DIRECTORS' REPORT 1.Your Directors have pleasure in presenting the 43rd Annual Accounts of the Company for the financial year ended 31st March, 2015 2. DIVIDEND In view of the operating loss suffered by the Company during the period under report, your Directors are not in a position to recommend any dividend for the year 2014-15 3. PRODUCTION AND SALES The Company has not been operating its Uppal (Hyderabad) plant since May 2000 and at present only its Silvassa plant is working. As the banks suspended all the credit facilities earlier made available, the Company revised its business strategy by accepting and executing job orders. This is reflected in continuance of business in spite of absence of working capital facilities. The Company produced 9492 Mts of Conductor during the year under Report as compared to 4347 Mts in the previous year. 4. REFERENCE TO BIFR The Company was declared as a sick industrial undertaking by BIFR in September, 2001 and Industrial Development Bank of India (IDBI) was appointed as the "Operating Agency" to examine the viability of the Company and formulate a scheme for its revival. As required, the Company submitted its Rehabilitation Proposal to IDBI and others in November, 2001 for their consideration. After a series of discussion, at the instance of the lending institutions, the Company submitted its revised Rehabilitation Proposal in October, 2003 and requested the institutions for its early consideration. After examining the proposal and further discussion, the Lenders initially gave time to the Company upto 30th September, 2004, which was later on extended upto 30th June, 2005, to show significant operational improvement in its performance. The Lenders also advised the Company to look into the possibility of one-time settlement of dues and the Company earnestly pursued the matter with the Lenders BIFR vide its order dated 14.09.2007 confirmed its opinion of winding up in terms of Section 20(1) of the Sick Industrial Companies (Special Provisions) Act. The Company preferred an appeal and got stayed the aforesaid Order. In the meantime, the Company's efforts to make a breakthrough in the matter has borne fruit and IDBI, SASF & UTI have agreed for one-time settlement of their dues. As regards others, modalities are being worked out. It is hoped that with massive investment planned in Power Sector, the situation is expected to turn-around in favour of the Company. 5. Contract / arrangement with related party All contracts / arrangements / transactions entered by the Company during the financial year with related parties, were in the ordinary course of business and on an arm's length basis. Your Directors draw attention of the members to Note 45 to the financial statement which sets out related party disclosures. 6. Particulars of loans, investments and guarantees The Company did not give any loan, make investment or provide guarantee u/s 186 of the Companies Act, 2013 during the financial year 7. Management Discussion and Analysis a. Business review and outlook The power sector, after going through a turbulent time for over a decade, has started looking up due to reforms initiated by the successive Governments. This augurs well for the aluminium industry, particularly for those like us engaged in the manufacture and supply of electrical conductors for overhead power transmission and distribution lines. b. Internal Control System and their adequacy. The Company has a proper and adequate system of internal controls with laid-down policies and procedures for all its operations and financial functions to see that all its assets are safeguarded and protected against loss from any unauthorized use or disposition and all financial records are maintained properly. The Company's Board has an Audit Committee which consists of two independent Directors to review, inter alia, the significant findings of the internal audit. c. Rehabilitation Scheme. BIFR vide its order dated 14.09.2007 confirmed its opinion of winding up in terms of Section 20(1) of the Sick Industrial Companies (Special Provisions) Act. The Company preferred an appeal before the Hon'ble High Court of Andhra Pradesh which has stayed BIFR order. In the meantime, the Company's efforts to make a break through in the matter has borne fruit and IDBI, SASF & UTI have agreed for one time settlement of dues. As regards others, modalities are being worked out. It is hoped that with massive investment planned in Power Sector, the situation is expected to turn- around in favour of the Company. d. Material developments in human resources / industrial relations. The Company values human resource as one of its most important assets and is strengthening it in line with its growth plans. The Company has always had an excellent track record of cordial and harmonious industrial relations. This year too, the industrial relations in the Company have been very cordial and not a single man-day was lost on this account. e. Cautionary Statement. Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be 'forward-looking statements' within the meaning of applicable securities law and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax law and other statutes and other incidental factors. 8. Composition of Directors The Board of Directors as at 31.03.2015 comprises seven directors, of which five are nonexecutive. The Chairman is non-executive and the number of independent directors, i.e. those who have no business relationship with the Company is three. The composition is as under: 9. Meetings of each Director: Five Board Meetings were held during the year, the dates being 30.05.2014, 09.08.2014, 14.11.2014, 09.02.2015 and 28.03.2015. The last AGM was held on 30.09.2014. The attendance record of the Directors at the Board Meetings and the last Annual General Meeting (AGM) is given below: 10. Policy for selection of Directors The Board formulated the following policy for selection of Directors and determining their Independence. 1) Introduction a) The Company believes that an enlightened Board consciously creates a culture of leadership to provide a long-term vision and policy approach to improve the quality of governance. Towards this, the Company ensures constitution of Board of Directors with an appropriate composition, size, diversified expertise and experience and commitment to discharge their responsibilities and duties effectively. b) The Company recognizes the importance of Independent Directors in achieving the effectiveness of the Board. The Company aims to have an optimum combination of Executive, Non-Executive and Independent Directors. 2) Scope This Policy sets out the guiding principles for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent directors of the Company. 3) Policy a) Qualifications and Criteria i) The Board, shall review on an annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a Board with diverse background and experience that are relevant for the Company's global operations. ii) In evaluating the suitability of individual Board member, the following factors are taken into account • General understanding of the Company's business dynamics, global business and social perspective; • Educational and professional background • Standing in the profession • Personal and Professional ethics, integrity and values; • Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively. iii) The proposed appointee shall also fulfill the following requirements: • Shall posses a Director Identification Number; • Shall not be disqualified under the Companies Act, 2013; • Shall give his written consent to act as a Director; • Shall endeavor to attend all Board Meetings and wherever he is appointed as a Committee Member, the Committee Meetings; • Shall abide by the Code of Conduct established by the Company for Directors and Senior Management Personnel; • Shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made; • Such other requirements as may be prescribed, from time to time, under the Companies Act, 2013, Equity Listing Agreements and other relevant laws. b) Criteria of Independence i) The Board shall assess the independence of Directors at the time of appointment / re-appointment and the Board shall assess the same annually. The Board shall re-assess determinations of independence when any new interests or relationships are disclosed by a Director. ii) The Independent Directors shall abide by the "Code for Independent Directors" as specified in Schedule IV to the Companies Act, 2013. c) Other directorships / committee memberships i) The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance. Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as directors of the Company. The Board shall take into account the nature of and the time involved in a Director's service on other Boards, in evaluating the suitability of the individual Director. ii) A Director shall not serve as Director in more than 20 companies of which not more than 10 shall be Public Limited Companies. iii) A Director shall not serve as an Independent Director in more than 7 Listed Companies and not more than 3 Listed Companies in case he is serving as a whole-time Director in any Listed Company. iv) A Director shall not be a member in more than 10 Committees or act as Chairman of more than 5 Committees across all companies in which he holds directorships. For the purpose of considering the limit of the Committees, Audit Committee and Stakeholders' Relationship Committee of all Public Limited Companies, whether listed or not, shall be included and all other companies including Private Limited Companies, Foreign Companies and Companies under Section 8 of the Companies Act, 2013 shall be excluded. 11. Remuneration Policy The following Remuneration Policy for Directors, Key Managerial Personnel and other employees is followed 1. Introduction Galada Power and Telecommunication Ltd., (GPTL) recognizes the importance of aligning the business objectives with specific and measureable individual objectives and targets. The Company has therefore formulated the remuneration policy for its directors, key managerial personnel and other employees keeping in view the following objectives: a) Ensuring that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate to run the company successfully. b) Ensuring that relationship of remuneration to performance is clear and meets the performance benchmarks. c) Ensuring that remuneration involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals. 2. Scope This policy sets out the guiding principles for the Nomination and Remuneration Committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the Company. 3. Policy a) Remuneration to Managing Director, Executive Director and Key Managerial Personnel. i) The Board on the recommendation of Nomination and Remuneration Committee , shall review and approve the remuneration payable to Managing Director and Executive Director of the Company within overall limits approved by the shareholders. ii) The Board, on the recommendation of the Committee, shall also review and approve the remuneration payable to the Key Managerial Personnel of the Company. iii) The remuneration structure to the Managing Director, Executive Director and Key Managerial Personnel shall include the following components: * Basic Pay * Perquisites and Allowances * Retiral benefits b) Remuneration to Non-Executive Directors. Non-Executive Directors shall be entitled to sitting fees for attending the meetings of the Board and the Committees thereof. The Non-Executive Directors shall also be entitled to reimbursement of expenses in addition to the sitting fees. c) Remuneration to other employees Employees shall be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile, skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs. 12. Declaration by Independent Director The Company received necessary declarations from each Independent Director u/s 149 (7) of the Companies Act, 2013 to the effect that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013. 13. Board Evaluation The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and frame work adopted by the Board as envisaged in the Companies Act, 2013. 14. Training of Independent Directors Every new Independent Director of the Board attends an orientation programme to get familiarized with the Company's strategy, operations, product, service, markets, organization structure, finance, human resources, technology, quality, facilities and risk management. 15. Changes in the Board of Directors. 1. Mr T B Subramanian expired on 20.08.2014 and the Board places on record its appreciation for the services rendered by him during his tenure with the Company. 2. Ms Ameeta Trehan who is well versed will the indian financial system was appointment as Additional Director w.e.f 09.02.2015 to hold office till the date of AGM. The Company seeks your support in confirming the appointment of Ms Ameeta Trehan in the ensuing AGM. 3. As per the provisions of the Companies Act 2013, Mr M C Galada retires at the ensuing AGM and being eligible, seeks reappointment. The Board recommends his reappointment. 4. The Companies Act, 2013 provides for the appointment of Independent Directors upto 5 consecutive years on the Board of the Company. Accordingly, the Board recommends the appointment of Shri M L Sachdeva and Ms Ameeta Trehan as Independent Directors for 5 consecutive years on the Board of our Company and the support of the member is sought for in this regard. 16. Committees of the Board Consequent to the demise of Shri T B Subramaniam and the induction of Ms Ameeta Trehan on our Board, the following Committees are reconstituted with effect from 09.02.2015. 19. Explanation I comments by the Board on the qualification, reservation, adverse remark or disclaimer made by the Statutory Auditor in his report 1. Additional interest / liquidated damages payable to Financial Institutions and others are not provided as the Company has sought waiver of these amounts from the Institutions. The Company has already received approvals from IDBI, SASF & UTI and as regards others, modalities are being worked out. 2. Interest on working capital demand loan has not been provided from the date of initiation of legal proceedings by Banks. As regards observations at para 7(b) forming part of Annexure to Auditor's Report, we submit that the payment of arrears of sales tax and property tax is being suitably dealt with in the Rehabilitation Package / OTS proposal. As regards the re-appointment of Executive Director and Managing Director, we submit that the re-appointments are made on the same terms and conditions stipulated on 30.11.1994 and no increase whatsoever is considered pending the complete turn-around of the Company. The equipment in transit is inspected by the Company officials at regular intervals and the equipment can be commissioned once it is cleared from the Customs under the Rehabilitation Scheme which is yet to be formulated. 20. Annual Return Extract of Annual Return of the Company is attached herewith as Annexure II 21. Risk Management The Company manages, monitors and reports on the principal risk and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organization structure, processes, standards, code of conduct and behavior govern the business of the Company and manage the associated risks 22. Internal financial control 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. 23. Conservation of energy, technology absorption and foreign exchange earnings loutgo A. Conservation of Energy The Company has been vigorously implementing various measures for energy conservation such as installation of sophisticated power saving furnaces in the heat treatment and ageing operations and carrying out modifications on a continuing basis for conservation of energy in other fields. The additional cost incurred is more than offset by the reduction in production cost due to lower consumption of energy per unit of output. B. Technology Absorption The efforts of the Company are focused on improvement of" existing products and standardization. There is no bought - out technology from foreign countries to be absorbed by the company. C. Foreign Exchange Earnings and Outgo There are no foreign exchange earnings and outgo during the period under report. 24. 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 Chpter 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 Executive Director of the Company receives 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 of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. ACKNOWLEDGMENTS The Board of Directors would like to place on record their deep appreciation and sincere thanks for the continues cooperation, guidance, support and assistance provided during the period under review by all the stake holders. By order of the Board D C Galada Managing Director Devendra Galada Executive Director Place : Hyderabad Date : 30.05.2015 |