Regency Ceramics Ltd.
|BSE: 515018||Sector: Consumer|
|NSE: REGENCERAM||ISIN Code: INE277C01012|
|BSE 00:00 | 27 Feb||Regency Ceramics Ltd|
|NSE 05:30 | 01 Jan||Regency Ceramics Ltd|
Regency Ceramics Ltd. (REGENCERAM) - Director Report
Company director report
Your Directors hereby present their 35th Annual Report of the Companytogether with the Audited Accounts for the financial year ended 31st March 2019.
The performance of the Company for the Financial Year ended 31st March 2019is as under:
Rs in Lakhs
REVIEW OF OPERATIONS AND STATE OF COMPANY'S AFFAIRS:
During the year under review your Company could not make any sales and as such theTurnover was Rs.Nil (Previous year:Rs.Nil) and incurred a Net loss of Rs.517.05 Lakhs(previous year Net profit: Rs.333.00 Lakhs).
PERFORMANCE & FINANCE:
Your company declared lock-out of its plant at Yanam with effect from 31.01.2012 afterthe devastating incident occurred on 27.01.2012. Since then there is no production in theplant.
As there was no operations in the company from the last 7 years due to devastatingincident occurred on 27.01.2012 and hence the company is not in a position to recommendany dividend for the year under review.
During the year your Company has not transferred any amount to General Reserve Account.
CHANGE IN THE NATURE OF BUSINESS:
There is no change in the nature of business of the Company.
Your company made a claim on reinstatement value basis in accordance with the policytaken and submitted its claim for loss/damage to the properties of the company. Howeveras per the policy terms the Repairs/ Replacement of Plant & Machinery should havebeen completed within 12 months from the date of incident. The policy condition has notbeen complied with due to the precarious situation of labour unrest and as such therepairs/replacement has not been carried out till date. The insurance company thereforedenied the claim made by the company on the basis of Reinstatement Value finalized theclaim under depreciation method and sent the discharge vouchers for acceptance. Yourcompany returned the discharge vouchers under protest and invoked arbitration clause asper the policy terms. And the matter is in progress.
Your company paid full and final settlement amounts to those who have resigned from thecompany and waiting for the balance workmen to come forward for final settlement. Actioninitiated by your company against the workers involved in the violence is pending fordisposal at the Labour Tribunal.
LENDERS' DUES SETTLEMENTS:
The company requested the lenders for sanction of revised OTS due to on-going agitationof the workers non receipt of insurance claim and inability of the promoters to mobilizefunds. Four lenders have sanctioned the same and the company paid the entire OTS amountsto them. The Company is awaiting similar sanction from the fifth lender based on thedecision taken by consortium the Bank filed a petition before Hon'ble NCLT HyderabadBench under section of Insolvency and Bankruptcy code 2016. Your company contesting thesame.
Earlier as per rules the lenders initiated recovery action against the company underthe SARFAESI Act. The lenders also took symbolic Possession under Rule 8(1) of SecurityInterest (Enforcement) Rules 2002 of the properties in exercise of powers conferred onthem under section 13(4) of the SARFAESI Act. Further the lenders also filed anapplication under section 19 of the Recovery of Debts due to Banks and FinancialInstitutions Act 1993 in the Debts Recovery Tribunal Hyderabad for recovery of theirdues.
The future prospects of the Company and industry outlook are given in the ManagementDiscussion and analysis report.
All properties and insurable interests of the Company including building plant andmachinery and inventory were usually fully insured at the reinstatement values every year.However after the incident of 27.01.2012 the Insurance companies denied insurancecoverage for the good assets as the assessment could not be completed.
MATERIAL CHANGES & COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There are no major material changes and commitments affecting the financial position ofthe Company after the end of the financial year and up to date of this report i.e.30.05.2019)
The Board of Directors duly met five (5) times during the financial year from 1stApril 2018 to 31st March 2019. The dates on which the meetings were held are30.05.2018
14.08.2018 06.11.2018 14.11.2018 and 14.02.2019.
APPOINTMENT / RE-APPOINTMENT / RESIGNATION / RETIREMENT OF DIRECTORS /CEO/ CFO AND KEYMANANGERIAL PERSONNEL:
Mr. B. Surendra and Mr. D. Chandra Sekhar Babu Non-executive Independent Directorshave resigned from the company with effect from 14.08.2018 and 14.02.2019 respectively.
Dr. G N Naidu shall be reappointed as Chairman and Managing Director with effect from
09.02.2019 for the period of three years.
Mr. G. Sreenivasulu Naidu Non-executive director is liable to retire by rotation andhas offered himself for reappointment.
Mr. K. C. Choudappa and Mr. Y. Gopala Krishna were appointed as additional directors on14.08.2018 and 14.02.2019 and are seeking to be appointed as Independent Directors of theCompany.
As required under regulation 36 (3) of the SEBI (LODR) Regulations 2015 briefparticulars of the Directors seeking appointment/re-appointment are given as under:-:
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:
The Company has received declarations from Mr. Kunda China Chowdappa Mr. Y. GopalaKrishna and Mrs.Y. VijayaLakshmi Independent Directors of the Company to the effect thatthey are meeting the criteria of independence as provided in SubSection (6) of Section 149of the Companies Act 2013 and Regulation 25 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:
Independent Directors are familiarized about the Company's operations and businesses.Interaction with the Business heads and key executives of the Company is also facilitated.Detailed presentations on important policies of the Company is also made to the directors.Direct meetings with the Chairman is further facilitated to familiarize the incumbentDirector about the Company/its businesses and the group practices.
The details of familiarisation programme held in FY 2018-19 are also disclosed on theCompany's website at https:// www.regencytiles.com.
POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The assessment and appointment of Members to the Board is based on a combination ofcriterion that includes ethics personal and professional stature domain expertisegender diversity and specific qualification required for the position. The potential BoardMember is also assessed on the basis of independence criteria defined in Section 149(6) ofthe Companies Act 2013 and Regulation 27 of SEBI (LODR) Regulations 2015.
In accordance with Section 178(3) of the Companies Act 2013 Clause 49 (IV) (B) of theListing Agreement and Regulation 19(4) of SEBI (LODR) Regulations 2015 on therecommendations of the Nomination and Remuneration Committee the Board adopted aremuneration policy for Directors Key Management Personnel (KMPs) and Senior Management.The Policy is attached as an Annexure to the Corporate Governance Report.
NON-EXECUTIVE DIRECTORS' COMPENSATION AND DISCLOSURES:
None of the Independent / Non-Executive Directors has any pecuniary relationship ortransactions with the Company which in the Judgment of the Board may affect theindependence of the Directors.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(3)(C) and 134(5) of the Companies Act 2013and on the basis of explanation given by the executives of the Company and subject todisclosures in the Annual Accounts of the Company from time to time we state as under:
1. That in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
2. That the Directors have selected such accounting policies and applied themconsistently and made judgment and estimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company at the end of the financialyear and of the profit or loss of the Company for that period;
3. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
4. That the Directors have prepared the annual accounts on a going concern basis:
5. That the Directors have lain down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
6. That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
INDIAN ACCOUNTING STANDARDS -IndAS:
The Ministry of Corporate Affairs vide its notification dated 16th February 2015 hasnotified the Companies (Indian Accounting Standards) Rules 2015. The implementation ofIndian Accounting Standards (IndAS) is a major change process for which the Company hasset up a dedicated team and is providing desired resources for its completion within thetime frame.
INVESTOR EDUCTION AND PROTECTION FUND (IEPF):
As no dividend was declared from Financial Year 2004-05 and hence no amount has beentransferred to IEPF.
INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES /ASSOCIATES/ JOINT VENTURES:
During the year under review the Company does not have any subsidiaries jointventures or associate Companies.
EXTRACT OF ANNUAL RETURN:
As required pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return inmGT-9 is a part of this Annual Report in enclosed as Annexure-I.
The members of the Company in accordance with Section 139 of the Companies Act 2013had passed a resolution for appointment of M/s. K S Rao & Co. as Statutory Auditorsof the Company for a period of 5 years in the AGM held on 27.09.2017 to hold office up tothe conclusion of 38th Annual General Meeting of the Company to be held in theyear 2022 which was subject to ratification as per the provisions of Companies Act 2013.
However pursuant to notification from the MCA dated 07.05.2018 ratification ofappointment of statutory auditors at every Annual General Meeting has been dispensed with.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB SECTION (12) OF SECTION 143OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT:
There have been no frauds reported by the auditors u/s 143(12).
Pursuant to the provisions of Section 138 of the Companies read with rules made thereunder the Board has appointed M/s. Brahmayya & Co Chartered Accountants as InternalAuditors of the Company for the financial year 2019-2020.
DISCLOSURE ABOUT COST AUDIT:
Cost Audit is not applicable to the company.
Pursuant to the provisions of Section 134(3) (f) &Section 204 of the Companies Act2013 the Board has appointed Mr. K. V. Chalama Reddy Practicing Company Secretaries tounder take Secretarial Audit of the Company for financial year ending 31.03.2019. Thereport of the Secretarial Auditor is enclosed herewith vide Annexure-II of this Report.
QUALIFICATIONS IN AUDIT REPORTS:
Explanations or comments by the Board on every qualification reservation or adverseremark or disclaimer made
(a) Statutory Auditors Report:
The Board has duly reviewed the Statutory Auditor's Report on the Accounts for the yearended March 31 2019 beening annexure to this Annual Report.
i. Referring to Para on basis for qualified opinion of the Auditors' Report theDirectors would like to refer Notes forming part of Accounts which is self explanatory.The reference to note numbers are as under :
ii. Referring to Para 7 (a) and 7(b) of the Annexure to the Auditors report yourDirectors are of the opinion that the Company is in the process of executing variousalternative plans to control such delays in future. With regard to para 8 of the Annexureto the Auditors Report Directors are confident that the revised OTS will be sanctionedand the lenders dues will be fully settled.
(b) Secretarial Audit Report:
The Board has duly reviewed the Secretarial Audit Report for the year ended March 312019 on the Compliances according to the provisions of Section 204 of the Companies Act2013.
With respect to observations made in the report our explanations are follows:
Regarding the observation Nos 1234 of the report the Company is unable to complywith the same due to financial position of the Company. Regarding the Observation No.6the Promoters are advised to convert their share holdings in dematerlised form at theearliest. Regarding the observation Nos. 7 the Company is in the process of updating thewebsite.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The Company has not given loans Guarantees or made any investments during the yearunder review.
RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. There were no materialsignificant related party transactions made by the Company with the Promoters DirectorsKey Managerial Personnel or the Senior Management which may have a potential conflict withthe interest of the Company at large.
None of the Directors have any pecuniary relationship or transactions with the Companyexcept payments made to them in the form of remuneration rent sitting fees and intereston unsecured loans.
The Company has not entered into any contracts/arrangements with related partiesreferred to Section 188(1) of the Companies Act 2013 including certain arm lengthtransaction during the year. Accordingly no disclosure or reporting is required coveredunder this Section.
NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:
During the year under review no Company has become or ceased to become itssubsidiaries joint ventures or associate Company.
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The required information as per Sec.134 (3) (m) of the Companies Act 2013 is providedHereunder:
A. Conservation of Energy:
The company has installed LED Bulbs to save the energy in the factor and office.
B. Technology Absorption:
During the year there was no technology absorbtion. The company is planning to reviveits operations and in this process your company is planning to absorb the new technology.
1. Research and Development (R&D): NIL
2. Technology absorption adoption and innovation: NIL
C. Foreign Exchange Earnings and Out Go:
Foreign Exchange Earnings: NIL Foreign Exchange Outgo: NIL
(I) AUDIT COMMITTEE:
The Audit Committee of the Company is constituted in line with the provisions ofRegulation 18(1) of SEBI (LODR) Regulations with the Stock Exchanges read with Section 177of the Companies Act 2013 are included in the Corporate Governance report which formspart of this report.
(II) NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee of the Company is constituted in line withthe provisions of Regulation 19(1) of SEBI (LODR) Regulations with the Stock Exchangesread with Section 178 of the Companies Act 2013 are included in the Corporate Governancereport which forms part of this report.
(III) STAKEHOLDERS RELATIONSHIP COMMITTEE:
The Stakeholders Relationship Committee of the Company is constituted in line with theprovisions of Regulation 20 of SEBI (LODR) Regulations with the Stock Exchanges read withSection 178 of the Companies Act 2013 are included in the Corporate Governance reportwhich forms part of this report.
RISK MANAGEMENT POLICY:
The Company has formulated a Risk Management Policy under which various risksassociated with the business operations is identified and risk mitigation plans have beenput in place.
VIGIL MECHANISM/WHISTLE BLOWER POLICY:
In pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013a vigil Mechanism for Directors and employees to report genuine concerns has beenestablished. It also provides for necessary safeguards for protection againstvictimization for whistle blowing in good faith.
Vigil Mechanism Policy has been established by the Company for directors and employeesto report genuine concerns pursuant to the provisions of section 177(9) & (10) of theCompanies Act 2013. The same has been placed on the website of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR COMPOSITION OF CSR COMMITTEE AND CONTENTS OF CSRPOLICY):
Since your Company does not has the net worth of Rs. 500 crores or more or turnover ofRs. 1000 crores or more or a net profit of Rs. 5 crores or more during the financialyear section 135 of the Companies Act 2013 relating to Corporate Social Responsibilityis not applicable to the Company.
Your Company has not accepted any deposits falling within the meaning of Sec 73 74& 76 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014during the financial year under review.
SIGNIFICANT & MATERIAL ORDERS PASSED BY COURTS / REGULATORS / TRIBUNALS:
There are no significant and material orders passed by the regulators /courts thatwould impact the going concern status of the Company and its future operations.
DISCLOSURE OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has appointed Internal Auditors to observe the Internal Controls whetherthe work flows of organization is being done through the approved policies of the Company.Internal Auditors will present to the Audit Committee the Internal Audit Report andManagement Comments on the Internal Audit observations.
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. The Company maintains appropriate system ofinternal control including monitoring procedures to ensure that all assets aresafeguarded against loss from unauthorized use or disposition. Company policiesguidelines and procedures provide for adequate checks and balances and are meant toensure that all transactions are authorized recorded and reported correctly.
During the period under review there is no material or serious observations have beennoticed for inefficiency or inadequacy of such controls.
The authorised share capital of the Company stands at Rs.300000000/-.
The paid up share capital of the Company stands at Rs. 264415860/- divided into26441586 equity shares of Rs.10/- each.
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:
The Company has implemented all of its major stipulations as applicable to the Company.As stipulated under Regulation 34 read with schedule V of SEBI (LODR) Regulations 2015 areport on Corporate Governance duly audited is appended as Annexure III for information ofthe Members. A requisite certificate from the Auditors of the Company confirmingcompliance with the conditions of Corporate Governance is attached to the Report onCorporate Governance.
MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT:
The Management Discussion and Analysis Report pursuant to the SEBI (LODR) Regulationappended as Annexure IV for information of the Members.
The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandatedthe formulation of certain policies for all listed companies. All the policies areavailable on our website (https://www.regencytiles.com ). The policies are reviewedperiodically by the Board and updated based on need and new compliance requirement.
ENVIRONMENTS AND HUMAN RESOURCE DEVELOPMENT:
Your Company always believes in keeping the environment pollution free and is fullycommitted to its social responsibility. The Company has been taking upmost care incomplying with all pollution control measures from time to time strictly as per thedirections of the Government.
We would like to place on record our appreciation for the efforts made by themanagement and the keen interest shown by the Employees of your Company in this regard.
The Company has complied with the required provisions relating to statutory compliancewith regard to the affairs of the Company in all respects.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The following is the summary of sexual harassment complaints received and disposedduring the calendar year.
* No. of complaints received during the financial year: Nil
* No. of complaints disposed off during the financial year: Nil
* No. of complaints pending at the end of the financial year: Nil
STATEMENT SHOWING THE NAMES OF THE TOP TEN EMPLOYEES IN TERMS OF REMUNERATION DRAWN ANDTHE NAME OF EVERY EMPLOYEE AS PER RULE 5(2) & (3)OF THE COMPANIES(APPOINTMENT &REMUNERATION) RULES 2014:
A table containing the particulars in accordance with the provisions of Section 197(12)of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended as Annexure V to this Report.
The Company is not carrying any operations and is making efforts to revive the Company.
Upto 31-12-2018 threre were only 5 employees in the Company and they were drawn verynegligible salary and after the Company is taking the services from outsiders as and whenrequired.
During the year NONE of the employees is drawing a remuneration of Rs.10200000/- andabove per annum or Rs.850000/- and above in aggregate per month the limits specifiedunder the Section 197(12) of the Companies Act2013 read with Rules 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
RATIO OF REMUNERATION TO EACH DIRECTOR
No remuneration was paid to Dr. G N Naidu Chairman and Managing Director and Mr. NSatyendra Prasad Whole-time Director of the Company for the financial year 2018-19.
CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING:
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulation 2015. The InsiderTrading Policy of the Company lays down guidelines and procedures to be followed anddisclosures to be made while dealing with shares of the Company as well as theconsequences of violation. The policy has been formulated to regulate monitor and ensurereporting of deals by employees and to maintain the highest ethical standards of dealingin Company securities.
The Insider Trading Policy of the Company covering code of practices and procedures forfair disclosure of unpublished price sensitive information and code of conduct for theprevention of insider trading is available on our website www.regencytiles.com
The Company is in compliance with the applicable secretarial standards.
EVENT BASED DISCLOSURES
During the year under review the Company has not taken up any of the followingactivities:
1. Issue of sweat equity share: NA
2. Issue of shares with differential rights: NA
3. Issue of shares under employee's stock option scheme: NA
4. Disclosure on purchase by Company or giving of loans by it for purchase of itsshares: NA
5. Buy back shares: NA
6. Disclosure about revision: NA
7. Preferential Allotment of Shares: NA
CEO/ CFO Certification
The Managing Director cum CEO and CFO certification of the financial statements for theyear 2018-2019 is annexed in this Annual Report.
Your Directors wish to place on record their appreciation of the contribution made bythe employees at all levels to the continued growth and prosperity of your Company. YourDirectors also wish to place on record their appreciation of business constituents banksand other financial institutions and shareholders of the Company for their continuedsupport for the growth of the Company.