The Directors have pleasure in presenting their Report together with audited accountsfor the year ended March 31 2016.
|Financial Results : || ||(Rs. in lacs) |
|Particulars ||2015-16 ||2014-15 |
| ||(Year ended 31.3.2016) ||(Year ended 31.3.2015) |
|Operating Profit/ (Loss) before Interest and Depreciation ||(2829.33) ||(15103.60) |
|Other income ||250.51 ||682.94 |
|Less: Interest ||5687.45 ||7081.58 |
|Less: Depreciation ||2473.58 ||2518.30 |
|Profit / (Loss) before Tax ||(10739.85) ||(24020.54) |
|Prior period items ||- ||- |
|Provision for Taxation (earlier year) ||- ||- |
|Deferred Tax Liability/ (Asset) ||- ||4978.16 |
|Profit/(Loss) after Tax ||(10739.85) ||(28998.70) |
|Brought Forward ||(44480.93) ||(14346.64) |
|Profit /(Loss) || || |
|Prior period expense (Depreciation) ||- ||1135.59 |
|Carry Forward Profit/(Loss) ||(55220.78) ||(44480.93) |
Registration of the Company under the provisions of The Sick Industrial (Spl.Provisions) Act with BIFR.
Pursuant to last year s Annual Report and consequent upon erosion of 100% of the networth of the Company in the FY 2013and upon a reference made to BIFR under the provisionsof The Sick Industrial Companies (Special Provisions) Act the Company has been registeredas a sick Company on 14.11.2014 under case no:69/2014. The Company under the direction ofthe BIFR has intimated about its reference under BIFR to various statutory authoritiesbanks and creditors. Periodical hearings are held and the Company is yet to file arestructuring plan with the BIFR.
Assigning of Bank loans to Edeweiss Reconstruction Company (ARC):
The total borrowing of the Company from banks Viz.IOB PNB UBI IB AB OBC BOM FB)led by BOI in the consortium amounted to Rs.706.66Crs. Besides this the Company had alsoborrowed from Sugar Development Fund to the tune of Rs.57.47Crs. These loans were availedfor the units located at Naidupet and Ambasamudram. Due to series of problems anddifficulties the Company encounted as mentioned elsewhere in this report the Company sentire networth had eroded in the financial year 2013 and hence the Company wascontemplating various avenues such as shifting of Ambasamuram Sugar unit to Karnatakawhere we had made arrangements to procure a valid IEM and redo sugar business. As shiftingof the Ambasamudram power unit was not possible we explored an option to replace theexisting TG boilers with CFBC boilers suitable for Coal based operations. (since Bagasseis not available as raw material) However we had to spend Rs.100 crs for change inboilers which would give additional EBITDA of Rs.40 crs. All these proposals could not befructified due to financial constraints and hence the Company had been forced to become asick Company. Some of the banks on the other hand assigned their loans to Edeweiss ARCsince the recoverability cannot be anticipated. As on the date of this report the bankscomprising OBC UBI IB AB and BOM have assigned their loans aggregating Rs.393.62Crs toEdelweiss ARC which constitutes 58% of total bank borrowings. It is apprised that thebalance amount of Rs.313.04 Crs of the total outstanding is standing in the books towardsdues of IOB BOI and PNB and FB.
Review of Financial Performance:
The operating loss before interest and depreciation for the year under review wasRs.2829.33lacs. As reported in the Annual Report last year the Sugar mill at Ambasamudramcould not be operated due to non-availability of sugar cane. As a consequence the 50MWpower plant had to be shut due to dearth of Bagasse from Sugar plant and non availabilityof sufficient working capital for purchase of coal being an alternate fuel.
During the year under review Sugar Unit at Naidupet crushed 114549 MTs of cane andproduced 104202 MTs of Sugar and achieved a recovery rate of 9% as against 8.86% in theprevious year.
The IAP Unit has produced4942486 litres of ENA RS IS/DS during the year underreview.
Having been referred to BIFR and due to lack of finance the Company may continue toperform at minimum levels in respect of Sugar and IAP portfolios. Further due tonon-availability of sugar cane in and around Ambasamudram the chances to restart crushingoperations continues to be bleak.
Change in the nature of business if any :
There is no change in the nature of the business during the year under review.
Material Changes and commitments affecting the Financial position of the Companybetween the end of the Financial Year and the date of the Report:
There are no material changes and commitments affecting the financial position of thecompany between the end of the financial year and the date of the report.
Being referred to BIFR and in view of accumulated losses in the successive years fromFY2013 the Company is unable to declare any dividend.
Share Capital :
The paid up share capital of the Company is 41972900 equity shares of Rs.10 each. Theshare application money of Rs.140.36 crs remains unallotted in favour of the holdingcompany namely Empee Distilleries Ltd due to a)non-obtainment of statutory approvals andb) the Company is under BIFR.
Your Company has not invited or accepted any fixed deposits either from the public orfrom the shareholders of the Company during the period under review.
Transfer to Reserves :
Due to losses of the Company for the year ended 31.3.2016 your Directors have notproposed any amount to be transferred to the General Reserves of the company.
Particulars of Loans Guarantees or Investments under section 186 :
The particulars of loans guarantees and investments u/s 186 of the Companies Act 2013is annexed herewith as Annexure-A.
Management Discussion and Analysis Report :
The Management Discussion and Analysis Report is annexed herewith as AnnexureB.
Details of Directors or Key Managerial personnel who were appointed or have resignedduring the year :
Appointment of Mr. M P Purushothaman as CMD:
Mr.M P Purushothaman is the founder chairman of the Company and is well aware of theintricacies of Company s business and helped the Company at many crucial phases. Hiscontribution during the past are commendable and he is the person who is overseeing thefunctions of the Company on day to-day basis. Keeping in view of the past contributionsand the future outlook of the Company the Board of Directors at their meeting held on11.02.2016 appointed him as Chairman and Managing Director of the Company for a period of5 years w.e.f. 11.02.2016 subject to various approvals to be obtained.
CFO and Company Secretary:
The Company finds it challenging to recruit CFO and CS and remunerate them owing toprevailing conditions of operations and financial position. However constant efforts arebeing made by the Company to recruit CFO and CS.
Number of Board Meetings held during the year 2015-16 :
The Company has duly complied with the provisions of the Companies Act 2013 in holdingBoard meetings and the details of the meetings are furnished in the Corporate GovernanceReport.
Changes in the Directorate of the Company :
During the year under review Mr.M.P.Mehrotra Mr.T.S.Raghavan Mr. Sheeju PurushothamanandMr.M.K.Mohanresigned from the Board of Company w.e.f. 12.11.2015 11.02.201611.02.2016 and 22.02.2016 respectively. Mr.R.Rangarajanwas appointed as AdditionalNon-executive Independent Director w.e.f. 9.5.2016. As per the provisions of the CompaniesAct 2013 Mr. R. Rangachari is proposed to be appointed as an Independent Director for aterm of five years as set out in the AGM Notice for the approval of members. He hassubmitted a declaration u/s.149(7) of the Act that he meets with the criteria ofindependence as provided in Section 149(6) of the Act and there has been no change in thecircumstances which may affect his status as Independent Director during his directorship.
Mr. M P Purushothaman was appointed as Chairman and Managing Director of the Companyw.e.f. 11.02.2016 for a term of five years upon expiry of his term on 24thDec2015 pursuant to the recommendation of the Nomination and Remuneration Committee. Mr. M PPurushothaman will be paid a remuneration of Rs.5 lacs and perquisites upon approval to beobtained from members and Central Government. Necessary resolutions are set out in the AGMnotice.
Declaration by Independent Directors :
The Independent Directors namely Mr.R.Rangachari and Mr.Shankar Menon have givendeclarations that they meet the criteria required under section 149(6) of the CompaniesAct 2013. Details of web link for familiarization program of Independent Directors aregiven at www.empeegroup.co.in
Details of Polices.
a. Nomination and Remuneration Policy :
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Company s Remuneration Policy is available on the Company s websitewww.empeegroup.co.in and the same is attached herewith as Annexure - C.
b. Risk Management Policy :
Business Risk Evaluation and Management is an ongoing process within the Organization.Pursuant to Section 134(3)(n) of the Companies Act 2013 the Board has framed a RiskManagement Policy for the Company. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives. Major risksidentified by the business and functions are systematically addressed through mitigatingactions on a continuing basis.
c. Whistle Blower Policy :
Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanismfor employees and directors of the Company to approach the Audit Committee to ensureadequate safeguards against victimisation. This policy would help to create an environmentwherein individuals feel free and secure to raise an alarm whenever any fraudulentactivity takes place or is likely to take place. It will also ensure that complainant(s)are protected from retribution whether within or outside the organization. The details ofestablishment of the Vigil Mechanism Policy as per Annexure D is displayed on thewebsite of the Company www.empeegroup.co.in.
Corporate Governance :
As required by Clause 49 of Listing Agreement and Regulations 27 of SEBI s LODR 2015with the Stock Exchanges the Corporate Governance Report and the Auditor s Certificateregarding compliance of Corporate Governance forms part of the Annual Report.
Board Committees :
|Name of the Committee ||Composition ||Details of Meetings held during the year 2015-16 |
|Audit Committee ||Mr.R.Rangachari ||23.5.2015 14.8.2015 |
| ||Mr.Shankar Menon ||12.11.2015 and 11.02.2016 |
| ||Ms.Nisha Purushothaman || |
|Nomination & Remuneration Committee ||Mr.Shankar Menon ||11.02.2016 |
| ||Mr.R.Rangachari || |
| ||Ms.Nisha Purushothaman || |
|Stakeholders Relationship Committee ||Mr.R.Rangachari ||11.5.15 23.6.15 15.7.15 |
| ||Mr.Shankar Menon ||12.8.15 24.10.15 30.11.15 |
| ||Ms.Nisha Purushothaman ||26.12.15 15.02.16 01.03.16 10.3.16 and 21.3.16 |
Details of recommendation of audit committee which were not accepted by the Board alongwith reasons:
The same is not applicable as the Audit Committee s recommendations were accepted andimplemented by the Board.
Names of Companies which have become or ceased to be its subsidiaries joint venturesor associate Companies during the year Not applicable
The consolidated accounts of the company includes the audited accounts of subsidiariesnamely Empee Power Company (India) Ltd and M/s.Appollo Wind Energy Pvt Ltd.
A statement containing salient features of the subsidiaries in form AOC 1 is annexedherewith marked as Annexure - E and forms part of this report. Details of web link forPolicy for determining material subsidiaries are given at www.empeegroup.co.in.
a. Statutory Auditors :
M/s. Venkatesh& Co Chartered Accountants who was appointed as Statutory Auditorsfor five years in terms of Sec. 139 141 of the Companies Act 2013 shall hold office tillthe conclusion of the 28th AGM of the Company to be held in the year 2018however subject to ratification of their appointment at every AGM.
The Company has received a letter from the Statutory Auditors of the CompanyVenkatesh& Co (ICAI Firm Registration Number: 0046365) Chartered Accountants to theeffect that the ratification of their appointment if made will be as per therequirements laid down under Section 139 and 141 of the Companies Act 2013 read with Rule4 of the Companies (Audit and Auditors) Rules 2014. subject to approval of the Members..
Accordingly a resolution is being placed before the Members for their approval asgiven in the AGM notice.
A. Details of Audit Qualification: The company has received amount of Rs. 140.37 croresfrom 7th July 2008 to 30th September 2012 towards share application money from holdingcompany Empee Distilleries Ltd. These shares could not be allotted to the applicantcompany in view of the non-receipt of approval from the SEBI and stock Exchange. By virtueof the Rules of the Companies Acceptance and Deposit Rules these are public deposits tobe repaid. However the Company has obtained a legal opinion that in view of the fact thatthe Company is under BIFR the issue will have to be decided by BIFR.
Management Reply : Regarding this qualification the issue of shares against theapplication money is long pending due to reason that the company could not go in for afollow on issue of shares if shares are allotted to Empee Distilleries Limited as per SEBIguidelines and hence SEBI s approval could not be obtained. Further the Company has becomea Sick Company and the same has been registered under SICA with BIFR vide its order dated24/11/2014 hence the company is unable to allot the Shares to Empee Distilleries Limited.
B. Confirmation of Sundry debtors Trade payables Advance to suppliers Cane advancesHarvest Advance Other Payables and other deposit is subject to confirmation andreconciliation.
Management Reply : Regarding Confirmation of Sundry debtors Trade payables Advance tosuppliers Cane advances Harvest Advance Other Payables and other deposit is subject toconfirmation and reconciliation. The company has taken appropriate steps to reconcile thesame with respective debtors/creditors and once the amount is reconciled necessaryadjustments will be made in the accounts.
b. Secretarial Auditors :
M/s. S Dhanapal& Associates a firm of Practising Company Secretaries Chennai hasbeen appointed as Secretarial Auditors of the Company for the Financial Year 2016-17in theBoard meeting held on30.5.2016.
The Secretarial Audit Report received from the Secretarial Auditors is annexed to thisreport marked as Annexure-F and forms part of this report.
c. Cost Auditors :
The Board has appointed Mr.N.Thagarajan as Cost Auditor of the Company in terms ofSection 148 of the Companies Act 2013 for the financial year 2016-17 in the Board meetingheld on 30.5.2016. A resolution to ratify the payment of remuneration to Mr.NThiagarajanCost Auditor for the financial year 2015-16 is set out in the notice convening the AGM.
Conservation of Energy Technology Absorption and Foreign Exchange outgo :
Information regarding conservation of Energy Technology absorption and ForeignExchange earnings and outgo is given as Annexure -G and forms part of this Report.
Status on Amalgamation :
Pursuant to the last year s Board Report the Scheme of Amalgamation of your companywith Empee Distilleries Ltd and Appollo Wind Energy Pvt Ltd had been withdrawn pursuant tothe Hon ble High Court of Andhra Pradesh consenting to withdraw the amalgamation proposalvide its Orders dated 31.8.2015.
Related party Transactions :
The details of Related Party Transactions during the year ended 31.03.2016 being arm slength transactions have been reported in the Financial statements and forms part of thisreport. Details of web link for Policy on dealing with Related Party Transactions aregiven at www.empeegroup.co.in.
Managerial Remuneration :
The details of employees/managerial persons remuneration as required to be given u/s197 of the Companies Act 2013 read along with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial personnel) Rules 2014 as applicable is attached herewith asAnnexure-H.
Details of Pecuniary relationship or transaction of the non-executive independentdirectors Vis a Vis the Company :
There is no pecuniary relationship or transactions of the Non-Executive IndependentDirectors vis--vis the company for the year ended 31.3.2016.
Boards Evaluation :
Pursuant to the provisions of the Companies Act 2013 Listing Agreement andRegulations of the LODR 2015 the Board has carried out the annual performanceevaluation performance of the Directors as well as the evaluation of the working of itsAudit Nomination and Remuneration and Compliance Committees.
While independent directors in their separate meeting have carried out to assess theperformance of Chairman and Managing Director and other Directors of the Board moreparticularly about their business acumen and contribution to the Company the performanceevaluation of the Independent Directors was carried out by the entire Board.
The Independent Directors expressed their satisfaction with the evaluation processfunctioning such as adequacy of the composition of the Board and its Committees Boardculture execution and performance of duties obligations responsibilities andgovernance.
Adequacy of Internal Financial Controls :
The Company has a proper and adequate internal control system to ensure that all assetsare safeguarded and protected against loss from unauthorized use or disposition and thosetransactions are authorised recorded and reported correctly.
The Internal Audit/Control is exercised through an external auditor namely M/s. RameshSubramaniam& Co. Chartered Accountants Chennai. The audit observations andcorrective action taken thereon are periodically reviewed by the audit committee to ensureeffectiveness of the internal audit/control system.
Significant and material orders passed by the regulators or Courts or Tribunalsimpacting the going concern status and companys operations in future:
There is no significant and material orders passed by the regulators or Courts orTribunals impacting the going concern status and company s operations in future.
Extract of Annual Return:
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as
Annexure - I.
The Industrial relations continued to remain congenial during the year.
Directors Responsibility Statement :
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed.
b. The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 or loss of the Company for the year under review.
c. The directors have 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 have prepared the annual accounts on a going concern basis.
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.
f. The directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.
Your Directors wish to express their gratitude for the continuous assistance andsupport extended by the Banks Financial Institutions Customers and Governmentauthorities and also to the shareholders for their confidence in the management. Furtheryour Directors also place on record their deep sense of appreciation for the contributionsmade by employees at all levels to the growth and success of the company.
For and on behalf of the Board of Directors
Chairman & Managing Director