DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the Twenty Ninth Report of your Company along with the Audited Statement of Accounts for the year ended 31st March, 2015. STATEMENT OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK During the year under review, the total income of your Company increased to Rs. 1795.87 lakhs from Rs. 1701.16 lakhs as compared to previous year. The said total income includes an additional contribution of turnover from new venture of handling services division of the Company of Rs. 174.11 lakhs during the year. During the year, the net profit before interest and tax from steel manufacturing division decreased to Rs. 26.22 lakhs from Rs. 43.18 lakhs as compared from the previous year. However during the year, the new venture of handling services business had contributed an additional net profit before interest and tax of Rs. 84.27 lakhs. The other income comprising the return from investments activities has registered a net profit before interest and tax of Rs. 70.32 lakhs as compared to Rs. 22.57 lakhs in the previous year. The Management System of your Company is in compliance with the requirement of international quality standard ISO 9001 : 2008 and it has been duly certified by the JAS-ANZ, an International Certification Agency. Your Directors has explored the handling services business and foresees the activities as profitable venture for future year business of the Company. Your directors are hopeful to record growth in the profitability by earning from handling services business as well as proper savings on account of overhead expenses in the current financial year. CHANGE IN NATURE OF BUSINESS There was no change in the nature of business of your company during the year. DIVIDEND Your Directors have not recommended dividend for the year ended 31st March, 2015. DEPOSITS FROM PUBLIC During the year under review, your Company did not invite / accept any Deposits from the public under section 73 and 74 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 1975. EXTRACT OF ANNUAL RETURN Pursuant to the Section 92(3) of the Companies Act, 2013 extract of the Annual Return is annexed to this report as Annexure I and form part of the Annual Report. NUMBER OF BOARD MEETINGS During the Financial Year 2014-15, 5 (Five) Board Meetings were held and the gap between two meetings did not exceed four months. The Board Meetings were held on 30.05.2014, 13.08.2014, 02.09.2014, 13.11.2014 and 12.02.2015. DIRECTORS & KEY MANAGERIAL PERSONNEL In terms of Section 149 of the Act, the Members, at their meeting held on 30th September, 2014, appointed the following as Independent Directors of the Company: • Mr. Pankaj Aggarwal • Mr. Chaitanya Dalmia • Mrs. Abhilasha Goenka The Company has received the declaration under section 149(6) of the Companies Act, 2013 from the Independent Directors of the Company. In terms of Section 203 of the Act, the following were designated as Key Managerial Personnel of your Company by the Board: • Mr. Ashok Kumar Modi, Managing Director • Mr. Pawan Kumar Modi, Joint Managing Director cum Chief Financial Officer In terms of section 196 of the Act, on recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on 3rd July, 2015 extended the terms of Mr. Ashok Kumar Modi, Managing Director and Mr. Pawan Kumar Modi, Joint Managing Director of the Company for five year i.e. upto on 3rd July, 2020. In accordance with the requirements of the Act and the Articles of Association of the Company, Mr. Vasu Modi retires by rotation and is eligible for re-appointment. During the year under review Mr. Anshuman Goenka, an Independent Director of the Company, had resigned w.e.f. 2nd September, 2014. Also Mrs. Abhilasha Goenka was appointed as an Independent Director of the Company w.e.f. 2nd September, 2014. AUDITORS & AUDITORS' REPORT A. Statutory Auditors M/s. R. K. Govil & Co., Chartered Accountants, Statutory Auditor of the Company, holds office till the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received letter from the auditor to the effect that their appointment, if made, would be within the prescribed limits under section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. B. Secretarial Auditors M/s. Deepak Bansal & Associates, Company Secretaries, were appointed as Secretarial Auditors to conduct Secretarial Audit of records and documents of the Company for financial year 2014-15. The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. The Secretarial Audit Report is given in Annexure II and form part of the Annual Report. C. Cost Auditors In terms of provision of section 148(1) of the Companies Act, 2013 read with rule 4 of the Companies (Cost Records and Audit) Amendment Rules, 2014, Company is not required to maintain cost records for the financial year 2014-15. However, in terms of provision of section 209(1)(d) of the Companies Act, 1956, applicable for the financial year 2013-14 for the product manufactured by the Company, the Company has filed the Cost Audit Report for the financial year 2013-14 on 25th September, 2014, within the prescribed time during the year under review. D. Internal Auditors Your Company has appointed M/s. B.R.Maheswari & Co., Chartered Accountants, New Delhi as Internal Auditors of the Company for the financial year 2015-16. EXPLANATIONS OR COMMENTS ON QUALIFICATION, RESERVATION OR ADVERSE REMARKS: a) By Statutory Auditors : There are no qualifications made by the Auditors in their Report which requires any explanation from the Board of Directors of the Company. The Notes to Accounts referred to in the Auditors' Report are self-explanatory and do not call for any further comments. b) By Secretarial Auditors : There were no comments in the Secretarial Auditors Report which requires any explanation from the Board of Directors of the Company. FRAUD Neither the Auditors nor the Secretarial Auditors have brought to the notice of the Audit Committee or the Board of Directors or the Central Government the occurrence or brewing of any fraud in the Company. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY There have been no material changes and commitments which can affect the financial position of the company between the end of the period under review and date of this report. AUDIT COMMITTEE The details pertaining to composition of Audit Committee are included in the Corporate Governance Report which forms part of this report. DETAILS OF SUBSIDIARY, JOINT VENTURES AND ASSOCIATE The Company does not have any Subsidiary Company or Joint Venture Company. The detail of Associate Company is given in Extract of Annual Return under Annexure I of this report. PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTY All related party transactions done by the Company during the financial year were at arm's length and in ordinary course of business. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for their necessary review and approval. During the financial year your Company has not entered into any material transaction (as per Clause 49 of the Listing Agreement) with any of its related parties which may have potential conflict with the interest of the Company at large. Disclosures pursuant to Accounting Standards on related party transactions have been made in the notes to the Financial Statements. PARTICULARS OF LOAN, GUARANTEES, SECURITIES AND INVESTMENTS The Company has not given any loan, guarantee, securities or made any investments under Section 186 of the Companies Act, 2013 INTERNAL FINANCIAL CONTROLS 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 Audit function 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. RISK MANAGEMENT The Board of Directors of your Company has, on recommendation of the Audit Committee framed and adopted a policy on Risk Management of the Company. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. WHISTLE BLOWER/VIGIL MECHANISM Your Company has an effective Vigil Mechanism system which is embedded in its Code of Conduct to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy. The Code of Conduct of your Company serves as a guide for daily business interactions, reflecting your Company's standard for appropriate behavior and living Corporate Values. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of the Company. NOMINATION & REMUNERATION POLICY The broad terms of reference of the Nomination and Remuneration Committee ("NRC") of the Company are as under: a) To identify suitable persons, interview them, if necessary, and recommend them as suitable candidates to fill up vacancies on the Board or augment the Board and Senior Management. b) To develop a policy to ensure the optimum composition of the Board of Directors ensuring a mix of knowledge, experience and expertise from diversified fields of knowledge i.e. Policy on Board Diversity. The Policy also intends to add professionalism and objectivity in the process of deciding Board membership. c) To lay down criteria for the evaluation of the Board. d) To formulate a criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a Policy thereon. e) To formulate criteria for evaluation of Directors. The company has adopted a Nomination and Remuneration Policy as recommended by "NRC" and the objective of Nomination and Remuneration Policy is to ensure rationale and objectivity in the remuneration of the Directors, Senior Management & employees of the Company. The Policy also intends to bring in a pragmatic methodology in screening of candidates who may be recommended to the position of Directors and to establish effective evaluation criteria to evaluate the performance of every Director and the overall Board of the Company. The Policy also serves as a guiding principle to ensure good Corporate Governance as well as to provide sustainability to the Board of Directors of the Company The policy as adopted is framed in accordance with provisions contained in sub-section (3) of Section 178 of the Companies Act, 2013. Provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not applicable to your Company as no Director of the Company is drawing remuneration from the Company during the year under review. None of the employees is related to any Director of the Company. FORMAL EVALUATION OF BOARD, COMMITTEES & DIRECTORS' PERFORMANCE Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. CONSERVATION OF ENERGY, TECHNOLOGLY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo for the year ended 31st March, 2015 are annexed as Annexure III and form an integral part of this report. PARTICULARS OF EMPLOYEES The information required under Rule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not required as there was no employee on the payroll of the Company receiving remuneration in excess of limit prescribed under the said rules. CORPORATE GOVERNANCE In terms of Circular Number CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014, issued by SEBI, the provision of clause 49 is not mandatory as paid-up share capital of the Company is less than Rs. 10 crore and net-worth of the Company is less than Rs. 25 crore, as on the last day of the previous financial year. Your Directors has voluntarily done compliance to the requirement set out by the Securities and Exchange Board of India's Corporate Governance practices and have implemented the prescribed stipulations. A Report on Corporate Governance annexed as Annexure V and Management Discussion & Analysis Report annexed as Annexure IV, in terms of Clause 49 of the Listing Agreement together with a Certificate from the Company Secretary in practice confirming compliance with the conditions of Corporate Governance form part of the Annual Report. CORPORATE SOCIAL RESPONSIBILITIES The provision of section 135 of the Companies Act, 2013 is not applicable on the Company as your Company did not meet any of the applicability criteria as specified under Companies (Corporate Social Responsibility Policy) Rules, 2014. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE, (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 Your company did not come across any complaints by any employees during the year under review relating to the sexual harassment. DIRECTORS' RESPONSIBILITY STATEMENT Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15. Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors in respect of the Audited Annual Accounts for the year ended 31st March, 2015, to the best of their knowledge and ability, hereby state and confirm that: (i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) They 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 ended on March 31, 2015 and of the profit of the Company for that period; (iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) They have prepared the annual accounts on a going concern basis. (v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. APPRECIATION & ACKNOWLEGEMENT Your Directors take this opportunity to express their appreciation for the co-operation and assistance received from the Central Government, the State Government, the Financial Institutions, Banks as well as the Shareholders during the year under review. Your Directors also with the place on record their appreciation of the devoted and dedicated service rendered by all the employees of your Company. For and behalf of the Board of Directors For NATIONAL GENERAL INDUSTRIES LIMITED Sd/- Ashok Kumar Modi Chairman and Managing Director Place : New Delhi Date : 03.09.2015 |