TO THE MEMBERS
Your Directors present the 28 Annual Report together with the Audited Statements ofAccounts of the Company for the financial year ended 31 March 2019.
|FINANCIAL RESULTS: || || |
| || ||(Rs. in Lacs) |
|Particulars ||2018-19 ||2017-18 |
|Revenue from Operations ||4.50 ||NIL |
|Other Income ||187.94 ||85.94 |
|Total Income ||192.44 ||85.94 |
|Expenditure ||(600.14) ||(114.85) |
|Loss due to Assets Discarded ||(3407.58) ||Nil |
|Profit / Loss Before Tax ||(3815.28) ||(28.91) |
|Other Comprehensive Income ||Nil ||(1012.85) |
|Total Comprehensive Income (Net of Tax) ||(3815.28) ||(1041.76) |
Company's Plant under construction has been under shut down since September 2000 andwith the passage of time and in the absence of any operation since then the corrosion istaking place in the Plant due to climatic and cyclonic conditions in the area. During theprevious year provision of Ind AS became applicable to the Company and thus the Companyhas decided to adopt for fair valuation of Property Plant & Equipments as at01.04.2016. On the basis of valuation from reputed valuer the plant and equipments underconstruction of the Company were fair valued and a loss of Rs. 688.07 crore was providedon transition to Ind AS in the year 2017-2018.
Further in the last year the Company has approached various agencies for advice toutilise the plant under construction for alternative uses however Technical Advisor hasgiven health assessment report of the plant and has catergorially stated that if theCompany tries to repair the equipment after some inspections it will not be possible toguarantee overall safety & reliability of high pressure equipment for hazardous plantoperation. He stated that it is not considered safe to operate the equipment in Company'splants & offsite facilities at this stage and concluded that Company's plant andequipments under construction are not considered fit for operation and hence should bediscarded. Accordingly company has discarded / disposed off the plant during the year.
Your Directors have not recommended any dividend on equity shares for the year as thereis no profit in the year.
STATE OF COMPANY'S AFFAIRS:
The Strategic Investor of the Company has received a proposal for setting up of MegaFood Park as provided under the Mega Food -
Park Scheme Guidelines issued by Ministry of Food Processing Industries Government ofIndia. Strategic Investor of the Company has received "Final" approval on dated28.01.2019 of the competent Authority for establishment of Mega Food Park at VillageBhadawal Chhatta Chatta-Barsana Road District Mathura Uttar Pradesh. The primaryobject these guidelines is to provide modern infrastructure facilities for the foodprocessing along the value chain from the farm to the market. It will include creation ofthe processing infrastructure near the farm transportation logistic and centralizedprocessing centers. This scheme aims to facilitate the establishment of a strong foodprocessing industry backed by an efficient supply chain which include collection centersprimary processing centers and cold chain infrastructure. The food processing units underthe scheme would be located at a Central Processing Centre with need based commoninfrastructure required for processing packaging environmental protection systemsquality control labs etc. The Food Park to be completed within 30 months from the date offinal approval by MOFPI (Ministry of Food Processing Industry)
For the purpose of entering into new venture of Mega Food Park the Company has takenapproval of the shareholders vide postal ballot on 22nd February 2018 to sale leasetransfer its PTA plant as it has not been in operation since Sept' 2000 due to variousreasons beyond its control and has also changes its object clause vide postal ballot on22nd February 2018. Company is in the process of utilizing its infrastructure for somenew Industry as advised by international consultants EY.
Company has granted a 76 years lease of its investment properties to its associatecompany Nandvan Mega Food Park Pvt Limited a Government approved project for Mega FoodPark. The lease rent is payable from third year onwards with 5% increment periodically.Token lease rent of Rs 18 lakh for 1st year commencing from January 2019 and Rs 35 lakhfor the 2nd year is receivable.
ORDER RECEIVED FROM BSE
The Company has received letter from SEBI dated 7th August 2017 SEBI vide its letterbearing no. SEBI / HO/ ISD/ OW/ P/ 2017/ 18183 as forwarded a list of 331 shell companiesas identified by Ministry of Corporate Affairs and has directed the Exchanges to identifythe companies listed on their trading platform and to initiate some measures. Wheretrading in all such listed securities shall be placed in Stage VI of the GradedSurveillance Measure (GSM) with immediate effect. Therefore as per the provisions of GSMframework the securities were not be available for trading from 9th August 2017. Tradingin these securities are be permitted only on first Monday of the month.
The Company had filed an application/representation dated August 17 2017 with BSE toremove the name of the Company from the list of suspected shell companies and from GradedSurveillance Measures Stage VI and BSE vide its order dated 8 of March 2018 had rejectedthe application/representation of Company.
Thereafter Company had filed an appeal to SEBI Appellate Tribunal (SAT) against theorder of BSE dated 8 of March 2018 and on 27 May 2019 SAT has given its order in favorof the Company. SAT has stated that the approach adopted by SEBI as well as BSE is totallyerroneous and that the impugned order passed by the BSE cannot be sustained and isquashed. It further directed SEBI and BSE not to place the Company in the category of ashell Company or place it in GSM Stage VI. The shares of the Company are traded underlisted category.
DETAILS OF SIGNIFICATION AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS /TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE:
In the year under review no material order has been passed by above said authoritiesimpacting the going concerned status.
INTERNAL FINANCIAL CONTROL (IFC):
Your Company has a Management Assurance and Audit Department which providescomprehensive audit coverage of functional areas and operations of the Company to examinethe adequacy of and compliance with policies procedures statutory and regulatoryrequirements. Significant audit observations and follow up actions thereon are reported tothe Audit Committee.
The Audit Committee reviews and evaluates adequacy and effectiveness of the Company'sinternal control environment and monitors the implementation of audit recommendations.Management Assurance and Audit is an independent and objective assurance and consultingactivity designed to add value and improve the Company's operations. Management Assuranceand Audit function is accountable to the Board of Directors through the Chairman of theAudit Committee. Management Assurance and audit also assist the management in identifyingoperational opportunities for revenue leakage cost savings and revenue enhancements;ensures working within the regulatory and statutory framework and facilitate earlydetection and prevention of frauds.
The Company has internal control system commensurate with the size scale andcomplexity of its operation. The Company has appointed Mr. S.K. Khandelwal CharteredAccountants as the Internal Auditor at a remuneration of Rs. 66000/- p.a. in compliancewith section 138 of the Companies Act 2013. The scope of audit and the outcome of theaudit are reviewed by Audit Committee at regular interval.
We have not accepted any fixed deposit and as such no amount of principal or interestwas outstanding as on the date of balance sheet.
M/s. Chaturvedi SK & Fellow Chartered Accountants were appointed as StatutoryAuditors of your Company at the Annual General Meeting held on 1 July 2017 for a term offive consecutive years i.eupto the date of Annual General Meeting in 2021-22.
In accordance with the Companies Amendment Act 2017 enforced on 7th May 2018 by theMinistry of Corporate Affairs the appointment of Statutory Auditors is not required to beratified at every Annual General Meeting.
The observations by the Auditors in their report are self-explanatory and in theopinion of the Board do not require any further explanation.
At present we have only one class of shares i.e. equity shares of Rs. 10 each. Ourauthorized share capital is Rs. 170 Crores divided into 17 Crores equity shares of Rs. 10each. The issued subscribed and paid-up capital of the Company is Rs. 161.86 Crores as onMarch 31 2019.
EXTRACT OF THE ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure "A"
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:
Your Company shall take sufficient care in the technical design of your Food Park tooptimize the energy consumption to the maximum. However the Company makes all effortstowards conservation of energy protection of environment & ensuring safety.
FOREIGN EXCHANGE EARNINGS & OUTGO:
The Company has not utilized any foreign exchange and has not earned any foreignexchange during the financial year ended 31 March 2019.
CORPORATE SOCIAL RESPONSIBILTIY:
The Provision with respect to Corporate Social Responsibility is not attracted to theCompany as the Company is yet to commence the production.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the CompanyMr. Suresh Chaturvedi (DIN 00577689) Director of the companyretires by rotation at the ensuing Annual General Meeting and being eligible offerherself for re-appointment. Details about Mr. Suresh Chaturvedi (DIN 00577689 )is given inthe Notice of the ensuring Annual General Meeting sent to the shareholders along with theAnnual Report.
DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND RE- APPOINTMENT IF ANY:
A declaration by an Independent Directors have been received stating that they meet thecriteria of independence as provided in sub-section (6) of section 149 of the CompaniesAct 2013. An independent director shall hold office for a maximum of two term of fiveconsecutive years on the Board of a Company. The resolutions re-appointment of theIndependent Directors i.e. Mr. P.P. Shashtri Mr. G.S Dahotre Mr. I.G. Mehtrotra and Mr.Jaffar Imam is incorporated in the Notice to the Annual General Meeting for the approvalof the shareholders.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
During the year under review 6 Board Meetings and 4 Audit Committee Meetings wereconveyed and held. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.
MEETING OF INDEPENDENT DIRECTOR:
During the year 2018-19 a separate meeting of the Independent Directors was held on 8Sept. 2018without the presence of the non-Independent Directors in accordance with theprovisions of the Companies Act 2013 and Regulation 25 of the SEBI (Listing Obligationsand Disclosure Requirement) Regulations 2015.
The Audit Committee acts as a link between the statutory and internal auditors and theBoard of Directors. Its purpose is to assist the Board in fulfilling its oversightresponsibilities of monitoring financial reporting processes reviewing the Company'sestablished systems and processes for internal financial controls governance andreviewing the Company's statutory and internal audit activities. The Committee is governedby a Charter which is in line with the regulatory requirements mandated by the CompaniesAct 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
STAKEHOLDER RELATIONSHIP COMMITTEE:
Your Company believes that its members are amongst its most important stakeholder. TheStakeholder Relationship Committee of the Company consists of Mr. Suresh V. Chaturvedi asChairman Mr. Jaffar Imam and Mr. G.S. Dahotre members. During the year under review theStakeholders Relationship Committee met for 26 times.
NOMINATION AND REMUNERATION COMMITTEE:
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personal andtheir remuneration. The Nomination and Remuneration Committee consist of Mr. G.S. Dahotreas chairman Mr. Jaffar Imam and Mr. I.G. Mehrotra as members. This Committee has beenconstituted as per terms or provision of the Companies Act and under regulation of SEBI(Listing Obligations and Disclosure Requirements) Regulations2015. During the year underreview the Committee met three times.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has implemented a Whistle Blower Policy pursuant to which Whistle Blowercan raise concerns relating to Reportable Matters (as defined in the policy) such asbreach ofCode of Conduct fraud bribery corruption employee misconduct illegalityhealth and& safety environmental issues and wastage/ misappropriation of bankfunds/assets etc. Further the mechanism adopted by the Company encourages the WhistleBlower to report genuine concerns or grievances and provides for adequate safe guardsagainst victimization of Whistle Blower who can avail such mechanism and has directaccess to the Chairman of the Audit Committee in exceptional cases.
The functioning of the Vigil Mechanismis reviewed by the Audit Committee from time totime. None of the Whistle Blower has been denied access to the Audit Committee of theBoard. The details of the Whistle Blower Policy are available on the website of theCompany i.e. www.svcindustriesltd.com
CONTRACT / ARRAGEMENT WITH RELATED PARTIES:
All related party transactions that were entered during the financial year were inordinary course of the business of the company and were on arm's length basis. There areno materially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have potentialconflict with the interest of the Company. -
The policy on materiality of Related Party Transactions is uploaded on the website ofthe company.
Your Company has an elaborate Risk Management Framework which is designed to enablerisks to be identified assessed and mitigated appropriately. The Board is entrusted withthe responsibility to assist in (a) Overseeing and approving the Company's enterprise widerisk management framework; and (b) Overseeing that all the risks that the organizationfaces such as financial credit market liquidity security property IT legalregulatory reputational and other risks have been identified and assessed and there is anadequate risk management infrastructure in place capable of addressing those risks.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference tofinancial statement. It has establish edan integrated framework for managing risks andinternal controls. The internal financial controls have been documented and embedded inthe business processes. Such controls have been assessed during the year under review andwere operating effectively.
In order to control expenses as advised by the shareholders in the earlier AnnualGeneral Meeting the Company proposes to appoint the Mr. Sanjay Agarwal Chief FinancialOfficer of the Company as the Manager under the Companies Act 2013 in compliance with theCompanies Act 2013 no additional remuneration. The resolution for the appointment isincorporated in the Notice to Annual General Meeting for the approval of the shareholders.
There is no employee covered pursuant to section 197 read with rule 5(2) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014. Hence no particularsare given.
SECRETARIAL AUDIT REPORT:
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Ranjeet Kumar Sharma & Associates a practicing Company Secretaries inpractice to undertake the Secretarial Audit of the Company. The report of the SecretarialAudit is annexed herewith as "Annexure B".
SECRETARIAL COMPLINACE REPORT:
While the Annual Secretarial Audit shall cover a broad check on compliance with alllaws applicable to the entity listed entities shall additionally on an annual basisrequire a check by the Company Secretary in Practice on compliance of all applicable theSEBI Regulations and circulars / guidelines issued thereunder consequent to which theCompany Secretary in Practice shall submit a report to the listed entity in the mannerspecified in the SEBI Circular No. CIR/CFD/CMD1/27/2019 dated February 08 2019. YourCompany has appointed Ranjeet Kumar Sharma & Associates a practicing CompanySecretaries in practice to give Secretarial Compliance Report of the Company. The reportof the Secretarial Audit is annexed herewith as "Annexure C".
MANAGEMENT DISCUSSION AND ANALYSIS:
Separate section on Management discussion and analysis forming part of the Directors'report is annexure as Annexure "D".
During the year under review the Company has not reported fraud of any nature to theAudit Committee or Board.
DIRECTORS' RESPONSIBILITY STATEMENT:
As required u/s 134 (5) of the Companies Act 2013 the Directors confirm that;
I. In the preparation of the annual accounts for the year ended 31 March 2019 theapplicable accounting standards have been followed along with explanation relating tomaterial departures;
II. They have selected such accounting policies and applied them consistently exceptfor the non-provision of interest on all secured loans as mentioned in Note No. 12formingpart of the Balance Sheet and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as on 31 March2019;
III. The Directors had 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; and
IV. The Directors have prepared the annual accounts for the financial year ended 31March 2019 on a going concern basis.
V. They have laid down 'internal financial controls' to be followed by the Company andthat such internal financial control are adequate and were operating effectively.
VI. The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:
Your Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).
The Company has taken adequate steps to ensure that all mandatory provisions ofCorporate Governance in terms of Regulation 34 of the Securities Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 are complied with. Aseparate report on Corporate Governance is being incorporated as a part of the AnnualReport along with a certificate from the Auditors of the Company regarding Compliance ofthe conditions of Corporate Governance which is annexed to the Directors' Report.
RECONCILIATION OF SHARE CAPITAL AUDIT REPORT:
As directed by the Securities and Exchange Board of India (Depositories andparticipants) Regulations1996 Reconciliation of Share Capital is being carried out atthe specified periodicity by the practicing Company Secretary. The findings of theReconciliation of Share Capital Audit are regularly taken at the Board Meeting besidessubmitting it to the BSE Limited.
CODE OF CONDUCT:
The Board has adopted the Code of Ethics and Business for the Non-Executive Directorsas also for the employees and other members of Senior Management. The said code has beencommunicated to all the Directors and Members of the Senior Management. Board members andsenior management personnel have affirmed compliance with the Code for the financial year2017-19.
CEO / CFO CERTIFICATION:
As there is no CEO in the Company CFO of the Company have certified to the Board ofDirectors inter alia the accuracy of financial statements and adequacy of internalcontrols for the financial reporting as required under Regulation 17(8) of the ListingRegulations for the year ended 31 March 2019.
The Company has adopted a Code of Conduct for Prevention of Insider Trading inaccordance with the requirements of SEBI (Prohibition of Insider Trading) Regulations2015and Companies Act 2013 with a view to regulate trading in securities by the Directorsand designated employees of the Company. The Code requires pre-clearance for dealing inthe Company's shares beyond threshold limits. Further it prohibits the purchase or saleof Company shares by the Directors and the designated employees while in possession ofunpublished price sensitive information in relation to the Company and during the periodwhen the Trading Window is closed.
The disclosures obtained under the code are submitted to the BSE Limited from time totime. The Company regularly follows the system of Share Trading Window mechanism as perthe Insider Regulation.
DEMATERIALISATION OF SHARES:
As part of its efforts to provide better investor services your Company has admittedits equity in the Depository System of the National Securities Depositories Ltd. (NSDL)and Central Depository Services (India) Ltd. (CDSL) since 07.03.2000 and 23.03.2000respectively and has offered investors the facility to hold the shares in electronic formand enter into script less trades. Your Company has always paid utmost attention toimprove investor's relationship. As on 31 March 2019 approximately 87.38 %of the totalshares of the Company has already been dematerialized.
Your Directors would like to place on record their sincere thanks for the co-operationand support received from various agencies of the Central and State Governments allShareholders and Creditors.
Your Directors also take this opportunity to place on record their appreciation of thededication and sense of commitment shown by the officers and employees of the Company atall levels.
For and on behalf of the Board
Suresh V. Chaturvedi
Date: 7 August 2019