DIRECTORS' REPORT Your Directors are pleased to present the 30th Annual Report and the Audited Financial Statements for the Financial Year ended 31st March, 2015. State of the Company's Affairs Your Directors wish to present the details of Business operations done during the year under review: During the year under review your Company has recorded total revenue of Rs. 3208.27 lakhs as against Rs.3520.10 lakhs in the previous year, and the company has recorded the Profit before finance cost, depreciation and tax expenses Rs. 220.95 lakhs (2014-15) as against Rs. 183.82 lakhs (2013-14). In the current year the Net profit is Rs. 65.41 Lakhs against the previous year Rs. 20.62 lakhs. Your Directors are hopeful of better performance with increased revenue in the next year. Listing of Equity Shares The Company's Equity shares are listed at the following Stock Exchanges: i. BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai - 400 001; and The Company has paid the Annual Listing Fee to the said Stock Exchanges for the Financial Year 2014-15. Performance and financial position of each of the subsidiaries, associates and joint venture Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies of the Company is prepared and same is enclosed as Annexure -1 to this Report. Number of Meetings of the Board of Directors During the year ended March 31, 2015, five Board Meetings were held. The dates on which the Board meetings were held are 30.05.2014, 14.08.2014, 01.10.2014, 15.11.2014 and 14.02.2015. Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013 Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms: i. that in the preparation of the Annual Accounts, the applicable accounting standards have been followed; ii. that 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 the Company as at March 31, 2015 and of Profit and Loss Account of the Company for that period; iii. that the Directors have taken proper and sufficient care 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; iv. that the Directors have prepared the Annual Accounts for the Financial Year ended March 31, 2015 on a going concern basis; v. that the Directors have laid down Internal Financial Controls to be followed by the company and that such Internal Financial Controls are adequate and were operating effectively; and vi. that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149 The Independent Directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6). Nomination and Remuneration Committee The Nomination and Remuneration Committee consists of the following Directors namely Mr. Y Ravinder Reddy, Chairman, Ms. Sadhana Bhansali, Mr. Dipankar Dasgupta. P Brief description of terms of reference: • identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal; • carry on the evaluation of every Director's performance; • formulation of the criteria for determining qualifications, positive attributes and independence of a Director; • recommend to the Board a policy relating to the remuneration of the Directors, key managerial personnel and other employees; • formulation of criteria for evaluation of Independent Directors and the Board; • devising a policy on Board diversity; and • any other matter as the Board may decide from time to time. P Nomination and Remuneration policy The objectives of the Policy 1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration. 2. To determine remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in peer companies. 3. To carry out evaluation of the performance of Directors. 4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company's operations. 5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. Particulars of Loans, Guarantees or Investments under Section 186 The company has not given any Loans, Guarantees, and made Investments during the Financial Year ended on March 31, 2015 in compliance with the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014. Particulars of Contracts or Arrangements with Related Parties Referred to in Sub-Section (1) of Section 188 During the year under review there are no contracts / arrangements / transactions entered by the Company during the financial year with related parties and do not attract the provisions of Section 188 of the Companies Act, 2013. Transfer of Amount to Reserves The Company doesn't propose to transfer any amount to the general reserve for the Financial Year ended 31st March, 2015. Dividend The Board of Directors of the Company could not recommend Dividend for the financial year ended March 31, 2015. Extracts of Annual Return The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - 4 to this Report. The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014 Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - 5 to this Report. Risk Management Committee Philosophy The Board has constituted Risk Management Committee to formulate a Risk Management Policy for dealing with different kinds of risks attributable to the operations of the Company outlining different kinds of risks and risk mitigating measures to be adopted. The Board shall be responsible for framing, implementing and monitoring the risk management plan of the Company. The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate Internal Control Systems and procedures to combat the risk. The Risk management procedure will be reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company. Mechanism for Evaluation of Board Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors. A. Criteria for evaluation of Board of Directors as a whole i. The frequency of meetings; ii. The length of meetings; iii. The administration of meeting; iv. The number of committees and their roles; v. The flow of information to and between Board members; vi. The quality and quantity of information; and vii. The Disclosure of Information to the stakeholders. B. Criteria for evaluation of the Individual Directors i. Ability to contribute and monitor Corporate Governance practices; ii. Ability to contribute by introducing best practices to address top management issues; iii. Participation in long term strategic planning; iv. Commitment to the fulfillment of Director obligations and fiduciary responsibilities; v. Guiding strategy; vi. Monitoring management performance and development; vii. Statutory compliance & Corporate Governance; viii. Attendance and contribution at Board / Committee meetings; ix. Time spent by each of the member; and x. Core competencies. Directors Mr. ARIHANT BAID was appointed as the Managing Director of the Company for a period of three (3) years with effect from 18.05.2012 on the terms and conditions and remuneration as approved by the Members at the Annual General Meeting held on 30th September 2012. As such, the present term of office of Mr. ARIHANT BAID shall expire on 17.05.2015. Mr. ARIHANT BAID has been associated with the Company since 2012 and currently holds overall responsibility for the working of the Company. Keeping in view the contribution made by Mr. ARIHANT BAID for the growth of the Company, the Board of Directors of the Company and the Remuneration Committee have recommended the reappointment of Mr. ARIHANT BAID for a period of three (3) years effective from 18th May 2015. Mr. T.M Gopalakrishnan was appointed as the Whole Time Director of the Company for a period of three (3) years with effect from 18.05.2012 on the terms and conditions and remuneration as approved by the Members at the Annual General Meeting held on 30th September 2012. As such, the present term of office of Mr. T.M. Gopalakrishnan shall expire on 17.05.2015. Mr. T.M Gopalakrishnan has been associated with the Company since 2012. Keeping in view the contribution made by Mr. T.M. Gopalakrishnan for the growth of the Company, the Board of Directors of the Company and the Remuneration Committee have recommended the reappointment of Mr. T.M. Gopalakrishnan for a period of three (3) years effective from 18th May 2015. Mr. DIPANKAR DASGUPTA was appointed as Additional Director of the Company by the Board at its meeting held on October 1, 2014. The Company has received a notice in writing from a Member, along with the requisite deposit of money, proposing his candidature for the office of Director of the Company under Section 160 of the Companies Act, 2013. The Board considers that his continued association would be of immense benefit to the Company and it is desirable to continue to avail services of Mr. DIPANKAR DASGUPTA as an Independent Director Details of Directors or Key Managerial Personnel who were Appointed or have resigned during the Year The shareholders of the Company have re-appointed Mr. Y. RAVINDER REDDY and appointed Ms. SADHANA BHANSALI as Independent Directors of the Company for a period of 5 years with effect from September 30, 2014. The Board of Directors has appointed Mr. DIPANKAR DASGUPTA as Additional Director on 01.10.2014 Mr. Laxmipat Baid has been designated as Chief Financial Officer of the Company pursuant to provisions of Section 203 of the Companies Act, 2013. Deposits The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013. Statutory Auditors At the Annual General Meeting held on September 30th, 2014, Laxminiwas & Jain, Chartered Accountants (Firm Registration No. 001859S), Hyderabad, were appointed as Statutory Auditors of the Company to hold office for a period of three years i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of Laxminiwas & Jain, Chartered Accountants, Hyderabad, as Statutory Auditors of the Company is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Act. The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Directors Mr. ARIHANT BAID was appointed as the Managing Director of the Company for a period of three (3) years with effect from 18.05.2012 on the terms and conditions and remuneration as approved by the Members at the Annual General Meeting held on 30th September 2012. As such, the present term of office of Mr. ARIHANT BAID shall expire on 17.05.2015. Mr. ARIHANT BAID has been associated with the Company since 2012 and currently holds overall responsibility for the working of the Company. Keeping in view the contribution made by Mr. ARIHANT BAID for the growth of the Company, the Board of Directors of the Company and the Remuneration Committee have recommended the reappointment of Mr. ARIHANT BAID for a period of three (3) years effective from 18th May 2015. Mr. T.M Gopalakrishnan was appointed as the Whole Time Director of the Company for a period of three (3) years with effect from 18.05.2012 on the terms and conditions and remuneration as approved by the Members at the Annual General Meeting held on 30th September 2012. As such, the present term of office of Mr. T.M. Gopalakrishnan shall expire on 17.05.2015. Mr. T.M Gopalakrishnan has been associated with the Company since 2012. Keeping in view the contribution made by Mr. T.M. Gopalakrishnan for the growth of the Company, the Board of Directors of the Company and the Remuneration Committee have recommended the reappointment of Mr. T.M. Gopalakrishnan for a period of three (3) years effective from 18th May 2015. Mr. DIPANKAR DASGUPTA was appointed as Additional Director of the Company by the Board at its meeting held on October 1, 2014. The Company has received a notice in writing from a Member, along with the requisite deposit of money, proposing his candidature for the office of Director of the Company under Section 160 of the Companies Act, 2013. The Board considers that his continued association would be of immense benefit to the Company and it is desirable to continue to avail services of Mr. DIPANKAR DASGUPTA as an Independent Director Details of Directors or Key Managerial Personnel who were Appointed or have resigned during the Year The shareholders of the Company have re-appointed Mr. Y. RAVINDER REDDY and appointed Ms. SADHANA BHANSALI as Independent Directors of the Company for a period of 5 years with effect from September 30, 2014. The Board of Directors has appointed Mr. DIPANKAR DASGUPTA as Additional Director on 01.10.2014 Mr. Laxmipat Baid has been designated as Chief Financial Officer of the Company pursuant to provisions of Section 203 of the Companies Act, 2013. Deposits The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013. Statutory Auditors At the Annual General Meeting held on September 30th, 2014, Laxminiwas & Jain, Chartered Accountants (Firm Registration No. 001859S), Hyderabad, were appointed as Statutory Auditors of the Company to hold office for a period of three years i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of Laxminiwas & Jain, Chartered Accountants, Hyderabad, as Statutory Auditors of the Company is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Act. The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Qualification by Statutory Auditor Information & Explanation in respect of Qualification / Reservation or Adverse remarks contained in Independent Auditor's Report under Paras: Basis for Qualified opinion, Emphasis of Matter and Other Matters: Balance in Advances, Deposits, Unsecured loans, other Liabilities, Trade Receivables, Trade Payables and Advances against Suppliers are subject to confirmation by respective parties. Board's Response: As pointed out by the Statutory Auditors, the company has not obtained confirmation of balances of Advances, Deposits, Unsecured Loans, other liabilities, Trade Receivables, Trade Payables and advance against Suppliers. The Company has made best of its efforts to obtain the same before signing the accounts for current financial year as well as for last financial year. Further, the management of the company confirms that balances shown in the books are true and correct as per their knowledge Internal Auditors The Board of Directors of the Company has appointed Mr. Laxmipat Baid to conduct Internal Audit of the Company for the Financial Year ended 31st March, 2015. Audit Committee There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review. Corporate Governance A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditor's Certificate on its compliance. Vigil Mechanism The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy. A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases. Secretarial Audit Report As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed M/s. BSS & Associates, Company Secretaries, as Secretarial Auditors to conduct Secretarial Audit of the company for the Financial Year ended on March 31, 2015. Secretarial Audit Report issued by Mr. S. Srikanth, Partner of M/s BSS & Associates, Company Secretaries, in Form MR-3 is enclosed as Annexure - 3 to this Annual Report. The following qualification was observed by the Secretarial Auditor in his Report to which the Board has shared the following explanations: Qualification: The Company has not appointed Company Secretary as required under the Provisions of section 203 of the Companies Act, 2013 and Clause 47(a) of the Listing Agreement entered with Stock Exchange(s). Response: The company is in the process to appoint a suitable person as Company Secretary of the company to comply the provisions under section 203 of the Companies Act, 2013. Statement of particulars of appointment and remuneration of managerial personnel The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 2 to this Annual Report. Insurance All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured. Details in respect of adequacy of Internal Financial Controls with reference to the Financial Statements 1. The Company has set Internal Control Systems to maintain accurate and complete accounting records, to safeguard its assets, to prevent and detect any frauds and errors. 2. The Company has appointed Internal Auditors to observe the Internal Controls, whether the work flow of organization is being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; and 3. The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Fixed Assets Policy, Whistle Blower Policy, Policy to determine Material Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The names of companies which have become or ceased to be company's subsidiaries, joint ventures or associate companies during the year: -NIL- Change in the nature of business There is no change in the nature of business of the Company. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. Material changes and commitments There are no Material changes and commitments in the business operations of the Company from the Financial Year Ended 31st March, 2015 to the date of signing of the Directors' Report. Policy on Sexual Harassment The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the Financial Year ended 31st March, 2015, the Company has not received any Complaints pertaining to Sexual Harassment. Acknowledgement The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the Shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels. On behalf of the Board of Directors for Gennex Laboratories Limited Arihant Baid Managing Director DIN: 01171845 T.M. Gopalakrishnan Whole Time Director DIN: 03137458 Place: Hyderabad Date: August 14, 2015 |