BOARDS' REPORT TO, THE MEMBERS, Your Board of Directors have pleasure in presenting their 44th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015 COMPANY'S STATE OF AFFAIRS Review of Performance During the year under review the Company has earned income of Rs.6.02 Crores (including sale of telephone handsets and accessories of Rs.2.75 Crores) as against Rs.6.97 Crores in the corresponding period of the previous year- (which also included income from sale of telephone handsets and accessories of Rs.2.61 Crores) from recovery of over dues from HP/Lease/Bills Discounting/Loan Parties, Commission from insurance related activities, service charges earned from telephone bill recovery services, dividend and interest. The operating expense incurred during the reporting period was Rs.4.27 Crores as against Rs.4.36 Crores in the previous year. The accumulated losses which was at Rs.7.67 Crores as on 31st March, 2015 has been reduced to Rs.6.47 Crores on 31st March, 2015. The net worth of the Company as on 31st March, 2015 went up to Rs.9.89 Crores (Rs.7.13 Crores in the corresponding period of previous year). Scheme of Arrangement The details of unclaimed public liabilities with the Company as per the Scheme of Arrangement sanctioned by the Hon'ble High Court of Karnataka have been covered in the Corporate Governance Report. However, the total liability unpaid as on 31st March, 2015 was Rs.2.85 Crores which does not include cheques issued to the investors but not presented amounting Rs.2.94 Crores. Future Business Plans As reported in the earlier years, the company stopped NBFC business as per the undertaking given to H'ble High Court of Karnataka while considering the company's application for scheme of arrangement. Since then company was focusing its activities on recovery of over dues. The company's net owned funds has become positive and meets the minimum required NOF stipulated by Reserve Bank of India for Non-Banking Finance Business. The Compnay has applied RBI for registering it as a Non-Deposit taking NBFC for pursuing business of Hire Purchase/Lease finance. Fee based Activities In order to generate some income to partly meet the establishment expenses, your Company is engaged as Corporate Agent for Life and General Insurance Companies, and also acting as address verification agents for Fullerton India Credit Company Limited and Tata Teleservices Limited at Coimbatore. Besides, your company has taken up distributorship of MTS Mobile Phones & accessories of Sistema Shyam Teleservices Ltd., Videocon and Intex brand handsets at Coimbatore and Salem areas in Tamil Nadu. The company is also focusing on collecting over dues from HP/Lease/Loans/Bills discounted parties. DIVIDEND Since the Company has carried forward losses in the current year, the Directors express their inability to recommend Dividend. SHARE CAPITAL The paid up Share Capital as on 31st March, 2015 was Rs.13,02,67,000/-. During the year under review, the Company has not issued any shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. DEPOSITS The Company has not accepted any deposits from the public/ shareholders during the year under review as per Section 73 of the Companies Act, 2013. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, Corporate Governance Report and Auditor's Certificate regarding Compliance of conditions of Governance are made part of this Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL Sri H. N. S. Rao, [DIN 00106953] Director retire by rotation at the forthcoming Annual General Meeting and being eligible, offer herself for reappointment. Mrs. Vimal Chandrashekhar Kamath [DIN 07182821] has been appointed as an Additional Director pursuant to Section 149(1), 152 and 160 of the Companies Act, 2013 and Clause 49(II)(A) (1) of the Listing Agreement. She holds office upto the date of ensuing Annual General Meeting. The Board recommends the confirmation/appointment of Mrs. Vimal C. Kamath at the ensuing Annual General Meeting. During the year under report, Mr. Govindaraya Raman Nayak appointed as Chief Financial Officer (CFO) of the company in terms of Section 203 of the Companies Act, 2013. Details of remuneration paid to the Directors and Key Managerial Personnel are given in the Annexure I forming part of the Boards' Report. A brief profile of the Directors seeking confirmation/appointment, nature of expertise in specific functional area, name of other public companies in which he/she holds directorship and membership/ chairmanship of the committees of the Board of Directors and the particulars of the shareholding as stipulated under Clause 49 of the Listing Agreement entered with the Stock Exchanges is appended to the Notice. All the Independent Directors have furnished to the Company a declaration under Section 149(7) of the Companies Act, 2013 stating that they meet criteria of independence as provided under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement and the same are given in Annexure III forming part of the Boards' Report. MEETINGS A calendar of Meetings is prepared and circulated in advance to the Directors. During the year four Board Meetings were convened and held on 30-05-2014, 13-08-2014, 14-11-2014 and 11-02-2015. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The role and terms of reference of Audit Committee cover the areas mentioned under Clause 49 of the Listing Agreement and Section 179 of the Companies Act, 2013, besides other terms referred to by the Board of Directors from time to time. During the year, the Committee met on 30th May, 2014, 13th August, 2014, 14th November, 2014 and 11th February, 2015. AUDIT COMMITTEE The Audit Committee comprises independent directors namely Mr. Bharath K. Nayak, (Chairman), Mr. K. M. Udupa, Mr. A. Giridhar Pai and Mr. U. Harish P. Shenoy as other members. All the recommendations made by the Audit Committee were accepted by the Board. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES OF THE COMPANY Since the company is still carrying over the losses Corporate Social Responsibility committee pursuant to provisions of Section 135(1) of the Companies Act, 2013 has not been formed for the time being. PARTICULARS OF EMPLOYEES During the year under review, the Company had no employees whose remuneration exceeded the limit prescribed pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. RISK MANAGEMENT Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. SUBSIDIARY/ASSOCIATE COMPANIES The Consolidated Financial Statements of the Company and its subsidiaries and associates, prepared in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India, form part of the Annual Report and are reflected in the Consolidated Financial Statements of the Company. The Annual Accounts of the subsidiaries / associates and related detailed information will be kept at the Registered Office of the Company, as also at the registered offices of the respective subsidiary/associate companies and will be available to investors seeking information at any time. Salient features of financial statements of subsidiary/associate companies pursuant to Section 129(3) of the Companies Act, 2013 have been covered in the Financial Statements in Form AOC-1. RELATED PARTY TRANSACTION All related party transactions that were entered into were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of Companies Act, 2013 ("the Act"). There were no materially significant related party transactions made by the Company during the year that would have required shareholders approval under the provisions of the Act. Details of the transactions with related parties are provided in the Note No. 2.28 of accompanying financial statements. Form AOC-2 pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith marked as Annexure II. Your Company through its risk management process strives to contain impact and likelihood of the risks from time to time. BOARD EVALUATION Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, Board has carried out an annual performance evaluation of its own performance and the Directors individually. The manner in which the evaluation has been carried out are detailed below: The performance evaluation of Chairman and Non-Independent Directors was carried out by the Independent Directors. The Independent Directors evaluated the parameters viz., level of engagement, duties, responsibilities, performance, obligations and governance safeguarding the interest of the Company. The performance evaluation of Independent directors was carried out by the entire Board. AUDITORS The Auditors, Chaturvedi & Shah, Chartered Accountants, Mumbai (Firm Registration No. 101720W) retire at the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment to hold office till the conclusion of the 46th AGM to be held in the Calendar year 2017. AUDITORS' REPORT In respect of the comments made by the auditors in their independent auditors report on consolidated financial statement, in the Para "Basis for qualified Opinion" relevant explanation given by the Company vide Note No. 2.14(b) to the Financial Statements is self explanatory. SECRETARIAL AUDIT REPORT In terms of Section 204 of the Act and Rules made there under, Sri Shrinivas Devadiga, Practicing Company Secretary (Membership No. 22381 CoP No. 10372) from Bangalore has been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditor is enclosed as Annexure IV to this report. As per Section 134 (3f) of the Companies Act, 2013 Company is required to make comments on the adverse remarks / comments on the Secretarial Auditors Report. 1. As per the Secretarial Auditor's Report placed before the Board, the Secretarial auditor have opined that the Company has not appointed Company Secretary: Your Directors reiterate that, Company has been trying to appoint a qualified company secretary since 1995. During 1996 a qualified company sec. was however appointed. He was in service till January 2006, when he left for his better prospects. From the year 1998 onwards company had to face financial crunch due to stringent regulatory norms issued by RBI for deposit taking NBFCs. Added to the misery due to default committed by some other NBFCs in this area, the investors of our company also exerted heavy pressure for repayment of their investments prematurely. The Company was hence forced to approach Hon'ble high court of Karnataka with a scheme of arrangement for repayment of outstanding investments in installments. The Scheme was sanctioned on December 2004 and company thereafter repaid all the investments as per the scheme. However the company was not engaged in any business consequently there were no income. Under these circumstances the company was forced to reduce the number of branches and also number of employees. This is the main reason for not appointing a company secretary. The aspirants for this post in Manipal expects huge salary and other perquisites which is at present beyond the company's capacity. However as and when the company engages itself in a proper business, it would certainly comply with this requirement. 2. As per the Secretarial Auditor's Report placed before the Board, the Secretarial auditor have opined that the Company has not appointed Woman Director within the stipulated time. Your Directors reiterate that, Company did identify a woman director and requested her to join the Board before 31st March, 2015 as per provisions of the Act. However, she expressed her difficulty to join prior to 31st March owing to some personal reason. She was however inducted to the Board at its meeting held on 19th May, 2015 which was the immediate next meeting after 31st March. 3. As per the Secretarial Auditor's Report placed before the Board, the Secretarial auditor have opined that the Company has not registered the lease agreement which are entered by Company having tenure more than 11 months. Your Directors reiterate that they will review all such agreements and noted the observations for compliance. INTERNAL FINANCIAL CONTROL The Company has established and maintained adequate internal controls over the financial reporting. Internal controls have been designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements in accordance with accounting principles generally accepted in India. The Company has internal control system commensurate with the size and nature of the business. The Company engages M/s Pai Nayak & Associates, Chartered Accountants, Udupi with Firm Registration No. 009090S as its Internal Auditors. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed and acts upon and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. EXTRACT OF ANNUAL RETURN As required pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is attached as a part of this Annual Report as ANNEXURE I. Material changes and commitments, if any, affecting the financial position of the company which has occurred between the end of the financial year of the company to which the financial statements relate and the date of the report: There are no such material changes to be reported in this regard. Change in nature of Business: There is no change in nature of business. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future: Your Directors wish to state that there have been no significant or material orders that were passed by the Regulators or Courts or Tribunals which may impact the going concern status and operations of the Company in future. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: Details of Loans: Nil. Details of Guarantee/Security Provided: Company has not provided any guarantee/Security during the financial year. Investments made are of the nature quoted/unquoted equity shares and investment in property. Particulars of such investments are provided in the financial statements vide Note Nos. 2.08. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 In order to prevent sexual harassment of Women at workplace, a new Act The Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013 has been notified on 9th December, 2013. In terms of the said Act, Your Company has constituted an Internal Complaints Committee to look into complaints of sexual harassment at workplace of any women employee. The company has adopted a policy for prevention of sexual harassment of women at workplace and has set up internal committee for implementation of the said policy. During the year, your Company has not received any complaint of sexual harassment of any women employee. The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15: a. No. of complaints received : Nil b. No. of complaints disposed off : Nil CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The company did not have any activity in relation to conservation of energy or technology absorption. The company had no foreign exchange earnings or outgoings during the year under report. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors hereby report in terms of Clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, that — (a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) 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 and loss of the company for that period; (c) the directors have 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; (d) the directors have prepared the annual accounts on a going concern basis; and (e) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. 26-9-2014), with the Ministry of Corporate Affairs. VIGIL MECHANISM It is proposed to put in place a Vigil Mechanism pursuant to Section 177 (9) and (10) of the Companies Act, 2013 for directors and employees to report genuine concerns if any. The Mechanism once it is established will be uploaded in the Company's website www.icdslimited.com A Vigil Mechanism Policy is being finalized and adopted separately. ACKNOWLEDGEMENTS Your Directors wish to place on record their appreciation of the services and co-operation extended by our Bankers, Investors and Members of Staff of the Company, during the year under report. Your directors also wish to thank the shareholders for their support. Your directors also wish to place on record their deep sense of appreciation of the services rendered by the staff members at all levels. For and on behalf of the Board of Directors Sd/- (T. Mohandas Pai) Chairman & Whole-time Director Place : Manipal Date : 07-08-2015 |