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Your Directors hereby present their 49th Annual Report on the business and operations together with the Audited Accounts of the Company for the year ended March 31,2019.
|SUMMARY OF FINANCIAL RESULTS:||Rs. in lakhs|
|(Loss) before Depreciation, Interest, Exceptional Item Tax||(172.66)||(87.87)|
|Profit/(Loss) before Exceptional Item and Tax||(220.40)||(142.61)|
|Profit/(Loss) before Tax||61.11||(253.46)|
|Profit/(Loss)for the year||61.11||(253.46)|
|Other Comprehensive Income||54.76||0.83|
|Total Comprehensive Income||115.87||(252.63)|
|Earnings per share||0.32||(1.32)|
In view of the continued losses, your Directors are unable to recommend any dividend for the year ended 31st March, 2019.
The turnover for the year 2018-19 is marginally higher than last year. The turnover of water soluble fertilizers was increased to Rs.6 crores as compared to Rs.50 lakhs in the previous financial year. Production of Single Super Phosphate at Ennore factory was affected by non-availability of Sulphuric Acid, due to closure of its manufacturer in South India, a common factor affecting all fertilizer manufacturing factories in South India. This has resulted reduced royalty income for the company.
Further, due to the ban on manufacture of NPK Mixtures continued during first half of the financial year and was lifted in October 2018 resulting in the manufacture of mixtures only for a period of five months during the year.
The business plan of traded products of the company would augment the turnover and profitability of the company for the coming year.
With the prospects of favourable monsoon during the balance of the current season, augmentation of supplies of traded goods from suppliers and reorientation of the marketing team, it is expected that the company would register better performance during the coming year.
Shareholders are aware at the Extra-ordinary General Meeting held on 26th February 2019, the object clause of Memorandum of Association has been expanded to include a large range of activities which the company can embark upon. The Managing Director is actively engaged in exploring various avenues for diversification as envisaged in the expanded object clause and with the assistance of technical and financial experts would consider feasibility for implementation of some of the diversification plans, for which purpose, adequate injection of funds would be sought for.
TRANSFER OF PROPERTY
Pursuant to the approval of the shareholders at the Extra-ordinary General Meeting of the company held on 26th February 2019, the company since sold two floors of Kothari Buildings to M/s.Gemini Iron and Steel Pvt. Ltd. for a consideration of Rs.23 crores which has resulted in substantial profit to the company.
The Horse Brand products of the company commend ready acceptability in the market place which is an added strength to the company.
The paid up equity share capital as on 31st March 2019 remains unchanged at Rs. 955.54 lakhs.
The company has not issued any shares during the year under review.
TRANSFER TO RESERVES
Your company has not transferred any amount to the reserves for the year ended 31st March, 2019.
MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE:
In terms of provisions of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015, (hereinafter referred to as Listing Regulations) the Management Discussion and Analysis Report is appended as Annexure I to this report.
PARTICULARS OF EMPLOYEES:
The details of remuneration of Directors and Employees in accordance with the 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, is appended as Annexure II to this report.
A statement showing the remuneration of employees who were in receipt of remuneration as prescribed under Rule 5(2) & Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this report and will be provided to any member on a written request to the Company Secretary.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
A) Change in Board Constitution
i) Mr. Pradip D Kothari, Director will retire at the forthcoming Annual General Meeting. He is eligible for re-election and offers himself accordingly.
ii) Board of Directors had appointed Ms.Thoopjlamudu Arulpathy Rajalaxmi as an Additional Director under the category of independent director of the Company with effect from 11th June, 2018 and appointed as Independent Director at the 48th Annual General Meeting held on 26.09.2018
iii) The tenure of Mr. Dilip Machado Machado, independent director of the company would lapse on 30.03.2020 and is eligible for reappointment. The Board of Directors on the basis of the recommendation of the Nomination and Remuneration Committee has proposed their reappointment, subject to approval of the members of the company at the ensuing Annual General Meeting for further period of 5 years commencing from 31.03.2020 to 30.03.2025.
B) Details with regards to meeting of Board of Directors and attendance during the year of the Company
(i) Composition of the Board of Directors as on the date of this Report is mentioned below;
|Name of the Director||Designation||Category|
|Mr. Pradip D Kothari||Director/Chairman||Non-executive Director|
|Mr. Rafiq Ahmed||Vice Chairman & Managing Director||Executive Director|
|Mr. Gunasekaran||Director||Independent Director|
|Mr. Dilip Machadoo Machadoo||Director||Independent Director|
|Ms.Thoopjlamudu Arulpathy Rajalaxmi||Director||Independent Director|
(ii) Meeting of Board of Directors and Attendance during the Year:
During the FY 2018-2019, 8 meetings of the Board of Directors of the Company were held
i.e. on 30.05.2018, 11.06.2018, 18.06.2018, 14.08.2018, 14.11.2018, 01.02.2019, 13.02.2019 & 27.02.2019. The gap between two meetings did not exceed 120 days. The attendance of the members at the Board of Directors meetings was as follows:
|Name of Director||No. of Board Meetings attended|
|Mr. Pradip D Kothari||8|
|Mr. Rafiq Ahmed||7|
|Mr. Dilip Machadoo Machadoo||8|
|Ms.Thoopjlamudu Arulpathy Rajalaxmi||6|
(C) Policy on Directors Appointment and Remuneration:
The Policy of the Company on Directors Appointment and Remuneration, including criteria for determining qualifications, positive attributes, independence of director and other matters provided under Section 178(3) of the Companies Act, 2013, adopted by the Board, is appended as Annexure III to this report. We affirm that the Remuneration paid to the director is as per the terms laid out in the said policy.
(D) Declaration by Independent Directors:
The Company has received necessary declarations from each Independent Director(s) under Section
149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.
(E) KEY MANAGERIAL PERSONNEL:
The following are Key Managerial Personnel:
Mr. J Rafiq Ahmed, Managing Director
Mr. Anil Kumar Padhiali, Company Secretary cum Compliance officer
Mr. V. Singravel, Chief Financial Officer
COMPOSITION OF BOARDS COMMITTEES:
Currently, the Board has three Committees: the Audit Committee, the Nomination and Remuneration Committee, and the Stakeholders Relationship Committee. All Committees are appropriately constituted. Details of the All Committee are listed in the Corporate Governance Report.
Annual evaluation of the performance of the Board, its Committees and of individual directors has been made, pursuant to the section 134(3) of the Companies Act, 2013.
The Nomination and Remuneration Committee ("NRC") reviewed the annual performance of the individual Directors.
In a separate meeting of Independent Directors, performance of non-Independent Directors, performance of the Board as a whole was evaluated.
The Company has established a mechanism for Directors and employees to report their concerns relating to fraud, malpractice or any other activity or event which is against the interest of the Company. The Whistle Blower Policy is in place. Employees can report to the Management concerned unethical behaviour, act or suspected fraud or violation of the Companys Code of Conduct Policy. No Employee has been denied access to the Audit Committee. The Vigil Mechanism policy of the company is available on our website www. kotharis.in.
CORPORATE SOCIAL RESPONSIBILITY:
As per the provision of Section 135 of the Companies Act, 2013, all companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more during any financial year are required to constitute a CSR committee and hence our Company do not meet the criteria as mentioned above and also in view of continued losses the Company has not constitutedany Corporate Social Responsibility Committee and the provisions of Section 135 of the Companies Act, 2013 is not applicable to the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013:
The Company has in place a Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act 2013. All the employees (permanent, Contractual, temporary, Trainees) are covered under this policy. During the year under review, no complaints were received falling under the category of Sexual Harassment of Women.
Pursuant to provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company engaged the services of Mr.R.Srinivasan, Company Secretaries in practice, Chennai to conduct the Secretarial Audit of the Company for the 12 months period ended on 31 st March, 2019. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-IV to this Report.
Comments of the Board on the Observation/qualification/reservation/adverse remarks/disclosure made:
|Observations by Secretarial Auditor||Our Reply|
|As indicated in the previous year 2017-18 Annual Report, the Company had convened the Annual General Meetings for FY 2015-16 on 28th September 2017 and for FY 2016-17 on 30th December 2017 for which permissions were not granted by ROC and the company made applications for compounding of offence with NCLT, Chennai and the same were pending before them and since there were no hearing for a long time, the company had withdrawn the said applications made with NCLT and is presently in the process of filing a fresh application with the Regional Director, Ministry of Corporate Affairs, Shastri Bhavan, Chennai, as per new norms prescribed under the Act.||Initially the company had filed application for compounding of offence with NCLT, and ROC, Chennai and the same were pending before them and since there was no hearing for a long time, the company had withdrawn the said applications made with NCLT and As per Ordinance Act, 2018; Company had filed the 3 GNL-1 forms with ROC, MCA, Chennai for all 3 years. The physical copies are being submitted to Regional Director, MCA and Registrars of Companies, MCA, Chennai.|
|As per the terms of the listing agreement, the company is required to maintain the shareholders data at a single point with the Registrar & Transfer Agents(RTA) and the company is still in the process of updating the data and to hand over the same to the RTA.||The Company had handover the physical shareholders data to the Registrar & Transfer Agents. The process is expected to be completed shortly.|
AUDITORS AND STATUTORY AUDITORS REPORT:
At the 48th Annual General Meeting of the company held on 26th September 2018 M/s. Arockiasamy & Raj, Chartered Accountants, Chennai, were re-appointed as Statutory Auditors for a period of five years. The Independent Auditors Report on the accounts for the financial year ended 31st March 2019 does not contain any qualificatory remarks.
PARTICULARS ON CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
(i) Energy Conservation: The superphosphate factory is under long lease and the lessee has taken appropriate steps to ensure energy in a comprehensive manner. The disclosure pertaining to Energy conservation is not applicable to your Company.
(ii) Foreign Exchange Earnings and Outgo: The Company has not earned or spent any foreign exchange during the year under review. The disclosure pertaining to Foreign Exchange Earnings and Outgo is not applicable to your Company.
(iii) Research and Development & Technology Absorption: The Company is not directly engaged in manufacture. The disclosure pertaining to Research and Development & Technology Absorption is not applicable to your Company.
DIRECTORS RESPONSIBILITY STATEMENT:
The Directors confirm that:-
a) In the preparation of the Accounts for the Financial Year ended 31st March 2019 the applicable accounting standards and schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), have been followed along with the proper explanation relating to material departure;
b) They have selected such accounting policies and applied them consistently and made judgements 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 or Loss of the Company for that period.
c) To the best of their knowledge and information, they 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; and
d) They have prepared the annual accounts on a going concern basis.
e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls though adequate are being strengthened on an ongoing basis quite effective to operate effectively; and
f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
SUBSIDIARIES, ASSOCIATES, AND JOINT VENTURES:
Kothari Marine International Limited is a subsidiary of the Company. The subsidiary Company is incorporated as on 13/07/2018 with the paid up capital of Rs.10,00,000/-. The Company is holding 99.99 percent shares of that Company and does not have any Associate Company nor does it have Joint Venture with any entity. Consolidated Financial statements are applicable to your Company.
CONSOLIDATION FINANCIAL STATEMENTS:
The Audited Consolidated financial statements of the company for the Financial Year ended 31st March 2019 together with the report of the Independent Auditors form part of the Annual Report.
Pursuant to first proviso to subsection (3) of Section 129 read with Rule 5 of the Companies (Accounts) Rule, 2014 a statement containing salient features of financial statements of subsidiary is annexed as Annexure V. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
The Company has not given any loan or guarantee in terms of Section 186 of the Companies Act, 2013, during the financial year 2018-19.During the year under review, Company has made an investment in Kothari Marine International Limited, the details of investment is mentioned in notes to the financial statements.
The Company has implemented a risk management policy including identification therein of elements of risk, if any, which in the opinion of the Board is adequate. EXTRACT OF ANNUAL RETURN:
As required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT-9 is annexed with this Report as Annexure - VI.
RELATED PARTY TRANSACTIONS:
During the year under review,the company has entered into any contract or arrangement in terms of section 188(1) of Companies Act, 2013 have been on arms length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 is annexed as Annexure-VII.
The provision of Corporate Governance is not applicable on the Company in terms of Regulation 15(2) of SEBI (LODR) Regulations, At the Company, we constantly strive to evolve and follow up on the Corporate Governance guidelines. However, as a matter of good practice,and best practices a separate section on Corporate Governance is annexed as Annexure- VIII to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT:
There are no significant and material orders passed by the Regulators or Court that would impact the going concern status of the company.
INTERNAL FINANCIAL CONTROLS:
The Company has a well-placed, proper and adequate internal control system, which ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. This has been endorsed by statutory auditors in their separate report which is annexed.
M/s. N. Ganesan Associates, Chartered Accountants as the Internal Auditor of the Company have carried out effective internal audit of the operations and accounts of the company during the year.
MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
No material changes and commitments affecting the financial position of the company occurred.
The Company is not in arrears of listing fees and most of the formalities have been completed for revocation of suspension.
The Company has not accepted any public deposit during the year.
Your Directors place on record their appreciation of the valuable support and help of M/s. Gemini Fertilizers both in management and financial matters, Financial Institutions, Government authorities, Banks and Employees. The cooperation and the forbearance of the members are gratefully acknowledged.
|By Order of the Board of Directors|
|For KOTHARI INDUSTRIAL CORPORATION LIMITED|
|Place : Chennai||PRADIP D KOTHARI|
|Date : 10.08.2019||CHAIRMAN|