DIRECTORS' REPORT Dear Members, Your Directors are glad to inform that suspension in trading of Equity Shares of the Company has been revoked and is permitted for trading on BSE Ltd w. e. f. 13.06.2014 under "T" Group. Members of the Company will now have better liquidity for their investments. Directors of the Company in their board meeting held 08th September 2014 have approved the draft scheme of arrangement by way reduction of share capital u/s 391 and 394 of Companies Act 1956 proposing to reduce the share capital of the Company by 90% by cancelling 9 equity shares of Rs. 10/-each against every 10 equity shares of Rs. 10/- each held by the shareholders. The Scheme was subsequently approved by the BSE Ltd under clause 24(f) of Listing Agreement. The Scheme was submitted to Hon'ble High Court of Gujarat AT Ahmedabad and was subsequently admitted. Hon'ble High Court of Gujarat at Ahmedabad vide its oral order dated 16.02.2015 ordered to convene meeting of the shareholders on 20.03.2015 at the registered office of the Company. Members of the Company in their duly convened meeting approved the Scheme of arrangement by way of reduction of share capital with requisite majority. Report of scrutinizer along with supporting documents was submitted to the Hon'ble Court. Petition for sanctioning the aforementioned scheme was also submitted to Hon'ble Court and consequent to that Hon'ble Court vide its oral order dated 20.04.2015 has ordered to issue a notice to Central Government for their relevant report. After approval of the scheme Financial statements of the Company will reveal true nature of financial position. Your Directors feel pleasure in presenting their 30th Annual Report together with the Audited Statements of accounts for the Financial Year ended on 31st March, 2015. 2. DIVIDEND: During the Financial Year 2014-15, due to considerable financial loss, Directors do not recommend any Dividend. 3. FINANCE A. DEPOSITS AND LONG TERM BORROWINGS: During the year, Company has not accepted any Deposits or long term borrowings from any party. B. RELATED PARTIES TRANSACTIONS During the year, Company has not entered in to any related party transactions except payment of remuneration and hence no such disclosures have been made in relevant section of Related Party Transactions. 4. SUBSIDIARIES AND JOINT VENTURE Company does not have any subsidiary companies. Company has not made any investment in Joint Venture. 5. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(3) of the Companies Act, 2013, in relation to the Financial Statements for FY 2014-15, the Board of Directors states that: a) in preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; b) the Directors have 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 as on 31st March, 2015 and of the profits for the year ended 31st March, 2015; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 6. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to Financial Statements. During the year, such controls were tested and no reportable material weakness was observed. 7. AUDITORS: STATUTORY AUDITORS: M/s Arpan Chudgar & Associates, Chartered Accountant Ahmedabad were appointed as Statutory Auditors of the Company in its 29th Annual General Meeting for the term of six years. However to their preoccupation, they tendered their resignation w. e. f. 01st March 2015. Hence the Board of Directors in their Board Meeting held on 05th March 2015 has appointed M/s Jignesh Domadiya & Co., Chartered Accountant, Ahmedabad as the statutory auditor of the Company. They shall retire at the ensuing Annual General meeting and are eligible for reappointment. They have furnished a certificate regarding their eligibility for reappointment as Statutory Auditor of the Company pursuant to Section 139(1) of Companies Act 2013, read with rules framed thereunder. The Board of Directors recommend their appointment till the conclusion of sixth Annual General Meeting subject to approval of the members in each Annual General Meeting. The Auditors' report for financial year 2014-15 is self explanatory and forms part of this Annual Report and does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITORS: Pursuant to Section 204 of the Companies Act, 2013 read with Rules thereof, the Board of Directors has appointed M/s. J Akhani Associates, Company Secretaries, Ahmedabad, as Secretarial Auditors of the Company for FY 2014-15. A Secretarial Audit Report for FY 2014-15 is annexed herewith as Annexure A. There are no adverse observations in the Secretarial Audit Report which call for explanation. The Board has appointed M/s J Akhani & Associates, Company Secretaries, Ahmedabad, as Secretarial Auditors of the Company for FY 2015-16. 8. DIRECTORS AND KEY MANAGARIAL PERSONNEL: APPOINTMENT AND RESIGNATION Board of Directors in their Board Meeting held on 12.05.2014 has appointed Ms. Romita Jaiswal as Company Secretary and Compliance officer of the Company u/s 203 of Companies Act 2013 and Listing Agreement. Subsequent to the notification of section 149 of Companies Act 2013, the Board of Directors of the Company in their Board Meeting held on 25.03.2015 has appointed Ms. Alkaben Kulkarni as Woman Independent Director whose term shall expire on conclusion of 30th Annual General Meeting. RE APPOINTMENT OF DIRECTORS There are no Directors on the Board whose term expires at this 30th Annual General Meeting and hence the Board does not recommend any Reappointment of Directors. DIRECTORS RETIRING BY ROTATION Mr. Gordhan Patel, a Director, whose terms of office is liable to determination by retirement of Directors by rotation under section 152 of Companies Act 2013 and being eligible offers himself for reappointment. Directors recommend his re appointment DECLARATION BY INDEPENDENT DIRECTORS Pursuant to provisions of section 149(7) of Companies Act 2013, the Company has received declaration from Independent Directors for FY 2014-15 confirming that they meet the criteria of independence as prescribed under the Act and Clause 49 of Listing Agreement. NUMBER OF MEETINGS OF THE BOARD The Board meets at regular interval with gap between two meetings not exceeding 120 days. Additional meetings are held as and when necessary. During the year under review, the Board met fifteen times. POLICY ON DIRECTORS' APPOINTMENT Pursuant to provisions of section 178 read with 134(3)(e) of Companies Act 2013, The Nomination and Remuneration Committee (NRC) has approved the criteria and process for identification / appointment of Directors which are as under: Criteria for Appointment: A) The proposed Director shall meet all statutory requirements and should: - Possess highest values, ethics and integrity. - Not have any direct or indirect conflict with business operations. - Be willing to devote time and efforts. - Have relevant experience. - Have understanding about corporate functionality. - Understand real value of stakeholders. Process for identification of Directors / Appointment of Directors: - Board Members may suggest any potential person to the Chairman of the Company meeting the above criteria. If the chairman deems fit, recommendation will be made by him to NRC. - Chairman himself can also recommend a person to NRC. - NRC shall process and evaluate the proposal and shall submit their recommendation to Board. - Board shall consider such proposal on merit and decide suitably. Criteria for Performance Evaluation The Board considered and approved criteria for performance evaluation of itself and that of its committees and individual directors as follow: Criteria for Board Evaluation: - Focus on strategic decisions. - Qualitative discussion and processes. Criteria for Committee Evaluation: - Fulfillment of allotted responsibilities. - Effectiveness of recommendation, meetings. Criteria for Independent and Non Independent Directors' evaluation: - Contribution through their experience and expertise. - Focus on Stakeholders' interest. MANNER OF EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS The Evaluation of Board, its Committees and Individual Directors was carried out as per process and criteria laid down by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee. The obtaining and consolidation of feedback from all Directors in this regards, was coordinated by the Chairman of Independent Directors' meeting for Board and Non-Independent Directors while the process of evaluation of the Independent Directors was coordinated by the Chairman of the Company. Based on this, Chairman of the Company briefed the Board and each of the Individual Directors, as applicable. 9. REMUNERATION REMUNERATION POLICY The Company has formulated the policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees of the Company which is as under: A) Components of Remuneration - Fixed Pay comprising Basic Salary, HRA, Car Allowance (applicable to General Managers & above employees), Conveyance Allowances / Reimbursement, Company's contribution to Provident Fund, Superannuation Fund, Gratuity, etc. - Variable Pay, which is either in the form of: Commission to Managing Directors and Commission to Whole-time Directors B) Annual Appraisal process: Annual Appraisals are conducted, following which annual increments and promotions in deserving cases are decided once in a year based on: - Employees self-assessment - Assessment by Immediate Superior and - Assessment by Head of Department Annual Increment leading to an increase in Fixed Pay consists of - Economic Rise based on All India Consumer Price Index published by the Government of India or Internal Survey wherein inflation on commonly used items is calculated. Remuneration of Independent Directors: The Company has formulated a policy for the remuneration of Independent Directors as follows: - Sitting Fees of Rs. 2500/- for each meeting of the Board or any Committee thereof, attended by them; - Reimbursement of Expenses incurred by Independent Directors for attending any meeting of the Board. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES As the Directors of the Company have not been paid any remuneration, disclosure under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not required. 10. AUDIT AND RISK MANAGEMENT: During the year, the Board decided that the Audit Committee shall also carry out the role of Risk Management and so Audit Committee has been renamed as Audit and Risk Management Committee and also changed its terms of reference in this context. VIGIL MECHANISM The Company has adopted a Whistle Blower Policy since March 2015 in compliance with Listing Agreement and Companies Act 2013. The Policy empowers all the Stakeholders to raise concerns by making Protected Disclosures as defined in the Policy. The Policy also provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Whistle Blower mechanism is reviewed by the Audit Committee on a quarterly basis. RISK MANAGEMENT POLICY The Board of Directors has developed and implemented Risk Management Policy for the Company. It has identified and assessed various risks factors, with potential impact on the Company in achieving its strategic objectives or may threaten its existence. The Policy lays down procedures for risk identification, assessment, monitoring, review and reporting. The Policy also lists the roles and responsibilities of Board and Risk Management Committee. 11. ENVIRONMENT, HEALTH AND SAFETY The Company accords the highest priority to health, environment and safety. The Company does not carry on manufacturing operations. The Company takes at most care for the employees and ensures compliance with the applicable rules and regulation applicable to the Company. 12. CORPORATE GOVERNANCE As stipulated by Clause 49 of the Listing Agreement, Report on Corporate Governance forms part of this Annual Report. Certificate of the Auditors regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is annexed to the Board's Report. 13. MANAGEMENT DISCUSSION AND ANALYSIS As stipulated by Clause 49 of the Listing Agreement, the Management Discussion and Analysis Report form part of this Annual Report. 14. CONSERVATION OF ENERGY, TECHNOLOGY ABSOPTION, FOREIGN EXCHANGE EARNIGS AND OUTGO: During the financial year 2014-15, Company has not undertaken any manufacturing operations. Company has neither earned nor spent anything in foreign currency. Hence no disclosure is required under this head pursuant to Companies (Accounts) Rules 2014. 15. THE EXTRACTS OF ANNUAL RETURN The extract of the Annual Return in Form MGT-9 is annexed to this Directors' Report. 16. APPRECIATION AND ACKNOWLEDGMENT The Directors feel pleasure thanking all the stakeholders who have reposed their faith in the management and the company and for their valuable support and cooperation. BY ORDER OF THE BOARD FOR STARVOX ELECTRONICS LIMITED JITENDRA MEHTA MANAGING DIRECTOR DATE: 30.05.2015 PLACE: AHMEDABAD |