DIRECTORS' REPORT Dear Shareholders, 1. Your Directors are presenting the 30th Annual Report of your Company and the Audited Financial Statements for the year ended 31st March 2015. 2. OPERATIONS: During the year under review, the Company's revenue from operations stood at Rs. 21762.07 Lacs as against Rs. 23068.95 Lacs in the previous year. The Loss Before Tax stood at Rs. 430.19 Lacs. The Company has suffered a Net Loss of Rs. 430.19 Lacs for the financial year ended 31.03.2015. The Company had operational profit of Rs. 1806.10 Lacs as compared to Rs. 2549.02 Lacs in the previous year. The reduction of operational profit is due to reduction in turnover of the Company by 6% as compared to previous year. As reported in earlier years the company is having liabilities towards Foreign Currency Convertible Bonds of US $ 8 Mln and towards invocation of Corporate Guarantee given by the Company to its Wholly owned subsidiary company M/s. Pana Textil GmbH of Euro 4.4 Mln, which is under liquidation process. Company has provided the liabilities in the books of accounts towards applicable annual charge & forex fluctuation on the said liabilities as claimed by the Bank from time to time. Due to the said provisions the company's profitability has been adversely affected. 3. DIVIDEND: Due to financial losses, your company has not recommended any dividend for the year. 4. RESERVES: The Company has not transferred any amount to reserves due to losses in current financial year. 5. DEPOSITS: The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, or under Chapter V of the Companies Act, 2013. 6. RELATED PARTY TRANSACTIONS: All transactions entered into with related party as defined under Section 188(3) of the Companies Act, 2013 and Clause 49 of the Listing agreement during the financial year were in the ordinary course of business and on arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The Company has proposed to take approval of shareholders regarding related party transactions entered into by the Company during financial year and propose to be enter into with related parties in next financial year through Special Resolution. 7. INTERNAL FINANCIAL CONTROLS: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. 8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: For the financial year under review as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchange, Management Discussion and Analysis Report is Annexed thereto. 9. CORPORATE GOVERNANCE: The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement entered into with the Stock Exchange. A separate report on Corporate Governance is Annexed thereto. 10. BOARD MEETINGS: During the year under review, the Company has conducted 8 (Eight) Board Meetings on 1st April, 2014, 28th April, 2014, 9th May, 2014, 29th May, 2014, 14th August, 2014, 14th November, 2014, 29th December, 2014 and 13th February, 2015. 11. AUDIT COMMITTEE: The Audit Committee comprises of four members namely Mr. Vasudeva Rao (Chairman), Mr. Rajiv Rai Sachdev, Mr. Ajay Anand and Mr. Sanjay Anand. All the recommendations made by the Audit Committee were accepted by the Board. The Audit Committee met 4 (Four) times in the year on 29th May, 2014, 14th August, 2014, 14th November, 2014 and 13th February, 2015. 12. REMUNERATION COMMITTEE: The Company has constituted a Remuneration Committee pursuant to Section 178(1) of the Companies Act, 2013 and has defined the policy on Director's appointment and payment of remuneration including criteria for determining qualifications, positive attributes and independence of a Directors. The Remuneration Committee comprises of two members namely Mr. Vasudeva Rao (Chairman) and Mr. Rajiv Rai Sachdev. All the recommendations made by the Committee were accepted by the Board. 13. SUBSIDIARY COMPANY: The Company's Wholly owned subsidiary company M/s. Pana Textil GmbH has filed an insolvency petition in the German Court. The German court has completed the insolvency proceedings and the company is in the process of liquidation. 14. EXTRACT OF ANNUAL RETURN: The details forming part of extract of the annual return in Form MGT - 9 is Annexed to this report. 15. DIRECTORS' RESPONSIBILITY STATEMENT: To the best of their knowledge and belief and according to the information and explanations obtained by them, your directors make the following statement in terms of Section 134 (3) (c) of the Companies Act, 2013: (i) that in the preparation of the Annual Financial Statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (ii) that such accounting policies as mentioned in Notes to Financial Statements have been selected and applied consistently and made judgments and estimates have been made 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 the loss of the Company for the year ended on that date; (iii) that 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) that the Annual Financial Statements have been prepared on a going concern basis; (v) that the proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; (vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS AND OUTGOINGS: The information as required under Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings and outgoings is annexed to this report. 17. RISK MANAGEMENT POLICY: The Company has in place a mechanism to inform Board of Directors about the Risk assessment and risk minimization procedures and periodical reviews to ensure that risk is controlled by the Management through the means of a properly laid-out framework. 18. CORPORATE RESPONSIBILITY STATEMENT (CSR): The company is not required to comply with section 135 of Companies Act, 2013 along with rules made in this behalf as company is having negative Networth and is incurring losses since last 4 years. 19. PERFORMANCE EVALUATION OF BOARD: 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, Remuneration and other Committees. The same is found to be satisfactory. 20. DECLARATION FROM INDEPENDENT DIRECTORS: The Company has received necessary declaration from Independent Director of the Company Mr. Vasudeva Rao. Under Section 149(7) of the Companies Act, 2013, he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013. 21. STATUTORY AUDITORS: M/s. Thakur Vaidyanath Aiyar & Co., Chartered Accountants, Mumbai (Firm Rgn. No. 000038N) being eligible offer themselves for re-appointment. M/s. Thakur Vaidyanath Aiyar & Co. has confirmed that the appointment will be within the prescribed limits specified in Section 139 of the Companies Act, 2013. Members are requested to appoint the auditors. 22. SECRETARIAL AUDIT: Pursuant to the provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sanjay Dholakia & Associates, Practicing Company Secretary to undertake Secretarial Audit. The Report is annexed to this Annual Report. 23. OBSERVATIONS - AUDITOR & SECRETARIAL AUDITOR: Statutory Auditor: As regards to qualifications contained in the Auditors Report, the Auditor's views are self-explanatory. The Board of Directors shall take necessary steps towards depreciation calculation as per Companies Act, 2013 in the following Financial year. Secretarial Auditor: As mentioned in the report, the Company was required to appoint a Chief Financial Officer (CFO as KMP) and a Woman Director on the Board. Your Directors would like to inform you that the Company is still in the process of appointing the same. 24. COST RECORDS: Pursuant to the directives of the Central Government under the provisions of Section 148(1) of Companies Act, 2013, Company has maintained cost records and included the same in Books of Accounts. 25. ACKNOWLEDGMENT: Your Directors wish to place on record their appreciation for the co-operation extended by all the employees, Bankers, Financial Institutions, various State and Central Government authorities and Stakeholders. For and on behalf of the Board FOR FAZE THREE LIMITED Ajay Anand Chairman & Managing Director Place: Mumbai Date : 30th May, 2015 |