DIRECTORS' REPORT To THE MEMBERS OF SAVERA INDUSTRIES LTD, The Directors have pleasure in presenting the 46th Annual Report of Savera Industries Ltd (the company), and the consolidated audited financial statements along with the audited financial statements for the financial year ended 31st March, 2015. OPERATING RESULTS The revenues of the company increased by Rs. 655.55 lakhs representing 11.60% over last year. The occupancy of the main unit i.e. Savera Hotel, Chennai rose to 76% during the year as against 69% over the corresponding period last year. As can be seen above, the profit before tax is at Rs. 396.23 lakhs as compared to Rs. 446.02 lakhsoflastyear, registeringa decrease of 11.16%. During the year under review, the company has closed the business at its unit viz., Walnut Hotel, situated at Hyderabad as approved by the shareholders. Besides, the company's other units are in progressive stages. STATE OF COMPANY'S AFFAIRS Total expenditure for the period ended as at 31st March, 2015 amounted to Rs. 5912.80 lakhs increased by Rs. 705.34 lakhs (13.54%) as compared to the previous year. The Profit (EBITDA) before depreciation, finance cost and tax for the year ended 31st March, 2015 amounted to Rs. 1212.51 lakhs increased by Rs. 54.63 lakhs representing 4.72% over the corresponding period last year. The tax expense including deferred tax for the year ended 31st March, 2015 amounted to Rs. 107.00 lakhs. The Profit after Tax for the year ended 31st March, 2015 stood atRs. 289.23 lakhs as against a loss ofRs. 167.39 lakhs. No transfer was made to General Reserve during the year under review. OUR BUSINESSISYOU DIVIDEND The Board of Directors of the Company has recommended a dividend of Rs. 1.20 per equity share for the financial year ended 31.03.2015. The total outflow towards dividend will be Rs. 143.13 lakhs and the tax on dividend works out to Rs. 29.30 lakhs which will be absorbed by the company. FIXED DEPOSIT The Company has not accepted any fixed deposits under the provisions of the Companies Act, 2013. FINANCIAL HIGHLIGHTS OF THE COMPANY The financial highlights of the company for last 10 years are furnished in the Annual Report. FINANCIAL INFORMATION AND DETAILS OF SUBSIDIARY The Consolidated Financial Statement of the company and its subsidiary viz., Elkhill Agrotech Pvt Ltd. is prepared in accordance with the 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 consolidated financials disclose the assets, liabilities, income, expenses and other details. The minutes of the subsidiary company along with the financial statements were placed and reviewed by the Board of Directors of the company. The annual accounts of the said subsidiary and related detailed information will be kept at the Registered Office of the company, as also at the registered office of the respective subsidiary company and will be available to members seeking information at any time. The salient features relating to the subsidiary as required by sub-section 3 of Section 129 of the Companies Act, 2013 (Act) read with rule 5 of the Companies (Accounts) Rules, 2014 is furnished hereto in the Annexure 2. There is no associate company within the meaning of section 2(6) of the Companies Act, 2013 ("Act"). DIRECTORS AND KEY MANAGERIAL PERSONNEL The Board of Directors met four (4) times once in every quarter during the year to review and consider the financial results and the meeting dates are provided in the Corporate Governance Report. Pursuant to the provisions of the Companies Act, 2013,Mrs. A. Nina Reddy, Director retires by rotation and is eligible for reappointment. The Board recommends her appointment and accordingly resolution seeking approval of the members for her appointment has been included in the notice of the forthcoming Annual General Meeting of the company along with her brief profile. During the year under review, Mr. R. Dayakar Naidu was appointed as the Chief Financial Officer. The Key Managerial Personnel of the company presently are Mr. A. Ravikumar Reddy, Managing Director, Mr. N. S. Mohan, Company Secretary and Mr. R. Dayakar Naidu, Chief Financial Officer. DIRECTORS' RESPONSIBILITY STATEMENT On the basis of internal financial controls and systems relating to compliance maintained by the company, work done by the internal, statutory and secretarial auditors, the reviews performed by the management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the company's internal financial controls were adequate and effective during the financial year2014-15. Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, and based on the representations received from the management, the directors hereby confirm that: i.In the preparation of the Annual Accounts for the year 2014-15, the applicable accounting standards have been followed and there are no material departures; ii. 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 31st March,2015 and of the profit of the company for that period; iii.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 the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. iv.They have prepared the annual accounts on a going concern basis; v.They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and operating properly; vi.They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. INTERNAL CONTROL & SYSTEM The Company has internal control and systems commensurate with the size of the complexity of the business operations and it has well defined internal audit functions. For the purpose of independence, the internal audit dept. reports to Chairman of the Audit Committee of the Board of Directors. SECRETARIAL AUDITOR Mr. R. Balasubramaniam, Practising Company Secretary has been appointed as the Secretarial Auditor during the year. The Secretarial Audit Report given by him shall form part of this report. AUDITORS In accordance with the provisions of Section 139 the Companies Act, 2013, and the rules framed there under, the Auditors, M/s. D.A. Reddy & Co., Chartered Accountants, were appointed as statutory auditors of the company from the conclusion of the 45th Annual General Meeting of the company held on 22.09.2014 till the conclusion of the 48thAnnual General Meeting(AGM) to be held in the year 2017, subject to ratification of their appointment at every AGM. SIGNIFICANT AND MATERIAL ORDERS There were no significant and material orders passed by the regulators or courts or tribunals affecting the going concern status and future operations of the company. INDEPENDENT DIRECTORS DECLARATION Mr. G. Sitharaman, Mr. A. Sudhakar Reddy, Mr. B. Ranga Reddy, and Mr. S. Sridhar Rao who are independent directors, have submitted a declaration that each of them meets the criteria of independence as provided in sub-section (6) of section 149 of the Act and revised clause 49 of the listing agreement. Further , there is no change in their status as independent director during the year. STATUTORY AND SECRETARIAL AUDITORS REPORT There are no qualifications, reservations or adverse remarks or disclaimers in the Statutory Auditors and Secretarial Auditors Report. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013. LOANS & INVESTMENTS : A sum of Rs. 82,09,372/- is due from its wholly owned subsidiary company M/s. Elkhill Agrotech P. Ltd. as on 31-3-2015 as against the previous balance of Rs. 1,25,79,763/- as on 31-3-2014. The company has made an investment of Rs. 73,150/- for 1330 compulsory convertible debentures at the rate of Rs. 55/- each in the Indian Hotels Company Ltd which are convertible into equity shares of Rs. 1/- each upon expiry of eighteen months from the date of allotment. The company has not given any guarantee to any person/corporate. TRANSACTIONS WITH THE RELATED PARTIES All related party transactions that were entered into during the financial year were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. Further all contracts or arrangements with related parties entered into during the financial year ended 31-3-2015 were on an arm's length basis and in the ordinary course of business. All such contracts or arrangements have been approved by the Audit Committee and the Board of Directors of the company. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 are furished in Form AOC-2. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY In compliance with clause 49 of the listing agreement, the Board of the Company has formed a risk management committee and defined the roles and responsibilities of the Risk Management Committee. The Board further delegated to the Risk Management Committee to monitor, review and implement the risk management plan for the company and ensure its effectiveness. In addition, the Board takes responsibility in overseeing the risk management plan for the company. The Risk Management Policy facilitates in identifying the risks associated with the operations of the company and in giving suitable measures/solutions to mitigate the same. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. CORPORATE SOCIAL RESPONSIBILITY. 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 1 to this Report . 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. NOMINATION AND REMUNERATION POLICY The company's policy on directors appointment and remuneration and other matters provided in section 178(3) of the Companies Act, 2013 has been disclosed in the corporate governance report, which forms part of the directors' 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). A separate meeting of the independent directors was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. After the annual independent directors meeting, the collective feedback of each of the independent directors was discussed by the Chairman of Nomination and Remuneration Committee with the Board's Chairman covering performance of the Board as a whole, performance of the non-independent directors and the performance of the Board Chairman. Important key criteria for performance evaluation are as follows. Directors performance evaluation Attendance at Board or Committee Meetings Contribution at Board or Committee Meetings Guidance/support to management outside Board/Committee meetings. Performance evaluation of Board and Committees Structure of the Board and Board composition Establishment and delineation of responsibilities to Committees. Effectiveness of Board processes , information and functioning. Board culture and dynamics Quality of relationship between Board and management. Efficacy of communication with external stakeholders. LISTING The equity shares of the Company are listed and Madras Stock Exchange Limited.(MSE). Stock Exchange Ltd only. on Bombay Stock Exchange Limited (BSE) The listing fees have been paid to Bombay CORPORATE GOVERNANCE In terms of clause 49 of the Listing Agreement, a report on Corporate Governance,the Auditors' Certificate on the compliance of conditions of Corporate Governance and the report on Management Discussion and Analysis form part of the Annual Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information required under Section 134 (3) (m) of the Act, read with the companies (Accounts) Rules 2014 is furnished hereunder. Your company is part of the eco green practices and is keen in green energy practices. The company installed solar water heater system through which the company is able to get 100 % solar hot water for meeting the requirements of unit at Chennai. The entire Hotel lightings are now either in LED or in CFL. This reduces the power consumption at the maximum and reduces the heat generation at the minimum level. The company is having centralized LPG banking system, by this the residue of the LPG is minimized. The company is constantly monitoring the electrical and diesel consumption and necessary control system is implemented to control the consumption. The total electrical power consumption is backed up by the wind energy resulting in saving more in the electricity cost. The company is practicing of reduce, reuse and recycle system by which the company is closely controlling the wastage generation. For reuse, all the unwanted materials are placed in red band area and the required item will be retrieved by the necessary departments. The sewage and sewerage waste water is treated in STP and the treated water is reused in flushing system and in cooling towers. The company also installed organic waste generators. This generators converts the organic wastes into composite manure. Hotel being a service industry, technology absorption, transfer etc., are not applicable. The company has installed Wi-Fi internet, group mobile system, wireless systems for its security for faster communication. Earnings in convertible foreign exchange for the year amounted to Rs. 393.90 lakhs for the services rendered to Foreign Tourists (Previous year Rs. 409.50 lakhs). Expenditure in Foreign Currency is Rs. 133.42 lakhs (Previous Year Rs. 48.41 lakhs ). DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. The Company has in place an Anti-Sexual harassment Policy in line with the requirement of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual and trainees ) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year2014-15.No. of complaints received-Nil; No. of complaints disposed off: Nil. EXTRACT OF THE ANNUAL RETURN As Provided under section 92(3) of the Act, the extract of annual return is given in Annexure 3 in the prescribed form MGT -9 which forms part ofthis report. PARTICULARS OF EMPLOYEES The information required under section 197(12) of the Act, read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished in the Annexure 4 to this report. No employee had drawn remuneration during the year2014-15 more than the amount prescribed under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014. Your directors wish to place on record their appreciation for the good services rendered by the employees at all levels of the company. GENERAL: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review. Issue of equity shares with differential rights as to dividend, voting or otherwise Issue of shares (including sweat equity shares) to employees of the company under any scheme. Neither the Managing Director nor the Joint Managing Director receive any remuneration or commission from its subsidiary. ACKNOWLEDGEMENTS The directors would like to thank the Central Bank of India, and other financial institutions for extending their financial support. They further express their thanks to the Central Government, State Government and other stakeholders for their patronage, support and guidance. For and on behalf of the Board A. Ravikumar Reddy Managing Director A. Nina Reddy Joint Managing Director Date : 14th August, 2015 Place : Chennai |