BS Ltd Directors Report.
The Members of BS Limited,
Your Directors have the pleasure of presenting their Report on the business and operations of the Company and Audited Financial Statement of Accounts for the year ended March 31, 2018.
The financial performance of the Company for the financial year ended on March 31, 2018 is summarized below:
(Rs. in Lakhs)
|Revenue from operations||8342.09||69298.28||46250.86||221911.30|
|Profit/(Loss) Before Depreciation, Finance Cost, Exceptional items, Extraordinary items & Tax||(74562.04)||(27151.97)||(74899.38)||(23561.80)|
|Less: Depreciation and||5775.21||14361.35||7184.14||16058.21|
|Less: Exceptional items/||-||-||-||-|
|Profit/(Loss) Before Taxation Provisions||(80337.25)||(41513.33)||(82083.52)||(39620.01)|
|Profit / (Loss)After Tax||(79971.01)||(40811.75)||(82002.98)||(39620.01)|
|Balance Carried to Balance Sheet||(79971.01)||(40811.75)||(82002.98)||(39620.01)|
|Earnings per Share||(18.11)||(9.24)||(18.57)||(8.82)|
Note: the above figures are extracted from the audited standalone and consolidated financial statements as per Indian accounting Standards (Ind AS).
The Company continues to operate in Multiple Segments, i.e., Engineering, Procurement and Construction and Trading Business. There has been no change in the nature of business of the Company. State Bank of India, one of the working capital banks, has filed an application on 12.4.2018 for initiation Corporate Insolvency Resolution Process (CIRP) against our Company u/s 7 of Insolvency & Bankruptcy Code, 2016 (IBC) with National Company Law Tribunal (NCLT), Hyderabad. Since Companys bank accounts have been put on hold, after NPA classification by the lenders since July 2016, Company is not able to conduct its business on an on-going business and the same has affected the Companys financial performance.
The Standalone and Consolidated Performance of the Company for the year under review were as under:
Total Revenue (excluding other Income) in current FY 2018 stood at Rs. 83.42 Crores as against Rs. 692.98 Crores in previous FY 2017.
EBIDTA in current FY is Rs. (747.19) Crores as compared with Rs. (274.24) Crores in previous FY 2017.
Loss after Tax for the current FY 2018 was Rs. (799.71) Crores as against Rs. (408.11) Crores in previous FY 2017.
Consolidated Total Revenue (excluding other Income) of the Company in current FY 2018 stood at Rs. 462.51 Crores as against Rs. 2219.11 Crores in previous FY 2017.
Consolidated EBIDTA in current FY is Rs. (751.41) Crores as compared with Rs. (241.34) Crores in previous FY 2017.
Consolidated Loss after Tax in current FY 2018 was Rs. (820.03) Crores as against Rs. (389.66) Crores in previous FY 2017
REVISION OF FINANCIAL STATEMENTS
The Company had earlier on 9.12.2016 filed an application with Honble National Company Law Tribunal (NCLT) Hyderabad Bench (under I.R. No. 886 of 2016) under section 131 of the Companies Act of 2013 read with rule 77 of the National Company Law Tribunal Rules for revision of Financial Statements of the Company for the Financial Years 2014-15 & 2015-16. The said application was dismissed by the NCLT and the detailed order is received by the Company on 26.04.2018. Your Board had on 17.05.2018 vide resolution through circulation no. 87 had approved to file an appeal in National Company Law Appellate Tribunal (NCLAT) against the said order. Accordingly the appeal was filed on 19.06.2018 and the matter is pending before NCLAT. The Audited Financial Statements represent the Companys financials without factoring into adjustments / changes which may be necessitated upon NCLT/NCLATs approval for Companys application filed with them for revision of financial statements under Sec. 131 of The Companies Act, 2013
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of your Company for the financial year 2017-18 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued there under, applicable Accounting Standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the "Listing Regulations"). These statements have been prepared on the basis of audited financial statements of your Company, its subsidiaries / Joint venture Company as approved by their respective Board of Directors.
SUBSIDIARIES / JOINT VENTURES / ASSOCIATE COMPANIES
Player in the Your Company continues to have Two Subsidiaries Overseas and there were no changes in the same during the year. Financials of Subsidiaries are disclosed in the Consolidated Financial Statements which forms part of this Annual Report. Your Company has one Joint Venture (JV) in India, which was incorporated as a Special Purpose Vehicle Company. The accounts of the said JV are consolidated with the Accounts of the Company.
Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries.
A Separate Statement containing salient features of Financial Statements of Subsidiaries of your Company in the prescribed form no. AOC 1 forms part of Consolidated Financial Statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The Financial Statements of the Subsidiary Companies and related information are available for inspection by the Members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and Public Holidays up to the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. The Financial Statements including the Consolidated Financial Statements, Financial Statements of Subsidiaries and all other documents required to be attached to this Report have been uploaded on the website of the Company (www. bslimited.in).
The Company has laid down policy on material subsidiaries and none of the subsidiaries are material subsidiary as per the Policy. The policy is placed on the website of the Company (www.bslimited.in).
REPORT ON THE PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
Pursuant to Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the details on the Performance and Financial Position of Subsidiaries, Associates and Joint Venture Companies included in the Consolidated Financial Statements are as under: a) M/s. BS Global Resources Private Limited, Singapore M/s. BS Global Resources Private Limited ("BSGRPL") was incorporated in 2011 as a Wholly-Owned Subsidiary of the Company. Headquartered in Singapore, BSGRPL is engaged in the business of Trading of Coal, Nickel, Copper Cathode and Minerals such as Iron Ore, and is a one-point sourcing firm for Trading and Supply of Mineral Resources and Agro Products.
The Entity has lasting partnerships with major Coal Mines and Suppliers, Credible Buyers and Sellers of Mineral Resources and has an Economical Pricing Strategy with Long-Term Focus that lends it competitive advantage. It seeks to become a Significant Minerals Trading Markets.
During the year, the said Company has reported a Turnover of Rs. 229.61 Crores and a Loss before Tax and Loss after Tax of Rs. 19.77 Crores and Rs. 22.63 Crores, respectively.
In view of changed market scenario in the subsidiarys business in their area of operations, the margins have declined which has affected the performance of our subsidiary also. b) M/s. BS Limited FZE, Dubai M/s. BS Limited FZE has been incorporated as a Wholly-Owned Subsidiary in compliance with the laws and regulations of Dubai Airport Free Zone Authority and has received the Certificate of Incorporation from Dubai Airport Free Zone Authority on March 06, 2014. The Principal activities of the said Subsidiary consist of
"Trading in Power Transmission Materials & Coal and Providing Related Engineering Services.
During the year, the said Company has reported a Turnover of Rs. 132.13 Crores and a Profit before Tax and after Tax of Rs. 2.22 Crores and Rs. 2.22 Crores, Profit respectively. c) M/s. Raichur Sholapur Transmission Company Private Limited M/s. Raichur Sholapur Transmission Company Private Limited ("RSTCPL) (formerly known as M/s. Raichur Sholapur Transmission Company Limited) has been incorporated as a Special Purpose Vehicle ("SPV") Company, in Joint Venture with M/s. Patel Engineering Limited and M/s. Simplex Infrastructures Limited. The revenues in the said BOOM project is on sharing basis and the same is spread over a period of 35 years. As on March 31, 2016, your Company holds 26,664,000 Equity Shares (33.33%) aggregating to Rs. 266,640,000/- of the Total Paid-up Share Capital of RSTCPL.
During the year, the said Company has reported a Turnover of Rs. 36.10 Crores from Transmission Service and Rs. 2.24 Crores as other income by way of interest. The Company incurred a loss of Rs. 0.02 Crores for the year ended March 31, 2018.
The lenders consortium led by Axis Bank have considered and approved the subsidiarys ECB limits under the Reserve Bank of Indias 5/25 (Scheme of Restructuring) in the months of June / July 2017. Accordingly the terms of sanction especially the repayments were changed and RSTCPL executed documentation with the lenders during the period under review.
Information in this respect can also be referred in form AOC-1 which has been disclosed in the Consolidated Financial Statements.
With a view of Companys critical financial position, Directors have not recommended any Dividend for the Financial Year 2017-18.
During the year under review, there were no change in the Issued, Subscribed and Paid-up Equity Share Capital of the Company.
ANNUAL GENERAL MEETING:
The Company has convened and holds the Annual General Meeting for the financial year ended 31.3.2017 on 28.12.2017 after receiving approval from Registrar of Companies, Andhra Pradesh & Telangana dated 04.09.2017 granting an extension of 3 months to convene and hold the Annual General Meeting for the financial year ended 31.3.2017 till 30.12.2017.
EMPLOYEE STOCK OPTION PLAN
The Company has initiated Employee Stock Option Plan (ESOP) plan in 2011 wherein all the options have been vested / lapsed as on March 31, 2018.
BANK LIMITS AND CREDIT FACILITIES
The consortium of Working Capital Banks, led by State Bank of India, has classified the companys working capital limits and Corporate Loan limits / accounts as "Non-performing Asset" during the earlier financial year. Similarly the companys term lenders viz. IFCI Limited and Bank of India have classified the companys term loan accounts as "Non-performing Asset" during the earlier financial year.
The Working Capital Banks of the company have issued notices to the company under Section 13 (2) of The SARFAESI Act. (for recovery) Company has replied to the banks in response to the said notices.
|Sl. No.||Name of the Bank||Date of SARFAESI Notice||Replied on|
|1.||IDBI Bank Limited||19-04-2017||04-07-2017|
|2.||Bank of India||13-06-2017||19-06-2017|
|3.||Lakshmi Vilas Bank||19-06-2017||03-07-2017|
A. ISSUANCE OF NOTICES UNDER SECTION 13 (4) OF
a. SBI issued notice dated 7.12.2017 to the company under Rule 13 (4) 8(1) and (2) advising taking symbolic possession of the land / building properties which were mortgaged to the bank: i. Property situated at Plot no. 42 (part) in S. No. 258/1 and 259 situated at Jeedimetla Industrial Area, Shapurnagar, RR district, AP admeasuring 22,439.26 sq. yds standing in the name of M/s Agarwal Developers ii. Residential flat admeasuring 2575 sq. ft. bearing No.103 in 2nd floor. Block D of Trendset Valley view apartment bearing MCH Nos. 8-2-405/1/2/3 at Banjara Hills, Road No. 6, Hyderabad standing in the name of Sri Rajesh Agarwal Open land admeasuring Ac. 3.10 guntas in survey situated at Survey No. 119, 120, 121, 122 your & 124 Athvelly Village, Medchal Mandal, Ranga Reddy District standing in the name of M/s. B S Limited and Mr. Rajesh Agarwal B. SBI issued notice dated 29.12.2017 to the company under Rule 13 (4) 8(1) and (2) advising taking symbolic possession of the land / building properties which were mortgaged to the bank: a. Office premises No. 302 on the 3rd Floor, admeasuring 3702 sq. ft. Carpet Area (equivalent to 344.05 sq. mtr.) along with 3 (Three) Car Parking in Stack Car parking System of the Building No. 19 (A Wing), Pinnacle Corporate Park situated on all that piece or parcel of land or ground situated in the revenue village of Kole Kalyan, Taluka Andheri in the Registration, Sub District of Bandra, District Bombay Suburban now in Greater Mumbai bearing CTS No. 4207 (pt) of Village Kole Kalyan, standing in the name of M/s Agarwal Reality Developers Pvt. Ltd.
SYMBOLIC POSSESSION BY STATE BANK OF INDIA UNDER SARFAESI ACT
The company informed the exchanges on 16.9.2017 that it had received a notice from State Bank of India (the lead bank of Working capital consortium) stating that the bad had had taken the symbolic possession of the properties of the company mortgaged to the bank, under Sec. 13 (4) of the SARFAESI Act read with Rule 8 due to non-payment of dues to the banks.
FILING OF APPLICATION BY SBI LED BANKS WITH DRT
* State Bank of India and 7 others Banks have filed an application with Debts Recovery Tribunal (DRT) on 13.7.2017 vide OA No. 437 of 2017 for recovery of outstanding dues to the Banks from BS Limited which have become irregular and overdue.
* The Honble DRT has passed an interim order on 21.7.2017.
* Companys legal counsel has filed its affidavit on the above application.
* The above case is pending with the Honble DRT for arguments and further submissions if any.
DECLARATION / ISSUANCE OF WILFUL DEFAULTER NOTICE BY IFCI LTD. AND OTHERS
IFCI Limited, one of the term lenders, has declared the Company as "Wilful Defaulter" under the guidelines of Reserve Bank of Indias Circular dated 1.7.2015. IFCI Limited vide their letter No. IFCI/HRO/BSL/WD/2018-419 dated 19.3.2018 has cited the reasons "The Unit has defaulted in meeting its payment / repayment obligations to the Lender even when it has the capacity to honour the said obligations" [under clause 2.1.3.(a) of the RBI Circular DBR NO. CID.
BC.2220.16.003/2015-16 dated 1.7.2015] for taking the above said action of classification as "Wilful Defaulter". The Company has preferred an appeal / writ petition with the High Court of Hyderabad for staying the above action of IFCI Limited.
State Bank of India, SAM II Branch, Hyderabad, vide their letter No. SAMB/HYD/KSJ/1871 dated 5.3.2018 issued a show-cause notice to the company seeking companys replies as to why the company should not be declared as a willful defaulter. They have invoked the provisions of relevant RBI guidelines [Sec. 2.1.3. (a) and Sec. 2.2.1. (d)]. Company has submitted their point-wise replies on 3.4.2018 and requested for not classifying the Company as a Willful defaulter.
ACTION INITIATED BY THE TAX AUTHORITIES
Demand notices were raised on 29.11.2017 for assessment years 2013-14 & 2014-15 for Rs. 18,26,84,830 and Rs. 85,06,22,530 respectively by the assessing officer. Company preferred appeal with the Appellate Tribunal. Appellate Tribunal vide its order dated 27.4.2018 set aside the order in some aspects for the AY 2013-14. However final order from the Assessing Officer is awaited.
SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS
As explained above, the Company has filed an appeal in National Company Law Appellate Tribunal (NCLAT) against the order of National Company Law Tribunal. Because of our application pending at NCLT / NCLAT for last two years, Company could not file the Annual Reports for last two years i.e. for 2015-16 & 2016-17. Meanwhile, Company has received a suspension of trading in shares notice dated 11.05.2018 from Stock Exchanges due to non-filing of Annual Reports for last two continuous years i.e. 2016-17 & 2017-18 and hence, Company has however decided to file an Annual Reports for the said two financial years along with current financial year 2017-18.
Moreover, State Bank of India (SBI), one of the Financial Creditors of the Company has filed an application with Honble National Company law Tribunal (NCLT), Hyderabad on 12.04.2018 for initiation of Corporate Insolvency Resolution Process (CIRP) against our Company u/s 7 of Insolvency & Bankruptcy Code, 2016 (IBC).
BOARD OF DIRECTORS
Pursuant to Sections 149, 152 and other applicable provisions, if any, of the Companies Act, 2013, One-third of the Directors as are liable to retire by rotation, shall retire every year and, if eligible, offer themselves for re-appointment at every AGM. Accordingly, Mr. Arun Dogra retires by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re-appointment.
The Board of Directors had appointed Mr. Pochender Shanigarapu as Additional Director of the Company, in the category of Non-Executive Independent Director, in terms of Section 149(1) of the Companies Act, 2013 read with Rules prescribed thereunder, with effect from 27.03.2017, to hold Office up to the ensuing Annual General Meeting of the Company. Before the Board took up the issue of regularization and reappointment of Mr. Pochender Shanigarapu as Additional Director (Non-Executive Independent Director), the Company received the notice of disqualification of Mr. Pochender Shanigarapu from NSE and hence, the Company did not consider his reappointment in Annual General Meeting held on 28.12.2017.
Further, Mr. Narayan Rao Gali, Independent Director of the Company, has resigned vide his Letter dated 30.03.2017, from the Directorship of the Company and accordingly he was relived from the closing business hours of 31.03.2018. Your Company and its Board of Directors hereby deeply appreciate the valuable contributions made by the erstwhile Directors viz. Mr. Pochender Shenigarapu and Mr. Narayan Rao Gali during their tenure as Board Members of BS Limited. In order to comply with the provisions of Section 149 Companies Act, 2013 read with rules made thereunder and Regulation 17 of SEBI (LODR) Regulations, 2015, the Company has appointed Mr. Ch Umamaheshwara Rao and Mr. Kotla Chandra Sekhararao, as Additional (Independent) Directors of the Company w.e.f 30.05.2018 to hold the office up to the date of ensuing Annual General Meeting of the Company.
The brief resume of the Directors proposed to be appointed and / or re-appointed and other relevant information have been furnished in the Explanatory Statement to the Notice of the ensuing AGM. The Directors recommend the Resolutions for the aforesaid appointment / re-appointment for approval of the Members at the ensuing AGM.
The Company recognizes and embraces the importance of a diverse Board in its success. We believe that a truly diverse Board will leverage differences in thought, perspective, knowledge, skill regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will ensure us retain our competitive advantage. The Board has adopted the Board Diversity policy which sets out the approach to diversity of the Board of Directors.
POSTAL BALLOT AND E-VOTING
Your company has informed the Exchanges that pursuant to Section 108, 110 of the Companies Act, 2013 read with Rule 20 of the Companies (Management & Administration) Rules, 2014, as amended, the Company will provide e-voting facility to the Shareholders to exercise their vote for transacting the business through Postal Ballot.
DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to provision of section 149(7) of the companies Act, 2013 the Company has received necessary declaration from each Independent Directors that he meets the criteria of Independence laid down in section 149(6) of the Companies Act, 2013 and Regulations 25 of SEBI (LODR) Regulations,2015.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
In terms of Section 134 of the Act 2013 and the Corporate Governance requirements as prescribed under the provisions of SEBI LODR Regulations, the Board had carried out performance evaluation of its own, the Board Committees and of the Independent directors. Further, Independent Directors at a separate meeting, discussed, reviewed and evaluated performance of the Non-Independent Directors, Board as a whole and of the Chairman of the Board, after taking into consideration the views of Executive and Non-Executive Directors.
The Board discussed and assessed its own composition, size, mix of skills and experience, its Meeting Sequence, Effectiveness of Discussion, Decision Making, Follow-up Action, Quality of Information and the Performance and Reporting by the Committees, viz., Audit Committee, Nomination and Remuneration Committee (NRC), Stakeholders Relationship Committee (SRC) and Corporate Social Responsibility Committee (CSR).
They also assessed the quality, quantity and timeliness of flow of information between the the Board that are necessary for the Board to effectively and reasonably perform its duties. All the Independent Directors were present at the Meeting.
The performance of Individual Directors including all Independent Directors assessed against a range of criteria such as contribution to the Development of Business Strategy and Performance of the Company, understanding the major risks affecting the Company, clear direction to the Management and Contribution to the Board cohesion. The Performance Evaluation has been done by the entire Board of Directors, except the Director concerned being evaluated. The Board noted that all Directors have understood the Opportunities and Risks to the Companys Strategy and are supportive of the direction articulated by the Management Team towards consistent improvement.
The Performance of each Committee was evaluated by the Board by seeking inputs from its Members on the basis of the criteria such as matters assessed against terms of reference, time spent by the Committees in considering matters, quality of information received, work of each Committee, overall effectiveness and decision making and compliance with the Corporate Governance requirements, and concluded that all the Committees continued to function effectively, with full participation by all its Members and the Members of Executive Management of the Company. The Directors expressed their satisfaction at the performance of all concerned.
The Company has put in place a structured induction and Familiarization Programme for all its Directors. The Company, through such programmes, familiarizes the Independent Directors as well as any new appointee to the Board, with a brief background of the Company, individual Roles, Rights and Responsibilities in the Company, Management Structure, Companys operations and other relevant information which would enable them to effectively discharge the responsibilities and functions conferred on them. They are also informed about important Policies of the Company including the Code of Conduct for Board Members and Senior Management Personnel and the Code of Conduct to Regulate, Monitor and Report Trading by Insiders, etc.
The Familiarization Programme for Independent Directors in terms of provisions SEBI LODR Regulations is uploaded on the website of the Company at www.bslimited.in.
KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel of the Company, in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force), are as under:
1. Mr. Rajesh Agarwal - Chairman & Managing Director
2. Mr. Arun Dogra - Whole-Time Director designated as CFO
Apart from the changes as mentioned under the "Board of Directors" Section, there was change in the Company Secretary of the Company. During the year under review Companys Management and consequent upon resignation of Ms. Alka Kumari with effect from 10.8.2017 from the post of Company Secretary of the Company your board had appointed Mr. BSK Sirish as a Company Secretary and Compliance Officer of the Company w.e.f. 11.8.2017. However he was relieved off his duties from the closing hours of 24.10.2017.
Consequent upon the resignation of Mr. BSK Sirish from the position of Company Secretary, Mr. Arun Dogra, the Whole-time Director of the Company has been designated as Compliance Officer with effect from 10.11.2017 under Regulation 6 of SEBI (LODR) guidelines, 2015, till a new Company Secretary is appointed.
POLICY ON DIRECTORS APPOINTMENT, REMUNERATION AND OTHER DETAILS
Your Company has been constituted a Nomination and Remuneration Committee which is empowered to nominate the number of members of the Board and various standing committees based on their different experience levels, knowledge and educational qualifications in different Sectors and discipline relating to the Companys business.
The remunerations paid to Executive Directors are in accordance with the recommendation of the Nomination & Remuneration Committee as well as by the prescribed law. Due care is also taken to ensure that the remuneration package is in consistent with the recommended best practices in the country.
PARTICULARS OF REMUNERATION OF DIRECTORS / KMP / EMPLOYEES
The information required under Section 197(12) of the Act with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure III which forms part of this Report.
The particulars of employees required to be furnished pursuant to Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Management Personnel) Rules, 2014 forms part of this Report.
NUMBER OF MEETINGS OF THE BOARD
Five meetings of the Board were held during the financial year 2017-18, the details of which are given in the Corporate Governance Report that is annexed to this Report as Annexure V. The intervening gap between any two meetings was not only within the period prescribed by the Companies Act, 2013 but it was also in accordance with SEBI (LODR) Regulations, 2015.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act, 2013 and subject to disclosures in the Annual Accounts, your Directors state as under: a) While preparing the annual accounts of the financial year ended on March 31, 2018, the applicable accounting standards have been followed and there are no material departures. b) That the Director have selected appropriate accounting policies in consultation with Statutory Auditors and applied them consistently to give a true and fair view of the state of affairs of the Company at the end of financial Loss Account of the period yearunderreview and Profit under report. c) Proper and sufficientcare has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) Annual Accounts have been prepared on a going concern basis. e) The directors have 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 have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company, will retire at the conclusion of the ensuing AGM and, being eligible, have consented and offered themselves for re-appointment as Statutory Auditors for the Financial Year 2018-19. Your Company has received stating written consent and a Certificate that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and that their re-appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and Rules issued thereunder that they are not disqualified for such re-appointment under the provisions of applicable laws and also that there is no proceeding against them or any of their partners pending with respect to professional matter of conduct.
As required under provisions of SEBI (LODR) Regulations, the Auditors has also confirmed that they have subjected themselves to the peer review process of Institute of Chartered issued Accountants of India (ICAI) and hold a valid Certificate by the Peer Review Board of the ICAI.
The Audit Committee and the Board of Directors recommend the re-appointment of M/s. P. Murali & Co., Chartered Accountants, as the Auditors of your Company for the Financial Year 2018-19 till the conclusion of the next AGM.
Auditors Adverse Observations and Management Response to Auditors Adverse Observations are given in the Annexure I forming part of this Report.
As per Section 148 of the Companies Act, 2013 read with Rules framed thereunder, M/s. Srinivas & Co., Cost Accountants, (Firm Registration No. 00278) were re-appointed as Cost Auditors for the Financial Year 2018-19 to conduct Cost Audit of the Accounts maintained by the Company in respect of the various products prescribed under the applicable Cost Audit Rules. The remuneration proposed to be paid to the Cost Auditors, subject to the ratification, in terms of Section 148(3) of Companies Act, 2013, by the members at the ensuing Annual General Meeting, would be Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand only) excluding out of pocket expenses, if any and applicable taxes.
Your Company has received consent from M/s. Srinivas & Co., Cost Accountants, to act as the Cost Auditor for conducting audit of the cost records for the Financial Year 2018-19 along with a certificate confirming their independence and arms length relationship.
In terms of the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Y. Koteswara Rao, Practicing Company Secretary (Certificate of Practice No. 7427), was appointed as Secretarial Auditor of the Company for the Financial Year 2017-18. The Secretarial Audit Report submitted by him in the prescribed Form MR-3 is attached as Annexure - VI and forms part of this Report. There are no qualifications or observations or adverse remarks of the Secretarial Auditor in the Report issued by him for the Financial Year 2017-18 which call for any explanation from the Board of Directors.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as on March 31, 2018 in the prescribed Form No. MGT-9, pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is attached as Annexure II to this Report.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered by the Company during the financial year, were in the ordinary course of business and on an arms length basis. Further, there were no transactions with related parties which qualify as material transactions under the SEBI Listing Regulations. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.
The details of the related party transactions as per Accounting Standard 18 are set out in Note 39 to the Standalone Financial Statements forming part of this report.
The Company has also formulated a policy on Related Party Transactions as approved by the Board of Directors which has been uploaded on the website of the Company.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to provisions of Section 186 of the Companies Act, 2013 the particulars of Loans, Guarantees and Investments are disclosed in the Financial Statement.
Risk is an integral part of business and your Company is committed to managing risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment along with the cost of treating risks, and incorporates risk treatment fromplans thein its strategy, business and operational plans.
Your Company, through its Risk Management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors. As per the requirements of the Regulation 21 of SEBI LODR Regulations, your Company has constituted a Risk Management Committee to oversee the risk management efforts in the Company under the Chairmanship of Mr. Rajesh Agarwal, Chairman & Managing Director of the Company. The details of the Committee along with its charter are set out in the Corporate Governance Report forming part of this Report. There are no risks which in the opinion of the Board threaten the existence of your Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the SEBI LODR Regulations. The Policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details on the Vigil Mechanism and the Whistle Blower Policy of your Company have been outlined in the Corporate Governance Report which forms part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with CSR Rules, the Company has constituted CSR committee and formulated CSR policy. The CSR Policy outlines the CSR vision of your Company based on embedded tenets of trust, fairness and care. The Policy primarily rests on four broad tenets: Healthcare, Education, Community Development and Ecology and the same is within the ambit of Schedule VII of the Act. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out herewith as Annexure VII to this Report.
Board of Directors of your Company had decided not to spend money on CSR activities till the NCLAT order. Also, your Company had also booked a loss for the FY ended 31.3.2018, therefore did not provide any funds under the CSR guidelines. However,
CORPORATE GOVERNANCE REPORT
Your Directors adhere to the requirements set out under the provisions of SEBI (LODR) Regulations. In compliance with Regulation 34 of the said Regulations, a separate report on Corporate Governance is attached as Annexure V and forms part of the Annual Report. The Chairman & Managing Directors Declaration regarding the compliance of Code of Conduct and Ethics for Board Members and Senior Management Personnel forms part of Report on Corporate Governance. The requisite Certificate Auditors of the Company confirming Compliance to the conditions of Corporate Governance as stipulated under the provisions of SEBI LODR Regulations is attached to the Report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As stipulated under the provisions of SEBI (LODR)
Regulations, the Management Discussion and Analysis forms an integral part of this Report and gives detail of the overall Industry Structure, Performance and State of Affairs of the Companys various businesses, Internal Controls and their adequacy, Risk Management Systems and other material developments during the Financial Year 2017-18.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place, policy on Prevention, Prohibition and Redressal of Sexual Harassment for women at workplace in accordance with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been in place to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the work place. All women employees are covered under this policy. The Company has not received any complaints during the year under review.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Companies Act, 2013 re-emphasizes the need for an effective Internal Financial Control System in the Company which should be adequate and shall operate effectively. Rule 8 (5) (viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Boards report.
To ensure effective Internal Financial Controls the Company has laid down the following measures: o Compliance relating to Cost Records of the Company is ensured by way of Cost Audit; o The Internal Auditors have also been engaged for providing assistance in improvising IFC framework and deployment of Self-Assessment Tool.
LISTING ON STOCK EXCHANGES
The Equity Shares of your Company continue to remain listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE), but Company has received a suspension of trading in shares notice dated 11.05.2018 from Stock Exchanges due to non-filing of Annual Reports for last two continuous years i.e. 2015-16 & 2016-17. The Annual Listing Fee for the Financial Year 2018-19 has been duly paid within the stipulated time to both the Stock Exchanges.
As stated earlier, your Company received a notice dated May 11, 2018 from Stock Exchanges suspending trading of equity shares due to non-filing of Annual Reports for last two years i.e. 2015-16 & 2016-17. Your Board has decided to file an Annual Reports which comprises of Financial Statements along with Auditors Report & Directors Report, etc. for the Shareholders approval for the said two financial years viz. 2015-16 & 2016-17 along with current financial year 2017-18.
During the year under review, your Company has not accepted any Deposit within the meaning of Sections 73 & 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any Statutory modification(s) or re-enactment(s) for the time being in force).
TRANSFER TO RESERVES
Your Company has not transferred any amount to the General Reserves for the Financial Year 2017-18.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo as required to be disclosed under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is set out herewith as Annexure IV which forms part of this Report.
Your Directors wish to place on record their gratitude to the Shareholders, Customers, Vendors, Bankers, Financials Institutions, Government Authorities, Contractors, Joint Venture Partners and all other Stakeholders for their continued support and valuable assistance and co-operation to the Company. Your Directors take this opportunity to commend the continued commitment and dedication of employees at all levels and look forward to valuable sustained support and encouragement.
|For and on behalf of the Board of Directors|
|Date : June 14, 201||(RAJESH AGARWAL)|
|Place : Hyderabad||CHAIRMAN & MANAGING DIRECTOR|