DIRECTORS' REPORT Your Directors are pleased to submit herewith their report together with the audited statement of accounts for the 21st financial year ended 31st March, 2015 OPERATIONAL OVERVIEW During the year under review the Company has earned total income of Rs. 92,350 /- (Previous Year of Rs. 547,339) from business. After deducting all administrative expenses and depreciation and necessary adjustments for taxation, etc. the company has incurred a net loss of Rs. (1,541,923) /- (Previous of Rs (1, 59,000)/-). DIVIDEND Due to loss, your Directors have not recommended dividend for the financial year 2014-15. BUSINESS ACTIVITY Khyati Multimedia Entertainment Limited has involved in the area of high-quality Desktop Publishing, imaging, Corporate Presentations, creative designing, graphic designing and multimedia software development and is also engaged in the business of letting out vehicle. There was no change in the nature of any of the business activity during the year. DETAILS OF THE ASSOCIATES/ JOINT VENTURE / SUBSIDIARIES COMAPANIES The company does not have holding or subsidiary companies during the year and no other company has become holding / subsidiary/ joint venture. FIXED DEPOSIT The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year. REGULATORY STATEMENT In conformity with provision of Clause 32 in the Listing Agreement (s), the Cash Flow Statement for the year ended 31.03.2015 is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. The Company has paid listing fees for the year 2015-16 to above stock exchanges. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO. As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIES ACT, 2013 The Company is not entering into related parties transactions for sale/purchase of goods or services at preferential prices. However, all the transactions in the nature of sales/purchase of goods or services are made on arms length basis except the salary paid to employees and director and key managerial person. However a lease rent is being paid to Mrs. Jignaben K Patel as per the valid lease rental agreement which will be paid for further 3 years up to 31.03.2018.. The same were reported to the Board at every meeting and Board took a note of the same and approved. Other details for inter corporate financial transactions or remuneration and other benefits paid to directors, their relatives, key managerial personnel etc. are given in the notes to the accounts vide note no. 31 as per requirements of AS 18. The Company has formulated various other policies like Risk Management Policy, Evaluation of Board Performance Policy, and CSR Policy etc. etc. All such policies were documented and adopted by the Board in its meeting held on 16.03.2015. Full details of Risk Management Policy are given in the Corporate Governance Report under the head Whistle Blower Policy. As the Company is loss making one, the provisions related to CSR is presently not applicable to the Company. Regarding Performance Review of each of the member of the Board and also the performance of the various Committees and the Board, the Company has adopted the Model Code of Conduct for Independent Directors, Key Managerial Personnel as prescribed in Schedule IV to the Companies Act, 2013 and also as prescribed in the SEBI (Insider Trading) Regulations. The Company strictly follows the procedure to obtain necessary timely declarations from each of the directors and key managerial personnel from time to time. DETAILS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013 During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company. However the company has borrowed a sum of Rs.25,00,000 from Mr. Kartik J.Patel, Managing Director as a unsecured loan at 0% Interest for dealing with the day to day fund requirement of the company. The Company has also sold its Equity investment of M/s Kome on Communication Limited and M/s Somplast Leather Industries Limited as the Listing of both the companies has suspended and there is no liquidity for realization of these investments and get released of the funds of the company. It is also necessary for the company to sell this investment and raised the required financial cash resources on an urgent basis The Board of Directors supports to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance. BOARD OF DIRECTORS Details about the Board of Directors Meetings are attached to the Report on Corporate Governance. Further, Kartik J. Patel, will be the Director retiring by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. DECLARATION BY INDEPENDENT DIRECTORS: (Pursuant to Provisions of section 149(6) OF the Companies Act 2013) All the Independent Directors of the Company do hereby declare that: (1) All the Independent Directors of the Company are neither Managing Director, nor a Whole Time Director nor a Manager or a Nominee Director. (2) All the Independent Directors in the opinion of the Board are persons of integrity and possesses relevant expertise and experience. (3) Who are or were not a Promoter of the Company or its Holding or subsidiary or associate company. (4) Who are or were not related to promoters or directors in the company, its holding, subsidiary or associate company. (5) Who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company or their promoters or directors, during the two immediately preceding financial years or during the current financial year. (6) None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary, or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakhs rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year, (7) Who neither himself, nor any of his relatives, (a) Holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of three financial years immediately preceding the financial year in which I\he is proposed to be appointed. (b) Is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial years in which he is proposed to be appointed of (i) A firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; OR (ii) Any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent, or more of the gross turnover of such firm; (iii) Holds together with his relatives two per cent, or more of the total voting power of the company; OR (iv) Is a Chief Executive or director, by whatever name called, or any non-profit organization that receives twenty five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; OR (v) Who possesses such other qualifications as may be prescribed. DIRECTORS' RESPONSIBILITY STATEMENT In terms of section 134 Clause (C) of Sub-Section (3) of the Companies Act, 2013, in relation to financial statements for the year 2014-15, the Board of Directors state: a) In the preparation of the annual accounts for the financial year ended 31st March 2015, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure; b) 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 at the end of the financial year and profit and loss account of the Company for that period; c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) The Directors have prepared the annual accounts on a going concern basis; and e) The directors in the case of a listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION BY BOARD AS PER REQUIREMENT OF SECTION 178 (1) In compliance with Section 178 (1) as also in compliance with Clause 49 of the Listing Agreement, the Board of Directors do hereby declare that: a. The Company has proper constitution of the Board of Directors including independent directors in proportion as per requirement of clause 49 of the Listing Agreement. However, the Company is still in process for appointing a suitable person as woman director as required under Section 149 of the Companies Act, 2013. b. The Company has constituted Nomination and Remuneration Committee, Stakeholders Relationship Committee, Audit Committee as per requirements of the Clause 49 of the Listing Agreement and provisions of the Companies Act 2013. c. The Company has the policy for selection and appointment of independent directors who are persons of reputation in the society, have adequate educational qualification, sufficient business experience and have integrity & loyalty towards their duties. d. The Company pays managerial remuneration to its Managing/Whole Time Directors based upon their qualification, experience and past remuneration received by them from their previous employers and company's financial position. e. The Independent Directors are paid sitting fee for attending Board and other committee meetings as decided by the Board from time to time. This sitting fee is decided considering the financial position of the company. f. The Company is not paying any commission on net profits to any directors. g. During the year the Board has met 4 times during the year. The details of presence of every director at each meeting of the Board including the meetings of the Committees, if any, are given in the reports of the Corporate Governance. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY: The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report. SYSTEM OF PERFORMANCE EVALUATION OF THE BOARD, INDEPENDENT DIRECTORS AND COMMITTEES AND INDIVIDUAL DIRECTORS 1. The Board makes evaluation of the effectiveness and efficiency of every individual directors, committee of directors, independent directors and board as a whole. 2. For these purpose the Board makes evaluation twice in a year on a half yearly basis. 3. The performance of individual directors are evaluated by the entire Board, excluding the Director being evaluated on the basis of presence of every directors at a meeting, effective participation in discussion of each of the business of agenda for the meetings, feedback receives from every directors on draft of the minutes and follow up for action taken reports from first line management. 4. Effectiveness and performance of various committees are evaluated on the basis of the scope of work assign to each of the committees the action taken by the committees are reviews and evaluated on the basis of minutes and agenda papers for each of the committee meetings. 5. The performance of independent directors are evaluated on the basis of their participation at the meetings and post meeting follow up and communication from each of such independent directors. III. The number of permanent employees on the rolls of company: There were no other employees other than the Key Managerial person and directors which are on the pay rolls of company. IV. The explanation on the relationship between average increase in remuneration and company performance; NOT APPLICABLE as there was no substantial increase in remuneration of any employee during the year. The increase was only due to increase in inflation index. V. Comparison of the remuneration of the Key managerial personnel against the performance of the company The KMP i.e. Whole time Directors and Financial Managers does not receive any remuneration apart from the Company Secretary who has been paid a yearly Remuneration of Rs.90,000/- per annum. VI. Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year; Closing Market Price of shares of Company as on 31/03/2014: Rs. 0.82 /- Closing Market Price of shares of Company as on 31/03/2015: Rs. 0.82/-Earning Per share for the financial year ended on 31/03/2014:Rs.0.01/-Earning per share for the financial year ended on 31/03/2015: Rs. (0.14)/- Regarding other information like Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies is not given herewith since Company had made IPO more than 5 Years before and there was no substantial variation in the market price of shares of the company. Company's EPS is negative and hence PE Ratio is not given. VII. Comparison of the remuneration of each key managerial personnel against the performance of the company; As the company is paying minimum managerial remuneration to its managerial personnel and the Company is the loss making one the comparison of remuneration of each of the KMP with performance of the company is not comparable. Since Managing director and Executive Directors are being not paid minimum remuneration and other KMPs are getting remuneration as per prevailing industry norms, it is not possible to compare remuneration with the performance of the company. VIII. The key parameters for any variable component of remuneration availed by the directors; NOT APPLICABLE. IX. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; There were No employees who are receiving remuneration in excess or higher than the remuneration of Director or Key Managerial Personnel. X. Affirmation that the remuneration is as per the remuneration policy of the Company. All remuneration of the Employees and directors are paid as per remuneration policy of the Company. PARTICULARS OF THE EMPLOYEES Particulars of the employees as required under provisions of Section 197 (12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of Rs.5,00,000 per month during the year or Rs. 60 Lacs per annum in the aggregate if employed part of the year. AUDITORS STATUTORY AUDITORS M/s. D.J.N.V & CO, Chartered Accountants, an Auditors firm are statutory auditors of the company since 200809. As per Rule 6(3) of the Companies (Audit and Auditors) Rules 2014, they are eligible to continue as the statutory auditors of the company for financial years 2014-15, 2015-16, 2016-17, and 2017-18. Accordingly Statutory Auditors of the company have given their letter of consent and confirmation under section 141(1) the Companies Act 2013 for their appointment as Statutory Auditors of the Company up to the financial year 2017-18 hence, the Board has now proposed to appoint the Statutory Auditors for a period of up to 2017-18. Necessary Resolution for their appointment as the Statutory Auditors and fixing their remuneration is proposed to be passed at the Annual General Meeting. COST AUDITORS : NOT APPLICABLE INTERNAL AUDITOR The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the audit Committee in order to strengthen the internal control system for the Company. SECREATARIAL AUDITOR The Company has appointed M/s. KAMLESH SHAH & SHAH CO. as the secretarial auditor for the financial year 2014-15. They have given their report in the prescribed form MR-3 which is annexed to this report as an ANNEXURE. OBSERVATION OF THE SECRETARIAL AUDITOR The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executives Directors and Independent Directors and the woman director. Company Secretary has resigned w.e.f 1.05.2015 and Company has already appointed a new Company secretary w.e.f 30.05.2015 EXPLANATION TO THE AUDITORS' REMARKS The Directors submit their explanations to the various observations made by the statutory auditors in the report are as under for the year 2014-15. ANNEXURE TO INDEPENDENT AUDITORS' REPORT - PARA 7 (b) The Company has not deposited the Provident fund amounting to Rs 200750/- in the respective account for which it was clarified that the matter is under dispute under Provident fund Appellate Tribunal New Delhi, Which has remanded the case to APFC, Ahmedabad after the final satisfaction of the dispute it will be deposited. The CIT (Appeals) has charged penalty under Section 271(1)(c) for Asst. Year 2006-2007 of Rs 8,57,298/- There are no other observations made by the Auditors in their report. In addition to the above clarifications, the notes to the Accounts are self explanatory and give suitable explanation to qualifications in the Auditors' Report. MATERIAL CHANGES / INFORMATION: 1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company. However, net worth of the company has been completely eroded 2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future. APPRECIATION Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Company's shareholders in its entire endeavor. For and on behalf of the Board Kartik J. Patel (DIN: 00047862) Chairman Date: 30.05.2015 Place: Ahmedabad |