DIRECTORS' REPORT Dear Members, Your Directors take pleasure in presenting the 26th Annual Report of the Company together with the Audited Accounts for the year ended 31st March 2015. DIVIDEND & RESERVES In view of the losses incurred, your Board is unable to recommend any dividend for the financial year ended March 31, 2015. The Company has not transferred any amount to the reserves for the year ended March 31, 2015. SHARE CAPITAL The paid up equity capital as on March 31, 2015 was Rs.10.00 Lacs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS The Company had one Subsidiary Company, namely SBEC Investments Limited. Pursuant to Ministry of Corporate Affairs General Circular No. 36/2011 dated 7th June, 2011 regarding Guidelines for Fast Track Exit Mode for defunct companies under section 560 of Companies Act, 1956, the company has made an application to the Registrar of Companies, NCT of Delhi & Haryana, New Delhi for striking off the name of the Company under Section 560 of the Companies Act, 1956, in E-Form FTE vide SRN C00707000 dated 26.03.2014. Thus, the Ministry of Corporate Affairs vide their letter dated 02/08/2014 has been struck off the name of the Company from the Register. DIRECTOR'S RESPONSIBILITY STATEMENT: Pursuant to the provisions contained in Section 134 (5) of the Companies Act, 2013, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management, confirm that: a) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed and there are no material departures from the same; b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 at March 31, 2015 and of the loss of the Company for the year ended on that date; 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, 2013 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 proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively. f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Jagan Nath Khurana (DIN 00003817), Non-Executive Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment. Mr. Rajeev Kumar Agarwal, Mr. Jagdish Chandra Chawla and Mr. Shyam Babu Vyas was appointed as an Additional Non-executive Director of the Company with effect from May 21, 2015 and holds office upto the date of the forthcoming Annual General Meeting. As per provision of Section 149 and other applicable provisions, if any, of the Companies Act, 2013, Mr. Rajeev Kumar Agarwal, Mr. Jagdish Chandra Chawla and Mr. Shyam Babu Vyas are proposed to be appointed as Independent Directors of the Company for a period of five years commencing from September 23rd, 2015. Mr. Louis Claude Norland Suzor ceased to be Director of the Company under section 167 of the Companies Act, 2013.w.e.f. 21st May, 2015. Mr. Bindu Kumar Luthra who has been appointed as an alternate director during the absence of Mr. Louis Claude Norland Suzor be and is hereby ceased to be the alternate director and appointed as additional NonExecutive Director of the Company w.e.f. 21st May, 2015. All the Independent Directors viz., Mr. Rajeev Kumar Agarwal, Mr. Jagdish Chandra Chawla and Mr. Shyam Babu Vyas have submitted declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. Ms. Shivani Chaudhary has resigned from the post of Company Secretary and Compliance Officer of the Company w.e.f. 10th June, 2014 and Ms. Varsha Yadav was appointed as Company Secretary and Compliance Officer of the Company w.e.f. 1st May, 2015. Mr. Anil Jain resigned from the post of Manger w.e.f. 21st May, 2015 and re-appointed and designated as Chief Financial Officer of the Company w.e.f.21st May, 2015. Mr. S.S. Agarwal, Director of the Company is designated as Chief Executive Officer of the Company w.e.f.21st May, 2015. The Board met Four times during the financial year 2014-15, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. In accordance with the provisions of Section 134 of the Act and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the performance of Committees of the Board, namely, Audit Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee and also the directors individually. The manner in which the evaluation was carried out and the process adopted has been mentioned in the Corporate Governance Report. The Board, on the recommendation of the Nomination & Remuneration Committee, has framed a policy for selection and appointment of Directors, Senior Management and their remuneration and also framed the criteria for determining qualifications, positive attributes and independence of directors. The Remuneration Policy and criteria for Board nominations are given in Annexure - A to this Report. STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS As required under Section 149 (7) of the Companies Act, 2013, all the Independent Directors have given their respective declarations that they meet the criteria of independence as specified in Section 149 (6) of the Companies Act, 2013. AUDITORS AND AUDITORS REPORT The Shareholders at the 25th Annual General Meeting held on September 24, 2014, had appointed M/s K.K. Jain & Co. ( FRN - 02465N ) as Statutory Auditors of the Company to hold office until the conclusion of ensuing Annual General Meeting subject to ratification of their appointment at every intermittent AGM. M/s K.K. Jain & Co. being eligible has expressed their willingness to continue as auditors of the Company and accordingly, the ratification of their appointment is recommended to the Shareholders. Qualifications The observation made in the Auditors' Report read together with relevant notes thereon are self-explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. Reference to the Auditors comments on non-provision of expenses related to deputation charges of foreign technicians, it is hereby clarified that the expense of Rs. 7.66 lacs related to deputation charges of foreign technician was payable under Service Agreement entered into by the Company at the time of implementation of the project for one of its customers. However, certain dispute arose during the implementation of the project and the payment was not made and therefore no provision for the same was made. The said technician has also not made any claim for the payment. Management is of view that the expenses will be charged to profit & Loss Account in the year in which the payment is made. Reference to the Auditors comments on non reversal of diminution of current quoted investment, it is hereby clarified that the company is holding 1,42,31,214 Equity Shares of SBEC Sugar Limited, the Equity Shares of which are listed with Bombay Stock Exchange Limited and is one of the promoters of SBEC Sugar Limited. Since, the company is not intending to sale/ transfer/ otherwise dispose off these shares, the management has decided not to make any provision of diminution or reversal thereof. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s R.Singhal & Associates, Company Secretaries in practice as the Secretarial Auditor to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is given in Annexure-B to this Report. The observation in secretarial audit report are self-explanatory and therefore not call for any further explanation. Reference to the Secretarial Auditors comment that the Company has not updated Fixed Asset Register, the management is in process for preparing the fixed Asset Register. RISK MANAGEMENT As required under Clause 49 of the Listing Agreement, the provisions of Clause 49 (VI) (C) as given in Part- B i.e. Constitution of Risk Management Committee shall be applicable to top 100 listed Companies by market capitalization as at the end of the immediate financial year. As the Company not fall under the category of top 100 listed Companies, the Company is not required to constitute a Risk Management Committee. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has adequate Internal Financial Controls with proper checks to ensure that transactions are properly authorised, recorded and reported apart from safeguarding its assets. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis. The internal auditors of the Company reviews the controls across the key processes and submits reports periodically to the Management and significant observations are also presented to the Audit Committee for review. Follow up mechanism is in place to monitor the implementation of the various recommendations. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES. Section 135 of the Companies Act, 2013 provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the Company to be Rs. 500 crore or more; or (b) turnover of the company to be Rs. 1,000 crore or more; or (c) net profit of the company to be Rs.5 crore or more. As the Company does not fall under any of the threshold limits given above, the provisions of Section 135 are not applicable to the Company. RELATED PARTY TRANSACTIONS All contracts/arrangements/transactions entered into during the financial year with the related parties were on arm's length basis and were in the ordinary course of business. Section 188(1) of the Companies Act, 2013 exempts related party transactions that are in the ordinary course of business and are on arm's length basis. However, under clause 49 of the Listing Agreement, all material Related Party Transactions requires approval of the shareholders through special resolution. There were no materially significant related party transactions with the promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The policy on dealing with Related Party Transactions as approved by the Board is available at the investors section of the Company's website at www.sbecsystems.com The details of contracts/arrangements with related parties as required to be disclosed in Form-AOC-2 is not applicable on the Company. CORPORATE GOVERNANCE The Report on corporate governance as stipulated under the Listing Agreement forms part of this Report. The requisite certificate confirming compliance with the conditions of corporate governance is attached to the Corporate Governance Report. The report also contains the details as required to be provided on Board evaluation, remuneration policy, whistle blower policy/vigil mechanism etc. The CEO and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under the Listing Agreement. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, form part of this Annual Report. DISCLOSURES Committees of the Board During the year in accordance with the Companies Act, 2013 the Board re-constituted/re-named some of its Committees and presently the Company has the following Committees: • Audit Committee • Nomination and Remuneration Committee • Stakeholders Relationship Committee The details of all the Committees along with their composition, terms of reference and meetings held during the year are provided in the "Report on Corporate Governance" forming part of this Annual Report. VIGIL MECHANISM & WHISTLE BLOWER POLICY The Company has a vigil mechanism and a whistle blower policy. The same has been posted on the Company's website and the details of the same are given in the Corporate Governance Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure-C to this Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: During the financial year 2014-15, the company has not made any investment nor given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 relating to the ratio of the Remuneration of each Director to the median employees remuneration shall not apply because none of the Directors has drawn any remuneration from the Company for the financial year 2014-15. In terms of the Provisions of Section 197(12) of the Companies act, 2013 read with Rule 5(2)&(3) of the Companies Appointment & Remuneration of Managerial Personnel ) Rules, 2014 None of the employees of the Company were in receipt of remuneration of more than limit specified as set out in the above said Rules. EXTRACT OF THE ANNUAL RETURN The details of the extract of the Annual Return in Form MGT-9 are given in Annexure-D to this Report. FIXED DEPOSITS During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. PERSONNEL RELATIONS Your directors hereby place on record their appreciation for the services rendered by the executives, staff and workers of the Company for their hard work, dedication and commitment. During the year under review, relations between the employees and the management continued to remain cordial. APPRECIATION Your directors thank the various Central and State Government Authorities and Agencies for the continued help and cooperation extended by them. The Directors gratefully acknowledge all stakeholders of the Company viz., customers, members, dealers, vendors and banks for their excellent support during the year. The Directors also place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued cooperation to the Company. For & behalf of the Board for SBEC Systems ( India) Limited Sd/- Vijay Kumar Modi Chairman Place: New Delhi Date: 12-08-2015 |