The Members of
Gayatri BioOrganics Limited
Your Directors present the Twenty Sixth Annual Report along with the Audited FinancialStatements and the Auditor's Report thereon for the period ended 31st March2017.
|FINANCIAL RESULTS ||(Rs. in lakhs) |
|Particulars ||31.03.2017 ||31.03.2016 |
|Net Sale Income from Operations || || |
|Other Operating Income || || |
|Income from operations || || |
|Other Income || || |
|Total Income || || |
|Total Expenditure || || |
| || || |
|Finance Charges || || |
|Depreciation || || |
|Provision for Taxation || || |
|Net Profit / (Loss) ||-8261.97 ||-3872.72 |
*Operations are carried in the Company pending transfer of assets and liabilities inpursuance of Business Transfer Agreement entered with Bluecraft Agro Private Limited andhence entire revenue from operations represent revenue from discontinued operations ( Asper Accounting Standard 24- Discontinued Operations issued by ICAI)of the Company and therequired disclosures are hereunder.
| ||(Rs. in lakhs) |
|Particulars ||31.03.2017 ||31.03.2016 |
|Revenue (Net of Excise) ||7969.33 ||13815.40 |
|Operating Expenses discontinuing operations ||16231.30 ||17688.13 |
|Profit before Tax from discontinuing operations ||-8261.98 ||-3872.72 |
|Income Tax Expense || || |
|Profit after Tax from discontinuing operations ||-8261.98 ||-3872.72 |
|Total Assets related to discontinuing operations ||10380.76 || |
|Total Liabilities related to discontinuing operations ||14768.51 || |
SALE OF ASSETS
The Board in its meeting held on 13.08.2016 has carried out a comprehensive review ofthe ongoing business operations of the Company and the financial crisis and challengesfacing by the management in running the business as the operations of the Company resulteda net loss of Rs. 2214.69 Lakhs for the first quarter ended on 30.06.2016. The Board alsotook into consideration the net losses of Rs 3872.71 Lakhs recorded by the Company forthe financial year 2015-16 and accumulated losses of Rs.7 958.43 Lakhs as on 31.03.2016.
The Members of the Company Passed the Special Resolutions on 21.09.2016 and 21.06.2016through postal ballot notice dated 13.08.2016 and 07.05.2016 respectively for the sale ofUnit-I & II of the Company Situated at NH-9
Nandikandi Village Sadasivapet Mandal Medak District Telangana and BalabadrapuramVillage Biccavole Mandal East Godavari District Andhra Pradesh . In Connection with thesale on 28.11.2016 the management of the Company has entered into a Business TransferAgreement (BTA) with Bluecraft Agro Private Limited (CIN:U01100GJ2016PTC094317) acompany registered under the Companies Act 2013 having its registered office at 9Ambalal Park Jawahar Chowk Sabarmati Ahmedabad Gujarat- 380005.
AMOUNT TO BE TRANSFERRED TO RESERVES AND DIVIDEND PROPOSED:
In the current financial year No amount was transferred to reserves and the Board ofDirectors of the Company does not recommend any dividend for the financial year underreview.
During the year the Company has not accepted any deposits covered under the Chapter Vof the Companies Act 2013
At the 23rd Annual General Meeting (AGM) held on 30th September2014 M/s M Bhaskara Rao & Co. Chartered Accountants were appointed as StatutoryAuditor of the Company to hold office from the conclusion of AGM held on September 302014 to the conclusion of the 28th AGM (subject to ratification of theappointment by the members at every AGM held after that AGM) at such remuneration as maybe decided by the Board of Directors. In terms of the first proviso to Section 139 of theCompanies Act 2013 the appointment of the auditor shall be placed for ratification atevery Annual General Meeting. Accordingly the appointment of M/s M Bhaskara Rao &Co. Chartered Accountants as statutory auditors of the Company is hereby placed forratification by the shareholders. In this regard the Company has received a certificatefrom the auditors to the effect that if they are reappointed it would be in accordancewith the provisions of Section 141 of the Companies Act 2013.
The Board of Directors based on the recommendation of the Audit Committee hasre-appointed M/s. M O S & Associates Chartered Accountants Hyderabad as theInternal Auditors of your Company. The Internal Auditors are submitting their reports onquarterly basis.
Mr. Y. Koteswar Rao Practicing Company Secretary was appointed to conduct theSecretarial Audit of the Company for the financial year 2016-17 as required under Section204 of the Companies Act 2013 read with Rule 9 there-under. The secretarial audit reportfor F.Y 2016-17 annexed to this Board's Report as Annexure-I.
In accordance with Section 148(3) and other applicable provisions if any of theCompanies Act 2013 and The Companies (Audit and Auditors) Rules 2014 and In accordancewith the Audit Committee recommendation the Board of Directors had appointed M/s.N.S.V.Krishna Rao & Co Cost Accountants Hyderabad to conduct the Cost Audit for theFinancial Year 2017-2018. M/s. N.S.V.Krishna Rao & Co Cost Accountants submitted theCost Audit Report for the Financial Year ended 31st March 2017.
DIRECTORS & KEY MANAGERIAL PERSONNEL:
Smt.T. Sarita Reddy (DIN: 00017122) retires by rotation at the forth coming annualgeneral meeting and being eligible offers herself for re-appointment.
The independent directors of the company are highly qualified and stalwarts in theirrespective filed with wide and varied experience. They actively participate in thediscussions at the Board meeting and their suggestions have helped the company to grow ata rapid pace. The independent directors are paid sitting fees for attending the Board andcommittee meetings. The nomination and remuneration committee has in place their criteriafor determination of qualifications positive attributes and independence of thedirectors which they would consider as and when the company would be required to appointthe new independent directors. Pursuant to the provisions of Companies Act 2013 andSEBI(Listing Obligations and Disclosure Requirements)Regulations2015 the Board hascarried out an evaluation of its own performance the directors individually as well asthe evaluation of working of its audit committee nomination and remuneration committeeand stakeholders relationship committee . The manner in which the evaluation has beencarried out has been explained in the corporate governance report. The manner in which theremuneration is paid to the directors executive directors and senior level executives thecompany has also been explained in the corporate governance report. During the year EightBoard meetings and Six audit committee meetings were convened and held the details ofwhich are given in the corporate governance report. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013.
Mr. C.V. Rayudu was re-appointed as Whole time Director of the Company in the BoardMeeting held on 28th May 2017. The Management is in the process of shortlisting and finalizing the suitable candidates for the offices of CFO and CS of theCompany.
The Company has received disclosures from the Independent Directors confirming theirindependence in terms of the SEBI(Listing Obligations and DisclosureRequirements)Regulations2015 and Section 149(6) of the Companies Act 2013. The Letter ofAppointment issued to the Independent Directors containing the terms and conditions areavailable under investors section on the website of the Companyhttp://www.gayatribioorganics.com A Brief Profile of the Directors of the Company isannexed herewith to this report as Annexure - II
RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were atarm's length basis. There are no materially significant related party transactions made bythe company with promoters key managerial personnel or other designated persons which mayhave potential conflict with interest of the company at large. A detailed report onmaterial contracts and arrangements made during the year 2016-17 being arm's lengthtransactions have been reported and annexed hereto in form AOC-2 as Annexure - III andforms part of this report.
EXTRACT OF ANNUAL RETURN:
The extract of annual return in form no. MGT-9 as provided under section 92 (3) of theCompanies Act2013 read with Rule 12 of the Companies (Management & Administration)Rules 2014 is annexed hereto as Annexure-IV and forms the part of this report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
a. Business Environment
In FY 2016-17 the global economy showed signs of recovery with growth in demand fromthe developed countries in the second half of the year. Emerging markets including Indiahad to face multiple challenges of rising current account deficit depreciation of thelocal currency and additional pressure due to capital outflows.
Your Company's performance for the year 2016-17 has to be viewed in the context ofaforesaid economic and market environment.
b. Industry Structure and Developments
The Company is engaged in the business of producing Sorbitol and Starch. Sorbitol is awater soluble polyhydric alcohol having sweet taste and high stability besides propertiesof plasticizing. It finds application as input material in various industrial sectors suchas Tooth Paste Pharmaceuticals Vitamin-C Cosmetics Paper and Paints etc. Sorbitol andStarch industries in India are very much fragmented and scattered throughout India. Incase of Sorbitol at present only four major players are there in South India. When itcomes to Starch nearly 50% of Indian Starch production comes from Gujarat where fourmajor Starch Factories are located.
c. Opportunities and threats
The Starch Industry at time shown good future the raw material availability atreasonable prices and cheaper imports of starch from the neighboring Countries will havean impact on the profitability of the Industry and Your Company is not an exception to it.The company has been facing the threat of import of Sorbitol.
However your Company is likely to face competition from other competitors; there maybe risks inherent in meeting unforeseen situations not uncommon in the industry. YourCompany is aware of these challenges and is geared to meet them.
d. Out look
Revival of the financial position of the Company.
e. Risks and Concerns
The Company faces risk of lower realization in the event of cheap imports. Other riskfaced by the Company is that Sorbitol is based on the agro commodity which is exposed tofactors of Monsoon in the Country. Besides the factors mentioned above agriculturalincome economic scenario wholesale and consumer price level impact of trade agreementswith other countries and trade blocks etc. are some of the factors which affects theperformance of the Company.
f. Internal Control Systems and their adequacy
The Company has designed an effective Internal Control System to balance the financialoperational compliance and other risks and explore its business opportunities at thefullest to achieve its desired objectives.
g. Operational performance
This has already been discussed in this report.
h. Human Financial Resources / Industrial Relations
People are the most valued assets of the Company. They work individually andcollectively contributing to the achievement of the objectives of the business. Therelation between the employees and the Company remained harmonious and cordial throughoutthe year. Your Company's corporate culture and the vision and values help unite theworkforce and provide standards for how your Company conducts the business. Your Companyhas successfully aligned human capital with business and organizational objectives. Theemphasis has been on team work skill development and development of leadership andfunctional capabilities of the employees. The Industrial relations remained cordial at allunits of the Company.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1)5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are provided as Annexure-V to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE OUTGO:
Information required under section 134 (3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed to this Board's Report asAnnexure-VI.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:
The Company is yet to put in place Internal Control System commensurate with the sizescale and complexity of its operations in view of proposed Sale of undertakings as per theBusiness Transfer Agreement entered into with Blue Craft Agro Pvt Ltd.
The Company has no subsidiaries as on the date of 31st March 2017.
NOMINATION AND REMUENRATION POLICY:
A committee of the Board named as "Nomination and Remuneration Committee" hasbeen constituted to comply with the provisions of section 178 Schedule IV of theCompanies Act to recommend a policy of the Company on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters and to frame proper systems foridentification appointment of Directors & KMPs Payment of Remuneration to them andEvaluation of their performance and to recommend the same to the Board from time to time.The policy is also posted in the investors section of the company's website.
Pursuant to the provisions of the Companies Act 2013 and SEBI(Listing Obligations andDisclosure Requirements)Regulations2015 the Board has carried out the annual performanceevaluation of its own performance the Directors individually as well as the evaluation ofthe working of its Audit Nomination and Remuneration Committees.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance. A separate exercise wascarried out to evaluate the performance of individual Directors including the Chairman ofthe Board who were evaluated on parameters such as level of engagement and contributionindependence of judgment safeguarding the interest of the Company and its minorityshareholders etc. The performance evaluation of the Independent Directors was carried outby the entire Board. The performance evaluation of the Chairman and the Non IndependentDirectors was carried out by the Independent Directors. The Directors expressed theirsatisfaction with the evaluation process.
Your Company has not accepted any fixed deposits and as such no principal or interestwas outstanding as on the date of the Balance sheet.
The Members of the Company Passed the Special Resolutions on 21.09.2016 and 21.06.2016through postal ballot notice dated 07.05.2016 and 13.08.2016 for the sale of Unit-I &II of the Company Situated at NH-9 Nandikandi Village Sadasivapet Mandal MedakDistrict Telangana and Balabadrapuram Village Biccavole Mandal East Godavari DistrictAndhra Pradesh . In respect of which the management of the Company has entered into aBusiness Transfer Agreement (BTA) with Bluecraft Agro Private Limited(CIN:U01100GJ2016PTC094317) a company registered under the Companies Act 2013 havingits registered office at 9 Ambalal Park Jawahar Chowk Sabarmati Ahmedabad Gujarat-380005.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
During the year the company has not given any loans or guarantees covered under theprovisions of section 186 of the Companies Act 2013.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors' confirm that:
i) In the preparation of annual accounts for the financial year ended 31stMarch 2017 the applicable Accounting Standards have been followed along with properexplanation relating to material departures;
ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company at the end of the financial year ended 31stMarch 2017 and of the profit and loss of the Company for the year;
iii) The Directors have taken proper and sufficient care for their maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) The Directors had prepared the annual accounts on a 'going concern' basis;
v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy framed to deal with instance of fraud andmismanagement if any in the Company. The details of the Policy are explained in theCorporate Governance Report and also posted under investors section on the website of theCompany http://www.gayatribioorganics.com
Your Directors have constituted a Risk Management Committee and defined its roles andresponsibilities which focuses that all the risks that the organization faces such asStrategic Operational Compliance Financial and other risks have been identified andassessed and there is adequate risk management infrastructure in place capable ofaddressing those risks.
STATEMENT ON DEVELOPMENT AND IMPLEMENATION OF RISK MANAGEMENT POLICY:
The statement on development and implementation of risk management policy is givenunder the management discussion and analysis report which is attached with this annualreport.
CORPORATE SOCIAL RESPONSIBILTY (CSR) POLICY AND CSR INITIATIVES:
Your Company does not fall under the purview of Sec.135 of the Companies Act 2013.Hence the Company not required to Constitute Corporate Social Responsibility Committee.
CORPORATE GOVERNANCE REPORT:
Your Company has complied with the requirements of Clause 49 of the Listing Agreementand SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a separatereport on corporate governance forms part of the annual report. A certificate from theauditors regarding compliance of conditions of corporate governance also forms the part ofthe annual report.
Your Company considers its Human Resources as the key to achieve its objectives. Theunflinching commitment of the employees is the driving force behind the Company's vision.Your Company appreciates the spirit of its dedicated employees.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
Statements in this "Management Discussion & Analysis" may be consideredto be "forward looking statements" only. Actual results could differ materiallyfrom those expressed or implied within the meaning of applicable securities laws orregulations.
LISTING OF SECURITIES:
(a) The Company's Shares are listed with BSE Limited Phiroze Jeejeebhoy Towers DalalStreet Mumbai - 400 023.
(b) The Company paid Listing fees for the year 2017-18 to BSE Limited.
REPLY TO ADVERSE REMARKS OF AUDITORS' REPORT:
With regard to qualified opinion The Company had to sell it's both the units of theCompany to come out of the financial crisis and to reduce the overall cost burden. Themanagement continues its support to the Company with all necessary assistances includingfinancial and operational.
The management is in the process of establishing internal financial control mechanism.
Point No. (vii) (a) of Annexure to Auditors' Report with regard to irregularity andserious delays in remitting statutory dues including provident fund income-tax salestax value added tax duty of customs service tax cess and other material statutory dueswere due to working capital constraints.
Point No. (viii) of Annexure to Auditors' Report with regard to overdue of amountspayable to bankers and financial institution are also owing to working capitalconstraints.
REPLY TO ADVERSE REMARKS OF SECRETARIAL AUDITORS' REPORT:
The company was under the process of short listing and finalising the suitablecandidate for the offices of Company Secretary of the Company and Chief Financial Officer(CFO). The management is in the process of selection of appropriate candidates for theabove mentioned offices.
Your Directors would like to place on record their sincere appreciation and gratitudeto all Financial Institutions Company's Bankers Shareholders Government AgenciesSuppliers Customers Co-operation and support during the year and their confidence in itsmanagement. The Directors wish to convey their appreciation to all the employees for theirenormous personal efforts as well as their collective contribution to the Company'sperformance. The Directors are also thankful to all other stakeholders for their valuablesustained support to the Company.
| ||By Order of the Board |
|Place: Hyderabad ||T. Sandeep Kumar Reddy |
|Date: 29.08.2017 ||Chairman |