TO THE MEMBERS
Your Directors present the 27 Annual Report together with the Audited Statement ofAccounts of the Company for the financial year ended 31 March 2018.
|FINANCIAL RESULTS: || ||(Rs. in Lacs) |
|Particulars ||2017-18 ||2016-17 |
|Revenue from operation ||NIL ||NIL |
|Other Income ||85.94 ||NIL |
|Total Income ||85.94 ||NIL |
|Expenditure ||(114.85) ||NIL |
|Profit / Loss Before Tax ||(28.91) ||NIL |
|Other comprehensive Income ||(1012.85) ||NIL |
|Total Comprehensive Income (Net of Tax) ||(1041.76) ||NIL |
The Ministry of Corporate Affairs ('MCA') has notified the mandatory adoption of IndianAccounting Standards (Ind-AS) by all companies other than Insurance Companies Bankingcompanies and Non-Banking Finance companies.
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 theyear provision of Ind AS became applicable to the Company and thus the Company hasdecided to adopt for fair valuation of Property Plant & Equipments as at 01.04.2016.On the basis of valuation from reputed valuer the plant and equipments under constructionof the Company were fair valued and a loss of Rs. 688.07 crore was provided on transitionto Ind AS .
Further during the 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.
Based on above advice the Company has provided Impairment losses of Rs. 113.43 crore inline with provisions of Ind AS 36 Impairment of Assets and thus considering the scrapvalue of the plant under construction being realisable value for the asset. Company hasappointed largest plant disposal & management consultant to auction the disposal ofplant & equipments under construction by scraping subject to necessary approval fromlenders. The impairment loss has been accounted in reserves of the company under othercomprehensive income (Refer Nore No. 21). The Capital work in progress after impairment istransfered to respective heads of tangible fixed assets on 31.03.2018 and therefore nodepreciation has been provided on the same. As on 31.03.2018 the Company has received anadvance of Rs. 401 lacs from one of the party interested in purchase of plant &equipments under construction by auction process.
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 ofFood Processing Industries Government of India. Strategic Investor of the Company hasreceived "In-principal" approval of the competent Authority for establishment ofMega Food Park at Village Bhadawal Chhatta Chatta-Barsana Road District Mathura UttarPradesh. The primary object these guidelines is to provide modern infrastructurefacilities for the food processing along the value chain from the farm to the market. Itwill include creation of the processing infrastructure near the farm transportationlogistic and centralized processing centers. This scheme aims to facilitate theestablishment of a strong food processing industry backed by an efficient supply chainwhich include collection centers primary processing centers and cold chaininfrastructure. The food processing units under the scheme would be located at a CentralProcessing Centre with need based common infrastructure required for processingpackaging environmental protection systems quality control labs etc.
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 changed 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.
The Company has leased 57.42 acres of land for 75 years to its 100 % subsidiary forfood park or other industry. The Company shall get Equity shares or any otherconsideration for the value of assets lease out. The Company shall sell the infrastructurebuilt or constructed on the above leased land including administrative buildingswarehouses weigh bridge ETP STP Internal roads Boundary wall SWD Underground waterstorage Fire and Raw Water Sump Etc. to SPV.
CHANGE OF NAME OF THE COMPANY
With the consent of the Members through Special Resolution passed at the 26 AnnualGeneral Meeting held on 1 July 2017 the name of the Company was changed from SVCSuperchem Limited to SVC Industries Limited in order to emphasis focus of variousactivities apart from manufacturing of chemicals which is the main line of Company'sbusiness.
A fresh Certificate of Incorporation consequent to change of name was given byRegistrar of Companies Mumbai on 13 August 2017.
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 shellcompanies as identified by Ministry of Corporate Affairs and has directed the Exchanges toidentify the companies listed on their trading platform and to initiate some measures.Where trading 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 permitted only on first Monday of the month. The Company repliedto SEBI through its letter dated 10th August 2017.
Thereafter the company received letter from BSE under SEBI directions w.r.t. ListedShell Companies to submit required documents. The company filled respective documents toBSE.
The Company has again made the representation vide its letter dated 12th April 2018& 22nd May 2018 to BSE Limited & SEBI requesting them to reconsider the decisionnarrating the flow of the events since the date of issue of notice by BSE Limited dated10th August 2017. BSE is yet to revert back.
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.
SALE OR DISPOSAL OF THE PLANT
Company's PTA plant has been closed since September 2000 and with the passage of timein spite of time to time maintenance by the Company and in the absence of any operationsince then the corrosion is taking place in the plant due to climatic and cyclonicconditions in the area.Now because the capacity of our plant has economically reduced andtechnologically obsolete the Company wants to utilize its infrastructure for some newIndustry as advice by international consultant.
The Company has leased the available land for short term and /or long term period toits subsidiary and other unit for Food Park and other industry. The Company shall sell theinfrastructure built or constructed on the above leased land including administrativebuildings warehouses weigh bridge ETP STP Internal roads Boundary wall SWDUnderground water storage Fire and Raw Water Sump Etc. to SPV at a fair valuation.
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 there gulatory 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. 60000/- 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 intervals.
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 of five consecutive years i.e upto thedate 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 2018.
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 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 2018.
CORPORATE SOCIAL RESPONSIBILTY:
The Provision with respect to Corporate Social Responsibility is not attracted to theCompany as the company never commenced the production & has not earned any profit /income.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Ms. Abha Ravi Director of the company retires by rotation atthe ensuing Annual General Meeting and being eligible offer herself for re-appointment.Details about Ms. Abha Ravi is given in the Notice of the ensuring Annual General Meetingsent to the shareholders along with the Annual 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 term upto fiveconsecutive years on the Board of a Company.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:
During the year 6 Board Meetings and 4 Audit Committee Meetings were held. The detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.
MEETING OF INDEPENDENT DIRECTOR:
During the year 2017-18 a separate meeting of the IndependentDirectors was held on 9thAugust 2017 without the presence of the non-IndependentDirectors in accordance with theprovisions of the Companies Act 2013and 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 the StakeholdersRelationship Committee met for 27times.
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 theCommittee met once to appoint Company Secretary of the Company.
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 Mechanism is 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 / ARRANGEMENT 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 PartyTransactions is uploaded on the website of the 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 established an 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 did not appoint any Managing Director /Whole-time Director or manager as required under section 197 of the Companies Act 2013.
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 toundertake the Secretarial Audit of the Company. The report of the Secretarial Audit isannexed herewith as "Annexure B".
MANAGEMENT DISCUSSION AND ANALYSIS:
Separate section on Management discussion and analysis forming part of the Directors'report is annexure as Annexure "C".
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 2018 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. 12 formingpart 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 March 2018;
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 31 March 2018 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 year2017-18.
CEO / CFO CERTIFICATION:
As there is no CEO in the Company CFO of the Company has 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 Listing
Regulations for the year ended 31 March 2018.
The Company has adopted a Code of Conduct for Prevention of Insider Trading inaccordance with the requirements of SEBI (Prohibition of Insider Trading) Regulations2015 and Companies Act 2013 with a view to regulate trading in securities by theDirectors and designated employees of the Company. The Code requires pre-clearance fordealing in the Company's shares beyond threshold limits. Further it prohibits thepurchase or sale of Company shares by the Directors and the designated employees while inpossession of unpublished price sensitive information in relation to the Company andduring the period when 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 23.03.2000 respectivelyand has offered investors the facility to hold the shares in electronic form and enterinto script less trades.
Your Company has always paid utmost attention to improve investor's relationship. As on31 March 2018 approximately 87.38 % of the total shares of the Company has already beendematerialized.
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 July 2018