| DEAR MEMBERS,
The Directors have pleasure in presenting their 25th Annual Report
together with the Audited Accounts of the Company for the year ended
31st March, 2015.
FINANCIAL HIGHLIGHTS (Rs. in lakhs)
PARTICULARS 2014-15 2013-14
Profit before Interest and Depreciation and Tax 238.09 403.72
Less: Interest 1438.70 224.70
Profit/Loss Before Depreciation & Tax (1200.61) 179.02
Less : Depreciation 220.75 118.47
Add : Exceptional Item 6.74 6.99
Profit/Loss Before Tax [PBT] (1414.62) 67.55
Less : Tax Expenses
a. Current Tax -- 12.75
b. Mat Entitlement -- (12.75)
c. Deferred Tax 23.33 3.69
Profit / Loss After Tax (1391.30) 63.86
Balance b/f from previous years 374.98 311.12
Balance to be carried over to Balance sheet (1016.32) 374.98
OPERATIONAL REVIEW:
During the year under review, your Company's hotels operations and
finances were severely affected. The primary drivers of loss are
borrowing cost for various components of the stalled projects and no
income generated from them. Gross revenues decreased to Rs.1493.31 Lacs
against Rs. 1575.43 Lacs in the previous year. Profit Before Interest,
Depreciation and Taxation was Rs. 238.09 lacs against Rs. 403.72 Lacs
in the previous year. After providing for Interest, Depreciation and
Taxation of Rs.1438.70 Lacs & Rs. 220.75 Lacs respectively, the Net
Loss of the Company for the year under review was placed at Rs.1391.30
Lacs as against Net Profit of Rs.63.86 Lacs in the previous year.
According to Accounting Standard 16, a Company should suspend
capitalization of borrowing costs during extended periods in which it
suspends active development of a qualifying asset i.e. project assets
and such costs are costs of holding partially completed assets and do
not qualify for capitalization. In view of the above, the entire
borrowing cost incurred for all the components of the projects, which
are stalled owing to paucity of funds, has been treated as expense and
debited in the profit and loss account.
During the year under review, the pending receivables such as lease
rentals, electricity charges, air conditioning charges and other
operation charges from the tenants of the Shopping Mall have now been
written-off.
STATE OF THE COMPANY'S AFFAIRS
The members are aware that the Company is implementing diversification
cum expansions projects in a phased manner namely Shopping Mall,
Multiplex Theater, 2.7 MW Bio-mass based co-gen power generation plant,
Biomass Plantation, Convention Center and additions & renovation of
existing hotels properties for which the Company was initially
sanctioned credit facilities by both Allahabad Bank, Tirupur and Andhra
Bank, Coimbatore. The Company subsequently was not extended timely
support by the Banks, both in terms of additional debt funding required
as well as alteration in the terms of the existing loans.
The original project cost for the entire development was Rs.124.42
crore for the above components. During the course of construction and
subsequent discussions with the technical consulting agencies, it was
realized that the project required substantial up-gradation thereby
increasing the scope of overall project accordingly. This has
necessitated significant and substantial addition of buildings and
equipments for the project. All these have resulted in a thorough
revision of the components of the project (including component of Bio
Mass cultivation) resulting in a total project cost of Rs. 204.15 Crore
(Rs.162.06 Crore in July 2012) in place of Rs.124.42 Crore as
originally envisaged. Hence, the company was in need of further funding
in respect of revision in the components of the project and slowed in
the construction of the Projects due to change in scope of work
primarily for the Renewable Energy Power Plant and the Hyper-mart and
Multiplex.
* The shopping mall was formally launched in December, 2013. The most
of occupants at the Mall either downed their shutters temporarily or
withdrawn from their agreements entirely due to delays in the
completion of the Multiplex and the Food Court. As a result, the
occupants of the Mall declined to make payments their rentals,
electricity charges and other operational charges.
* The construction of the Renewable Energy Power Plant has been
completed. All the major equipments including the Gasifiers and Gensets
have been installed. The balance works include the plant integration
and automation. Due to the use of superior technology, this Renewable
Energy Power Plant will have an effective output of 4.1 MW in Co-Gen.
* The Hyper-mart / Multiplex has been partially constructed. There have
been significant changes in scope of work for this building. These
changes are required to achieve a better construction quality and
durability.
Owing to some changes in scope of work for the Renewable Energy Power
Plant and the Hyper-mart and Multiplex primarily due to technical
up-gradation, the Company approached the existing bankers for an
additional financial assistance. Even though, the company was
sanctioned the additional loan facility, there has been unexplained
delay in the disbursement of loan and hence the cost of project
escalated further. Moreover, apart from the delay, the major portion of
amount of additional term loan was said to have been adjusted towards
the dues of the Company. This has resulted in the deferring of
completion and commissioning of these projects further.
The Company has provided a letter to the existing bankers during March,
2014 summarizing the situation and requesting to restructure its
accounts as per certain guidelines issued by Reserve Bank of India for
formation of Joint Lender Forum (JLF) for considering Corporate Debt
Restructuring (CDR). The Company has made representation to the
existing bankers on this aspect to invoke the said provision and
undertake the restructuring of the debts to enable the interests of the
banks and of the company for the project to be safeguarded. Despite,
the restructure plan being very reasonable, there was no proper
response but, however, there was an attempt to recall the entire loan
in lump sum by treating the Company's account as one which became NPA
(Non Performing Asset) and to recall the entire account from the
existing banks invoking the Securitization Act under Section 13(2).
Your Company had received Notice under Section 13(2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 ("SARFAESI ACT") issued jointly by Allahabad
Bank and Andhra Bank calling upon your Company to discharge the alleged
outstanding liability together with interest and all other incidental
expenses, to the Lender Banks within 60 (Sixty) days from the date of
the Notice, failing which the Banks would exercise its rights under
Section 13(4) of the SARFAESI Act with respect to the secured assets of
the Company. The Guarantors for the above terms loans were also served
the same notice. The Company's immovable properties are subject to
matter of Notice of Possession issued by Banks then. Your Company has
challenged the legality and validity of these notices and filed the stay
petition before the Debt Recovery Tribunal ("DRT") at Coimbatore. The
Company is in consultation with its legal advisers to take other steps
as may be advised by the legal advisors to protect your Company's
interests in these proceedings.
DIVIDEND:
In view of operating losses incurred during the year, your Directors do
not recommend payment of any dividend. SHARE CAPITAL:
The paid up equity capital as on March 31, 2015 was Rs.3196.41 Lakhs.
During the year under review, the company has not issued shares with
differential voting rights nor granted stock options nor sweat equity.
TRANSFER OF AMOUNT TO RESERVE
As the company reported Loss after tax, the company does not propose to
transfer any amount to reserves.
FIXED DEPOSITS
Your Company has not accepted any deposits within the meaning of
Section 73 of the Companies Act, 2013 and the Companies (Acceptance of
Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the
provisions of Section 186 of the Companies Act, 2013. During the year
under review, the Company has not made any investments as well.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations. The scope and authority of the
Internal Audit function is defined in the Internal Audit Manual. To
maintain its objectivity and independence, the Internal Audit function
reports to the Chairman of the Audit Committee of the Board & to the
Managing Director.
The Internal Auditor monitors and evaluates the efficacy and adequacy
of internal control system in the Company, its compliance with
operating systems, accounting procedures and policies at all locations
of the Company. Based on the report of internal audit function,
corrective action is taken in their respective areas and thereby
strengthen the controls. Significant audit observations and
recommendations along with corrective actions thereon are presented to
the Audit Committee of the Board.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Since the Company does not come under "Corporate Social Responsibility"
(CSR), applicability of the Annual Report on CSR activities is not
annexed.
CONSERVATION OF ENERGY
a) The operations of the Company are not energy intensive. However, the
Company ensures that all the operations are conducted in the manner
whereby optimum utilisation and maximum possible savings of energy is
achieved.
b) No specific investment has been made in reduction in energy
consumption.
c) As the impact of measures taken for conservation and optimum
utilisation of energy are not quantitative, its impact on cost cannot
be stated accurately.
d) Since the Company does not fall under the list of industries, which
should furnish this information in Form A annexed to the aforesaid
Rules, the question of furnishing the same does not arise.
TECHNOLOGY ABSORPTION
The Company has no technical collaboration arrangement with any
organization. The Company continues to absorb and upgrade modern
technologies and advanced hotel management techniques in various guest
contact areas, which includes wireless internet connectivity in the
hotel.
FOREIGN EXCHANGE EARNINGS AND OUT-GO (Rs jn |akhs)
Foreign Exchange Earnings And Outgo Current Year Year
2014-15 2013-14
1. Earnings 373.01 328.53
2. Expenditure in Foreign Currency Nil Nil
INDUSTRIAL RELATIONS
During the year under review, your Company enjoys cordial relationship
with workers and employees at all levels. DIRECTORS AND KEY MANAGERIAL
PERSONNEL
Whole-Time Directors Sri. M. R. Gautham and Sri. B. A. Madhusudhan
retire by rotation and, being eligible, offer themselves for re
appointment. The Directors recommend Sri. M. R. Gautham and Sri. B. A.
Madhusudhan for re-appointment. If they are re-appointed as a director,
immediately on retirement by rotation, they shall continue to hold
office of Whole-time Directors and such re-appointment as director
shall not be deemed to constitute break in their appointment as a
Whole-time Director.
During the year under review, Smt. R. Lalitha, AGM - Finance & Accounts
was promoted / appointed as Chief Financial Officer of the Company. In
addition, Sri. E. V. Muthukumara Ramalingam, Managing Director, Sri. M.
R. Gautham, Executive Director, Sri. B. A. Madhusudhan, Whole-time
Director and Sri. M. Srinivasan, Company Secretary, are other KMPs as
per the provisions of the Act and were already in office before the
commencement of the Act. None of the KMPs resigned during the year.
All independent directors have given declarations that they meet the
criteria of independence as laid down under section 149(6) of the
Companies Act, 2013 and clause 49 of the Listing Agreement.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business of the Company.
BOARD EVALUATION
Pursuant to the provisions of the Act and Clause 49 of the Listing
Agreement, evaluation of every Director's performance was done by
Nomination and Remuneration Committee. The performance evaluation of
Non-Independent Directors and the Board as a whole, Committees thereof
and Managing Director of the Company was carried out by the Independent
Directors. Evaluation of Independent Directors was carried out by
the entire Board of Directors excluding the Director being evaluated. A
structured questionnaire was prepared after circulating the draft
forms, covering various aspects of the evaluation such as adequacy of
the size and composition of the Board and Committee thereof with regard
to skill, experience, independence, diversity; attendance and adequacy
of time given by the Directors to discharge their duties; Corporate
Governance practices etc. The Directors expressed their satisfaction
with the evaluation process.
The Policy on appointment of Directors and Senior Management, Policy on
Remuneration of Directors and Policy on Remuneration of Key Managerial
Personnel and Employees is stated in the Corporate Governance Report.
MEETINGS
A calendar of Meetings is prepared and circulated in advance to the
Directors.
During the year 6 Board Meetings and 4 Audit Committee Meetings were
convened and held. The details of which are given in the Corporate
Governance Report. The intervening gap between the Meetings was within
the period prescribed under the Companies Act, 2013.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134 (3) ( c ) read with 134 (5) of the Companies
Act, 2013, the Directors would like to state that:
i) In the preparation of the annual accounts, all the applicable
Accounting Standards have been followed.
ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 loss of the
Company for the year under review.
iii) 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) The Directors have prepared the Annual accounts on a going concern
basis.
v) 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.
vi) The Directors had devised proper system to ensure compliance with
the provisions of all applicable laws and that such system is adequate
and operating effectively.
RELATED PARTY TRANSACTIONS:
During the year, the Company did not enter into any material
transaction with related parties, under Section 188 of the Companies
Act, 2013. All related party transactions that were entered into during
the financial year were on arm's length basis and were in the ordinary
course of the business. There are no materially significant related
party transactions made by the Company with Promoters, Key Managerial
Personnel or other designated persons which may have potential conflict
with interest of the Company at large.
All the related party transactions entered into by the Company in the
ordinary course of business and were on an arm's length basis. The
requirement of disclosure in the prescribed Form AOC-2 is reported in
the Annexure-C1. Further, the Company's policy on Related Party
Transactions is attached as part of this report vide Annexure C2, as
required under the clause of the listing agreement as revised.
A resolution for a proposal for related party transaction with related
party is placed before this Annual General Meeting for approval of
members of the Company. The details of same are reported in the
explanatory statement annexed to the notice of AGM.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31,2015 AND MAY 28, 2015
(DATE OF THE REPORT)
There were no significant material changes and commitments affecting
the financial position of the Company between the end of financial year
and the date of the Report (May 28, 2015)
SUBSIDIARY COMPANIES
The Company does not have any subsidiary.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is
applicable to the Members of the Board and all employees in the course
of day to day business operations of the Company. The Company believes
in "Zero Tolerance" against bribery, corruption and unethical dealings
/ behaviours of any form and the Board has laid down the directives to
counter such acts.
The Code lays down the standard procedure of business conduct which is
expected to be followed by all the Directors and the designated
employees in their business dealings and in particular on matters
relating to integrity in the work place, in business practices and in
dealing with stakeholders.
All the Board Members and the Senior Management personnel have
confirmed compliance with the Code. All Management Staff have been
given appropriate training in this regard.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Fraud and Risk Management
Policy to deal with instance of fraud and mismanagement, if any.
The Company has a Fraud Risk and Management Policy to deal with
instances of fraud and mismanagement, if any. The FRM Policy ensures
that strict confidentiality is maintained whilst dealing with concerns
and also that no discrimination will be meted out to any person for a
genuinely raised concern.
A high level Committee has been constituted which looks into the
complaints raised. The Committee reports to the Audit Committee and the
Board.
PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider
Trading with a view to regulate trading in securities by the Directors
and designated employees of the Company. The Code requires
pre-clearance for dealing in the Company's shares and prohibits the
purchase or sale of Company shares by the Directors and the designated
employees while in possession of unpublished price sensitive
information in relation to the Company and during the period when the
Trading Window is closed. The Board is responsible for implementation
of the Code.
All Board Directors and the designated employees have confirmed
compliance with the Code.
AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT
The observation made in the Auditors' Report read together with
relevant notes thereon are self explanatory and hence, do not call for
any further comments under Section 134 of the Companies Act, 2013.
As required under section 204 (1) of the Companies Act, 2013 the
Company has obtained a Secretarial Audit Report. Certain observation
made in the report with regard to non- compliance with the requirement
of Minimum Public Shareholding (MPS) under 40A of Listing agreement and
SEBI Act, 1992 read with Section 12A of the Securities Contracts
(Regulation) Act, 1956. The SEBI had passed an interim order during
June 2013 with respect to the listed companies including our company
who did not comply with requirement of the MPS. The Company made
various correspondence and proper representation with SEBI to seek
extension of time to comply with Clause 40A of the listing agreement
and MPS norms on grounds that no revenue to be generated from the
stalled projects owing to paucity of funds. The Company, in view of the
said circumstances, requested SEBI to remove the sanctions imposed vide
the said interim order. However, SEBI issued an ORDER dated 27th
February, 2015 confirming the directions issued vide the Interim Order
against the Company, its directors and promoters / promoters group. The
Company / Promoters would ensure in future that all the provisions with
regard to 40A of the Listing agreement and MPS norms are complied to
the fullest extent.
AUDITORS
P. S. Krishnan & Co, Chartered Accountants, retire at the conclusion of
the ensuing Annual General Meeting and being eligible offer themselves
for re-appointment.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with
the requirements of The Sexual Harassment of Women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints
Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy. No complaints were
received during the year 2014-15.
SECRETARIAL AUDIT
Pursuant to provisions of section 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 the company has appointed Sri. S. R. Baalaji, Company
Secretaries in Practice to undertake the Secretarial Audit of the
Company. The Secretarial Audit report is annexed herewith as "Annexure
A"
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as" Annexure B".
BUSINESS RISK MANAGEMENT
Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49
of the listing agreement, the company has constituted a business risk
management committee. The details of the committee and its terms of
reference are set out in the corporate governance report forming part
of the Boards report.
At present the company has not identified any element of risk which may
threaten the existence of the Company, except high interest cost of
borrowing.
STATEMENT UNDER COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL
PERSONNEL) RULES, 2014
The information required pursuant to Section 197 (12) of the Companies
Act, 2013 read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 in respect of
employees of the Company is provided in Annexure-D.
As there are no employees drawing remuneration of more than Rs.60 Lacs
per annum or drawing remuneration of Rs.5 lacs per month if employed
part of the year as required under Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) rules 2014, no
such information is reported.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS
The Corporate Governance and Management Discussion & Analysis Report,
which form an integral part of this Report, are set out as separate
Annexures, together with the Certificate from the Auditors of the
Company regarding compliance with the requirements of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement.
ACKNOWLEDGEMENTS
Your Company and its Directors wish to extend their sincerest thanks to
the Members of the Company, Bankers, Professionals, State Government,
Local Bodies, Customers, Suppliers, Executives, Staff and workers at
all levels for their continuous co-operation and assistance.
For and on behalf of the Board
E. V. Muthukumara Ramalingam
Managing Director &
Place : TIRUPUR M. R. Gautham
Date : 28.05.2015 Executive Director
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