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Decolight Ceramics Ltd.

BSE: 532858 Sector: Consumer
NSE: DECOLIGHT ISIN Code: INE172I01012
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Decolight Ceramics Ltd. (DECOLIGHT) - Director Report

Company director report

To

The Members

Your Directors are pleased to present their report on the working of the company alongwith the Audited Accounts for the year ended 31st March 2015:

1. FINANCIAL RESULTS:

The details of the financial performance of the company are appearing in the Balancesheet Profit & Loss Account along with other financial statement.

Highlights are as under

(Rs. In Lacs)

Particulars 2014-15 2013-14
Total Income from operations 237.31 1019.85
Profit before considering Exceptional items Prior Period Items Interest Depreciation and Taxation -929.96 -1756.97
Less: Interest & Financial Charges 564.56 498.37
Less: Depreciation 514.37 431.86
Profit / (Loss) before considering Exceptional Items prior period Item and Tax -2008.89 -2687.20
Less: Exceptional Items 830.28 789.81
Profit / (Loss) after exceptional items and before prior period Item and tax -2839.17 -3477.01
Less: Prior period items 5.00 -
Profit / (Loss) Before Tax -2844.17 -3477.01
Provision for taxation ' - -
Profit / (Loss) after Tax -2844.17 -3477.01
Add: Balance of Profit brought forward from previous year -3222.67 254.34
Profit available for appropriation . -6066.84 -3222.67
Appropriation to: - -
Proposed Dividend on Equity Shares - -
Balance Carried over to the Balance Sheet -6066.84 -3222.67

2. TRANSFER TO RESERVES:

In view of the state of affairs of the company as highlighted herein no amount isproposed to be transferred to reserves.

3. DIVIDEND:

Your directors do not recommend any dividend for the year 2014-15 due to theperformance of the company not meeting management expectations.

4. BUSINESS PERFORMANCE:

The business performance of the company was seriously affected owing to financialdifficulties. The manufacturing facilities and the plant were not operational due to gravefinancial difficulties. Fixed expenses interest charges and other expenses remained thusunabsorbed leading to incurring losses as given above.

5. PRESENT STATE OF AFFAIRS OF THE COMPANY:

The Company has been served with notice under SARFAESI Act for recovery of dues andpresently the properties of the company including collaterals are under symbolicpossession of the Bank. There was no plant and manufacturing facilities operationspresently. The management’s efforts are on to find solution to the problems of thecompany including willing potential investors.

6. CORPORATE HIGHLIGHTS:

Capacity Expansion:

The current capacity of the company’s manufacturing facilities for the productionof’vitrified tiles stand at 12000 sq. mtrs per day. There was no capacity expansionduring the year under review.

7. SHARE CAPITAL & SUSPENSION OF TRADING IN SECURITIES:

A) Issue of equity shares with differential rights.

The Company has not issued any equity shares with differential rights during the yearunder review.

B) Issue of sweat equity shares

The Company has not issued any Sweat Equity Shares during the year under review.

C) Issue of employee stock options

The Company has not provided any Stock Option Scheme to the employees.

D) Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees

The Company has not bought back or provided for buyback of any of its securities duringthe year under review.

E) issue of Bonus Shares

No Bonus Shares were issued during the year under review.

Presently the company's total issued subscribed and paid up capital stands at Rs483354440/- The company’s shares have been listed in the Bombay Stock ExchangeLtd. and The National Stock Exchange Ltd. Trading of securities of the Company remainssuspended from the first week of May 2015 in NSE for reasons of non/late compliance andnon-payment of listing fees fines etc. as the company continued to be in financialdifficulties. In BSE also call auction is suspended due to penal reasons. Listing feearrears for 2013-14 and listing fee for 2014-15 is yet to pay.

8. PUBIC DEPOSITS:

The Company has neither accepted nor renewed any deposits from public within themeaning of Section 73 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014 during the year.

9. DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES:

The names of each of the companies which have become or ceased to be its subsidiariesjoint ventures or associate companies during the year along with the details of theirperformance and financial position to be mentioned separately: NIL

10. PARTICULARS OF LOAN GUARANTEES OR INVESTMENTS UNDER SECTION 186: NIL

There are no Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013.

11. LISTING:

The equity shares of the Company are listed with Bombay Stock Exchange (BSE) andNational Stock Exchange (NSE).

12. AWARDS AND RECOGNITIONS:

During the year under review the company is not in receipt of any award or recognition.

13. HEALTH SAFETY AND ENVIRONMENT:

The Company is taking continuous steps and also developing environment friendlyprocesses for effective resource management with specific focus to energy water and basicraw materials. Monitoring and periodic review of the HSE Management System is done on acontinuous basis with emphasis and focus given to safety at workplace. For betterenvironment management operations the Company has implemented a Management Systemcomplying with the requirements of ISO 14001:2004 for manufacturing of Vitrified Tiles.

14. QUALITY:

The company’s products undergo different quality parameter checking and theCompany continues to focus on delivering products and services that consistently meetcustomer’s expectations.

15. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act 2013 anextract of the Annual Return in Form MGT-9 is given as Annexure ’F’ forming partof this Report.

16. INSURANCE:

All the assets of the Company are adequately insured and the policies are valid andsubsisting.

17. PARTICULARS OF THE EMPLOYEES:

Pursuant to Rule 5 of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the Company states that none of the employees of the Company whowas in receipt of remuneration in excess of Rs. 60 Lacs if employed throughout the yearor Rs. 5 Lacs per month if employed for part of the financial year or receivedremuneration in excess of that drawn by the MD/WTD/Manager & holding 2% or more ofequity share capital of the Company (himself along with spouse & dependent children).Hence the disclosure as required by above Rule are not given as none of the employeesqualify for such disclosure.

18. EMPLOYEES STOCK OPTION SCHEME:

Pursuant to Rule 12(9) of The Companies (Share Capital and Debentures) Rules 2014 theCompany has no Employees Stock Option Scheme in force hence disclosures are not for thetime being applicable to the Company.

19. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

Presently the company’s properties including collaterals are under its commercialbanker’s symbolic possession and so the plants and allied manufacturing facilitiesare not operational. The Company has in place an Anti Sexual Harassment Policy in linewith the requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013. Internal Complaints Committee will be set up toredress complaints received regarding sexual harassment when the company will be fullyoperational. All employees (permanent contractual temporary trainees) are covered underthis policy. During 2014-15 the company has not employed any women employee.

20. VIGIL MECHANISM:

The company established vigil mechanism for directors and employees to report genuineconcerns. The vigil mechanism Inter alia provides for adequate safeguards againstvictimization of persons who use such mechanism and also makes provision for direct accessto the Chairperson of the Audit Committee in appropriate or exceptional cases.

21. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING ANDOUTGO::

A) CONSERVATION OF ENERGY:

a) Energy Conservation steps taken:

Your Company continued to be committed to energy conservation in its manufacturingoperations.

i) Some significant Energy conservation steps implemented in the recent past are:

1. The company took every necessary step towards reducing the consumption of energy.

2. The Company continued to reduce the firing cost of Tiles driers by effectiverecovery of waste heat for using in Roller Kilns and for this the company on a regularbasis identified leakage points and necessary prevention / rectification is done / beingdone.

3. The Company made regular maintenance to plant and machinery in addition to designmodifications in the machinery and allied equipments to aid in conservation of energy andimprovement in operational efficiency.

4. The instructions of the energy auditor have been disseminated throughout themanufacturing set ups with the objective of creating awareness towards effectiveconservation of energy and reduction of costs.

5. Majority of the instructions have been implemented leading to substantial savings inspecific energy consumptions.

6. The Company also uses the energy saving techniques by using the waste steamconverting into vapors and then reusing the same in cooling and filtering the Coal gas.

7. To reduce the company’s Spray Dryer fuel cost further the company imported newCoal Stove in the past.

8. The company also imported digital testing machines towards upgrading its laboratorylast year.

ii) The steps taken by the company for utilizing alternate sources of energy ;

Presently the company’s properties including collaterals are under its commercialbanker’s symbolic possession and so the plants and allied manufacturing facilitiesare not operational. Therefore no steps were taken by the company for utilizing alternatesources of energy.

iii) The capital investment on energy conservation equipment:

There were no capital investments on energy conservation equipment during financialyear 2014-15 owing to the company’s properties including collaterals under symbolicpossession with its commercial banker. Also the plants and allied manufacturingfacilities were not operational during 2014-15.

B) TECHNOLOGY ABSORPTION:

Efforts made in technology absorption:

During year 2014-15 the Company continued to pursue its research and developmentefforts in the areas of product concept development raw material usage giving priority tolocal contents and product features and product quality improvement reduction in the Kilncycling of Vitrified Tiles etc. However the plant remained mostly closed during 2014-15owing to financial difficulties and presently the plant is closed consequent upon symbolicpossession of the company’s properties by the company's commercial banker. As aresult the company could not pursue its intended programs technology absorption front.

The benefits derived are reflected in the products of the company in the form ofimproved product features quality product life and better hygienic contents in additionto the increased business opportunities for the company’s product that may accrue inthe periods ahead.

The company has not imported any Technology during the last three years reckoned fromthe beginning of the financial year.

The expenditure incurred on R & D:

The company’s property is under symbolic possession of the company’scommercial banker and the plant is closed presently and there is substantial uncertaintywith respect to future plan of action. The company is presently in grave financialdifficulties. No amount therefore has been spent on R &D during the financial year2014-15.

Foreign exchange Earnings and Outgo:

There are no Foreign Exchanges earned in terms of actual inflows during the financialyear 2014-15. Also there are no Foreign Exchange outgoes during the financial year 2014-15in terms of actual outflows.

22. RISK MANAGEMENT POLICY: .

During the year 2014-15 the Board of Directors developed and implemented riskmanagement policy for the company including identification of elements of risk which inthe opinion of the board might threaten the existence of the company. The Company’sAudit Committee terms of reference include evaluation of risk management systems and theyare satisfied themselves that systems of risk management are robust and defensible.

The company periodically reviews its risk assessment and minimization procedures so asto ensure that executive management controls risk through means of a properly definedframework. Executive management of the company periodically places before the AuditCommittee risk identification report and risk mitigation measures. Subject to thecompany’s properties and collaterals now under the symbolic possession of thecompany's commercial bankers the properties of the company are adequately insured fromrisk and where risk transfer is not practicable such risks are retained and effectivelycontrolled as per the Risk Management Policy of the Company.

23. CORPORATE SOCIAL RESPONSIBILITY:

Pursuant to the requirements of Section 135 (1) of the Companies Act 2013 the Companystates that the company is for the year 2014-15 not meeting the criteria mentioned inthe said section. Therefore the Company has not constituted any Corporate ResponsibilityCommittee during the financial year 2014-15 and the composition of such committee notdisclosed. Subject to the present state of affairs of the company the company willconstitute a Corporate Social Responsibility (CSR) Committee as soon as thecompany’s financial condition is improved which shall formulate and recommend to theBoard a CSR Policy indicating the activities to be undertaken by the company as well asthe amount of expenditure to be incurred on the activities as mentioned in the policy.

24. INDUSTRIAL / HUMAN RELATIONS:

The Industrial relations during the year under review continue to remain cordialbetween the workers and management. The Management appreciates the employees of all cadresfor their dedicated service to the Company and expects continued support for higher levelof productivity in achieving the targets set for the future. The Company continued itsefforts in the HR policies and processes to further its performance.

25. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report as required under the Listing Agreement withthe Stock Exchanges is attached as Annexure ‘A’.

26. DIRECTORS:

In accordance with the provisions of the Companies Act 1956 and the Articles ofAssociation of the Company-

i) Mr. Kantibhai M Pethapara Director of the Company retires by rotation and beingeligible offers himself for re-appointment.

ii) Mr. Girishbhai M Pethapara Whole-time Director is being reappointed for a furtherterm of three years effective from 1st October 2015.

iii) Mr Kantibhai M Pethapara Managing Director is being reappointed for a furtherterm of three years effective from 1st October 2015.

iv) Mr. Jayantibhai M Pethapara Director and Mr Ashvin H Bopaliya IndependentDirector resigned during the year 2014-15 w.e.f. 15.12.2014.

Appropriate resolution for the appointment of the aforesaid Director is being moved atthe ensuing Annual General Meeting for your approval.

27. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

Pursuant to the requirements of Section 134 of the Companies Act 2013 The Board ofDirectors met 07 (Seven) times during the year. The details of the Board Meetings and theattendance of the Directors are provided in the Corporate Governance Report attachedhereto which forms part of this Report.

28. BOARD EVALUATION / INDEPENDENT DIRECTORS MEETING:

During the year under review the Independent Directors met on February 14 2015 interalia to discuss:

1. Evaluation of the performance of Non Independent Directors and the Board ofDirectors as a Whole;

2. Evaluation of the performance of the Chairman of the Company taking into accountthe views of the Executive and Non Executive Directors.

3. Evaluation of the quality content and timelines of flow of information between themanagement and the Board that is necessary for the Board to effectively and reasonablyperform its duties.

All the independent Directors were present at the meeting.

Manner of evaluation: Presently the company is in financial distress. Two of thedirectors already resigned. Auditors have expressed high uncertainty as to the status ofgoing concern. Subject to these state of affairs a framework for evaluation has beenprepared and based on the framework questionnaire has been made including differentspecific topics of evaluation and setting out different parameters / criteria againstwhich the different topics as to the Board and its committees Chairman andnon-independent directors have been evaluated both individually and collectively basedon inputs received from directors and internal sources.

Performance of the Independent Directors was evaluated by the Peer group basis as perthe evaluation criteria determined by the Nomination Committee which inter alia includesthe following:

* Clear accountability

* More independent view

* More time to devote to task

* Other leadership skills and experiences

* Contribution to the development of (i) Strategy and (ii) risk management.

* Follow up on matters on which the independent directors expressed concern

* Relationship with other board members the company secretary and senior management

* How actively and successfully do they refresh their knowledge and skill?

* Skill gaps

29. APPOINTMENT / RE-APPOINTMENT OF INDEPENDENT DIRECTOR:

Pursuant to Section 149 (10) of the Companies Act 2013 the Company discloses that -

Shri Vasant A Kaila (DIN: 02680103) was appointed in the annual general meeting heldon 29th September 2014 as an Independent Director of the Company to hold office for 3(three) consecutive years for a term up to the conclusion of 18th Annual General Meetingof the Company in the calendar year 2017.

Shri Vijay M Vidja (DIN: 02680111) was appointed in .the Annual General Meeting heldon 29th September 2014as an Independent Director of the Company to hold office for 3(three) consecutive years for a term up to the conclusion of 18th Annual General Meetingof the Company in the calendar year 2017.

There are no re-appointments of independent director at the ensuing annual generalmeeting.

30. CHANGE IN THE COMPOSITION OF THE BOARD:

Pursuant to Section 168(1) of the Companies Act 2013 read with Rule 8(5)(iii) of TheCompanies (Accounts) Rules 2014the details of directors or key managerial personnel whowere appointed or have resigned during the year:

During the year 2014-15 Mr. Jayantibhai M Pethapara and Mr. Ashwin H BopaliyaDirectors have resigned from the office of Directors effective from 15th December 2014.The Board appreciated the services rendered by them to the Company.

Reason for resignation by Mr. J M Pethapara Director: Owing to financial difficultiesthe company is not in operation presently. Besides the Company’s commercial Bankerhad taken over symbolic possession of the company. These unfortunate developments badlyaffected his physical health and mental condition and therefore he was unable to continuein the Board or contribute anything to the Board. Under those backgrounds he tendered hisresignation from the Board as Whole Time Director.”

Reason for resignation by Mr. A H Bopaliya Director: Owing to financial difficultiesthe company is not in operation presently. Besides the Company's commercial Banker hadtaken over symbolic possession of the company and the plant is closed. In view of thesedevelopments he was not willing to be in the Board and therefore he tendered hisresignation from the Board and its committees on his own interest and accord.

Shri Suresh S Dave Company Secretary resigned from the Company effective from 15thDecember 2014.

Reason for resignation by Mr. Suresh S Dave Company Secretary: Due to pre-occupation.

Declaration of fulfillment of independence

Pursuant to Section 149 (7) of the Companies Act 2013 the Company has receivedstatement with respect to declaration of fulfillment of the criteria of independence byindependent directors.

Details of equity share with differential rights

Pursuant to Rule 4(4) of The Companies (Share Capital and Debentures) Rules 2014 theCompany states that during the year 2014-15 the Company has not issued any equity shareswith differential rights.

Details of Sweat equity shares

Pursuant to Rule 8(13) of The Companies (Share Capital and Debentures) Rules 2014 theCompany states that during the year 2014-15 the Company has not issued any sweat equityshares.

Composition of Audit Committee

Pursuant to the requirement of Section 177 (8) of the Companies Act 2013 following isthe composition of the Audit Committee for year 2014-15:

Mr. Vasant Avachar Kaila -- Chairman
Mr. Mr Vijay Maganlal Vidja -- Member
Mr. Ashvin H Bopaliya ~ Member (resigned w.e.f.15.12.2015)
Mr. Kantibhai M Pethapara - Member

The recommendations of the audit committee have been accepted by the Board.

31. CORPORATE GOVERNANCE:

The disclosures as required under the Corporate Governance have been furnished as partof this report. Subject to the ongoing financial difficulties the Company has taken therequisite steps to comply with the recommendations concerning Corporate Governance. Areport on Corporate Governance together with a certificate of compliance from thePracticing Company Secretary forms part of this report.

32. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirements under section 134 (3) (c) and (5) of the Companies Act2013 the Board of Directors of the Company hereby state 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 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 (theauditors of the company have qualified that there is high uncertainty as to the goingconcern status of the company).

(e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

33. STATUTORY AUDITORS:

Pursuant to provisions of Section 224 of the Companies Act 1956 M/s SVK &Associates Chartered Accountants Ahmedabad were the statutory auditors of the Companywho hold office up to the conclusion of the this Annual General Meeting and they completedtwo terms of consecutive five years.

As per Section 139 (2) of the Companies Act 2013 M/s G.P. Kapadia & Co.Chartered Accountants Morbi are being appointed as the new statutory auditors for a termof maximum five years from the conclusion of this AGM till the conclusion of theconsecutive fifth annual general meeting subject to ratification by Members at everyannual general meeting. The Company has received a letter from M/s G.P. Kapadia & Co.Chartered Accountants Morbi to the effect that their re-appointment if made would bein accordance with the conditions prescribed under section139 (2) of the Companies Act2013 and they are not disqualified for such reappointment within the meaning of Section141of the said Act.

The observation of the auditors referred to in the Auditors’ Report have beensuitably explained in the Notes on Accounts.

34. AUDITORS’ QUALIFICATION:

Auditors have qualified the financial statements about unutilized funds 6f equitypreferential issue privately placed lying in ICD of Rs 27.57 Crores is pending for renewal/ receipt from respective parties. In this context the management proceeding legallyfiled civil suit in Morbi Court for recovery of the above amount.

Auditors have also qualified the financial statements with respect to the Going ConcernAspect due to various reasons. In this context the management is putting their bestefforts to find potential investors who can take the company on track and thus affordgoing concern status to the company.

35. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS:

The auditors in their report have qualified over going concern status of the company onthe following grounds-

1. The short term borrowings of the company have been classified as NPA by the bankconsequent to default in repayment of debt by the company.

2. Pending various statutory liabilities

3. Operational efficiency of the plant badly affected due to old technology based plant& machinery and also sale of certain machineries

4. Reduction in volume of sales operation resulting into cash losses owing to thefinancial operational and machinery related issues. '

5. Various Contingent Liabilities not provided for.

6. Others like i) Power connection of the factory unit disconnected by the StateElectricity Board ii) Bank has filed complain / legal suits on the company for sales ofmachineries / stock hypothecated to bank without its consent and also for recovery of itsentire dues along with the interest iii) Differences in physical verification of plant& machineries taken by bank and management of the company iv) Receivables/ advancesand Payables/liabilities of th_company are subject to confirmation of the concernedparties v) ongoing various litigations by government as well as non-government parties.

In this context the management is putting their best efforts to find out solution tothe problems of the company including willing potential investors who can take the companyon track.

36. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyappointed M/s. Kavita Khatri & Associates Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the Financial Year 201415. TheSecretarial Audit Report is given as Annexure 'D' forming part of this Report.

The Secretarial Auditors have given adverse comments in their reports with respect tothe appointment of Women Director Chief Financial Officer and Company Secretary. In thiscontext the management reports that the company was served with notice under SARFAESI Actfor recovery of dues and presently the properties of the company including collaterals areunder symbolic possession of the bank. There was no plant and manufacturing facilitiesoperations during the year under review or presently. In such a situation the company iscontinuously confronting financial difficulties in appointing key managerial persons andto keep them remunerated. Besides given the state of affairs of the company no candidatefor women director was willing to join the Board. However the management’s effortsare on to appoint key managerial persons.

37. ACKNOWLEDGEMENT:

Your Directors place on record their sense of appreciation for the co-operationreceived from all.

For and on behalf of Board of Directors
Sd/-
Place: Morbi Kantilal Maganlal Pethapara
Date: 30th June 2015 Managing Director
DIN: 00055108

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