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Scan Projects Ltd.

BSE: 531797 Sector: Industrials
NSE: N.A. ISIN Code: INE393D01015
BSE 05:30 | 01 Jan Scan Projects Ltd
NSE 05:30 | 01 Jan Scan Projects Ltd

Scan Projects Ltd. (SCANPROJ) - Director Report

Company director report

To The Members

Your directors have pleasure in presenting the 25th Annual Report togetherwith the Audited Statements of Accounts of the Company for the financial year ended 31stMarch 2017:

1. Financial Highlights:

(Rs. In Lacs)

2016-17 2015-16
Revenue from Operations 314.70 677.79
Operating Expenditure 275.95 622.02
Earning before interest tax depreciation and amortization
(EBITDA) 38.75 55.77
Other Income (Net) 2.63 14.44
Finance Costs 15.19 12.32
Depreciation and amortization expenses 6.68 8.25
Profit before exceptional item and tax 19.51 49.64
Exceptional item 0.00 0.00
Profit Before Tax (PBT) 19.51 49.64
Tax Expenses 6.98 15.86
Profit After Tax (PAT) 12.53 33.78
Add: Balance Brought forward from previous year (2.30) (34.96)
Less: Income Tax for earlier years adjusted 0.00 1.12
Amount of Surplus available for appropriation 10.23 (2.30)

2. Operations State of Company’s affairs and Future Outlook:

With new activities i.e. Engineering Services (Erection commissioning supervisionproject drawing and designing services) and trading of fabricating material equipmentparts and other items etc. the overall growth of the company is good and encouraging. Inthe current year 2016-17 the Company has earned the total revenue from operationRs.314.70 Lacs against the previous years Rs.677.79 Lacs which reflects downward trend inthe performance of the Company due to overall recession in the market. However the samewill be improved in the ensuing years because the Company has sufficient work order forErection and Commissioning in hand at different locations in India and Nepal which willbe executed in the ensuing financial year. The net profit after tax of the company isRs.29.65 Lacs Rs.33.78 Lacs and Rs.12.53 Lacs in the year 2014-15 2015-16 and 2016-17respectively. Due to these and other substantial factors the accumulated losses of thecompany have been minimized and the net worth of the company has become positive. All theabove factors reflects that the management is serious and hopeful to achieve betterresults in the ensuing years with new business activities. We further inform that there isno change in the business activities of the company in the current financial year.

3. Dividend:

No dividend has been recommended by the Directors this year and consequently no amountshave been transferred to general reserves.

4. Transfer to Reserves:

The board of the Company has decided not to transfer any fund to general reserve out ofthe amount available for appropriation and an amount of surplus Rs.10.23 Lacs to beretained in the profit and loss account.

5. Change in Share Capital if any

There has been no change in Share Capital of the Company during the financial year2016-17.

6. Deposits:

The company has not accepted any deposits from the public during the year and as suchno amount on account of principal or interest on deposits from public was outstanding ason the date of the balance sheet.

7. Directors:

As per the provisions of Section 152 of the Companies Act 2013 Smt. Prakriti ChandraDirector of the Company retires by rotation at the forthcoming Annual General Meeting andbeing eligible offered herself for re-appointment. The Board recommends herre-appointment.

Sh. Sunil Chandra is re-appointed as Managing Director of the Company w.e.f. April 12017 to March 31 2022. Pursuant to the Articles of Association of the Company he will notbe liable to retire by rotation. Resolutions seeking approval of the members for theappointment of Sh. Sunil Chandra as Managing Director of the Company and fix hisremuneration have been incorporated in the Notice of the forthcoming AGM along with briefdetails about them.

Sh. Chaitanya Chandra Executive Director of the Company has given resignation w.e.f.28th October 2016 during the year.

Sh. Akshay Chandra who was appointed as Non-Executive Director of the Company w.e.f. 14thFebruary 2012 has shown his willingness to act as whole time Executive of the company.Hence the Board has proposed to appoint him as Whole time Executive Director of thecompany w.e.f. from 01st April 2017. Resolutions seeking approval of themembers for the appointment of Sh. Akshay Chandra as Whole time Executive Director of theCompany have been incorporated in the Notice of the forthcoming AGM along with briefdetails about them.

The notice convening the Annual General Meeting includes the proposal for appointmentof Directors.

Further your Company has also received declarations from all the Independent Directorsof the Company confirming that they meet with the criteria of Independence as prescribedunder the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.

8. Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement the Board has carried out the annual performance evaluation of its ownperformance the Directors individually as well as the valuation of the working of itsvarious committees as per the criteria of evaluation provided in the NominationRemuneration and Evaluation Policy adopted by the Company. The performance evaluation ofIndependent Directors was carried out by the entire Board and the performance evaluationof the Chairman and the Board as a whole was carried out by the Independent Directors.

9. Meetings of the Board:

The Board of Directors of your company met 10 times during 2016-17. The meetings wereheld on 28-04-2016 21-05-2016 30-05-2016 13-08-2016 06-09-2016 28-10-201611-11-2016 30-01-2017 13-02-2017 and 30-03-2017. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013.

10. Particulars of Loan given Investment made Guarantee given and Securitiesprovided:

There were no loans given investment made guarantee given and securities provided bythe Company under Section 186 of the Companies Act 2013 during the year under review andhence the said provision is not applicable.

11. Extract of Annual Return:

As provided under Section 92(3) of the Act the extract of annual return is given in AnnexureI in the prescribed Form MGT-9 which forms part of this report.

12. Subsidiary Joint Ventures and Associate Concerns:

The Company does not have any Subsidiary Joint Ventures or Associate Concerns as on 31stMarch 2017.

13. Corporate Governance:

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges the companyhas implemented the code of Corporate Governance during the year. The reports on CorporateGovernance together with Compliance Certificate on the same are attached to this report.

14. Management’s Discussion and Analysis Report

Management’s Discussion and Analysis Report for the year under review asstipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India ispresented in a separate section forming part of the Annual Report.

15. Directors’ Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act 2013 thedirectors hereby confirm that:

i) in the preparation of the annual accounts for the financial year ended 31stMarch 2017 the applicable accounting standard have been followed and there are nomaterial departures;

ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2017 and of the profitof the Company for the period from 1st April 2016 to 31st March2017;

iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; and

vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

16. Contract and arrangements with Related Parties:

The Company’s policy on dealing with related party transactions has beenformulated and amended from time to time. All contracts/arrangements/ transactions enteredby the Company during the financial year with related parties were in the ordinary courseof business and on the arm’s length basis. There are no materially significantrelated party transactions made by the company with promoters directors key managerialpersonnel or other designated persons which may have a potential conflict with theinterest of the company at large. Your Directors draw attention of the members to Note28(i) to the financial statements which set out related party disclosures pursuant toclause 32 of the listing agreement. Information on transactions with related partiespursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts)Rules 2014 are given in Annexure II in Form AOC-2 and the same forms partof this report. In respect of material related party transactions which were entered bythe Company in its Ordinary course of business and on arm’s length basis theprovisions of Clause 49 of the Listing Agreement regarding Related Party Transactions havebecome applicable to the Company vide Notification dated 2nd September 2015 ofSecurities Exchange of India. The Company has been in compliance with the provisionsstated herein above. The existing material related party contracts or arrangements whichwere entered by the Company in its Ordinary course of business and on arm’s lengthbasis had duly been approved by the shareholders in the General Meeting held on dated 30thSeptember 2016.

17. Auditor and Auditors’ Report:

M/s Jayant Bansal & Co. Chartered Accountants Ambala Cantt the Statutory Auditorof the company hold office till the conclusion of 25th Annual General Meetingof the Company. They have completed their tenure of Statuary Auditors under Section 139(2) and 3rd proviso of this subsection of the Companies Act 2013 read withRules framed there under. The Board has recommended the appointment of M/s Deepak Sharmaand Associates Chartered Accountants as the statutory auditors of the Company in theirplace from the conclusion of 25th Annual General Meeting to hold office tillthe conclusion of the next Annual General Meeting and is eligible for appointment.

As required under the provisions of section – 139(1) of the Companies Act 2013the company has received a written consent from M/s Deepak Sharma and AssociatesChartered Accountants to their appointment and a certificate to the effect that theirappointment if made would be in accordance with the Act and the Rules framed there underand that they satisfy the criteria provided in Section- 141 and 139 (2) of Companies Act2013. The Board recommends their appointment for the financial year 2017-18.

There are no qualifications or adverse remarks in the Auditor’s Report whichrequire any clarification/explanation. The notes on financial statements areself-explanatory and needs no further comments.

Further auditor’s report for the financial year ended 31st March 2017is given as an annexure which forms part of this report.

18. Secretarial Auditors:

The Board has appointed M/s J. P. Jagdev & Co. Company Secretary to conductSecretarial Audit for the financial year 2016-17. The Secretarial Audit Report for thefinancial year ended 31st March 2017 is annexed herewith as Annexure IIIto this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.

19. Corporate Social Responsibility (CSR):

The Company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135(1) of the Companies Act 2013 and henceit is not required to formulate policy on corporate social responsibility.

20. Risk Management:

The board of the Company has formed a risk management committee to frame implementand monitor the risk management plan for the Company. The Committee is responsible forreviewing the risk management plan and ensuring its effectiveness. The audit committee hasadditional oversight in the area of financial risks and controls. Major risks identifiedby the businesses and functions are systematically addressed through mitigating actions ona continuing basis.

21. Internal Control System and their adequacy:

The Company’s internal controls are commensurate with the size of the company andthe nature of its business. These have been designed to provide reasonable assurance withregard to recording and providing reliable financial and operational informationcomplying with applicable statutes safeguarding assets from unauthorized use executingtransactions with proper authorization and ensuring compliance of corporate policies. Thecompany has an audit committee the details of which are provided in the CorporateGovernance Report. The audit committee reviews the internal control system and follows upon the implementation of corrective actions if required. The committee also meets thecompany’s statutory auditors to ascertain interalia their views on the adequacy ofinternal control system in the Company and keeps the Board of Directors informed of itsmajor observations from time to time. The management also regularly reviews theutilization of fiscal resource compliance with law efficiencies so as to ensure optimumutilization of resources and achieve better efficiencies. Based on its evaluation (asdefined in section 177 of Companies Act 2013) our audit committee has concluded that asof March 31 2017 our internal financial controls were adequate and operatingeffectively.

22. Vigil Mechanism Policy:

The Company has a vigil mechanism policy which also incorporates a whistle blowerpolicy in line with the provisions of the Section 177(9) of the Act and the revised Clause49 of the Listing Agreements with stock exchanges which deals with the genuine concernsabout unethical behaviour actual or suspected fraud and violation of the Company’sCode of Conduct and ethics.

23. Committees of Board:

The Board of Directors of your Company had already constituted various committees incompliance with the provisions of the Companies Act 2013 and Listing Agreement viz. AuditCommittee Nomination and Remuneration Committee Shareholder’s/Investor’sGrievances Committee Risk Management Committee. All decisions pertaining to theconstitution of committees appointment of members and fixing the terms of reference /role of the Committees are taken by the Board of Directors. Detail of the role andcomposition of Committees including the number of meetings held during the financial yearand attendance at meetings are provided in the Corporate Governance Report section of theAnnual Report which forms part of this report.

24. Conservation of Energy Technology absorption and foreign exchange earning andoutgo:

Information required under Section 134(3)(m) of Companies Act 2013 read with Companies(Accounts) Rules 2014 is given as under: Conservation of Energy: The Company hasnot been carrying on any manufacturing activities hence this information is notapplicable on the company during the year under review.

Technology absorption adaption and innovation: The Company always adopted latesttechnologies for improving the performance and quality of its services. The Company’soperations do not require significant import of technology. Research and Development(R&D): The Company has not done any Research and Development work during the yearunder review. However the company has adopted/reviewed the methods for improving theperformance and quality of its services on regular basis.

Foreign Exchange Earnings and Outgo: The Company directly did not spend any foreignexchange and also did not earn any foreign exchange during the year under review.However the Company is having Branch/Permanent Establishment at Nepal and all theinformation related to foreign exchange earnings and outgo is pertained to Nepal branchonly.

(Rs. In Lacs)

Foreign exchange earnings and outgo 2016-17 2015-16
a. Erection Commissioning and Supervision related activities
(Including Overseas Branch Revenue) 3324905.00 7891451.00
b. CIF Value of Imports NIL NIL
c. On Overseas Contracts (i.e. Overseas Branch expenditure) 3207992.00 7041198.00
d. Capital Goods (i.e. Capital expenditure incurred at 0.00 0.00
Overseas Branch)

25. Nomination Remuneration and Evaluation Policy:

The Nomination Remuneration and Evaluation Policy recommended by the Nomination andRemuneration Committee is duly approved by the Board of Directors of the Company and thesame are provided in the Corporate Governance Report section of the Annual Report whichforms part of this report.

26. Human Resources:

Your Company treats its "human resources" as one of its most important assetsand has taken continuous efforts to set up and maintain an efficient work force. Thecompany is continuously taken steps towards maintaining a low attrition rate which itbelieves shall be achieved by investing in learning and development programmes foremployees competitive compensation creating a compelling work environment empoweringemployees at all levels as well as a well-structured reward and recognition mechanism.

27. Particulars of Employees:

I) The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Executive Director Ratio to median
1 Sh. Sunil Chandra (Managing Director) 1.21:1
2. Sh. Chaitanya Chandra (Wholetime Executive Director) 1.47:1

Note: The Company has not given any remuneration/benefits tonon-executive/independent directors of the company during the year 2016-17.

b. The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the financial year:

Directors Company Secretary and Financial Officer % increase in remuneration in the financial year
1 Sh. Sunil Chandra (Managing Director) 12.50%
2. Sh. Chaitanya Chandra (Whole time Executive Director) NIL
3. CS. Satish Kumar (Company Secretary) NIL
3. Sh. Deepak Sharma (Financial Officer) 8.69%

c. The percentage increase in the median remuneration of employees in the financialyear: 12.87%

d. The number of permanent employees on the rolls of Company: 18 Employees as on31st March 2017

e. The explanation on the relationship between average increase in remuneration andCompany performance: The performance of the Company for the current financial year isnot encouraging than the previous year. However the Company has minor increase inremuneration to Executive Director/key managerial personnel. While at Middle & Juniorlevel management the proper increment was given in accordance with the inflation rate andat workmen and staff level.

f. Comparison of the remuneration of the key managerial personnel against theperformance of the Company: Remuneration to Managing and Wholetime directors were paidas per the scale approved by the members of the company.

g. Variations in the market capitalization of the Company price earnings ratio asat the closing date of the current financial year and previous financial year:

Particulars March 31 2017 March 31 2016 % Change
Market Capitalization 84.47 84.47 -
(Rs. In Lacs)

h. Percentage increase over decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with the Last public offer:

Particulars March 31 2017 At the time of Last Public % Change
Market Price (BSE) 2.94 10.00 (-) 70.60%

i. Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration: Properincrements at both managerial and staff/worker level has been given in financial year2016-17.

j. Comparison of each remuneration of the key managerial personnel against theperformance of the Company: The head (Corporate Finance) was promoted to the positionof Financial Officer hence he was given an increase as a part of promotion and salaryadjustment.

k. The key parameters for any variable component of remuneration availed by thedirectors : No such variable component is included in the remuneration paid todirectors.

l. The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year: Sh. Sunil Chandra (Managing Director): 0.62:1

m. Affirmation that the remuneration is as per the remuneration policy of theCompany: The Company affirms remuneration is as per the remuneration policy of theCompany.

II. There was no employee on the roll of the company who drew remuneration in excess ofthe limits prescribed by the provisions of Section 197(12) of the Companies Act 2013 readwith Rules 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 hence this relevant information is not applicable to the Company.

28. Disclosure under sexual harassment of women at workplace (PreventionProhibition & Redressal)

Act 2013:

In order to prevent sexual harassment of women at work place a new act The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 hasbeen notified on 9th December 2013. Under the said Act every company is required to setup an Internal Complaints Committee to look into complaints relating to sexual harassmentat work place of any women employee. Company has adopted a policy for prevention of SexualHarassment of Women at workplace and has set up Committee for implementation of saidpolicy. During the year Company has not received any complaint of harassment.

29. Other Disclosures:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

i) 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.

ii) No Material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateand the date of this Report.

2. The provisions of Section 125(2) of the Companies Act 2013 related with transfer ofunclaimed dividend to Investor Education and Protection Fund do not apply to the Companyas there was no dividend declared and paid in previous years and there is no unclaimeddividend.

3. Equity Shares:

• No issue of equity shares with differential rights as to dividend voting orotherwise during the year under review.

• The Company has not bought back any of its securities during the year underreview.

• No Bonus shares were issued during the year under review.

• No issue of shares (including sweat equity shares) to employees of the Companyunder Stock option Scheme during the year under review.

• No Shares outstanding under the head Shares Suspense Account/Unclaimed SuspenseAccount at the beginning and end of the year under review.

30. Listing with Stock Exchanges:

The stocks of the Company are listed on Delhi Stock Exchange Stock Exchange MumbaiStock Exchange Ahmedabad and Jaipur Stock Exchange. We further confirm that the Companyhas paid the Annual Listing Fees regularly where the Company’s Shares are listedexcept Jaipur Stock Exchange which is outstanding since long. In respect of Regional StockExchanges the Company is inoperative since long.

31. Acknowledgements:

Your directors wish to place on record their gratitude for the valued support andassistance extended to the Company by the Shareholders Banks and Government Authoritiesand look forward to their continued support. Your directors also express theirappreciation for the dedicated and sincere services rendered by the Executives Officersand Employees of the Company.

By Order of the Board of Directors
Place: Yamunanagar (SUNIL CHANDRA)
Dated: 05-09-2017 Managing Director
DIN: 01066065