THE MEMBERS OF MRO-TEK REALTY LIMITED
Your Board of Directors has pleasure in presenting the 32nd Annual Report and Auditedfinancial results for the year ended 31st March 2016 together with the IndependentAuditors Report and the Secretarial Audit Report.
1. FINANCIAL RESULTS:
|Particulars ||2015-16 ||2014-15 |
| ||(Rs. Lakhs) ||(Rs. Lakhs) |
|Net Revenue from operations ||2928.52 ||4095.14 |
|Other Income ||24.70 ||68.87 |
|Operational Profit (Loss) before Interest and Depreciation ||9.29 ||(219.41) |
|Operational Profit (Loss) before Interest ||(109.61) ||(353.43) |
|Interest and other Finance Costs ||(149.02) ||(207.21) |
|Operational Loss before Taxation and Extraordinary/ Exceptional items ||(258.63) ||(560.64) |
|Exceptional Items and Extraordinary items ||(1288.97) ||- |
|Profit /(Loss) before Tax ||(1547.60) ||(560.64) |
|Provision for Taxation (Deferred Tax Adjustments) ||(0.88) ||(8.26) |
|Profit / (Loss) after Taxation ||(1548.48) ||(568.90) |
|Loss from Discontinuing Operations ||(1320.90) ||(548.48) |
|Loss for the period ||(2869.38) ||(1117.38) |
The Company has incurred losses during the year and hence there is no question oftransfer of profits to reserves during the year.
During the year under review
The Company earned operational profit of Rs 9.29 Lakhs before exceptional items/ extraordinary items discontinuing operations finance cost and depreciation during theyear 2015-16 as against operational loss of Rs 219.41 Lakhs during the previous year.
The recessionary trend in overall business continued to prevail in the marketcreating complex environment to capture the business.
The Company faced cash flow deficiency and hence adopted the method ofliquidating the non- moving and slow moving inventory to strengthen the fund flowposition. With this the Company achieved contribution margin of 44.15 % as compared toprevious years 33.97 %.
The Company carried out restructuring activities including reduction of manpowerand consequently incurred retrenchment and compensatory expenditures of Rs 353.01 Lakhs.
The Company reduced the manpower cost to significant extent by bringing down thenumber of employees to 16 during the year. The required manpower resources are being meton need basis by hiring through agencies.
The Company carried out the impairment testing for the existing building atHebbal Corporate Office which is subject to development as per Development agreemententered on January 1 2016 and recognized impairment of building to the extent of Rs756.59 Lakhs.
Due to continued cash losses the Board of Directors resolved to discontinue"Solar Based Equipment & Projects" in the Meeting held on January 14 2016.
The Company incurred loss of Rs 1320.90 Lakhs from discontinuing operations ofSolar business segment during the year as Rs 548.48 Lakhs during the correspondingprevious year.
The Total turnover of the Company reduced to Rs 2953.22 Lakhs from Rs 4164.01Lakhs due to tough competition and working capital constraints.
To overcome working capital constraint and to meet restructuring cost theCompany decided to opt for development of property situated at Hebbal and received the nonrefundable amount of Rs 900 Lakhs.
The Company decided to include Real estate development as an additional mainobject of the Company after complying with all the prescribed procedures and convertedimmovable property situated at Hebbal into stock in trade.
Serious efforts are being infused to reduce the general and administration costduring the year under review.
The Networking Products Space recorded turnover of Rs. 2928.52 Lakhs as comparedto Rs. 4095.13 Lakhs in the previous year. Details on segmental revenue and performanceare furnished in Para II (g) of Note 26 on Additional Notes to Accounts.
Accumulated losses stood at Rs 7849.24 Lakhs for the year ended 31st March 2016as against Rs 4979.86 Lakhs in the last year.
The net worth of the Company is negative due to recognition of impairment cost ofbuilding substantial restructuring cost and the loss recognized under the Discontinuingoperation. However the Company has not recognized the non refundable amount received tothe tune of Rs 900 Lakhs as revenue during the year under review.
The Company proposed to the Board of its Joint Venture Company RAD-MRO ManufacturingPrivate Limited to initiate the liquidation proceedings. The hearing in respect of appealbefore CESTAT is yet to take place and we are waiting for disposal of the case to initiatethe liquidation proceedings.
2. SHARE CAPITAL:
The Company has Authorised share capital of Rs. 150000000/- (Rupees Fifteen Croresonly) divided into 30000000 (Three crores) equity share of Rs. 5/- (Rs. Five only)each. During the year Company has Paid-up Equity Capital of Rs. 93423010/- (Rs. NineCrores Thirty Four Lakhs Twenty Three Thousand and Ten only) divided into 18684602equity shares of Rs. 5/- (Rs. Five only) each.
During the year under review the Company has not issued shares with/withoutdifferential voting rights nor granted stock options or sweat equity shares.
3. CHANGE IN NATURE OF BUSINESS NAME AND REGISTRED OFFICE:
There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014.
However the Company altered its Object Clause of the Memorandum of Association byadding two new Clauses 2 and 3 relating to Real Estate activities to the existing Clauseof Memorandum of Association vide approval of Members by way Special Resolution dated 19thMarch 2016 passed through Postal Ballot notice dated 9th February 2016.
The Company has obtained necessary approval from the Registrar of Companies foralteration of Main Objects.
The Company has obtained necessary approval from its Shareholders by way of SpecialResolution through Postal Ballot for change of name to MRO-TEK Realty Limited and furtherit has obtained the approval from the Registrar of Companies Karnataka endorsing thechange of name vide certificate dated 11th day of May 2016. The Company has obtained inprinciple approval from BSE Limited and National Stock Exchange Limited for change of nameof the Company.
The Company has shifted its Registered office from Bellary Road Hebbal Bangalore 560024 to No.6 New BEL Road Chikkamaranahalli Bangalore 560054 witheffect from 12th May 2016 as per the resolution passed at the Board Meeting of theCompany held on 5th May 2016.
4. MATERIAL CHANGES & COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THECOMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
There are no material changes and commitments between the end of the Financial Year andthe Date of the Report which affect the financial position of the Company.
On 19th May 2016 Mr. Aniruddha Mehta Mrs. Gauri A. Mehta and Messrs Umiya HoldingPrivate Limited collectively called as the Acquirers entered into SharePurchase Agreement with the Promoters of the Company to acquire 7410056 Equity Shares ofRs. 5/- each at a price of Rs.40/- per Equity Share which triggered the OpenOffer pursuant to Regulation 3(1) & 4 of the Securities and Exchange Board ofIndia (Substantial Acquisition of Shares and Takeovers) Regulations 2011. Subsequentlythe Acquirers engaged Investment Bankers and initiated actions on the OpenOffer.
Pervious promoters of the Company i.e. Mr. S. Narayanan Mr H Nandi Mrs. JayashreeNarayanan Mrs. Shyamali Nandi Mr. Murari Narayanan and Mrs. Prakrithy N who werecollectively holding 7410056 shares (39.66 % of total Share Capital) transferred theirshareholding to Mr. Aniruddha Mehta Mrs. Gauri A Mehta and Messrs Umiya Holding PrivateLimited as New Promoters of the Company and their shareholding are as follows: NewPromoters Share holding:
|S. No Name Promoters of ||Acquisition of shares through SPA ||Through Open offer ||Total Share holding ||% to total Paid up Capital |
|1. Aniruddha Mehta ||3000000 ||12223 ||3012223 ||16.12 |
|2. Gauri A. Mehta ||400000 ||86064 ||486064 ||2.60 |
|3. Umiya Holding Private Limited ||4010056 ||198719 ||4208775 ||22.53 |
|Total ||7410056 ||297006 ||7707062 ||41.25 |
Further the Management carried out the physical verification of assets as part ofmanagement process and observed assets having net book value of Rs 4820843 / to bewritten off.
5. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no significant events subsequent to the date of financial statements apartfrom the matters specified in the above Para 4.
Whilst your Directors understand the sentiments of the Investors the losses incurredin the year that has passed constrained the Board to state that the dividend could not berecommended.
However the Directors will strive hard to bring the Company back to dividend trackbefore long and the improving performance of the Company is hoped to continue tofacilitate consideration of dividend in the days to come.
7. BOARD MEETINGS:
During the year six(6) meetings of the Board of Directors were held on the followingdates: 27.05.2015 03.08.2015 04.11.2015 24.12.2015 14.01.2016 and 09.02.2016 andrelated details including that of the various committees constituted by the Board aremade available in the Report of Directors on Corporate Governance forming part of theAnnual report placed before the Members.
8. Committees of the Board:
Currently the Board has six Committees viz. Audit Committee the Nomination andRemuneration Committee the Stakeholders Relationship Committee Independent DirectorsCommittee the Risk Management Committee and prevention of Sexual Harassment against Womenat Work place Committee. A detailed note on the composition of the Board and its Committeeand other related particulars are provided in the Report of Directors on CorporateGovernance forming part of this Annual Report.
9. DIRECTORS AND KEY MANANGERIAL PERSONNEL:
Consequent upon the Open Offer and change in Management the Committees werereconstituted on 8th August 2016 and the information on the same are as below:
Re-constitution of Board of Directors:
Mr. S. Narayanan Chairman and Managing Director and Mr. H. Nandi Managing Directorsof the Company Mr. N. Sivaram Mr. N.K. Rajasekharan and Mr. K. Rajamani respectiveIndependent Director of the Company. Ms. Sunanda Nag Woman Director on Board resignedfrom the office of directorship w.e.f 14th January 2016.
Mr. Aniruddha Mehta as Chairman and Managing Director of the Company Mrs. Gauri AMehta as Director of the Company Mr. S.Radhakrishnan Mr. Sudhir Kumar Hasija and Mr. MV Sampat Kumar as Independent Directors.
Brief profile of each new Director:
1. Mr. Aniruddha Mehta Chairman & Managing Director: (Age: 55 years) Mr.Aniruddha Mehta a born entrepreneur and a visionary leader has been the iconic figurebehind the success of the Umiya Group. He possesses a wide range of expertise and specialskills instrumental in building a company committed to develop quality projects with sheerpassion diligence and a burning desire to achieve excellence. A graduate from Mumbai Mr.Aniruddha Mehta is blessed with a keen business acumen that was honed while working withhis uncle who ran a public limited company and his grandfather in the Clearing &Freight Forwarding business. An opportunity that presented itself while on a business tripestablished him in Bangalore.
A small up market residential project saw the birth of Umiya in the year 2000 and therewas no looking back. A few more residential projects gave Mr. Mehta the confidence toexpand his horizon beyond Bangalore and the first step to his dream was fulfilled bysetting up his business in Goa in the year 2007.
2. Mrs. Gauri Aniruddha Mehta - Non Executive Non Independent Director: (Age: 52 years)Mrs. Gauri Aniruddha Mehta born in business family graduated in Arts and a landscapearchitect by passion having vast experience in designing.
3. Mr. Radhakrishnan Seetharaman Independent Director: (Age: 51 years) BusinessUnit CFO CIO at Nestl India; Chartered Accountant (FCA); Company Secretary (ACS); Mr.Radhakrishnan Seetharaman is a dynamic Professional having vast experience in the field ofFinance and Accounts; He had worked in different position in Top management during hisentire Career and contributed immensely in the key strategic planning .
4. Mr. Sudhir Kumar Hasija Independent Director: (Age: 60 years) Mr. SudhirKumar Hasija is first generation entrepreneur and pioneer in the field of electronics andtelecommunication. He is the founder of well known mobile manufacturing company"KARBONN".
5. Mr. M V Sampath Kumar Independent Director: (Age: 72 years) Mr. M.V. SampathKumar is Bachelor of Engineering Mech. Bangalore University has been a successfulmanager with a proven track record and is now holding a Senior position in a largeorganization.
He held management consultant positions in Indonesia - commonwealth UKPresident / Director in various companies in India Africa Indonesia with offices inEurope USA Canada and South East Asia.
Mr. Srivatsa who was appointed as Compliance Officer of the Company w.e.f 09.02.2016ceased to be so with effect from 8th August 2016.
During the year Mr. M. D. Muralidharan who was appointed as Company Secretary and KeyManagerial Person on 3rd August 2015 resigned from office w.e.f. 9th February 2016. YourManagement has appointed Mr. Barun Pandey a qualified Company Secretary in his place andappointed him as Compliance officer with effect from August 8 2016.
The newly constituted Board thanks Mr. S Narayanan and Mr. H Nandi who have promotedyour Company and who have been responsible for nourishing the Company to take to higherlevels.
Your Board places on record its appreciation for the contribution and support extendedby the outgoing Directors.
10. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(6) & 149(7) of the Companies Act 2013 that the IndependentDirectors of the Company meet with the criteria of their Independence laid down in Section149(6) (Annexure I).
11. COMPOSITION OF AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE &STAKEHOLDERS RELATIONSHIP COMMITTEE:
Following are the compositions of various Committees:
|Up to 8.8.2016 ||After 8.8.2016 || |
|i) Audit Committee: || || |
|a) Mr. K. Rajamani ||Mr. S. Radhakrishnan ||- Chairman |
|b) Mr. N. Sivaram ||Mr. Sudhir kumar Hasija ||- Member |
|c) Mr. N K. Rajasekharan ||Mr. M V Sampath Kumar ||- Member |
|d) - ||Mrs. Gauri A Mehta ||- Member |
|ii) Nomination and Remuneration Committee || || |
|a) Mr. K Rajamani ||Mr. Sudhir kumar Hasija ||- Chairman |
|b) Mr. N. Sivaram ||Mr. S. Radhakrishnan ||- Member |
|c) Mr. N K. Rajasekharan ||Mr. M V Sampath Kumar ||- Member. |
|d) - ||Mrs. Gauri A Mehta ||- Member |
|iii) Stakeholders Relationship Committee: || || |
|a) Mr. K Rajamani ||Mr. Sudhir kumar Hasija ||- Chairman |
|b) Mr. N. Sivaram ||Mr. S. Radhakrishnan ||- Member |
|c) Mr. N K. Rajasekharan ||Mr. M V Sampath Kumar ||- Member |
|d) - ||Mrs. Gauri A Mehta ||- Member |
12. ANNUAL BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and The Listing Regulations theBoard has carried out an annual performance evaluation of its own performance itsCommittee and the Directors individually. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.
13. VIGIL MECHANISM:
Report details of establishment of Vigil Mechanism (for Directors and Employees toreport genuine concerns) pursuant to the provisions of Section 177(9) & (10) of theCompanies Act 2013 and as per Regulation 22 of SEBI (Listing obligations and DisclosureRequirements) Regulation 2015 of the Listing Agreement is posted on the website of theCompany http://mro-tek.com/pdf/ Whistle%20Blower%20Policy.pdf
14. DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of Section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that:
(a) In the preparation of the Financial Statements the applicable Accounting Standardshad been 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 profit and 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 Financial Statements on a going concern basis; and
(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 systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
15. EXTRACT OF ANNUAL RETURN:
As required pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of Annual return inMGT-9 is attached as a part of this Annual Report (Annexure II).
The Auditors Messrs Singhvi Dev & Unni Chartered Accountants (Firm RegistrationNo 003867S) retire at the ensuing Annual General Meeting; the said Auditors have expressedinability to continue to act as Auditors. Your Board based on the proposal from aShareholder and on the recommendation of the Audit Committee has appointed Messrs K. S.Aiyar and Co. (ICAI Firm Registration No. 100186W) as the Statutory Auditors of theCompany.
The Company has received a certificate under Section 141 of the Companies Act 2013from the said firm that their appointment would within the limits specified therein.
Your Directors recommend the appointment of Messrs K. S. Aiyar and Co. CharteredAccountants as the Statutory Auditors for the financial year ending 31st March 2017. TheResolution seeking approval of the Members for appointment of Statutory Auditors andfixation of their remuneration and authorization to the Board of Directors are included inthe notice convening the ensuing Annual General Meeting.
17. SECRETARIAL AUDIT:
The Secretarial Audit for the Financial year 2015-16 was conducted as required underSection 204 of the Companies Act 2013 by Mr. Vijayakrishna K T Company Secretary interms of Section 204(3) of the Act. Your Directors are pleased to inform that there was noqualification made by the said Company Secretary in their Secretarial Audit report. TheSecretarial Audit report is enclosed to the report of the Board of Directors in terms ofSection 134(3) (f) read with Section 204 (1) of the Act is annexed to this Report (AnnexureIII). The observations made in the said Report have been duly considered by the Board andwill be addressed suitably.
18. DISCLOSURE ABOUT COST AUDIT:
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Rules 2014 dated December 31 2014 issued by Ministry of CorporateAffairs (MCA) the cost audit records maintained by the such Companies as may beprescribed in respect of the products covered as per the above dated notification issuedby MCA is required to be audited by an Cost Accountant.
However the Company not being a prescribed company as per the rules the Cost Audit isnot applicable for the year under report.
19. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
(a) Conservation of Energy:
Your Company is duly certified under ISO 14001:2004 (Environment Management System).
Every possible effort is made / introduced to conserve and avoid wastage of energy.
Adequate facilities have been installed for rain water harvesting recycling of usedwater solar-powered energy and maximum usage of natural lighting and ventilation andthus implementing Go Green Policy in its total spirit.
(b) Technology Absorption:
Efforts also continue to maximize utilization of the technological skills in findingstate-of-the-art solutions to provide more effective and revolutionary solutions for allsegments of Networking Products Industry.
During the year no amount was incurred towards Capital Expenditure in this division. Onrevenue account an amount of Rs 1.24 Crores (Prev. year- Rs. 1.70 Crores) was expendedand absorbed in these accounts in accordance with the applicable Accounting Standards.
The in-house technical and commercial teams consistently engage themselves in theirendeavor to indigenize technology and components as well as implementation ofvalue-engineering and cost-saving methods.
(c) Foreign Exchange Earnings and Outgo:
Full details of foreign exchange earnings and expenditure are furnished under para 12and 13 of Note 26 II on additional notes to accounts. However following areexhibited:
Earning - Rs. 1140411/-
Outgo - Rs. 137761143/-
Your Company has not invited/accepted/renewed any deposits from the public as definedunder the provisions of Companies Act 2013 and accordingly there were no deposits whichwere due for repayment on or before 31st March 2016.
21. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
The Company continued to maintain high standards of internal control designed toprovide adequate assurance on the efficiency of operations and security of its assets. Theadequacy and effectiveness of the internal control across various activities as well ascompliance with laid-down systems and policies are comprehensively and frequentlymonitored by your Companys management at all levels of the organization.
The Audit Committee which meets at least four times a year actively reviews internalcontrol systems as well as financial disclosures statutory compliances with adequateparticipation inputs from the Statutory Internal and Corporate Secretarial Auditors.
22. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The Company has not made any loan guarantees or investments of any nature during theyear under review.
23. RISK MANAGEMENT POLICY:
The Company has formulated a Risk Management Policy and has in place a mechanism toinform the Board about risk assessment and minimization procedures and periodical reviewto ensure that executive management controls risk by means of a properly designedframework. The policy details available at this link http://www.mro-tek.com/pdf/MRO-TEK-Risk_Management_Policy.pdf
24. RISK AND AREA OF CONCERN:
The Company has laid down a well defined risk management mechanism covering the riskmapping and trending analysis risk exposure potential impact and risk mitigatingprocess. A details exercise is being carried out to identify evaluate manage and monitorand non business risk. The Audit Committee Risk Management Committee and the Boardperiodically review the risks and suggest steps to be taken to manage/mitigate the same.
During the year a risk analysis and assessment was conducted and no major risks werenoticed which may threaten the existence of the Company.
25. NOMINATION AND REMUNERATION COMMITTEE POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and forother employees and their remuneration. The same has been disclosed in the website athttp://www.mro-tek.com/
26. CORPORATE SOCIAL RESPONSIBILITY:
The Company has continuously been incurring losses from past three financial years.Hence the Company was not required to incur any CSR Expenditures during the year.
27. RELATED PARTY TRANSACTIONS:
All related party transactions which were entered into during the financial year wereon an arms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are audited and a statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompanys website. Web link for the same is http://mro-tek.com/pdf/20_5_15_RPT_Policy.pdf and also Particulars of Contracts or Arrangements with Relatedparties referred to in Section 188(1) in Form AOC- 2 annexed to this report as (AnnexureIV).
28. ANNUAL BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 the Board hascarried out an annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its Audit Nomination &Remuneration and Compliance Committees.
29. RATIO OF REMUNERATION TO EACH DIRECTOR:
Details / Disclosures of Ratio of Remuneration to each Director to the medianemployees remuneration are annexed to this report as (Annexure-V).
30. LISTING WITH STOCK EXCHANGES:
The Equity Shares of the Company continued to be listed on the BSE Limited (BSE) Mumbaiand the National Stock Exchange of India Ltd (NSE) Mumbai. The Company confirms that ithas paid the Annual Listing Fees for the year 2016-2017 to NSE and BSE where theCompanys Shares are listed.
The Securities Exchange Board of India (SEBI) has notified the SEBI (ListingObligations and Disclosure Requirements) Regulation 2015 on September 02 2015 with theaim to consolidate and streamline the provisions of Listing Agreement for differentsegments of capital to ensure better enforceability. The Regulations were made effectivefrom December 01 2015. Accordingly as per the requirements your Company entered intoListing Agreements with the NSE and BSE within the prescribed period.
Mr. Barun Pandey a Company Secretary has been appointed as Compliance Officer of theCompany consequent upon resignation of Mr. M. D. Muralidharan Company Secretary of theCompany. The Board of Directors has authorized Chairman Managing Director and the ChiefFinancial Officer severally for reporting disclosure of the material events if any interms of Regulations 30 of the said Regulations.
31. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:
As required under the Companies Act 2013 your Company has taken adequate steps toadhere to all the stipulations laid down Regulation 34 read with Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015. A report on CorporateGovernance is included as a part of this Annual Report as (Annexure VI).
Certificate from a Practising Company Secretary confirming the compliance with theconditions of Corporate Governance as stipulated under Regulation 33 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 obtained is attached to thisreport.
32. CAPITAL EXPENDITURE:
As on 31st March 2016 the gross tangible and intangible assets stood at Rs.365880267/- and the net tangible and intangible assets at Rs 94198598/- Additionsduring the year amounted to Rs. 72001/-. The Company has incurred impairment loss of Rs75659286 for Corporate office building. Further an amount of Rs 506077 has beenrecognized as impairment loss towards assets related to solar business. The Company hasnot purchased any assets under lease.
33. JOINT VENTURE
As reported in prior year/s the activities in the JV Company viz. RAD-MROManufacturing Private Limited Bangalore were suspended from November 2007. The Companystill awaits procedural completion of requisite legal formalities soon after whichfurther actions for (Members voluntary) winding-up of this JV Company will be initiated.Efforts are being taken to expedite the same.
In the meanwhile this JV Company continues to register revenue by way of InterestIncome (on Fixed Deposit/s with the Bank) which earning is adequate to meet its outgocommitments (by way of professional charges and connected expenses) for completion of thepresently-pending activities and also leave behind a nominal surplus thereby retainingpositive Net Worth in the Company. Such financials are detailed in Para (l) of Note 26 IIon additional notes to accounts.
Steps have been taken towards winding up of Joint Venture under the Companies Act1956/2013.
34. MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBNUALS IMPACTING GOINGCONCERN STATUS OF COMPANY:
No order was passed by any court or regulator or tribunal during the period underreview which in the opinion of the Board affects going concern status of the Company.
35. INDUSTRIAL RELATIONS:
Due to sustained losses incurred by the Company Board of Directors decided to carryout restructuring activity in the interest of the Company to reduce overhead costsincluding manpower cost. Subsequently the Company offered retrenchment compensation tothe Factory workers as per the Industrial Disputes Act 1947 and other terminal benefitsas agreed with workers. However Industrial relations have been cordial and constructivewhich have helped your Company to achieve production targets.
36. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-2016:
No of complaints received: NIL
No of complaints disposed off: NIL
37. MANAGEMENT DISCUSSION AND ANALYSIS:
The following Managements Discussion and Analysis ("MD&A") shouldbe read in conjunction with the financial statements and accompanying notes("Financial Statements") of MRO-TEK REALTY LIMITED for Financial Year endedMarch 31 2016.
1. Segment wise or Product wise performance
2. Risk and Concerns
3. Internal Control Systems and their adequacy
4. Discussion on financial performance with respect to operational performance
5. Material Developments in Industrial Relations front In addition to the above thefollowing points have been furnished below.
FORWAD LOOKING AND CAUTIONARY STATEMENTS
The statements in this report describing the Company's objectives estimationsexpectations or projections outlook etc. may constitute forward looking statementswithin the meaning of the applicable Rules Laws and Regulations. Actual results may varyfrom such expectations projections etc. whether express or implied. These statements arebased on certain assumptions and expectations of future events over which the Company hasno direct control.
Industry Structure and Development Strengths Weakness Opportunities and ThreatsMajor initiatives undertaken and planned to ensure sustained performance and growth;
There has been lot of emphasis on human resources skill development specialuniversities to catering to the Electronics and Renewable Energy industry. This will havea positive impact on the Company as it gives lot of emphasis on the indigenousdevelopment of products. MRO-TEK has always tried to do indigenization of design andmanufacture to reduce the cost of the equipments and less dependency on the foreignvendors for spares and other maintenance activities.
In the networking sector though there is nothing much happening on indigenous lines.All the products which are in use in data and communication networks in India aredesigned/developed/manufactured/tested outside the country. We have networking andcommunication equipments from every fathomable part of the world right from USA in theWest to the far eastern countries like Taiwan but hardly any from India.
MRO-TEK is a Public Limited Company that is doing its bit to help hold up theIndigenous flag in the networking space for India. Since its inception in 1984 TheCompany has been is and will be an Indigenous player in the true sense of the word.
The entire process involved right from the conception of a new idea and the eventualevolution of this idea into a real world product through the R&D and Manufacturing isdone indigenously.
We also take great pride in the fact that with the added activities of R&D andManufacturing we are still a Green ISO 14001 certified company. Our completemanufacturing process is certified "GREEN".
Real estate sector is one of the most critical sectors of Indian economy due to itshuge multiplier effect on the economy. Any impact on real estate sector has a directbearing on economic growth. 100% Foreign Direct Investment (FDI) was permitted for Indianreal estate sector in 2005 which had led to a boom in investment and developmentalactivities in later years. According to DIPP total FDI inflow in construction developmentsector (including townships housing built-up infrastructure) during April 2000 toSeptember 2015 has been around US$ 24.16 billion which is about 9% of total FDI inflows(in terms of UD$) from April 2000 to September 2015 as per Federation of Indian Chambersof Commerce & Industry (FICCI) survey report.
During the year "MRO-TEK LIMITED" had included Realty Business in its Mainobject as per the Companys Business Strategy to overcome its past losses.
CAUSE OF DIVERSIFICATION OF BUSINESS:
1. Cash flow Crisis:
With reference to Resolution passed by Board of Directors at their meeting held on 19thFebruary 2015. The Board had recalled the Continuing cash Losses and resolved to sell itsland and properties where Corporate Office and Manufacturing Premises were presentlysituated and shift both the facilities to smaller rented premises.
2. Continues Losses in Solar Business;
Due to high working capital requirement.
Delayed or non-payment from Customers.
Non-moving /slow moving inventories.
3. Suitable Property Developer Identified:
With reference to Resolution passed by Board of Directors at its meeting held on 4thNovember 2015 for entering into a joint development agreement which is subject toapproval by Shareholders under section 180 of Companies Act 2013 and other applicablelaws with the reputed business house.
Pursuant to Section 110 of the Companies Act 2013 and other applicable RulesCompanies has passed Special Resolution for entering into Joint venture including thejoint development of the Properties through postal ballot held on 22nd December 2015.
After due deliberation and long search Company found the Suitable and Reputed Businessentity called "Umiya Builders and Developers".
TURN AROUND ACTIONS
1. Company has reduced manpower from 197 to 16 (permanent employees/ employees on payroll) during the year under review.
2. Hired workers or staff on contractual terms to optimize the utilization of resourceson need basis.
3. Entered into Development Agreement with reputed business firm to utilize the idleresources to generate working capital and to reduce the maintenance cost of the company.
4. Discontinued Solar Business to mitigate loss of the Company.
5. Included Realty Business in Main object and change the name from "MRO-TEKLimited" to "MRO-TEK Realty Limited" to suit the nature of business carriedon by the Company
6. Vacated the corporate office premises and shifted to rented premises and accordinglyaltered its registered office.
SWOT ANALYSIS MRO-TEKS Strength
We have new component supply agreements at optimum cost and with world classmanufacturing unit at Electronic City we address different market segments our area ofoperations have gone up in view of this.
Since our core strength is Quality Solution Design On time delivery andeffective 24/7 after sales support across India and hence we are recognized for our brand"MRO-TEK".
Continuous obsolescence of technology variation in business dynamics of serviceproviders due to their own velocity of business.
The above may increase non-moving inventory situations creating funds crisis.
Also new entrants of competition may enjoy new technology which has just changed
New technologies increasing consumer base of service providers will force themto increase the capex which will give us an opportunity to increase our business in 4Groll out as all our products are internet connectivity oriented this will serve asexcellent growth curve and rapidly benefit us in our revenue.
During the year the Company has entered into Development Agreement with UmiyaGroup and ventured into Realty Sector. Experience of Umiya Group in Realty Sector mighthelp Company to recover its past losses.
Realty Sector is one of the fastest growing sector in Bangalore Karnataka.
A sluggish economy increasing competition and increased government regulationsare just a few external threats that can limit a company's future success. Threats areoutside events or influences that create future hurdles for a company.
Lack of adequate working capital.
Material Developments in Human Resources
The Company to retain the skilled employees made an effort to evaluate the performanceand increase the remuneration during the year.
Due to past Financial Performance The Company made an effort to reduce the manpowercount from 197 at the beginning of the financial year to 16 at the end of the financialyear. The Company paid compensation to its employees as part of restructure measure to thetune of Rs 35300539 during the year 2015-16.
38. CODE OF CONDUCT:
In terms of Regulation 26(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 all the Members of the Board and Senior ManagementPersonnel have affirmed compliance with the Code of Conduct of the Board of Directors andSenior Management for the year FY 2015-16. As required under Schedule V (D) of the saidRegulations a declaration signed by the Managing Director & Chief Finance Officer ofthe Company stating that the Members of the Board and the Senior Management Personnel haveaffirmed compliance of their respective code of Conduct. http://www.mro-tek.com/pdf/Code_of_Conduct%20_MRO-TEK.pdf
Your Directors appreciate and acknowledge the long term involvement and commitment tothe Company by the outgoing promoters for building the reputed generally accepted brand inthe industry and seek continues support for growth of the Company in future. The Employeeswho were associated with the Company have relentlessly contributed to the growth of theCompany and they deserve to be complimented. Without their support the Company could nothave grown and sustained. The Board whole heartedly thanks employees at all levelsincluding those who exited the Company.
Your Directors would like to acknowledge the role of all its stakeholders vizshareholders bankers lenders customers vendors and all other acquaintances for theircontinued to support to your Company and the confidence and faith that they have alwaysreposed in your Company.
Your Directors acknowledge and appreciate the guidance and support extended by all theGovernmental agencies the Regulatory authorities including Securities Exchange Board ofIndia (SEBI) Ministry of Corporate Affairs (MCA) Registrar of Companies KarnatakaStock Exchanges BSE/NSE and the NSDL/ CDSL.
| ||For & on behalf of the Board of Directors |
| ||S Narayanan |
| ||Chairman & Managing Director |
| ||DIN: 00037980 |
|Place: Bangalore || |
|Date: 8th August 2016 || |