DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the 35th Annual Report on business and operations along with Audited Annual Accounts for the Financial Year ended 31st March, 2015. The financial highlights for the year under review are given below: REVIEW OF OPERATIONS AND STATE OF COMPANY'S AFFAIR Year in Retrospect During the year under review, total income of the Company was Rs. 22392.26 Lacs as against Rs. 21622.79 Lacs in the previous year reflecting Y-O-Y growth of 3.44%. During the current reporting period, the Company has suffered a loss of Rs. 4590.80 lacs. Depreciation of Rs. 2479.92 Lacs and interest accrued of Rs. 3818.65 Lacs during the current year forced the company to suffer loss after tax of Rs. 73,31.87 Lacs. The main reason for non-recovery of Depreciation and Interest in total are as under: 1. High Inflation rate faced by Indian economy. 2. Coal Price, Petroleum Products, Transportation Costs on Peak Levels. 3. Declining in hotel rooms and occupancy rates. 4. High Competition and low operating Margin. The company is taking necessary steps to perform better in coming years. The detailed Management Discussion & Analysis Report is attached hereto with the Directors' Report and should be read as part of this Directors' Report. Segments Paper Division We are pleased to inform to our stakeholders that, at present, the Company is manufacturing the following Products a. Paper Board b. Newsprints Benefits of Manufacturing Paper Board 1. Demand has been increased by reason of increase in the volume of packaged material by consumers. 2. As the plasting bags are hazardeous for environment, hence, demand of Paper Board has also been increased. 3. Almost manufacturing are based on orders/ demands, hence, the risk of spoilage are less. 4. Less expenditure on stock/ inventory management. Benefits of Manufacturing Newsprints 1. Demand for Newsprints paper is increased. 2. The realization of payment is better with less risk of bad debts. 3. Final Product is exempt from Excise Duty. Hotel Division The Hotel Division started its operation w. e. f. 15-02-2009 under the Brand "Country Inn & Suites" and having "FIVE STAR" category with 216 Rooms. Due to increased room inventory and heavy competition in Delhi NCR; the Average Room Revenue has steeply decreased and resulting low EBITDA margin in Hotel Division. DIVIDEND As the Company has suffered losses during current year due to the increase in the raw material cost, increase in Petroleum products worldwide, increase in the Coal price by the Central Govt. declining in the occupancy and room rental in hotel division and increased rate of interest. In view of the aforesaid facts, your Directors regret their inability to recommend any dividend for the financial year ended 31st March, 2015. DIRECTORS AND KMPs In accordance with the provisions of the Companies Act, 2013 and the Company's Articles of Association, Mr. Praveen Kumar Jain and Mr. Shiv Pravesh Chaturvedi are liable to retire by rotation and being eligible offer themselves for re-appointment. The brief resumes of the directors who are to be appointed/ re-appointed and have been appointed, the nature of their expertise in specific functional areas, names of companies in which they have held directorships, committee memberships/ chairmanships, their shareholdings etc. are furnished in Corporate Governance Report attached with this report. Appointment of Director on the Board Ms. Monisha Chaudhary has been appointed as the Additional Director of the Company as on 12th February, 2015 as per the provisions of the Companies Act. We seek your support and approval in confirming her appointment in the forthcoming Annual General Meeting. Appointment/ Change of Company Secretary Mr. Anant Prakash resigned from the post of Company Secretary w.e.f. 16th April, 2014. And the Company has appointed Ms. Monisha Chaudhary as Company Secretary of the Company w.e.f. 1st September, 2014 pursuant to Section 203 of the Companies Act. Appointment/ Change in Chief Financial Officer Mr. Sanjay Sharma had been appointed as Chief Financial Officer (CFO) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013. Further on 21st February, 2015, Mr. Sharma resigned from the post of CFO. Again, Mr. Parmod Kumar Jain has been appointed as Chief Financial Officer (CFO) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013 w.e.f. 21st February, 2015. Re-appointment of Whole-Time Director Board of Directors of the Company, in its meeting held on 9th December, 2014, re-appointed Mr. Abhey Kumar Jain as Whole Time Director for the term of 3 (three) years with effect from 10th December, 2014 as his previous term was expired on 9th December, 2014. We seek your support and approval in confirming his re-appointment in the forthcoming Annual General Meeting. Declaration by Independent Directors The Independent Directors have submitted their disclosures to the Board confirming that they fulfill all the requirements to qualify for their appointment as Independent Director under the provisions of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement. Board Evaluation The Board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors pursuant to the provisions of the act and the corporate governance requirements as prescribed by Securities & Exchange Board of India (SEBI) under clause 49 of the Listing Agreement. The Company has devised an evaluation matrix for the performance evaluation and collate the evaluation results internally. A meeting of Independent Director was held on 31st March, 2015 without the attendance of other directors (Non-Independent) to review the performance of Non-Independent Directors, the Board as a Whole, Chairman of the Company/ Meetings, to assess the flow of information between Company Management and the Board. It was noted that the Board is broad based, information is timely provided, decisions are taken after due deliberations, Board members are encouraged by the Chairman to participate and offer their independent advise based on their experience and act in the best interest of the company and its stakeholders. MATERIAL CHANGES After the end of financial year 2014-15 but before the date of signing of this Report, Punjab National Bank, Lead member of consortium lenders has withdraw the nomination of Mr. Bikash Narayan Mishra from the post of Nominee Director in the Company. And the Board has noted in its meeting dated 30th July, 2015 the cessation of Mr. Bikash Narayan Mishra. PUBLIC DEPOSITS During the year under report, your Company did not accept any deposits from the public in terms of the provisions of Companies Act, 2013. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A. Conservation of Energy: Information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings/ outgo is included in Annexure I. B. Technology Absorption: The Company is taking care of latest developments and advancements in technology and all steps are being taken to adopt the same. The Company is using indigenous technology, which is well established in the Country. C. Foreign exchange earnings and outgo: PARTICULARS OF EMPLOYEES The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure II to this Report. The Company does not have any employees employed throughout the financial year and in receipt of remuneration of Rs.60 Lakh or more, or employed for part of the year and in receipt of Rs.5 Lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. HUMAN RESOURCE DEVELOPMENT The Company has been successful in building a performance oriented culture with high levels of engagement and empowerment in an environment of teamwork. The focus has been on creating reserves through cross functional and inter-disciplinary exposure at all levels to ensure redundancy and robustness in the organization. The morale of the team is at a high level. VIGIL MECHANISM A vigil mechanism of the Company which also includes a Whistle Blower Policy pursuant to Section 177(9) & 10 of Companies Act, 2013, has also been established and can be accessed on the Company website. AUDIT COMMITTEE The Audit Committee comprises Independent Directors namely Mr. Shri Krishan Jain (Chairman), Mr. Rakesh Garg, Mr. Naveen Jain as other members. All the recommendations made by the Audit Committee were accepted by the Board. Further details are included in the Corporate Governance Report. NOMINATION AND REMUNERATION COMMITTEE Details pertaining to composition of Nomination and Remuneration Committee are included in the Corporate Governance Report. STAKEHOLDERS RELATIONSHIP COMMITTEE Details pertaining to composition of Stakeholders Relationship Committee are included in the Corporate Governance Report. MEETINGS OF THE BOARD The Board of Directors met at eight times on 26th Apr. 2014, 30th May 2014, 1st Aug. 2014, 13th Aug. 2014, 1st Sept. 2014, 13th Nov. 2014, 9th Dec. 2014 and 12th Feb. 2015 during the financial year 2014-15. Further details pertaining to composition of Nomination and Remuneration Committee are included in the Corporate Governance Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS No disclosure or reporting is required in respect of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 as there was no transaction under the above stated heads. RELATED PARTY TRANSACTIONS All Related Party Transactions that were entered into during the financial year were on arm's length and were in the ordinary course of business. All Related Party Transactions were placed before the Audit Committee of the Board of Directors for their approval. The Audit Committee has granted omnibus approval for Related Party Transactions as per the provisions and restrictions contained in the Listing Agreement. The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The policy is available on the Company's website www.magnumventures.in. The current and the future transactions are/ will be deemed to be 'material' in nature as defined in Clause 49(VII) of the Listing Agreement as they may exceed 10 per cent of the annual turnover of the Company based on future business projections. Thus, in terms of Clause 49(VII)(E) of the Listing Agreement, these transactions would require the approval of the members by way of a Special Resolution. RISK MANAGEMENT Your Company has established the Risk Management System to mitigate the risk faced by the Company in the ordinary course of business. In the opinion of the Board, there is no risk which may threaten the existence of the Company. INTERNAL FINANCIAL CONTROL The Company has in place internal financial controls with reference to financial statements. However, during the year, it has come to know that there is no adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets, and with regard to the sale of goods as the Company was unable to collect their sale proceeds and also not able to recover their claims against their rejection in purchase of inventory. In this regard, the Company is in process to strengthen its internal control system upto a level that commensurate with the size of Company and nature of its business to overcome with the aforesaid problem CORPORATE GOVERNANCE We believe that good and effective Corporate Governance is more of an organizational culture than a mere adherence to rules. Laws alone cannot bring changes and transformation and voluntary compliance both in form and in substance plays an important role in developing system of good Corporate Governance. Good Corporate Governance and Risk Management frameworks put in place over the years ensure a value-driven approach, sound business practices, fundamentally strong control environment, strong information systems, effective early warning mechanisms and real-time response system. The Company is in compliance of all mandatory requirement of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges. For the year ended March 31, 2015, the compliance status is provided in the Corporate Governance section of the Annual Report. A Certificate issued by CS Munish Kumar Sharma, Company Secretary in Practice on confirming compliance of the conditions of Corporate Governance stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges forms part of Report on Corporate Governance as Annexure -III. AUDITORS AND AUDITORS' REPORT Statutory Auditors At the Annual General Meeting held on 10th September, 2014, M/s Aggarwal & Rampal, Chartered Accountants (FRN: 003072N), were appointed as statutory auditors of the Company to hold office till the conclusion of the 38th Annual General Meeting to be held in year 2018. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s Aggarwal & Rampal, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. The notes on financial statements referred to in the Auditor's report are self-explanatory and do not call for any further comments. The Auditor's Report does not contain any qualification, reservation or adverse remark except the following: In Audit Report 1. Debtors including Rs. 2348.49 lacs which are due for more than 6 months out of which debtors of Rs. 110.13.lacs are under litigation. 2. No provision has been made by the Company for outstanding claims receivable from its suppliers for Rs. 1394.88 lacs. 3. No provision has been made against zero coupon debentures issued by the Company to its lenders. 4. Balances of debtors and creditors are subject to confirmation. 5. The Company has shown Term loans and interest accrued on them as per their CDR Package. However, the CDR package is yet to be implemented. In CARO 1. The Company has does not have adequate internal control system which does not commensurate with the size and nature of its business and it further needs to be strengthened. 2. The Accumulated losses at the end of the year are more than the Net worth of the Company. 3. A second Rework package was approved by CDR on 24th December, 2014. As per the CDR circular, the package should have been implemented within 120 days by all the banks without waiting for their individual approval. However, banks waited for the sanction of authorities and all documents were signed on 31st July, 2014. 4. The fixed assets are not revalued in the first five years subsequent to the date of revaluation. COST AUDITORS Companies (Cost Records and Audit) Amendment Rules, 2014 mandates Paper Industry to get the audit of its cost records after a prescribed turnover of the product for the financial year commencing on or after 1 st April, 2015. And the Company is required to get its cost record audited for the financial year 2015-16. M/s V.K. Dube & Co., Cost Accountants, is appointed as Cost Auditors of the Company to audit the cost records of the Company for financial year 2015-16. Name of the Cost Auditor?s Firm V.K. Dube & Co., Cost Accountants Membership Number of Cost Auditor 00343 Address: T II/206, Gulmohar Enclave, Nehru Nagar III, Ghaziabad, U.P. E-mail id vkdube.costaccountant@gmail.com INTERNAL AUDITOR M/s B L Chakravarti & Associates, Chartered Accountants, is appointed as Internal Auditors of the Company. Particulars of Internal Auditors' are mentioned below: Name of the Internal Auditor?s Firm M/s B L Chakravarti & Associates, Chartered Accountants Membership Number of Internal Auditor 401638 Address: AAF 02, Shipra Krishna Azure, Kaushambi, Ghaziabad, U.P.- 201010 E-mail id blchakravarti.associates@gmail.com SECRETARIAL AUDITOR The Board has appointed M/s Munish K Sharma & Associates, Company Secretaries to conduct the secretarial audit of the Company for financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith marked as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Board has appointed M/s Munish K Sharma & Associates Company Secretaries, as Secretarial Auditor of the Company for the financial year 2015-16. Particulars of Secretarial Auditor's are mentioned below: Name of the Secretarial Auditor?s Firm M/s Munish K Sharma & Associates, Company Secretaries Membership Number of Secretarial Auditor F-6031 Address: AAF 14, Shipra Krishna Azure, Kaushambi, Ghaziabad, U.P.- 201010 E-mail id munish_171@yahoo.com DIRECTORS' RESPONSIBILITY STATEMENT In terms of the provisions of section 134(5) of the Companies Act, 2013, and to the best of their knowledge and belief and according to the information and explanations obtained by them and save as mentioned elsewhere in this Report, the attached Annual Accounts and the Auditors' Report thereon, your Directors confirm that: a. in preparation of the annual accounts for the financial year ended 31st March,2015, the applicable accounting standards have been followed and there is no material departure from the same; 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 31st March, 2015 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 the 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; e. the directors had 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. that 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. SIGNIFICANT & MATERIAL ORDERS: There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. PREVENTION OF SEXUAL HARASSMENT POLICY The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2014-2015, no complaints were received by the Company related to sexual harassment. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure V. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report is part of this report and attached as Annexure VI. STOCK EXCHANGE LISTING The shares of the Company are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The listing fee for the financial year 2015-16 has already been paid to the Bombay Stock Exchange and National Stock Exchange. ENVIRONMENTAL PROTECTION, HEALTH AND SAFETY During the year, the Company enhanced its efforts to address Health, Safety and Environment matters. The Safety & Health of employees and external stakeholders are embedded in the core organizational values of the Company. The Health & Safety Policy aims to ensure safety of public employees, plant & equipment, ensure compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities, and promoting eco - friendly activities. The Company continues to maintain excellent track record on safety. The site had no accidents during the year 2014-15. PEL also has a Committee for the safeguard of its workmen. This Committee meets at regular intervals to take measures for worker's protection in order to make the Company a safe place to work. ACKNOWLEDGEMENT Your Directors take this opportunity to place on record their sincere appreciation for the co-operation and assistance the Company has received from Bankers and various Government Departments. The Board also places on record its appreciation of the devoted services of the employees, support and co-operation extended by the valued business associates and the continuous patronage of the customers of the Company. For and on Behalf of the Board MAGNUM VENTURES LIMITED Pradeep Kumar Jain Managing Director Abhey Kumar Jain Whole Time Director Place: Delhi Date: 13th August, 2015 |