Neycer India Ltd.
|BSE: 502255||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE275N01013|
|BSE 05:30 | 01 Jan||Neycer India Ltd|
|NSE 05:30 | 01 Jan||Neycer India Ltd|
|BSE: 502255||Sector: Consumer|
|NSE: N.A.||ISIN Code: INE275N01013|
|BSE 05:30 | 01 Jan||Neycer India Ltd|
|NSE 05:30 | 01 Jan||Neycer India Ltd|
Your Directors have pleasure in presenting the Fifty Eighth Annual Report and Audited Accounts of the Company for the financial year ended 31st March 2019.
PERFORMANCE AND STATE OF AFFAIRS OF THE COMPANY
The Company has achieved Net sales of Rs.6.24 Crores for the year ended 31st March 2019 as compared to Rs.17.70 Crores in the previous year.
The Company has incurred a Net Profit of Rs.7.85 Crores as against a loss of Rs.2.62 Crores in the previous year. The production during the year was lower. Under review the production was 450 tonnes as against 1878 tonnes during corresponding previous year. The production would have been higher but the stoppage of operation from July 2018 due to a number of factors that contributed to it. ***non-availability of gas continuously and frequent breakdown of machinery caused such fall in tonnes produced. There was also no working capital available for the company by the company s bankers. In view of the same your directors were forced to sell the surplus land available with the company and pay off the dues to bank.
Your directors are taking necessary steps to restart the plant after arranging working capital and refurbishment of machinery. A few major events below which forced the company to stop operations are elaborated to allow shareholders to get a correct perspective of issues faced by the company.
Arbitration award - GMB Ceramics Limited
The Division Bench of Calcutta High Court Allowed the Appeal in the order Dated 24.09.2018 confirming the most unusual & unheard of arbitration award of the Umpire and dismissed the appeal of the company against the Single Judge Bench order dated 14.10.2015 where the Single Judge Bench partially allowed the appeal for Rs 2 crores and dismissed all other claims which were earlier awarded by the umpire for Rs 1169.63 lakhs for damages along with interest @ 15% till the date of payment. This award amount now restored by the Division Bench comes to around 2250 times the net knowhow fee of Rs 2 lakhs paid by GMB to Neycer for services.
An agreement was made between GMB and Neycer where the agreement was styled as Consultancy dated 26.11.1986 as modified later as Collaboration agreement. These were done prior to change of management & ownership where Neycer provided technical knowhow to set up a sanitaryware plant for GMB Ceramics. These constitute basic structure for the disputes raised.
At present SLP has been moved to the Supreme Court and the Learned Chief Justice made a Docket Order stating There shall be stay of the execution proceedings subject to deposit of a sum of Rs.20000000/- (Rupees two crores only) on account of the principal amount and another amount of Rs.20000000/- (Rupees two crores only) by way of interest (subject to due calculation at a subsequent point of time) by the petitioner. The said amounts will be deposited within four weeks from today whereafter it will be open for the respondent to withdraw the said amount of Rs.40000000/- (Rupees four crores only) subject to furnishing of an undertaking before the Court that it will return the said amount if the same is required under orders of this Court at any subsequent point of time. Dated 24.09.2018. To rescue the company from liquidation this payment was made by diverting funds meant for operations and repairs of the plant out of an inevitable sale of a portion of unused land to remit the funds of Rs 4 crores as ordered by Supreme Court. This resulted in closure of plant operations.
The financial burden on an already sick and closed company is huge and that limits our ability to fund high legal costs at Supreme Court. We like to inform the shareholders that a fair judgement from the Hon ble Supreme Court is essential for survival of the company. The company is strong on the merits of the case and has faith in and hopes to get a fair opportunity to present our case fully by the Supreme Court despite the time pressure on it due to many pending cases.
The summary is given below:
Rs 2 lakhs fee is received by Neycer in 1989 for knowhow fee and 1.8 lakh shares of GMB Ceramics was awarded as part of arbitration award to Consultant Neycer (BIFR company on revival) in 1999. GMB was closed 5 years before then and thus ZERO value shares were awarded (not yet delivered) from GMB which has no or negligible revenue/real assets/operations and almost a shell/dormant company for 24 years & survived 3 winding up orders. The award confirmed by Calcutta High Court order (Annexure 1) gives GMB around Rs 4500 lakhs award for damages to GMB in 2018!!! Thus the award for damages is around 2250 times the net knowhow fee received by Neycer and is over 6 times the project cost of GMB.
Award includes claims for interest not paid by GMB on loans borrowed by them which was written off by banks ALSO claims for loss of profit even for 2 year+ period GMB was closed for labour problems etc as per banks and BIFR ALSO claims for ESTIMATES of Advertisement costs NOT incurred and ALSO many speculative/time barred claims. Award generously and liberally misinterpreted or ignored evidence on record.
GMB in these 29 years created innumerable hurdles at many forums like BIFRAAIFR NCLT High courts of Calcutta Chennai Delhi Orissa etc by recycling even dismissed litigations repeatedly to obstruct and destroy revival of Neycer & group companies.
More details are given below :
Petitioner for SLP : Neycer India Limited (Neycer) Tamilnadu
Neycer a reputed brand in sanitaryware is a 57 years running company on revival after approved BIFR scheme employing over 300 workers and giving uninterrupted yearly revenues to Govt of a few hundreds of crores rupees so far. Livelihood of about 1500 people is dependent on the functioning of the Plant. Respondent for SLP : GMB Ceramics Limited (GMB) Calcutta
GMB had operational problems since 1989 and it made a reference to BIFR in 1992. GMB has no operations for past 27 years since 1991 except for 3 years before 1997. Other than this litigation GMB did not report any business in the past 25 years. Revenues as per GMB accounts show annual revenues of ZERO or negligible for the past 21 years. Thus it almost falls into category of a shell/dormant company for almost 25 years.
After many opportunities BIFR vide its Order dated May 02 2000 (Annexure 2) confirmed winding up of GMB. AAIFR also confirmed winding up of GMB on 17/10/2000 (Annexure 3). The winding up proceedings were initiated before the Company Judge Orissa High Court who appointed Official Liquidator (Annexure 2).
Facts of the Case
GMB entered Consultant agreement with Neycer (Annexure 4) to set up plant to manufacture of vitreous sanitary ware. Disputes arose between the Parties in relation to several breaches of Contract by GMB including the date of commissioning of the Plant by Neycer and consequent damages sought by GMB.
Consequently the matter was referred to Arbitration in 1992. GMB's Managing Director Mr. R. A.Jalan vide Telex messages dated 05.10.1989 and 19.10.1989 has preferred a specific Claim of onlyRs.2 crores for Arbitration(Annexure 5).
Though the original Claim of GMB which was referred to Arbitration was only Rs.2 crores the Umpire granted an Award (Annexure 6) of Rs.1169.63 lacs on June 23 1999 as under allowing amendments which were time barred (allowed after the period of Limitation) with interest @15% p.a. to the Respondent which now comes to around Rs 45 crores.
The award with interest as confirmed by Calcutta High Court in 2018 comes to around Rs 45 crores!!
(2250 times the actual know how fee paid by GMB to Neycer)
Ignored Facts or Misinterpreted Evidence on record:
The Award was speculative time barred and Unincurred/unverified Claims were allowed. Material evidence & written filings was ignored and available evidence misinterpreted and the Umpire travelled beyond his jurisdiction. The Umpire on the sole basis of a project/feasibility report (noted at page 229/I of award) has allowed a claim of 3.46 Crores in full as damages under Schedule E that is loss of profit (see page 232/I) which included even the period when factory is closed for around 2 years from 25.10.1991 for which labour problems power and others were the reasons for closure of plant as per BIFR order and IFCI s report and have nothing to do with Neycer s role.
As per DRS sanctioned by BIFR for GMB dated May 30 1995 IFCI the OA categorically mentioned that The plant of GMB wasClosed on 25th October 1991 due to labour problems and disconnection of electric power as the dues of Orissa State Electricity Board (OSEB) had not been Paid. They also added that he operations of GMB have been below breakeven level right from the beginning mainly due to lack of proper infrastructure leading to disruption in availability of raw material and despatch of finished goods low labour productivity coupled with strained industrial relations adverse climatic conditions affecting mould and green ware drying and high rate of rejections in casting as a result of which it incurred continuous cash losses and failed to meet its obligations to the Institutions. The plant which was closed since 26th October 1991 has been restarted in August 1993.(Annexure 7).
In addition the Umpire ignored the above facts and awarded GMB s Claim of Rs 203.43 lakhs(Schedule C of award) for unincurred estimates of Branding and Advertising expenditure or other costs above even for the period operations were closed for reasons nothing to do with Neycer despite IFCI & BIFR orders confirming that. The real costs as per filed accounts of GMB are less than Rs 15 lakhs in that period.
The award included even the interest not paid by GMB & written off by the FIs. As per the annual report of the Company the FI s waived an amount of Rs.519.64 lacs as interest and Rs.910 lacs as principal and total waiver amounted to Rs.1429.64 lacs Source: Annual Report of GMB for year ended March 31 2012 enclosed as Annexure 8). Hence there is no loss of whatsoever nature to GMB Ceramics Limited on account of Neycer. This award gives double undue enrichment to GMB and if upheld by Supreme Court must be paid back to FIs that wrote off.
The entire Award of Damages by the Umpire was based on the wrong conclusion of delay in commissioning the plant by Neycer by misinterpretation and ignoring of facts on record and which formed part of the Umpire award itself. The In Principle Sanction letter of May 1987 from one of the Lenders (Annexure 9) for part loan (..%) subject to balance tie up and many conditions to be fulfilled by GMB was wrongly interpreted as the date of the final Sanction Letters of all the consortium Lenders whereas the Final Loan Sanction letters/ Loan Agreement was received only in December 1987 (Annexure 10). As foreseen in the Agreement & as confirmed by the statements of GMB enclosed with the arbitration award the Plant was commissioned in May 1989 (and Trial runs completed in July 1989) which was well within the 18 month timeframe as contemplated in the Agreement. Hence there was no delay in commissioning the Plant. The MD of GMB (Mr R.A.Jalan) in his written submission to the Umpire has accepted that the Plant was commissioned in May 1989 (page 45 of the Umpire Award) (Annexure 11). GMB in its written statement to the Arbitrator has also confirmed that the Plant was commissioned in May 1989 (Annexure 12 page 224 of the award). The 18 months as per the agreement applies only for plant commissioning and not for Commercial production which is dependent on many things to be done by GMB itself and not consultant. Based on the wrong assumption of in principle sanction date of only part loan as Loan Sanction date and b) the consequent wrongly interpreted commissioning dates by ignoring & misinterpreting the evidence on record the Umpire accepted GMB s Claims on the grounds of Overrun and awarded all claims totalling Rs.11.69 crore when the claim referred for arbitration was Rs 2 crores.
Misinterpretation of Clause 20 of Agreement : Further the Collaboration Agreement clearly mentions in Clause 20 (Annexure 4) that Neycer would endeavour to complete the Project. However the Umpire misinterpreted endeavour and treated it as obligation which is not the intention of the Agreement between the Parties and which is subject to many other factors.
Thus there is neither delay in commissioning nor obligation of any time frame of 18 months for it as per clause 20 of the agreement.
Clause 13 of the Collaboration Agreement (Annexure 4) clearly mentions that the Collaborators and their Associate Companies shall not be called upon to find ways and means to provide additional funds in the event of Overrun raising from whatsoever causes there may be and that it will be the sole responsibility of GMB for procuring additional funds that may be needed. However the award added all speculative and unincurred estimates towards Overrun
ONE TIME SETTLEMENT OF DUES TO BANK:
Your directors are pleased to inform you that the company has paid off entire dues to Bank of India under one-time settlement (OTS) dues scheme of the bank. The company had to pay more than 100% of principal amount to the bank towards the settlement. Your company exclusively banked with Bank of India since inception 57 years ago. The bank earned hundreds of crores of income with this association and has been supportive to the company until 910 years ago after which the bank while agreeing with the viability of the company concentrated only on overdues and adjusted more than Rs 10crores from collections on a daily deduction basis without being sensitive to operations of the company. This resulted in stoppage of operations many times and also damaged the machinery. This is in addition to the OTS amount mentioned above. As can be seen from the summary below the bank s actions and delays resulted in aggravating the cash crunch situation further resulting in stoppage of operations. The Company had to sell a portion of the land for this purpose to pay the bank. The following is the summary
Neycer banked exclusively with Bank of India (BOI) since inception for the last 55 years
Neycer brand is well known & commands premium for sanitary ware in India and abroad for decades.
Neycer became sick and was taken over by Spartek and was referred to BIFR (case no.29/92) in 1991. BIFR scheme approved after 17 years in Oct 2008.
Investor group brought in by the Promoters negotiated a onetime settlement with ICICI IDBI & LIC and acquired their entire debt and consequently Bank of India became the paripassu secured creditor.
In addition Promoters brought in Rs.6 crores as required by BIFR scheme.
The company has not sought for any waivers from Bank of India though other Fis granted waiver of 100% interest and 60% principal and Bank of India continued with the company.
Though the company was sick and was referred to BIFR since 1990 promoters kept up all commitments to Bank of India and thus Neycer was a standard asset for BoI till 2006 as the sanitary ware division remained profitable all the time.
The reconciliation of the principal amount due and interest not completed even after nine years of BIFR approval as the bank wrongly debited penal interest compound interest and interest for tile plant which is not as per the scheme approved by BIFR.
The company s operations were profitable from 2010 to 2012 after the scheme was approved in 2008.
The profit cycle was hit by Natural calamity Thane cyclone in Dec 2011 which damaged Rs 7.5 crores of productive assets and more than 50% of capacity was damaged.
The company received meagre insurance claim against damages actually incurred resulting in loss of Rs.5 crores that too after 9 months delay adversely affecting the operations.
This disruption caused the inability of the Company to keep up its commitment of repayment of term loans to BoI in Jan 2012. BoI did not consider numerous requests since 2012 to the bank to allow Adhoc loan or bridge finance pending insurance claim or at least defer repayments in view of national calamity damage. Adding fuel to the fire the bank started recovering Rs.50000/- per day at a time when production completely stopped for 3 months due to natural calamity and when funds badly needed to repair the damage.
The unilateral deduction by the bank has resulted in the company continuously defaulting the statutory dues and affected the operations of the company.
The company during 2012 proposed sale of surplus unutilised land and use the proceeds to fund urgent capital expenditure to restore the damaged capacity repay bank pay statutory and worker dues. Later the Bank finally approved asset sale in 2014 subject to approval of BIFR.
Based on discussions with the then Chairperson and senior management the company submitted another comprehensive proposal to Bank in March 2016 exactly on the lines suggested by bank. However this remained under consideration with no decision till 2018.
The BIFR which was non-functional from Feb 2015 to June 2016 finally gave a hearing on 16th November 2016. BoI in spite of its earlier approval of sale of assets requested for postponement of the hearing to study the proposal mainly due to communication gap arising out of change of executives within the bank. The next hearing was postponed to 12th December 2016.
Unfortunately BIFR was wound up by the Govt. with effect from 1st December 2016 and the subjects will be dealt by NCLT at a future date.
Thus the company s restructuring and asset sale proposals were pending from 2012 and the bank retained more than Rs 10 crores towards its loans and interest by deducting Rs.50000/- per day when the company s operations were paralysed for want of funds.
In spite of all the above factors the company s pending orders were always to the tune of Rs.100 lakhs at any time which could not be supplied due to insufficient capacity.. An export order worth more than Rs.35 crores could not be fulfilled. The company offered to get letters of orders from at least 100 dealers for additional sales if only the bank can provide working capital or temporarily stop Rs 50000 per day deduction for retaining cash in company or allow the company to sell surplus lands and use the proceeds to regularize overdues of bank statutory dues and working capital.
Company made numerous requests since 2013 to bank at DGM/AGM levels to visit plant and understand operations and support by not deducting Rs.50000/- per day for a few months till we restore capacity. It did not happen.
The Company employs around 500 people directly and another 500 people indirectly. Hence the livelihood of about 1000 families will be affected.
As things dragged on for 6 years the company opted for One time settlement (OTS) as per bank scheme and completed it in 2018-19 by proceeds of sale of land.
Compared to 2012 when the land prices were higher at the time company requested the bank to permit excess land sale the asset value was more than 6 times the principal of the term loan. The land prices came down drastically in the past few years for reasons known and the company had to sell almost double the land to clear all payments. Thus the bank delays for 6 years on land sale permission resulted in increased liabilities and reduced sale proceeds of around Rs 20 crores plus apart from business losses.
This is typical of problems of MSMEs with sound business potential while the banks concentrated on their balance sheet issues clean up in the past few years.
Violation of judicial orders of BIFR by Gas Authority of India Limited (GAIL) :
Gail dishonoured the judicial orders dated 6thOct 2008 of BIFR and their violation of led to severe cash crunch since then. GAIL resorted to innumerable delay tactics & litigations at multiple judicial forums like BIFR AAIFR High Court NCLT etc and used it s monopolistic position as the sole supplier of natural gas in that region and exploited the vulnerability of the company by forcing the renewal of supply agreements under threat of cutting off supplies. As per BIFR order the amount payable by GAIL is around Rs 30 crores as of June2019. The company made necessary claims in this regard and taking the legal steps to recover the amount. The summary is as below :
During the year 1999 Neycer got allotment of Natural Gas from GAIL from its well at Bhuvanagiri. The company was initially allotted 8000 SCM gas initially and additional 4500 SCM was allotted later totaling to 12500 SCM for which agreement has been entered into with GAIL. Neycer is the only customer of GAIL for the past 15 years for the Bhuvanagiri gas wells in Tamilnadu. Based on assurances of uninterrupted supply of Natural Gas the company changed its existing kiln burners from LDO to suit gas at a huge cost. It later added another kiln with full gas burners.
GAIL laid their pipelines from its wells to Neycer s plant at Vadalur. The entire cost of laying pipelines was recovered as transportation charges from Neycer. Neycer is a sick company referred to BIFR and based on the rehabilitation scheme for Neycer from the operating agency Bank of India BIFR ordered GAIL to refund the excess transportation charges and also to stop charging further transportation charges. The relevant portion of the BIFR order of October 2008 relating to GAIL is as follows.
To refund excess amount of fixed transportation charges recovered from the Company towards the cost of laying pipelines.
To waive future fixed transportation charges on account of cost of laying the pipelines especially as it is reported to have already recovered.
To allocate additional natural gas of 35000 scm per day for the proposed expanded activities.
The supplies from GAIL were erratic at pressures as low as 10% of committed pressures in specifications and was insufficient to take care of the needs of Neycer. There were many stoppages without notice and all of above damaged the kilns at Neycer resulting in major production losses and assets damage. While not able to supply to Neycer GAIL also allotted gas to one Saravana Insulators a neighboring company through the pipelines laid for Neycer from another well BVG 10. This affected Neycer supplies further and company was forced to shut down the kilns often that resulted in low and poor quality & loss of production resulting in losses of crores of production and machinery damage.
Further GAIL contrary to the above order of BIFR has till date not refunded the charges that have been levied in excess by them and also they are still continuing to levy transportation charges which is in contravention to the provisions of the judicial orders of BIFR.
GAIL has challenged the orders of the BIFR dated 06.10.2008 which interalia envisaging various reliefs from GAIL was sanctioned in an appeal before the Hon ble AAIFR. The Hon ble AAIFR vide its order dated 28.06.2011 dismissed the said appeal.
GAIL moved a writ petition before the Hon ble High Court of Delhi. The Hon ble High Court did not support GAIL and vide its order dated 07.12.2011 referred the matter back to BIFR limited only to the issues specified in order dt 02.11.2011 to quantify the alleged excess amount collected which is to be quantified and refunded as in clause 10(L) of the scheme and held that the rest of the scheme continues.
GAIL has taken a stand that they are collecting transportation charges only for maintaining the pipelines. But this is contrary to the facts that pipeline maintenance does not cost almost 40-50% of pipeline cost. As per estimates done by an official valuer used by banks & High Courts the cost of Laying Pipelines can be maximum Rs.300 lakhs and the transportation charges paid till June 2018 is Rs.1717 lakhs and the amount to be refunded is Rs.1417 lakhs on this. Gail is also charging transportation charges @ Rs.13 lakhs per month even for ZERO supply which also has to be refunded to the company.
The company filed a Miscellaneous Petition before BIFR for stopping GAIL from recovering further transportation charges in violation of BIFR s original orders and to provide details of actual quantified details from GAIL as ordered by Delhi High Court and refund the excess transportation charges received by them. GAIL delayed for years with litigations and vague replies and avoided giving the details sought as per orders of Delhi High court. The MA filed by the company could not be heard and consequent to the repeal of SICA 2016 and winding up of BIFR shifted the matter to NCLT. Hence the company filed an application under Rule 11 of the NCLT Rules 2016 before NCLT Chennai. The application was heard on various dates and GAIL was directed to supply the following information along with relevant documents. GAIL has been avoiding giving information to the NCLT and has been filing some application or other. After wasting so many years with litigations to avoid giving this information GAIL finally replied at NCLT in late 2018 that the original cost of laying the pipelines by GAIL was Rs 304.54 lakhs. GAIL tried to mislead the NCLT by combining the original cost of RS 304.54 lakhs with recent new pipeline done by them and mentioned the cost of pipeline at Rs.1448.62 lakhs. However the BIFR order of 2008 refers to cost of pipeline originally done and not the costs to be incurred again by them in future in 2015-16. It is also admitted by GAIL that they have collected from company alone is Rs.1717.41 crores much higher than the cost of Rs 304.54 crores incurred by GAIL.
Based on GAIL s own affidavit dt. 27/11/2018 filed with NCLT GAIL is to refund the following amount to the company: Rs.(1717.41--3.04)crores = Rs 1412.83 crores +interest from 2008 till 31.06.2019. In addition
a. Despite judicial order of BIFR as per clause 10 (L) GAIL continues to violate the BIFR orders and hence is in contempt of court. There was no stay on the order obtained by GAIL.
b. Financial damages on account of GAIL s violation of judicial orders non-supply and erratic supplies etc. resulted in a loss of more than Rs 50 crores in the past ten years.
In view of the NCLAT order dt 29/1/2019 which called the Removal Of Difficulties order of the Govt as invalid there is no legal forum that is specified to give a remedy to the situation. In view of this since the quantified amount is given by GAIL itself in it s affidavit to NCLT the company has been advised to file a writ at the High court for implementation of the BIFR order& steps are being taken now.
GAIL has been now writing to the company that it will supply only 1250 cu mtrs/day of gas which is hardly 10% of the original allocation committed and also raising each month transportation charges of Rs 13 lakhs Per month for ZERO supplies. Thus the transportation charges from GAIL alone come to 150% of the gas price at offered quantity which is unheard of and the highest in the world. Thus GAIL is using it s monopolistic position to exploit a sick company and ruined it s revival and forced the company to close operations with it s approach. A similar case was held against GAIL in CCI. GAIL is responsible for closure of the company and is liable to pay damages apart from the original amounts with interest payable as per judicial orders of BIFR. Apart from destroying a sick company s revival and forcing closure GAIL s actions also resulted in Govt losing more than Rs 100 crores of GST & other taxes so far and more than 1000 jobs lost causing misery to the worker families. Such a blatant violation of judicial orders is not heard of from any PSU in India.
As per the judicial orders of BIFR in their order dated 6.10.2008 GAIL is liable to pay the amounts of more than Rs30 crores to Neycer as of 30.06.2019.
The company also cleared many statutory overdues from the proceeds of sale of land. Unfortunately company had to deal with multiple departments of the Govt where actions of one arm of Govt prevented the company from complying with law or payment of the other resulting in huge interest penalties and coercive steps and harassment from the Govt. In addition your company faced a number of other financial and other damages due to factors that cannot be put in writing. A coordinated action of all Govt departments would have helped the Government also to have gained more revenue from the company by allowing operations. Unfortunately such an environment does not exist in India yet and thus for a company in such a financial crunch created by many external factors as above it was impossible to operate as the entire funds and time of limited executives was used in fighting for survival of the company. Since the Government speaks of ease of doing business now your Directors hope that future steps of the Government in this direction will really allow MSMEs like your company to grow again.
Thus the company spent most of the year on clearing past problems and could concentrate with limited executives only on project sales by outsourcing for most of the year after stoppage of operations due to funds crunch. Having settled major hurdles of the past 10 years like the bank and many statutory dues issues during the year the company started adding sales team to reactivate sales to dealers and also made plans for restart of the plant. New senior management is being recruited. The required plant repairs and corrections are planned to be completed in the next few months and plant operations will commence within this financial year 2019-20. Hence the accounts are prepared on a going concern basis.
The detailed documents relating to some of the above are placed on the company website at link https://www.neycer.in/ for perusal by the shareholders to get a correct perspective on the subjects.
The paid up Equity Share Capital as on March 31 2019 was Rs.101669160. No additions and alterations to the capital were made during the financial year 2018-19. Out of the above 1330000 shares are yet to be listed.
Considering the huge accumulated losses in the past your Board of Directors could not recommend any dividend to the shareholders for the financial year ended 31.03.2019.
TRANSFER OF PROFIT TO RESERVES
The company has not proposed to transfer any of its profits to reserves in view of the Carried forward losses.
MATERIAL CHANGE AND COMMITMENTS OF THE COMPANY
There were no material changes and commitments affecting the financial position of the company which have occurred between the end of the Financial year to which the Financial statement relate and the date of report and there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company s operations in future.
PARTICULARS OF LOANS GUARNATEES OR INVESTMENTS
There has been no loan guarantees and investment given or made by the company under Section 186 of the Act during the financial year 2018-19.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES
The company does not have any subsidiaries associates and joint venture companies.
The Meetings of the Board were held periodically and 120 days has not lapsed between two meetings as prescribed under section 173(1) of the Companies Act 2013. The details of attendance of the meetings are given in the Corporate Governance report.
The Board of the Company had constituted the Audit Committee under the provisions of the Companies Act 2013 and SEBI (LODR) Regulations and the details of the composition of the Audit Committee is furnished in the Corporate Governance Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The company has in place the Whistle Blower Policy. The said policy is in compliance with the provisions of the Companies Act 2013 and the Listing Regulations. The quarterly reviews are submitted before the Audit Committee.
M/s. SNS ASSOCIATES Chartered Accountants (Firm Registration No.006297S) have been appointed as statutory auditors of the company for a period of 5 (five) Consecutive years at the Annual General Meeting held on 26th September 2017.Due to the amendment of section 139 of the Companies Act 2013 ratification of the Auditor s appointment is not required any longer. His term shall expire on 31.03.2022
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Copies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board has appointed Secretarial Auditors to conduct secretarial audit for the financial year 2018-19.
The Secretarial Audit Report as received from the secretarial auditor is annexed to this report as Annexure II.
COMMENT ON SECRETARIAL AUDITOR REPORT
With reference to the remarks made by the secretarial auditor in the Secretarial Audit Report the company has taken the corrective measures during the current financial year.
As per the provisions of the Companies Act 2013 the company has M/s. R.Sundararaman & Co. as an Internal Auditor for the company for the financial year 2018-19.
The Company proposes to continue their services and appoint M/s. R. Sundararaman & Co. as an Internal Auditor for the financial year 2019-20 to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.
PARTICULARS ON REMUNERATION
No employee of the company was in receipt of the remuneration as specified in Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Amendment Rules 2016 under Section 197(12) of the Companies Act 2013 and further in terms of the said rules no employee of the company holds by himself or along with his/her spouse and dependent children more than two percent of the equity shares of the company.
INTERNAL CONTROL AND ITS ADEQUACY
The internal auditors of the company regularly conduct audit and submit their quarterly reports which are reviewed by the Audit Committee. The company has an adequate Internal Control System commensurate with the size scale and complexity of its operations. To maintain its objectivity and independence the Internal Auditor reports to the Chairman of the Audit Committee of the Board. During the year such controls were tested and no reportable material weaknesses in the design or operation were observed.
The Management envisions trained and motivated employees as the backbone of the Company Special attention is given to recruit trained and experienced personnel not only in the production department but also in marketing finance and accounts. The Management strives to retain and improve employee s morale. The company is in the process of revamping the employer employee engagement program.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Rule 8(3) of the Companies (Account) Rules.2014 are as follows:
A. Conservation of Energy
At present there is no manufacturing activity in the company. Hence the scope for conservation of energy is very limited. Hence reporting this clause is not applicable.
Details of Consumption of electricity
B. Technology Absorption:
Your company is planning to adopt improved technology for better quality improvement energy saving materials consumption and reduction of wastages.
C. Foreign Exchange earnings and outgo:
Since the company has not carried on any export during the financial year under review the disclosures requirement relating to exports initiatives taken to increase exports; development of new export markets for products and services and export plans doesn't arise.
RELATED PARTY TRANSACTIONS
During the year 2018-19 the company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material as per sub-section (1) of Section 188 of the Companies Act 2013. Hence the question of reporting under this requirement of said section does not arise.
EXTRACT OF ANNUAL RETURN
Pursuant to sub-section 3(a) Section 134 and sub section 3 of section 92 of the Companies Act 2013 read with Rule 12 of the Companies (Management and Administration) Rules 2013 the extract of the Annual Return as at March 31 2019 in Form MGT-9 forms part of this report as ANNEXURE I.
RISK MANAGEMENT POLICY
The risk management is overseen by the Audit committee of the company on a continuous basis therefore constituting a Risk Management Committee does not arise. Major risks if any identified by the business and functions are systematically addressed through mitigating action on a continuous basis. The Risk Management policy is available in the company website www.neycer.in.
DISCLOSURE AS PER PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has constituted a separate committee under the Sexual Harassment of women at Workplace (Prevention prohibition and Redressal) Act 2013. The following are the details of the committee:
Sexual Harassment Committee:
Y. Mohan prasad
Mr. Ganpathy Krishnamoorthy
The company has zero tolerance for sexual harassment at work place. During the financial year 2018-19 the members met on 30th March 2019 for review and no complaints were received.
The policy is available in the company website www.neycer.in.