to give finaleffect and therefore improve the Balance Sheet with more current items. For one debtor accounts, the company has initiated legal recourse and has been advised that there is strong case of recovery of those dues, this amounts to around Rs 2.9 crores. The debtor in question has responded and admitted to their dues and asked for a settlement which is being pursued. For the remaining accounts the Company is in discussion with its customers and is on track for recovering and reconciling the dues. The overall ageing of overdue receivables therefore has significantly improved in Q4 of FY 23 and management is confident of recovery/settlement.

Internal financial controls

The Board is responsible for establishing and maintaining adequate internal financial control as per Section 134 of the Act. The policies and processes in respect of internal financial controls and such internal financial controls were adequate and were operating effectively. The internal financial controls covered the policies and procedures adopted by your Company for ensuring orderly and efficient conduct of business in -cluding adherence to your Companys policies, safeguarding of the assets of your Company, prevention and detection of fraud and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

Cost Audit

Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014 and as per the Cost Audit Orders, the cost audit records maintained by the Company in respect of its Forging Business are required to be audited.

In view of the same and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s. R.C.K & Co, Cost Accountants (Firm Registration No. 002587), Mr. Rahul Chincholkar, Partner

(F-27063) have been appointed as Cost Auditors to conduct the audit of cost records of your company for the financial year 2023-24. The re -muneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting.

In accordance with the provisions of Section 148(1) of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost accounts and records.

Secretarial Audit

In terms of Section 204 of the Companies Act, 2013 and Rules made thereunder, Mr. Nitin Prabhune (Membership No. FCS 6707) Company Secretary in practice has been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditors is enclosed as Annexure 3 to this report.

There are no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors in their report.

Reporting of fraud by auditors

During the year under review, the Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Act to the Audit

Committee.

Secretarial Standards

The company has complied with the revised Secretarial Standards on meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2).

Significant and Material Orders Passed by Regulators or Courts

There are no significant material orders passed by the regulators and courts which would impact the going concern status of the company.

Particulars of Loans, Guarantees or Investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013, are given in the notes to the Financial Statements. (Refer Note 3 of the Financial Statements).

Material Changes and Commitments

There have been no material changes and commitments, affecting the financial position of the company, which have occurred between the end of the financial year and the date of this report.

Human Resources

Your Company treats its "human resources" as one of its most important assets.

Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Companys thrust is on the promotion of talent internally through job rotation and job enlargement.

Related Party Transactions

All contracts/ arrangement/ transactions entered by the Company during the Financial Year with related party were in the ordinary course of business and on arms length basis. Such transaction forms part of the notes to the financial statements provided in the Annual Report.

During the year, the particulars of any contract / arrangement / transaction with related parties which could be considered material entered into in accordance with the policy of the Company on materiality of related party transactions which is available on the Companys Website: ww.kalyaniforge. co.in.

The summary of related party transaction in Form AOC-2 is enclosed as Annexure 4. Related Party disclosures as per IND AS 24 have been provided in Note 30.7(b) to the financial statements.

Risk Management Policy

In terms of the requirement of the Companies Act, 2013 the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically. The detailed Risk Management Policy is available on Companys website. Highlights of the same are enclosed in Annexure 5.

Management Discussion and Analysis

Management Discussion and Analysis comprising an overview of the financial results, operations/performance and the future prospects of the Company form part of this Annual Report.

Corporate Social Responsibility (CSR)

The Company has adopted the CSR policy pursuant to Sec 135 of the Companies Act, 2013. The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure 6. The detailed Corporate Social Responsibility Policy is available on Companys website.

Highlights of Corporate Social Responsibility Policy

The Company proposes to undertake CSR projects and programmes in respect of the activities stated below with a preference to implement these projects and programme in the areas in which it operates:

• Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation and making available safe drinking water;

• Promoting education including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

• Promoting gender equality, empowering women, setting-up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

• Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water.

• Protection of national heritage, art and culture including restoration of buildings and sites historical importance and works of art; setting-up public libraries, promotion and development of traditional arts and handicrafts.

• Measures for the benefit of armed forces veterans, war widows and their dependents.

• Training to promote rural sports, nationally recognized sports, Paralympics Sports and Olympic Sports.

• Contribution to the Prime Ministers National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.

• Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government.

• Rural development Projects.

Particulars of Employees

Pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement of particulars of employees is annexed as Annexure 7.

Details of establishment of vigil mechanism for directors and employees:

The details of establishment of vigil mechanism/ whistle blower policy for directors and employees to report genuine concerns are available at the website of the company at https://www.kalyaniforge.co.in/investors/corporate-information/

Highlights of Whistle Blower Policy are enclosed in Annexure 8.

Corporate Governance Certificate

The Compliance certificate from the Auditors regarding compliance of conditions of corporate governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed with the report.

Details of conservation of energy, technology absorption, foreign exchange earnings and outgo

The Company, in its continuous endeavour to conserve energy, has adopted various innovative measures to reduce waste and to achieve optimum utilization of energy resulting into good earning of Power Factor incentive from MSEB and in turn resulting into reduction of power cost.

(a) Conservation of energy

(i) the steps taken or impact on conservation of energy The Company, in its continuous endeavor to conserve energy, has adopted various innovative measures to reduce waste and to achieve optimum utilization of energy resulting into good earning of Power Factor incentive from MSEB and in turn resulting into reduction of power cost.
(ii) the steps taken by the company for utilizing alternate sources of energy
(iii) the capital investment on energy con- servation equipment Latest upgraded induction billet heaters with per Kw extra out puts. It will save units per MT.

(b) Technology absorption

(i) the efforts made towards technology absorption • Productivity improvement in both forged and machined components together with competitive quality.
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution • Process technology improvements to achieve competitive advantage in the business.
• Successful commercial scale up of forged and machined parts.
• Capability building for attracting new customers.
• Yield improvements for forging parts
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- NA
• the details of technology imported
• the year of import;
• whether the technology been fully absorbed
• if not fully absorbed, areas where absorption has not taken place, and the reasons thereof
(iv) the expenditure incurred on Research and 55,150,928
Development

Total energy consumption and energy consumption per unit of production as per Form – A of the Annexure to the Rules is as given below:

Sr. No. Description 2022-23 2021-22
1) POWER AND FUEL CONSUMPTION
I) Electricity
(a) Purchased Units (KWH) 2,05,49,698 1,96,84,220
Total Amount (In. Rs) 22,81,35,539 19,63,03,607
Rate/Unit (Rs) 11.10 9.97
b) Own Generation
i) Through Diesel Generator (Units generated) 6,000 5,644
ii) Total Diesel consumption (Ltrs) 1,000 1,022
ii) Through Steam Generator (KWH) 0 0
II) Coal
III) Fuel Oil (FO + CBFS)
Quantity (Ltrs.) 5,92,000 7,17,930
Total Amount ( In lacs.) 3,13,76,000 3,29,87,679
Average Rate /Litre (lacs.)- FO+CBFS 53 46
2) CONSUMPTION PER UNIT OF PRODUCTION
Product : high quality closed tolerance die forgings Unit : M.T. 10,639 11,509
Electricity (KWH/M.T.) 161 1,711
Fuel Oil (KL/M.T.) 0.09 0.06
Coal 0 0

Research & Development (R&D):

The Companys R & D facility is backed by highly experienced and qualified team. Our R & D team follows the principle to accept zero defects, produce zero effects and pass on zero defects The main objectives of the Companys R & D programs are:

• To develop new and innovative forgings and engineering components. • To improve in the areas of technologies up gradation. • To conserve energy through reduction in fuel consumption.

• To take measures for improvements in the material yield.

• To optimize forging and machining processes and minimization of pollution.

Highlights of R & D initiatives undertaken during the Financial Year 2022-23 were as follows:

1. Development of negative draft forgings with machining.

2. In-house machining capability of Steering and Suspension parts.

3. New Bolster development with Hydraulic Clamping & Power Pack.

4. Pro-active development of new profile forging for its application in Electric Vehicles (EVs).

5. Pro-active development of complex profilerocker arm forging.

6. New machining process of rack rolling operation introduced for machined supply condition

7. To enhance environmental cleanliness and reduce soil pollution, polymer coating operation introduced before ironing operation in warm forging process replacing hazardous zinc phosphate coating operation.

8. To promote quality assurance in warm forging parts supply to the Customers, Eddy current testing process has been introduced to avoid material mix up.

Core Focus areas of R&D Department of the Company:

1. New product family development distinguishing in profilecomplexity, manufacturing difficulties & material properties in terms of strength, wear resistance and fatigue life.

2. New process development with aim of reducing process cycle time, increase product safety and reduce operator fatigue, protect environmental aspects from pollution.

3. Introduce New technology with aim of enhancing customer satisfaction by expanding supply condition limits, improve quality and quantity of products supplied.

(c) Foreign exchange earnings and Outgo

During the year, the total foreign exchange used was Rs. 10,79,60,061.54 and the total foreign exchange earned was Rs. 32,05,13,459.89

(d) Technology Absorption, Adaptation and Innovation

Through In-house Research and Development activities Company has developed Outer race forgings for driveline assemblies with internal tracks by warm and cold forging method. With the help of fracture split technology, the Company is now moving towards adoption of technology for critical automotive connecting rods for the overseas markets.

Directors Responsibility Statement

a. Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that: in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; if any

26 b. the directors had 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 the year;

c. the directors had 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 had prepared the annual accounts on a going concern basis; and

e. the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

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.

Acknowledgement

Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.

Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support. Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support.

For and on behalf of the Board
Rohini G. Kalyani
Place: Pune Executive Chairperson
Date: May 30, 2023 (DIN: 00519565)