DIRECTORS REPORT TO, THE MEMBERS OF LN INDUSTRIES INDIA LIMITED. Your Directors hereby present the Twenty Second Annual Report of your Company together with the Audited Accounts for the financial year ended March 31, 2015 and the Report of the Auditor thereon. STATE OF COMPANY'S AFFAIRS: The Company has undertaken during the year only Job works/Conversion Works owing to lack of working capital. Due to the same the turnover has been very low during the year. The Development activity at the land given by Company under Joint Development Agreement would commence shortly with the receipt of necessary approvals from Regulatory Authorities. The Working Capital and Term Loan due to State Bank of Hyderabad (SBH) are declared as NPA (Non Performing Asset) by Bankers. State Bank of Hyderabad has initiated action for recovery of the dues of the Company. INDUSTRY STRUCTURE AND DEVELOPMENT: The Company is engaged in the manufacture of Texturized Twisted Polyester Dyed Yarn and Nylon Dyed Yarn. It has also significant presence in the trading of various textile products. One of the major finished products of the Company Polyester Dyed Yarn is used in the manufacturing of Dress Materials, Sarees, Shirting, Suiting and Furnishing Fabrics. Another product Nylon Dyed Yarn is used in the manufacture of Socks, Sports Gear etc., The industry offers significant leverage to the Company for scaling up its operations both in terms of the higher volumes of the existing products as well as the scope for setting up new and enhanced facilities which can facilitate back ward integration for the present product line of the Company. Because of the products application and utility across the wide spectrum of the users segment, offers significant opportunities for growth. LISTING OF EQUITY SHARES: The Company's Equity shares are presently listed on BSE Limited and the Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2014 - 2015. TRANSFER TO RESERVES: The Company has incurred a loss of Rs.394.94 lacs during the year. The said loss is set off against the reserves held by the Company. CHANGE IN NAUTURE OF BUSINESS, IF ANY: During the year under review, there has been no change in the nature of business of the Company. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT: There are no material changes and commitments in the business operations of the Company from the financial year ended 31st March, 2015 to the date of signing of the Directors Report. PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANY: The Company does not have any subsidiaries or associate companies. Hence the required information under this head is not being attached to the report. CORPORATE GOVERNANCE: The Corporate Governance Report and a certificate by the Statutory Auditors regarding compliance of the conditions of corporate governance by your Company as stipulated in clause 49 of the Listing Agreement with Stock Exchanges, are annexed to this Report. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS: All the Independent Directors have given declarations 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 subsection (6) of Section 149 of the Companies Act, 2013. MEETING OF INDEPENDENT DIRECTORS: The performance of the Individual Directors on the Board and the Committees thereof is done by the Board and the Independent Directors in their exclusive meeting done as per the policy formulated by the Board in this regard. VIGIL MECHANISM: In terms of the provisions of Section 177 of the Companies Act, 2013 your Company has formulated a Whistle Blower Policy as a Vigil Mechanism. This mechanism 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 policy. This mechanism is for the 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 victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases. BOARD EVALUATION: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the performance evaluation of the Board, the Committees of the Board and Individual Directors is done on annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors. CHANGES IN DIRECTORS: INDUCTIONS: On the recommendations of the nomination and remuneration committee, the Board appointed Mrs. Sneha Rupesh Talreja (DIN 07161901) as an Independent Director on the Board with effect from 21st April, 2015. We seek your support in confirming the appointment of Mrs. Sneha Rupesh Talreja (DIN 07161901) in the ensuing Annual General Meeting. RE - APPOINTMENTS: As per the provisions of the Companies Act 2013, Sri. Shailesh Shivram Mistry (DIN: 02828383) retires at the ensuing Annual General Meeting and being eligible, seek his re-appointment. The Board recommends his re-appointment. None of the independent directors will retire at the ensuing Annual General Meeting. RESIGNATIONS: During the year under review Sri.G.RameshBabu has resigned as Director of the Company due to his preoccupation. The Board places on record its appreciation for the services rendered by him during his tenure as the Director of the Company. CHANGES IN KEY MANAGERIAL PERSONNEL: There have been no changes in the Key Managerial Personnel. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS: During the year under review Five (5) times Board meetings were held on the following dates: 1. 29th May ' 2014. 2. 12th August ' 2014. 3. 30th August ' 2014. 4. 14th November ' 2014. 5. 14th February ' 2015. The intervening gap between any two Board Meetings was within the period prescribed under the provisions of the Companies Act, 2013. All the recommendations given by the Audit Committee are accepted by the Board. INTERNAL FINANCIAL CONTROL: The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that: i. in the preparation of the annual accounts for the financial year 2014 - 15, the applicable accounting standards have been followed and there are no material departures; ii. 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 of the Company for the financial year; iii. and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. prepared the annual accounts on a going concern basis; v. laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and vi. devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively CORPORATE SOCIAL RESPONSIBILITY: Your Company does not fall under any of the criteria specified under the provisions of Companies Act, 2013. Hence the Company has not constituted any committee and is not required to furnish information required under the provisions of the said Act. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS: There have been no loans, guarantees and investments under Section 186 of the Act during the financial year 2014 - 15. TRANSACTIONS WITH RELATED PARTIES: There were no related party transactions during the year except that entered in the ordinary course of business and on arms length basis. There were no materially significant related party transactions between your Company and the Directors, promoters, Key Managerial Personnel and other designated persons which may have a potential conflict with the interest of Company at large. Form AOC - 2 for disclosure of particulars of contracts / arrangements, entered into by your Company with related parties is attached herewith as Annexure - I. TECHNOLOGY ABSORPTION, ENERGY CONSERVATION & FOREIGN EXCHANGE EARNINGS AND OUTGO: Information in accordance with clause (m) of sub section (3) of Section 134 of the Companies Act, 2013 is annexed herewith as Annexure - II to this report. PARTICULARS OF EMPLOYEES: The information and statement containing particulars of employees required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are provided in Annexure -III and forms part of this report. The Nomination and remuneration committee of the Company has affirmed that the remuneration is as per the Remuneration policy of the Company. Your Directors take this opportunity to record their deep appreciation of the continuous support and contribution from all employees of the Company. EXTRACT OF ANNUAL RETURN: As required under Sub-Section (3) of Section 92 of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 an extract of Annual Return in Form MGT - 9 forms part of this report as Annexure - IV. DEPOSITS: During the year under review your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date. AUDITORS: Statutory Auditors: At the Annual General Meeting held on September 30, 2014, M/s. Kumar & Giri, Chartered Accountants, were appointed as the Statutory Auditors of the Company to hold office till the conclusion of the 21st Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Kumar & Giri, Chartered Accountants, as the statutory auditors of the Company is placed for ratification by the shareholders. 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 Companies Act, 2013. There are no specifications, reservations, adverse remarks on disclosures by the Statutory Auditors in their report. They have not reported any incident of fraud to the Audit Committee of the Company during the year under review. DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. During the financial year 2014-15, the Company has not received any complaints on sexual harassment. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS: There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. ACKNOWLEDGEMENTS: Your Directors place on record their appreciation for the assistance and co-operation extended by the Bankers, State and Central Government agencies. Your Director also thanks all the Customers, Members and Employees for their valuable support and confidence in the Company. on behalf of the Board of Directors for LN INDUSTRIES INDIA LIMITED G. SURENDER REDDY Managing Director DIN:00109441 Place: Hyderabad. Date: 29-08-2015. |