Tree House Education & Accessories Ltd Directors Report.
Your directors take great pleasure in presenting the Tenth Annual Report of our company and Companys Audited financials for the financial year ended March 31,2016.
The Financial Performance of your Company for the year ended March 31,2016 is summarized below:
|Rs. In lacs|
|Expenditures excluding depreciation|
|Profit before Depreciation and Tax||5,978||11,155|
|Net Profit Before Tax||1,623||8,473|
|Provision for Tax||946||2,386|
|Profit after Tax||677||6,087|
|Proposed Dividend on equity Shares||Nil||846|
|Balance Carried to Balance Sheet||677||5,072|
|Paid up Share Capital||4,231||4,231|
|Reserves & Surplus||61,239||60,241|
*previous year figures have been regrouped/rearranged wherever necessary.
OVERVIEW OF COMPANYS FINANCIAL PERFORMANCE
During the year under review, the Companys performance has been muted and recorded a total Income of INR 21,942 lacs as against INR21.460 lacs in the previous year registering a growth of 2.25%.
The profit after tax was lower by 88.87 % compared with the previous year. The profit after tax for the year under review was INR 677 lacs as against INR 6,087 lacs in the previous year.
Your Directors are reviewing the business growth aspects and putting efforts to improve profitability by closing down unprofitable or lagging pre-school centres. Also working on aggressively to reduce costand run the business efficiently to deliver better performance.
During the year your Company has opened 116 self-operated pre-school centres and 2 franchisees of pre-schools. Also as part of restructuring 85 nos. of self-operated pre-school centres were closed down, thus effectively only 536 preschool self-operated centres were operational as on 31st March 2016. The Company now operates in 96 cities on Pan India basis.
There are no significant and /or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of future operations of the Company.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES:
Your company has two Joint Venture/Associate Companies viz., JT Infrastructure Private Limited and Mehta Tree House Infrastructure Private Limited.
The particulars of Joint Venture/Associate Companies as on March 31,2016 have been included inform MGT-9 which is part of this report.
Further, the report on the performance and financial position of each of the subsidiaries, associates and joint ventures and salientfeatures of the financial statements in the prescribed Form AOC-1 is marked and annexed as "Annexure A" to this report.
PERFORMANCE AND FINANCIAL POSITION OF JOINT VENTURE/ASSOCIATE COMPANIES
As required by Accounting Standard-21 (AS-21) issued by the Institute of Chartered Accountants of India, the Companys consolidated financial statements included in this Annual Report incorporate the accounts of its Joint Venture/Associate Companies being the consolidating entities. A summary of key financials of the Companys Joint Venture/ Associate Companies is also included in this report.
With a view to conserve the resources for future business requirements and expansion plans, your Directors are of view that the currentyears profit ploughed back into the operationsand hence no dividend recommended for the year under review.
The paid up Equity Share Capital of the Company as on 31st. March, 2016 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 31st. March, 2015 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 31st. March, 2016.
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 internal financial controls and the Internal Audit Reports along with recommendations contained therein are reviewed by the Audit Committee.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
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 2015-16, your Directors confirm that:
a) The Financial Statements of the Company- Comprising of Balance sheetas at March, 31 2016 and the statement of Profit and Loss for year ended on that date, have been prepared on a going concern basis following applicable 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, 2016, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed along with proper explanation relating to material departures;
c) rectors 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 31,2016 and of the profits and loss of the company for financial year ended March 31,2016.
d) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act, 2013 to safeguard the assets ofthe Company and for preventing and detecting fraud and other irregularities.
e) Requisite internal 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 31,2016 are as follows:
1. Mr. Rajesh Bhatia (DIN: 00074393), Managing Director
2. Mr. Vishal Shah (DIN:01153074), Executive Director
3. Mrs.Geeta Bhatia (DIN: 00074444), Non-Executive Woman Director
4. Mr.T.S. Sarangpani (DIN: 01453050), Independent Director
5. Mr.Parantap Dave (DIN: 00019472), Independent Director
6. Mr.Sanjay Shah (PAN:AAVPS8852P), Chief Financial Officer (w.e.f. August 05,2015)
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 the Company:
1. Mr.Ashu Garg (DIN: 01980048) resigned as director of the company w.e.f. 27th May, 2015;
2. Mr. Rishi Mavani (DIN:01758427) resigned as director of the Company w.e.f. 3rd December, 2015;
3. Mr.Sanjaya Kulkarni (DIN: 00102575) resigned as director of the Company w.e.f. 4th February, 2016;
4. Mr. Sanjay Shah (PAN: AAVPS8852P) was appointed as Chief Financial Officer of the company w.e.f. 5th August, 2015 in place of Mr.Utsav Shrivastava (PAN: AQGPS7669M);
5. Mr. Ram Kumar Gupta (DIN: 07356532) and Mr. Chanakya Dhanda (DIN: 02709047) appointed as Independent Director of the Company w.e.f. 29th May, 2016.
6. Mr. T.S. Sarangpani (DIN: 01453050)resigned as director of the Company w.e.f. 2nd June, 2016
7. Mr. Vishal Shah (DIN: 01153074) and Mr. Parantap Dave (DIN: 00019472 resigned as director of the Company w.e.f. 28th July, 2016
8. Mr. Hardik Desai (PAN: ASEPD1731D) was appointed as Company Secretary of the Company w.e.f. 27th May, 2015 in place of Ms.Pooja Bhimjiyani (PAN: AQJPB2460J). Subsequently, Mr.Hardik Desai (PAN:ASEPD1731D) also resigned from the post of Company Secretary w.e.f. 18th March, 2016. Hence, company is in the process of finding suitable candidate forthe post of Company Secretary.
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 General Meeting and, being eligible has offered himself for re-appointment.
The Board has recommended forthe same. Details about the directors being appointment / re-appointed are given in the Notice of the 10thAnnual General Meeting being sent to the members along with the Annual Report.
b) Declaration by Independent Director(s)
Your Company has received declarations from all 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 under specified regulation of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulation, 2015 ("the listing regulation") is 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 undersub-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.Chanakya Dhanda and Mr. Ram Kumar Gupta were appointed as Additional Directors by the Board of Directors of the Company with effect from May, 29, 2016and 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 in writing under Section 160 of the Companies Act, 2013 from a member proposing Mr.Chanakya Dhanda and Mr. Ram Kumar Gupta for appointment as Independent Directors respectively. A brief profile of Mr.Chanakya Dhanda and Mr. Ram Kumar Gupta, 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) Annual 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 directorsappointment and remuneration and other details
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.
In Compliance with the provisions of Regulation 34 of the Listing Regulation, a separate report on Corporate Governance along with the certificate from the Auditors on its compliance forms an integral part of this Report.
MANAGEMENTS 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".
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 underthe Securities and Exchange Board of Indian Guidelines as on March 31,2015are set out in "Annexure C"
a) Statutory Auditors
Your Company has appointed M/sAgarwal & Associates, Chartered Accountants, Mumbai (having firm registration number 323210E) in Ninth Annual General Meeting for a period of Five consecutive years subject to ratification by members at an every annual general meeting.
Your Company has received an eligibility certificate from M/sAgarwal & Associates, Chartered Accountants, Mumbai (having firm registration number 323210E), Statutory Auditors under Section 141 of the Companies Act, 2013, for ratification in their appointment. The Board discussed the same and directed to place the matter relating to ratification in theirappointment by members at an ensuing Annual General Meeting.
There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report.
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 Company with the approval of its Board, has appointed Mihen Halani &Associates, Practicing Secretaries to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2016. The Secretarial Audit Report is annexed herewith as Annexure-D. The qualifications provided in the report are self explanatory.
The Board has also appointed Mihen Halani & Associates as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2016-17.
c) Cost Auditors
The Board of Directors had appointed M/s Kishore Bhatia & Associates, Cost Accountants, as the CostAuditors of your Company for the financial year 2015-16 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 2016-17 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 (Rupees Seventy 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 2016-17 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 2015-16 your Company has entered into transactions with related parties as defined under Section 2(76) ofthe 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 of the Companies Act, 2013, and Rules issued thereunder and clause 49 ofthe Listing Agreement or Regulation 23 ofthe Listing regulation. During the financial year 2015-16, there were no transactions with related parties which qualify as material transactions underthe Listing Agreement and the listing regulation.
The details of the related party transactions as required under Accounting Standard-18 are set out in Note Nos. 2.28 to the standalone financial statements forming part ofthis Annual Report. The Policy on related party transactions may be accessed on the Companys website at a link:
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 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: http://www.nseprimeir.com/z_TreeHouse/pdffiles/Treehouse_CorporateSocialResponsibilityPolicy_070215.pf
The initiatives undertaken by your Company during the financial year 2015-16 in CSR have been detailed in this Annual Report.
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 ABSORPTION 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.
The details of the Outgoing Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31,2016. The members are requested to refer to the said Note No. 2.34 for details in this regard.
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. Anumber 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 fora period of Seven years. Therefore there were no funds which were required to be transferred to investor Education and Protection Fund (IEPF).
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 form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. September 25,2015), 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 allot any 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 company affecting 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|
|Date: July 28,2016||Managing Director||Director|