The Members of Sujana Universal Industries Limited (A Company under CorporateInsolvency Resolution Process by NCLT order No. CP(IB)No. 186/09/HDB/2019).
Your Directors and the Resolutional Professional (Herein after referred to as "TheDirectors" for the sake of brevity) have pleasure in presenting their Report and theAudited Financial Statements of your Company for the year ended 31st March 2019.
Your Directors hereby report that the Company has achieved a turnover of Rs. 236.32lakhs upto 31.03.2019 as against the turnover of Rs. 5534.72 lakhs during the previousfinancial year ended 31.03.2018.
| || ||Rs. in Lakhs |
|Particulars ||2018-2019 ||2017-2018 |
|Revenue: Revenue from Operations ||236.32 ||5534.72 |
|Other Income ||40.28 ||217.43 |
|Total Income ||276.60 ||5752.15 |
|Expenses: Cost of Materials Consumed ||- ||37.76 |
|Purchase of Stock-in-Trade ||- ||4404.01 |
|Changes in inventories of Finished Goods Work-in-Progress and ||- ||- |
|Stock-in-Trade ||887.45 ||454.04 |
|Employee Benefit Expenses ||111.10 ||251.89 |
|Finance Costs ||2730.16 ||55.60 |
|Depreciation and Amortization Expenses ||1006.10 ||1817.31 |
|Other Expenses ||68453.30 ||8296.74 |
|Total Expenses ||73188.11 ||15317.35 |
|Profit Before Tax ||(72911.51) ||(9656.20) |
|Current Tax ||- ||- |
|Differed Tax ||96.52 ||949.20 |
|Profit for the year ||(73008.03) ||(10514.40) |
|Balance of Profit ||(99393.05) ||(23712.90) |
Operations & Overall Performance:
During the year under review your Company reported total income of Rs. 276.60- Lakhsas against Rs. 5752.15 lakhs of previous year. Your company incurred loss before tax ofRs. 73008.03 lakhs as against loss of Rs. 10514.40 lakhs in the previous year. Aftermaking a provision of Rs. 2730.16 Lakhs towards interest and Rs. 1006.10 Lakhs towardsdepreciation the current financial year closed with a net loss of Rs. 73008.03 Lakhs asagainst net loss of Rs. 10514.40 Lakhs last year.
In view of the losses your Company does not recommend any dividend for the year underreview.
Material Changes and Commitments:
There is no material change and commitment has occurred affecting the financialposition of the Company between the end of the financial year of the Company i.e. 31stMarch 2019 and the date of this report.
Your Company has not accepted Deposits from Public or Members under Chapter V of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 for the yearunder review.
Related Party Transactions
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in ordinary course of business and on arm's length basis.During the year the Company had not entered into any contract/arrangement/ transactionwith related parties which could be considered material under Regulation 23 of ListingRegulation. Accordingly the disclosure of Related Party Transactions as required nderSection 134(3)(h) of the Companies Act 2013 in Form AOC - 2 is not applicable. The Policyon materiality of related party transactions and dealing with related party transactionsas approved by the Board is also posted in the Investors section of the Company's websitewww.sujana.com. Your Directors draw attention of the members to Note No. 2.28 to thefinancial statements which sets out related party disclosures.
Prior omnibus approval is obtained on an annual basis for the transactions with relatedparties which are of a foreseeable and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted and a statement giving details of alltransactions with related parties are placed before the Audit Committee and Board ofDirectors for their review on a periodic basis. None of the Directors other than to theextent of their shareholding receipt of remuneration / commission has any pecuniaryrelationships or transactions vis--vis the Company.
Corporate Social Responsibility
Corporate Social Responsibility Policy framed in consonance with Section 135 of theCompanies Act 2013 read with the rules framed there under duly indicating the activitiesto be undertaken by the Company as specified in the Schedule VII of the Companies Act2013. The Corporate Social Responsibility Policy is posted in the Investors section of theCompany's website. The Company is not falling under any of the applicability criteria's ofCSR as mentioned under the provisions of Section 135 of the Companies Act 2013 as amendedby the Companies Amendment Act 2019. Reporting as required under the aforesaid Sectionfor the FY 2018-19 as Annexure - I and forms part of this report.
Directors' Responsibility Statement:
Directors' Responsibility Statement as required under the provisions of Section134(3)(c) of the Companies Act 2013 is given in the Annexure - II attached hereto andforms part of this Report.
(a) Statutory Auditors
M/s. J. Singh & Associates Chartered Accountants (FRN No. 110266W) are theStatutory Auditors of the Company and they hold the office till the conclusion of the 33rdAnnual General Meeting of the Company in the year 2022.
Notes to the accounts as referred in the Auditor's Report are self-explanatory.
During the year under review the Auditors of the Company have not reported any fraudas specified under Section 143 (12) of the Companies Act 2013 to the Audit Committee.
Statutory Auditors' Qualification / Comment /Explanations on the Company'sStandalone/Consolidated Financial Statements
a) The Company has defaulted in repayment of dues to Banks/Financial Institutions andall loans outstanding were classified as NPA's by the banks. Provision for interest(excluding penal interest) amounting to Rs. 55.67 Cr. and Rs.213.40 Cr for the quarterended 31st March 2019 and Year ended on such date respectively on its Working Capital Loanand Term Loan has not been made in the books by the Company as those Loan Accounts wereclassified as NPA by the Lending Banks and Financial Institutions. The loss of the Companyhas been understated by Rs.55.67 Cr for the quarter ended 31st March 2019 and Rs. 213.40Cr for the year ended on such date in view of non-provision of Interest amount.
As on 31.3.2019 the outstanding secured loans stand at Rs. 1123.20 cr. and theCompany is pursuing with the lenders a viable restructuring package. As almost all theBanks/Financial Institutions the lenders have classified our loan accounts as NPA's andin view of the Company's efforts with the lenders for settlement of dues in the form ofOTS/Resolution of debts by takeover by strategic investors the Company has not providedin the books of account unpaid interest amounting to Rs.213.40 cr. for the currentfinancial year 2018-19.
b. In absence of technical and costing evaluation of current and non current assetsimpact of impairments if any on their economic value we can't comment on the realizablevalue of same.
The amounts in current assets and non current assets advance paid for services etc.and in the opinion of the management they are good and recoverable in cash or in kind.Hence provision has not been made.
c. The Trade receivables could not be verified as the confirmation of balances have notbeen received. The Company has made a provision for bad and doubtful debts for tradereceivables amounting to Rs.409.18 Cr during the Year ended 31st March 2019. Therealizability of remaining trade receivables amounting to Rs.579.63 Cr is in doubt and thecompany has not made any provision for Bad and Doubtful Debts in respect of this tradereceivables.
The Company has sent letters to the debtors requesting for confirmation of balance ason 31.03.2019. The Company is following up with the Debtors for the confirmations. Thecompany has made provision for bad and doubtful debts to the extent of Rs.409.18 crore andis confident of realizing the balance amount of Rs.579.63 crore. Hence provision has notbeen made for the amount.
d. Loans and advances of Rs. 44.16 Cr has been given to various sub-contractorssuppliers and other parties are old advances. Having regard to the age of this advancesin our opinion this are doubtful of recovery. The company is yet to assess the change inrisk of default and resultant expected credit allowance on such Loan and advances. Had theaforesaid Loans and advances has been provided for impairment loss of the company for thequarter ended 31st March 2019 and year ended on such date would have been higher by Rs.44.16 Cr .
The amount of Rs.44.16 Cr. has been paid as advance for supply of goods/ servicesand in the opinion of the management they are good and recoverable in cash or in kind.Hence provision has not been made.
e. The Company's Net worth has been eroded on account of losses incurred by the companyduring the year ended 31st March 2019 and previous financial year and the net worth of thecompany is negative. The Current Liabilities of the company exceeded the current assets ofthe company as at 31st March 2019 by Rs.754.64 Cr. It would cast doubt on the Company'sability to continue as a going concern basis.
The company has been making efforts for settlement of the dues of banks/ FinancialInstitutions in the form of OTS/ Resolution of debts through takeover by strategicinvestors. The company expects its net worth to become positive in the process and hencecan continue as a going concern.
Note No. f in Independent consolidated audit report
f. Except Sun Trading Net worth of the companies in the Group has been eroded onaccount of losses incurred during current financial year ended 31st March 2019 andprevious financial year doubt on the Company's ability to continue as a going concernbasis
Due to adverse conditions in the international market for steel and allied products andother problems the subsidiaries incurred losses and their Net Worth has been eroded. Itmay be observed from the net worth of all the subsidiaries excepting Sun Trading Ltd hasbeen eroded fully. Since the company management was of the opinion that the impairment ofvaluation of the subsidiaries excepting Sun Trading Ltd was permanent a provision forimpairment to the extent of Rs.174.97 crore (book value of investment in subsidiariesexcepting Sun Trading Ltd) was made in books.
(b) Cost Auditors:
M/s. B V R Associates & Co Cost Accountants have been appointed as the CostAuditor of the Company for financial year 2019-20 pursuant to provisions of Section 148and other applicable provisions of the Companies Act 2013. As required by Section 148 ofthe Companies Act 2013 necessary resolution has been included in the notice conveningthe Annual General Meeting seeking ratification by the members to the remunerationproposed to be paid to the cost auditors for the financial year ending 31st March 2020.
The Company is in process of filing the Cost Audit Report for the financial year2018-19 with the Central Government.
(c) Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules framedthere under the Resolution Professional has appointed Anand Kumar C Kasat PracticingCompany Secretaries Mem. No. 42078 CP. No. 17420 to undertake the secretarial audit ofthe Company. The secretarial audit report issued by Anand Kumar C Kasat PracticingCompany Secretary for the financial year ending 31st March 2019 is given in theAnnexure-III-A attached hereto and forms part of this Report. There are no qualificationsreservations or adverse remarks made by the secretarial auditor and the observation madeis self explanatory and requires no further explanation from the Board.
(d) Secretarial Compliance Report
Pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015 the Company has obtained annual Secretarial Compliance Report for thefinancial year ended 31st March 2019. The report has been annexed herewith as"Annexure - III-B".
(e) The Company could not appoint Company Secretary under Section 203 of CompaniesAct 2013 reading Rule 8A of Companies (Appointment and Remuneration of Key ManagerialPersonnel) Rules 2014 in spite of its efforts and the Company is taking further steps tocomply with the provisions for appointment of Company Secretary.
Since the appointment of Company Secretary could not be made the Company could notfile Form INC 22A and consequently the Company has been classified as Non CompliantCompany by the Ministry of Corporate Affairs.
The paid up equity share capital as on 31st March 2019 was Rs. 168841072. During theyear 2018-19 there was no change in the share capital of the Company.
The Company has not issued any share with differential voting rights nor has grantedany stock options or sweat equity as on 31st March 2019. None of the Directors of theCompany hold instruments convertible into equity shares of the Company.
Extract of Annual Return:
Pursuant to the provisions of Section 92 of the Companies Act 2013 and rules framedthere under the extract of the Annual Return in form MGT-9 is annexed herewith asAnnexure-IV and forms part of this Report.
Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo:
Particulars with respect to Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as required under Section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 are given in the Annexure -V attached hereto andforms part of this Report.
During the year under review 5 (Five) board meetings were held on May 30th 2018August 14th 2018 August 29th 2018 November 14th 2018 and February 14th 2019. Themaximum time gap between any two consecutive meetings was within the period prescribedunder the Companies Act 2013 and and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
Pursuant to the provisions of Section 152 of the Companies Act 2013 and in accordancewith the Articles of Association of the Company Shri. S.Hanumantha Rao(DIN: 00118801)Director of the Company will retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment.
The Resolutions proposing their re-appointment/appointments as Directors will be placedbefore the Shareholders for their approval at the ensuing Annual General Meeting of theCompany.
Dr.V.Malakonda Reddy (DIN: 00839850) Independent Director of the Company has resigneddue to personal reasons from the directorship of the Company w.e.f May 30th 2018. TheBoard places on record its deep appreciation for the valuable services rendered by himduring his association as a Director and Independent Director of the Company.
Ms. G.Uma Devi (DIN: 07958472) Independent Director of the Company has resigned due toher full time employment in a private organization w.e.f: May 29th 2019. Ms. G.Uma Devihas communicated and confirmed that there are no material reasons other than thoseprovided above. The Board places on record its deep appreciation for the valuable servicesrendered by her during her association as a Director and Independent Director of theCompany.
Shri Venkatakrishnan (08067933) Nominee Director of the Company has resigned due towithdrawal of nomination by the IDBI Bank Limited with effect from September 18th 2018.The Board places on record its deep appreciation for the valuable services rendered by himduring his association as a Director and Independent Director of the Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they continue to meet with the criteria of independence as prescribedunder sub-section (6) of Section 149 of the Companies Act 2013 and under Regulation16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
None of the Directors of your Company is disqualified under Section 164 (2) of theCompanies Act 2013. As required by law this position is also reflected in the Auditors'Report.
The following persons are Key Managerial Personnel of the Company:
Shri G Srinivasa Raju : Managing Director
Shri S Hanumantha rao : Whole time Director
Shri S Rengaraj : Chief Financial Officer
For Directors seeking appointment/re-appointment in the forthcoming Annual GeneralMeeting of the Company; the particulars as required to be disclosed in accordance withRegulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 are attached and forms part of this Report.
The Board of Directors evaluated the annual performance of the Board as a whole itscommittee's and the directors individually in accordance with the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 in the following manner:
Structured evaluation forms after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance for evaluation of theperformance of the Board its Committee's and each director were circulated to all themembers of the Board along with the Agenda Papers. The members of the Board were requestedto evaluate by filling the evaluation forms and the duly filled in evaluation wererequired to be sent to the Company Secretary in a sealed envelope or personally submittedto the Chairman at the concerned meeting.
The Board also provided an individual feedback to the concerned director onareas of improvement if any.
A separate meeting of Independent Directors was held on 30th March 2019 to evaluatethe performance of the Chairman the Non Independent Directors the Board and flow ofinformation from management.
Particulars of Employees:
The information required pursuant to the provision of Section 197 read with Rule 5 ofThe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company are set out in Annexure-VI of this Report.
Management Discussion and Analysis Report:
Management Discussion and Analysis forming part of this report as required underRegulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is attached hereto as Annexure- VII and forms part of this Report.
Your Company is committed to principles of good Corporate Governance. The Board ofDirectors ensures that your Company is in compliance with all the applicable regulationsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 pertaining toCorporate Governance. A detailed report on Corporate Governance is attached asAnnexure-VIII and forms part of this report. Certificate from the Practicing CompanySecretary confirming the compliance with the conditions of Corporate Governance asstipulated under Regulation 34(3) read with Schedule V of SEBI(Listing Obligations andDisclosure Requirements) Regulations 2015 is attached to this report.
Details of the subsidiaries are given below :
Your Company has the following Wholly Owned Subsidiaries:
PAC Ventures Pte Ltd Singapore was set up in the year 2007 with a view to expandthe Company's business of general wholesale trade(including general imports and exports)in the overseas markets and the Company has achieved revenue of Rs. Nil during the year
Sujana Holdings Ltd Dubai was set up in the year 2006 for carrying on the businessof investments and trading and its revenue during the year is nil Further Sujana Holdingshas expanded its operations in Sharjah UAE by forming a subsidiary namely Empire Gulf FZESharjah UAE.
Nuance Holdings Ltd Hong Kong was set up in the year 2006 for carrying on thebusiness of investments and trading and its revenue during the year was Rs. Nil. NuanceHoldings Ltd has expanded its operations by forming a subsidiary namely Selene HoldingsLtd Mauritius.
Sun Trading Ltd Cayman Islands was set up in the year 2008 for carrying on thebusiness of general wholesale trade which includes general imports and exports and itsconsolidated revenue was Rs. Nil. Sun Trading Ltd has a subsidiary namely Sun globalTrading Pte. Ltd Singapore.
Hestia Holdings Ltd Mauritius has became subsidiary of the Company w.e.f. 27thDecember 2010 with the object of carrying on the business of general trade which includesgeneral imports and exports.
A separate statement containing the salient features of the Financial Statement for thefinancial year ended 31st March 2019 of the aforesaid subsidiary companies are includedin the Annual Report as Form AOC-1 as an Annexure -IX'. The Financial statements ofthe said Subsidiaries Companies are available for inspection by the Shareholders at theRegistered office of your Company. Your Company undertakes that the Financial statementsof the Subsidiaries Companies shall be made available to the Shareholders of the Companyon demand.
Consolidated Financial Statements:
The consolidated financial statements of your Company for the financial year 2018-19are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and Listing Regulations as prescribed by the Securities and ExchangeBoard of India (SEBI).
The consolidated financial statements have been prepared on the basis of auditedfinancial statements of the Company and its subsidiaries.
Your Company has constituted an Audit Committee as per the requirements of Section 177of the Companies Act 2013. The details of the composition of the Audit Committee asrequired under the provisions of Section 177(8) of the Companies Act 2013 is given inthe Corporate Governance Report furnished as part of the Annual Report. During the yearunder review the Board has accepted all the recommendations of the Audit Committee.
Internal Control Systems and their adequacy:
Your Company has an effective Internal Control System to prevent fraud and misuse ofCompany's resources and protect shareholders' interest. Your Company has an independentInternal Audit Department to monitor and review and focus on the compliances of variousbusiness processes. The internal audit report alongwith audit findings and tracking ofprocess improvements & compliances is presented for review to the Audit Committee ofBoard of Directors.
The Board of Directors of the Company have adopted various policies like Related PartyTransactions Policy Whistle Blower Policy Corporate Social Responsibility Policy RiskManagement Policy Dissemination of Material Events Policy Documents Preservation PolicyMonitoring and Reporting of Trading by Insiders Code of Internal Procedures and Conductfor Regulating Code of Practices and Procedures for Fair Disclosures and such otherprocedures for ensuring the orderly and efficient conduct of its business for safeguardingof its assets the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information
The Board of Directors on recommendation of the Audit Committee established a vigilmechanism by framing a Whistle Blower Policy to deal with instance of fraud andmismanagement if any. The Vigil Mechanism framework ensures that strict confidentialityis maintained whilst dealing with concerns and also that no discrimination shall be metedout to any person for a genuinely raised concern. The designated officer/ Audit CommitteeChairman can be directly contacted to report any suspected or confirmed incident offraud/misconduct.
The Board of Directors on recommendation of the Nomination and Remuneration Committeeframed a Nomination and Remuneration policy for selection appointment and remuneration ofDirectors KMP and Senior Management and matters covered u/s 178(3) of the Companies Act2013. The details of the same are provided in the Corporate Governance Report.
The Policy is also posted in the Investors section of the Company's websitewww.sujana.com.
Particulars of Loans Guarantees or Investments:
Particulars of Loans Guarantees and Investments as required under the provisions ofSection 186 of the Companies Act 2013 are provided in the notes to the FinancialStatements.
Risk Management :
The Risk Management programme at The Company is focused on ensuring that risks areknown and addressed. The Board of Directors on recommendation of the Audit Committeeestablished a robust Risk Management framework by framing a Risk Management Policy to dealwith all risks including possible instances of fraud and mismanagement if any. The RiskManagement Policy details the Company's objectives and principles of Risk Management alongwith an overview of the Risk Management process procedures and related roles andresponsibilities.
The Board is of the opinion that there are no elements of risks that may threaten theexistence of the Company. The board periodically tracks the progress of implementation ofthe Risk Management policy
Your directors are happy to report that the Industrial Relations have been extremelycordial at all levels throughout the year.
Sexual Harassment Policy:
The Company as required under the provisions of "The Sexual Harassment of Women atWorkplace (Prohibition Prevention and Redressal) Act 2013" has framed a Policy onProhibition Prevention and Redressal of Sexual Harassment of Women at Workplace andmatters connected therewith or incidental thereto.
In the year under review the Company has not received any complaint under the saidPolicy.
Environment and Social Obligation:
The Company's plants comply with all norms set up for clean and better environment bythe competent authorities. The Company undertakes regular checks / inspections includingcertification for the maintenance of the environment. The Company values environmentalprotection and safety as the major considerations in its functioning. The Company hasadequate effluent Treatment
Plants to prevent pollution. The Company is continuously endeavoring to improve thehealth and quality of life in the communities surrounding its industrial complexes.
Human Resource Management:
The Company believes that Human Resource is its most valuable resource which has to benurtured well and equipped to meet the challenges posed by the dynamics of BusinessDevelopments. The Company has a policy of continuous training of its employees bothin-house. The staff is highly motivated due to good work culture training remunerationpackages and the values which the company maintains. Your Directors would like to placeon record their deep appreciation of all employees for rendering quality services and toevery constituent of the Company be its customers shareholders regulatory agencies orcreditors. Industrial relations have remained harmonious throughout the year.
All the properties and insurable assets of the Company including Building Plant andMachinery stocks etc. wherever necessary and to the extent required have beenadequately the covered.
Your Company accorded high priority to quality safety training development healthand environment. The Company endeavours to ensure continuous compliance and improvementsin this regard
The Management take this opportunity to express their deep sense of gratitude to theCentral State Government and Local Authorities Financial Institutions Banks CustomersDealers Vendors and all the stakeholders for their continued cooperation and support toyour Company.
The Management wishes to express its appreciation to all the employees of the Companyfor their outstanding contribution to the successful operations of the Company.
Management specially thank to the shareholders for their continued confidence and faithin the Company.
| ||For SUJANA UNIVERSAL INDUSTRIES LIMITED |
| ||Ramakrishnan Sadasivan |
| ||Resolution Professional |
| ||(IP Registration No.IBBI/IPA-001/IP-P00108/2017-18/10215) |
|PLACE: Hyderabad ||(A Company under Corporate Insolvency Resolution Process by |
|DATE: November 14th 2019 ||NCLT order No. CP(IB)No. 186/09/HDB/2019) |