Dear Members,
Your Directors hereby present their Thirty First Annual Report of the
Company together with the Audited Accounts for the financial year ended
31st March, 2015.
FINANCIAL SUMMARY:
The performance of the Company for the Financial Year ended 31st March
2015 is as under:
Rs in Lakhs
Sl. Particulars 2014-15 2013-14
No.
1 Turnover - 3
2 Loss / Profit before Interest
and Depreciation (105) 70
3 Finance charges 104 249
4 Loss before Depreciation and Tax (209) (179)
5 Less : Provision for Depreciation 1132 931
6 Loss before Tax (1341) (1110)
7 Less : Provision for Income Tax - -
8 Net Loss after Tax (1341) (1110)
9 Balance carried to Balance Sheet (9455) (8114)
REVIEW OF OPERATIONS AND STATE OF COMPANY'S AFFAIRS:
During the year under review, your Company could not make any sales and
as such the Turnover was Rs.NIL compared to previous year of Rs.3 Lakhs
and incurred a Net Loss of Rs.1341.06 Lakhs compared to previous year
Net loss of Rs.1110.49 Lakhs.
PERFORMANCE & FINANCE:
Your company declared lock-out of its plant at Yanam with effect from
31.01.2012 after the devastating incident occurred on 27.01.2012. Since
then, there is no production in the plant.
DIVIDEND :
Your Directors express their inability to recommend any dividend for
the year under review due to insufficient disposable income.
INSURANCE SETTLEMENTS:
Your company submitted its claim for loss/damage to the properties of
the company and provided all the supporting information as called for
by the surveyors. Your company is awaiting the decision of the
insurance company.
LABOUR SETTLEMENTS:
Your company paid full and final settlement amounts to those who have
resigned from the company and waiting for the balance workmen to come
forward for final settlement. Action initiated by your company against
the workers involved in the Violence is pending for disposal at the
Labour Tribunal.
LENDERS' DUES SETTLEMENTS:
Your company paid part of One Time Settlement (OTS) amount to the
lenders and requested for extension of time for balance payment.
However, the lenders issued a Demand Notice under section 13(2) of
SARFAeSi Act. State Bank of India on behalf of its bank, Corporation
Bank and State Bank of Travancore issued a Possession Notice (Symbolic)
under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 and taken
possession of the properties in exercise of powers conferred on them
under section 13(4) of the SARFAeSi Act on 04.03.2015. State Bank of
Bikaner & Jaipur assigned and transferred the facilities sanctioned by
them together with all underlying securities interests thereto to
Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The
lenders filed an application under section 19 of the Recovery of Debts
due to Banks and Financial Institutions Act, 1993 in the Debts Recovery
Tribunal, Hyderabad for recovery of their dues.
REFERENCE TO BIFR:
A reference made by your company to Board for Industrial and Financial
Reconstruction (BIFR) as per the provisions under section 15(1) of Sick
Industrial Companies (Special Provisions) Act, 1985 has been registered
as case no. 19/2014.
FUTURE OUTLOOK:
Consequent to the completion of the general elections and assumption of
the new governments at the center and as well as in Andhra Pradesh and
Telangana states, the economic activity which had slowed down during
the past few years has started picking-up. The construction activity
and infrastructure activities in the country are expected to push the
demand for ceramic tiles and all tile producing Companies would be able
to take full advantage of the economic momentum in the coming years.
Your company is in the process of resolving all pending issues
including settlement of insurance claim, release of the claim amount,
settlement with workmen, settlement with lenders, settlement with
statutory authorities, suppliers and other creditors. Your company is
also pursuing with Central and State government for extending support
by way of reliefs, concessions, grants, etc. for recommencing plant
operations.
INSURANCE
All properties and insurable interests of the Company including
building, plant and machinery and inventory were being fully insured at
the reinstatement values every year. However, after the incident of
27.01.2012, the Insurance companies denied insurance coverage for the
good assets as the assessment could not be completed.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from Company's Auditors confirming
compliance forms an integral part of this report.
EXTRACTS OF ANNUAL RETURN
The Extracts of Annual Return is prepared in Form MGT-9 as per the
provisions of the Companies Act, 2013 and Rule 12 of Companies
(Management and Administration) Rules, 2014 and the same is enclosed as
Annexure - 1 to this Report.
DIRECTORS:
In accordance with the provisions of Section 152 of the Companies Act,
2013 and the Company's Articles of Association, Mr. N. Satyendra
Prasad, Director retires by rotation at the forthcoming Annual General
Meeting and being eligible offers himself for re- appointment.
Further, the tenure of Mr. N. Satyendra Prasad as a Executive Director
will expire on
31.07.2015 and the Board of Directors at its meeting held on 29.05.2015
re-appointed him as Executive Director of the Company for further period
of 5 years with effect from 31.07.2015 on terms and conditions as
mentioned in the notice of the meeting.
The Board of Directors at its meeting held on 14th November 2014 has
appointed Smt G. Vijaya Vani as an Additional Director of the Company.
As per Section 161(1) of the Companies Act, 2013, the above said
Additional Director holds office only up to the date of this Annual
General Meeting of the Company. A notice has been received from a
member proposing her as a candidate for the office of Director of the
Company with effect from 14th November, 2014 to hold office for five
consective years for a term up to 14th November, 2019 as Independent
Director as mention in the resolution.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the
financial year 2014-15 forms part of the Corporate Governance Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY
The details of Loans, Guarantees, Investments given during the
Financial Year ended on 31st March, 2015 in terms of the provisions of
Section 186 of the Companies Act, 2013 read with Companies (Meetings of
Board and its Powers) Rules, 2014: NIL
REMUNERATION AND NOMINATION POLICY
The Board of Directors has framed a policy which lays down a framework
in relation to remuneration of Directors, Key Managerial Personnel and
Senior Management of the Company. This policy also lays down criteria
for selection and appointment of Board Members. The details of this
policy are explained in Corporate Governance Report.
STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL
PERSONNEL
There are no employees in the Company withdrawing remuneration in
excess of Rs. 5 lakhs and the median remuneration of managerial
personnel has not been disclosed as no remuneration is being paid to
the Key Managerial Personnel of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties
referred to in sub- section (1) of Section 188 of the Act, are prepared
in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section
134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 :
NIL
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act,
2013, with respect to the Directors' Responsibility Statement, the
Board of Directors of the Company hereby confirms:
1) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
2) that the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit and
loss of the company for that period;
3) that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
4) That the Directors have prepared the accounts for the financial year
ended 31st March, 2015 on a "Going Concern" basis.
5) The directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
STATUTORY AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Hyderabad were appointed as
Statutory Auditors of the Company to hold office until conclusion of
Thirty First Annual General Meeting. The Board pursuant to the
recommendation of Audit Committee of the company now recommends the
re-appointment of M/s Brahmayya & Co., Chartered Accountants, Hyderabad
as statutory auditors to hold office from the conclusion of this Annual
General Meeting until the conclusion of next Annual general Meeting and
authorized the Board of Directors to fix their remuneration.
The Company has received a letter from them to the effect that their
appointment, if made, would be within the prescribed limits under
Section 141(3)(g) of the Companies Act, 2013 and that they are not
disqualified for appointment.
AUDITORS REPORT
M/s.Brahmayya & Co., Chartered Accountants (ICAI Regn. No.000513S) have
issued Auditors Report for the Financial Year ended 31st March, 2015
being annexed to this Annual Report.
The Auditors' comments in the Report are self-explanatory.
Auditor's Remarks:
i. Referring to Para on basis for qualified opinion of the Auditors'
Report, the Directors would like to refer Notes forming part of
Accounts which is self explanatory. The reference to note numbers are
as under :
a. Para 1 of basis for qualified opinion - Note No.25.3
b. Para 2 of basis for qualified opinion - Note No.25.3
c. Para 3 of basis for qualified opinion - Note No.25.8
d. Para 4 of basis for qualified opinion - Note No.25.4
e. Para 5 of basis for qualified opinion - Note No.25.9
f. Para 6 of basis for qualified opinion - Note No.10
g. Para 7 of basis for qualified opinion - Note No.25.10
ii. Referring to Para 7 (a), 7(b) and 7(c) of the Annexure to the
Auditors' report, your Directors are of the opinion that the Company is
in the process of executing various alternative plans to control such
delays in future.
COST AUDITORS:
The Board of Directors, on the recommendation of Audit committee has
appointed M/s. Badri Prasad & Associates, Practicing Cost Accountants,
Hyderabad as Cost Auditor to audit the cost accounts of the Company for
the financial year 2015-16.
The Cost Audit Report for the financial year 2014-15 was not applicable
to the company.
CUSTOMS, EXCISE, INCOME TAX & OTHER MATTERS:
1. Your Company preferred appeals before the Hon'ble CESTAT, Bangalore
against the demand from Customs & Central Excise Department (Service
Tax Cell) for service tax on installation, erection and commissioning
of plant & machinery imported during the year 2005-06 and on GTA
services during the year 2008-09, though paid by the service provider.
2. The income Tax Appellate Tribunal, Hyderabad disposed of the appeal
preferred by the Company partly in its favour on the demand from Dy
Commissioner of Income Tax, Hyderabad in respect of Assessment year
2004-05 for disallowance of additional depreciation, for which the
company is eligible under the Act.
3. Yanam Muncipality has demanded Property Tax of Rs.32.35 lakhs for
the years from 1998-99 to 2006-07 and your company disputed the same as
the grounds are not just proper and reasonable.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013,
and rules made thereunder, the Company has appointed Mr. K.V.Chalama
Reddy, Practicing Company Secretary as Secretarial Auditor to undertake
the Secretarial Audit of the company for the Financial year ended on
31st March, 2015.
Secretarial Audit Report issued by Practicing Company Secretary in Form
MR-3 is enclosed as Annexure - 2 to this Annual Report and certificate
is enclosed as Annexure - 3.
With respect to observations made in the report, the explanations are
as follows:
Regarding the observation Nos, 01,03, 04 and 05 of the report, the
Company could not comply with the same due to current financial
position of the Company.
Regarding the Observation No.02, Non -compliance noticed was rectified
later.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO THE FINANCIAL STATEMENTS
The Company has appointed Internal Auditors to observe the Internal
Controls, whether the work flows of organization is being done through
the approved policies of the Company. Internal Auditors will present to
the Audit Committee the Internal Audit Report and Management Comments
on the Internal Audit observations.
VIGIL MECHANISM
The Board of Directors of the Company has adopted Whistle Blower
Policy. The Whistle Blower Policy aims for conducting the affairs in a
fair and transparent manner by adopting highest standards of
professionalism, honesty, integrity and ethical behavior. All permanent
employees of the Company are covered under the Whistle Blower Policy.
A mechanism has been established for employees to report concerns about
unethical behavior, actual or suspected fraud, or violation of Code of
Conduct and Ethics. It also provides for adequate safeguards against
the victimization of employees who avail of the mechanism, and allows
direct access to the Chairman of the audit committee in exceptional
cases.
RISK MANAGEMENT POLICY
The Company has a Risk Management Policy for dealing with different
kinds of risks which it faces in day to day operations of the Company.
Risk Management Policy of the Company outlines different kinds of risks
and risk mitigating measures to be adopted by the Board. The Company
has adequate internal control systems and procedures to combat the
risk. The Risk management procedure will be reviewed by the Audit
Committee and Board of Directors on a periodical basis at the time of
review of Quarterly Financial Results of the Company.
OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place an Anti Sexual Harassment Policy in line with
the requirements of the Sexual Harassment of Woman at workplace
(Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints
Committee has been set up to redress complaints received regarding
Sexual Harassment. All employees (permanent, contractual, temporary and
trained) are covered under the policy.
The following is a summary of sexual harassment complaints received and
disposed off during each calender year:
A) No. of Complaints received - NIL
B) No. of Complaints disposed off - NIL
DECLARATION BY INDEPENDENT DIRECTORS
The independent directors have submitted the declaration of
independence, as required pursuant to section 149 (7) of the Companies
Act ,2013 stating that they meet the criteria of independence as
provided in sub-section 6 of Section 149 of the Companies Act 2013.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility is commitment of the Company to improve
the quality of life of the workforce and their families and also the
community and society at large. The Company believes in undertaking
business in such a way that it leads to overall development of the
stakeholders and society.
Pursuant to section 134 of the Companies Act, 2013 and the relevant
rules, the Board has constituted the CSR Committee under the
Chairmanship of Dr. G N Naidu with the other members as required.
The report on CSR activities as required under Companies(Corporate
Social Responsibility) Rules, 2014 is set out as Annexure -4 forming
part of this report.
MATERIAL CHANGES AND COMMITMENTS
There are no Material Changes and Commitments impacting the going
concern status and Company's operations in future.
DEPOSITS
The Company has not invited/accepted any deposits from the public in
terms of Section 73 of the Companies Act, 2013 during the Financial
Year 2014-15.
INDUSTRIAL RELATIONS:
Your Company has always been known to maintain cordial industrial
relations with its employees. Your Company believed in developing Human
Resources at all levels by imparting continuous training, motivation to
attain higher productivity, finer quality, cost control, safety and
environment protection.
CONSERVATION OF ENERGY:
Your Company committed to energy conservation and had taken up the fuel
saving technology for the manufacture of ceramic tiles and was
constantly upgrading the same to reduce the consumption of gas and
power. Regular maintenance and repairs of all the equipment and
machinery were carried out to ensure optimum efficiency and to minimize
wastage. Necessary steps were initiated for implementing the energy
conservation across the plant.
TECHNOLOGY ABSORPTION:
Your Company was continuously endeavoring to upgrade its technology
from time to time in all aspects through R&D primarily aiming at
reduction of cost of production and improving the quality of the
product. Your company developed several value added products and high
definition designs with laser printing.
FOREIGN EXCHANGE EARNINGS AND OUTGO
(Rs. In Lakhs)
Foreign Exchange: 2014-15 2013-14
Foreign Exchange Inflow - -
Foreign Exchange Outflow - -
ACKNOWLEDGEMENTS:
The company places on record continued support and cooperation extended
by the Banks and other secured lenders, Central and state government
departments, GAIL, Dealers, customers, suppliers and shareholders. The
Company also places on record the deep sense of appreciation for the
dedicated efforts and contribution being made by employees at all
levels during the year.
For and on behalf of the Board
Place : Hyderabad Dr G N Naidu N Satyendra Prasad
Date : 29.05.2015 Chairman and Managing Director Executive Director
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