To the Members
Your Directors have pleasure in presenting herewith the 25thAnnual Report onthe business of Your Company together with the Audited Accounts for the financial yearended 31st March 2019.
(Rs. In Lakhs)
|Particulars ||Financial Year 2018-19 ||Financial Year 2017-18 |
|Total Income ||7971.98 ||7847.40 |
|Total Expenditure ||7725.98 ||7535.51 |
|Profit/(Loss) before Depreciation & || || |
|Financial Charges ||246.00 ||311.89 |
|Depreciation ||48.85 ||49.39 |
|Financial Charges ||148.27 ||164.18 |
|Profit/Loss Before Tax ||48.88 ||98.32 |
|Prior period items ||- ||- |
|Provision for tax ||14.00 ||- |
|Deferred tax ||(6.13) ||(4.56) |
|NET PROFIT/(LOSS) ||41.00 ||64.34 |
REVIEW OF OPERATIONS:
With a view to get hold of stabilize compete and increase the Company's presence inthe market initially the Company is concentrating on the trading. The move would certainlycreate good presence and name to the Company which would enable the Company in future togenerate good income. During the year under review as the price volatility of trading wasvery high the volume of trade restrained to the extent reported.
CHANGE IN NATURE OF BUSINESS:
During the year under review there is no change in the nature of business carried outby your Company.
Due to inadequacy of profits the Directors of your Company did not recommend anydividend for the Financial Year 2018-19.
TRANSFER TO RESERVES:
Your Company has not transferred any amount to the general reserve.
Your Company has not accepted any deposits falling within the meaning of Section 73 ofthe Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 duringthe Financial Year.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
Your Board consists of Five (5) Directors including Two Independent Non- ExecutiveDirectors and One Non-Executive Non- Independent Director. None of the Directors of theCompany are disqualified under the Provisions of the Companies Act 2013 (Act') orunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Allindependent Directors have provided confirmations as contemplated under Section 149(7) ofthe Companies Act 2013 stating that they meet the criteria of independence as provided inSection 149(6) and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
As per the provisions of the Companies Act 2013 and Articles of Association of theCompany Mr. Kiran Kumar Vankineni Director (DIN: 02696680) of the Company retires at theensuing Annual General Meeting and the Board of Directors on the recommendation ofNomination and Remuneration Committee recommends his re-appointment. His brief profile isannexed to the Notice of the Annual General Meeting.
The Board of Directors based on the recommendation of Nomination and RemunerationCommittee (NRC) recommend re-appointment of Mr. Bhanu Prakash Vankineni as ManagingDirector (DIN: 00919910) of the Company to hold office for a period of 3 years w.e.f. 14thNovember 2019 on the terms and conditions as provided in the explanatory statementannexed to the Notice of the Annual General Meeting.
The Board of Directors based on the recommendation of Nomination and RemunerationCommittee (NRC) recommend re-appointment of Mr. V. V. Vinod Kumar (DIN: 03642809) and Mr.Srinivas BabuEdupuganti(DIN: 03637508) as Independent Directors of the Company forfurther period of 5 years in accordance with Section 149 of the Companies Act 2013 andother applicable provisions read with SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Mr. V. V. Vinod Kumar and Mr. Srinivas BabuEdupugantihave given a declaration separately that they meet the criteria of independence pursuantto Section 149(6) of the Act.
There is no change in the Board Composition after 31st March 2019 and up tothe date of this report. However Mr. Chada Jagadish Reddy (PAN: AFRPC9153N) has beenappointed as Company Secretary and Compliance Officer of the Company w.e.f. 01stSeptember 2018 and he has resigned andceased to be as such w.e.f. 15th April2019.
FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS
The Board of Directors has carried out an Annual Evaluation of its own performance andhas devised a Policy on evaluation of performance of Board of Directors Committees andIndividual Directors pursuant to the provisions of the Act the Corporate Governancerequirements and as prescribed by SEBI(Listing Obligations and Disclosure Requirements)Regulations 2015.
The Extract of the Policy on Evaluation of Performance of the Board its Committees andindividual Directors is available on the website of the Companywww.diligentindustries.com.
In a separate meeting of independent directors held on February 12 2019 theperformance of non-independent directors performance of the Board as a whole andperformance of the Chairman was evaluated taking into account the views of Executivedirectors and non-executive directors. The same was discussed in the Board meeting thatfollowed at which the performance of the Board its Committees and individual directorswas also discussed.
The performance of the Board as a whole was evaluated by the Independent Directorsafter seeking inputs from all the directors on the basis of the criteria such as theBoard's composition structure effectiveness of Board processes information andfunctioning etc.
The Independent Directors reviewed the performance of the individual directors on thebasis of the criteria such as the contribution of the individual director to the Boardlike preparedness on the issues to be discussed meaningful and constructive contributionand inputs in meetings etc. In addition the Chairman was also evaluated on the keyaspects of his role.
Evaluation by Board (Other than Independent Directors):
In accordance with Regulation 17(10) of SEBI Listing Regulations the entire Board ofDirectors of the Company shall evaluate the performance of Independent Directors of theCompany.Performance evaluation of IndependentDirectors was done by the entire Boardexcluding the Independent Director being evaluated.
Criteria for Performance Evaluation:
a. Ability of the candidates to devote sufficient time and attention to hisprofessional obligations as Independent Director for informed and balanced decisionmaking.
b. Adherence to the Code of Conduct in letter and in spirit by the IndependentDirectors.
c. Bringing objectivity and independence of view to the Board's discussions in relationto the Company's strategy performance and risk management.
d. Statutory Compliance and ensuring high standards of financial probity and CorporateGovernance.
e. Responsibility towards requirements under the Companies Act 2013 Responsibilitiesof the Board and Accountability under the Director's Responsibility Statement.
Familiarization Programmes for Independent Directors:
All Independent Directors inducted into the Board attended an orientation program. TheFamiliarization Policy of the Company is available on its websitewww.diligentindustries.com. A familiarization program for the Independent Directors washeld in its separate meeting.
INDEPENDENT DIRECTORS' DECLARATION
Each of the Independent Directors of the Company have submitted declaration pursuantto Section 149(7) of the Companies Act 2013 ("the Act") stating that they meetthe criteria of independence as laid down in Section 149(6) of the Act and Regulation 16of the SEBI (LODR) Regulations 2015.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 Your Directors' confirm that:
i) In preparation of annual accounts for the financial year ended 31stMarch 2019 the applicable Accounting Standards have been followed along with properexplanation relating to material departures;
ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company at the end of the financial year ended 31stMarch 2019 and of the profit and loss of the Company for the year;
iii) The Directors have taken proper and sufficient care for their maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) The Directors had prepared the annual accounts on a going concern' basis;
v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
At the 22nd Annual General Meeting M/s NSVR & Associates LLP CharteredAccountants (Firm Registration No.008801S) were appointed as Statutory Auditors of theCompany to hold office till the conclusion of the Annual General Meeting to be held inthe calendar year 2020-21.
M/s. P.S.Rao & Associates Practicing Company Secretaries was appointed to conductthe secretarial audit of the Company for the financial year 2018-19 as required underSection 204 of the Companies Act 2013 and
Rules there-under. The secretarial audit report for FY 2018-19 forms part of the AnnualReport as Annexure-II to the Board's report.
The Board has appointed M/s. P.S.Rao & Associates Practicing Company Secretariesas secretarial auditors of the Company for the financial year 2019-2020.
The Secretarial Audit Report does not contain any qualifications/reservations oradverse remarks and is self-explanatory.
Comments by the Board on Every Qualification Reservation or Adverse Remark orDisclaimers:
As there is no qualification reservation or adverse remark in the reports made by theStatutory Auditors your directors need not give their comments on that.
However with regard to the qualification raised by the Secretarial Auditors onappointment of Company Secretary your company states that as the registered office of theCompany is situated in a village which is far away from any nearby town none of thequalified personnel intended to work in a village environment. However your Company withdue efforts appointed Mr. Chada Jagadish Reddy (PAN:AFRPC9153N) as the Company Secretaryand Compliance Officer w.e.f. 01st September 2018.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. Management has set-up a system to monitor and evaluates theefficacy and adequacy of internal control system in the Company on regular basis itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. Based on the audit reports the units undertake corrective action in theirrespective areas and strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board periodically.
The Board of Directors of the Company have adopted various policies like Related PartyTransactions policy Whistle Blower Policy policy to determine material subsidiaries andsuch other procedures for ensuring the orderly and efficient conduct of its business forsafeguarding its assets the prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial information.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the Board of Directors is of the opinion thatthe Company's internal financial controls were adequate and effective during the FY2018-19.
The Risk Management is overseen by the Audit Committee of the Company on a continuousbasis. The Committee oversees Company's process and policies for determining risktolerance and review management's measurement and comparison of overall risk tolerance toestablished levels. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuous basis. For detailsplease refer to the Management Discussion and Analysis report which form part of the BoardReport.
The Board has framed a Risk Management Policy inter alia identifying various elementsof risks faced by the Company which in the Board's opinion may threaten its existenceand providing measures to control and mitigate such risks. The said Policy is posted onthe Company's website www.diligentindustries.com.
EXTRACT OF ANNUAL RETURN:
In accordance with the provisions of Section 92 of the Companies Act 2013 an extractof the Annual Return for the FY 2018-19 in Form MGT-9 is annexed herewith as Annexure -I.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
As per the criteria laid down in the Companies Act 2013 the provisions of CorporateSocial Responsibility are not applicable to your Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE OUTGO
Information required under section 134(3) (m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is enclosed herewith as Annexure III.
During the year under review Five Board Meetings were held. For further details pleaserefer Corporate Governance Report which forms part of this Annual Report.
Committees of Board
Your company has the following committees namely:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
The constitution of all the committees is as per the Companies Act 2013 and SEBI(LODR) Regulations 2015. The details of the Constitution are mentioned in CorporateGovernance Report which forms part of this Annual Report.
The Report on Corporate Governance as stipulated in Regulation 34(3) of SEBI (LODR)Regulations 2015 is attached hereto as a part of this report as Annexure IX
MANAGEMENT DISCUSSION AND ANALYSIS
A brief note on the Management discussion and analysis for the year is annexed as Annexure- VIII
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013and Regulation 22 of SEBI (LODR) Regulations 2015 a Vigil Mechanism for directors andemployees to report genuine concerns or grievances about unethical behavior actual orsuspected fraud or violation of the Company's code of conduct or Ethics Policy and toprovide adequate safeguards against victimization of persons who use such mechanism and toprovide direct access to the Chairperson of the Audit Committee in appropriate orexceptional cases.
The Policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website www.diligentindustries.com
REMUNERATION RATIO OF THE DIRECTORS/ KEY MANAGERIAL PERSONNEL/ EMPLOYEES:
Statement showing disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act read with Rule 5(1) and 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed herewith asAnnexure IV.
PARTICULARS OF EMPLOYEES
As required under Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 no employee of your Company is in receipt ofremuneration Rs. 10200000/- (Rupees One
Crores Two Lakh) or more or employed for part of the year and in receipt of Rs.850000/- (Rupees Eight Lakh Fifty Thousand) or more a month during the financial yearunder review.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of the Loans guarantees and investments if any covered under Section 186 ofthe Companies Act 2013 are given in the notes to the financial statements pertaining tothe year under review.
SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES:
The salient features of the Company's subsidiaries associate companies and jointventures to the extent applicable are furnished in form AOC-1 annexed herewith as Annexure V.
RELATED PARTY TRANSACTIONS:
Related party transactions entered during the financial year under review are disclosedin the Financial Statements of the Company for the financial year ended 31stMarch 2019. These transactions were enteredat an arm's length basis and in the ordinarycourse of business. There were no materially significant related party transactions withthe Company's Promoters Directors Management or their relatives which could have had apotential conflict with the interests of the Company. Form AOC-2 containing a noteon the aforesaid related party transactions is enclosed herewith as Annexure VI.
Related Party Disclosures as per Schedule V of SEBI (LODR) Regulations 2015 areenclosed herewith as Annexure-VII.
The policy on materiality of Related Party Transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's websitewww.diligentindustries.com
Your Company considers its Human Resources as the key to achieve its objectives.Keeping this in view your Company takes utmost care to attract and retain qualityemployees. The employees are sufficiently empowered and such work environment propels themto achieve higher levels of performance. The unflinching commitment of the employees isthe driving force behind the Company's vision. Your Company appreciates the spirit of itsdedicated employees.
DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013:
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and Redressal of sexual harassment at workplace in linewith the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the rules framed thereunder. Further details pertaining tothe same as required to be disclosed are furnished in the Corporate Governance Report.
1. Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
I. Issue of equity shares with differential rights as to dividend voting or otherwise.
II. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
III. Neither the Managing Director nor the Whole-time Director of the Company receiveany remuneration or commission from any of its subsidiaries.
IV. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
V. No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year and date of report.
VI. No frauds were reported by the auditors during the year under review.
VII. Maintenance of Cost Records as specified by the Central Government under Section148(1) of the Companies Act 2013 is not required by the Company.
2. The Company has complied with Secretarial Standards i.e. SS-1 and SS-2 relating toMeetings of the Board of Directors and General Meetings respectively issued by theInstitute of Company Secretaries of India and notified by the Ministry of CorporateAffairs.
Your Directors wish to convey their appreciation to business associates for theirsupport and contribution during the year. The Directors would also like to thank theemployees shareholders customers suppliers alliance partners and bankers for thecontinued support given by them to the Company and their confidence reposed in themanagement.
| ||By order of the Board of Directors |
| ||For Diligent Industries Limited |
|Place: Denduluru || |
|Date: 14.08.2019 || |
| ||Sd/- |
| ||Bhanu Prakash Vankineni |
| ||Managing Director |
| ||DIN: 00919910 |
| ||Sd/- |
| ||Phani Anupama Vankineni |
| ||Director |
| ||DIN: 00935032 |