Your Directors present the Twenty Third Annual Report of the Company together with theAudited Accounts for the year ended on March 312014.
1 FINANCIAL RESULTS AT A GLANCE
|PARTICULARS ||CURRENT YEAR ENDED ON 31.03.2014 ||PREVIOUS YEAR ENDED ON 31.03.2013 |
| ||(Rs. In lacs) ||(Rs. in lacs) |
|Gross Income ||432.28 ||644.80 |
|Profit/(Loss) before depreciation ||(563.08) ||339.18 |
|Depreciation ||35.26 ||36.10 |
|Profit/(Loss) before tax ||(598.34) ||303.08 |
|Provision for tax ||- ||- |
|Profity(Loss) before Extra ordinary items ||(598.34) ||303.08 |
|Prior period adjustment ||0.54 ||6.00 |
|Net Profit/(Loss) ||(598.34) ||303.08 |
|Profit/(Loss) brought forward from previous year ||(8496.14) ||(8799.23) |
|Surplus /(Loss) carried to Balance Sheet ||(9094.46) ||(8496.14) |
2 COMPANYS' AFFAIRS / OPERATIONS / MATERIAL DEVELOPMENTS
The Statement of Company Affairs operations opportunities and threats performance onthe recoveries front and developments in the Scheme of Arrangement filed by the Companybefore the Hon'ble High Court of Delhi have been elaborately and explicitly explained anddealt with in the Management Discussion and Analysis Report (which forms part of thisreport) and accordingly have not been repeated herein to avoid repetition.
The Equity Shares of the Company are presently listed on the seven Stock Exchangesincluding The Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE). TheShares of the Company are compulsorily traded in dematerialized form.
The Directors had recommended the voluntary delisting of shares from other five stockexchanges i.e. Ahmedabad Madras Delhi Calcutta and Jaipur Stock Exchanges and the shareholders in the Annual General Meeting held on 30* December 2011 had approved the same.However steps for delisting could not be taken due to circumstances beyond control of theCompany.
Due to sustained efforts made by your Company in recovery of dues from its customersand efforts for settlement of liabilities towards secured and unsecured creditors inparticularthe Fixed Deposit holders the Reserve Bank of India (RBI) allowed yourCompany's application for grant of certificate for registration (COR) as NBFC to remainpending till 5th of March 2004 on which date RBI issued orders rejecting the Company'sapplication for grant of Certificate of Registration (CoR). Your Company filed an appealbefore the Appellate Authority in the Ministry of Finance and vide order dated 21st May2004 the Appellate Authority directed the Reserve Bank of India to keep its order ofrejection of CoR in abeyance for a period of six months during which the Company shallfile the revised scheme for restructuring before appropriate authority or till thedisposal of the Company's review petition by the Hon'ble Delhi High Court. Even thoughyour Company's business plan as of now do not envisage any fresh aggressive fund basedNBFC business exposure as it envisages exploring other business activities and NBFCactivities shall be restricted to non fund bases business apart from continuation ofaggressive recovery from its defaulting customers.
RBI against the orders of the Appellate Authority filed a Constitutional Writ beforethe Hon'ble High Court of Delhi at New Delhi and the Hon'ble Court granted stay on theoperations of the orders of the Appellant Authority. RBI thereafter filed a Petition forwinding up of the Company before the Hon'ble High Court of Delhi at New Delhi. Both thePetitions filed by RBI are pending adjudication and have been clubbed with the Scheme.
In view of the accumulated losses in the past years the Directors regret theirinability to recommend dividend for the period under review.
The Board of Directors comprises of Mr. Surender Kumar whole time Director Mr. OmPrakash Gupta Non-Executive Independent Director Mr. Rajeshwar Singh Non-ExecutiveIndependent Director.
Mr. Arif Beg Independent Director resigned with effect from 30- July 2014 due topersonal reasons. The Board records its appreciation forthe valuable services rendered byMr. Arif Beg.
Pursuant to Section 152 of the Companies Act 2013 Mr. Surender Kumar.directorretires by rotation and being eligible offers themself for reappointment.
Pursuant to section 149 and section 152 of the companies Act 2013 read with companies(Appointment and Qualification ofDirectors) Rules 2014 along with schedule IV of the Actit is proposed to appoint Mr. Om Prakash Gupta DIN:06853097 the existing IndependentDirector as Non-Executive Independent Director for a period of three year wef 01.04.2014and Mr. Rajeshwar Singh DIN:00024646 the existing Independent Director as Non-Executivedirector for a period of three years wef 07.02.2014 subject to the approVal of members atthe forthcoming Annual General Meeting. The Independent director shall not be liable toretire by rotation. All the above mentioned Directors have given the Declaration ofIndependence as per section 149 (6) of the Companies Act 2013.
Brief resume of the Directors proposed to be appointed/ reappointed nature of hisexpertise in specific functional areas name of companies in which he hold directorships/chairmanships of Board committees shareholding detail as stipulated under clause 49 ofthe Listing Agreement with the stock exchanges are provided in the Report of corporateGovernance
Mr. Surender Kumar is also proposed to be appointed as Whole Time director designatedas "Executive Director" of the Company subject to approval by the CentralGovernment
Keeping in view the experience of Mr. Sharma requirement of Companies Act 2013 andchallenges ahead your director's recommend appointment of Mr. Sharma as the Executivedirector of the Company.
5. FIXED DEPOSITS
During the year under review the Company had not invited any fixed deposits.
That as on 31st March2014 .there were 50928 fixed deposits aggregating Rs.56.34 Crremained unpaid as the scheme of repayment to fixed depositors is pending approval beforethe Hon'ble High Court of Delhi and out of these deposits Rs.3.51 Crores (3639depositors) remained unclaimed .
6 SUBSIDIARY COMPANY
In accordance with the general circular issued by the Ministry of Corporate Affairsthe Balance Sheets including annexures and attachments thereto of the Company'ssubsidiary are not being attached with the Annual Report of the Company. The annualaccounts of the subsidiary company and the related detailed information will be madeavailable to any member of the Company seeking such information. These documents will alsobe available for inspection by any member at the Registered Office of the Company and thatof the respect subsidiary company. The consolidated financial statements presented in thisAnnual Report include financial results of the subsidiary companies. A statementcontaining information on the Company's subsidiary is included in this Annual Report
The Auditors' Report on the Accounts of the Company is attached. The Directors'observation on the Auditors' Report are as under: -
1. Recognition of Rental Income: With reference to Para( i) of the auditor's report asthere are certain disputes with the tenant and the matter is pending arbitration TheCompany is hopeful in recovering.
2. No provision of Rs 826.38 lacs: Provision of interest on certain liabilities coveredunder Para (ii) and under notes 4.1.f 4.1.g (i) 4.2.c 4.2.d 4.3.2 4.3.3 4.4(f) &4.6 is in accordance with the Scheme of restructuring filed by the Company before theHon'ble Delhi High Court which provides for waiver and cancellation of interest and thesame is pending before the Hon'ble Court.
3. For redemption of debentures of Rs 8.75 Lacs debenture redemption reserve isrequired to be created as mentioned in para (iii). Debenture redemption reserve of Rs8.75lac has not been created due to insufficient profits. The same has been explained inNote 2.2.
4. Depletion in the value of Assets charged to Banks/Institution and Debentures in Para(iv) and covered under notes 4.1 .d 4.2.b & 4.3.1 relates to ascertainment ofSecurity against Debentures and Bank Loan which could not be ascertained since theCompany is in litigation with various Lease and Hire Purchase customers and the mattersare sub-judice hence confirmations and acknowledgements are not feasible
5. Fixed Deposits and Bills Payable as per records maintained by the Company are Rs.5642.96 lacs and as per financials books amounting to Rs. 5632.27 lacs Their is adifference of Rs. 10.69 lacs which is un-reconciled in the Fixed Deposit Register asmentioned in para (iv). The reason is either lack of identification of depositors or noclaim or confirmation having been received by the company. The provision of suchdifferential amount has not been made. This has been explained in Note 4.4.(d) & Note4.4.(e).
6. Maintenance of minimum liquid assets covered under para (vi) and note 4.4.(g). Dueto the liquidity crisis and default in payment to fixed depositors the liquid assets heldby the Company had to be used for repayment to depositors. Thereafter the Company hadmade an application to the RBI as well as the Hon'ble Company Law Board for exemption frommaintaining minimum liquid assets.
7. Non-Provision of interest on unpaid share application money pertaining to groupCompanies as covered in Para (vii). Group Companies have infused money in Company fromtime to time for its revival and as these amount are not be paid back group companieshave requested to convert the outstanding amount into Share Capital. In view of pendingscheme before the Hon'ble High Court of Delhi these amount remained in share applicationmoney only and asshares can be issued once the scheme is sanctioned by the court. Keepingthese facts In view interest has not been provided.
8. Going Concern Basis Para (viii) & Note 29: In accordance with section 217 (2AA)of the Companies Act 1956 the financial statements are required to be made on goingconcern basis. In light of the fresh scheme of restructuring pending before the Hon'bleDelhi High Court the Company has plans for future business and income generation.Accordingly it is not only prudent but also imperative to draw the financial statementbased on such Going Concern basis. The Scheme seeks to restructure relying on debt equityswaps and profits earned by engaging in service oriented fee based business leading toprogressive reduction in the debt of the Company. The Scheme of Arrangement would not onlyenable the Company to wipe out its debts but will also enable it to reduce carry forwardlosses to be a profitable entity. Further in accordance with amended Section 217 (2AA) ofthe Companies Act 1956 the financial statements are required to be made on going concernbasis.
9. Para (ix)abc&d on Contingent liabilities: The Company is contesting claimslodged against it not acknowledged as debts including claims on account of securitizationtransaction and underwriting obligations. Rest of the contingent liabilities are beingaddressed through the Scheme.
Para (ix) a&b : Punjab & Sind Bank Indusind Bank are to be paid in terms ofrestructuring scheme pending before Hon'ble High Court of Delhi and hence the amountpayable under the scheme has been provided in books.The matters before DRT has been stayedby the Hon'ble High Court of Delhi since 2005.
Para(ix)c: Company has made an application before Hon'ble High Court of Delhi forpermission to deposit Rs. 1.00 Cr with Hon'ble High Court of Punjab & Haryana and thesame is pending.
Para (ix) d: Company has preferred an appeal before Hon'ble High Court of Delhi in theMS Shoes East Limited matter
All the other notes are self-explanatory.
IWs V. Sahai Tripathi & Co. Chartered Accountants Auditors of the Company retiresat the conclusion of the ensuing Annual General Meeting. They have furnished a Certificateto the effect that their re-appointment if made will be within the limits specifiedunder section 224(1 B) of the CompaniesAct 1956.
9 LISTING AGREEMENT COMPLIANCES
The Company is presently listed at Stock Exchanges at Ahmedabad Calcutta ChennaiDelhi Jaipur Mumbai and the National Stock Exchange. Due to Financial constraints theCompany is in arrears of listing fees to the Stock Exchanges at Ahmedabad CalcuttaChennai Delhi and Jaipur and also applied for delisting its shares from these StockExchanges because of nonavailability of nation wide terminals and there is no suffering tothe investors for trading & it will reduce the cost to your company. Howeverthe trading on National Stock Exchange is suspended since October 2010 due to certainqueries raised by the National Stock Exchange and reply to same has been made. The Companyis in constant touch with the National Stock Exchange and efforts are being made to revokethe suspension of trading on National Stock Exchange.
INCORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANDANALYSISREPORT
The Management Discussion and Analysis Report and report on Corporate Governance forman integral part of this report. The Certificate from the Auditors of the Companycertifying compliance of the conditions of corporate governance as stipulated in Clause 49of the Listing Agreements with the Stock Exchanges is also annexed to the Report onCorporate Governance. Though the Company is complying with all the requirements of theListing Agreement yet your company had been served a Show Cause Notice from NationalStock Exchange for noncompliance of Clause 49 III of the Listing Agreement. TheShow Cause Notice states that your Company has not appointed an independent Director onthe Board of Directors of its material Subsidiary Company. Your company has replied to theshow cause notice wherein it has been stated that the company is complying with therequirements of the Clause 49 of the Listing Agreement however since your company hasdefaulted in paying its depositors all its Directors are disqualified under section 274(1 )(g) of the Companies Apt 1956 hence the Directors on the Board of Directors of yourCompany cannot become the Directors on the Board of any Public Limited Company.
11. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 217(2AA) of the CompaniesAct 1956 withrespect to Directors' Responsibility Statement it is confirmed that for the period endedon March 31st 2014:
(i) In the preparation of the Annual Accounts the Company has followed the applicableAccounting Standards and there are no material departure except for non-payment ofinterest and discounting charges which is in line with the new scheme of restructuringu/s 391-394 filed by the Company which envisages waiver of Interest. It may be worthwhileto note that the said new Scheme has already been approved by the requisite class ofSecured and Unsecured Creditors and is pending approval before the Hon'ble High Court ofDelhi.
(ii) They have in the selection of the accounting polices consulted the Statutory andInternal Auditors from time to time and have applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial period aforementioned and ofthe profit or loss of the Company for that period.
(iii) They have taken proper and sufficient care to the best of their knowledge andability and consulted the Statutory as well Internal Auditors from time to time for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 1956 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities for the financial year aforementioned.
(iv) The financial statement has been prepared on a going concern basis
12. CODE OF CONDUCT
Pursuant to the requirements of clause 49 of Listing Agreement the Board Members andSenior Management Personnel have affirmed compliance with the Code of Conduct for thefinancial year ending 31st March 2014.
13. INTERNAL CONTROL SYSTEM
The company has adequate internal control procedure proportionate to the nature of thebusiness and size of its operations for the smooth conduct of its business. Internal auditis conducted at regular intervals and covers the key area of operations. The performanceof the company is regularly viewed by the Board of directors to ensure that it is inkeeping with the overall corporate policy and in line with pre-set objectives
14. PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGYABSORPTION
In view of the nature of operations of the Company no particulars are furnished inrespect of conservation of energy and technology up graduation.
15. FOREIGN EXCHANGE EARNING AND OUTGO
There has been no foreign exchange income and outgo for the period of this report.
16. PARTICULARS OF EMPLOYEES
During the year ended March 31*' 2014 there was no employee drawing remuneration inexcess of the amount prescribed under section 217(2A) of the CompaniesAct 1956.
17. FORWARD LOOKING STAEMENTS
Certain statements describing the future outlook industry structure developmentsprojection estimates expectations or predictions may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Since the Company'soperation are influenced by many external and internal factors beyond the control of thecompany and its management. Important factors that could make the difference to theCompany's operation and future include RBl's stance towards the company outcome of therestructuring scheme industry and economic conditions changes in Govt regulations taxlaws and other statues.
Yours Directors wish to place on records their sincere thanks and deep appreciation forthe guidance support continued co-operation extended by the Banks specially the ReserveBank of India Central Bank of India Punjab & Sind Bank Induslnd Bank Ministry ofCompany Affairs Creditors Shareholders Debenture holders fixed depositors and itsSolicitors advocates for their continued support and assistance.
The Directors also take this opportunity to acknowledge the dedicated efforts of theemployees at all levels.exchanges.
| ||On behalf ofthe Board of Directors |
| ||Sd/- |
|Place: New Delhi ||OM PRAKASH GUPTA |
|Date: 5th Dec2014 ||(Chairman) |