Euro Ceramics Limited
Your Directors presents the Fifteenth (15 ) Annual Report of the Company together withthe Audited Financial Statements for the financial year ended on March 31 2017.
FINANCIAL HIGHLIGHTS FOR THE CONTINUING OPERATIONS:
| || ||(`In Lakhs) |
|Particulars ||Year Ended ||Year Ended |
| ||March 31 ||March 31 |
| ||2017 ||2016 |
|Revenue from operations ||1069.08 ||2515.54 |
|Other Income ||202.08 ||168.56 |
|Total Income ||1271.16 ||2684.10 |
|Less: Total Expenditure ||2317.96 ||3631.08 |
|Earnings Before Interest ||(1046.80) ||(946.98) |
|Depreciation and Tax || || |
|Less : Interest and other finance ||69.89 ||76.30 |
|expenses || || |
|Less: Depreciation ||1969.44 ||2010.16 |
|Profit/(Loss) Before Exceptional ||(3086.13) ||(3033.44) |
|and Extraordinary Item& Tax || || |
|Exceptional items [(Loss)/Gain] ||5004.52 ||- |
|Profit / (Loss) before ||1918.39 ||(3033.44) |
|extraordinary items and tax || || |
|Less: Extraordinary Item ||- ||- |
|Profit/(Loss) Before Tax ||1918.39 ||(3033.44) |
|Less: Tax Expenses ||- ||1523.92 |
|Profit / (Loss) for the Year from ||1918.39 ||(1509.52) |
|Continuing Operations (A) || || |
|Profit / (Loss) for the period from ||583.91 ||282.22 |
|Discontinuing Operations || || |
|Net Profit from Disposal of Assets ||2715.86 ||- |
|of Discontinuing operations || || |
|Less: Tax expenses for ||- ||- |
|discontinuing operations || || |
|Total Profit/(Loss) from ||3299.77 ||282.22 |
|Discontinuing Operations (B) || || |
|Profit/(Loss) for the year (A) + (B) ||5218.17 ||(1227.30) |
|Add: Balance Brought forward from ||(26337.96) ||(25110.60) |
|the previous year || || |
|Balance Carried forward to ||(21119.79) ||(26337.96) |
|Balance Sheet || || |
During the year the Company has sold its sanitaryware division and the same isconsidered as discontinued operations for the financial reporting as per AccountingStandard AS 24 of issued by the ICAI. The above financials are given for the continuingoperations of tiles which includes vitrified tiles wall tiles and marble division. TheCompany has restated all the prior period financial statements presented above incompliance with AS 24 for the continuing operations. Accordingly profit or loss fromdiscontinued operations and profit or loss on disposal of assets of discontinuedoperations is shown separately in profit and loss account. The performance of thecontinuing operations is as under:
The turnover of the Company for the year is reduced by ` 1446.46 Lakhs compared toprevious year. Loss before exceptional and extraordinary item & tax stood at `3086.13Lakhs compared to
` 3033.44 Lakhs for previous year.
The brief financial highlights are given above and discussed in detail in ManagementDiscussion and Analysis as part of this report.
a. Tiles Division Aluminium Extruded Section and Realty Division:
The Company's vitrified tiles plant wall tiles plant and Aluminium Extruded Sectionsplants were continued to be in-operative during the year under review due to workingcapital shortages and did not generate any revenue except for sale of old stock in hand.
There was no business in the Realty Division during the year.
b. Calcareous Tiles/Mable Division :
During the year under review the operational revenue was majorly contributed by Marbledivision. The marble division was under performed due to working capital shortages.
c. Sanitaryware Divisions:
During the year under review the Company has sold Sanitaryware business undertakingincluding land building and plant & machinery for a total consideration of ` 8600Lakhs and made the profit on disposal of the assets of the sanitaryware division amountingto ` 2715.86 Lakhs. The proceeds of the said sale were utilised in repayment/settlementof debt of the Company.
The Company has generated profit before tax of
`583.91 Lakhs from operations of the Sanitaryware division during the year against
` 282.22 Lakhs for previous year.
There was no change in share capital of the Company during the year 2016-17.The paid upequity share capital of your Company as on March 31 2017 is ` 337377170/- (RupeesThirty Three Crore Seventy Three Lakh Seventy Seven Thousand One Hundred Seventy only)divided into 33737717 Equity shares of the face value of `10/- (Rupee Ten) each.
LISTING OF SHARES:
The Equity shares of the Company are listed on National Stock Exchange of India Limited(NSE) and BSE Limited (BSE). The Company has paid the requisite listing fees to the saidStock Exchanges for the financial year 2016-17.
In view of stress cash flow and liquidity crunch felt by the Company. Your Directors donot recommend any dividend for the financial year 2016-17.
During the year under review the Company has not accepted any deposits within themeaning of Section 73 and 76 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014.
REFERENCE TO BIFR:
The Company on the basis of audited accounts for the financial year ended March 312013 has filed the reference under section 15(1) of the Sick Industrial Companies (SpecialProvisions) Act 1985 before the Hon'ble Board for Industrial and Financial Reconstruction(BIFR). The above reference has been duly registered by the Learned Registrar of Hon'bleBIFR. However Ministry of Finance vide notification dated November 25 2016 has repealedthe Sick Industrial (Special Provisions) Act 1985 (SICA) with effect from December 12016. Accordingly BIFR is dissolved from that date and all the proceedings that werepending before BIFR were referred to the National Company Law Tribunal (NCLT) constitutedunder the Companies Act 2013 under the provisions of The Insolvency and Bankruptcy Act2016 within 180 days from such date. The Company is in the process of filing applicationbefore the NCLT for the same.
ACTION AGAINST THE COMPANY BY THE BANKS UNDER SECURITIZATION AND RECONSTRUCTION OFFINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002 (SARFAESI) AND THERECOVERY OF DEBTS DUE TO THE BANKS AND FINANCIAL INSTITUTION ACT 1993:
The Company has been incurring losses since F.Y.2011-12 onwards which has resulted inerosion of its net worth and depletion in its working capital. Eventually there weredefaults in the repayment of obligations to banks and the relevant loan accounts - TermLoans Cash Credits and other Non-Fund Based Credits classified as Non-Performing Assetsby the Lenders. Consequently the Lenders have called-off their advances and issued noticefor recovery under Section 19 of Recovery of Debts (DRT) and under section 13(2) of theSecuritization & Reconstruction of Financial Assets & Enforcement of Security(Second) Interest (SARFAESI) Act 2002 to the Company.
During the year the Company has settled the secured lenders by entering into compromisesettlement arrangements and accordingly some of the lenders are settled completely bypayment of upfront amount and some of the lenders have granted deferred payment schedulehowever outstanding of such lenders whose dues are still pending is shown as totaloutstanding less the amount paid to them under settlement scheme. Based on the no duecertificates received from the lenders the Company has subsequently settled some of thecharges as registered with the office of the Registrar of Companies Mumbai.
EXTRACT OF ANNUAL RETURN:
An extract of Annual Return in Form MGT 9 is appended to this Report as Annexure I.
HOLDING SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES:
During the financial year ended March 31 2017 the Company has One wholly ownedsubsidiary Company - M/s. Euro Merchandise (India) Limited. The Company does not have anyHolding Associates Company or any Joint Ventures during the financial year 2016-17.
During the year the Board of Directors (the Board') reviewed the affairs of thesubsidiaries and associates. In accordance with Section 129(3) of the
Companies Act 2013 we have prepared Consolidated Financial Statements of the Companyand its subsidiaries which form part of the Annual Report. Further a statement containingsalient features of the financial statements of the Wholly-owned subsidiary in Form AOC-1is appended as Annexure to the Financial Statements provided in this Annual Report.
In accordance with Section 136 of the Companies Act 2013 the Audited FinancialStatements including the Consolidated Financial Statements and related information of theCompany are available on the Company's website.
These documents will also be available for inspection at the Registered Office of theCompany during business hours on all working days and upto the Annual General Meeting.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the year under review the members of the
Company at the 14 Annual General Meeting held on September 30 2016 appointed Mr. ViralNandu as Director of the Company with effect from conclusion of 14 Annual General Meeting.
Mr. Mukund Modi Mr. Dhaval Gada and Mrs. Lata Mehta were appointed as the IndependentDirectors
of the Company by the members in the 14 AGM held on September 30 2016 for a period of5 (five) years with effect from conclusion of 14 Annual General Meeting of the Company tohold office as such upto September 29 2021.
Mr. Pratik Shah Chairman and Whole-Time Director of the Company Mr. Karan Rajput Mr.Amit Nandu and Mrs. Usha Kotian Independent Directors of the Company vacated theirrespective positions as such pursuant to the provisions of Section 167(1)(a) read withSection 164(2)(b) of the Companies Act 2013 with effect from conclusion of 14th AnnualGeneral Meeting (AGM) of the Company held on September 30 2016.
Mr. Mukund Modi ceased to be a Director of the Company due to his sad demise on March25 2017. The Board places on record condolences for his sad demise and expresses itsappreciation for his valuable guidance as an Independent Director of the Company.
In accordance with the provisions of Section 152 of the Companies Act 2013 read withCompanies (Management & Administration) Rules 2014 and
Articles of Association of the Company Mr. Viral Nandu Whole-time Director of theCompany retires by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for reappointment.
Upon recommendation of Nomination and Remuneration Committee the Board of Directors atits meeting held on September 30 2016 appointed Mr. Viral Nandu as Chairman&Whole-time Director of the Company for a period of two years with effect fromSeptember 30 2016 subject to the approval of the members.
The Board of Directors of the Company at its meeting held on May 30 2017 appointedMr. Gautam Pandit as an Additional (Independent) Director for a period of five years witheffect from May 30 2017 subject to the approval of members. The Company has received anotice in writing along with the requisite deposit from a member under Section 160 ofCompanies Act 2013 proposing his candidature as an Independent Director of the Company.
Pursuant to Regulation 36(3) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 (hereinafter referred to as Listing Regulations')and Secretarial Standards (SS-2) issued by the Institute of Company Secretaries of India(ICSI) brief resume of the Directors proposed to be appointed / re-appointed in theensuing Annual General Meeting are provided in Notice of 15 Annual General Meeting of theCompany.
Your Board recommends the appointment of the above Director for the approval of theMembers at the 15 Annual General Meeting of the Company.
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and Regulation 16(1)(b) of Listing Regulations.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors of yourCompany to the best of their knowledge and based on the information and explanationsobtained by them state that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any; b.the directors have selected such accounting policies and applied them 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 March 312017and of the profit of the company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d. the directors have prepared the annual accounts on a going concern basis;
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; and
f. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
MEETINGS OF THE BOARD OF DIRECTORS:
The Board meets at regular intervals to discuss and decide on Company's business policyand strategy apart from other business of the Board. During the year under review theBoard met 10 (Ten) times. The details of the meetings of Board of Directors and theattendance of the Directors at the meetings are provided in the Report on CorporateGovernance. The intervening gap between the two consecutive meetings was within the periodprescribed under the Companies Act 2013.
ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD:
In terms of applicable provisions read with Schedule IV of the Companies Act 2013 andRules framed thereunder and Regulation 17 of Listing Regulations read with Part D ofSchedule II of the Listing Regulations the Board of Directors has put in place a processto formally evaluate the effectiveness of the Board along with performance evaluation ofeach Director to be carried out on an annual basis.
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theevaluation of the Board and its performance the directors individually and the working ofits Audit Committee Stakeholders' Relationship Committee and
Nomination and Remuneration Committee of the Company was carried out by the Board. TheBoard has evaluated the performance of each of Executive Non-Executive and IndependentDirectors considering the business of the Company and the expectations that the Board havefrom each of them. The evaluation framework for assessing the performance of Directorscomprises of the following key areas:
i. Attendance of Board Meetings and Board Committee Meetings;
ii. Quality of contribution to Board deliberations;
iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance;
iv. Providing perspectives and feedback going beyond information provided by themanagement.
v. Ability to contribute to and monitor corporate governance practices
During the year under review the Nomination and Remuneration Committee reviewed theperformance of all the executive and non-executive directors.
A separate meeting of the Independent Directors was held for evaluation of performanceof non-independent Directors performance of the Board as a whole and performance of theChairman.
COMMITTEES OF THE BOARD:
Subsequent to the changes in the Board of Directors during the year under review theBoard reconstituted its Committees in accordance with the Companies Act 2013 and ListingRegulations. There are currently three Committees of the Board as follows:
a. Audit Committee b. Stakeholders' Relationship Committee c. Nomination andRemuneration Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Report on Corporate Governance" whichforms part of this Annual Report.
AUDIT COMMITTEE AND ITS COMPOSITION:
The Audit Committee of the Company reviews the reports to be submitted with the Boardof Directors with respect to auditing and accounting matters. It also supervises theCompany's internal control and financial reporting process.
The Audit Committee is duly constituted as per the provisions of Section 177 of theCompanies Act 2013 and Regulation 18 of Listing Regulations. The Composition of the AuditCommittee is also given in the Report on Corporate Governance which is annexed to thisreport.
As per Section 139 of the Companies Act 2013 read with Companies (Audit and Auditors)Rules 2014 the term of M/s. Deepak Maru & Co. Chartered Accountants Mumbai (FRN:115678W) as the Statutory Auditor of the Company expires at the conclusion of the 15Annual General Meeting. The said Statutory Auditor has functioned as such for more than 5consecutive years in the Company. Hence the Company proposes to appoint new StatutoryAuditor to comply with Section 139 of the Companies Act 2013 in their place.
On recommendation of Audit Committee the Board of Directors of the Company at itsmeeting held on September 1 2017 has appointed M/s. Rasesh Shah & AssociatesChartered Accountants (FRN: 108671W) as the Statutory Auditor of the Company for aperiod of 5 years to hold office from the conclusion of 15 Annual General Meeting till theconclusion of 20 Annual General Meeting of the Company subject to approval ofshareholders in place of retiring auditors M/s. Deepak Maru & Co. CharteredAccountants Mumbai (FRN: 115678W).
The Company has received written consent and a certificate that they satisfy thecriteria provided under Section 141 of the Companies Act 2013 and if appointed theirappointment would be within the limits prescribed under Section 139 of the Companies Act2013.
Your Directors recommend the appointment of M/s. Rasesh Shah & AssociatesChartered Accountants Mumbai (FRN: 108671W) as the Statutory Auditors of the Company tohold office from the conclusion of 15 Annual General Meeting upto the conclusion of 20Annual General Meeting of the Company (subject to ratification by members at every AGMheld after the 15 AGM).
With reference to the observations made by the Statutory Auditors in their Standaloneand Consolidated Report on the Audited Financial Statements for the year ended March 312017 your Directors would like to reply as under:
1. The attention is invited to note no. 3 to the financial statements towards the factthat the Company's financial facilities / arrangements including Term Loans WorkingCapital Facilities and Non Fund Based Credit Facilities have expired and the accounts withthe Banks have turned into Non Performing Assets since more than 3 years.
Some of the bank lenders have initiated legal proceedings against the Company forrecovery of their respective debts at the Debt Recovery Tribunal and have taken symbolicpossession of the securities u/s. 13(4) of the SARFAESI Act 2002. However the Company hasbeen able to renegotiate with the secured lenders and arrive at a amicable settlement ofits debts. The Company has made the settlement of its total debt outstanding with thesecured lenders. Accordingly some of the lenders have been settled completely on one timesettlement basis and others have agreed for deferred payment along with some upfrontpayment based on their respective terms of settlement. In view of the above settlementthe Company has not provided the interest on the outstanding dues payable as per thesettlement terms on the outstanding agreed amount of settlement amounting to ` 880.11lakhs for the year ended March 31 2017. Had the same been accounted for the net profit(after tax) would have decreased and current liabilities for the year ended March 31 2017would have increased by that amount. In addition to this the Company has beencontinuously incurring substantial losses since past few years and as on March 31 2017the Company's current liabilities exceed its current assets by ` 22562.88 lakhs. Furtherthe networth of the Company has fully eroded and the Company had also filed registrationu/s. 15(1) of the erstwhile Sick Industrial Companies (Special Provisions) Act 1985before the erstwhile Hon'ble Board for Industrial & Financial Reconstruction.
All the above events indicate a material uncertainty that casts a significant doubt onthe Company's ability to continue as a going concern and therefore it may be unable torealize its assets and discharge its liabilities in the normal course of business. Thefinancial results do not disclose the fact that the fundamental accounting assumption ofgoing concern has not been followed.
Your Directors would like to state that the Company is operational and currentlyManufacturing Marble employing more than 100 manpower. The Company and its management withits positive efforts could sale its fixed assets of sanitaryware business undertaking andland and settled its debt with many of its secured lenders either on one time settlementbasis or deferred payment schedule with some upfront payment as per their terms ofcompromise settlement. It is also making serious efforts in reviving its tiles divisionoperation. The management has taken and been taking all diligent steps under legal adviceto defend the Company in all the litigation. Considering the reduction in debt burden andconsidering the ample opportunities in the market and growth drivers for the industry perse your Directors are optimistic about the turnaround of the Company with the infusion ofthe long term funds and working capital fund with support of the lenders.
2. Pursuant to the Sanctioned Compromise Settlement with remaining bank lenders withregards to whom the Company had deferred payment schedule as on March 31 2017 theCompany has not provided for interest on credit facilities from amounting to ` 880.11lakhs for the year ending March 31 2017 subject to reconciliation with banks. Had thesame been provided the loss for the year ending March 31 2017 would have increased by `880.11 lakhs. The corresponding liabilities would also have increased by ` 880.11 lakhs asat March 31 2017.
The Company has settled its debts with secured lenders either on one time settlementbasis or compromise settlement with defer payment schedule with some upfront payment asper the terms of sanction. In view of the present settlement with the lenders the Companyhas not provided for interest to the tune of ` 880.11 lakhs (calculated based on lastsanction letters in hand) on financing facilities for the year ending March 31 2017.
3. Attention is also drawn to the fact that the Company has not provided forimpairment or diminishing value of its assets/investment as per Accounting Standard28 Accounting for Impairment of Assets' as notified under the Companies (AccountingStandards) Rules 2006 read with the General
Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs inrespect of Section 133 of the Companies Act 2013. The effect of such Impairment ordiminishing value has not been quantified by the management and hence the same is notascertainable.
The Company has made the provisions for diminution in the value of itsinvestments/assets wherever required. Management has a policy to maintain the assets andkeep them in working condition so that its value does not get affected in long run. Themanagement is optimistic about realizing the value of its Assets / Investments nearest toits carrying value and there is no further diminution in the value of its assets /investment other than depreciation /amortization provided for.
4. We draw attention to the fact that financial statements are subject toreceipt of confirmation of balances from many of the debtors loans & advancesinvestments banks sundry creditors and other liabilities. Pending receipt ofconfirmation of these balances and consequential reconciliations / adjustments if anythe resultant impact on the financial statements is not ascertainable.
Your management would like to state that the Company is in the process of obtaining theconfirmations from debtors creditors lenders and loans advances in routine course ofbusiness and have obtained from some of them. The reconciliations are made and the effectshave been given in the books of accounts wherever required.
5. We draw attention to the facts that the non-ascertainment of completeparticulars of dues to Micro Small and Medium enterprises if any under MSMED Act 2006and provisions towards interest if any is not ascertained at this stage which is not inconformity with para14 of Accounting Standard 29-Provision Contingent Liabilitiesand Contingent Assets.
The Company is in the process of identifying the creditors which are Micro Small andMedium Enterprises under MSMED Act.
6. In our opinion and according to the information and explanations given to usthere are no stipulations made regarding repayment of principal amount and interest inrespect of loans granted by the Company to parties covered in the register maintainedunder section 189 of the Companies Act 2013. Hence we are unable to comment as toregularity of repayments of principal and interest amount.
The management would like to state that the loans and advances are given in the normalcourse of business to a firm where the Company is a partner with majority share.
During the year under review the Auditor had not reported any fraud under Section143(12) of the Companies Act 2013 therefore no detail is required to be disclosed underSection 134(3)(ca) of the Companies Act 2013.
Pursuant to provisions of Section 138 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 on recommendation of Audit Committee M/s. Kavish Shah & CoChartered Accountants Mumbai were appointed as its Internal Auditors for the financialyear 2016-17. The Internal Auditors have given their report on periodical basis to theAudit Committee.
Based on the report of internal audit the management takes corrective action inrespective areas observed and thereby strengthen the controls.
SECRETARIAL AUDIT REPORT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardhas appointed M/s. Manish Ghia & Associates Company Secretaries Mumbai as theSecretarial Auditors to conduct the Secretarial Audit of the Company for the FinancialYear 2016-17.
The Report of the Secretarial Auditor is appended to this Report as (Annexure II).
With regard to observations made by the Secretarial Auditors' in their Report yourDirectors would like to state as under:
a) as required under section 203 of the Act the company is yet to appoint a CompanySecretary and the company is not in compliance with Regulation 6 of LODR which requiresCompany Secretary to be appointed as Compliance Officer;
The Company is in process of appointment of Whole time Company Secretary. The Companyhas also given advertisement in newspaper for the vacancy however still suitablecandidate is awaited.
b) although the loans/ advances extended by the company under Section 186 of the Actpertains to the previous financial years but which are still continuing in the periodunder review are interest free in nature and there are no stipulation as to itsrepayment;
The loans and advances are given in the normal course of business to a firm where theCompany is a partner with majority share.
c) the company has not complied with the provisions of Section 133 of the Actpertaining to Accounting Standards (AS-28) w.r.t Accounting for Impairment of Assets andAccounting Standards (AS-29) Provisions Contingent Liabilities and Contingent Assets thebrief particulars of which are stated in the Statutory Auditor's Report in "point no3 & 5" under the heading Basis for Qualified opinion;
The Company has made the provisions for diminution in the value of its investments /assets wherever required in compliance of AS-28. Management has a policy to maintain theassets and keep them in working condition so that its value does not get affected in longrun. The management is optimistic about realizing the value of its Assets / Investmentsnearest to its carrying value and there is no further diminution in the value of itsassets/investment other than depreciation / amortization and provided for.
d) in respect of outstanding deposits as at March 31 2016 the company was required tofile Form DPT-3 latest by June 30 2016 which has not been filed;
e) there has been a delay of in transferring the Share Application Money amounting to `33855 pertaining to financial year 2006-07 into Investor Education and Protection Fund;
The non-compliance in regards to para no. (d) and (e) are unintentional and in absenceof
Whole time Company Secretary the compliances were missed out inadvertently.
f) the entire Board which continued till September 30 2016 was incurred with thedisqualification in terms of the provisions of Sec 164(2)(b) of the Act also the vacationof the Board that took place on September 30 2016 was not in accordance with theprovisions of Act; further due to which the composition of mandatory committees of Boardwas also not in accordance with the respective provisions of the Act;
i. pursuant to our observation at "f" above the Company is not in compliancewith Regulation 17(1) 18(1) & 19(1) of LODR; and
ii. the Composition of the Board and mandatory committees mentioned in CorporateGovernance Report submitted to the Stock Exchanges for the Quarter ended June 30 2016does not reflect the correct position due to our observation mentioned in the sub-para"i" above.
Your Company has obtained a legal opinion after the receipt of Secretarial Audit Reportdated August 12 2016 for the year ended March 31 2016 to confirm whether the Directorsare disqualified under Section 164(2)(b) of the Companies Act 2013.
Legal opinion stated that the existing Directors of the Company are disqualified underSection 164(2)(b) of the Companies Act 2013.
After detail discussion on the basis of the legal opinion the Board Members decided toappoint new Directors on the Board of the Company as well as re-constitute the Committeesof the Board as per applicable provisions of Companies Act 2013 and SEBI (ListingObligations & Disclosure Requirements) Regulations 2015.
The members at the 14 Annual General Meeting held on September 30 2016 appointed Mr.Viral Nandu as Director of the Company and Mr. Mukund Modi Mr. Dhaval Gada and Mrs. LataMehta as Independent Director of the Company. Further all the Committees werere-constituted as per the provisions of the Companies Act 2013 and
SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.Thedisqualified directors as on September 30 2016 have vacated their position fromdirectorship of the Company pursuant to the provisions of Section 167(1)(a) read withSection 164(2)(b) of the Companies Act 2013 with effect from conclusion of 14 AnnualGeneral Meeting (AGM) of the Company held on September 30 2016.
VIGIL MECHANISM POLICY:
The Company has adopted a Vigil Mechanism / Whistle Blower Policy to deal with instanceof fraud and mismanagement if any in accordance with Section 177 of the Companies Act2013. The mechanism also provides for adequate safeguards against victimization ofdirectors and employees who avail of the mechanism and also provide for direct access tothe Chairman of the Audit Committee in the exceptional cases. The detail of the VigilMechanism Policy is explained in the Report on Corporate Governance and also available onthe website of the Company at http:/ /www. eurovitrified.com/pdf/Vigil%20Mechanisum%20Policy.pdf.We affirm that during the financial year 2016-17 no employee or Director wasdenied access to the Audit Committee.
PARTICULARS OF REMUNERATION:
During the year under review no employee was in receipt of remuneration exceeding thelimits as prescribed under provisions of Section 197 of the Companies Act 2013 and Rule5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.
Disclosure with respect to the ratio of remuneration of each Director to the medianemployees' remuneration as required under Section 197 of the Companies Act 2013 read withRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is appended to this Report as Annexure III.
INTERNAL FINANCIAL CONTROL:
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to Company Policies safeguardingof assets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and timely preparation of reliable financial disclosures.
The Audit Committee evaluates the efficacy and adequacy of financial control system inthe Company its compliance with operating systems accounting procedures and policies atall locations of the Company and strives to maintain the Standard in Internal FinancialControls.
RISKS AND AREAS OF CONCERN:
The Company has laid down a well-defined Risk Management Policy covering the riskmapping trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor bothbusiness and non-business risk. The Board periodically reviews the risk and suggest stepsto be taken to control and mitigate the same through a properly defined framework.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1) OF THE COMPANIES ACT 2013:
All Related Party Transactions entered during the year under review were in theordinary course of business and on arm's length basis. No material related partytransactions were entered during the year under reveiw by your Company. The policy onRelated Party Transactions as approved by the Board is uploaded on the Company's websiteat http://www.eurovitrified.com/pdf/Policy%20on%20 Related%20Person%20Transaction.pdf.
Accordingly the disclosure of related party transactions as required under Section134(3) of the Companies Act 2013 in Form AOC-2 is not applicable.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013:
The details of loans guarantees or investments made by your Company under Section 186of the Companies Act 2013 during the financial year 2016-17 are given in the Notes toFinancial Statements provided in this Annual Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
There was no significant or material order passed by any regulator or court ortribunal which impacts the going concern status of the Company or will have bearing oncompany's operations in future.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATESAND THE DATE OF THE REPORT:
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year 2016-17 to which this financial statementrelates and the date of this report.
REPORT ON CORPORATE GOVERNANCE:
Pursuant to the provisions of Regulation 34 read with Schedule V of Listing Regulationthe following have been made a part of the Annual Report and are appended to this report:
a. Management Discussion and Analysis
b. Report on Corporate Governance.
c. Declaration on Compliance with Code of Conduct
d. Auditors' Certificate regarding compliance with conditions of Corporate Governance
INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has zero tolerance for sexual harassment at workplace and adopted a Policyon prevention prohibition and redressal of sexual harassment at workplace in line withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder. There was no complaint on sexual harassmentduring the year under review.
PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO:
Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 ofthe Companies Act2013 regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo read along with Rule 8 of the Companies (Accounts) Rules aregiven in Annexure IV.
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON CORPORATE SOCIALRESPONSIBILITY INITIATIVES:
The provisions relating to Corporate Social Responsibility under Section 135 of theCompanies Act 2013 and rules made thereunder are not applicable to the Company.Therefore the Company has not developed and implemented any Corporate SocialResponsibility initiatives.
Your Directors acknowledges with gratitude and wish to place on record their deepappreciation of continued support and co-operation received by the Company from thevarious Government authorities Shareholders Bankers Lenders Business AssociatesDealers Customers Financial Institutions and Investors during the year.
By Order of the Board of Directors
Chairman & Whole Time Director
Date: September 1 2017