DIRECTORS' REPORT TO THE MEMBERS You Directors are pleased to present Twenty Eighth Annual Report, Audited Financial Statements and the report on Company's business and operations for the financial year ended 31st March, 2015. Operational and Financial Performance During the year ended 31st March, 2015 the Company has earned an Operating Income of Rs.6396.73 lakh against Rs.4441.35 lakh for the year ended 31st March, 2014. During the year the Company has successfully executed Contract for Seisloop Seismic Survey and its extension in Mizoram, three contracts for 2D and 3D Seismic Survey in Cambay Basin Gujarat, one contract for 2D Seismic Survey in Assam and One Contract for 2D Transition Zone Seismic Survey Contract in Cauvery Basin. Your Company's efforts in simultaneous execution of multiple contracts and organised resource management resulted in Profit before tax for the current year of Rs.1552.83 lakh against Rs.1147.67 lakh in previous year. Tax Expense for current financial year of H63.19 is net of MAT Credit entitlements of Rs.222.00 Lakh and Deferred Tax Credit for Rs.16.26 lakh. Profit after Tax for the current year is Rs.1489.64 lakh against Rs.1125.78 lakh in previous year. The Shareholders Funds as on 31st March 2015 are increased to 6149.05 lakh from Rs.4795.05 lakh as on 31st March 2014. Your Directors are of the view that, with the improved and committed government initiatives in Oil and Gas Exploration Sector, your Company will achieve better performance barring unforeseen circumstances, in the forthcoming year. Group Performance During the year ended 31st March, 2015 the total operations of the Group achieved an Operational Income of Rs.7268.04 lakh against Rs.9428.27 lakh for the year ended 31st March, 2014. Your Company has excelled in domestic front in the current year. However, sharp volatility in oil prices, delayed statutory clearances to exploration companies for the blocks awarded resulted in postponing or observing cautious approach in announcing seismic survey programmes internationally. Profit after Tax of the Group for the year is Rs.1449.45 lakh and the Shareholders Fund of the Group as on 31st March 2015 is Rs.8382.92 lakh. The international subsidiary of the group is making its efforts in expanding its operations to new geographical locations. Dividend Board of Directors are pleased to recommend a dividend at the rat e of Rs.2/- per Equity share of H10/- each for the financial Year 2014-15, for the approval of the Members at 28th Annual General Meeting of the Company. The Dividend if approved will be paid to those shareholders whose names appear on the register of the members of the Company as on 21st September 2015. Management Discussion and Analysis Report Management Discussion and Analysis Report for the year under review as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges, is presented as a separate section forming part of the Annual Report. Subsidiaries The Company has one 100% owned Subsidiary, Alphageo International Limited, incorporated in Jebel Ali Free Zone Area in Dubai and one 100% owned First Level Step Down Subsidiary Alphageo DMCC incorporated in Dubai Multi Commodities Center (DMCC). During the year ended 31st March, 2015 the Subsidiaries have achieved a turnover of H871.30 Lakh. A Statement containing salient feature of the Financial and Operational information of the Subsidiaries is provided in Form AOC-1 as Annexure-1 to this report. The Consolidated Financial Statements presented by the Company include the financial results of these Subsidiary Companies. Pursuant to Section 136 of the Companies Act, 2013, the Financial Statements of the Subsidiaries are available on the website of the Company and also will make available upon the request by any member of the Company. During the year there were no Companies which have become or ceased to be the Subsidiaries, Joint Ventures or Associate Companies of the Company. Consolidated Financial Statements In compliance with the Accounting Standard -21 notified under the Companies Act, 2013 ("Act") and Section 129(3) of Companies Act, 2013 on consolidated financial statements and with the Listing Agreement with the Stock Exchanges, the Consolidated Financial Statements of the Company and its Subsidiaries for the year ended 31st March, 2015 have been prepared and the same together with Auditors Report thereon form part of this Report. Number of Meetings of the Board of Directors During the year ended 31st March 2015, the Board of Directors has met five times on 29th May 2014, 12th August 2014, 10th November 2014, 5th January 2015 and 22nd January 2015. Directors Responsibility Statements as required under Section 134 of the Companies Act, 2013 Pursuant to the requirement under Section 134 of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the Annual Accounts for the year ended 31st March, 2015, the applicable Accounting Standards read with requirements set out under Schedule III to the Companies Act, 2013, have been followed and that there are no material departures from the same; (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 31st March, 2015 and of the profit for the year ended on that date; (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 Annual Accounts for the year ended 31st March, 2015 have been prepared on a going concern basis; and (v) internal financial controls have been laid down and such controls are adequate and operating effectively; (vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently. Audit committee The primary objective of the Audit Committee is to oversee the Company's financial reporting process and the disclosure of financial information to ensure that the financial statement is correct, sufficient and credible. The Audit Committee of the Board currently headed by Independent Director as Chairperson and another 2 Independent Directors and one Promoter Director as Members of the Committee. The Committee meets regularly to discharge its terms of reference effectively and efficiently. During the year there were no instances where the recommendations of the Audit Committee were not accepted by the Board. The details of Composition, scope, terms reference of the Audit Committee are in detail provided in Corporate Governance Report forming part the Directors' Report. Statutory Auditors The present auditors, M/s. P V R K Nageswara Rao & Co., Chartered Accountants, Hyderabad, at the 27th Annual General Meeting held on 26th September, 2014 were appointed as Auditors of the Company from the conclusion of 27th Annual General Meeting to the conclusion of 30th Annual General Meeting, subject to ratification of their appointment as such by the Members at the Annual General Meeting of the respective year in compliance with provisions of Section 139, 142 and applicable provisions of the Companies Act, 2013. The Auditors have confirmed that they are not disqualified from the re-appointment and their re-appointment if made is within limits under section 141(3)(g) of the Companies Act, 2013. Accordingly the appointment of present auditors as Auditors of the Company is placed for ratification by Shareholders Statutory Auditors' report on Financial Statements The Auditors' report on financial statements for the year ended 31st March 2015 does not contain any qualifications, reservations or adverse remarks. Particular of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013 During the year the Company has given an interest bearing loan of US$ 1,300,000 equivalent to Rs.8,13,68,040/- to its 100% owned Subsidiary Alphageo International Limited for meeting its commitments in their ordinary course of business. Particulars of Contracts or Arrangements with Related Parties Referred to in Sub-Section (1) of Section 188 of the Companies Act, 2013 The Particulars of the transactions with related parties as required in Accounting Standard-18 are given at Note. 27.II.12 of Notes on Financial Statements annexed to this Report. All contracts and transactions entered by the Company during the financial year with related parties were on arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Agreement. There are no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company during the year. The Company has adopted a policy on related party transactions and the same is available at URL: <http://www.alphageoindia>. com/pdf/RELATED%20PARTY%20 TRANSACTIONS %20 POLICY.PDF All the related party transactions are with the prior approval of the Audit Committee. The details of the transactions on quarterly basis are being provided to Committee for their review and consideration. During the year there were no contracts or arrangements or transactions entered into with the related parties other than at arm's length price and there were no material and significant transaction at arm's length price with the related parties. Accordingly there were no transactions during the year ended 31st March, 2015 required to be reported in Form AOC-2 of the Companies (Accounts) Rules, 2014. Transfer to Reserves During the year no amount has been proposed to transfer/ appropriated to any of the reserves and the entire surplus for the year ended 31st March 2015 is continued to be retained as Balance in Profit and Loss Account. Corporate Social Responsibility Committee The Company is committed to fulfil its Corporate Social Responsibility obligations and formed a Corporate Social Responsibility Committee currently consisting Two Independent Directors and One Promoter Director of the Committee. The Company has formulated and adopted a policy for this purpose and the same is available at URL <http://www.alphageoindia>. com/pdf/CORPORATE%20SOCIAL%20RESPONSIBILITY%20 POLICY.PDF for the information of the Members. However, due to incurring of losses for the years from 201011 to 2012-13, the Company is not obligated with mandatory spending on CSR Activities for the year 2014-15 as per the applicable provisions of the Companies Act, 2013. Even then the Company is in the process of identifying the beneficiaries for its non-mandatory CSR Activities. Accordingly the Company is of the view that the disclosure of information is not required to be furnished as an Annual Report on CSR Activities for the year 2014-15. Directors and Key Managerial Personnel Appointments During the year pursuant to the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, Mr. Mohan Krishna Reddy Aryabumi, Mr. Z.P. Marshal and Mr. Ashwinder Bhel were appointed as Independent Directors on Board of the Company and Mrs. Savita Alla was appointed as Director of the Company. Re-appointments Mr. Rajesh Alla and Mr. Srinivas Reddy Ravula retired by rotation were re-appointed as Directors of the Company at 27th Annual General Meeting held on 26th September, 2014. Resignations Mr. P.K. Reddy, Independent Director in terms of Clause 49 of the Listing Agreement has resigned from the Board with effect from 12th August 2014. He is associated with the Board since 2007. The Board sincerely appreciates his contributions as a Director and Member of Board Committees during his tenure. Mrs. G. Sandhya Rani, Company Secretary has resigned from service during the year. Whole Time Directors: Mrs. Savita Alla, Director of the Company has been appointed as Joint Managing Director of the Company for a period of 3 years with effect from 25th May, 2015. The Board recommended her appointment for the approval of Members at 28th Annual General Meeting of the Company. Disclosure by Independent Directors Pursuant to and in compliance with the provisions of Section 149(7) of the Companies Act 2013, every independent director is providing the declaration conforming meeting the criteria of independence as provided 149(6) of the Act and Listing Agreement with the Stock Exchanges. Remuneration Policy Nomination and Remuneration Policy of the Company for appointment and remuneration of Directors, Key Managerial Personnel and Other employees including criteria for determining qualifications, position attributes and directors' independence, on the recommendation of Nomination and Remuneration Committee of the Board, has been framed by the Board of the Directors and the same is available on website of the Company at URL: <http://www.alphageoindia.com/pdf/> REMUNERATION%20AND% 20NOMINATION%20POLICY. PDF. The appointment of Key Managerial Personnel and revision of the remuneration to Whole Time Directors during the year are in compliance with the policy. Particulars of Remuneration to Directors and Key Managerial Personnel Particulars of Employees as required under Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure-2 and forms part of this Report. Particulars of Employees Particulars of Employees as required under Rule 5(2) read with Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure-3 and forms part of this Report. Board Evaluation Pursuant to the provisions of the Act and the Listing Agreement with the Stock Exchanges, the Board of Directors (Board) has carried out an annual evaluation of its own performance, and that of its committees and individual directors. The performance of the Board was evaluated based on criteria that includes aspects like Composition and structure of the Board, effectiveness of the Board processes, information and functioning of the Board etc., Evaluation of the Committee's performance was based on the criteria like composition, its terms of the reference and effectiveness of committee meetings etc., Individual Directors' performance evaluation is based on their preparedness on the issues to be discussed, meaningful and constructive discussions and their contribution to the Board and Committee meetings. The Chairperson was evaluated mainly on key aspects of his role. These performance exercises were conducted seeking inputs from all the Directors/ committee members wherever applicable. The Nomination and Remuneration Committee reviewed the performance of the individual directors. A separate meeting of the individual directors was also held to review the performance of Non-independent directors; performance of the Board as a whole and performance of the Chairperson of the Company taking into account the views of all the Directors. This was followed by the discussions on the performance of the Board, its Committees and individual directors at a Board Meeting. Corporate Governance and Shareholders' Information The Company is continued to be in good compliance with Corporate Governance requirements set in Clause 49 of Listing Agreement with Stock Exchanges. The Corporate Governance Report is presented as a separate section forming part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming the compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is annexed with the Report on Corporate Governance. Risk Management The Company continuously monitors and addresses potential industrial, business, financial and other risks that effects its operations and functioning of the Company. The Company's policy on risk management is provided in Management Discussion and Analysis Report forming part of the Directors' Report. Vigil Mechanism The Company has established, to strengthen its policy of corporate transparency, has established an innovative and empowering mechanism for employees. Employees can report to the management their concern about unethical behaviour, actual or suspected fraud or violation of Company's Code of conduct or ethics policy. No personnel have denied access to the Audit Committee. The Policy formulated for this mechanism can be accessed at URL: <http://www.alphageoindia.com/> pdf/WHISTLE%20BLOWER%20POLICY%20 VIGIL%20 MECHANISM.PDF Secretarial Audit Pursuant to provisions of Section 204 of the Companies Act, 2013 the Company has appointed M/s. D. Hanumanta Raju & Co., Practicing Company Secretaries as Secretarial Auditors for the year 2014-15. The Audit Report for the year 201415 issued by them is provided as Annexure -4 to this Report. The Secretarial Audit Report does not contain any reservation, qualification or adverse remark. Extract of Annual Return Pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014, an Extract of Annual Return as on the financial year ended on 31st March 2015 is provided as Annexure-5 to this Report. Deposits The Company has not accepted any deposits covered under Chapter V of Companies Act, 2013 and also any other deposit which is not in compliance with the requirements of Chapter V of the Companies Act, 2013. Internal Financial Controls The Company has in place adequate internal financial controls with reference to preparation of financial statements and the same are operating efficiently and no deficiencies have been observed during the year. Employees Stock Option Scheme The Company has issued Stock Options to the Employees under the Scheme "Alphageo ESOS 2008". Out of total Stock Options Authorised, as on 31st March, 2015, 235067 Stock Options are available for granting to the Employees. The Stock options issued earlier, in terms of the issue, were lapsed and there are no enforceable stock options outstanding as on 31st March, 2015. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo The particulars as prescribed under Section 134 (3) (m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014 are: a. Conversation of Energy : Not Applicable b. Technology Absorption : NIL c. Foreign Exchange Earnings and Outgo: The Particulars of Foreign Exchange Earnings and outgo during the year are given at Clause 27.II.16, 27.II.17 and 26.II.18 of the Notes forming part of Financial Statements for the year 2014-15. Transfer of amounts to Investor Education and Protection Fund Pursuant to provisions of Section 124 of Companies Act 2013, the declared dividends transferred to Unpaid Dividend Accounts of the Company, which remain unclaimed for a period of seven years from the date of such transfer, will be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government of India pursuant to Section 125 of the Companies Act, 2013. Pursuant to the provisions of Section 124(2), the Company has uploaded the details of unclaimed amount of dividend as on 31st March 2014 on the Ministry of Corporate Affairs website. Other Disclosures During the year no significant and material orders were passed by the regulators or courts or tribunals on the Company impacting the going concern status and Company's operation in future. During the year there was no change in the nature of business of the Company. During the year no complaints of sexual harassment received under "The Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013". Acknowledgment The Directors take this opportunity to thank the Shareholders, Company's employees, Customers, Vendors, Service Providers and Bankers for their continuous support. The Directors appreciate and value the contributions made by every member of the Alphageo family. For and on behalf of the Board Z. P. Marshall Chairperson Place : Hyderabad date : 10.08.2015 |