DIRECTORS' REPORT To, The Members, 1.Your directors hereby present the 21st Annual Report along with audited statement of accounts of the Company for the year ended 31st March, 2015. 2. DIVIDEND In view of losses incurred by the Company during the current financial year, your directors do not recommend declaration of any dividend for the year 2014-2015. 3. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company which the financial statement relates and the date of the report. 4. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs) Outstanding FCCBs amounting to US$ 7.5 million were due for redemption on 23rd November, 2011 at a premium equal to 145.54% of the outstanding principal amount i.e. @ US$ 7,277. Pending redemption, a winding up petition has been filed against the Company by the trustees on behalf of FCCB holders. However, in the hearing held on 16.12.2014, the High Court of Delhi and Hon'ble Company Court set aside the liquidation orders pronounced by the same court, in view of reference of the Company registered with BIFR. The Company Court also directed the petitioner viz. Bank of New York (BONY) to take any further action, as may be deemed fit by them, only after seeking prior permission of the BIFR for initiation of such proceedings. Therefore, the winding up petition preferred by trustees on behalf of FCCB holders was set aside. Status quo is being maintained as no further action has been initiated by BONY for any further proceedings. The Bonds are listed at Luxembourg Stock Exchange. 5. GLOBAL DEPOSITORY RECEIPTS (GDRs) The Global Depository Receipts issued by the Company during the financial year 2006-2007 are listed at Luxembourg Stock Exchange. There are GDRs outstanding which represents 301,750 equity shares of Rs.2/- each as on 31st March, 2015. 6. FUTURE OUTLOOK During the year under review, your Company consolidated its position further in the industry through optimum capacity utilisation and new products launches as per evolving industrial standards. To keep abreast with the latest trends in the industry, your Company was also vigilant about technological upgradation of its production facilities, with the aim of improving assets performance and cost competitiveness. The domestic Optical Fibre Cables industry is expected to grow at a good pace but competitive conditions are likely to persist over the medium-term in the Power Cable segment. The Company's focus in future, shall be to sustain momentum in the business segments namely, Optical Fibre and Copper Telecom Cables, power cables and railway signalling cables, etc. by leveraging its inherent strength of products development as per evolving industrial standards and superior project execution capabilities to drive both the short term and long term growth. 7. TRANSFER TO RESERVES In view of losses incurred by the Company during the current financial year, your Company do not proposes to transfer funds to the General Reserves. 8. PUBLIC DEPOSITS During the financial year 2014-2015, your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. 9. BOARD OF DIRECTORS In compliance with the provisions of Section 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. S.P.S. Dangi, Mr. Satya Pal and Mr. Vijay Bhushan were appointed as Independent Directors on the Board of Directors of your Company at the 20th Annual General Meeting held on 26th September, 2014, to hold office upto 5 (Five) consecutive years i.e. upto 31st March, 2019. Further, in accordance with the provisions of the Section 152 of the Companies Act, 2013 read with Articles of Association of the Company, Mr. Sanjay Aggarwal, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment as a Director. The Board of Directors of the Company in their meeting held on 30th January, 2015 appointed Mrs. Malini Gupta as an Additional Director. Pursuant to Section 161(1) of the Companies Act, 2013, she will hold the office as Director up to the date of the ensuing Annual General Meeting. The Company has received notice under Section 160 of the Companies Act, 2013 proposing her candidature as Director. In terms of Section 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, the independent directors of the Company will have to be appointed by the members for a term upto five years, and no independent director shall be liable to retire by rotation. Mrs. Malini Gupta has given declaration to the Company under Section 149(6) of the Companies Act, 2013 that she qualifies the criteria of independence. Accordingly, it is proposed to appoint her as an Independent Director not liable to retire by rotation for a term of five years upto 31st March, 2020. In compliance with Clause 49 of the Listing Agreement, brief resume(s) of the director proposed to be appointed/ reappointed, the nature of their expertise in specific functional areas, names of the companies in which they hold directorships and memberships/chairmanships of Board Committees, shareholding and relationships between directors inter-se, are forming part of the Notice of Annual General Meeting. 10. DECLARATION OF INDEPENDENCE Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. 11. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, your Directors hereby confirm that: i) In the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any; ii) They had 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; iii) They had 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; iv) They had prepared the annual accounts for the financial year ended 31st March, 2015 on a 'going concern' basis; v) They had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and vi) They had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 12. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has formed a policy to carry out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee, Stakeholders'/Investors' Grievance Committee, Risk Management Committee and Share Transfer & Transmission Committee. 13. REMUNERATION POLICY The Nomination and Remuneration Committee recommend the appointment of Director, and there appointment or re-appointment, based on their qualifications, professional experience, positive attributes, view points, skills and area of expertise and independence. 14. KEY MANAGERIAL PERSONNEL Mr. Sanjay Aggarwal, Chairman & CEO, Mr. Sandeep Aggarwal, Managing Director, Mr. Shambhu Kumar Agarwal, Chief Financial Officer and Ms. Tannu Sharma, Company Secretary are the Key Managerial Personnel of your Company under the provisions of Section 2(51) and Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 15. DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC. As required under Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of the ratio of the remuneration of each director to the median employee's remuneration and such other details as prescribed therein are given in "Annexure-A", which is attached hereto and forms a part of the Directors' Report. 16. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, 6 (Six) Board Meetings and 5 (Five) Audit Committee Meetings were convened and held. The details of these meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 17. AUDITORS M/s Jagdish Chand and Co., Chartered Accountants, New Delhi, (Firm Registration No. 000129N) the statutory auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Audit Committee had recommended their re-appointment. The certificate from the Auditors have been received to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013. 18. AUDITORS REPORT-CLARIFICATIONS AND EXPLANATIONS Auditors Report point No. 9 (a): Preparation of financial statements on going concern basis. The accompanying financial statements have been prepared on a going concern basis despite negative net worth, overdue in redemption of Foreign Currency Convertible Bonds (FCCBs). Your Company is confident that the Company will be able to generate profits in future years and meet its financial obligations. The management is also exploring inducting financial investor(s) in the Company and/or joint venture with foreign companies. The accompanying financial statements have been prepared on a going concern basis based on cumulative impact of the following mitigating factors: • Company has no over dues in payment of statutory dues or its trade creditors etc. • Company has again proposed the banks to reschedule term loans repayments. • Company and promoters have undertaken to raise and had raised adequate finances by way of disposal of assets and induction of fresh funds by promoters and/or promoter group companies. The management is also exploring inducting financial investors in the Company and/or joint venture with foreign companies. • Company has good order book position. Auditors Report point No. 9 (b): Payment of interest on borrowings. Interest on borrowing from banks has been provided based upon information available from banks and as per best estimates of the management. 19. COST AUDITORS The Board of Directors had appointed M/s. Jain Sharma & Associates, Cost Accountants as the Cost Auditor of your Company for the financial year 2014-2015 to conduct the audit of the cost records of your Company. As per Section 148 read with Companies (Audit and Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors of the Company has appointed M/s. Jain Sharma & Associates, Cost Accountants as the Cost Auditor of the Company for the financial year 2015-2016 on the recommendations made by the Audit Committee. The remuneration proposed to be paid to the Cost Auditor, would be Rs. 50,000/-(Rupees Fifty Thousand only) and out of pocket expenses, plus taxes. The Company has received a letter from their firm to the effect that their re-appointment would be within the limits prescribed under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013. The Cost Audit involves audit of the cost records relating to 'Electric Cables and Conductors' maintained by the Company. 20. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. A.K. Popli & Co., a firm of Company Secretaries in Practice, was appointed to conduct the secretarial audit of the Company for the financial year 2014-2015. The Secretarial Audit report for financial year 2014-2015 forms an integral part of the Annual Report as "Annexure-B" to the Board's Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 21. SUBSIDIARIES The Company does not have any Indian subsidiary Company. However, the Company has the following direct/ indirect wholly owned foreign subsidiaries: 1. Paramount Holdings Limited, Cyprus; 2. AEI Power Cables Limited, United Kingdom and 3. "06196375 Cables Limited" (formerly AEI Cables Limited), United Kingdom* Consolidated financials include audited financials of Paramount Holdings Limited, Cyprus and AEI Power Cables Ltd., United Kingdom for the year ended 31st March, 2015. *"06196375 Cables Limited" (formerly AEI Cables Limited), United Kingdom, a step down subsidiary of the Company, is under Administration w.e.f. 28th February, 2014. The details pertaining to subsidiaries are mentioned under the statement made pursuant to Section 129 of the Companies Act, 2013, which forms a part of this Annual Report. 22. REPORTING TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION {BIFR} Your Company has been registered with the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 vide case no. 77/2013, order dated 31st October, 2013. BIFR has restrained Company from disposing of or alienating in any manner any fixed assets of the Company without consent of BIFR. 23. MEASURES TAKEN FOR REVIVAL AND REHABILITATION OF THE COMPANY The Company has approached its bankers with restructuring request to convert the substantial part of loan into convertible securities. Apart from this the Company is exploring possibilities of new investors and joint venture with foreign companies. The Company is also taking several measures to reduce its cost. 24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as per the requirements of Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are annexed hereto and forms an integral part of the report. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal. 25. ISO CERTIFICATION The Company holds ISO 9001:2008 and ISO 14001:2004 certifications for both of its plants at Khushkhera, Rajasthan and Dharuhera, Haryana. 26. 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, names and other particulars in respect of employees of the Company are required to be attached to the Directors' Report. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and other entitled thereto, excluding the information on employees' particulars as there are no employees whose particulars are required to be disclosed in this report. 27. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. During the year 2014-2015, pursuant to Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, all Related Party Transactions were placed before the Audit Committee and also for the Board approval, wherever required. Prior/omnibus approval of the Audit Committee is generally obtained for the transactions which are of a foreseen and repetitive nature and these transactions are reviewed by the Audit Committee on quarterly basis. The policy on Related Party Transactions as approved by Board is uploaded on the Company's website www.paramountcables.com . The Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is set out as "Annexure-C" to this report. 28. LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by the Company are given in the notes to the financial statements. 29. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee and to the Chairman and Managing Director of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee and the Board. 30. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code. 31. EXTRACT OF ANNUAL RETURN In accordance with Sections 134(3)(a) and 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure-D". 32. RISK MANAGEMENT Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses the risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans. As per the requirements of Section 134(3)(n) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, your Company has constituted a Risk Management Committee to oversee the risk management efforts in the Company. The details of the committee along with its charter are set out in the Corporate Governance Report forming part of this report. There are some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this report. 33. CODE OF CONDUCT The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings/behaviours of any form and the Board has laid down the directives to counter such acts. The Code has been posted on the Company's website www.paramountcables.com . The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practice and in dealing with shareholders. All the Board Members and the Senior Management Personnel have confirmed compliance with the Code. All Management staff were given appropriate training in this regard. 34. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY The Company is not required to make expenditure on CSR, hence no CSR committee as per the prescribed format under Companies (Corporate Social Responsibility Policy) Rules, 2014, has been formulated. 35. VIGIL MECHANISM/WHISTLE BOWLER POLICY The Company has vigil mechanism policy to deal with instances of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to high standards of Corporate Governance and shareholders responsibility. The policy ensures that strict confidentiality is maintained while dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. Accordingly, the Board of Directors have formulated a Vigil Mechanism/Whistle Blower Policy which is in compliance with the provisions of Sections 177(9) and 177(10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy is also available on the website of the Company www.paramountcables.com . 36. INSURANCE All insurable interest of the Company including inventories, buildings and plant & machinery are adequately insured. 37. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of Section 125 of the Companies Act, 2013 {Erstwhile Section 205C of the Companies Act, 1956} read with Companies (Declaration and Payment of Dividend) Rules, 2014, the Company has transferred Rs.4,67,296/- to the Investor Education and Protection Fund. This amount was lying unclaimed/unpaid with the Company for a period of seven years after declaration of Dividend for the financial year ended 2006-2007. 38. LISTING OF SHARES The equity shares of the Company are listed at The Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The BSE & NSE have nation-wide trading terminals and therefore provide full liquidity to investors. The Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs) issued by the Company in the international market are listed at Luxembourg Stock Exchange. Equity shares of the Company had also been listed with the Calcutta Stock Exchange Ltd. However, the Company has applied for delisting on 03.03.2004 and the application is still pending for disposal at the exchange. 39. INDUSTRIAL RELATIONS Paramount is an equal opportunities employer. The Company do not discriminate on grounds of age, gender, colour, race, ethnicity, language, caste, creed, economic or social status or disability. The global workforce spreads across the continents forms the backbone of the entity. We handle global preferences and mindsets of both internal and external customers. The Company humbly acknowledge employees contributions with best compensation and benefits that appropriately reward performance. Pay revisions and other benefits are designed in such a way to compensate good performance of the employees of the Company and motivate them to do better in future. During the period under review, your Company enjoyed healthy, cordial and harmonious relationship with workers and employees at all levels. The enthusiasm and unstinting efforts of employees have enabled the Company to improve its position. 40. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT In compliance with the provisions of Clause 49 of the Listing Agreement, a separate section on Corporate Governance along with a certificate from the Auditors on its compliance, forms an integral part of this report. Further, Management Discussion and Analysis which includes detailed review of operations, performance and future outlook of the Company and its businesses forms a part of this report. 41. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: a) Issue of equity shares with differential rights as to dividend, voting or otherwise. b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme. c) Neither the Managing Director nor the Whole Time Director of the Company receives any remuneration or commission from any of its subsidiaries. d) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. e) During the year under review, there were no cases filed or reported pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 42. ACKNOWLEDGEMENT AND APPRECIATION Your Directors convey their thanks to customers, vendors, investors and banks for their continued support during the year. They also thank the various Central and State Government Departments, Organisations and Agencies for their continued help and all the co-operation extended by them. Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilisation of the Company's resources. The Directors wish to place on record their appreciation of the efficient and loyal services rendered by each and every employee, without whose whole-hearted efforts, the overall satisfactory performance would not have been possible. Your Directors look forward to a long term future with confidence. For and on behalf of the Board (Sanjay Aggarwal) Chairman & CEO Place: New Delhi Date : 12.08.2015 |