DIRECTORS' REPORT TO THE SHAREHOLDERS The Directors have pleasure in presenting their Report and the Audited Financial Statements of your Company for the year ended 31st March 2015. Company's Performance: Your Company has achieved a turnover of Rs. 2,11,440.84 lakhs for the year ended 31st March, 2015, as against the turnover of Rs. 1,80,098.61 lakhs for the previous year ended 31st March, 2014, the highlights of the financial results are as follows: Review of Operations: In order to complete in the changing market conditions, STL started adapting different strategic initiatives in its existing businesses. A focussed approach and unique strategy was adopted for each business division with the objective of achieving higher growth and profitability. Various strategic initiatives are also in pipeline to lead the divisions towards profitability and stability. Subsidiary Companies: Your Company has the following subsidiaries: A) Digitech Business Systems Ltd: The operations of M/s. Digitech Business Systems Limited have commenced in a small way. We have stepped up the marketing activities under the aegis of this Company and we hope to clock good turnover during the next year B) Telesuprecon Limited: M/s Telesuprecon Limited has branches in three countries viz., Malawi, Zambia and Kenya, providing telecom infrastructure services to Telecom operators. The Telecom Business in Africa was slowdown and many contracts were kept pending due to Global recession. We hope for the improvement of the situation during the next year. As per the law prevailing in Mauritius, financial statements of M/s Telesuprecon Limited are not required to be audited. C) STL Africa Limited: As of date the concentration is more on CAD/CAM contracts and Company is planning to enter into Execution Contracts across Eastern Africa and has already started working in this direction. Consolidated Financial Statements: As required under the Listing Agreements entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statement has been prepared in accordance with the relevant accounting standards as prescribed under Section 133 of the Companies Act, 2013. The consolidated financial statement discloses the assets, liabilities, income, expenses and other details of the Company and its subsidiaries. As per the provisions of Companies Act, 2013 annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies' investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at its Head Office in Hyderabad and that of the subsidiary companies concerned. A gist of the financial performance of the subsidiaries in the prescribed Form AOC-1 is enclosed to this Annual Report. Particulars of Loans, Guarantees or Investments Particulars of Loans, Guarantees and Investments as required under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the Financial Statements. Deposits: The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 and as such, no amount of principal or interest was outstanding as on 31st March, 2015. Industrial Relations: Your directors are happy to report that during the year there were very cordial and extremely good industrial relations at all levels. Meetings: During the year under review 6 (Six) board meetings were held on 30th May 2014, 14th July 2014, 12th August 2014, 28th August 2014, 11th November, 2014 and 14th February 2015. The maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013. Directors: During the year under review, the members at the AGM held on 30th September, 2014 appointed Shri A. S. Anand Kumar, Shri M.V. Bhaskara Rao and Shri L V Rao as Independent Directors under Section 149 of the Act and Clause 49 (revised) of the Listing Agreement to hold office for 5 (five) consecutive years. The Board has appointed Smt B. Sandhyasri, as Additional Director (Independent Director) w.e.f. 30th March, 2015 and now it is recommended her appointment to be regularized and be appointed for a period of 5 (Five) years i.e., from 30th March, 2015 to 29th March, 2020. The Board of Directors of the Company, on the recommendation of the Nomination and Remuneration Committee, appointed Shri G. Srinivasa Raju as Managing Director of the Company with effect from 28th May, 2015, subject to the approval of the members, at the forthcoming Annual General Meeting. In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company Shri. S Hanumantha Rao, Director of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Shri Y. S. Chowdary, the Chairman and Promoter-Non Executive Director of the Company resigned from the Board of Directors with effect from 15th October, 2014. The Board placed on record its appreciation for the outstanding contributions made by Shri Y. S. Chowdary during his tenure. Shri Y. Kamesh has tendered his resignation on completion of his term as Managing Director from the Board of Directors with effect from 26th May, 2015. The Board placed on record its appreciation for the outstanding contributions made by Shri Y. Kamesh during his tenure. The Resolutions proposing their reappointment/ appointments as Independent Directors will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they continue to meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of this Annual Report. The following persons are Key Managerial Personnel of the Company: Shri G. Srinivasa Raju, Managing Director Smt S. Kalyani, Vice-President (Finance) Shri P. Apser Hussen, Company Secretary & Compliance Officer. During the year the term of Shri Y. Kamesh as Managing Director has completed and thereafter he has resigned from the Board of Directors w.e.f 27th May 2015. Shri L. Narasimha Rao, Company Secretary has resigned w.e.f 23rd April, 2015. Related Party Transactions The Board of Directors, on recommendation of the Audit Committee framed a policy for Related Party Transaction which includes matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report. The Policy is also posted in the Investors section of the Company's website. All Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The requisite details of the related party transactions entered into during the financial year are provided in Annexure (I) included in this to this report. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, where ever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis. None of the Directors, other than to the extent of their shareholding, receipt of remuneration / commission, has any pecuniary relationships or transactions vis-a-vis the Company. Audit Committee Your Company has constituted an Audit Committee as per the requirements of section 177 of the Companies Act, 2013. The details of the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act, 2013, is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Audit Committee. Sexual Harassment Policy The Company as required under the provisions of "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto. In the year under review, the Company has not received any complaint under the said Policy. Corporate Social Responsibility The Board of Directors, on recommendation of the Corporate Social Responsibility Committee framed a Corporate Social Responsibility Policy in consonance with Section 135 of the Companies Act, 2013 read with the rules framed there under duly indicating the activities to be undertaken by the Company as specified in the Schedule VII of the Companies Act, 2013. The Corporate Social Responsibility Policy is posted in the Investors section of the Company's website. The report on CSR activities is annexed herewith as Annexure (II) and forms part of this report. Risk Management The Risk Management programme at STL is focused on ensuring that risks are known and addressed. The Board of Directors, on recommendation of the Audit Committee, established a robust Risk Management framework by framing a Risk Management Policy to deal with all risks including possible instances of fraud and mismanagement, if any. The Risk Management Policy details the Company's objectives and principles of Risk Management along with an overview of the Risk Management process, procedures and related roles and responsibilities. The Board is of the opinion that there are no elements of risks that may threaten the existence of the Company. The board periodically tracks the progress of implementation of the Risk Management policy. Directors' Responsibility Statement: Directors' Responsibility Statement as required under the provisions of Section 134(3)(c) of the Companies Act, 2013, is given in the Annexure (III) attached hereto and forms part of this Report. Statutory Auditors: The Statutory Auditors of the Company, M/s. Venugopal & Chenoy, Chartered Accountants, (Firm Regn. No.004671S), were re-appointed by the members at the 7th Annual General Meeting held on 30th September, 2014 for a term of 3(Three) years till the conclusion of 10th Annual General Meeting to be held in 2017. Members are requested to ratify the same at the ensuing Annual General Meeting of the company, in accordance with section 139 of the Companies Act 2013. The Audit Report issued by the Statutory Auditors for the financial year ended 31st March, 2015 forms part of this Report. There are no qualifications, reservations or adverse remarks made by the Statutory Auditors which requires explanation or comments from the Board. Cost Auditors: M/s. Nageswara Rao & Co., Cost Accountants, (Member Ship No Firm No.000332) Hyderabad were re-appointed as Cost Auditors of the Company for the Year 2015-16 as per the provisions of the Companies Act, 2013 and the rules made there under. The Cost Auditors has submitted the report along with their observations and suggestions, and Annexure to the Central Government/stipulated authority within stipulated time period. Members are requested to ratify the remuneration payable to the Cost Auditors at the ensuing Annual General Meeting of the Company, in accordance with section 148 of the Companies Act, 2013. Secretarial Audit: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules framed there under, the Board of Directors, on recommendation of the Audit Committee, appointed Shri Y. Ravi Prasada Reddy, Practicing Company Secretary (CP. No 5360) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report issued by Shri Y. Ravi Prasada Reddy Practicing Company Secretary for the financial year ending 31st March, 2015 is given in the Annexure (IV) attached hereto and forms part of this Report. There are no qualifications, reservations or adverse remarks made by the secretarial auditor and the observation made is self explanatory and requires no further explanation from the Board. Extract of Annual Return: Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed there under, the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure (V) and forms part of this Report. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are given in the Annexure (VI) attached hereto and forms part of this Report. Environment and Social Obligation: The Company's plants comply with all norms set up for clean and better environment by the competent authorities. The Company undertakes regular checks / inspections including certification for the maintenance of the environment. The Company values environmental protection and safety as the major considerations in its functioning. Particulars of Employees: The information required pursuant to the provision of Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, are set out in Annexure (VII) of this Report. Vigil Mechanism: The Board of Directors, on recommendation of the Audit Committee, established a vigil mechanism by framing a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Vigil Mechanism framework ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination shall be meted out to any person for a genuinely raised concern. The designated officer/ Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud/ misconduct. Remuneration Policy: The Board of Directors, on recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy for selection, appointment and remuneration of Directors, KMP and Senior Management and matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report. The Policy is also posted in the Investors section of the Company's website www.sujana.com. Board Evaluation: The Board of Directors evaluated the annual performance of the Board as a whole, its committee's and the directors individually in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement in the following manner: • Structured evaluation forms, after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance, for evaluation of the performance of the Board, its Committee's and each director were circulated to all the members of the Board along with the Agenda Papers. • The members of the Board were requested to evaluate by filling the evaluation forms and the duly filled in evaluation forms were required to be sent to the Company Secretary in a sealed envelope or personally submitted to the Chairman at the concerned meeting. • The Board also provided an individual feedback to the concerned director on areas of improvement, if any. A separate meeting of Independent Directors was held on 30th March, 2015 to evaluate the performance evaluation of the Chairman, the Non Independent Directors, the Board and flow of information from management. Human Resource Management: Human Capital has gained prime importance in last few years. Our Company believes that the human capital is of utmost importance to sustain the market leadership in all product segments and also to capture new markets. We have changed the Organisation Structure to optimise best resources & to leverage the market potential. We have identified the high Performers and rewarded them appropriately, which has helped to achieve better employee engagement. Dividend: As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS), your Company is required to pay the dividend of Rs. 2,96,800/- (Previous year Rs. 2,96,800/) which represents 1% on 2,96,795 Cumulative Redeemable Preference Shares(CRPS) of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the year under review, Further your Company also provided a provision of dividend tax to the extent of Rs.1,26,100/- (Previous year Rs.75,660/-). With an unprecedented raise costs and interrupted supplies and power cuts, operations are severely hit. The Company's operations also hampered during the year. As a result the profit of the Company was declined and your director's are not proposing any equity dividend during the year. Quality: Your Company accord to high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard. Material Changes and Commitments: During the year, the Board of Directors has considered opportunities to cede some of the business verticals of the Company i.e '(a) Unit -1: Plot No. 9, Survey No. 172/E,U,UU, IDA Bollaram, Jinnaram Mandal, Medak Dist.Telangana; (b)Unit - II: Plot No. 10 A, Survey No.172, IDA Bollarum Jinnaram Mandal, Medak Dist., Telangana; (c) Unit - III: Plot No. 128/A, Survey No. 172/B, IDA Bollaram, Jinnaram Mandal, Medak Dist, Telangana; (d) Unit - V: Survey No. 321, Turkala Khanapur, Hathnoora Mandal, Medak Dist, Telangana'. It was proposed to hive-off/sell/transfer the above business verticals to M/s. Agarwal Steel Structures (India) Private Limited (Buyer). The Company has entered Business Transfer Agreement (BTA) with Buyer. This hive-off is subject to the approval of share holders (the Company obtained the same, NOC from bankers (the Company is in the process of obtaining) Competition Commission of India (CCI) (Buyer is under process of obtaining the same). Details of significant and material Orders passed by the regulators or courts or tribunals impacting the going concern status of the Company and the Company's operations in future: There are no significant and material orders passed during the year. Internal Control Systems and their adequacy: Your Company has an effective Internal Control System to prevent fraud and misuse of Company's resources and protect shareholders' interest. Your Company has an independent Internal Audit Department to monitor and review and focus on the compliances of various business processes. The internal audit report alongwith audit findings and tracking of process improvements & compliances is presented for review to the Audit Committee of Board of Directors. Corporate Governance: Your Company has complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. A report on the Corporate Governance practices, the Auditors' Certificate on compliance of mandatory requirements thereof and Management Discussion and Analysis are given as Annexure (VIII) & (IX) to this report. Acknowledgment: The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Suppliers and other Business Associates. The Directors also wish to place on record their appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company. The Directors also thank the Governments of various Countries, Government of India, State Governments in India and concerned Government Departments/Agencies for their co-operation. By order of the Board G.Srinivasa Raju Managing Director S.Hanumantha Rao Director Place: Hyderabad Date : 12th August, 2015 |