REPORT OF DIRECTORS & MANAGEMENT DISCUSSION AND ANALYSIS REPORT For the year ended 31st March 2015 Your Directors have pleasure in presenting the Thirty Eighth Annual Report together with the Audited Accounts of your Company for the year ended 31st March 2015. Operations / Performance review Net sales of the company were at Rs. 76.5 Crores which was more or less same as compared to previous year figure of Rs 76.5 Crores. The revenue generated from the performance of the Drill business in the current year was better against the same in the last financial year PBT before exceptional item for FY 15 was at 1.1 Crores as against Rs. 14.1 Crores loss in FY 14. Certain measures undertaken in respect of restructuring of construction equipment division, close control on costs by aligning resources to business volumes, inventory control , focusing on order book, better product mix helped company to bring about the turnaround. Exceptional items for FY 15 was Rs 2.3 Crores as against Rs.7.9 Crores in FY 14. Interest charge was Rs 10.4 Crores for FY 15 against Rs 11.3 Crores for FY 14. Management discussion and analysis Structure and Developments, opportunities and Threats, outlook, risk and concern: Overview of the Economy India is set to become the world's fastest-growing major economy by 2016 ahead of China, the International Monetary Fund (IMF) said in its recent forecast. India is expected to grow at 6.3 percent in 2015, and 6.5 percent in 2016 by when it is likely to cross China's projected growth rate, the IMF said in the latest update of its World Economic Outlook. Industrial production grew at a two-month high of 4.1 percent in April, primarily driven by the manufacturing sector, but capital goods growth slowed. However, retail inflation too edged up in May amid worries over deficient monsoon. Business Environment, outlook & Prospects for FY 2015-16. Coal India Ltd. (CIL) produced 494 Million Ton against target of 507 million ton registering growth of 6.9%. CIL had unveiled its road map to attain one billion ton coal production by 2019-20. With the projected coal demand of the country by 2020 be 1200 million ton at an envisaged growth rate of 7%. MCL and SECL are expected to play a vital role in CIL's vision of attaining one billion ton production with 250 million ton and 240 million ton respectively. With this better outlook, Central Government's focus on infrastructure growth, private sector participation on coal mining, it is expected that demand for company's products will grow better. First quarter of FY 16 reflects improvement in business with sales at Rs 34.2 Crores and profit after tax at Rs 4.6 Crores; prior year first quarter sales were Rs 11.6 Crores with a loss of Rs 1.6 Crores. Transfer to reserves Due to losses incurred in current year, the Company is unable to transfer any amount to its Reserves. Dividend No dividend has been declared in the financial year under review having regard to results of the year. Transfer of unclaimed dividend to investor education and protection fund In terms of Section 205A & 205C of the Companies Act, 1956, an amount of Rs.1,03,540/- being unclaimed dividend (2005-06) was transferred during the year to the Investor Education and Protection Fund established by the Central Government. Further, there is no due for remittance of any unclaimed or unpaid Dividend to the Investor Education and Protection Fund established by the Central Government. Share capital The paid-up capital of the Company as at 31.03.2015 stood at Rs.3,06,69,430/-. During the year under review, the Company has not made any fresh issue of shares. Extract of Annual Return The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure A and is attached to this report. Board meetings and its committees conducted during the period under review The Company had conducted Seven (7) Board meetings, Five (5) Audit Committee Meetings, Four (4) Stakeholders Relationship Committee Meetings and Two (2) Nomination and Remuneration Committee Meetings during the period under review. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith. Directors' Responsibility Statement Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013, with respect to Directors' Responsibility Statement, the Board hereby confirm that - a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departure from those standards; b) the Directors have 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; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a going concern basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) the Directors have devised proper system to ensure compliance with the provisions of all the applicable laws and such systems are adequate and operating effectively Details in respect of frauds reported by auditors under Section 143(12) of the Companies Act, 2013 other than those which are reportable to the central government There have been no frauds reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013. Declaration of independent directors The Company has received the declarations from all the independent directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges. Company's policy relating to directors appointment, payment of remuneration and other matters provided under Section 178(3) of the Companies Act, 2013 The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Remuneration policy of the Company is annexed herewith as Annexure B and can also be accessed on the Company's website at the link <http://www.revathi.in/wp-content/themes/rel/pdf/Nomination-Remuneration-Policy.pdf> Particulars of loans, guarantees or investments made under Section 186 of the Companies Act, 2013 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. Particulars of contracts or arrangements with related parties All transaction entered into with related parties as defined under Section 188 of the Companies Act, 2013 during the financial year 2014-15 were in the ordinary course of business and on an arm's length basis. Since there are no transactions which are not on arm's length basis and material in nature, the requirement of disclosure of such related party transactions in Form AOC-2 does not arise. Material changes and commitments affecting the financial position of the company: No material changes and commitments affecting the financial position of the company have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report. Conservation of energy, technology absorption, foreign exchange earnings and outgo The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure C and is attached to this report. Statement concerning development and implementation of risk management policy of the company The Company has been addressing various risks impacting the business of the Company and risk mitigation measures are being taken then and there. Lower than expected GDP growth in infrastructure sector, particularly in coal and construction segment may impact your company's prospects. Details of policy developed and implemented by the company on its corporate social responsibility initiatives The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable. Annual evaluation of the Board on its own performance and of the individual directors and Committees As per the requirements of the Companies Act, 2013 and the clause 49 of the listing agreement, the formal annual evaluation of the Board as a whole, its committees and individual directors was conducted based on the criteria and framework adopted by the Board. The evaluation process included an assessment of each director's eligibility, skills and knowledge and the Board is satisfied that all the Directors on the Board are competent and have the necessary experience to effectively execute their duties. The Board also evaluated the working of the Committees and the Board expressed its satisfaction on the quality, quantity and timeliness of the flow of the information between the Committees and the Board. The Independent Directors of the Company have also convened a separate meeting for reviewing the performance of Non-Independent Directors and the Board as a whole. Directors & Key Managerial Personnel During the year under review, the members have approved the appointment of Mr.S.C.Katyal and Mr.B.V.Ramanan as the Independent Directors of the Company for a period of five years. Mr. B.D. Narang and Mr.P.M.Rajanarayanan have resigned from the Directorship with effect from 27th October 2014 and 25th November 2014 respectively. Your Directors wish to place on record the valuable services rendered by them during their tenure of Office as Directors of the Company. The Board appointed Mr.Kishore Sidhwani and Mr.M. Poongavanam as additional directors on the Board with effect from 25th November 2014 and subsequently in accordance with Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, they were appointed as Independent Directors of the Company on 22nd January 2015 by the members through Postal Ballot. As per the provisions of the Companies Act, 2013, Mr.S.Hariharan, Director, retires at this Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment. The Board of Directors at their meeting held on 10th July 2015 have re-appointed Mr.Abhishek Dalmia as the Executive Chairman of the Company for a further period of 5 years with effect from 1st April 2016 on such remuneration as recommended by the Nomination and Remuneration Committee. The Board recommends his re-appointment. Subsidiaries, joint ventures and associate companies The Company has two subsidiaries namely M/s. Semac Consultants Pvt Ltd - a material subsidiary within the definition of clause 49 of the listing agreement and M/s. Semac and Partners, LLC - step down subsidiary. M/s. Panchtatva Realty (joint venture) is an Association of Persons (AOP) in which the Company is having 54% holding. A report containing the salient features of the subsidiaries and joint ventures as required under Section 129(3) of the Companies Act, 2013 has been annexed herewith in Form AOC-1 and is attached as Annexure D to this report. The policy on determination of material subsidiaries of the company as approved by the Board of Directors has been uploaded on the website of the Company and can be accessed at the link <http://www.revathi.in/wp-content/themes/rel/pdf/Material-Subsidiary->Policy.pdf The consolidated financial statements of the company and its subsidiaries and joint ventures have been prepared in accordance with the applicable accounting standards have been annexed to the Annual Report. The annual accounts of the subsidiary companies are posted on the website of the Company viz. www.revathi.in <http://www.revathi.in> and will also be kept open for inspection by any shareholder at the Registered Office of the Company. The Company shall also provide the copy of the annual accounts of subsidiary companies to the shareholders upon their request. The company has not accepted any deposits from public during the year and accordingly there are no unclaimed deposits as at 31/03/2015. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future. There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future. Internal control systems and their adequacy. Your company is committed to maintaining an effective internal control environment and a system of accounting and control that provides assurance on the efficiency of operations, existence of internal controls and safeguarding of its assets and management of risks. The system of accounting and controls are modified and improved from time to time, in line with changes in business conditions and recommendations of internal auditors. During the financial year under review, the Audit Committee met five times to examine the reports on internal control/audit systems, financial disclosures and monitoring the implementation of internal audit recommendations. Your company continues to focus on risk management and also evaluate the internal control systems continuously so as to minimize and mitigate risks and improve control systems. Auditors Statutory auditors M/s Lodha & Co, Chartered Accountants, Kolkata have expressed their unwillingness to be reappointed as the Statutory Auditors of the Company at the ensuing AGM. The Directors wish to place on record their appreciation for the valuable services rendered by them. The shareholders approval is being sought for the appointment of M/s. S.S. Kothari Mehta & Co (Firm Registration No. 000756N) Chartered Accountants, New Delhi in the place of M/s Lodha & Co, Chartered Accountants, Kolkata for a period of 5 years commencing from the conclusion of the ensuing Annual General Meeting up to the conclusion of the Annual General Meeting of the Company which ought to be held during the year 2020 subject to ratification by the Shareholders annually. The Company has received a certificate from the Auditors M/s. S.S. Kothari Mehta & Co (Firm Registration No. 000756N) Chartered Accountants, New Delhi, to the effect that if the appointment is made, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr.M.D.Selvaraj, MDS & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit is annexed herewith as Annexure E to this report. Particulars of Employees The disclosure as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure F and is attached to this report. The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 does not apply to the Company as there were no employees who are in receipt of remuneration in the aggregate at the rate of not less than Rs.60,00,000/- if employed throughout the year or Rs.5,00,000/- per month if employed for part of the year. Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2014-15. Corporate governance As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as Auditors' Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report. Vigil mechanism (whistle blower policy) The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Company's code of conduct. The policy can be accessed on the Company's website at <http://www.revathi.in/wp-content/themes/rel/pdf/Whistle-Blower-Policy.pdf> CEO/CFO certification As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Whole-time Director and the Chief Financial Officer has furnished necessary certificate to the Board on the financial statements presented. Human resources Your company realizes that it has to re-orient its organization as dynamics of business are changing fast. The company is taking steps to retain its talent pool, enhance skill of existing people and recruit the most suited talent to spearhead its growth initiatives. Cautionary note Certain statements in "Management Discussions and Analysis" section may be forward looking and are stated as required by law and regulations. Many factors, both external and internal, may affect the actual results which could be different from what the directors envisage in terms of performance and outlook. Appreciation The Directors express their sincere appreciation of dedicated efforts put in by our employees and their commitment to make the company a high performance Company. The Directors also place on record their appreciation of the continued support and recognition provided by our esteemed customers and bankers. By Order of the Board For Revathi Equipment Limited Abhishek Dalmia Executive Chairman DIN : 00011958 Place : Bangalore Date : October 17, 2015 |