DIRECTORS' REPORT To the Members of Ganesha Ecosphere Ltd. Your Directors have pleasure in presenting the Twenty Sixth Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31st March, 2015. FINANCIAL AND OPERATIONAL PERFORMANCE During the Year 2014-15, your Company has recorded revenues from operations of Rs. 623.25 crores, as compared with previous year's revenues of Rs. 499.48 crores, thus registering rise of 24.78%. Earnings before Depreciation, Interest and Taxation (EBITDA) stood at Rs. 64.68 crores in the current year, as compared with 56.30 crores in the previous year, recording an increase of 14.88%. The improvement in revenues of the Company has been mainly on account of increase in sales volume due to addition in production capacity. The Net Profits of the Company stood at Rs. 23.07 crores as against Rs. 24.54 crores in previous year. The bottom line of your Company was impacted due to pricefall of RPSF and Yarn aftermath sudden crash in crude oil prices as well as higher inventory carrying losses resulting in reduced margin. Your directors are pleased to report that the Company's unit situated at Temra, Bilaspur, Distt. Rampur (U.P.), has started commercial production of Recycled Polyester Staple Fibre (RPSF) with an installed capacity of 21,000 TPA w.e.f. 01.12.2014 and full effect thereof will be reflected in the working of current financial year. With the commissioning of the project, the consolidated RPSF capacity of the Company has reached at 87,600 TPA. The performance of the Company during the current year continues to be encouraging and barring unforeseen circumstances, your Directors expect your Company to achieve better results during the year. DIVIDEND Your Directors are pleased to recommend for approval of the members, a dividend of Rs. 1.20 per share (i.e. @ 12%) on Equity Shares of Rs. 10/- each, involving cash outflow of Rs. 2,33,98,970/- (inclusive of dividend distribution tax of Rs. 39,57,770/-) for the financial year 2014-15. In view of conversion of 31,07,500 Compulsorily Convertible Preference Shares (CCPS) into 27,25,877 Equity Shares of the Company, during the current year, the accumulated dividend on CCPS till the date of conversion had been declared and paid as interim dividend. SHARE CAPITAL & DEBENTURES During the year under review, the Company has allotted 31,07,500 Compulsorily Convertible Preference Shares (CCPS) and 2,50,000 Warrants to MCAP India Fund Limited, on preferential basis. During the current year, the 31,07,500 CCPS so allotted have been converted into 27,25,877 Equity Shares of Rs. 10/- each of the Company at the price of Rs.114/- per Equity Share (including premium of Rs.104/- per share). During the year under review, the Company has allotted 10,15,000 Equity Shares upon conversion of 10,15,000 warrants, allotted to the 'Promoter's Group & Others' on preferential basis. The proceeds of the aforesaid issues have been utilized for the purpose for which the funds were raised. With the aforesaid allotments of Equity Shares, the total Paid-up Equity Share Capital of the Company stood increased from Rs. 15.19 crore to Rs. 18.93 crore. During the year under review, the Company has fully redeemed the outstanding non-convertible debentures allotted to Green India Venture Fund. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis Report is provided in a separate section forming part of the Annual Report. DIRECTORS During the year under review, Shri Anoop Gupta, Shri Surendra Kumar Kabra, Shri Vishwa Nath Chandak, Shri Pradeep Kumar Goenka, Shri Abhilash Lal and Shri Narayanan Subramaniam were appointed as Independent Directors for a term of 5 (five) years with effect from 29th September, 2014. The Board of Directors has re-appointed Shri Shyam Sunder Sharmma as Managing Director of the Company, for a further period of three years with effect from 18th September, 2015 and the matter is placed for your approval at the ensuing Annual General Meeting. Pursuant to the provisions of the Companies Act, 2013 and Articles of Association of the Company, Shri Gopal Singh Shekhavat, Director of the Company retires from the Board by rotation and being eligible, he has offered himself for re-appointment. DECLARATION FROM INDEPENDENT DIRECTORS The Company had received the declarations u/s 149(7) of the Companies Act, 2013 from all the Independent directors that they meet the criteria of independence as per Section 149(6) of the Companies Act, 2013. COMPOSITION OF AUDIT COMMITTEE The Audit Committee of the Company comprises of six Directors, out of which five Directors are independent. The composition and other details are provided in the Corporate Governance Report of the Company. All the recommendations made by the Audit Committee were accepted by the Board. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of the financial year ended 31st March, 2015, confirm that:- a) in preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; b) they have selected such accounting policies and applied them consistently and made judgements 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 profits of the Company for that 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 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 are operating effectively. f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls commensurate with the size of the Company and the nature of its business, with reference to financial statements. The Audit Committee of the Board of Directors regularly reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. NUMBER OF MEETINGS OF THE BOARD The details of the number of meetings of the Board held during the financial year 2014-15 are given under the Corporate Governance Report. EXTRACTS OF ANNUAL RETURN The extracts of the Annual Return in form MGT-9 as required under section 92 of the Companies Act, 2013, are included in this Report as "Annexure A" and form an integral part of this Report. LISTING Your Directors are pleased to inform you that the Company's Equity Shares were listed and admitted for trading at National Stock Exchange of India Ltd. w.e.f. 9th March, 2015. Further, Equity Shares of the Company have been voluntarily delisted from the U.P. Stock Exchange Limited, Kanpur w.e.f. 7th August, 2014. The Equity Shares of the Company are presently listed at BSE Limited and National Stock Exchange of India Ltd. and the listing fee for both the Stock Exchanges is paid upto date. AUDITORS AND AUDITORS' REPORT a) Statutory Auditors M/s. Mehrotra Rakesh Kumar & Co., Chartered Accountants, Kanpur were appointed as Statutory Auditors of the Company at the 25th Annual General Meeting of the Company held on 29.09.2014, who shall hold office till the conclusion of the 28th Annual General Meeting in accordance with the provisions of the Companies Act, 2013. However, this appointment was subject to ratification by the members at every Annual General Meeting held after appointment during their tenure of office. The Auditors have confirmed their eligibility and qualification under Section 141 of Companies Act, 2013 and therefore, their ratification for appointment as Statutory Auditors for the year 2015-16 is being sought from the Members of the Company at the ensuing AGM. As regards Auditors' remark in Para 12 to the annexure to their report in respect of fraud on the Company, it is clarified that the Company had lodged police Complaint and investigations are in progress. b. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board has appointed M/s. S.K. Gupta & Co., Company Secretaries, as Secretarial Auditor, to conduct secretarial audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith as "Annexure B" to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. c. Cost Auditors M/s. R. M. Bansal & Co., Cost Accountants (Firm Regn. No.:00022) and M/s. Rakesh Misra & Co., Cost Accountants (Firm Regn. No.: 00249), have been appointed as Cost Auditors of the Company to conduct the audit of the Cost Accounts of the Company in respect of its products 'Yarn' and 'Recycled Polyester Staple Fibre' respectively, for the financial years ending 31st March, 2015 and 2016. As required under the Companies Act, 2013, the resolutions seeking Member's ratification for the remuneration payable to Cost Auditors forms part of the Notice convening the Annual General Meeting. d. Internal Auditors The Company has appointed M/s. Kapoor Tandon & Co., Chartered Accountants as the Internal Auditors of the Company for the year 2014-15. The Internal Audit Report is placed before the Audit Committee of the Company, time to time. RELATED PARTY TRANSACTION The Company has formulated a policy on dealing with Related Party Transactions. The policy is disclosed on the website of the Company (weblink <http://www.ganeshaecosphere.com/pdf/> related-party-transaction.pdf). During the year under review, the Company has not entered into any transaction with related parties attracting provisions of Section 188 of the Companies Act, 2013. Thus, disclosure in Form AOC-2 is not required. All transactions entered into with Related Parties as defined under Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/ arrangement/ transactions with related parties which can be considered as material in nature. The related party transactions are disclosed under Note No. 37 of the Notes to Financial Statements for the year ended 31st March, 2015. PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS BY THE COMPANY Your Company has not made any investments, given loans and guarantees attracting provisions of Section 186 of the Companies Act, 2013. WHISTLE BLOWER POLICY Pursuant to Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and employees to report to the management about the unethical behavior, fraud or violation of Company's code of conduct. The details of the policy are explained in the Corporate Governance Report. The Policy has been posted on the website of the Company and may be accessed at the link www.ganeshaecosphere.com/ pdf/whistle-blower-policy.pdf. NOMINATION AND REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee, adopted a policy on 'Nomination, Remuneration and Board Diversity' for selection and appointment of Directors, Senior Management and their remuneration. The detailed policy is available on the website of the Company at the link www.ganeshaecosphere.com/pdf/policy-on- nomination-remuneration-and-board-diversity.pdf and is also annexed as "Annexure C" to this report. BOARD EVALUATION The Board of directors at its meeting held on 31.01.2015, had evaluated its own performance including its committees along with performance of individual directors based on criteria for performance evaluation laid down under the 'Nomination, Remuneration and Board Diversity Policy' of the Company. Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Independent Directors also reviewed the performance of all Non-Independent Directors and the functioning of Board and its committees. RISK MANAGEMENT During the year, the Board has also adopted a Risk Management Policy for the Company. The Board members are regularly informed about the potential risks, their assessment and minimization procedures. The Board frames a plan for elimination / minimization of the risk and further lays out the steps for implementing and monitoring of the risk management plan. There are no risks which in the opinion of the Board are of the nature that can threaten the existence of the Company. However, the risks inter-se those are generally dealt in regular course of business and have to be taken care of, are fluctuations in foreign exchange rates and prices of raw material as well as finished products. The Risk Management Policy has been uploaded on the Company's website and may be accessed at the link www. ganeshaecosphere.com/pdf/risk-management-policy.pdf CORPORATE SOCIAL RESPONSIBILITY The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. In line with the provisions of the Companies Act, 2013, the Company has framed its CSR policy which provides a path for its CSR activities. The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as "Annexure D". The CSR Policy has been uploaded on the Company's website and may be accessed at the link: www. ganeshaecosphere.com/pdf/corporate-social-responsibility-policy.pdf. DEPOSITS During the year under review, the Company has not accepted any deposit in terms of the provisions of Sections 73 and 76 of the Companies Act, 2013 and the rules framed there under. Further, the deposits accepted by the Company before the commencement of the Companies Act, 2013, had been repaid during the year. Accordingly, there are no unclaimed or unpaid deposits lying with the Company for the year under review. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2014-15 till the date of this Report. Further, there was no change in the nature of business of the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There were no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of the Company and its future operations. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure E". PARTICULARS OF EMPLOYEES The Information as per Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as "Annexure F". CORPORATE GOVERNANCE A separate section on Corporate Governance along with Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report. POLICY ON SEXUAL HARASSMENT 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 Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. No complaint has been received for sexual harassment of women at work place by the Company during the financial year 2014-15. ACKNOWLEDGEMENTS Your Directors take this opportunity to place on record appreciation for the co-operation and support extended by various departments of the Central and the State Government(s), Bankers and Business associates. Your Directors also wish to place on record appreciation to all the employees for their sincere and dedicated services rendered to the Company and are also grateful to all the shareholders of the Company for reposing continued trust and confidence in the management of the Company. For and on behalf of the Board (Shyam Sunder Sharmma) Chairman and Managing Director Place : Kanpur Date : 10th August, 2015 |