Today's Top Gainer
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To the Members,
Your Directors are pleased to present the 37TH Annual Report of your Company alongwith Audited Financial Statement for the financial year ended 31st March, 2019.
FINANCIAL RESULTS The financial performance of the Company for the year ended 31st March, 2019 is summarized below:
|(Rs. in Lacs)|
|Surplus before interest, depreciation, exceptional items and Tax||4334.17||3745.88|
|Less: Financial Cost||2201.26||2633.22|
|Cash Profit before tax||2132.91||1112.66|
|Profit /(Loss) before taxation||1257.25||242.01|
|Provision for current tax||278.56||47.58|
|Income Tax of earlier year||12.87||48.80|
|Profit /(Loss) after taxation||789.75||164.22|
|Transfer to General Reserve||-||-|
|Earning Per Share (face value of Re. 1/- each)||0.81||0.17|
REVIEW OF OPERATIONS
FERTILIZER & CHEMICALS DIVISION
The year 2018-19 fared well for the Company. The prices of Sulphur and Sulphuric Acid remained high throughout the year mainly due to global sentiment and constrained domestic supply. Even though it was not viable to produce and sell large quantities of Fertilizer due to the high input costs of Sulphuric Acid, the Company could capitalize on the situation by selling higher quantities of Acid from its Sulphuric Acid Plants.
Being mostly rainfed with only around 40% land being irrigated, India remains highly dependent on monsoons for its agricultural production. In 2018, the monsoons remained below normal with deficit in the States of west Madhya Pradesh, parts of Maharashtra, Rajasthan, Gujarat etc. These are some of the main states where the Company sells its fertilizer products.
The GOI could successfully implement the partial Direct Benefit Transfer system for the Fertilizer Industry, however some glitches remain. We are hopeful that they would also be sorted out soon. The GOI has also agreed to keep the subsidy for the SSP sector separately earmarked within the overall Phosphates and Potassium segment. This shall further improve the liquidity in the sector once implemented.
During the year, the turnover of your Company has increased from Rs. 35,628.77 lacs for the year 2017-18 to Rs. 37,320.34 lacs for the year 2018-19, by about 15.70%, the operating income has increased from Rs 3,745.88 lacs in 2017-18 to Rs. 4,334.17 lacs in 2018-19, and the cash profit has increased from Rs 1,112.66 lacs to Rs 2,132.91 in the respective periods, while the net profit after tax has increased from Rs. 164.22 lacs to Rs. 789.75 lacs.
The Company has produced 3,18,554 MT (previous year 3,00,375 MT) Single Super Phosphate and 180443 MT (previous year 90,768 MT) Sulphuric Acid and sold 3,03,679 MT (previous year 3,38,986 MT) Single Super Phosphate & 140329 MT (previous year 51,194 MT) Sulphuric Acid.
The Company is trying to diversify its portfolio and has initiated import of NPK fertilizers in a small way. The Company has imported nil NPK fertilizers (previous year 10,986 MT) and sold 7,576 MT during the year (previous year 6,884 MT). The Company has also added value added fortified fertilizers in its product range. Both the above products launched by the Company have been well accepted by the farmers.
The Company is continuing its efforts for optimizing its current assets to leverage sales on the one hand and diversifying into new geographical markets on the other. Focus is being laid on producing more value added fortified fertilizers, to improve the product portfolio.
The raw material prices have increased and are now on an uptrend. To keep the end prices of fertilizers to the farmers within reasonable limits, the Government has maintained the Nutrient Based Subsidy rates at Rs. 2,734/- per MT.
In the coming year 2019-20, the long range forecast of monsoons is about normal. This coupled with the rising trend in the commodity prices, which will give better marketability to SSP vis a vis other NPK products and fortified grades of SSP, we expect to perform better in this year.
Another important development in the Industry has been increased focus of the Ministry of Fertilizers towards quality compliance in the SSP Industry. The movement is already gaining momentum and expected to yield good results. With the improvement in the overall quality of the Industry the organized sector and the Industry as a whole is expected to do well.
The Soya Industry is passing through a tough phase with widespread activities of speculation by Industry players. The Company has reduced its activities in this segment to a large extent alongwith total control on fixed expenses.
The margins in the Industry had improved in 2017-18 due to imposition of higher customs duty on import of palm oil. However during the current year the margins were again under pressure due to lowering of palm oil prices by Malaysia.
The Board of Directors is pleased to recommend final dividend of Re. 0.05 per equity share (face value of Re. 1/- per share) for the financial year 2018-2019, previous year Re.0.05 per equity share.
The paid up Equity Share Capital as on 31st March, 2019 was Rs. 969.89 Lacs divided into 9,69,89,200 shares of Re. 1/- each. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.
RESERVES AND SURPLUS
The Company has not transferred any amount to General Reserves for the financial year 2018-19.
INVESTORS EDUCATION & PROTECTION FUND
Dividend which was declared by the Company for the year ended March 31, 2012 at the Annual General Meeting held on August 3, 2012 and remained unclaimed will be transferred to the Investor Education and Protection Fund of the Central Government on September 2, 2019 pursuant to the provisions of Companies Act, 2013. Thereafter no claim shall lie on dividend for the year ended March 31, 2012 from the shareholders.
PROJECTS & FINANCE
Due to uncertainty in the economic environment, the Company has neither undertaken any major capital expenditure nor has any fresh loan been raised from banks during the year.
The Company has not accepted any deposits from the public during the year under review, pursuant to the provisions of Section 73 of the Companies Act, 2013 & the Deposit Rules made there under.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Information required under section 134(3)(m) of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed in Form-A of Annexure A and forms part of the report.
Your Directors are of the opinion that the Company has already opted for latest technology for producing Single Super Phosphate, Sulphuric Acid and Seed Processing & Oil Refinery. Hence, information specified to be given in Form-B of Annexure A is not applicable.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with Schedule V(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Report (Annexure-B).
FOREIGN EXCHANGE EARNING AND OUTGO
The Company has earned Rs. NIL on export of goods (Previous year Rs. NIL) and incurred Rs. 6694.67 lacs (Previous year Rs. 8312.95 lacs) on import of Raw Materials, Fees & Subscription and Interest on Foreign Currency Loan.
In accordance with the provisions of Section 152 (6)(c) of the Companies Act, 2013 and the Articles of Association of the Company, Shri Jagdish Lal Jajoo (DIN : 02758763), Whole Time Director of the Company is due to retire by rotation at forthcoming Annual General Meeting, and being eligible, has offered himself for re-appointment. Directors recommend his reappointment for the consideration of members of the Company at the ensuing General Meeting.
The Board has re-appointed Shri Shailesh Khaitan (DIN:00041247), as a Chairman & Managing Director (KMP) of the Company for a period of three years from April 1, 2019 to March 31, 2022, subject to the approval of the members in ensuing General Meeting as a Special Resolution. The present terms of his appointment expired on 31.03.2019. Directors recommend his re-appointment. The Board has also re-appointed Shri Vijay Gupta (DIN:03511193) and Shri Balmukund Dakhera (DIN:05105269), as an Independent Directors (Non-Executive) of the Company for a period of five years commencing from April 1, 2019 to March 31, 2024, subject to the approval of the members in ensuing General Meeting as a Special Resolution. The present terms of their appointment expired on 31.03.2019. Directors recommend their reappointments.
The Board has also re-appointed Shri Utsav Khaitan (DIN:03021454), as a Whole Time Director of the Company for a period of three years with retrospective effect from April 1, 2019 to March 31, 2022, subject to the approval of the members in ensuing General Meeting as a Special Resolution. Shri Utsav Khaitan is son of Shri Shailesh Khaitan, Promoter, Chairman and Managing Director of the Company and to take him on the Board for larger long term interest of the Company. Directors recommend his re-appointment.
The Board has also re-appointed Ms. Veena Chadha (DIN:06886533), as an Independent Director (Non-Executive) of the Company for a period of five years with effect from August 7, 2019 to August 6, 2024, subject to the approval of the members in ensuing General Meeting as a Special Resolution. The present terms of her appointment is expiring on 06.08.2019. Directors recommend her re-appointment.
Particulars of the directors seeking appointment/re-appointment are provided in the notes forming part of the notice for the ensuing Annual General Meeting, as required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Company has received disclosures from all the directors and none of the directors has been disqualified as stipulated under Section 164 of the Companies Act, 2013 and rules made thereunder.
During the year, the Board of Directors met 4 (Four) times. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report(Annexure - C).
KEY MANAGERIAL PERSONNEL:
The following employees were designated as whole-time key managerial personnel as required under section 203 of the Companies Act, 2013 by the Board of Directors during the year under review:
(a) Shri Shailesh Khaitan, Chairman & Managing Director;
(b) Shri Harsh Vardhan Agnihotri, President & Chief Financial Officer and
(c) Shri Kamlesh Joshi, Company Secretary (Compliance Officer) & General Manager
INDEPENDENT DIRECTORS DECLARATION
The Independent Directors have confirmed and declared that they are not disqualified to act as an Independent Director in compliance with the provisions of Section 149 of the Companies Act, 2013 read with Regulation 16 (B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Board is also of the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Directors.
Your Company has always strived to maintain appropriate standards of good corporate governance. The report on corporate governance as stipulated under Schedule V (C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Report. The requisite certificate confirming compliance with the conditions of corporate governance as stipulated under the said clause is attached to this report. (Annexure C).
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES:
The Company has no Subsidiary/Joint Venture/Associate Company.
PARTICULARS OF LOAN, GUARANTEES, INVESTMENTS:
During the year under review, the Company has not made any investments or given loan or provided security or guarantees falling under the provisions of Section 186 of the "the Act".
VIGIL MECHANISM / WHISTLE BLOWER POLICY
As per the requirement of Section 177 (9) of the Companies Act, 2013, and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015,the Company has established a Vigil Mechanism called the Whistle Blower Policy for Directors and Employees to report concern of unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy and the details of the Whistle Blower Policy has been uploaded on the Companys website, Web-link: http://khaitanchemfert.com/wp-content/uploads/2016/04/KCFL-Vigil-Mechanism-Policy
COMPOSITION OF AUDIT COMMITTEE
As per the requirement of Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Section 177 of the Companies Act, 2013. The present strength of the Audit Committee comprises of Shri Balmukund Dakhera, Shri Vijay Gupta and Ms. Veena Chadha. Shri Balmukund Dakhera, Chartered Accountant, is the Chairman of the Audit Committee of the Company. All the members of the Audit Committee are independent and non-executive directors. The recommendations of audit committee were duly accepted by the Board of Directors.
NOMINATION & REMUNERATION POLICY
Pursuant to Section 178 of the Companies Act, 2013, the rules made there under and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Nomination & Remuneration Committee, comprises of Shri Balmukund Dakhera, Chairman, Shri Vijay Gupta and Ms. Veena Chadha as its members. The Nomination & Remuneration Committee framed a policy for selection and appointment, re-appointment, removal, appraisals of Directors and Senior Management and the same is stated in the Corporate Governance Report (Annexure C).
AUDITORS & AUDIT REPORT
The Company had appointed M/s. NSBP & Co., Chartered Accountants, New Delhi as Statutory Auditors of the Company for carrying out the Statutory Audit of the Company for the Term of 5 years commencing from the conclusion of 35th Annual General Meeting to the conclusion of 40th Annual General Meeting of the Company (from Financial Year 2017-18 to 2021-22), which will be subject to ratification by shareholders (every year) in ensuing Annual General Meeting. The Company has received a certificate from them to the effect that their appointment as Statutory Auditors of the Company, would be within the limit prescribed u/s 139 & 141 of the Companies Act, 2013 & also received a peer review certificate issued by the ICAI Peer Review Board, as required under the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed there under, either to the Company or to the Central Government.
The notes on accounts referred to and the Auditors Report are self-explanatory and therefore do not call for any explanatory note.
The Board of Directors, in pursuance of an order under section 148 of the Companies Act, 2013, read with Rule 14 of the Companies (Audit & Auditors) Rules, 2014, issued by the Central Government, has appointed on the recommendation of Audit Committee M/s. M.P. Turakhia & Associates, Cost Accountants, Indore as Cost Auditors to conduct audit of the cost accounts maintained by the Company in respect of Fertilizer, Sulphuric Acid and Soya products for the financial year 2019-20.
As required under Companies Act, 2013 a resolution seeking members approval for the remuneration payable to cost Auditor forms part of the notice conveying the Annual General Meeting for their ratification.
M/s. APAS & Company, Chartered Accountants, New Delhi is appointed as Internal Auditor of the Company to conduct the internal audit of the Company for the Financial Year 2019-20, as required under Section 138 of the Act 2013 and the Companies (Accounts) Rules, 2014.
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the Internal Control System and suggests improvements to strengthen the same. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board. Based on the report of internal audit function, Company undertakes corrective action in their respective areas and thereby strengthens the controls. Recommendations along with corrective actions thereon are presented to the Audit Committee of the Board and accordingly implementation has been carried out by the Company.
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 on the recommendation of Audit Committee M/s. Ritesh Gupta & Co., Company Secretaries, Indore (C.P. No. 3764), to undertake the Secretarial Audit of the Company for the financial year 2019-20.
The Secretarial Audit Report for the year 2018-19 is self-explanatory and therefore do not call for any explanatory note and the same is annexed herewith as (Annexure - D).
The Company has complied with the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Pursuant to Section 135 of Companies Act, 2013 and the relevant rules, the Corporate Social Responsibility Committee comprises of Shri Jagdish Lal Jajoo as the Chairman and Shri Utsav Khaitan, Shri Balmukund Dakhera, Shri Vijay Gupta & Ms. Veena Chadha as its members. The detailed CSR Policy has been uploaded on Companys Website, Web-link: http://khaitanchemfert.com/ wp-content/uploads/2016/04/KCFL-CSR-Policy
The Company has not required to spend any amount towards CSR Expenditure as none of the thresholds as specified in Section 135 (1) of the Companies Act, 2013 is crossed and the details is annexed herewith as (Annexure - E)
Pursuant to the provisions of section 134 (3)(p) of the Companies Act, 2013 and applicable Regulations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board adopted a formal mechanism for evaluating its performance and 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 Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues etc.
The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors.
The Directors were satisfied with the evaluation results, which reflected the overall engagement and effectiveness of the Board and its Committees with the Company.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return for the year ended on 31.03.2019 in Form MGT-9 is annexed herewith as (Annexure G). The details forming part of the extract of the Annual Return for the year ended on 31.03.2019 in Form MGT-9 has been uploaded on Companys Website in investor section at www.khaitanchemfert.com
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act, 2013, your Directors confirm that:
1. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. 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 as at 31st March, 2019 and of the profit & loss of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956/2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
5. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively.
6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
As per the requirement of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated the Policy on Materiality of Related Party Transactions. All such transactions that were entered into during the financial year were on an arms length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee and the same has been approved by the Board. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature and the same is been reviewed by the Audit Committee on quarterly basis. The company has framed Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions and is placed on the Companys website and the web link for the same is http://khaitanchemfert.com/wp-content/uploads/2016/04/Policy-on-materiality-of-RPT-KCFL.pdf. The Company has also formed Related Party Transactions Policy and the weblink for same is http://khaitanchemfert.com/ wp-content/uploads/2016/04/Related-Party-Transactions-Policy.pdf.
Pursuant to the provisions of Section 134 (3) (h) of the Companies Act, 2013, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, and prescribed in Form AOC-2 of Companies (Accounts) Rules, 2014, are appended as Annexure-H to this report. Related Party Transactions during the year have been disclosed as a part of Financial Statements as required under Accounting Standard 18 issued by the Institute of Chartered Accountants of India.
LISTING OF SHARES
Shares of the Company are listed on The BSE Limited, Mumbai, which provides a wider access to the investors nationwide.
The Company has made all the compliances of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 including payment of annual listing fees up to 31 March, 2020 to the BSE.
DEMATERIALISATION OF SHARES
The shares of your Company are being traded in electronic form and the Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, Members are requested to avail the facility of dematerialization of shares with either of the Depositories as aforesaid and update their bank A/c and Email ID with the respective depository Participant. As on March 31, 2019, 97.96% of the share capital stands dematerialised.
The Company has in place Risk Management Policy as per requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 134(3)(n) of the Companies Act, 2013, which requires the Company to lay down procedure for risk assessment and risk minimization. The Board of Directors, Audit committee and the Senior Management of the Company should periodically review the policy and monitor its implementation to ensure the optimization of business performance, to promote confidence amongst stake holders in the business processes, plan and meet strategic objectives and evaluate, tackle and resolve various risks associated with the Company. The business of the Company is exposed to various risks, arising out of internal and external factors i.e. Industry, Competition, Input, Geography, Financial, Regulatory, Other Operational, Information Technology related other risks.
The details of Risk Management Policy as per requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 134(3)(n) of the Companies Act, 2013 has been uploaded on Companys Website in policies section at www.khaitanchemfert.com
Implementation of the Scheme:
The functional managers at all locations will be responsible for identifying and assessing the risks within their areas of responsibilities and actions agreed beforehand to resolve such risks. They will report for any new risk or changes in the existing risk to the President/Managing Director. The Board and the senior executives of the Company will oversee the implementation of the policy and review the same periodically; the Board will be updated on key risks faced by the Company and the mitigating actions taken to resolve them.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITIONAND REDRESSAL)ACT, 2013.
"The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed off during the year 2018-19.
No of complaints received: NIL
No of complaints disposed off: Not Applicable".
MATERIAL CHANGES AFFECTING FINANCIAL POSITIONS OF THE COMPANY
No material changes have occurred and commitments made, affecting the financial position of the Company, between the end of the financial year of the Company and the date of this report. There is no order passed by any regulator or court or tribunal against the company, impacting the going concern concept or future operations of the Company.
PARTICULARS OF EMPLOYEES
In terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the rules there under as amended from time to time, forms part of this report (Annexure-H).
There are no instances of employees who was in receipt of remuneration in excess of the limit prescribed in provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the rules made thereunder.
In accordance with the provisions of Section 136 of the Act, the Annual Report and Accounts are being sent to all the Members of the Company excluding the aforesaid information and the said particulars will be made available on request and also made available for inspection at the Registered Office of the Company. Any Member interested in obtaining such particulars may write to the Company Secretary of the Company.
None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company.
The Board of Directors, wish to place on record its sincere appreciation for the support and co-operation received from all its stakeholders including customers, promoters, shareholders, bankers, suppliers, auditors, various departments/ agencies of Central/State Government and other business associates of the Company.
Your Board recognizes and appreciates the contributions made by all employees at all level that ensure sustained performance in a challenging environment.
|for and on behalf of the Board|
|Place: Gurugram||(SHAILESH KHAITAN)|
|Date: 09.05.2019||CHAIRMAN & MANAGING DIRECTOR|