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Directors Report of Samruddhi Realty Ltd.

Mar 31, 2015

Dear Members,

We are pleased to present the TWELFTH ANNUAL REPORT AND AUDITED ACCOUNTS of the company for the financial year ended on 31st March, 2015.

FINANCIAL HIGHLIGHTS

(Figures in Rs.)

Particulars For the year ended For the year ended 31.03.2015 31.03.2014

Revenue 51,44,77,391 51,67,32,054

Operating profit 9,65,16,986 10,82,12,171

Interest 5,12,93,156 4,87,21,127

Depreciation 1,24,00,172 71,35,768

Profit before tax 3,28,23,658 5,23,55,276

Provision for tax 1,24,76,868 2,01,60,325

Profit after Tax (PAT) 2,03,46,790 3,21,94,951

Appropriations

Transfer to general reserve NIL 85,00,000

Dividend (including tax on distributed profits) 60,56,640 NIL

Balance c/f out of current year PAT 1,42,90,150 2,36,94,951

NATURE OF BUSINESS

The Company is engaged in the business of Real Estate Development. The Company develops residential projects. There was no change in the nature of the business of the Company during the year under review. During the year under review the Company finalised development of two projects one at Kanakapura and another one at Nandi Hills.

FINANCIAL PERFORMANCE

During the year under review, the Company earned a profit before tax of Rs. 3.28 crores as compared to Rs. 5.24 crores in the corresponding previous year representing a decrease of 37.40%. The Company earned a profit after tax of Rs. 2.03 crores as compared to Rs. 3.22 crores in the previous year representing a decrease of 36.95%.

TRANSFER TO RESERVES

It is not proposed to transfer any amount out of the current profits to General Reserve.

DIVIDEND

The Board of Directors has recommended a dividend at the rate of Re. 0.60 per equity share (i.e. 6%) for the year ended 31st March, 2015 (previous year: NIL). The proposed dividend (excluding the dividend distribution tax) will absorb an amount of Rs. 60,56,640. The dividend payout is subject to approval of Shareholders at the ensuing Annual General Meeting.

The dividend will be paid to those Shareholders whose names will appear in the Register of Members as on 22nd September, 2015 and in respect of shares held in dematerialised form, it will be paid to Shareholders whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

UNCLAIMED DIVIDEND

There is no balance lying in the unpaid equity dividend account of the Company.

ASSOCIATE AND JOINT VENTURE COMPANIES

The Company has three associate companies viz., Samruddhi Real Assets Private Limited, Studio 3 Planners Private Limited and Samruddhi Infratech (India) Private Limited. There are no joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ('the Act').

In terms of proviso to sub-section 3 of Section 129 of the Act, the salient features of the financial statements of the Associate Companies is set out in the prescribed form AOC-1 (Part 'B' - Associates and Joint Ventures) which forms part of the Annual Report.

ISSUE OF BONUS SHARES

During the year under review, the Company issued bonus equity shares in the ratio of one equity share of Rs. 10/- each fully paid up for every five equity shares held by the shareholders of the Company as on the Record Date i.e., 19th September, 2014. The aggregate number of bonus equity shares issued was 16,82,400. The allotment of these shares was made on 20th September 2014 and they were listed and permitted to trade in by Bombay Stock Exchange with effect from 29th September, 2014.

ISSUE OF NON CONVERTIBLE DEBENTURES (NCDs)

During the year the Company issued Non-Convertible Debentures (NCDs) by way of private placement, aggregating to Rs. 60 crores. As on 31st March, 2015 the aggregate amount of NCDs allotted was Rs. 21 crores.

CRISIL assigned a "CRISIL BB-/Stable" rating to these NCDs. which reflects Company's stable financial discipline and prudence.

ALTERATION OF ARTICLES OF ASSOCIATION

The Articles of Association of the Company were altered during the year to align with the requirements of the Companies Act, 2013 and the Debenture Trust Deed.

INCREASE IN BORROWING POWERS

During the year under review the borrowing powers of the company were increased to Rs. 250 Crores. This was approved by the shareholders in the Annual General Meeting held on 9th September, 2014

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Sections 149, 150, 152, Schedule IV of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 and the Listing Agreement and General Circular No. 14/2014 dated 9th June, 2014 issued by the Ministry of Corporate Affairs, 2014 Mr. Praveen Narayanaswamy, Ms. Sushma Thirunalpalya Somashekarappa and Mr. Srinivas Gulur Seshagirirao, were appointed as Independent Directors of the Company for a term of five years from 1st April, 2014 to 31st March, 2019.

Mr. Ravindra M. Madhudi retires by rotation at the forthcoming Annual General Meeting and, being eligible, offer himself for re- appointment.

The current term of appointment of Mr. V. R. Manjunath, Mr. Hemang D. Rawal and Mr. Ravindra M. Madhudi as Whole Time Directors' (WTDs) of the Company will expire on 15th January, 2016. The Board of Directors considers that for smooth and efficient running of the administrative affairs of the Company, the services of all the three WTDs should be available to the Company for a further period of three years with effect from 15th January, 2016

Brief resume of these WTDs, nature of their experience in specific functional areas, names of the companies in which they hold directorship and membership/chairmanship of board committees, shareholding and relationship between directors inter-se, as stipulated under Clause 52 of the SME Equity Listing Agreement with the Stock Exchange, are provided in the Notice for convening the Annual General Meeting.

The Company has formalised the existing appointments of Mr. Hemang D. Rawal (as Managing Director), Mr. Yashodhara K (as Chief Financial Officer) and Mr. Dharmesh M. Kuvalekar (as Company Secretary), as the Key Managerial Personnel of the Company to comply with the provisions of Section 203 of the Companies Act, 2013.

MIGRATION FROM SME SEGMENT TO MAIN BOARD

The Company has been listed and traded on the SME Platform for more than two years and hence eligible to migrate on to the Main Board as per the guidelines specified by SEBI vide their circular dated 18th May, 2010 and as per the procedures laid down under Chapter XB of SEBI ICDR Regulations, 2009.

Listing on the Main Board of BSE Limited will take the Company into a different league altogether with enhanced recognition and increased participation by retail investors.

Necessary resolution for obtaining the approval of shareholders has been incorporated in the Notice of the forthcoming Annual General Meeting of the Company. The said resolution authorises the Board of Directors of the Company to migrate from SME Platform to Main Board of BSE Limited.

AUDITORS REPORT

The observations made by the Auditors in their Report referring to the Notes forming part of the Accounts are self-explanatory and therefore, do not require any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

AUDITORS

At the 11th Annual General Meeting of the Company held on September 9, 2014 M/S. A. R. PAI & CO, Chartered Accountants were appointed as the Statutory Auditors of the Company.

In terms of the first proviso to Section 139 of the Act read with Rule 3(7) of Companies (Audit and Auditors) Rules, 2014, the appointment of the auditors shall be subject to ratification by the Members at every Annual General Meeting.

In this regard, the Company has received a certificate from the Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Act.

Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members.

INTERNAL AUDITORS

The Board has appointed Mr. Kiran Kumar K. Chartered Accountant as the Internal Auditor of the company for the financial year 2015-16

DISCLOSURES UNDER SECTION 134(3) (l) OF THE COMPANIES ACT, 2013

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and the date of this report.

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate.

During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business and that the provisions of Section 188 of the Companies Act 2013 are not attracted. Thus disclosure in form AOC-2 is not required. Further there are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act 2013 are given in the notes to the Financial Statements.

DECLARATIONS BY INDEPENDENT DIRECTORS

Pursuant to the provisions of sub-section (7) of Section 149 of the Companies Act, 2013, the Company has received individual declarations from all the Independent Directors confirming that they fulfil the criteria of independence as specified in Section 149(6) of the Companies Act, 2013.

MEETINGS OF THE BOARD

The Board of Directors met eleven times during the financial year ended March 31,2015 in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. All the Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time. The details of the meetings are given in Corporate Governance Report which forms part of this Report.

Additionally, during the financial year ended March 31, 2015 the Independent Directors held a separate meeting in compliance with the requirements of Schedule IV of the Companies Act, 2013 and the Listing Agreement.

The details of other committee meetings are given in the Corporate Governance Report which forms part of this report.

AUDIT COMMITTEE

The Audit Committee comprises Mr. Srinivas Gulur Seshagirirao as Chairman, Mr. Hemang D Rawal and Ms. Sushma T S as members. All the recommendations made by the Audit Committee were accepted by the Board.

DIRECTOR'S RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2015, the Board of Directors hereby confirms that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors 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 as on March 31, 2015 and of the profits of the Company for the year ended on that date;

c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company has a practice of conducting familiarization programme for Independent Directors of the Company. At the time of appointment, a formal letter of appointment is given to Independent Directors which inter-alia explains the role, functions, duties and responsibilities expected from them as a Director of the Company. The Company conducts structure orientation programmes for the Independent Directors to understand and get updates on the business and operations of the Company on a continuous basis. Such programmes provide an opportunity to the Independent Directors to interact with Senior Leadership team of the Company and help them to understand the Company's strategy models, operations services, product-offerings, finance, human resources and such other areas as may arise from time to time.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In compliance with the provisions of Section 177(9) the Board of Directors of the Company has framed the "Whistle Blower Policy" as the vigil mechanism for Directors and employees of the Company. The Whistle Blower Policy is disclosed on the website of the Company at www.samruddhirealty.com.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has formulated a Risk Management Policy which aims at enhancing shareholders' value and providing an optimum risk reward trade off. The risk management approach is based on a clear understanding of the variety of risks that the organisation faces, disciplined risk monitoring and measurement and continuous risk assessment and mitigation measures.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, a structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning, composition of the Board and its committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, extract of the Annual Return for the financial year ended March 31, 2015 made under the provisions of Section 92(3) is attached as Annexure - 1 which forms part of this Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

During the year, there was no employee in receipt of remuneration as prescribed in the Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees as required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - 2 and forms part of this Report.

As on March 31, 2015 there were 69 permanent employees.

REMUNERATION AND NOMINATION POLICY

The Board has framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of this Policy are attached as Annexure-3 to this report.

STATEMENT PURSUANT TO LISTING AGREEMENT

The Company's equity shares are listed at Bombay Stock Exchange Limited, (SME segment). The Annual listing fee for the year 2015-16 has been paid.

SECRETARIAL AUDIT

As required under the provisions of Section 204 of the Companies Act, 2013, the report in respect of the Secretarial Audit carried out by Mr. V. C. Krishnamurthy, Practising Company Secretary in Form MR-3 for the FY 2014-15 is attached as Annexure - 4 to this report. The said report does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

CORPORATE GOVERNANCE

The Company has complied with the mandatory provisions of Corporate Governance as stipulated in the Listing Agreement with the Stock Exchange. A separate report on Corporate Governance along with the requisite Auditors' Certificate is annexed and forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report has been separately furnished in the Annual Report. HUMAN RELATIONS

During the year employee relations continued to be cordial and harmonious at all levels and in all divisions of the Company. There was a total understanding of the management objectives by the employees. The Company has consistently tried to improve its HR policies and processes so as to acquire, nurture & retain the best of the available talent in the Industry.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Considering the Company's business activities, the Directors have nothing to report under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts ) Rules, 2014 with reference to Conservation of Energy & Technology Absorption.

The transaction involving foreign exchanges during the year are as below:

(Figures in Rs.)

Particulars 2014-15 2013-14

Foreign Exchange Earnings NIL NIL

Foreign Exchange Outgo 34,44,016 51,69,624

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

* Details relating to deposits covered under Chapter V of the Act

* Disclosure relating to equity shares with differential rights

* Disclosure relating to sweat equity shares

* Disclosure relating to employee stock option scheme

* Disclosure in respect of voting rights not directly exercised by the employees

* Disclosure of significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

* Disclosure under Section 134(3)(o) of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, since the Company is not covered under Section 135 of the Companies Act, 2013.

DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT ACT, 2013

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the 'said Act') has been made effective w.e.f. December 9, 2013. It is an Act to provide protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected therewith or incidental thereto. The Company has constituted an Internal Complaint Committee ('ICC') as required by the said Act. The Company is strongly opposed to sexual harassment and employees are made aware about the consequences of such acts and about the constitution of ICC.

During the year under review, no complaints were filed with the Committee under the provisions of the said Act.

ACKNOWLEDGEMENT

The Board of Directors wishes to thank the Central Government, State Government, RBI, SEBI, and The Bombay Stock Exchange Limited (BSE) for their co-operation in various spheres of Company's functions. The Board of Directors expresses it's gratitude for the co-operation extended by the Financial Institutions / Term Lenders and Company's Bankers for their valuable support. The Directors thank all the shareholders of the Company, its customers and investors for their valuable support during the year and look forward to their continued support in the years to come. The Company has also gained considerably from the sincere and devoted services rendered by its employees at all levels. The Board of Directors wishes to place on record its sincere appreciation of the employee's efforts in enhancing the image of the company in the market.

On behalf of the Board

Sd/- Sd/-

Bangalore Hemang D. Rawal Ravindra M Madhudi Date: 29.05.2015 Managing Director Whole Time Director DIN - 00513746 DIN - 00513694


Mar 31, 2013

To, The Members,

The have great pleasure in presenting the TENTH ANNUAL REPORT AND AUDITED ACCOUNTS of the company for the year ended on 31st March, 2013.

FINANCIAL HIGHLIGHTS

(Rs.)

Particulars Standalone Consolidated 2012-13 2011-12 2012-13 2011-12

Revenue 272,838,383 125,628,372 272,838,383 125,628,372

Operating profit 63,708,001 25,395,253 63,708,001 25,395,253

Interest 32,673,921 14,259,325 32,673,921 14,259,325

Depredation 3,762,742 2,429,983 3,762,742 2,429,983

Profit before tax 27,271,338 8,705,945 27,271,338 8,705,945

Provision for tax 8,954,564 4,561,928 8,954,564 4,561,928

Profit after Tax (PAT) 18,316,774 4,144,017 18,316,774 4,144,017

Appropriations

Transfer to general Nil Nil Nil Nil reserve

Balance c/f out of current 1,83,16,774 41,44,017 1,83,16,774 41,44,017 year PAT

FINANCIAL PERFORMANCE

Standalone Performance

During the year under review, the Company earned a profit before tax of Rs. 2.73 crores as compared to Rs. 0.87 crores in the corresponding previous year representing an increase of 213,80 %, The Company earned a Profit after Tax of Rs, 1,83 crores as compared to Rs.0.41 crores in the previous year representing an increase of 346.34%.

Consolidated Performance

The total consolidated a profit before tax stood at Rs. 2.73 crores as compared to Rs. 0.87 crores representing an increase of 213.80 % .The Company earned a consolidated Net Profit After Tax of Rs, 1-83 crores as compared to Rs. 0.41 crores in the previous year representing an increase of 346.34%.

OPERATIONS

During the year under review the Company commenced two projects comprising of 2,41,010 sq. ft. of area in the city of Bangalore. All the projects undertaken by the Company are progressing as per schedule.

TRANSFER TO RESERVES

It is not proposed to transfer any amount out of the current profits to General Reserve.

DIVIDEND

The Directors have not recommended any dividend on equity shares for the year under review.

ISSUE OF BONUS SHARES

The Directors have, subject to the approval of the shareholders, declared a bonus issue of equity shares in the ratio of one equity share of the company of Rs. 10/- each fully paid up for every five equity shares held by the shareholder of the Company as on the Record Date as determined by the Board of Directors. Necessary resolution for obtaining the approval of shareholders has been incorporated in the Notice for the forthcoming Annual General Meeting of the Company.

INCREASE IN AUTHORISED SHARE CAPITAL

During the year under review, the authorized share capital of the company was increased from Rs. 5 crores divided into 50 lakh equity shares of Rs. 10/- each to Rs. 10 crores divided into 100 lakh equity shares of Rs. 10/- each.

Further, it is proposed to increase the authorised share capital from Rs. 10 crores divided into 100 lakh equity shares of Rs. 10/- each to Rs. 20 crores divided into 200 lakh equity shares of Rs. 10/- each. Necessary resolution for obtaining the approval of shareholders has been incorporated in the Notice for the forthcoming Annual General Meeting of the Company.

INITIAL PUBLIC OFFERING AND LISTING OF SHARES

During the year the company came out with an Initial Public Offering of 21,70,000 Equity Shares of the face value of Rs. 10 each for cash at a price of Rs. 12 per Equity Share (including a share premium of Rs. 2 per Equity Share) aggregating to Rs. 260.40 Lakhs.

The public issue opened for subscription on 28th March, 2013 and closed on 3rd April, 2013. The Issue received applications for 26,20,000 Equity Shares (including reserved portion of Market Maker) resulting in 1.21 times subscription. The Basis of Allotment was finalized in consultation with the Designated Stock Exchange - Bombay Stock Exchange LTD. and while finalising the basis of allotment 10,000 additional Equity Shares were issued due to rounding off along with the shares issued through the IPO. The allotment of 21,80,000 Equity Shares was made on April 09, 2013.

The Company''s shares got listed on the SME segment of Bombay Stock Exchange LTD. on 12th April, 2013.

SHIFTING OF REGISTERED OFFICE

With effect from 30th April, 2013 the registered office of the Company is shifted from 202, Raheja Chambers, 12, Museum Road, Bangalore, Kamataka - 560 001 to The Land Mark, No. 21/15, 4th Floor, M.G. Road, Bangalore, Karnataka - 560 001.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, the Directors hereby confirm that:

I) In the preparation of the annual accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed and there are no material departures.

ii) They have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2013 and of the profit of the company for the financial year ended 31st March 2013.

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) They have prepared the annual accounts for the financial year ended 31st March, 2013 on a going concern basis.

CONSERVATION OF ENERGY a TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 217 (1) (e) of the Companies Act, 1956 and the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding conservation of energy and technology absorption are not applicable.

Since the company caters to domestic market only, it has not undertaken any activities relating to export, initiatives to increase exports, development of new export markets for products and services or formulated any export plans.

The transaction involving foreign exchanges during the year are as below:

Total expenditure in foreign Exchange:

Current Year Rs. 46,01,566 (Rs. 1,10,032 in the previous year)

SUBSIDIARY COMPANIES

As on 31st March, 2013, the Company had three Subsidiaries namely Samruddhi Gruha Nirman Private Ltd, Samruddhi Holiday Resorts Private Ltd and Samruddhi Vaastu Infracon Private Ltd.

In accordance with Accounting Standard 21, Consolidated Financial Statements presented by the Company include the financial information of its subsidiaries. Pursuant to General Circular No. 2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs, the Board of Directors at its Meeting held on 18th March, 2013 decided not to attach the Balance Sheet, i.e., financial information of subsidiaries. Accordingly, the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Auditors of the Subsidiary Companies are not attached.

The Company will make available these documents/details upon request to any member of the Company interested in receiving this information. The Annual Accounts of the Subsidiary Companies will also be kept for inspection by any investor at the Registered Office of the Company and its Subsidiaries.

A statement pursuant to Section 212(1) (e) read with Sub-Section (3) of Section 212 of the Companies Act, 1956 for the Financial Year 31st March, 2013 for the subsidiary companies forms part of the Annual Report.

PUBLIC DEPOSITS

During the year under review, the company has not accepted or renewed any fixed Deposits from the public.

UNCLAIAAED DIVIDEND

There is no balance lying in the unpaid equity dividend account of the Company.

PARTICULARS OF THE EMPLOYEES

During the year, no employee of the Company was in receipt of remuneration exceeding the sum prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standards AS-21 and AS-27 on Consolidated financial Statements read with the Accounting Standard AS-23 on Accounting for investments in Associates, the Audited consolidated financial statements are provided in the annual report.

DIRECTORS

During the year Mr. Hemang D. Rawal was re-appointed as the Managing Director of the Company for a period of three years w.e.f., 15 January, 2013. Mr. V. R. Manjunath and Mr. Ravindra M. Madhudi were also re-appointed as Whole-Time-Directors of the Company w.e.f., 15th January, 2013 for a period of three years. Mr. V. R. Manjunath was appointed as the Chairman of the Board till the conclusion of the next Annual General Meeting of the Company

Mr. Praveen Narayanaswamy, Ms. Sushma Thirunalpalya Somashekarappa and Mr. Srinivas Gulur Seshagirirao, who were appointed as Additional Directors w.e.f., 15th January, 2013, shall vacate their office at the Ensuing Annual General Meeting. A resolution for their appointment as Directors at the Ensuing Annual General Meeting is incorporated in the Notice of Annual General Meeting.

Brief resume of the Directors proposed to be appointed, nature of their experience in specific functional areas, names of the companies in which they hold directorship and membership/chairmanship of board committees, shareholding and relationship between directors inter-se, as stipulated under Clause 52 of the SME Equity Listing Agreement with the Stock Exchange, are provided in the Notice for convening the Annual General Meeting.

AUDITORS

The Company''s Auditors, M/S. A. R. PAI & CO, Chartered Accountants, retire as Auditors of the Company at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have indicated their willingness to accept re-appointment and have further furnished necessary Certificate in terms of Section 224 (1B) of the Companies Act, 1956.

The Audit Committee has considered and recommended the re-appointment of M/S. A. R. PAI & CO, Chartered Accountants, Bangalore, as Statutory Auditors of the Company, to the Board of Directors at its meeting held on 23rd July, 2013. The Directors have accepted the recommendation and recommend to the shareholders the re-appointment of M/S. A. R. PAI & CO, Chartered Accountants, Bangalore as the Statutory Auditors of the Company.

INTERNAL AUDITORS

The Board has appointed Mr. Gopalan K. Chartered Accountant as the Internal Auditor of the company for the financial year 2013-14

COST COMPLIANCE REPORT

The Company has appointed a Practising Cost Accountant for obtaining Cost Compliance Report under the Companies (Cost Accounting Records) Rules, 2011 as per the notification of Ministry of Corporate Affairs dated 3rd June 2011. The Compliance Report will be duly filed with Ministry of Corporate Affairs, within 180 days from the close of the Financial Year ending 31st March, 2013.

AUDITORS REPORT

The observations made by the Auditors in their Report referring to the Notes forming part of the Accounts are self-explanatory and therefore, do not require any further comments under Section 217(3) of the Companies Act, 1956.

STATEMENT PURSUANT TO LISTING AGREEMENT

The Company''s Equity shares are listed at Bombay Stock Exchange Limited, (SME segment). The Annual listing fee for the year 2013-14 has been paid.

CORPORATE GOVERNANCE

The Company has committed to maintain the highest standards of Corporate Governance as set out by SEBI. The Report on Corporate Governance as stipulated under Clause 52 of the SME Equity Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the company confirming compliance with conditions of Corporate Governance as stipulated under the said clause is attached to this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report has been separately furnished in the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

The company is acutely aware of the need to give back to the society. It has therefore, taken several measures to enrich the quality of life of the underprivileged and preserve the ecological balance like supporting girts'' education at Sneha Orphanage, funding Disha - Free Mason''s old age home, construction of a meditation hall near Nelamangala and taking care of the educational needs of over 40 children near Sondekoppa.

HUMAN RELATIONS

During the year employee relations continued to be cordial and harmonious at all levels and in all divisions of the Company. There was a total understanding of the management objectives by the employees. The Company has consistently tried to improve its HR policies and processes so as to acquire, retain & nurture the best of the available talent in the Industry.

ACKNOWLEDGEMENT

The Board of Directors wishes to thank the Central Government, State Government, RBI, SEBI, and The Bombay Stock Exchange Limited (BSE) for their co-operation in various spheres of Company''s functions. The Board of Directors expresses it''s gratitude for the co- operation extended by the Financial Institutions / Term Lenders and Company''s Bankers for their valuable support. The Directors thank all the shareholders of the Company, its customers and investors for their valuable support during the year and look forward to their continued support in the years to come. The Company has also gained considerably from the sincere and devoted services rendered by its employees at all levels. The Board of Directors wishes to place on record its sincere appreciation of the employee''s efforts in enhancing the image of the company in the market.

FORA.R.PAiaCO.

CHARTERED ACCOUNTANTS

Registration No.002519S]

Bansalore A.R.PAI

23 July 2013 [M. No. 023139]

PROPRIETOR

 
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