Mar 31, 2015
The Directors are pleased to present the Twenty Ninth Annual Report with the Audited Accounts for the financial year ended on March 31, 2015
(Rs. In Lakhs)
Particulars 2014-2015 2013-2014 2014-2015 2013-2014 (12 Months) (15 Months) (12 Months) (15 Months)
Sales/Income from operations 7,246 1,00,884 7,751 1,01,442
Other Income 617 1,159 617 972
Less: Expenses 7,493 1,34,963 13,393 1,36,640
Profit/Loss before Finance Cost, Depreciation,
Exceptional Items and Taxes 370 (32,920) (5025) (34,226)
Less: Finance Cost (Interest) 623 18,041 624 18,042
Less: Depreciation 5,343 7,605 5,376 7,644
Less: Exceptional Items 17,194 93,129 11,718 91,229
Profit/Loss before Taxes (22,790) (1,51,695) (22,743) (1,51,142)
Less: Provision for Taxes
(a) Tax related to previous years 3 (685) 3 (685) (b) Deferred Tax Adjustment 194 29 194 29
Profit/(Loss) after Taxes (22,987) (1,51,039) (22,940) (1,50,486)
Proposed Dividend 00 00 00 00
Dividend Tax 00 00 00 00
Minority Interest 00 00 (550) (111) Balance carried to Balance Sheet (22,987) (1,51,039) (22,389) (1,50,374)
Earning Per Equity Share
Basic/ Diluted (F.V. Re. 1 each) (5.07) (32.98) (4.94) (32.83)
During the Financial year under review, your company's total sales (Standalone) were Rs 7,246 Lakhs. The Profit before finance cost, depreciation, exceptional items and taxes (Standalone) was Rs. 370 Lakhs. The finance cost (Standalone) was Rs. 623 Lakhs. The EPS (Earning per Share) of the Company is Rs. (5.07) for the period ended March 31, 2015. The stalled operation of the Company has severely affected the performance of the Company.
The previous financial year of the Company was extended by 3 month i.e. from 31/12/2013 to 31/03/2014. Hence the current financial year of the Company is not comparable with the results of the previous financial year 2013-2014 which was 15 months period.
DIVISION WISE OPERATIONAL PERFORMANCE FOR THE PERIOD ENDED MARCH 31, 2015 WAS AS UNDER:
A. Oil Division
1. Mustard Oil: During the period under review the Company's mustard oil plant was utilized up to 5.13 % of its installed available capacity; it processed 67,764 MT (Include 67,764 MT Processed under Job work arrangement) of mustard seeds. Mustard Oil production stood at 20,875 MT (Includes 20,875 MT produced under Job work arrangement) against that of 9,951 MT in the previous year, recording a significant Increase of 109.78% as compared to previous year.
2. Refined Oils: The Company's refined oil plants utilized 5.00% of its available capacity and processed 23,981 MT (Include 23,981 MT Processed under Job work arrangement) of crude oil. Refined oil production stood at 22,753 MT (Includes 22,753 MT produced under Job work arrangement) against that of 26,705 MT in the previous year, recording a significant decrease of 14.80% over the previous year.
3. De Oiled Cake (DOC): Solvent extraction plant utilized 9.53 % of its available capacity during the year under review and processed 120,032 MT (Include 120,032 MT Processed under Job work arrangement) of oil cake/seeds. During the year, DOC production was at 111,661 MT (Includes 111,661 MT produced under Job work arrangement) as against 132,882 MT during the previous year, thus recording a decrease of 15.97% over the previous year.
B. Power Division
During the year power generated through wind mills was 102,398,049 units as against 124,521,579 units in the last year, thus recording a decrease of 17.77% over the previous year. Out of these units, the Company has utilized 7,545,287 units for in- house consumption and sold 94,852,762 units.
The company is in stringent working capital situation and hence the company is currently unable to source Seeds for its own production. (Seeds are the prime input both in quantitative & price terms for any product in the Edible Oil Sector). Accordingly, during the year, company has earned a portion of its revenue from job-work. Job work has been done for local suppliers who are inclined to increase their job work in the company in view of imported machinery, state of art infrastructure and superior quality product. Job-work has enabled the company to meet with employee expenses and plant maintenance expenses and reduce its cash losses. The company expects increase in revenue contribution from job-work in future adding to the bottom line.
Considering the stalled operating operations of the company and in view of the continuous losses, no dividend is proposed to be paid for the Fiscal 2014-2015, as per the Companies (Declaration and Payment of Dividend) Rules, 2014.
EROSION OF NET WORTH
As per the Audited Financial Statements for Financial Year 2014- 15, the accumulated losses of the Company as on 31st March, 2015, are in excess of its entire net worth as on the same date, as such the Company has become a Sick Industrial Company and the necessary reference be made with the Board for Industrial & Financial Reconstruction (BIFR) in terms of the provisions of Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for determination of measures for its rehabilitation. The Company is in the process of making the necessary statutory compliances.
CHANGE IN SHARE CAPITAL
During the financial year under review, there was no change in the share capital of the company.
Your Company follows the highest standards of Corporate Governance best practices. It adheres to and has implemented the requirements set out by SEBI's Corporate Governance practices. As a part of this practice, a separate section on Corporate Governance forms a part of the Directors' Report. A certificate from CS Mayank Dubey, practicing Company Secretary, confirming compliance of Clause 49 on Corporate Governance of the Listing Agreement is included in this Annual Report. The Managing Director & Executive Director & CFO of the Company have issued the required certificate to the Board in terms of Clause 49 (IX) of the Listing Agreement for the financial year ended on March 31, 2015.
With regard to the observations made by Practicing Company Secretary in his compliance certificate pursuant to Clause 49(IV) (A) of the listing Agreement, it has been clarified that, the company could not be able to follow the same due to non availability of non executive director, however, the company has made an appointment of Independent Director on February 17, 2015 and reconstituted the Committee of the Nomination and Remuneration on June 13, 2015.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report (MD&A) for the year under review, as stipulated under Clause 49 of the Listing Agreement, is presented in a separate section forming part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The details of the Directors being recommended for Appointment pursuant to Clause 49 of the Listing Agreement are included in the accompanying Notice of the ensuing Annual General Meeting.
During the period under review Mr. Sourabh Garg, Executive Director, Mr. P. K. Mandloi, Independent Director, Mr. R. S. Sisodia, Independent Director and Mr. B. N. Singh, Independent Director have been removed from the Board of Directors w.e.f September 03, 2014.
The Nominee Director Mr. B. S. Bhasin (SBI) and Mr. M.B. Kaul (IDBI) have been ceased to be directors of the Company w.e.f July 02, 2014 & November 11, 2014 respectively.
In terms of the Section 149 of the Companies Act, 2013 Mrs. B. Swarupa Rani was appointed Additional Independent Women Director of the Company w.e.f February 17, 2015 for a period of 5 (five) years to hold Office till February 16, 2020. This is subject to shareholders' approval at the forthcoming Annual General Meeting of the Company.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
In addition to the above, Mr. Ramesh Chand Garg, Managing Director, Mr. Davesh Agarwal, Executive Director & CFO and Mr. Sandeep Kumar, Company Secretary have been designated as the Key Managerial Personnel of the Company under Section 203 of the Companies Act, 2013.
The Company has devised a mechanism for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. The criteria for performance evaluation of directors cover the areas relevant to their functioning as member of Board or its Committees thereof.
The manner in which the performance evaluation of the board and its committees, the chairman and the directors individually has been carried out and explained in the Corporate Governance Report.
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.
The calendar of Meetings is prepared and circulated in advance to the Directors. During the year five Board meetings and five Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
The Board currently has 5 (five) Committees:
1) Audit Committee: As on March 31, 2015, the Audit Committee comprised of Mr. Boda Venkat Ram as Chairman, Mr. Arvind Pandalai and Mr. Davesh Agarwal as Members.
2) Nomination and Remuneration Committee: As on March 31, 2015, the Committee comprised of Mr. Boda Venkat Ram as Chairman, Mr. Arvind Pandalai and Mr. Davesh Agarwal as Members.
3) Stakeholders Relationship Committee: As on March 31, 2015, the Committee comprised of Mr. Arvind Pandalai as Chairman, Mr. Boda Venkat Ram and Mr. Davesh Agarwal as Members.
4) Corporate Social Responsibility Committee: As on March 31, 2015, the Committee comprised of Mr. Ramesh Chand Garg as Chairman, Mr. Davesh Agarwal and Mr. Boda Venkat Ram as Members.
5) Management and Finance committee: As on March 31, 2015, the Committee comprised of Mr. Ramesh Chand Garg as Chairman, Mr. Davesh Agarwal and Mr. Boda Venkat Ram as Members.
Separate Independent Directors' Meetings
The Independent Directors meet at least once in a year, without the presence of Executive Directors or Management representatives. They also have a separate meeting with the Non-Executive Chairman, to discuss issues and concerns, if any.
The Independent Directors met on 17th February, 2015 during the Financial Year ended 31st March, 2015.
Familiarization programme for Independent Directors
The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. The details of the same is available on the website of the Company www.ksoils.com.
The Nomination, Remuneration and Evaluation Policy is attached herewith marked as Annexure - I
There are Nil recommendation of the Audit Committee which has not been accepted by the Board.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, your Directors confirm:
a). That in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departure was made for the same;
b). That 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 of the Company for the period ended on March 31, 2015;
c). That Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d). That the annual financial statements have been prepared on a going concern basis;
e). That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
f). That proper systems had been devised to ensure compliance with the provisions of all applicable laws and were adequate and operating effectively.
CODE OF CONDUCT
The Company has in place a comprehensive Code of Conduct (the Code) applicable to Directors, Independent Directors and Senior Management Personnel. The Code gives guidance and support needed for ethical conduct of business and compliance of law. The Code reflects the values of the Company. A copy of the Code has been put on the Company's website www.ksoils.com. The Code has been circulated to Directors and Senior Management Personnel and its compliance is affirmed by them annually.
PREVENTION OF INSIDER TRADING
The Securities and Exchange Board of India (SEBI) vide notification dated January 15, 2015 has put in place a new framework for prohibition of Insider Trading in Securities and to strengthen the legal framework thereof. These new regulations of the SEBI under the above notification have become effective from May 15, 2015. Accordingly, the Board has formulated the Code of Practice for Fair Disclosure of Unpublished Price Sensitive Information in accordance with Regulation 8 of Insider Trading Regulations, 2015 and the Code of Conduct, as per Regulation 9 for regulating, monitoring and reporting of Trading of Shares by Insiders. The Code lays down guidelines, procedures to be followed and disclosures to be made while dealing with shares of the Company and cautioning them on consequences of non-compliances. The copy of the same is available on the website of the Company.
RELATED PARTY TRANSACTIONS
There are no related party transactions as per Section 188 of the Companies Act, 2013 however, the significant transaction carried out during the financial Period as per AS18 is disclosed in Note No. 47 of the Standalone Financial Statement and the same were carried on arm's length basis. Therefore the requirement of AOC2 is not mandated. Except Managerial Remuneration and disclosers made elsewhere, there are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential confect with the interest of the Company at large.
The policy on Related Party Transactions as approved by the Board may be accessed on the Company's website at the link: http://www. ksoils.com/pdf/RTPPolicy_2015.pdf
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
During the period under review the Company has not made any fresh Investment or given guarantees or provided securities. Particulars of loans given along with the purpose for which the loans are provided is disclosed in the standalone financial statement (Please refer Notes 13 & 18).
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at the link: http://www.ksoils.com/pdf/CSRPolicy.pdf
During the year, the Company has spent Nil amount on CSR activities as the Company is having a continuous loss. The Annual Report on CSR activities is annexed herewith as Annexure - II to this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as Annexure - III to this Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure-IV to this Report.
STATUTORY AUDITORS AND REPORT
M/s Ladha G. D. & Co., Chartered Accountants were appointed as the Statutory Auditors of the Company from Adjourned 28th Annual General Meeting until the conclusion of 32nd Annual General Meeting of the Company subject to ratification by the shareholders at every Annual General Meeting. The Company has also received a certificate from M/s Ladha G. D. & Co., Chartered Accountants pursuant to Section 139 of the Companies Act 2013, confirming their eligibility.
The Independent Auditors report contains the qualification and management response thereof has been made in the notes to the accounts wherever necessary. However, the said qualifications/ reservations / observations have been duly addressed by the management. In the opinion of the management, there would be no material impact expected on the reported loss for the period on this account.
Further, all observations made in the Auditors' Report and notes to the accounts are self-explanatory and may be treated as information/ explanation submitted by the Board as contemplated under provisions of the Companies Act, 2013.
SECRETARIAL AUDITORS AND REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M. D. & Associate, Company Secretaries, a frm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure - VI.
The report does not contain any qualification save and except the following:
i. The company has delayed / defaulted in fling of several forms with the Registrar of Company including Annual Accounts within due time as the same has not been finalized during audit period; There is a gap of more than 15 months between two AGM's due to extended financial year of 15 months; and AGM held on 30/09/2014 which was adjourned due to non-finalization of Annual Accounts and non-appointment of Statutory Auditor.
Management Response: Due to casual vacancy of Independent Auditor the Annual Accounts could not get finalized and in lining up the procedural aspect the delay has occurred. In line of the above, the Company has improved the manner and process for fling of forms with the Registrar of Companies.
ii. Internal Auditor has not been appointed.
Management Response: Due to non availability of the qualified personal in remote location the company could not be able to appoint the Independent Auditor. However, the company is endeavoring to achieve the same.
iii. Limited Review Report for the quarterly result has not been provided by the Statutory Auditor hence could not take up and approve by the Audit committee and Board respectively.
Management Response: The same is due to rotation of Statutory Auditor and for covering up the backlog created pursuant to such casual vacancy.
iv. The Company has delay / default in Clause 41 and 49(VI) (A) of the Listing Agreement
Management Response: The Company has appointed one Independent Director and reconstituted the Nomination and Remuneration Committee as per Clause 49(VI) (A).
v. The Company has delay Default in falling of Annual Performance Report in respect of foreign subsidiary with RBI through Authorized dealer and Monthly and Annual Return of ECB External Commercial Borrowing
Management Response: In line of the above, the company has improved the process for future. Further due to delay in Adoption of Financial Statement as described in abovementioned point no. 1 the said default has been occurred.
M/s. S. K. Saxena & Co., Cost Accountants (Registration No. 100126) have been re-appointed by the Board of Directors of the Company at a remuneration of Rs. 35,000/- subject to payment of applicable taxes thereon and re-imbursement of out of pocket expenses to conduct audit of the cost accounting records of the Company for the financial year 2015-16. As required under the Companies Act, 2013, a resolution seeking members' approval for the remuneration payable to the Cost Auditors forms part of the Notice convening the Annual General Meeting.
The Equity Shares of your Company are listed at National Stock Exchange of India Ltd. and Bombay Stock Exchange Limited, the National Stock Exchange has suspended the trading w.e.f June 21, 2013. The Annual Listing fees for the listed equity shares of the Company, pertaining to the year 2015-16 has been paid to the Bombay Stock Exchange, however Listing fees to the National Stock Exchange has not been paid.
SUBSIDIARIES, JOINT VENTURE AND ASSOCIATES
At the beginning of the year, we had 7 (Seven) subsidiaries. As on March 31, 2015. We have 1 (One) direct subsidiaries, 6 (six) step- down subsidiaries.
A statement pursuant to Section 129 of the Companies Act, 2013 relating to subsidiaries, Joint Ventures or Associate Companies for the year ended on March 31, 2015 has been attached in the Annual Accounts.
The Consolidated Financial Statements of the Company and all its subsidiaries as prepared in compliance with the applicable accounting standards and listing agreements are enclosed. The statement of statutory information in aggregate for each subsidiary is enclosed along with the Consolidated Financial Statements. The annual accounts of the subsidiaries shall be made available to the shareholders seeking such information and shall also be available for inspection at its Registered Office. The Policy for determining material subsidiaries as approved may be accessed on the Company's website in investor section: http://www.ksoils.com/pdf/Policy_MaterialNon- ListiedSubsitiary.pdf
INTERNAL FINANCIAL CONTROL
The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has laid down the procedures to inform Board Members about risk assessment and minimization procedures. The Board of Directors of the Company has framed risk management policy which can be accessed on the Company's website at the link: http://www.ksoils.com/pdf/ RiskManagementPolicy_2015.pdf This policy forms part of the internal control and corporate governance process of the Company. Basically the aim of this policy is not to eliminate risks, rather to manage the risks involved in the Company activities to maximize opportunities and minimize adversity by considering the following:- ? Identification of risk, defend ownership with clearly defend role and responsibilities;
- Balance between the cost of managing risk and the anticipated benefits;
- Contributing to more efficient use/allocation of capital and resources;
- to encourage and promote an pro-active approach towards risk management
- Identifying any unmitigated risks and formulating action plans for its treatment through regular review.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The Company did not have any employee of the category mentioned in Section 197(12) of the Companies Act, 2013, read with the Rule 5(2) & (3) of the Companies Appointment and remuneration) Rules, 2014 as Amended and forming part of the Directors' Report for the Financial Year ended March 31, 2015
The ratio of remuneration of each Director to the median employee's remuneration and other details in terms 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 annexed as part of this report at Annexure - V.
Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under report. Your Company firmly believes that a dedicated workforce constitute the primary source of sustainable competitive advantage. Accordingly, human resource development continues to receive focused attention. Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the staff and workforce of your Company. There are 364 numbers of employees of the Company as on 31 March 2015.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The same has also been displayed on the website of the Company and the link for the same is http://www.ksoils.com/pdf/WBlowerPolicy_2014-15_1.pdf
ENHANCING SHAREHOLDERS VALUE
Your Company believes that its Members are amongst its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
5. Significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future disclosed in Auditors Report.
Your Directors further state that during the year under review, there were no cases fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
FORWARD LOOKING STATEMENT
This Report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words 'anticipate', 'believe', 'estimate', 'expect', 'intend', 'will' and other similar expressions as they relate to the Company and/or its businesses are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward- looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.
Your Directors thank various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.
By the Order of the Board of Directors
For K. S. Oils Limited
Davesh Agarwal Ramesh Chand Garg
Executive Director & CFO Managing Director
DIN : 01102237 DIN: 00027025
Date : 05/12/2015
Place : New Delhi