REPORT OF THE DIRECTORS TO THE MEMBERS Your Directors have pleasure in presenting the Fifty-fourth Annual Report, together with the Audited Accounts for the year ended 31st March 2015 2. DIVIDEND Though the Company has suffered a loss during the year, your Directors have recommended a dividend of 25% (Rs. 2.50 per equity share of Rs. 10/- each) out of Reserves and Surplus for the year ended 31st March 2015 on the paid up Equity Share Capital of Rs. 1,460 lacs, resulting in an outgo of Rs. 438 lacs inclusive of dividend tax. 3. RESERVES After withdrawing Rs. 438 lacs for payment of dividend, the Reserves of the Company stood reduced to Rs. 550 crore at the end of the year under review as against Rs. 556 crore for the previous year. 4. OPERATIONS Your Company's sales turnover during the year 2014-15 touched Rs. 2,03,982 lacs against Rs. 2,29,675 lacs in the year 2013-14, resulting in a decline of about 11%. The sales volume also declined marginally at 2,62,640 KLS/MTs during the year 2014-15 as against 2,72,805 KLs/MTs achieved in the year 2013-14. For the first time since listing, your Company suffered a loss of Rs. 127 lacs during the year under review as against a net profit of Rs. 8,974 lacs for the previous year. The loss incurred by your Company was due to extraordinary and unprecedented fall in the price of Crude Oil from USD 105 per barrel (NYMEX) in July, 2014 to USD 48 per barrel in March, 2015 resulting in unprecedented fall in the price of Base Oil resulting in high inventory losses to your Company. This adverse situation was worsened by the foreign exchange volatility, both resulting in uncertain/deferred demand for the products of your Company. The consistent fall in prices of Crude Oil and Base Oil especially in the second half of year 2014 finally started showing signs of bottoming out in the first quarter of year 2015. Since then, these prices have shown a lot more stability which augurs well for your Company. During the financial year 2014-15, your Company's Wind Power Plants situated in the states of Maharashtra, Karnataka and Tamil Nadu generated a total of 88.53 MU against 93.06 MU generated in the previous year. During the year under review, your Company did not install any new wind mills leaving the total installed capacity in Wind Power sector of your Company at 54.15 MW. 5. PUBLIC DEPOSITS Your Company has not accepted any deposits from the public or its employees during the year under review. 6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 7. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated by Securities and Exchange Board of India (SEBI). The report on Corporate Governance as per the requirement of the Listing Agreement forms an integral part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance. 8. DIRECTORS As per the provisions of Section 152 of the Companies Act, 2013, Mr. Gautam N. Mehra, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Based on recommendations of the Nomination and Remuneration Committee, the Board of Directors - 1) in its Meeting held on 31st October 2014 and after reviewing the declaration submitted by Mrs. Meghana C. Dalal, formed an opinion that she meets with the criteria of Independence as per Section 149 (6) of the Companies Act, 2013 ("the Act") and the rules made thereunder and also meets with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges and accordingly appointed her as an Additional Director to hold office as an Independent Director of the Company w.e.f. 31st October 2014 upto the conclusion of the ensuing Annual General Meeting of the Company. 2) in its Meeting held on 1st August 2015 has proposed to appoint her as an Independent Director of the Company for a period upto 31st March 2019 from the conclusion of the ensuing Annual General Meeting, subject to approval by the Members of the Company. Mrs. Meghna C. Dalal is a Commerce Graduate and a Fellow Member of the Institute of Chartered Accountants of India. She has experience in professional practice for the last 29 years specialising in Management of Corporate Emoluments across various Industries. She is also a Director of Chetan Dalal Investigation and Management Services Private Limited. She is engaged with the Company in the capacity as an Independent Director. Your Company has received the requisite disclosures/declarations from Mrs. Meghana C. Dalal as required under the relevant provisions of the Companies Act, 2013. Your Company has also received Notice from a Member under Section 160 (1) of the Companies Act, 2013 signifying intention to propose her candidature for the office of Director of the Company. 3) in its meeting held on 1st August 2015 re-appointed Mr. Gautam N. Mehra as the Managing Director for a period of 3 years and Mr. C. V. Alexander as the Whole-time Director of your Company till the conclusion of the next Annual General Meeting. Their re-appointments as the Directors of the Company are subject to the approval of the Members at the ensuing Annual General Meeting. Item Nos.5, 7 & 8 of the Notice along with the Explanatory Statement be treated as Abstracts of the terms and conditions of their appointments/re-appointments under Section 196 of the Companies Act, 2013. Profiles of the Directors seeking appointment/re-appointment have been given in the Notice of the ensuing Annual General Meeting of the Company. Your Company has also received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. 9. KEY MANAGERIAL PERSONNEL During the year under review, in addition to Mr. C. V. Alexander, Whole-time Director of the Company, Mr. Suhas M. Dixit and Mr. Uday C. Rege were formally appointed as Key Managerial Personnel of the Company in compliance with the provisions of Section 203 of the Companies Act, 2013 w.e.f. 21st July 2014. Mr. Suhas M. Dixit functions as the Chief Financial Officer of the Company and Mr. Uday C. Rege as the Company Secretary and Executive VP - Legal of the Company. Remuneration and other details of the said Key Managerial Personnel for the financial year ended 31st March 2015 are mentioned in the Extract of the Annual Return which is attached to the Board's Report. 10. BOARD COMMITTEES The Board of Directors of your Company has constituted various Committees in compliance with the provisions of the Companies Act, 2013/Listing Agreement viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Risk Management Committee and CSR Committee. All decisions pertaining to the constitution of Committees, appointment of members and fixing of reference/role of the Committees are taken by the Board of Directors. Details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Corporate Governance Section of the Annual Report. 11. NUMBER OF MEETINGS The Board of Directors of your Company met 4 times during 2014-15. The Board Meetings were held on 29th May 2014, 21st July 2014, 31st October 2014 and 31st January 2015. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days. The Audit Committee met 4 times during 2014-15 on 29th May 2014, 21st July 2014, 31st October 2014 and 31st January 2015. The Nomination and Remuneration Committee met thrice on 29th May 2014, 21st July 2014 and 23rd February 2015. The Risk Management Committee met on 31st January 2015 and the CSR Committee met on 29th May 2014. 12. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134 (5) of the Companies Act, 2013, your Directors confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) the selected accounting policies were applied consistently and the Directors 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 as at March 31, 2015 and of statement of profit and loss of the Company for the year ended on that date. c) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis. e) the internal financial controls have been laid down to be followed by the Company and such controls are adequate and are operating effectively. f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and are operating effectively. 13. PERFORMANCE EVALUATION Pursuant to the provisions of Section 134 (3) (p), 149 (8) and Schedule IV of the Companies Act, 2013 and Clause 49 of the Listing Agreement, annual performance evaluation of the Directors as well as of the Audit Committee, Nomination and Remuneration Committee and Stakeholders' Relationship Committee for the year 2014-15 was carried out by your Company. For the year 2014-15, the performance evaluation of the Independent Directors was carried out by the entire Board and the performance evaluation of the Chairman and Non-Independent Directors was carried out separately by the Independent Directors. 14. INDEPENDENT DIRECTORS' MEETING During the year under review, the Independent Directors of the Company met on 31st March 2015, interalia, to discuss: i) Evaluation of performance of Non-Independent Directors and the Board of Directors of the Company as a whole. ii) Evaluation of performance of the Chairman of the Company, taking into account views of Executive and Non-Executive Directors. iii) Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties. 15. MANAGERIAL REMUNERATION The information required under Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as a separate annexure. Additional information as required under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request by any Member of the Company. In terms of Section 136 (1) of the Companies Act, 2013, the Report and the Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining copy of the same may write to the Company Secretary at the Registered Office of the Company. 16. NOMINATION AND REMUNERATION POLICY The Nomination and Remuneration Policy recommended by the Nomination and Remuneration Committee was approved by the Board of Directors of the Company in its Meeting held on 29th May 2014. The Remuneration Policy of the Company is attached to this Report as a separate annexure. 17. CSR POLICY The Corporate Social Responsibility Policy recommended by the CSR Committee was approved by the Board of Directors of the Company in its Meeting held on 29th May 2014. The same is available on the website www.savita.com of the Company. The disclosure relating to the amount spent on Corporate Social Responsibility activities for the financial year ended 31st March 2015 is attached to this Report as a separate annexure. 18. LISTING AND OTHER REGULATORY ORDERS AGAINST THE COMPANY, IF ANY Your Company's shares continue to be listed on BSE Limited and National Stock Exchange of India Limited. The Listing Fees to these two Stock Exchanges for the year 2015-16 have been paid by your Company on time. There were no significant or material orders passed by any of the regulators or courts or tribunals impacting the going concern status and your Company's operations in future. 19. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND During the year, your Company has transferred Rs. 6.87 lacs towards unclaimed Interim Dividend, Rs. 2.02 lacs towards unclaimed Final Dividend and Rs. 1.42 lacs towards unclaimed Fractional Entitlement (totaling to a sum of Rs. 10.31 lacs) to the Investor Education and Protection Fund, which amounts were due and payable for the year 2006-07 and remained unclaimed and unpaid for a period of 7 years, as provided in Section 124 of the Companies Act, 2013. 20. STATUTORY AUDITORS The Members of the Company had, at the 53rd Annual General Meeting held on 6th September 2014 approved the appointment of G. M. Kapadia & Co., Chartered Accountants, Mumbai, bearing Firm Registration No.104767W as the Statutory Auditors of the Company, to hold office from the conclusion of that AGM until the conclusion of the 56th Annual General Meeting subject to ratification of the appointment by the Members at every AGM held after the aforesaid AGM. In view of the above, the existing appointment of G. M. Kapadia & Co., Chartered Accountants, Mumbai covering the period from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting to be held in the year 2016-17, is being placed for Members' ratification. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the rules made thereunder, as may be applicable. 21. AUDITORS' REPORT The Auditors' Report to the Members on the Accounts of the Company for the financial year ended March 31, 2015 is attached to this Report and does not contain any qualification, reservation or adverse remark. 22. SECRETARIAL AUDIT REPORT Secretarial Audit for the year 2014-2015 was conducted by MP & Associates, Company Secretaries in Practice in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report is attached as a separate annexure to this Report. In connection with the Auditors observations in the report, it is clarified that the non-filing of MGT-14 in respect of one board resolution happened inadvertently and the excess remuneration paid to the Managing Director is being placed before the Members for their approval at the ensuing AGM after which necessary application for waiver will be filed with the authorities. 23. COST AUDIT In compliance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors of the Company at its meeting held on 30th May 2015 had appointed M/s Sevekari, Khare & Associates, Cost Accountants as Cost Auditors of the Company for the year 2015-16. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of The Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors has to be ratified by the Members. Accordingly, necessary resolution is proposed at the ensuing AGM for ratification of the remuneration payable to the Cost Auditors for year 2015-16. 24. RISK MANAGEMENT Pursuant to the requirement of Section 134 of the Companies Act, 2013, the Company has already put in place a Risk Management Plan. The Company has a robust business risk management framework to identify and evaluate business risks and opportunities. This framework seeks to have transparency, minimise adverse impact on the business objectives and enhance your Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at Company level. In accordance with the provisions of Clause 49 of the Listing Agreement, your Company has also constituted a Risk Management Committee and has displayed the Risk Management Policy on the website www.savita.com of the Company. 25. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has Internal Control Systems, commensurate with the size, scale and complexity of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies within the Company with the help of an outside auditing firm. The report of internal audit function is assessed by the Audit Committee from time to time which in turn suggests undertaking corrective actions in the respective areas and thereby strengthens the controls. Significant observations and corrective actions thereon are presented by the Audit Committee to the Board of Directors of the Company from time to time. 26. VIGIL MECHANISM The Company has a vigil mechanism policy to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy framed for the purpose is uploaded on the website www.savita.com of the Company. 27. RELATED PARTY TRANSACTIONS All related party transactions attracting compliance under Section 188 and / or Clause 49 of the Listing Agreement are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee is also sought for transactions which are of a foreseen and repetitive nature. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors of the Company is uploaded on the website www.savita.com of the Company. The disclosures on related party transactions are made in the Financial Statements of the Company. 28. EXTRACT OF ANNUAL RETURN The details forming part of the extract of Annual Return in prescribed Form MGT 9 is annexed as a separate annexure forming part of this Report. 29. SEXUAL HARASSMENT GRIEVANCES During the year under review, there were no grievances reported under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 30. INDUSTRIAL RELATIONS The industrial relations continued to be generally peaceful and cordial during the year. 31. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required to be disclosed under the Companies (Accounts) Rules, 2014, is given as an annexure forming part of this Report. 32. ACKNOWLEDGEMENTS Your Directors would like to acknowledge and place on record their sincere appreciation to all stakeholders - Customers, Suppliers, Financial Institutions, Banks, the Company's valued investors and all other business partners for their continued co-operation and excellent support received during the year. Your Directors recognize and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress. For and on behalf of the Board Gautam N. Mehra Managing Director (DIN:00296615) Place : Mumbai Date : 1st August 2015 |