Directors' Report To The Members, Frontline Corporation Limited Your Directors have pleasure in presenting their 26th Annual report along with Audited Accounts for the year ended on March 31, 2015. Dividend : Due to loss during the year under the review, your Directors do not recommend any dividend for the year. Review Of Operations : The year 2014-2015 marked deterioration in the fundamentals of both the global and the Indian economies. The year under review was a challenging one for your company as well. Your Company made a Net Loss of Rs. 183.16 Lacs against Net Loss of Rs. 17.13 Lacs in the earlier year. The Loss has increased by more than 10 times. The increase in loss was due to lesser revenue and higher operating and interest costs. During the year the company has achieved operational income of Rs. 3752.28 Lacs as against Rs. 4198.46 Lacs in the previous year. The company posted Loss before tax of Rs. 253.81 Lacs as against Loss before Tax of Rs. 125.95 Lacs in the previous year. The Company incurred Loss after Tax of Rs. 183.16 Lacs as against Rs. Loss of Rs. 17.13 Lacs in the previous year. A balance of Rs. 478.96 Lacs has been carried forward to Balance Sheet as against Rs. 676.93 Lacs in the previous year. Disclosure under Rule 8 (5) of Companies (Accounts) Rules, 2014 : Change in Nature of Company Business: The Company is engaged in the business of transportation, wind energy, trading of automotive parts and renting of immovable properties. There is no change in nature of Company Business. Details of Directors / Key Managerial Personnel Appointed / Resigned: During the year under the review, Mr. Roshan Lal Saklani was appointed as Chief Financial Officer of the Company. During the year under the review Ms. Aarefa Oanali Dudhwala was appointed as an Additional Director. In terms of provision of Section 152 (6) of the Companies Act, 2013 Mr. Ram Prasad Agarwal and Mr. Narayan Prasad Agarwal, retires by rotation and being eligible offers themselves for reappointment. Further, in compliance with the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Ms. Aarefa Oanali Dudhwala were appointed as Additional Director at the Meeting of Board of Directors of the Company held on 23rd March, 2015 and your Company propose to appoint her at the ensuing Annual General Meeting of the Company to hold office up to 5 (five) consecutive years up to 31st March 2020. Shri Rahul Chomal, Independent Director of the Company was appointed on 14th August, 2014 and resigned from the office of Director on 23rd March, 2015. Further Mr. Bharat Arora has resigned from the Board with effect from 25th August, 2014. During the year under the review, no Directors / Key Managerial Personnel except Shri Rahul Chomal , Independent have resigned. Details of Holding / Subsidiary Companies / Joint Ventures / Associate Companies: During the year under review, there was no holding / Subsidiary Company / Joint Ventures / Associate Companies were there. Deposit: The Company has not invited any deposit other than the exempted deposit as prescribed under the provision of the Companies Act, 2013 and the rules framed there under, as amended from time to time. Hence there are no particulars to report about the deposit falling under Rule 8 (5) (v)and ( vi ) of Companies ( Accounts ) Rules, 2014. Details of Significant and Material Orders passed by Regulators or Courts or Tribunals: During the year under review there were no significant and material orders passed by any Regulators or Court or Tribunals which may have impact on the going concern status. No order has been passed by any Regulators or Court or Tribunals which may have impact on the Company's operation in future. Internal Financial Controls: The Company has adequate internal financial controls to support the preparation of the financial statements. INSURANCE: The properties of the Company stand adequately insured against risks of fire, strike, riot, earthquake, explosion and malicious damage. DIRECTOR'S RESPONSIBILITY STATEMENT: As required under the provisions of Section 134 of the Act, your Directors report that: (a)In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. (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 of the Loss 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 the 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. (e)The Directors have laid down internal financial controls as required by Explanation to Section 134(5) (e) of the Act to be followed by the Company and such internal financial controls are adequate and are operating effectively. (f) The Directors have devised proper systems to ensure compliance with the provisions of applicable laws and such systems are adequate and operating effectively. PARTICULARS OF EMPLOYEES: There was no employee drawing remuneration requiring disclosure under the Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. LISTING: The Equity Shares of the Company are listed on Bombay Stock exchange, Ahmadabad Stock Exchange and Calcutta Stock Exchange. The Company is regular in payment of listing fees. The Company has paid the listing fees for the year 2015 - 2016. AUDITORS AND AUDITORS REPORT: The Auditors M/s. Paresh Thothawala & Co. Chartered Accountants, Ahmadabad hold office until the conclusion of the ensuing Annual General Meeting and have expressed their willingness to be reappointed. The Company has received a letter from a member of the Company proposing the name of M/s. Paresh Thothawala & co., Chartered Accountants as Statutory Auditors of the Company. Members of the Company at the 25thAnnual General Meeting of the Company have appointed M/s. Paresh Thothawala & co. Chartered Accountants as auditors of the Company upto 30th Annual General Meeting of the Company. In accordance with the provision of Section 139 of the Companies Act, 2013 members are requested to ratify the appointment of the auditors for the balance term to hold office from the conclusion of the 26thAnnual General Meeting until the conclusion of the 30th Annual General Meeting, subject to ratification at each annual general meeting on such remuneration as may be fixed by the Board, apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose of audit The Company has received a certificate from the Auditors to the effect that their appointment if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 The auditors observations and its reply are as under : Basis for Qualified Opinion •Note No. 10.3 regarding physical possession of Land & Building taken by Punjab and Sindh Bank. •Note No. 10.2 and 29.1 for Demand Notice issued by UCO Bank by virtue of which some fixed assets details of which are given in detailed note offixed assets have been symbolically possessed by the bank. In reply to point No. 1 and 2 of qualified opinion raised by the Statutory Auditors of the Company in their Independent Auditors' Report it is stated that the attachment of properties by the Bank is a legal process and the Company is taking all legal steps to protect the property. Further the Company is taking all steps to make the settlement of the matter and the Company is actively undertaking the settlement matter with the Banks. Further the Company is also making all its efforts to repay the debt and to release the property. •Note No. 29.2 regarding corporate guarantee given by the company for credit facilities to Fairdeal Supplies Limited, a group company, and non-compliance of Section 295 of the companies Act, 1956. •In reply to Para (x) of the Independent Auditors' Report and qualified opinion point no. 3 it is stated that the Company at the time when M/s. Fairdeal Supplies Limited, a Group concern of the Company obtained the loan from the Banks, the financial conditions and other prospects of M/s. Fairdeal Supplies Limited were excellent. The Board of Directors of the Company did not fore cast that loan availed by M/s. Fairdeal Supplies Limited will be defaulted. The Bankers of M/s. Fairdeal Supplies Limited have stipulated condition to give the collateral and guarantee for the facilities to be availed by the Fairdeal Supplies Limited. •The Board of Directors of the Company would further like to state that it has already filed necessary petition before the respective authorities for compounding the matter. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The details in respect of the conservation of energy, technology absorption and foreign exchange earnings and outgo are more detailed in the Annexure I to the Directors Report. CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreement with BSE Limited (Bombay Stock Exchange), ASE Limited and The Calcutta Stock Exchange Limited Management Discussion & Analysis, Corporate Governance Report and Auditor's Certificate regarding compliance to conditions of corporate governance are made part of this Annual Report. The Management Discussion and Analysis which is attached herewith and forms part of the report and which is attached as Annexure VII and the Corporate Governance Report which is attached herewith and forms part of the report and which is attached as Annexure VIII. Related Party Transactions All related party transactions that were entered into during the year under report were on an arm's length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company during the year. Related Party Transactions Policy is available on the website of the Company at www.frontlinecorporation.org. The details of transactions with the related party is provided in . No advance is / was paid for entering into related party transactions. The prices paid to the related party transactions are based on the ruling market rate at the relevant point of time. The requisite details in form AOC - 2 is attached herewith as Annexure - II which forms part of the Directors Report Particulars of Loans / Guarantees / Investment: The Company has not given any loan or made any investment to any person The details of the loans provided are mentioned in note no. 13 and 18 of the Balance Sheet. Members are requested to refer the same. Further with respect to loans / investment to and from the related parties are more detailed in note no. 33 of the Balance Sheet. The Company is holding 600 Equity Shares of Rs. 10/- each of Sonal Sil-Chem Ltd which has been delisted and the amount has been fully written off in the Books of Account. The Company has provided its Security and also provided its Corporate Guarantee for the loan availed by M/s. Fairdeal Supplies Limited for Rs. 315 Crores. The Security / Corporate Guarantee was provided under the erstwhile Companies Act, 1956 which is continuing till date. Code for Prevention of Insider Trading Practices The Company has instituted a comprehensive code of conduct in compliance with the SEBI regulations on prevention of insider trading. The code lays down guidelines, which advise on procedures to be followed and disclosures to be made, while dealing in shares of the Company and cautions on the consequences of non-compliances. Risk Management Policy The Company has a structured risk management policy. The Risk management process is designed to safeguard the organisation from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventoried and integrated with the management process such that they receive the necessary consideration during decision making. It is dealt with in greater details in the management discussion and analysis section. The Risk Management Policy is also available on the Company's website at www.frontlinecorporation.org Declaration by Independent Directors: The following Directors are independent in terms of Section 149(6) of the Act and Clause 49 of the Listing Agreement: (A)Shri Virendra Sharma (B)Shri Jiwraj Khaitan (C)Shri Sital Kumar Banerjee (D)Ms. Aarefa Oanali Dudhwala The Company has received requisite declarations/ confirmations from all the above Directors confirming their independence. Extract of the Annual Return Pursuant to provision of Section 92 and 134 and other applicable provision of the Companies Act, 2013 and of Rule 12 (1) of Companies (Management and Administration) Rules, 2014 the extract of the annual return in form MGT 9 for the Financial Year ended on 31st March, 2015 is annexed as Annexure III to this Report. Number of Board Meetings During the year the Board of Directors met 13 times. The dates of the Board meetings are as under : 30/05/2014, 1/07/2014, 15/07/2014, 06/08/2014, 14/08/2014, 25/08/2014, 26/09/2014, 30/09/2014, 14/11/2014, 26/12/2014, 13/02/2015, 02/03/2015 and 23/03/2015 Corporate Social Responsibility: The Company is not covered under the criteria of the provision of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, and therefore it is not mandatory for the Company to have the Corporate Social Responsibility. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has in place an Anti-harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee are set up at shop floor level to redress complaints received regularly and are monitored by women line supervisors who directly report to the Chairman. All employees (permanent, contractual, temporary, trainees) are covered under the policy. There was no compliant received from any employee during the financial year 2014-15 and hence no complaint is outstanding as on 31.03.2015 for redressal. SECRETARIAL STANDARDS: Pursuant to provision of Section 110 of the Companies Act, 2013 mandatory compliance of Secretarial Standards were not notified during the year. SECRETARIALAUDIT REPORT: Pursuant to Section 204 of the Act, the Secretarial Audit Report for the Financial Year ended 31st March, 2015 given by M/s. Jalan Alkesh & Associates, Practising Company Secretary is annexed as Annexure IV to this Report. The qualifications are self-explanatory ANNUAL PERFORMANCE EVALUATION: In compliance with the provisions of the Act and Clause 49 of the Listing Agreement, the performance evaluation was carried out as under: Board: In accordance with the criteria suggested by The Nomination and Remuneration Committee, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of the Board as a whole based on various criteria. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory. Committees of the Board: The performance of the Audit Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee was evaluated by the Board having regard to various criteria such as committee composition, committee, processes, committee dynamics etc. The Board was of the unanimous view that all the committees were performing their functions satisfactorily and according to the mandate prescribed by the Board under the regulatory requirements including the provisions of the Act, the Rules framed thereunder and the Listing Agreement. Individual Directors: (a) Independent Directors: In accordance with the criteria suggested by The Nomination and Remuneration Committee, the performance of each independent director was evaluated by the entire Board of Directors (excluding the director being evaluated) on various parameters like engagement, leadership, analysis, decision making, communication, governance and interest of stakeholders. The Board was of the unanimous view that each independent director was a reputed professional and brought his/her rich experience to the deliberations of the Board. The Board also appreciated the contribution made by all the independent directors in guiding the management in achieving higher growth and concluded that continuance of each independent director on the Board will be in the interest of the Company. (b)Non-Independent Directors: The performance of each of the non-independent directors (including the chair person) was evaluated by the Independent Directors at their separate meeting. Further, their performance was also evaluated by the Board of Directors. The various criteria considered for the purpose of evaluation included leadership, engagement, transparency, analysis, decision making, functional knowledge, governance and interest of stakeholders. The Independent Directors and the Board were of the unanimous view that each of the non-independent directors was providing good business and people leadership POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION The requisite details as required by Section 134(3) (e), Section 178(3) & (4) and Clause 49 of the Listing Agreement is attached herewith and forms part of the Directors Report. The details of the remuneration policy of the Company as required in terms of the Clause 49 of the Listing agreement is provided in Annexure V to the Report. The details in respect Disclosure under Section 197(12) and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure VI of the Report. MATERIAL CHANGES AND COMMITMENTS: There are no material changes and commitments, if any, affecting the financial position of the Company subsequent to the date of the Balance sheet and up to the date of the report. APPRECIATION: Your Directors acknowledge the continued support and cooperation received from the Central Government, Shareholders, Banks and other Lenders, suppliers and Dealers. The Board also wishes to record its sincere appreciation of the total commitment, dedication and hard work, put in by every member of Frontline Group. By order of the Board of Directors of Frontline Corporation Limited Narayan Prasad Agarwal Director Pawan Kumar Agarwal Managing Director Place: Ahmedabad Date: August 31, 2015 |