DIRECTORS' REPORT TO THE MEMBERS OF TARINI INTERNATIONAL LIMITED Dear Shareholders, Your Directors are pleased to present their Annual Report on the working of the Company for the period from 1st April, 2014 to 31st March, 2015 with audited statements of accounts :- RESERVES & SURPLUS The Company's reserve & surplus in the year 2015 has increased to Rs. 15,68,18,125 as compared to the previous year which was Rs. 4,31,46,133 PERFORMANCE REVIEW During the Year and review, your Company has rendered technical Consultancy related to hydro power and T&D projects. The Company also retains the operation and maintenance contract for Damanganga hydro power project in Gujarat. The Gross revenues of your Company was Rs. 278.10 lakhs and the Profit after taxes recorded was Rs.21.94 Lakhs. The earnings per equity share (of face value Re. 10) for the year is Rs. 0.18. In September 2014, your Company was awarded a civil work contract by the M/s ABB India for erection of 66 kV GIS cum Control Room building, Switchyard and associated works at Dahej, Gujarat. The project is successfully completed and handed over to the client - M/s ABB India. During the tenure of the project, your Company bagged the "Best Safety Award" trophy by the principal client M/s Lubrizol. Your Company is now a preferred sub-contractor for M/s ABB and look forward to participating in their future projects. FUTURE PROSPECTS Your company is professionally competent to undertake such projects and has developed as an integrated player providing turnkey services under one umbrella of designing, construction, generation, transmission & distribution. Your Company is also keen to enter into a share acquisition agreement with M/s Hydro Power & Welding Experts (HPWE) GmbH, Austria for the purpose to design, manufacture and supply hydro mechanical / electrical equipment on turnkey basis. HPWE has an impressive clientele in Europe and as partners with your Company, aims to venture into Africa, Eastern Europe and Mediterranean market which has huge potential in the power sector in the years to come. Once the agreement is signed, your Company will have 51% share holding and HPWE will be direct subsidiary to your Company in all respect in their future ventures. Your Company is at the final stage of compilation of Detailed Project Reports (DPR) of 2 Nos. major hydro projects with aggregate capacity of about 100 MW in the Kingdom of Lesotho, Africa. The Construction contract is expected during the next two years. Over the years, your Company has emerged as a well established organization in power and T&D sector having worked extensively in India and Africa as turnkey contractors and partnering with HPWE will further strengthen your Company into manifolds in the related sector. In view if the foregoing, your Directors are confident of achieving better working results in the coming years. DIVIDEND With a view to provide a cushion for any financial contingencies in the near future and to strengthen the financial position of the Company, your Directors have decided not to recommend any dividend for the period under review. SUBSIDIARY COMPANIES The Company has (02) two subsidiaries Tarini Sugars and Distillaries Limited and Venture Infrastructure Limited There are (02) two associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (Act) ie: Tarini Infrastructure Limited, and Tarini Lifesciences Limited. There has been no material change in the nature of the business of the subsidiaries and there is no company which have become or ceased to become subsidiary, joint-venture or Associate Company during the year. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard- 21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries. Further, a separate statement containing the salient features of the financial statements of subsidiaries of the Company in the prescribed form AOC-1 has been disclosed in the Consolidated Financial Statements. In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the Subsidiary Companies on its website. The Company will make available physical copies of these documents upon request by any shareholder of the Company/ subsidiary interested in obtaining the same. These documents shall also be available for inspection at the registered office of the Company during business hours up to the date of ensuing AGM. PUBLIC DEPOSIT The Company has not accepted any Public Deposit pursuant to provisions of section 73 of the Companies Act, 2013, during the period under review. AUDITORS M/s VCG & Co Chartered Accountants will retire at the forthcoming Annual General Meeting and are eligible for reappointment. In accordance with the Companies Act 2013, it is proposed to reappoint them from the conclusion of this Annual General Meeting till the conclusion of the 17th Annual General Meeting, subject to the approval of shareholders. The Auditors have given certain observations in their Audit report as under: (a) The holding company and its subsidiaries has made certain advances amounting to Rs. 575 Lakhs for which documents related to such advances given by the group companies were not available as the documents were impounded by the income tax authorities as mentioned in note no 29 of the financial statements. Further, confirmation from the parties as at end of the year was not found on records. In view of non-availability of related documents and other alternate audit evidence to corroborate the management's assessment of recoverability of these advances, we are unable to comment on the extent to which these balances are recoverable. For the above observation, your Directors would like to state that the said parties could not give balance confirmation certificates in view of the fact that the Income Tax Authorities are conducting consequent inquiries with the respective Companies. However, your Directors are following up with the respective Companies for the Balance Confirmation Certificates and are hopeful to get the same as soon as possible. (b) We draw attention to note 27 to Financial Statement regarding the investment made by amounting Rs.68 Lakhs in a subsidiary, who has suffered recurring losses and has a net capital deficiency. The financial statements of that subsidiary have been prepared assuming that the Company will continue as a going concern. These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements of holding company do not include any adjustments relating to the recoverability and classification of asset carrying amounts that might result that the subsidiary be unable to continue as a going concern. Though there is an accumulated loss in the subsidiary company, the said company viz. Venture Infrastructure Limited, has not bagged new projects or work orders due to recession scenario around. However, lot of bids are still open for participation and the said company will bag some orders in the near future and hence your directors are of the opinion that no adjustment is required at this stage and the same will be done at the appropriate time. (c) We draw attention to the note 30 of the financial statements whereby the holding company has raised the money by way of Public Issue, during the year. Further, there has been variation in the utilisation of money, between the objects of public issue contained in the prospectus and actual utilisation, which was need to be authorised from the members. In view of this, we are unable to comment upon the appropriateness of variation in utilisation of money by holding company. At the outset, your directors would clarify that the variation is between the Heads of expenditure envisaged. This variation has been necessitated due to the fact that the infrastructure projects, which are handled by your Company, require huge capital lay out and are capital intensive in nature which leads to long gestation period obviously causing slight mismatch with projections as originally envisaged and hence your directors would like to justify this variation. (d) In respect of provision for impairment of goodwill, aggregating to Rs.66,65,123 arising on consolidation of a subsidiary, whose net worth is substantially eroded as at March 31,2015, not considered necessary by the management. In absence of valuation of investments in the subsidiary, we are unable to comment whether any impairment of goodwill is required. The position with regard to the subsidiary in question has been explained to the reply for the observation at Point No. (b) above. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Mr. Manoj Sharma, Partner, RSMV & Co. Practising Company Secretaries, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is appended as Annexure I to this Report. The Report contains the following observations:- 1. We draw attention to the note 26 of the financial statements regarding the survey operations conducted u/s 133A of income tax Act, 1961 by the Income tax Authorities in the company's premises during the previous year of which outcome is awaited. However, the management is confident about no adverse impact due to such outcome. 2. We draw attention to the note 27 of the financial statements whereby the company has raised the funds by way of Public Issue, during the year, and the variation is observed in utilization of funds as against the terms of Public issue contained in Prospectus without complying with the provisions of Section 27 of the Act. 3. The company has given the collateral guarantee for the loan taken by its associate company & loans/advances granted amounting to Rs. 1328.16 Lakhs to group companies / associated companies in which directors are interested; To this extent, there is a non-compliance of provisions of sections 185,186 and 188 of the Companies Act, 2013. 4. There was a show-cause notice from SEBI issued on 19th November 2014, asking certain information / clarification / documents. The same had been replied suitably and the requisite documents sent. The same is under consideration by SEBI. 5. The Nomination and Remuneration Committee consists of one Executive Director (Promoter) in the place of Non Executive Director. To this extent, there is non-compliance of provision of section 178 (1) of the Companies Act 2013 and the relevant rules and Clause 52 of Listing Agreement with the Stock Exchange Your Directors would like to state as under in reply to the said observations 1. The observation is a factual statement and your Director is of the opinion that this observation does not need any reply. 2. At the outset, your directors would clarify that the variation is between the Heads of expenditure envisaged. This variation has been necessitated due to the fact that the infrastructure projects, which are handled by your company require huge capital outlay, and hence your directors would like to justify this variation. 3. It should be noted that these loans were given for execution of various work items by these companies for the projects proposed to be undertaken by the Companies under the same management. It should also be noted that these companies have no source of funding such as bank loans etc., due to infra start ups in nature. 4. The observation is a factual statement and your Director is of the opinion that this observation does not need any reply. 5. Your Directors are looking for a suitable persons for appointment which will be done as earliest as possible. CORPORATE GOVERNANCE Your Company has always laid a strong emphasis on transparency, accountability and integrity and believes that good governance is the basis for sustainable growth of the business and for enhancement of shareholder value. We keep our governance practices Under Continuous review and benchmark Ourselves to the best governed Companies across the globe. The report on corporate governance forms an integral part of this report and is set out as separate section to this annual report. The certificate of M/s. V. Ramasamy & Co., Company Secretaries, certifying compliance with the conditions of corporate governance as stipulated in clause 52 of the listing agreement is annexed with the report on corporate governance. MANAGEMENT DISCUSSION & ANALYSIS REPORT As required pursuant to Clause 52 of the Listing Agreement with the Stock Exchanges, a detailed Management Discussion and Analysis Report is attached herewith and forms a part of the Annual Report. CORPORATE SOCIAL RESPONSIBILTY (CSR) The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable. EXTRACT OF THE ANNUAL RETURN In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure II to the Board's Report. NUMBER OF MEETINGS OF THE BOARD The Board met (18) Eighteen times during the financial year viz; on 03.04.2014, 08.04.2014, 09.04.2014, 11.04.2014, 22.04.2014, 26.04.2014, 08.05.2014, 20.05.2014, 23.05.2014, 25.06.2014, 04.08.2014, 08.08.2014, 29.08.2014, 24.10.2014, 28.10.2014, 15.11.2014, 19.11.2014 and 24.01.2015. .The necessary quorum was present in all the meetings. The intervening gap between any two meetings was not more than one hundred and twenty days as prescribed by the Companies Act, 2013. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, has been disclosed in the corporate governance report, which forms part of the Board's Report. BOARD EVALUATION In pursuance to the provisions of the Companies Act, 2013 and clause 52 of the Listing Agreement, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of committees. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, board meetings and effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the compliance with the terms of reference of the committees, composition of committees, functions and duties, committee meetings & procedures, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings, attendance, independent Judgment etc. In addition, the Chairman was also evaluated on the basis of criteria such as leadership, managing relationship, conducting board meetings etc. In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the Board, its committees and individual directors was discussed. COMMITTEES OF THE BOARD The Board has three committee's viz., the audit committee, nomination and remuneration committee and Shareholders' / Investors' Grievance Committee The details pertaining to composition of above committees are included in the Corporate Governance Report, which forms part of this report. DIRECTORS AND KEY MANAGERIAL PERSONNEL Pursuant to the provisions of Section 203 of the Act, effective from April 1, 2014, the appointments of Mr. Vakamulla Chandrashekhar, Chairman & Managing Director, Mrs. V. Anu Naidu, Mr. Abhilash Chand Jain, Chief Financial Officer and Mr. Amit Arora, Company Secretary as key managerial personnel of the Company were formalized. As per the provisions of the Companies Act 2013, Mrs. V. Anu Naidu (DIN: 00073661), retires at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends her re appointment. The brief profile of the Directors who are to be re-appointed / appointed, are furnished in the notice of annual general meeting. The Board recommends re-appointments of above said directors. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declaration from each independent director that he/she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Clause 52 of the Listing Agreement. DIRECTORS' RESPONSIBILITY STATEMENT The Audited Accounts for the financial year ended March 31, 2015 are in conformity with the requirements of the Companies Act, 2013. Pursuant to Section 134(5) of the Companies Act, 2013, your directors hereby confirm that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed. ii) 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 account of the company for that period. iii) 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. iv) The Directors had prepared the annual accounts on a going concern basis. v) 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. vi) 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. PARTICULARS OF LOANS AND GUARANTEES Pursuant to the requirement under Section 134(3) (g) of the Companies Act, 2013 the particulars of loans, guarantees or investments under Section 186 of the Act as at end of the Financial Year 2014-15 are attached as Annexure - III which forms part of this report. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. The Company has not entered in any material related party transaction during the year. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure 4 in Form AOC-2 and the same forms part of this report as per Annexure IV. Please refer Note No. 33 to the financial statement which sets out related party disclosures as prescribed under Accounting Standard 18. RISK MANAGEMENT The Audit Committee in supervision of Board of Directors is responsible for identifying, evaluating and managing all significant risks faced by the Company. The detailed statement indicating the development and implementation of risk management policy including identification therein of elements of risk has been covered in the management discussion and analysis, which forms part of this report. INTERNAL FINANCIAL CONTROL The Company has in place adequate internal financial controls with reference to financial statement, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. The detailed information about internal controls is set out in the Management Discussion & Analysis report which is attached and forms part of this Report. VIGIL MECHANISM The Company has implemented a Whistle Blower Policy and has established a vigil mechanism for employees and directors to report their genuine concerns. The Policy provides for a mechanism to report genuine concerns to Whistle Counselor or the Whistle Blower Committee and in exceptional cases, Chairman of the Audit Committee of the Company. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The Whistle Blower Policy complies with the requirements of Vigil mechanism as stipulated under Section 177 of the Companies Act, 2013. The details of establishment of the Whistle Blower Policy/ Vigil mechanism have been disclosed on the website of the Company. SIGNIFICANT AND 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. PARTICULARS OF EMPLOYEES The information required under section 197 (12) of the Act Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company is appended as Annexure V to the Board's report. As far as the disclosure with regard to Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the information may be treated as NIL. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 regarding Conservation of Energy and Technology Absorption does not apply to your Company. FOREIGN EXCHANGE EARNINGS & OUTGO During the year under review the foreign exchange earnings and the expenditure was nil. BUY BACK OF SECURITIES The Company has not made any offer for buy back of its securities during the year under review. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, ROHIBITION AND REDRESSAL) ACT, 2013 Your Company has in place a formal policy for prevention of sexual harassment of its women employees in line with "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation for the whole hearted and sincere co-operation the Company has received from its banker, State Bank of India and various Government agencies. Your Directors also wish to thank all the employees for their co-operation. By Order of the Board of Directors For Tarini International Limited Vakamulla Chandrashekhar Managing Director DIN 00073657 V. Anu Naidu Whole Time Director DIN 00073661 Date: 31.08.2015 |