BOARD'S REPORT To the Members, The Directors have pleasure in presenting before you the Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2015. Performance of the Company: During the financial year ended 31st March 2015 your company continued its efforts for recovery of non-performing assets as done in the previous financial years. During this period the company had recovered Rs.0.57 crores from individual housing loans and project loan accounts as against Rs.1.41 crores during the previous year. The loss for the financial year 2014-15 has decreased to Rs.7.35 crores when compared to Rs. 9.24 crores in the previous financial year. Dividend During the year, your company had incurred a net loss of Rs.7.35 crores. Hence the Board of Directors have not recommended any dividend for the financial year ended 31st March 2015. BOARD MEETINGS: The Board of Directors met four times on 23.04.2014, 09.08.2014, 20.10.2014 & 07.02.2015 during this financial year. DIRECTORS AND KEY MANANGERIAL PERSONNEL Shri G. Rajeevan Pillai has resigned from the Board on his retirement from the services of Indian Bank consequent to his attaining superannuation on 31.05.2014. His resignation was taken on record by the Board at the meeting held on 09.08.2014. In this place Indian Bank has nominated Shri Udaya Baskara Reddy, General Manager, Indian Bank and he was co-opted as additional Director at the meeting held on 09.08.2014 and appointed as Director at the ensuing annual general meeting as Director liable to retire by rotation. Shri Udaya Baskara Reddy has resigned from the Board consequent to his transfer to Kolkata as Zonal Manager on 23.05.2015. Shri B Rajkumar has resigned from the Board consequent to completion of his term of appointment in Indian Bank as Executive Director on 31.05.2015. Indian Bank has nominated Shri S Krishnan, General Manager, Indian Bank and Shri V Gopal, General Manager, Indian Bank. They were inducted in the Board additional Directors at the Board meeting held on 13.08.2015. Shri K Subramanian, Sr. Executive Director, Regional Office, HUDCO, Chennai was in the Board of your company as nominee of HUDCO. The HUDCO has nominated Dr P Jayapal, Sr. Executive Director HUDCO in his place as Shri K Subramanian has retired from the services of HUDCO on attaining superannuation. Dr P Jayapal was inducted in the Board of your company on 30.05.2014. The HUDCO has nominated Smt Rekha V Sarathy Executive Director, Regional Office, HUDCO, Chennai in the place of Dr P Jayapal who was transferred to New Delhi. Smt Rekha V Sarathy was inducted into the Board on 09.08.2014 in the place of Dr P Jayapal. With the coming into force of the Companies Act, 2013, your Company, being a listed Company, Clause 49 of the Listing Agreement stipulates that 50% of the Board of Directors should be Independent Directors excluding the Nominee Director who was earlier treated as Independent Directors. In order to comply with the requirement our Board strength was increased to 8 by inducting 2 more Directors i.e., Shri T.R.Chandrasekaran and Ms. Sripriya Kumar (both are Chartered Accountants) as Additional Directors of the Company in the category of Independent Directors with effect from 09.08.2014 at the Board meeting held on 09.08.2014. At the annual general meeting held on 27.09.2014 the existing Independent Directors ie., Shri A Damodaran & Shri M.S. Natarajan and the Additional Directors appointed in the category of Independent Directors at the Board meeting held on 09.08.2014 i.e., Shri T.R.Chandrasekaran and Ms. Sripriya Kumar were appointed as Independent Directors under the Act each for a term of five years who will hold the office till the conclusion of 28th annual general meeting. They are not liable to retire by rotation. In the opinion of the Board the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and the rules made there under and are independent of the management. Your directors' place on record their appreciation for the valuable contributions made by Shri B Rajkumar, Executive Director, Shri Udaya Baskara Reddy, General Manager Shri G. Rajeevan Pillai, General Manager from Indian Bank and Shri K Subramanian & Dr P Jayapal, Sr. Executive Directors, HUDCO during their tenure as Directors of the company. RETIREMENT OF DIRECTORS BY ROTATION The company's Board consists of 4 Independent Directors who are not liable to retire by rotation as per the section 149(13) of the Companies Act, 2013. The nominee of HUDCO who is holding 25% share in the company is not liable to retire by rotation in terms of clause 110 of the Articles of Association of the company. The Managing Director who was appointed for a fixed tenure cannot retire by rotation. The other two Directors who are nominees of Indian Bank are appointed as Additional Directors at the Board meeting held on 13.08.2015. They will hold the office of Directorship until the ensuing annual general meeting and their appointment as Directors is placed before the ensuing annual general meeting. The other four Directors are Independent Directors who were appointed for fixed term of 5 years. They will hold the office till the conclusion of 28th AGM to be held in the year of 2019. None of the Directors are retiring by rotation. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). The Board has accepted all the recommendations of the Audit Committee. Pursuant to the provisions of the Companies Act, 2013 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 and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 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. The Remuneration Policy is stated in the Corporate Governance Report. VIGIL MECHANISM The Company has established a vigil mechanism called Whistle-blower Policy for its directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and as per Clause 49 of the Listing Agreement. The details of the Whistle-blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company DIRECTOR'S RESPONSIBILITY STATEMENT In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had 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 had 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 had prepared the annual accounts on a going concern basis; and e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively 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 form MGT 9 is annexed herewith. AUDITORS The Auditors, M/s Anand & Ponnappan, Chartered Accountants, Chennai were appointed by the office of the Comptroller and Auditor General of India, New Delhi in exercise of the powers conferred on them by section 139 of the Companies Act, 2013 as statutory auditors of the company for the financial year 2014-15. SECRETARIAL AUDIT: Secretarial audit report in form MR3 as given by M/s. P Sriram & Associates, Practising Company Secretary is annexed to this Report as annexure QUALIFICATIONS IN AUDIT REPORTS There is no qualification in auditors' report. However. observations made by the Auditors in their Report and Notes on Accounts furnished are self-explanatory. Information as per section 134 (3) (m) of the Companies Act 2013: a) the company has no activity relating to conservation of energy or technology absorption. b) The company did not have any foreign exchange earnings as well as expenses DETAILS RELATING TO DEPOSITS, COVERING THE FOLLOWING The Company has suspended accepting deposits from public since the year 1998. The company has taken efforts to identify and repaid all deposits including unclaimed deposits. The total amount of fixed deposits matured and remaining unclaimed with the Company as on March 31, 2015 was Rs.6.33 lakhs pending disposal in terms of Court orders. The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. During the year 2014-15, in terms of Section 125 of the Companies Act, 2013, an amount of Rs.2386/- was transferred to Investor Education and Protection Fund (IEPF) being the amount of deposits along with interest thereon, that remained unclaimed and unpaid for a period of 7 years from the date it became first due for payment. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS There is no significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the company's operations in future. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. RISK MANAGEMENT POLICY The company has put in place Risk Management Policy compatible with the type and size of operations and risk perception. The said policy is drawn up based on the guidelines of NHB issued in this regard. CORPORATE SOCIAL RESPONSIBILTY POLICY The company has incurred net loss during the last three financial years ending with 2014-15. The company does not fall within the criteria specified in the section 135 of the Companies Act, 2013 making mandatory for the company to contributory towards the corporate social responsibility. RELATED PARTY TRANSACTIONS The Company has availed term loan from Indian Bank, promoter bank, during the year 1998 and 2004 with the approval of the Board of Directors at the time of availing. This loan was availed during the normal course of business. Since the said loans are still outstanding, the details of which disclosed in the notes on accounts to the financial statements. Apart from this the company has no related party transactions referred to in section 188 (1) of the Companies Act 2013. FORMAL ANNUAL EVALUATION Pursuant to the provisions of the Companies Act, 2013 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 and Compliance Committees. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process and the performance of the Board RATIO OF REMUNERATION TO EACH DIRECTOR: Details / Disclosures of Ratio of Remuneration to each Director to the median employee's remuneration as ANNEXURE - I LISTING WITH STOCK EXCHANGES The Company confirms that it has paid the Annual Listing Fees of Rs. 2 lakhs for the year 2015-2016 to BSE where the Company's Shares are listed. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as a part of this Annual Report annexed. Certificate from the practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report. Particulars of Employees The information required pursuant to Section 197 read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, are attached to this report. None of the employees of the company received remuneration in excess of the limits prescribed Under Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules of the Companies Act, 2013. INDUSTRY BASED DISCLOSURES AS MANDATED BY THE RESPECTIVE LAWS GOVERNING THE COMPANY As required under National Housing Bank Directions, your Company is presently required to maintain a minimum capital adequacy of 12% on a stand-alone basis. The company capital adequacy ratio is negative due to continuous loss. The Company has adhered to the prudential guidelines for Non-Performing Assets (NPAs), issued by the National Housing Bank(NHB) under its Directions of 2010, as amended from time to time. The Company did not recognise income on such NPAs and further created provisions for contingencies on standard as well as non-performing housing loans and property loans, in accordance with the National Housing Bank Directions. General The Directors also place on record their appreciation for the assistance, active support and guidance received from NHB, the sectoral regulator for housing finance, Indian Bank and its officers and staff. The Directors express their appreciation for the contribution of the employees of the company. The Board of Directors thank all the Shareholders and Depositors for their patronage. Their continued patronage and support are of great encouragement to the company and will serve as a source of strength in all its future endeavours. For and on behalf of the Board of Directors V Gopal Director B Panda Managing Director Place: Chennai |