morgan industries ltd Directors report

To

The Members,

Your Directors have pleasure in presenting their 26^th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015.

1. Performance of the Company

(Rs.. in Lakhs)

Particulars	2014-2015	2013-14
Gross Turnover	5227.68	4184.85
Cash Accruals/(Loss)	(25.69)	96.39
Profit/(Loss) before tax	(148.68)	11.59
Profit After Tax	(123.97)	12.74
P & L A/c. balance c/f	(461.96)	(337.99)

2. State of Companys affair

The company is striving its best to increase its production levels in the factory and the contract of M/s. Huntsman, USA is a good beginning. The company is also obtaining job contracts to fill its available production capacity. Also, trading activity is in the line of focus of the company which would enable the company to minimize the loss and expect growth trends in the future towards profitability.

3. Change in the nature of business, if any

There is no change in the nature of business of the company. The company continues to engage itself in the production of tapes and participating in trading activities

4. Dividend

Due to inadequate profits, the company has not proposed any dividend for the year.

5. Reserves

No amount is carried to Reserves.

6. Share Capital

There is no change in the Share capital of the company during the year.

7. Directors and Key Managerial Personnel

Shri. V. Balasubramanian & Shri. P.S. Bhaskaran, Directors retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. Board of Directors recommend their re-appointment in the forthcoming General Meeting.

Smt. Sreelekha Mahadevan was appointed w.e.f. 30.03.2015 as an Additional Director (Woman)by the Board in its meeting on 30.03.2015 in the place of Shri. Ashok Mehta, who resigned w.e.f.30.10.2014. The company has received necessary deposits proposing her name as an Independent Director for a period of five years in the forthcoming general meeting. Board of Directors recommends her appointment in the forthcoming general meeting.

Shri. T. Baskaran was appointed by the Board in its meeting on 04.10.2014 as Chief Financial Officer of the company w.e.f.04.10.2014.

Shri. K.Premnatha who was appointed as Company Secretary of the Company w.e.f. 11.09.2014, had resigned and his resignation was accepted by the Board of Directors w.e.f. 09.06.2015.

8. Particulars of Employees Not applicable

9. Meetings

During the year 9 Board Meetings and 6 Audit Committee Meetings were convened and held,the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

10. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

11. Declaration by an Independent Director(s)

A declaration by an Independent Director(s) that he/they meet the criteria of independence as provided in Section 149 of the Companies Act, 2013 shall be enclosed as Annexure IV.

12. Remuneration Policy

The Companys objective as regards Remuneration Policy is to attract and retain individuals and motivate them for working at higher and skilled levels.

The Nomination and Remuneration Committee formulates the Remuneration Policy for Directors, Key Managerial Personnel, and Senior Executives from time to time.

Non-Executive Director is not paid any remuneration including Sitting Fee. Only Independent Directors are paid Sitting Fee as prescribed by the Board from time to time.

Remuneration of Executive Director, Key Managerial Personnel (KMP) and Senior Executives are fixed by the Committee as per the needs of the time. The strategy is so designed to balance short term and long term strategy of the company. Experts, Specialists, Qualified Key Managerial Personnel and Senior Executives are attracted and retained.

Also, the relevant strategy, provisions, market trends and interest of Stake Holders are reckoned while fixing * the remuneration.

Remuneration for Employees, Workers and Workmen

Remuneration for these categories is based on the performance levels, skilled levels, the performance of the company as well as price levels prevailing. The annual review is a regular feature and employees are awarded accordingly.

Post-Retirement benefits of the Managing Director and Employees are Provident Fund, Gratuity and other payables according to then existing conditions.

The Contracts of employment with the Executive Director and regular employees provide for compensation of up to 3 months pay or advance notice of similar period. There is no regular system of granting of loans to Directors, KMP and employees of the Company.

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

(i) The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the Financial Year 2014-15, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2014-15 and the comparison of remuneration of each Key Management Personnel (KMP) against the performance of the Company are as under:-

S.No. Name of Director/KMP and Designation	Remuneration of Director/KMP for Financial Year 2014-15 (ff.in lakhs)	% increase in remuneration in the Financial Year 2014-15	Ratio of remuneration of each Director/to median remuneration of employees
1 Ashok Balasubramanian* Managing Director	11,41,980.00	Nil	5.24
2 P.S. Bhaskaran Executive Director	6,18,350.00	51.25	2.84
3 T. Baskaran* Officiating Chief Financial Officer	8,16,000.00	Nil	3.75

* - The above remuneration represents cost to the Company.

i) The median remuneration of employees of the Company during the financial year: Rs..2.18 lakhs.

ii) Percentage increase in the median remuneration of employees in the financial year: 11.305%.

iii) Number of permanent employees on the rolls of Company in the financial year: 57.

iv) Variations in the market capitalization of the Company price earning ratio as at the closing date of the current financial year and previous financial year: Nil.

The Companys shares are not quoted on any stock exchange.

v) The key parameters for any variable component of remuneration availed by the directors: .

The Non-Executive Directors are paid only sitting fees for attending the meetings of the Board and Committee thereof. The remuneration of Executive Directors are not consisting of variable component except commission based on the provisions of the Companies Act, 2013.

(vi) Ratio of the remuneration of the highest paid director to that of the employee who is not a director, but receive remuneration in excess of the highest paid director during the year: 0.57:1

(vii) Affirmation that the remuneration is as per the Remuneration Policy of the Company: The Company affirms that remuneration is as per the Remuneration Policy of the Company.

(viii) Employed throughout the year ended March 31, 2015 with remuneration aggregating to not less than Rs..60,00,000 per annum: None.

(ix) Employed for part of the year ended March 31, 2015 with remuneration aggregating to not less than Rs..5,00,000 per month: None.

13. Details of Subsidiary/Joint Ventures/Associate Companies

The Company is an Associate company of Morgan Asia Limited.

14. Auditors

M/s. R. Subramanian & Co., Chartered Accountants, Chennai were appointed as the statutory Auditors of the company in the 25^th AGM held on 30.10.2014 upto the conclusion of 28^th AGM to be held in the year 2017, subject to ratification of their appointment at every AGM.

Accordingly, the Board of Directors place before the shareholders as an Ordinary Resolution the ratification of appointment (yearly) of M/s. R. Subramanian & Co., Chartered Accountants, Chennai, who being eligible, offer themselves for reappointment.

15. Auditors Report

Auditors qualification and replies thereof:

Auditors Qualification	Replies by the Company
1. Regarding non-receipt of confirmation of the closing balances/not reconciling balances as on 31.3.2015 in respect of debit and credit balances including ‘Net balances consequent to adjustments of various debit and credit balances in different accounts relating to trade payables, trade receivables, loans and advances, unsecured loans, creditors, other liabilities and group company accounts. The adjustment, if any, which may be required consequent to receipt of confirmation/completion of reconciliation is unascertainable at this stage and not provided for as the quantum is not ascertainable at this stage.	Despite determined efforts to analyze debtors/creditors and other reconciliation aspects, the company is facing severe constraints in identifying relevant records especially after the aftermath of cyclone which has seriously bashed the factory (Regd. Office). The first priority, however, is to locate the relevant records and ascertain if they are unaffected/ washed away or destroyed thereof.
2. a) Regarding non capitalization/non adjustment of amount of Rs.. 17.91 crores kept under capital work-inprogress (CWIP) suitably for more than 3 years and consequently non-provision of depreciation on the assets which would have otherwise suffered depreciation in the normal course had the same capitalized or the impact thereof had the same been written-off either fully or partly.	As regards relocating the machineries in Puducherry, it may be mentioned that the company is in the advanced stage of negotiation for which shareholders permission for the sale of vacant land is currently sought. The decision regarding allocation of expenditure, depreciation etc., would be finalized after the relocation of machinery and sale of land which will reflect the correct status as well as profit and loss thereof.
b) No impairment test has been done in respect of this capital work-in-progress and in respect of other fixed assets. The impact on account of depreciation/ impairment loss is unascertainable and has not been provided for as per Accounting Standard 28.	The Management is confident to realise the value in full and accordingly no provision towards impairment is required to be considered at this stage.
3. Regarding Non Compliance of Accounting Standard - 2 with regard to valuation of inventories and non- reconciliation of physical inventories with financial records. The closing stock have not been valued at cost or Net Realisable value, whichever is lower.	The valuation of stock has been noted for corrective action.
	Reconciliation of physical and financial figures is in progress.
As per Accounting Standard 2 (Inventory Valuation) no provision has been considered in the accounts towards obsolescence on account of non/slow moving items of stock.	A technical team has been formed to identify the slow moving and obsolete items.

16. Disclosure about Cost Audit

Cost Audit is not applicable to the company.

17. Secretarial Audit Report

In terms of Section 204 of the Act and Rules made there under, M/s. S. Dhanapal &Associates, Practising Company Secretaries, Chennai, have been appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure V to this report.

The report is self-explanatory and no comments are felt necessary.

18. Internal Audit & Controls

The Company has appointed M/s. K.S.& Co., Chartered Accountants, Chennai, as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the systems control. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas. Internal Auditors findings were discussed with the process owners and suitable corrective action taken to improve efficiency.

19. Issue of employee stock options

The Company has not issued any employee stock options.

20. Vigil Mechanism

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.morganchennai.com .

21. Risk management policy

During the year, company has constituted a Risk Management Committee comprising of Shri.A.Sangaiah, Shri.C.V.Kumar, Shri.B.Jagadeesh and Shri.P.S.Bhaskaran. Shri. P.S. Bhaskaran heads the committee.

22. Extract Of Annual Return

As required pursuant to Section 92(3) of the Companies Act,2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report is enclosed as ANNEXURE I.

23. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

There are no material changes.

24. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

There are no such events.

25. Details in respect of adequacy of internal financial controls with reference to the Financial Statements

Adequate financial controls are in place. However, improvement in the system as that are necessary are being addressed.

26. Deposits

The Company has not accepted/invited any deposit from the public during the year.

27. Particulars of loans, guarantees or investments under Section 186 Details of Loans:

Date of making loan	Details of Borrower	Amount	Purpose for which the loan is to be utilized by the recipient	Time period for which it is given	Date of BR	Date of SR (if reqd)	Rate of Interest	Security
1 31.03.15	Megasearch Consultancy Private Limited	1,02,004
2 31.03.15	Morgan Waste Management Technologies Limited	2,677

Details of lnvestments:-NIL

Date of investment	Details of Investee	Amount	Purpose for which the proceeds from investment is proposed to be utilized by the recipient	Date of BR	Date of SR (if reqd)	Expected rate of return

Details of Guarantee/Security Provided.NIL

Date of providing security/ guarantee	Details of recipient	Amount	Purpose for which the security/guarantee is proposed to be utilized by the recipient	Date of BR	Date of SR (if any)	Commission

28. Particulars of contracts or arrangements with related parties

The particulars of every contract or arrangement entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto shall be disclosed in Form No. AOC-2 as Annexure II.

29. Corporate Governance

Your company as far as feasible complied with the requirements of Corporate Governance as required under SEBI. A report on Corporate Governance in this regard is made as part of this Annual Report and a certificate from the practising company secretaries regarding compliance of conditions of corporate governance is attached to this report as Annexure VI.

30. Management Discussion And Analysis Report

The Management Discussion and Analysis Report forms part of this Annual Report for the year ended 31st March, 2015 as Annexure VII.

31. The Sexual Harassment Of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013

The company has adopted a policy for prevention of Sexual Harassment of Women at the workplace and has set up Committee for implementation of said policy.

Your directors further state that, there were no cases filed pursuant to Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

32. Conservation of energy, technology absorption and foreign exchange earnings and outgo - NIL

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

a) Conservation of energy

(i) the steps taken or impact on conservation of energy
(ii) the steps taken by the company for utilizing alternate sources of energy
(iii) the capital investment on energy conservation equipments

(b) Technology absorption

(i) the efforts made towards technology absorption
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-
(a) the details of technology imported
(b) the year of import;
(c) whether the technology been fully absorbed
(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof
(iv) the expenditure incurred on Research and Development

(c) Foreign exchange earnings and Outgo

During the year,the total foreign exchange used was Rs..23,36 lakhs towards purchase of raw materials and the total foreign exchange earned was NIL.

33. Corporate Social Responsibility (CSR)

As the company does not fall under the provisions of the Companies Act, 2013 with respect to CSR, the company has not opted for CSR policy.

34. Human Resources

The industrial relations have continued to be cordial.

35. Directors Responsibility Statement

The Directors Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(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 the financial year and of the 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 this 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; and

(e) 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.

(f) 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.

36. Transfer of Amounts to Investor Education and Protection Fund

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore, there wqre no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

37. Listing With Stock Exchanges

Annual Listing Fees for the year 2015-2016 to BSE, where the Companys Shares are listed are yet to be paid.

Acknowledgements

An acknowledgement to all with whose help, cooperation and hard work the Company is able to achieve the results.

	For and on behalf of the Board of Directors
	Morgan Industries Limited
	Sd/-	Sd /-
	Ashok Balasubramanian	P.S. Bhaskaran
	Managing Director	Executive Director
	DIN: 00010789	DIN: 05143879
Place: Chennai
Date: 14/12/2015