To the Members of
Cals Refineries Limited
The Directors present their Thirty First Annual Report and Audited Financial Statementsfor the financial year 2014-15.
1. Financial Summary/highlights on Performance of the Company(Standalone)
(Rs. in million)
|Description || |
Year Ended March 31 2015
Year Ended March 31 2014
|Revenue from Operations ||- ||- |
|Other Income ||0.16 ||3.76 |
|Total Revenue || |
|Operational Expenses ||- ||- |
|Employee Benefit Expenses ||6.47 ||6.32 |
|Interest and Finance Charges ||0.00 ||81.90 |
|Depreciation and Amortizations ||0.38 ||0.45 |
|Other Expenses ||8.29 ||17.57 |
|Total Expenses || |
|Profit/(Loss) before exceptional items || |
|Exceptional Items ||5587.67 ||(47.19) |
|Profit/(Loss) for the year || |
As there is no operating income and consequently no profit is available fordistribution as dividend.
The Company is not having any income and therefore there is no surplus available to becarried forward to Reserves.
4. Brief description of the Company's working during the year/ State ofCompany's affair
A. Company's operation during the year
This business operation of the Company has been stand still since long. We have to theextent possible tried to explain the reason behind such situation. The prime reasons forsuch stagnancy in the business operation was the investigation conducted by the Securitiesand Exchange Board of India (SEBI) and the restrictive order passed by SEBI in thisrespect in the year 2011.
The prolonged investigation took approx. 2 years and ended with a negative orderagainst the Company issued on 23rd October 2013 restricting the Company from enteringinto the securities market and altering its capital structure in any manner effectivelyfor period of 8 years from the date of the order. The Company has challenged that order ofSEBI at Securities Appellate Tribunal in December 2013. Approx. 2 years have elapsedsince then and the matter is still pending before the Tribunal.
The aforesaid incident has grossly affected the status of the Company at large and as aresult the business operations of the company have come to a complete stand still.
Since there is no business operation in the Company the prime responsibility of theCompany is limited to the compliances of the various statutory requirements underdifferent laws rules and regulations dealing with the litigations and other day to dayadministrative activities.
In addition to the above and as apparent from the financial statement the Company hasnot had any operational income since a long time and therefore serious thought is requiredto be taken on how the requisite funds should be arranged to maintain the necessarystatuary compliances of the Companies.Being a listed Company with a wide shareholder baseof approx. 1.85 lakh shareholders the costs of compliances remains on the higher side. Itis pertinent to note here that the Management of the Company remains vigilant to thenecessary compliances as applicable to the Company.They have ensured that all therequisite compliances are complied with in the given time period of the prescribed lawrules and regulations. Despite of having no operational income and facing the prohibitoryorders of SEBI from entering into the market the Company had managed to efficientlycomply with all the applicable compliances and has also not defaulted on the payment ofthe statutory dues.
Till date the Company has been managing its day to day activity expenses to make thenecessary compliances and payment of statutory dues through an arrangement of loan fromone of its related parties namely Nyra Holdings Pvt. Ltd. which may not be a viable longterm solution. Considering the constraint situation of the Company your Company has alsowritten to the Securities and Exchange Board with a copy to the Registrar of Companiesmaking prayers that an exemption be granted to the Company from making its Compliancestill the SEBI prohibition is lifted and to allow M/s Nyra Holdings Private Limited to giveinterest free loans to the company without considering the same to be a default of theprovisions of the Companies Act 2013 and also to modify the SEBI order dated 23rd October2013 and permit the current promoters (M/s Nyra Holdings Private Limited in specific) toinduct capital / funds against issue of equity. The Company has received no reply tilldate.
Further to reiterate the Company's operation has come to a standstill and noimprovements is being made towards implementation of the project of the Company.Thecontracts and the agreements which were entered by the Company w.r.t the implementation ofthe refinery project have also lapsed or expired long back. Capital advances which weremade at the implementation stage of the project are either not recoverable or specificperformance against the said advances cannot be enforced. The Board of Directors afteranalyzing the status and also based on the opinion received from legal firms have decidedto write off these advances land and pre-operative expenses etc. from the balance sheetof the Company to give true and fair picture of the financial statement. The Boardfurther considered that carrying such advances which have no material value or relevanceto the books of accounts would be inappropriate and would not give a true and fair view tothe investors/shareholders of the Company.
It should also be noted that such writing off of aforesaid advances land andpre-operative expense have resulted in substantial change in the profit/loss of theCompany as compared to the previous year. The loss for this year is Rs. 5602.65 Million.as compared to the Loss for the previous year of Rs. 55.29 Million.This has furtheraffected the Net worth of the Company which is now completely eroded.
The Auditors have also pointed this out in their Report and qualified theiropinion the Board has given their comment on the qualification of Auditors in thelater part of this Report.
Investigation of Serious Fraud Investigation Office (SFIO)
The Members be apprised that the Serious fraud investgation office (SFIO) had initiatedan investigation into the affairs of the Company on 4th Day of February 2015. They wereappointed as investigating authority under section 212 of the Companies Act 2013 theinvestigation was relating to the issuance of GDRs by the Company in the year 2007 and theproposed GDR issue in the year 2011.
Your Company has provided all the requisite information and lent the necessary supportto the officers of SFIO we have also provided all the documents as enquired by them fromtime to time.
B. Status of project
Company's Crude Oil refinery proposed in 2007 at Haldia (West Bengal) with a capacityof 5 MMTPA has now become unviable and is an opportunity lost on account ofnon-availability of funds restrictive order of SEBI having a long lasting impact pendinglitigations unrecoverable advances paid to suppliers on account of non-fulfilment offinancial obligations by company in time. As considerable time has lapsed and the companycould not raise the required funding in time all efforts and investments in the projecthas been reduced to negligible financial value.A discussion containing importantmilestones past and present status of the project is given below which would give a fairidea of how non-achievement of financial closure and other related issues have damaged theprospect of the project revival:
Allotment of land admeasuring about 400 acres at Haldia by HaldiaDevelopment Agency (HDA) West Bengal
Haldia Development Authority (HDA) vide its memo dated March 25 2008 offered landadmeasuring about 400 acres at Haldia West Bengal to the Company for setting up therefinery project ('the project'). As per the terms of the said memo lease premium of Rs.600 million was stipulated which could not be paid by the company pending financialclosure for the refinery project. Subsequently the Company entered into a tripartiteagreement dated March 19 2010 along with HDA and West Bengal Industrial DevelopmentCorporation Limited (WBIDC). The Company was given permissive possession of the land for aperiod of six months from the date of the agreement with a condition that the land shallbe sub-leased in favour of the Company at the end of six months subject to compliancewith certain conditions. Since the Company could not comply with these conditions it hadrequested additional time from WBIDC for the same.
WBIDC while granting such extension stipulated additional conditions relating to tieup of equity and achievement of financial closure for the project. The Company was not ina position to comply with these conditions as the SEBI order was subsisting and informedWBIDC accordingly requesting further extension. However WBIDC had not acceded to theCompany's request and had withdrawn the permissive possession of land.
In the absence of any development in the project and withdrawal of the permissivepossession of land Cost of leasehold land Rs. 990.71 million including cost of landdevelopment Rs. 196.91 million and civil work of factory building (included in capitalwork in progress) Rs. 49.64 million are written off.
The Ministry of Forest and Environment (MOEF) upon our application had accordedEnvironmental Clearance for 5 MMTPA refinery project Company in the past the Company hadrevised the capacity of refinery envisaged in Haldia to 10 MMTPA from 5 MMTPA and hadfiled an application to Ministry of Environment to enhance the approval for putting up200000 bpd equivalent to 10 MMTPA capacity refineries. The Ministry vide its letter datedSeptember 20 2011 declined the request as Haldia has been notified as a criticallypolluted area and no new capacity or expansion can be permitted till it is de-notified.
Initial civil construction was done at the project site and included the boundary wallat the project site. The other necessary construction w.r.t establishment of the refinerywas being undertaken in the past. Presently no construction is going on at the site.
Arrangements to the Import of Plant and Machinery (the Refineries) toIndia:
Initially the Company entered into contracts for relocation of one refinery fromIngolstadt Germany and had also paid advances for such equipments. However the Companycould not achieve financial closure and fulfill the terms of the said contract resultingin cancellation of the contract and forfeiture of the advances paid.
Similarly other advances were also paid to various other suppliers for import ofrefinery and refinery equipments. These have also now been written off as the companycould not achieve financial closure and fulfil the terms of the contracts. Further theCompany on March 15 2011 entered into an Asset Purchase Agreement with TagoreInvestments SA (Tagore) (an affiliate of Hardt group) for the CENCO Petroleum Refinery ata cost of US$ 275 million. The Company had also contracted for another set of Refineryequipments from another affiliate of Hardt group namely Amber Energy SA (Amber) at a costof US$ 142 million. Simultaneously the Company had entered in to a 'Deed of Novation'with an affiliate of Hardt Group for assuming the contractual obligations envisaged on thesupplier under an erstwhile agreement of plant & machinery for which an advance of Rs.4583.44 million had been paid. The Hardt Group had agreed to become a strategic investorin the Company and assist it in implementing the refinery project. Abboro Limited(affiliate of Hardt Group) had brought in Rs. 136.52 million as equity during March 2011to March 2012 (out of which 120.76 million already allotted & the balance 15.76million to be allotted as equity shares). However these agreements have also now lapsedand after the restrictive order of SEBI their commitment to the project may havediminished.
C. Future outlook
As reported above that the Company has been sailing through rough times for the pastfew years and the reasons for same were also explained to the extent possible. Presentlythe management is only concentrating on trying to get rid of the adverse conditions.Itwould be pertinent to note that the Company's future will be depending on the outcome ofthe proceeding at SAT where Company has filed an appeal against the restrictive order ofthe SEBI issued against the Company on 23rd October 2013.
In the current circumstances any discussion on the project implementation will be afutile exercise as with passage of time the chances of the survival of the project aregetting bleak. The previous contracts agreements which were entered into w.r.t theimplementation of refineries have expired long back and now not in force moreover atthis moment the Company has no operational project and hence no operational revenuesaccrues to the Company. Moreover as reported above various capital advancespre-operative expenses consultancy fee and capital work in progress were written offfrom the balance sheet of the Company just to give true and fair picture of thefinancials.As submitted above that the Company's future is highly dependent on the outcomeof the SAT in the proceedings against the restrictive order of the SEBI.
5. Change in the nature of business if any
There was no change in the nature of business of the Company during the financial year2014-15.
6. Material changes and commitments if any affecting the financialposition of the company which have occurred between the end of the financial year of thecompany to which the financial statements relate and the date of the report.
There are no changes and commitments which are affecting the financial position of theCompany from the end of the financial year i.e. 31st March 2015 till the date of thisReport. i.e 07th August 2015. Though Ms. Rekha Sarda the Chief Financial Officer (CFO)of the Company has resigned from the office w.e.f 29th July 2015. The Company is in theprocess to identify a suitable person to be appointed as CFO of the Company.
7. Details of significant and material orders passed by the regulators orcourts or tribunals impacting the going concern status and company's operations in future.
SEBI Vide Interim Order in 21st September 2011 had issued directions to the Companynot to issue equity or any other instruments convertible into equity or alter capitalstructure in any manner till further directions which was confirmed on 30th December2011. The SEBI further issued a final order dated 23rd October 2013 against the Companywhich operative portions are as under:
a. That the Company will not issue equity shares or any other instrumentsconvertible into equity shares or any other security for a period of ten years.
b. Vide Interim Order dated September 21 2011 (later confirmed through theConfirmatory Order on December 30 2011) the Company was directed not to issue equityshares or any other instrument convertible into equity shares or alter their capitalstructure in any manner till further directions. In this context the Company has alreadyundergone the prohibition imposed vide the Interim Order for a period of approximately twoyears. In view of this factual situation it is clarified that the prohibition alreadyundergone by the Company pursuant to the aforementioned SEBI Order shall be reduced whilecomputing the period in respect of the prohibition imposed vide this order.
From the above Order it is clear that the Company is restrained from issuing anyfurther equity shares or any other instruments convertible into equity shares or anyother security effectively for a period of eight years (approx) from the date of theorder.
The Company's various efforts to restart the project also failed due to the embargo onissue of new equity by SEBI. The aforesaid order has also compelled the Company to standstill its project and also to struggle to manage funds for its day to day operations.
The aforesaid restrictive order has helped building such circumstances wherein theCompany was not able to move ahead with its project and various contracts and agreementswhich were entered into and for which advances were paid have expired long back. TheManagement has taken suitable decision to write off such advances pre-operative expensesconsultancy fee and capital work in progress to give true and fair picture of thefinancials though such writing off has completely eroded net worth of the Company.
The Auditors of the Company has taken note of the same and qualified their Reportraising their apprehension on the going concern of the Company. The management has giventheir detailed comments on such qualification of the Auditors at the later part ofthis Report. Though it is pertinent to note that the ability of the Company to continue asa going concern is significantly dependent on getting a favourable order from SAT and themanagement is confident for such favourable order.
8. Details in respect of adequacy of internal financial controls withreference to the Financial Statements.
The Company has adequately adopted the procedures to ensure the proper internalcontrol suitable policies and guidelines as required under various provisions of theCompanies Act 2013 and the Listing Agreement are in place. These policies e.g. VigilMechanism policies/Whistle Blower Policies Risk Management Policy are meant to adhere theproper guideline rules and regulations to comply with the requirement of the law toreduce the possible threats of fraud and to ensure the orderly and efficient conduct ofthe business of the Company. These policies and guidelines are adequately monitored by thedesignated Committees of the Board.
The Company apart from the above has also in place a system of Internal Controladequate in respect to the size and operations of the Company. M/s Hemant K. Agrawal &Associates had been the Internal Auditor of the Company for the financial year 2014-15.He has been conducting internal audit at regular intervals at every quarter ending. Nomaterial discrepancies have reported by him during the period of his Audit. The Companyprepares the financial information/Reporting as per the requisite requirements of theCompanies Act 2013 and the Listing Agreement and place it to the Audit Committee andBoard for the approval once approved the said financial results are submitted to thestock exchange and also placed on the website of the Company.
9. Details of Subsidiary/ Joint Ventures/ Associate Companies
The Company neither has any Subsidiary nor any Joint Venture or AssociateCompany.Since the Company is not having any Subsidiary accordingly no policy has beenformulated for determining Material Subsidiaries.
10. Performance and financial position of each of the subsidiaries associates andjoint venture companies included in the consolidated financial statement.
The Company is not having any Subsidiary Joint Venture or Associate Company.
The Company has not accepted any deposits during financial year 2014-15 under theprovisions of Chapter V of Companies Act 2013.
12. Statutory Auditors
M/s Kanu Doshi Associates Chartered Accountants (ICAI Firm Registration No.- 104746W)have conducted the audit of the Company for the financial year 2014-15. They have showntheir unwillingness to continue as auditor of the Company.
In view of the above the Audit Committee considered appointment of a new auditor. Itwas noted that all the operations of the Company including day to day activities are basedat Delhi. Majority of the Board members reside in Delhi-NCR and meetings of the Board ofDirectors are ordinarily held in Delhi. The registered office of the Company is also atDelhi. Hence the committee agreed to hire services of a CA Firm based at Delhi-NCR. TheCommittee after review of few profiles of the Auditors found M/s VATSS & AssociatesChartered Accountants New Delhi (Firm Registration No.- 017573N) suitable to replace theretiring auditors M/s Kanu Doshi Associates Mumbai. Consent of the proposed auditors wasobtained. The new auditors have agreed to complete the audit for the financial year2015-16 at the same fees which was being charged by the retiring auditors.
The Board recommends the appointment of M/s VATSS & Associates CharteredAccountants as the new auditors of the Company for a period of 5 consecutive yearscommencing from the financial year 2015-16 till the financial year 2019-2020 subject tothe ratification of the appointment by the members at every Annual General Meeting.Members are requested to consider and approve the same.
13. Auditors' Report
The Auditors have qualified their Audit Report issued to the Company by stating thefollowing qualification:
"Attention of the matters is invited to note no. 30(d) of the notes to accountsregarding the financial statements of the Company having been prepared on a Going concernbasis notwithstanding that due to continuous losses incurred by the Company during thepast years and current year the accumulated losses of the Company have far exceeded itsnet worth resulting in negative net worth on balance sheet date. The Company haswritten-off a substantial part of its Fixed Asset during the year. This situationindicates the existence of a material uncertainty that may cast a significant doubt on theCompany's ability to continue as a Going concern."
The Board considered the aforesaid qualification and recorded its comment as below:
The board noted that the audit qualification has raised the question on the ability ofthe Company to continue as going concern as the Company has suffered continous losses inpast years and in current year the accumulated losses of the Company have far exceeded itsNet Worth resulting in negative Net Worth on the balance sheet date as the Company haswritten-off a substantial part of its Fixed Asset during the year.
The board had further taken on record that the Losses which the Company has sufferedduring the previous years were obvious as the Company was going through theimplementation process of the project and the expenses were incurred as pre-operationalexpenses of the project since 2011 i.e. till the time when SEBI has issued its interimorder prohibiting the Company from entering into the capital market or issuing any kindof securities and altering its capital structure. This order had slowed the projectimplementation process and related expenses. A final order by SEBI against the company on23rd October 2013 which has prohibited the Company from entering into the capitalmarket or issuing any kind of securities and altering its capital structure for aneffective period of approx 8 years from the date of the order. Thesaid order has beenchallenged at Securities and Appelated Tribunal for which the proceeding is going on.However this restrictive order has brought this Company to be in a position where noproject could be implemented and no source of income could be generated till date whichhas in turn resulted into the accumulated losses for the Company over the year.
The Board took note of the auditor's Observation on writing off of substantial part ofthe Fixed Asssets during the year. The Board recorded that the writing off of the FixedAssets were required and mandated to give a true and fair picture of the financialstatement. The Board noted that the auditors in the meeting of the Board of Directors heldon 10th february 2015 had raised query regarding the sanctity of carrying capitaladvances in the books as the enforcing contracts and agreements mandating these advancesearlier given expired long back. They had wanted board to review the possibility of therecovery of the advances.
The Board thereafter took the legal opinion on this matter from M/s Chauhan andChauhan Law Office Greater Kailash Part-1 New Delhi-110048 The lawyer have consideredall the aspect relating to this matter Including evaluation of two core concerns on theissue i.e
A. Status of Asiatexx contracts and
B. Options/ Remedies Available Qua Advances Made
Relevant extract of the lawyer's opinion is reproduced herein below for readyreference.
A. Status of Asiatexx contracts
"We accordingly are of the opinion conclude that any endevourto claim enforcement or pursue the Asiatexx contract shall prove to be a futile exercisewith nil chances of success. We are further of the opinion that the SEBI Order dated23rd October 2013 inter alia prohibiting/ banning Querist from not issuing any equityshares or any other instruments convertible into equity shares or any other security isoperative binding and continues to subsists. Though an appeal has been filed however nostay has been granted. As such and presently for this very reason the Querist is not in aposition to comply with its obligations to issue GDRs.
The company also cannot violate the SEBI orders. Otherwise also we are informed thatthe Querist has no running business or revenue return or available funds to make balanceor equivalent payments under these contracts. At one time it may have been a viableproject but presently it has no takers. Infact the company is at its worst and facing asevere financial crunch. The project site/ lands given under concessions agreement atHaldia West Bengal have been cancelled. In absence of such site/land the RefineryProject it seems cannot be implemented. All these supervening factors are required to beconsidered in a correct perspective. Necessarily they further render it futile andimprudent for the Querist to pursue or try to enforce the Asiatexx agreement with Asiatexxor Hardt Group or seek its performance."
On another note it is imperative to point out that Asiatexx we areinformed is a company devoid of assets. Any proceedings initiated against Asiatexx evenif successful including by a arbitration award in favour Querist would not result inpayments being realized by the Querist. Asiatexx is also likely to resist any proceedings/ award on the ground of (a) fraud having been perpetrated against it (b) no moneyshaving been received by it consequent to the fraud.
B. Options/ Remedies Available Qua Advances Made
We further more and am of the opinion that by way of the SEBI Order dated31st December 2014 has exercised jurisdiction over the advances paid to Asiatexxcontract. Also all issues as to Asiatexx contract are open and pending before the SEBI/SAT. Querits itself is a party to these proceedings. Presently therefore to file claimsfor recovery of advance may not serve any purpose. We believe the Querist should anywaysawait the final outcome of the SEBI/ SAT proceedings. One of the possible outcome of theseproceedings can be that the order of disgorgement is confirmed either to be paid by GaganRastogi/ Asiatexx or Sanjay Malhotra. In any event at such stage the purpose of recoverywould be achieved in investor interest. We also note that the SEBI in its capacity as aregulator is bound to deal with the proceeds of disgorgement in terms of Securities andExchange Board of India (Investor Protection and Education Fund) Regulations 2009. TheseRegulations provide for establishment of the Investor Protection fund. Rule 5 of thesesRegulations further provide the purposes for which the fund can be utilized. Significantlyby way of sub-section 3 of Rule 5 the Board has to ultlize the amounts disgorged andcredited to the fund and the interest accrued thereon to restitute eligible andidentifiable investors who have suffered losses resulting from violation of securitieslaws. Necessarily this adjudication currently underway cannot be pre-empted. Querist mustawait its outcome as per law.
We furthermore note that from the circumstances explained above theadvances to Asiatexx should be written off in the books of the Querist so that thefinancial statements of the Querist reflect true and fair view of the financial position.It be also noted and for this we find support in a Supreme Court Judgment of SalimAkbarali Nanji Vs Union of India (UOI) and Ors.; holding that the concept of writingoff debts is a internal management/ accounting procedure to clean up the balance sheet ofa company. Such procedure/ decision to write off an advance/ debt can be resorted to evenin cases where a party has not exhausted all the avenues for recovery of dues. It has noimpact on the right of a party to proceed against the opposite party. Nor does it bar orrender non-maintainable recovery proceedings.
The Board after considering the aforesaid legal opinion and considering thatpossibility of recovery of the Capital advances or enforceability of such Contract(including novation) against them is bleak consented to write off these advances.
The board recorded that the decision of writing off is necessary to give true and fairview of the financial statement of the Company the Board while taking it on record alsodecided to write off other Fixed Assets and advances which is having similar nature asaforesaid and accordingly various advances fixed assets and Pre-operative expenses werewritten off by the Board. Details of write offs are appropriately explained in the notesto the accounts.
Even if the auditors have qualified their report by raising apprehension on the goingconcern status of the Company as the Company's networth has been completely eroded due tothe decision taken by the management to write off various capital advances and fixedassets. Your management justify its decision as such writing off is to give true and fairpictures of the financial statement of the Company. Apart from this your management isalso hoping to have the positive outcome from the SAT proceedings which Company hasinitiated against the restrictive orders of the SEBI which will considerably determinethe future of the Company.
14. Share Capital
The Company's Capital Structure remains unchanged during Financial Year 2014-15.
15. Extract of the annual return
The extract of the annual return in Form No. MGT - 9 is annexed as Annexure -01.
16. Conservation of energy technology absorption and foreign exchange earnings andoutgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
(A) Conservation of energy and Technology absorption
The Company has not initiated its operations till date no particulars in respect ofconservation of energy and technology absorption have been furnished as per Section134(3)(m) of the Companies Act 2013.
(B) Foreign exchange earnings and Outgo
There were no foreign exchange earnings and outgo during the year under review.
17. Corporate Social Responsibility (CSR)
The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is enclosed as Annexure-02.
A) Changes in Directors and Key Managerial Personnel: Cessation of Directors:
During the Year under review Mr. Alexander Walter Schweickhardt ceased to beassociated with the Company as a Director on the Board with effect from the end of thebusiness hours on 31st March 2015 due to vacation of office under Section 167 of theCompanies Act 2013 for not attending any meetings of the Board during the Financial year2014-15. In spite of giving due notice of the meeting of the Board of Directors and alsomaking him aware about the relevant provisions of the Companies Act 2013 w.r.t vacationof office of Director he did not turn up for the meeting.
The Directors would like to place on record their appreciation of the contributionsmade by Mr. Alexander Walter Schweickhardt during his tenure as the Non- ExecutiveIndependent Director.
Appointment of New Directors:
The Board of Directors on the recommendations of the Nomination & RemunerationCommittee appointed Mrs. Monika Moorjani as Additional Directors (in capacity ofIndependent Director) on 10th February 2015 in compliance to Section 149 and 161 of theCompanies Act 2013 read with Clause 49 of the listing agreement and she will be holdingthe office of Director till the date of ensuing Annual General Meeting of the Company.Appointment of Mrs. Monika Moorjani as an Independent Director in the Company alsofulfills the requirement of appointment of a Women Director as per Rule 3 of Companies(Appointment and Qualification of Directors) Rules 2014 and Clause 49(II)(A)(1) of theEquity Listing Agreement entered into with Stock Exchange.
Reappointment of Directors:
As mentioned above the office of Mrs. Monika Moorjani as an additional Director in theCompany is till the date of ensuing Annual General Meeting of the Company. The Company hasreceived notices under Section 160 (1) of the Companies Act 2013 from member(s) proposingher candidature for appointment as directors. The Board of Directors has recommended herappointment.
Further Subject to the provisions of Section 152(6) of Companies act 2013 Mr. DeepKumar Rastogi Director of the Company is liable to retire by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for re-appointment. Briefresume of directors seeking appointment and reappointment along with other details asstipulated under clause 49 of the listing agreement are provided in the Notice forconvening the Annual General Meeting.
B) Declaration by an Independent Director(s) & reappointment if any
All Independent Directors have submitted declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 ofthe listing agreement.
C) Details of training imparted to Independent Directors
Every new Independent Director inducted on the Board attends an orientation program inwhich he/she is familiarized with the strategy operations and Status of the Company. Theyare further briefed with history of the Company and also handed over a Copy of the bunchof Company's Annual reports its Memorandum and Articles of Association various policiesand the Code of Conduct of the Company.
Further at the time of appointment of an Independent Director the Company issues aformal letter of appointment outlining his/her role functions and duties/responsibilitiesas a Director. The Format of the letter of appointment is provided on our website a weblink thereto is given below: http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20Model%20LOI%20-%20Independent % 20Directors.pdf
D) Formal Annual Evaluation
Clause 49 of the Listing Agreement mandates that the Board shall monitor and review theframework of its evaluation. The Companies Act 2013 states that a formal annualevaluation needs to be made by the Board of its own performance and that of its committeesand individual Directors. Schedule IV of the Companies Act 2013 states that theperformance evaluation of Independent Directors shall be done by the entire Board ofDirectors excluding the Director being evaluated.
The Independent Directors of the Company in their meeting held on February 10 2015reviewed the performance of the Non Independent Directors in case of our Company Mr.Deep Kumar Rastogi the Executive chairman of the Company and the Board as a whole.Further the Board of Directors in their meeting held on May 29 2015 evaluated theperformance of all the Independent Directors based on set questioners circulated to theBoard. On the Basis of the above evaluations the performance of the entire BoardExecutive Directors and Independent Directors were found satisfactory specially takinginto consideration of the existing circumstances in which the Company is operating.
19. Number of meetings of the Board of Directors
The Board met 5 Times during the year the details of which are given in CorporateGovernance report forming part of this annual report. The intervening gap between any twomeetings was within the time prescribed under Companies Act 2013.
20. Audit Committee
During the year the Audit Committee was constituted with Mr. Sameer Rajpal Chairmanof the Committee Mr. Pranav Kumar and Mr. Alexander Walter Schweickhardt. However theoffice Mr. Alexander Walter Schweickhardtwas vacated with effect from the end of thebusiness hours of 31st March 2015 under Section 167 of the Companies Act 2013 for notattending any meetings of the Board during the Financial year 2014-15. The Committee wasreconstituted with the appointment of Mr. Deep Kumar Rastogi as a member of the Committee.
A detail description about the audit Committee is given in the Corporate GovernanceReport forming part of the Director's Report.
Further all recommendations made by Audit Committee during the year were accepted bythe Board.
21. Details of establishment of vigil mechanism for directors and employees
The Members of the Audit Committee recommended to the Board a draft VigilMechanism/Whistle Blower Policy as per the requirements of Section 177 of Companies Act2013 and Clause 49(II)(F) of the Listing Agreement in their meeting held on 14th November2014 and finally accepted and adopted by the Board in the meeting held on February 102015.
A weblink to the policy is mentioned below:http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20Vigil%20Mechanism.pdf
22. Nomination and Remuneration Committee
The policy formulated by the Board relating to the remuneration for the Directors KeyManagerial Personnel and other employees and also the Criteria for determining theQualifications positive attributes and Independence of a Director pursuant to Section178(3) of Companies Act 2013 is annexed as Annexure-03 to this Report.
23. Particulars of loans guarantees or investments under section 186
The Company has not granted any Loans extended any Guarantees or made Investmentsduring the Financial year 2014-15 pursuant the provisions of Section 186 of CompaniesAct 2013.
24. Particulars of contracts or arrangements with related parties
The Company has not made any contracts with related parties pursuant to Section 188 ofCompanies Act 2013.
However your Company has been obtaining loan from Nyra Holdings Pvt. Ltd. a relatedparty as per Section 2 (76) of the Companies Act 2013 to meet its day to day financialneeds and also to meet the statutory dues and necessary compliances. Such arrangements ofobtaining loan from related party falls into the category of material related partytransaction as per Clause 49 (VII) of the Listing Agreement.
Further clause 49 (VII)(C) differentiate the related party transaction and thematerial related party transaction it prescribes the limit of the transaction which willbe treated as the material related party transaction i.e. "transaction/s withrelated party being entered individually or taken together with previous transactionduring a financial year exceeds 10% of the annual consolidated turnover of the Company asper the last audited financial statement will be material related party transaction. SubClause (E) of this clause mandates that all material related party transaction shallrequire approval of the shareholders through special resolution.
As on the date of the Balance sheet of 31st March 2015 your company has borrowed asum of Rs. 6.83 Crores from Nyra Holdings Private Limited however in the financial year2014-15 the total borrowing from the said related party was Rs. 1.14 Crores. As Company'sTurnover as per previous audited Balance Sheet (2013-14) is Nil the aforesaid transactionwith Nyra holdings pvt. Ltd. shall be treated as material related party transaction whichrequires approval of the shareholders. The Company has circulated the matter in the Noticeconvening this AGM for the requisite approval of the shareholders.
Moreover the Company has formulated a policy on materiality of related partytransactions and also on dealing with Related Party Transactions which can be downloadedfrom the link mentioned below:http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20RPT%20Policy.pdf
25. Managerial Remuneration:
Disclosure pursuant to Section 197(12) of Companies Act 2013 and Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided below:
i) The Ratio of the remuneration of each Director to the Median remuneration of theemployees of the Company for the year 2014-15:
|Directors ||Nature of Directorship ||Ratio |
|Mr. Deep Kumar Rastogi ||Whole time Director & Executive Chairman ||N.A.* |
|Mr. Alexander Walter Schweickhardt ||Non-Executive Independent Director ||N.A.* |
|Mr. Pranav Kumar ||Non-Executive Independent Director ||1:15.33 |
|Mr. Sameer Rajpal ||Non-Executive Independent Director ||1:13.63 |
|Mrs. Monika Moorjani ||Non-Executive Independent Director ||1:110.39 |
*Mr. Deep Kumar Rastogi and Mr. Alexander Walter Schweickhardt had opted not towithdraw any remuneration during the year.
ii) The percentage increase in remuneration of each Director CFO CEO CS or Managerin the financial year: There was no increase in the remuneration of any of the Directorduring the financial year.
The remuneration of CS & CFO of the Company has been increased by 21.83% and 8.72%respectively from financial year 2013-14.
iii) the percentage increase in the median remuneration of employees in the financialyear: An increase of 16.37% from financial year 2013-14.
iv) the number of permanent employees on the rolls of Company: During the year 2014-15there were 4 employees on the rolls of the Company one of the employee left the Companyin the middle of the year. Accordingly as on 31st March 2015 only 3 employees werethere on the rolls of the Company.
v) the explanation on the relationship between average increase in remuneration andCompany Performance: The Company is not into operations since a long it has recorded hugelosses and also maintaining the bare minimum staff required to keep the Company going. Themanagement decided to make a nominal increase in the remuneration of the employees toretain them according to their caliber and expertise and to match up with the growinginflation.
vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company: Out of the three KMP's in the Company Mr. Deep Kumar Rastogithe Whole time Director is not withdrawing any remuneration from the Company.
Apart from him remuneration of CS & CFO of the Company has been increased by21.83% and 8.71% respectively from financial year 2013-14 which was necessary to retainthem and to match up the growing inflation. The Company is facing a lot of legalcomplexities and therefore qualified and experienced personnel is required to sail theCompany out of this adverse situation and hence it was imperative to give them their dueraise.
vii) variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer:
The Company had allotted shares at Rs. 10/- each under its last public offer which werelater subdivided into face value of Rs. 1/- per Equity Share. The Market Quotations/priceof shares as at 31st March 2015 at BSE compared to the IPO decreased by 91%.
|Particulars || |
As at 31st March 2015
As at 31st March 2014
|Closing Share Price ||Rs. 0.09/- ||Rs. 0.09/- ||Nil |
|Market Capitalization (INR) (Market Value per share *No. of Outstanding Shares) ||Rs.746456679/- ||Rs.746456679/- ||Nil |
|P/E ratio (Market Value per share/EPS) ||Rs.-0.13/- ||Rs.-9.00/- ||-98.56% |
viii) average percentile increase already made in the salaries of employees other thanmanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
There has been no increase in the remuneration of managerial personnel apart from thatof KMP's justification for which has been given in point (vi) above.
ix) Comparison of the each remuneration of the Key Managerial personnel against theperformance of the Company As mentioned in point (vi) above the remuneration of CS &CFO of the Company has been increased by 21.83% and 8.71% respectively from financialyear 2013-14 which was necessary to retain them and also to match up the inflationgrowth. Since the Company has not recorded any performance as no business operations wasrecorded during the year therefore such comparison of the each remuneration of the KeyManagerial personnel against the performance of the Company is not possible.
x) the key parameters for any variable component of remuneration availed by theDirectors: Only the Independent Directors of the Company are withdrawing sitting fee fromthe Company nothing else is being paid to the Directors in form of remuneration andhence there is no variable component.
xi) The ratio of the remuneration of the highest paid director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid directorduring the year: The ratio of the remuneration of the highest paid director to that of theemployees who are not Directors but receive remuneration in excess of the highest paiddirector during the year is 1:82.64.
xii) The Remuneration is as per the remuneration policy of the Company.
26. Secretarial Audit Report
A Secretarial Audit Report in Form No. MR-3 for the Financial year 2014-15 given by M/sVineet Gupta & Associates Company Secretaries is annexed as Annexure-04with this report.
The following disclosures has been made by the Secretarial Auditor in his reportrequiring explanation:
"Share application money for an amount of Rs 15757463/-remains pending forallotment." Explanations given:
It has been explained to the Secretarial Auditor that the above mentioned amount of Rs.15757463/- is part of FDI which was received from M/s Abboro Limited a foreign BodyCorporate. This amount is pending for allotment due to the restrictive order of SEBI dated23rd October 2013 which has restricted the Company from accessing the Capital marketsand/or issuing shares and/or any other instruments convertible into equity or altering itscapital structure. Though the Company through its letter dated 12th May 2015 has askedfor a special permission from SEBI under intimation of Registrar of Companies NCT ofDelhi and Haryana for the relaxation in its order so that the equity shares could beallotted to M/s Abboro Limited.
The same fact has been suitably recorded by the Secretarial Auditor in his Report.
27. Risk management policy
Pursuant to the requirements of Clause 49(VI) of the Listing agreement the Board hasconstituted the Risk Management Committee and has also laid down the Risk Management Planof the Company. The Committee is responsible for the monitoring and reviewing of the RiskManagement Plan. The Major elements of Risk which may threaten the existence of theCompany have been identified and laid down in the Risk Management Plan of the Company.Simultaneously the Audit Committee of the Company is also looking after the areas ofFinancial Risk and Controls. The Risk Management System of the Company is workingsystematically and is commensurate with the Nature Size and Operations of the Company.
28. Management Discussion and Analysis Report
The Management Discussion and Analysis Report as required under Clause 49 of theListing Agreement with the stock Exchange forms part of this Report.
29. Corporate Governance Report
A separate Section on Corporate Governance forming part of the Director's Report and acertificate from the Practicing Company Secretary confirming compliance of the CorporateGovernance Norms as stipulated in Clause 49 of the Listing Agreement is included in thisAnnual Report.
30. Listing of Securities
The Securities of your Company are currently listed with Bombay Stock Exchange (BSE)with ISIN- INE 040C01022 and scrip code 526652. The Company has paid listing fee to theBombay Stock Exchange for the financial year 2015-16. All compliances with respect to thelisting agreement is being made in regular course.
31. Directors' Responsibility Statement
In terms of the provisions of Section 134(5) of the Companies Act 2013 your Directorsconfirm that -
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors wish to place on record their appreciation for the Cooperation andassistance received from Regulatory Bodies Government Bankers Shareholders businessassociates and various other Stakeholders who have extended their valuable sustainedsupport and encouragement during the year under review.
The Directors would also like to place on record a hearty thanks to the management andthe employees of the Company who have been standing with the Company and giving theirtireless support in the adverse circumstances.
|For and on behalf of the Board of Directors || |
|(Deep Kumar Rastogi) ||(Sameer Rajpal) |
|Executive Chairman ||Director |
|DIN: 01229644 ||DIN: 05184612 |
|Place: New Delhi || |
|Date: 07.08.2015 || |