Kilburn Engineering Ltd Directors Report.

FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2020

The Directors of your Company are pleased to present the 32nd Annual Report and Audited Statement of Accounts for the financial year ended 31st March, 2020.

FINANCIAL RESULTS

(INR in Lac)

Year ended 31st March, 2020 Year ended 31st March,2019
Revenue from Operations 13114 14386
Other Income 1917 2001
Total Revenue 15031 16,387
Total Expenses (excluding finance cost & depreciation) 12206 13,404
Earnings Before Finance Costs & Depreciation (EBIDTA) 2825 2,983
Finance Costs 1722 1,711
Depreciation & Amortization Expenses 414 422
Profit Before Tax 689 850
Tax Expenses 172 258
Profit for the Year 517 592

DIVIDEND

Board of Directors did not recommend dividend for FY: 2019-20, in view of the impact of Covid pandemic on business operations of the Company.

OPERATIONAL REVIEW & STATE OF THE COMPANYS AFFAIRS

Your company is primarily engaged in Designing, Manufacturing, & Commissioning Customized / Critical Equipments/Systems for critical applications across a wide range of industries.

Process Equipments (PE): During the year, major orders have been bagged for Rotary Dryers and Calciners for Soda Ash and Carbon Black from reputed customers in that sector.

Kilburn has established itself in manufacturing reliable sludge dryers in collaboration with Nara Machinery of Japan. During the year, it has bagged a record of 19 sludge dryers worth 18 crores.

During the year, Kilburn bagged orders from the process industry worth 76 crores.

Food Processing Equipment

Despite very low tea prices and market sentiments being poor, Kilburn maintained its leadership in the tea dryer business reaching the level of the previous year. Bangladesh and Africa markets continue to be focus export markets for tea dryers and withering machine.

During the year, Kilburn installed a fully automated withering machine at one of the gardens of Leading

KILBURN ENGINEERING LTD.

Tea Company in Kenya. This is the first of its kind of withering machine and received wide appreciation from tea growers in Africa.

Order booking

The total order booking during the year 2019-20 was Rs 98 crores, with a closing order book of Rs 69 crores.

FUTURE OUTLOOK

Your Company operates primarily in two divisions viz Process Equipment and Tea Drying Equipment. The future outlook based on orders in hand and the expected order inflow appears to be encouraging.

A detailed review of the outlook of each division is incorporated in the Management Discussion and Analysis Report in Annexure I which forms part of this Report.

AUDITORS

a) Statutory Auditors: At the AGM on 13.08.2019 M/S. V. Singhi & Associates, Chartered Accountants (FRN:311017E) were appointed as Statutory Auditors, to fill the causal vacancy caused by resignation of previous auditors M/s. S R B C & CO LLP, Chartered Accountants for a tenure of five years upto AGM to be held in 2024.

b) Internal Auditors: M/s. Bhide & Bhide, Chartered Accountants were appointed as Internal Auditors by the Board of Directors for 2019 - 20 and they have conducted internal audits periodically and submitted their reports to the Audit Committee. Their reports have been reviewed by the Statutory Auditors and the Audit Committee.

c) Cost Auditors: Your Company appointed M/s. D. Sabyasachi & Co. ( FRN: 00369 ) Cost Accountants as Cost Auditors of the Company for the Financial Year 2019-20 and their appointment is proposed for 2020 - 21 at the remuneration set out in the notice of AGM and explanatory statement thereto.

d) Secretarial Auditors: M/s. Dhrumil M. Shah,

Mumbai were appointed as secretarial auditor of the Company for the Financial Year 2019-20, as required under section 204 of The Companies Act, 2013 read with the applicable rules. The Secretarial Audit Report for 2019 - 20 forms part of the Annual Report as Annexure - VII.

Statutory Auditors Report

The audit report for Financial year 2019 - 20 has a qualified opinion, as following:

Basis for Qualified Opinion

As detailed in Note 5b to the accompanying Ind AS financial statements, the Company has Inter Corporate Deposits (ICDs) and interest accrued thereon receivable from group companies amounting to 10,816 lakhs and 1,927 lakhs respectively as on 31st March, 2020. Considering the financial position of these group companies and in the absence of sufficient and appropriate audit evidence in relation to recoverability of these ICDs and accrued interest thereon, we are unable to determine whether any adjustments are required to the carrying value of these ICDs and interest accrued thereon.

Qualified opinion in the Audit Report on Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of The Companies Act, 2013 reads as following:

The Company did not have an appropriate internal control system for recoverability of Inter Corporate Deposits (ICDs) given to group companies and interest thereon, which could potentially result in the Company not recording adequate provision for doubtful ICDs and recognising interest revenue without establishing reasonable certainty of ultimate collection.

Managements response to the Audit qualification:

Considering the financial position of these group companies, the Company has obtained unconditional and irrevocable personal guarantee from Promoter Director, for the said Inter- Corporate Deposits as collateral security in case the borrowers are unable to repay the ICDs and interest accrued thereon.

Further, a promoter group level restructuring is currently underway to monetize assets to meet up the various liability of the group companies (owned by same promoter) including the settlement of outstanding ICDs. During the year the Group Companies have gradually commenced Interest payments and will continue to do so. The management has assessed the recoverability of the said ICDs, including interest receivable thereon, and has considered the same to be good and recoverable.

The Company is implementing appropriate Internal Control System to ensure timely recovery of the Inter Corporate Deposits ( ICDs ) placed with group companies alongwith interest thereon.

Management response to auditors observations in secretarial audit report

Due to frequent changes in statutory and system requirements from time to time, few delays and lapses occurred in the process of filing of prescribed documents and necessary steps were taken to rectify the same and required systems were put in place to avoid such delays in future.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provision of Section 134 (5) of the Companies Act, 2013, the Board of Directors of your Company hereby confirms:

1) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure;

2) that the Directors 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 the end of the financial year and of the Profit and Loss of the Company for the period;

3) that 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 other irregularities;

4) that the Directors have prepared the annual accounts on a going concern basis.

5) that 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.

6) that 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.

MANAGEMENT DISCUSSION & ANALYSIS

A separate report on Management Discussion & Analysis is appended to the Annual Report as Annexure "I" and forms part of this Directors Report;

CORPORATE GOVERNANCE

Report on Corporate Governance has been attached herewith as Annexure - II pursuant to the provisions of Regulation 34(3) and 53(f) read with schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

EMPLOYEE RELATIONS

The tripartite agreement with the trade unions was signed during the year. Employee relations remained cordial.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required to be disclosed pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, as amended, is appended to this Annual Report as Annexure "VIII" and forms part of this Directors Report.

ADEQUACY OF INTERNAL CONTROL SYSTEM WITH RESPECT TO THE FINANCIAL STATEMENTS The Company has a comprehensive system of internal control which is being strengthened. The internal control system is also subject to review by auditors.

The Company has appointed a firm of auditors for conducting internal audit on a quarterly basis and the report is considered by the Audit Committee of the Board headed by a Non-executive Independent Director. DIRECTORS

Mr. Subir Chaki continued as Managing Director of the Company during the year, as per terms of appointment approved by members. Board of directors had reappointed Mr. Chaki as Managing Director for a tenure of two years with effect from 01.04.2018 at the terms of remuneration, which was approved by members of the Company at AGM on 28th September, 2018 and his tenure ended on 31.03.2020. Board appointed him as Whole Time Director w.e.f. 1st April, 2020 for one year, subject to the approval of members of the Company.

Mr. Manmohan Singh, independent director had resigned with effect from 30.04.2019 due to his health reasons. Mr. Padam Kumar Khaitan, independent director has resigned with effect from 28.05.2019, due to his preoccupations with profession of Legal practice.

Mrs. Priya Saran Chaudhri, Non Executive Director has resigned with effect from 22nd July, 2019 due to her other pre-occupations.

Mr. Amitav Roy Choudhury was appointed as an Independent Director in the Board Meeting held on 29th May, 2019. His appointment was approved by the members at 31st AGM held on 13.08.2019, for a tenure of five years.

Mr. Subir Ranjan Dasgupta, Independent Director had resigned with effect from 19th June, 2019 due to other preoccupations.

There are no material reasons for resignation by Independent Directors, other than the reason mentioned above.

Mr. Gobind P. Saraf was appointed as Independent Director for a second tenure of five years at Annual General Meeting held on 13th August, 2019. Members also

approved his continued appointment after completion of 75 years of age.

Mr. Mahesh Shah was appointed as an additional director on 06.08.2019 and his tenure ended on the close of 31st Annual General Meeting on 13.08.2019. Board of directors approved his appointment as an additional director and designated him as Independent Director for a tenure of five years in their meeting held on 13.08.2019, subject to the approval of the members.

Ms. Arundhuti Dhar was appointed as an additional director on 06.08.2019 and her tenure ended on the close of 31st Annual General Meeting on 13.08.2019. Board of directors approved her appointment as an additional director and designated her as Independent Director for a tenure of five years in their meeting held on 13.08.2019, subject to the approval of the members. Requisite Notices have been received from Members proposing the appointment of the said Independent Directors

DECLARATIONS BY INDEPENDENT DIRECTORS

Necessary declarations from all the Independent Directors of the Company, confirming that they meet the criteria of independence as prescribed, have been received.

KEY MANAGERIAL PERSONNEL

During the year 2019 - 20, following officials continued as Key Managerial Personnel, pursuant to section 203 of The Companies Act, 2013:

i. Mr. Subir Chaki , Managing Director

ii. Mr. Sachin J. Vijayakar, Chief Financial Officer

iii. Mr. Arvind Bajoria, Company Secretary BOARD EVALUATION

Securities Exchange Board of India (SEBI) vide its circular no. SEBI /HO /CFD /CMD /CIR /P /2017/004 dated 5th January, 2017 had issued a guidance note on Board Evaluation which inter alia contains indicative criterion for evaluation of the Board of Directors, its Committees and the individual members of the Board.

Pursuant to the new Evaluation Framework adopted by the Board, the Board evaluated the performance of the Board, its Committees and the Individual Directors. After the evaluation process was complete, the Board was of the view that the performance of the Board as a whole was adequate and fulfilled the parameters stipulated in the evaluation framework. The Board also ensured that the Committees functioned adequately and independently in terms of the requirements of the Companies Act, 2013 and the Listing Regulations and at the same time supported as well as coordinated with the Board to help in its decision making. The individual Directors performance was also evaluated and the Board was of the view that the Directors fulfilled their applicable responsibilities and duties as laid down by the Listing Regulations and the Companies Act, 2013 and at the same time contributed with their valuable knowledge, experience and expertise to grab the opportunity and

counter the adverse challenges faced by the Company during the year.

HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Your Company has no holding or subsidiary company. Williamson Magor & Company Limited is holding 4319043 equity shares constituting 32.58% of total shareholding of the Company, so it is an associate company within the meaning of section 2 (6) of The Companies Act, 2013.

RELATED PARTY TRANSACTIONS

Your Board has developed and approved a Related Party Transactions Policy for purposes of identification and monitoring of related party transactions and the same has been displayed on the Companys website at http:// www.kilburnengg.com/company-policy-main.

The Statement in Form AOC -2 containing the details of the Related Party Transactions pertaining to contracts with Related Parties forms a part of this Report as Annexure - IX.

MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each director to the median employees remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as per annexure - X.

Mr. Subir Chaki, Managing Director is the only Executive Director in receipt of remuneration, and remuneration details are available in the corporate governance details attached to this directors report.

VIGIL MECHANISM

The Company has formulated a vigil mechanism for Directors and employees of the Company to report concerns about unethical behaviour, actual or suspected fraud or violation of the companys code of conduct or ethics policy. The VIGIL MECHANISM is available on the website of Company and can be accessed at http://www. kilburnengg.com/company-policy-main.

REMUNERATION POLICY

The Company has formulated a Remuneration Policy for Directors, Key Managerial Personnel and employees of the Company to ensure that adequate remuneration paid to attract, retain and motivate the senior management employees to run the company successfully. The Policy is available on the website of the Company at http:// www.kilburnengg.com/company-policy-main/ and also annexed herewith as Annexure - V.

RISK MANAGEMENT

Directors have adopted risk management policy to identify the risks involved in all activities of the Company. The main objective of this policy is to ensure sustainable business growth and to promote a pro-active approach in identifying, reporting, evaluating and mitigating risks associated with the business. The policy guides the board in identification of various business risks and to take appropriate steps to mitigate the same.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility (CSR) Committee in compliance with provisions of Section 135 of the Companies Act 2013 and SEBI Listing Regulations, with Mr. Amritanshu Khaitan (Chairman), Mr. Mr. Subir Chaki (Member), Mr. Mahesh Shah (Member) and Mr. Amitav Roy Choudhury. The CSR Committee laid down the CSR policy of the Company which can be accessed at http:// www.kilburnengg.com/ company-policy-main/. The Company made a total CSR expenditure amounting to 18.00 Lacs (through various implementing agencies) during the FY: 2019-20. The details of said expenditure are given in Annual Report on CSR Activities, attached herewith as Annexure - IV in the form prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9, as per annexure - VI forms part of the Boards report.

OTHER DISCLOSURES

During the year under review:

a. Your Company has constituted an Internal Committee (IC) to consider and resolve all sexual harassment complaints reported by women employees. The constitution of IC is as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were no complaints reported or cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

b. Your Company has not accepted any deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

c. There were no significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

COLLABORATORS

The Directors place on record its sincere appreciation to all its Collaborators for extending their valuable support and co-operation.

ACKNOWLEDGEMENT

The Directors wish to convey their appreciation to their Customers, Bankers, Dealers, Suppliers, Stock Exchanges, Government and all other Stakeholders for the excellent assistance and cooperation. The Directors also thank all the employees of the Company for their valuable service and support during the year.

For and on behalf of the Board

Place : Kolkata Aditya Khaitan
Date : 22nd July, 2020 Chairman