DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS TO THE MEMBERS The Directors have pleasure in presenting the 68th Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March, 2015. CORE INVESTMENT COMPANY The Company is a Core Investment Company-Non Deposit Taking-Systemically Important (CIC-ND-SI) registered with the Reserve Bank of India (RBI) and has been complying with all the conditions prescribed by RBI. OPERATIONS & OUTLOOK Total Revenue for the year under review was Rs. 3865.56 lacs and the profit after tax was Rs. 2056.47 lacs. The Company, being a Core Investment Company, holds significant investments in Group Companies with a wide and diversified industrial segment, fortunes of which are dependent upon prevailing economic conditions. Fiscal 2014-15 was indeed a challenging year for the Indian economy. There was a partial acceleration in some segments of the Indian economy. Inflationary pressures also eased during the year. In addition, there was some softening of interest rates leading to hopes of higher economic growth. GDP growth during the year was 7.3%. The improving investment sentiment along with lower inflation should rebound investment activities. This should have positive impact on the working of the Investee Companies and the capital market leading to better valuations. DIVIDEND Your Directors are pleased to recommend a dividend of Rs. 7 per Share (70%) for the year ended 31st March 2015. The dividend outgo would amount to Rs. 607.85 lacs. EXTRACT OF ANNUAL RETURN An extract of the Annual Return as on 31st March, 2015 in the prescribed form MGT-9 is attached as Annexure-1 to this Report and forms part of it. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS The Company being a Core Investment Company registered with the Reserve Bank of India, Section 186 of the Companies Act, 2013 is not applicable to it. The particulars of loans, guarantees and investments are given in the financial statements RELATED PARTY TRANSACTIONS During the financial year ended 31st March, 2015, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arms' length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. Further, the Company has not entered into any contract or arrangement or transaction with the related parties which could be considered material in accordance with the policy of the Company on materiality of the Related Party Transactions. In view of the above, disclosure in Form AOC-2 is not applicable. The Related Party Transactions Policy as approved by the Board is available on the website of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL Your Directors express their profound grief and sorrow on the sad demise of Shri Lajpat Rai Puri, Director of the Company, on 6th April, 2015. He was associated with the Company for a long time during its initial years and joined the Company as Director on 2nd February, 2009. He had held various senior management positions and had rich experience of managing industrial and commercial enterprises. He was also the President of the Institute of Company Secretaries of India and on the Board of several other Companies. Your Directors pay their respectful homage and tribute to Shri Lajpat Rai Puri and highly valued his commitment and sincerity in the best interest of the Company till his last day. With enactment of the Companies Act, 2013, all the four Independent Directors of the Company, namely, Shri Shailendra Swarup and Shri O.P. Khaitan, each for a term of five consecutive years and Late Shri L.R. Puri and Shri J.R.C. Bhandari, each for a term of three consecutive years commencing from the date of the Annual General Meeting (AGM), were appointed by the members at the AGM held on 2nd September, 2014 under Section 149 of the Act. All Independent Directors of the Company have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Clause 49 of the Listing Agreement with the Stock Exchange. Shri Bharat Hari Singhania, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting (AGM). Shri Bakul Jain was appointed as an Additional Independent Director of the Company with effect from 16th May, 2015 for a term of five consecutive years subject to approval of the members at the ensuing AGM. Shri Bakul Jain has given declaration about his independence pursuant to Section 149 of the Companies Act, 2013. The Company has also received requisite Notice from a Member of the Company proposing the name of Shri Bakul Jain for appointment as Director at the ensuing AGM. The Board of Directors recommends his appointment as aforesaid. Further, in terms of Section 203 of the Companies Act, 2013, Shri U.K. Gupta, Manager and Chief Financial Officer and Shri Dillip Swain, Company Secretary were appointed as "Key Managerial Personnel" of the Company. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited Consolidated Financial Statements together with Auditors' Report form part of the Annual Report. A report on the performance and financial position of each of the subsidiaries and associates, included in the Consolidated Financial Statements is presented in a separate section in this Annual Report. Please refer AOC-1 annexed to the Financial Statements in the Annual Report. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company. During the financial year under review, no company has become or ceased to be your Company's subsidiary. With the coming into effect of the Companies Act 2013, JK Lakshmi Cement Ltd., JK Tyre & Industries Ltd., JK Paper Ltd., JK Agri Genetics Ltd., Umang Dairies Ltd., Pranav Investment (M.P.) Company Ltd., Dwarkesh Energy Ltd., Global Strategic Technologies Ltd., Deepti Electronics & Electro-Optics Pvt. Ltd. and PSV Energy Pvt. Ltd. have become associates of the Company. DEPOSITS The Company is a registered Non-Banking Finance Company and does not accept public deposits and as required by the Reserve Bank of India (RBI), the Board of Directors have also passed necessary resolution not to accept public deposits during the financial year 2015-16, without prior approval of RBI. AUDITORS (a) Statutory Auditors and their Report M/s Lodha & Co., Chartered Accountants, have been appointed as Auditors of the Company to hold the office from the conclusion of the 67th Annual General Meeting held on 2nd September, 2014 until the conclusion of the 72nd Annual General Meeting to be held in the Year 2019, subject to ratification of the appointment by the members at the respective AGMs to be held in the years 2015, 2016, 2017 and 2018. Accordingly, being eligible, matter relating to the appointment of the Auditors will be placed for ratification by members at the forthcoming Annual General Meeting. The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self explanatory. (b) Secretarial Auditor and Secretarial Audit Report Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2014-15. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure-2. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS During the financial year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. PARTICULARS OF REMUNERATION During the period under review, the Company had no employee in the category of Section 197 of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Information in accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Report. However, as per the provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. The said information is available for inspection at the Registered Office of the Company during working hours. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements and no material reportable weakness was observed in the system. Further, the Company has in place adequate internal financial controls commensurate with the size and nature of its operations. The Company also has robust Budgetary Control System and Management Information System (MIS) which is the backbone of the Company for ensuring that your Company's assets and interests are safeguarded. DIRECTORS' RESPONSIBILITY STATEMENT As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state 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 accounting policies have been selected and applied consistently and judgments and estimates made 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 profit and loss of the Company for that period; (c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act 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) the internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and (f) the proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems were adequate and operating effectively. CORPORATE GOVERNANCE - including details pertaining to Board Meetings, Nomination and Remuneration Policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism. Your Company re-affirms its commitment to the highest standards of corporate governance practices. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of this Report. The Corporate Governance Report which forms part of this Report, also covers the following: (a) Particulars of the four Board Meetings held during the financial year under review. (b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors. (c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors. (d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism. (e) Details regarding Risk Management. RISK AND CONCERNS The Company is mainly exposed to capital market risks in the form of change in value of its investments. The Company is also exposed to the fluctuations of economy and industry cycles. CAUTIONARY STATEMENT The statement in this Management Discussion and Analysis Report, describing the Company's outlook, projections, estimates, expectations may be "Forward-looking Statements" within the meaning of applicable securities laws or regulations. Actual results could differ materially from those expressed or implied. CORPORATE SOCIAL RESPONSIBILITY The requirement of Corporate Social Responsibility (CSR) in terms of Section 135 of the Companies Act, 2013 and the rules made thereunder is not applicable to the Company, since the Company's main source of income is dividend from CSR compliant companies. CONSERVATION OF ENERGY ETC. As required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 the requirement of furnishing particulars of energy conservation, technology absorption, etc. is not applicable to the Company. Further, particulars of Foreign Exchange Earning and Outgo are as under:- i) Foreign Exchange earned : NIL ii) Foreign Exchange Outgo : Rs. 10.15 Lacs ACKNOWLEDGEMENTS Your Directors wish to place on record and acknowledge their appreciation for the continued support and co-operation received from the Government Authorities, Lending Institutions and the esteemed shareholders of the Company. The Directors also record their appreciation for the total dedication of the employees. On behalf of the Board BHARAT HARI SINGHANIA Chairman Place: New Delhi Date : 05th August, 2015 |