DIRECTORS' REPORT The Members of ECO RECYCLING LIMITED Your Directors are pleased to present the Twenty First Annual Report along with Audited Financial Statements of your Company for the Financial Year ended 31st March, 2015. The State of the Company's Affairs The previous year set the ball rolling for the Waste Management Companies in India with the announcement of Swachh Bharat Mission by 2nd October, 2019 (150th Birth Anniversary of Mahatma Gandhi), spending 2% for Corporate Social Responsibility which includes Environmental Projects, streamlining the present Rules & Regulations relating to Waste Management etc. E-waste being the most hazardous as well as most valuable waste caught attention of the Regulators, Municipal Authorities, Corporates, NGOs, Environmentalists and others for safe & secured disposal. In the light of the above and being the pioneer in the segment, your company is extremely confident of extra ordinary performance and growth both organically & inorganically in a short to medium term. Your Board has taken several initiatives to expand reach & presence to increase volume of infeed and enlarge customer base. 2. DIVIDEND Your Directors have not recommended any dividend for the financial year ended 31st March, 2015. 3. TRANSFERS TO RESERVES The Company has proposed to transfer 135 lakhs to the General Reserve out of amount available for appropriations. 4. 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; 5. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Since Recycling is the core activity of your Company, Section 134(3) of the Companies Act, 2013 read with the rules made thereunder, the clause relating to Conservation of Energy and Technology absorption is not applicable to your Company and hence the information required to be disclosed in the Board’s Report is not given. 6. FOREIGN EXCHANGE EARNINGS AND OUTGO (` in Lacs) The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows. 7. CHANGE IN THE NATURE OF BUSINESS There has been no change in the nature of business of the Exchange during the year under review. 8. ANNUAL RETURN The extract of annual return for the financial year 2014-15 is attached in Annexure I 9. FIXED DEPOSITS Your Company has not accepted any deposits within the meaning of Section 73(1) of the Companies Act, 2013 and the Rules made thereunder. 10. The details in respect of adequacy of internal financial controls with reference to the Financial Statements. A. Board Meetings The Board of Directors (herein after called as "the Board") met for 5 number of times during the Year under review. B. Change in Directors and key managerial personal The following directors were appointed during the financial year ended March 31, 2015: 1. Mr. Vijay Acharya has been appointed as Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 with effect from 08/01/2015 as an additional Director, Mr. Vijay Acharya will hold office upto the date of the ensuing Annual General Meeting. The Company has received notice as per the provisions of Section 160(1) of the Companies Act, 2013, from a member proposing his appointment as a Director. The Board of Directors recommends his appointment. 2. M r. Dattatraya Tri m bak Deval e has been appointed as Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 with effect from 16/05/2015 as an additional Director, Mr. Dattatraya Trimbak Devale will hold office upto the date of the ensuing Annual General Meeting. The Company has received notice as per the provisions of Section 160(1) of the Companies Act, 2013, from a member proposing his appointment as a Director. The Board of Directors recommends his appointment. 11. STATEMENT ON DECLARATION GIVE N BY THE INDEPENDENT DIRECTORS UNDER SECTION 149 (6) OF THE COMPANIES ACT, 2013: Pursuant to Section 1 49 (4) of the Companies Act, 2013 read with The Companies (Appointment and Qualifications of Directors) Rules, 2014 WEEE Recycle Nation's Health and Wealth the Central Government has prescribed that your Company shall have minimum two Independent Directors. All the above Independent Directors meet the criteria of 'independence' prescribed under section 149(6) and have submitted declaration to the effect that they meet with the criteria of 'independence' as required under section 149(7) of the Companies Act, 2013. 12. COMMITTEES OF BOARD: A. Nomination and Remuneration Committee: In accordance with Section 178 of the Companies Act, 2013 your Company has re-constituted a Nomination and Remuneration Committee consisting of 3 non-executive directors out of which not less than one-half are be independent directors. The Composition of the Committee is as under: Chairman: Mr. Srikrishna B., NonExecutive and Independent Director Members: 1) Mr. T. R. Rao, Non- Executive and Independent Director 2) Mrs. Aruna Soni, Executive Director. 3) Mr. Vijay Acharya, NonExecutive and Independent Director 4) Mr. Srikrishna B., Non-Executive and Independent Director The Nomination and Remuneration Committee has formulated policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under subsection (3) of section 178 and the policy formulated by the Committee is attached herewith in Annexure II. B. Audit Committee: Your Company under the provisions of Section 177 of the Companies Act, 2013 has re-constituted / constituted an "Audit Committee" comprising of minimum three directors with independent directors forming a majority. The Audit Committee acts in accordance with the Terms of Reference specified by the Board in writing. The Composition of the Committee is as under: Chairman: Mr. Srikrishna B. Members: Mrs. Aruna Soni, Mr. T. R. Rao, Mr. Srikrishna B. Secretary: The Company is in the process of appointing the Company Secretary The functions of the Audit Committee are broadly : (a) Overview of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. (b) Review and monitoring of internal control system and compliance of audit observations of the Auditors (c) Review of the financial statements before submission to the Board. (d) Supervision of other financial and accounting matters as may be referred to by the Board. (e) Reviewing, with the management, performance of statutory and internal auditors, and adequacy of internal control systems (f) Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as have post-audit discussion to ascertain any area of concern. (g) Reviewing the company's financial and risk management policies. (h) Overseeing vigil mechanism for adequ ate safegu ards ag ai n st victimization of persons who use such mechanism and make provision for direct access to the chairperson of the Audit Committee in appropriate and exceptional cases. 13. THE VIGIL MECHANISM; The Board of Directors of your Company has established a vigil mechanism and believes in promoting a fair, transparent, ethical and professional work environment. The Board of Directors of the Company has established a Whistle Blower Policy & Vigil Mechanism in accordance with the provisions of the Companies Act, 2013 and the Listing Agreement for reporting the genuine concerns or grievances or concerns of actual or suspected, fraud or violation of the Company's code of conduct. The said Mechanism is established for directors and employees to report their concerns. The policy provides the procedure and other details required to be known for the purpose of reporting such grievances or concerns. The same is uploaded on the website of the Company. 14. QUALIFICATION GIVEN BY THE AUDITORS A. QUALIFICATION GIVEN BY THE STATUTORY AUDITORS: 1) During the year 2014-15, the Company has not revised the useful life of the Fixed Assets as required by Schedule - II of the Companies Act, 2013, as a result its impact on the Balance Sheet and Statement of Profit and Loss account is unascertainable. 2) We draw attention to Note 33 of the Notes forming part of financial Statements regarding method of accounting of miscellaneous expenditure which are in our opinion is not in accordance with the Accounting Standard 26 " Intangible Assets" aggregating to Rs.3,919,517. 3) Company has not complied with the requirement of Gratuity as required under AS-15 and has not made any provision for the same, as a result its impact on the Balance Sheet and Statement of Profit and Loss account is unascertainable. Explanations or Comments By The Board On Every Qualification, Reservation Or Adverse Remark Or Disclaimer Made By Auditor 1. The same has been rectified in Quarter 1 of Financial 2015-2016 and the impact on Profit & Loss Account is negligible. 2. As regards to 2nd qualification on Miscellaneous Expenditure it is a call taken by the Management to amortize the said Miscellaneous Expenditure 3. As regards to 3rd qualification, the same has been rectified in Q1 of Financial year 2015-2016 & the Impact on Profit on Loss Account is negligible. B. QUALIFICATION GIVEN BY THE SECRETARIAL AUDITOR: Th e Com pan y was required to appoint an Internal Auditor within six months of the commencement of Companies Act, 2013 i.e. within six months from 1st April, 2014. However, as per the representation received from the management, Company has appointed Internal Auditors at the Board Meeting held on 14.02.2015 and they are in the process of filing of form MGT-14. Explanations or Comments By The Board On Every Qualification, Reservation Or Adverse Remark Or Disclaimer Made By Auditor 1. With regards to above qualification, we would like to state that the company has appointed internal auditor with effect from 14th February, 2015. 15. RISK MANAGEMENT: The Board of Director of your Company have identified industry specific risk and other external, internal, political and technological risk which in opinion of the board are threaten to the Company and Board has taken adequate measures and actions which are required to take for diminishing the adverse effect of the risk. 16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. 17. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS: During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest etc. The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. Having regard to the industry, size and nature of business your company is engaged in, the evaluation methodology adopted is, in the opinion of the Board, sufficient, appropriate and is found to be serving the purpose. 18. AUDITORS: M/s. GMJ & Co, Chartered Accountants, Statutory Auditors of your Company, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Auditors have given their consent in writing and have furnished a certificate to the effect that their re-appointment, if made, would be in accordance with the provisions of Section 139(1) and that they meet with the criteria prescribed under section 141 of the Companies Act, 2013. Yours Directors recommend their re-appointment in the ensuing Annual General Meeting. 19. SECRETARIAL AUDITOR Your Company has appointed M/s. Pramod S. Shah and Associates as a Secretarial Auditor of the Company, according to the provision of section 204 of the Companies, Act 2013 for conducing secretarial audit of Company for the financial year 2014 - 15. M/s. Pramod S. Shah and Associates have issue there Audit report is attached in Annexure III. 20. DISCLOSURE OF REMUNERATION PAID TO DIRECTOR AND KEY MANAGERIAL PERSONAL; Details of remuneration of each director to the median remuneration of the employees pursuant to section 197 read with rule 5 of the Companies, Act 2013 is attached to this report as ANNEXURE II. DETAILS OF REMUNERATION / COMPENSATION RECEIVED BY MANAGING / WHOLE TIME DIRECTOR FROM HOLDING / SUBSIDIARY COMPANIES - NIL 21. PARTICULARS OF EMPLOYEES: None of the employees of the Company is drawing remuneration in excess of the limits prescribed under Rule (5)(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 22. RELATED PARTY TRANSACTIONS The Company has entered in transactions with related parties in accordance with the provisions of the Companies Act, 2013 and the particulars of contracts or arrangements with related parties referred in Section 188(1), as prescribed in Form AOC-2 is appended as annexure IV of the rules prescribed in Chapter IX relating to Accounts of Companies Act, 2013, is duly entered in the register. 23. SEXUAL HARASSMENT Your Company has always believed in providing a safe and harassment free workplace for every individual through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. During the year ended 31 March, 2015, no complaints have been received pertaining to sexual harassment. 24. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to sub-section (5) of Section 134 of the Companies Act, 2013 and to the best of their knowledge and belief and according to the information and explanations obtained /received from the operating management, your Directors make the following statement and confirm that- (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 had 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 had prepared the annual accounts on a going concern basis; and (e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Acknowledgement Your Directors place on record their sincere gratitude for the assistance, guidance and co-operation the Company has received from all stake holders. The Board further places on record its appreciation for the dedicated services rendered by the employees of the Company. For and on behalf of the Board of Directors Chairman 14th August 2015 Mumbai |