DIRECTORS' REPORT To, The Members, Prag Bosimi Synthetics Limited (PBSL). Your Directors have pleasure in presenting the 23rd Annual Report together with audited accounts of the Company for the 18 months period ended on 31st March, 2015. COURSE OF BUSINESS: Your directors regret to inform you that during the period under review, your Company could not restart its operations, due to acute financial crisis, non-restoration of power supply and settlement with labour. However, your Company has made representation to Assam Industrial Development Corporation (AIDC) our joint sector partner for rehabilitation scheme which is under active consideration. We are regularly following up with AIDC and Government of Assam. Your Company has made settlement with Standard Chartered Bank who was holding OCCDs amounting to Rs. 11.34 crores plus interest amounting Rs. 3.41 crores totalling to Rs. 14.75 crores, at an amount of 20% of principal amount i.e. at Rs. 2.26 crores. Interest was fully waived. DIVIDEND: Due to inadequate profits your directors have not recommended any dividend for the current period. DIRECTORS AND KEY MANAGERIAL PERSONS: As per the provisions of the Companies Act, 2013 and the Articles of Association of the Company Shri. Devang Vyas, Director (DIN: 00076459) and Shri M.K. Das (DIN: 00179722), Director of the Company would be retiring by rotation and being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting (AGM). Pursuant to Clause 49 of the Listing Agreement, the detailed profile of the Directors retiring by rotation is provided in the Notice convening the Annual General Meeting. Mr. Devang H Vyas (DIN: 00076459), Mr. Rohit P Doshi (DIN: 00424996) and Mrs. Deepali Rajneesh Pathak were appointed as additional Directors of the Company on 15/ 05/2014, 15/05/2014 and 31/03/2015 respectively to hold office upto the date of ensuing Annual General Meeting. Mr. Rajesh Shetty was appointed as Company Secretary of the Company on 01-09-2014 in place of Mrs. Melvita Almeida, who resigned with effect from 25/07/2014. DECLARATIONS BY INDEPENDENT DIRECTORS: The Company has received declarations form all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence visa-vis the Company. TRANSFER TO RESERVES In view of loss incurred during the period under review, the Board of Directors has not recommended transfer of any amount to reserves. PUBLIC DEPOSITS: The Company has not accepted any Public Deposits during the period under review. DEPRECIATION ON PLANT & MACHINERY Depreciation is systematically allocated over the useful life of an asset as specified in part C of schedule II of Companies Act, 2013. MATERIAL CHANGES AND COMMITMENTS Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position, have occurred between the end of the financial period of the Company and date of this report. DIRECTORS' RESPONSIBILTY STATEMENT: Pursuant to Section 134(5) of the Companies Act, 2013, the Directors of your Company confirm that: a. in the preparation of the accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2015 and of the loss of the Company for that period; c. proper and sufficient care was taken 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 accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; BOARD MEETINGS: The Board of Directors met 12 times during the period ended 31st March, 2015 in accordance with the provisions of the Companies Act, 2013 and rules made there under. NOMINATION AND REMUNERATION COMMITTEE: The Nomination and Remuneration Committee of Directors as constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act. The composition of the committee is as under: 1. Mr.G. M. Das, Chairman, Independent Director 2. Mr. M.K. Das Director and 3. Mr. Rohit Doshi Independent Director. The Board has in accordance with the provisions of subsection (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. Major criteria defined in the policy framed for appointment of and payment of remuneration to the Directors of the Company, are as under: Minimum Qualification Positive Attributes Independence Experience RISK MANAGEMENT POLICY: The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/ strategic business plans and in periodic management reviews. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES: The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL: No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future. CORPORATE GOVERNANCE: Your Company affirms its commitment to Corporate Governance and is fully compliant with the conditions of Corporate Governance stipulated in Clause 49 of the Listing Agreement with Stock Exchanges. A separate section on compliance of Corporate Governance and a Certificate from the Auditor's firm and practising Company Secretary dated 30th May, 2015 in this regard are annexed hereto and forms a part of the Report. MANAGEMENT DISCUSSION AND ANALYSIS: The Management's Discussion and Analysis Report, as required under Corporate Governance, is forming a part of this report and gives a reflection of the current state of business. It also deals with opportunities, challenges and the outlook of the Company. CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES There are no transactions/contracts/arrangements entered by the Company with related party(ies) as defined under the provisions of Section 2(76) of the Companies Act, 2013, during the financial year under review. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the period under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls. LOANS, GUARANTEES, INVESTMENTS AND SECURITIES: During the period Company has given Corporate Guarantee in respect of its subsidiary namely Prag Jyoti Textile Park Pvt. Ltd. for raising funds to the tune of Rs. 22 crores. SUBSIDIARIES: The Company has 3 subsidiary companies; the consolidated accounts of these Subsidiary Companies are annexed to this report along with the statement pursuant to the Companies Act, 2013. Prag Jyoti Textile Park Private Limited has recently received approval from Central Government for setting up the Textile Park and we have taken necessary steps for implementation of the Textile Park. Since our subsidiary Prag Jyoti Textile Park Private Limited has now got approval for setting up the Textile Park, now our other subsidiaries namely Prag Bosimi Texurising Private Limited and Prag Bosimi Packaging Private Limited can commence commercial operations shortly. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO: The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure I which forms part of this Report.. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial period ended 31st March 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure II which forms part of this Report. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD: Attendance at the meetings, Participation and contribution, Responsibility towards stakeholders, Contribution in Strategic Planning, Compliance and Governance, Participation, Performance Evaluation and Updation of Knowledge are the criteria's for Performance Evaluation of Directors, Committee and Board. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014: The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial period under review has been marked as Annexure III. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE PERIOD ENDED 31ST MARCH 2015: The observations made by the Statutory Auditors in their report for the financial period ended 31st March 2015 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. SECRETARIAL AUDIT REPORT FOR THE PERIOD ENDED 31ST MARCH 2015: Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. CS Rakesh Kapur, Practicing Company Secretary had been appointed to issue Secretarial Audit Report for the period 13-15. Secretarial Audit Report issued by Rakesh Kapur, Company Secretary in Form MR-3 for the financial year 2014-15 forms part to this report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. INTERNAL CONTROL SYSTEMS: Adequate internal control systems commensurate with the nature of the Company's business and size and complexity of its operations are in place has been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected. AUDITORS: M/s Bharat Shroff & Company, Chartered Accountants, Mumbai; and M/s. A M D & Associates, Chartered Accountants, Guwahati Auditors of the Company will retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment seek appointment as the Auditors of the Company. SECRETARIAL AUDITOR: Rakesh Kapur, Company Secretary, Mumbai, is appointed as Secretarial Auditor of the Company. INTERNAL AUDITOR: M/s. Dhawan Pandey & Associates, Chartered Accountants, are appointed as Internal Auditors of the Company. INDUSTRIAL RELATIONS/ HUMAN RESOURCES: Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the period under review. Your Company firmly believes that a dedicated workforce constitute the primary source of sustainable competitive advantage. Accordingly, human resource development continues to receive focused attention. Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the staff and workforce of your Company. APPRECIATION: Your Directors take this opportunity to offer their sincere thanks to the Government of India, State Government of Assam, AIDC, Dena Bank, IDBI, Standard Chartered Bank, IFCI Ltd, LIC, UTI, GIC & its subsidiaries, SBI, NEDFI, Allahabad Bank, Bank of Baroda, Central Bank of India, UCO Bank, Indusind Bank, North East Frontier Railways, Srei Infrastructure Finance Limited and our valued investors who through their continued support and co-operation, have helped in your Company's progress. By order of the Board of Directors Hemant B. Vyas Managing Director Devang Vyas Director Date: 30th May, 2015 Place: Guwahati |