The Members of
Bhagyanagar India Limited
The Directors have pleasure in presenting the 32nd Annual Report of yourCompany and the Audited financial statements for the financial year ended 31stMarch 2017 together with Auditors' Report thereon.
The performance of the Company during the year has been as under:
| || || |
(Amount in Rs.)
|Particulars || |
| ||2017 ||2016 ||2017 ||2016 |
|Sales and other Income ||3016981448 ||2937476172 ||3043156762 ||2960221956 |
|EBIDTA ||210511931 ||214300304 ||225525588 ||224852142 |
|LESS : Loss on Foreign Exchange Fluctuation ||12063099 ||40482164 ||12063099 ||40482164 |
|Depreciation ||34358606 ||50582033 ||47118799 ||63695881 |
|Interest ||59369584 ||76152011 ||61287285 ||76157333 |
|Amortisation of FCMITDA ||10844686 ||22294090 ||10844686 ||22294090 |
|Extraordinary Items ||42588988 || ||42588988 || |
|Profit before Taxation ||51286968 ||24790006 ||51622731 ||22222674 |
|Provision for Taxation : Current Tax ||10374911 ||3575228 ||10454117 ||3575228 |
|Deferred Tax ||2097640 ||1020346 ||(2745589) ||(6799704) |
|MAT Credit ||(9597782) ||- ||(9597782) ||- |
|Tax of earlier years ||- ||- ||745 ||- |
|Profit after Tax ||48412199 ||20194432 ||53511241 ||25447150 |
|Less: Minority Interest ||- ||- ||(1876517) ||(1367319) |
|Less: Change in Interest of Associate Companies ||- ||- ||527657 ||912349 |
|Less: Divestment on account of Demerger ||- ||- ||1270407 ||- |
|Surplus brought forward from previous year ||751589062 ||731464290 ||767937442 ||743014922 |
|Dividend Tax of Earlier Years ||- ||(69660) ||- ||(69660) |
|Balance available for appropriation ||800001261 ||751589062 ||821370230 ||767937442 |
|Transfer to General Reserves ||23199230 ||- ||23199230 ||- |
|Balance c/f to Balance Sheet ||776802031 ||751589062 ||798171000 ||767937442 |
PERFORMANCE AND OPERATIONS:
During the year 2016-17 the Company's total revenue is increased by 2.71% as that oflast year. PBT increased by 106.88% as compared to last year. PAT also increased by139.73% as compared to previous year.
SCHEME OF ARRANGEMENT (DEMERGER):
Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the Stateof Andhra Pradesh sanctioned the Scheme of Arrangement between Bhagyanagar India Limited("Demerged company') and Surana Telecom and Power Limited ("1stResulting Company/STPL') and Bhagyanagar Properties Limited ("2ndResulting Company/BPL") vide its Order dated 21.11.2016. With effect from AppointedDate i.e. 1st April 2016 all the assets and liabilities of Solar Divisionbecomes assets & liabilities of Surana Telecom and Power Limited and all the assetsand liabilities of Real Estate Division becomes assets & liabilities of BhagyanagarProperties Limited as per the Scheme of Arrangement. In Consideration of vesting of solardivision into STPL and real estate division into BPL the equity shares have been allottedby resulting companies in the following share exchange ratio:
"For every 6 equity shares of Rs.2/- each of BIL as on record date will continueto hold 3 equity shares of Rs.2/- each of BIL and will get 4 equity shares of Re.1/- eachof STPL and 3 equity shares of Rs.2/- each of BPL."
Further the Company's paid up capital has been reduced to 50% from 63990000 equityshares of Rs.2/- each to 31995000 equity shares of Rs.2/- each as per the Scheme ofArrangement and the trading in the above said equity shares has commenced on the StockExchanges w.e.f. 17.05.2017.
OUTLOOK FOR THE YEAR 2017-18:
(i) Copper: The Company will remain focused on copper business. We will continue toadd further value added products in line with the requirement of our OEM customers. We arelooking at a minimum of 10% volume growth in this year. The situation post GST looks verypromising and the company's disadvantage against tax free territories like Silvasa will nolonger apply.
(ii) Wind Power: The Company currently has an overall installed capacity of 9 MWcomprising of 7 wind turbines in state of Karnataka and 6.4 MW comprising 5 wind turbinesin Tamilnadu through its Subsidiary viz. Solar Dynamics Private Limited. The saidprojects are giving steady income.
Your company has the following Subsidiary and Associate companies as mentioned below.Further there has been no material change in the nature of business of the Subsidiariesand Associates:
|Name of the Company ||Percentage of shareholding |
|Subsidiary Companies: || |
|Bhagyanagar Metals Limited ||100.00 |
|Solar Dynamics Private Limited ||63.77 |
|Associate Companies: || |
|Bhagyanagar Cables Private Limited ||26.00 |
In terms of proviso to sub section (3) of Section 129 of the Act 2013 read withCompanies (Accounts) Rules 2014 the salient features of the financial statement of thesubsidiaries and Associates is set out in the prescribed Form AOC-1 which forms part ofthe annual report.
With effect of the Scheme of Arrangement the following Companies have been ceased tocontinue as Subsidiaries of Bhagyanagar India Limited w.e.f. 01.04.2016 (Appointed date):
(i) Bhagyanagar Properties Limited
(ii) Scientia Infocom India Private Limited
(iii) Metropolitan Ventures India Limited
CONSOLIDATED FINANCIAL STATEMENTS:
The consolidated financial statements prepared and annexed in accordance with theAccounting Standards 21 and 23 as prescribed under Section 133 of the Companies Act 2013read with Rule 7 of Companies (Accounts) Rules 2014 and Guidelines issued by Securitiesand Exchange Board of India ("SEBI") also forms part of this Annual Report.
As per the provisions of Section 136 of the Companies Act 2013 the Company has placedseparate audited accounts of its subsidiaries on its website www.bhagyanagarindia. com andcopy of separate audited financial statements of its subsidiaries will be provided to theshareholders at their request.
With effect of the Scheme of Arrangement the Company's paid-up share capital has beenreduced to 50% from Rs.127980000 to Rs.63990000. The paid-up Share Capital of theCompany as on 31st March 2017 is Rs.63990000 divided into 31995000equity shares of Rs.2/- each.
The Board of Directors have not recommended dividend for the financial year 2016-17 toretain the maximum possible cash in the system. The Company is constrained to skip thedividend in view of the impeding cash out flow on account of ECB repayment obligations.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
The Management Discussion and Analysis forms an integral part of this Report and givesdetails of the overall industry structure developments performance and state of affairsof the Company's various businesses viz. Copper Products renewable energy internalcontrols and their adequacy risk management systems and other material developmentsduring the financial year.
Management Discussion and Analysis Report is presented in a separate section forms partof the Annual Report as Annexure-II.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto the Directors' Responsibility Statement the Board of Directors of the Company herebyconfirms:
(a) That the preparation of the annual accounts for the financial year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures;
(b) That the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year 31st March 2017 and of the profit and loss of the company forthat period;
(c) That the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
(d) That the directors have prepared the annual accounts for the financial year 31stMarch 2017 on a going concern basis; and
(e) That the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:
The independent directors have submitted the declaration of independence as requiredpursuant to sub-section (7) of section 149 of the Companies Act 2013 stating that theymeet the criteria of independence as provided in sub- section (6) of Section 149.
NOMINATION AND REMUNERATION POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy which lays down a framework in relation to selection appointment andremuneration to Directors Key Managerial Personnel and Senior Management of the Company.The details of Nomination and Remuneration Committee and Policy are stated in theCorporate Governance Report.
PARTICULARS OF LOANS GUARANTEES OR SECURITIES OR INVESTMENTS:
The details of Loans Guarantees Securities and Investments made during the financialyear ended 31st March 2017 are given in the notes to the Financial Statementsin compliance with the provisions of Section 186 of the Companies Act 2013 read withCompanies (Meetings of Board and its Powers) Rules 2014.
RELATED PARTY TRANSACTIONS:
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. There are no materially significantrelated party transactions made by the Company with Promoters Directors Key ManagerialPersonnel or other designated persons which may have a potential conflict with theinterest of the Company at large. All Related Party Transactions are placed before theAudit Committee as also the Board for approval where ever required. Prior omnibusapproval of the Audit Committee is obtained for the transactions which are of aforeseeable and repetitive nature. A statement giving details of all related partytransactions entered into pursuant to the omnibus approval so granted are placed beforethe Audit Committee and the Board of Directors on a quarterly basis. The Company hasdeveloped a Policy on Related Party Transactions for the purpose of identification andmonitoring of such transactions. The policy on Related Party Transactions as approved bythe Board is uploaded on the Company's website www.bhagyanagarindia.com.
The particulars of contracts or arrangements with related parties referred to insub-section (1) of section 188 is prepared in Form AOC-2 pursuant to clause (h) of theCompanies (Accounts) Rules 2014 and the same is annexed herewith as"Annexure-III" to this Report.
EXTRACT OF ANNUAL RETURN:
The Extracts of Annual Return as per the provisions of Section 92 of the Companies Act2013 and Rule 12 of Companies (Management and Administration) Rules 2014 in Form MGT-9are enclosed as Annexure - IV to this Report.
PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO:
The information on Conservation of Energy Technology Absorption Foreign ExchangeEarnings and outgo required to be disclosed under Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are provided in theAnnexure-I forming part of this Report.
RISK MANAGEMENT POLICY:
In terms of the requirement Section 134(3)(n) and Regulation 21 of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 read with relevant provisions of the Companies Act 2013 the Company has developed andimplemented the Risk Management Policy. The Audit Committee has additional oversight inthe area of financial risks and controls. Major risks identified by the businesses andfunctions are systematically addressed through mitigating actions on a continuing basis.The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report. At present theCompany has not identified any element of risk which may threaten the existence of thecompany.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
The Company is not covered under the criteria mentioned in the provisions of CompaniesAct 2013. The Company however over the years is pursuing as part of its CorporateSocial Responsibility for welfare and aspirations of the Community. The CSR activities ofthe Surana Group are guided by the vision and philosophy of its Founding Father Shri GMangilal Surana who embodied the value of trusteeship in business and laid the Foundationfor its ethical and value-based functioning.
The core elements of CSR activities include ethical functioning respect for allstake-holders protection of human rights and care for the environment. The G.M. SuranaFoundation is established purely for the purpose of providing medical relief to the peoplewho are in below poverty line. It is being run by qualified and registered doctors.
During the year under review pursuant to the provisions of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the evaluation ofperformance of all Directors is undertaken annually. The company has implemented a systemof evaluating performance of the Board of Directors and of its Committees and individualDirectors on the basis of a structured questionnaire which comprise evaluation criteriataking into consideration various performance related aspects.
The Board of Directors has expressed their satisfaction with the valuation process.
During the financial year under review Dr R.N.Sreenath Independent Director resignedfrom the Board w.e.f. 10.02.2017.
Shri Narender Munoth Director of the Company will retire by rotation at the ensuingAnnual General Meeting and it is proposed to not to fill such vacancy.
The brief particulars of the Directors seeking appointment /re-appointment at thisAnnual General Meeting are being annexed to the Corporate Governance Report.
Pursuant to the provisions of Section 203 of the Act Shri Narender Surana and ShriDevendra Surana Managing Directors and Shri N. Krupkar Reddy Whole-time Director Shri.Surendra Bhutoria Chief Financial Officer and Shri. Badarish H Chimalgi CompanySecretary were formalized as the Key Managerial Personnel of the Company.
During the financial year under review 6(Six) Board Meetings and 4 (Four) AuditCommittee Meetings were convened and held. The details of which are given in the CorporateGovernance Report. The intervening gap between the meetings was within the period of 120days as prescribed under the Companies Act 2013 and Regulation 17 of SEBI ListingRegulations 2015.
The Company has not accepted any deposits from the public in terms of Section 73 of theCompanies Act 2013 and as such no amount on account of principal or interest on publicdeposits was outstanding as on the date of the balance sheet.
Under Section 139 of the Companies Act 2013 and the Rules made thereunder it ismandatory to rotate the statutory auditors on completion of the maximum term permittedunder the said section. The Audit Committee of the Company has proposed and the Board ofDirectors has recommended the appointment of M/s. Luharuka & Associates CharteredAccountants (Firm Registration No.001882S) as Statutory Auditors of the Company. M/s.Luharuka & Associates will hold office for a period of five consecutive years from theconclusion of the 32nd Annual General Meeting till the conclusion of the 37thAnnual General Meeting to be held in 2022 subject to the approval of the shareholder ofthe Company. The first year of audit will be of the financial statements for the yearending 31st March 2018.
M/s. Luharuka & Associates Chartered Accountants (Registration No. 001882S) haveconfirmed that their appointment if made shall be in accordance with the provisions ofSection 139 of the Companies Act 2013. Accordingly a resolution seeking member'sapproval on appointment of M/s. Luharuka & Associates Chartered Accountants as theStatutory Auditors of the Company for a period of five consecutive years is included atItem No. 3 of the Notice convening the Annual General Meeting.
There are no qualifications reservations or adverse remarks made by M/s.Sekhar &Co Chartered Accountants Statutory Auditors in their report for the Financial Year ended31st March 2017.
The Statutory Auditors have not reported any incident of fraud to the Audit Committeeof the Company in the year under review.
The Board of Directors of the Company have appointed M/s Luharuka & AssociatesChartered Accountants as Internal Auditors to conduct Internal Audit for the FinancialYear ended 31st March 2017.
The Board of Directors subject to the approval of the Central Government re-appointedM/s BVR & Associates Cost Accountants holding certificate of practice No.16851 as aCost Auditor for conducting the Cost Audit for the financial year 2017-18. Subject tosection 148 of the Companies Act 2013 read with Companies (Cost Records and Audit) Rules
2014 issued by the MCA the Audit Committee recommended their re-appointment. TheCompany has also received a letter from the Cost Auditor stating that the appointment ifmade will be within the limits prescribed pursuant to the section 141 of Companies Act2013.
The Company has implemented the procedures and adopted practices in conformity with theCode of Corporate Governance as per the requirements of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
A separate report on corporate governance practices followed by the Company togetherwith a Certificate from the Company's Auditors confirming compliances forms an integralpart of this Report.
The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report concerns aboutunethical behavior actual or suspected fraud or violation of Code of Conduct and Ethics.It also provides for adequate safeguards against the victimization of employees who availof the mechanism and provides direct access to the Chairperson of the Audit Committee inexceptional cases. It is affirmed that no personnel of the Company has been denied accessto the Audit Committee. The policy of vigil mechanism is available on the Company'swebsite. The Whistle Blower Policy aims for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behavior.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mrs. Rakhi Agarwal Company Secretary in Practice as Secretarial Auditors toconduct Secretarial audit of the company for the financial year ended March 31 2017.
The Secretarial Audit Report issued by Ms. Rakhi Agarwal Company Secretary in Practicein Form MR-3 is enclosed as Annexure - V to this Annual Report.
The Secretarial Audit Report does not contain any qualifications reservation oradverse remarks.
PARTICULARS OF EMPLOYEES
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Companies Act 2013read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
PARTICULARS OF REMUNERATION
The remuneration and perquisites provided to the employees and Management are at parwith the industry levels. The remuneration paid to the Managing Director and seniorexecutives are reviewed and recommended by the Nomination and Remuneration Committee.
(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year;
|Name of the Director ||Ratio to Median Remuneration |
|Shri Devendra Surana MD ||27.62 |
|Shri N. Krupakar Reddy WTD ||2.27 |
Note: Shri Narender Surana MD and Shri Narender Munoth WTD voluntarily not drawingsalary from the Company.
(ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;
|Name of Person ||% increase in remuneration |
|Shri Devendra Surana MD* ||-44.44 |
|Shri N.Krupakar Reddy WTD ||7.32 |
|Shri Surendra Bhutoria CFO ||52.91 |
|Shri Rohit Jain CS** ||NA |
* Shri Devendra Surana MD has voluntarily reduced his remuneration. "Resigned asCompany Secretary w.e.f 10.02.2017
(iii) The percentage increase in the median remuneration of employees in the financialyear - 8.48%
(iv) The number of permanent employees on the rolls of company - 120.
(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;
The average increase in salaries of employees other than managerial personnel in2016-17 was 10.13%. Percentage increase in the managerial remuneration for the year was1.97.
(vi) Affirmation that the remuneration is as per the remuneration policy of the company- Yes.
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 InternalAudit function reports to the Chairman of the Audit Committee 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 and
its subsidiaries. Based on the report of internal audit function process ownersundertake corrective action in their respective areas and thereby strengthen the controls.Significant audit observations and corrective actions thereon are presented to the AuditCommittee of the Board.
CHANGE IN NATURE OF BUSINESS
There is no change in nature of business of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT:
Except the scheme of arrangement as sanctioned by the Hon'ble High Court Hyderabad asmentioned above there are no significant and material orders passed by the Regulators orCourts or Tribunals which would impact the going concern status of the Company and itsfuture operations
MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year 31st March 2017to which the financial statements relates and the date of signing of this report.
The industrial relations of the Company continued to be harmonious during the yearunder review.
ISO 9001-2008 CERTIFICATION:
Your Company continues to hold ISO 9001-2008 Certification by meeting all therequirements of Certification from time to time.
POLICY ON SEXUAL HARRASSEMENT
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
During the financial year ended 31st March 2017 the Company has notreceived any Complaints pertaining to Sexual Harassment.
Your Directors wish to place on record their appreciation to employees at all levelsfor their hard work dedication and commitment. The enthusiasm and unstinting efforts ofthe employees have enabled the Company to remain at the forefront of the industry despiteincreased competition from several existing and new players.
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother factors such as litigation and industrial relations.
The Directors take this opportunity to place on record their sincere thanks to thesuppliers customers strategic partners Banks and Financial Institutions InsuranceCompanies Central and State Government Departments and the shareholders for their supportand co-operation extended to the Company from time to time. Directors are pleased torecord their appreciation of the sincere and dedicated services of the employees andworkmen at all levels.
For and on behalf of the Board of Directors
|NARENDER SURANA ||DEVENDRA SURANA |
|MANAGING DIRECTOR ||MANAGING DIRECTOR |
|DIN-00075086 ||DIN-00077296 |
|Place : Secunderabad || |
|Date : 31.07.2017 || |
PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
(Information Under Section 134(3)(m) of The Companies Act 2013
Read with Rules 8(3) of the Companies (Accounts) Rules 2014)
FORM - A
|1. CONSERVATION OF ENERGY: || |
|(i) Energy Conservation measures : ||More introduction of Variable Frequency Drive (VFD) to reduce the Power |
| ||Consumption |
|(ii) Total energy consumption : ||N.A. |
|2. TECHNOLOGY ABSORPTION : ||Efforts made in technology absorption as per Form-B |
(Disclosure of particulars with respect to Technology Absorption)
A. Research and Development (R & D) :
|1. Specific areas in which R & D is carried out by the Company ||: NIL |
|2. Benefits derived as a result of the above R & D ||: NIL |
|3. Future plan of action ||: The Company plans to develop thinner Copper foils and commutator segments |
|4. Expenditure on R & D ||As no significant amount has been spent the same has not being shown separately. |
B. Technology absorption adaptation and innovation:
The Company is making all its efforts for improving productivity product quality andreducing consumption of scarce raw materials and fuels.
3. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Activities relating to exports and initiatives taken to increase export products andservices and export plans: NIL
Total Foreign Exchange used and earned:
|Used ||: Rs. 1240028063 |
|Earned ||: Rs. 21292519 |
| || |
For and on behalf of the Board of Directors
| ||NARENDER SURANA ||DEVENDRA SURANA |
|Place : Secunderabad ||MANAGING DIRECTOR ||MANAGING DIRECTOR |
|Date : 31.07.2017 ||DIN-00075086 ||DIN-00077296 |