Potential Investments and Finance Limited
Your Directors have pleasure in presenting the Annual Report on the business andoperations of the Company together with the Audited Financial Statements for the yearended 31st March 2016.
The summarized financial results of your Company are given in the table below:
(Rs in Lakhs)
|Particulars ||F.Y 2015-16 ||F.Y 2014-15 |
|Operative & Other Income ||1669.07 ||6018.25 |
|Depreciation ||0.39 ||0.88 |
|Profit/loss before tax ||3.24 ||9.33 |
|Profit after tax ||(0.85) ||26.51 |
Keeping in view the performance we are unable to recommend dividend for the year underreview.
The Financial year 2015-16 was marked by structural excess steel capacity globallyfalling demand and steep drop in prices. Indian steel industry in-spite of growth indemand faced severe stress and falling in margins caused by surge in steel imports atpredatory prices. In these challenging conditions the Companys profitability wasalso impacted. The Companys Networth was Rs. 316.06 lakhs as on 31stMarch 2016 as compared to Rs. 316.91 lakhs as on 31st March 2015.
Managements Discussion and Analysis Report
The detailed report on the Managements Discussion and Analysis Report ispresented in a separate section forming part of the Annual Report.
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014. Accordinglythere are no unclaimed or unpaid deposits lying with the Company for the year underreview.
Details of significant and Material Orders passed by the Regulators Courts andTribunal
No significant and material order has been passed by the Regulators Courts andTribunals impacting the going concern status and Companys operations in future.
Change in the nature of business if any
There was no Change in the nature of business of the Company during the Financial Yearended March 31 2016.
Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report
During the financial year 15-16 the Public Announcement is made for open offer foracquisition of 4810000 equity shares by Mr. Saket Agarwal ("Acquirer") inaccordance with Regulation 3(1) and 4 of the Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeovers) Regulations 2011. Further Mr. SaketAgarwal was entered into Share Purchase Agreement with the Promoters of the Company dated21.01.2016 to acquire 3097900 equity shares of Promoters (total holding ofPromoter/Promoter group) aggregating 16.75% of the total holding on 31.03.2016 the totalholding of Mr. Saket Agarwal is 3800000 Equity shares comprising 20.54% of total paid upcapital of the Company..
Directors Responsibility Statement
Pursuant to the Section 134 of the Companies Act 2013 your Directors to the best oftheir knowledge hereby state and confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures. b) Suchaccounting policies and have been applied consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsas at March 31 2016 and of the Company profits or loss for the year ended on that date.c) Proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities. d) The annualfinancial statements have been prepared on a going concern basis. e) The internalfinancial controls were laid down to be followed and such internal financial controls wereadequate and were operating effectively. f) Proper systems were devised to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
Explanations or Comments by the Board on every Qualification Reservation or AdverseRemark
No qualification reservation or adverse remarks were made during the financial2015-16.
Your Company has complied with the requirement of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirement) Regulations 2015 and Clause 49 ofthe erstwhile Listing Agreement regarding Corporate Goverance. A report on the CorporateGovernance practices the Auditors Certificate on compliance of mandatoryrequirements thereof are given as annexure to this part.
Particulars of Contracts and Arrangements with Related Parties
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 the particulars of all contracts /arrangements / transactions entered into by the Company with related parties during thefinancial year are in the ordinary course of business and on arms length basis.During the year the Company had not entered into any contract / arrangement / transactionwith related parties which could be considered material in accordance with the policy ofthe Company on related party transactions and materiality of related party transactions.The policy on dealing with Related Party Transactions as approved by the Board is uploadedon the Companys website http://www.potentialindia.net/investorsinfo/RPTPolicy. ThePolicy intends to ensure that proper reporting approval disclosure process are in placefor all transactions between the Company and Related Parties. This policy specificallydeals with review and approval of Related Party Transaction keeping in mind the Potentialor actual conflicts of interest that may arise because of entering into thesetransactions. All Related Party Transactions are placed before the Audit committee forreview and approval. Prior Omnibus approval for Related Party Transactions which are ofrepetitive nature and/or entered in the course of Business and are at Arms length.All Related Party Transactions which are subjected to Independent review by a reputedaccounting firm to establish compliance with the requirement of Related Party Transactionunder the Companies Act 2013 and Regulation 23 of Securities and Exchange Board of India(Listing Obligation and Disclosure Requirements) Regulations 2015 and Clause 49 of theerstwhile Listing Agreement.
Your Directors draw attention of the members to Note 21 to the Financial Statementwhich sets out related party disclosures. The particulars of contracts and arrangementsentered into by the company with related parties referred to in Section 188 in Form AOC-2is attached herewith as Annexure-B.
Details in respect of adequacy of Internal Financial Controls with reference to theFinancial Statements
The Company has a robust and comprehensive Internal Financial Control Systemcommensurate with the size scale and complexity of its operations. The objective of theseprocedures is to ensure efficient use and protection of the Companys resourcesaccuracy in financial reporting and procedures. Some significant features of Internalcontrols over financial reporting:
The system encompasses the major processes to ensure reliability of financialreporting compliance with the policies procedures laws and regulations safeguardingassets and economical and efficient use of resources.
De-risking the Companys assets/resource and protecting them from any loss.
The policies and procedures adopted by the company ensure the orderly andefficient conduct of its business and adherence to the companys policies preventionand detection of frauds and errors accuracy and completeness of the records and timelypreparation of reliable financial information.
Ensuring the integrity of the accounting system; proper and authorized recordingand reporting of all transactions.
Preparation and monitoring of annual budgets for all operating and servicefunctions.
Ensuring liability of all financial and operational information.
The scope and authority of the Internal Audit function is defined in theInternal Audit Manual. To maintain its objectivity and independence the Internal Auditfunction reports to the Chairman of the Audit Committee of the Board and to the Chairman.The Internal Audit Department monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.
Directors and Key Managerial Personnel
In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Association of the Company Ms. Ruta Jindal (DIN: 01366744) retire byrotation at the forthcoming Annual General Meeting and being eligible offers herself forre-appointment.
Mr. Rajeev Kohli (DIN: 01994387) who was appointed as an additional director of theCompany in the category of Independent director by the Board of Directors with effect from22nd December 2015 in terms of Section 161 of the Companies Act 2013 and interms of Articles of Association of the Company holds office until the date of ensuingAnnual General Meeting. Your Company has received a notice in writing from a member ofyour Company signifying his intention to propose the name of Mr. Rajeev Kohli forappointment as a Director of your Company.
The Proposals regarding the appointment/re-appointment of the aforesaid Directors areplaced for your approval
During the Financial year 2015-16 Mr. Achal Kapoor has resigned from the post ofCompany Secretary & Compliance officer of the Company and Mr. Chetan Malik wasappointed as a Company secretary of the Company.
Policy on directors Appointment and Remuneration
Matching the needs of the Company and enhancing the competencies of the Board are thebasis for the Nomination and Remuneration Committee to select a candidate for appointmentto the Board. The current policy is to have a balance mix of executive and non-executiveIndependent Directors to maintain the Independence of the Board and separate its functionof governance and management. As at 31.03.2016 the Board of Directors comprises of 4Directors of which 3 are non-executive including 1 women Director. The number ofIndependent Directors is 2 which is one half of the total numbers of Directors. ThePolicy of the Company on Directors appointment including criteria for determiningqualifications positive attributes independence of Directors and other matters asrequired under Section 173 of Companies Act 2013. The remuneration paid to the Directorsis in accordance with the remuneration policy of the Company.
Declaration by Independent Director(s)
All the Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149 of the Companies Act 2013 andRegulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015so as to qualify themselves to be appointed as Independent Directors under the provisionsof the Companies Act 2013 and the relevant rules.
The Board carried out an annual performance of its own performance the IndependentDirectors individually as well as the evaluation of the working of various Committees ofthe Board. The performance evaluation was carried out the Nomination and RemunerationCommittee. The performance evaluation of the Chairman and the Non-Independent Directorswas carried out by the Independent Directors. Details of the same are given in the Reportof Corporate Governance annexed hereto.
Criteria for Evaluation of Directors
For the purpose of proper evaluation the Directors of the Company have been divided in3 (three) categories i.e. Independent Non-Independent and Non-Executive and Executive.The criteria for evaluation includes factors such as engagement strategic planning andvision team spirit and consensus building effective leadership domain knowledgemanagement qualities team work abilities result/achievements understanding andawareness motivation/ commitment/ diligence integrity/ ethics/ value and openness/receptivity.
Number of Meetings of the Board of Directors
During the year 10 Board meeting were convened and held the details of which are givenunder Corporate Governance Report. The intervening gap between the Meetings was within theperiod prescribed under the Companies Act 2013 and Regulation 17 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
The Audit Committee comprises three Directors of which two are Non-Executive andIndependent Directors. Mr. Bharat Bhushan Sahny is the Chairman of the Committee. Themembers posses the adequate knowledge of Accounts Audit and Finance etc. The Compositionthe Committee meets the requirement as per Section 177 of the Companies Act 2013 andRegulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and Clause 49 of the erstwhile Listing Agreement. There are no recommendations of theAudit Committee which have not been accepted by the Board.
Details of establishment of Vigil Mechanism for Directors and Employees
The Company has a vigil mechanism named to deal with instance of fraud andmismanagement if any. Details of the same are in Corporate Governance Report.
Auditors and Auditors Report
A. Statutory Auditors: At the Companys 33rd Annual General Meeting(AGM) held on 28th September 2015 M/s VAPS & Co. Chartered AccountantsAuditors of the Company were appointed as the Companys Statutory Auditors from theconclusion of the 33rd AGM till the conclusion of the 37th AGM. Interms of Section 139 of the Companies Act 2013 the appointment of the statutory auditorsto hold office from the conclusion of the 33rd AGM until the conclusion of the37th AGM is placed before your ratification. The Auditors Report to theshareholders for the period under review does not contain any qualification. No fraudshave been reported by the Auditors under Section 143(12) of the Companies Act 2013requiring disclosure in the Boards Report.
B. Secretarial Auditors: Pursuant to the provisions of Section 204 of the CompaniesAct 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the Company has appointed M/s Anjali Yadav & Associates Company Secretaries toconduct Secretarial Audit for Financial Year 2015-16. The Secretarial Audit Report for theFinancial Year ended on 31st March 2016 is annexed herewith marked as Annexure"C" to this Report. The Secretarial Audit Report is self-explanatory andtherefore do not call for any further comments.
Particulars of Loans Guarantees or Investments under Section 186 of the Companies Act2013
Details of Loans Guarantees and Investments covered under provisions of Section 186 ofthe Companies Act 2013 are given in the notes to the Financial Statements.
There was no change in the Companys share capital during the period under review.The Companys paid up equity Share capital remained at Rs. 37000000 comprising18500000 equity shares of Rs. 2/- each.
Extract of the Annual Return
In accordance with the provisions of Section 134 (3)(a) of the Companies Act 2013 theextract of the Annual Return in Form no. MGT-9 is annexed hereto as Annexure-"A"and forms part of the this Report.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
Information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3) (m) of Companies Act 2013read with the Rule 8 (3) of the Companies (Accounts) Rules 2014 is annexed hereto asAnnexure "E" forming part of this Report.
Particulars of Employees and related disclosures
Details pursuant to Section 197(12) of the Companies Act 2013 read with Rules 5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014form part of this Annual Report and annexed herewith as Annexure "D".
Disclosure as per Sexual Harassment of women at workplace (Prevention Prohibition andRedressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the rules framed there under. No complaint has been receivedfor sexual harassment of women at work place by the Company during the financial year2015-16.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 125 (2) (c) of the Companies Act 2013 theCompany is not required to transfer any amount during the financial year 2015-16 to theInvestor Education and Protection Fund.
Yours Directors take this opportunity to express their appreciation for theco-operation received from the customers vendors bankers stock exchanges depositoriesauditors legal advisors consultants business associates state government and localbodies during the period under review. The Directors also wish to place on record theirappreciation of the devoted and dedicated services rendered by the employees of theCompany.
| ||By the Order of the Board |
| ||Potential Investments and finance Limited |
| ||Sd/- |
|Place: Delhi ||Saket Agarwal |
|Date: 20.07.2016 ||Director |