DIRECTORS' REPORT TO THE SHAREHOLDERS Dear Members, Your Directors are pleased to present the 24th Annual report together with the audited accounts of your company for the financial year ended 31st March, 2015.The summarized consolidated and standalone financial performance of your company is as under; FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB's): During the year under review company has redeemed the last leg of its Foreign Currency Convertible Bond (FCCB) offering (face value of USD 2.461 million) as per the negotiated terms with the said bond holders. The gain / benefit, cost, charges including foreign exchange gain / loss at the close of the year are transferred to Pokarna Engineered Stone Limited (subsidiary) as per the Scheme of Arrangement sanctioned by Hon'ble Andhra Pradesh High Court and agreement thereto. DIVIDEND Looking into the improved financial performance, the Board of Directors is pleased to recommend dividend of Rs. 3/-(30%) per Equity share having face value of Rs. 10/- each for the year ended 31st March, 2015. The dividend payout for the year under review, inclusive ofTax on Dividend distribution, is Rs. 223.89 Lacs, resulting in a pay-out of 13.77% of the profits of the Company on a stand-alone basis. TRANSFER TO RESERVES: During the year under review, Company has not transferred any amount to reserves. NUMBER OF BOARD MEETINGS During the year under review 7 (Seven) Board meetings were held, the details of which are mentioned in the report on Corporate Governance, annexed to this report. KEY MANGERIAL PERSONNEL During the year under review: • Mr. Rahul Jain, who retired at the 23rd Annual general meeting of the Company, held on 15th September, 2014, was re-appointed in the said meeting. • Ms. Apurva Jain, was appointed as Executive Director of the Company, with effect from 09th August, 2014. • Mr. Viswanath Reddy, Chief Financial Officer and Mr. Vinay Paruchuru, Company Secretary of the Company, were designated as Key Managerial Personnel, pursuant to provisions of Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, your directors confirm that: • in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to the material departures, if any. • such accounting policies have been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period; • proper and sufficient care have been taken 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; • the annual accounts are prepared on a going concern basis. • proper internal financial controls had been laid down, to be followed by the Company and that such internal financial controls are adequate and were operating effectively. • proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. PERFORMANCE OF SUBSIDIARY Wholly owned subsidiary of the Company M/s. Pokarna Engineered Stone Limited, manufactures and sells artificial/ engineered Stone, under the brand "Quantra" Natural Quartz Surfaces, from Pokarna. Statement containing the salient features of the financial statement of the Subsidiary Company are contained in Note 2.35 of the Standalone financial statements. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: <http://goo.gl/AkiKD0> AUDIT COMMITTEE In terms of the requirement of clause 49 of the listing agreement with the Bombay Stock Exchange and Section 177 of the Companies Act, 2013, your company has constituted Audit committee. The composition of the committee & other details are given in the corporate governance report which forms part of this annual report. CORPORATE GOVERNANCE Your company is committed to maintain the highest standards of corporate governance. As required under Clause 49 of the listing agreement with the Bombay Stock Exchange, a report on corporate governance as well as Auditors certificate on the compliance of conditions on corporate governance are annexed and form part of this annual report. All board members and senior management personnel have affirmed compliance with the Code of conduct for the year 2014-15. A declaration to this effect signed by the Chairman & Managing Director of your company is annexed to this annual report. MANAGEMENT DISCUSSION AND ANALYSIS 'Management's Discussion and Analysis Report' is provided in a separate Section and forms part of this annual report. CONSOLIDATED FINANCIAL STATEMENT In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report. STATUTORY AUDITOR The Statutory Auditors of the Company, M/s. S. Daga & Co., Chartered Accountants ( Reg. No. 000669S), retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment as per the provisions of the Companies Act, 2013. The Audit Committee and the Board of Directors of the Company recommend the reappointment of S. Daga & Co., Chartered Accountants, as Statutory Auditors of the Company. The Board has duly reviewed the Statutory Auditors Report on the Accounts. The Auditors without qualifying the report have made some observations, such observations are self explanatory and therefore do not call for any further comments or further explanation by the Board. The attention of the shareholders is drawn to the "Emphasis of Matter" in the Auditors Report on consolidated financial statements of the Company, which is self explanatory. SECRETARIAL AUDITOR The board has appointed Mr. K.V. Chalamareddy, Practising Company Secretary, to conduct secretarial audit for the financial year 2014-15. the secretarial audit report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure IV to this report. the secretarial audit report does not contain any qualification, reservation or adverse remark. COST AUDITOR The Company has appointed M/s. DZR & Co., Cost Accountants, as the Cost Auditors of the Company. DIRECTORS In accordance with the provisions of the Companies Act, 2013 Mr. Prakash Chand Jain, Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offered himself for re-appointment. Board of Directors recommends his re-appointment. PARTICULARS OF EMPLOYEES None of the employees of the company was in receipt of remuneration in excess of limits prescribed under Rule 5(2) read with Rule 5(3) of the Companies (Appointment Remuneration of Managerial Personnel) Rules, 2014. DISCLOSURES RELATED TO REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Disclosures required as per Section 197(12) of the Companies Act, 2013 read with Clause 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith marked as Annexure III. CONSERVATION OF ENERGY AND TECHNOLOGY CONSUMPTION: A. Conservation of Energy: The Company has always been conscious of the need for conservation of energy and has been sensitive in making progress towards this initiative. The energy conservation efforts in the Company are being pursued on a continuous basis. Close monitoring of energy conservation is maintained to minimize wastage and facilitate optimum utilization of energy. Regular maintenance and repairs of all the equipment's and machineries are carried out to ensure optimum efficiency. The other energy conservation measures taken are: • plants are equipped with high energy efficiency motors and variable frequency drives. • continuous monitoring of power factor. • training and awareness programmes for employees were conducted for reducing energy waste. Steps taken by the company for utilizing alternate sources of energy: • Use of roof mounted self-driven ventilator in plant thereby enabling substantial saving in electrical energy. Roof mounted self-driven ventilators work on wind assisted ventilation. • Use of sky lights in the plants to reduce need for lighting during daytime. Capital investment on energy conservation equipments: During the current financial year, the Company has not incurred any capital expenditure on the energy conservation equipment. B. Technology absorption: Our Technical team visits international markets to understand and explore the possibility of using such latest technology in production and processing of our products. Benefits derived as a result of the above efforts are in the areas of process simplification, cost reduction and quality improvement. The Company has not imported any technology during the last three years. Hence, the particulars with respect to efforts made towards technology absorption and benefits derived etc. are not applicable to the Company The Company during the year under review has not carried out any activity which can be construed as Research & Development and as of now there is no specific plan for engaging into such activities. As such, there is no expenditure to report. FOREIGN EXCHANGE EARNINGS AND OUTGO During the year under review, the total standalone foreign exchange earnings was Rs. 13806.51 lacs and expenditure was Rs. 484.64 lacs. INTERNAL FINANCIAL CONTROLS The Company has in place adequate financial controls with reference to the financial statements. During the Financial year such controls were tested and no reportable material weakness in the design or operation were observed. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS During the year under review the Company has not made any loans or investments or provided any guarantee, pursuant to Section 186 of the Companies Act, 2013. RISK MANAGEMENT POLICY The Company has kept in place a risk management policy for the Company including the identification therein of elements of risks, if any, which in the opinion of the Board may threaten the existence of the company. CORPORATE SOCIAL RESPONSIBILITY In line with the provisions of the Companies Act, 2013 and rules made there under ("the Act"), a Corporate Social Responsibility ("CSR") Committee has been formed by the Board of Directors, Mr. Gautam Chand Jain, Mr. Meka Yugandhar and Mr.Vinayak Rao Juvvadi are the members of the CSR Committee. Your Company has identified Health, Sanitation, Education and Environment as thrust areas for CSR activities. The Annual Report on CSR activities is annexed herewith marked as Annexure II. During the year under review Company has not spent the amount of Rs. 4,94,087/- out of the prescribed expenditure of Rs. 10,59,187/- (i.e. 2% of the average net profits). Company is cautious about identifying the projects, in order ensure that the projects are optimally benefitted to the society at large. Hence there was delay in identifying the suitable projects and spending the required amount, during the year. However, management is taking steps to spend the remaining amount along with the CSR expenditure to be incurred for the Financial Year 2015-16. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES: All Contracts/arrangements/transactions entered by the Company during the financial year with related parties were in compliance of Section 188 of the Companies Act, 2013 read with Clause 49 of the Listing Agreement. The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://goo.gl/d4DC7f> Your Directors draw attention of the Members to Note 2.27 of the financial statement which sets out the related party transactions. POLICY ON VIGIL MECHANISM The Policy on vigil mechanism/whistle blower policy may be accessed on the Company's website at the link: <http://> goo.gl/VaWjyV EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure I to this Report. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment ofWomen at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENTS Your Directors express their appreciation for the support, trust and co operation received from the banks, Government authorities, customers, suppliers, shareholders and other stakeholders during the year under review. Your Directors acknowledge with gratitude the commitment and dedication of the employees at all levels, which has contributed to the growth and success of the company. Your Directors look forward to the continued support from all of you in the years to come. By order of the Board Gautam Chand Jain Chairman & Managing Director (DIN: 00004775) Date : 25.05.2015 Place : Secunderabad Registered Office: 105, First Floor, Surya Towers, S. P. Road, Secunderabad- 500 003. CIN : L14102TG1991PLC013299 Tel : +91 40-27842182 Fax: +91 40-2784 2121 Email : contact@pokarna.com Website : www.pokarna.com |