DIRECTORS' REPORT TO THE MEMBERS OF KANANI INDUSTRIES LIMITED Your Directors have pleasure in presenting their 32nd Annual Report on the Audited Statement of Accounts of Kanani Industries Limited ["Company"] for the Financial Year ended March 31, 2015. 2. REVIEW OF OPERATIONS Your company is engaged in the manufacturing activities and during the year under review, the Company has posted total Income of Rs. 696,782,891/- as against total Income of Rs. 715,450,763/- in the corresponding previous year. Net Profit after Tax for the year under review was Rs. 1,655,012/- as against Net Profit after Tax of Rs. 1,397,518/- in the corresponding previous year. 3. DIVIDEND AND RESERVES In order to conserve the resources for the further growth of the Company, your Directors think fit not to recommend any dividend for the year under review. 4. SHARE CAPITAL The Paid-up Equity Share Capital of the Company as on 31st March, 2015 is Rs. 9,89,34,000, comprising of 9,89,34,000 shares of Re. 1/- each. During the year under review, the Company has not issued any equity shares. 5. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Harshil Kanani, Managing Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. Further, Mrs. Ami D. Jariwala has been appointed as an Independent Director of the Company with effect from 31st March, 2015, for a term of 5 years. The Companies Act, 2013 (the Act) provides for appointment of independent Directors. sub section (10) of Section 149 of the Companies Act, 2013 (effective from April 1, 2014) provides that independent directors shall hold office for a term of up to five consecutive years on the Board of a Company, but shall be eligible for re-appointment on passing of a special resolution by the company in the Annual General Meeting and disclosure of such appointment in the Board's report. Accordingly, the Board of Directors proposes to appoint the existing Independent Director i.e. Mr. Shailesh Patel as an Independent Director of the Company under Section 149 of the Companies Act, 2013 for term up to 5 (five) years, in ensuing Annual General Meeting. Sub-section (11) states that no independent director shall be eligible to hold office for more than two consecutive terms of five years. Sub- section (13) states that the provisions of retirement by rotation as defined in sub-section (6) and (7) of Section 152 of the Act shall not apply to such independent director. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. Declaration for meeting the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with Stock Exchanges, has been received. 6. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) & 134(5) of the Companies Act, 2013, the Board of Directors of the Company hereby confirm that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. 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 at the end of the financial year and of the profit and loss of the company for that period; c. the directors have 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;uhiited d. the directors have prepared the annual accounts on a going concern basis; and e. the directors have 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 have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 7. PARTICULARS OF MANAGERIAL REMUNERATION The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is enclosed as Annexure I and forms part of this Report. 8. PARTICULARS OF EMPLOYEES PURSUANT TO THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 As per the provisions specified in Chapter XIII of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 none of the employees of the Company are in receipt of remuneration exceeding Rs. 60,00,000/- per annum, if employed for whole of the year or Rs. 5,00,000/- per month, if employed for part of the year. 9. NUMBER OF BOARD MEETINGS A calendar of meetings is prepared and circulated in advance to the Directors. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. During the year, 06 (Six) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. 10. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The Directors expressed satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 11. INDEPENDENT DIRECTORS The Independent Directors have submitted their disclosure to the Board that they fulfill all the requirements as to qualify for their appointment as Independent Director, under the provisions of section 149 of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement. 12. NOMINATION AND REMUNERATION POLICY The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors. This policy also lays down criteria for selection and appointment of Board Members. The Nomination and Remuneration policy has been uploaded on the website of the Company at <http://> www.kananiindustries.com/pdf/NominationandRemunerationPolicy.pdf 13. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES The Statement AOC-1 pursuant to the provisions of Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 regarding Subsidiary Company is enclosed as Annexure IV to this Report. 14. STATUTORY AUDITORS' AND AUDITORS' REPORT M/s. Ravi & Dev, Chartered Accountants, retires at the conclusion of the forthcoming Annual General Meeting and do not seek re election due to their unwillingness to act as Auditors' of the Company. Your Directors recommend that M/s. Rajpara & Co, Chartered Accountants, Surat [Firm Regd. No.114232W] be appointed as the Statutory Auditors of the Company to hold office for the term of 1 year from the conclusion of 32nd Annual General Meeting held for Financial Year ended 2015 till the conclusion of the 33rd Annual General Meeting to be held for the Financial Year 2016. As required under the provision of section 139 of the Companies Act, 2013, the company has obtained a written consent and eligibility certificate from M/s. Rajpara & Co, Chartered Accountants, to the effect that appointment, if made, would be in conformity with the limits specified in the said section Auditors Report as issued by M/s. Ravi & Dev, Chartered Accountants, Auditors of the Company is self explanatory and need not call for any explanation by your Board. 15. COST AUDIT Pursuant to the Companies (Cost records and Audit) Rules, 2014, maintaining the cost records, and Appointment of Cost Auditor is not applicable to our Company. 16. APPOINTMENT OF COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER The Company is in process of appointing Company Secretary in whole time employment and pursuant to Section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Further, the Company has appointed Mr. Darshak Pandya as the Chief Financial Officer of the Company w.e.f. 06/08/2015. 17. SECRETARIAL AUDIT In terms of Section 204 of the Act and Rules made there under, M/s. Deep Shukla & Associates, Practicing Company Secretary, have been appointed Secretarial Auditor of the Company. The Secretarial Audit Report is enclosed as Annexure V to this report. 18. INTERNAL AUDIT & CONTROLS The Company has in place adequate internal financial controls with reference to the financial statement. The Audit Committee of the Board periodically reviews the internal control systems with the management, Internal Auditors and Statutory Auditors. Significant internal audit findings are discussed and follow-ups are taken thereon. The Company has appointed M/s. Deepak Mehta & Associates, Chartered Accountant as the Internal Auditor of the Company w.e.f. 27/01/2015 pursuant to Section 138 of the Companies Act, 2013. 19. COMPOSITION OF AUDIT COMMITTEE All members of the Audit Committee possess strong knowledge of accounting and financial management. The Key Managerial Personnel are regularly invited to attend the Audit Committee meetings. The other details of the Audit Committee are given in the Corporate Governance Report, appearing as a separate section in this Annual Report. 20. RE-CONSTITUTION OF NOMINATION AND REMUNERATION COMMITTEE During the financial year, Mrs. Ami D. Jariwala, was appointed as Independent Director of the company w.e.f. 31st March, 2015. She was introduced as a Member in the Nomination and Remuneration Committee in place of Mr. Harshil Kanani who, being an Executive Director cannot be the Member of the Committee. Pursuant to Clause 49 IV A of the Listing Agreement the Nomination and Remuneration Committee shall consist of Non- Executive Members only. The Board of Directors of the Company has re-constituted the Nomination and Remuneration Committee w.e.f. 31st March, 2015. The other details of the Committee are given in the Corporate Governance Report, appearing as a separate section in this Annual Report. 21. EMPLOYEES' STOCK OPTION PLAN The Company has not provided stock options to any employee. 22. WHISTLE BLOWER POLICY In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Whistle Blower Policy for directors and employees to report genuine concerns has been established. The Whistle Blower Policy has been uploaded on the website of the Company at <http://www.kananiindustries.com/pdf/> Whistle%20Blower%20Policy.pdf. The employees of the Company are made aware of the said policy at the time of joining the Company. 23. RISK MANAGEMENT POLICY The Company has laid down the procedure to inform the Board about the risk assessment and minimization procedures. These procedures are reviewed by the Board annually to ensure that there is timely identification and assessment of risks, measures to mitigate them, and mechanisms for their proper and timely monitoring and reporting. 24. EXTRACT OF ANNUAL RETURN The details forming part of the Extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 is included in this Report as Annexure II and forms part of this Report. 25. DEPOSITS The Company has not accepted nor renewed any fixed deposits during the FY 2014-15. 26. LOANS & GUARANTEES During the year under review, the Company has not provided any loan, guarantee, security or made any investment covered under the provisions of Section 186 of the Companies Act, 2013 to any person or other body corporate. 27. INSURANCE The properties/assets of the Company are adequately insured. 28. RELATED PARTY TRANSACTIONS During FY 2014-15, the Company entered into certain Related Party Transactions which are in the ordinary course of business and at arm's length basis, with approval of the Audit Committee. The Audit Committee grants omnibus approval for the transactions which are of foreseen and repetitive nature. A detailed summary of Related Party Transactions is placed before the Audit Committee & the Board of Directors for their review every quarter. There are no materially significant Related Party Transactions executed between the Company and its Promoters, Directors, key Managerial Personnel or other designated persons, that may have a potential conflict with the interest of the Company at large. As there are no Related Party Transactions entered into by the Company Form AOC-2 is not applicable to the Company. 29. CORPORATE GOVERNANCE CERTIFICATE A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreement forms a part of this Annual Report. 30. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report, which gives a detailed state of affairs of the Company's operations forms a part of this Annual Report. 31. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company is committed to discharging its social responsibility as a good corporate citizen. The Board of Directors has framed a policy which lays down a framework in relation to Corporate Social Responsibility of the Company. This policy also lays down to lay down guidelines for the company tomake CSR a key business process for sustainable development for the Society. The details of this policy are explained by way of Annexure III. During the year under review, the Company has not expended any amount towards CSR activities as the same is not applicable to the Company pursuant to section 135 of the Companies Act, 2013. 32. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE A) Conservation of energy-Even though its operations are not energy-intensive, significant measures are taken to reduce energy consumption by using energy-efficient equipment. The Company regularly reviews power consumption patterns across all locations and implement requisite improvements/changes in the process in order to optimize energy/ power consumption and thereby achieve cost savings. Energy costs comprise a very small part of the Company's total cost of operations. However, as a part of the Company's conservation of energy programme, the management has appealed to all the employees / workers to conserve energy. B) Technology absorption- i. The efforts made towards technology absorption: The Company values innovation and applies it to every facet of its business. This drives development of distinctive new products, ever improving quality standards and more efficient processes. The Company has augmented its revenues and per unit price realization by deploying innovative marketing strategies and offering exciting new products. The depth of designing capabilities was the core to our success over the years. The Company uses the service of in-house designers as well as those of free-lancers in developing product designs as per the emerging market trends. The Company uses innovation in design as well as in technology to develop new products. ii. Benefits derived as a result of the above efforts : As a result of the above, the following benefits have been achieved: a. Better efficiency in operations, b. Reduced dependence on external sources for technology for developing new products and upgrading existing products, c. Expansion of product range and cost reduction, d. Greater precision, e. Retention of existing customers and expansion of customer base, f. Lower inventory stocks resulting in low carrying costs, iii. The Company has not imported any technology during the year under review iv. The Company has not expended any expenditure towards Research and Development during the year under review. 34. GENERAL During the year ended 31st March, 2015, there were no cases filed /reported pursuant to the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE and NSE where the Company's Shares are listed. During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company's operations. 35. 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 Company thrust is on the promotion of talent internally through job rotation and job enlargement. 36. ACKNOWLEDGEMENT The Directors would like to thank all shareholders, customers, bankers, suppliers and everybody else with whose help, cooperation and hard work the Company is able to achieve the results. The Directors would also like to place on record their appreciation of the dedicated efforts put in by the employees of the Company. For and On behalf of the Board of Directors PREMJIBHAI KANANI Chairman DIN : 01567443 Place: Mumbai Date: 6th August, 2015 |