Your Directors have pleasure in presenting the Thirtieth Annual Report of the Companytogether with the Audited Financial Statement for the year ended 31st March2020.
1. FINANCIAL AND OPERATIONAL PERFORMANCE a. Standalone Financial Results
| || ||(In Rupees) |
|Particulars || |
| ||For the Financial Year ended 31st March 2020 ||For the Financial Year ended 31st March 2019 |
|Revenue from Operations ||1066681413 ||1395559895 |
|Profit/(Loss) before Interest ||(356931798) ||165299382 |
|Depreciation and Tax || || |
|Less: Interest ||74315565 ||68515129 |
|Profit/(Loss) before Depreciation and ||(431247363) ||96784253 |
|Tax || || |
|Less: Depreciation and Amortization ||47014208 ||40304159 |
|Profit / (Loss) before Tax ||(478261571) ||56480094 |
|Exceptional Items || ||22853055 |
|Extra-ordinary items || ||- |
|Tax expenses || ||11733243 |
|Remeasurements of Net Defined || ||(136845) |
|Benefits Plans || || |
|Profit / (Loss) after tax ||(478261571) ||22030641 |
The Company's total revenue is reduced to Rs. 1066681413/- in F.Y. 2019-20 from Rs.1395559895/- posted in the same period last year. The Company made a loss of Rs.(478261571)/- in financial year 2019-20 as compared to profit of Rs. 22030641/-posted in financial year 2018-19. During the month of October 2020 the Company receiveda notice from Maharashtra Pollution Control Board (MPCB) and pursuant to the same thefactory operations were halted. This led to decline in the profits of the company duringthat period.
The Company had huge loans and interest payments but due to financial constraints theCompany couldn't repay the loans taken from Saraswat Bank. Hence Saraswat Bank vide theirletter dated February 18 2020 sent to the Company a notice declaring the company asNon-Performing Asset (NPA) and thereafter the Company handed over the assets of theCompany to Saraswat Bank.
c. Report on Performance of Subsidiaries:
The Company does not have any subsidiary company. d. Dividend:
Your Directors have not recommended any dividend for the financial year ended 31stMarch 2020 and no amount has been transferred to reserves. e. Transfer to reserves:
During the year under review the Board of Directors has not recommended transfer ofany amount to reserves. f. There was no change in the nature of business of company duringF.Y. 2019-20. g. Disclosures under section 134(3)(l) of the Companies act 2013:
Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Company's financial position have occurred between the end of thefinancial year of the Company and date of this report. h. Share Capital:
There was no change in the Company's Capital during the year under review.
I. DISCLOSURE OF INTERNAL FINANCIAL CONTROL:
The Internal Financial Control with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation for inefficiency or inadequacy of such controls are reported.
II. PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES:
Full Particulars of Loans & Guarantees Given Investments made and Securitiesprovided along with the purpose for which the loan or guarantee or security is proposed tobe utilized by the recipient are provided in the financial statement. (Please refer toNotes [3 and 10 of the Financial Statement.)
III.PARTICULARS OF CONTRACTS/ ARRANGEMENTS/ TRANSACTIONS WITH RELATED
All contracts / arrangements / transactions falling within the purview of Section 188of the Companies Act 2013 entered into by the Company during the financial year withrelated parties were in the ordinary course of business and on an arm's length basis. Noneof the transactions entered into by the Company with related parties were material innature i.e. exceeding the limit 10% of annual turnover of the Company. The particulars ofcontracts or arrangements with related parties are forming part of notes to Accounts inthis Annual Report. All Related party transactions have been placed before the AuditCommittee and subsequently before the Board for its approval. As per the policy onMateriality of and Dealing with Related Party Transactions omnibus approval was obtainedon annual basis for transactions which are of repetitive nature. The policy on relatedparty transactions as approved by the Board of Directors has been uploaded on the websiteof the Company.
IV.MATTERS RELATED TO CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL AND
DECLARATION BY INDEPENDENT DIRECTORS:
During the financial year under review:
- Mrs. Leena P. Chitalia was appointed as the Non - Executive IndependentDirector of the Company with effect from July 19 2019.
- Mr. Prameshkumar B. Mehta resigned as the Non - Executive Independent Directorof the Company with effect from December 6 2019.
- Mr. Dilip Kamalakar Pimple Executive Director resigned from the office ofdirectorship of the Company with effect from February 6 2020.
- Ms. Nancy Napoleon resigned from the post of Company Secretary &Compliance Officer of the Company with effect from June 2 2020.
Directors Retiring by Rotation
Pursuant to the provisions of Section 152 of the Companies Act 2013 no director isliable to retire by rotation.
Declaration by Independent Directors:
The Company has received and taken on record the declarations received from all theIndependent Directors of the Company in accordance to Section 149(6) of the Companies Act2013 confirming their independence vis-a-vis the Company.
V. DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES: A. BOARD MEETINGS:
Seven (7) meetings of Board of Directors were held during the financial year underreview details of which are furnished in the Corporate Governance report forming part ofAnnual report.
B. DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedAnnual Financial Statements of the Company for the financial year ended March 31 2020the Board of Directors hereby confirms that:
a. in the preparation of the annual accounts for the financial year ended 31st March2020 the applicable accounting standards have been followed along with proper explanationrelating to material departures.
b. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2020 and of the Profit of the Company for that year.
c. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
d. the annual accounts of the Company have been prepared on a going concern basis.
e. internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.
f. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
C. COMMITTEES OF BOARD:
The Company has the following three (3) board level Committees which have beenestablished in compliance with the requirements of the business and relevant provisions ofapplicable laws and statutes:
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders Relationship Committee.
Details with respect to the composition terms of reference number of meetings heldetc. of these Committees are provided in Corporate Governance Report which forms part ofthe Annual Report.
(I) Vigil Mechanism Policy:
In compliance of the requirements of section 177 of the Companies Act 2013 Regulation22 of Listing Regulations and as measure of good Corporate Governance practice the Boardhas formulated a Vigil Mechanism Policy. The policy comprehensively provides anopportunity for employees / directors of the Company to raise issue concerning breachesaccounting policies or any act resulting in financial or reputation loss and misuse ofoffice or suspected or actual fraud. The policy is adequate safeguard againstvictimization. The Board of Directors of the Company has pursuant to the provisions ofSection 178(9) of the Companies Act 2013 read with Rule 7 of the Companies (Meetings ofBoard and its Powers) Rules 2014 framed Vigil Mechanism Policy for Directorsand Employees of the Company to provide a mechanism which ensures adequate safeguards toemployees and Directors from any victimization on raising of concerns of any violations oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports etc. and the same is also hosted on the website of the Company.The employees of the Company have the right/option to report their concern/grievance tothe Chairman of the Audit Committee. The Company is committed to adhere to the higheststandards of ethical moral and legal conduct of business operations.
(II) Risk Management Policy:
The Board of Directors of the Company has designed Risk Management Policy andGuidelines to avoid events situations or circumstances which may lead to negativeconsequences on the Company's businesses and define a structured approach to manageuncertainty and to make use of these in their decision-making pertaining to all businessdivisions and corporate functions. Key business risks and their mitigation are consideredin the annual/strategic business plans and in periodic management reviews.
E. Internal Control Systems:
Adequate internal control systems commensurate with the nature of the Company'sbusiness and size and complexity of its operations are in place and have been operatingsatisfactorily. Internal control systems comprising of policies and procedures aredesigned to ensure reliability of financial reporting timely feedback on achievement ofoperational and strategic goals compliance with policies procedure applicable laws andregulations and that all assets and resources are acquired economically used efficientlyand adequately protected.
VI. AUDITORS AND AUDITOR'S REPORTS:
a. Statutory Auditor and their report:
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s Raman S. Shah & Associates CharteredAccountants registered with the Institute of Chartered Accountants of India (ICAI)bearing registration number 119891W was appointed as the Statutory Auditors of theCompany from the conclusion of the twenty-Seventh Annual General Meeting (AGM) held on 29thSeptember 2017 till the conclusion of the thirty second AGM of the Company subjectto the ratification of their appointment at every AGM.
Pursuant to Companies (Amendment) Act 2017 the proviso regarding ratification ofappointment of auditors in every general meeting by the members removed vide notificationdated 7th May 2018. Therefore M/s Raman S. Shah & Associates continues tohold office upto thirty second AGM. M/s Raman S. Shah & Associates has provided theirrespective consent certificates and declaration as required under Section 139 and 141 ofthe Act and the Companies (Audit and Auditors) Rules 2014. The Report of the Auditors onthe financial statement for the year ended 31st March 2020 contains onequalification as under: Qualification:- I. Notice is issued by Saraswat Bank dated 18thFebruary 2020 under section 13(2) of the Securitization and Reconstruction of FinancialAssets and Enforcement of Security Interest (SARFAESI) Act 2002 for non-payment ofprincipal and interest of Rs. 76.24 Crores up to 18th February 2020 after the due dateby the company and therefore all loan accounts became Non-Performing Assets effective fromrespective dates mentioned in such notice.
II. We draw attention regarding impact of permanent decline in respect of non-currentinvestments (Long term investments) in Tekno Point Mercantile Private Limited (theParty Company) for Rs. 4.15 Crores which is shown as Current Investment (Short TermInvestment). Out of the above 4.15 Crores the management has provided for a diminution ofRs. 4 Crores thus reducing the Investments in the Party company to Rs. 15 Lakhs. In theabsence of financial statement for the year ended 31st March 2020 of the party companyit has been observed from the perusal of the financial statements of F.Y. 2018-19 thatthe Party Company has accumulated losses of Rs 289.55 Lakhs for the year ended 31st March2019. The Party Company is under losses since a past few years. The Party Company'sIndependent Auditors' Report audited by the other auditor shows qualified opinion onnon-provision of losses to the extent of Rs.7.54 Crores on account of valuation of stockat cost instead of lower of Cost or market value for the year ended 31st March 2019. As aresult of this the net worth of the Party Company has eroded significantly. Theseconditions along with absence of clear indications or plans for revival in our opinionindicate that there is significant uncertainty and doubt about the correct Fair marketvalue of the said investment. In our opinion management has not adequately orsufficiently accounted for the imminent diminution if management accounted for suchdiminution the profit for the year ended 31st March 19 would have been further reducedand accordingly carrying value of investment would have also been reduced. We were unableto determine the impact on the Audited standalone financial result of potentialadjustment for provision of diminution in the value of investment made in the said partycompany.
III. During the year the Company has carried out the impairment/obsolete testingexercise on the inventory and found it necessary to provide for impairment of Work inprogress and intermediate products inventory. Based on the management's estimate of thefair realizable value of inventory as per Ind AS 2 an impairment provision of Rs. 25.21Crores has been provided based on the management's best judgment and subject to technicalreview by a technical team of consultants. In view of uncertainty we were unable todetermine the impact on the Audited standalone financial result of potential adjustmentfor impairment provision of inventory that might have been necessary in order to presentthe inventory at its estimated realizable value. The Saraswat bank have took over thebalance stock of Rs.3.55 Crores as the bank declared the Company as Non-performing Assetand has initiated Notice u/s.13(2) of the Securitization and Reconstruction of FinancialAssets and Enforcement of Security interest Act 2002.
IV. As per section 17(5)(h) of CGST Act 2017 the liability to forego the Input TaxCredit (ITC) arises when the value of inventory is fully written off from the books ofaccounts on impairment of inventory. Taking into consideration the above point theCompany has failed to reverse the ITC to the extent of inventory written off on account ofimpairment. In view of uncertainty we were unable to determine the impact on the Auditedstandalone financial result of potential adjustment for reversal of ITC. The losses inour opinion would have substantially increased if the Company had provided for theliability of reversal of Input Tax Credit.
V. According to Ind AS-19 related to employees' benefits the company has not givenany effect of gratuity liabilities as per actuarial valuation; hence the effect ofgratuity expenses as per Ind AS-19 is not reported in other comprehensive income. As perinformation provided by the company its operational activities are standstill sinceFebruary' 2020 and due to non-availability of key personnel there is no detail availablefor actuarial valuation.
VI. The Company has not considered the possible effects that may result from thepandemic relating to COVID-19 on the carrying amounts of Audited standalone financialstatements. In developing the assumptions relating to the possible future uncertainties inthe global economic conditions because of this pandemic the Company as at the date ofapproval of these financial statements has not used internal and external sources ofinformation including credit reports and related information and economic forecasts. Basissuch uncertainties we were unable to determine the adverse impact on its future cashflows and its ability to meet its obligations as and when they fall due. Reply to thequalification: -
Emphasis of matter
We draw attention to Note 3 of the accompanying standalone financial results duringthe year under review the Company incurred huge losses which resulted into eradicationof entire net worth negative working capital loss of key personnel and negative cashflow. Hence the Company's future performance is doubtful and has not been able to payliabilities of banks creditors. As informed to us and relied as per management viewduring the financial year 2019-20 Company has written off huge stock on account ofclosure of plant by Pollution control Board in periodic interval for differentmanufacturing units power/water disconnection due to closure notice batch failure andCOVID 19 situation has lost key personnel responsible for production and Loss of skilledworkers. The Company has been facing many problems related to pollution issues andreceived closure notice from Maharashtra Pollution control Board since past three years indifferent occasions. Lastly under COVID 19 it could not produce material. Further toabove we draw attention to Note No. 3 of accompanying financial result regarding noticeissued by the Saraswat Co-Operative Bank Limited under section 13(2) of the Securitizationand Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act2002 for non-payment of principal and interest thereon after the due date by the companyand therefore all loans accounts became Non-Performing Assets effective from respectivedates mentioned in such notice. These factors along-with other matters as set forth insaid notice raise substantial doubt about the company's ability to continue as a goingconcern in the foreseeable future.
In view of the same and events stated in points I II III IV V and VI in the paraabove Basis for Qualified Opinion indicate that a material uncertainty existsthat may cast a significant doubt on the Company's ability to continue as a going concern.
Management's Responsibilities for the Standalone Financial Results
The Statement has been prepared on the basis of the standalone annual financialstatements. The Board of Directors of the Company are responsible for the preparation andpresentation of the Statement that gives a true and fair view of the net loss and othercomprehensive income of the Company and other financial information in accordance with theapplicable accounting standards prescribed under Section 133 of the Act read with relevantrules issued thereunder and other accounting principles generally accepted in India and incompliance with Regulation 33 of the Listing Regulations. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Statement that give a trueand fair view and are free from material misstatement whether due to fraud or error. Inpreparing the Statement the Board of Directors are responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless the Boardof Directors either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process. b. Secretarial Auditor and their Report
The Board had appointed M/s. Ratish Tagde & Associates Practicing CompanySecretaries as Secretarial auditors for the financial year 2019-20. Secretarial AuditReport issued by M/s. Ratish Tagde & Associates in form MR-3 for the FY 2019-20 formspart of this report and marked as Annexure II.
VII. ANNUAL EVALUATION:
The Board evaluated the effectiveness of its functioning and that of the Committees andof individual directors by seeking their inputs on various aspects of Board/CommitteeGovernance. The aspects covered in the evaluation included Board Composition Strategicorientation Board Functioning and Team Dynamics leadership style contribution to andmonitoring of corporate governance practices fulfilment of Directors' obligations andfiduciary responsibilities including but not limited to active participation at theBoard and Committee meetings. The Nomination and Remuneration Committee considered anddiscussed the inputs received from the Directors and outcome of such evaluation processwas satisfactory which reflected the overall engagement of the Board and its Committeeswith the Company. Further the Independent Directors at their meeting reviewed theperformance of Board Chairman of the Board and of Non- Executive Directors.
VIII. DISCLOSURE OF REMUNERATION PAID TO DIRECTOR AND KEY MANAGERIAL
PERSONNEL AND EMPLOYEES:
Information required pursuant to Section 197 (12) of the Companies Act 2013 read withRule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided as Annexure III to this report.
IX. FRAUD REPORTING:
During the year under review there was no material or serious instances of fraudfalling within the purview of Section 143 (12) of the Companies Act 2013 and rules madethereunder by officers or employees reported by the Statutory Auditors of the Companyduring the course of the audit conducted.
X. OTHER DISCLOSURES:
Other disclosures as per provisions of Section 134 of the Act read with Companies(Accounts) Rules 2014 are furnished as under: a. Extract of Annual Return:
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2020 made under theprovisions of Section 92(3) of the Act is attached as Annexure IV which forms part of thisReport. b. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:
The particulars as required under the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in Annexure V which forms part of this Report. c. Corporate Governance andManagement Discussion & Analysis Reports:
The Company is committed to maintain high standards of Corporate Governance and adheresto its requisites set out by the respective authorities. The report on CorporateGovernance as stipulated under the Listing Regulations is annexed vide Annexure VI andforms an integral part of this Annual Report. Requisite certificate from the Auditors ofthe Company M/s. Raman S. Shah & Associates Chartered Accountants (Firm RegistrationNumber:119891W) confirming compliance with the conditions of Corporate Governance asstipulated in Chapter IV of Listing Regulations by the Company is attached as AnnexureVI(A) and forms an integral part of this Annual Report. Certificate issued by ManagingDirector and Chief Executive Officer of Company with regard to certification on AuditedFinancial Statement of the Company for financial year 2019-20 is also annexed herewithvide Annexure VI(B) and forms an integral part of this Annual Report. The Company has laiddown the Code of Conduct for all Board Members and Senior Management personnel of theCompany. The declaration by CEO of the Company related to the compliance of aforesaid Codeof Conduct is also attached herewith vide Annexure VI(C) and forms an integral part ofthis Annual Report. Management Discussion and Analysis Report for the year under reviewas required pursuant to the provisions of Regulation 34 read with Schedule V (B) ofListing Regulations is annexed herewith vide Annexure VII and forms part of this AnnualReport. d. General Disclosures:
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions pertaining to these matters during F.Y.2019-20:
a. Details relating to acceptance of deposits covered under Chapter V of the CompaniesAct 2013.
b. Issue of equity shares with differential rights as to dividend voting or otherwise.c. Issue of shares (including sweat equity shares and ESOS) to employees of the Companyunder any scheme.
d. Instances with respect to voting rights not exercised directly by employees of theCompany.
e. The Managing Director nor the Whole-time Directors of the Company have received anyremuneration or commission from its wholly owned subsidiary Company/ subsidiary.
f. Your Directors further state that:
g. 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.
h. There was no change in the nature of business of company during F.Y. 2019-20.
i. Pursuant to the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 no case pertaining to sexual harassment at workplacehas been reported to company during F.Y. 2019-20. j. Reinstatement of the financialstatements of the previous financial years.
XI. CAUTIONARY STATEMENT:
Statements in the directors' and management discussion and analysis describing thecompany's objectives projections estimates expectations or predication may beforward-looking statements' within the meaning of applicable securities laws andregulations actual results could differ materially for those expressed or impliedimportant factors that could make difference to the company's operations include rawmaterial availability and its prices cyclical demand and pricing in the company'sprinciple markets changes in government regulations tax regimes economic developmentswithin India and the countries in which the company conducts business and other ancillaryfactors.
XII. ACKNOWLEDGEMENTS AND APPRECIATION:
Your Directors take this opportunity to thank its customers shareholders suppliersbankers business partners/associates financial institutions and Central and StateGovernments for their consistent support and encouragement to the Company. Your Directorsrecord with sincere appreciation the valuable contribution made by the employees at alllevels and looks forward to their continued commitment to achieve further growth and takeup more challenges that the Company has set for the future.
|For and on behalf of the Board of Directors |
|Uday Mukesh Desai ||Mukesh Naik |
|Chief Executive Officer ||Chairman & Managing |
| ||Director |
| ||DIN: 00412896 |
Date: November 16 2020