DIRECTORS REPORT Dear Members, Your Directors take pleasure in presenting the 67th Annual Report together with the Audited Financial Statements for the year ended on 31st March, 2015. 2. DIVIDEND Due to inadequacy of Profit and the provisions of the Companies Act, 2013, your Directors are not in position to propose any dividend for the year ended on 31st March, 2015. 3. OPERATIONS REVIEW During the year under review, the company commenced the infrastructure development of its real estate project 'Shervani Legacy' as per approved layout plan. This includes construction of roads, pedestrian pathways, sewer, water and electricity lines. The project has received much appreciation from the public but the booking of plots could not reach the expected levels due to a sluggish market and the slow down of the economy in general. The initial development expenses, therefore, are not commensurate with the amount of advance received towards booking of plots. But during the next year, your company hopes to book and sell plots in line with its business plan. 4. MANAGEMENT DISCUSSION AND ANALYSIS A. Business Overview, Industry Structure and Development While there have been positive signals from the new Government in power, the macro economic recovery is yet to kick in. Real estate sector has been under economic slowdown for the past year or two that has also had an adverse impact on the sale of plots. As the economy and the real estate business recovers, your company expects the sales to speed up as well. In second tier cities the real estate business is not as organized as in the metros providing many opportunities to both direct and develop the market by providing value added products. The demand for housing from upper and middle strata of society in such cities is expanding and your Company expects to capitalize on the same by building group housing apartments as planned in the second stage of the Shervani Legacy project. B. Outlook on Opportunities, Threats, Risks and Concern Growing urbanization is lifting the demand in housing sector specially in tier two cities. The high standards of construction adhered to in the previous project has infused trust and had a positive impact on the current development which is reflected in enquiries from the public for the current Shervani Legacy project. Continuous upward trend in input cost and instability in international money market is a matter of concern for Indian public including real estate industry. Completion of Project in optimal time and according to schedule is key to building strong reputation and maximizing profits. Delays increase the input costs and have adverse impact on project. A significant factor leading to delays both in terms of time, risk and cost is over land acquisition and related legal documentation. In the current project the ready availibility of land off sets the risks and concern factor to a great extent. C. Subsidiary Company M/s Farco Foods Pvt Limited, the wholly owned subsidiary of your Company has maintained its productivity by manufacturing 5139 MT biscuits of Priyagold Brand on job work basis. We are hopeful that in coming financial year the plant will be upgraded to gas plant which will help to improve the quality of finished product. D. Internal Financial Controls The Company has an adequate system of internal control to ensure compliance with policies and procedures. The internal audit is done by an independent firm of Chartered Accountants. The internal audit reports alongwith recommendations contained therein are reviewed by the Audit Committee of the Board. E. Development in Human Resource and Industrial Relation The Company maintains a very cordial relationship with its employees. They whole heartedly support the management in all activities and endeavors. F. Research and Development In view of the nature of business activities of the Company there is little scope for research and development work. The company is making all efforts to reduce costs by maintaining the standards for the benefit of consumers. 5. CORPORATE GOVERNANCE As per Clause 49 of The Listing Agreement with the Stock Exchange a separate section on the corporate governance practices followed by the Company together with a certificate from the Company's Auditors confirming compliance is separately furnished and forms an integral part of this report. 6. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure -A. 7. BOARD MEETINGS The calendar of Meetings is prepared and circulated in advance to the Directors. During the year, 4 nos. Board Meetings were convened and details of which are given in the Corporate Governance Report. 8. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134 (3) of the Companies Act, 2013, the Directors state that; (i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed; (ii) the directors 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 as at the end of the financial year and of the profit and loss of the Company for that period; (iii) the Directors 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: (iv) the Directors had prepared the Annual Accounts on a going concern basis: (v) 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 (vi) 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. 9. DECLARATION BY INDEPENDENT DIRECTORS All Independent Directors have given declaration that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. 10. NOMINATION & REMUNERATION The Board on the recommendation of the Nomination & Remuneration Committee, make the appointment of Directors, senior management and fix their remuneration. Key Management Personnel are appointed by the Board after consideration of their qualification and exposure to required fields. The details are stated in the Corporate Governance Report. 11. AUDITORS REPORT The observations of the Statutory Auditors in their report are appropriately dealt with notes forming part of Financial Statement. No qualification or adverse remarks has been made by the Company Secretary in practice in his Secretarial Audit Report. 12. RELATED PARTY TRANSACTIONS To provide transparency in management and ensure compliance with the provisions of various laws the Audit Committee has provided guidelines to the Directors/Board. The guidelines inter alia provide for identification, manner of dealing, conduct and documentation of such transactions as per the provisions of the Companies Act and other applicable rules and regulations. There were no related party transactions between the Company and the Promoters, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of Company. All related party transactions that were entered in to during the financial year were in the ordinary course of business and disclosed at Note No.31 attached to the balance sheet. None of the Director's has any pecuniary relationship or transaction vis-a-vis the Company. 13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO There is nothing to report about the conservation of energy and technology absorption during the year. There is no foreign exchange earnings and outgo. . 14. RISK MANAGEMENT Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out separately in the Corporate Governance Report. 15. CORPORATE SOCIAL RESPONSIBILITY The provisions of section 148 of the Companies Act, 2013 are not applicable to your company. 16. BOARD EVALUATION The Board carries out annual evaluation of its own performance, of the Directors individually as well of the working of its various Committees. The key areas for evaluation are the quality of deliberations and contribution towards performance and guidance to management. The Board of Directors expressed their satisfaction with the evaluation process. 17. DIRECTORS Mr.Tahir Hasan and Mr.Raju Verghese are the Directors retiring by rotation and, being eligible, offers themselves for re-appointment. In compliance of section 161 of the Companies Act, 2013 and Listing Agreement regarding appointment of woman Director the Board in the meeting held on 9.02.2015 appointed Mrs Shefali Bansal as an Additional Director of the Company till the date of this Annual General Meeting. The Board recommends the appointment of Mrs Shefali Bansal as Director of the Company liable to retire by rotation. As required by the Listing Agreement with the Stock Exchange the relevant details in respect of the Directors proposed to be appointed / re-appointed have been annexed to the notice of meeting in terms of Section 102(1) of the Companies Act 2013.The Directors recommend all the resolutions placed before the Members relating to Directors for their approval. 18. STATUTORY AUDITORS M/s P.L.Tandon & Co. Chartered Accountants, Kanpur retire at the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility under section 141 of the Companies Act, 2013 and the rules framed there under for re-appointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 19. SECRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies ( Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s Siddiqui & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of Secretarial Auditor is annexed herewith as Annexure-B. 20. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013 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. 21. SUBSIDIARY COMPANY FARCO FOODS PRIVATE LIMITED During the year under review the subsidiary company has produced 5139 MT biscuits of Priyagold Brand on job work basis. The unit earned a profit of Rs.33.46 lacs. 22. DEPOSITS The Company had discontinued its public deposit scheme in financial year 2014-2015 and paid all the deposit alongwith interest thereon during the financial year. The Company has not accepted or renewed any deposit during the year falling within the ambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 accordingly no amount was outstanding as on date of the Balance Sheet. 23. CONSOLIDATED FINANCIAL STATEMENT In accordance with the section 129(3) of the Companies Act, 2013 and the accounting standard AS-21 on consolidated financial statement(s) read with accounting standard AS-23 on accounting for investments in associates, your Company has prepared the consolidated financial statements and the salient features of the financial statements of the subsidiary and associate companies are given in the Notes to Consolidated Financial Statements and annexed here-with in Form AOC-1 as Annexure-C. 24. DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT & REMUNERATION ) RULES, 2014. None of the employee of the Company was in receipt of total remuneration of Rs. 60,00,000/- per annum, or Rs. 5,00,000/-per month during the financial year under review. Information required pursuant to section 197 of the Companies Act, 2013 read with Rule 5 of the Companies ( Appointment & Remuneration ) Rules, 2014 is annexed as Annexure-D. 25. INDUSTRIAL RELATIONS Industrial relations remained satisfactory during the period under review. 26. ACKNOWLEDGEMENTS Your Directors wish to convey their deep sense of appreciation for the continued support, and co-operation extended by bankers, Central and State Government and all other stakeholders. The Directors also wish to place on record their sincere appreciation for the commitment and enthusiasm of the employees for the Company. For and on behalf of the Board Tahir Hasan Whole-time Director S I Shervani Managing Director & Chief Financial Officer Place: Allahabad Date: August 8, 2015 |