Directors' Report Dear Shareholders, Your Directors have pleasure to present the 26th Annual Report of the Company together with the Audited Accounts for the financial year ended 31st March, 2015. 2. Performance: The financial year 2014-15 has been very important year for the Company. Your Company achieved a good turnover of Rs.4920.55 lakhs during the year 2014-15 as against turnover of Rs.3505.31 lakhs during the previous year. The Company could make profit Rs.81.94 lakhs before taxes as against Rs.92.94 lakhs during the previous year. After providing for prior period adjustments and taxes, the Company could make net profit of Rs.53.65 lakhs during 2014-15 as against net profit of Rs.61.49 lakhs during 2013-14. Though the turnovers have increased, the profitability of the Company has come down because of heavy competitive prices for the products and failure of agriculture season in some parts of the Country which resulted in cut down of the prices of the products in the market. During the year 2014-15, the turnover increased by 40.37% as compared to the turnover of 2013-14. The ratio of Manufacturing Expenses to the Sales during the year 2014-15 is 84.51% as against 77.88% during 201314. The ratio of Administrative, Selling and other expenses to the total expenditure is 14.24% during the year 2014-15 as against 17.26% during 2013-14. 3. Review of Operations: a. Brief about Activities and Operations of the Company: Your Company is mainly into the business of manufacturing & marketing of pesticides for agriculture sector and presently carrying on the business in two segments i.e. Pesticides Formulations and Real Estate Activities. The main focus is on the Pesticides Business and the following manufacturing facilities for various pesticides formulations are available at the Factory: i. Liquid & SC Formulations ii. Weedcide Formulations iii. Wettable & Powder Formulations iv. Granule Formulations Presently, the Company has Production Capacity of 90,00,000 Ltrs/Kgs per annum to manufacture various pesticide formulations and has established its marketing network in the states of Andhra Pradesh, Telangana, Maharashtra, Gujarat and Karnataka. The products are marketed with its own brands through dealers & distributors network. The Company is also into Real Estate Activity in a small way in Bengaluru for the last few years. b. Performance of the Company: The Company has achieved good turnovers during the year 2014-15 compared to previous year and the profits have decreased due to failure of agri season in some parts of country resulting in cut down of prices of the products and heavy competition in the market. Apart from this, finance cost and employee's cost have effected the profits. Though the sales are less in the real estate activity, good profit is recorded. c. Prospects for the Financial Year 2015-16: The Company estimates a turnover of Rs.61.07 crores during the current year 2015-16. Since the Primary business of the Company is Agri related, monsoon conditions play major role in achieving the estimated turnovers. With the established marketing network, the Company is hopeful of reaching its target. As on date, the Company's deployment of funds in Real estate is Rs. 96.79 lakhs and hopes to encash the opportunities available in the real estate field at Bengaluru with good margins. 4. Dividend: Your Board of Directors could not recommend any Dividend for the financial year 2014-15 as the Company proposes to plough back its profits for the internal use keeping in view the long term growth of the Company. 5. Details of Subsidiary / Joint Ventures / Associate Companies: The Company does not have any Subsidiaries or Joint Ventures or Associate Companies. 6. Finance: Cash and cash equivalents as at 31st March, 2015 was Rs.46.54 lakhs. The Company continues to focus on judicious management of its working capital, receivables, inventories and other working capital parameters and they were kept under strict check through continuous monitoring. 7. Material changes and Commitments, affecting the Financial Position of the Company: There were no material changes and commitments affecting the financial position of the Company from the year ended 31st March 2014 to till the date of this report. 8. Details of Significant and Material Orders passed by the Regulators / Courts / Tribunals impacting the going concern status and the Company's operations in future: There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status, growth and operations of the Company in future. 9. Share Capital: The authorised share capital of the Company is Rs.4,75,00,000 which is divided into 47,50,000 equity shares of Rs.10/- each and paid up share capital is Rs.4,30,02,000 divided into 43,00,200 equity shares of Rs.10/-each. There is no change in the Share Capital of the Company during the year. Further details of share capital are mentioned at Notes - 2 of the Annual Report. 10. Reserves: The Reserves in Profit & Loss account as per last Balance Sheet is Rs.3,11,59,115 and the Company transferred the profits of Rs.53,64,570 for the financial year 2014-15 to Reserves & Surplus account. After adjusting the Depreciation on fixed assets and deferred tax income of Rs.16,76,823, balance reserves are available at the end of the year, 2014-15 is Rs.3,48,46,862. Further details of Reserves & Surplus are mentioned at Notes - 3 of the Annual Report. The Company has revised the useful life of its Fixed Assets to comply with the useful life as mentioned under Schedule II of the Companies Act, 2013. The carrying amount of the Fixed Assets as on 1st April, 2014 has been depreciated over the remaining revised useful life of the Fixed Assets. Consequently, the carrying value of assets whose useful lives are already exhausted as on 1st April 2014 amounting to Rs.24.27 lakhs and Deferred tax of Rs.7.50 lakhs thereon have been adjusted with the opening balance of Reserves as on 1st April 2014. 11. Corporate Social Responsibility (CSR) : The compliance of CSR policy is not applicable to your Company. However, to carry out the spirit of CSR, the Company has taken up few need based initiatives, released some funds. 12. Deposits : The Company has not accepted any fixed deposits from the public during the year. 13. Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013: The Company has not provided any Loans, given Guarantees or made any Investments in any other Companies during the year under Section 186 of the Companies Act, 2013. 14. Particulars of Contracts or Arrangements with Related Parities under Section 188 of the Companies Act, 2013 : All contracts / arrangements / transactions entered by the Company during the financial year with related parties 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 / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. However, particulars of these transactions are given at Notes 38 to Accounts in compliance of AS No.18. 15. Risk Management Policy : The Company has formulated effective risk management policy and through a Steering Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. Major risks identified in the Company are systematically addressed through justifying actions on a continuing basis. In addition to this, the audit committee has additional oversight in the area of financial risks and controls. The details of Risk Management as practiced by the Company is provided as part of Management Discussion and Analysis Report attached to this Report. 16. Disclosures under Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013 : There are no cases filed / complaints lodged pursuant to the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013: 17. Extract of Annual Return : The extract of Annual Return is given in Annexure - I in the prescribed Form MGT-9, which forms part of this Report as required under Section 92(3) of the Companies Act, 2013. 10. Reserves: The Reserves in Profit & Loss account as per last Balance Sheet is Rs.3,11,59,115 and the Company transferred the profits of Rs.53,64,570 for the financial year 2014-15 to Reserves & Surplus account. After adjusting the Depreciation on fixed assets and deferred tax income of Rs.16,76,823, balance reserves are available at the end of the year, 2014-15 is Rs.3,48,46,862. Further details of Reserves & Surplus are mentioned at Notes - 3 of the Annual Report. The Company has revised the useful life of its Fixed Assets to comply with the useful life as mentioned under Schedule II of the Companies Act, 2013. The carrying amount of the Fixed Assets as on 1st April, 2014 has been depreciated over the remaining revised useful life of the Fixed Assets. Consequently, the carrying value of assets whose useful lives are already exhausted as on 1st April 2014 amounting to Rs.24.27 lakhs and Deferred tax of Rs.7.50 lakhs thereon have been adjusted with the opening balance of Reserves as on 1st April 2014. 11. Corporate Social Responsibility (CSR) : The compliance of CSR policy is not applicable to your Company. However, to carry out the spirit of CSR, the Company has taken up few need based initiatives, released some funds. 12. Deposits : The Company has not accepted any fixed deposits from the public during the year. 13. Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013: The Company has not provided any Loans, given Guarantees or made any Investments in any other Companies during the year under Section 186 of the Companies Act, 2013. 14. Particulars of Contracts or Arrangements with Related Parities under Section 188 of the Companies Act, 2013 : All contracts / arrangements / transactions entered by the Company during the financial year with related parties 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 / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. However, particulars of these transactions are given at Notes 38 to Accounts in compliance of AS No.18. 15. Risk Management Policy : The Company has formulated effective risk management policy and through a Steering Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. Major risks identified in the Company are systematically addressed through justifying actions on a continuing basis. In addition to this, the audit committee has additional oversight in the area of financial risks and controls. The details of Risk Management as practiced by the Company is provided as part of Management Discussion and Analysis Report attached to this Report. 16. Disclosures under Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013 : There are no cases filed / complaints lodged pursuant to the Sexual Harassment of Women at workplace (Prevention, Prohibition & Redressal) Act, 2013: 17. Extract of Annual Return : The extract of Annual Return is given in Annexure - I in the prescribed Form MGT-9, which forms part of this Report as required under Section 92(3) of the Companies Act, 2013. 18. Directors and Key Managerial Personnel: Pursuant to provisions of Section 149 and other applicable provisions of the Companies Act, 2013 read with Rules thereon, the following Directors were appointed as Independent Directors of the Company at the Annual General Meeting held on 29-09-2014 for a period of three years effective from the meeting date. a. Mr.C.N.Chary b. Mr.T.A.Choudary c. Mr.N.Sudhakar d. Mr.M.Balarama Krishnaiah e. Mrs.S.Kavitha Rani Dr.Y.Venkateswarlu and Mr.P.Anjaneyulu who retired by rotation were reappointed as Directors liable to retire by rotation at the Annual General Meeting held on 29-09-2014. In accordance with the provisions of Section 152 of the Companies Act, 2013, Dr.Sreemannarayana Prathipati (DIN:00377472) will retire by rotation at this Annual General Meeting and being eligible, has offered himself for re-appointment. During the year, the non-executive and Independent Directors of the Company had no pecuniary relationship or transactions with the Company. Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr.Ashok Kumar Pipalwa an Associate Member of the Institute of Company Secretaries of India, was appointed as Company Secretary of the Company during the year. 19. Declaration by the independent Directors of the Company that they meet the criteria of independence as provided in Sec 149(6) of the Companies Act, 2013 : All the independent Directors have given declarations that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. 20. Formal evaluation statement by the Board of its own performance, it's committees and individual Directors : Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing Agreement, the Board has formulated a policy for evaluation of its Board, Board Committees, Directors and their performances and carried out evaluation of them. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 21. Number of Meetings of the Board : Six meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report. 22. Audit committee : Four meetings of the Audit Committee were held during the year. The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report. 23. Directors' Responsibility Statement : As required under section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: a. In the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed. b. The Directors 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 as at 31st March, 2015 and of the profit of the Company for the year ended on that date. c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d. The Directors have prepared the annual accounts of the Company on a going concern basis. 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 and 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. 24. Auditors & Observations : M/s. T. Adinarayana & Co., Chartered Accountants, Hyderabad (Firm Registration No: 000041S) were appointed as the statutory auditors of the Company for a period of three years at the Annual General Meeting(AGM) of the Company held on 29th September, 2014. Their appointment for the above tenure is subject to ratification by the members at every AGM. They have given their willingness to accept the reappointment and intimated that they are not disqualified for reappointment as per Section 139 of the Companies Act, 2013. The ratification for reappointment as Auditors of the Company is recommended to the members of the Company in the ensuing AGM. The Auditor's Report does not contain qualification, reservation or adverse remark on the accounts and related matters of the Company. 25. Declaration from Independent Directors on Annual Basis : The Company has received the necessary declarations from all the independent Directors of the Company on annual basis during the year. 26. Policy on Directors' Appointment and Remuneration and other details : Policy laid down by the Nomination and Remuneration Committee for Remuneration of Directors, KMP & other Employees and the criteria formulated by the Committee for determining Qualifications, Positive Attributes, Independence of a Director. The Company's policy on Directors' Appointment and Remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of the Directors' Report. 27. Depository System : As the Members are aware, your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with Central Depository Services (India) Limited (CDSL) & National Securities Depository Limited (NSDL). In view of the numerous advantages offered by the depository system, the Members are requested to avail the facility of Dematerialization of the Company's shares on CDSL & NSDL. The ISIN allotted to the Company's Equity shares is INE 037C01010. The Company is pursuing the share holders, including the promoters, holding the shares in physical form for dematerialization of their shares. 28. Vigil Mechanism / Whistle Blower Policy : Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Policy on Vigil Mechanism / Whistle Blower and the same will be posted shortly on the official website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director / employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. 29. Secretarial Audit Report : Pursuant to provisions of section 204 of the Companies Act, 2013, the Company has appointed M/s Puttaparthi Jagannatham and Co., Company Secretaries to undertake the secretarial audit of the Company. The Secretarial Audit Report obtained is annexed within as Annexure- II. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 30. Disclosures of Ratio of Remuneration to each Director : The ratio of the Remuneration of each Director to the median Remuneration of the employees of the Company for the financial year: The Ratio to median remuneration - a. Executive Directors:- i. Mr. Y. Nayudamma - 11.89 : 1 ii. Mr. Y. Janaki Ramaiah (w.e.f. 29th July, 2014)* *Since this information is for part of the year, the same is not comparable. b. Non-executive Directors :- i. Dr. P. Sreemannarayana ii. Dr. Y. Venkateswarlu iii. Mr. P. Anjaneyulu iv. Mr. C. N. Chary v. Mr. T. A. Choudary vi. Mr. N. Sudhakar vii. Mr. M. Balarama Krishnaiah viii. Mrs. S. Kavitha Rani The Company has not paid any remuneration to the Non-executive Directors except sitting fee. 31. Corporate Governance : The Company is committed to maintain and adhere to the good standards of Corporate Governance. As per Clause 49 of the Listing Agreement, a Report on Corporate Governance forming part of this Report, together with the Auditors' Certificate regarding the compliance of the conditions of Corporate Governance is given in a separate section in the Annual Report. 32. Particulars regarding Energy Consumption, Technology Absorption and Foreign Exchange Earning and Outgo: The particulars prescribed under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are furnished in Annexure - III to this Report. 33. Payment of Listing fee : The shares of the Company are listed at Bombay Stock Exchange Limited, which has nationwide trading terminals and the listing fee has been paid by the Company upto date. 34. Prevention of Insider Trading : The Company has adopted a code of conduct for prevention of insider trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The code requires pre clearance for dealing in the Company's shares and prohibits the purchase or sale of Company's shares by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Board is responsible for implementation of the code. All the Board Members and the designated employees have confirmed compliance with the Code. Acknowledgements : The Directors wish to express their appreciation for the assistance and continued co-operation received from the Central and State Governments, Banks, Financial Institutions, Customers, Dealers and Suppliers and also the Directors wish to thank all the employees for their contribution, support and continued cooperation throughout the year. For and on Behalf of the Board N. Sudhakar Director DIN : 00426897 Y. Nayudamma Managing Director DIN : 00377721 Place: Hyderabad Date : 06th August, 2015 |