BOARDS' REPORT The Directors have pleasure in presenting their Report together with audited accounts for the year ended March 31, 2015. BIFR. As reported in last year's Annual Report and consequent to erosion of 100% of the net worth of the Company and upon a reference made to BIFR under the provisions of the Sick Industries Companies Act, the Company has been registered as a sick Company on 14.11.2014 under case no. 69/2014. The Company under the direction of the BIFR has intimated about its reference under BIFR to various statutory authorities, banks and creditors. Review of Financial Performance. The operating loss before interest and depreciation for the year under review was Rs.15103.60 lacs. As reported in the Annual Report last year, the Sugar mill at Ambasamudram could not be operated due to non-availability of sugar cane. As a consequence the 50MW power plant had to run using coal as fuel instead of bagasse which was not available from the Sugar factory due to its shut down. During the year under review the 50 MW power plant could generate 11,69,10,500 Units upto November 2014 and the same become non operational due to working capital crunch. During the year under review Naidupet Sugar plant crushed 187588 MTs of cane and produced 16630.60 MTs of sugar and achieved a recovery rate of 8.86% as against 8.96% in the previous year. The IAP plant has produced 56,19,693 litres of ENA during the year under review. Feature Outlook Naidupet Unit: The Sugar Plant which normally crushes 3.00 lac MT to 4.00 lac MT of Sugar cane is dependent on availability of cane. The Sugar industry prospects and economic scenario are the deciding factors in future to enhance sugar production. IAP : The production of ENA in future is lucrative given the blending options of ENA with petrol and other fuel elements, are being contemplated by the Government of India. Ambasamudram Unit: Due to non-availability of sugar cane in and around Ambasamudram, the chances to restart the crushing operations poses challenge. Power: As working capital requirements are not available, the generation of electricity is affected. However the Company is confident to resume electricity generation soon. Dividend. Being referred to BIFR and in view of losses in the successive years from FY 2012, the Company is unable to declare any dividend. Share Capital. The paid up share capital of the Company is 41972900 equity shares of Rs.10 each. The share application money of Rs.140.36 crs remains unallotted in favour of the holding company namely Empee Distilleries Ltd due to non-obtainment of statutory approvals. Deposits Your Company has not invited or accepted any fixed deposits either from the public or from the shareholders of the Company, during the period under review. Change in the nature of business, if any There is no change in the nature of the business during the year. Transfer to Reserves Due to losses of the Company for the year ended 31.3.2015, your Directors have not proposed any amount to be transferred to the General Reserves of the company. Particulars of Loans, Guarantees or Investments under section 186 The particulars of loans, guarantees and investments u/s 186 of the Companies Act, 2013 is annexed herewith as Annexure-A. Management Discussion and Analysis Report. The Management Discussion and Analysis Report is annexed herewith as Annexure-B. Details of Directors or Key Managerial personnel who were appointed or have resigned during the year. There were no Directors or Key Managerial personnel appointed during the year under review. Company Secretary. Company Secretary Mr.S.S.K.Swarup, Company Secretary resigned w.e.f 30th April 2015. CFO The company has taken necessary steps to appoint CFO and Company Secretary and the same is delayed due to BIFR status of the company. Declaration by Independent Directors. The Independent Directors namely, Mr.M.K. Mohan, Mr.T.S. Raghavan, Mr.M.P. Mehrotra and Mr.Shankar Menon have given declarations that they meet the criteria required under section 149(6) of the Companies Act, 2013. Details of web link for familiarization program of independent Directors are given at www.empeegroup.co.in Auditors qualification: a. Write off of Rs.99.10 crores relating to Inventories: The write off is due to the diminution in the realizable value of inventories, due to Quality, Moisture and GCV contents of Coal,etc. The reduction is also due to TRS contents in Molasses and deterioration in the quality of sugar over the years. b. Write off receivables amounting to Rs.44 crs. Due to difference in the electricity unit rates applied by TANGEDCO, the Company had to revise the invoices raised against TANGEDCO and the difference of Rs.44 crs had to be written off. c. Accumulated losses and reference to BIFR Since the net worth of the Company has been completed eroded during the FY 2013 the Company took necessary steps to register the same with BIFR under the provisions of Sick Industrial Companies (Spl. Provisions ) Act, 1985. Accordingly the Company has been registered as a sick company under case no: 69/2014 on 14th November 2014 by BIFR. d. Share Application money of Rs.140.36 crs received from Empee Distilleries Ltd.(EDL) The Company could not allot convertible preference shares to EDL, due to non-receipt of certain statutory approvals. Further Empee Distilleries Ltd. had recalled the share application money to be refunded and the Company expressed its inability to refund the same due to present status. e. Confirmation of Sundry Debtors, Trade payables etc: The confirmation from Sundry Debtors, Trade payables advance to suppliers, cane advances, harvest labourers advance could not be verified by the Auditors, due to the fact that there are large number of accounts. Number of Board Meetings held during the year 2014-15. The Company has duly complied with the provisions of the CompaniesAct, 2013 in holding Board meetings and the details of the meetings are furnished in the Corporate Governance Report. Details of Polices. a. Nomination and Remuneration Policy : The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company's Remuneration Policy is available on the Company's website www.empeegroup.co.in and the same is attached herewith as Annexure - C. b. Risk Management Policy Business Risk Evaluation and Management is an ongoing process within the Organization. Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Board has framed a Risk Management Policy for the Company. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. At present the company has not identified any element of risk which may threaten the business (or) existence of the company. c. Whistle Blower Policy Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanism for employees and directors of the Company to approach the Audit Committee to ensure adequate safeguards against victimisation. This policy would help to create an environment wherein individuals feel free and secure to raise an alarm, whenever any fraudulent activity takes place or is likely to take place. It will also ensure that complainant(s) are protected from retribution, whether within or outside the organization. The details of establishment of the Vigil Mechanism Policy as per Annexure D is displayed on the website of the Company www.empeegroup.co.in. Corporate Governance. As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the Corporate Governance Report and the Auditor's Certificate regarding compliance of conditions of Corporate Governance, form part of the Annual Report. Details of recommendation of audit committee which were not accepted by the Board along with reasons. The same is not applicable as the Audit Committee's recommendations were accepted and implemented by the Board. Names of Companies which have become or ceased to be its subsidiaries, joint ventures or associate Companies during the year – Not applicable Subsidiaries The consolidated accounts of the company includes the audited accounts of subsidiaries namely Empee Power Company (India) Ltd and M/s.Appollo Wind Energy Pvt Ltd. A statement containing salient features of the subsidiaries in form AOC 1 is annexed herewith marked as Annexure - E and forms part of this report. Details of web link for Policy for determining material subsidiaries are given at www.empeegroup.co.in. Auditors' Statutory Auditors Pursuant to AGM resolution dated 26.9.2014, the Board has appointed M/s. Venkatesh& Co., Chartered Accountants as Statutory Auditors for five years in terms of Sec.139, 141 of the Companies Act, 2013 to hold office from the conclusion of 23rd AGM till the conclusion of the 28th AGM of the Company to be held in the year 2018, however subject to ratification of their appointment at every AGM. The Company has received a letter from the Statutory Auditors of the Company, Venkatesh & Co, (ICAI Firm Registration Number: 0046365) Chartered Accountants, to the effect that their appointment, if made, will be as per the requirements laid down under Section 139 and 141 of the Companies Act, 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014, subject to approval of the Members and ratification of the appointment at this Annual General Meeting. Secretarial Auditors M/s. S Dhanapal & Associates, a firm of Practising Company Secretaries, Chennai has been appointed as Secretarial Auditors of the Company for the Financial Year ended 31.03.2015 vide Board resolution dated 11.2.2015. The Secretarial audit report received from the Secretarial Auditors is annexed to this report marked as Annexure - F and forms part of this report. Cost Auditors Since Mr. G.Sundaresan, Cost Auditor of the Company has resigned, the Board has appointed Mr.N.Thagarajan as Cost Auditor of the Company in terms of Section 148 of the Companies Act, 2013 for the financial year 2015-16 in the Board meeting held on 23.5.2015. A resolution to ratify the payment of remuneration to Mr.G.Sundaresan, Cost Auditor for the financial year 2014-15 is set out in the notice convening the AGM. Conservation of Energy, Technology Absorption and Foreign Exchange outgo. Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo is given as Annexure - G and forms part of this Report. Status on Amalgamation. As already intimated to the Stock Exchanges, the Scheme of Amalgamation of your company with Empee Distilleries Ltd. and Appollo Wind Energy Pvt. Ltd has been withdrawn. However the Hon'ble High Court, Andhra Pradesh, is yet to pass orders in this regard. Related party Transactions The details of Related Party Transactions during the year ended 31.03.2015, being arm's length transactions have been reported in the Financial statements and forms part of this report. Details of web link dealing with Related Party Transactions are given at www.empeegroup.co.in. Managerial Remuneration The details of employees/managerial persons remuneration as required to be given u/s 197 of the Companies Act, 2013 read along with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 as applicable is attached herewith as Annexure - H. Details of Pecuniary relationship or transaction of the non-executive independent directors Vis a Vis the Company There is no pecuniary relationship or transactions of the Non-Executive Independent Directors vis-a-vis the company for the period ended 31.3.2015. Board's Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees. While independent directors in their separate meeting have carried out to assess the performance of Chairman and Managing Director and other Directors of the Board more particularly about their business acumen and contribution to the Company, the performance evaluation of the Independent Directors was carried out by the entire Board. The Independent Directors expressed their satisfaction with the evaluation process, functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of duties, obligations, responsibilities and governance. Adequacy of Internal Financial Controls. The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and reported correctly. The Internal Audit/Control is exercised through an external auditor namely, M/s.Ramesh Subramaniam & Co., Chartered Accountants, Chennai. The audit observations and corrective action taken thereon are periodically reviewed by the audit committee to ensure effectiveness of the internal audit/control system. Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. There is no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future Extract of Annual Return. The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure - I. Industrial Relations. The Industrial relations continued to remain congenial during the year. Director's Responsibility Statement In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:In the preparation of the annual accounts, the applicable accounting standards have been followed. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review. The directors have 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. The directors have prepared the annual accounts on a going concern basis. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. Acknowledgement Your Directors wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their forbearance and their confidence in the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company. For and on behalf of the Board of Directors M.P.Purushothaman Chairman & Managing Director Place : Chennai Date : 14.08.2015 |