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Your Directors are presenting the 39th Annual Report together with the Audited Statement of Accounts of your Company for the year ended 31st March 2018
1. FINANCIAL RESULTS:
The Financial highlights for the year under review are given below:
|(Rs. in lakhs)|
|Particulars||FY 2017-18||FY 2016-17|
|Sales and Other Income||0.30||10.68|
|Profit Before Tax||-3,396.83||2,278.43|
|Provision for Tax*||0||0|
|Profit After Tax||-3,396.83||2,278.43|
2. OPERATIONS :
There were no plant operations and hence no production and sales were recorded. There were only expenditure incurred during this period for the up keeping of the plant & company as a whole.
3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
As per the requirements Section 134(3) (I) of the Companies Act, 2013, we declare that, there are below significant material changes and commitments affecting financial position of the Company between 31st March, 2018 and the date of Boards Report.
There are ongoing legal cases between JMFARC and Bheema Cements Limited at DRT and NCLT.
On 9th July 2018, Honble NCLT Hyderabad passed orders admitting the company into CIRP process wherein Interim Resolution Professional was appointed and CIRP process shall take 180 days time.
4. CHANGE IN THE NATURE OF BUSINESS:
As per the requirements Rule 8(5)(ii) of the Companies (Accounts) Rules, 2014, we want to declare that, there is no significant change in the nature of business of the Company during the last financial year.
5. SHARE CAPITAL AND CLASSIFICATION OF COMPANY:
The authorized capital of the Company as on 31st March, 2018 was Rs. 78,00,00,000/- divided into 4,20,00,000 equity shares of Rs.10/- each and 36,00,000 preferential shares of Rs. 100 each. The Subscribed, Issued and Paid-up capital of the Company as on 31st March, 2018 was Rs.55,70,35,600/- divided into 5,57,03,560 equity shares of Rs. 10/- each.
Our directors express their inability to recommend any dividend for the financial year 2017-2018 due to no operation in the business.
7. FIXED DEPOSITS:
Your Company has not accepted/invited any deposits from the public for the year under review as per Section 73 of the Companies Act, 2013 and the rules made there under.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
A. RETIREMENT BY ROTATION:
Pursuant to provisions of the Companies Act, 2013, Sri S Kishore Chandra (DIN: 00974625 ) Director will retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment.
Sri Josyula Ramu as Whole Times Director of the Company*
Sri S Chandra Mohan as Executive Chairman of the Company
* appointed by the Board of Director in its Meeting held on 17th August 2017
Sri Josyula Ramu has resigned as Whole Time Director of the Company w.e.f. 28th May 2018 citing personal reasons.
D. FAMILIARIZATION PROGRAM:
No new Independent Director inducted into the Board
E. EVALUATION OF THE BOARDS PERFORMANCE:
As per provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (LODR) Regulations, 2015, The Company has devised a policy for performance evaluation of Independent Directors, Board, Committees and other individual directors which includes criteria for performance evaluation of executive and non-executive director. The Directors were overall satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.
F. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Managements Discussion and Analysis Report for the year under review, in terms of the provisions of Regulation 34 of the SEBI (LODR) Regulations, 2015, presented in a separate section forming part of the Annual Report. Annexure I
G. REMUNERATION POLICY:
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is attached to this report as Annexure II.
H. DECLARATION BY INDEPENDENT DIRECTORS:
In accordance with Section 149(7) of the Companies Act, 2013, each Independent Director has confirmed to the Company that he or she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b)of the SEBI (LODR) Regulations, 2015..
I. DIRECTORS RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
(a) THAT in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) THAT 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 of the company for that period;
(c) THAT 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) THAT the directors had prepared the annual accounts on a going concern basis;
(e) THAT 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; 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.
J. VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Board of Directors of the Company have adopted Whistle Blower Policy. This policy is formulated to provide an opportunity to employees to raise concerns and to access the Audit Committee in good faith, in case they observe unethical and improper practices or any other wrongful conduct in the Company, to provide necessary safeguards for protection of employees from reprisals or victimization and to prohibit managerial personnel from taking any adverse personnel action against those employees.
There were no complaints received during the year 2017-18.
9. AUDITORS & AUDITORS REPORT:
A. STATUTORY AUDITORS:
The Statutory Auditors Report contain the below qualifications:
The Statutory Audit report for the financial year 2017-18 is annexed herewith as Annexure III to this Report. Management reply to the Qualifications of the Auditor are mentioned below. a) Note Nos. 25 (2) which explains the circumstances that lead to accumulated losses and the reasons based on which the accounts have been prepared on Going Concern Basis.
The lenders have initiated CIR Proceeding against the company on account of default in payment of their dues under the Insolvency and Bankruptcy Code, 2016 ("Code"), which was admitted by the The Honble National Company Law Tribunal, Hyderabad ("NCLT"). The corporate insolvency resolution process shall be completed within an initial period of One hundred and eighty days, subject to permitted grace period if any required thereafter, falling which, the company will be liquidated. There is a material uncertainty as the ability of the company to continue as going concern, which would depend upon future outcome of the CIR Proceeding.
Notwithstanding the fact that the company has not been operating since 2014, has been incurring losses and has not been able to service its debts including interests during the current year as well as during the previous years, companys negative net worth, the financial statements of the Company have been prepared on Going Concern
Basis. In our opinion, this will have an effect on the Going Concern Status of the Company.
The management is of the opinion that the CIRP process would bring a positive outcome as there shall be a resolution plan to revive the unit in this fiscal year, hence the financials still be considered as Going Concern basis.
b) Note No.25 (2) (b) which explains the role of Resolution Professional in admitting the claims as per the insolvency code, the consequential impact of which on their carrying amounts is yet to be ascertained/determined and hence, has not been considered in the preparation of the Financial Statements.
Management Reply: After the claims submitted are scrutinized and confirmed then the actual impact would be known.
c) Note No.25 (2) (c) which explains the role of Resolution Professional in determining the realizable value of the Company Assets, the consequential impact of which on their carrying costs is yet to be ascertained/determined and hence, has not been considered in the preparation of the Financial Statements.
Management Reply: After the valuation report is prepared by the external agency the realizable value of the Company Assets, the consequential impact could be determined.
d) Note No. 25 3 (a) which explains the circumstances leading to non-provision of the interest on cumulative borrowings (from banks including those assigned to ARC) comprising of term loans and working capital dues. We are of the opinion that the interest on the cumulative bank borrowings should have been provided on accrual basis of accounting till the time a formal communication is received from the lender banks / ARC (the assignor), fixing the final liability agreed for settlement. Based on the information provided to us, the amount of such interest not provided in the accounts works out to Rs.5779.16 Lakhs for the current year (previous year Rs.5,187.53 Lakhs).
We are also of the opinion that the Company should have provided for the interest on the loans assigned to the ARC from the cut-off date till 31st March 2018, as per the terms and conditions provided in the sanction letter issued by ARC. The impact of non-provision of interest on the loans assigned to the ARC (based on the sanction letter issued by ARC) is that the loss for the year is understated by the above referred amount and the Liabilities are lower to that extent.
Based on information provided and explanations offered to us, such liabilities should have been accounted at Rs.46,145.69 lakhs instead of Rs.20,758.09 lakhs. As a result, the loss of the company is understated by Rs.25,387.60 Lakhs (previous year Rs.19,608.53 Lakhs) and the liabilities have been understated on this account by 25,387.60 Lakhs (previous year Rs.19,608.53 Lakhs).
Management Reply: JMFARC has settled the banks for the amounts mentioned in the sanction letter given earlier. Even though the sanction letter was withdrawn by JMFARC, there has been no schedule of payment given by JMFARC, also during the past 2 years there were several instances of discussions of revival via raising working capital through banks, JMFARC providing additional loan by way of 3rd party collateral, etc. Also, there have been discussions on EXIT PLAN for secured lenders and that the amount payable to them would be substantially lower hence the lower amount has been considered.
e) Note No.25 3 (b) which explains the circumstances in which Dividend on 6% CRPS Capital of Company has not been provided for the current financial year and the previous financial years. Consequent to transition to Ind AS and its applicability in preparation and presentation of financial statements, Company is obligated under Ind AS 32 to treat any fixed dividend payable on mandatorily redeemable preference shares as a liability. However, the Company has not carried out this treatment. The consequential impact of its non-recognition in books of account is that the liability and corresponding loss stands understated for the year by Rs.74.82 lacs and cumulatively by Rs.472.78 lacs.
Management Reply: Management Reply: The 6% CRPS Capital allotment by the Company to agreed lender banks is a consequence of CDR. Company believes that the obligation to pay the dividend arises only in the case of distributable profits. However, the Companys operations stand suspended and Company continues to report operating losses. Company intends to recognize the obligation at the time of EXIT PLAN for its stressed bank outstandings, currently assigned to JMFARC.
f) Note No.25 (6) (c) which explains the circumstances in which the Deferred Tax Liability has not been provided for the current financial year and the previous financial year. In the absence of adequate information we are not able to quantify the effect of such non provision for the current year.
Management Reply: As there have been no operations of the company during the past 4 years, the management is of the opinion that the deferred tax liability should not be provided for the years FY14-15, FY15-16. FY16-17 & FY17-18.
g) Note No.25 (14) regarding non-provision of gratuity and provision for leave encashment, the impact of which is not ascertainable in the absence of adequate information.
Management Reply: During the CIR Process, provision for gratuity and leave encashment shall be made. At present it is not ascertainable for want of details.
h) Note No.25 (23) which explains that the balances of Sundry Debtors, Sundry Creditors, Loans including deposits and advances are subject to confirmation from and reconciliation with the relevant parties as on the date of balance sheet date. We are not in a position to certify the amounts at which such balances are receivable and payable.
Management Reply: The various balances of Sundry Debtors, Creditors & loans are mainly carry forwarded entries from FY13-14 as the plant was not operational since then. Since past 4 years there have been some funds brought in by the Promoters for revival, upkeeping and safety of the plant.
i) While framing our qualified opinion as above, we were unable to ascertain/determine the consequential impact of outcome of CIR Proceedings on the following aspects/elements of Financial Statements viz.
1. Recognition of and Provision for Impairment in the value of assets (fixed assets, intangibles, other non-current assets and financial assets), since determination of fair values/liquidation values by approved/register valuers is under process.
2. Recognition of Deferred Tax Assets (DTA), in view of the current non-availability of estimates regarding future realizability of benefits from unabsorbed losses and depreciation and consequent recognition or otherwise of Deferred Tax Assets (DTA).
3. Recognition of claims of operational and financial creditors, since their acceptance and determination of carrying amounts by Resolution Professional is still under process.
4. Accounting for reductions in liabilities (comprising of principle and interest portions) of lenders, on account of impending haircuts and their consequential write backs by way of credits to profit and loss statement.
As a result of the matters specified as above, we are unable to determine whether any adjustments might have been found necessary in respect of recorded or unrecorded assets and liabilities in Balance Sheet and the corresponding elements making up The Statement of Profit and Loss, and Cash Flow Statement.
Management Reply: The management is of the opinion that the above elements are dependent on the outcome of CIRP process, which is still underway, pending outcome. Management continues to be hopeful of a positive outcome as there shall be a resolution plan to revive the unit in this fiscal year. Management accordingly proposes to ascertain, determine and recognize impact of the above in accounts, after the outcome of CIRP process.
B. SECRETARIAL AUDITOR:
The Company has appointed P. Surya Prakash, Whole Time Practicing Secretary, R&A Associates (ACS: 18803, C.P.No.11142) as Secretarial Auditor. The Secretarial Audit Report (SAR) for the financial year 2017-18 is annexed herewith as Annexure IV to this Report.
The board took note of the qualifications in the SAR. The board is reforming the existing internal control systems and compliance team of the company in order to ensure foremost compliance of the applicable rules, law and regulations applicable to the company. Management is taking necessary steps to regularize the violations including filing of application with BSE Ltd for revocation of suspension of trading.
10. TRANSFER TO RESERVES:
The Company is not required to transfer any amount to the General Reserve.
11. HUMAN RESOURCES :
The Company has suspended the operations with effect from March 2014 and in view of the long period of suspension of operations there has been higher attrition of human resources and there are still some key employees in each department at factory and head office working towards revival of the unit.
12. CORPORATE GOVERNANCE:
A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance is annexed to the Report on Corporate Governance.
The Company has complied with the requirements about code of conduct for Board members and Senior Management Personnel.
Pursuant to Schedule V of SEBI (LODR) Regulations, 2015 the declaration signed by the Managing Director affirming compliance of the Code of Conduct by the Directors and Senior Management personnel of the Company for the financial year 2017-18 is annexed and forms part of the Corporate Governance Report Annexure V.
13. CORPORATE SOCIAL RESPONSIBILITY :
The Company was not required to constitute a CSR Committee as the Company has not met any of the thresholds mentioned in Section 135 of the Companies Act, 2013 during the financial year under review. Hence reporting about policy on Corporate Social Responsibility and the initiatives taken are not applicable to the Company. Company is running a School at the factory premises for 250 students.
14. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The information required pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company is enclosed herewith in separate section Annexure - VI.
No employee was in receipt of remuneration exceeding Rs. 1,02,00,000/- or more per annum or Rs. 8,50,000/- or more per month as the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules, 2014 and hence the disclosure as required under Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not required.
15. RELATED PARTY TRANSACTIONS:
The company has provided for remuneration to the Chairman, Managing Director, and Whole Time Director among the key management personnel of Rs.24.00 Lacs each as approved by members. In addition, the Company has provided Rs.4.50 Lacs (Previous Year Rs.5.06 Lacs) as Directors Sitting fee to all the Independent Directors.
Further, the Company has provided for remuneration during the year was Rs 12 Lacs (including last year pending dues) to one relatives of Key Management Personnel.
Further the Promoters have given the following amounts as loans (interest free) to the company during the past several years for the revival of the unit and keeping the unit as an On going concern.
|S.Chandra Mohan||Rs 404.21 Lakhs|
|S.Kishore Chandra||Rs 182.79 Lakhs|
|S.Karthik Sarath Chandra||Rs 188.36 Lakhs|
|S.Sasi Rekha||Rs 3.50 Lakhs|
16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
The Company has not made any loan, given guarantee, provided security or made investments pursuant to the provisions of Section 186 of Companies Act, 2013 other than the normal course of business.
A. EXTRACT OF ANNUAL RETURN:
Extract of Annual Return of the Company is annexed herewith as Annexure IX to this Report.
B. COMPOSITION OF AUDIT COMMITTEE:
The Audit Committee comprises of Sri M H S P Prasad (Chairman), Smt Ameeta Trehan and Sri S. Chandra Mohan as members.
All the recommendations made by the Audit Committee were accepted by the Board.
C. NUMBER OF BOARD MEETINGS:
The Board of Directors of the Company met 5 (Five) times during the year. For further details, please refer report on Corporate Governance.
D. LISTING OF SHARES:
The equity share of the Company is listed with Bombay Stock Exchange (BSE). Listing fees was paid for the financial year 2017-18. Share Trading is suspended. The company with the financial support of JMFARC is in the process of completion of revocation of suspension of the shares in BSE.
On September 2, 2015, Securities & Exchange Board of India issued SEBI (LODR), Regulations 2015 streamlining the provisions of the Listing Agreement for different segments of Capital markets to ensure better enforcement, hence enforcing the Companies to enter into fresh Listing Agreement with the stock exchanges where the shares are listed.
18. RISK MANAGEMENT:
The Board of your company has formulated a risk management policy in connection with the risk that the organization faces in its day to day business such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory etc.
The board reviews the policy in regular interval.
19. FRAUD REPORTING:
Pursuant to Companies Amendment Bill, 2014 there was no case of fraud that has been reported to the Audit Committee or Board during the year.
20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, is not applicable since there is no such activity at present being pursued by the Company.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: a. The Company has no subsidiaries, joint ventures or associate companies. b. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future. Even though Honble NCLT admitted the case and appointed Insolvency Professional, the Insolvency Process would approve the resolution plan submitted by the bidders for revival of the unit. c. The Company has in place adequate internal financial controls with reference to financial statements. These controls ensure the accuracy and completeness of the accounting records and preparation of reliable financial statements.
22. POLICY ON SEXUAL HARASSMENT:
There were no complaints/cases pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
23. ACKNOWLEDGEMENTS :
Your Directors wish to take this opportunity to express their grateful appreciation and deep sense of gratitude to secured lenders & various Departments of Central and State Governments and Statutory Auditors, & Consultants for their valuable guidance and co-operation extended during the year and look forward to their continued support in future. Your Directors would like to thank all the Share Holders, Vendors, Dealers and Consumers for the confidence reposed in the Company and its management.
Your Directors wish to place on record the deep sense of appreciation of the devoted services rendered by the Executives, Staff and Workers of the Company at all levels.
|For BHEEMA CEMENTS LIMITED|
|Place: Hyderabad||S Chandra Mohan|
|Date: 31st Oct 2018||Executive Chairman|
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO REQUIRED UNDER THE COMPANIES (ACCOUNTS) RULES, 2014
Information on Conservation of Energy, technology absorption, foreign exchange earnings and outgo required to be given pursuant to Section 134 (3) (m) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts) Rules, 2014 is not applicable since there is no such activity at present being pursued by the Company.
A. CONSERVATION OF ENERGY:
1 The steps taken or impact on conservation of energy
2 The steps taken by the Company for utilizing alternate sources of energy
3 The capital investment on energy conservation equipment
B. TECHNOLOGY ABSORPTION:
1. The efforts made towards technology absorption
2. The benefits derived like product improvement, cost reduction, product development or import substitution
3. 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 and
4. The expenditure incurred on Research and Development
Management Reply: As there were no operations during this financial year, Company has not made any developments in this regard. When the company comes back to the operations, Company will take necessary steps to improve the current production rate and also the quality even more while also reducing the pollution and waste generation through the implementation of various innovative techniques recommended by the technical personnel working at the plant as well as technical consultants.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
|i) Foreign Exchange Earned:||NIL||NIL|
|FOB value of exports|
|CIF value of exports|
|ii) Foreign Exchange used:||NIL||NIL|
|Commission on Exports|
|Foreign Travel Expenses|
FORM - A (See Rule - 2)
FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
|For the Year ended 31.03.2018||For the Year ended 31.03.2017|
|A. POWER AND FUEL CONSUMPTION|
|b. Own Generation|
|i) Through Diesel generator (Unit/Nos.)||-||-|
|Units per Ltr. Of Diesel Oil|
|ii) Through Steam Turbine Generator Unit per Ltr. Of fuel|
|Oil/Gas Cost/Unit (Rs.)||-||-|
|Coal used in Kiln||-||-|
|Total Cost (Rs.)||-||-|
|Average Rate (Rs.)||-||-|
|B.CONSUMPTION PER UNIT OF PRODUCTION|
|Standard Production (with details)||-||-|
|Electricity (Units/Ton of Cement)||-||-|
|Coal (% on Clinker)||-||-|