We are presenting our 37th Annual Report together with the audited accounts of theCompany for the year ended 31st March 2016.
The working of the Company during the year under review has been highlighted below:
| ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 |
|Production (Tonnes) ||25 ||7499 |
| ||Rs in Lacs ||Rs in Lacs |
|Sales ||19 ||2828 |
|Other Income ||80 ||81 |
| ||99 ||2909 |
|Gross Profit/(Loss) ||-1877 ||-2583 |
|Less: Interest ||2133 ||2056 |
|Depreciation for the year ||893 ||912 |
|Profit Before Exceptional Items and Tax ||-4903 ||-5551 |
|Exceptional Items ||247 ||- |
|Profit for the year before tax ||-5150 ||-5551 |
|Less: Income Tax Adjustment of Earlier Years ||12 ||- |
|Profit / (Loss) after taxation ||-5138 ||-5551 |
|Profit/(Loss) brought forward from last year ||-20014 ||-14463 |
|Loss carried to Balance Sheet ||-25152 ||-20014 |
Operations & Reason for losses
The Central Pollution Control Board (CPCB) vide its LetterNo.D-23012/1/PCI-III/5944-5948 has stopped the production on all the three paper machinesof the Company in October 2014. Conditional clearance of the same was received in March2015. Due to which the financial position has further deteriorated. The Company isexploring various avenues to infuse the funds for revival of the Company.
The Paper Mill of the Company is closed since October 2014 due to order by CPCB orderto make modification in the Pollution Control Plant. This requires investment of nearlyRs. 2 Crores.
In the meanwhile Government of Uttar Pradesh has issued Government Order (GO) no1701/77-1-2015-10(BIFR)/ 09TC dated 7th December 2015 which offers various benefits toeligible units we are eligible and benefits available to us are as follows:
Refund of 85% of paid VAT CST (in case of GST 85% of State Government share)including aforesaid taxes paid on raw material for 10 years.
Total Electricity and other State Dues net of interest surcharges be allowed tobe repaid in 10 equal yearly installments after 2 years moratorium.
To allow the sale of surplus land with land use conversion.
Our Company is in a position to avail the benefits provided we arrange funds for theScheme and get Reliefs/ Settlement with our Lenders. The Company is in advance stage offinalizing and submitting a Rehabilitation Scheme to Bank of Baroda the Operating Agencyappointed by BIFR. In the meanwhile BOB and JM Financial ARC Private Limited have sent anotice under Sub section (2) of Section 13 of the Securitization and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act 2002.
Looking into the urgency of the situation and in view of the cyclical nature of PaperIndustry the management is of the view that the restructuring of the Company is onlypossible with fresh infusion of funds and also by sale of surplus land and machinery ofthe Company. The new paper machine and DIP has been sparingly used and has a long residuallife. Therefore the production should be restarted based on the new machines.
The pollution load of waste paper plant is much lower and can easily meet NGT standard.In this light the profitability of Agro pulping and old paper machine should be reviewedto decide future course of action. The new paper machine can also be restarted withminimum gestation period. Proposal will be made to the lenders based on sustainable debtand relief will be sought accordingly. Part of dues of Secured Creditors can be paid overa short period of time by sale of surplus assets and land if the scheme is approved byPICUP and permission given by lenders.
Compliance of Sick Industrial Companies (Special Provisions) Act 1985
The Company has filed a Reference Application under Section 15 (1) of Sick IndustrialCompanies (Special Provisions) Act 1985 (SICA) with Honble BIFR which wasregistered as Case No. 29/2013. In the hearing held on 26th September 2013 theHonble BIFR declared the Company as Sick u/s 3 (1) (o) of SICA andappointed Bank of Baroda as the Operating Agency (OA) u/s 17 (3) of the Act to prepare aRehabilitation Scheme for the Company. The Company has submitted the Draft RehabilitationScheme (DRS) to Bank of Baroda (OA) and other stakeholders with a copy to HonbleBIFR. Indian Bank has sold its loan to the ARC M/s JM Financial Asset ReconstructionCompany Pvt. Ltd whose name has been substituted in place of Indian Bank.
The revival of the Company is dependent on approval of Draft Rehabilitation Scheme atthe earliest.
The paid up Equity Share Capital as on 31st March 2016 was Rs.348272240/-. Duringthe year under review the Company has not issued shares with differential voting rightsnor granted stock options or sweat equity.
Directors and Key Managerial Personnel
The present tenure of office of Shri Girish Tandon as Managing Director and ShriAlankar Tandon as Executive Director expired on 31st March 2016. The Board of Directorsof the Company having regard to the present situation of the Company and closure ofmanufacturing facility decided to recommend the re-appointment of Shri Girish Tandon asManaging Director of the Company for a further period of three years subject to requisiteapprovals. After the improvement in situation the other appointment may be considered.
Your Directors expressed their deep appreciation for valuable contributions of ShriAlankar Tandon to the Company as Executive Director of the Company but he shall continueto remain the Non Executive Director on Board. Shri Alankar Tandon Director is retiringby rotation being eligible and offers himself for re-election has given his consent forthe same.
During the Year the Non Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fee and reimbursement ofexpenses incurred by them for the purpose of attending meetings of the Company.
Pursuant to Provisions of Section 203 of the Companies Act 2013 key managerialpersonnel of the Company are Shri Girish Tandon Managing Director Shri R M Pandey ChiefFinancial Officer and Smt Babita Jain Company Secretary. There has been no change in keymanagerial personnel during the year.
The Brief resume and other details relating to the Directors who are to be appointed/re-appointed as stipulated under Regulation 36(3) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are furnished in the Annual Report.
Further all independent Directors have given declarations that they meet the criteriaof independence as laid down under Section 149 (6) of the Companies Act 2013 and Clause49 of the Listing Agreement. None of the Director is disqualified under Section 164 (2) ofthe Companies Act 2013 and Clause 49 of the Listing Agreement with the Stock Exchange.
Corporate Governance Code
Your Company has complied with all the mandatory requirements of Corporate Governance.The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreementwith the Bombay Stock Exchange and SEBI Listing Regulations forms an integral part of theDirectors Report.
The Statutory Auditors of the Company have examined the Companys compliance tothe Code of Corporate Governance and have certified the same as required under SEBIguidelines. The certificate is reproduced with Corporate Governance Report to the Members.
Managements Discussion and Analysis Report
Managements Discussion and Analysis Report for the year under review asstipulated under Clause 49 of the Listing Agreement with the Bombay Stock Exchange andSEBI Listing Regulations is presented in a separate section forming part of the AnnualReport.
Auditors and Auditors Report
M/s. P. L. Gupta & Co. Chartered Accountants Statutory Auditors of the Companyretire from their Office at the conclusion of ensuing Annual General Meeting. They arehowever eligible for re-appointment and have furnished certificate to the effect thattheir appointment if made will be in accordance with the limits specified in Sub-Section (I-B) of Section 139 of the Companies Act 2013. Your Directors recommend theirre-appointment up to the conclusion of next annual general meeting.
Auditors Qualification/ Remarks
With regard to qualifications/ remarks in Auditors Report Management responsethere on as under:
a) The balances of some of the trade receivables trade payables lender and loans andadvances are subject to confirmation/ reconciliation and subsequent adjustments if any.Due to closure of the Plant necessary verification has been delayed however theManagement is of the opinion that there are no material adjustments in this regard.
b) The Company became a sick industrial company within the meaning of Section 3 (1) (O)of Sick Industrial Companies (Special Provisions) Act 1985 (SICA) due to erosion of itsentire net worth and the Company was declared a sick Industrial Company by HonbleBIFR on 26th September 2013. The Company has submitted the Draft Rehabilitation Scheme(DRS) to operating agency Bank of Baroda. The Company has provided interest on Term Loanand other loans of Indian Bank and Bank of Baroda @ 10.50% with effect from 1st January2013 in accordance with Guidelines and Checklist for preparation of Draft RehabilitationScheme as provided by Honble BIFR.
c) The Company has not recognized additional net Deferred Tax Asset during the year.There has been delay in approval of Draft Rehabilitation of scheme/ settlement withlenders. The Company is confident of getting support from lenders for settlement /revivalof the Company and generate profit in near future.
d) The Company could not get the Actuarial Valuation of Gratuity during the year underreview and provided the gratuity liability on estimated basis for the year.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its paper activity is required to be audited. Your Directors had on therecommendation of the Audit Committee appointed Shri Rakesh Mishra Cost Accountant asCost Auditor for auditing the cost accounts of the Company for the Financial Year 2016-17at a remuneration of Rs.10000/-(Rupees ten thousand only). As required under theCompanies Act 2013 the remuneration payable to the Cost Auditor is required to be placedbefore the Members in the general meeting for ratification. Accordingly a Resolutionseeking members ratification for the remuneration payable to Shri Rakesh Misra Cost Auditor is included in the Notice convening the Annual General Meeting.
The Company has received a letter from him to the effect that his re-appointment wouldbe within the limits prescribed under Section 141(3)(g) of the Companies Act 2013 andthat he is not disqualified for such re-appointment within the meaning of Section 141 ofthe Companies Act 2013.
The Board of Directors of the Company have appointed M/s. Adesh Tandon &Associates Company Secretaries as the Secretarial Auditor of the Company for thefinancial year 2016-17 in terms of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The Report of the Secretarial Auditor for the year 2015-16 is annexed herewith asAnnexure A and forms an integral part of this Report. The comments mentioned inSecretarial Audit Report are self explanatory.
The Board of Directors of the Company have appointed M/s. S. Kakkar & CompanyChartered Accountants as the Internal Auditor of the Company for the financial year2016-17. The Internal Auditors have consistently expressed their satisfaction aboutadequacy of internal control systems and procedures followed by the Company for conductingits business efficiency. All issues raised by Internal Auditors are being suitably dealtwith and rectified under the close monitoring of the Audit Committee.
Extract of Annual Return
Pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12(1) of the Company(Management & Administration) Rules 2014 extract of Annual Return of the Company isannexed herewith as Annexure B in Form MGT-9 to this Report.
Particulars of Employees/Managerial Remuneration
None of the Employee of the Company was in receipt of total remuneration ofRs.6000000/- during the financial year under review or Rs.500000/- per month.
Information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith asAnnexure C and form an integral part of this Report.
The Company has not accepted any deposit under Section 73 or Section 76 of theCompanies Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014 during theyear under review.
Particulars of conservation of energy technology absorption and foreign exchangeearnings and outgo
Particulars with respect to conservation of energy technology absorption and foreignearnings and outgo pursuant to Section 134 (3) (m) read with the Companies (Accounts)Rules 2014 for the year ended 31st March 2016 are provided in Annexure D to this Report.
Directors Responsibility Statement
Pursuant to the requirement under Section 134(3) (c) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed:
I) that in the preparation of the annual accounts for the year ending 31st March 2016the applicable accounting standards had been followed along with proper explanationrelating to material departures if any;
II) that such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year ended 31st March 2016 and ofthe loss of the Company for that period;
III) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
IV) that the annual financial statements for the year ending 31st March 2016 have beenprepared on a going concern basis;
V) that proper internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and were operating effectively;
VI) that systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.
Material Changes and Commitments affecting the Financial position of the Company whichhave occurred between the end of financial year to which the financial year relates andthe date of the Report
The Company has received Notice under Section13 (2) of the Securitisation andReconstruction of Financial Assets and Enforcement of Security Interest Act 2002. TheCompany is in process of settlement with the lenders.
Disclosures Audit Committee
The Audit Committee comprises of five Directors namely Shri Badri Vishal Tandonnon-executive non independent Director and four Independent Directors namely Shri C.M.Krishna Brig. (Retd.) Shri Rajeev Lochan Singh SC Shri Saran Vinod and Shri Atul Seth.All the recommendations made by the Audit Committee were accepted by the Board.
Particulars of Loans Guarantees or Investments
The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013. The details of the investments made by Company aregiven in the notes to the financial statements.
The Board of Directors has constituted a Risk Management Committee to monitor andreview the risk management plan and apprised the Board about Risk Management frameworkmethodology for categorization of risk and mitigation plan and such other function asdirected by Board from time to time. The main objective of this policy is to ensuresustainable business growth with stability and to promote a proactive approach inreporting evaluating and resolving risks associated with the business. In order toachieve the key objective the policy establishes a structured and disciplined approach toRisk Management in order to guide decisions on risk related issues. In todayschallenging and competitive environment strategies for mitigating inherent risks inaccomplishing the growth plans of the Company are imperative. The common risks inter aliaare Regulations competition Business risk Technology obsolescence Investmentsretention of talent and expansion of facilities. Business risk inter-alia furtherincludes financial risk political risk fidelity risk legal risk. As a matter of policythese risks are assessed and steps as appropriate are taken to mitigate the same.
Pursuant to provisions of Section 177 of the Companies Act 2013 the Company hasadopted Vigil Mechanism of the Company which also incorporates a whistle blower policy.Adequate safeguards are provided against victimization to those who avail the mechanismand access to the Chairman of the Audit Committee in exceptional cases. This policy isavailable on the Companys website at www.shbhawani.com
Pursuant to the provisions of Section 205A (5) and 205C of the Companies Act 1956 theCompany has transferred the unpaid or unclaimed dividends for the financial year up to2006-07 from time to time on due dates to the Investor Education and Protection Fund (theIEPF) established by the Central Government. The Company has not declared any dividendthereafter till the year under review.
Contracts and Arrangements with related parties
During the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. The policy onmateriality of related party transactions and dealing with related party transactions asapproved by the Board may be accessed on the Companys website at www.shbhawani.comYour Directors draw attention of the members to Note 31 to the financial statement whichsets out related party disclosures.
Meetings of the Board
Five meetings of the Board of Directors were held during the year. For further detailsplease refer Report on Corporate Governance of this Annual Report.
Subsidiary and Associate Companies
The Company does not have any Subsidiary/ Associate Company.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key managerial PersonnelSenior Management and their remuneration. The appointment Policy is stated in theCorporate Governance Report and is available on website of the Company www.shbhawani.com
Pursuant to the provisions of the Companies Act 2013 and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI Listing Regulations") the Board has carried out an annual performanceevaluation of its own performance and the performance of the individual Directors as wellas the evaluation of the working of its Committees. The manner in which the evaluation wascarried out has been explained in the Corporate Governance Report. The details ofprogramme for familiarization of Independent Directors of the Company is available onwebsite of the Company www.shbhawani.com
Listing with Stock Exchange
The Equity Shares of the Company are listed on Bombay Stock Exchange Limited.
Disclosure under the Sexual Harassment of women at workplace (Prevention Prohibitionand Redressal) Act 2013.
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the sexual harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013. Till date the Company has not received any complaint there under.
Your Directors would like to express their thanks to the Banks for their co-operationand assistance from time to time. The Directors would also like to record theirappreciation to the members of staff and workers who in spite of constraints have beenworking hard for the Company and are maintaining cordial relations.
|FOR AND ON BEHALF OF THE BOARD || |
|GIRISH TANDON ||ALANKAR TANDON |
|MANAGING DIRECTOR ||DIRECTOR |
|PLACE: ALLAHABAD || |
|DATED: 13TH AUGUST 2016 || |