Your Directors have pleasure in presenting the Forty Fourth
Annual Report along with the Audited Financial statements of the Company for thefinancial year ended 31st March 2017.
|Particulars ||For the Year ended on 31.03.2017 ||For the Year ended on 31.03.2016 |
|Total Income ||19137496.49 ||3295412 |
|Total Expenditure ||81598881.45 ||100074889.43 |
|Exceptional Item ||58098390 ||- |
|Profit/(Loss) before taxation ||(120559774.96) ||(96779477.43) |
|Provision for Tax ||(12710093.59) ||(12298658.38) |
|Profit/(Loss) after Taxation ||(107849681.37) ||(84968144.05) |
During the year the company has net loss of `107849681.37/- (Previous Year loss of` 84968144.05/-).
The company has been mainly servicing customers whose requirements matched thecompany's stock of semi-finished and finished goods entirely or partially. In severalcases semi-finished and finished goods have been re-worked to meet the current customers'requirements. The production facility of the company is still in partial closure mode dueto lack of availability of working capital funds and persistent labour problem.
The reworked Corporate Debt Restructuring (CDR) package although sanctioned by the CDRCell in March 2010 and sanctioned individually by all the lender bankers was notimplemented at all though it was expected to be implemented by July 2010. Further thebanks unilaterally decided to exit from the CDR scheme.
Meanwhile our accounts with the banks were designated as
Non- Performing Asset (NPA) by the bankers and in May 2011 the bankers initiatedrecovery action under the Securitization and Reconstruction of Financial Assets andEnforcement of Security
Interest Act 2002. The Company is taking all requisite measures to ensure that theoutstanding dues to the bankers is settled and has already given its proposal for one-timesettlement with the bankers. State Bank of India which became our lead bank after themerger of State Bank of Indore with it in August 2010 also sent us a possession notice inOctober 2011 against which the company has already filed an application with the DebtRecovery Tribunal. The management is making constant endeavors to move on with discussionswith the bankers so as to arrive at a mutually acceptable proposal.
The management is also evaluating various options with respect to raising the fundsrequired for settling the banks' dues including selling or leasing the land on which thefactory is situated and shifting the operations to an alternate site. As of date themanagement is seriously considering a couple of proposals although a structured outcomeis yet to emerge.
Members are aware that the company had filed a reference under section 15(1) of theSick Industrial Companies (Special Provisions) Act 1985 due to erosion of its net worth.As of 31st March 2015 the net worth remains negative in view of the accumulated losses.
The Company has now received an order dated 27th January 2016 by the Board ofIndustrial and Financial Reconstruction (BIFR) that reference of the Company is registeredFurther after the repeal of the BIFR Act in December 2016 the Company is taking furtheropinion for next course of action. The Company is in process of one time settlement withvarious banks. The Company has settled all type of loan of State Bank of Patiala and StateBank of Hyderabad. The loan has been taken over by ARC Companies.
TRANSFER TO RESERVES IN TERMS OF SECTION 134 (3) (J) OF THE COMPANIES ACT 2013
For the financial year ended 31st March 2017 the Company has incurred loss thereforeno amount is transferred to General Reserve Account.
In view of past losses Directors did not recommend any dividend for the equityshareholders for the financial year 2016-17.
The Company has not invited and/ or accepted any deposits within the meaning of Section73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014made thereunder.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Particulars of Loans Guarantees or Investments under Section 186 of Companies Act2013 are given in the notes forming part of Financial Statements for the year ended 31stMarch 2017. The investment made in the subsidiary company registered in Netherland hasbeen written off with a loss amounting to `. 58098390 due to windingup of theCompany.
Presently the Paid up Share Capital of the Company is `. 125004740/- dividedinto 12500474 equity Shares of `10/- each.
DETAILS OF SUBSIDIARY COMPANIES/ASSOCIATES/ JOINT VENTURE:
During the year under review no Company has become Subsidiary/Associate/Joint VentureCompany of your Company.
The wholly owned subsidiary of the Company registered in Netherlands namely M/s SGFLInternational BV has been wound up w.e.f. 15th January 2016 and the investment made inthe subsidiary company has been written off.
Your Company complies with the provisions laid down in Corporate Governance laws to theextent possible. It believes in and practices good corporate governance. The Companymaintains transparency and also enhances corporate accountability.
Pursuant to Regulation 27 of the SEBI (Listing Obligation and Disclosure Requirements)Regulation 2015 with the Stock Exchanges and Schedule V of SEBI (Listing Obligation andDisclosure Requirements) Regulation 2015 the following forms part of this Annual Report:i. Declaration regarding compliance of Code of Conduct by Board Members and SeniorManagement Personnel; ii. Management Discussion and Analysis; iii. Report on the CorporateGovernance; and Auditors' Certificate regarding compliance of conditions of CorporateGovernance.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
There was order passed by the D.R.T. againts which we have filed writ petition in thehigh court for relief
MATERIALCHANGESANDCOMMITMENTSAFFECTING THE FINANCIAL POSITION OF THE COMPANY:
No material changes and commitments have occurred subsequent to the close of FY 2016-17till date of this report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Provision of Section 135 and Schedule VII of the Companies Act 2013 in respect toCorporate Social Responsibility (CSR) is not applicable on the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION:
The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct2013 and Rule 8 of the Companies (Accounts) Rules 2014 in respect of conservation ofenergy technology absorption and foreign exchange earnings and outgo as required to bedisclosed under the Act and the Companies (Accounts) Rules 2014 are as under:
(a) Conservation of energy measures taken:
The Board of Directors has taken following steps to conserve the energy: Switching offlights A/C and computers whenever not used.
Power utilization on all computers pantry and cabins.
Planning to replace lights with low energy consumption units Controlled theenergy consumption by optimizing the temperature inside the office premises is the majorcontributor for the energy conservation for the stores.
Optimized lighting consumption by strictly controlling the operating hours asper the usage pattern.
The board is constantly taking initiatives and steps to reduce the bills and isoptimist for a favorable output. The Board is planning to use energy saver equipment.
(b) Technology absorption measures:
(i) The efforts made towards Technology Absorption
The Company is trying its best to save electricity due to its sick status company isunable to use any modern technology for technology absorption.
(ii) the benefits derived like product improvement cost reduction product developmentor import substitution -
(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year)- --(a the details of technology imported --(b)the year of import; --(c) whether the technology been fully absorbed --(d) if not fullyabsorbed areas where absorption has not taken place and the reasons thereof --(iv) theexpenditure incurred on Research and Development --
(c) Foreign Exchange Earnings and Outgo There were no foreign exchange earnings andoutgo during the year under review.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The Company does not have any employees drawing remuneration in excess of the limitsspecified in Section 197(12) read with Rule 5 of (Appointment and remuneration ofmanagerial Personnel) Rules 2014.
RATIO OF REMUNERATION OF EACH DIRECTOR
The information required pursuant to Section 197 read with Rule 5(1)(i) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is notapplicable to the Company as the Company has not paid any remuneration to the ManagerialPersonnel during the year 31st March 2017.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. Suitable disclosuresas required under AS-18 have been made in the Notes to the financial statements.
The Company has formulated Risk Management Policy. The Board takes all necessary stepsto identify and evaluate business risks and opportunities and take corrective steps.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size and the limitednature of its business activities.
DIRECTOR'S RESPONSIBILITY STATEMENT:
To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013: a. In the preparation of the annualaccounts the applicable accounting standards have been followed. b. The directors haveselected such accounting policies and applied them consistently and made judgments andestimates that were 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 and of the profit or loss ofthe Company for the year under review. c. The directors have taken proper and maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities. d. The directors have prepared the annual accounts on a going concernbasis. e. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively. f. The directors had devised proper system to ensure compliance with theprovisions of all applicable laws and that such system were adequate and operatingeffectively.
DETAILS OF DIRECTORS AND KMPs APPOINTMENT OR RESIGNATION DURING THE YEAR:
In accordance with the provisions of the Companies Act 2013 Mr. DeepakSekhriDirectorof the Company retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for reappointment. The Board recommends his re-appointment for theconsideration of the Members of the Company at the ensuing Annual General Meeting. Membersare requested to refer the Notice of ensuing Annual General Meeting for breif profile andother related information of Director appointing/reappointing in the AGM. There was noother change in the directors and KMP during the year under review.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and underregulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
In terms of Section 203 of the Companies Act 2013 as on 31st March 2017 thefollowing are the Key Managerial Personnel (KMP) of the Company: In terms of theprovisions of Section 203 of the Act Mr. Deepak Sekhri Managing Director Mrs. AnitaSekhri Whole Time Director and Mr. Pronab Kumar Chakravarty Chief Financial Officerarethe Key Managerial Personnel of your Company.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transaction with the Company other than reimbursement of expensesincurred by them for the purpose of attending meetings of the Company.
The Board of Directors of your Company met 4Times during the year to carry the variousmatters. The Meetings were convened on 30.05.2016 14.11.2016 31.01.2017 and 30.05.2017respectivelyand further details of which are given in the Corporate Governance Reportforming part of this Annual Report.
The Board of Directors has made the formal annual evaluation of its own performance andthat of its committees and individual care for the directors and found it to besatisfactory.
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KMP AND REMUNERATION POLICY:
The Company's policy on director's appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which form part of this report.
NOMINATION AND REMUNERATION COMMITTEE:
The composition and terms of reference of the Nomination and Remuneration Committee hasbeen furnished in the Corporate Governance Report forming a part of this Annual Report.
The Audit Committee comprises of Mr. Gyan Prakash Singh who serves as the Chairman ofthe Committee and Mr. Deepak B. Sekhri& Mrs. Anita Deepak Sekhri as other members. Theterms of reference of the Audit Committee has been furnished in the Corporate GovernanceReport forming a part of this Annual
The Company has a vigil mechanism in terms of Section 177 of the Companies Act 2013and Regulation 22 of SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 to deal with instance of fraud and mismanagement if any and to report concernsabout unethical behavior wrongful conduct and violation of the Company's code of conductor ethics policy.
The term of existing Statutory Auditor M/s. Batliboi & Purohit (Firm no. 1010480W)Chartered Accountants Mumbai is expiring at the ensuing Annual General Meeting.
Pursuant to the provisions of Section 139(2) 142 and other applicable provisions ifany of the Companies Act 2013 and the Rules framed thereunder as amended from time totime M/s. R. K. Chaudhary& Associates (Firm Registration No. 133512W)
Chartered Accountant Mumbai being eligible pursuant to Section 141 and consented tobe the auditor is being recommended to be appointed as a Statutory Auditor of the Companyfor a term of five (5) consecutive years to hold office from the conclusion of AnnualGeneral Meeting (AGM) till the conclusion of the 49thAGM oftheCompanytobeheldintheyear2022(subjecttoratification of their appointment at every AGM)
STATUTORY AUDITORS' OBSERVATIONS & COMMENTS FROM BOARD:
1. Remark:- Bank balance confirmations have not been provided to us for SBI SBP SBHBOM during the audit and hence we are not able to comment on the actual balances and theconsequent impact on the loss and reserves of the
2. Remark:- The company was not able to produce the fixed deposit receipts of the aboveconstorium Banks which casts an uncertainty to its right. We are thus not able to commenton the actual balances. Comment for 1 and 2: The Company is under DRT and thus banks arenot providing the company the statement of accounts.
3. Remark:- The financial statements indicate that the company has accumulated lossesand its net worth has been substantially eroded; the company has incurred net loss duringthe current and previous year. These conditions along with other matters set forth innote indicate the existence of a material uncertainty that may cast significant doubtabout the company's ability to continue as a going concern. However the financialstatements of the Company have been prepared on a going concern basis. Our opinion is notmodified in respect of these matters.
Comment: Due to financial constraints management is unable to do the compliance.
4. Remark:- The Loan of State Bank of Hyderabad and State Bank of Patiala have beentransferred by the bank to Asset reconstruction company. This ARC has assigned theliability of payment of these loans to the Guarantor of Shree Ganesh Forgings Ltd at areconstructed amount. This does not have any impact or adjustment to the financialstatement during the year.
5. Remark:- The Company has failed to provide the necessary information and dataand has not disclosed the impact of pending litigations as on March 31 2017 on itsfinancial position in its financial statements.
Comment: The Company being a sick company and due to financial constraintscould not retain the experienced staff and higher qualified staff. However management istaking all necessary steps to revive the company and to provide all possible informationand documents to the auditors with the existing setup.
6. Remark:- The Company has Unpaid/ Unclaimed Dividend and Share Application Money ofRs. 183957 and 154786 respectively for more than 8 years and which is required to betransferred to IEPF Account.
Comment: Due to financial constraints management is unable to do the compliance.
7. Remark:- The Company is not regular in depositing undisputed statutory dues
Comments: Due to financial constraints management is unable to pay the dues in time.
In terms of the provisions of section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. Anish Gupta & Associates Company Secretaries Mumbai as SecretarialAuditor for conducting Secretarial Audit of your Company for the financial year31.03.2017. The report of the Secretarial Auditor is annexed herewith as"AnnexureA"
SECRETARIAL AUDITORS' OBSERVATIONS & COMMENTS FROM BOARD:
a) The Company has not appointed Company Secretary as KMP as required under section 203of Companies Act 2013 and Compliance Officer as required under regulation 6 of SEBI(LODR) Regulations 2015:- The Company is looking for a suitable candidate for the samebut being a sick company and due to weak financial problem no candidate is willing tojoin the company.
b) The Company has not updated its website and uploaded the documents and informationas required under the Companies Act 2013 and Regulation 46 of SEBI (LODR) Regulations2015:- Due to financial problems it is unable to continue the services of consultant toupdate the website.
c) The Company has not appointed Internal Auditor during the period under review:-Beinga sick company it is unable to appoint internal auditor.
d) The Constitution of the Nomination & Remuneration Committee is not in accordancewith section 178 of Companies Act 2013 and Regulation 19 of SEBI (LODR) Regulations2015:- since the Company is sick company no one is interested to be an IndependentDirector.
e) There is delay and non-submission in filing the forms and returns during the periodunder review including the filing of balance sheet:- The Company will ensure thecompliances.
f) The Company has Unpaid/ Unclaimed Dividend and Share Application Money of Rs.183957 and Rs. 154786 respectively for more than 7 years and which is required to betransferred to IEPF Account which is yet to be complied with:- Due to financial problemthe company is unable to transfer the funds.
g) The company has defaulted in payment of statutory dues and the company has defaultedin repayment of interest and loans borrowed from banks:-The Company has a financial crunchtherefore we are not in position to clear statutory dues.
h) The company has not complied with the regulation 31(2) of LODR according to which100% shareholding of promoters shall be in Demat Form.
i) Code of Conduct for Independent Director and meeting at least one meeting in a yearnot held as per under Schedule IV:- Since the company has only one independent directorthe meeting with one ID is not possible.
EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) of the Act read with the Companies(Management and Administration) Rules 2014 an extract of the Annual Return of yourCompany for the financial year ended 31st March 2017 is given in Annexure B.
Your Company has not issued any shares with differential voting.
There was no revision in the financial statements.
Your Company has not issued any sweat equity shares.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:
The compliance regarding Disclosures under Section 22 of Sexual Harassment of Women atWork (Prevention Prohibition and Redressal) Act does not apply to the Company. Howeverthe Company is committed to provide a safe & conducive work environment to itsemployees. At present the company has no female staff.
PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The
Board is responsible for implementation of the Code. All Board Directors and thedesignated employees have confirmed compliance with the Code.
Your Company and its Directors wish to extend their sincerest thanks to the Members ofthe Company Bankers Staff and workers at all levels for their continuous co-operationand assistance.
By Order of the Board of Directors
For Shree Ganesh Forgings Limited
Mr. Deepak B. Sekhri