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SBEC Systems (India) Ltd.

BSE: 517360 Sector: Others
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SBEC Systems (India) Ltd. (SBECSYSTEMS) - Director Report

Company director report

Dear Members

Your Directors take pleasure in presenting the 26th Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2015.

FINANCIAL RESULT

The Summarised Financial Results of the Company for the Financial Year 2014-15Vis-a-Vis 2013-14 are as under:

(Rs. in Lacs)
Particulars Period ended 31.03.2015 Period ended 31.03.2014
Sales & Other Income 23.35 66.74
Total Expenditure 48.72 110.70
Operating Profit/(Loss) before Tax (25.36) (43.96)
Profit/(Loss) After Tax (25.36) (43.96)

During the year under review the sales and other income stood at Rs. 23.35 Lacs. Thenet loss of the Company stood at Rs. 25.36 Lacs as compared to net loss of Rs. 43.96 Lacsfor the previous year.

DIVIDEND & RESERVES

In view of the losses incurred your Board is unable to recommend any dividend for thefinancial year ended March 312015.

The Company has not transferred any amount to the reserves for the year ended March312015.

SHARE CAPITAL

The paid up equity capital as on March 31 2015 was Rs.10.00 Lacs. During the yearunder review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity.

SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

The Company had one Subsidiary Company namely SBEC Investments Limited. Pursuant toMinistry of Corporate Affairs General Circular No. 36/2011 dated 7th June 2011 regardingGuidelines for Fast Track Exit Mode for defunct companies under section 560 of CompaniesAct 1956 the company has made an application to the Registrar of Companies NCT of Delhi& Haryana New Delhi for striking off the name of the Company under Section 560 of theCompanies Act 1956 in E-Form FTE vide SRN C00707000 dated 26.03.2014. Thus the Ministryof Corporate Affairs vide their letter dated 02/08/2014 has been struck off the name ofthe Company from the Register.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to the provisions contained in Section 134 (5) of the Companies Act 2013your Directors to the best of their knowledge and belief and according to information andexplanations obtained from the management confirm that:

a) in the preparation of the annual accounts for the financial year ended March 312015 the applicable accounting standards have been followed and there are no materialdepartures from the same;

b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312015 and of the loss ofthe Company for the year ended on that date;

c) the Directors 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) The Directors have prepared the Annual Accounts on a going concern basis.

e) The Directors have laid down proper internal financial controls to be followed bythe Company and such controls are adequate and operating effectively.

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the Company Mr. Jagan Nath Khurana (DIN 00003817)Non-Executive Director of the Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible offer himself for re-appointment.

Mr. Rajeev Kumar Agarwal Mr. Jagdish Chandra Chawla and Mr. Shyam Babu Vyas wasappointed as an Additional Non-executive Director of the Company with effect from May212015 and holds office upto the date of the forthcoming Annual General Meeting.

As per provision of Section 149 and other applicable provisions if any of theCompanies Act 2013 Mr. Rajeev Kumar Agarwal Mr. Jagdish Chandra Chawla and Mr. ShyamBabu Vyas are proposed to be appointed as Independent Directors of the Company for aperiod of five years commencing from September 23rd 2015.

Mr. Louis Claude Norland Suzor ceased to be Director of the Company under section 167of the Companies Act 2013.w.e.f. 21st May 2015.

Mr. Bindu Kumar Luthra who has been appointed as an alternate director during theabsence of Mr. Louis Claude Norland Suzor be and is hereby ceased to be the alternatedirector and appointed as additional NonExecutive Director of the Company w.e.f. 21st May2015.

All the Independent Directors viz. Mr. Rajeev Kumar Agarwal Mr. Jagdish ChandraChawla and Mr. Shyam Babu Vyas have submitted declarations confirming that they meet thecriteria of independence as prescribed under Section 149(6) of the Companies Act 2013 andClause 49 of the Listing Agreement with the Stock Exchanges.

Ms. Shivani Chaudhary has resigned from the post of Company Secretary and ComplianceOfficer of the Company w.e.f. 10th June 2014 and Ms. Varsha Yadav was appointed asCompany Secretary and Compliance Officer of the Company w.e.f. 1st May 2015.

Mr. Anil Jain resigned from the post of Manger w.e.f. 21st May 2015 and re-appointedand designated as Chief Financial Officer of the Company w.e.f.21st May 2015.

Mr. S.S. Agarwal Director of the Company is designated as Chief Executive Officer ofthe Company w.e.f.21st May 2015.

The Board met Four times during the financial year 2014-15 the details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.

In accordance with the provisions of Section 134 of the Act and Clause 49 of theListing Agreement the Board has carried out an evaluation of its own performance theperformance of Committees of the Board namely Audit Committee Stakeholders RelationshipCommittee and Nomination and Remuneration Committee and also the directors individually.The manner in which the evaluation was carried out and the process adopted has beenmentioned in the Corporate Governance Report.

The Board on the recommendation of the Nomination & Remuneration Committee hasframed a policy for selection and appointment of Directors Senior Management and theirremuneration and also framed the criteria for determining qualifications positiveattributes and independence of directors. The Remuneration Policy and criteria for Boardnominations are given in Annexure - A to this Report.

STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

As required under Section 149 (7) of the Companies Act 2013 all the IndependentDirectors have given their respective declarations that they meet the criteria ofindependence as specified in Section 149 (6) of the Companies Act 2013.

AUDITORS AND AUDITORS REPORT

The Shareholders at the 25th Annual General Meeting held on September 24 2014 hadappointed M/s K.K. Jain & Co. ( FRN - 02465N ) as Statutory Auditors of the Company tohold office until the conclusion of ensuing Annual General Meeting subject to ratificationof their appointment at every intermittent AGM. M/s K.K. Jain & Co. being eligible hasexpressed their willingness to continue as auditors of the Company and accordingly theratification of their appointment is recommended to the Shareholders.

Qualifications

The observation made in the Auditors' Report read together with relevant notes thereonare self-explanatory and hence do not call for any further comments under Section 134 ofthe Companies Act 2013.

Reference to the Auditors comments on non-provision of expenses related to deputationcharges of foreign technicians it is hereby clarified that the expense of Rs. 7.66 lacsrelated to deputation charges of foreign technician was payable under Service Agreemententered into by the Company at the time of implementation of the project for one of itscustomers. However certain dispute arose during the implementation of the project and thepayment was not made and therefore no provision for the same was made. The said technicianhas also not made any claim for the payment. Management is of view that the expenses willbe charged to profit & Loss Account in the year in which the payment is made.

Reference to the Auditors comments on non reversal of diminution of current quotedinvestment it is hereby clarified that the company is holding 14231214 Equity Sharesof SBEC Sugar Limited the Equity Shares of which are listed with Bombay Stock ExchangeLimited and is one of the promoters of SBEC Sugar Limited. Since the company is notintending to sale/ transfer/ otherwise dispose off these shares the management hasdecided not to make any provision of diminution or reversal thereof.

The Statutory Auditors have not reported any incident of fraud to the Audit Committeeof the Company during the year under review.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s R.Singhal & Associates Company Secretaries in practice as theSecretarial Auditor to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is given in Annexure-B to this Report.

The observation in secretarial audit report are self-explanatory and therefore not callfor any further explanation.

Reference to the Secretarial Auditors comment that the Company has not updated FixedAsset Register the management is in process for preparing the fixed Asset Register.

RISK MANAGEMENT

As required under Clause 49 of the Listing Agreement the provisions of Clause 49 (VI)(C) as given in Part- B i.e. Constitution of Risk Management Committee shall be applicableto top 100 listed Companies by market capitalization as at the end of the immediatefinancial year. As the Company not fall under the category of top 100 listed Companiesthe Company is not required to constitute a Risk Management Committee.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate Internal Financial Controls with proper checks to ensure thattransactions are properly authorised recorded and reported apart from safeguarding itsassets. These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis. The internal auditors of the Company reviews the controls across the keyprocesses and submits reports periodically to the Management and significant observationsare also presented to the Audit Committee for review. Follow up mechanism is in place tomonitor the implementation of the various recommendations.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.

Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company i.e. (a) net worth of the Company to be Rs. 500 crore or more; or(b) turnover of the company to be Rs. 1000 crore or more; or (c) net profit of thecompany to be Rs.5 crore or more. As the Company does not fall under any of the thresholdlimits given above the provisions of Section 135 are not applicable to the Company.

RELATED PARTY TRANSACTIONS

All contracts/arrangements/transactions entered into during the financial year with therelated parties were on arm's length basis and were in the ordinary course of business.Section 188(1) of the Companies Act 2013 exempts related party transactions that are inthe ordinary course of business and are on arm's length basis. However under clause 49 ofthe Listing Agreement all material Related Party Transactions requires approval of theshareholders through special resolution.

There were no materially significant related party transactions with the promotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.

The policy on dealing with Related Party Transactions as approved by the Board isavailable at the investors section of the Company's website at www.sbecsystems.com

The details of contracts/arrangements with related parties as required to be disclosedin Form-AOC-2 is not applicable on the Company.

CORPORATE GOVERNANCE

The Report on corporate governance as stipulated under the Listing Agreement forms partof this Report. The requisite certificate confirming compliance with the conditions ofcorporate governance is attached to the Corporate Governance Report. The report alsocontains the details as required to be provided on Board evaluation remuneration policywhistle blower policy/vigil mechanism etc.

The CEO and the Chief Financial Officer have submitted a certificate to the Boardregarding the financial statements and other matters as required under the ListingAgreement.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review as stipulatedunder Clause 49 of the Listing Agreement form part of this Annual Report.

DISCLOSURES

Committees of the Board

During the year in accordance with the Companies Act 2013 the Boardre-constituted/re-named some of its Committees and presently the Company has the followingCommittees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

The details of all the Committees along with their composition terms of reference andmeetings held during the year are provided in the "Report on CorporateGovernance" forming part of this Annual Report.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

The Company has a vigil mechanism and a whistle blower policy. The same has been postedon the Company's website and the details of the same are given in the Corporate GovernanceReport.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-C to this Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

During the financial year 2014-15 the company has not made any investment nor givenany loans or guarantees covered under the provisions of section 186 of the Companies Act2013.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 relating to the ratioof the Remuneration of each Director to the median employees remuneration shall not applybecause none of the Directors has drawn any remuneration from the Company for thefinancial year 2014-15. In terms of the Provisions of Section 197(12) of the Companiesact 2013 read with Rule 5(2)&(3) of the Companies Appointment & Remuneration ofManagerial Personnel ) Rules 2014 None of the employees of the Company were in receipt ofremuneration of more than limit specified as set out in the above said Rules.

EXTRACT OF THE ANNUAL RETURN

The details of the extract of the Annual Return in Form MGT-9 are given in Annexure-Dto this Report.

FIXED DEPOSITS

During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V - Acceptance of Deposits by Companies of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

PERSONNEL RELATIONS

Your directors hereby place on record their appreciation for the services rendered bythe executives staff and workers of the Company for their hard work dedication andcommitment. During the year under review relations between the employees and themanagement continued to remain cordial.

APPRECIATION

Your directors thank the various Central and State Government Authorities and Agenciesfor the continued help and cooperation extended by them. The Directors gratefullyacknowledge all stakeholders of the Company viz. customers members dealers vendors andbanks for their excellent support during the year. The Directors also place on recordtheir sincere appreciation to all employees of the Company for their unstinted commitmentand continued cooperation to the Company.

For & behalf of the Board
for SBEC Systems ( India) Limited
Sd/-
Place: New Delhi Vijay Kumar Modi
Date: 12-08-2015 Chairman