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Directors Report of Kiri Industries Ltd.

Mar 31, 2014

Dear members,

The Directors have pleasure in presenting 16th Annual Report together with Audited Accounts of the Company for the financial year ended on 31st March, 2014.

* Standalone Performance:

The highlights of Company''s financial performance, f or the year ended 31st March, 2014 are as under: (Rs. in Lacs) Particulars 2013-14 2012-13

Total Revenue 58351.97 52603.47

Profit Before Finance Cost, Depreciation, Tax and Prior period adjustments 6212.09 3475.83

Less : Finance Cost 7726.23 7542.79 Depreciation 3349.64 3197.90 Prior Period adjustments 22.54 20.57

(Loss) before taxation and extra ordinary items (4886.32) (7285.43) Less : Extra Ordinary Items 2876.61 11159.19

(Loss) Before Taxation (7362.93) (18444.62) Less : Provision for Taxation 0.00 0.00 Deferred Tax (24.40) (101.70)

Net Loss After Tax (7738.53) (18342.92) Add : Surplus / (Deficit) Brought Forward (12038.59) 6304.33

(Loss) Available for Appropriation (19777.12) (12038.59)

* Highlights of Operations:

Total Revenue:

During the year under review total turnover of the Company to some extent increased by 10.93% from Rs. 52603.47 Lacs to Rs. 58351.97 Lacs as compared to previous financi al year ended 31st March, 2013, increase in revenue mainly due to support of Dyes Intermediate business of the company.

* Profit before Finance Cost, Depreciation, Tax and Prior period adjustments:

Earning before Finance cost, Depreciation, tax and prior period adjustment increased by 78.72% from Rs. 3475.83 Lacs to Rs. 6212.09 Lacs 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 Lacs as Compared to Rs. 59888.90 Lacs of the previous financial year. The increase in total expenses are due to in crease in Finance Costs, Depreciation, Employee Benefits Expenses, Manufacturing Expenses and increase in selling and distribution expenses as compared to the previous financial year.

* Net Loss:

During the year under review the Company has achieved success to diminish the huge amount of losses occurred in the previous year. In the Current year the Net Loss had reduced by 58.71% to Rs. 7738.53 Lacs as compared to Rs. 18342.92 Lacs of the previous financial year, the net loss reduced mainly on account of reduction of loss from foreign exchange transactions and also due to support of business operations of the Company as compared to the previous financial year.

* Highlights of Consolidated Performance:

(Rs. in Lacs)

Particulars 2013-14 2012-13

Total Revenue 69211.30 55584.09

Profit Before Finance Cost, Depreciation, Tax and Prior period adjustments 7383.32 2506.02

Less : Finance Cost 8022.18 7754.62 Depreciation 3657.28 3476.16 Prior Period adjustments 31.56 20.57

(Loss) before taxation and extra ordinary items (4327.70) (8745.33) Less : Extra Ordinary Items 2876.61 11159.19

(Loss) Before Taxation (7204.31) (19904.52) Less : Provision for Taxation 0.00 23.18 Deferred Tax 63.96 24.99

Net Loss After Tax (7268.27) (19952.70) Add : Share of Profit from Associate 8259.54 0.00

Profit/(Loss) After Tax for the year 991.27 (19952.70)

* Highlights of Operations:

Total Revenue:

During the year under review, the total revenue increased by 24.52% from Rs. 55584.09 Lacs to Rs. 69211.30 Lacs as compared to the previous financial year ended 31st March, 2013 due to increase in prices of products of the Company.

* Profit before Finance Cost, Depreciation, Tax and Prior period adjustments:

During the year under review, the Profit before Finance Costs, Depreciation, Tax and prior period adjustments increased to Rs. 7383.32 Lacs from Rs. 2506.22 Lacs as compared to the previous financial year. I t was mainly due to marginal increase in intermediate price of the Company and effective cost reduction measured taken by the Company.

* Total Expense:

During the year under review, the total Expenditure is increased by 14.32% to Rs. 73539.00 Lacs as Compared from Rs. 64,329.42 Lacs of the previous financial year. The reasons for increase in total expenses are only due to increase in Finance Costs, Depreciation, Employee Benefits Expenses and increase of Manufacturing Expenses as compared to the previous financi al year.

* Net Profit/(Loss) :

During the year under review, the Company had achieved profit of Rs. 991.27 Lacs as compared to the Loss of Rs. 19952.70 Lacs of the previous financial year. I t was mainly due to increase in total revenue and decrease in foreign exchange loss an d positive contribution o f joint venture of the Company.

* Dividend:

In view of losses incurred during the financial year 2013-14, your Directors do not recommend any Dividend for the year under review.

* Subsidiaries and Consolidated Financial Statements:-

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Company has not attached the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies with the Balance Sheet of the Company.

The Company had prepared Consolidated Financial Statements in accordance with the Generally Accepted Accounting Principles (GAAP). The same has been attached with the Annual Report of the Company. The summary of financial information of each of the subsidiary companies is also attached herewith and forms part of the Annual Report. The Company will provide the Annual Accounts of its subsidiary companies and the related detailed information on specific request made by any shareholder(s).

* 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 2014- 2015 within the stipulated time.

* Directors:

Appointment of Directors:

Mr. Jayanta Kumar Sinha has been appointed as Nominee Director on behalf of State Bank of India w.e.f. 12th August, 2013.

In compliance with the provisions of Section 149, 152 of the Companies Act, 2013 ("the Act"), other applicable provisions if any of the Act, rules framed thereunder and as per the Circular (Ref No. CIR/CFD/POLICY CELL/2/2014) issued by the Securities And Exchange of Board of India ("SEBI") dated 17th April, 2014 pertaining to amendment in Clause 49 of the Listing Agreement, the Board of Directors of the Company has proposed Mr. Keyoor Bakshi for appointment as Independent Director of the Company with effective from 26th September, 2014 for a period of 5 (Five) consecutive years upto 25th September, 2019 and in compliance of above as well as section 161 of the Act. The Board of Directors has appointed Mr. Mukesh Desai as additional director with effect from 11th August, 2014 and also proposing him for appointment as Independent Dir ector for the period of 5 (five) consecutive years with effective from 26th September, 2014 upto 25th September, 2019.

Re-Appointment of Retiring Directors:

Mr. Pravin Kiri, Chairman of the Company, retires at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. A brief profile of Mr. Pravin Kiri as required under Clause 49 of the Listing Agreement is annexed to the Notice.

Withdrawal of Nominee Director:

IFCI Limited had withdrawn their Nominee Director Mr. V. Anish Babu from the Board of the Company w.e.f. 28 th October, 2013.

* Auditors and Audit Report:

M/s. V. D. Shukla & Co., Statutory Auditors (Firm Registration No.: 110240W) of the Company, retires at the ensuing Annual General Meeting and is eligible for re-appointment. The Company had received a certificate pertaining to their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013, other applicable provisions of the Act and rules framed thereunder from time to time.

* Cost Auditors:

In compliance of the provisions of the Section 148 of the Companies Act, 2013 ("the Act"), other applicable provisions of the Act and rules framed thereunder from time to time, the Board of Directors had appointed M/s. V. H. Savaliya & Associates (Registration No. 100346) as Cost Auditors for audit of Cost records of the Company for the year 2014-15.

* Public Deposits:

The Company has not accepted any public deposits and as such, no amount on account of principal or in terest thereon was outstanding as on the date of the balance sheet.

* Directors'' Responsibility Statement:

In compliance of Section 217(2AA) of the Compani es Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

1. In the preparation of the annual accounts for the financial year ended 31st March, 2014, all applicable accounting standards have been followed and no material departure have been made from the same;

2. The Directors have selected appropriate accounting policies and applied them consistently and made judgments and estimates that were 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 2013-14 and of the loss of the company for the year under review;

3. The Dir ectors have taken proper and sufficient care to the best of their knowledge and ability, for the 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; and

4. The Directors have prepared the annual accounts for the financial year ended 31st March, 2014 on a going concern basis.

* Particulars of Employees:

During the year under review, none of the employee of the Company is drawing remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act, 1956.

* Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and Outgo:

Additional information on conservation of energy, technology absorption, foreign exchange earnings & outgo as required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Reports of Board of Directors) Rules, 1988, is given as an annexure to this report.

* Corporate Governance & Management Discussion and Analysis:

The Company has always endeavored to maintain applicable standards of good Corporate Governance as embodied in its vision, mission and corporate values. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached and forms part of this report. The requisite certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the said clause is attached to this report.

* Acknowledgement:

Your Directors would like to expr ess 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 the board of Directors

Place : Ahmedabad Pravin Kiri Date : 11th August, 2014 Chairman


Mar 31, 2012

To The Members of Kiri Industries Limited

The Directors have pleasure in presenting 14th Annual Report together with Audited Accounts of the Company for the financial year ended on 31st March, 2012.

REVIEW OF STANDALONE PERFORMANCE:

(Rs. In Lacs)

Particulars 2011-12 2010-11

Net Sales and Other income 53704.08 57658.26

Profit Before Finance Cost, Depreciation, Tax and Prior period adjustments 8735.22 11396.37

Less : Finance cost 5238.86 4389.28

Depreciation 3025.62 1861.55

Prior Period Adjustments 21.54 16.25

Profit before taxation and Extra ordinary Items 449.20 5129.29

Less : Extra Ordinary Items 2184.12 1283.88

(Loss)/Profit Before Taxation (1734.92) 3845.41

Less : Provision for Taxation 301.21 770.16

Deferred Tax 322.81 539.88

Add : MAT Credit Entitlement 0.00 (769.65) Net (Loss)/ Profit After Tax (2358.94) 3305.02

Add : Surplus Brought Forward 9463.27 6654.78

Profit Available for Appropriation 7104.33 9959.80

Appropriation:

1. Dividend on Equity Shares and tax thereon 0.00 331.23

2. Transferred to General Reserve 0.00 165.30

3. Debenture Redemption Reserve 800.00 0.00

Balance Carried to Balance Sheet 6304.33 9463.27

During the year under review, the Company has recorded a total income of Rs. 53704.08 Lacs as against Rs. 57658.26 Lacs a decrease of 6.86 the performance was impacted as the worldwide economy went through turmoil. Across the world, on account of economic crisis in various countries, demand has gone sluggish and hence we could see under utilization of our dyes production capacities making the same as loss making units. Pile up of inventories on lack of demand has also added to the wounds of the colours business. Profit before Finance Cost, Depreciation, Tax and Prior period adjustments decreased from Rs. 11396.37 Lacs to Rs. 8735.22 Lacs in the reporting year, a decline by 23.35% as compared to the previous financial year. The sharp depreciation of Rupee as against Dollar in FY 2011-12 had added to the adverse impact of the company's performance and for the first time in the company's history it reported a Net Loss. Out of the total Loss for the year 2011-12 of Rs. 2358.94 Lacs as against a Net Profit of Rs. 3305.02 Lacs in the preceding financial year 2010-11, Rs. 2184.12 Lacs is on account of forex losses.

REVIEW OF CONSOLIDATED PERFORMANCE:

(Rs. In Lacs)

Particulars 2011-12 2010-11

Revenue 410883.51 368182.11

Cost of Sales (306568.00) (273972.70)

Gross Profit 104315.51 94209.41 Expenditure (99165.84) (102878.86)

Other Income 11442.75 7148.10

Profit/(Loss) from Operating activities 16592.42 (1521.35)

Finance Cost (21161.58) (11079.70)

Loss before taxation (4569.16) (12601.05)

Income tax (expenses)/Credit (2299.86) 1360.59

Loss for the year (6869.02) (11240.46)

Other Comprehensive (Loss)/Income (388.31) 2424.78

Total Comprehensive (Loss) (7257.33) (8815.68)

During the financial year under review, the consolidated revenue increased by 11.59% to Rs. 410883.51 Lacs from Rs. 368182.11 Lacs on account of sustained efforts of the Management. The Cost of sales increased by 11.90% as compared to the previous financial year from Rs. 273972.70 Lacs to Rs. 306568.00 Lacs. The gross profit of the Company increased from Rs. 94209.41 Lacs to Rs. 104315.51 Lacs, showing an increase by 10.73% as compared to the previous financial year. The finance cost increased by 91% from Rs. 11079.70 Lacs to Rs. 21161.58 Lacs, mainly on account of increased borrowings. However, the total comprehensive loss for the year has been reduced by 17.68% to Rs. 7257.33 Lacs from Rs. 8815.68 Lacs that of previous financial year.



DIVIDEND:

In view of losses incurred during the financial year 2011-12, your Directors do not recommend any Dividend for the year under review.

NON CONVERTIBLE DEBENTURES:

During the year under review, your Company has issued 400 Secured Redeemable Non Convertible Debentures (NCDs) of Rs. 10.00 Lacs each, aggregating to Rs. 4000.00 Lacs. The NCDs carry coupon rate of 10.75% p. a. and redemption premium of 2% is payable on redemption of NCDs.

SUBSIDIARIES AND CONSOLIDATED FINANCIAL STATEMENTS:

As per General Circular No: 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Company has not attached the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies with the Balance Sheet of the Company. The Company has prepared Consolidated Financial Statements and its subsidiaries in accordance with the International Financial Reporting Standards (IFRS). The same has been attached with the Annual Report of the Company. The summary of financial information of each of the subsidiary companies is attached herewith and forms part of the Annual Report.

The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any shareholder(s). The said annual accounts are open for inspection at the Registered Office of the Company during the business hours on all working days, except Sunday and public holidays.

LISTING:

The Equity Shares of your Company are listed and actively traded on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company has paid annual listing fees to the both stock exchanges for the year 2012- 2013. The Secured Redeemable Non Convertible Debentures are listed on the Bombay Stock Exchange Limited.

DIRECTORS:

Mr. Shanker R. Patel, Director of the Company retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. A brief profile of Mr. Patel as required under clause 49 of the Listing Agreement is given as Annexure to the Notice.

Mr. Yamal A. Vyas had resigned as a Director w.e.f 15th October, 2011 and Mr. Ajay Patel had resigned as a Director w.e.f. 14th August, 2012. The Board of Directors places on record their sincere appreciation for the valuable services rendered by them during their tenure.

The Board of Directors of the Company has, at its meeting held on 13th February, 2012, appointed Mr. V. Anish Babu as a Nominee Director of IFCI Limited.

AUDITORS AND AUDITORS' OBSERVATION IN AUDIT REPORT:

M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, retires at the ensuing Annual General Meeting and are eligible for re-appointment. They have issued a certificate stating that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

In respect of the auditors observation regarding default in repayment of principal and interest to banks and financial institutions, it is hereby clarified that the said default in payment was temporary in nature due to mismatches in cash flow on account of delay in realization of receivables from the customers and global slowdown in dyes and chemicals industries.

In respect of auditors observation regarding irregularity in payment of statutory dues, it is hereby clarified that the said delay was due to mismatches in cash flow and tight liquidity position of the Company.

COST AUDITORS:

As per notification F. No. 52/26/CAB-2010, dated January 24, 2012, issued by the Ministry of Corporate Affairs, Government of India, the Company is required to appoint a Cost Auditor for audit of the cost accounting records for the financial year 2012-13. Pursuant to the provisions of Section 233B read with Section 224(1B) of Companies Act, 1956, M/s. V. H. Savaliya & Associates had given their consent to act as Cost Auditors of the Company and accordingly, the Board of Directors at their meeting held on May 14, 2012, appointed them as Cost Auditors of the Company for the Financial Year 2012-13.

The Central Government has approved the appointment of cost auditors for conducting Cost Audit for the financial year 2012-13.

PUBLIC DEPOSITS:

During the year under review, your Company has not accepted any deposits as per the provisions of section 58A of the Companies Act. 1956.

DIRECTORS' RESPONSIBILITY STATEMENT:

In compliance of Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

1. That in the preparation of the annual accounts for the financial year ended 31st March, 2012, all applicable accounting standards have been followed and no material departure have been made from the same.

2. That the Directors have selected appropriate accounting policies and applied them consistently and made judgments and estimates that were 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 2011-12 and of the loss of the company for the year under review.

3. That the Directors have taken proper and sufficient care to the best of their knowledge and ability, for the 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.

4. That the Directors have prepared the annual accounts for the financial year ended 31st March, 2012 on a 'going concern' basis.

EMPLOYEE RELATIONS:

The relations with the employees have been cordial throughout the year. Your Directors place on record their sincere appreciation in respect of the services rendered by the employees of the Company at all levels.

PARTICULARS OF EMPLOYEES:

The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, is required to be set out in Directors1 Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the report is being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING AND OUTGO:

Additional information on conservation of energy, technology absorption, foreign exchange earning & outgo as required to be disclosed in term of Section 217(1)(e) of the Companies Act, 1956, read together with the Companies (Disclosures of Particulars in the Reports of Board of Directors) Rules, 1988, is given as an annexure to this report.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS:

A separate report on the Corporate Governance and Management Discussion and Analysis Report, along with the Certificate from the Statutory Auditors of the Company in compliance with clause 49 with the Listing Agreement is annexed herewith and forms part of this Annual Report.

QUALIFYING PERSONS FOR INTER SE TRANSFER OF SHARES:

As per the information provided by the promoters and as required under regulation 10(1)(a) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 persons constituting "qualifying persons" as defined in the said regulations is given as under:

(1) Mr. Pravin Kiri, (2) Mr. Manish Kiri, (3) Mrs. Aruna Kiri, (4) Mrs. Anupama Kiri, (5) Ms. Amisha Kiri, (6) Master Hemil Kiri, (7) Synthesis International Limited, (8) Kiri Infrastructure Private Limited, (9) DyStar Global Holdings (Singapore) Pte. Ltd. (formerly known as Kiri Holding Singapore Private Limited), (10) Kiri International (Mauritius) Private Limited, (11) Lonsen Kiri Chemical Industries Limited, (12) Kiri Investment and Trading Singapore Private Limited, (13) Kiri Peroxide Limited, (14) S.M.S. Chemicals Co. Limited, (15) APK Advisory Services Private Limited, (16) Chemhub Exim Private Limited, (17) Chemhub Tradelink Private Limited.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their sincere appreciation for the support received from the government, bankers and financial institutions, customers, suppliers, business associates and shareholders and look forward for their continues support in the future. Your Directors would also like to place on record, sincere appreciation for significant contributions made by the employees through their dedication and commitment towards the Company.

For and on behalf of the Board of Directors

Place : Ahmedabad Pravin A. Kiri

Date : 3rd September, 2012 Chairman

 
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