DIRECTORS' REPORT DEAR SHAREHOLDERS, On behalf of the Board of Directors, we present the 37th Annual Report together with the Audited Statement of Accounts of Kalyani Forge Limited ("the Company") for the year ended March 31, 2016. Summary of Operations During the year, the net revenue from operations of your Company Decreased to Rs 230.94. Crores from Rs. 240.80 Crores. For FY 15-16, your Company's Profit after tax stood at Rs. 1.10 crore as against Loss of Rs 2.26 Crores last Year. Change in the nature of business, if any There is no Change in the nature of the business of the Company during the year. Reserves The Company has not transferred any amount to General Reserves. Dividend Your Directors are pleased to recommend for approval of members a dividend of Rs. 2/- per Equity Share (20%) of Rs 10/- each for the Year ended 31st March, 2016 absorbing Rs. Eighty eight lakhs including Dividend Distribution Tax. Capital/ Finance During the year, the Company has not issued/allotted Equity or preference Shares. As on 31st March, 2016, the issued, subscribed and paid up share capital of your Company stood at Rs. 36,380,000/-, comprising 36, 38,000 Equity shares of Rs.10/- each. Fixed Deposits Your Company has not accepted any deposits from public. Therefore, details relating to deposits, covered under Chapter V of the Companies Act, 2013 are not applicable to the Company. Extract of Annual Return Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is Annexed as Annexure 1. Transfer of Amounts to Investor Education and Protection Fund Your Company has not transferred funds lying unpaid or unclaimed for a period of seven years to Investor Education and Protection Fund (IEPF), as the form could not be uploaded and the same is under revision by MCA (Ministry of Corporate Affairs) and new form is not available on site. However the Company has kept the required amount ready in the form of a Demand Draft for depositing with MCA once the new form is available on the MCA site. Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company is required to file the necessary form and upload the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. 5th September, 2015), with the Ministry of Corporate Affairs. Declaration by independent directors Mr. Pradeep Nadkarni, Mr. Abhijit Sen & Mr. Vishwas Chitrao are independent Directors on the Board of your Company. In the opinion of the Board and as confirmed by these Directors, they fulfil the conditions specified in section 149 of the Act and the Rules made thereunder about their status as Independent Directors of the Company. Directors and Key Managerial Personnel Mr. Viraj G. Kalyani, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. During the year, Mr. D.S. Gupta, & Mr. Abhijit Sen have been appointed as an Independent Directors on 6th November, 2015 & 2nd February, 2016 respectively subject to shareholders approval in Annual General Meeting. Further, Mr. Ashok R. Jamenis Mr. C. H. Naniwadekar, Mr. D.S. Gupta & Mr. S. Ravindran ceased to be Director in terms of Section 168 of Companies Act, 2013 w.e.f 13th August, 2015, 12th August, 2015, 10th March, 2016 & 14th March, 2016 respectively. Also, Ms. Anushanethri V has resigned as Company Secretary w.e.f 13th July, 2015 & Ms. Ketaki Sawant Satam who was appointed as Company Secretary w.e.f.13th July, 2015 has also resigned w.e.f 6th November. Mr. Ravi Dugar has been appointed as Company Secretary of the Company w.e.f. 2nd February, 2016 Note: Due to resignation of Mr. D.S. Gupta & Mr. S Ravindran w.e.f. 10th March, 2016 & 14th March, 2016 respectively. Subsequently the Company in its Board Meeting Dated 16th April, 2016 appointed Mr. Vishwas Chitrao as an Additional Independent Director to the Company. (As Recommended by Nomination & Remuneration Committee) Formal Annual Evaluation The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive Directors and Executive Director. The Company commenced with the review of the best practices prevalent in the industry and evaluation of Board members. On the basis of review and the Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The detailed programme for familiarisation of Independent Directors with the Company, their roles, rights and responsibilities in the Company, nature of business, AOP, business model of the Company, etc. was undertaken by the Company. Company's policy on appointment and remuneration The policies relating to selection of Directors and determining Directors independence and Remuneration Policy for Directors, Key Managerial Personnel and other employees is attached herewith marked as Annexure 2 Highlights on Company's policy on Sexual Harassment As per "SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013", the highlights of the policy adopted by the company is attached herewith marked as Annexure 3 Holding and Subsidiaries During the period under review the Company does not have any holding or Subsidiary company. Statutory Auditors, their Report and Notes to Financial Statements In the AGM held on September 18, 2014, M/s. P. G. Bhagwat, Chartered Accountants were appointed Statutory Auditors of the Company for a period of 5 years. The Statutory Auditors have resigned from 6th October, 2015.The Board in its Meeting held on 8th October, 2015 appointed M/s K.S. Aiyar & Co. Chartered Accountants as Statutory Auditor of the Company. The Company opted for E-voting/Postal Ballot process instead of calling Extra-Ordinary General Meeting for obtaining Shareholders approval for the same. E-voting/Postal Ballot was conducted in the month of December 2015 & approval of the Shareholders was received. Further, the report of the Statutory Auditors alongwith notes to Schedules is enclosed to this report. The observations made in the Auditors' Report are self-explanatory and therefore do not call for any further comments. Internal financial controls The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company. Cost Audit As per the Cost Audit Orders, Cost Audit is applicable to the Company's Forging business for the FY 2015-16. In view of the same and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s. R. A Chincholkar & Co, Cost Accountants have been appointed as Cost Auditors to conduct the audit of cost records of your company for the financial year 2016-17. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing AGM. Your Company submits its Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period. Secretarial Audit In terms of Section 204 of the Company's Act, 2013 and Rules made thereunder, M/s NMK & Associates, Practicing Company Secretaries have been appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure 4 to this report. The Directors have noted the qualifications in Secretarial Audit Report. The necessary steps have been taken to ensure the required compliances. Human Resources Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. Related Party Transactions The details of transactions entered into with the Related Parties are enclosed as Annexure 5. Risk Management Policy In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically. The detailed Risk Management Policy is available on Company's website. Highlights of the same are enclosed in Annexure 6 Management Discussion and Analysis Management Discussion and Analysis comprising an overview of the financial results, operations / performance and the future prospects of the Company form part of this Annual Report. Corporate Social Responsibility (CSR) The Company has adopted the CSR policy pursuant to Sec 135 of the Companies Act, 2013. The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure 7 Highlights of Corporate Social Responsibility Policy The Company proposes to undertake CSR projects and programmes in respect of the Activities stated below with a preference to implement these projects and programme in the areas in which it operates: Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation and making available safe drinking water; Promoting education including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects. Promoting gender equality, empowering women, setting-up homes and hostels for women and orphans; setting-up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water. Protection of national heritage, art and culture including restoration of buildings and sites historical importance and works of art; setting-up public libraries, promotion and development of traditional arts and handicrafts. Measures for the benefit of armed forces veterans, war widows and their dependents. Training to promote rural sports, nationally recognised sports, Paralympics Sportsand Olympic Sports. Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women. Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government. Rural development Projects. Particulars of Employees Pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement of particulars of employees is annexed as Annexure 8. Details of establishment of vigil mechanism for directors and employees The details of establishment of vigil mechanism for directors and employees to report genuine concerns are to be disclosed. Highlights of Whistle Blower Policy are enclosed in Annexure 9. Corporate Governance Certificate The Compliance certificate from the Auditors regarding compliance of conditions of corporate governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed with the report. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo The Company, in its continuous endeavor to conserve energy, has adopted various innovative measures to reduce waste and to achieve optimum utilization of energy resulting into good earning of Power Factor incentive from MSEB and in turn resulting into reduction of power cost. (c) Research & Development (R&D) I) Specific Areas of Research & Development Development of new products both in the area of Forging as well as Machined components for Domestic & Export. Introduced Hydraulic Die Clamping bolster on 630TP to improve Quality & Productivity. Ongoing Research and Development activities for Yield Improvement. During the year 2015-16, your Company made significant achievements in the area of Product Development. The Company developed variety of products as per the specific requirements of the Customers such as Rocker Levers, Crank Shafts, Stub Axles, Front Suspension Arm, Flanges, Double Yokes & Yoke shafts, Bracket Fan, Lobe etc. II) Future Plan of Action: Research & Development in Single Minute exchange of Dies project. Focused development of variety of Cold Forging Components. Planning to commence activities in bigger size Forgings. (d) Foreign exchange earnings and Outgo During the year, the total foreign exchange used was Rs. 3,74,43,983 and the total foreign exchange earned was Rs. 23,04,38,865. (e) Technology Absorption, Adaptation and Innovation: Through In-house Research and Development activities Company has developed Outer race forgings for Driveline assemblies with internal tracks by Warm and cold forging method. With the help of fracture split technology, the Company is now moving towards adoption of technology for critical automotive connecting rods for the overseas markets. Directors' Responsibility Statement Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (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 profit and 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 this 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 on a going concern basis; and (e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Acknowledgement Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company. Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support. Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support. For and on behalf of the Board Rohini G. Kalyani Chairperson & Managing Director Place : Pune Date : 27th May, 2016 |