Directors' Report To, The Members Kiri Industries Limited Your Directors have pleasure in presenting 17th Annual Report together with Audited Accounts of the Company for the financial year ended on 31 st March, 2015. ? Highlights of Operations > Total Revenue: During the year under review total turnover of the Company increased by 34.26% from Rs 58385.23 Lakhs to Rs. 78386.84 Lakhs as compared to previous financial year ended 31st March, 2014, increase in revenue mainly due to increase in production and pri ce of Dyes Intermediate and positive support from Dye and basi c chemical division. > Profit before Finance Cost, Depreciation, Tax and Prior period adjustments: Profit before Finance cost, Depreciation, tax and prior period adjustment increased by 17.37% from Rs 6212.09 Lakhs to Rs. 7291.40 Lakhs which is due to increase in price of Dyes Intermediate of the Company > Total Expense: During the year under review, the Total Expense increased by 5.59% amounting to Rs. 63238.29 Lakhs as Compared to Rs. 59888.90 Lakhs of the previous financial year. The increase in total expenses are mainly on account of increase in Finance Costs, Employee Benefits Expenses, Manufacturing Expenses, Administrative Expenses and increase in selling and distributon expenses as compared to the previous financial year. > Net Loss: During the year under review the Company is able to reduced loss as compared to the previous year. In the Current financial year the Net Loss had reduced by 52.36% to Rs. 3686.37 Lakhs as compared to Rs. 7738.53 Lakhs of the previous financial year, the net loss reduced mainly on account of support of intermidiate business of the Company as compared to the previous financi al year. * Highlights of Operations > Total Revenue: During the year under revew, the total revenue increased by 34.77% from Rs. 69211.30 Lakhs to Rs. 93275.99 Lakhs as compared to the previous financial year ended 31st March, 2014 due to increase in prices of products of the Company and positive support from Dye and basic chemi cal business and significant contribution by joint venture company. > Profit before Finance Cost, Depreciation, Tax and Prior period adjustments: During the year under review, the Profit before Finance Costs, Depreciation, Tax and pror period adjustments increased to Rs. 10362.34 Lakhs from Rs. 7383.32 Lakhs as compared to the prevous financial year. It was mainly due to increase in revenue from operations. > Total Expense: During the year under review, the total Expenditure is increased by 28.63% to Rs. 94559.11 Lakhs as compared to Rs. 73539.00 Lakhs of the previous financial year. The reasons for increase in total expenses are only due to increase in Finance Costs, Material Cost, Employee Benefits Expenses, increase in Administrative, Selling and Distribution and Manufacturing Expenses as compared to the previous financial year. > Net Profit: During the year under revew, the Company had achieved profit of Rs. 18152.46 Lakhs as compared to the profit of Rs. 991.27 Lakhs of the previous financial year. The increase in net profit mainly on account of increase in total revenue, increase in prce of products of the Company, positive contributon by dyes and basic chemical division and joint venture of the Company. ? Dividend In view of losses incurred during the financial year 2014-15, your Directors do not recommend any Dividend for the year under review. ? Subsidiaries and Consolidated Financial Statements The Company has prepared Consolidated Financial Statements in accordance with the Generally Accepted Accounting Principles (GAAP). The Company has presented financial statements as per Schedule III, as notified under the Companies Act, 2013. Except where otherwise stated, the accounting policies are consistently applied. All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. The Board reviewed the affairs of the Company's subsidiares during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiares/Associates and Joint Venture, which form part of this Annual Report. Further in compliance of section 129 (3) of the Companies Act, 2013, a statement containing salient features of the Financial Statements of subsidiares/ Associates and Joint Venture is attached in Form AOC-1 as "Annexure A", which forms part of the Directors Report. ? Listing Fees The Equity Shares of your Company are listed and actively traded on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company had paid Annual Listing fees to both the stock exchanges for the Financial Year 2015- 2016 within the stipulated time. ? Directors Appointment of Director: In compliance with the provisions of Section 149, 152, 161 of the Companies Act, 2013 ("the Act"), other applicable provisi ons if any of the Act, rules framed thereunder, the Board of Directors of the Company at their meeting held on 10th October, 2014 has proposed Mrs. Veenaben Padia (DIN: 06992591) as Independent Director of the Company with effective from ensuing Annual General Meeting for a period of 5 (Five) consecutive years upto 25th September, 2020. Re-Appointment of Retiring Director: Mr. Manish Kiri, Managing Director of the Company, retires at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. A brief profile of Mr. Manish Kiri as required under Clause 49 of the Listing Agreement is annexed to the Notice. Withdrawal of Nominee Director: - The State Bank of India (SBI) had withdraw their Nominee Director, Mr. Jayanta Kumar Sinha w.e.f. 25.08.2014; - The Export Import Bank of India (Exim Bank) had withdraw their Nominee Director, Mrs. Harsha Bangari w.e.f. 01.12.2014. ? Declaration of Independent Directors Pursuant to Section 149 (7) of the Compani es Act, 2013, the Company has received necessary declaration from each Independent Director for FY 2014-15 confirming that they meet the criteria of independence as prescribed under the Act and Clause 49 of the Listing Agreement. ? Appointment of Key Managerial Personnel During the period under revew, the Board of Directors of the Company has appointed Mr. Jayesh Vyas, as Chef Financial Officer of the Company w.e.f. 10th October, 2014, in accordance with the provisions of Section 2(51), 203 of the Companies Act, 2013 ("the Act"), other applicable provisions, if any, of the Act, Appointment and Remuneration of Manageral Personnel Rules, 2014 and other applicable rules of the Act (including any statutory modificaton or re-enactment thereof from time to time). ? Board Meetings as well as separate Independent Directors Meeting: The Board met 6 (Six) times during the financial year (on 29.05.2014, 11.08.2014, 10.10.2014, 13.11.2014, 11.02.2015 and 30.03.2015). The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. A separate meeting of Independent Directors of the Company was held on 30th March, 2015. At the meeting, the Independent Directors reviewed the performance of Executive Directors, the Board and the Chairman of the Company. * Auditors and Audit Report: The members of the Company at their 16th Annual General Meeting (AGM) held on 26th September, 2014 has re-appointed M/s V. D. Shukla & Co., Chartered Accountants, Statutory auditors of the Company for conducting Audit of the Company to hold office from conclusion of 16th Annual General Meeting (AGM) till the conclusion of 19th AGM of the Company to be held in the year 2017 (subject to ratification of their appointment and remuneration by the members, at every AGM). M/s V. D. Shukla & Co., Chartered Accountants have given certificate under secton 141 of the Companies Act, 2013 and confirmed their eligibility to the effect that their re-appointment, if made, would be within the limits prescribed under the Act and that they are not disqualified for re-appointment. The Board recommends their re-appointment as statutory auditors of the Company. Notes to the financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. ? Cost Auditors: The Audit Committee of the Company at their meeting held on 29th May, 2015 has recommended to the Board of Directors, for appointment and fixing of remuneration of M/s. V H. Savaliya & Associates, Cost Accountants, for audit of cost records of manufacturing units of the Company for the financial year 2015-16. The Board of Directors of the Company at their meeting held on 29th May, 2015 has appointed M/s. V. H. Savaliya & Associates as Cost Auditors at a remuneration of Rs 2,00,000 plus Service Tax & out of pocket expenses subject to ratification by the members of the Company at the ensuing general meeting. * Internal Auditors In compliance of Section 138 of the Companies Act, 2013 ("the Act"), other applicable provisions of the Act and the Companies (Account), Rules 2014 and other applicable rules framed there under (subject to modification or reenactment thereof from time to time), the Board of Directors of the Company at their meeting held on 29th May, 2015 has re-appointed Mr. Mittal Shah, Chartered Accountants, Ahmedabad [Membership No.: 131116] for conducting the internal audit of the Company for the year 2015-16. ? Secretarial Auditors In compliance of the provision of section 204 of the Companies Act, 2013, other applicable provisions of the Act, the Companies (Appointment and Remuneration of Managerial Personnel), Rules 2014 and other applicable rules framed there under (subject to modificaton or reenactment thereof from time to time), the Board of Directors at their meeting held on 30th March, 2015 has appointed M/s Kashyap R. Mehta & Associates, Practcing Company Secretary, Ahmedabad [Membership No.: FCS 1821, COP No.: 2052] as Secretarial Auditor for conducting Secretarial Audit of the Company for the year 2014-15. The secretarial audit report is attached herewith as "Annexure - B". The Secretarial Audit Report do not contained any qualifcation. ? Public Deposits: During the year under review, the Company has not accepted any deposits from public within the meaning of provisions of Section 73 of the Companies Act, 2013 and other applicable provisions of the Act, the Companies (Acceptance of Deposits by Companies) Rules, 2014 and other applicable rules framed there under (subject to modification or reenactment thereof from time to time). * Changes In Capital Structure: Allotment of Equity Shares: During the year under review, the Board of Directors of the Company at their meeting held on 10th October, 2014 has allotted 37,25,073 Equity Shares on preferential basis as per SEBI (ICDR), Regulations, 2009 and conversion of foreign currency convertible bonds. Due to issuance of said equity shares, issued and paid up equity share capital has been increased from Rs. 1900.00 Lakhs to Rs. 2272.51 Lakhs. Further, the Board of Directors of the Company at its meeting held on 30th March, 2015, has allotted 43,33,500 Cumulative Non Convertible Redeemable Preference Shares of Rs. 10 each, at an issue price of Rs. 15 per share (including securities premium of Rs 5.00 per Preference Share) aggregating to Rs. 650,02,500/- (Six Crores Fifty Lakhs Two Thousand Five Hundred Only) to TATA Capital Financi al Services Limited against redemption of 65 Non Convertible Debentures of Rs. 10,00,000 each held by them. The said preference shares carry dividend @ 0.15% and will be redeemed on or before 7 years from date of allotment. ? Directors Responsibility Statement Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; 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 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 the 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 for the year ended March 31, 2015 on a 'going concern' basis; f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. ? Contracts and Arrangements with Related Parties All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. Therefore disclosure in form AOC-2 as per provisions of section 188 of the Companies Act, is not required and hence not furnished. ? Composition of Committees Audit Committee: In terms of provisions of section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, your Company has constituted the Audit Committee and the Composition of the said committee given below: Nomination and Remuneration Committee: The Company has constituted Nomination and Remuneration Committee in compliance with section 178 of the Companies Act, 2013 and clause 49 of the Listing Agreement. The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management, recommend to the Board their appointment and removal and shall carry out evaluation of performance of every directors of the Company. The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. The said committee will also comply the requirements of Clause 49 of the Listing Agreement. The Composition of Committee is given below: Stakeholder's Relationship Committee: The Company has constituted Stakeholder's Relationship Committee in compliance with secton 178 of the Companies Act, 2013 and clause 49 of the Listing Agreement. The Company believes in upholding and maintaining high transparency between the Company's affairs and its stakeholders Thus as a part of its endeavor to follow its Eth.cs and values, A special Committee of Directors has been created named "Stakeholder's Relationship Committee", which resolves the grievances/Complaints received from any security holders. Corporate Social Responsibility Committee: As part of its Corporate Social Responsibility (CSR), the Company makes concentrated efforts in the fields of Community Healthcare, Sanitaton & Hygiene, Education and Social Care & Concern. In line with the provisions of the Companies Act, 2013 and rules made thereunder, the Company has constituted Corporate Social Responsibility Committee; the Composition of the Committee is given below: ? Adoption of Policies Adoption of Whistle Blower Policy (Vigil Mechanism): In compliance of provisions of Section 177 of the Companies Act, 2013 ("the Act"), other applicable provisions of the Act, Companies (Meetings of the Board and Its Powers), Rules 2014 and Clause 49 of the Listing Agreement, your Company has establish a vigil mechanism for their directors and employees, so as to report their genuine concerns or grievances. The vigil mechanism shall provide for adequate safeguards against victimisation of person(s) who use such mechanism and make provision for direct access to the chairman of the Audit Committee or the director nominated by the Audit Committee, as the case may be, in exceptional cases. The detail of establishment of such mechanism through Whistle Blower Policy is available on the website of the Company and also annexed with this report and as "Annexure C" The functioning of the Whistle Blower mechanism is reviewed by the Audit Committee on regular basis. Adoption of Nomination and Remuneration Policy: In compliance of the provisions of section 178 of the Act, other applicable provisions of the Act, the Companies (Meetings of Board and its Powers), Rules 2014 and subject to modification(s) / re-enactment(s) thereof from time to time and Clause 49 of the Listing Agreement, your company has adopted and implemented Nomination and Remuneration Policy and the same is available on the website of the Company and also annexed to this report as "Annexure D". Adoption of Corporate Social Responsibility Policy: In compliance of Section 135 of the Companies Act, 2013 ("the Act") your Company has always been committed to the cause of social service since its inception and has repeatedly channelized its resources and activities, which positively affects the society socially, ethically and also environmentally. Your Company has taken up various Corporate Social Responsibility ("CSR") initiatives and enhanced value in the society. Your Company has formulated CSR Policy which encompasses its philosophy and guides its sustained efforts for undertaking and supporting socially useful programs for the welfare & sustainable development of the society. In compliance of Section 135 of the Companies Act, 2013, the Company shall ensure that, in every financial year at least 2% of average net profit of last three years has been utilized towards CSR activities. Our company has incurred losses since last three financial years therefore, the provision of section 135 is not applicable to the Company for mandatory contributing fund for CSR activities. However, the Company during the year 2014-15, has contributed directly or through NGO/Trust Rs. 33.89 Lakhs towards education, distribution of clean water in surrounding villages of Padra, Contribution to NGO/Trust for medical treatment, education, food supply in municipal school etc The detail about CSR policy is available on the website of the Company and annexed with this Report along with details of amount contributed in CSR activities as "Annexure E" Adoption of Policy of prevention of Sexual Harassment of Women at work place Your Company believes in conduct of its affairs in a fair and transparent manner to foster professionalism, honesty, integrity and ethical behavior and committed to developing a culture where it is safe for all the employees to raise their concerns about any misconduct or unacceptable practice by co- employee. In accordance with the provisions of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013, the Company shall have to implement policy to provide protection against sexual harassment of women at work place and for the prevention and redressal of complaints of sexual harassment and for matters connected therewith or incidental thereto. The sexual harassment results in violation of the fundamental rights of women to equality under articles 14 and 15 of the Constitution of India and their right to life and to live with dignity under article 21 of the Constitution and right to practice any profession or to carry on any occupation, trade or business which includes a right to work in safe environment. Your Company has formulated and implemented this policy to protect the fundamental and human rights of the women against the sexual harassment at work place of the Company. The said policy is available on the website of the Company and annexed with this report as "Annexure F" * Manner of Evaluation of Board, Its Committees and Individual Directors Pursuant to the provisions of the Companies Act, 2013 a structured questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, composition of the Board and its committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the independent Directors was completed. The performance evaluation of the executive Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. * Familiarisation Programme The Company undertook various steps to make the Independent Directors have full understanding about the Company. The details of such familiarisation programmes have been disclosed on the Company's website www.kiriindustries.com . * Particulars of Loans given, Investments made, Guarantees given and Securities provided Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in notes to the financial statement of the Company for the year en ded 31st March, 2015. ? Extract of annual return In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is annexed to this report as "Annexure G". * Conservation of energy, research and development, technology absorptions and foreign exchange earnings and outgo Additional information on conservation of energy, technology absorption, foreign exchange earnings & outgo as required to be disclosed in term of Section 134(3)(m) of the Companies Act, 2013 together with the Companies (Accounts of Companies) Rules, 2014 is annexed to this report as "Annexure H". * Corporate Governance & Management Discussion and Analysis The Corporate Governance philosophy of the Company rests on five basic principles viz. protection of rights & interests of members, equality in treatment of all members, disclosure of timely & accurate information, strategic guidance & effective monitoring by the Board and accountability of the Board to the Company & its members. As stipulated by Clause 49 of the Listing Agreement, Report on Corporate Governance given as forms part of this Annual Report. Certificate of the Auditors regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is also annexed to the Annual Report of the Company. As stipulated by Clause 49 of the Listing Agreement, the Management Discusson and Analysis Report is given as part of this Annual Report. ? Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Your Directors declared and confirm that, during the year under review, there is no cases filed under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ? Acknowledgement: Your Directors would like to express their appreciation for the assistance and co-operation received from the government, financial institutions, banks, customers, suppliers, business associates and members during the year under review. Your Directors would also like to place on record, sincere appreciation for the significant contribution made by the employees through their dedication and commitment towards the Company. For and on behalf of Board of Directors Pravin Kiri Chairman Date : 7th August, 2015 Place : Ahmedabad |