Mar 31, 2010
The Directors present the 16th Annual Report together with the Audited
statement of Accounts of the Company for the year ended 31st March
2010.
1) FINANCIAL RESULTS
The Financial performance of your Company for the year under review is
summarized below:
(Rs. in Lacs.)
PARTICULARS YEAR ENDED YEAR ENDED
31.03.2010 31.03.2009
Sales 37,03,61,340 34,66,43,206
Profit/ (Loss) before
Exceptional Items (13,331638) (43,65,821)
Less: Exceptional
Items - -
Profit/before Taxation (13,340,638) (37,14,107)
Less: Provision for Taxation (24,27,868) (40,73,573)
Net Profit after Taxatation (10,912,770) 3,59,466
Balance Brought Forward from
previous years (5,36,46,084) (5,40,05,550)
Surplus Defecit carried to
Balance Sheet (64,558,854) (5,36,46,084)
2) REVIEW OF OPERATION:
During the year the Company has incurred loss of Rs. 10,912,770/- as
compared profit of Rs.3,59,466/- in the previous year. The Directors of
the Company have planned out the course of action to take the necessary
steps to cultivate profit out of the existing plans.
3) DIVIDEND
In view of the losses, your Directors do not recommend any dividend for
the financial year ended 2009-10.
4) ISSUE OF SECURITIES:
The Company has issued 8,55,0000 6% Cumulative Redeemable Preference
Shares of Rs.10/- each on Preferential Basis in their Board Meeting
held on 12th June 2009 to Kanchan Kitchen-aid Private Limited and has
complied with all the formalities relating to issue. During the period
under review it has received Rs.38.35 lacs towards preferential issue
and the same has been utilized towards working capital requirement of
the Company.
5) DELISTING OF SECURITIES FROM ASE AND MSE:
As decided by the Members in the last AGM, your Company has completed
all the procedure for delisting of the securities from the Madras as
well as Ahmedabad Stock exchanges. However, formal letters of delisting
of the securities from the said Stock exchanges are awaited.
6) SHIFTING OF REGISTERED OFFICE WITHIN THE LOCAL LIMITS:
The Board of Directors in their meeting held on 14th August 2008 has
shifted the registered office of the Company from 25, Yudhistir Co-Op
Housing society, Ground Floor, N.L.Complex, Anand Nagar, Dahisar
(East), Mumbai 400068 to 41, Mid Town, S. V. Road, Borivali (west),
Mumbai 400092.
7) SUBSIDIARY COMPANIES:
The accounts of the Subsidiary Company of the Company, viz. Kanchan
International Middle East F.Z.E for the year ended 31st March 2010
along with statement required by Section 221 (1) (e) of the Companies
Act 1956 are annexed. Pursuant to Listing Agreement, the Consolidated
Financial Statement of the Company alongwith its Subsidiary also forms
part of Annual Report.
The Government of Ajman (UAE) has not prescribed any format for
preparation of accounts of the Company. But the Company had prepared
the accounts as per the Provisions of Companies Act, 1956 and other
provisions of applicable Accounting Standards. The same has been
annexed herewith the report.
8) FIXED DEPOSITS:
The Company has not accepted any Deposits under Section 58A of the
Companies Act, 1956 during the year under review.
9) DIRECTORS:
The Board of Directors of a Company provides leadership and strategic
guidance, objective judgment, independent of management to the Company
and exercise control over the Company, while remaining at all times
accountable to the shareholders.
In accordance with the provision of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. Praveen Kumar Gupta & Mr.
Shailesh Parekh retire by rotation at the ensuing Annual General
Meeting and being eligible, have offered themselves for re-appointment.
Their brief profile forms a part of Notice of this Annual Report.
10) CORPORATE GOVERNANCE:
Your Company is committed to maintain the highest standard of Corporate
Governance and adhere to the requirements set out by SEBI. With a view
to strengthening the Corporate Governance framework, the Ministry of
Corporate Affairs has issued a set of Voluntary Guidelines in December
2009 for adoption by the Companies. Your Company already complies with
certain provisions of these Voluntary Guidelines and has initiated
appropriate action to comply with other requirements.
The Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement, including the shareholders information and
auditors certificate on its compliance, forms apart of this Annual
Report.
11) DEPOSITORIES:
The Company is registered both with the National Securities Depository
Limited and Central Depository (Services) limited. The shareholders can
take advantage of holding their scripts in dematerialized mode.
12) INSURANCE:
All the assets of the Company wherever necessary and to the extent
required have been insured.
13) DIRECTOR RESPONSIBILITY STATEMENT:
In Compliance to the requirements of Section 217 (2AA) of the Companies
Act 1956, your Directors confirm that:
a) the Company has followed the applicable accounting standards in the
preparation of the Annual Accounts and there had been no material
departure.
b) directors had selected the 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 year under review.
c) the Directors have taken proper and sufficient care for maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
d) the Directors have prepared the Annual Accounts on a going concern
basis.
14) AUDITORS AND AUDITORS REPORT:
The present Statutory Auditors of the Company M/s Shankar & Kishor,
retire at the conclusion of ensuring Annual General Meeting. The
Company has received a letter as required under section 224( 1B) of the
Companies Act 1956 from M/s. Shankar & Kishor, confirming their
eligibility and willingness to act as Statutory Auditors if
re-appointed. The members are requested to appoint the Statutory
Auditors from the conclusion of this Annual General Meeting until the
conclusion of next Annual General Meeting.
With reference to the auditors observation / Qualification in the
Auditors report para no. Vii, ix,x and xi, in the management has
already initiated effective steps in this regards. Your Directors
assure you that corrective actions will be implemented in the interest
of all the stake holder.
15) MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:
Managements discussion and analysis report for the year under review,
as stipulated in Clause 49 of the Listing Agreement with the Stock
Exchanges in India, is presented in separate section forming part of
the Annual Report.
16) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The particulars pursuant to requirements under section 217(l)(e) of the
Companies Act 1956 read with the Companies (Disclosure of particulars
in the report of Board of Directors) Rules, 1988 is given in the
annexure of the report.
17) PARTICULARS OF EMPLOYEES:
There were no employees employed during the year or part of year
drawing remuneration, which falls within the purview of the provisions
of section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975. Therefore the statement for the
same is not attached.
18) CORPORATE SOCIAL RESPONSIBILITIES:
As a concerned Corporate Citizen, your Company believes that CSR
initiatives are a way to pay back social debt and obligations. Your
Company does not see CSR as a charity; not even as a responsibility,
but as an opportunity to change and your companys activities are
determined by the concept of Changing Lives. Your company is constantly
endeavored to improve the quality of life of the communities and to
bridge the gaps in society and help transform communities around the
workplace.
19) APPRECIATION:
The Board of Directors expresses their deep gratitude for the
co-operation and support extended to your Company by its customers,
suppliers, Bankers and various Government agencies. Your Directors also
place on record the commitment and involvement of the employees at all
levels and looks forward to their continued co- operation.
For and on behalf of the board
Date: 14th August 2010 Dinesh Khimavat
Place : Mumbai Chairman & Managing Director
Mar 31, 2009
The Directors have pleasure in presenting the 15th Annual Report
together with the Audited statement of Accounts of the Company for the
year ended 31st March 2009.
FINANCIAL RESULTS
The Financial performance of your Company for the year under review is
summarized below:
Amount in Rs.
PARTICULARS YEAR ENDED YEAR ENDED
31.03.2009 31.03.2008
Sales 34,66,43,206 28,52,35,422
Profit/ (Loss) before
Exceptional Items (43,65,821) (5,45,06,874)
Less: Exceptional Items <6,51,714) 1,27,76,764
Profit/(Loss) before Taxation (37,14,107) (6,72,83,638)
Less: Provision for Taxation
Provision for Deferred Tax (43,91,116) (2,38,65,042)
Provision for Fringe Benefits Tax 3,17,543 3,22,332
Net Profit after Taxatation 3,59,466 (4,37,40,928)
Balance Brought Forward from
previous years (5,40,05,550) (1,02,64,622)
Balance carried to Balance Sheet (5,36,46,084) (5,40,05,550)
REVIEW OF OPERATIONS
During the year, sales turnover is increased to Rs. 34,66,43,206/- as
compared to Rs. 28,52,35,422/- during the preceding year. The Company
has incurred loss before tax of Rs. 37,14,107/- as compared to the loss
before tax of Rs. 6,72,83,638/- during the preceding year. Profit
after tax for the current year is Rs. 3,59,466/- During the earlier
years, the Company had incurred losses which are carried forward to the
current year, which impacted the balance carried to Balance sheet which
shows the loss of Rs. 5,36,46,084/-
The Company has now adopted innovative strategies to increase the
turnover and profitability of the Company. Accordingly, the Company
has taken vigorous measures with respect to Debtors management, Stock
management, introduced ERP operating system as an internal control
measure. Due to these measures, infusion of funds by the Management and
the the support extended by bankers,the Company could earn marginal
profits during the year.
The Company is continuing its efforts to improve its productivity and
curtail costs. Plant at Baddi continues to be eligible for tax holidays
pursuant to section 80 IB of the Income Tax Act, 1956 and exemption
from Excise tax.
The operation of the Company is carried in a single segment i.e.
manufacturing and marketing of home appliance products.
DIVIDEND
In view of carry forward of the losses, the Company could not recommend
any dividend for the financial year ended 2008-09.
FUTURE OUTLOOK
As regards macro variables, interest rates are stable and are going to
be steady in the near future, which is adding to the strength of the
Indian Economy.
The growth in demand for home appliances continues to rise in tandem
with the increase income and living standards of the people in rural
and urban areas of India. It is being noticed by your management that
the demand for home appliances like Pressure Cookers, Mixers, Gas
Stoves has been on encouragingly uptrend in India in the present year,
which is going to be likewise in the coming years also.
In the light of the said scenario, your directors have already
initiated suitable steps therefore; and the relevant details are as
follows:
DIVISION PRODUCT QUANTITY PER DAY
Unit - I - Daman Non-Stick 1500 pieces
Unit - II - Daman Pressure Cooker 1000 pieces
Unit -III - Daman Mixer 1000 pieces
Baddi Mixer 300 pieces
Now, we are expecting to make monthly sales of about Rs. 500 Lacs from
manufacturing activity and Rs.100 lacs from sourcing business.
Furthermore, as regards domestic market, we were earlier marketing our
products in two states i.e, Andhra and Karnataka only, which has now
been expanded to other states like Tamilnadu, Kerala in the South; and
Gujarat , Rajasthan and Maharashtra in the West.
On exports front, we used to market our products hitherto in one
country i.e, Sri Lanka, which was expanded to few other countries,
namely, Nigeria, Kenya, Middle East Countries. Thus, your directors
hope that the Company would be able to make monthly sales of at least
Rs. 600 Lacs in both domestic and overseas markets.
RECLASSIFICATION OF SHARE CAPITAL
During the year under review, the Company in its Extra ordinary General
Meeting originally scheduled to be held on 28" March 2009 which was
adjourned and subsequently held on 30" March 2009, has reclassified
its Authorised Share Capital of Rs.5,00,00,000/-(Rupees Five Crores
Only) consisting of 50,00,000 (Fifty Lacs) Equity Shares into 36,50,000
(Thirty Six Lacs Fifty Thousand) Equity Shares of Rs. 10/- each and
13,50.000 (Thirteen Lacs Fifty Thousand) 6% Cumulative Redeemable
Preference Shares of Rs. 10/- each.
The Company took the approval of members, in their meeting held on 30"
March 2009, for issuing 13,50,000 6% Cumulative Redeemable Preference
Shares on preferential basis, out of which, on 12m June 2009 the
Company allotted 8,55,000 6% Cumulative Redeemable Preference Shares of
Rs. 10/- each at par on preferential basis to Kanchan Kitchenaid
Private Limited.
The Company also took the approval of members, in their meeting held on
30" March 2009, to offer, issue and allot in one or more lot(s) upto
4,00,000 (Four Lacs) Equity Shares of Rs.10/- each, on preferential
basis, at par. The Company is waiting for the In- Principal Approval
from the Stock Exchange for allotting the same on preferential basis.
CHANGE IN THE REGISTERED OFFICE
During the year under review, the Company has changed its registered
office within the city limits for operational convenience. The
registered office has changed from "Shah Arcade, G-2, Rani Sati Marg,
Malad (E), Mumbai 400097" to "25, YudhistirCo-Op. Housing Society,
Ground Floor, N LComplex, Anand Nagar, Dahisar(East), Mumbai-400068"
SUBSIDIARY ACCOUNTS
The accounts of the Subsidiary of the Company viz., Kanchan
International Middle East F.Z.E for the year ended 31" March 2009
along with the statement Required under section 212(1) (e) of the
Indian Companies Act, 1956 are annexed.
The Government of Ajman (UAE) has not prescribed any reporting formats
for preparation of financial statements and audit of the same under
their law. However, the Company has drawn accounts of Kanchan
International Middle East F.Z.E (subsidiary) as per the provisions of
the Indian Companies Act, 1956 and the applicable Indian Accounting
Standards. The same is annexed with the holding companys accounts.
The parent company intends to develop distribution and service channel
through the wholly owned subsidiary to boost exports of its products to
the Middle East countries. Hence, the Company has incorporated a wholly
owned subsidiary at trade free zone of Ajman (UAE). which provides
hassle free world class logistic and infrastructure facilities. The
subsidiary is helping parent company in distribution of its products in
Middle East and making products available to market at minimum lead
time by warehousing the same at Ajman.
Kanchan International Middle East F.Z.E has achieved a modest sale of
Rs 1,85,98,973 (previous year Rs. 2,36.95,746/-)
OPPORTUNITIES & THREATS
Opportunities
- Strong Brand.
- Wide distribution network
- Global coverage
- Established leadership position in home appliance segment.
- The implementation of VAT should help to remove the disadvantage due
to activities of unorganized sector.
Threats
- Cheap imports from China and Far East
- Uncertain Market
- A large number of players in the unorganized sector enjoy price
advantage either due to tax concessions or SSI status.
RISK & CONCERNS
As you are aware, there has been global economic slowdown, which
adversely affected every country including Indian Industries. The home
appliances industry is no exception to this negative phenomenon.
Consequently, there has been a lower pay scale among the salaried class
in our country too, which would certainly affect home appliances
industry.
On the other hand, there has been rise in the global prices of raw
materials especially Aluminum and Copper, which are being extensively
used by your company. Hence, the said uncontrollable factor is likely
to increase the cost of production of many products manufactured by the
Company.
Hence, in order to insulate ourselves from the said negative impact,
the management of the Company has been vigorously expanding its exports
where the profit margins are high. For instance, the Company expanded
its existing dealer network in Sri Lanka, resulting in higher sales.
Furthermore, the Company has recently introduced its products in
Nigeria, Kenya and Middle East Countries, which were hitherto
unexplored territories.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
We have always believed that transparency, systems and controls are
important factors in the success and growth of any organization. The
Company has appointed qualified professional for carrying out the
internal audit and internal control/systems on periodic basis, close
monitoring thereof and to strengthen and modify the same from time to
time to meet the changing requirement of the Company. The deviation
from the norms are first informed to the concerned operating person for
corrective actions and in case of need, these are brought to the notice
of the concerned head of the unit or the department, as the case may
be. The Management is constantly look into the areas where there is a
possibility of saving in cost and submits their suggestions to the
concerned operating departments. All major findings and suggestions are
complied and reported to the Audit Committee of the Directors on a
quarterly basis or earlier if so required. It operates at all the
Plants at Daman and other business locations but centrally controlled
from the corporate office at Mumbai. We believe that we have a sound
internal control system in our Company.
MATERIAL DEVELOPMENT ON HUMAN RESOURCES / INDUSTRIAL RELATIONS
The biggest strength of the Company has always been its people. Only
with their participation we have managed to achieve a healthy work
culture, transparency in working, fair business practice and a passion
for efficiency. The Company follows a unique, homegrown philosophy of
allowing people to set their own targets and give them the freedom to
achieve them: I can. This philosophy has spread across all our
employees and has been a constant source of motivation for our people.
Further, to enhance their skills and enrich their experience, the
Company provides continuous training. This includes workshops, courses,
seminars and visit to the Companys plants. Of late, we have also
started in- house conferences for various disciplines. Employees from
all our offices are invited to participate. It is a useful forum for
sharing experiences, ideas, innovations and developmental work
undertaken in their respective work places. From the beginning, we have
followed a progressive policy of taking keen interest in the well-being
and progress of our people. All of this, we believe, has nurtured a
strong sense of belonging among our people.
DIRECTORS
The Board of a Company provides leadership and strategic guidance,
objective judgment independent of management to the Company and
exercise control over the Company, while remaining at all times
accountable to the shareholders. To make the Board more effective and
broad, the Company has inducted professionals on the Board of
Directors.
Mr. Ashok Khimavat, Director of the Company is liable to retire by
rotation and being eligible, offer himself for re-appointment. Your
Directors recommends his appointment.
During the year under review, Mr. Shailesh Parekh was appointed as
additional director of the Company and shall hold the office till the
conclusion of the ensuing Annual General Meeting. Being eligible he has
offered himself for re- appointment. Your Directors recommends his
appointment.
Brief resume of the Directors proposed to be appointed/re-appointed,
nature of their expertise in specific functional areas, names of the
companies in which they hold directorships and the membership /
chairmanships of Committees of the Board and their shareholding in the
Company, as stipulated under Clause 49 of the Listing Agreement entered
into with the Stock Exchanges, are set out in the Annexure to the
Notice forming part of the Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT:
In Compliance to the requirements of Section 217 (2AA) of the Companies
Act 1956, your Directors confirm that:
a) The Company has followed the applicable accounting standards in the
preparation of the Annual Accounts and there had been no material
departure.
b) The Directors had selected the 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 as at 31" March 2009 and of the profit or loss of the
Company for the year ended on that date.
c) The Directors have taken proper and sufficient care for maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act. 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
d) The Directors have prepared the Annual Accounts on a going concern
basis.
AUDITORS
M/s Shankar & Kishor, Chartered Accountants, retire as Auditors of the
Company at the conclusion of the ensuing Annual General Meeting and
have confirmed their eligibility and willingness to accept the office
of the Auditors, if reappointed. The retiring Auditors have furnished
a Certificate of their eligibility for re-appointment under section
224(1-B) of the Companies Act, 1956. Your Directors recommend
appointing M/s Shankar & Kishor, Chartered Accountants as Statutory
Auditors of the Company from the conclusion of this Annual General
Meeting till the conclusion of next Annual General Meeting.
AUDITORS REPORT:
With respect to observations by Auditors in their report, directors
have dealt as below:
1. With reference to the Auditors observation that the Company does
not have an internal audit system, the Management has to say that the
Company has appointed qualified professional for carrying out the
internal audit and internal control/systems on periodic basis, close
monitoring thereof and to strengthen and modify the same from time to
time to meet the changing requirement of the Company. Also to
strengthen the internal audit and internal control system, the Company
has decided to introduce ERP operating system, which will be introduced
very soon. Introduction of ERP will benefit the Company by improvement
in the operations of the Company by way of better control on costs,
dissemination of accurate information across the organization and
access of information to the top management anytime anywhere
irrespective of the location.
2. With reference to the Auditors observation that the Company is not
regular in depositing statutory dues, the Management has to say that
due to acute financial difficulties faced by the Company, the said
amount could not be paid in time. However, the Company has started
clearing the dues and the process will be completed shortly.
COMPANY SECRETARY
The Company was required to appoint Whole-time Company Secretary as per
the provisions of section 383A of the Companies Act, 1956. Accordingly
Mr. V. Subramanian, a member of the Institute of Company Secretaries of
India, who had the requisite qualification, was appointed as the
Company Secretary. He resigned w.e.f. 9th May 2009. However, the
Company is looking for a suitable candidate for the post of Company
Secretary.
CORPORATE GOVERNANCE
Your Company has complied with the mandatory provisions of Corporate
Governance as prescribed in the Listing Agreement with the Stock
Exchanges. The Company has obtained a certificate from the Auditors of
the Company regarding compliane of conditions of Corporate Governance.
The same is annexed to this Report.
FIXED DEPOSITS
The Company has not accepted any fixed deposits and, as such, no amount
of principal or interest was outstanding as on the date of the Balance
Sheet
INSURANCE
All the assets of the Company wherever necessary and to the extent
required have been insured.
BUYBACK
During the financial year under review, the Company has not offered to
buy back any of its outstanding shares.
The Company has not accepted any deposit within the purview of section
58A of the Companies Act, 1956 during the year under review.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, ADAPTATION AND
INNOVATION
The particulars pursuant to requirements under section 217 (1) (e) of
the Companies Act, 1956 are as under:
a) The Companys operation involve low energy consumption, hence there
is hardly any measure required to be taken for conservation of energy.
b) There was no technology absorption during the year.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is engaged in activities relating to exports and taking
measures for increasing exports, developing new export market for our
products and formulating export plans.
Total foreign exchange earning is Rs.761.24 lacs (Previous year Rs.
629.16 lacs) and expenditure is Rs. 4.89 lacs (Previous year Rs. 25.42
lacs)
PARTICULARS OF EMPLOYEES:
None of the employees of the Company were drawing remuneration in
excess of the limits prescribed u/s 217 (2A) of the Companies Act,
1956, read with the Companies (particulars of employees) Rules, 1975,
as amended. Therefore the statement for the same is not attached.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with the Accounting Standard (AS) 21 on Consolidated
Financial Statements, issued by the Institute of Chartered Accountants
of India, the audited Consolidated Financial Statements are annexed
forming the part of Annual Report.
ACKNOWEDGEMENT
Your Directors would like to express their grateful appreciation for
the assistance and Co-operation received from the financial
institutions, Banks, Government Authorities, customers, vendors and
members during the year under review. Your Directors also wish to place
on record their deep sense of appreciation for the committed services
of the executives, staff and workers of the Company.
For and on behalf of the Board
Dinesh C. Khimavat
Managing Director
Place: Mumbai
Date: 30th June 2009
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