Cals Refineries Ltd.
|BSE: 526652||Sector: Oil & Gas|
|NSE: N.A.||ISIN Code: INE040C01022|
|BSE 00:00 | 06 May||Cals Refineries Ltd|
|NSE 05:30 | 01 Jan||Cals Refineries Ltd|
|BSE: 526652||Sector: Oil & Gas|
|NSE: N.A.||ISIN Code: INE040C01022|
|BSE 00:00 | 06 May||Cals Refineries Ltd|
|NSE 05:30 | 01 Jan||Cals Refineries Ltd|
To the Members of Cals Refineries Limited Your Directors hereby presents the ThirtyThird Annual Report together with the Company's Audited Financial Statements for thefinancial year 2016-17.
1. Financial Summary/highlights on Performance of the Company (Standalone)
As there is no operating income and consequently no profit is available fordistribution as dividend.
The Company is not having any surplus available to be carried forward to Reserves.
4. Brief description of the Company's working during the year/ State of Company'saffair
(i) Company's operation during the year
The Company has no business operations. The financial situation has been grim and inprevailing circumstances of no funding available coupled with various litigations againstthe company chances of starting business operations seem nearly impossible.
The reasons for such status of the Company and present scenario of the Company could bearticulated in the below points:
a. Sebi's Investigation against the Company for Market Manipulation using GDRs issue.
Your Directors have been reporting continuously about the investigation against theCompany by the Securities and Exchange board of India (SEBI) and the restriction imposedon the Company vide Sebi's order in September and December 2011 which was finallyconfirmed on 23rd October 2013 via its final order upon the completion of theInvestigation against the Company. The SEBI vide this order has restricted the Companyfrom entering into the securities market and altering its capital structure in any mannereffectively for a period of eight years from the date of the final order. Your Company haschallenged the order in the Securities Appellate Tribunal (SAT) which proceedings areongoing your Company is expecting the order of the SAT in near future.
The sanctions imposed by the order of the SEBI against the Company has had asignificant adverse impact on the activities of the Company relating to the establishmentand start of the project.
b. Failure to achieve the financial closure
The aforesaid restriction on the Company has led to the situation where your Companyhas failed to achieve the required financial closure. The said failure of the Company hada severe impact on its abilities to perform its part of the contract with vendorssuppliers for various components of the projects including the Refinery. The Company hadgrossly failed to make the balance payments to the suppliers in view of lack of the fundsinto the Company. This has the further impact of writing off of various advancespreoperative expenses consultancy fee and capital work in progress as the relevantcontracts and arrangements had expired long back and the Capital advances which were madeat the time of project implementation stage are either not recoverable or specificperformance against the said advances cannot be enforced. The Board of Directors based onthe aforesaid difficult situation took a legal opinion in this matter to reflect a trueand fair view of the financial statement and decided to write off the various advancesland and pre-operative expenses etc. from the balance sheet of the Company.
Such writing off of aforesaid advances land and preoperative expenses had resulted insubstantial change in the profit and loss of the Company which has completely eroded thenet worth of the Company. This situation indicates the existence of a material uncertaintythat may cast a significant doubt on the Company's ability to continue as a going concern.The Auditor have taken cognizance of this fact in their Report of the previous year and inthis year too and have qualified their opinion. The board has given their comments on thesaid qualification of Auditor's in the later part of this Report.
c. Huge Litigation and Compliance cost Financial Support & Arrangements
Your Board would like to submit that despite adverse situation in the Company yourCompany has always diligently complied with all the requirements of the various laws andregulations in true spirit and manner. Various litigations appeals and court proceedingsfor and against the Company had a severe impact on the financial conditions of theCompany. Having noted the present financial conditions and status of the businessoperations of the Company as against the expenses incurred to comply with the variouscompliances under different laws and regulations and also meeting the huge litigationexpenses the company is currently in a shattered state.
Considering the prohibition imposed by the SEBI no equity infusion was allowed in theCompany hence the only option left with the Company was to borrow from related parties.During the period under review your Company had a single source of funding through one ofthe related party and promoter group Company Nyra Holdings Private Limited. Your Companyhas been receiving the Inter-Corporate Loan as aforsaid to manage its day to dayoperation compliances and litigation expenses. The said loan from the body corporate havean impact of interest as per the prevailing provisions of the Companies Act 2013 whichyour Company needs to bear with.
Further Nyra Holdings Pvt. Ltd. on 28th March 2017 has assigned theaforesaid Loan arrangements to its parent/ holding Company i.e. M/s Spice Energy PrivateLimited under the process of restructuring of investment within the group. In the saidprocess of restructuring the Nyra Holdings Private Limited has arranged to set-off itsloan taken from Spice Energy Pvt. Ltd. with the loan amount extended to our Company worthRs. 92627000/-.
A tri-partite agreement was executed between our Company (as borrower) Nyra HoldingsPvt. Ltd. (as assignor) and Spice Energy Pvt. Ltd. (as assignee) to effect the aforesaidtransaction i.e. assignment of loan from Nyra Holdings to Spice Energy Pvt. Ltd. and forSpice Energy Private Limited to continue with the loan arrangements with your Company infuture.
The aforesaid agreement arrangement and matter is also proposed to be ratified by theshareholders of the Company in this Annual General Meeting i.e. for the FY 2016-17. Thefactual points in relation to above have been duly explained in the explanatory statementof the Notice of the Annual General Meeting.
d. Change in Promoter of the Company
In the aforesaid arrangements/restructuring within the group Company the Nyra HoldingsPvt. Ltd. has also transferred
its equity holdings bearing 233196000 equity shares constituting 2.81% of the entirepaid-up capital of the Company to its Parent cum Holding Company i.e. Spice Energy Pvt.Ltd. The said transfer was made at the prevailing market price through off market mode.This transaction/transfer of shares to the Spice Energy Pvt. Ltd. by Nyra Holdings Pvt.Ltd. has resulted in change in the promoters of the Company i.e. Spice Energy replacesNyra Holdings as promoter in the shareholding list of the Company. The Spice Energy andNyra Holdings has given the requisite disclosures under Regulation 29 and 30 of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations 2011 and Insider TradingRegulations which is duly reported to the Stock Exchange and the necessary e-form hasbeen filed with the Registrar of Companies in relation to the above.
e. Contingent Liabilities
During the period under review the contingent liabilities which are required to bereported are as under:
The Claim against the Company to the extent of Rs. 9.19 Million pertains to M/sThakurdas Khinvraj Rathi & Ors who has issued a notice to the Company demanding theaforesaid amount under a litigation relating to taking a premises (along with a garage)situated at 95A Marine Drive Mumbai-400002 on lease and license basis in the year2007-08. The dispute is ongoing and no finality has yet taken place.
The amount of Rs. 5862.11 million under Disputed Duties/ Tax Demands pertainsto the Income Tax orders issued for the A.Y. 2008-09 and 2014-15 for Rs. 5860.28 millionand Rs. 1.83 million respectively. The assessment order for the A.Y. 2008-09 is related tothe assessment u/s 148 w.r.t. the issuance of GDRs however assessment proceedings forA.Y. 2014-15 pertains to the regular assessment i.e. assessment u/s 143(3) of the IncomeTax Act 1961. The Company has filed appeals before the CIT (A) in the aforementionedmatters which is yet to finalise.
Karan Nirman Udyog Private Limited have filed winding up petition in the Hon'bleHigh Court of Delhi at New Delhi for the recovery of Rs. 5.00 million. The Company iscontesting however the matter is still pending.
f. Investigation of Serious Fraud Investigation Office (SFIO):
The Company has reported in the previous year that the Serious Fraud InvestigationOffice (SFIO) had initiated an investigation into the affairs of the Company under section212 of the Companies Act 2013 the investigation is relating to the issuance of GDRs bythe Company in the year 2007 and the proposed GDR issue in the year 2011.
The members be apprised that the Company has not received any official communication onthe development in the aforesaid investigation process. The Company has provided adequateinformation and all essential support in the investigation process and have also providedall the documents as enquired from time to time. As on the date of this report the companyhas not received any intimation from SFIO regarding closure of matter.
g. Updates on Notices u/s 148 of the Income Tax for the A.Y. 2008-09 and 2009-10 forthe Income Escaping Assessment U/s 147 of the Income Tax Act 1961.
Your Company had received Notices u/s 148 of the Income Tax for the A.Y. 2008-09 and2009-10 for the Income Escaping Assessment U/s 147 of the Income Tax Act 1961. The Noticewas in respect of assessment/re-assessment re-computing the Loss/Depreciation of theCompany for the said Assessment Years. As per the requirement of the Section 147 andSection 148 of the Income Tax Act 1961 the authority has provided the reasons forre-opening the case for both of the Assessment years.
As reported earlier w.r.t the A.Y. 2009-10 the A.O. had passed an order dated28/03/2016 without making any addition and stating that the advances in subject mattergiven by the Company is not made for the business purpose of the Company and therefore theCapital Work In Progress must be reduced by Rs. 464.97 crores. This Order has beenchallenged by the Company at the appropriate forum under Section 246A(1)(b) of the IncomeTax Act 1961 which proceedings are undergoing.
The assessment proceedings for A.Y. 2008-09 was referred by the A.O. to the TransferPricing officer for his due assessment. The Transfer pricing officer after dealing withthe matter and after detailed deliberations have passed his order on 28thOctober 2016 stating that "the transaction done by assesse are with AssociateEnterprise i.e. Honor Finance for reasons already stated in the Show cause and in theAO's letter the aforesaid transaction is an international transaction u/s 92B(1)".It was also mentioned that "no inference is drawn in respect of arm's length price ofthe international transaction i.e. issuance of GDR and A.O. may take necessary action asdeemed fit on the issue of imposition of penalty u/s 271AA and 271 BA on protective basistill disposal of appeal of the assessee by Securities Appellate Tribunal."
Taking note of the aforesaid assessment made by the TPO and also after giving dueopportunity to the Company the A.O. has issued a final order on 28.12.2016 which wasobtained from the department on 02.02.2017 raising a demand of Rs. 5860281490/-.
Your Company have denied and disputed the order and the demand as raised by the A.O.and have filed an appeal before Hon'ble CIT (A) under the relevant provisions of theIncome Tax Act 1961. Further your Company has also appealed to the department to take alenient view on the deposit of the aforesaid demand till the matter is heard before CIT(A) however the Department has attached one of the Company's Bank Account against theorder of demand.
h. Suspension in the trading of equity shares of the Company at Bombay Stock Exchange(BSE) website and Putting the Company into the list of Shell Company:
The trading of the equity shares of the Company at BSE website has been suspended w.e.f08th August 2017. The SEBI vide its letter bearing No. SEBI/HO/ISD/OW/P/2017/18183 dated 07th August 2017 has provided a list of shell Companies asidentified by Ministry of Corporate Affairs (MCA) to the Exchange with a direction totake necessary measures. The BSE based on the above has taken a measure against theCompany which inter-alia includes moving the securities to GSM Framework under stage VIw.e.f August 08 2017. "As per the GSM framework trading in the securities of theCompany shall be permitted only once a month under trade to trade category and any upwardprice movement in the securities shall not permitted beyond the last traded price andadditional surveillance deposit of 200% of trade value shall be collected from the buyerswhich shall be retained with the exchanges for a period of five months".
Earlier the equity of the Company was placed under stage 1 of GSM framework vide thenotice dated 13th June 2017 and now it has been directly moved to stage VI ofthe GSM framework which have led to the aforesaid restrictions in the trading.
The Company had no idea or any information on what ground and basis it has been movedto the list of shell Company by Ministry of Corporate Affairs and such restrictions on thetrading is being imposed on the Company. Your Company has written to SEBI and BSE askingfor the basis/ground of such treatment or terming the Company as shell Company resultinginto such stringent restrictions on trading of its equity at the Exchange.
(ii) Status of project and Future Outlook:
As your Directors have been reporting since long that your Company had plans to set upa Crude Oil Petroleum Refinery (the project). The Company has raised Rs. 7880 millionthrough Global Depository Receipts (GDR) in December 2007 for part funding the project.The proceeds of the GDR issue were fully utilized to pay capital advances related topurchase of equipment of two used oil refineries and other corporate expenses incurredduring construction period. Due to non-availability of funds restrictive orders of SEBIpending litigations and unrecoverable advances paid to suppliers on account ofnon-fulfilment of financial obligations by company in time the implementation of theproject has been stalled. Since considerable time has elapsed the prospect of the projectrevival and its implementation has become bleak.
Further your Company is going through the appeal proceedings in the Hon'ble SecuritiesAppellate Tribunal (SAT) against the final order of the Securities and Exchange Board ofIndia (SEBI) the order for which is expected in near future. We have apprised you abovehow the restrictive orders and litigations have affected the project implementation of theCompany. The restriction on the Company has prohibited the Company to enter into thesecurities market and explore any capital generation. It has been limited and confined tothe loan arrangements from one of the promoter group Company. In the present scenarioyour Company has no operational project as no operational revenues accrue to the Companyhence it is evident that the Company will only be able to survive if the SAT considersour appeal favorably and issues an appropriate final order. Presently no discussion indetail on the project implementation is possible or relevant.
5. Change in the nature of business if any
During the period under review there was no change in the nature of business of theCompany.
6. Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report There are no changes andcommitments which are affecting the financial position of the Company from the end of thefinancial year i.e. 31st March 2017 till the date of this Report i.e. 14thAugust 2017.
7. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future
Order dated 23rd October 2013 passed by Securities and ExchangeBoard of India:
As reported earlier The Securities and Exchange Board of India has issued an Orderagainst the Company in the matter of "Market Manipulation using GDR Issues." TheOrder dated October 23 2013 mainly states that:
Cals shall not issue equity shares or any other instrument convertible intoequity shares or any other security for a period of ten years.
Vide the Interim Order dated September 21 2011 (later confirmed through theConfirmatory Order on December 30 2011) Cals was directed not to issue equityshares or any ^ other instrument convertible into equity shares or alter their capitalstructure in any manner till further directions. In this context Cals has alreadyundergone the prohibition imposed vide the Interim Order for a period of approximately twoyears. In view of this factual situation it is clarified that the prohibition alreadyundergone by Cals pursuant to the aforementioned SEBI Order shall be reduced whilecomputing the period in respect of the prohibition imposed vide this order.
However the Company has filed an appeal to the Hon'ble Securities and AppellateTribunal (SAT) against the abovementioned order of the SEBI which is ongoing. From theabove Order it is clear that the Company is restrained from issuing any further equityshares or any other instruments convertible into equity shares or any other securityeffectively for a period of eight years (approx) from the date of the order however theCompany has survived the order for approx. 4 years from its date and approx. 6 years intotal from the date of the first order.
At this moment the Company has no operational project and hence no operational revenuesaccrue to the Company. The Company has been funding its day to day operations andstatutory requirements through the funding received by way of unsecured loans from one ofthe promoter group company. It has now become difficult to continue receive fundingsupport from any other sources including by way of unsecured loans. In view of the complexstatutory requirements and financial position of the Company no lender other than thepromoter group Company is ready to lend money to the Company. The aforesaid restrictiveorder has built such adverse circumstances wherein the Company was not able to move aheadwith its project and various contracts and agreements which were entered into and forwhich advances were paid have expired long back. The management in the previousfinancials has written off such advances pre-operative expenses consultancy fee andcapital work in progress to give true and fair picture of the financials though suchwriting off completely eroded the net worth of the Company.
The Auditors of the Company has taken note of the same and qualified their Reportraising their apprehension on the going concern status of the Company. The management hasgiven their detailed comments on such qualification of the Auditor's at the later part ofthis Report. Though it is pertinent to note that the ability of the Company to continue asa going concern is significantly dependent on getting a favourable order from SAT and themanagement is confident for such favourable order.
8. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements.
The Company has adequately adopted the procedures criteria and mechanism to ensure theproper internal control suitable policies and guidelines as required under variousprovisions of the Companies Act 2013 and the Listing Agreement are in place. Thefollowing policies adopted by the Company which focuses on comprehensive managementcontrol and compliance with different rules and regulations as prescribed under variouslaws applicable to the Companies.
1. Vigil Mechanism Policies/Whistle Blower Policies
2. Risk Management Policy
The said policies ensure reduction of possible threats of fraud the orderly andefficient conduct of the business of the Company. These policies and guidelines areadequately monitored by the designated Committees of the Board.
The Company in addition to the above has in place a proper system of internal auditthat is adequate in respect to the size and operations of the Company. M/s Amar Jeet Singh& Associates Chartered accountants had been appointed as the Internal Auditor of theCompany for the financial year 2016-17. They had adequately conducted the Quarterlyinternal audit exercise within the terms of regulatory requirements. During the AuditProcess no material discrepancies were reported by him. The Company prepares thefinancial information/reporting as per the requisite requirements of the Companies Act2013 and the Listing Regulations and place it to the Audit Committee and Board for theapproval once approved the said financial results are submitted to the stock exchange andalso placed on the website of the Company. The Internal Auditors are empowered with thefacility to directly report to the Audit Committee of the Board of Directors of theCompany.
9. Subsidiary/ Joint Ventures/ Associate Companies During the period under review theCompany neither has any Subsidiary nor any Joint Venture or Associate Company. Since theCompany is not having any Subsidiary accordingly no policy has been formulated fordetermining Material Subsidiaries.
10. Performance and financial position of each of the subsidiaries associates andjoint venture companies included in the consolidated financial statement.
The Company is not having any Subsidiary Joint Venture or Associate Company.
During financial year 2016-17 the Company has not accepted any deposits under theprovisions of Chapter V of Companies Act 2013.
12. Statutory Auditors & Auditor's Report
M/s VATSS & Associates Chartered Accountants (ICAI Firm Registration No.-017573N) were appointed as Statutory Auditors of the Company for a period of 5 years inthe Annual General Meeting (AGM) of the Company held on 25th September 2015subject to ratification of their appointment by the members in every subsequent AGM. Theyhave completed the audit of the Company for the financial year 2016-17. The Board herebyrecommends appointment of M/s VATSS & Associates Chartered Accountants as thestatutory auditors of the Company for the financial year 2017-18 for ratification of themembers. Members are requested to consider and ratify the same.
13. Auditor's Report
The Auditors have qualified their Audit Report issued to the Company by stating thefollowing qualification:
"A ttention of the matters is invited to note no. 28(d) of the notes to accountsregarding the financial statements of the company having been prepared on a Going Concernbasis not withstanding that due to continuous losses incurred by the company during thepast years and current year the accumulated losses of the Company have far exceeded itsNet Worth resulting in negative net worth on Balance Sheet date. The company haswritten-off a substantial part of its Fixed Asset during^ earlier years. This situationindicates the existence of a material uncertainty that may cast a significant doubt on thecompany's ability to continue as going concern."
The Board considered the aforesaid qualification and recorded its comment as below:
The board noted qualified opinion of the Auditors raising the concern on the ability ofthe Company to continue as going concern.
It has been informed continuously and it is a matter of record also that the lossessuffered during the previous years were on account of expenses incurred as pre-operationalexpenses relating to the project implementation. In the year 2011 the Company hadundergone an investigation by the Securities and Exchange Board of India (SEBI) relatingto the market manipulations using GDRs. SEBI in the aforesaid matter had forthwith issuedits interim orders prohibiting the Company from entering into the capital market orissuing any kind of securities and altering its capital structure. This prohibition had aconsiderable impact on the capacity of the Company to raise funds and thus the projectimplementation process got slowed. The SEBI in the investigation process has issued theirfinal order on 23rd October 2013 confirming the aforesaid restrictions on theCompany effectively for a period of 8 years approx. from the date of final order. TheCompany has challenged the final order at Securities Appellate Tribunal where theproceeding is ongoing and still not got finality your Company is expecting the order ofthe SAT in near future.
This restrictive order has brought this Company to a position where no project could beimplemented and no source of income could be generated till date which has in turnresulted into the accumulated losses for the Company over the years. This has furtherimpacted the Company that it could not carry its business further and all the projectimplementation was stalled. Gradually all the contract entered into by the Company andadvances paid in this behalf expired and become obsolete due to nonpayment of balancefunds which also resulted into not arranging the necessary machineries for the projectand management in this respect and with an intention to give true and fair picture of thefinancials was bound to take a call for the writing off of all such advances/fixed assetsmade to the parties.
Before taking decision of such writing off of substantial part of the advances/fixedassets during the earlier years the Board also took note of the auditor's observationwhich was made by them in the meeting held on 10th February 2015. The Board
recorded the fact that the writing off of such assets were required and mandated togive a true and fair picture of the financial statement.
The Board further took legal opinion on this matter from one of the leading law housesin Delhi and after considering the various aspects of the legal opinion and also afterconsidering the possibilities of recovery of the Capital advances or the enforceability ofsuch Contracts (including novation) consented to write off these advances.
The Board based on the aforesaid decision further decided to write off other FixedAssets and Advances which is having similar nature as aforesaid and accordingly variousadvances fixed assets and pre-operative expenses were written off.
The management is hoping to receive a favourable order from the SAT proceedings whichCompany has initiated against the restrictive orders of the SEBI which will positivelyimpact the future of the Company. In view of the willingness to start the project once thefavourable business conditions are in the Management has taken stand to continue theaccounting of the business as a Going Concern.
14. Share Capital
During Financial Year 2016-17 the Company's Capital Structure remains unchanged.
15. Extract of the annual return
The extract of the annual return in Form No. MGT - 9 is annexed as Annexure -01.
16. Conservation of energy technology absorption and foreign exchange earnings andoutgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
(A) Conservation of energy and Technology absorption The Company has not initiated itsoperations till date no particulars in respect of conservation of energy and technologyabsorption have been furnished as per Section 134(3)(m) of the Companies Act 2013.
(B) Foreign exchange earnings and outgo
There were no foreign exchange earnings and outgo during the year under review.
17. Corporate Social Responsibility (CSR)
The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is enclosed as Annexure-
02. The members be apprised that the said policy is now not effective as the CSRCommittee of the Company has been dissolved w.e.f 26th May 2017.
Please note that the said committee was established by the Board in compliance with theprovisions of Section 135 of the Companies Act 2013 and rules made thereunder on 29thMay 2014. The said Committee was comprising Mr. Pranav Kumar Mr. Sameer Rajpal and Mr.Deep Kumar Rastogi as its members. Further on 26th May 2017 your board afterconsidering the provisions of Rule 3(2) of the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 and also after taking into consideration of the factual thresholdlimits to constitute the Committee as mentioned in section 135 (1) of the Companies Act2013 noted that the requirement to constitute the Committee is no more required for theCompany and accordingly the board decided to dissolve the same with immediate effect.
(A) Changes in Directors and Key Managerial Personnel (KMP):
Cessation of Directors/KMP:
No cessation of Director or KMP of the Company had taken place during the financialyear under reporting.
Appointment of New Directors/KMP:
Ms. Monika Moorjani who had resigned from the office of Director of the Company on 23rdMarch 2016 was again appointed as director of the Company under I ndependent- NonExecutive Category w.e.f. 27th May 2016. She has further resigned from theBoard w.e.f. 14th August 2017.
Reappointment of Directors:
In terms of the provisions of Section 152(6) of Companies Act 2013 Mr. Deep KumarRastogi Director of the Company is liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible has offered himself for re-appointment. Brief resumeof director seeking reappointment along with other details as stipulated under regulation36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 areprovided in the AGM Notice for convening the Annual General Meeting.
(B) Declaration by an Independent Director(s) & reappointment if any:
All Independent Directors have submitted declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
(C) Details of training imparted to Independent Directors: Your Company has the policythat every new Independent Director inducted on the Board attends an orientation programin which he/she is familiarized with the strategy operations and status of the Company.They are further briefed with history of the Company and also handed over a Copy of thebunch of Company's Annual Reports its Memorandum and Articles of Association variouspolicies and the Code of Conduct of the Company.
On November 14 2016 a familiarization program was held for Independent Directors. Inthat session a detailed discussion was held on the applicability and various aspects ofGST (Goods and Services Act) and its impact on the Company if any. All the IndependentDirectors i.e. Mr. Pranav Kumar Mr. Sameer Rajpal and Ms. Monika Moorjani were physicallypresent in the aforementioned programme. The said familiarization programme for Directorsis available on the Company's website with below link:http://www.cals.in/Data/Familiarisation_Program.pdf Further at the time of appointment ofan Independent Director the Company issues a formal letter of appointment outlininghis/her role functions and duties/responsibilities as a Director. The Format of theletter of appointment is provided on our website a web link thereto is given below:http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20Model%20LOI%20-%20Independent %20Directors.pdf
(D) Formal Annual Evaluation:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the performance evaluation of every Directorhas been carried out by the Company. The Board has adopted and implemented the criteriafor performance evaluation of every Director which focuses on various aspects of thefunctioning of members of Board and Committees such as attendance at meetingcontribution awareness towards Company's development etc. The result of aforesaidevaluations was noted by the Nomination and Remuneration Committee in their meeting heldon 26th May 2017.
19. Number of meetings of the Board of Directors
The Board met 5 times during the year the details of which are given in CorporateGovernance report forming part of this annual report. The intervening gap between any twomeetings was within the prescribed time limit under Companies Act 2013.
20. Audit Committee
During the year the Audit Committee was constituted with Mr. Sameer Rajpal Chairmanof the Committee Mr. Pranav Kumar and Mr. Deep Kumar Rastogi.
A detailed description about the audit Committee is given in the Corporate GovernanceReport forming part of the Director's Report.
Further all recommendations made by Audit Committee during the year were accepted bythe Board.
21. Details of establishment of vigil mechanism for directors and employees
The Company has in place a Vigil Mechanism/ Whistle Blower Policy framed as per therequirements of Section 177 of the Companies Act 2013 and Regulation 22 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Vigil Mechanismpolicy has also been displayed on Company's website athttp://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20%20Vigil%20Mechanism.pdf
22. Nomination and Remuneration Committee
In terms of Compliance of Section 178 of the Companies Act 2013 and Regulation 19 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhas a duly constituted Nomination and Remuneration Committee. The detailed descriptionabout the Committee is given in the Corporate Governance Report forming part of theDirector's Report. Remuneration Policy has been framed adopted and implemented by theNomination and Remuneration Committee. During the year under review the Nomination andRemuneration Committee reviewed the Remuneration Policy for Directors KMPs and otheremployees and recommended no changes to be made in the Policy to the Board of Directors ofthe Company. The said policy forms part of the Board's Report as Annexure- 03.
23. Particulars of loans guarantees or investments under section 186
The Company has neither granted any Loans extended any Guarantees nor made Investmentsduring the Financial year 2016-17 pursuant the provisions of Section 186 of CompaniesAct 2013.
24. Particulars of contracts or arrangements with related parties
The Company has not made any contracts with related parties pursuant to Section 188 ofCompanies Act 2013.
However your Company has been obtaining loan from Nyra Holdings Pvt. Ltd. a relatedparty as per Section 2 (76) of the Companies Act 2013 to meet its day to day financialneeds and also to meet the statutory dues necessary compliances and the legal expenses.Such arrangements of obtaining loan from related party falls into the category of materialrelated party transaction as per Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
As submitted in the previous year report that your Company had obtained your approvalfor the said material related party transaction with Nyra Holdings Private Limited anentity belonging to the promoters' group. Further to apprise you that the Nyra HoldingsPrivate Limited during the year i.e. on 28th March 2017 had assigned theentire loan facility extended to the Company i.e. Rs. 92670000/- to its parent/holdingCompany Spice Energy Pvt. Ltd. (another promoter group Company) under an internalrestructuring of investments.
Your Company in this context are moving a special resolution for your approval in theNotice of the ensuing Annual General Meeting and have also explained the detailedtransaction in the concern explanatory statement of the said Notice. Moreover the Companyhas formulated a policy on materiality of related party transactions and also on dealingwith Related Party Transactions which can be downloaded from the link mentioned below:http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20RPT%20Policy.pdf
25. Managerial Remuneration
Disclosure pursuant to Section 197(12) of Companies Act 2013 and Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided below:
(i) The Ratio of the remuneration of each Director to the Median remuneration of theemployees of the Company for the year 2016-17:
*Mr. Deep Kumar Rastogi had opted not to withdraw any remuneration while he wasappointed as Whole Time Director.
(ii) The percentage increase in remuneration of each Director CFO CEO CS or Managerin the financial year:
The remuneration of any Director of the Company was not increased/changed during thefinancial year 2016-17.
The remuneration as per Section 17 (1) of Income Tax Act 1961 of Company Secretary ofthe Company and Chief Financial Officer of the Company has been increased by 7.43% and8.88% respectively from Financial Year 2015-16.
(iii) the percentage increase in the median remuneration of employees in the financialyear:
The median remuneration of employees has been increased from the previous year due tothe increase in remuneration paid to them.
(iv) the number of permanent employees on the rolls of Company:
During the year 2016-17 there were 3 employees on the rolls of the Company.
(v) average percentile increase already made in the salaries of employees other thanmanagerial 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: As reportedabove total 3 employees are on the rolls of the Company out of which two being the KMP'S(CS & CFO) and one other employee in the operations department. There has beenincrease in the remuneration of all three employees including the Company Secretary andCFO of the Company during the reporting period. The average percentage increase in theremuneration of the Managerial Personnel is 8.15% as against the percentage increase ofthe other employee is 6.02%. The said increase in the remuneration of the managerialpersonnel vis-a-vis another employees is nominal and almost parallel. However the CompanySecretary and Chief Financial Officer are responsible for ensuring various Compliancesmaintenance of books of accounts and handling other litigations of the Company thoughthe work relating to the operation department (where another employee is working) is verylimited and confined as the project could not take off. Further the increase in theremuneration to the employee is to mitigate the inflation effect.
(vi) The Remuneration is as per the remuneration policy of the Company.
(vii) The names of top 10 employees in terms of remuneration are:
(viii) There were no employees in the Company during the year who were in receipt ofremuneration in excess of Rs. 10200000/- per annum or Rs. 850000/- per month.
26. Secretarial Audit Report
In terms of the provisions of Section 204 of the Companies Act 2013 and rules madethere under Mr. Kumar Bhavesh Kishore Proprietor (CP No. 11598) M/s KBK & COCompany Secretaries Delhi was appointed as the Secretarial Auditor of the Company duringthe Financial Year 2016-17.
A Secretarial Audit Report in Form No. MR-3 for the financial year 2016-17 given by theSecretarial Auditors of the Company is annexed as Annexure-04 with this report.
The following disclosures has been made by the Secretarial Auditor in his reportrequiring explanation:
"Share application money for an amount of Rs 15757463/- remains pending forallotment."
Since the situation w.r.t the circumstances in this matter has not been changed hencethe explanation to the Secretarial Auditor was the same as given earlier which state asbelow:
It has been explained to the Secretarial Auditor that the above- mentioned amount ofRs. 15757463/- is part of FDI which was received from M/s Abboro Limited a foreignBody Corporate. This amount is pending for allotment due to the restrictive order of SEBIdated 23rd October 2013 which has restricted the Company from accessing thecapital markets and/or issuing shares and/or any other instruments convertible into equityor altering its capital structure. Though the Company through its letter dated 12thMay 2015 and reminder letter dated 29th May and 7th December 2015had asked for a special permission from SEBI under intimation of Registrar of CompaniesNCT of Delhi and Haryana for the relaxation in its order so that the equity shares couldbe allotted to M/s Abboro Limited.
The same fact has been suitably recorded by the Secretarial Auditor in his Report.
27. Risk Management Policy
The Company has formulated its Risk Management Policy in accordance with the legalrequirements which majorly includes procedure and criteria for identification andmitigation of risk. Also it enumerates comprehensive system for risk management. AuditCommittee of the Board of Directors is entrusted with the responsibility to manageCompany's risk in the best possible manner.
The Company had also constituted a Risk Management Committee which was later dissolvedby the Company w.e.f. 09.02.2016 in terms of Regulation 21 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. However it was ensured thatthe Risk Management System/ policy of the Company would now to be looked after by theAudit Committee of the Company.
28. Management Discussion and Analysis Report
The Management Discussion and Analysis Report as required under Regulation 21(1) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms part ofthis Report.
29. Corporate Governance Report
Your Company believes in good Corporate Governance with a view to perform variouscompliances as prescribed under various laws and regulations which are applicable to theCompany for the time being in force. A separate section on Corporate Governance formingpart of the Director's Report and a certificate from the Practicing Company Secretaryconfirming compliance of the Corporate Governance Norms as stipulated in Regulation 34 (3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015 is included with this Annual Report.
30. Listing of Securities
The Securities of your Company are currently listed on Bombay Stock Exchange Limited(BSE Limited) with ISIN- INE40C01022 and scrip code 526652. The Company has partly paidlisting fee to the Bombay Stock Exchange for the financial year 2016-17. All compliancesunder the listing regulations are being made in regular course and in prescribed timeperiod.
31. Directors' Responsibility Statement
Your Directors make the following statement/confirmations in terms of the provisions ofSection 134(5) of the Companies Act 2013 that-
(a) in the preparation of the annual accounts for the financial year ended on 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures;
(b) the appropriate accounting policies have been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year 2016-17 andof the profit and loss of the company for that period;
c) the proper and sufficient care has been taken 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 annual accounts for the financial year ended on 31st March 2017have been prepared on a going concern basis; and
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
32. Acknowledgements and Appreciations
Your Directors would like to express their sincere thanks to various stakeholders ofthe Company i.e. Regulatory Bodies Government Bankers Shareholders/Investors businessassociates etc. for the Cooperation and assistance received from them. The Board ofDirectors would also like to appreciate them for extending their trust reliancesustained support and encouragement during the year under review.
The Directors would also like to place their deep appreciation to the management andthe employees of the Company who have been supporting the Company with their dedicationhard work and commitment at all levels and in the adverse circumstances.
For and on behalf of the Board of Directors