BOARD'S REPORT TO, THE MEMBERS OF K G PETROCHEM LIMITED Your Directors have pleasure in presenting this 35th Board's Report of your Company together with the Audited Statement of Accounts and the Auditors' Report of your company for the financial year ended, 31st March, 2015 REVIEW OF OPERATIONS During the Financial Year, the company was able to improve its performance in revenue from operation. The revenue from operation of the company for the year ended 31 st March 2015 was Rs. 18589.93 lacs as against Rs. 15104.95 in F.Y 201314, an increase of 23.07% on a yearto year basis. The reduction in the profit for the year was due to increase in finance charges and deprecation. Further Segment wise result of operation is as under- Textile Division During the year, its revenue from operation was Rs. 18501.44 lacs including export sales of Rs 14810.95 lacs (fob) as against Rs. 15004.84 lacs including export of Rs. 10835.35 lacs in previous year, growth of 23.30%. The division has performed well during the year under review due to successful execution of expansion project. Agency Division During the year the agency division has sold HDPE/LLDPE Granules 21846 Mt. amounting to Rs 25581 lacs in comparison of 24679 Mt. amounting of Rs. 27456.93 lacs and earned commission of Rs. 88.43 lacs as compared to last year Rs. 100.11 Lacs Garment Division Garment division is doing job work for Textile Division. MATERIALCHANGEAND COMMITMENTS There were no change in the business of the Company. There were no material changes and commitments effect the financial position of the company between 31 March, 2015 and the date of this report. CREDIT RATING CARE has reaffirmed the Company's long-term rating of CARE BBB-(Triple B Minus) and short-term rating of CAREA3( A three). It denotes moderate degree of safety regarding timely payment of financial obligations. The company is regular in making timely payments of all its financial obligations and it is expected that the rating shall further improve in the coming years. * LISTING STATUS Shares of the Company are listed on the Bombay Stock Exchange. Company has initiated the process for delisting of shares and is taking necessary steps to get its shares delisted. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES The company does not have any subsidiary/associate/joint venture. DIVIDEND In order to conserve the resources of company the directors are not recommending any dividend. There was no unclaimed / unpaid dividend, hence the company is not required to transfer any amount to Investor Education and Protection Fund (IEPF) pursuant to sections 205A and 205C of the Companies Act, 1956 and other applicable provisions. SHARE CAPITAL During the Financial Year 2014-15, there is no change in structure of share capital of the company. MEETINGS OF THE BOARD OF DIRECTORS During the year 2014-15, the six Board meetings were conveyed and held on 30/05/2014, 10/07/2014, 14/08/2014, 14/11/2014, 24/12/2014 & 14/02/2015. Other details pertaining to attendance at the meeting are given in Corporate Governance Report attached with this Report. The provisions of Companies Act, 2013 and listing agreement were adhered to while considering the time gap between two meetings. DIRECTORS AND KEY MANAGERIAL PERSONNEL I. As on March 31, 2015, the Company has eight directors. During the year Smt.Savitri Kandoi was appointed as Director and all other non- executive non promoter directors have been re-designated as Independent Directors as per the provisions of Companies Ac 12013. Shri Manish Singhal retires by rotation and being eligible has offers himself for re-appointment. II. None of the directors on the board hold directorships in more than ten public companies. Further, none of them is a member of more than ten committees or chairman of more than five committees across all the public companies in which he is a director. Necessary disclosures regarding committee positions in other public companies as on March 31,2015 have been made by the directors. III. Pursuant to the provisions of the Section 149(4) Companies Act, 2013 Mr. Nitin Jaipuria, Mr. Kamlesh Sharma, Mr. Raj Kumar Agarwal and Mr. Rameshwar Pareek were appointed as an independent director. Independent directors are non-executive directors as defined under Clause 49(II)(B)(1) of the Listing Agreement. The maximum tenure of the independent directors is in compliance with the Companies Act, 2013 ("Act"). All the independent directors have submitted declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year IV. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company. V. The names and categories of the directors on the board, their attendance at board and general meetings held during the year are given in Corporate governance Report During the year company has appointed the following KM P's Shri GS Kandoi - Managing Director Shri ShivRatan Sharma - Chief Financial Officer CS Navita Khunteta — • Company Secretary ANNUAL EVALUATION The evaluation of the directors, KMPs and the senior officials of the company is to be conducted on annual basis to satisfy the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Company has prepared an annual performance evaluation policy for performance evaluation of Independent Directors, Board and the Committees. Separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performzfnce evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. SECRETARIAL AUDIT AND REPORT According to provision of the section 204 of the Companies Act 2013 read with rule 9 of the companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report Submitted by M/s Arms & Associates LLP, Practicing Company Secretaries, for the financial year ended 31st March, 2015 is annexed herewith for your kind perusal and information. (Annexure -I) RATIO OF REMUNERATION TO EACH DIRECTOR AND PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished in (Annexure: II) There was no employee in the company drawing remuneration in excess of the limits set out in the Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. STATUTORY AUDITORS and REPORT thereon Pursuant to the provisions of Section 139 of the Act and the rules framed there under, R Sogani & Associates, Chartered Accountants, (FRN 018755C) was appointed as statutory auditors of the Company from the conclusion of the thirty fourth annual general meeting (AGM) of the Company held on September 27, 2014 till the conclusion of the thirty-ninth annual general meeting to be held in the year 2019, subject to ratification of their appointment at every AGM. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of R Sogani & Associates, Chartered Accountants, as statutory auditor of the Company is placed for ratification by the shareholders. Pursuant to Section 141 of the Companies Act, 2013 and relevant Rules prescribed there under, the Company has received certificate from the Auditors to the effect, inter-alia, that their re-appointment, would be within the limits laid down by the Act and that they are not disqualified for such re-appointment under the provisions of applicable laws The observation of the Auditors in their report read with relevant notes on the accounts, as annexed are self-explanatory and need no elaboration. COST AUDIT As per Sub Rule (3) of Rule 4 of Companies (Cost Records & Audit), Rules, 2014, for the F.Y 2014-15 Cost Audit is not applicable on the company as the export turnover of the company is more than 75% of its total turnover. VIGIL MECHANISM /WHISTLE BLOWER POLICY The Company has formulated a vigil mechanism (whistle blower policy) for its directors and employees of the Company for reporting genuine concerns about unethical practices and suspected or actual fraud or violation of the code of conduct of the Company as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement. This vigil mechanism shall provide a channel to the employees and Directors to report to the management concerns about unethical behavior, and also provide for adequate safeguards against victimization of persons who use the mechanism and also make provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. The Vigil Mechanism Policy has been uploaded on the website of the Company at <http://www.kgpetro.in>. RISK MANAGEMENT POLICY There is a continuous process of identifying/ managing risks through a Risk Management Process. The measures used in managing the risk are also reviewed. The risk identified by the company broadly fall in the category of operational risk, Regulatory risk, Financial and accounting risk and Foreign currency related risk. The Board and the Audit committee of the company periodically review and evaluate the risk management system of the company so that the management controls the risks through properly defined network. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in prescribed Form MGT-9 is annexed herewith as (Annexure-III). INTERNAL CONTROL SYSTEM AND THEIR ADEpUACY The Management with Audit Committee periodically reviews the Internal Control System and procedure for the efficient conduct of the business. The Internal Auditor of the company conduct the audit on regular basis and Audit Committee actively review the Internal Audit Report. DEPOSITS The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. LOANS, GUARANTEES AND INVESTMENTS U/s 186. There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable for the F.Y. 2014-15. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. During the Year, the company has not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with the policy of the company on materiality of related party transaction. Further all the necessary details of transaction entered with the related parties are attached herewith in Form No. AOC-2 in Annexure: IV. CORPORATE GOVERNANCE Our Company continues to be committed to good corporate governance and ethical corporate practice. A separate report on Corporate Governance on compliances with the conditions of Corporate Governance as per Clause 49 of the Listing Agreement with Stock Exchange is provided as part of this Annual Report. CORPORATE SOCIAL RESPONSIBILITY As per Section 135(5) of the Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and schedule VII of the Companies Act, 2013, the company has duly constituted CSR Committee. The committee has decided the activities to be undertaken by the company and the expenditures to be incurred on the same and recommended the same to the board thereafter the board approved the CSR policy. The other detail related to CSR is given in Annexure-V. Additionally, the CSR policy has been uploaded on the website of the company <http://www.kgpetro.in>. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO: Information on conversation of energy, technology absorption , foreign exchange earning and out go pursuant to sec. 134 of the Companies Act, 2013 read with Rule of the Companies (Accounts)Rules, 2014 is given in Annexure VI of the report. DISCLOSURE UNDER SEXUAL HARSSEMET OF WOMEN AT WORK PLACE (PREVENTATION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has setup an internal complaints committee to redress complaints regarding sexual harassment for the F.Y. 2014-15 . During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors of the Company confirms that- a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 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 and loss of the company for that period; 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. APPRECIATION Your Directors wish to express their grateful appreciation to the continued co-operation received from the Banks, Government Authorities, Customers, Vendors and Shareholders during the year under review. Your, Directors also wish to place on record their deep sense of appreciation for the committed service of the Executives, staff and Workers of the Company. For and behalf of the Board Gauri Shanker Kandoi CMD DIN NO. : 00120330 Date : 14th August, 2015 Place: JAIPUR |