DIRECTORS' REPORT Dear Members, The Board of Directors of South India Projects Limited are pleased to present the Thirty Fourth Annual Report for the Financial Year ended 31st March, 2015, together with the Auditors' Report and Audited Accounts for the Financial Year 2014- 2015. FINANCIAL PERFORMANCE: During the year under review, your Company achieved revenue from operations of Rs. 186.92 Lacs as against Rs. 70.62 Lacs in the Previous Year and recorded Profit before Finance Cost, Depreciation and Taxation of Rs. 164.32 Lacs as against Rs. 59.91 Lacs in the Financial Year 2014- 2015. The financial year 2014-15 was a significant year for the Company in terms of growth in profitability, the net profit during the year has grown around by 207.60% over the previous financial year. DIVIDEND & RESERVES: The Board of Directors of your Company has decided not to declare any Dividend during the Financial Year so as to retain the earnings for better working in the future. During the Financial Year under review, your Company transferred a sum of Rs. 79.25 lakhs to Special Reserve as per Section 45-IC of RBI Act, 1934 for the Financial Year ended 31.03.2008 to ended 31.03.2013 and for the Financial Year ended 31.03.2015, as the Company inadequately did not transferred the required surplus reserves figures to the aforementioned Special Reserve. CHANGES IN SHARE CAPITAL: During the Financial Year 2014-15, the total issued and paid-up Capital of the Company has increased from Rs. 1,99,56,500/- to Rs. 3,03,33,880/- of face value of Rs. 10/- each pursuant to allotment 10,37,738 bonus shares of face value of Rs. 10/- each on 21.05.2014 at a ratio of 13:25 (i.e thirteen equity shares for every twenty five equity shares already held) to the members of the Company. PUBLIC DEPOSITS: Your Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES: Your Company do not have any Subsidiary Company, Joint Venture Or Associate Companies as on the date of the Balance Sheet. LISTING: The Company received the listing approval from the BSE Limited vide their Notice No. 20150119-19 dated 19th January, 2015 for the enlistment of entire equity and paid-up share capital of 30,33,388 equity shares of the face value of Rs. 10/-each of the Company on the BSE Limited.Thus, the equity shares of the Company are presently listed on both The Calcutta Stock Exchange Ltd. ["CSE"] and BSE Limited ["BSE"] and the listing fees for the Financial Year 2015- 2016 have already been paid to the CSE and for the BSE it is yet to be paid. STATE OF THE COMPANY'S AFFAIRS AND FUTURE OUTLOOK: The Company is solely concentrating in the Non- Banking Financial Company segment and there has been no change in the business of the Company during the financial year ended 31st March, 2015. INDUSTRY SCENARIO: NBFCs play a vital role in the financial sector of our economy along with other financial institutions. Over the years, due to their strategic management practices and refined operational techniques coupled with lower costs of delivery, lower restrictions on customers etc., have led to it being an alternate choice and at times the first choice for several customers, who need financing. While the RBI has made regulations stringent for the NBFCs, it has also recognized the utility of the NBFCs and thereby made them eligible to set up Banks and also act as an extension of Banks, where the Banks cannot reach. Due to the increase in finance space by NBFCs, the RBI's surveillance has increased. Through its various regulatory measures NBFCs are brought under stricter supervisory regime of RBI. While several steps are being taken to increase the role that the NBFCs play, norms are being strengthened to ensure that there is a strong, transparent and robust non banking financial sector. MATERIAL CHANGES AND COMMITMENTS: No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statement relates and the date of this report except for the below-mentioned information therein: - Open Offer for acquisition of equity shares of the Company: Mr. Joseph Sudheer Reddy Thumma and Mr. Jagan Mohan Reddy Thumma (the "Acquirers") have entered into Share Purchase Agreement dated 08.04.2015 with the Present Promoters/ Promoter Group of the Company to acquire in aggregate 12,29,346 equity shares of Rs. 10/- each representing 40.53% of the total equity and voting share capital of the Company at a price of Rs. 25/- per fully paid-up equity share, requiring them to make an Open Offer for 26.00% of the equity and voting share capital of the Company in compliance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011. However, the Open Offer is subject to RBI, SEBI and other Statutory approvals and hence the approval have not yet been received. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013: The Company is committed to provide a safe and conducive work environment to its employees. During the year under review, no case of sexual harassment was reported. CORPORATE SOCIAL RESPONSIBILITY (CSR): Since your Company does not fall under the threshold laid down in section 135 of the Companies Act, 2013, the provision of section 134(3)(o) of the Companies Act, 2013 is not applicable and no disclosure is required by the Board. GENERAL RESULTS: During the year under review the funds of the Company were deployed in the Stock Market and other fixed interest beating instruments which have been reflected in the Accounts. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:Pursuant to the allotment of 10,37,738 bonus shares on 21.05.2014, the Corporate Governance is applicable to the Company w.e.f Financial Year 2014-15. Accordingly, your Company is committed to maintain the highest standards of ethics and governance, resulting in enhanced transparency for the benefit of all stakeholders. Further, the SEBI vide circular no. CIR/CFD/POLICY CELL/7/2014 dated 15th September 2014 has prescribed certain requirement for paid up share capital and its net-worth as compliance for clause 49 of the listing agreement. Since the paid up share capital of your Company and its net-worth was below the prescribed limit w.e.f. 01.10.2014; the compliance of clause 49 of the listing agreement is not mandatory on the Company in the financial year 2014-2015. Accordingly, a separate section on Management Discussion and Analysis on Corporate Governance, a Report on the composition of the Committee for Corporate Governance (as applicable for the part of the year) are annexed to this report as Annexure A & Annexure B. The Company has adopted Code of Conduct, which is applicable to the Board members and senior management, in accordance with the recently enacted statutory changes as applicable to the Company w.e.f Financial Year 2014-15. DIRECTORS: At the ensuing Annual General Meeting, Shri Aakash Tantia, Director retire by rotation in terms of the Articles of Association of the Company and being eligible, offers himself for reappointment. During the Year, the Board of Directors appointed Mr. Sanjay Kumar Mohta and Mrs. Nita Agarwal as Independent Director of the Company on 05.02.2015 and 20.03.2015 respectively as an Additional Directors of the Company. In terms of Section 149 of the Companies Act, 2013 (to the extent notified) the Board proposes appointment of Mr. Sanjay Kumar Mohta and Mrs. Nita Agarwal who are Independent Directors as Non Rotational Directors for a period of five years at the ensuing Annual General Meeting. A brief resume of Director(s) retiring by rotation seeking appointment/ re- appointment at the ensuing Annual General Meeting, nature of their expertise in specific functional areas and names of companies in which they hold Directorship and/or Membership/Chairmanship of Committees of Board, as stipulated under the then clause 49 of the Listing Agreement with the Stock Exchanges, shall be accompanied to the notice for the ensuing 34th Annual General Meeting. DIRECTORS’ RESPONSIBILITY STATEMENT: Pursuant to Section 134 of the Companies Act, 2013 the Board of Directors here by state and confirm that:- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; The Directors had selected such accounting policies and applied consistently and have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31.03.2015 and of the profit of the Company for the year ended 31.03.2015; 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; The Directors had prepared the annual accounts on a going concern basis; 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; and 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. DECLARATION BY INDEPENDENT DIRECTORS: Mr. Amitabh Kejriwal, Mr. Pradeep Chhotaria, Mr. Premjeet Singh, Mr. Sanjay Kumar Mohta and Mrs. Nita Agarwal are Independent Directors on the Board of your Company. These Non-Executive Independent Directors fulfill the conditions of Independence specified in Section 149(6) of the Companies Act, 2013 and Rules made thereunder and meet with the requirement of Clause 49 of the Listing Agreement entered into with the Stock Exchanges. A format letter of appointment to Independent Director as provided in Companies Act, 2013 and the Listing Agreement has been issued and disclosed on the website of the Company viz. www. www.southindiaprojectslimited.in. Further,the Independent Directors of your Company, comprising of Mr. Amitabh Kejriwal, Mr. Pradeep Chhotaria and Mr. Premjeet Singh in the meeting held on 18.02.2015 has reviewed performance evaluation of Non-Independent Directors of the Company and other agendas in line with the requirement of Clause 49 of the Listing Agreement read with applicable provisions of Schedule IV of the Companies Act, 2013 were transacted thereat. STATUTORY AUDITORS,THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS: In the last AGM held on 29.09.2014, M/s. S. K. Soni & Co., Chartered Accountants, have been appointed as the Statutory Auditors of the Company for a period of three years. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. Further, the report of the Statutory Auditors along with notes to Schedules is enclosed to this report. The Auditors' Report is self-explanatory and therefore does not call for any further comments. WHISTLE BLOWER POLICY/ VIGIL MECHANISM SYSTEM: The Company as per the section 177 of the Companies Act, 2013 and applicable clause of the Listing Agreement formulated the Vigil (Whistle Blower) Mechanism which aims to provide a channel to the Directors and employees to report to the management instances of unethical behavior, actual or unsuspected fraud or violation of the Company’s code of conduct. The policy provides adequate safeguard against victimization of employees and Directors who avail of Whistle Blower/Vigil Mechanism and also provide for direct access to the Chairman of the Audit Committee etc. EXTRACT OF ANNUAL RETURN: Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is enclosed as Annexure C. SECRETERIAL AUDIT: In terms of Section 204 of the Act and Rules made there under, M/s. RBM & Associates, represented by Radhaballav Mandal , Practicing Company Secretary, had been appointed Secretarial Auditor of the Company. The Secretarial Audit Report, enclosed as Annexure D is self-explanatory and does not call for any further comments. PARTICULARS OF LOANS,GUARANTEES OR INVESTMENTS: Loans and advances balances are subject to confirmation by the respective parties and the details of guarantees and/or security in connection with loans to other body corporates or persons are given in notes to the Financial Statements. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year ended 31st March, 2015 were on an arm’s length basis and were in the ordinary course of business. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted. Further, there are no materially significant related party transactions during the Financial Year under review 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. Thus, disclosure in Form AOC-2 is not required, marked as “Annexure E”. PARTICULARS OF EMPLOYEES: During the year under review, None of the employees has received a remuneration exceeding the limit specified under Section 197 of the Companies Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 . PERFORMANCE EVALUATION: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Board Committees. A structured questionnaire was prepared after circulating the draft forms, 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. The performance evaluation of the Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process. COMPANY’S POLICY ON APPOINTMENT AND REMUNERATION In accordance with Section 178 of the Companies Act, 2015, the Board of Directors have adopted a Policy on Board Diversity, Director Attributes and the Remuneration. The Policy of Nomination and Remuneration Committee has been framed to encourage diversity of thought, experience, knowledge, perspective, age and gender in the Board. The Remuneration Policy for Directors, Key Managerial Personnel and all other employees is aligned to the philosophy on the commitment of fostering a culture of leadership with trust. The Remuneration Policy aims to ensure that the level and composition of the remuneration of the Directors, Key Managerial Personnel and all other employees is reasonably sufficient to attract, retain and motivate them to successfully run the Company. The Details of Remuneration paid by the Company is given in MGT- 9 of the Annual Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS: There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The Company is a Non Banking Financial Company and therefore information relating to Conservation of Energy and Technology Absorption are not applicable. The Company has neither earned nor used any foreign exchange during the Financial Year under review. 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, Officers 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, Officers 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 Board of Directors and the designated employees have confirmed compliance with the Code. ACKNOWLEDGEMENT: Your Directors wish to place on record their appreciation of the contribution of employees at all levels. Your Directors also take this opportunity to thank the Company’s Bankers, Shareholders and all others concerned for their valuable support and co-operation extended to the Company. For and on behalf of the Board |