|BSE: 533276||Sector: Infrastructure|
|NSE: BSLIMITED||ISIN Code: INE043K01029|
|BSE 00:00 | 26 Nov||BS Ltd|
|NSE 05:30 | 01 Jan||BS Ltd|
|BSE: 533276||Sector: Infrastructure|
|NSE: BSLIMITED||ISIN Code: INE043K01029|
|BSE 00:00 | 26 Nov||BS Ltd|
|NSE 05:30 | 01 Jan||BS Ltd|
The Members of BS Limited
Your Directors have the pleasure of presenting their Report on the business andoperations of the Company and Audited Financial Statement of Accounts for the year endedMarch 31 2018.
The financial performance of the Company for the financial year ended on March 31 2018is summarized below:
Note: the above figures are extracted from the audited standalone and consolidatedfinancial statements as per Indian accounting Standards (Ind AS).
The Company continues to operate in Multiple Segments i.e. Engineering Procurementand Construction and Trading Business. There has been no change in the nature of businessof the Company. State Bank of India one of the working capital banks has filed anapplication on 12.4.2018 for initiation Corporate Insolvency Resolution Process(CIRP') against our Company u/s 7 of Insolvency & Bankruptcy Code 2016(IBC') with National Company Law Tribunal (NCLT) Hyderabad. Since Company's bankaccounts have been put on hold after NPA classification by the lenders since July 2016Company is not able to conduct its business on an on-going business and the same hasaffected the Company's financial performance.
The Standalone and Consolidated Performance of the Company for the year under reviewwere as under:
Total Revenue (excluding other Income) in current FY 2018 stood at Rs. 83.42Crores as against Rs. 692.98 Crores in previous FY 2017.
EBIDTA in current FY is Rs. (747.19) Crores as compared with Rs. (274.24) Croresin previous FY 2017.
Loss after Tax for the current FY 2018 was Rs. (799.71) Crores as against Rs.(408.11) Crores in previous FY 2017.
Consolidated Total Revenue (excluding other Income) of the Company incurrent FY 2018 stood at Rs. 462.51 Crores as against Rs. 2219.11 Crores in previous FY2017.
Consolidated EBIDTA in current FY is Rs. (751.41) Crores as compared with Rs.(241.34) Crores in previous FY 2017.
Consolidated Loss after Tax in current FY 2018 was Rs. (820.03) Crores asagainst Rs. (389.66) Crores in previous FY 2017
REVISION OF FINANCIAL STATEMENTS
The Company had earlier on 9.12.2016 filed an application with Hon'ble National CompanyLaw Tribunal (NCLT') Hyderabad Bench (under I.R. No. 886 of 2016) under section 131of the Companies Act of 2013 read with rule 77 of the National Company Law Tribunal Rulesfor revision of Financial Statements of the Company for the Financial Years 2014-15 &2015-16. The said application was dismissed by the NCLT and the detailed order is receivedby the Company on 26.04.2018. Your Board had on 17.05.2018 vide resolution throughcirculation no. 87 had approved to file an appeal in National Company Law AppellateTribunal (NCLAT') against the said order. Accordingly the appeal was filed on19.06.2018 and the matter is pending before NCLAT. The Audited Financial Statementsrepresent the Company's financials without factoring into adjustments / changes which maybe necessitated upon NCLT/NCLAT's approval for Company's application filed with them forrevision of financial statements under Sec. 131 of The Companies Act 2013
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of your Company for the financial year 2017-18are prepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules issued there under applicable Accounting Standards and the provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as the "Listing Regulations"). These statements have been prepared on thebasis of audited financial statements of your Company its subsidiaries / Joint ventureCompany as approved by their respective Board of Directors.
SUBSIDIARIES / JOINT VENTURES / ASSOCIATE COMPANIES
Player in the Your Company continues to have Two Subsidiaries Overseas and there wereno changes in the same during the year. Financials of Subsidiaries are disclosed in theConsolidated Financial Statements which forms part of this Annual Report. Your Company hasone Joint Venture (JV') in India which was incorporated as a Special PurposeVehicle Company. The accounts of the said JV are consolidated with the Accounts of theCompany.
Pursuant to Section 129(3) of the Companies Act 2013 and Accounting Standard 21 issuedby the Institute of Chartered Accountants of India the Consolidated Financial Statementspresented by the Company include the Financial Statements of its Subsidiaries.
A Separate Statement containing salient features of Financial Statements ofSubsidiaries of your Company in the prescribed form no. AOC 1 forms part of ConsolidatedFinancial Statements in compliance with Section 129 and other applicable provisions ifany of the Companies Act 2013. The Financial Statements of the Subsidiary Companies andrelated information are available for inspection by the Members at the Registered Officeof your Company during business hours on all days except Saturdays Sundays and PublicHolidays up to the date of the Annual General Meeting (AGM') as required underSection 136 of the Companies Act 2013. The Financial Statements including theConsolidated Financial Statements Financial Statements of Subsidiaries and all otherdocuments required to be attached to this Report have been uploaded on the website of theCompany (www. bslimited.in).
The Company has laid down policy on material subsidiaries and none of the subsidiariesare material subsidiary as per the Policy. The policy is placed on the website of theCompany (www.bslimited.in).
REPORT ON THE PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES ASSOCIATES AND JOINTVENTURE COMPANIES
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies(Accounts) Rules 2014 the details on the Performance and Financial Position ofSubsidiaries Associates and Joint Venture Companies included in the ConsolidatedFinancial Statements are as under: a) M/s. BS Global Resources Private Limited SingaporeM/s. BS Global Resources Private Limited ("BSGRPL") was incorporated in 2011 asa Wholly-Owned Subsidiary of the Company. Headquartered in Singapore BSGRPL is engaged inthe business of Trading of Coal Nickel Copper Cathode and Minerals such as Iron Ore andis a one-point sourcing firm for Trading and Supply of Mineral Resources and AgroProducts.
The Entity has lasting partnerships with major Coal Mines and Suppliers CredibleBuyers and Sellers of Mineral Resources and has an Economical Pricing Strategy withLong-Term Focus that lends it competitive advantage. It seeks to become a SignificantMinerals Trading Markets.
During the year the said Company has reported a Turnover of Rs. 229.61 Crores and aLoss before Tax and Loss after Tax of Rs. 19.77 Crores and Rs. 22.63 Crores respectively.
In view of changed market scenario in the subsidiary's business in their area ofoperations the margins have declined which has affected the performance of our subsidiaryalso. b) M/s. BS Limited FZE Dubai M/s. BS Limited FZE has been incorporated as aWholly-Owned Subsidiary in compliance with the laws and regulations of Dubai Airport FreeZone Authority and has received the Certificate of Incorporation from Dubai Airport FreeZone Authority on March 06 2014. The Principal activities of the said Subsidiary consistof
"Trading in Power Transmission Materials & Coal and Providing RelatedEngineering Services.
During the year the said Company has reported a Turnover of Rs. 132.13 Crores and aProfit before Tax and after Tax of Rs. 2.22 Crores and Rs. 2.22 Crores Profitrespectively. c) M/s. Raichur Sholapur Transmission Company Private Limited M/s. RaichurSholapur Transmission Company Private Limited ("RSTCPL) (formerly known as M/s.Raichur Sholapur Transmission Company Limited) has been incorporated as a Special PurposeVehicle ("SPV") Company in Joint Venture with M/s. Patel Engineering Limitedand M/s. Simplex Infrastructures Limited. The revenues in the said BOOM project is onsharing basis and the same is spread over a period of 35 years. As on March 31 2016 yourCompany holds 26664000 Equity Shares (33.33%) aggregating to Rs. 266640000/- of theTotal Paid-up Share Capital of RSTCPL.
During the year the said Company has reported a Turnover of Rs. 36.10 Crores fromTransmission Service and Rs. 2.24 Crores as other income by way of interest. The Companyincurred a loss of Rs. 0.02 Crores for the year ended March 31 2018.
The lenders' consortium led by Axis Bank have considered and approved the subsidiary'sECB limits under the Reserve Bank of India's 5/25 (Scheme of Restructuring') in themonths of June / July 2017. Accordingly the terms of sanction especially the repaymentswere changed and RSTCPL executed documentation with the lenders during the period underreview.
Information in this respect can also be referred in form AOC-1 which has been disclosedin the Consolidated Financial Statements.
With a view of Company's critical financial position Directors have not recommendedany Dividend for the Financial Year 2017-18.
During the year under review there were no change in the Issued Subscribed andPaid-up Equity Share Capital of the Company.
ANNUAL GENERAL MEETING:
The Company has convened and holds the Annual General Meeting for the financial yearended 31.3.2017 on 28.12.2017 after receiving approval from Registrar of Companies AndhraPradesh & Telangana dated 04.09.2017 granting an extension of 3 months to convene andhold the Annual General Meeting for the financial year ended 31.3.2017 till 30.12.2017.
EMPLOYEE STOCK OPTION PLAN
The Company has initiated Employee Stock Option Plan (ESOP') plan in 2011 whereinall the options have been vested / lapsed as on March 31 2018.
BANK LIMITS AND CREDIT FACILITIES
The consortium of Working Capital Banks led by State Bank of India has classified thecompany's working capital limits and Corporate Loan limits / accounts as"Non-performing Asset" during the earlier financial year. Similarly thecompany's term lenders viz. IFCI Limited and Bank of India have classified the company'sterm loan accounts as "Non-performing Asset" during the earlier financial year.
The Working Capital Banks of the company have issued notices to the company underSection 13 (2) of The SARFAESI Act. (for recovery) Company has replied to the banks inresponse to the said notices.
A. ISSUANCE OF NOTICES UNDER SECTION 13 (4) OF
a. SBI issued notice dated 7.12.2017 to the company under Rule 13 (4) 8(1) and (2)advising taking symbolic possession of the land / building properties which were mortgagedto the bank: i. Property situated at Plot no. 42 (part) in S. No. 258/1 and 259 situatedat Jeedimetla Industrial Area Shapurnagar RR district AP admeasuring 22439.26 sq. ydsstanding in the name of M/s Agarwal Developers ii. Residential flat admeasuring 2575 sq.ft. bearing No.103 in 2nd floor. Block D of Trendset Valley view apartment bearing MCHNos. 8-2-405/1/2/3 at Banjara Hills Road No. 6 Hyderabad standing in the name of SriRajesh Agarwal Open land admeasuring Ac. 3.10 guntas in survey situated at Survey No. 119120 121 122 your & 124 Athvelly Village Medchal Mandal Ranga Reddy Districtstanding in the name of M/s. B S Limited and Mr. Rajesh Agarwal B. SBI issued notice dated29.12.2017 to the company under Rule 13 (4) 8(1) and (2) advising taking symbolicpossession of the land / building properties which were mortgaged to the bank: a. Officepremises No. 302 on the 3rd Floor admeasuring 3702 sq. ft. Carpet Area (equivalent to344.05 sq. mtr.) along with 3 (Three) Car Parking in Stack Car parking System of theBuilding No. 19 (A Wing) Pinnacle Corporate Park situated on all that piece or parcel ofland or ground situated in the revenue village of Kole Kalyan Taluka Andheri in theRegistration Sub District of Bandra District Bombay Suburban now in Greater Mumbaibearing CTS No. 4207 (pt) of Village Kole Kalyan standing in the name of M/s AgarwalReality Developers Pvt. Ltd.
SYMBOLIC POSSESSION BY STATE BANK OF INDIA UNDER SARFAESI ACT
The company informed the exchanges on 16.9.2017 that it had received a notice fromState Bank of India (the lead bank of Working capital consortium) stating that the bad hadhad taken the symbolic possession of the properties of the company mortgaged to the bankunder Sec. 13 (4) of the SARFAESI Act read with Rule 8 due to non-payment of dues to thebanks.
FILING OF APPLICATION BY SBI LED BANKS WITH DRT
* State Bank of India and 7 others Banks have filed an application with Debts RecoveryTribunal (DRT') on 13.7.2017 vide OA No. 437 of 2017 for recovery of outstandingdues to the Banks from BS Limited which have become irregular and overdue.
* The Hon'ble DRT has passed an interim order on 21.7.2017.
* Company's legal counsel has filed its affidavit on the above application.
* The above case is pending with the Hon'ble DRT for arguments and further submissionsif any.
DECLARATION / ISSUANCE OF WILFUL DEFAULTER NOTICE BY IFCI LTD. AND OTHERS
IFCI Limited one of the term lenders has declared the Company as "WilfulDefaulter" under the guidelines of Reserve Bank of India's Circular dated 1.7.2015.IFCI Limited vide their letter No. IFCI/HRO/BSL/WD/2018-419 dated 19.3.2018 has cited thereasons "The Unit has defaulted in meeting its payment / repayment obligations to theLender even when it has the capacity to honour the said obligations" [under clause2.1.3.(a) of the RBI Circular DBR NO. CID.
BC.2220.16.003/2015-16 dated 1.7.2015] for taking the above said action ofclassification as "Wilful Defaulter". The Company has preferred an appeal / writpetition with the High Court of Hyderabad for staying the above action of IFCI Limited.
State Bank of India SAM II Branch Hyderabad vide their letter No. SAMB/HYD/KSJ/1871dated 5.3.2018 issued a show-cause notice to the company seeking company's replies as towhy the company should not be declared as a willful defaulter. They have invoked theprovisions of relevant RBI guidelines [Sec. 2.1.3. (a) and Sec. 2.2.1. (d)]. Company hassubmitted their point-wise replies on 3.4.2018 and requested for not classifying theCompany as a Willful defaulter'.
ACTION INITIATED BY THE TAX AUTHORITIES
Demand notices were raised on 29.11.2017 for assessment years 2013-14 & 2014-15 forRs. 182684830 and Rs. 850622530 respectively by the assessing officer. Companypreferred appeal with the Appellate Tribunal. Appellate Tribunal vide its order dated27.4.2018 set aside the order in some aspects for the AY 2013-14. However final order fromthe Assessing Officer is awaited.
SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS
As explained above the Company has filed an appeal in National Company Law AppellateTribunal (NCLAT') against the order of National Company Law Tribunal. Because of ourapplication pending at NCLT / NCLAT for last two years Company could not file the AnnualReports for last two years i.e. for 2015-16 & 2016-17. Meanwhile Company has receiveda suspension of trading in shares notice dated 11.05.2018 from Stock Exchanges due tonon-filing of Annual Reports for last two continuous years i.e. 2016-17 & 2017-18 andhence Company has however decided to file an Annual Reports for the said two financialyears along with current financial year 2017-18.
Moreover State Bank of India (SBI') one of the Financial Creditors of theCompany has filed an application with Hon'ble National Company law Tribunal (NCLT')Hyderabad on 12.04.2018 for initiation of Corporate Insolvency Resolution Process(CIRP') against our Company u/s 7 of Insolvency & Bankruptcy Code 2016(IBC').
BOARD OF DIRECTORS
Pursuant to Sections 149 152 and other applicable provisions if any of the CompaniesAct 2013 One-third of the Directors as are liable to retire by rotation shall retireevery year and if eligible offer themselves for re-appointment at every AGM.Accordingly Mr. Arun Dogra retires by rotation at the ensuing Annual General Meeting ofthe Company and being eligible offers himself for re-appointment.
The Board of Directors had appointed Mr. Pochender Shanigarapu as Additional Directorof the Company in the category of Non-Executive Independent Director in terms of Section149(1) of the Companies Act 2013 read with Rules prescribed thereunder with effect from27.03.2017 to hold Office up to the ensuing Annual General Meeting of the Company. Beforethe Board took up the issue of regularization and reappointment of Mr. PochenderShanigarapu as Additional Director (Non-Executive Independent Director)' theCompany received the notice of disqualification of Mr. Pochender Shanigarapu from NSE andhence the Company did not consider his reappointment in Annual General Meeting held on28.12.2017.
Further Mr. Narayan Rao Gali Independent Director of the Company has resigned videhis Letter dated 30.03.2017 from the Directorship of the Company and accordingly he wasrelived from the closing business hours of 31.03.2018. Your Company and its Board ofDirectors hereby deeply appreciate the valuable contributions made by the erstwhileDirectors viz. Mr. Pochender Shenigarapu and Mr. Narayan Rao Gali during their tenure asBoard Members of BS Limited. In order to comply with the provisions of Section 149Companies Act 2013 read with rules made thereunder and Regulation 17 of SEBI (LODR)Regulations 2015 the Company has appointed Mr. Ch Umamaheshwara Rao and Mr. KotlaChandra Sekhararao as Additional (Independent) Directors of the Company w.e.f 30.05.2018to hold the office up to the date of ensuing Annual General Meeting of the Company.
The brief resume of the Directors proposed to be appointed and / or re-appointed andother relevant information have been furnished in the Explanatory Statement to the Noticeof the ensuing AGM. The Directors recommend the Resolutions for the aforesaid appointment/ re-appointment for approval of the Members at the ensuing AGM.
The Company recognizes and embraces the importance of a diverse Board in its success.We believe that a truly diverse Board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will ensure us retain our competitive advantage.The Board has adopted the Board Diversity policy which sets out the approach to diversityof the Board of Directors.
POSTAL BALLOT AND E-VOTING
Your company has informed the Exchanges that pursuant to Section 108 110 of theCompanies Act 2013 read with Rule 20 of the Companies (Management & Administration)Rules 2014 as amended the Company will provide e-voting facility to the Shareholders toexercise their vote for transacting the business through Postal Ballot.
DECLARATION BY INDEPENDENT DIRECTORS
Pursuant to provision of section 149(7) of the companies Act 2013 the Company hasreceived necessary declaration from each Independent Directors that he meets the criteriaof Independence laid down in section 149(6) of the Companies Act 2013 and Regulations 25of SEBI (LODR) Regulations2015.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
In terms of Section 134 of the Act 2013 and the Corporate Governance requirements asprescribed under the provisions of SEBI LODR Regulations the Board had carried outperformance evaluation of its own the Board Committees and of the Independent directors.Further Independent Directors at a separate meeting discussed reviewed and evaluatedperformance of the Non-Independent Directors Board as a whole and of the Chairman of theBoard after taking into consideration the views of Executive and Non-Executive Directors.
The Board discussed and assessed its own composition size mix of skills andexperience its Meeting Sequence Effectiveness of Discussion Decision Making Follow-upAction Quality of Information and the Performance and Reporting by the Committees viz.Audit Committee Nomination and Remuneration Committee (NRC') StakeholdersRelationship Committee (SRC') and Corporate Social Responsibility Committee(CSR').
They also assessed the quality quantity and timeliness of flow of information betweenthe the Board that are necessary for the Board to effectively and reasonably perform itsduties. All the Independent Directors were present at the Meeting.
The performance of Individual Directors including all Independent Directors assessedagainst a range of criteria such as contribution to the Development of Business Strategyand Performance of the Company understanding the major risks affecting the Company cleardirection to the Management and Contribution to the Board cohesion. The PerformanceEvaluation has been done by the entire Board of Directors except the Director concernedbeing evaluated. The Board noted that all Directors have understood the Opportunities andRisks to the Company's Strategy and are supportive of the direction articulated by theManagement Team towards consistent improvement.
The Performance of each Committee was evaluated by the Board by seeking inputs from itsMembers on the basis of the criteria such as matters assessed against terms of referencetime spent by the Committees in considering matters quality of information received workof each Committee overall effectiveness and decision making and compliance with theCorporate Governance requirements and concluded that all the Committees continued tofunction effectively with full participation by all its Members and the Members ofExecutive Management of the Company. The Directors expressed their satisfaction at theperformance of all concerned.
The Company has put in place a structured induction and Familiarization Programme forall its Directors. The Company through such programmes familiarizes the IndependentDirectors as well as any new appointee to the Board with a brief background of theCompany individual Roles Rights and Responsibilities in the Company ManagementStructure Company's operations and other relevant information which would enable them toeffectively discharge the responsibilities and functions conferred on them. They are alsoinformed about important Policies of the Company including the Code of Conduct for BoardMembers and Senior Management Personnel and the Code of Conduct to Regulate Monitor andReport Trading by Insiders etc.
The Familiarization Programme for Independent Directors in terms of provisions SEBILODR Regulations is uploaded on the website of the Company at www.bslimited.in.
KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel of the Company in accordance with the provisions ofSections 2(51) 203 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (including any statutory modification(s)or re-enactment(s) for the time being in force) are as under:
1. Mr. Rajesh Agarwal - Chairman & Managing Director
2. Mr. Arun Dogra - Whole-Time Director designated as CFO
Apart from the changes as mentioned under the "Board of Directors" Sectionthere was change in the Company Secretary of the Company. During the year under reviewCompany's Management and consequent upon resignation of Ms. Alka Kumari with effect from10.8.2017 from the post of Company Secretary of the Company your board had appointed Mr.BSK Sirish as a Company Secretary and Compliance Officer of the Company w.e.f. 11.8.2017.However he was relieved off his duties from the closing hours of 24.10.2017.
Consequent upon the resignation of Mr. BSK Sirish from the position of CompanySecretary Mr. Arun Dogra the Whole-time Director of the Company has been designated asCompliance Officer with effect from 10.11.2017 under Regulation 6 of SEBI (LODR)guidelines 2015 till a new Company Secretary is appointed.
POLICY ON DIRECTOR'S APPOINTMENT REMUNERATION AND OTHER DETAILS
Your Company has been constituted a Nomination and Remuneration Committee which isempowered to nominate the number of members of the Board and various standing committeesbased on their different experience levels knowledge and educational qualifications indifferent Sectors and discipline relating to the Company's business.
The remunerations paid to Executive Directors are in accordance with the recommendationof the Nomination & Remuneration Committee as well as by the prescribed law. Due careis also taken to ensure that the remuneration package is in consistent with therecommended best practices in the country.
PARTICULARS OF REMUNERATION OF DIRECTORS / KMP / EMPLOYEES
The information required under Section 197(12) of the Act with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attachedas Annexure III' which forms part of this Report.
The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Companies Act 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Management Personnel) Rules 2014 forms part of this Report.
NUMBER OF MEETINGS OF THE BOARD
Five meetings of the Board were held during the financial year 2017-18 the details ofwhich are given in the Corporate Governance Report that is annexed to this Report asAnnexure V'. The intervening gap between any two meetings was not only within theperiod prescribed by the Companies Act 2013 but it was also in accordance with SEBI(LODR) Regulations 2015.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act 2013and subject to disclosures in the Annual Accounts your Directors state as under: a) Whilepreparing the annual accounts of the financial year ended on March 31 2018 theapplicable accounting standards have been followed and there are no material departures.b) That the Director have selected appropriate accounting policies in consultation withStatutory Auditors and applied them consistently to give a true and fair view of the stateof affairs of the Company at the end of financial Loss Account of the periodyearunderreview and Profit under report. c) Proper and sufficientcare has been taken formaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. d) Annual Accounts have been prepared on a goingconcern basis. e) The directors have laid down internal financial controls to be followedby the Company and that such internal financial controls are adequate and were operatingeffectively. f) The Directors have devised proper system to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
M/s. P. Murali & Co. Chartered Accountants Statutory Auditors of the Companywill retire at the conclusion of the ensuing AGM and being eligible have consented andoffered themselves for re-appointment as Statutory Auditors for the Financial Year2018-19. Your Company has received stating written consent and a Certificate that theysatisfy the criteria provided under Section 141 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 and that their re-appointment if made shallbe in accordance with the applicable provisions of the Companies Act 2013 and Rulesissued thereunder that they are not disqualified for such re-appointment under theprovisions of applicable laws and also that there is no proceeding against them or any oftheir partners pending with respect to professional matter of conduct.
As required under provisions of SEBI (LODR) Regulations the Auditors has alsoconfirmed that they have subjected themselves to the peer review process of Institute ofChartered issued Accountants of India (ICAI') and hold a valid Certificate by thePeer Review Board of the ICAI.
The Audit Committee and the Board of Directors recommend the re-appointment of M/s. P.Murali & Co. Chartered Accountants as the Auditors of your Company for the FinancialYear 2018-19 till the conclusion of the next AGM.
Auditor's Adverse Observations and Management Response to Auditor's AdverseObservations are given in the Annexure I' forming part of this Report.
As per Section 148 of the Companies Act 2013 read with Rules framed thereunder M/s.Srinivas & Co. Cost Accountants (Firm Registration No. 00278) were re-appointed asCost Auditors for the Financial Year 2018-19 to conduct Cost Audit of the Accountsmaintained by the Company in respect of the various products prescribed under theapplicable Cost Audit Rules. The remuneration proposed to be paid to the Cost Auditorssubject to the ratification in terms of Section 148(3) of Companies Act 2013 by themembers at the ensuing Annual General Meeting would be Rs. 150000/- (Rupees One LakhFifty Thousand only) excluding out of pocket expenses if any and applicable taxes.
Your Company has received consent from M/s. Srinivas & Co. Cost Accountants toact as the Cost Auditor for conducting audit of the cost records for the Financial Year2018-19 along with a certificate confirming their independence and arm's lengthrelationship.
In terms of the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr. Y.Koteswara Rao Practicing Company Secretary (Certificate of Practice No. 7427) wasappointed as Secretarial Auditor of the Company for the Financial Year 2017-18. TheSecretarial Audit Report submitted by him in the prescribed Form MR-3 is attached asAnnexure - VI' and forms part of this Report. There are no qualifications orobservations or adverse remarks of the Secretarial Auditor in the Report issued by him forthe Financial Year 2017-18 which call for any explanation from the Board of Directors.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as on March 31 2018 in the prescribed Form No. MGT-9pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 is attached as Annexure II' to thisReport.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act 2013 all contracts andarrangements with related parties under Section 188(1) of the Act entered by the Companyduring the financial year were in the ordinary course of business and on an arm's lengthbasis. Further there were no transactions with related parties which qualify as materialtransactions under the SEBI Listing Regulations. Thus disclosure in form AOC-2 in termsof Section 134 of the Companies Act 2013 is not required.
The details of the related party transactions as per Accounting Standard 18 are set outin Note 39 to the Standalone Financial Statements forming part of this report.
The Company has also formulated a policy on Related Party Transactions as approved bythe Board of Directors which has been uploaded on the website of the Company.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to provisions of Section 186 of the Companies Act 2013 the particulars ofLoans Guarantees and Investments are disclosed in the Financial Statement.
Risk is an integral part of business and your Company is committed to managing risks ina proactive and efficient manner. Your Company periodically assesses risks in the internaland external environment along with the cost of treating risks and incorporates risktreatment fromplans thein its strategy business and operational plans.
Your Company through its Risk Management process strives to contain impact andlikelihood of the risks within the risk appetite as agreed from time to time with theBoard of Directors. As per the requirements of the Regulation 21 of SEBI LODR Regulationsyour Company has constituted a Risk Management Committee to oversee the risk managementefforts in the Company under the Chairmanship of Mr. Rajesh Agarwal Chairman &Managing Director of the Company. The details of the Committee along with its charter areset out in the Corporate Governance Report forming part of this Report. There are no riskswhich in the opinion of the Board threaten the existence of your Company. However some ofthe risks which may pose challenges are set out in the Management Discussion and Analysiswhich forms part of this Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors has formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177(10) of the Companies Act 2013 andRegulation 22 of the SEBI LODR Regulations. The Policy provides for a framework andprocess whereby concerns can be raised by its employees against any kind ofdiscrimination harassment victimization or any other unfair practice being adoptedagainst them. More details on the Vigil Mechanism and the Whistle Blower Policy of yourCompany have been outlined in the Corporate Governance Report which forms part of thisReport.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act 2013 read with CSRRules the Company has constituted CSR committee and formulated CSR policy. The CSR Policyoutlines the CSR vision of your Company based on embedded tenets of trust fairness andcare. The Policy primarily rests on four broad tenets: Healthcare Education CommunityDevelopment and Ecology and the same is within the ambit of Schedule VII of the Act. TheAnnual Report on CSR activities in accordance with the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out herewith as Annexure VII' to thisReport.
Board of Directors of your Company had decided not to spend money on CSR activitiestill the NCLAT order. Also your Company had also booked a loss for the FY ended31.3.2018 therefore did not provide any funds under the CSR guidelines. However
CORPORATE GOVERNANCE REPORT
Your Directors adhere to the requirements set out under the provisions of SEBI (LODR)Regulations. In compliance with Regulation 34 of the said Regulations a separate reporton Corporate Governance is attached as Annexure V' and forms part of the AnnualReport. The Chairman & Managing Director's Declaration regarding the compliance ofCode of Conduct and Ethics for Board Members and Senior Management Personnel forms part ofReport on Corporate Governance. The requisite Certificate Auditors of the Companyconfirming Compliance to the conditions of Corporate Governance as stipulated under theprovisions of SEBI LODR Regulations is attached to the Report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As stipulated under the provisions of SEBI (LODR)
Regulations the Management Discussion and Analysis forms an integral part of thisReport and gives detail of the overall Industry Structure Performance and State ofAffairs of the Company's various businesses Internal Controls and their adequacy RiskManagement Systems and other material developments during the Financial Year 2017-18.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place policy on Prevention Prohibition and Redressal of SexualHarassment for women at workplace in accordance with the requirements of The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. AnInternal Complaints Committee (ICC') has been in place to redress complaintsreceived regarding sexual harassment. The policy has set guidelines on the redressal andenquiry process that is to be followed by complainants and the ICC whilst dealing withissues related to sexual harassment at the work place. All women employees are coveredunder this policy. The Company has not received any complaints during the year underreview.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Companies Act 2013 re-emphasizes the need for an effective Internal FinancialControl System in the Company which should be adequate and shall operate effectively. Rule8 (5) (viii) of Companies (Accounts) Rules 2014 requires the information regardingadequacy of Internal Financial Controls with reference to the financial statements to bedisclosed in the Board`s report.
To ensure effective Internal Financial Controls the Company has laid down the followingmeasures: o Compliance relating to Cost Records of the Company is ensured by way of CostAudit; o The Internal Auditors have also been engaged for providing assistance inimprovising IFC framework and deployment of Self-Assessment Tool.
LISTING ON STOCK EXCHANGES
The Equity Shares of your Company continue to remain listed on the BSE Limited(BSE') and the National Stock Exchange of India Limited (NSE') but Companyhas received a suspension of trading in shares notice dated 11.05.2018 from StockExchanges due to non-filing of Annual Reports for last two continuous years i.e. 2015-16& 2016-17. The Annual Listing Fee for the Financial Year 2018-19 has been duly paidwithin the stipulated time to both the Stock Exchanges.
As stated earlier your Company received a notice dated May 11 2018 from StockExchanges suspending trading of equity shares due to non-filing of Annual Reports for lasttwo years i.e. 2015-16 & 2016-17. Your Board has decided to file an Annual Reportswhich comprises of Financial Statements along with Auditor's Report & Director'sReport etc. for the Shareholders' approval for the said two financial years viz. 2015-16& 2016-17 along with current financial year 2017-18.
During the year under review your Company has not accepted any Deposit within themeaning of Sections 73 & 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any Statutory modification(s) orre-enactment(s) for the time being in force).
TRANSFER TO RESERVES
Your Company has not transferred any amount to the General Reserves for the FinancialYear 2017-18.
PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
The particulars relating to Conservation of Energy Technology Absorption and ForeignExchange Earnings and outgo as required to be disclosed under Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 is set out herewith asAnnexure IV' which forms part of this Report.
Your Directors wish to place on record their gratitude to the Shareholders CustomersVendors Bankers Financials Institutions Government Authorities Contractors JointVenture Partners and all other Stakeholders for their continued support and valuableassistance and co-operation to the Company. Your Directors take this opportunity tocommend the continued commitment and dedication of employees at all levels and lookforward to valuable sustained support and encouragement.