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Your directors present their Seventieth Annual Report together with the audited statement of accounts of the Company for the financial year ended 31 st March 2016.
1. Financial Results
The performance of the Company for the financial year 2015-16 is as under:
(Rs in Lakhs)
|Gross Turnover & other Income||3647||2748|
|Profit / (Loss) before Int, Depreciation & Tax||(261)||(1005)|
|Add: Interest & Finance Charges||541||119|
|Profit/Loss after Tax||(317)||(1182)|
|Less: Effect of capital reduction as per BIFR scheme||.||693|
|Loss Brought forward||(48752)||(48263)|
|Loss Carried forward||(49069)||(48752)|
2. Scheme of Rehabilitation
The Honble Board for Industrial and Financial Reconstruction ("BIFR") vide its order dated 12.02.2014 has sanctioned the Rehabilitation Scheme of the Company [herein called as the Sanctioned Scheme (SS - 14)].
(a) The Scheme envisages the following broad strategy for revival of the Company:
i. Settlement with secured creditors at 100% of the principal amount.
ii. Technical Restructuring of Conductor division, Switchgear division, Relay Division, Machinery Division through in house research and development & by making substantial investment in up gradation of technology and strengthening the after sale services network.
iii. Conversion of preference share capital into equity share capital at par.
iv. Sacrifices by promoters and equity shareholders involving write down of their capital by 90% and infusion of fresh loans / Equity for working capital and /or shortfalls if any.
v. Mobilisation of Funds: The promoters propose to bring Rs 153 crores towards revival of the company. Present promoters have arranged M/s. Volta Impex Pvt Ltd as strategic investor ("SI") and the SI proposes to bring 30 % of the amount proposed to be brought in by the promoters.
vi. Restructuring of existing outstanding liabilities (except secured loans) keeping in view the expected future cash flows in order to achieve complete repayment of dues of the Company.
vii. Payment of all outstanding labour dues as per the agreement entered /to be entered into between the Company and labour unions. The dues will be paid within three months of the sanction of scheme by BIFR.
viii. Grant of reliefs and concessions from Central Government and Authorities / Departments and Bodies thereof, various State Governments and Authorities / Departments and Bodies thereof, Secured Creditors and other Stakeholders / Parties concerned.
Since your Company has incurred loss this year, the Directors do not recommend any dividend for the Financial Year 2015-16.
4. RESERVES: .
The Company has not transferred any amount to the reserves during the current financial year.
5. STATE OF COMPANYS AFFAIRS
Your company is manufacturing Circuit Breakers, Vaccum Interrupters, numerical controls and relay panel. The turnover of the Company has increased from Rs. 24.73 Crores in F.Y.14-15 to Rs. 29.78 Crores in F.Y. 15-16.
6. CHANGE INTHE NATURE OF BUSINESS:
During the year under review, there has been no change in the nature of business of the Company.
7. MATERIAL CHANGES AND COMMITMENTS:
There have been no material changes that have occurred subsequent to the close of the financial year of the Company to which the Financial Statements relates and the date of the report.
8. DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES:
The Company doesnt have any subsidiary or associate or joint venture company as on the date of this report.
9. PUBLIC DEPOSITS:
The Company has not invited or accepted deposits from the public covered under Section 73 of the Companies Act, 2013 ("the Act") and The Companies (Acceptance of Deposits) Rules, 2014.
At the Annual General Meeting held on 30th September, 2015 M/s. Balakrishnan & Co., (FRN No. 011890S), Chartered Accountants, were appointed as statutory auditors of the company to hold office till the conclusion of the 74th Annual General Meeting subject to ratification by members annually.
Accordingly, the appointment of M/s. Balakrishnan & Co. (FRN No. 011890S), Chartered Accountants, as statutory auditors of the Company is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
The qualifications in the attached Auditors Report read with the notes on accounts are self explanatory except those points which are being explained as below:
The Company has prepared accounts for the year 201516 based on the concept of Going Concern for all the divisions. Certain provisions were made on the estimated basis and for known expenses were accounted in full. Your Directors have also noted the observation of the auditors along with the notes on accounts and wish to comment / clarify on the important observations as follows:
1. The Company is steadily maintaining its books of accounts on the concept of "going concern basis" as the Flonble BIFR has approved the scheme (SS - 14) on 12.02.2014. The Company is on the revival path on account of approved scheme by BIFR. The Company is planning to modernize and enhance its operations on a substantial scale. As envisaged by the recent management, these measures shall show significant improvement in the performance of the Company in future years. Accordingly the Company continues to follow its decision taken in the previous years to maintain the accounts on the concept of going concern basis.
2. 9.5% Redeemable Cumulative Preference Shares were due for redemption in 2000. However due to financial crisis, the Company could not redeem the same. However, in terms of scheme sanctioned by Honble BIFR, the preference share would be converted in to Equity Shares.
3. The Company has requested for waiver of interest and penalties on the delays of payment of statutory dues and has further taken steps to deposit the balance amount with the statutory authorities.
4. Since the various concessions and reliefs as mentioned in Sanctioned Scheme are still in the process of approval and confirmation and as prudent approach company has not crystallized the effect of the scheme. Thus the required accounting adjustments in respect of Preference Share Redemption / Conversion, Securities Premium Account, Investment Allowance Reserves, Secured Loans, and other liabilities, etc. are not given effect to in these accounts
5. Records showing full particulars including quantitative details and situation of fixed assets are being updated and verified for all the units during the year. Physical verification of the assets is in progress so as to cover most of the fixed assets of the Company.
6. The Company is in the process of conversion of preference share capital in to equity share capital.
7. Remedial steps are being taken on other qualifications raised in the Auditors Report.
12. SECRETARIAL AUDIT: *
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 has appointed M/s Makarand Patwardhan & Co, Practicing Company Secretaries as Secretarial Auditors of the Company. The Secretarial Audit Report for the financial year ended 2016 is annexed herewith as "Annexure 1".
Your Directors have also noted the observation of the Secretarial auditors and wish to comment/verify on the important observation as follows:
1. The Company is taking remedial steps to avoid such delay in filing form with MCA.
13. SHARE CAPITAL:
In terms of the shareholders approval obtained at the Annual general meeting held on September 30,2015, (a) The Authorised Capital of the Company has been increased to Rs. 130,00,00,000 (Rupees One Hundred Thirty Crores only) consisting of 128.00. 00.000 (One Hundred Twenty Eight Crores) Equity Shares of Re.1/- (Rupee One only) each and 2.00. 000 (Two Lakhs) Preference share of Rs. 100/- (Rupees One Hundred only) each.
As envisaged in the Sanctioned Scheme, during the year 2015-16, your Company raised an aggregate amount of Rs. 38.98 Crores by issue of 38.98.00. 000 number of equity shares of Re. 1/- each to the promoters and strategic investors.
Subsequently, by way of Special Resolution passed by the Shareholders at the Extra-Ordinary General Meeting of the Company held on on 17th May, 2016,the Authorized Capital of the Company was raised from Rs. 130,00,00,000 Rupees One Hundred Thirty Crore only) consisting of 128.00. 00.000 (One Hundred Twenty Eight Crores) Equity Shares of Re.1/- (Rupee One only) each and 2.00. 000 (Two Lakhs) Preference share of Rs. 100/- (Rupees One Hundred only) each to Rs. 145.00. 00.000 (One hundred & forty Five Crores) divided into 143,00,00,000 (One Hundred Forty Three Crores) Equity Shares of Re. 1/- each and 2.00. 000 (Two Lakhs) Preference Shares of Rs. 100/- (Rupees One Hundred) each.
14. EXTRACT OF ANNUAL RETURN:
The Board hereby attaches as "Annexure 2" an extract of annual return in Form MGT-9 as envisaged under the provisions of the Companies Act, 2013.
15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS ANDOUTGO:
Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are given in the "Annexure 3" hereto and forms part of this report.
The following are the Board of Directors of the Company as on the date of this report:
|DIN||Directors||Date of Appointment|
|00218125||Mr. Jugal K.Choudhury||29/06/2011|
|02808196||Mr. Jayakumar K. Chettiyar||31/08/2009|
|07285837||Mrs. Shweta Parakh||03/03/2014|
a. Change in Directorship during the period:
There has been no changes in directorship during the period under review.
b. Statement on declaration given by Independent Directors under sub-section (6) of Section 149:
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.
d. Non-independent directors:
In accordance with the provisions of section 152 of the Companies Act, 2013, Mr. Jayakumar K. Chettiyar (DIN: 02808196),retire by rotation and being eligible has offered himself for re-appointment. Your Directors recommend his appointment as Directors of the Company.
e. Key Managerial Personnel:
Mr. Bimal Agarwal resigned as the CFO of the Company w.e.f. 01.01.2016 and Mr. Nitin Kothari has been appointed as the CFO of the Company w.e.f 1st March, 2016.
17. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the financial year ended 31st March, 2016. Eight Board Meetings were held, 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.
18. MEETINGS OF INDEPENDENT DIRECTORS
During the year under review, a meeting of Independent Directors was held on 1s March 2016 wherein the performance of the Non-Independent Directors and the Board as a whole was reviewed. The Independent Directors at their meeting also assessed the quality, quantity and timeliness of flow of information between the Companys management and the Board of Directors of the Company.
19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:
Loans and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the Audited Financial Statements provided in this Annual Report.
20. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The particulars of every contract or arrangements 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 are disclosed in Form No. AOC - 2 (enclosed as Annexure 4).
21. PARTICULARS OF EMPLOYEES:
None of the employees of the Company is in receipt of remuneration exceeding the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
22. DIRECTORSRESPONSIBILITY STATEMENT:
Pursuant to the requirement of Sections 134(3)(c) and 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, the Directors hereby confirm that:-
(i) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards, have been followed and there are no material departures from the same.
(ii) 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 at the end of the financial year and of the loss of the Company for that period save and except provided in the Notes to Accounts;
(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting recording accordance with the provisions of this Act for safeguarding the assets of the Company in the working units namely, Relays Division at Trivandrum, Switchgear Division at Mannar and Machinery Division at Hyderabad and efforts are being made to maintain proper records and in respect of other units and for preventing and detecting fraud and other irregularities; and
(iv) the Directors have prepared the annual accounts of the Company on a going concern basis on the basis of relief and concessions granted by the BIFR upon approval of SS-14.
(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.
23. CORPORATE GOVERNANCE:
A separate report on the practices followed by the Company on Corporate Governance is annexed and forms a part of this report.
24. MANAGEMENT DISCUSSION AND ANALYSIS:
Management Discussion and Analysis for the year under review is presented in a separate section forming part of this Annual Report.
25. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with its size, requirement and the nature of operations. The Companys system of internal control has been designed to provide a reasonable assurance with regard to maintenance of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting.
26. INTERNAL FINANCIAL CONTROL
The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations.The Company has policies and procedures in place to properly and efficiently conduct its business, safeguard its assets, detect fraud and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.
27. PERFORMANCE EVALUATION:
Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual directors.
The Nomination and Remuneration Committee at its meeting established the criteria based on which the board will evaluate the performance of the directors. A separate exercise was carried out to evaluate the performance of individual Directors, on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company etc. The performance evaluation of the Non Independent Directors and Board as a whole was also carried out by the Independent Directors. The Directors expressed their satisfaction over the evaluation process and results thereof.
28. AUDIT COMMITTEE
The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.
29. NOMINATION AND REMUNERATION COMMITTEE
The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.
30. STAKEHOLDERS RELATIONSHIP COMMITTEE
The composition and terms of reference of the Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.
31. REMUNERATION POLICY :
The Policy of the Company on Directorsappointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of Companies Act, 2013, is appended as "Annexure-5" to this Report.
32. WHISTLE BLOWER POLICY:
The Company has formed a Whistle Blower Policy/ Vigil Mechanism as required under Section 177 of the Companies Act, 2013 and. A Vigil (Whistle Blower) mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Codes of conduct or policy.
None of the officials/personnel of the Company has been denied access to the Audit Committee. The Vigilance Officer/Chairman of Audit Committee has not received any complaint during the financial year ended 31st March, 2016.
33. RISK MANAGEMENT
The Company has a defined Risk Management framework to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION, PROHIBITION AND REDRES^AL) ACT, 2013:
The company has in place an Anti Sexual Harassment Policy in line with the requirements of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.
All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during each calendar year:
No. of complaints received: Nil
No. of complaints disposed off: Nil
35. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED IMPACTINGTHE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
There has been no material or significant orders that have been passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.
Your Directors acknowledge the continued support received from the Board for Industrial and Financial Reconstruction, Lenders, Central and State Government Departments, particularly Government of Kerala, Andhra Pradesh, Telangana and Odisha, Customers, Suppliers and Shareholders during the year under review. Their continued support is vital and critical for the successful implementation of the revival scheme duly approved by Honble Bl FR vide its order dated 12.02.2014.
Your Directors also wish to place on record their deep appreciation to the employees for their commitment and continued contribution to the Company.
For and on behalf of the Board of Directors
|Prashant Somani||K. Venkateswara Rao|
|DIN :00075690||DIN :00667410|
|Dated: 31s August, 2016|