BOARD'S REPORT Your Board has the pleasure in presenting the Twenty Third Annual Report of Ovobel Foods Limited (the Company) for the year ended 31st March, 2015. 1. DISCLOSURE UNDER SECTION 92(3) OF THE COMPANIES ACT. 2013 (HEREINAFTER KNOWN AS THE "ACT") Disclosure under Section 92(3) of the Act that relate to the Extracts of Annual Return has been placed at Annexure I and forms part of this Board Report. 2.MEETINGS OF THE BOARD DURING THE FINANCIAL YEAR 2014-15: The Board duly met for 14 times during the year under review. 3.DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 134(5) of the Act, the Board, based on the representations received from the management, confirms that: a)In the preparation of the annual accounts, for year ended on 31.03.2015, the applicable accounting standards have been followed and that there are no material departures; b)The Board has selected such accounting policies and applied them consistently and made judgments and estimated 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 the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and d)The Directors had prepared the annual accounts on a going concerns basis. e)The directors 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. 4. DECLARATIONS BY INDEPENDENT DIRECTORS: Pursuant to Section 149(7) of the Act, Independent Directors of the Company have submitted their Declarations confirming about all the requirements as specified under Section 149(6) of the said Act. 5.COMPANY'S POLICIES ON APPOINTMENT OF DIRECTORS. REMUNERATION AND OTHER MATTERS: The Company shall, for the purpose of appointment of Directors, assess the current Board's skills, experience and expertise to identify the skills that would best increase Board effectiveness; assess the needs of the business currently and going forward to ensure that the Board is structured in a way that it has a proper understanding of, and competence to deal with, the current and emerging issues of the business; exercises independent judgment; encourages and enables the enhanced performance of the Company and can effectively review and challenge the performance of management. The details regarding the remuneration of all Executive, Non-Executive and Independent Directors are provided in Annexure 1 which is attached herewith to this Report. 6.STATUTORY AUDITORS: M/s. Guru & Jana, Chartered Accountants were appointed as statutory auditors by the company to hold office till the conclusion of ensuring Annual General Meeting, being eligible, offer themselves for reappointment for the Financial Year 2015-16. The Board recommends their re-appointment. 7.AUDITORS' REPORT: •Auditor's Comment: Point i.a) in the Annexure to Auditor's Report: The company has not maintained register for fixed assets showing full particulars, including quantitative details and situation of fixed assets. Directors' Reply: Your Directors hereby state that the Company shall take all the necessary steps to maintain a Register for Fixed Assets in the forthcoming years. •Auditor's Comment: Point ix) in the Annexure to Auditor's Report: The company had defaulted in repayment of dues to the financial institutions & during the current year, has settled the dues through Draft Rehabilitation Scheme. Directors' Reply: As stated by the Auditors, the company has settled the dues through Draft Rehabilitation Scheme. However, the scheme is still pending approval from the BIFR and hence once the scheme is approved, the settlement of dues would be resolved. 8.SECRETARIAL AUDITOR: Pursuant to the provisions of Section 204 of the Companies Act 2013, Mr. Rafeeulla Shariff, Practicing Company Secretary, was appointed as the Secretarial Auditor for conducting the Secretarial Audit for the Financial Year 2014-15. 9.SECRETARIAL AUDIT REPORT: Secretarial Auditor Report given by Mr. Rafeeulla Shariff, Practising Company Secretary, forms part of Annexure VI of the Board's Report for the Financial Year 2014-15. In the report issued by the Secretarial Auditor under Companies Act, 2013, the following qualifications / observations were made: Auditor's Comment: The Company has not appointed a Company Secretary as a Key Managerial Personnel pursuant to the provisions of Section 203 of the Companies Act, 2013. However before signing of this report, the Company has appointed Mr. Sutheja K.J as the Company Secretary with effect from 30th April, 2015. Directors' Reply: The Directors of the Company had taken necessary steps to appoint a Company Secretary as a result of which the Company has appointed a Company Secretary with effect from 30th April, 2015. Auditor's Comment: The Company has not appointed an Internal Auditor for the financial year for the purpose of Internal Audit pursuant to the provisions of Section 138 of the Companies Act, 2013. Directors' Reply: The Board hereby confirms that M/s Nara Hari and Raghavendra, Chartered Accountants are appointed as Internal Auditors of the Company with effect from 30th April, 2015 to comply with the provisions of Companies Act, 2013. Auditor's Comment: •The Company is suspended from trading of its equity shares at Bombay Stock Exchange Limited from 07th January, 2002 due to penal reasons. However, the Company is under the process of revocation of suspension from trading of its securities and before signing of this report the Company has submitted application for revocation to Bombay Stock Exchange Limited on 13th July, 2015. Directors' Reply: •The Company has submitted the application for revocation of suspension from trading of securities to Bombay Stock Exchange Limited on 13th July, 2015. The Board has been taking necessary steps in order to revoke the suspension. Auditor's Comment: •The Company is suspended from trading of securities at Calcutta Stock Exchange Limited. Directors' Reply: •The Board will take necessary steps in order to revoke the suspension from trading of securities at the Culcutta Stock Exchange Limited. 10.PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186: The Company had no transactions during the year 2014-15 falling under the purview of the provisions of Section 186 of the Companies Act, 2013. 11.PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: Company has adopted a framework and policy for approving relating party arrangements / transactions. Review of Related Party arrangements / transactions is carried by the Audit Committee at its meetings. Company has framed Related party Transactions Policy providing the framework for approval of related party transactions by the Audit Committee and Board. The details of the Related Party Transactions during the period under review are provided in Annexure 2 which forms part of Board Report. The policy on the Related Parties Transactions has been disclosed on the website of the Company. Below is the link of the website. http: //www.ovobelfoods.com/general-information/related-party-transaction/. 12.WHISTLE BLOWER POLICY / VIGIL MECHANISM: The Company has in place a Vigil Mechanism / Whistleblower Policy. The policy provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. None of the personnel of the Company has been denied access to the Audit Committee. Whistle Blower Policy has been disclosed on the website of the Company. Below is the link of the website. http://www.ovobelfoods.com/general-information/whistle-blower-policy/ 13.STATE OF COMPANY AFFAIRS OF THE COMPANY: The Revenue from Operations of the Company for the year under review was Rs. 9,82,965 (In 000's) in comparison to [previous year figure of Rs. 1,054,182 (In 000's)]. The Board promises to improve its performance in the forthcoming years. 14.RESERVES: The Directors are happy to mention that the Annual Audited Financial Statements of the Company for the year ended March 31, 2015 have reported a Net Profit of Rs. 92,149 (In 000's) and the entire amount of the profits have been transferred to Reserves. 15.DIVIDEND: Due to accumulated losses during the previous years, the Board does not recommend any dividend for the Financial Year 2014-15. 16.MATERIAL CHANGES POST END OF THE FINANCIAL YEAR: The Company has revised the estimated useful lives of its fixed assets with effect from April 01, 2014 as provided in Schedule II of the Companies Act, 2013. Accordingly, the net book value of the fixed assets as at April 01, 2014, is depreciated on a prospective basis over the remaining useful life, wherever applicable. This change in accounting estimate has resulted in increase in depreciation and amortization expenses for the year ended March 31, 2015 by Rs.177 (In 000's). 17.CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNINGS / OUTGO: a)Conservations of Energy With the increase in demand for the non-renewable energy resources such as water and electricity, the Company has been using Wood Fired Boilers in the factory which run on a fuel known as Briquettes (Agro waste) instead of electricity. The Briquettes fuel is made of saw dust, groundnut shell, coffee husk and tamarind shell. The consumption of the briquettes per hour is 450 kgs/hr and the consumption of agro waste is 925 kgs/hr. The Capacity of the boiler is 20,00,000 kcals/hr and the Company has invested Rs.35,03,000 towards it. b)Technology Absorption The Company continues to keep abreast the developments and seeks to implement the latest technology in the factory for the forthcoming years. However, there was no technology imported by the Company during the last three years. 18.CORPORATE SOCIAL RESPONSIBILITY (CSR): Company had incurred losses continuously in the immediate three preceding Financials years and hence the provisions of Section 135 of the Companies Act, 2013 is not applicable. 19.STATEMENT INDICATING FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND DIRECTORS: ii.CHANGE IN THE NATURE OF BUSINESS: There was no change in the nature of business of the Company during the period under review. iii.DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED DURING THE FINANCIAL YEAR: Pursuant to Section 149 of the Act, the Company during the period under review the Company has appointed Narendra Haldawar as Additional Director in the category of Independent Director of the Company with effect from 31st December, 2014. Further, Mr. Sudhir Kulkarni was appointed as the Chief Financial Officer of the Company with effect from 02nd March, 2015. iv.DETAILS RELATING TO DEPOSITS COVERED/ NOT COVERED UNDER THE COMPANIES ACT, 2013: There were no Deposits which are covered / not covered under the Companies Act, 2013. v.THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE: There were no such significant and material orders passed. vi.THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS: There were adequate internal financial controls with reference to the financial statements during the financial year. 20. MANAGERIAL REMUNERATION Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014: Your Board report that: •The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year was 11.3634:1 •The percentage increase in remuneration during the financial year of each: ¦Executive Director (including Chief Executive Officer); and ¦Chief Financial Officer and Company Secretary (or Manager, if any,) There was no increase in the remuneration of any Executive Director, Chief Financial Officer or Company Secretary of the Company and hence not applicable. •The percentage increase in the median remuneration of employees in the financial year is: Not applicable •The number of permanent employees on the rolls of company: 105 •The explanation on the relationship between average increase in remuneration and company performance: Not Applicable •Comparison of the remuneration of the Key Managerial Personnel against the performance of the company: Since the Company is still coping with the accumulated losses, the remuneration paid to its Managerial Personnel cannot be compared with the performance of the Company. However, the remuneration of the Key Managerial Personnel is reviewed from time to time based on their performance and contribution to the Company. •Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year: Currently, the trading of the securities of the Company in the Stock Exchange is suspended due to which the market value of its shares is unavailable. However, the Company has submitted application to the Bombay Stock Exchange for revocation of suspension of trading in securities of the Company. •Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Not Applicable •Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company: Since the Company is still coping with the accumulated losses, the remuneration paid to its Managerial Personnel cannot be compared with the performance of the Company. However, the remuneration of the Key Managerial Personnel is reviewed from time to time based on their performance and contribution to the Company. •The key parameters for any variable component of remuneration availed by the directors: There is no variable component of remuneration availed by the directors; •The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: there were no such employees in the Company who receive remuneration in excess of the highest paid director during the year. •Affirmation that the remuneration is as per the remuneration policy of the Company: Company affirms that the remuneration is as per the Remuneration policy of the Company. •No employee during the year- (i)Was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees; (ii)Was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month; (iii)Was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company. 21.SHARE CAPITAL: During the year, there was no change in the Share Capital of the Company. 22.PUBLIC DEPOSITS: The Company has not accepted any public deposits during the year. 23.SUBSIDIARIES: The Company does not have any Subsidiaries. 24.CORPORATE GOVERNANCE: Disclosures relating to Corporate Governance are placed at Annexure V and forms part of this Board Report. 2 5.ACKNOWLEDGEMENTS: The Directors wish to place on record their appreciation of the efforts and co-operation of the Company's employees, consultants, associates, auditors, solicitors, vendors, shareholders, bankers and business associates for their support to the company. For and on behalf of the Board Shanti Swarup Aggarwal Managing Director DIN: 00322011 Swapan Kumar Majumder Director DIN: 03178122 Place: Kolkata Date: 29th August, 2015 |