TO THE MEMBERS
The Directors have pleasure in presenting the Annual Report of the Company along withAudited Accounts for the year ended March 31 2019.
Financial Performance for the year ended March 31 2019:
| || |
For the Financial Year Ended
|Particulars || || |
| ||31.03.2019 ||31.03.2018 |
| ||( Rs ) ||(Rs ) |
|Income ||15717551 ||10369082 |
|Less : Expenditure ||82326647 ||26480221 |
|Loss before tax and exceptional item ||(66609096) ||(16084139) |
|Exceptional item : Profit on sale of Investment ||97175455 ||- |
|Profit/(Loss) before Tax ||30566359 ||(16084139) |
|Tax Expense (Earlier year) ||500000 ||(9668) |
|Profit/(Loss) after Tax ||30066359 ||(16074471) |
Considering the available fund position and the required future commitments nodividend has been recommended for the financial year ended March 31 2019.
Operations of the Company
The total income of the Company during the financial year under review was Rs15717551 as against Rs 10369082 in the previous financial year. The increase wasprimarily due to increased dividend income.
The total expenditure during the year was Rs 82326647 as against Rs 26480221 inthe previous financial year. The increase in expenditure was primarily due to increase inemployee costs and legal / professional expenses.The net profit is Rs 30066359 asagainst a loss of Rs 16074471in the previous year. The profit for the year was earnedfrom sale of investments.
Market Value of Company's investment
The Company's net worth taking into account the market value of the Company'sinvestments would be more than adequate to meet its liabilities and to continue itsoperations in future.
Your Company is in the category of NBFC-CIC (exempted) and it continues to holdstrategic investments in different companies. The dividend distribution by the InvesteeCompanies contributes to the Company's revenue.
In order to strengthen the prospects of the Company your Directors/Management wereevaluating options to enter into additional activities. The attachment/transfer of theCompany's investments by the Regulators has affected the cash flow position of the Companywhich in turn has affected these primary discussions. Should the situation improve theCompany would again evaluate available options during the current year.
Directors and Key Managerial Personnel
Ms. Tushita Patel (DIN 07017591) a Non-Executive Woman Director is liable to retireby rotation at the ensuing Annual General Meeting and being eligible offers herself forre-appointment.The Nomination and Remuneration Committee has recommended there-appointment of Ms. Tushita Patel as a Director liable to retire by rotation.
Mr. Ajay Kumar Vijay was appointed as a Whole Time Director and Key ManagerialPersonnel of the Company for a period of 3 years w.e.f. May 9 2019 designated asExecutive Director and Chief Executive Officer of the Company onthe recommendation of theNomination and Remuneration Committee. His appointment is subject to the approval of theMembers of the Company.
The other Key Managerial Personnel are the Company Secretary Mr. Manoj Kumar and theChief Financial Officer Mr. Arindam Ash. The affairs of the Company are conducted underthe overall supervision and guidance of the Board of Directors of the Company. None of theDirectors of the Company are disqualified under Section 164 (2) of the Companies Act2013. Your Directors have made necessary disclosures as required under the provisions ofthe Companies Act 2013.
Directors' Responsibility Statement
The Board of Directors of the Company hereby state that:
(a) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures; (b)accounting policies have been selected and applied consistently and the judgments andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at the end of the financial year and of the profit of theCompany for that period; (c)proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for prevention and detection of fraudand other irregularities; (d)the Annual Accounts have been prepared on a going concernbasis; (e)Internal Financial Controls have been laid down to be followed by the Companyand that such Internal Financial Controls are adequate and operating effectively and(f)proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
(a)Appointment of Statutory Auditors:
The Members of the Company had appointed M/s. BVC & Co. Chartered Accountants(Firm Registration No. 008154S) as the Statutory Auditors of the Company for a period offive years commencing from the conclusion of the Thirteenth Annual General Meeting to theconclusion of the Eighteenth Annual General Meeting of the Company. The Auditors haveconfirmed that they continue to fulfil the criteria for appointment as Auditor of theCompany as prescribed under the Act and the Rules framed thereunder.
(b)Auditor's Qualifications and Board responses:
Certain issues relating to Company's income stream and its effect on the goingconcern aspects Company's investments in a Promoter Company which is under winding upproceedings in Karnataka High Court and Company's investments in a Promotee Company whichis in liquidation as per the Order of National Company Law Tribunal Mumbai are thesubject matter of Qualifications in the Audit Report.These Qualifications have beenexplained in Note no. 23 and 18 of the financial statements.
Corporate Governance & Management Discussion and Analysis Reports
Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI LODR) a report on Corporate Governanceand Management Discussion and Analysis Report are attached to this Report.
The Auditor's Certificate confirming compliance of conditions of Corporate Governanceis appended to this report. (CEO/CFO Certificate) as required under Regulation 17 of theSEBI LODR has been signed by the CFO of the Company.
Board and its Committees
The details of the composition of the Board and its Committees and the meetings of theBoard and Committees held during the financial year are given in the Report on CorporateGovernance. All the recommendations made by the Audit Committee and Nomination andRemuneration Committee from time to time were accepted by the Board.
Declarations by Independent Directors
All the Independent Directors have given a declaration in terms of sub-section (6) ofSection 149 of the Companies Act 2013. During the year your Company have not appointedany Independent Director.
Performance Evaluation of the Board and Committees
The details of annual evaluation made by the Board of its own performance and that ofits committees individual directors individually and performance criteria for IndependentDirectors laid down by the Nomination and Remuneration Committee are enclosed as Annexure A tothis Report. The policy for performance evaluation of the IndependentDirectors and Board of Directors is available on the Company's websitewww.mcdowellholdings.co.in.
Details of remuneration to Directors
During the year under review none of the Directors were paid any remuneration otherthan sitting fees for attending the committee and board meetings as such the disclosuresrequired under Section 197(12) of the Companies Act 2013 is not applicable to theCompany. Sitting fees are paid to Independent Directors for attending Board/Committeemeetings. They are also entitled to reimbursement of actual travel expenses boarding andlodging conveyance and incidental expenses incurred in attending such meetings.
Particulars of Employees and Related Disclosures
Disclosures required to be made under Section 197(12) of the Companies Act 2013 readwith Rules 5(1) 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 do not apply to Company for the year under review. TheCompany had not offered any shares to its employees or Key Managerial Personnel under anyscheme of Employees Stock Option and has also not issued any sweat equity at any time.
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter-V (Acceptance of Deposits by Companies) of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
Corporate Social Responsibility (CSR)
The Company has constituted a Corporate Social Responsibility Committee as requiredunder Section 135 of the Companies Act 2013. Since the average net profit of the Companyfor the preceding three financial years was negative there was no necessity for theCompany to carry out any CSR spending for the period under review.
(a) Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. I B Harikrishna & Co.
(C. P. No. 5302/Membership No. F 5829) Company Secretary in Practice to undertake theSecretarial Audit of the Company. The Report furnished by Auditor in the format prescribedis enclosed as Annexure - B to this report.
(b) Qualifications and Board responses
The Board responses to the qualifications of the Secretarial Audit are as under
Mr. Ajay Kumar Vijay was appointed as a Whole Time Director and Key ManagerialPersonnel of the Company for a period of 3 years w.e.f. May 9 2019 designated asExecutive Director and Chief Executive Officer of the Company.
In the absence of a Chief Executive Officer/Managing Director the ComplianceCertificate has been obtained from the Chief Financial Officer of the Company.
Internal Control System
The Company has a robust system of internal control the effectiveness of which istested by the process of internal audit under the supervision of Audit Committee.
Your Company through internal audit under the supervision of the Audit Committeereviews the risk management process risk mitigation plans and risk reporting.
The adequacy and effectiveness of Internal Financial Controls have been endorsed by theInternal Auditor and the Statutory Auditors. The report of the Independent StatutoryAuditors in the annexure to their Audit Report does not contain any adverse observations.
The Company has implemented a vigil mechanism to provide a framework for the Company'semployees and Directors to promote responsible and secure whistle blowing. It protects theemployees who raise concern about serious irregularities within the Company. A briefsummary of the vigil mechanism implemented by the Company is set out in Annexure - Cto this report.
Your Company hereby affirms that no Director/employee has been denied access to theChairman of the Audit Committee and that no complaints were received during the year underreview. The Whistle Blower Policy is available in the Company website www. mcdowellholdings.co.in.
The Authorised Share Capital of the Company stands at Rs 150000000 comprising of15000000 equity share of Rs 10 each and the issued subscribed and paid up capital ofthe Company as on March 31 2019 remain unchanged at Rs 139922580 comprising of13992258 equity shares of Rs 10 each.
The trading in the equity shares of your Company is under compulsory dematerialisationmode. As the depository system offers numerous advantages Members are requested to takeadvantage of the same and avail the facility of dematerialisation of the Company's shares.Moreover transfer of shares of the Company by physical means has been barred from April01 2019 pursuant to SEBI's Notification dated December 3 2018.
Your Company's Equity Shares are listed on the BSE Limited (formerly Bombay StockExchange Limited) and National Stock Exchange of India Limited. The listing fees have beenpaid to both the Stock Exchanges for the year 2019-2020.
Extract of Annual Return
An extract of Annual Return in Form MGT-9 as on March 31 2019 is available on thewebsite of the Company www. mcdowellholdings.co.in and is available through the linkhttp://mcdowellholdings.co.in/investors/others.
Nomination and Remuneration Policy
The Board on the recommendation of the Nomination and Remuneration Committee has laiddown a policy for the appointment and remuneration of the Directors Key ManagerialPersonnel and Senior Executives of the Company. The same is set out in Annexure - Dto this report.
Particulars of Loans Guarantees or investments
Details of loans guarantees and investments covered under Section 186 of the CompaniesAct 2013 are given in Note 8 & 11 of the Notes to the Financial Statements.
Subsidiary Associates and Joint Ventures
The Company does not have any Subsidiary Associates or Joint Ventures
Related Party Transactions
There were no related party transactions within the purview of Section 186 of theCompanies Act 2013. The Policy for Related Party Transactions is available on theCompany's website: www.mcdowellholdings. co.in.
Familiarisation Programme for Independent Directors
The details of programmes for familiarisation of the Independent Directors theirroles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are available on theCompany's website: www.mcdowellholdings.co.in.
Energy Conservation Technology Absorption Foreign Exchange Earnings and Outgo
The provisions under Section 134 of the Companies Act 2013 and rules made there underrelating to energy conservation technology absorption do not apply to the Company as theCompany is not engaged in the manufacturing activities. There were no foreign exchangeearnings or outgo during the year under review.
Significant and material changes/commitment/events/orders passed by the regulatorssubsequent to the date of financial statement for the year under review.
The Company has entered into a Settlement Agreement dated June 17 2019 (herein afterreferred to as "SA") with Zuari Agro Chemicals Limited (hereinafter referred toas "ZACL") Pursuant to SA the Company's dues to ZACL as on June 30 2019 hasbeen finalised at Rs 18.52 crores (this includes interest of ` 7.91 crores and Principalof Rs 10.61 crores.)
ZACL (in which Zuari Fertilizers and Chemicals Ltd has merged) had initiated CorporateInsolvency Resolution Process (under Section 7 of the Insolvency and Bankruptcy Code2016) on the premise of non-payment of dues of Rs 17.87 crores from the Company to ZACL.Mangalore Chemicals and Fertilizers Limited (hereinafter referred to as "MCF")which is a subsidiary of ZACL owed ` 9.39 crores to the Company. The Company had soughtfor an adjustment of this amount from the total dues payable to ZACL. The SA was executedto bring an end to the Insolvency proceedings wherein the dues from MCF to the Company hasbeen agreed to be adjusted by ZACL against their dues. The dues to ZACL as on June 172019 has been finalised at Rs 18.97 crores. This has been partly paid (` 5.91 crores) hasbeen paid by transfer of 1185151 MCF shares to ZACL. Pursuant to this adjustment theamount outstanding to ZACL as on July 31 2019 is
Rs 12.74 crores only. The interest is accruing @18% per annum.As per the SA thebalance due is payable within 18 months from the date of SA and non-payment within thisperiod gives a right to ZACL to re-initiate the Insolvency proceedings upon the Company.
Pursuant to this SA all the related proceedings in City Civil Court Supreme CourtHigh Court of Karnataka and NCLT (IBC proceedings) have been withdrawn by both theparties.
Sexual harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013
There were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Your Directors wish to acknowledge the co-operation and support extended by theemployees and the shareholders of the Company.
| ||By Order of the Board |
| ||M S Kapur |
|Place: Bengaluru ||Chairman |
|Date: August 02 2019 ||[DIN 00703815] |