Everonn Education Ltd Directors Report.
To the Members,
Everonn Education Limited
Your Directors present the 16th Annual Report of the Company along with Audited Financial Statements for the financial year ended 31st March, 2016.
1. Financial Highlights
Rs. In Lakhs
|For the year ended|
|Particulars||31st March 201 6||31st March 2015|
|Income from operations||1,762.19||2,832.54|
|Total expenditure before interest & Depreciation||3,213.98||3,305.20|
|Operating Profit / (Loss) (EBIDTA)||(1,315.89)||(444.07)|
|Depreciation / Amortization||893.21||3,277.24|
|Profit before exceptional and extraordinary items and tax||(6,196.15)||(7,804.61)|
|Less Exceptional items||69,516.64||634.39|
|Profit / (Loss) before tax||(75,712.79)||(8,439.00)|
|Income Tax/ Deferred Tax Reversal||18,993.35||-|
|Profit / (Loss) after tax (PAT)||(94,706.14)||(8,439.00)|
2. REVIEW OF OPERATIONS:
During the year under review, the Company earned total revenue of Rs.1,898.09 Lakhs as against Rs.2,861.13 Lakhs in the previous year. The Loss before tax was Rs.75,712.79 Lakhs as againstRs.8,439.00 Lakhs in the previous year. The Loss after tax (which includes effect of reversal of Deferred Tax assets created in previous years amounting to Rs.17,056.36 Lakhs) was Rs.94,706.14 Lakhs as against Rs.8,439.00 Lakhs in the previous year.
The agreed business plans as per the Debt Restructuring Agreement (DRA) entered with the lending banks could not be implemented in view of failure on the part of the lending banks to honor their disbursement commitment to the Company. The lending banks demanded the company to keep servicing the debt, which the company was unable to honor. The lending banks have classified the loans as Non-Performing Assets (NPA). The lenders have issued legal notices for recovery of debts and recalling the loans. Accordingly, the difficulties faced by the Company shall have a resulting impact on the operations of the Company including its subsidiaries.
The management is of the view that adoption of the concept of realization basis would reflect the true and fair view of the operations of the Company rather than the use of the concept of Going Concern. The Financial Statements have, therefore, been prepared on realization basis and hence necessary provisions / reversal s have been made which have an impact of Rs. 88,509.99 lakhs in the Loss after Tax during the FY 2015-16
Steps taken towards reduction of above Financial Loss
For the financial year 2016-17, the management continues to focus on successful execution and completion of the existing ICT (Instructional Computing Technology) contracts and drive the collection of legacy receivables and advances. The management has downsized its manpower and other overheads including office premises and is also exploring avenues for monetization of non-core assets across the portfolios in order to unlock the available value in the business.
In view of the accumulated losses, the Board of Directors have not recommended payment of dividend for the year 201 5-1 6.
4. PUBLIC DEPOSITS:
During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.
5. SHARE CAPITAL:
There was no change in the share capital of the Company during the year 2015-16.
6. LISTING OF SHARES:
The Equity Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Listing fees for the year 2015-16 have already been paid to BSE and NSE. The custodial fees payable to depositories namely NSDL & CDSL have also been remitted by the Company.
7. CHANGE OF REGISTERED OFFICE:
In view of the steps taken for reduction of above financial losses, during the year 2015-16, the Registered Office of the Company was shifted from "1 st Floor, A Block, S. P. Infocity, Plot # 40, MGR Salai, Kandanchavadi, , Perungudi, Chennai - 600 096" to "Capital Tower, Unit No 203 & 204 , II Floor, Door Nos.6/13& 6/14, Kodambakkam High Road, Nungambakkam, Chennai - 600034" .
8. EXTRACT OF ANNUAL RETURN:
An extract of Annual Return in Form MGT 9 is appended to this Report as Annexure I.
9. SUBSIDIARY COMPANIES:
As on 31st March, 2016, the Company has 15 Subsidiary Companies including 3 step flown Subsidiary Companies. The Company also has 1Associate Company. There has been no material change in the nature of the business of the subsidiaries.
Pursuant to the provisions of Section 129, 134 and 136 of the Companies Act, 2013 read with rules framed thereunder, your Company has prepared Consolidated Financial Statements of the Company and its Subsidiaries which forms part of the Annual Report.
The Consolidated Financial Statements do not include the consolidation of Right Track Admizzionz Campus Private Limited (Associate Company), as the investment made in the said company is not from long term perspective; besides the Company also does not have control over the management of the said associate. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is attached as Annexure II.
In accordance with the provisions of Section 1 36 of the Companies Act, 201 3, theAudited Financial Statements including the Consolidated Financial Statements, as above, and relevant information of the Company are available on the website of the Company i.e. www.everonn.com. The financial statements of the subsidiary companies shall be kept for inspection at the registered office of the Company and of the respective subsidiary companies during working hours on all working days and during the Annual General Meeting.
10. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company;
Mr. Ajay Shekar Shetty, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Your Board recommends his re-appointment. Mr. Mustafa Sheriff and Ms. Priyanka Gupta, Independent Directors of the Company resigned from the Board w.e.f 31st December, 2015 and 2nd February, 2016 respectively.
Mr. C. N. Radhakrishnan, Managing Director of the Company stepped down from the position of Managing Director of the Company w.e.f 12th February, 2016. However, he continues as Non-Executive Director of the Company.
Mr. Sandeep Maniyar, Whole Time Director and Chief Financial Officer of the Company, resigned from the position of Whole Time Director and Chief Financial Officer w.e.f 12th February, 2016, however, he will continue as Non-Executive Director of the Company.
Mr. Himansu Sekhar Kabi was appointed as Chief Financial Officer of the Company w.e.f. 12th February, 2016. Mr. Sachin Dhingra was appointed as Manager of the Company w.e.f. 12lh February, 2016, this is subject to the approval of the shareholders.
The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence for the year 2015-16 as prescribed both under Section 149(6) of the Companies Act, 2013 and erstwhile Clause 49 of Listing Agreement read with Regulation 16(1)(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (hereinafter referred to as Listing Regulations).
At present, there are no Independent Directors (including a female director) in the Company and hence the Composition of the Board of Directors is not in accordance to the provisions of Companies Act, 2013 and Listing Regulations. In view of the challenging business situation, the Company is unable to attract suitable persons for the position of independent directors (including a female director). Hence, the Board had decided to take appropriate steps in this direction including filing suitable petition/application with National Company Law Tribunal as and when the constitution is in place; however in the interim the Company is seeking advice on any other recourse available, in order to be in compliance with the provisions of Companies Act, 2013 and Listing Regulations.
As stipulated under the Regulation 36 of the Listing Regulations, brief resume of the Directors proposed to be appointed/re-appointed are given in the Notice convening the AGM.
11. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors state that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; if any b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 31st March, 2016 and of the loss of the company for that period; c. the directors have 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 have prepared the annual accounts on Realization Basis as use of Going Concern assumption is considered not appropriate; e. the board appointed an external consultant to review the Internal Financial Control (IFC) process and its adequacy. The consultant reviewed the process and financial controls in place during the FY 2015-16 and submitted its report to the board. The board has taken cognizance of the report and its findings. The board has also directed the CFO and the Compliance officer of the company to suitably address the findings of the IFC report and place the follow up report before the board in the subsequent board meeting.
However during the FY 2015-16, the company has in place adequate compensating controls directly monitored by Directors to ensure adequate financial and operational controls. f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and are operating effectively.
12. MEETINGS OF THE BOARD:
The Board meets at regular intervals to discuss and decide on Companys business policy and strategies apart from other business. In case of a special and urgent business need, the Boards approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.
The notice of Board / Committee meetings is given well in advance to all the Directors of the Company. The agenda of the Board/Committee meetings including detailed notes on the items to be discussed is circulated normally seven days prior to the date of the meeting.
The details of meetings of the Board of Directors are given in the Report on Corporate Governance and the intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.
13. ANNUAL PERFORMANCE EVALUATION BY THE BOARD MEMBERS:
In view of the non- availability of the Independent Directors on the Board, the Composition of Nomination and Remuneration Committee is presently not in conformity with the Listing Regulations/ Companies Act, 2013. Hence, the performance evaluation of the Independent Directors by the Board is not carried out.
14. AUDIT COMMITTEE:
The details pertaining to composition of Audit Committee are included in the Report on Corporate Governance, which forms part of this report.
In view of the non- availability of the Independent Directors on the Board, the Composition of theAudit Committee is presently not in conformity with the Listing Regulations/ Companies Act, 2013.
15. COMMITTEES OF THE BOARD:
Subsequent to the resignation of the Independent Directors from the Board of the Company/during the year, the constitution of the committees are not in compliance with the Companies Act, 2013 and the Listing Regulations. There are currently three Committees of the Board, as follows:
1. Audit Committee
2. Stakeholders Relationship Committee
3. Nomination and Remuneration Committee
The Composition of the Committee/s after re-constitution is detailed below:
|SI. No.||Name of the Committee / Directors||Mr. Mustafa Shariff Mohammed||Ms. Priyanka Gupta||Mr. C. N. Radhakrishnan||Mr.Ajay Shekar Shetty||Mr. Sandeep Maniyar|
|Committee||(w.e.f 23.05.2015 upto 31.12.2015)||(w.e.f 23.05.2015 upto 01.02.2016)||12.02.2016)||(w.e.f 23.05.2015)||(w.e.f 29.05.2015)|
|Relationship Committee||(w.e.f 23.05.2015 upto 31.12.2015)||(w.e.f 23.05.2015 upto 01.02.2016)||12.02.2016)||(w.e.f 23.05.2015)||(w.e.f 29.05.2015)|
|3.||Nomination &||Chairman||Member||Member (w.e.f||Member||Member|
|Remuneration Committee||(w.e.f 23.05.2015 upto 31.12.2015)||(w.e.f 23.05.2015 upto 01.02.2016)||12.02.2016)||(w.e.f 23.05.2015)||(w.e.f 29.05.2015)|
Details of the committees with respect to their terms of reference, meetings and attendance at the meetings held during the year, are provided in the Report on Corporate Governance, forming part of this report.
16. WHISTLE BLOWER POLICY/ VIGIL MECHANISM:
The Company has a vigil mechanism / whistle blower Policy to deal with instance of fraud and mismanagement, f any. The mechanism also provides for adequate safeguards against victimization of directors and employees i who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases.
The details of the Vigil Mechanism Policy is explained in the Report on Corporate Governance and also posted on the website of the Company i.e. http://everonn.com/PDFs/Wishtle Blower Policy.pdf We affirm that during the financial year 2015-16, no employee or director was denied access to the Audit
17. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in Section 178(3) of the Companies Act, 2013 and Listing Regulations has been disclosed in the Report on Corporate Governance.
18. RISK MANAGEMENT:
The company had appointed an in-house internal Auditor to identify, evaluate and assess the risk and its potential impact on a regular basis and report to the management. During the FY 2015-16 the Internal Auditor has carried out the audit on an regular basis and reported to the management in case of any no-compliance, financial irregularities, process gaps as well as business and operational risk exposures.
19. CORPORATE SOCIAL RESPONSIBILITY:
The provisions of Section 135 of the Companies Act, 2013 on Corporate Social Responsibility is not applicable to the Company.
20. INTERNAL FINANCIAL CONTROL SYSTEMS :
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this Report.
21. INTERNAL AUDITORS:
The Company had an Internal Auditor during the financial year 2015-2016.
22. STATUTORY AUDITORS:
M/s. Haribhakthi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company holds office as such upto the conclusion date of the ensuing AGM of the Company and are eligible for re-appointment. The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if reappointed, their re-appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013 and they are not disqualified from being appointed as Auditor.
Your Directors recommend the re-appointment of M/s. Haribhakthi & Co. LLP, CharteredAccountants pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, as statutory auditors of the Company from the conclusion of the 1 6th AGM till the conclusion of the 20th AGM to be held for the year ended 31st March, 2020, subject to the approval of the shareholders in the forthcoming AGM.
23. REMARKS IN AUDITORS REPORT:
With regard to observation made by the Auditors in their Standalone and Consolidated Report, please refer the management reply to the auditors qualification in the addendum to directors report forming part of the Annual Report.
24. SECRETARIAL AUDITORS REPORT:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Mr. S Hari Krishnan, Practicing Company Secretary, Chennai as Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2015-16. The Report of the Secretarial Auditor is given as Annexure III which forms part of this report.
25. PARTICULARS OF LOANS. GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF COMPANIES
The details particulars of loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 during the financial year 2015-16 have been disclosed in Notes to Accounts of the financial statements.
26. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN
SECTION 188(1) OF THE COMPANIES ACT 2013
There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website at http://everonn.com/PDFs/RTP Policy.pdf.
None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act, 2013 in Form AOC-2 is not applicable.
27. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given as in Annexure IV.
28. PARTICULARS OF REMUNERATION:
Pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014, details are appended to this report as Annexure V (PART A). A Statement showing names of the top ten employees in terms of remuneration drawn is forming part of Annexure V (PART B) appended to this report.
During the year under review, no employee was in receipt of remuneration exceeding the limits as prescribed under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2)and 5(3)of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
29. REPORT ON CORPORATE GOVERNANCE:
The report of the Directors on Corporate Governance is given as a separate section titled Corporate Governance Report, which forms part of the Annual Report.
Further, pursuant to Regulation 34 read with Schedule V of Listing Regulations, the following have also been made a part of the Annual Report and are attached to this report: a. Management Discussion and Analysis b. Certificate regarding compliance with provisions of Corporate Governance
30. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
No order has so far been passed by any regulator or court or tribunal impacting the going concern status of the Company. However there are certain winding up petitions against the company that may have a bearing on Going Concern status of the Companys and its operations in future.
In view of the challenges faced by the Company with the Lenders for disbursement of the funds as was envisaged and agreed with them, the management is of the view that the use of Going Concern assumption for the preparation of the financial statements of the Company is considered not appropriate.
31. INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION. PROHIBITION AND REDRESSAL) ACT. 2013:
The Company has zero tolerance for sexual harassment at workplace and adopted a Policy on prevention, prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. There was no complaint on sexual harassment during the year under review.
32. ACKNOWLEDGEMENT AND APPRECIATION:
Your Directors take this opportunity to express their appreciation to all its employees and stakeholders support.
|For and behalf of the Board of the Directors|
|Sandeep Maniyar||Ajay Shekar Shetty|
|Date: 12th Aug, 2016|