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Your directors take great pleasure in presenting the Eleventh Annual Report of our company and Companys Audited Standalone and Consolidated Financials forthe financial year ended March 31,2017.
The Financial Performance of your Company forthe year ended March 31,2017 is summarized below:
(Rs. In Lakhs)
|Expenditures excluding depreciation||9,038||15,985||9,038||15,985|
|Profit before Depreciation and Tax||(2,739)||5,957||2,739||5,957|
|Net Profit Before exceptional Items and Tax||(7,731)||1,493||(7,731)||1,493|
|Share of net profit/(loss) of associates and joint ventures accounted for using the equity method||Nil||Nil||(19)||(20)|
|Net Profit Before Tax||(16,526)||1621||(16,545)||1,601|
|Provision for Tax||(232)||926||(232)||926|
|Profit after Tax||(16,294)||695||(16,313)||675|
|Proposed Dividend on equity Shares||Nil||Nil||Nil||Nil|
|Tax on Dividend||Nil||Nil||Nil||Nil|
|Balance Carried to Balance Sheet||(16,294)||695||(16,313)||675|
|Paid up Share Capital||4,231||4,231||4,231||4,231|
|Reserves & Surplus||45,081||61,312||45,042||61,292|
^previous year figures have been regrouped/rearranged wherever necessary.
OVERVIEW OF COMPANYS FINANCIAL PERFORMANCE
During the year under review, the Companys performance has been drastically declined and recorded a total Income of INR 6,299 lakhs as against INR21,942 lakhs in the previous year registering a large in de growth earning.
During year the Company has incurred a loss of INR 16,294 lakhs after tax against profit of INR 695 lakhs after tax in previous year.
The Company has gone through a change in its overall business model from self operated centres to franchisee centres. This entire shift in the dynamics of the business brought a complete change in the financial results leading to heavy one time write off in the balance sheet of the Company since majority of the centres were converted to franchisee or discontinued operations.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES:
Your company has two Joint Venture/Associate Companies viz., J T Infrastructure Private Limited and Mehta Tree House Infrastructure Private Limited.
The particulars of Joint Venture/Associate Companies as on March 31,2017 have been included in form MGT-9 which is part of this report.
Further, the report on the performance, financial position and overall contribution to companys profitability of each of the subsidiaries, associates and joint ventures and salient features of the financial statements in the prescribed Form AOC-1 is marked and annexed as "Annexure A" to this report.
The Company has incurred a loss during the year. Hence board does not recommend dividend on the equity shares of the Company for the year under review.
The paid up Equity Share Capital of the Company as on 31st. March,2017 was INR 423,107,240 (Indian Rupees Forty two crores, thirty one lacs, seven thousand two hundred and forty only) comprising of 42,310,724 Equity Shares of Rs. 10 /each. As on 31sMarch,2016 the Equity Share Capital of the Company was INR 423,107,240 and there has been no change in the share capital during the reporting period ended 31 MMarch,2017.
INTERNAL FINANCIAL CONTROLS
The Board of directors has laid down internal financial controls to be followed by the Company for ensuring the orderly and efficient conduct of its business and the said internal financial controls are adequate and are operating effectively. Internal Audits are regularly carried out to review the internalfinanciai controls and the Internal Audit Reports along with recommendations contained therein are reviewed by the Audit Committee.
PARTICULARS OF LOANS, GUARANTEES ORINVESTMENTS
The provisions of Section 186 of the Companies Act, 2013 requiring disclosure in the financial statements giving particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security is not applicable to your company since no transactions of such nature has been undertaken or entered into by your company.
BOARD AND BOARD COMMITTEES
The details of Board Meetings held during the year, attendance of the directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report.
Your Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposit under Section 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits)
Rules, 2014 was outstanding as on the date of the Balance Sheet.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, in relation to the Audited Financial Statements for the Financial Year 2016-17, your Directors confirm that:
a) The Financial Statements of the Company Comprising ofBaiancesheetas at March, 31 2017 and the statement of Profit and Loss for year ended on that date, have been prepared on a going concern basis following applicable Indian accounting standards and that no material departure have been made from the same;
b) In the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable Indian accounting standards, have been followed along with proper explanation relating to material departures;
c) Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your company as at March 31,2017 and of the profits and loss of the company for financial yearended March 31,2017.
d) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities.
e) Requisite interna! financial controls laid down and that financial controls are adequate and were operating effectively; and
f) Proper systems to ensure compliance with the provisions of all applicable laws in place and that such systems were adequate and operating effectively.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
Your Companys Board comprises of mix of executive and non-executive directors with considerable experience and expertise in various fields and business strategy. The details of the directors and their meetings held during the year have been given in the Corporate Governance Report, which forms part of this report.
The list of Directors & key managerial person of the Company as on March 31,2017 are as follows:
1. Mr. Rajesh Bhatia (DIN: 00074393), Managing Director
2. Mrs.Geeta BhatiafDIN: 00074444), Non-Executive Woman Director
3. Mr. Suraj Manghnani (DIN: 06625583), Independent Director
4. Mr.Deepak Valecha (DIN: 07736480), Independent Director
5. Mr.Devanshu Parekh(PAN: AZRPP4679G), Company Secretary & Compliance Officer (w.e.f. October21,2016)
a) Changes in Directors and Key Managerial Personnel:
Since the last report, the following changes took place in the Board of Directors and the Key Managerial Personnel of
1. Mr. Ram Kumar Gupta (DIN: 07356532) and Mr. Chanakya Dhanda (DIN: 02709047) appointed as Additional Director, in the category of Non-Executive Independent, of the Company w.e.f. 29th May, 2016 and re-appointed as Non-Executive Independent Directors of the Company by members in the Annual general Meeting held on 26th September, 2016.Mr. Chanakya Dhanda and Mr. Ram Kumar Gupta both have resigned from the post of director w.e.f. December 15,2016 and December 16,2016 respectively.
2. Mr.T. S. S a rang pan i (DIN: 01453050) resigned as director of the Company w.e.f. 2nd June, 2016;
3. Mr. Parantap Dave (DIN: 00019472) and Mr. Vishal Shah (DIN: 01153074) resigned as directors of the Company w.e.f. 28lhJuly,2016;
4. Mr. Sanjay Shah (PAN: AAVPS8852P) resigned as Chief Financial Officer (CFO) of the Company w.e.f. 14th October, 2016;
5. Mr. Sura] Manghnani (DIN: 06625583) appointed as an Additional Director, in the category of Non-Executive Independent, of the Company w.e.f. December30,2016;
6. Mr. Deepak Valecha (DIN: 07736480) appointed as an Additional Director, in the category of Non-Executive Independent, of the Company w.e.f, February13,2017;
7. Mr. Devanshu Parekh (PAN: AZRPP4679G) was appointed as Company Secretary & Compliance Officer of the Company w.e.f. 21st October, 2016. Subsequently, Mr.Devanshu Parekh resigned from the post of Company Secretary & Compliance Officer w.e.f. 20th May, 2017.
Pursuant to provisions of section 152 of the Companies Act, 2013 and subject to Articles of Association, Mrs. Geeta Bhatia, Director of the Company is liable to retire by rotation at an ensuing Annual Genera! Meeting and, being eligible has offered herself for re-appointment.
The Board has recommended for the same. Details about the directors being appointment / re-appointed are given in the Notice of the 11 ^Annual General Meeting being sent to the members along with the Annual Report.
b) Declaration by Independent Director(s)
Your Company has received declarations from ai! the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of section 149(6) of the Companies Act, 2013 and there is no change in the circumstances as on the date of this report which may affect their respective status as an independent director.
Furthermore, a brief profile of each of these Independent Directors, nature of their expertise in specific functional areas and names of the Companies in which they hold Directorships and/or membership/chairmanship of Committees of the Board, as stipulated underspecified regulation of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the listing regulation"^ given in the Corporate Governance Report which is forming part of this Report. The Company has received declaration from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and prescribed regulation of the Listing regulation.
Pursuant to the provision of Section 161 of the Companies Act, 2013, read with the relevant provision in the Articles of Association, Mr.ChanakyaDhandaand Mr. Ram Kumar Gupta were appointed as an Additional Directors by the Board of Directors of the Company with effect from May, 29, 2016and both of the directors have been re-appointed by the members of the Company in its AGM on September 26, 2016. Mr. Chanakya Dhanda and Mr. Ram Kumar Gupta both have resigned from the post of director w.e.f. December 15,2016 and December 16,2016 respectively.
Pursuant to the provision of Section 161 of the Companies Act, 2013, read with the relevant provision in the Articles of Association, Mr. Suraj Manghnani and Mr. Deepak Valecha were appointed as an Additional Directors by the Board of Directors of the Company with effect from December 30, 2016 and February 13, 2017 respectively and both of the directors shall hold office up to the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing under Section 160 of the Companies Act, 2013 from a member proposing Mr.Suraj Manghnani and Mr. Deepak Valechafor appointment as an Independent Directors respectively. A brief profile of Mr.Suraj Manghnani and Mr. Deepak Valecha, nature of their expertise in specific functional areas and names of the Companies in which they hold Directorships and/or membership/chairmanship of Committees of the Board, as stipulated under respective regulations of the Listing regulation is forming part of this Report.
c) Annua! Evaluation of the Board
Evaluation of the directors is done on an annual basis. The process is led by the Nomination and Remuneration Committee with specific focus on the performance vis-a-vis the plans, meeting challenging situations, performing leadership role within, and effective functioning of the Board. The evaluation process also involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors and also considers the time spent by each of the directors, accomplishment of specific responsibilities and expertise, conflict of interest, integrity of director, active participation and contribution during discussions.
d) Policy on directors appointment and remuneration and other detaicls
The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of this report.
e) Familiarisation Programme For Independent Directors
Independent Directors are familiarised with their roles, rights and responsibilities in the Bank as well as with the nature of industry and business model of the company through various internal programmes and through presentations on economy & industry overview, key regulatory developments, strategy and performance which are made to the Directors from time to time.
Your Company has complied with Regulation 34 of SEBI (Listing Obligations and Disclosure Regulations) Requirements, 2015 of the stock exchanges. A report on Corporate Governance as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Regulations) Requirements, 2015 along with independent Auditors Certificate on compliance with the Corporate Governance, forms part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDAR)
A detailed analysis of your Companys performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.
DISCLOSURES RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES
Disclosure of the ratio to the remuneration of each director to the median employees remuneration and other details required pursuant to section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as "Annexure B".
PARTICULARS OF EMPLOYEES:
During the year under review, there are no employees who comes within the purview of Section 134 (3)(q) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
EMPLOYEES STOCK OPTION SCHEME
Details as required under Rule 12(9) of Companies (Share Capital and Debentures) Rules, 2014 and as required to be provided under the Securities and Exchange Board of Indian Guidelines as on March 31,2017 are set out in "Annexure C."
a) Statutory Auditors
M/s Agarwal & Associates, Chartered Accountants, Kolkata (having firm registration number 32321 OH), an existing Statutory Auditor of the Company have shown their unwillingness to continue as Statutory Auditor.
The Board of Directors (on recommendation of Audit Committee) decided to appoint M/s. S. Dedhia & Co. as a New Statutory Auditor for a period of 5 years in place of M/s Agarwal & Associates, Chartered Accountants, Kolkata (having firm registration number 32321OE), subject to approval of shareholders at an ensuing Annual General Meeting of the Company.
M/s. S. Dedhia & Co., have express their willingness to get appointed as the Statutory Auditor of the Company and has furnished a certificate of their eligibility and consent under section 141 of the Companies Act, 2013 and the rules framed there under.
The Board recommends the members for appointment of M/s. S. Dedhia & Co.at an ensuing Annual General Meeting of the Company.
The Auditor of the Company have made adverse remarks in its audit report for the financial year ended March 31,2017 are as follows along with the explanation given by the Board.
I) The Company has defaulted in repayment of loans availed from financial institutions due to which these borrowings have been classified as shortterm borrowings. The amount payable to financial institutions is Rs. 7260 lakhs.
Since the play group centers closed during the year, the company was facing acute cash shortage, due to which the company was not able to repay loans from financial institutions. The company is trying to pay outstanding amount to settle the dues with the financial institutions.
II) The company has discontinued most of the centers operated by the company and have converted some of them into franchisee, The company has not passed any adjustment entries/ impairment loss for the fixed assets including furniture and fixture, teaching equipment and lease hold improvements for most of the centers discontinued/ closed/ converted into franchisee during the year.
The management has informed us that the recoverable amount of these assets within the meaning of Indian Accounting Standards (IN DAS) -36 is more than the carrying value and as such no amount needs to be recognized in the financial statements for impairment loss. We have not been able to validate this assertion in the absence of internal exercise or external valuation report of an independent agency and the uncertainty of resumption of future operation/ results of future operations thereof. We are unable to comment on the carrying value of these assets.
During the year owing to exceptional year, and the very fact that the management of the company was for the major part of the year being handled by another group, who have chosen to discontinue the centers, The company is trying to convert its centers to franchise centers, no impairment loss for the assets needs to be recognized for the year. The company is confident In earning future income out of the assets lying in closed centers.
III) No revenue is received from school management services rendered to K-12 schools from last 2 quarters and the invoices raised in the first 2 quarters have also not been acknowledged by the other party creating dispute over its realization.
In our opinion, since there is no probable certainty of revenue from the cash generating unit, the carrying amount shown under "Business Commercial Rights (BCR) under Intangible assets needs to be impaired and impairment test is required as per Indian Accounting Standard (IND-AS)-36 and impairment loss needs to be recognized.
Management has informed us that the recoverable amount of these Intangible Assets within the meaning of Indian Accounting Standards (IND AS) -36 is more than the carrying value and as such no amount needs to be recognized in the financial statements for impairment loss. We have not been able to validate this assertion in the absence of internal exercise or external valuation report of an independent agency and the uncertainty of resumption of future operation/results of future operations thereof. We are unable to comment on the carrying value of these assets.
During the year due to lack of manpower, the company was not able to provide school management services to K12 schools for last two quarters and thus no income was recognized for those quarters. The company has secured contract with all K12 schools and will resume its services shortly. As the contract is in force, impairment of Business Commercial Rights (BCR) was not earned out We cannot comment on other partys acknowledgement of invoices, as we do not have any controi on trusts.
IV) In respect to various deposits given to Educational trust amounting to Rs 18889 lacs, the balance lying in the companys books could not be verified in absence of confirmations received from the trust.
Further the management has informed that the carrying amount of these deposits classified as financial assets have not been accounted at fair value as required within the meaning of Indian Accounting Standard (ind AS)109. In view of the management the carrying amount of these assets is the fair value and no amount needs to be recognized as loss. We have not been able to validate this assertion in the absence of internal exercise or external valuation report of an independent agency. We are neither able to comment on the carrying value of these assets nor we are able to ascertain the impact of not valuing these deposits at fair value in the attached financial results.
The deposits given to Educational trust amounting to Rs. 18889 lakhs was provided for development of schools. The amount is receivable from trusts and is verified with the trust from time to time. The transactions during the year were found reconciling with the trust accounts. As the deposits are fully recoverable in near term, fair valuation of deposits was not carried out.
V) In respect to Receivables amounting to Rs. 2877 lacs due from Educational trust, the deliverables and receipts are outstanding for a long time. Absence of recoveries from these parties since long indicates the existences of material uncertainty that may cast doubt on the recoverability of these receivables. However, in view of management no provision is required as such balances are good and recoverable.
The company is receiving amounts due from two educational trust out of four education trusts
VI) The carrying value of lease deposits with landlords amounting to Rs 1473 lacs is related to closed/ discontinued centers and administrative office. We are of the opinion that the recoverable amount is much lower than the carrying value of these lease deposits and impairment test needs to be carried out.
The company is trying to convert the centers to franchise centers and thus the lease deposits are being taken over by franchises by settling liabilities of the respective center. Lease deposits are thus fully recoverable and no impairment for the same was required to be carried out.
VII) The Loans & Advances and Receivables which have been classified as Financial Assets in compliance to Ind AS, have been recognized at their carrying amount and not at fair value. In view of the management the carrying amount of these assets is the fair value and no amount needs to be recognized as ioss. We have not been able to validate this assertion in the absence of internal exercise or external valuation report of an independent agency. We are unable to comment on the carrying value of these assets as the same is not in conformity to Ind AS.
In view of lack of man power, fair valuation of financial assets could not be carried out and same is taken at carrying cost by the company.
VIM) The policies, procedures and overall internal controls needs to be strengthen in order to provide proper evidences
regarding recoverability of receivables, valuations of financial assets including deposits, write off of fixed assets including impairments and accounting for direct & indirect taxes including other statutory compliances and timely and proper recording of capital and revenue transactions. We are unable to ascertain its impact, if any on the statement in respect of the above matters.
The internal controls are well in place and the company will continue to strengthen its internal controls as per the requirement and scale of business.
IX) The company has neither carried out the fair valuations of assets classified as financial assets and financial liabilities including ESOPS, nor it has carried out the impairment testing for intangible assets (Goodwill & Brands) wherever required and stated above in compliance to Indian Accounting Standards issued under Companies (Indian Accounting standards) Rules 2015. Therefore, the possible impact of the same on the profit & loss and retained earnings, if any, cannot be ascertained.
The company has transferred fund to meet its ESOPs requirements to Tree House Employee Welfare Trust The ESOP is being managed by the trust and the company does not exercise any control. As and when the ESOPs are being exercised by the employee, the amount is transferred back to the company. Goodwill and Brands are owned by the company, and the company is able to convert its centers to franchise centers on the basis of goodwill it has created in the past Due to lack of manpower intrinsic value of ESOP could not be earned out The company is of the view that no impairment loss towards ESOP, Goodwill and Brands is required to be recognized by the company.
X) Confirmation letters have been sent by the company to Sundry Creditors and parties to whom Loans and Advances have been granted for confirming the balances lying in their ledger accounts in books of the company. In view of confirmations having been received from only few of the parties, the balances under these heads have been shown as per books of accounts and are subject to reconciliation and adjustment, if any.
The confirmations have all being sent to creditors and other parties. As no information/objections was received from them, the same is considered to be confirmed by the company.
XI) Some landlords, creditors as well as statutory authorities have initiated legal proceedings against the company, which may result in compensation, interest and penalties. The possible impact of the same on financial results cannot be ascertained, pending such outcome.
As the matter is subjudice, we are unable to comment on the same.
b) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company, has appointed M/s Kaushal Doshi & Associates, Practicing Company Secretaries in place of M/s. Mihen Halani & Associates, Practicing Company Secretaries to conduct the Secretarial Audit of the Company for thefinancial year ended March 31,2017.
The Secretarial Audit Report is annexed herewith as Annexure-D. The qualifications provided in the report are as follows along with explanation of Board.
a) During the year under review, the Board of Directors of the Company was not duly constituted w.e.f. 16.12.2016 till 12.02.2017 with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. However, the Composition of Board has been reconstituted w.e.f. 13.02.2017 in the duly held Board Meeting. Further, the Company has informed that the said complication with respect to the composition of Board took place due to sudden resignation of few directors and that the promoter has filed legal proceedings in this case and the matter is subjudice with Honble High Court.
The committee of the Board is not duly constituted. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
The qualification is self- explanatory:
b) Adequate notice is given to all directors to schedule the Board Meetings and Committee Meetings, agenda and detailed notes on agenda were sent at least seven days in advance except for two meetings dated 28.07.2016 and 16.08.2016, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
During the year owing to exceptional year, and the very fact that the management of the company was for the major part of the year being handled by another group.
c) The Company has not spent at least 2% of its average net profits made during the three immediately preceding financial years towards Corporate Social responsibility as required under Sec 135 of the Companies Act, 2013.
The Company has gone through a drastic change in scenario of financial position and Company made loss in ail the quarters of the financial year 2016-17 and due to reason of thesame the Company was not in a position to spent amount towards its Corporate Social Responsibility of the Company.
The CSR is not only a responsibility of the Company but its a social endeavour towards the betterment of the society and the company will perform its responsibility towards the same as soon as company turns in positive financial position.
d) As per section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has not appointed Company Secretary (CS) in whole time employment. However, the Company has appointed CS in whole time on 21.10.2016.
The Company was not finding a suitable candidate, as the Company found the eligible candidate the appointment was made.
e) The Company has held Audit Committee Meeting on 14.11.2016 for consideration of unaudited financial results for the quarter and half year ended September, 2016 through video conferencing which is prohibited as per Rule 3 of Companies (Meetings of Board and Its Powers) Rules, 2014.
As per quorum requirement under Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 two members or one third of the members of the audit committee, whichever is greater with at least 2 Independent Directors should be present, as there were only 2 Independent Directors in the Company and due to ill health of one independent Director, he was not able to present physically and as per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company have to submit its financial within 45 days of end of the quarter, the Company had to conduct meeting through video conferencing.
f) Annual General Meeting (AGM) minutes are not signed by the Chairman within a period of 30 days from the date of AGM.
As informed above, during the year owing to exceptional year, and the very fact that the management of the company was for the major part of the year being handled by another group.
g) Minutes of the Board Meeting, Audit Committee Meeting held on 16.08.2016 are not signed.
As informed above, during the year owing to exceptional year, and the very fact that the management of the company was for the major part of the year being handled by another group and the same matter is sub-judice.
h) As informed to us, SEBi investigation has been commenced against the Company.
The Authority is performing its duty, we are unable to comment.
c) Cost Auditors
The Board of Directors had appointed M/s Kishore Bhatia & Associates, Cost Accountants, as the Cost Auditors of your Company for the financial year 2016-17 to conduct the audit of the cost records of your Company.
Pursuant to Section 148 and other applicable provisions, if any of the Companies Act, 2013 read with Companies (Cost record and Audit) Rules, 2014, the Board of Directors of your Company has appointed M/s Kishore Bhatia & Associates, Cost Accountants as the Cost Auditor for the financial year 2017-18 on the recommendations made by the Audit committee. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM, would be not exceeding INR 75,000 (RupeesSeventy Five Thousand Only) excluding taxes and out of pocket expenses, if any. Your directors recommend approval of said remuneration to the Cost Auditors of the Company.
Your company has received consent from M/s. Kishore Bhatia & Associates, Cost Accountants, to act as the Cost Auditor of your company for the financial year 2017-18 along with certificate confirming their Independence.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure E" to this report.
RELATED PARTY TRANSACTIONS
During the Financial Year 2016-17 your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms length basis and in accordance with the provisions section 188 of the Companies Act, 2013, and Rules made thereunder and Regulation 23 of the Listing regulation. During the financial year 2016-17, there were no transactions with related parties which qualify as material transactions under the SEBI (LODR) Regulations, 2015.
The details of the related party transactions as required under "tnd As - 24" are set out in Note Nos. 35 to the standalone financial statements forming part of this Annual Report.
The Policy on related party transactions may be accessed on the Companys website at a link: https://www.nseprimeir.com/z_TreeHouse/pdffiles/TREEHOUSE__POLICY_ON__RELATED__PARTY_TRANSACTION__ PoIicy.pdf
VIGIL MECHANISM & WHISTLE BLOWER POLICY:
The Board has approved and adopted Vigil Mechanism that provides a formal mechanism for all Directors and employees of the Company to approach the Chairman of the Audit Committee of the Board and make protective disclosures about the unethical behavior, actual or suspected fraud. The Vigil Mechanism comprises the Whistle Blower Policy which requires every Director or employee to promptly report to the Management any actual or possible violation of the Code or any event wherein he or she becomes aware of that which could affect the business or reputation of the Company. Under the Policy, every Director or employee of the Company has an assured access to the Chairman of the Audit Committee.
RISK MANAGEMENT POLICY
The Company has adopted a Risk Management Policy duly approved by Board and is overseen by the Audit Committee of the Company on a continuous basis to identify, assess, monitor and mitigate various risks to key business objectives.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. The processes and controls are reviewed periodically. The Company has a mechanism of testing the controls are regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information. During the year such controls were tested and no reportable material weakness in the design or operation was observed.
In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the certification by the Managing Director and Chief Financial Officer on the financial statements and Internal Controls relating to financial reporting has been obtained.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors at its meeting held on February 06, 2015 approved the Corporate Social Responsibility (CSR) Policy for your Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility policy) Rules, 2014, on the recommendations of the CSR committee.The Corporate Social Responsibility Policy may be accessed on Companys website at a link:
The initiatives undertaken by your Company during the financial year 2016-17 in CSR have been detailed in this Annual Report.
The meeting of CSR committee held on March 17,2017, the committee discussed on unspent amount on the CSR activity stating that the Company has gone through a drastic change in scenario of financial position and Company had made loss in all the three quarters of the financial year 2016-17 and due to the reason of the same Company was not able to spent amount towards its Corporate Social Responsibility of the Company.
Further added that the CSR is not only a responsibility of the Company but its an social endeavour towards the betterment of the society and the company will perform its responsibility towards the same as soon as company gets its positive financial position.
The Annual report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in "Annexure F" in this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNING AND OUTGO
The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesnt own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.
Foreign Exchange Earnings: NIL Foreign Exchange Outgo: NIL
INDIAN ACCOUNTING STANDARDS (INDAS)-IFRSCONVERGED STANDARDS
The Ministry of Corporate affairs vide its notification dated February 16, 2015 has notified the Companies (Indian Accounting Standards)Ruies, 2015. In pursuance of this notification, the Company has already adopted IND AS and the financial statements for the year ended March 31,2017 are prepared in accordance to the same.
Your Company treats its "human resources" as one of its most important assets.
Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focussed people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Your Company did not have any funds lying unpaid or unclaimed for a period of Seven years. Therefore there were no funds which were required to be transferred to investor Education and Protection Fund (I EPF).
Pursuant to the provisions of the Investor Education Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary forms and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. September 26,2016), with Ministry of Corporate Affairs.
Your company has not issued equity shares with differential rights as to dividend, voting or otherwise;
Your Company did not a I lota ny equity share as sweat equity shares. Therefore, no disclosures as required under Rule 8 (13) of Companies (Share Capital and Debentures) Rules, 2014;
During the year under report, no significant and material order was passed by the regulators or courts or tribunals which would have impacted the going concern status and your Companys operations in future;
There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)Act, 2013;and
There were no material changes and commitments occurred between the end of financial year of the companyaffecting the financial position of the Company.
Your Directors take this opportunity to thank the government, regulatory bodies and shareholders for their consistent support and also place on record appreciation to the contribution made by Companys staff and teachers at all levels, without whom the Company would not achieved the desired growth. The Directors also commend the continuing commitment and dedication of the employees at all levels which has been critical for the Companys growth. The Directors lookforward to their continued support in future.
For and on behalf of the Board
Tree House Education and Accessories Limited
|Rajesh Bhatia||Geeta Bhatia|
|(DIN: 00074393)||(DIN: 00074444)|
|Date: 10th August, 2017|