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. () - Director Report
Company director report
To the Members
Your Directors are pleased to present the Twenty-Fifth Annual Report on thebusiness and the audited accounts for the financial year ended 31st March2016 together with the Independent Auditors Report.
1. FINANCIAL SUMMARY
Standalone Financial Summary and performance highlights of your Company for thefinancial year ended March 31st 2016 are as follows:
RESERVES AND SURPLUS
Considering significant contingent liabilities in the books and capital expenditureplan for the year your Directors have not recommended any dividend for the financial year2015-16. However the minority shareholders of Phoenix Lamps Limited will be entitled tofinal dividend if any declared by its Holding Company (Suprajit Engineering Limited)subject to requisite approvals upon amalgamation of your Company with the Holding Company.
FINANCIAL AND OPERATIONAL PERFORMANCE:
Your Company is the market leader in automotive halogen lamps in India with significantshare of business of Indian automotive OE Market aftermarket and exports. Postacquisition by Suprajit Engineering Limited the Management teams of both Suprajit andPhoenix have worked together to overhaul operations of your Company. Significant effortswere jointly infused to improve rationalize and optimize the operational efficiencythrough improved plant operations employee engagement and customer management.Considering aging plant and equipment the new Management has decided to put together acapital expenditure plan of Rs. 3000 Lakhs to improve process quality &productivity which will be completed by December 2016. Due to challenges in the qualitycertain customer confidence was lost leading to certain revenue loss both in the domesticand export markets. With the combined efforts of Phoenix and Suprajit Managements postacquisition the confidence was restored with the customers improvements were made in theproduct quality and some of the lost businesses were regained. Your Company recorded astandalone Gross Income of Rs. 24496.78 Lakhs during the year 2015-16 as against Rs.26328.34 Lakhs during the year 2014-15 recording a degrowth of 7%. The standalone ProfitAfter Tax was Rs.141.36 Lakhs during the year 2015-16 as against the Profit After Tax ofRs. 274777 Lakhs during the year 2014-15 recording a de-growth of 95%.The reason forde-growth is largely due to provision for diminution in value of investment of Rs.1995.36Lakhs (Previous year: Nil).
The consolidated income was Rs. 34745.70 Lakhs for the year 2015-16 against Rs.38311.85 Lakhs for the year 2014-15 recording a de-growth of 9%. The consolidated Profitafter Tax was Rs. 2290.28 Lakhs during the year 2015-16 as against Rs.195725 Lakhsduring the year 2014-15 a growth of 17 %. Due to certain earlier loss of business withits customers cross currency effects and quality related issues your Companysperformance was affected during the year. Operational focus was brought in by the newmanagement Q Initiative was launched to engage employees at various levels toimprove quality and customer contacts were increased to regain the lost confidence.
All efforts are relentlessly being focused to regain customer confidence back toimprove the operational efficiency increase supply chain effectiveness regroup marketingstrategy and focus on every sector of the business. The much needed operational focus isgiven to the business to align all stakeholders on quality and customer satisfaction. Withclose interaction with the Management team at Suprajit your Company has been able toreestablish operational and quality efficiencies to a good extent. Certain lost customershave been recaptured. It is expected that new capital expenditure already in place andongoing will improve quality and cost efficiencies. Your Company will continue to makeinroads into newer customers to gain the confidence to increase the share of business.
SHIFTING OF THE REGISTERED OFFICE:
Based on the approval from the Shareholders Registered Office of your Company is beingshifted from Noida to Bangalore headquarters of Suprajit in an effort to focus andconsolidate the corporate structure and with a view to rationalize various input effortsmanage regulatory tax and other statutory compliances better. This will also improve costefficiencies in various ways. The contingent tax liabilities are being addressed atvarious regulatory levels and this will take time to resolve. Your Company will make everyeffort to address these issues.
2. STATE OF THE COMPANYS AFFAIRS AND MATERIAL CHANGES AND COMMITMENTSACQUISITION:
During the year Suprajit Engineering Limited a leading listed auto componentmanufacturer acquired 61.93% of the equity in the share capital of your Company. Suprajitinitially acquired 14289843 Equity Shares of Rs. 10/- each at a consideration @ Rs.89/- per share aggregating to Rs. 1271796 Lakhs amounting to 51% from Argon IndiaLimited Mauritius and Argon South Asia Limited Mauritius. In accordance with theprevailing legal requirements an Open Offer was made to the Public Shareholders of theCompany to acquire additional 26% out of which 15021 shares were tendered to @ Rs. 100/-per share aggregating to Rs. 15.02 Lakhs. Suprajit further acquired the balance 3047312Equity Shares of Rs. 10/- each at a consideration @Rs.89/- per
share aggregating to Rs. 2712 Lakhs amounting to 10.88% stake from Argon IndiaLimited Mauritius and Argon South Asia Limited Mauritius and completed the transactionin line with Share Purchase Agreement signed on 6th May 2015. With this your Company hasbecome a subsidiary of Suprajit Engineering Limited.
MERGER WITH SUPRAJIT ENGINEERING LIMITED:
On 18th April 2016 your Company and Suprajit Engineering Limited inseparate meetings of their respective Audit Committees and Board of Directors announcedthe merger of your Company with Suprajit Engineering Limited(Suprajit) subject tonecessary regulatory and shareholders approvals. The Share Exchange Ratio has beenbased on the SEBI approved guidelines of price determination based on which Boards ofboth companies have set the merger ratio at 4 shares of (Re.1/- each) in Suprajit forevery 5 shares of (Rs. 10/- each) in Phoenix Lamps Limited(Phoenix).
The merger price of Phoenix at Rs.110/- based on closing price of Suprajit on 13thApril 2016 on NSE represents the premium of 23.50% on Rs. 89/- per one Equity Share ofRs. 10/- of Phoenix Lamps Limited paid by Suprajit to acquire Phoenix 10% premium to theOpen Offer price of Rs.100/- and 10% premium on the 6 months average price of Phoenix.Boards of Phoenix and Suprajit have recommended the approval of the merger to theirrespective shareholders subject to all statutory approvals. Both Suprajit which holds61.93% of Phoenix shares and Promoter group of Suprajit which holds 4737% of Suprajithave irrevocably agreed to vote in favor of merger. Your Board feels that the merger ofPhoenix with Suprajit will bring significant strengths with stronger balance sheet alongwith excellent customer reach. It will enhance cost efficiencies at various levels betterglobal footprint and management bandwidth. This will also help in managing regulatorycompliances and tax matters. Phoenix is a strong brand in the market and will becontinued. Your Directors believe that this is a win-win situation for both Phoenix LampsLimited and Suprajit Engineering Limited and recommend the merger to the shareholders.
3. POSTAL BALLOT RESULTS
During the year the Company passed the following Resolutions through Postal Ballot:
The Company has successfully completed the process of obtaining approval of itsshareholders for resolutions on the items detailed above vide postal Ballot.
Mr. Vijayakrishna K.T a Practising Company Secretary Bangalore was appointed as theScrutinizer for carrying out Postal Ballot Voting Process in a fair and transparentmanner.
4. PARTICULARS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED DURINGTHE FINANCIAL YEAR ENDED MARCH 312016.
Post acquisition of majority shareholding by Suprajit Engineering Limited Mr. K. AjithKumar Rai was appointed Chairman of the Company. Mr. Ian Williamson and Mr. Suresh Shettywere inducted in to the Board as Independent Directors. Ms. Sunita Mathur continued as anIndependent Director.
Mr. N.S.Mohan was appointed as Director and Chief Executive Officer of the Company.
Mr. Padmanabh P Vora Mr. Gurdeep Singh Mr Shomik P Mukherjee Mr.Ganapati RathnamDirectors of the Company before the acquisition of your Company by Suprajit resigned andmade way for the new Directors.
Mr. Pranay D Gandhi the then Managing Director of the Company resigned during theyear.
Your Directors place on record appreciation for the services rendered by all theseDirectors for their valuable support and guidance to the Company during the tenure oftheir office.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES:
As on 31st March 2016 your Company had only two Wholly Owned Subsidiaries- Luxlite Lamps S.a.r.l. (Luxembourg) and Trifa Lamps Germany GmbH (Germany). During theyear your Company has purchased 83% of Trifa shares held by Luxlite Lamps to make TrifaLamps a 100% Wholly Owned subsidiary of your Company. International Lamps Holding CompanySA(ILHC) was merged with Luxlite to make Luxlite a Wholly Owned Subsidiary of yourCompany. Your Directors believe that the current structure of 100% ownership ofthese two subsidiaries will pave way for much better ownership structure improvedorganizational efficiencies reduced compliances and focused operational performance.
Mr.Frank Klinkert continues to be Managing Director at Luxlite Lamps S.a.r.L and Ms.Mary Gentzsch continues to be Managing Director at Trifa Lamps. The Shareholders may beaware that during the previous ownership the Company had invested in these companies. Inline with the prudent and conservative management approach by new Board of Directors theinvestment value in Luxlite Lamps was reviewed by your Directors and a provision has beenmade in the books of accounts for diminution in value of investments amounting to Rs.1995.36 Lakhs. This is shown as an exceptional expense. Both ownership restructuring inLuxlite and Trifa and diminution in investment are reflected appropriately at thesubsidiary and the Holding Company accounts.
The total revenue of Luxlite Lamps S.a.r.l. was Rs. 9319.30 Lakhs (Euro 128.88 Lakhs)for the year 2015-16 against Rs. 9130.76 Lakhs (Euro 11786 Lakhs) for the year 2014-
15 an increase of 2%. The Loss was Rs.294.26 Lakhs (Euro 4.07 Lakhs) for the year2015-16 against the loss of Rs. 753.36 Lakhs (Euro 9.72 Lakhs) for the year 2014-15. TheProfit Before Tax after exceptional items was Rs. 2378.66 Lakhs (Euro 32.90 Lakhs) forthe year 2015-16 against Loss of Rs. 1359.24 Lakhs (Euro 1755 Lakhs) for the year2014-15. Profit before Tax for the year 2015-16 includes Profit on Sale of Investment inTrifa of Rs. 3043.35 Lakhs ( Euro 42.09 Lakhs).
The Total Revenue of Trifa Lamps Germany GmbH was Rs.11687.24 Lakhs (Euro161.63 Lakhs)for the year 201516 against Rs. 14691.68 Lakhs (Euro 189.64 Lakhs) for the year 2014-15a decrease of 20%. The EBIDTA was Rs. 831.61 Lakhs (Euro 11.50 Lakhs) for the year 2015-16against Rs. 46739 Lakhs (Euro 6.03 Lakhs) for the year 2014-15 an increase of 78%. TheProfit before Tax was Rs. 66728 Lakhs (Euro 9.23 Lakhs) for the year 2015-16 against Rs.319.87 Lakhs (Euro 4.13 Lakhs) for the year 2014-15 an increase of 109%.
With the restructuring of subsidiaries and focused business development plan yourDirectors expect the performance of the wholly owned subsidiaries to stabilize in thecurrent year.
5. EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 is enclosed as a part of this report incompliance with Section 134(3) of the Companies Act 2013. (Annexure-1)
6. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186.
The Company has entered into in following transactions pursuant to Section 186 of theCompanies Act 2013:
7 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1) OF THE COMPANIES ACT 2013.
All related party transactions which were entered in to during the financial year werein the ordinary course of business and were on arms length basis. There were nomaterial related party transactions entered by the Company with Directors KMPs or otherpersons which may have a potential conflict with the interest of the Company.
All related party transactions wherever applicable are placed before the AuditCommittee. The quarterly disclosures of transactions with related parties are made to theAudit Committee and also disclosed to the Stock Exchanges under SEBI (LODR) Regulations2015.
The policy on materiality of Related Party Transactions and also on dealing withRelated Party Transactions as approved by the Audit Committee and the Board of Directorsis uploaded on the website of the Company- www. phoenixlamps.co.in.
In compliance with Section 134(3) of the Companies Act 2013 particulars of contractsor arrangements with related parties referred to in Section 188(1) of the Companies Act2013 are enclosed in the Form AOC-2 as a part of this report (Annexure-2).
8. NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR
During the financial year 2015-2016 seven (7) meetings of the Board of Directors wereheld on 14th May 2015 22nd May
2015 18th June 2015 at 4:00 p.m. 18th June2015 at 5:30
?. m. 9th August 2015 7th November 2015 and 8thFebruary
9. DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act 2013 your Directors herebystate and confirm that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
?. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d. they have prepared the annual accounts on a going concern basis;
e. they have laid down internal financial controls to be
followed by the Company and such internal financial control are adequate and wereoperating effectively; and
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
10. COMMENTS BY THE BOARD ON AUDIT QUALIFICATION
There are no qualifications reservations or adverse remarks or disclaimers made byStatutory Auditors in their report and by Secretarial Auditor in his secretarial auditreport.
11. RISK MANAGEMENT POLICY
Your Directors have adopted a Risk Management Policy for the Company. The AuditCommittee and the Board of Directors of the Company review the risks if any involved inthe Company from time to time and take appropriate measures to minimize the same. TheAudit Committee ensures that the Policy for Risk Management is adopted across the Companyin an inclusive manner.
12. ORDERS PASSED BY THE REGULATORS OR COURTS IF ANY
No significant and material orders were passed by the Regulators Courts or Tribunalsimpacting the going concern status and Companys operations in future.
13. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS.
The Companys internal control systems are supplemented by an extensive programmeof internal audit by an independent professional agency and periodically reviewed by theAudit Committee and Board of Directors. The internal control system is designed to ensurethat all financial and other records are reliable for preparing financial statementsother data and for maintaining accountability of assets.
14. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS
In terms of the definition of Independent Director as prescribed under SEBI(LODR) Regulations 2015 entered with Stock Exchanges and Section 149(6) of the CompaniesAct 2013 and based on the confirmation/disclosures received from following IndependentDirectors :- Following Directors were on the Board up to 18th June 2015 :
Mr. Padmanabh P Vora( DIN- 00003192)
Mr. Gurdeep Singh (DIN- 00036922)
Mr. Ganapathi Rathnam (DIN-00171207)
Ms. Sunita Mathur (DIN-00008923)
After 18th June 2015 following are on the Board
Mr. Suresh Shetty (DIN-00316830)
Mr. Ian Williamson (DIN-01805348)
Ms. Sunita Mathur (DIN-00008923)
15. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FORDETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR AND OTHERMATTERS AS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT 2013.
Your Company has adopted a Policy on Directors Appointment and Remunerationincluding criteria for determining qualifications positive attributes independence of adirector and other matters as provided under Section 178(3) of the Companies Act 2013.The Policy is enclosed as a part of this report in compliance with Section 134(3) of theCompanies Act 2013 (Annexure-3). The Policy on Terms of Appointment ofIndependent Directors as approved by the Board of Directors is uploaded on the website ofthe Company- www.phoenixlamps.co.in.
16. PERFORMANCE EVALUATION OF THE BOARD
The Nomination and Remuneration Committee at its meeting held at November 11 2015 andthe Board of Directors at its meeting held on February 8 2016 respectively had laid downcriteria for performance evaluation of Directors Key Managerial Personnel (KMPs) andBoard and its Committees as a whole. Further self evaluation with respect to performanceof the Committees was done by the Committees and then recommended to the Board for furtherevaluation. The Board of Directors in its meeting held on February 8 2016 has reviewedthe performance of the Committees the Members and the Board as a whole. The criteria andmanner for performance evaluation is as per the Nomination and Remuneration Policy asannexed to this Report.
17. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE In compliance with Section 135 of theCompanies Act 2013 read with the rules made there under the Company has formed CorporateSocial Responsibility (CSR) Committee. The Annual Report on CSR Activities forms part ofthis Report as (Annexure-4). The Policy on Corporate Social Responsibility asapproved by the Board of Directors is uploaded on the website of the Company- www.phoenixlamps.co.in.
The composition of the Corporate Social Responsibility Committee is as under:
18. AUDIT COMMITTEE
The Company complies with the provisions related to Audit Committee and SEBI (LODR)Regulations 2015 and Section 177 of the Companies Act 2013. The composition of the AuditCommittee is as under:
All Members of the Committee are financially literate Mr. Suresh Shetty Chairman isa Commerce graduate and a qualified Chartered Accountant and underwent ManagementEducation Programme (M.E.P.) in IIM Ahmadabad having the requisite financial managementexpertise.
19. VIGIL MECHANISM
Your Company has formulated the Whistle Blower Policy with a view to provide amechanism for Employees and Directors of the Company to approach the Whistle blowerCompliance Officers/the Audit Committee of the Company in compliance with Section 177(9)of the Companies Act 2013 and of the SEBI (LODR) Regulations 2015 details of theWhistle Blower Policy are explained in the Report on Corporate Governance and WhistleBlower policy of the Company is available on the website of the Company i.e.
20. DISCLOSURES UNDER SECTION 197 OF THE COMPANIES ACT 2013 AND RULE 5 OF THECOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.
In accordance with the provisions of Section 197(12) of the Companies Act 2013 andRule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the names and other particulars of employees are set out in the annexure to theBoards Report and forms part of this report. In terms of the provisions of Section136(1) of the Companies Act 2013 the Boards Report is being sent to theshareholders without this annexure. Shareholders interested in obtaining a copy of theannexure may write to the Company Secretary at the Companys Registered Office. Theratio of the remuneration of each director to the median employees remuneration andother details in terms of Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areforming part of this report as (Annexure-5).
21. EMPLOYEES STOCK OPTIONS DETAILS.
The Company does not have any Employee Stock Option Scheme.
Messrs. S. R. Batliboi & Co. LLP Chartered Accountants (Firm Registration No.301003E/E300005) have been appointed as the Statutory Auditors of the Company in the 23rdAnnual General Meeting of the Company held on July 212014 to hold the office till theconclusion of 28th Annual General Meeting of the Company subject to theratification of shareholders at every Annual General Meeting.
The Shareholders ratified appointment of Messrs S. R. Batliboi & Co. LLP CharteredAccountants as the Statutory Auditors for the Financial Year 2015-2016.
Further the ratification in respect with the appointment of Messrs S. R. Batliboi& Co. LLP Chartered Accountants as the Statutory Auditors of the Company is proposedfor the ratification of shareholders in the Notice of 25th Annual GeneralMeeting of the Company.
Pursuant to Section 204 of the Companies Act 2013 the Company had appointed Mr.Parameshwar G Bhat Practising Company Secretary Bangalore as its Secretarial Auditor toconduct the Secretarial Audit of the Company for FY 2015-2016. The Report of SecretarialAuditor (Form MR-3) for the FY 2015-2016 is annexed to the report as (Annexure-6).
On the recommendation of Audit Committee and in accordance with the provisions underSection 148 of Companies Act 2013 read with rules made there under the Board ofDirectors in its meeting held on May 28th 2016 has appointed Messrs J. K.Kabra & Company Cost Accountants as the Cost Auditor of the Company for the financialyear 2016-17 on such remuneration as may be decided by the Board and out of expenses onactual basis for the year 2016-17
The remuneration payable to the Cost Auditor of the Company has been proposed forratification by the members of the Company and shall form part of the notice of 25thAnnualGeneral Meeting.
24. PUBLIC DEPOSITS
Your Company has not accepted any deposits covered under Chapter V of the CompaniesAct 2013.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information under Section 134(3) (m) of the Companies Act 2013 read with rule 8(3) ofthe Companies (Accounts) Rules 2014 is given below:
A. Conservation of Energy
i. Steps taken or impact on conservation of energy:- The Company continues its policyof giving priority to energy conservation measures including regular review of energyconservation consumption and effective control of utilization of energy.
The following energy conservation measures were implemented during the year underreview.
High wattage Sodium vapor and Mercury lamps replaced by low wattage LED lamps.
Capacity of APFC (Auto Power Factor Correction) panel has been increased tomaintain the value of power factor by nearly 0.99 to reduce the reactive power loss.
Up-gradation of machine by using VFDs (Variable Frequency Drives) and TPRs(Thyristor Power Regulators) to increase the m/c efficiency and reduction of powerconsumption.
ii. The steps taken by the Company for utilizing alternate sources of energy-NIL.
iii. Capital investment on energy conservation equipment
(a) Additional Investments and proposals if any being implemented for reduction ofconsumption of energy. Capital expenditure plan to improve process and product quality islaunched and is expected to have overall lower energy consumption.
(b) Impact of the measures referred to above for reduction of energy consumption andconsequent impact on the cost of production of goods. This will be felt in the mediumterm.
B. Technology Absorption Adaptation and Innovation
i) Efforts in brief made towards technology absorption adaptation and innovation-NIL
ii) Benefits derived as a result of the above efforts: N.A.
iii) Details of technology imported during last five years
(a) Technology Imported: N.A.
(b) Year of Import: N.A.
(c) Has technology been fully absorbed: N. A.
(d) If not fully absorbed area where this has not taken place: N.A.
Expenditure incurred on Research and Development.
During the year under review the Company has not incurred any expenses on Research& Development. The Companys products viz. Halogen Lamps are produced with wellestablished technologies. However in the current year a focus has been initiated onR&D for new products and upgrades.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows and the Foreign Exchange outgoin terms of actual outflows during financial year 2015-16 are as follow :-
26. MANAGEMENT DISCUSSION & ANALYSIS REPORT
a) INDUSTRY STRUCTURE AND DEVELOPMENT
Your Company retained its position as a market leader in Automotive Halogen Lamps inIndia with supplies to all major OEMs in Passenger Vehicle and Two Wheeler Industry. It isalso a major exporter to developed countries. The long term outlook for the Indianautomotive industry remains positive due to strong macroeconomic fundamentals improvingeconomic activity and easy availability of finance. With almost all the major automobilemanufacturers setting up production bases in India your Directors expect a satisfactorygrowth for your Company in the coming years.
b) OPPORTUNITIES AND THREATS OPPORTUNITIES
Potential to improve aftermarket including OLM.
Potential to grow the exports business.
Entry into new platforms launches in the OEM segment.
Introduction of new and higher margin products. THREATS
Quality issues with customers can reduce their off-take.
Service and deliver issues can reduce customer business.
Slowdown in the Indian Auto industry can impact OEM volumes.
Currency fluctuations can affect the nett realization of sales and hence themargins.
c) SEGMENTWISE OR PRODUCT WISE PERFORMANCE
As at March 31st 2016 the Company is engaged in manufacturing and trading ofAutomotive Lamps.
The outlook for the current year looks reasonable considering the decent economicgrowth automotive outlook for OE aftermarket and exports.
e) RISKS AND CONCERN
The Company has faced quality problems and customer complaints repeatedly in the pastyears leading to loss of business. Excessive volatility in the Companys key rawmaterials can have impact on its profitability. As the Company derives a portion of itsrevenues from exports and pays for purchases with foreign exchange excessive fluctuationsin currency rates can have impact. The Company is taking effective steps to address theseissues.
f) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has an adequate system of internal controls commensurate with its size toensure that all assets are safeguarded and protected against loss from unauthorized use ordisposition. All the transactions are authorized recorded and reported correctly.
g) FINANCIAL PERFORMANCE VIS-A-VIS OPERATIONAL PERFORMANCE
Your Company recorded Gross Income of Rs. 24496.78 Lakhs. Profit before tax afterexceptional items was Rs. 127731 Lakhs and the Net Profit for the current financial yearis Rs. 141.36 Lakhs.
The Companys internal control systems are further supplemented by an extensiveprogramme of internal audit by an independent professional agency and periodic review bythe Management. The internal control system is designed to ensure that all financial andother records are reliable for preparing financial statements and for maintainingaccountability of assets.
h) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES & INDUSTRIAL RELATIONS FRONT INCLUDINGNUMBER OF PEOPLE EMPLOYED.
Employees continue to be the backbone of the Organization. Industrial Relations havebeen generally harmonious in all units.
Sound human resource development policies of the Company ensure that each employeegrows as an individual and contributes to the performance and growth of the Company.Regular in-house training programs for employees at all levels help in this objective. Thenumber of persons employed in the Company is 830 (on rolls) as on 31st March 2016.
27. CORPORATE GOVERNANCE
Your Company is committed to achieve the highest standards of Corporate Governance andadheres to the Corporate Governance requirements set by the Regulators/applicable laws.
A separate section on Corporate Governance standards followed by the Company asstipulated under SEBI (LODR) Regulations 2015 is enclosed as an Annexure to this report.The report on Corporate Governance also contains certain disclosures required under theCompanies Act 2013.
A Certificate from Mr. Vijayakrishna K.T. Practising Company Secretary confirmingcompliance to the conditions of Corporate Governance as stipulated under SEBI (LODR)Regulations 2015 is annexed to this Report.
The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandatedthe formulation of certain policies for all listed companies. All the corporate governancepolicies are available on the website (www.phoenixlamps.co.in).The policies are reviewed periodically by the Board and updated based on need and newcompliance requirement.
Securities and Exchange Board of India (SEBI) on 2nd September 2015 issuedSEBI (LODR) Regulations 2015 which is effective from 1st December 2015.Accordingly all listed entities were entitled to enter into listing agreement within sixmonths from effective date. The Company entered into listing Agreement with BSE Limitedand National Stock Exchange of India Limited during December 2015
28. LISTING OF SHARES
The Equity Shares of the Company are listed on BSE Limited and National Stock Exchangeof India Limited. The Listing Fees for the financial year 2016-17 has been paid.
29. CAUTIONARY NOTE
Management Discussion and Analysis forming part of this Report is in compliance withCorporate Governance Standards incorporated in the Listing Agreement with Stock Exchangesand such statements may be " forward looking" within the meaning of applicablesecurities laws and regulations. Actual results could differ materially from thoseexpressed or implied. Important Factors that could make a difference to the Companysoperations include economic conditions affecting demand/supply and price conditions in thedomestic and overseas markets / currency fluctuations in which the Company operateschanges in the Government regulations tax laws and other statues and other incidentalfactors.
Your Directors wish to place on record their gratitude to NSEZ Authorities BanksBusiness Associates and Shareholders for their unstinted support assistance andco-operation. Your Directors place on record their deep appreciation to employees at alllevels for their hard work dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled the Company to remain at the forefront of theIndustry.
CEO & CFO CERTIFICATION
I N. S. Mohan Chief Executive Officer of the Company certify to the Board ofDirectors that:
(a) I have reviewed financial statements and the cash flow statement for the FinancialYear ended 31stMarch 2016 and that to the best of our knowledge and belief:
(i) these statements do not contain any materially untrue statement or omit anymaterial fact or contain statements that might be misleading;
(ii) these statements together present a true and fair view of the Companysaffairs and are in compliance with existing accounting standards applicable laws andregulations.
(b) to the best of our knowledge and belief no transactions entered into by theCompany during the year which are fraudulent illegal or violate the Companys codeof conduct.
(c) I accept responsibility for establishing and maintaining internal controls forfinancial reporting and that we have evaluated the effectiveness of internal controlsystems of the Company pertaining to financial reporting and we confirm that there are nodeficiencies in the design or operation of such internal controls.
(d) I have indicated to the auditors and the Audit Committee that there is:
(i) no significant changes in internal control over financial reporting during theyear;
(ii) no significant changes in accounting policies during the year;
(iii) no instances of significant fraud in the company has come to our knowledge.
FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN
As on financial year ended on 31.03.2016
I. REGISTRATION & OTHER DETAILS:
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
(All the business activities contributing 10% or more of the total turnover of thecompany shall be stated)
III. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES-
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
i) Category-wise Shareholding
(ii) Shareholding of Promoters-
* % change during the year in bracket shows the decrease in shareholding.
(iii) Change in Promoters Shareholding (please specify if there is no change)-
(iv) Shareholding Pattern of top ten Shareholders (Other than Directors Promoters andHolders of GDRs and ADRs):
Note: Closing of Top ten shareholders of the Company as on March 312015 has beenconsidered for the above disclosure.
(v) Shareholding of Directors and Key Managerial Personnel-
V. INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accruedbut not due for payment.
(Amount in Rs.)
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL-
A. Remuneration to Managing Director Whole-time Directors and/or Manager:
* Mr. Pranay D. Gandhi resigned as Managing Director and Director with effect from 18thJune 2015.
* Mr. N.S. Mohan is paid remuneration from its Holding Company.
B. Remuneration to other Directors-
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
Remuneration of Mr.Aditya Rungta as outgoing Company Secretary is till09.10.2015. ** Remuneration of Ms. Shrabanti Mandol is from 12.10.2015 to 31.03.2016.
*** Remuneration of Mr. Gagandeep Singh as Chief Financial Officer is till 31.03.2016.
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL
Disclosure of particulars of contracts/arrangements entered into by the company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basis:NIL
(a) Name(s) of the related party and nature of relationship:
(b) Nature of contracts/arrangements/transactions:
(c) Duration of the contracts / arrangements/transactions:
(d) Salient terms of the contracts or arrangements or transactions including the valueif any:
(e) Justification for entering into such contracts or arrangements or transactions
(f) Date(s) of approval by the Board:
(g) Amount paid as advances if any:
(h) Date on which the special resolution was passed in general meeting as requiredunder first proviso to Section 188:
2. Details of material contracts or arrangement or transactions at arms lengthbasis:
For and on behalf of the Board
K. Ajith Kumar Rai
NOMINATION AND REMUNERATION POLICY
In pursuance of the Companys policy to consider human resources as its invaluableassets to pay equitable remuneration to all Directors Key Managerial Personnel andemployees of the Company to harmonize the aspirations of human resources consistent withthe goals of the Company and in terms of the provisions of the Companies Act 2013 and theListing Agreement as amended from time to time this Nomination and Remuneration Policy onnomination and remuneration of Directors Key Managerial Personnel and Senior Managementhas been formulated by the Committee and approved by the Board of Directors.
Objective and Purpose:
The objective and purpose of this Nomination and Remuneration Policy is:
To lay down criteria and terms and conditions with regard to identifying personswho are qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.
To determine remuneration based on the Companys size and financialposition and trends and practices on remuneration prevailing in peer companies in theindustry.
To carry out evaluation of the performance of Directors as well as KeyManagerial and Senior Management Personnel.
To provide them reward linked directly to their effort performance dedicationand achievement relating to the Companys operations.
To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage. In the context of theaforesaid criteria the following Nomination and Remuneration Policy has been formulated bythe Committee and adopted by the Board of Directors at its meeting held on 29th September2014.
This Nomination and Remuneration Policy shall be effective from 1st October2014.
The Nomination and Remuneration Policy is applicable to:
Directors (executive and non-executive)
Key Managerial Personnel
This Nomination and Remuneration Policy is divided in two parts: Part - A coversthe appointment and nomination and Part - B covers remuneration and perquisites etc.
The key features of this Companys Nomination and Remuneration policy shallbe included in the Boards Report.
PART A - POLICY FOR APPOINTMENT AND REMOVAL OF DIRECTOR KEY MANAGERIAL PERSONNEL ANDSENIOR MANAGEMENT
Appointment criteria and qualifications:
1. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director Key Managerial Personnel or atSenior Management level and recommend to the Board his / her appointment.
2. A person should possess adequate qualification expertise and experience for theposition he/ she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person is sufficient /satisfactory for the concerned position.
3. The Company shall not appoint or continue the employment of any person as Whole-timeDirector who has attained the age of 70 (seventy) years. Provided that the term of theperson holding this position may be extended beyond the age of 70 (seventy) years with theapproval of shareholders by passing a special resolution based on the explanatorystatement annexed to the notice for such motion indicating the justification for extensionof appointment beyond 70 (seventy) years.
Term / Tenure:
1. Managing Director/Whole-time Director:
The Company shall appoint or re-appoint any person as its Chairperson/ChairmanManaging Director or Whole-time Director for a term not exceeding 5 (five) years at atime. No re-appointment shall be made earlier than 1 (one) year before the expiry of term.
2. Independent Director:
An Independent Director shall hold office for a term up to 5 (five) consecutiveyears on the Board of the Company and will be eligible for re-appointment on passing of aspecial resolution by the Company and disclosure of such appointment in the Boardsreport.
No Independent Director shall hold office for more than 2 (two) consecutiveterms but such Independent Director shall be eligible for appointment after expiry of 3(three) years of ceasing to become an Independent Director. Provided that an IndependentDirector shall not during the said period of 3 (three) years be appointed in or beassociated directly or indirectly with the Company in any other capacity.
At the time of appointment of Independent Director it should be ensured thatnumber of boards on which such Independent Director serves is restricted as provided underthe Companies Act 2013 and the rules there under and the Listing Agreement.
The appointment/re-appointment of Independent Directors shall be in accordancewith the condition as prescribed under the Companies Act 2013 rules made there under andthe Listing Agreement.
The Committee shall carry out evaluation of performance of every Director KeyManagerial Personnel and Senior Management Personnel at regular interval (yearly) andrecommend it to the Board.
Due to reasons for any disqualification mentioned in the Companies Act 2013 rulesmade thereunder or under any other applicable Act rules and regulations the Committeemay recommend to the Board with reasons recorded in writing removal of a Director KeyManagerial Personnel or Senior Management Personnel subject to the provisions andcompliance of the said Act rules and regulations.
The Director Key Managerial Personnel and Senior Management Personnel shall retire asper the applicable provisions of the Companies Act 2013 and the prevailing policy of theCompany. The Board will have the discretion to retain the Director Key ManagerialPersonnel Senior Management Personnel in the same position / remuneration or otherwiseeven after attaining the retirement age for the benefit of the Company.
PART B - POLICY RELATING TO THE REMUNERATION FOR THE WHOLE-TIME DIRECTOR KEYMANAGERIAL PERSONNEL AND SENIOR MANAGEMENT
1. The remuneration/ compensation/ commission etc. to the Whole-time Director KeyManagerial Personnel and Senior Management will be determined by the Committee based oncriteria such as industry benchmarks the Companys performance vis-a-vis theindustry responsibilities shouldered performance/track record macro-economic review onremuneration packages of heads of other organizations and recommended to the Board ofDirectors for approval. The remuneration/ compensation/ commission etc. shall be subjectto the approval of the shareholders of the Company and Central Government whereverrequired.
2. The remuneration and commission to be paid to the Whole-time Director shall be inaccordance with the percentage/ slabs/ conditions laid down in the Articles of Associationof the Company and as per the provisions of the Companies Act 2013 and the rules madethereunder.
3. Increments to the existing remuneration/ compensation structure may be recommendedby the Committee to the Board. Increments will be effective from 1st April in respect ofall Whole-time Directors and employees of the Company.
4. Where any insurance is taken by the Company on behalf of its Whole-time DirectorChief Executive Officer Chief Financial Officer the Company Secretary and any otheremployees for indemnifying them against any liability the premium paid on such insuranceshall not be treated as part of the remuneration payable to any such personnel. Providedthat if such person is proved to be guilty the premium paid on such insurance shall betreated as part of the remuneration.
Remuneration to Whole-time/ Executive/ Managing Director Key Managerial Personnel andSenior Management:
1. Fixed pay:
The Whole-time Director / Key Managerial Personnel and Senior Management shall beeligible for a monthly remuneration as may be approved by the Board on the recommendationof the Committee. The break-up of the pay scale and quantum of perquisites includingemployers contribution to P.F pension scheme medical expenses club fees etc.shall be decided and approved by the Board on the recommendation of the Committee andapproved by the shareholders and Central Government wherever required.
2. Minimum Remuneration:
If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Whole-time Director in accordance with theprovisions of Schedule V of the Companies Act 2013 and if it is not able to comply withsuch provisions with the previous approval of the Central Government.
3. Provisions for excess remuneration:
If any Whole-time Director draws or receives directly or indirectly by way ofremuneration any such sums in excess of the limits prescribed under the Companies Act2013 or without the prior sanction of the Central Government where required he / sheshall refund such sums to the Company and until such sum is refunded hold it in trust forthe Company. The Company shall not waive recovery of such sum refundable to it unlesspermitted by the Central Government.
Remuneration to Non-Executive/ Independent Directors:
Independent Directors are appointed for their professional expertise in theirindividual capacity as independent professionals / business executives. IndependentDirectors receive sitting fees for attending the meeting of the Board and committees ofthe Board and commission as approved by the Board and shareholders.
1. Remuneration/ Commission:
The remuneration/ commission shall be fixed as per the slabs and conditions mentionedin the Articles of Association of the Company and the Companies Act 2013 and the rulesmade there under. The remuneration by way of commission paid to the Independent Directorsshall be determined periodically and reviewed based on the industry benchmarks.
2. Sitting Fees:
The non-executive/ Independent Director may receive remuneration by way of fees forattending meetings of Board or Committee thereof. Provided that the amount of such feesshall not exceed such maximum permissible amount per meeting of the Board or Committee asmay be prescribed under the Companies Act 2013 or such amount as may be prescribed by theCentral Government from time to time.
Commission may be paid within the monetary limit approved by the Shareholders subjectto the limit not exceeding 1% of the profits of the Company computed as per theapplicable provisions of the Companies Act 2013.
4. Stock Options:
An Independent Director shall not be entitled to any stock option of the Company.
THE ANNUAL REPORT ON CSR ACTIVITIES
1. A brief outline of the Companys CSR policy including overview of projects orprograms proposed to be undertaken: Outline of the Companys CSR policy:
Suprajit Foundation is spearheading the CSR activities of the Company. The focus areaof the Foundation activities is education healthcare and rural development. The policy ofthe Company is to give back to society that is in need of education healthcare andupliftment of rural community. Suprajit Foundation is focused on executing sociallyrelevant projects in these areas.
Overview of Activities:
Various projects under the above CSR policy are undertaken through Suprajit Foundationand well-known not-for-profit organizations. Some of these educational projects areundertaken by Bharatiya Vidya Bhavan Vittala Vidya Sangha etc. The mid-day meal programis undertaken through Akshayapatra Founation. Other not-for-profit agencies involved areRotary Club of Bangalore Indiranagar Needy Heart Foundation One Billion LiteratesFoundation etc. Suprajit Foundation has received the amounts due as per the CSR policyrequirements. It spends a portion of the funds received and is developing a corpus fundfor the significant future project in the area of focus as above.
Web link to the CSR Policy of the Company:
2. The Composition of the CSR Committee.
Your Company recognizes its responsibility towards the society and environment in whichit operates and accordingly had been working towards CSR and Sustainable Development. Inaccordance with Section 135 of the Companies Act 2013 your Company has constitutedCorporate Social Responsibility Committee to monitor the CSR activities.
Members of the committee are:
1. Mr. K. Ajith Kumar Rai (Chairperson of the Committee)
2. Mr. Ian Williamson (Non-Executive Independent Director)
3. Mr. Suresh Shetty (Non-Executive Independent Director)
3. Average net profit of the company for last three financial years: Rs. 3665.97lakhs/-
4. Prescribed CSR Expenditure (two per cent. of the amount as in item 3 above): Rs.73.32 lakhs/-
5. Details of CSR spent during the financial year: Rs. 73.70 Lakhs/-
(a) Total amount to be spent for the financial year: Rs. 73.32 lakhs/-
(b) Amount unspent if any: Nil
For and on behalf of the
Corporate Social Responsibility Committee
K. Ajith Kumar Rai
Chairman of the Corporate Social Responsibility Committee
a) Information as per Rule 5(1) of Chapter XIII Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:
Managing Director Remuneration is paid till 18th June 2015.
1. The ratio of the remuneration of each director to the median remuneration of theemployees for the financial year ending on 31 03 2016 is as follorw
*Managing Director Remuneration is paid till 18th June 2015
* Except Ms. Sunita Mathur and Mr. Suresh Shetty Sitting Fees of Non ExecutiveDirector is paid till 18.06.2015 The Median remuneration of the employees for thefinancial year ends March 31st 2016 is Rs. 169627/-.
2. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year endson 31.03.2016 is as follows:
Managing Director Remuneration is paid till 18th June 2015
Mr. K. Ajith Kumar Rai (Chairman and Non-Executive Director) Mr. Mohan N S (Directorand Chief Executive Officer) Mr. Ian Williamson (Independent Director) and Mr. SureshShetty (Independent Director) were appointed on the Board on 18th day of June 2015.
Ms. Sunita Mathur (Independent and Woman Director) was appointed on the Board witheffect from 22nd March 2015 and is continuing as Independent Director till date.
Mr. Padmanabh P Vora (Chairman) Mr. Pranay D. Gandhi (Managing Director) Mr. GurdeepSingh (Independent Director) Mr. Shomik P Mukherjee (Non-Executive Director) resignedfrom the Board of the Company with the Change in Management on 18th day of June 2015.
Mr. Aditya Rungta Company Secretary resigned on 9th October 2015. Ms. ShrabantiMandol a qualified Company Secretary was appointed as Company Secretary of the Companywith effect from 12th October 2015.
Mr. Gagandeep Singh Chief Financial Officer of the Company resigned from the Companywith effect from 31st day of March 2016.
* The above remuneration to the Non-Executive Directors does not include the sittingfees paid during the year.
b) Information as per Rule 5(2) of Chapter XIII of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:
(i) During the financial year 2015-16 no employee received the remunerationaggregating to Rs. 60 lakhs p.a.
(ii) Employed for part of the year with an average salary above Rs. 5 lakh per month:
1. The above employees are on the rolls of the Company.
2. None of the employees mentioned above is related to any director of the Company.
3. Information about qualifications and last employment is based on particularsfurnished by the concerned employee.
4. None of the employee is relative of any Director of the Company and does not holdany equity share in the Company.
(iii) During the financial year 2015-16 no employee received remuneration in excess ofthe highest-paid director.
Form No. MR-3
SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31.03.2016
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies
(A nnnintmant anri Rami maratinn Parornnal) Ri ila o OD1A1
PHOENIX LAMPS LIMITED Noida
I have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by PHOENIX LAMPS LIMITED (CIN:L31500UP1991PLC012944) (hereinafter called the Company). Secretarial Audit wasconducted in a manner that provided me a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing my opinion thereon.
Based on my verification of the books papers minute books forms and returns filedand other records maintained by the Company and also the information provided by theCompany its officers agents and authorized representatives during the conduct ofSecretarial Audit I hereby report that in my opinion the Company has during the auditperiod covering the financial year ended on 31.03.2016 complied with the statutoryprovisions listed hereunder and also that the Company has proper Board processes andcompliance mechanism in place to the extent in the manner and subject to the reportingmade hereinafter:
I have examined the books papers minute books forms and returns filed and otherrecords maintained by PHOENIX LAMPS LIMITED for the financial year ended on 31.03.2016according to the provisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rules madethereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):
a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999;
e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008;
f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009;
h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; and
i) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015;
(vi) The Company is presently engaged in the business of manufacturing and trading ofelectric lamps parts and fittings thereof and having its two plants located at NoidaSpecial Economic Zone (NSEZ) and there are no specific laws applicable to the Companypursuant to the business carried by the Company.
(vii) The other general laws as may be applicable to the Company including thefollowing:
(1) Employer/Employee Related laws & Rules:
i. Industries (Development & Regulation) Act 1951
ii. The Factories Act 1948 (in case of manufacturing companies where applicable)
iii. The Employment Exchanges (Compulsory notification of Vacancies) Act 1959
iv. The Apprentices Act 1961
v. The Employees Provident Fund & Miscellaneous Provisions Act 1952
vi. The Employees State Insurance Act 1948
vii. The Workmens Compensation Act 1923
viii. The Maternity Benefits Act 1961
ix. The Payment of Gratuity Act 1972
x. The Payment of Bonus Act 1965
xi. The Industrial Disputes Act 1947
xii. The Trade Unions Act 1926
xiii. The Payment of Wages Act 1936
xiv. The Minimum Wages Act 1948
xv. The Child Labour (Regulation & Abolition) Act 1970
xvi. The Contract Labour (Regulation & Abolition) Act 1970
xvii. The Industrial Employment (Standing Orders) Act 1946
xviii. Equal Remuneration Act 1976
xix. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Services)Act 1979
xx. The Sexual Harassment of Women at Work Place (Prevention Prohibition &Redressal) Act 2013
xxi. Persons with Disabilities (Equal Opportunities Protection of Rights and FullParticipation) Act 1996
xxii. Prohibition of Employment as Manual Scavengers and their Rehabilitation Act 2013
xxiii. Dangerous Machines (Regulation) Act 1983
xxiv. Indian Boilers Act 1923
xxv. The Industrial Establishments (National and Festival Holidays) Act 1963
xxvi. The Labour Welfare Fund Act 1965
xxvii. Explosive Act
xxviii. Weight & Measure Act 1976
xxix. The U.P. dookan Aur Vanijya Adhisthan Adhiniyam1962
xxx. For majority of Central Labour Laws the State has introduced Rules [names of eachof the Rules is not included here]
(2) Environment Related Acts & Rules:
i. The Environment Protection Act 1986
ii. The Water (Prevention & Control of Pollution) Act 1974
iii. The Air (Prevention & Control of Pollution) Act 1981
iv. Hazardous Wastes (Management Handling and Transboundary Movement) Rules 2008.
(3) Economic/Commercial Laws & Rules:
i. The Competition Act 2002
ii. The Indian Contract Act 1872
iii. The Sales of Goods Act 1930
iv. The Forward Contracts (Regulation) Act 1952
v. The Indian Stamp Act 1899
vi. The Transfer of Property Act 1882
I have also examined compliances with the applicable clauses of the following:
(i) Secretarial Standards issued by the Institute of Company Secretaries of India onthe Board and General Meetings i.e. SS - 1 and SS - 2 (applicable from 1stJuly 2015).
(ii) The Listing Agreements entered into by the Company with the BSE Limited (BSE) andNational Stock Exchange of India Limited (NSE) and the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 whereverapplicable.
During the period under review the Company has complied with the provisions of theActs Rules Regulations Guidelines Standards etc. mentioned above as may be applicableduring the year under review. Certain non material findings made during the course of theaudit relating to the provisions of Companies Act Secretarial Standards Labour Laws wereaddressed suitably by the Management. Following are some of the observations which in myopinion will have material impact on the Companys compliance status:
1. Certain disclosures are yet to be updated in the official Website of the Company.
2. Annual Report for the year 31.03.2015 does not disclose certain information on weblinks as mandated under the Act and the Listing Agreement.
Further I report that with regard to financial and taxation matters I have reliedon the Audit Report Limited Review Report and the Internal Audit Report provided by theStatutory/Internal Auditor as the case may be.
I further report that the Board of Directors of the Company is duly constitutedwith proper balance of Executive Directors Non-Executive Directors and IndependentDirectors. The changes in the composition of the Board of Directors which took placeduring the period under review were carried out in compliance with the provisions of theAct.
Adequate notice is given to all Directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members views arecaptured and recorded as part of the minutes as per the practice followed. However duringthe period under report there was no such case instance.
I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.
I further report that during the year under report the Companys shares havebeen acquired by Suprajit Engineering Limited by around 61.93% of the fully paid up EquityShare Capital i.e. 14289843 Equity Shares of Rs. 10/- each at a consideration @ Rs.89/- per share aggregating to Rs. 1271796 Lakhs amounting 51% from Argon India LimitedMauritius and Argon South Asia Limited Mauritius and an Open Offer was madeto minority Shareholders to acquire additional 26% for which 15021 Shares were tenderedat Rs. 100/- per share aggregating to Rs. 15.02 Lakhs and Suprajit Engineering Limited hasfurther acquired the balance 3047312 Equity Shares of Rs. 10/- each at a consideration @Rs. 89/- per Share aggregating to Rs. 2712 Lakhs amounting to 10.88% stake and completedthe transaction in line with Share Purchase Agreement signed on 6th May 2015.Hence the Company has become the Subsidiary of Suprajit Engineering Limited.
I further report that during the year under report there was a complete change inthe management of the Company subsequent to the Company becoming the Subsidiary ofSuprajit Engineering Limited. The Board of Directors and the Key Managerial Personnel havebeen changed during the year in compliance with the applicable provisions of the Act.
I further report that during the year under report the Company has obtained theapproval of the Shareholders to the following subjects vide Postal Ballot Notice dated 21stDecember 2015 and the Scrutinizer Report dated 1st February 2016:
1. Shifting of Registered Office of the Company from the State of Uttar Pradesh to theState of Karnataka.
2. Alteration of situation clause of the Memorandum of Association of the Company.
3. Alteration of Articles of Association of the Company.
Further the Company has filed application before the Regional Director NorthernRegion Bench New Delhi for obtaining the approval for Shifting of Registered Office ofthe Company from the State of Uttar Pradesh to the State of Karnataka.
Note: This report is to be read with our letter of even date which is annexed asAnnexure and forms an integral part of this report.
My report of even date is to be read along with this letter:
1. Maintenance of secretarial record is the responsibility of the management of theCompany. My responsibility is to express an opinion on these secretarial records based onour audit.
2. I have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of Secretarial Records. Theverification was done on test basis to ensure that correct facts are reflected in thesecretarial records. I believe that the processes and practices I have followed provide areasonable basis for our opinion.
3. I have not verified the correctness and appropriateness of Financial records andBooks of Accounts of the Company including records under Income Tax Act Central ExciseAct Customs Act Central and State Sales Tax Act.
4. Where ever required the Company has represented about the compliance of laws rulesand regulations and happening of events etc as applicable from time to time.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of Management. My examination was limited tothe verification of procedures on test basis.
6. The secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the Management has conductedthe affairs of the Company.