BOARD'S REPORT TO THE MEMBERS Your Directors are pleased to present their 58th Annual Report together with the audited accounts of the company for the financial year ended 31st March 2015. DIVIDEND Preference Shares The Board of Directors have, at their meeting held on 31st March 2015, declared an interim dividend of 10% (Rs. 10 per share) on 10% Redeemable Cumulative Preference Shares of Rs. 100 each for the financial year ending 31st March 2015 amounting to Rs. 100 lakh. Further, the Board of Directors at their meeting held on 30th May 2015 recommended a pro rata dividend @ 10% on the 10% Redeemable Cumulative Preference Shares (new) allotted during the year (Rs. 0.14 on 4,29,550 Preference shares and Rs. 0.05 on 3,18,000 preference shares) amounting to Rs. 0.76 lakh. Equity Shares Your Directors are pleased to recommend a dividend of Rs. 1 per equity share (10% on the face value of equity share of Rs. 10 each) for the year ended 31st March 2015. ISSUE OF PREFERENCE SHARES (NEW) During the current year, 7,47,550 10% Redeemable Cumulative Preference Shares of Rs. 100 each have been issued on private placement basis aggregating to Rs. 747.55 lakh. Further 6,90,300 10% Redeemable Cumulative Preference Shares of Rs. 100 each which were issued on private placement basis on 31st March 2012 aggregating to Rs. 690.30 lakh has been redeemed out of the proceeds of the fresh issue of preference shares. As at 31st March 2015, the company has a paid-up preference capital of 10,57,250 10% Redeemable Cumulative Preference Shares of Rs. 100 each aggregating to Rs. 1057.25 lakh. DEPOSITS The total deposits with the company as at 31st March 2015 stood at Rs. 16513 lakh as against Rs. 12880 lakh for the corresponding previous year. As at the end of the financial year, 923 public deposits amounting to Rs.467.24 lakh were due for repayment but remained unclaimed. The Company has been reminding the depositors regularly about the maturity and out of the said deposits, 428 deposits amounting to Rs. 256.08 lakhs have since been claimed and repaid / renewed as per their instructions. PUBLIC ISSUE OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES FOR Rs. 100 CRORE During the year, the Company made a public issue of Secured, Redeemable, Non-Convertible Debentures (NCDs) of Rs. 100 each aggregating to Rs. 100 crore. The NCD issue opened on 27th February 2015 and closed on 19th March 2015. The Company made allotment of 1,00,00,000 NCDs to the applicants on 1st April 2015. The NCDs have been listed and admitted for trading on BSE Limited with effect from 7th April 2015. VOLUNTARY DELISTING FROM MADRAS STOCK EXCHANGE LIMITED At present, our company's equity shares are listed on BSE Limited. Madras Stock Exchange Limited (MSE) by its letter dated 12th June 2014 informed that SEBI had proposed to issue order for the de-recognition of MSE as MSE failed to achieve the prescribed trading turnover of Rs.1000 crore on a continuous basis at any time for the past two years. In view of this, MSE requested all Companies whose equity shares are listed on its exchange, to delist the equity shares from MSE. In view of the above, the Board of Directors at their meeting held on 9th August 2014 approved the proposal for voluntary delisting of its equity shares from MSE, by complying with SEBI (Delisting of Equity Shares) Regulations 2009. On our application, the MSE approved to remove the name of the company from the list of Listed Securities of the MSE with effect from 5th December 2014. The equity shares of the Company will continue to be listed on BSE. DIRECTORS AND KEY MANAGERIAL PERSONNEL 1. Dr.N.Mahalingam, Promoter of the Company passed away on 2nd October 2014. He was the Chairman of the Company for more than 3 decades. His advice and guidance immensely benefitted the company in its growth and adherences to good corporate practices. His overall contribution is immeasurable to the group as a whole and our company in particular. We pledge to follow his high standards in conduct of the business and in all activities. 2. Sri S Ragothaman, Independent Director resigned from the Board with effect from 14th January 2015. The Board wish to place on record the very valuable contributions made by him during his tenure of office. 3. Retiring by rotation In accordance with the provisions of Section 152(6), Sri M Srinivaasan (DIN: 00102387) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for reappointment. The Board recommends his reappointment. 4. Appointment Smt. Priya Bhansali (DIN:00195848) has been appointed as an Additional Director (Non-executive Independent Director) under Section 161 of the Companies Act 2013 with effect from 31st March 2015. Similarly, Sri K P Ramakrishnan (DIN:07029959) has been appointed as an Additional Director (Non-executive Independent Director) under Section 161 of the Companies Act 2013 with effect from 30th May 2015. As Additional Directors, they hold office up to the date of the ensuing Annual General Meeting. The Company has received notices as per Section 160(1) of the Companies Act 2013 from members proposing their appointment as Independent Directors for a period of 5 years commencing from the conclusion of the forthcoming Annual General Meeting. The Board recommends their appointment as Independent Directors. 5. Reappointment of Sri M Balasubramaniam as Managing Director The present term of office of Sri M Balasubramaniam, Managing Director is valid up to 28th September 2015. Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors at their meeting held on 7th August 2015, approved his reappointment for a further period of 5 years with effect from 29th September 2015. A resolution relating to his reappointment is placed before the members for their approval at the ensuing Annual General Meeting. The profiles of the Director's retiring by rotation, Additional Directors and the Managing Director, as required under Clause 49 of the Listing Agreement entered into with Stock Exchange, is given in the Annexure to the Notice of the 58th Annual General Meeting. 6. Changes in Key Managerial Personnel Sri M K Vijayaraghavan, Chief Financial Officer (CFO) of the Company resigned with effect from 30th September 2014. The Board placed on record its appreciation for the valuable services rendered by him during his tenure as CFO. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Dr S Veluswamy, Senior President (Operations) as CFO of the Company with effect from 1st October 2014. Pursuant to Section 203 of the Companies Act 2013, Sri M Balasubramaniam, Managing Director, Dr S Veluswamy, Chief Financial Officer and Sri S Venkatesh, Company Secretary were appointed as Key Managerial Personnel (KMP) of the Company. AUDIT COMMITTEE The Audit Committee has been functioning with the following three non-executive directors of which two are Independent Directors. 1. Dr A Selvakumar, Chairman 2. Sri A Shanmugasundaram, Member 3. Sri M Srinivaasan, Member MANAGEMENT DISCUSSION AND ANALYSIS REPORT As required under Clause 49 of the Listing Agreement, a report on Management Discussion and Analysis Report forms part of this report. CORPORATE GOVERNANCE REPORT As required under Clause 49 of the Listing Agreement, a report on Corporate Governance and a certificate from the auditors of the company regarding compliance of the conditions of Corporate Governance as stipulated under the listing agreement forms part of the Annual Report. The details of policy on remuneration is given in the Corporate Governance Report. DISLCOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013 The company 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 framed under it. During the financial year 2014-15, the company has not received any complaint on sexual harassment. DISCLOSURES REQUIRED UNDER THE COMPANIES ACT 2013 AND THE LISTING AGREEMENT The information required to be disclosed under the Companies Act 2013 and the Listing Agreement is set out in the Annexure-I and forms part of this report. DIRECTORS' RESPONSIBILITY STATEMENT As required under Section 134(5) of the Companies Act 2013, your directors confirm, to the best of their knowledge and belief, that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; b. 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 and of the profit of the company for the financial year; c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. they have prepared the annual accounts on a going concern basis; e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. CORPORATE SOCIAL RESPONSIBILITY (CSR) The CSR Policy of the Company and the details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed in Annexure-II. Further details of composition of the Corporate Social Responsibility Committee and other details are provided in the Corporate Governance Report which forms part of this report. BOARD EVALUATION The performance evaluation of the Board, its Committees and individual directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, Committees and self-evaluation. Directors, who were designated, held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as each of the other Directors. Based on the questionnaire and feedback, the performance of every director was evaluated in the meeting of the Nomination and Remuneration Committee (NRC). The meeting of NRC also reviewed performance of the Managing Director on goals (quantitative and qualitative) set at the beginning of the year in April 2015. A separate meeting of the Independent Directors ("Annual ID meeting") was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual ID meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the NRC with the Board's Chairman covering performance of the Board as a whole, performance of the non-independent directors and performance of the Board Chairman. Some of the key criteria for performance evaluation are as follows: Performance evaluation of Directors: • Attendance at Board / Committee Meetings • Contribution at Board / Committee Meetings • Guidance to management outside of Board / Committee meetings Performance evaluation of Board and Committees: • Degree of fulfilment of key responsibilities • Board structure and composition • Establishment of Committee's responsibilities • Effectiveness of Board processes and information • Efficacy of communication with external stakeholders a AUDITORS 1. Statutory Auditors M/s P N Raghavendra Rao & Co (ICAI Reg.No.003328S) were appointed as statutory auditors of the Company at the 57th Annual General Meeting to hold office up to the conclusion of the 60th Annual General Meeting, subject to the annual ratification of the appointment by the members. They have confirmed their eligibility under Section 141 of the Companies Act 2013 and the rules framed under the Act for continuation of their term. 2. Secretarial Auditors The Company appointed M/s. S Krishnamurthy & Co, Practising Company Secretaries, Chennai to carry out Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year 31st March 2015 is enclosed as Annexure- III. The clarification to the observations in the Secretarial Audit Report is given below: The Company had gone in for change of accounting software from the earlier software developed in-house, to newly bought-out software. On account of the migration to the new software, the checks and balances with regard to verification of veracity of accounting figures generated with the new software took additional time. This has caused the delay in compilation of the various returns in Form Nos. NBS-1, NBS-2, NBS-3, NBS-6 and ALM being submitted to RBI periodically. The company is making efforts to stabilize the accounting operations under the new software during the current year and expects to submit the aforesaid returns within the time lines prescribed by RBI prospectively. The Board has appointed M/s. S Krishnamurthy & Co, Practising Company Secretaries, Chennai as the Secretarial Auditors for the financial year 2015-16. Necessary consent has been received from them to act as Secretarial Auditors. PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT 2013 As required under Section 134(3)(m) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 are given below: a. The Company has no activity involving conservation of energy or technology absorption; b. The Company does not have any Foreign Exchange Earnings; and c. Foreign Exchange Outgo : Rs. 49.68 lakh The company has no employee drawing remuneration more than the limits prescribed under Section 197 of the Companies Act 2013. ACKNOWLEDGEMENT Your Directors wish to place on record the valuable assistance and excellent co-operation extended by the members, banks, financial institutions, rating agencies, Reserve Bank of India and other regulatory authorities. The Board of Directors wish to convey their sincere thanks to the depositors and debenture holders of the company for their continued patronage. They also wish to appreciate the excellent services rendered by the employees of the company. We pray the Goddess SAKTHI to continue to shower Her blessings and to guide us in all our endeavours. For and on behalf of the Board M Manickam Chairman Date : 7th August 2015 Place : Coimbatore |