To the Members of Ganesha Ecosphere Ltd.
Your Directors have pleasure in presenting the Twenty Seventh (27th) Annual Report ofthe Company together with the Audited Financial Statements for the financial year ended 31stMarch 2016.
The summarised financial results of the Company for the year ended 31stMarch 2016 as compared to the preceding year are as under: (Rs in crore)
| || |
|Previous Year |
|Particulars || |
|Total Revenue ||648.75 ||624.95 |
|Profit before Finance Costs Depreciation and Amortization Expense ||75.29 ||64.68 |
|Less: Finance Costs ||19.86 ||19.67 |
|Less: Depreciation & Amortization Expense ||21.05 ||18.87 |
|Profit before Tax ||34.38 ||26.14 |
|Tax Expense ||(9.52) ||(3.07) |
|Profit after Tax ||24.86 ||23.07 |
|Surplus brought forward from Previous Year ||107.59 ||86.12 |
|Balance available for appropriation ||132.45 ||109.19 |
|Less: Appropriations: || || |
|Taxation/ MAT Credit adjustments for earlier years (Net) ||0.05 ||0.42 |
|Transferred from Debenture Redemption Reserve ||- ||(3.37) |
|Interim Dividend on Compulsorily Convertible Preference ||1.52 ||- |
|Shares (Including Dividend Distribution Tax) || || |
|Dividend on Equity Shares for previous years (Including ||0.40 ||- |
|Dividend Distribution Tax) || || |
|Proposed Dividend || || |
|- Compulsorily Convertible Preference Shares ||- ||1.84 |
|- Equity Shares ||2.30 ||1.94 |
|Dividend Distribution Tax on Proposed Dividend ||0.47 ||0.77 |
|Surplus carried to Balance Sheet ||127.71 ||107.59 |
FINANCIAL AND OPERATIONAL PERFORMANCE
During the Year 2015-16 revenues from operations of your Company increased to H647.29crore as compared to previous years revenues of H623.25 crore hence representingthe growth rate of 3.86%. Earnings before Depreciation Interest and Taxation (EBITDA)increased by 16.40% being H75.29 crore in the current year as against H64.68 crore in theprevious year. During the year under review the Net Profits of the Company was placed atH24.86 crore as against H23.07 crore in previous year showing growth of 7.76%.
Your Company has been able to achieve satisfactory results during the year despitesharp fall in crude oil prices across the globe which resulted into steep decline inprices of Recycled Polyester Staple Fibre. During the year tax impact increasedsubstantially due to expiry of tax holiday period at one of the manufacturing unit of theCompany.
Your directors are pleased to inform you that the Company has decided to increase itsinstalled capacity by setting up another production line of Recycled Polyester StapleFibre (RPSF) with capacity of 21000 Tons per annum (TPA) at its unit situated at TemraBilaspur Distt. Rampur (U.P.) raising consolidated RPSF capacity of the Company to108600 TPA.
Your Directors hope that the additional capacity shall grab the increased demand andconsiderably reduce the lead time for supplying the Companys products on a largerscale. The proposed expansion shall also lead to improvement in margins as well asprofits.
The performance of the Company during the current year continues to be encouraging andbarring unforeseen circumstances your Directors expect your Company to achieve betterresults during the year.
Your Directors are pleased to recommend for approval of the members a dividend ofH1.20 per share (i.e. @ 12%) on Equity Shares of H10/- each of the Company involving cashoutflow of H27697005/- (inclusive of dividend distribution tax of H4684753/-) for thefinancial year 2015-16.
During the year under review 3107500 Compulsorily Convertible Preference Shares(CCPS) of H100/- each have been converted into 2725877 Equity Shares of H10/- each ofthe Company at a price of H114/- per Equity Share (including premium of H104/- per share).The Company has allotted 250000 Equity Shares of H10/- each at a premium of H104/- pershare consequent upon conversion of outstanding Warrants to MCAP India Fund Limited onpreferential basis during the year under review. The proceeds of the issue have beenutilized for the purpose for which the funds were raised.
With the aforesaid allotments of Equity Shares the total Paid-up Equity Share Capitalof the Company stood increased from H16.20 Crore to H19.18 Crore.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Management Discussion & Analysis Report is providedin a separate section forming part of the Annual Report.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
The Company has no Subsidiary Associate and Joint Venture Companies during the yearas such; the requirement of furnishing information relating to performance and financialposition of the Subsidiary Associate and Joint Venture Companies is not applicable.
Mrs. Poonam Garg ceased to be the Director of the Company w.e.f. 11thFebruary 2016 due to withdrawal of her nomination by IFCI Venture Capital Funds Ltd. TheBoard places on record its appreciation for the valuable services rendered by her duringher tenure as Director of the Company. Subsequently the Board on recommendation of theNomination and Remuneration Committee has appointed Mrs. Seema Sharma as an AdditionalDirector w.e.f. 30th March 2016 who holds office upto the date of ensuingAnnual General Meeting and is eligible for appointment as Director of the Company.
Pursuant to the provisions of Section 152 of the Companies Act 2013 and the Articlesof Association of the Company Shri Rajesh Sharma Director of the Company retires fromthe Board by rotation at the ensuing Annual General Meeting of the Company and beingeligible he has offered himself for re-appointment.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company had received the declarations u/s 149(7) of the Companies Act 2013 fromall Independent Directors that they meet the criteria of independence as laid down underSection 149(6) of the Companies Act 2013 and Regulation 16(b) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee of the Company comprises of six Directors out of which fiveDirectors are independent. The composition and other details are provided in the CorporateGovernance Report of the Company. All the recommendations made by the Audit Committee wereaccepted by the Board.
KEY MANAGERIAL PERSONNEL
During the year under review following are the Key Managerial Personnel of theCompany:
|Sl. No. ||Name of the person ||Designation |
|1. ||Shri Shyam Sunder Sharmma ||Chairman and Managing Director |
|2. ||Shri Sharad Sharma ||Joint Managing Director |
|3. ||Shri Gopal Agarwal ||Chief Financial Officer |
|4. ||Shri Bharat Kumar ||Company Secretary & |
| ||Sajnani ||Compliance Officer |
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability in respect of the financial year ended 31stMarch 2016 confirm that:-
a) In preparation of the Annual Accounts the applicable Accounting Standards have beenfollowed along with proper explanation relating to material departures if any;
b) they have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that year;
c) they have taken proper and sufficient care for the maintenance of adequateAccounting Records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) they have prepared Annual Accounts on a going concern basis.
e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company has in place adequate internal financial controls commensurate with thesize of the Company and the nature of its business with reference to financialstatements. The Audit Committee of the Board of Directors regularly reviews the adequacyand effectiveness of the internal control systems and suggests improvements to strengthenthe same.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the financial year2015-16 are given under the Corporate Governance Report.
EXTRACTS OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 asrequiredunderSection92(3)oftheCompaniesAct2013 read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 is included in this Report as "AnnexureA" and forms an integral part of this Report.
The Equity Shares of the Company are presently listed at BSE Limited and National StockExchange of India Ltd. and the listing fee for both the Stock Exchanges is paid upto date.The Company has entered into fresh Listing Agreement with BSE Limited and National StockExchange of India Ltd. in terms of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
AUDITORS AND AUDITORS REPORT a. Statutory Auditors
M/s. Mehrotra Rakesh Kumar & Co. Chartered Accountants Kanpur were appointed asStatutory Auditors of the Company at the 25th Annual General Meeting of theCompany held on 29th September 2014 to hold office till the conclusion of the28th Annual General Meeting in accordance with the provisions of the CompaniesAct 2013. However their appointment was subject to ratification by the members at everyAnnual General Meeting held after appointment during their tenure of office. The Auditorshave confirmed their eligibility and qualification under Section 141 of the Companies Act2013 and therefore their ratification for appointment as Statutory Auditors for the year2016-17 is being sought from the Members of the Company at the ensuing AGM. TheAuditors Report for the financial year 2015-16 does not contain any qualificationreservation or adverse remark. b. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Board has appointed M/s. S.K. Gupta & Co. Company Secretaries asSecretarial Auditor to undertake Secretarial Audit for the financial year 2015-16. TheSecretarial Audit Report for the financial year ended 31st March 2016 isannexed herewith as "Annexure B" to this report. The Secretarial AuditReport does not contain any qualification reservation or adverse remark. c. Cost Auditors
M/s. R. M. Bansal & Co. Cost Accountants (Firm Regn. No.:00022) and M/s. RakeshMisra & Co. Cost Accountants (Firm Regn. No.: 00249) have been appointed as CostAuditors of the Company to conduct the audit of the Cost Accounts of the Company inrespect of its products Yarn and Recycled Polyester Staple Fibrerespectively for the financial year 2016-17.
As required under the Companies Act 2013 the resolutions seeking Membersratification for the remuneration payable to Cost Auditors forms part of the Noticeconvening the Annual General Meeting. d. Internal Auditors
The Company has appointed M/s. Kapoor Tandon & Co. Chartered Accountants as theInternal Auditors of the Company for the financial year 2015-16 on the recommendations ofthe Audit Committee. The Internal Audit Report is placed before the Audit Committee of theCompany time to time.
RELATED PARTY TRANSACTIONS
The Company has formulated a policy on dealing with Related Party Transactions. Thepolicy is disclosed on the website of the Company at the link www.ganeshaecosphere.com/wp-content/uploads/2016/05/ related-party-transaction.pdf) During thefinancial year under review all transactions entered into with Related Parties were inthe ordinary course of business and on an arms length basis and they are placedbefore the Audit Committee as also to the Board for approval. Omnibus approval from theAudit Committee was obtained on annual basis for transactions which are of repetitivenature. Further the Company had not entered into any contract/ arrangement/ transactionswith related parties which can be considered as material in nature. The related partytransactions are disclosed under Note No. 37 of the Notes to Financial Statements for theyear ended 31st March 2016. There were no material related party transactionsrequiring disclosure in Form AOC - 2.
PARTICULARS OF LOAN GUARANTEES OR INVESTMENTS BY THE COMPANY
Your Company has not made any investments given loans and guarantees attractingprovisions of Section 186 of the Companies Act 2013.
WHISTLE BLOWER POLICY
Pursuant to Section 177 of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has adopted Whistle BlowerPolicy for vigil mechanism for Directors and employees to report to the management aboutthe unethical behavior fraud or violation of Companys code of conduct. The detailsof the policy are explained in the Corporate Governance Report. The Policy has been postedon the website of the Company and may be accessed at the link www.ganeshaecosphere.com/wp-content/uploads/2016/05/ whistle-blower-policy.pdf
NOMINATION AND REMUNERATION POLICY
Our current Nomination and Remuneration Policy is to have an appropriate mix ofExecutive and Non-Executive directors including the independent directors to maintain thediversity and independence of the Board. The detailed policy on directorsappointment and remuneration including criteria for determining positive attributesqualifications and independence of a director as required under Section 178(3) of theCompanies Act 2013 is available on the website of the Company at the linkwww.ganeshaecosphere.com/wp-content/ uploads/2016/08/Policy-on-Nomination-Remuneration-
And-Board-Diversity.pdf and is also annexed as "Annexure C" to thisreport. Further we affirm that the remuneration paid to the Directors is as per the termslaid out in Nomination and Remuneration Policy of the Company.
The Board of Directors at its meeting held on 11th February 2016 hadevaluated its own performance and of its committees along with performance of individualdirectors including independent directors. The Board of Directors expressed satisfactionwith the evaluation process. The Evaluation Process was conducted through a structuredquestionnaire prepared after taking into consideration the various aspects laid down underthe "Nomination Remuneration and Board Diversity Policy" of the Company.Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the performance evaluation of theChairman the Non-Independent Directors the Board and its Committees was carried out bythe Independent Directors at its meeting held on 10th February 2016.
Risk management is an ongoing process and embedded in the operating framework of yourCompany. Your Company believes that managing risks helps in maximizing returns. The Boardmembers are regularly informed about the potential risks their assessment andminimization procedures. The Board frames a plan for elimination / minimization of therisk and further lays out the steps for implementing and monitoring of the risk managementplan. There are no risks which in the opinion of the Board are of the nature that canthreaten the existence of the Company. However the risks inter-se those are generallydealt in regular course of business and have to be taken care of are fluctuations inforeign exchange rates and prices of raw material as well as finished products. The RiskManagement Policy has been uploaded on the Companys website and may be accessed atthe link www. ganeshaecosphere.com/wp-content/uploads/2016/05/ risk-management-policy.pdf
CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to focus on inclusive growth and improving lives bycontributing towards communities around which it operates. For achieving its CSRobjectives the Company has established a CSR Trust in the name of "Ganesh MemorialTrust" as a part of its initiative under the "Corporate SocialResponsibility" (CSR) drive.
The Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as "Annexure D". The CSRPolicy has been uploaded on the Companys website and may be accessed at the linkwww.ganeshaecosphere.com/wp-content/uploads/2016/05/corporate-social-responsibility-policy.pdf
During the year under review the Company has neither accepted nor renewed any depositfrom public in terms of the provisions of Sections 73 and 76 of the Companies Act 2013read with the Companies (Acceptance of Deposits) Rules 2014. In terms of Rule2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules 2014 the Company duringthe year has accepted an amount of H46150000/- as unsecured loans from the directorsand the balance outstanding as on 31st March 2016 was H18700000/-.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year 2015-16 and the date of this Report.Further there was no change in the nature of business of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed by the regulators or courts ortribunals which would impact the going concern status of the Company and its futureoperations.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureE".
PARTICULARS OF EMPLOYEES
The Disclosure required under Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed as "Annexure F" and forms an integral part of this Report.
The information showing names and other particulars of employees as per Rule 5(2) and5(3) of the aforesaid Rules forms part of this report. However as per first proviso toSection 136(1) of the Act the Annual Report excluding the aforesaid information is beingsent to the members of the Company and others entitled thereto. The said information isavailable for inspection by members at the registered office of the Company duringbusiness hours on all working days upto the date of ensuing Annual General Meeting. Anymember interested in obtaining a copy thereof may also write to the Company Secretary.
As required under Schedule V to the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Corporate Governance together withCertificate from the Companys Auditors confirming compliance of the conditions ofCorporate Governance forms an integral part of this Report.
POLICY ON SEXUAL HARASSMENT
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace with amechanism of lodging complaints in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder. No complaints were reported to the Board for sexual harassment of women at workplace during the financial year 2015-16.
Your Directors take this opportunity to place on record appreciation for theco-operation and support extended by various departments of the Central and the StateGovernment(s) Bankers and Business associates. Your Directors also wish to place onrecord appreciation to all the employees for their sincere and dedicated services renderedto the Company and are also grateful to all the Shareholders customers dealers agentssuppliers and bankers of the Company for reposing continued trust support and confidencein the management of the Company.
| ||For and on behalf of the Board |
| ||(Shyam Sunder Sharmma) |
|Place: Kanpur ||Chairman and Managing Director |
|Date : 25th July 2016 ||DIN: 00530921 |