Directors' Report for FY - 2014-15 To, The Members, 1. Your Directors have pleasure in presenting their 8thAnnual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015. 2. Dividend The Board in order to conserve the funds for future operations does not recommend any dividend for this Financial Year. 3. Reserves The Board had proposed to carry Rs.134.47Crs to Reserves during the year. 4. Brief description of the Company's working during the year/State of affairs The Company operates in one segment ie., Real Estate business only. 5. Change in the nature of business, if any NIL 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 The Company redeemed 2,39,02,516 9% Cumulative Preference shares along with dividend due and payable on May 12, 2015 Respective tax on Dividend was also paid during this period. 7. 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 NIL 8. Details in respect of adequacy of internal financial controls with reference to the Financial Statements. 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 determined by the Audit committee. The Internal Audit function reports to the Chairman of the Audit Committee of the Board, who is an independent director to maintain its objectivity and independence. The Company has engaged the services of an independent Chartered Accountants firm, M/s. Kalayana Sundaram & Associates to carry out the internal audit and ensure that recording and reporting are adequate and proper, the internal controls exist in the system and that sufficient measures are taken to update the internal control system, exercises for safeguarding assets and protection against unauthorized use are undertaken from time to time. The system also seeks to ensure that transactions are appropriately authorised, recorded, reported in financial statements and exceptions identified and are reported. The Internal Audit team 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 from time to time. Based on the report of internal audit function, process owners undertake corrective action 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 9. Risk management Audit Committee and the Board reviews the risk assessment and minimization procedures on regular intervals during its respective meetings. Accordingly the Management is getting advice of the Audit Committee and the Board Members on mitigating the risk involved in the business. 10. Details of Subsidiary/Joint Ventures/Associate Companies The Company does not have any Subsidiary,Joint venture or Associate Company 11. Performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement. Not applicable as there are no subsidiary, associates and joint venture companies. 12. Deposits The Company has not accepted Deposits. 13. Statutory Auditors M/s. M. Kuppuswamy PSG & Co., LLP, (Firm Regn. No.001616S) Chartered Accountants, Vellore retire at the conclusion of this Annual General Meeting. However they have expressed that due to their health reason they are not in a position to continue the audit from the conclusion of this Annual General Meeting onwards. Accordingly, on the recommendation of the Audit Committee, the Board at its meeting held on July 13, 2015 appointed M/s. P.B. Vijayaraghavan & Co, Chartered Accountants (Firm Regn. No:004721S) subject to the approval of the shareholders. The Board had commended the appointment of M/s. P. B. Vijayaraghavan& Co., to the Shareholders to carry on audit from the conclusion of this Annual General Meeting for FY 2015-16. 14. Auditors' Report There are no 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. 15. Share Capital A) Issue of equity shares with differential rights The Company has not issued any equity shares with differential rights during the year under review. B) Issue of sweat equity shares The Company has not issued any Sweat Equity Shares during the year under review. C) Issue of employee stock options The Company has not provided any Stock Option Scheme to the employees. D) Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees The Company has not bought back any of its securities during the year under review. 16. Extract of the annual return The extract of the annual return in Form No. MGT-9 shall form part of the Board's report (Annexure - E) 17. Conservation of energy, technology absorption and foreign exchange earnings and outgo The provisions of Section 134(m) of the Companies Act, 2013 are not applicable. There was no foreign exchange inflow or Outflow during the year under review. 18. Corporate Social Responsibility (CSR) Your company has traditional trait of caring the needy, "to improve the quality of life of the communities it serve through long term value creation for all stakeholders", which is in alignment with the Company's core purpose. Section 135 of the Companies Act, 2013 is applicable during the current financial year. Accordingly, the Board at its meeting held on July 13, 2015 appointed CSR Committee of the Board with the following members. Mr.M. Ethiraj - Non-Executive, Non-Independent Chairman Mr. E. Shanmugam - Executive, Non-independent - Member Mr.P.S. Pandyan (IAS Retd.) - Member Dr. K. Shivaram Selvakkumar - Member The annual report as required by the Act, on CSR activities is annexed herewith as Annexure A 19. Directors: Since Independent/Additional/Managing Directors' are not liable to retire by rotation, Mr. M. Ethiraj, Chairman will be liable to retire by rotation and being eligible offer himself for reappointment. Ms. S. Valli (DIN 00468218), who was appointed as an Additional Director of the Company by the Board of Directors with effect from 04.03.2015, in terms of Section 161(1) of the Companies Act, 2013 and Article 98 of the Articles of Association of the Company and whose term of office expires at the Annual General Meeting be and is hereby appointed as a Director of the Company whose period of office shall be liable to determination by retirement of directors by rotation." A) Changes in Directors and Key Managerial Personnel During the year your Company has appointed Mrs. S. Valli, Women Director Mr.S.S. Arunachalam, Company Secretary Mr.V. Krishnan, Chief Financial Officer During the year the following persons have resigned Mr.K.Venkatesan, Company Secretary Mr.R.Sugumaran, Company Secretary B)Declaration by an Independent Director(s) and re- appointment, if any The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. C) Formal Annual Evaluation of the Board Company conducts its operations under the directions of Board of Directors within the framework laid down by various statutes, more particularly by the Companies Act, 2013, the Articles of Association, Listing Agreement with stock exchanges and Code of Conduct and policies formulated by the Company for its internal execution. The Company's Board of Directors is dedicated to act in good faith; exercise their judgment on an informed basis, in the best interest of the company and its stakeholders. Accordingly, Board's evaluation policy was adopted by the Board of your Company. The present policy for performance evaluation is being put into place in accordance with the requirements of section 178 of the Companies Act, 2013 which provides for the a policy to be formulated and recommended to the Board, setting the criteria, based on which the performance of each and every director including the performance of the Board as a whole shall be assessed by the Board of Directors of the Company. Such an evaluation procedure will provide a fine system of checks and balances on the performance of the directors and will ensure that they exercise their powers in a rational manner. Following are some of the criteria which was used for evaluation the performance of the Members of the Board & its Committees BOARD OF DIRECTORS Some of the specific issues and questions that should be considered in a performance evaluation of the entire Board by Independent Directors are set out below: Assessment Criteria 1 The Board of Directors of the company is effective in decision making. 2 The Board of Directors is effective in developing a corporate governance structure that allows and encourages the Board to fulfill its responsibilities. 3 The Company's systems of control are effective for identifying material risks and reporting material violations of policies and law. 4 The Board reviews the organization's performance in carrying out the stated mission on a regular basis. 5 The Board of Directors is effective in providing necessary advice and suggestions to the company's management. 6 Is the board as a whole up to date with latest developments in the regulatory environment and the market?. 7 The information provided to directors prior to Board meetings meets your expectations in terms of length and level of detail. 8 Board meetings are conducted in a manner that encourages open communication, meaningful participation, and timely resolution of issues. 9 The Board Chairman effectively and appropriately leads and facilitates the Board meetings and the policy and governance work of the board. 10 The Board appropriately considers internal audit reports, management's responses, and steps towards improvement. 11 The Board oversees the role of the independent auditor from selection to termination and has an effective process to evaluate the independent auditor's qualifications and performance. 12 The board considers the independent audit plan and provides recommendations. COMMITTEES OF BOARD The Board has constituted the following committees: i. Audit Committee; ii. Nomination and Remuneration Committee; and iii. Stakeholders Relationship Committee iv. Corporate Social Responsibility Committee; For evaluating the performance of each committee, the Board of Directors shall pay regards to the following aspects as set out in the annexure below: S. Assessment Criteria of various Committees 1 Committee meetings are conducted in a manner that encourages open communication, meaningful participation and timely resolution of issues 2 Timely inputs on the minutes of the meetings KEY MANAGERIAL PERSONNEL AND SENIOR EXECUTIVES For evaluating the performance of Key Managerial Personnel and other Senior Executives, the Board of Directors shall pay regards to the following aspects as set out below: S. No. Assessment Criteria 1 Abidance and behavior in accordance with ethical standards & code of conduct of Company 2 Interpersonal and communication skills 3 Compliance with policies of the Company, ethics, code of conduct, etc. 4 Safeguarding interest of whistle-blowers under vigil mechanism 5 Team work attributes 6 Safeguard of confidential information 20. Number of meetings of the Board of Directors: a. Board Meetings: 7 28/05/2014, 04/08/2014, 29/09/2014, 10/11/2014, 07/01/2015, 30/01/2015&04/03/2015 b. Audit Committee Meetings : 4 28/05/2014, 04/08/2014, 10/11/2014 &30/01/2015, c. Nomination and Remuneration Committee :3 29/09/2014, 07/01/2015&04/03/2015 d. Stake Holders Relationship Committee Meeting : 34 The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 21. Audit Committee The Company is covered by section 177 of the Companies Act 2013 and Nomination and Remuneration Committee has been constituted consisting of four directors with two independent directors. Mr.R. Narayanan, Chairman Mr.E. Shanmugam, Member Mr.Y. Satyajit Prasad, Member Dr.K. Shivaram Selvakkumar, Member [appointed during the year] The above composition of the Audit Committee consists of independent Directors viz., Mr. Y. Satyajit Prasad and Dr.K. Shivaram Selvakkumar who form the majority. 22. Details of establishment of vigil mechanism for directors and employees The Company has established a vigil mechanism and oversee through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company. 23. Nomination and Remuneration Committee The Company is covered by section 178(1) of the Companies Act 2013 and Nomination and Remuneration Committee has been constituted consisting of three directors with one independent director. The Committee is in the process of framing the Company's policy on directors' appointment and remuneration including criteria for determining for qualifications, positive attributes, independence of a director, and senior management and their remuneration. 24. Particulars of loans, guarantees or investments under section 186 The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013 read with rule 11(1) of Companies (Meetings of Board and its Powers) Rules 2014. 25. Particulars of contracts or arrangements with related parties: As per Annexure B which is forming part of this Report. 27. Secretarial Audit Report The Company appointed M/s R. Kannan & Associates, Practicing Company Secretary Firm, to conduct Secretarial audit pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 to undertake the Secretarial Audit of the Company for FY 2014-15. The Secretarial Audit report is annexed herewith as Annexure D. 28. Corporate Governance Certificate The report on Corporate Governance forms part of an integral part of this Report. The requisite certificates from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance. 29. Directors' Responsibility Statement In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:- (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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors, had laid down policies and procedures adopted by the Company for internal financial controls for ensuring orderly and efficient conduct of its business including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounts records and the timely preparation of reliable financial information 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. 30. Acknowledgements Your Directors acknowledge the cooperation and assistance extended by the Government of India, Government of Tamil Nadu and Government of Karnataka and place on record their appreciation and gratitude to them. The Directors also thank the shareholders and employees for their continued cooperation. By Order of the Board M. ETHIRAJ E. SHANMUGAM Chairman Managing Director Regd. Office 13thJuly 2015 |