Decolight Ceramics Ltd Directors Report.
Your Directors are pleased to present their report on the working of the company along with the Audited Accounts for the year ended 31st March, 2015:
1. FINANCIAL RESULTS:
The details of the financial performance of the company are appearing in the Balance sheet, Profit & Loss Account along with other financial statement.
Highlights are as under
(Rs. In Lacs)
|Total Income from operations||237.31||1019.85|
|Profit before considering Exceptional items, Prior Period Items, Interest, Depreciation and Taxation||-929.96||-1756.97|
|Less: Interest & Financial Charges||564.56||498.37|
|Profit / (Loss) before considering Exceptional Items, prior period Item and Tax||-2008.89||-2687.20|
|Less: Exceptional Items||830.28||789.81|
|Profit / (Loss) after exceptional items and before prior period Item and tax||-2839.17||-3477.01|
|Less: Prior period items||5.00||-|
|Profit / (Loss) Before Tax||-2844.17||-3477.01|
|Provision for taxation||-||-|
|Profit / (Loss) after Tax||-2844.17||-3477.01|
|Add: Balance of Profit brought forward from previous year||-3222.67||254.34|
|Profit available for appropriation .||-6066.84||-3222.67|
|Proposed Dividend on Equity Shares||-||-|
|Balance Carried over to the Balance Sheet||-6066.84||-3222.67|
2. TRANSFER TO RESERVES:
In view of the state of affairs of the company as highlighted herein, no amount is proposed to be transferred to reserves.
Your directors do not recommend any dividend for the year 2014-15 due to the performance of the company not meeting management expectations.
4. BUSINESS PERFORMANCE:
The business performance of the company was seriously affected owing to financial difficulties. The manufacturing facilities and the plant were not operational due to grave financial difficulties. Fixed expenses, interest charges and other expenses remained thus unabsorbed leading to incurring losses as given above.
5. PRESENT STATE OF AFFAIRS OF THE COMPANY:
The Company has been served with notice under SARFAESI Act for recovery of dues and presently the properties of the company including collaterals are under symbolic possession of the Bank. There was no plant and manufacturing facilities operations presently. The managements efforts are on to find solution to the problems of the company including willing potential investors.
6. CORPORATE HIGHLIGHTS:
The current capacity of the companys manufacturing facilities for the production ofvitrified tiles stand at 12000 sq. mtrs per day. There was no capacity expansion during the year under review.
7. SHARE CAPITAL & SUSPENSION OF TRADING IN SECURITIES:
A) Issue of equity shares with differential rights.
The Company has not issued any equity shares with differential rights during the year under review.
B) Issue of sweat equity shares
The Company has not issued any Sweat Equity Shares during the year under review.
C) Issue of employee stock options
The Company has not provided any Stock Option Scheme to the employees.
D) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees
The Company has not bought back or provided for buyback of any of its securities during the year under review.
E) issue of Bonus Shares
No Bonus Shares were issued during the year under review.
Presently the companys total issued, subscribed and paid up capital stands at Rs, 48,33,54,440/- The companys shares have been listed in the Bombay Stock Exchange Ltd. and The National Stock Exchange Ltd. Trading of securities of the Company remains suspended from the first week of May, 2015 in NSE for reasons of non/late compliance and non-payment of listing fees, fines, etc. as the company continued to be in financial difficulties. In BSE also call auction is suspended due to penal reasons. Listing fee arrears for 2013-14 and listing fee for 2014-15 is yet to pay.
8. PUBIC DEPOSITS:
The Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year.
9. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES:
The names of each of the companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year along with the details of their performance and financial position, to be mentioned separately: NIL
10. PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS UNDER SECTION 186: NIL
There are no Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013.
The equity shares of the Company are listed with Bombay Stock Exchange (BSE), and National Stock Exchange (NSE).
12. AWARDS AND RECOGNITIONS:
During the year under review the company is not in receipt of any award or recognition.
13. HEALTH, SAFETY, AND ENVIRONMENT:
The Company is taking continuous steps and also developing environment friendly processes for effective resource management with specific focus to energy, water and basic raw materials. Monitoring and periodic review of the HSE Management System is done on a continuous basis with emphasis and focus given to safety at workplace. For better environment management operations, the Company has implemented a Management System complying with the requirements of ISO 14001:2004 for manufacturing of Vitrified Tiles.
The companys products undergo different quality parameter checking and the Company continues to focus on delivering products and services that consistently meet customers expectations.
15. EXTRACT OF ANNUAL RETURN:
Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is given as Annexure F forming part of this Report.
All the assets of the Company are adequately insured and the policies are valid and subsisting.
17. PARTICULARS OF THE EMPLOYEES:
Pursuant to Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company states that none of the employees of the Company who was in receipt of remuneration in excess of Rs. 60 Lacs, if employed throughout the year or Rs. 5 Lacs per month, if employed for part of the financial year or received remuneration in excess of that drawn by the MD/WTD/Manager & holding 2% or more of equity share capital of the Company (himself along with spouse & dependent children). Hence, the disclosure as required by above Rule are not given as none of the employees qualify for such disclosure.
18. EMPLOYEES STOCK OPTION SCHEME:
Pursuant to Rule 12(9) of The Companies (Share Capital and Debentures) Rules, 2014, the Company has no Employees Stock Option Scheme in force hence disclosures are not, for the time being, applicable to the Company.
19. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
Presently the companys properties including collaterals are under its commercial bankers symbolic possession and so the plants and allied manufacturing facilities are not operational. The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee will be set up to redress complaints received regarding sexual harassment when the company will be fully operational. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During 2014-15 the company has not employed any women employee.
20. VIGIL MECHANISM:
The company established vigil mechanism for directors and employees to report genuine concerns. The vigil mechanism, Inter alia, provides for adequate safeguards against victimization of persons who use such mechanism and also makes provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.
21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO::
A) CONSERVATION OF ENERGY:
a) Energy Conservation steps taken:
Your Company continued to be committed to energy conservation in its manufacturing operations.
i) Some significant Energy conservation steps implemented in the recent past are:
1. The company took every necessary step towards reducing the consumption of energy.
2. The Company continued to reduce the firing cost of Tiles driers by effective recovery of waste heat for using in Roller Kilns and for this the company on a regular basis identified leakage points and necessary prevention / rectification is done / being done.
3. The Company made regular maintenance to plant and machinery in addition to design modifications in the machinery and allied equipments to aid in conservation of energy and improvement in operational efficiency.
4. The instructions of the energy auditor have been, disseminated throughout the manufacturing set ups with the objective of creating awareness towards effective conservation of energy and reduction of costs.
5. Majority of the instructions have been implemented leading to substantial savings in specific energy consumptions.
6. The Company also uses the energy saving techniques by using the waste steam converting into vapors and then reusing the same in cooling and filtering the Coal gas.
7. To reduce the companys Spray Dryer fuel cost further, the company imported new Coal Stove in the past.
8. The company also imported digital testing machines towards upgrading its laboratory last year.
ii) The steps taken by the company for utilizing alternate sources of energy ;
Presently the companys properties including collaterals are under its commercial bankers symbolic possession and so the plants and allied manufacturing facilities are not operational. Therefore, no steps were taken by the company for utilizing alternate sources of energy.
iii) The capital investment on energy conservation equipment:
There were no capital investments on energy conservation equipment during financial year 2014-15 owing to the companys properties including collaterals under symbolic possession with its commercial banker. Also, the plants and allied manufacturing facilities were not operational during 2014-15.
B) TECHNOLOGY ABSORPTION:
Efforts made in technology absorption:
During year 2014-15 the Company continued to pursue its research and development efforts in the areas of product concept development, raw material usage giving priority to local contents and product features and product quality improvement, reduction in the Kiln cycling of Vitrified Tiles, etc. However, the plant remained mostly closed during 2014-15 owing to financial difficulties and presently the plant is closed consequent upon symbolic possession of the companys properties by the companys commercial banker. As a result, the company could not pursue its intended programs technology absorption front.
The benefits derived are reflected in the products of the company in the form of improved product features, quality, product life, and better hygienic contents in addition to the increased business opportunities for the companys product that may accrue in the periods ahead.
The company has not imported any Technology during the last three years reckoned from the beginning of the financial year.
The expenditure incurred on R & D:
The companys property is under symbolic possession of the companys commercial banker and the plant is closed presently and there is substantial uncertainty with respect to future plan of action. The company is presently in grave financial difficulties. No amount therefore has been spent on R &D during the financial year 2014-15.
Foreign exchange Earnings and Outgo:
There are no Foreign Exchanges earned in terms of actual inflows during the financial year 2014-15. Also there are no Foreign Exchange outgoes during the financial year 2014-15 in terms of actual outflows.
22. RISK MANAGEMENT POLICY: .
During the year 2014-15, the Board of Directors developed and implemented risk management policy for the company including identification of elements of risk which in the opinion of the board might threaten the existence of the company. The Companys Audit Committee terms of reference include evaluation of risk management systems and they are satisfied themselves that systems of risk management are robust and defensible.
The company periodically reviews its risk assessment and minimization procedures so as to ensure that executive management controls risk through means of a properly defined framework. Executive management of the company periodically places before the Audit Committee risk identification report and risk mitigation measures. Subject to the companys properties and collaterals now under the symbolic possession of the companys commercial bankers, the properties of the company are adequately insured from risk and where risk transfer is not practicable, such risks are retained and effectively controlled as per the Risk Management Policy of the Company.
23. CORPORATE SOCIAL RESPONSIBILITY:
Pursuant to the requirements of Section 135 (1) of the Companies Act, 2013, the Company states that the company is, for the year 2014-15, not meeting the criteria mentioned in the said section. Therefore the Company has not constituted any Corporate Responsibility Committee during the financial year 2014-15 and the composition of such committee not disclosed. Subject to the present state of affairs of the company, the company will constitute a Corporate Social Responsibility (CSR) Committee, as soon as the companys financial condition is improved, which shall formulate and recommend to the Board, a CSR Policy indicating the activities to be undertaken by the company as well as the amount of expenditure to be incurred on the activities as mentioned in the policy.
24. INDUSTRIAL / HUMAN RELATIONS:
The Industrial relations during the year under review continue to remain cordial between the workers and management. The Management appreciates the employees of all cadres for their dedicated service to the Company, and expects continued support for higher level of productivity in achieving the targets set for the future. The Company continued its efforts in the HR policies and processes to further its performance.
25. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is attached as Annexure A.
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company-
i) Mr. Kantibhai M Pethapara, Director of the Company, retires by rotation and, being eligible, offers himself for re-appointment.
ii) Mr. Girishbhai M Pethapara, Whole-time Director is being reappointed for a further term of three years effective from 1st October, 2015.
iii) Mr Kantibhai M Pethapara, Managing Director, is being reappointed for a further term of three years effective from 1st October, 2015.
iv) Mr. Jayantibhai M Pethapara, Director and Mr Ashvin H Bopaliya, Independent Director, resigned during the year 2014-15 w.e.f. 15.12.2014.
Appropriate resolution for the appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting for your approval.
27. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
Pursuant to the requirements of Section 134 of the Companies Act, 2013, The Board of Directors met 07 (Seven) times during the year. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report attached hereto which forms part of this Report.
28. BOARD EVALUATION / INDEPENDENT DIRECTORS MEETING:
During the year under review, the Independent Directors met on February 14, 2015, inter alia, to discuss:
1. Evaluation of the performance of Non Independent Directors and the Board of Directors as a Whole;
2. Evaluation of the performance of the Chairman of the Company, taking into account the views of the Executive and Non Executive Directors.
3. Evaluation of the quality, content and timelines of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
All the independent Directors were present at the meeting.
Manner of evaluation: Presently the company is in financial distress. Two of the directors already resigned. Auditors have expressed high uncertainty as to the status of going concern. Subject to these state of affairs, a framework for evaluation has been prepared and based on the framework, questionnaire has been made including different specific topics of evaluation and setting out different parameters / criteria against which the different topics as to the Board and its committees, Chairman and non-independent directors, have been evaluated, both individually and collectively, based on inputs received from directors and internal sources.
Performance of the Independent Directors was evaluated by the Peer group basis as per the evaluation criteria determined by the Nomination Committee, which inter alia, includes the following:
* Clear accountability
* More independent view
* More time to devote to task
* Other leadership skills and experiences
* Contribution to the development of (i) Strategy and (ii) risk management.
* Follow up on matters on which the independent directors expressed concern
* Relationship with other board members, the company secretary and senior management
* How actively and successfully do they refresh their knowledge and skill?
* Skill gaps
29. APPOINTMENT / RE-APPOINTMENT OF INDEPENDENT DIRECTOR:
Pursuant to Section 149 (10) of the Companies Act, 2013, the Company discloses that -
Shri Vasant A Kaila (DIN: 02680103), was appointed in the annual general meeting held on 29th September, 2014, as an Independent Director of the Company to hold office for 3 (three) consecutive years for a term up to the conclusion of 18th Annual General Meeting of the Company in the calendar year 2017.
Shri Vijay M Vidja (DIN: 02680111), was appointed in .the Annual General Meeting held on 29th September, 2014,as an Independent Director of the Company to hold office for 3 (three) consecutive years for a term up to the conclusion of 18th Annual General Meeting of the Company in the calendar year 2017.
There are no re-appointments of independent director at the ensuing annual general meeting.
30. CHANGE IN THE COMPOSITION OF THE BOARD:
Pursuant to Section 168(1) of the Companies Act, 2013 read with Rule 8(5)(iii) of The Companies (Accounts) Rules, 2014,the details of directors or key managerial personnel who were appointed or have resigned during the year:
During the year 2014-15, Mr. Jayantibhai M Pethapara, and Mr. Ashwin H Bopaliya, Directors, have resigned from the office of Directors effective from 15th December, 2014. The Board appreciated the services rendered by them to the Company.
Reason for resignation by Mr. J M Pethapara, Director: Owing to financial difficulties the company is not in operation presently. Besides, the Companys commercial Banker had taken over symbolic possession of the company. These unfortunate developments badly affected his physical health and mental condition and therefore he was unable to continue in the Board or contribute anything to the Board. Under those backgrounds he tendered his resignation from the Board as Whole Time Director.
Reason for resignation by Mr. A H Bopaliya, Director: Owing to financial difficulties the company is not in operation presently. Besides, the Companys commercial Banker had taken over symbolic possession of the company and the plant is closed. In view of these developments, he was not willing to be in the Board and therefore he tendered his resignation from the Board and its committees on his own interest and accord.
Shri Suresh S Dave, Company Secretary, resigned from the Company effective from 15th December, 2014.
Reason for resignation by Mr. Suresh S Dave, Company Secretary: Due to pre-occupation.
Declaration of fulfillment of independence
Pursuant to Section 149 (7) of the Companies Act, 2013, the Company has received statement with respect to declaration of fulfillment of the criteria of independence by independent directors.
Details of equity share with differential rights
Pursuant to Rule 4(4) of The Companies (Share Capital and Debentures) Rules, 2014, the Company states that during the year 2014-15, the Company has not issued any equity shares with differential rights.
Details of Sweat equity shares
Pursuant to Rule 8(13) of The Companies (Share Capital and Debentures) Rules, 2014, the Company states that during the year 2014-15, the Company has not issued any sweat equity shares.
Composition of Audit Committee
Pursuant to the requirement of Section 177 (8) of the Companies Act, 2013, following is the composition of the Audit Committee for year 2014-15:
|Mr. Vasant Avachar Kaila,||-- Chairman|
|Mr. Mr Vijay Maganlal Vidja||-- Member|
|Mr. Ashvin H Bopaliya||~ Member (resigned w.e.f.15.12.2015)|
|Mr. Kantibhai M Pethapara||- Member|
The recommendations of the audit committee, have been accepted by the Board.
31. CORPORATE GOVERNANCE:
The disclosures as required under the Corporate Governance have been furnished as part of this report. Subject to the ongoing financial difficulties, the Company has taken the requisite steps to comply with the recommendations concerning Corporate Governance. A report on Corporate Governance together with a certificate of compliance from the Practicing Company Secretary, forms part of this report.
32. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirements under section 134 (3) (c) and (5) of the Companies Act, 2013, the Board of Directors of the Company hereby 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 (the auditors of the company have qualified that there is high uncertainty as to the going concern status of the company).
(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.
33. STATUTORY AUDITORS:
Pursuant to provisions of Section 224 of the Companies Act, 1956, M/s SVK & Associates, Chartered Accountants, Ahmedabad , were the statutory auditors of the Company who hold office up to the conclusion of the this Annual General Meeting and they completed two terms of consecutive five years.
As per Section 139 (2) of the Companies Act, 2013, M/s G.P. Kapadia & Co., Chartered Accountants, Morbi, are being appointed as the new statutory auditors for a term of maximum five years from the conclusion of this AGM till the conclusion of the consecutive fifth annual general meeting, subject to ratification by Members at every annual general meeting. The Company has received a letter from M/s G.P. Kapadia & Co., Chartered Accountants, Morbi, to the effect that their re-appointment, if made, would be in accordance with the conditions prescribed under section139 (2) of the Companies Act, 2013 and they are not disqualified for such reappointment within the meaning of Section141 of the said Act.
The observation of the auditors referred to in the Auditors Report have been suitably explained in the Notes on Accounts.
34. AUDITORS QUALIFICATION:
Auditors have qualified the financial statements about unutilized funds 6f equity preferential issue privately placed lying in ICD of Rs 27.57 Crores is pending for renewal / receipt from respective parties. In this context, the management, proceeding legally, filed civil suit in Morbi Court for recovery of the above amount.
Auditors have also qualified the financial statements with respect to the Going Concern Aspect due to various reasons. In this context the management is putting their best efforts to find potential investors who can take the company on track and thus afford going concern status to the company.
35. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS:
The auditors in their report have qualified over going concern status of the company on the following grounds-
1. The short term borrowings of the company have been classified as NPA by the bank consequent to default in repayment of debt by the company.
2. Pending various statutory liabilities
3. Operational efficiency of the plant badly affected due to old technology based plant & machinery and also sale of certain machineries
4. Reduction in volume of sales operation resulting into cash losses owing to the financial operational and machinery related issues.
5. Various Contingent Liabilities not provided for.
6. Others like i) Power connection of the factory unit disconnected by the State Electricity Board ii) Bank has filed complain / legal suits on the company for sales of machineries / stock hypothecated to bank without its consent and also for recovery of its entire dues along with the interest iii) Differences in physical verification of plant & machineries taken by bank and management of the company iv) Receivables/ advances and Payables/liabilities of th_company are subject to confirmation of the concerned parties v) ongoing various litigations by government as well as non-government parties.
In this context, the management is putting their best efforts to find out solution to the problems of the company including willing potential investors who can take the company on track.
36. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s. Kavita Khatri & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the Financial Year 201415. The Secretarial Audit Report is given as Annexure D forming part of this Report.
The Secretarial Auditors have given adverse comments in their reports with respect to the appointment of Women Director, Chief Financial Officer and Company Secretary. In this context the management reports that the company was served with notice under SARFAESI Act for recovery of dues and presently the properties of the company including collaterals are under symbolic possession of the bank. There was no plant and manufacturing facilities operations during the year under review or presently. In such a situation, the company is continuously confronting financial difficulties in appointing key managerial persons and to keep them remunerated. Besides, given the state of affairs of the company, no candidate for women director was willing to join the Board. However, the managements efforts are on to appoint key managerial persons.
Your Directors place on record their sense of appreciation for the co-operation received from all.
|For and on behalf of Board of Directors|
|Place: Morbi||Kantilal Maganlal Pethapara|
|Date: 30th June, 2015||Managing Director|