BOARD'S REPORT DEAR MEMBERS, Your directors take great pleasure in presenting the Ninth Annual Report of your Company and the Company's audited financials for the financial year ended March 31, 2015. OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE During the year under review, the Company recorded a total income of Rs. 21,460 lacs as against Rs. 15,898 lacs in the previous year, registering a growth of 34.98%. The profit after tax was also higher by 38.61% compared with the previous year. The profit after tax for the year under review was Rs. 6,087 lacs as against Rs. 4,392 lacs in the previous year. Your Directors are continuously looking for avenues for future growth of the Company in the education sector and are geared up to address any opportunities available. During the year your Company has opened 119 self operated pre-school and 3 franchisees of pre-schools. The Company now operates in 88 cities on pan India basis. Management of your Company is committed towards delivering above-industry growth in revenue and profits in the coming year. We are pleased to announce our results for FY15 which show a 34.98% year-on-year growth in revenue and a 38.61% year-on-year growth in PAT for the Company. While these results are another milestone in our journey, we believe that the journey has just begun. As we gain acceptance and garner market share in city-after-city, and as the K12 schools we serve become known for their quality, the Tree House brand is becoming stronger day-by-day. We at Tree House are committed in creating a holistic Company catering to all, through both the Tree House brand and the Global champs initiative. We are committed to creating India's leading and most respected Educational services brand, which will create long term value for all its stakeholders. There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the financial year 2014-15 and the date of this report. ASSOCIATE COMPANIES During the year under review, Mehta Tree House Infrastructure Private Limited became Associate Companies of your Company. DIVIDEND Considering the remarkable performance during the year under review, Your Directors have recommended a higher dividend of Rs. 2/- (Rupees two only) per equity share of face value of Rs. 10/- (Rupees ten) each for the financial year 201415, for the approval of the shareholders at the ensuing AGM. If approved, the dividend for the financial year 2014-15 will be Rs. 2/- (Rupees two only) per equity share of the face value of Rs. 10/- (Rupee ten only) each against the dividend of Rs. 1.50 (Rupee one and paise fifty only) per equity share of the face value of Rs. 10/-(Rupee ten only) paid for the previous financial year 2013-14. The total outflow on this account will be Rs. 101,540,760/- (Rupees ten crores, fifteen lacs, forty thousand, seven hundred and sixty only) including dividend tax. The proposed dividend, if declared shall be free of tax in the hands of the shareholders. The Paid-up Equity Share Capital as on March 31, 2015 was Rs. 423,107,240/-(Rupees forty two crores, thirty one Lacs, seven thousand, two hundred and forty only) comprising 42,310,724 Equity Shares of Rs. 10/- each. During the year under review, the Company raised funds through issue and allotment of 4,545,454 Equity Shares at a price of Rs. 440/- (Rupees four hundred and forty only) per equity share (including a premium of Rs. 430/- {Rupees four hundred and thirty only} per equity share), aggregating to Rs. 1,999,999,760/- (Rupees one hundred and ninety nine crores, ninety nine lacs, ninety nine thousand, seven hundred and sixty only) to Qualified Institutional Buyers through Qualified Institutions Placement. The object of the issue is for expansion of companies' business activities. These equity shares ranks pari passu in all respect with the existing Equity Shares of the Company. ANALYSIS REPORT A detailed analysis of your Company's performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report. PUBLIC DEPOSITS During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Section 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. BOARD AND BOARD COMMITTEES The details of Board Meetings held during the year, attendance of the directors at the meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that: a) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same; 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 your company as at March 31, 2015 and of the profit and loss of the company for financial year ended March 31, 2015; c) proper and sufficient care has 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; d) the annual accounts have been prepared on a 'going concern' basis; e) Proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) proper systems to ensure compliance with the provisions of all applicable laws in place and that such systems were adequate and operating effectively. CORPORATE GOVERNANCE In compliance with the provisions of Clause 49 of the Listing Agreement, a separate report on Corporate Governance along with a certificate from the Auditors on its compliance forms an integral part of this Annual Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL During the financial year 2014-15, Mrs. Dimple Sanghi was appointed as Non-Executive, Non-Independent Director of your Company by the shareholders at AGM held on September 06, 2014. Further Mrs. Dimple Sanghi has tendered her resignation from the post of director w.e.f. February 05, 2015 and the same was accepted by Board of Directors at meeting held on February 06, 2015. 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, Mr. Sanjaya Kulkarni, Mr. Parantap Dave and Mr. T. S. Sarangpani were appointed as Independent Directors on the Board of Directors of your Company at 8th AGM of your Company held on September 06, 2014 to hold office upto 5 (five) consecutive years up to March 31, 2019. Mr. Rajesh Bhatia, Managing Director of your Company was re-appointed for a period of 5 (five) years commencing from November 14, 2014 to November 13, 2019 by the shareholders of the Company through postal Ballot result declared on March 17, 2015. Ms. Khusboo Kavedia was appointed as Company Secretary of the Company w.e.f April 10, 2014 and further Ms. Khusboo Kavedia has resigned from the post of Company Secretary w.e.f. August 05, 2014. Ms. Pooja Bhimjiyani was appointed as Company Secretary of the Company w.e.f. August 05, 2014 and as the Compliance Officer of the Company w.e.f. November 14, 2014. Mr. Rajesh Bhatia, Managing Director, Mr. Utsav Shrivastava, CFO and Mrs. Pooja Bhimjiyani, Company Secretary are the Key managerial Personnel of your Company in accordance with the provisions of Section 2(51), 203 of Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personal) Rules, 2014. DECLARATION OF INDEPENDENCE Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONAL AND PARTICULARS OF EMPLOYEES Disclosures of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as "Annexure A". The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of the Directors Report. EMPLOYEE'S STOCK OPTION SCHEME Details as required under Rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014 and as required to be provided under the Securities and Exchange Board of India Guidelines as on March 31, 2015 are set out in "Annexure B" to this Report. AUDITORS AND AUDITORS' REPORT Statutory Auditors Your Directors would like to inform you that the provision of Section 139 of the Companies Act, 2013 (hereinafter referred as Act) read with The Companies (Audit and Auditors) Rules, state as under: "Every Company shall at its first Annual General Meeting appoint a Statutory Auditors of the Company who shall hold office from the conclusion of the meeting till the conclusion of its sixth Annual General Meeting. The tenure of the auditor shall be for period of Five Years, subject to annual ratification by the shareholders of the Company. Further, the maximum tenure a Statutory Auditor can serve will depend upon the term already served by him as the Statutory Auditor of the Company." In order to comply with the above mentioned provisions, and for maintaining transparency and good Corporate Governance, the Audit Committee has recommended appointment of new firm of Chartered Accountants as Statutory Auditors in place of M/s Jogish Mehta & Co., Chartered Accountants at the ensuing Annual General Meeting. The Board placed on records sincere appreciation of the invaluable service rendered by M/s Jogish Mehta & Co. during their tenure as statutory auditors of the Company. Further, the Board shall be recommending the new proposed auditors to the Company. Auditors Observation: Your Directors have examined the Auditors' Report on account for period ended March 31, 2015. The Auditors' Report is self-explanatory and have no qualification, observation or adverse remarks except that there has been slight delay in a few cases in making payments of statutory dues and suggestion that there is a scope for considerable improvement in so far as internal control system for sale of goods and services is concerned in light of the geographical spread of our growth. Cost Auditors The Board of Directors had appointed M/s Kishore Bhatia & Associates, Cost Accountants, as the Cost Auditor of your Company for the financial year 2014-15 to conduct the audit of the cost records of your Company. As per Section 148 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of your Company has appointed M/s. Kishore Bhatia & Associates, Cost Accountants as the Cost Auditor for the financial year 2015-16 on the recommendations made by the Audit Committee. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM, would be not exceeding Rs. 150,000 (Rupees One lakh and fifty thousand only) excluding taxes and out of pocket expenses, if any. Your directors recommend the approval of said remuneration to the Cost Auditors of the Company. Your Company has received consent from M/s. Kishore Bhatia & Associates, Cost Accountants, to act as the Cost Auditor of your Company for the financial year 2015-16 along with a certificate confirming their independence. Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Mihen Halani, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as "Annexure C" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure D" to this Report. RELATED PARTY TRANSACTIONS During the financial year 2014-15, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder and Clause 49 of the Listing Agreement. During the financial year 2014-15, there were no transactions with related parties which qualify as material transactions under the Listing Agreement. The details of the related party transactions as required under Accounting Standard - 18 are set out in Note No. 2.30 to the standalone financial statements forming part of this Annual Report. The Policy on related party transactions may be accessed on the Company's website at a link: www.nseprimeir.com/z_TreeHouse/pdf-files/Treehouse_ RelatedPartyTrasactionPolicy_300914.pdf <http://www.nseprimeir.com/z_TreeHouse/pdf-files/Treehouse_RelatedPartyTrasactionPolicy_300914.pdf> LOANS GIVEN, INVESTMENT MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED Details of Loans, Guarantees, Securities and Investments are given in the notes to the Financial Statements. RISK MANAGEMENT POLICY The Company has adopted a Risk Management Policy duly approved by the Board and is overseen by the Audit Committee of the Company on a continuous basis to identify, assess, monitor and mitigate various risks to key business objectives. CORPORATE SOCIAL RESPONSIBILITY The Board of Directors at its meeting held on February 06, 2015 approved the Corporate Social Responsibility (CSR) Policy for your Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the recommendations of the CSR Committee. The Corporate Social Responsibility Policy may be accessed on Company's website at a link: www. nseprimeir.com/z_TreeHouse/pdf-files/Treehouse_ CorporateSocialResponsibilityPolicy_070215.pdf The initiatives undertaken by your Company during the financial year 2014-15 in CSR have been detailed in this Annual Report. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out herewith as "Annexure E" to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNING AND OUTGO The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesn't own any manufacturing facility. However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety. The details of the outgoing Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2015. The Members are requested to refer to the said Note No. 2.36 for details in this regard. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. HUMAN RESOURCES Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. September 06, 2014), with the Ministry of Corporate Affairs. SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. GENERAL Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; and Your Director further state that during the year under review, there were no cases filed pursuant to Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT Your Directors take this opportunity to thank the government, regulatory bodies and shareholders for their consistent support and also place on record appreciation to the contribution made by Company's staff and teachers at all levels, without whom the Company would not have attained such great heights in such a short period of its business. The Directors also commend the continuing commitment and dedication of the employees at all levels which has been critical for the Company's growth. The Directors look forward to their continued support in future. For and on behalf of the Board Tree House Education & Accessories Limited Rajesh Bhatia Managing Director Vishal Shah Director Date : Mumbai Place : May 27, 2015. |