Your Directors have pleasure in presenting their Third Annual Report on the performanceof your company along with the Audited Financial Statements of the Company for the yearended 31st March 2017.
1. COMPOSITE SCHEME OF ARRANGEMENT
The Composite Scheme of Arrangement between Upper Ganges Sugar & Industries LtdThe Oudh Sugar Mills Ltd Palash Securities Ltd Allahabad Canning Ltd Ganges SecuritiesLtd Cinnatolliah Tea Ltd Vaishali Sugar & Energy Ltd Magadh Sugar & Energy Ltdand Avadh Sugar & Energy Ltd and their respective shareholders and creditors hasreceived requisite approvals of regulatory authorities including Hon'ble High Court SEBICCI and finally by National Company Law Tribunal Allahabad Bench on March 2 2017. TheScheme envisaged Birla Group of Sugar Companies to re-arrange its business activities toachieve the Business alignment as per market dynamics and variant capital needs of eachbusiness as well as to house geographically in separate entities its sugar investmentstea and food processing businesses.
Pursuant to the Composite Scheme of Arrangement approved by National Company LawTribunal all the assets and liabilities of the food processing unit and investmentbusiness unit of The Oudh Sugar Mills Limited have been transferred to and vested in theCompany and thereafter the food processing business unit of the Company has beentransferred to and vested in its Wholly Owned Subsidiary Allahabad Canning Ltd.
2. FINANCIAL RESULTS
| || ||(Rs. in lakhs) |
|Particulars ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Revenue from Operations (Gross) ||0.10 ||- |
|Profit before Finance Costs Tax Depreciation and Amortization ||(42.47) ||(3.29) |
|Less: Depreciation & Amortization Expenses ||2.27 ||- |
|Profit/(Loss) before tax ||(44.74) ||(3.29) |
|Profit/(Loss) after tax ||(44.74) ||(3.29) |
3. FINANCIAL PERFORMANCE OF THE COMPANY
During the Financial Year 2016-17 the Company incurred a loss of Rs.44.74 lakhs ascompared to loss of Rs. 3.29 lakhs in the previous year.
In view of inadequate profits the Board of Directors has not recommended payment ofdividend.
There is no change in the nature of business of the Company. There were no significantor material orders passed by regulators courts or tribunals impacting the Company'soperation in future.
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year i.e. 31st March 2017 andthe date of this report.
4. SHARE CAPITAL
Duringthe yearunderreview the Authorised Share Capital ofthe Company was increased to?150000000/- (Rupees Fifteen Crores) from Rs.200 00000/- (Rupees Two Crores) on 12thSeptember 2016. Pursuant to the Scheme of Arrangement the Company allotted 10003102(One Crore Three Thousand One Hundred Two) Equity Shares of Rs.10/- (Rupees Ten)each tothe Equity shareholders and 1300000 (Thirteen Lakhs) 8.5 % Non-convertible CumulativeRedeemable Preference Shares of Rs 10/- (Rupees Ten) each to the Preference shareholdersof The Oudh Sugar Mills Limited respectively. The total paid up capital as on 31st March2017 was Rs.113031020/- (Rupees Eleven Crore Thirty Lakhs Thirty One ThousandTwenty).
5. SUBSIDIARY COMPANIES
The Company has five subsidiaries. The Company has formulated a policy for determiningmaterial subsidiaries in line with the requirement of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The said Policy is being disclosed on theCompany's website at the weblinkhttp://birla-sugar.com/Assets/Palash/Palash-Securities-Policy-for-Determining-Material-Subsidiaries.pdf.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with Rule5 of the Companies (Accounts) Rules 2014 the details containing salient features of thefinancial statements of the subsidiary companies in Form AOC-1 forms part of this Reportand is marked as Annexure "H".
The Board comprises of 5 (five) Non-Executive Directors having experience in variedfields and a Managing Director. Out of five Non-Executive Directors three of them areIndependent Directors. Mr Chandra Shekhar Nopany is the Chairperson of the Company.
Mrs. Shalini Nopany will retire by rotation at the ensuing Annual General Meeting andbeing eligible has offered herself for reappointment as Director of the Company.
Mr. Dilip Patodia and Mr. Brij Mohan Agarwal Non-executive Directors of the Companyhave resigned as Directors with effect from 30th March 2017. The Board places on recordits appreciation for the valuable contribution made by them during their association withthe Company.
Pursuant to the applicable provisions of the Companies Act 2013 the Board of Directorsof the Company at its meeting held on 14th March 2017 appointed Mr. Chandra ShekharNopany and Mr Dinesh Kacholia and on 30th March 2017 appointed Mr Chhedi Lal Agarwal andMr Arun Kumar Newar as Additional Directors and accordingly they would hold the officeupto the date of the ensuing Annual General Meeting and are eligible for appointment.
The Company has received notices in writing under Section 160 of the Companies Act2013 from members proposing the candidature of Mr. Chandra Shekhar Nopany Mr DineshKacholia Mr Chhedi Lal Agarwal and Mr Arun Kumar Newar respectively. The Board ofDirectors at its meeting held on 14th March 2017 and 30th March 2017 designated DineshKacholia Mr Chhedi Lal Agarwal and Mr Arun Kumar Newar respectively as IndependentDirectors.
The Company has also received necessary declaration from each Independent Directorunder Section 149(7) of the Companies Act 2013 that they meet the criteria ofindependence laid down in Section 149(6) of the Companies Act 2013.
Further the Board of Directors at its meeting held on 30th March 2017 had appointedMr. Chand Bihari Patodia as the Managing Director of the Company for a period of threeyears subject to the approval of members at the ensuing General Meeting.
Other information on the Directors proposed to be apponted/re-appointed includingrequired particulars of Directors retiring by rotation is provided in the Notice conveningthe Annual General Meeting.
7. KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company at its meeting held on 30th March 2017 hadappointed following persons as Key Managerial Personnel of the Company viz:
a. Mr. Chand Bihari Patodia Managing Director
b. Mr. Deepak Kumar Sharma Chief Financial Officer
All Directors Key Managerial Personnel and Senior Management of the Company haveconfirmed compliance with the Code of Conduct applicable to Directors & employees ofthe Company and a declaration to the said effect by the Managing Director is made part ofthe Corporate Governance Report which forms part of this report. The Code is available onthe Company's website at the weblinkhttp://birla-sugar.com/Assets/Palash/Palash-Securities-Code-of-Conduct.pdf. All Directorshave confirmed compliance with the provisions of Section 164 of the Companies Act 2013.
8. REMUNERATION POLICY
The Board has framed a policy for selection and appointment of Directors SeniorManagement and their remuneration. The Remuneration Policy as adopted by the Board ofDirectors is attached as Annexure "E" to this Report. The Committee hasalso framed criteria for performance evaluation of every Director and accordingly hascarried out the performance evaluation.
A calendar of Meeting is prepared and circulated in advance to the Directors. The Boardevaluates all the decisions on a collective consensus basis amongst the Directors. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013. During the financial year ended 31st March 2017 7 (seven) Meetings of theBoard of Directors of the Company were held. The details of the Board Meetings held duringthe F.Y. 2016-17 have been furnished in the Corporate Governance Report forming a part ofthis Directors Rs.Report.
10. AUDIT COMMITTEE
The Audit Committee was constituted on 30 th March 2017 and the Committee nowcomprises of Mr. Chhedi Lal Agarwal Mr. Arun Kumar Newar Mr. Dinesh Kacholia and Mr.Chand Bihari Patodia.
The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report which forms an integral part of this Report.
11. STAKEHOLDERS Rs.RELATIONSHIP COMMITTEE
The Stakeholders Rs.Relationship Committee was constituted on March 30 2017 and nowcomprises of Mr. Chhedi Lal Agarwal Mr. Arun Kumar Newar and Mr. Dinesh Kacholia. Thedetails of the terms of reference number and dates of meetings held attendance of theDirectors and remuneration paid to them are separately provided in the CorporateGovernance Report which forms an integral part of this Report.
12. NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee was constituted on 30th March 2017 and nowcomprises of Mr. Chhedi Lal Agarwal Mr. Arun Kumar Newar and Mr. Dinesh Kacholia. Thedetails of the terms of reference number and dates of meetings held attendance of theDirectors and remuneration paid to them are separately provided in the CorporateGovernance Report which forms an integral part of this Report.
13. LOANS GUARANTEE AND INVESTMENTS
During the year under review the Company has not given any loans and corporateguarantees covered under the provisions of Section 186 of the Companies Act 2013. Detailson particulars relating to investments under Section 186 of the Companies Act 2013 areprovided in Note 9 to the financial statement.
14. RELATED PARTY CONTRACTS/ARRANGEMENTS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There were 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. Accordingly no transaction are beingreported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014. However the Directors draw attention of the members toNote 18 to the financial statement which sets out related party disclosures.
The Company has developed a Related Party Transactions Policy for purpose ofidentification and monitoring of such transactions and accordingly any or all RelatedParty Transactions are placed before the Audit Committee as also the Board for approval.
15. PUBLIC DEPOSITS
The Company has not accepted any deposits from the public and as such there are nooutstanding fixed deposits in terms of Companies (Acceptance of Deposit Rules) 2014.
16. INTERNAL FINANCIAL CONTROLS
The Company has laid down internal financial controls through a combination of Entitylevel controls Process level controls and IT General controls inter-alia to ensureorderly and efficient conduct of business including adherence to the Company's policiesand procedures accuracy and completeness of accounting records and timely preparation andreporting of reliable financial statements/information safeguarding of assets preventionand detection of frauds and errors. The evaluations of these internal financial controlswere done through the internal audit process and were also reviewed by the StatutoryAuditors. Based on their view of these reported evaluations the directors confirm thatfor the preparation of financial statements for the financial year ended March 312017the applicable Accounting Standards have been followed and the internal financial controlsare generally found to be adequate and were operating effectively & that nosignificant deficiencies were noticed.
There was no fraud reported by the Auditors of the Company under Section 143(12) of theCompanies Act 2013 to the Audit Committee or the Board of Directors during the yearunder review.
17. WHISTLE BLOWER/VIGIL MECHANISM
The Company has established a vigil mechanism and adopted whistle blower policypursuant to which whistle blowers can report concerns about unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct. The mechanism providesadequate safeguards against victimisation of persons who use this mechanism. The briefdetail about this mechanism may be accessed on the Company's website at the weblinkhttp://www.birla-sugar.com/Assets/Palash/Palash-Securities-Whistle-Blower- Policy.pdf.
18. CORPORATE GOVERNANCE
Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Management Discussion & Analysis Report the Report on CorporateGovernance Declaration of Managing Director on Code of Conduct and a Certificate oncompliance of conditions of Corporate Governance form integral part of this Report and areannexed to this Report as Annexure "A" " B" "C" & "D" respectively.
19. AUDITORS AUDIT QUALIFICATIONS AND BOARD'S EXPLANATIONS STATUTORY AUDITORS
At the 2nd Annual General Meeting (AGM) of your Company held on 12th September 2016M/s. Agrawal Subodh & Co. Chartered Accountants having Firm Registration No.319260E were appointed as Statutory Auditors of your Company to hold office for a term of5 (five) years from the conclusion of 2nd AGM (subject to ratification of such appointmentby the Members at every AGM) till the conclusion of the 7th AGM of your Company.Accordingly the appointment of M/s Agrawal Subodh & Co. Chartered Accountants asStatutory Auditors of your Company is placed for ratification by the Members. The Boardof Directors of your Company recommend ratification of their appointment from theconclusion of this AGM upto the conclusion of the 4th AGM of your Company.
The Notes on financial statement referred to in the Auditors Rs.Report areself-explanatory and do not call for any further comments. The Auditors Rs.Report does notcontain any qualification reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasvoluntarily availed the services of Messrs Vinod Kothari & Co. Practising CompanySecretaries to undertake the Secretarial Audit of the Company for the financial year2016-17. The Secretarial Audit Report is annexed herewith as Annexure "F"and which is self explanatory and does not call for any further comments.
20. INVESTOR EDUCATION AND PROTECTION FUND
The provisions pertaining to Investor Education and Protection Fund (Uploading ofInformation regarding unpaid and unclaimed amounts lying with Companies) Rules 2012 arenot applicable to your company.
21. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure "G".
22. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO
The provisions of Section 134(3)(m) of the Companies Act 2013 do not apply to ourCompany. There was no foreign exchange inflow or outflow during the year under review.
23. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITON& REDRESSAL) ACT 2013
There has been no such case pending during the year under review.
24. PARTICULARS OF EMPLOYEES
During the year under review there was no employee in the Company who was in receiptof remuneration as required to be disclosed under Section 197 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
25. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and judgement and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 312017 and of the loss of the Company for the year ended onthat date;
c. that proper and sufficient care has been taken 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. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
26. CEO/CFO CERTIFICATION
Mr. Chand Bihari Patodia Managing Director and Mr. Deepak Kumar Sharma ChiefFinancial Officer have submitted certificates to the Board as contemplated underRegulation 17(8) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations2015.
Your Directors wish to place on record their appreciation for the services rendered tothe Company by its employees and shareholders. Your Directors also wish to express theirsincere thanks to the bankers and other lenders for their continued co-operation andassistance.
| ||For and on behalf of the Board |
| ||Chandra Shekhar Nopany |
|Place: Kolkata ||Chairperson |
|Dated: 29th May 2017 ||DIN: 00014587 |