DIRECTORS' REPORT Dear Shareholders, Your Directors have pleasure in presenting the 27th Annual Report on the business and operations of the Company and the Audited Financial Statement of the Company for the financial year ended March 31, 2015. STATE OF AFFAIRS OF THE COMPANY AND FUTURE OUTLOOK During the year under review, your Company continued to let out part of its factory shades and office space. Further, in accordance with the approval of the members under Section 293(1)(a) of the Companies Act, 1956 obtained vide resolution passed through postal ballot on 29th December, 2009, the Company is in the process of selling out the plant and machinery of the Unit situated at Panchalam Village, Melpettai Post, Tindivanam, Tamilnadu - 604 307. The closure of the Company's unit has posed a challenge for the Company to resume operation. Your directors are exploring alternate avenues to make the Company operative. DIVIDEND In view of the losses during the period under review, your Board of Directors are unable to recommend any dividend. SUBSIDIARIES Your Company had no subsidiaries during the year under review. TRANSFER TO GENERAL RESERVE In view of the accumulated losses, no transfer is proposed to the General Reserve. DIRECTORS Your Company has received declarations from the Independent Directors Mr. Mahesh Kumar Malpani, Mr. Beni Gopal Saraf and Mr. Pradip Manharlal Domadia confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and other applicable laws. During the year under review, the Board has appointed Ms. Mathangi Ramanujam (DIN: 07095686) as Additional Director (woman director) of the Company w.e.f. 13th February, 2015. She holds office as additional director up to the ensuing Annual General Meeting of the Company. The Company has received a notice in writing together with requisite deposit of Rs. 1 Lakh under Section 160 of the Companies Act, 2013, from a member of the Company proposing her candidature for the office of a director liable to retire by rotation. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ramesh Kumar Haritwal (DIN: 01486666), Managing Director & CEO of the Company, will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. None of the directors of your Company is disqualified under the provisions of Section 164(2)(a) & (b) of the Companies Act, 2013. CHANGES IN SHARE CAPITAL During the year under review, there was no change in the Share Capital of the Company. KEY MANAGERIAL PERSONNEL Mr. Ramesh Kumar Haritwal, Managing Director & CEO is the only Key Managerial Personnel of the Company. There was no appointment or resignation of Key Managerial Personnel during the year under review PERFORMANCE EvALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Equity Listing Agreement, the Independent Directors have evaluated the performance of non-independent directors, chairperson of the Company after considering the views of the other directors, board as a whole and assessed the quality, quantity and timely flow of information between the Company's management and the Board and the Nomination and Remuneration Committee also has carried out evaluation of performance of every director. On the basis of evaluation made by the Independent Directors and the Nomination and Remuneration Committee and by way of individual and collective feedback from the non-independent Directors, the Board has carried out the annual performance evaluation of the Directors individually as well as evaluation of the working of the Board and of the Committees of the Board. The following were the Evaluation Criteria : a. For Independent Directors : -Knowledge and Skills -Professional conduct - Compliance with Code of Business Ethics and Code of Conduct of the Company, if any. - Rendering independent and unbiased opinion - Attendance and presence in meetings of Board and Committees - Review of integrity of financial information and risk management - Updation of skills and knowledge - Raising of concerns, if any, to the Board - Reporting of frauds, violation etc. b. For Executive & Non- Executive Directors : -Performance as Team Leader/Member. -Evaluating Business Opportunity and analysis of Risk Reward Scenarios -Sharing of Information with the Board -Extent of participation during Board and Committee Meetings -Whether executive directors were able to answer the queries raised by Independent Directors, if any. - Compliance with Code of Business Ethics and Code of Conduct of the Company, if any. - Review of integrity of financial information and risk management - Raising of concerns, if any, to the Board - Reporting of frauds, violation etc. c. For Committees of the Board : - Adequate and appropriate written terms of reference - Whether the committees work in an 'inclusive' manner -Effectiveness of the Board's Committees with respect to their role, composition and their interaction with the Board -Are the committees used to the best advantage in terms of management development, effective decision etc. d. For Board of Directors : - Setting of clear performance objectives and how well it has performed against them - Contribution to the testing and development and strategy -Composition of the board and its committees appropriate with the right mix of knowledge and skills sufficient to maximize performance in the light of future strategy - Responding to the problems or crises that have emerged - Relationship between Board and its Committees and between committees themselves -Updation with latest developments in regulatory environments and the market in which the Company operates The Directors expressed their satisfaction with the evaluation process. AUDIT COMMITTEE The Audit Committee consists of two independent directors with Mr. Mahesh Kumar Malpani as Chairman and Mr. Beni Gopal Saraf as member and also one executive director Mr. Ramesh Kumar Haritwal, Managing Director & CEO as member. The Committee inter alia reviews the Internal Control System and reports of Internal Auditors and compliance of various regulations. The Committee also reviews the Financial Statements before they are placed before the Board. The detailed terms of reference of the Committee is provided herein below. Terms of Reference for the Audit Committee are as follows: Powers of the Audit Committee: The Audit Committee shall have Powers, which should include the following: • To investigate any activity within its terms of reference. • To seek information from any employee. • To obtain external, legal or other professional advice. • To secure attendance of outsiders with relevant expertise, if it is considered necessary. Role the Audit Committee: The Role of the Audit shall include the following: 1. Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; 2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company; 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors except those which are specifically prohibited; 4. Reviewing, with the management, and examination of the financial statements and auditor's report thereon before submission to the board for approval, with particular reference to: i. Matters required to be included in the Director's Responsibility Statement to be included in the Board's report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 ii. Changes, if any, in accounting policies and practices and reasons for the same iii. Major accounting entries involving estimates based on the exercise of judgment by management iv. Significant adjustments made in the financial statements arising out of audit findings v. Compliance with listing and other legal requirements relating to financial statements vi. Disclosure of any related party transactions vii. Qualifications in the draft audit report 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval; 6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 7. Review and monitor the auditor's independence and performance, and effectiveness of audit process; 8. Approval or any subsequent modification of transactions of the company with related parties; 9. Scrutiny of inter-corporate loans and investments; 10. Valuation of undertakings or assets of the company, wherever it is necessary; 11. Evaluation of internal financial controls and risk management systems; 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any significant findings and follow up there on; 15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 18. To review the functioning of the Whistle Blower mechanism; 19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate; 20. Carrying out any other function as may be referred to by the Board or mandated by regulatory provisions from time to time. Review of information by the Audit Committee: The Audit Committee shall mandatorily review the following information: a. Management discussion and analysis of financial condition and results of operations; b. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management; c. Management letters / letters of internal control weaknesses issued by the statutory auditors; d. Internal audit reports relating to internal control weaknesses; and e. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee consists of three independent directors with Mr. Pradip Manharlal Domadia, as Chairman and Mr. Mahesh Kumar Malpani and Mr. Beni Gopal Saraf as members of the Committee. The terms of reference of the Committee is given below. Terms of Reference for the Nomination and Remuneration Committee 1. To formulate criteria for: a. determining qualifications, positive attributes and independence of a director; b. evaluation of independent directors and the Board 2. To devise policies on remuneration including any compensation related payments of the directors, key managerial personnel and other employees and recommend the same to the board of the Company; 3. To identify persons who are qualified to: a. become directors in accordance with the criteria laid down, and recommend to the Board the appointment and removal of directors; b. be appointed in senior management in accordance with the policies of the Company and recommend their appointment to the HR Department and to the Board. 4. To carry out evaluation of the performance of every director of the Company. 14 5. To express opinion to the Board that a director possesses the requisite qualification(s) for the practice of the profession in case the services to be rendered by a director are of professional nature. 6. To carry out such other business as may be required by applicable law or delegated by the Board or considered appropriate in view of the general terms of reference and the purpose of the Nomination and Remuneration Committee Summary of Remuneration Policy of the Company The Board of Directors has adopted the remuneration policy at the recommendation of the Nomination and Remuneration Committee in compliance with Section 178 of Companies Act, 2013 and other applicable laws. This policy applies to all the "Executives" of the Company and is be valid for all employment agreements entered into after the approval of the Policy and for changes made to existing employment agreements thereafter. In keeping with the provisions of Section 178, the remuneration structure of the Company comprises of fixed remuneration (including fixed supplements), performance-based remuneration (variable salary) such as pension schemes, where applicable, other benefits in kind and severance payment, where applicable. Further, the Policy states that the non-executive directors and independent directors of the Company may receive remuneration only by way of fee and reimbursement of expenses for participation in meetings of the Board or Committee thereof and profit related commission, as may be permissible by the Applicable law. Additionally, the Policy also lays down the overall selection criteria for the Executives of the Company which is based on broad heads such as competencies, capabilities, compatibility, strong interpersonal skills, commitment among others. The Policy also entitles Executives to a severance fee. STAKEHOLDERS' RELATIONSHIP COMMITTEE The Stakeholders' Relationship Committee consists of two independent directors with Mr. Beni Gopal Saraf as Chairman and Mr. Mahesh Kumar Malpani as member of the Committee. The terms of reference of the Committee is given below; Terms of Reference for the Stakeholder's Relationship Committee are as below: i. To ensure proper and timely attendance and redressal of grievances of security holders of the Company in relation to: a. Transfer of shares, b. Non-receipt of annual reports, c. Non-receipt of declared dividend, d. All such complaints directly concerning the shareholders / investors as stakeholders of the Company; and e. Any such matters that may be considered necessary in relation to shareholders and investors of the Company. ii. Formulation of procedures in line with the statutory guidelines to ensure speedy disposal of various requests received from shareholders from time to time; iii. To review and / or approve applications for transfer, transmission, transposition and mutation of share certificates including issue of duplicate certificates and new certificates on split / sub-division / consolidation / renewal and to deal with all related matters. iv. To review and approve requests of dematerialization and rematerialisation of securities of the Company and such other related matters; v. Appointment and fixing of remuneration of RTA and overseeing their performance; vi. Review the status of the litigation(s) filed by/against the security holders of the Company; vii. Review the status of claims received for unclaimed shares; viii. Recommending measures for overall improvement in the quality of investor services; ix. Monitoring implementation and compliance with the Company's Code of Conduct for Prohibition of Insider Trading in pursuance of SEBI (Prohibition of Insider Trading) Regulations, 1992; x. Review the impact of enactments/ amendments issued by the MCA/ SEBI and other regulatory authorities on matters concerning the investors in general; xi. Such other matters as per the directions of the Board of Directors of the Company and/ or as required under Clause 49 of the Listing Agreements relating to Corporate Governance, as amended, from time to time. VIGIL MECHANISM In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and other applicable laws, a vigil mechanism or 'Whistle Blower Policy' for directors and employees to report genuine concerns has been established. RISK MANAGEMENT The Company is taking necessary steps to identify, assess, monitor and mitigate various risks to key business objectives. Major risks to be identified by the businesses and functions, if any, would be systematically addressed through mitigating actions on a continuing basis. INTERNAL FINANCIAL CONTROLS wITH REFERENCE TO THE FINANCIAL STATEMENTS The Directors had laid down internal financial controls procedures to be followed by the Company which ensure compliance with various policies, practices and statutes in keeping with the organization's pace of growth and increasing complexity of operations for orderly and efficient conduct of its business. The Audit Committee of the Board, from time to time, evaluated the internal financial control of the Company with regard to- 1. Systems have been laid to ensure that all transactions are executed in accordance with management's general and specific authorization. There are well-laid manuals for such general or specific authorization. 2. Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for aspects and the timely preparation of reliable financial information. 3. Access to assets is permitted only in accordance with management's general and specific authorization. No assets of the Company are allowed to be used for personal purposes, except in accordance with terms of employment or except as specifically permitted. 4. The existing assets of the Company are verified /checked at reasonable intervals and appropriate action is taken with respect to any differences, if any. 5. Proper systems are in place for prevention and detection of frauds and errors and for ensuring adherence to the Company's policies. CORPORATE SOCIAL RESPONSIBILITY During the year under review the compliance of the requirements of Section 135 of the Companies Act, 2013 was not applicable to the Company. Further, considering the financial and other factors, your company could not take any initiative in this regard. RELATED PARTY TRANSACTIONS Related party transactions that were entered into during the financial year were on arm's length basis and were in ordinary course of business. The particulars of material related party transactions which were entered into on arm's length basis are provided in Form AOC- 2 as required under section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 which is annexed herewith as Annexure-I. There are no materially significant related party transactions made by the Company which may have potential conflict with the interest of the Company. DIRECTORS' RESPONSIBILITY STATEMENT In terms of the provisions of Section 134 (3) (c) of the Companies Act, 2013, the Directors state that: a) In preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) the directors have selected such accounting policies as listed in Note 1 to the financial statements and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year as on 31st March, 2015 and of the profit of the Company for that period. c) The directors have taken proper and sufficient care for 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 have prepared the annual accounts on a going concern basis; and e) The directors have 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 have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. MATERIAL CHANGES There have been no material changes and commitments affecting the financial position of the Company since the close of financial year i.e. since 31st March, 2015. Further, it is hereby confirmed that there has been no change in the nature of business of the Company. PUBLIC DEPOSITS During 2014-15, the Company did not invite or accept any deposits from the public and no such deposit was outstanding at the beginning of the year. LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013 Details of Loans granted, Guarantees given and Investments made during the year under review, covered under the provisions of Section 186 of the Companies Act, 2013, are given in the Financial Statement of the Company. AUDITORS AND THEIR REPORT (a) Statutory Auditors: In compliance with the Companies (Audit and Auditors) Rules, 2014, M/s. D. Dhandaria & Company, Chartered Accountants, has been appointed as Statutory Auditors of the Company till the conclusion of 29th Annual General Meeting (AGM) for the financial year 2016-17, as approved by the members at their 26th Annual General Meeting held on 30th September, 2014. Further, pursuant to the requirement of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is to be ratified by the members at every Annual General Meeting. Based on their declaration received by the Company under Section 139 and 141 of the Companies Act, 2013, they are eligible for the appointment. Members are requested to ratify their appointment for the financial year 2015-16. (b) Secretarial Auditors: The Board of Directors of the Company appointed Mr. Dilip Kumar Sarawagi, Practicing Company Secretary, Proprietor of M/s. DKS & Co., having office at 173, M.G. Road, 1st Floor, Kolkata - 700007, to conduct Secretarial Audit for the financial year ended 31st March, 2015. The Secretarial Audit Report in Form MR-3 for the financial year ended 31st March, 2015, is annexed herewith as Annexure-II. (c) Cost Auditors: Your Company was not required to appoint Cost Auditor for the financial year ending 31st March, 2015. (d) Internal Auditor: During the year under review, the Board of Directors has appointed M/s AS & Associates, Cost Accountants, as Internal Auditor of the Company to carry out internal audit of the Company. RESPONSE TO AUDITORS' REMARKS There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their report and hence no explanation or comments of the Board is required in this matter. There is no qualification, reservation, adverse remark or disclaimer by the by the Secretarial Auditor in their Secretarial Audit Report except that the Secretarial Auditor has reported regarding non-appointment of Company Secretary and Chief Financial Officer by the Company as required under Section 203 of the Companies Act, 2013 and the Rules made thereunder. In respect of the said observation, it is stated that though, during the year under review, the Company has taken initiative to fill up the said vacancies caused by the resignation of the Chief Financial Officer and Company Secretary during the financial year 2010-11, considering the gloomy financial positions and business outlook of the Company it was not possible for the Company to employ suitable candidates for the said vacancies. EXTRACT OF ANNUAL RETURN The extract of Annual Return required under Section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is provided in Form MGT- 9 as Annexure-III to this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Owing to closure of manufacturing facility of the Company, no step was taken by the Company towards Conservation of energy and Technology Absorption during the year under review. Further there was no foreign exchange earnings and outgo during the year under review. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure-IV. FRAUD REPORTING There was no fraud reported by the Auditors of the Company to the Audit Committee or the Board of directors during the year under review. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITIONS REDRESSAL) ACT, 2013 No woman was in the employment of the Company during the year under review and hence the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition& Redressal) Act 2013 was not applicable to the Company. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE During the period under review, there were no significant and material orders passed by any regulator / court / tribunal impacting the going concern status and the Company's operations in future. NON-APPLICABILITY OF CLAUSE 49 OF EQUITY LISTING AGREEMENT Compliance with the provisions of the revised Clause 49 of the equity listing agreement, which has become effective 1st October, 2014, is not mandatory to your Company presently. In view of the same, the Corporate Governance Report and Management Discussion and Analysis Report are not provided. ACKNOWLEDGEMENT Your Directors place on record their sincere thanks and appreciation for the continuing support of financial institutions, vendors, clients, investors, Central Government, State Governments, regulatory authorities and other stakeholders. For and on behalf of the Board of Directors Saurabh Mittal Non-Executive Chairman Place : Kolkata Date : May 30th, 2015 |