DIRECTORS' REPORT_ To, The Members, DHANADA CORPORATION LIMITED The Board of Directors of your Company has pleasure in presenting the 29th Annual Report of the Company together with the Audited statements of accounts for the year ended on 31st March 2015. 2.Dividend: In view of the losses, the Board of Directors does not recommend any dividend for the year ended on 31st March 2015. 3.Reserves: No amount is proposed to be transferred to the Reserves. 4.State of Affairs (Standalone and Consolidated): The turnover of the Company has increased marginally during the year. However, operating margins were under pressure. The Company has suffered losses due to increase in the cost of input, finance costs and other expenses. The occupancy rate and Average Room Revenue (ARR) remained stagnant due to general economic slowdown. Paucity of funds affected the performance of the whole Group. The subsidiaries were non - operational during most of the year due to acute shortage of working capital. The subsidiaries have suffered losses. Finance The shortage of finance remained a major concern during the year. The parent company was not able to extend its helping hand due to its own problems. The management is striving hard to arrange funds for repayment of debt and working capital necessary for smooth running of the operations. Current Year Prospects The fortune of the hospitality industry has always been linked to the prospects of the tourism industry and general economic growth. On both fronts, the current year seems to be positive. Barring unforeseen difficulties, the Hotel is expected to continue on its path of steady growth. However, due to stagnant ARR, margins are likely to remain under pressure. As mentioned earlier, shortage of finance remains a major factor affecting the performance of the Company. During the first quarter of the current year, the F&B segment suffered a set-back due to general economic slow-down and severe draught in the region. 5.Change(s) in the nature of business, if any: There is no change in the nature of business of the Company. 6.Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report: Nil. No such material changes and commitments have occurred. 7. Details of significant and material orders passed by the regulators / courts / tribunals impacting the going concern status and the Company's operations in future: Nil. No such orders are passed. 8.Statement in respect of adequacy of internal financial controls with reference to the Financial Statements: Internal Financial controls are adequate commensurate with the size, nature of operations of the Company. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the 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 statements. 9.Details of Subsidiary / Associate Companies / Joint Ventures: Dhanada Engineering Private Limited, Dhanada Education Private Limited and Dhanada Clean Energy (India) Private Limited are subsidiaries of the Company. The Company has no Associate Company / Joint Venture. The Company has formulated policy for determining Material Subsidiaries. The said policy is available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/pdf/Policy_for_deteriming_Material_Subsidiary.pdf. A statement containing the salient features of the financial statement of subsidiaries in Form No. AOC-1 is attached as Annexure 1 to the Directors' Report. The Consolidated financial statements, prepared in accordance with Section 129(3) of the Companies Act, 2013 and listing agreement, form part of the Annual Report. Further, in accordance with Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements and all other documents required to be attached thereto and audited accounts of subsidiaries are available on the website of the Company www.dhanadacorp.com. 10.Performance and financial position of each of the subsidiaries included in the consolidated financial statement: Dhanada Engineering Private Limited, a Company engaged in manufacture of press parts for automobile industry, is a subsidiary of your Company. Dhanada Education Private Limited, a Company engaged in the business of providing education and training, is a subsidiary of your Company. Both the aforesaid subsidiaries were non - operational during most of the year. They have suffered losses. This was due to acute shortage of working capital. Dhanada Clean Energy (India) Private Limited, a Company engaged in manufacture and selling of wind power driven turbines, is a subsidiary of your Company. The Company is in capital intensive sector and its performance has also suffered due to shortage of working capital. It has also suffered losses. 11.Particulars of loans / advances / guarantees / investments outstanding during the financial year: The particulars of loans / advances / guarantees / investments covered under Section 186 of the Companies Act, 2013 and as per Clause 32 of the Listing Agreement are given in the notes to the financial statements provided in the Annual Report. 12.Deposits: The Company has not accepted deposits from the public within the meaning of Section 73 of the Companies Act, 2013 and the rules framed there under. 13.Auditors: Statutory Auditors M/s. G. K. Chandavarkar & Co., Chartered Accountants, Pune were appointed as Statutory Auditors of the Company in the 28th Annual General Meeting held on 30th September 2014 to hold office till the conclusion of 30th Annual General Meeting. Pursuant to Section 139(1) of the Companies Act, 2013, the Company will place the matter related to such appointment for ratification by the members at the ensuing annual general meeting. The Company has received eligibility certificate from the said Auditors in accordance with the provisions of Section 141 of the Companies Act, 2013. Secretarial Auditor Mr. R. V. Pore, Practicing Company Secretary was appointed to conduct the secretarial audit of the Company for the financial year 2014 - 2015, as required under Section 204 of the Companies Act, 2013 and rules made there under. The Secretarial Audit Report in Form No. MR-3 for the financial year 2014 - 2015 is attached as Annexure 2 to the Directors' Report. 14.Explanations or comments on qualification, reservation or adverse remark or disclaimer in Auditor's Report: The Audit Report contains certain observations and we offer our comments in this regard as under: Note 26(B) 1 The management was advised that the allotment is required to be made before the execution of the Conveyance Deed. Accordingly, in good faith the Board allotted the necessary shares to Dr. Laxman V. Kulkarni and prepared the deed for registration. However, Dr. Laxman V. Kulkarni, expressed his desire for upward revision of the total consideration, as the prices of the Land at Nande have gone up considerably since 01.04.2008 i.e. the appointed date and the market price of the equity shares of the Company have not appreciated in line with the same. Due to this the conveyance with Dr. Laxman V. Kulkarni is not yet done. The management is exploring ways and means to sort out the issue and hopes that the same will be resolved amicably. However, until the financial difficulties are resolved, a solution to this issue appears remote. Statutory Dues: Due to financial difficulties the Company could not pay the deferred sales tax. However, the Company will settle the dues shortly. Rest of the Auditor's observations are self explanatory. 15.Explanations or comments on qualification, reservation or adverse remark or disclaimer in Secretarial Audit Report: Discrepancies in the issued share capital and listed share capital: Due to technical issues, some formalities in respect of issue of shares made by the Scheme of Amalgamation are not yet completed; hence those shares and the shares further issued by the Company through private placement are yet to be listed. The Company is in a process to resolve the issue soon. However, until the financial difficulties are resolved, a solution to this issue appears remote. Non - filing of Forms MGT-10 required u/s 93 of the Companies Act, 2013: It was an understanding of the management that the Form MGT-10 needs to be filed when the change in the shareholding of the top 10 shareholders is 2% or more of the total paid up capital of the Company. As no such change occurred, the Company did not file any such Form. In future the Company will take due care in this regard. Regarding violation of the provisions of Section 185 of the Act: Dhanada Education Pvt.. Ltd. is a subsidiary of the Company. The said subsidiary was non - operational during the year 2014 - 2015. Hence, our Company has advanced sums to the said subsidiary from time to time to meet its essential statutory / fixed expenses. On 31.03.2015, the said subsidiary has issued shares to our Company against the entire amount of advance and interest accrued thereon. Thereafter, the Company has not advanced any amount to the said subsidiary. The Statutory Auditors does not hold Peer Review Certificate: The Auditor states that he has submitted his request to the Peer Review Committee and Peer Reviewer. However, the Peer Review is awaited. Non - publishing notices etc. in the newspapers as required under Listing Agreement: The Company has submitted notices, quarterly unaudited financial results and audited financial statements etc. required under the Listing Agreement to the Bombay Stock Exchange Ltd. within the prescribed time and the same were also made available on the website of the Company. However, due to financial difficulties, the Company did not publish notices, results and statements etc. in the newspapers. The Chairman of the Company is also the Managing Director and Chief Executive Officer of the Company: The Chairman of the Company is appointed as Managing Director and Chief Executive Officer of the Company before the commencement of the Companies Act, 2013. The management proposes to alter the Articles of Association of the Company in the ensuing Annual General Meeting which inter alia enables the Company to appoint the same individual as Chairman, Managing Director and Chief Executive Officer of the Company. Non - appointment of Company Secretary: The present Company Secretary has resigned w.e.f. 30.01.2015. The management is looking for another qualified person to fill the vacancy caused by such resignation. Rest of the Secretarial Auditor's observations are self explanatory. 16.Share Capital: There were no changes in the share capital during the year under review. 17.Extract of the Annual Return: The extract of annual return as on the financial year ended on 31st March 2015 in Form No. MGT-9 is enclosed as Annexure 3 and forms part of the Directors' Report. 18.Conservation of energy, technology absorption, foreign exchange earnings and outgo: The Company through constant monitoring, selection of energy saving equipments and education of staff and guests endeavors to conserve and optimize the use of energy. The Company does not undertake any research and development activity neither does it use any imported technology. Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Nil 19. Corporate Social Responsibility (CSR): Not applicable. 20.Directors: Changes in Directors and Key Managerial Personnel (KMP) Mr. Gajanan M. Deshpande (DIN 00151009), Independent Director of the Company resigned with effect from 18th September 2014. The Board accepted his resignation. Mr. Shriniwas G. Kale (DIN 00150957) was appointed as an Independent Director for a term of 5 (five) consecutive years by the shareholders in the Annual General Meeting held on 30th September 2014. On the recommendation of Nomination and Remuneration Committee, Mr. Mukund A. Kulkarni (DIN 03481615) was appointed as an Independent Director of the Company on 16th December 2014. Mrs. Sanjana Mandar Joshi, Company Secretary and Compliance Officer resigned with effect from 30th January 2015. The Board accepted her resignation. On the recommendation of Nomination and Remuneration Committee, Mr. Ramesh M. Pradhan was appointed as Chief Financial Officer (CFO) of the Company with effect from 13th February 2015. With effect from 12th May 2015, Mr. Mukund A. Kulkarni (DIN 03481615), Independent Director resigned. The Board accepted his resignation. Accordingly, the composition of Board is reconstituted. Now, the Board consists of 3 Directors only. Re-appointments Mrs. Veena R. Havele (DIN 00007593) retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. Your Directors recommend her re-appointment. None of the independent directors will retire at the ensuing Annual General Meeting. Statement on declaration given by Independent Directors The Company has received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013 that they meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Relationship between directors inter-se Mr. Ramesh R. Havele (DIN 00007580) and Mrs. Veena R. Havele (DIN 00007593) are related to each other as husband and wife. Formal Annual Evaluation The evaluation of the Board and its committees, evaluation of performance of individual directors and independent directors in compliance with Clause 49 of the Listing Agreement, Schedule IV and other applicable provisions of the Companies Act, 2013 was conducted based on the criteria such as the Board composition and structures, effectiveness of board processes, information and functioning, contribution of the individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. The Independent Directors at its separate meeting reviewed the performance of non - independent directors and the Board as a whole and the performance of the Chairman. The performance of independent directors was evaluated by the entire Board of Directors. Details of familiarisation programmes of Independent Directors The Company has a policy to keep the Independent Directors informed and updated about the business and the operations of the Company, on a continuous / as needed basis. In order to familiarise the Independent Directors with the Company and to inform them about their roles, rights and responsibilities, the Company conducts the orientation programs for them. The Company conducts an induction program for every new Independent Director joining the Company's Board covering the organization structure, Company's business and its subsidiaries. The Company issues detailed letter of appointment to the Independent Directors detailing their roles and duties to be performed as an Independent Director on the Board of the Company. The details of familiarisation programmes of Independent Directors are available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/pdf/Details%20of%20Familiarisation%20programme%20for%20IDs.pdf. 21.Number of meetings of Board of Directors: During the financial year 2014 - 2015, 5 (Five) meetings of the Board of Directors were held. 22.Audit Committee: The Company has Audit Committee. Till 12th May 2015, the composition of the Committee was as stated below: With effect from 12th May 2015, Mr. Mukund A. Kulkarni (DIN 03481615) resigned. Accordingly, the composition of Committee is reconstituted. Now, the Audit Committee consists of two members only i.e. Mr. Shreeniwas G. Kale (DIN 00150957) and Mrs. Veena R. Havele (DIN 00007580). All recommendations made by the Committee during the year were accepted by the Board. 23. Stakeholders Relationship Committee: The Company has Stakeholders Relationship Committee. Till 12th May 2015, the composition of the Committee was as stated below: With effect from 12th May 2015, Mr. Mukund A. Kulkarni (DIN 03481615) resigned. Accordingly, the composition of Committee is reconstituted. Now, the Stakeholders Relationship Committee consists of two members only i.e. Mr. Shreeniwas G. Kale (DIN 00150957), Chairman of the Committee and Mrs. Veena R. Havele (DIN 00007580). The Committee reviews and ensures redressal of investor grievances. No investor complaints were received during the financial year 2014 - 15. 24. Nomination and Remuneration Committee: With effect from 12th May 2015, Mr. Mukund A. Kulkarni (DIN 03481615) resigned. Accordingly, the composition of Committee is reconstituted. Now, the Nomination and Remuneration Committee consists of two members only i.e. Mr. Shreeniwas G. Kale (DIN 00150957), Chairman of the Committee and Mrs. Veena R. Havele (DIN 00007580). The Committee has formulated policy on nomination and remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees including criteria for determining qualifications, positive attributes and independence of director, performance evaluation and other matters in compliance with Section 178 of the Companies Act, 2013 read with rules made there under and Clause 49 of the Listing Agreement. The Nomination and Remuneration Policy is attached as Annexure 4 to the Directors' Report. The said policy is also available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/pdf/ Nomination%20and%20Remuneration%20Policy.pdf The Committee operates as per the policy adopted by the Board. All recommendations made by the Committee were accepted by the Board. 25.Details of establishment of vigil mechanism for directors and employees: The Company has established Whistle Blower / Vigil Mechanism Policy for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct and Ethics. The Whistle Blower / Vigil Mechanism Policy is attached as Annexure 5 to the Directors' Report. The said policy is also available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/pdf/Vigil%20Mechanism%20Policy.pdf 26.Particulars of contracts or arrangements with related parties: The Company has not entered into any contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013. The Company has formulated policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions in compliance with Clause 49 (VII) (C). During the year, the Company has not entered into any transaction with related parties which could be considered material in accordance with the policy of the Company on related party transactions and listing agreement. The said policy is available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/pdf/Related_ Party_Transactions_Policy. pdf 27.Managerial Remuneration: Median Remuneration of Employees (MRE) was ^ 8,350/- and ^ 6,950/- in the financial year 2014 - 15 and 2013 - 14 respectively. The increase in MRE in the financial year 2014 - 15, as compared to financial year 2013 - 14 is 20.14%. The number of permanent employees on the rolls of the Company as on 31.03.2015 and 31.03.2014 are 28 and 32 respectively. The revenue of the Company has gone up by 1.95%. The Company has suffered losses. The remuneration of the employees has increased by 4.49%. The market capitalization of the Company increased by 8.11% to ^ 33,56,01,486/- as of 31.03.2015 from ^ 31,04,31,375/- as of 31.03.2014. The Price earnings ratio was 5.71 as of 31.03.2015 and 277.50 as of 31.03.2014. The closing price of the Company's equity shares on BSE as of 31.03.2015 was ^ 6/- representing a 40% decrease over IPO price. It is affirmed that the remuneration of employees and KMPs is as per the remuneration policy of the Company. No director draws any remuneration from the Company. Hence, the ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year is not applicable. No employee of the Company is receiving remuneration exceeding the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 28.Risk Management Policy: In compliance with Clause 49 (VI) (A) and (B) of the Listing Agreement, the Company has laid down procedures to inform Board members about the risk assessment and minimization procedures. The Board of Directors has also framed Risk Management Policy / Plan. The said policy is available on the website of the Company. A web link thereto is http://www.dhanadacorp.com/ pdf/Risk%20Management%20Policy.pdf. 29.Corporate Governance and Management Discussion and Analysis Report: The Company is committed to achieve business excellence and stakeholders' welfare through good corporate governance and adhere to the corporate governance requirements set out by SEBI. As per Clause 49 of the Listing Agreement, Management Discussion and Analysis Report and Report on Corporate Governance along with Certificate of Compliance from Auditors are annexed and form part of the Directors' Report. 30.Directors' Responsibility Statement: The Directors of the Company hereby state 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)the Directors had 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 at the end of the financial year and of the profit and loss of the Company for that period; c)the Directors had taken proper and sufficient care 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 frauds and other irregularities; d)the Directors had prepared the annual accounts on a going concern basis; e)the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f)the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 31.Acknowledgements: The Directors express their sincere thanks to Dhanada Holdings Private Limited, the parent company, the Bankers, employees and stakeholders for their continued support and the faith and belief shown by them. For and on behalf of the Board of Directors DHANADA CORPORATION LIMITED Ramesh R. Havele Chairman & Managing Director (DIN 00007580) Place: Pune Date: 14th August 2015 |