DIRECTORS' REPORT TO, THE MEMBERS, Your Directors present the 53rd Annual Report with Audited Statements of Accounts for the year ended 31st March, 2015 2. Dividend In view of the loss incurred during the year, no dividend is recommended. 3. Management Discussion and Analysis Affairs of the Company are continued to be carried out on most economical scale by containing the expenses to minimal level. Due to lengthy process of the legal system required to be followed much could not be done towards recovery of old dues. As the company is having no funds, pending Infusion of fresh funds, Premier Ltd., the Promoters have continued to provide the funds to the company to keep the Company going. Up to 31st March, 2015 total amount disbursed to the company amounted to Rs. 221.73 lakhs. With the stringent provisions with regard to contravention of provisions of section 186(7) of the Companies Act, 2013, with regard to charging of interest on loans given by a Company, the promoters having no option but to charge interest on this borrowings, effective 1st April, 2014, at the rate at which they pay interest to their Banks. As at 31st March, 2015 total interest accrued amounted to Rs. 24.38 lakhs. With that total amount debited by the promoters as on 31st March, 2015 works out to Rs. 246.11 lakhs. 4. Restructuring of Equity Share Capital Reduction of Capital In the year 2012-13 Company implemented the Scheme of Reduction of Capital by reducing face value of Equity Shares from Rs. 10 per equity share to Re. 1 per equity share. Cancelled Capital of Rs. 1944.03 lakhs and Capital Reserve and Share Premium amounting to Rs. 767.47 lakhs are adjusted and accumulated losses are reduced to that extent. Infusions of Funds To achieve the positive Net Worth and to raise the funds required for revival of the business as a next step, a special resolution was passed by the members at an EGM held in December, 2013 for "Rights Issue" in ratio of 2:1 amounting Rs. 432 lakhs. As Merchant Banker appointed to act as Manager to the Issue, lost the concerned officials looking after this type of jobs, was unable to proceed further. Therefore, another Merchant Banker was appointed. By the time the Draft Letter of Offer was ready, and company was working for completing the process of filling the Draft Letter of Offer with SEBI, a Show Cause Notice was served by RBI to the Company for cancellation of Company's Registration as NBFC, details of which are given hereafter. In the circumstances, the Merchant Banker has advised the Company to (i) first adequately address the show cause notice and ensure that the same is withdrawn, so that the company continues to have a valid NBFC license and that they will proceed with the filling of offer document with SEBI only once the show cause notice is withdrawn/disposed of ensuring status quo as an NBFC (ii) the draft letter of offer should be filed with SEBI only after the show cause notice is withdrawn/disposed off. Accordingly, filling of draft letter of offer is withheld for the time being. 5. Revival of NBFC Business Company has negative net worth, and is not complying with RBI Guidelines with regard to adequacy of Net Owned Funds. Therefore, Show Cause Notice has been served upon the company by RBI, stating as to why the Certificate of Registration issued to the Company by RBI should not be cancelled in terms of provisions contained in Section 45-IA of the Act. Show Cause Notice received from RBI is replied explaining steps already taken by the company and being taken for Restructuring of Capital by the company to restore the net worth. The same was followed with the concerned Officers of RBI. During the meeting with them company's present situation, steps taken and how the Show Cause Notice will hinder the efforts of the company to restore the net worth is explained. RBI suggested that the company may furnish future plans and a Road Map in this regard. Company is in process of working towards best solutions for revival of the business by the company. 6. Change of Name Members have passed a special resolution for Change of Name of the Company at the EGM held on 16th December, 2013. Being NBFC, Company requires approval of RBI for Change of Name of the company. An application is made to RBI for the same. However, the company is given to understand that the permission will be given by RBI for change of name only after we achieve the required levelof net owned funds. Therefore, we will move in the matter further only at an appropriate time. 8. Taxation Return of income has been filed up to Financial Year 201314, Assessment year 2014-15. Assessment has been completed up to the Financial Year 2011-12, Assessment Year 2012-13. Assessment for the Financial Year 2006-07 was reopened under section 263 of Income Tax Act. In the revised assessment, Capital Receipts arising on account of one time settlement with the banks, which were treated as non-taxable in the original assessment, were considered as taxable Income. A demand of Rs. 196.49 lakhs was raised. This was contested by the company. Vide its order dated 31-12-2012, Income Tax Appellate Tribunal (ITAT) decided the matter in favour of the Company. Income Tax department has preferred an appeal before Hon'ble High Court, Bombay against the order of ITAT. Directors are advised by the Tax Consultants of the Company that the appeal is not tenable and no demand is expected in this regard. 9. Internal Financial Control Company has appointed a firm of Practicing Chartered Accountant as Internal Auditors of the Company. The company has in place an adequate internal financial control procedure commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and payment for expenses. Internal Auditors issue quarterly report on their findings and the same is being placed before Audit Committee and the Board of Directors. 10. Auditors' Report Independent Auditors Report to the members of the company is part of Annual Report for the year. There is no adverse comment in the same. 11. Acceptance of Fixed Deposits Company is not accepting and has not accepted any fixed deposit within the meaning of Section 73 of the Companies Act, 2013 and Non-Banking Financial Companies (Reserve Bank) Directions, 1998. There were no fixed deposits outstanding at the beginning or at the end of the year. 12. Statutory Auditors M/s. M. B. Agrawal & Co., Chartered Accountants, holds office until the conclusion of the 53rd Annual General Meeting of the Company and shall accordingly retire at the conclusion of the Meeting. The Company has received a consent letter from them to the effect that their appointment for the financial year 2015-2016, if approved, at the ensuing Annual General Meeting would be within the limits laid down under the Companies Act, 2013 and are not disqualified for such appointment under section 141 of the Companies Act, 2013. Accordingly, M/s. M. B. Agrawal & Co., Chartered Accountants, are proposed to be appointed as Auditors of the Company at the 53rd Annual General Meeting. If M. B. Agrawal & Co., are appointed as Auditors of the Company for Financial Year 2015-16 their appointment will be in accordance with the provisions of Section 139 of the Companies Act, 2013. 13. Secretarial Audit Report As required under Section 204 of the Companies Act, 2013, M/s. N L Bhatia & Associates, Practicing Company Secretaries were appointed as Secretarial Auditor of the Company for the financial year 2014-15. The Secretarial Audit Report along with the comments of the Board of Directors on the observations of the Secretarial Auditor is attached to this report. The same is forming part of this report. 14. The Extract of the Annual Return The extract of the Annual Return, in prescribed Form No. MGT - 9 is enclosed and is forming part of this report. 15. Corporate Social Responsibility Initiatives As the Company is not having profit, this provision is not applicable. 16. Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings And Outgoing The information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is as follows: a. Activities of the Company do not require any specific action for conservation of energy or technology absorption. b. The company does not have any Foreign Exchange earnings and outgo. 17. Directors The Board regrets to report that Shri M. D. Adhikari, Director of the company expired on 26th March, 2015. The Board places on record its appreciations of the valuable services rendered by Shri M. D. Adhikari, as a "Director" and also a member of the "Stakeholders Relationship Committee" (Formally known as "Investors & Shareholders Grievance Redressal Committee"). Effective from 30th March, 2015, Shrimati Urmila U. Nagarkar has been appointed as a Director of the Company in place of the causal vacancy caused by demise of Shri M. D. Adhikari. She being a woman her appointment as a director of the company also satisfy the requirement of provision of section 149(1) of Companies Act, 2013 and Clause 49(II)(A)(1)of Listing Agreement. At 52nd Annual General Meeting Shri K. D. Mankikar and Shri Jatin D Jhaveri were appointed as Independent Directors of the Company, by a resolution passed by the members as per provisions of section 149(4), 149(10) of Companies Act, 2013. Both Shri K. D. Mankikar and Shri Jatin D Jhaveri were already directors of the company, appointed by Board as Independent Directors as per requirement of clause 49 of Listing Agreement. They hold the office as Independent Director for a period of five years from 19th September, 2014, and are not liable to retire by rotation. A declaration by the company has been received from both 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 the Stock Exchange. Shri J. H. Shah, Director retires by rotation and being eligible offer himself for re-appointment. All the Directors of the Company are Non Executive Directors. None of the Director paid any remuneration, commission or amount in any form except sitting fees for attending meetings of the Board/ Committee of the Board of Directors and conveyance expense for attending the meeting. Therefore, Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel, 2014) is not applicable to the Company. Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, an annual performance evaluation of its own has been carried out by the Board. Nine Meetings of Board of Directors were held during the year. Details of dates of meeting amount paid as sitting fees and attendance are given in Compliance Report on Corporate Governance. 18. Committee of Directors Names of the Chairman and Members of each following Committee, number of meetings held and all other relevant details are given in Compliance Report on Corporate Governance. i. Audit Committee ii. Nomination & Remuneration Committee iii. Stakeholders Relationship Committee 19. Key Managerial Personnel To meet with the provisions of Section 203 of the Companies Act, 2013 read with Rule 8 of Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014, following Key Managerial Personnel are appointed by the Company. i. Manager and CEO Shri M. Sudalaikannu is appointed as Manager of the Company under Companies Act, 1956 and is Chief Executive Officer (CEO) of the Company. ii. Company Secretary Ms Kavita A Javheri is appointed as Company Secretary of the Company and also Compliance Officer. iii. Chief Financial Officer (CFO) Ms Rajeshree Parekh is appointed as Chief Financial Officer (CFO) of the Company. 20. Details of policies and practices of the company being followed as required under various sections of Companies Act, 2013 Details of establishment of Vigil Mechanism (whistle Blower Policy) for Directors and Employees, Risk Management Policy and Prevention, Prohibition Redressal Mechanism with regard to the sexual harassment of women and Remuneration Policy enclosed and the same is forming part of this report. The Company has not received any written complaint on sexual harassment during the financial year. 21. Particulars of Employees During the year, no employee of the company was in receipt of remuneration in excess of Rs. 60,00,000/-. 22. Particulars of loans, guarantees or investments under section 186 of Companies Act, 2013 Company or its Director on behalf of the Company has not given any loan or guarantee covered under the provisions of Section 186 of the Companies Act, 2013. 23. Compliance Report on Corporate Governance As a part of this Annual Report, the report on compliance with clause 49 of the Listing Agreement relating to Corporate Governance is enclosed as Annexure. Information given in Corporate Governance Report is also forming part of Directors Report. Corporate Governance Compliance Certificate thereon from Statutory Auditors of the Company is also enclosed. 24. Disclosure about Cost Audit Cost Audit is not applicable to your Company. 25. Issue of employees stock options No Stock option scheme was provided during year. 26. Significant and Material Orders There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company's future operations. 27. Transfer of Amounts to Investor Education and Protection Fund There is no amount required to be transferred to Investor Education and Protection Fund in accordance with theO Annual Report 2014-2015 Section 205C of the Companies Act, 1956 (1 of 1956)/ Section 125 of the Companies Act, 2013 and rules made there under. 28. Material changes and commitments, after the close of the financial year No material changes have occurred after the close of the financial year on 31st March, 2015 till the date of Directors' Report, which could affect the financial position of the Company. 29. Joint venture subsidiaries and holding companies The Company has no holding, subsidiary and joint venture. 30. Listing with Stock Exchanges Details of Listing and Dematerialization are given in the Corporate Governance Report. 31. Directors' Responsibility Statement The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013. a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; 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 this 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 systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 32. Acknowledgements The Directors wish to place on record their sincere appreciation to the Company's valued shareholders and associates for their continued support to the Company. The Directors place on record their sincere gratitude and appreciation to the employees of the Company for the hard work and commitment exhibited throughout the year. For and on behalf of the Board of Directors J. H. SHAH CHAIRMAN Registered Office PAL Credit & Capital Limited Amarsons Bhavan, 3rd Floor, Shri Vile Parle, K. V. O. Seva Samaj, 68, Misquitta Street, Vile Parle (East), Mumbai 400 057 Tel /Fax No: 022-26126875 Email: investors@palcc.co.in Website: www.palcc.co.in CIN NO: L51010MH1962PLC012287 Date: 14th August, 2015 Place: Mumbai |