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Konark Synthetic Ltd.

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Konark Synthetic Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE

The Company's philosophy on Corporate Governance is aimed at strengthening the confidence of the shareholders in the Company and building a long term relationship of trust with them by maintaining highest level of accountability, transparency, timely disclosures, dissemination of price sensitive information and ensuring compliance with all applicable laws and regulations. The Company believes in maintaining high standards of quality and ethical conduct in its operations.

2. BOARD OF DIRECTORS

a) Composition:

The Board of Directors provides strategic direction and thrust to the operations of the Company. The Board of Directors of the Company has an optimum combination of Executive and Non-Executive Directors. As on 31st March, 2015, the Board of Directors comprised of total Five Directors out of which three were Independent Directors and two were Executive Directors. The Company complies with the norms prescribed under Clause 49 of the Listing Agreement for constitution of Board of Directors.

None of the Independent Directors has any material pecuniary relationship or transaction with the Company, its Promoters, its Directors, its Senior Management, which would affect their independence.

Further, none of the Directors on the Board is a Member of more than 10 Committees and Chairman in more than 5 Committees, across all companies in which they are directors.

b) Board Procedure:

The agenda is prepared in consultation with the Chairman of the Board of Directors and the Chairman of the other Committees and the same together with the appropriate supporting documents are circulated well in advance of the meeting.

Matters discussed at Board meetings generally relate to the company's performance, business operations, quarterly/half yearly/annual results of the Company, review of reports of the Committee and consideration and implementation of their recommendation, suggestion and also the status of compliance with any regulatory, statutory or listing requirements, etc.

c) Attendance at the Board Meetings and at the last Annual General Meeting:

During the year ended on 31" March, 2015, the Board of Directors had 10 meetings and these were held on 30th May, 2014,18* June, 2014,14* August, 2014,1st October 2014,14* November, 2014,9th December, 2014, 23rd January, 2015, 14th February, 2015, 16" March, 2015, and 31st March, 2015. The last Annual General Meeting (AGM) was held on 30* September, 2014.

d) Separate Meeting of Independent Directors:

As stipulated by the Code of Independent Directors under Schedule IV of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a separate meeting of the Independent Directors of the Company was held on 14th February, 2015 to review the performance of Non-independent Directors (including the Chairman) and the Board as whole and the flow of information between the Board and the Management.

Directors Familiarization programme

The Company undertakes and makes necessary provision of an appropriate induction programme for new Directors and ongoing training for existing Directors. The new directors are introduced to the company culture, through appropriate training programmes. Such kind of training programmes helps develop relationship of the directors with the company and familiarize them with company processes. The management provides such information and training either at the meeting of Board of Directors or at other occasions.

The induction process is designed to:

• build an understanding of the Company processes and

• fully equip Directors to perform their role on the Board effectively

Upon appointment, Directors receive a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. The details of Director's induction and familiarization are available on the Company's website at www.konarkgroup.co.in  

e) Code of Conduct:

The Board of Directors has laid down a Code of Conduct for Business and Ethics (the Code) for all the Board members and all the employees in the management grade of the Company. The Code covers things the Company's commitment to honest and ethical personal conduct, fair competition, corporate social responsibility, sustainable environment, health and safety, transparency and compliance of laws and regulations etc. All the Board members and senior management personnel have confirmed compliance with the code. A declaration by Mr. Prakashchand Dalmia, Managing Director of the Company affirming the compliance of the same in respect of the financial year ended on 31st March, 2015 by the members of the Board and Senior Management Personnel, as applicable to them, is also annexed to this Annual Report.

As per SEBI (Prevention of Insider Trading) Regulation, 1992, the Company has adopted a Code of Conduct for Prevention of Insider Trading. All the Directors, employees at Senior Management and other employees who could have access to the unpublished price sensitive information of the Company are governed by this code. The trading window is closed during the time of declaration of results and occurrence of any material events as per the code.

3. AUDIT COMMITTEE

The Board has constituted a well-qualified Audit Committee. Majority members of the Committee are Independent Directors including Chairman. They possess sound knowledge on accounts, audit, finance, taxation, internal controls etc. The Compliance Officer of the Company acts as the Secretary to the Committee.

The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Company's internal control and financial reporting process.

During the financial year, the Audit Committee met 7 (Seven) times viz. 30th May, 2014, 18th June, 2014, 14th August, 2014, 1st October, 2014, 14th November, 2014, 14th February, 2015, and 31st March, 2015. As stipulated the gap between two Committee meetings did not exceed four months.

The scope of the activities and the terms of reference of the Audit Committee are as under:

The terms of reference of the Audit Committee are as per the guidelines set out in the Listing Agreement with the Stock Exchanges read with Section 177 of the Companies Act, 2013. These broadly includes (i) Develop an annual plan for Committee (ii) review of financial reporting processes, (iii) review of risk management, internal control and governance processes, (iv) discussions on quarterly, half yearly and annual financial statements, (v) interaction with statutory, internal and cost auditors, (vi) recommendation for appointment, remuneration and terms of appointment of auditors and (vii) risk management framework concerning the critical operations of the Company.

In addition to the above, the Audit Committee also reviews the following:

• Matter to be included in the Director's Responsibility Statement.

• Changes, if any, in the accounting policies.

• Major accounting estimates and significant adjustments in financial statement.

• Compliance with listing and other legal requirements concerning financial statements.

• Disclosures in financial statement including related party transactions.

• Management's Discussions and Analysis of Company's operations.

• Valuation of undertakings or assets of the company, wherever it is necessary.

• Periodical review of Internal Audit Reports.

• Findings of any special investigations carried out either by the Internal Auditors.

• Letters of Statutory Auditors to management on internal control weakness, if any.

• Major non routine transactions recorded in the financial statements involving exercise of judgment by the management.

• Recommend to the Board the appointment, re-appointment and, if required the replacement or removal of the statutory auditors considering their independence and effectiveness, and recommend the audit fees.

4. NOMINATION AND REMUNERATION COMMITTEE (formerly known as Remuneration Committee):

The Nomination and Remuneration Committee recommends the remuneration payable to Executive Directors of the Company. The Compliance Officer of the Company acts as the Secretary to the Committee.

During the financial year 2014-15 the Nomination and Remuneration Committee met three times on 14th  November, 2014,14th February, 2015 and 31st  March, 2015.

Terms of reference of the Nomination & Remuneration Committee:

The Committee is empowered -

• Formulate criteria for determining qualifications, positive attributes and independence of Directors and evaluating the performance of the Board of Directors.

• Identify and assess potential individuals with respect to their expertise, skills, attributes, personal and professional standing for appointment and re-appointment as Directors / Independent Directors on the Board and as Key Managerial Personnel.

• Formulate a policy relating to remuneration for the Directors, Committee and also the Senior Management Employees.

Remuneration Policy:

The Company follows a policy on remuneration of Directors and Senior Management Employees.

Remuneration of Managing Directors:

• At the time of appointment or re-appointment, the Managing Director's shall be paid such remuneration as may be mutually agreed between the Company (which includes the Nomination & Remuneration Committee and the Board of Directors) and the Managing Director within the overall limits prescribed under the Companies Act;

• The remuneration shall be subject to the approval of the Members of the Company in General Meeting;

• In determining the remuneration the Nomination & Remuneration Committee shall consider the following:

1. The relationship of remuneration and performance benchmarks is clear;

2. Balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals;

3. Responsibility of the Managing Director's and the industry benchmarks and the current trends;

4. The Company's performance vis-a-vis the annual budget achievement and individual performance.

Remuneration of Non-Executive Directors:

The Non-Executive Directors shall be entitled to receive remuneration by way of sitting fees, reimbursement of expenses for participation in the Board / Committee meetings. A Non-Executive Director shall be entitled to receive sitting fees for each meeting of the Board or Committee of the Board attended by him of such sum as may be approved by the Board of Directors within the overall limits prescribed under the Companies Act, 2013 and the Companies Managerial Remuneration Rules, 2014.

The Independent Directors of the Company shall not be entitled to participate in Stock Option Scheme of the Company, if any, introduced by the Company.

Remuneration of Senior Management Employees:

In determining the remuneration of the Senior Management employees (i.e. KMPs and Executive Committee Members) the Nomination & Remuneration Committee shall consider the following:

1. The relationship of remuneration and performance benchmark is clear;

2. The fixed pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals;

3. The components of remuneration includes salaries, perquisites and retirement benefits;

4. The remuneration including annual increment and performance incentive is decided based on the criticality of the roles and responsibilities, the Company's performance vis-a-vis the annual budget achievement, industry benchmark and current compensation trends in the market.

The Managing Director will carry out the individual performance review based on the standard appraisal matrix and after taking into account the appraisal score card and other factors mentioned hereinabove, recommends the annual increment to the Nomination & Remuneration Committee for its review and approval.

5. STAKEHOLDER'S RELATIONSHIP COMMITTEE

(formerly known as Investors' Grievance Committee):

During the year under review, the nomenclature of the Investors' Grievance Committee was changed to "Stakeholders' Relationship Committee" in line with the provisions of Section 178 of the Companies Act, 2013. Committee is empowered to oversee the redressal of investors' complaints pertaining to Share transfers, non-receipt of annual reports, dividend payments, issue of duplicate certificates, transfer/transmission /demat / remat of shares and other miscellaneous complaints. This Committee is responsible for the satisfactory redressal of investors' complaints and recommends measures for overall improvement in the quality of investor services.

During the financial year 2014-15, the Stakeholder's Relationship Committee met four times on 30th  May, 2014, 14th  August, 2014,14th  November, 2014 and 14th February, 2015.

Name of Compliance Officer Mr.A.K.Singhal.

Building No.7, Mittal Industrial Estate, Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai-400059 Tel No.: 022-4089 6300 Fax No.: 022-4089 6322 Email: info@konarkgroup.co.in

6. SUBSIDIARY COMPANIES

As on 31st March, 2015, the Company has three subsidiary and three steps down subsidiary companies:

a) Subsidiary Companies:

1. India Denim Limited

2. Konark Infratech Private Limited

3. Trade Bazaar Retail Private Limited

(Formerly known as Konark Greentech Private Limited)

b) Step down Subsidiary Companies:

1. Konark Gujarat PV Private Limited

(Wholly owned subsidiary of Konark Infratech Private Limited)

2. Konark Wind Projects Private Limited

(Wholly owned subsidiary of Konark Greentech Private Limited)

3. Konark Natural Foods Private Limited

(Wholly owned subsidiary of Konark Greentech Private Limited)

Except India Denim Limited and Konark Gujarat PV Private Limited, no other subsidiary Company falls under the norms prescribed in Clause 49 of the Listing Agreement for "Material non-listed Indian Subsidiaries".

A policy on material subsidiary is adopted by the Company as per the provisions of the Listing Agreement. The objective of the policy is to determine

a. Meaning of Material Subsidiary

b. Requirement of Independent Director in certain Material Non Listed Indian Subsidiaries

c. Restriction on disposal of shares of Material Subsidiary by the Company

d. Restriction on transfer of assets of Material Subsidiary

e. Disclosure Requirements, based on Clause 49 of the Listing Agreement and any other laws and regulations as may be applicable to the Company.

The policy of the Company is available on the website of the Company www.konarkgroup.co.in

7. VIGIL MECHANISM POLICY/ WHISTLE BLOWER MECHANISM:

With the rapid expansion of business, various risks associated with the business have also increased considerably. Some such risks identified are the risk of fraud, misconduct & unethical behavior. To ensure fraud-free work & ethical environment Company has laid down a Vigil Mechanism Policy. By which Company provide a platform to all the employee, vendors and customers to report any suspected or confirmed incident of fraud, misconduct, unethical behavioretc. through any of the following reporting protocols:

• E-mail : info@konarkgroup.co.in  

• Phone No. :02240896300 • Fax Number : 022 40896322

• Written Communication to : Building no. 7, Mittal Industrial Estate, Saki Naka,

Andheri (East) Mumbai-400059

The mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and direct access to the Chairman of the Audit Committee is also available in exceptional cases. No employee was denied access to the Audit Committee. The Whistle Blower Policy is available on the website of the Company viz., www.konarkgroup.co.in

Objectives of Vigil Mechanism Policy/Whistle Blower Mechanism:

• To protect the brand, reputation and assets of the Company from loss or damage, resulting from suspected or confirmed incidents of fraud / misconduct.

• To provide guidance to the employees, vendors and customers on reporting any suspicious activity and handling critical information and evidence.

To provide healthy and fraud-free work culture._

Working of Vigil Mechanism Policy/Whistle Blower Mechanism:

The Committee under the control of Audit Committee is responsible for:

• Implementation of the policy and spreading awareness amongst employees;

• Review all reported cases of suspected fraud, misconduct, unethical behavior;

• Order investigation of any case either through internal audit department or through external investigating agencies or experts;

• Recommend to the management for taking appropriate actions such as disciplinary action, termination of service, changes in policies & procedure and review of internal control systems;

• Annual review of the policy.

Audit Committee reports to the Board of Directors.

8. DISCLOSURES

a. Related Party Transactions:

There were no materially significant related party transactions, pecuniary transactions or relationship between the Company and its Directors during the financial year ended 31" March, 2015 that may have potential conflict with the interest of the Company at large. The transactions with the related parties, as per the requirements of the Accounting Standard (AS) 18, are disclosed in the Notes on Accounts, forming part of the Annual Report. The policy on dealing with Related Party Transaction is available on Company's website at www.konakgroup.co.in .

b. Disclosure of Accounting Treatment:

In the preparation of the financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable, except non provision of gratuity (AS -15).

c. Disclosure of Risk Management:

The Company has laid down procedure to inform Board members about the risk assessment and minimization procedures. The Company has framed the risk assessment and minimization procedure, which is periodically reviewed by the Board.

d. Compliance by the Company:

The Company has complied with the requirements of the Stock Exchange, SEBI and other statutory authorities on all matters relating to capital market during the last three years. The Company has complied with all the mandatory requirements of the Clause 49 of the Listing Agreement.

e. Code of Conduct and Auditors' Certificate on compliance of Corporate Governance:

The Board of Directors has adopted a Code of Conduct for the Board of Directors and Senior Management Personnel of the Company. All the Board members have affirmed their compliance with the Code of Conduct. A copy of the said Code of Conduct is available on the website of the Company at www.konarkgroup.co.in . A declaration by the Managing Director of the Company affirming the compliance of the same during the financial year ended on 31" March, 2015 by the members of the Board and the Senior Management Personnel as applicable to them, forms part of this Annual Report, which along with the Auditors' Certificate on compliance of Clause 49 of the Listing Agreement by the Company are annexed to this Annual Report.

f. Review of Directors' Responsibility Statement:

The Board in its report has confirmed that the annual accounts for the year ended 31st March, 2015 have been prepared as per applicable Accounting Standards (except AS 15) and policies and that sufficient care has been taken for maintaining adequate accounting records.

g. CEO/CFO Certification:

As required under Clause 49(IX) of the Listing Agreement, a certificate from Mr. Prakashchand Dalmia, Managing Director and Mr. Ramniwas Somany, Chief Financial Officer of the Company certifying that the financial statements do not contain any materially untrue statement and these statements represent a true and fair view of the Company's affairs was placed before the Board.

h. Details of Compliance with Mandatory / Non- Mandatory Requirements under Clause 49 of Listing Agreement:

The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement. The status of compliance with non-mandatory recommendations and the steps adopted by the company is provided below:

• Reporting of Internal Auditor: The Internal Auditor reports to the Audit Committee.

i. Code for Prevention of Insider Trading Practices:

In compliance with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading Regulations), 1992, the Company has laid down a comprehensive Code of Conduct for prevention of Insider Trading for its Directors, Senior Management, Officers & other employees. The Code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of the Company.

MEANS OF COMMUNICATIONS

The quarterly, half-yearly and yearly financial results of the Company are sent to the Stock Exchanges immediately after these are approved by the Board. These are widely published in "Financial Express", "Business Standard" and "Mumbai Lakshadeep". These results are simultaneously posted on the website of the Company at www.konarkgroup.co.in  and also uploaded on the website of BSE Limited.

The Management Discussion and Analysis is a part of the Annual Report and annexed separately.

The Company has not made any presentations to Institutional Investors or to the Analysts and has not given any press release during the year under review.

GENERAL SHAREHOLDERS'INFORMATION

Annual General Meeting

Date : Wednesday, 30th September, 2015

Time 3.30 p.m.

Venue Building No. 7, Mittal Industrial Estate, Andheri Kurla Road, Sakinaka, Andheri East, Mumbai -400 059.

Financial Year :

1st April,2014 to 31st  March,2015

Dividend Payment

N.A.

Financial Calendar 2015-16:

Event Due Date

Financial Results for the quarter ended 30th  June, 2015 On 14th August, 2015

Financial Results for the quarter ending 30th  September, 2015 By 14th  November, 2015

Financial Results for the quarter ending 31st December, 2015 By 14th February, 2016

Audited Financial Results for the quarter and year ending 31st March, 2016 By 30th  May, 2016 (Audited).

Annual General Meeting for the year ending on 31st March, 2016 By 30th September, 2016

e. Date of Book Closure :

Thursday, 24* September, 2015 to Wednesday, 30* September, 2015 (both days inclusive).

f. Listing on Stock Exchange :

BSE Limited (BSE)

Phiroze Jeejeebhoy Towers, Dalai Street, Mumbai - 400 001.

g. Listing Fees :

The Company has paid the necessary listing fees to BSE Limited fortheyear2015-16.

h. Stock Code :

514128

i. Scrip Id :

KONARKSY

j. ISIN :

INE517D01019

k. CIN :

L17200MH1984PLC033451

I. Cut-off date for remotee-voting:

The remote e-voting /voting rights of the shareholders/beneficial owners shall be reckoned on the equity shares held by them as on the Cut-off Date i.e. Wednesday, 23rd September, 2015.

m. Registrar and Share Transfer Agents:

Purva Sharegistry (India) Private Limited

Unit: Konark Synthetic Limited,

9, ShivShakti Industrial Estate, J. R. Boricha Marg, Lower Parel (East), Mumbai-400011 Tel No.: 2301 6761 and 2301 8261, Fax No.: 2301 2517 E-Mail: busicomp@vsnl.com

n. Share Transfer System:

All shares sent or transferred in physical form are registered by the Registrar and Share Transfer Agents (RTA) within 15 days of the lodgment, if documents are found in order. Shares under objection are returned within two weeks. All requests for dematerialization of shares are promptly processed and the confirmation is given to the respective depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL)within 21 days.

o. Dematerialization of Equity Shares and Liquidity:

As on 31st  March, 2015 about 96.74% of the Company's Equity Shares has been held in dematerialized form with NSDL & CDSL.

p. Outstanding ADRs, GDRs, Warrants or any convertible instruments, conversion date and impact on Equity:

The Company has not issued any ADRs/GDRs/Warrants or any convertible instruments during financial year ended 31 "March, 2015.

q. Reconciliation of Share Capital Audit:

As stipulated by Securities and Exchange Board of India (SEBI), a qualified practicing Company Secretary carries out the Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital.

r. Dematerialization of Equity Shares and Liquidity:

As on 31" March, 2015 about 96.74% of the Company's Equity Shares has been held in dematerialized form with NSDL & CDSL.

s. Outstanding ADRs, GDRs, Warrants or any convertible instruments, conversion date and impact on Equity:

The Company has not issued any ADRs/GDRs/Warrants or any convertible instruments during financial year ended 31st March, 2015.

t. Reconciliation of Share Capital Audit:

As stipulated by Securities and Exchange Board of India (SEBI), a qualified practicing Company Secretary carries out the Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital.