DIRECTORS' REPORT Dear Members, Your Directors are pleased to present their Report and the Audited Financial Statements of the Company for the Financial Year (FY) ended March 31, 2015. Management Discussion & Analysis of Financial Conditions, Results of Operations and State of Company Affairs Outlook Global growth remains moderate, with uneven prospects across the major economies. The global growth in the FY 2014-15 increased by 3.4% which is lower than initial expectations. The outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. Complex forces that affected global activity in FY 2014-15 are still shaping the outlook. These include medium and long-term trends, such as population aging and declining potential growth; global shocks, such as lower oil prices; and many country or region specific factors, exchange rate swings triggered by actual and expected changes in monetary policies. Growth is projected to be stronger in the FY 2015-16 relative to the FY 2014-15 in advanced economies, but weaker in emerging markets, reflecting more subdued prospects for some large emerging market economies and oil exporters. Medium-term prospects have become less optimistic for advanced economies, and especially for emerging markets, in which activity has been slowing since the FY 2010-11. In FY 2015-16, the uneven global recovery is likely to continue with the International Monetary Fund (IMF) expecting the world GDP growth to improve marginally to 3.5% in FY 2015-16 and 3.8% in FY 2016-17. Businesses are adapting, reshaping their strategies to establish a stronger customer connect, create competitive differentiation and address new opportunities, though it is taking longer than expected for economies to regain their stride. Despite unpredictable headwinds, the global economic recovery is gaining momentum. Building on the macroeconomic mending process that began in late FY 2013-14, the Indian economy has made commendable progress. A strong political mandate emerging from the outcome of the general elections, in May'2014, supported business, investor and consumer sentiment. Thereafter, a supportive global commodity price environment along with gradual improvement in governance resulted in an increase in economic output. Led by the manufacturing, finance and electricity sectors, the government expects GDP growth for the FY 2014-15 to be 7.4% up from 6.9% in the FY 2013-14. India's economic outlook for FY 2015-16 appears optimistic and is poised to return to its high-growth path. A confluence of lower fiscal and current account deficits, declining inflation, benign commodity price outlook and structural reforms shall boost investments. The monetary policy is also likely to be supportive with the Reserve Bank of India (RBI) having moved to flexible inflation targeting. The manufacturing sector is likely to benefit from lower interest rates. International rating agency Moody's, also upgraded India's sovereign outlook to positive from stable in April 2015. Precision Tools Group (PTG) The current financial year has been a year of consolidation and correction for this business vertical. In spite of industry slowdown, this business grew by 8%. The major focus was on the development of high performance product lines which suits different material applications. The design & development team developed products which are at par with international competitors. High performance tool sector has shown a growth of 20%, Year on Year (YoY). A new series of product lines was developed for the Automobile segment to cater to the changing productivity demand of the industry. During the year, the PTG initiated diversification into the non-auto sector. PTG now has a product line that can service the aerospace, railways and die & mould segments. PTG established a capacity of 60 MT per month of Spring Washer facility catering to major auto Original Equipment Manufacturers (OEM) with zero defect assurance. Specific focus on training & development helped PTG to win the second prize in a summit of Confederation of Indian Industry (CII) for cost competitiveness. The initiatives taken by the Company to strengthen its market position included modernizing the production facilities for better product quality, improvement in operational efficiencies and also in customer services. Operational excellence initiatives were undertaken under the 'Adapt, Change, Excel' (ACE) Program. There were continuous efforts to improve exports to the Middle East and the South East Asian markets and there were successful breakthroughs in Eastern Europe for taps. HSS drill product was established in Middle East market and has shown 100% growth on a YoY basis. The Company expects to make good progress in the markets in Japan and the United States of America. Coding Business Group (CBG) This business vertical, excelled its in-house assembling capability on a YoY and offered diversified solutions' to automobile and engineering industries. The highlights of automation solutions during the year were development of the first of its kind Optical Vision System Sorting Machine, Laser Marking systems, Automated assembly line for Water Filter cartridge assembly, Laser marking with 2D scanning & development of MES integrated system for a big automobile OEM. New initiatives included providing Traceability Software and Product development initiatives included handheld low cost marking device. This business vertical has shown good growth on a YoY basis and is expected to grow even in the future years. Energy Solutions Group (ESG) FY 2014-15 was dedicated to restructuring and streamlining the complete operations of this business vertical. ESG was integrated into the existing Enterprise Resource Planning (ERP) quite successfully during FY 2014-15. The laid down processes and procedures also brought ESG successfully under the International Organization for Standardization (ISO) Coverage. The Certification Audit of ESG was conducted in the 1st Quarter of the financial year by SGS and was successful. This year the market picked up considerably with two major projects being implemented at Bharat Petroleum Corporation Limited and Chennai Petroleum Corporation Limited. There were a number of Drive Turbine enquiries wherein ESG was successful in bidding as well as executing. The carry over order book is also healthy. The Power Sector Business which was targeted in FY 2014-15 was however not as successful as expected. On the Renewable Energy front there has been a lot of promise but projects have really not taken off in India due to low Power Purchase Agreements. Morgan Solar has deferred its launch of the Concentrated Photo Voltaic panels in India and is also examining seriously the possibilities of lowering its Tracker costs. The FY 2015-16 is promising to be a good year for ESG on the Drive Segment. Container Freight Stations (CFS) The Company has two CFSs, one at Mundra, in Gujarat and another at Veshvi (Jawaharlal Nehru Port Trust) near Mumbai. This business, once a lucrative option for Logistics, has now been impacted adversely by a severe proliferation of various new facilities. Over supply, depressed demand as well as frequent congestion at the major ports has caused container traffic to be diverted to various smaller ports in India. Poor agricultural exports, mainly of rice and cotton, have impacted the CFS but the general outlook for the FY 2015-16 on agriculture looks to be promising. In spite of the various uncertainties of the currency markets, trade sanctions and tough business conditions, this business vertical has had a stable performance. Freight Forwarding This business vertical still faces a lot of challenges primarily due to the continuous fluctuations in bunker prices and the resultant uncertainties arising out of it. Due to over supply of vessels, the demand for slots has not risen due to which the base freight rates have dropped drastically. In Indian economy there has been a sharp decline of export by 20% to Asian countries resulting in low volume turn over in exports. The continuing recession in Europe, highly competitive pricing as well as a huge influx of un-organised players have created a continuous pressure on the margins. Development of Plot of Land at Chandivali As per the terms of out-of-court settlement of the dispute relating to the sale of plot of land at Chandivali, the Company and Videocon Realty and Infrastructure Limited (Videocon) are jointly developing their respective share (50% each) on the plot of land at Chandivali through a specific flatwise allocation of built up area of apartments. The Project named 'Vicinia' is on a 6.74 acres piece of land (after reservation/road setback net available land would be approximately 5 acres of land). It will comprise of 7 towers with approximately 458 apartments. The Project is expected to be completed by December 2019. Investment in Subsidiaries/Joint Venture During the year, the Company incorporated a wholly owned subsidiary viz., Campbell Properties & Hospitality Services Limited. Forbes Campbell Finance Limited, a wholly owned subsidiary company of the Company divested its entire shareholding (50% shareholding in the Joint Venture) in Nypro Forbes Products Limited. Forbes Edumetry Limited is being wound up under Voluntary Liquidation. The Company is examining various options with respect to its investments in Edumetry Inc. Subsidiaries/ Associates /Joint Ventures Details of subsidiary(s), associate company(s) and joint venture(s) company(s) are set out in the statement in Form AOC-1, pursuant to Section 129 of the Companies Act 2013, is attached herewith as Annexure "I". Financial Statements of these subsidiaries are available for inspection at the registered office of the Company and that of the subsidiary company concerned and the same would be available on the website of the Company, www.forbes.co.in Eureka Forbes Limited & its Subsidiaries (EFL) In FY 2014-15, EFL as one dominating force, expanded its markets, executed its strategies, evolved as individuals and excelled in performance, to make EFL group a Global Multi-National Corporation. EFL posted a growth of 19% over the previous year with the revenue from operations (net) Rs. 2,232 Crores for the year as compared to Rs. 1,871 Crores for the previous year. The profit after tax for the year is Rs. 38.88 Crores compared to Rs. 14.64 Crores in the previous year. The Direct Sales Division of EFL has once again proved its mettle to stay ahead of the game with 'Category First' initiatives like - Paani-ka-Doctor clinics (smaller offices to improve visibility and expand reach) and rental sales. EFL has taken bold steps of restructuring its core brands in water to maintain its pole position in the market by introducing 'Dr. Aquaguard' as its flag-ship brand in Direct Sales with cutting-edge products and a state-of-the-art training and demo program. This has enabled EFL to move 'Aquaguard' in Retail segment to fight competition on a common platform. The Superbrand Euroclean has also reached new heights due to yearlong 'below the line' marketing activities. During FY 15-16, this category will be even more exciting with some new products in the pipeline. Foreseeing a major market shake-up, EFL has reinvented its range of Air Purifiers under the brand name ' Aeroguard'. There will be a special focus to drive this sunrise category and capture a significant market share. To ensure that EFL reaches maximum people, the three new sales channels - TV Shopping, e-Commerce and Tele-Sales Engine, are taking shape and have already started giving good returns. The Consumer Division of EFL will now forge a strong base with an exciting range of products under brand Aquaguard and take further the concept of 'Paani ka Doctor'. Dr. Sriram Nene and his celebrity wife Ms. Madhuri Dixit have joined the cause and will promote 'Not just pure but healthy water' through Aquaguard. EFL is also pursuing an aggressive expansion plan boosting its retail presence through two new channels - Rest of Urban and Rurban (Rural+Urban). The New Initiatives vertical has been restructured to include Security solutions, Packaged Drinking Water, FMCD and other projects which will help EFL to reach the aspirational $1 Billion target. The Aquasure Packaged Drinking Water (PDW) brand became available in over 24,000 outlets in 32 cities through 36 franchises, dispensing 41 million litres of water. The brand is now available across several prestigious clients. The Eurovigil Security Systems Brand secured prestigious multi-locational orders from several prestigious clients for Intrusion Alarm and Surveillance Systems (CCTV). The progress in all the categories is going to take EFL to the next level and hopefully make it a beacon of success for many more years to come. The Forbes Pro Clean Technology Solutions has been actively involved in the Swachh Bharat movement by joining hands with institutions and heritage sites to provide cleaning operations and demonstrating the impact of clean environment. There has been a significant switch from selling products to installing solutions and adding value to the customers. Forbes Facilities has moved into property management in prestigious clubs like Bombay Gymkhana and Bombay Presidency Golf Club and has also entered into facility management in the Oil and Gas sector. The water projects team made a foray into desalination plants by bagging and executing the first Diesel plant order from Toshiba, Japan for a power plant in Philippines. Besides this, considering lack of movement of projects in India, EFL executed many export orders to Africa, Vietnam, Thailand and Philippines and shall stand EFL in good stead in future. Digital marketing has been effectively used by the Forbes Pro water team and the team has signed with 'Blue Star' for cobranding with them on coolers cum purifiers. Water solutions and community fulfillment installed the first completely solar powered 1000 liters per hour water treatment plant in Kolkata's urban slum which is the first of its kind in India. No water is wasted in the whole process. The Water Solutions Division has also made a significant impact in realty segment by providing water treatment and waste water treatment plants and also developed a complete solution for swimming pools in a prestigious residential complex with 68 plunge pools and one big swimming pool. The year gone by has been challenging due to slow growth in India. However, with the orders and prospects on hand and the economy likely to open up, Forbes Pro is planning to grow significantly this year. As in the past, during the current year too, EFL and its subsidiaries received various awards and recognitions, some of which are as, hereunder: • Eureka Forbes : Selected Business Superbrand India 2014; • "Great Places to Work": Rank 12; • Reader's Digest : Trusted Brand : Aquaguard 2013; • The Economic Times Best Brands 2014: Aquaguard; • Forbes Facility has won the prestigious Ramkrishna Bajaj National Quality Award for its Quality Management programs; • 2014 Excellence Awards 'Asia's Best Marketing Brands : Aquaguard, Eureka Forbes' by WCRC (World Consulting & Research Corporation); • Asia's Best Marketing Brands : Eureka Forbes Vacuum Cleaners by WCRC (World Consulting & Research Corporation); • Forbes Lux ranked No 24 in DSN Global 100 rankings; • 'Golden Peacock Commendation' for Quality awarded to Aquamall, • Winner - India MAKE Award 2013; • Great Place to Work Best Workplaces in Asia - Rank 18; • Maharashtra State government recognised Eureka Forbes with the "Apang Kalyan Rajya Puraskar 2014' for Euroable Initiative; • Won prestigious UNESCO-Water Digest Award for the 7th time: - Best Water R&D and Technological Breakthrough : Aquaguard Magna HDRO + UV; - Best Complete Domestic Water Solutions Provider: Domestic; - Best Domestic RO Water Purifier: Reverse Osmosis: Aquaguard Enhance Green RO; - Technologically Enhanced Innovative Domestic Water Purifier (RO+UV/ UV+UF):Aquaguard Geneus; - Made In India: Best water Company (Private Sector): Eureka Forbes; and • Golden Peacock Innovative Product/Service Award for the year 2015 (for Aquaguard Magna with Mineral Absorption Technology). Forbes Technosys Limited (FTL) During the FY 2014-15, FTL continued its rapid growth across multiple dimensions and witnessed steady growth across its business verticals and product range. FTL continued to establish leadership in e-lobbies, Cash Deposit kiosks, Passbook Printing Kiosks, Ticket Vending Machines, Information Kiosks and Coin Vending Machines. FTL received orders from a large number of PSU banks and Private Banks who implemented their plans to set up fully electronic Self Service Branches called e-lobbies to enhance their services to customers. FTL also received large orders from Telecom Companies and Public Utilities for the deployment of Bill Payment Kiosk. FTL made significant investments in infrastructure creation, expansion of offices, service network, new product development and exports. The investments will help the company in addressing emerging opportunities in domestic and international markets in near future. FTL also recorded significant growth in its e-payments business and also launched an online portal for recharge, bill payments etc. to address the card users and Internet Banking segment. FTL made an entry into the Transportation sector by securing impressive orders from the Indian Railways for ATVMs (Automatic Ticket Vending Machines). FTL continued to receive awards and recognition which included: - Worldwide Achievers Business Leadership Award 2014; - 'SME of the Year 2014' at the ASSOCHAM Excellence Awards - ICAI; - 'Leading SMEs of India 2014' Dun & Bradstreet, Times Group & Federal Bank; - Leadership in Cash Deposit Kiosks-Best Project Implementation at eGov BFSI i.e. .Banking, Financial services and Insurance Leadership Summit; - CIO Company of the Year 2014-Cheque Truncation Solution; - Breakthrough Product Innovation in R&D Award from All India Management Association on 'Innovation led transformation'; and - CIO Review Magazine as one of the '20 Most Promising BFSI Software Companies in India'. Future plans and strategy includes the creation of a platform for long term profitable growth by: • Consolidating its leadership position in Self Service Banking Solutions, Transportation & Utilities • Targeting high growth in e-Payment services, Enterprise Mobility & Currency Handling Solutions Shapoorji Pallonji Forbes Shipping Limited (formerly SCI Forbes Limited) During the FY 2014-15 earnings enhanced due to improved freight rates, lower fuel prices and better fuel management. The Chemical markets performed better in 2014-15. The average earning per day per ship was USD 9703, as compared to USD 8369 per day per ship during the previous year, an increase of 16%. All the four tankers were well maintained and operated efficiently. All the vessels enjoy at least five Oil Major 'approvals' including approval from Shell. The average down time for the year has been just 1.67 days per ship; significantly better than the industry average. During the year, all the vessels continued to trade East of the Suez Canal. The general route was West Asia Gulf (WAG) to India to South East Asia. The ships remained in the MARIDA POOL of Nordic Womar Pte. Limited. The Pool has a fleet of eighteen vessels. The Pool has three 'Contracts of Affreightment' to lift regular cargoes out of Saudi Arabia, Qatar and Oman. This not only helps fill up the vessels substantially but also permits an opportunity to attract small spot parcels of chemicals from the load ports. During the year, three vessels had to undergo mandatory overhaul, layup and dry docking. The dry docking presented an opportunity to recoat MT Bhairavi with Marine Line that improves yield by over USD 250 per day. With this, two vessels have now been recoated; MT Asavari having been recoated, in 2013. The third vessel MT Malhari is currently undergoing recoating. The drydocking also enabled the recoating of the hull with an improved underwater paint 'SEAFLOWED' that has a better self polishing ability and thereby results in a fuel economy of 8 % to 10 % that translates to an improvement in yield by USD 485 on an average, per day per ship when the vessel is sailing. Forbes Bumi Armada Offshore Limited (FBAOL) FBAOL was awarded a 7 year contract by ONGC for providing a Floating Production Supply and Offloading Vessel (FPSO) on Charter Hire including its Operation & Maintenance. FBAOL has mobilized and deployed the FPSO Armada Sterling facility along with its crew in the D1 field of ONGC against the said contract. FPSO Armada Sterling completed its 2nd contract year of operations without Lost Time Injury (LTI) on April 22, 2015. Uptime of FPSO during the FY 2014-15 was nearly 100%. During the year the Revenue from operations increased by 2.3 % from Rs. 481.32 Crores to Rs. 492.41 Crores. However, the Profit was impacted by increased costs and provisioning during the year which resulted in lower Profit after tax for the FY 2014-15 at Rs. 9.25 Crores against Rs. 16.57 Crores in the previous year. Assets of the Svadeshi Mills Company Limited (Svadeshi) Assets of the Svadeshi continue to be in the hands of the Official Liquidator, High Court, Bombay. An application to get Svadeshi out of liquidation had been filed with the Hon'ble High Court, Bombay, inter alia, praying for permanent stay on the Order passed by the High Court ordering winding up of Svadeshi and to hand over to the applicants the entire undertaking of Svadeshi. The High Court had dismissed the application and directed the Official Liquidator to proceed expeditiously for winding up of Svadeshi. The Company had filed an appeal before the Division Bench against the Order of the High Court. The Division Bench also dismissed the Appeal vide its order dated August 23, 2013. The SLP has been filed in Supreme Court (SC) and the matter was heard on January 27, 2014. The SC allowed notice to be issued to the remaining respondents. The SC also directed all the parties to maintain status quo with regard to immoveable properties of the Company. The next date of hearing is July 28, 2015. The Company, being a secured creditor, with adjudicated dues by the Official Liquidator, expects to receive the dues along with nominal interest thereon. Dividend and Transfer to Reserves In view of the losses during the current year, the Directors regret their inability to declare dividend. No amount was transferred to reserves during the year. Share Capital The paid up Equity Share Capital of the Company as on March 31, 2015 was Rs.1289.86 lakhs. During the year under review, the Company has not issued any shares with differential voting rights or 'sweat equity shares' and has not granted any stock options. As on March 31, 2015 none of the Directors of the Company hold shares or convertible instruments of the Company. Finance The Company continues to focus on judicious management of its working capital. Relentless focus on receivables, inventories, strict cost control, use of alternative borrowing instruments has helped in keeping the borrowings and effective interest cost under control. • Redeemable Non-convertible Debentures The Non-convertible Redeemable Debentures aggregating to Rs. 100 Crores were outstanding during the year ended March 31, 2015. • Deposits The Company has not accepted deposits from public falling within the ambit of section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. Unclaimed matured deposits were transferred to Investor Education and Protection Fund as per the provisions of the Companies Act, 2013. Particulars of loans, guarantees and investments Particulars of Loans, Guarantees or Investments covered under provisions of section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Related Party Transactions All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There were 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. All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of a foreseen and repetitive nature. The transactions entered pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis. Form AOC-2 is annexed as Annexure 'II' to this report pursuant to Section 188 of the Companies Act, 2013. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. Vigil Mechanism/Whistle Blower Policy The Company has Whistle Blower Policy/Vigil Mechanism to deal with instances of fraud and mismanagement, if any. The Policy is also available on the website of the Company. Internal Controls and Systems The Company has an internal control system, which ensures that all transactions are recorded satisfactorily and reported and that all assets are protected against loss from unauthorized use or otherwise. The Internal Control Systems are supplemented by an internal audit system carried out by a team under the direct supervision of the Head of Internal Audit. The findings of such internal audits are periodically reviewed by the management and suitable actions taken to address the gaps, if any. The Audit Committee of the Board meets at regular intervals and addresses significant issues raised by both the Internal Auditors and the Statutory Auditors. The process of internal control and systems, statutory compliance, information technology, risk analysis and risk management are inter-woven to provide a meaningful support to the management of the business. Statutory Compliances The Company ensures compliance of applicable laws. The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. During the financial year 2014-15, no complaints on sexual harassment were received. Corporate Governance and Management Discussion and Analysis The guiding principle of the Code of Corporate Governance is 'harmony' i.e. balancing the need for transparency with the need to protect the interest of the Company and balancing the need for empowerment at all levels with the need for accountability. A detailed report on Corporate Governance is attached. The 'Management Discussion and Analysis' forms part of this report. Corporate Social Responsibility (CSR) The Company is committed to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical. The Board of Directors of the Company has voluntarily constituted Corporate Social Responsibility Committee in compliance with section 135 of the Companies Act, 2013 (Act) even though the provisions of Corporate Social Responsibility are not currently applicable to the Company. The Corporate Social Responsibility Policy adopted by the Board focus on areas of Health, Education, Environment Preservation, Rehabilitation of families affected by natural calamities and General Improvement in quality of life. The Company is committed to inclusive, sustainable development and contributing to building and sustaining economic, social and environmental capital and to pursue CSR projects that are replicable, scalable and sustainable with a significant multiplier impact on sustainable livelihood creation and environmental replenishment. Risk Management Risk management process includes identification of risk, its underlying dynamics, mitigation mechanism, prioritization of risk, measurement of key indicators and monitoring system. A Company-wide awareness of risk management policies and practices are being inculcated to minimize the adverse effect of risks on the operating results and the subject of management of risks is being approached in a planned and coordinated manner. Elucidation of role clarity, understanding of level of authority and reporting system is expected to help this process significantly. It is realized that this is a continuous process, requiring continued updating, based on changing business conditions and that risk management and performance improvement will go hand in hand. Significant and Material Orders Passed By the Regulators or Courts 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. DIRECTORS AND KEY MANAGERIAL PERSONNEL As per Companies Act, 2013, Mr. J. J. Parakh is due to retire by rotation at the ensuing AGM and being eligible seeks for re-appointment. The Board of Directors recommends his re-appointment as Director of the Company. The Company has received declarations from all the Independent Directors of the Company viz. Mr. T. R. Doongaji, Mr. Kaiwan D. Kalyaniwalla, Mr. D. Sivanandhan, Ms. Ameeta Chatterjee and Mr. Kannan Dasaratharaman confirming that they meet with the criteria of Independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. Independent Directors are familiarized with their roles, rights and responsibilities in the Company through induction programmes at the time of their appointment as Directors and through presentations made to them from time to time. The details of familiarization programme have been hosted on the website of the Company and can be accessed at www.forbes.co.in Ms. Sunetra Ganesan was appointed as Chief Financial Officer of the Company with effect from May 27, 2014. Audit Committee of the Board of Directors The details pertaining to the composition of the Audit Committee of the Board of Directors are included in the Corporate Governance Report which forms part of this report. Board Evaluation Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, 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, Stakeholder Relationship and Corporate Social Responsibility Committees. The performance of the Board was evaluated by the Board after seeking feedback from all the Directors on the basis of the parameters/criteria such as degree of fulfillment of key responsibility by the Board, Board Structures and Composition, establishment and delineation of responsibilities to the Committees, effectiveness of board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management. The performance of the committees viz. Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders Relationship Committee was evaluated by the Board after seeking feedback from committee members on the basis of parameters/criteria such as degree of fulfillment of key responsibilities, adequacy of committee composition, effectiveness of meetings, committee dynamics, quality of relationship of the committee with the Board and the Management. The Board and the Nomination & Remuneration Committee reviewed the performance of the individual directors on the basis of self-assessment questionnaire and feedback/inputs from other directors (without the concerned director being present). In a separate meeting of Independent Directors, performance of Non- Independent Directors of the Board as a whole and the performance of the Chairman were evaluated. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. Remuneration Policy of the Company acts as a guideline for determining, inter alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and Senior Managerial Personnel. Nomination & Remuneration Policy is annexed as Annexure 'III' to this report. Disclosure as required under section 197 (12) of the Companies Act, 2013 (Act) read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure 'IV' to this Report. Meetings of the Board The Board met at least once in each quarter and 6 meetings of the Board were held during the year and the maximum time gap between two Board meetings did not exceed the time limit prescribed in the Act. The details are given in the Corporate Governance Report. Directors' Responsibility Statement Pursuant to the provisions of section 134(5) of the Act, the Directors, based on the representations received from the operating management, confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) that the directors 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 and of the profit or loss of the Company for that period; (iii) that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and detecting fraud and other irregularities; (iv) that the directors have prepared the annual accounts on a going concern basis. (v) that the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively. (vi) that the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Auditors and Audit Report Statutory Auditors Members are requested to re-appoint Messrs. Deloitte Haskins & Sells LLP (DHS) as the Statutory Auditors of the Company to hold office from the conclusion of the forthcoming Annual General Meeting of the Company till the next Annual General Meeting of the Company and authorise the Board to fix their remuneration. DHS has confirmed their eligibility under section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Audit Report forms a part of the Annual Report. The Auditors have referred to certain matters in their report on Standalone and Consolidated Financial Statements to the shareholders, which read with relevant notes in the Financial Statements are self-explanatory. Cost Auditors As per the requirements of section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014, the cost accounts of the Engineering Division of the Company are required to be audited by a Cost Accountant. The Board of Directors of the Company have, on the recommendation of the Audit Committee appointed Kishore Bhatia & Associates, Cost Accountants, as Cost Auditors for the financial year 2015 - 2016 on a remuneration of Rs.2.60 Lacs plus out of pocket expenses. As required under the Companies Act, 2013, necessary resolution seeking members' ratification for the remuneration to the Cost Auditor is included in the Notice convening the Ninety Sixth Annual General Meeting of the Company. Secretarial Audit Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Makarand M. Joshi & Co, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure 'V'. Human Resources Development and Industrial Relations The major focus during the year was partnering with Businesses & Divisions with a view to making HR an integral Business Driver. Towards this, the Performance Management System which was introduced on the principle of Balance Score Card was entrenched across the Divisions. Specific learning and development interventions, pertaining to both domain and soft skills were done in Engineering and Shipping & Logistics Divisions. From a Leadership Development perspective, identified high potential employees from across divisions were nominated to SP Group Talent Development Programs 'Shikhar' and 'Udaan'. Strong employee induction processes were introduced to integrate and assimilate new entrants and enable them to become effective in a short span of time. HR partnered with Engineering Division in a critical business improvement intervention titled 'Adapt, Change, Excel' (ACE) which was rolled out across the Division. Employee Engagement levels were kept high through various cultural and other functions, also including participation in various sports events in the 150 years Celebration of SP Group where Forbes was a proud winner of several team and individual medals. Employee relations at large and relations with all the unit unions continued to be productive and cordial. Productivity and efficiency continued to be the focus areas in Manufacturing Operations. Particulars of Employees and Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo (a) The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of section 136 of the Act, the Report and Accounts are being sent to the Members, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during the business hours on working days of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. (b) Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 'VI'. Extract of Annual Report The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure 'VII' and forms part of this Report. Cautionary Statement Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply, input costs, availability, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. Acknowledgement Your Director acknowledge and thank all stakeholders of the Company viz. customers, members, employees, dealers, vendors, banks and other business partners for their valuable sustained support and encouragement. Your Directors look forward to receiving similar support and encouragement from all stakeholders in the years ahead. For and on behalf of the Board of Directors Shapoor P. Mistry Chairman Place : Mumbai, date : May 26, 2015. |