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Paramount Communications Ltd.

BSE: 530555 Sector: Engineering
NSE: PARACABLES ISIN Code: INE074B01023
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VOLUME 19799
52-Week high 8.08
52-Week low 2.66
P/E
Mkt Cap.(Rs cr) 76
Buy Price 6.10
Buy Qty 500.00
Sell Price 6.35
Sell Qty 344.00
OPEN 6.00
CLOSE 6.29
VOLUME 19799
52-Week high 8.08
52-Week low 2.66
P/E
Mkt Cap.(Rs cr) 76
Buy Price 6.10
Buy Qty 500.00
Sell Price 6.35
Sell Qty 344.00

Paramount Communications Ltd. (PARACABLES) - Director Report

Company director report

To

The Members

Your directors hereby present the 23rd Annual Report along with auditedstatement of accounts of the Company for the year ended 31st March 2017.

1. FINANCIAL HIGHLIGHTS

The financial performance of the Company for the year ended 31st March 2017is summarised below:

(Rs./Lac)
Year ended 31.03.2017 Year ended 31.03.2016
Gross Turnover including Other Income 35444.81 34633.17
Profit/ (Loss) before Interest Depreciation Tax and Exceptional items (4516.50) (4307.74)
Interest 1840.29 7215.54
Depreciation & Amortisation expenses 816.58 858.35
Profit/(Loss) before Tax and Exceptional Items (7173.37) (12381.63)
Exceptional Items 7142.04 152.61
Provision for Taxation - -
Profit/(Loss) after Tax and Exceptional Items (31.33) (12229.02)
Taxation for earlier years - -
Net Profit/(Loss) for the year (31.33) (12229.02)

The Company achieved gross turnover including other income of Rs.35444.81 Lac andincurred a net loss of Rs.31.33 Lac for the financial year 2016-2017 as against grossturnover including other income of Rs.34633.17 Lac and net loss of Rs.12229.02 Lac infinancial year 2015-2016. Losses before exceptional items have been Rs.7173.37 Lac asagainst net loss of Rs.12381.63 Lac during previous year 2015-2016.

2. DIVIDEND

In view of losses incurred by the Company during the current financial year yourdirectors do not recommend declaration of any dividend for the financial year 2016-2017.

3. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OFTHE COMPANY

During the year under review some of the Banks of the consortium have assigned theirloan together with all underlying securities thereto to an Asset Reconstruction Company(ARC) for settlement of their entire dues.

4. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

Outstanding FCCBs amounting to US$ 7.5 million having face value of US$ 5 Thousand PerBond were due for redemption on 23rd November 2011 at a premium equal to45.54% of the outstanding principal amount i.e. redemption value @ US$ 7277 Per Bond.Your directors are in discussion with the bond holders for restructuring the terms ofFCCBs and intend to settle the outstanding FCCBs on such terms as may be in the bestinterests of the Company.

The Bonds are listed at Luxembourg Stock Exchange.

5. FUTURE OUTLOOK

As a result of policies formulated by the Government of India the domestic OpticalFibre Cables industry is expected to grow at a good pace. Other sectors like PowerRailway and Copper Telecom Cables are also expected to grow at a better pace as comparedto last year. However competitive conditions are likely to persist over the medium-termin the cable industry. The Company's focus in future shall be to sustain and increase themomentum in its business segments namely Optical Fibre and Copper Telecom Cables powercables and railway signalling cables etc. by leveraging its inherent strength of productdevelopment as per evolving industrial standards and superior project executioncapabilities to drive both the short term and long term growth.

Your Company's vision for the coming year is to be a key participant in every relevantinitiative of the Government so as to improve growth and development prospects of theCompany.

6. TRANSFER TO RESERVES

In view of losses incurred by the Company during the current financial year yourCompany do not propose to transfer funds to the General Reserves.

7. PUBLIC DEPOSITS

During the financial year 2016-2017 your Company has not accepted any deposits withinthe meaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014.

8. BOARD OF DIRECTORS

In compliance with the provisions of Section 149 152 Schedule IV and other applicableprovisions if any of the Companies Act 2013 read with Companies (Appointment andQualification of Directors) Rules 2014 the independent directors of the Company viz.Mr.S.P.S. Dangi Mr. Satya Pal Mr. Vijay Bhushan and Mrs. Malini Gupta hold office for afixed term of five (5) years and are not liable to retire by rotation.

In accordance with the provisions of Section 152 of the Companies Act 2013 read withArticles of Association of the Company Mr. Sanjay Aggarwal(DIN: 00001788) is liable toretire by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-appointment. The Board recommends his re-appointment as a Director.

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 brief resume of the director proposed to be reappointed the nature of expertise inspecific functional areas names of the companies in which he holds directorship(s) andmembership/chairmanship of Board Committees shareholding and relationship betweendirectors inter-se are forming part of the Notice of Annual General Meeting.

9. DECLARATION OF INDEPENDENCE

In compliance with the provisions of Section 149 (7) of the Companies Act 2013 eachIndependent Director has given a written declaration to the Company thereby confirmingthat he/she meets the criteria of independence as mentioned under Section 149 (6) of theCompanies Act 2013 and regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

10. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors hereby confirm that:

i) In the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed along with proper explanationrelating to material departure if any;

ii) They had selected such accounting policies and applied them consistently and madejudgments and estimates that were 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 or loss of the Company for the year under review;

iii) They had 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;

iv) They had prepared the annual accounts for the financial year ended 31st March2017 on a ‘going concern' basis;

v) They had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and

vi) They had devised proper system to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

11. BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has formed a policy to carry outperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Committee Nomination & Remuneration CommitteeStakeholders'/Investor's Grievance Committee Risk Management Committee and Share Transfer& Transmission Committee.

12. REMUNERATION POLICY

Based on the recommendation of the Nomination and Remuneration Committee the Board asapproved the nomination & remuneration policy for Directors KMP & all otheremployees of the company. A copy of the Policy is available at website of the company.

13. KEY MANAGERIAL PERSONNEL

Mr. Sanjay Aggarwal Chairman & CEO Mr. Sandeep Aggarwal Managing Director Mr.Shambhu Kumar Agarwal Chief Financial Officer and Ms. Tannu Sharma Company Secretary arethe Key Managerial Personnel of your Company under the provisions of Section 2(51) andSection 203 of the Companies Act 2013 read with Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014. There has been no change in the Key ManagerialPersonnel of the company during the year under review.

14. DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.

As required under Section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the detailsof the ratio of the remuneration of each director to the median employee's remunerationand such other details as prescribed therein are given in "Annexure-A" which isattached hereto and forms a part of the Directors' Report.

15. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

During the year4 (Four) Board Meetings and 4 (Four) Audit Committee Meetings wereconvened and held. The details of these meetings are given in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013.

16. AUDITORS

As per the provisions of Section 139 of the Companies Act 2013 and the Rules madethereunder the Audit Committee have proposed and the Board of Directors of the Companyhas recommended the appointment of P. Bholusaria & Co. Chartered Accountants (FirmRegistration No.: 000468N) as the statutory auditors of the Company. P. Bholusaria &Co. will hold office for a period of five consecutive years from the conclusion of the 23rdAnnual General meeting of the Company scheduled to be held on 17th August2017 till the conclusion of the 28th Annual General Meeting to be held in theyear 2022 subject to the approval of the shareholders of the Company. The first year ofaudit will be of the financial statements for the year ending 31st March 2018which will also include the review of the quarterly financial statement for the year.

A certificate from the proposed Auditors have been received to the effect that theirappointment if made would be within the prescribed limits under Section 141(3)(g) of theCompanies Act 2013.

17. AUDITORS REPORT-CLARIFICATIONS AND EXPLANATIONS

Auditors Report point No. 8 & 10: Non-provision of interest and other dues andpreparation of financial statements on going concern basis:

Management's Views:

a. Company has obtained balance confirmation from the bank as on 31st March2017 and there are no material difference between outstanding as per the bank &outstanding as per company's books of accounts. Management is of the opinion that nofurther interest is to be provided other than that has already been accounted for.

b. The financial statements have been prepared on a going concern basis based oncumulative impact of following mitigating factors:

- The company has not defaulted in payment of statutory dues or its trade creditorsetc.;

- The company has entered in Settlement agreement with ARC for dues of two banksassigned to the ARC. Further Company is negotiating with ARC for settlement of dues foranother bank.

- Subsequent to the year end Company has entered into a settlement agreement with onebank.

- The terms of settlements with ARC and Banks will substantially reduce company's debtand interest burden and accordingly have a positive impact on the net worth and financialsof the Company. Also Company is confident about meeting terms and conditions ofsettlement with ARC/Bank on the basis of projected future cash flows of the Company andundertaking from the promoters to arrange necessary funds for meeting the obligations ofsettlement.

- The company has strong order book position.

18. COST AUDITORS

As per Section 148 read with Companies (Audit and Auditors) Rules 2014 and otherapplicable provisions if any of the Companies Act 2013 the Board of Directors of theCompany has appointed M/s. Jain Sharma & Associates Cost Accountants as the CostAuditor of the Company for the financial year 2017-2018 on the recommendations made by theAudit Committee. The remuneration proposed to be paid to the Cost Auditor would beRs.50000/- (Rupees Fifty Thousand only) and out of pocket expenses plus taxes. TheRemuneration is subject to the ratification of the members in terms of section 148 readwith rule 14 of Companies (Audit & Auditors) Rules 2014 & is accordingly pleacedfor your ratification.

The Company has received a letter from their firm to the effect that theirre-appointment would be within the limits prescribed under Section 141(3)(g) of theCompanies Act 2013 and that they are not disqualified for such re-appointment within themeaning of Section 141 of the Companies Act 2013.

19. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s. A.K.Popli & Co. Practicing Company Secretaries were appointed to as the SecretarialAuditor of the Company for the financial year 2016-2017. The Secretarial Audit report forfinancial year 2016-2017 to undertake the secretarial of the company forms an integralpart of this Annual Report as "Annexure-B" to the Board's Report. TheSecretarial Audit Report does not contain any qualification reservation or adverse remarkrequiring explanation or comment from the Board under Section 134 (3) of the CompaniesAct 2013.

20. SUBSIDIARIES

The Company does not have any Indian subsidiary Company. However the Company has thefollowing wholly owned foreign subsidiaries:

1. Paramount Holdings Limited Cyprus;*

2. AEI Power Cables Limited United Kingdom** and

3. "06196375 Cables Limited" (formerly AEI Cables Limited) United Kingdom***

Notes:

1) *The Board of Directors of Paramount Holdings Limited intends to liquidate theCompany in accordance with the applicable laws.

2) **AEI Power Cables Limited United Kingdom has ceased to trade and becamedormant w.e.f. 1st April 2017. The management of the Company intends to keepthe company in existence for use in foreseeable future as and when required.

3) ***"06196375 Cables Limited" (formerly AEI CablesLimited) United Kingdom a subsidiary of the Company is under Administration w.e.f. 28thFebruary 2014.

The Consolidated financials include un-audited financials of Paramount HoldingsLimited Cyprus and audited financials of AEI Power Cables Ltd. United Kingdom for theyear ended 31st March 2017.

The Company has no Joint venture with any other Company in India or abroad.

21. REPORTING TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION{BIFR}

Your Company has been registered with the Board for Industrial and FinancialReconstruction (BIFR) under Section 15(1) of Sick Industrial Companies (SpecialProvisions) Act 1985 vide case no. 77/2013 order dated 31st October 2013.However Ministry of Finance vide Notifications dated November 25 2016 has appointed 1stDecember 2016 as the date on which the provisions of Sick Industrial Companies(Special Provisions) Repeal Act 2003 shall come into effect and Section 4(b) of the SICARepeal Act shall be enforced. With the effectiveness of the SICA Repeal Act the SickIndustrial Companies (Special Provisions) Act 1985 ("SICA") stand repealed andthe Board for Industrial and Financial Reconstruction ("BIFR") and the AppellateAuthority for Industrial and Financial Reconstruction ("AAIFR") also standdissolved.

22. MEASURES TAKEN FOR REVIVAL AND REHABILITATION OF THE COMPANY

During the year under review some of the banks have assigned their debts to an ARC. Thecompany is hopeful that the remaining banks also assign/settle their dues during thecurrent year.

Apart from this the Company is exploring possibilities of new investors.

The Company has also taken several measures to reduce its cost.

23. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS ANDOUTGO

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as per the requirements of Section 134(3)(m) of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are annexed hereto and forms anintegral part of the report.

The Company constantly strives for maintenance and improvement in quality of itsproducts and entire Research & Development activities are directed to achieve theaforesaid goal.

24. ISO CERTIFICATION

The Company holds ISO 9001:2008 and ISO 14001:2004 certifications for both of itsplants at Khushkhera Rajasthan and Dharuhera Haryana.In addition to this the Company iscertified by BASEC and LPCB for supply of its products in the European Market.

25. PARTICULARS OF EMPLOYEES

The Company is not required to make any disclosure under Section 197 read with Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as noemployee is covered under the purview of the aforesaid Section/Rule.

26. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large.

During the year 2016-2017 pursuant to Section 177 of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 all Related PartyTransactions were placed before the Audit Committeeand also for the Board approvalwherever required.Prior/omnibus approval of the Audit Committee is generally obtained forthe transactions which are of a foreseen and repetitive nature and these transactions arereviewed by the Audit Committee on quarterly basis.

The policy on Related Party Transactions as approved by Board is available at theCompany's website www.paramountcables.com.

The Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 is set out as "Annexure-C" to this report.

27. LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.

The details of the investments made by the Company are given in the notes to thefinancial statements.

28. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee and to the Chairman & CEO andManaging Director of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee and the Board.

29. PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

30. EXTRACT OF ANNUAL RETURN

In accordance with Sections 134(3)(a) and 92(3) of the Companies Act 2013 and Rule12(1) of the Companies (Management and Administration) Rules 2014 the details formingpart of the extract of the Annual Return in Form MGT-9 is annexed herewith as"Annexure-D".

31. RISK MANAGEMENT

Your Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. Your Company periodically assessesthe risks in the internal and external environment along with the cost of treating risksand incorporates risk treatment plans in its strategy business and operational plans.

As per the requirements of Section 134(3)(n) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 your Company hasconstituted a Risk Management Committee to oversee the risk management efforts in theCompany. The details of the committee are set out in the Corporate Governance Reportforming part of this report.

Some of the risks which may pose challenges are set out in the Management Discussionand Analysis which forms part of this report.

32. CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe Company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings/behaviours of any form and the Board has laid down thedirectives to counter such acts. The Code has been posted on the Company's website www.paramountcables.com.

The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practice and indealing with shareholders.

All the Board Members and the Senior Management Personnel have confirmed compliancewith the Code.

33. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Due to the continous losses and negative net worth of the company the provisions arenot applicable to the Company hence the Company is not required to make expenditure onCSR and no CSR committee as prescribed under Companies (Corporate Social ResponsibilityPolicy) Rules 2014 has been formulated.

34. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has vigil mechanism policy to deal with instances of fraud andmismanagement if any.

The policy ensures that strict confidentiality is maintained while dealing withconcerns and also that no discrimination will be meted out to any person for a genuinelyraised concern. Accordingly the Board of Directors have formulated a VigilMechanism/Whistle Blower Policy which is in compliance with the provisions of Sections177(9) and 177(10) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.The policy is also available on the website of the Companywww.paramountcables.com.

35. INSURANCE

All insurable interest of the Company including inventories buildings and plant &machinery are adequately insured.

36. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

The money lying in the unpaid dividend account relating to dividend paid in thefinancial year 2007-2008 was duly transferred to the Investor Education and ProtectionFund during the previous year.Thereafter the company has not declared any dividend.

37. LISTING OF SHARES

The equity shares of the Company are listed at The Bombay Stock Exchange Ltd. (BSE) andNational Stock Exchange of India Ltd. (NSE). The BSE & NSE have nation-wide tradingterminals and therefore provide full liquidity to investors. Equity shares of the Companywere also listed with the Calcutta Stock Exchange Ltdhowever the Company has applied fordelisting on 03.03.2004 and the application is still pending for disposal at the exchangeby the Calcutta Stock Exchange authorities.

The Foreign Currency Convertible Bonds (FCCBs) issued by the Company in theinternational market are listed at Luxembourg Stock Exchange

38. INDUSTRIAL RELATIONS

Paramount is an equal opportunities employer. The Company do not discriminate ongrounds of age gender colour race ethnicity language caste creed economic orsocial status or disability. We handle global preferences and mindsets of both internaland external customers.

The Company humbly acknowledge employees contributions with best compensation andbenefits that appropriately reward performance. Pay revisions and other benefits aredesigned in such a way to compensate good performance of the employees of the Company andmotivate them to do better in future.

During the period under review your Company enjoyed healthy cordial and harmoniousrelationship with workers and employees at all levels.

39. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with the provisions of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate sectionon Corporate Governance along with acertificate from the Auditors on its compliance forms an integral part of this report.Further Management Discussion and Analysis which includes detailed review of operationsperformance and future outlook of the Company and its businesses forms a part of thisreport.

40. GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a) Issue of equity shares with differential rights as to dividend voting or otherwise.

b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

c) Neither the Managing Director nor the Whole Time Director of the Company receivesany remuneration or commission from any of its subsidiaries.

d) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

e) During the year under review there were no cases filed or reported pursuant to theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

41. ACKNOWLEDGEMENT AND APPRECIATION

Your Directors are thankful to the Central and State Government DepartmentsOrganisations and Agencies for the continued guidance and co-operation extended by them.

The Directors wish to place on record their appreciation to all valuable stakeholdersviz. customers shareholders dealers vendors Banks and other business associates fortheir support. The Directors also acknowledge the unstinted commitment and valuedcontribution of all employees of the Company.

For and on behalf of the Board
Place: New Delhi (Sanjay Aggarwal)
Date : 30.06.2017 Chairman & CEO