DIRECTORS' REPORT To The Members, Everest Organics Limited CIN : L24230TG1993015426 Your Directors have pleasure in presenting the 22nd Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March, 2015 b. OPERATIONS: During the financial year under review, the turnover of your Company increased by Rs 9,75,68,144/- (Rupees Nine Crore Seventy Five Lakh Sixty Eight Thousand One Hundred Forty Four only) registering a growth of 10.08% over the previous Year. The PAT (Profit After Tax) of your company at Rs 1,65,33,393/- (One Crore Sixty five Lakh Thirtythree Thousand Three Hundred Ninety three only) recorded an increase of 90.58% in the year under review, having risen by Rs. 78,58,161/- (Rupees Seventy-eight Lakh Fifty eight Thousand One Hundred Sixty one only) over the previous year. There was no change in nature of the business of the Company, during the year under review. c. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES: During the year under review, your Company did not have any subsidiary, associate and joint venture company. d. DIVIDEND: With a view to conserve resources, your Directors have thought it prudent to plough back the entire profits and regret for not being able to recommend any dividend for the financial year under review. e. TRANSFER TO RESERVES: The Board of Directors has not recommended transfer of any amount of profit to reserves during the year under review. Hence, the entire amount of profit for the year under review has been carried forward to the Profit and Loss Account. f. REVISION OF FINANCIAL STATEMENTS: There was no revision of the financial statements for the year under review. g. DEPOSITS The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable. h. DISCLOSURES UNDER SECTION 134(3Ul) OF THE COMPANIES ACT, 2013: No material changes and commitments which could affect the Company's financial position have occurred between the ends of the financial year of the Company. i. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls. The Company maintains appropriate system of internal control, including monitoring procedures, to ensure that all assets are safeguarded against loss from unauthorized use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances, and are meant to ensure that all transactions are authorized, recorded and reported correctly. j. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future. k. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES The details of transactions/contracts/arrangements entered into by the Company with related party(ies) as defined under the provisions of Section 2(76) of the Companies Act, 2013, during the financial year under review, are furnished in Annexure I and forms part of this Report. l. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES: No, loans, guarantees, investments and securities provided during the financial year under review. m. DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013: The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014. n. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013: The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014. o. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013: The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014. p. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013: During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014. q. CAPITAL REDUCTION SCHEME the scheme for Capital Reduction was approved by the shareholders in the Annual General Meeting dated 30.07.2014, and the same scheme has been approved by the High Court of judicature at Hyderabad, on 22.06.2015. Now the Company has allotted the new shares as per the shene in the ratio 36:100, dated 17.08.2015, and seeking for listing of these new sheres at BSE. 2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL a) BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL Mr. Sreeramakrishna Grandhi (DIN: 06921031) and Dr. Srikakarlapudi Sirisha (DIN: 06921012) on 30th July 2014 and Mr. Reddy Eashwer Kanthala (DIN : 02327979) on 31st August, 2015 were appointed as Additional Directors of the Company to hold office up to the date of ensuing Annual General Meeting. The Company has received notices from shareholder along with requisite deposits proposing the candidature of Mr. Sreeramakrishna Grandhi (DIN: 06921031), Dr. Srikakarlapudi Sirisha (DIN: 06921012) and Mr. Reddy Eashwer Kanthala (DIN 02327979) for appointment as Directors at the ensuing Annual General Meeting. Mr. G. Raghunandan (DIN : 00105412) resigned as Director of the Company with effect from 27th June 2014, due to the nomination withdrawn by reporting authority (APIDC). In accordance with the provisions of the Act, none of the Independent Directors is liable to retire by rotation. As per the provisions of Section 152 of the CompaniesAct, 2013, Mr.SriKakarlapudi Sitarama Raju (DIN : 02955723) and Mr. Srikakarlapudi Harikrishna,( DIN : 01664260) will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their candidature for approval. b. DECLARATIONS BY INDEPENDENT DIRECTORS: The Company has received declarations form all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company. 3. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES a. BOARD MEETINGS: The Board of Directors met 6 times during the financial year ended 31st March 2015 in accordance with the provisions of the Companies Act, 2013 and rules made there under. The dates on which the Board of Directors met during the financial year under review are as under: b. DIRECTOR'S RESPONSIBILITY STATEMENT: In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2015, the Board of Directors hereby confirms that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2015 and of the profit/loss of the Company for that year; c. proper and sufficient care was taken 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 annual accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; c. NOMINATION AND REMUNERATION COMMITTEE: The Nomination and Remuneration Committee of Directors as constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act. The composition of the committee is as under: 1. Mr. Ramakrishnam Raju Kounparaju (DIN : 01735481),Director 2. Mr. Swaminathan Venkatesan (DIN : 02810646), Director and 3. Mr. Sreeramakrishna Grandhi (DIN: 06921031), Chairman The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. d. AUDIT COMMITTEE: The Audit Committee of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit Committee is in conformity with the provisions of the said section. The Audit Committee comprises of: 1. Mr. Ramakrishnam Raju Kounparaju (DIN : 01735481), Chairman, 2. Mr. Swaminathan Venkatesan (DIN : 02810646), Independent Director and 3. Mr. Akella Parvatisem (DIN: 00910224), Director. The scope and terms of reference of the Audit Committee have been amended in accordance with the Act and the Listing Agreement entered into with the Stock Exchanges. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee. e. STAKEHOLDERS RELATIONSHIP COMMITTEE: During the year under review, pursuant to Section 178 of the Companies Act, 2013, the Board of Directors of the Company has constituted the Stakeholder's Relationship Committee, comprising Mr. Srikakarlapudi Harikrishna, Mr. V. Swaminathan and Mr. A. Parvatisem, Directors of the Company. Mr. SwaminathanVenketasan,is the Chairman of the Committee. The Company Secretary will acts as the Secretary of the Committee. f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES: The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports etc. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. g. RISK MANAGEMENT POLICY: The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. h. CORPORATE SOCIAL RESPONSIBILITY POLICY: As per the provisions of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee as under: 1. Mr. A. Parvatisem, Chairman, 2. Mr. S. K. Harikrishna 3. Mr. G.S.S.R Sarma, 4. Mr. P. S. Manyam and 5. Mr. CH. Ramesh The Board of Directors of the Company has approved CSR Policy based on the recommendation of the CSR Committee. The Company has initiated activities in accordance with the said Policy, but your Company does not fall in the applicable criteria incorporated under the provisions of Companies Act 2013. i. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD: A formal evaluation mechanism has been adopted for evaluating the performance of the Board as well as performance of Committees and individual Directors. Performance of all Directors and the Company has been carried out by way of structured evaluation process. Criteria for evaluation includes attendance and contribution at the meetings, preparedness for the meetings, effective decision making ability etc. INTERNAL CONTROL SYSTEMS: Adequate internal control systems commensurate with the nature of the Company's business, size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected. k. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014: The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year under review has been marked as Annexure ll. l. PAYMENT OF REMUNERATION / COMMISSION TO DIRECTORS FROM HOLDING OR SUBSIDIARY COMPANIES: Not Applicable, as the Company has no holding or Subsidiary entity. 4. AUDITORS AND REPORTS The matters related to Auditors and their Reports are as under: a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2015: The observations made by the Statutory Auditors in their report for the financial year ended 31st March 2015 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. 1. The auditor stated in their report that the Company has maintained proper quantitative details and situation of Fixed Assets but the Fixed Assets Register to be updated. Directors' Comment: The Company is in the process of restructuring and updating the Fixed Assets Register. 2. The Auditor stated that the Company has an adequate Internal Control System, which is prima facie commensurate with its size and nature of its business but the Company does not have internal audit system as per the provisions of section 138 of the Companies Act 2013 read with Rule 13 of Companies (Accounts) Rules, 2014. Directors' Comment: The Company has already an adequate Internal Control System. But in compliance with the provisions of section 138 of the Companies Act 2013 read with Rule 13 of Companies (Accounts) Rules, 2014, an internal auditor has since been appointed. b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31st MARCH 2015: Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. D. Hanumanta Raju & Co., Company Secretaries of B-13, F-1, P.S. Nagar, Vijayanagar Colony, Hyderabad - 500 057,India had been appointed to issue Secretarial Audit Report for the financial year 2014-15. Secretarial Audit Report issued by D. Hanumanta Raju & Co., Company Secretaries of B-13, F-1, P.S. Nagar, Vijayanagar Colony, Hyderabad - 500 057,India, Company Secretaries in Form MR-3 for the financial year 2014-15 forms part of this report as Annexure lll. The said report contains the observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. 1. The Company has not given any publications as required relating to Board Meetings, Annual General Meetings. Directors' Comment: The Company has since appointed a Company Secretary to look after compliance with all the regulatory provisions. 2. There are no Limited review Reports submitted to Stock Exchange. Directors' Comment: Due to suspension in trading of the company's shares, the company thought this was not required. Now the Company has appointed a Company Secretary to look after all the regulatory provisions and will submit all required documents accordingly. 3. Section 203 of Companies Act, 2013, is not complied with. Directors' Comment: The Company will meet all the related provisions of section 203 of the Companies Act, 2013 by the ensuing Annual General Meeting. The Company has already appointed the Company Secretary as per the said provisions. 4. The Website of the Company is not updated. Directors' Comment: The website will be updated as per the various requirements of listing Agreement and Companies Act, 2013 by the ensuing Annual General Meeting. The basic information regarding the Management, RTA, Compliance Officer, Email id, Unaudited Financial Results, Quarterly Shareholding Patterns, Corporate Governance Report and some of the policies and documents related to Corporate Action, Scheme of Capital Reduction have already been updated in the website as and when any event occurred and as per the requirement. 5. There was no appointment of Internal Auditor. Directors' Comment: The Company has an adequate Internal Control System. However, in compliance with the requirements under the Companies Act, 2013, the Company has since appointed an Internal Auditor. c. APPOINTMENT OF STATUTORY AUDITORS: Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s P.S. N. Ravi Shankar & Associates, Chartered Accountants, the Statutory Auditors of the Company, will be appointed for a term of two financial years 2015 - 2016 and 2016 - 2017. They will hold office till the Annual General Meeting of 2017. The consent of the Auditors along with the certificate under Section 139 of the Act has been obtained to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company. The Board recommends the appointment of M/s. P.S. N. Ravi Shankar & Associates, Chartered Accountants as the Statutory Auditors of the Company. Necessary resolution for reappointment of the said Auditors is included in the Notice of AGM for seeking approval of members. d. COST AUDITORS: Pursuant to the provisions of Section 148 of the CompaniesAct, 2013 read with Notifications/ Circulars issued by the Ministry of Corporate Affairs from time to time, as per the recommendation of the Audit Committee, the Board of Directors at their meeting dated 31.05.2014, appointed M/s Sativada Venkat Rao, Cost Accountants as the Cost Auditors of the Company for the financial year 2014-15 in respect of the Company's pharma manufacturing units at Aroor Village, Sadasivapet, Medak District, Telangana - 502 291. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year subject to the availability of respective e-forms at MCA Sites 2. OTHER DISCLOSURES Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under: a. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure lV which forms part of this Report. b. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy and technology absorption,foreign exchange earnings and outgo etc. are furnished in as per in Annexure V considering the nature of activities undertaken by the Company during the year under review which forms part of this report. 6. ACKNOWLEDGEMENTS AND APPRECIATION: Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company. For and on behalf of the Board Everest Organics Limited Ramakrishnam Chairman DIN:01735481 Raju Kounparaju Dr. S. K. Srihari Raju Managing Director DIN : 01593620 Registered Office Aroor Village, Sadasivapet Mandal, Medak District - 502 291 Telangana, India CIN L24230TG1993PLC015426 TEL No. 040-23115956 Fax No. 040-23115954 Mail eolcs0405@gmail.com website: www.everestorganicsltd.com |