As on: Sep 22, 2023 01:06 PM
To
Dear Members
The Board of Directors with the authorization of Resolution Professional (RP) of the Company presents to the Members, the 65th Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended 31st March, 2021.
SALIENT FEATURES OF THE REPORT
The National Company Law Tribunal, Amaravati Bench ("NCLT"), by its order dated May 14th, 2020 ("Admission Order"), has ordered the commencement of CIRP in respect of the Company under the provisions of the Insolvency and Bankruptcy Code, 2016 ("Code"). Pursuant to the Admission Order and in accordance with Section 16 of the Code, Mr. Bhrugesh Amin was appointed as an Interim Resolution Professional ("IRP"), and the appointment as Resolution Professional ("RP") was subsequently approved by the Committee of Creditors of the Company on June 26th, 2020. The Hon'ble NCLT, Amravati Bench has approved the Resolution Plan submitted by Resolution Applicants vide Order dated June 25, 2021. The Hon'ble NCLT, Amravati Bench has also approved the constitution and appointment of Mr. Bhrugesh Amin as monitoring agent of Monitoring Committee until closing date to supervise implementation of the Resolution Plan.
FINANCIAL RESULTS
(Rs .In lakhs)
OPERATIONS:
The company has not operated during the financial year 2020-21. The company has stopped operations at the plant from December 2018.
DIVIDEND:
Your Directors regret their inability to recommend any dividend on Equity Shares in view of the carry forward losses. Consequently, the payment of dividend in respect of Redeemable "C" Cumulative Preference Shares held by the Financial Institutions also has been passed over.
FIXED DEPOSITS:
The Company has not accepted any Fixed Deposit during the year and there are no fixed deposits outstanding as on 31st March, 2021.
INSURANCE:
The assets of the Company are adequately insured.
INDUSTRIAL RELATIONS:
Company's Industrial Relations continue to be harmonious and cordial.
EMPLOYEES:
Your Directors wish to place on record their sincere appreciation of the whole-hearted cooperation extended and the valuable contribution made by the employees at all levels.
AUDITORS:
Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad (Firm Registration No: 003109S) had been appointed as Statutory Auditors of your Company for a term of five years commencing from the company's financial year 2017-18 to hold the office from the conclusion of the 61st Annual General Meeting till the conclusion of the 66th Annual General Meeting to be held in 2021-22. Interms of the provisions of the Act, your ratification to their appointment as Statutory Auditors of your Company is being sought at the ensuing AGM and forms part of the Notice convening the AGM. The said Statutory Auditors have confirmed that they are not disqualified to act as Auditor and are eligible to hold office as Auditors of your Company.
AUDITOR'S REPORT:
Regarding Qualified Opinion:
(a) As reported in the audit report, the Company has outstanding inter-corporate loans as at 31.03.2021 in its group or associate entities, the auditors were unable to obtain audit evidence. There has been instances of no response or in adequate response due to lack of manpower in those entities. The Board has advised the management team to look into the process and get the requisite confirmations from respective entities during the current financial year 2021-22.
(b) As reported in the audit report, the Company has outstanding trade receivable as at 31.03.2021 which are classified as doubtful, the auditors were unable to obtain audit evidence. There has been instances of no response or in adequate response due to lack of manpower in those entities. The Board has advised the management team to look into the process and get the requisite confirmations from respective entities during the current financial year 2021-22.
(c) As reported in the audit report, the company has not carried physical verification for the Inventory due to lack of manpower and non - availability of staff. This is noted for compliance in subsequent years.
(d) As reported in the audit report, the company has not carried physical verification for the Property, Plant & Equipment and Capital work in progress due to lack of manpower and non - availability of staff. This is noted for compliance in subsequent years.
(e) Wherever amounts are substantial, efforts are being made to obtain external confirmation from the vendors, banks, financial institution and government authority regarding trade payable but unable to succeed for the same.
(f) As part of the Corporate Insolvency Resolution process, the claims from Financial and Operational creditors are being filed and further being admitted, rejected or pending verification. We are unable to comment on the liability that may arise due to such admittance, to the extent unrecorded/unreconciled with the books of accounts and its consequential impact on financial statements as on reporting date.
(g) As regards non-provision of gratuity, superannuation and leave encashment liability on actuarial valuation as per Ind-AS19 Employee Benefits and it is provided on the retirement of employees on a consistent basis and the liability is not ascertained, which is self-explanatory.
COST AUDIT:
Cost Audit will not be applicable from the financial year 2020-21, since the turnover of the company during the last financial year is below the statutory threshold as prescribed under the respective provisions of the Companies Act, 2013 and Cost Audit rules made there under.
SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Resolution Professional (RP) has appointed M/s. B S S & Associates, Hyderabad, Practicing Company Secretaries to conduct Secretarial Audit for the FY 2020-21. The Secretarial Audit Report for the financial year ended March 31st 2021, is annexed to this Report as Annexure II. The qualification/ remarks made in the Secretarial Audit Report are self-explanatory.
DIRECTORS:
The Board is suspended with effect 14th May, 2020 as per the orders of NCLT. Subsequently Mrs. Aravinda Rani, Women Director resigned w.e.f. 28th February, 2021. The NCLT vide its order No. 187/7 (AMR)/2019 dated 14th May, 2020 while admitting the petition has appointed Mr. Bhrugesh Amin as Interim Resolution Professional.
INDEPENDENT DIRECTORS
The Board is suspended. Further the term of 5 years of Independent Directors has expired and they ceased to be the directors of the Company.
BOARD EVALUATION:
Since the powers of the Board of Directors have been suspended w.e.f. 14th May, 2020 pursuant to the orders of Hon'ble National Company Law Tribunal (NCLT), Amaravati Bench, dated 14th May, 2020, evaluation of the Board has not taken place.
VIGIL MECHANISM:
The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics and Compliance Task Force comprising Senior Executives of the Company, protected disclosures can be made by a whistle blower through an e mail or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on Vigil Mechanism and whistle blower policy may be accessed on the company's web site at the link http://www.panyamcements.com.
KMPS OTHER THAN DIRECTORS:
As of March 31st 2021, in accordance with the provisions of the Companies Act, 2013 and Listing Agreement with the Stock Exchange, Mr. S. Sreedhar Reddy, Managing Director has been designated as the KMP of the Company.
MEETINGS OF THE BOARD AND AUDIT COMMITTEE:
Since the powers of the Board stood suspended with effect from 14th May, 2020 i.e. the date of commencement of the Corporate Insolvency Resolution Process ("CIRP") and continued to remain so for the period under review, no Board meetings were held during the financial year.
The roles and responsibilities of the Board and the committees were fulfilled by the Resolution Professional, Mr. Bhrugesh Amin, in accordance with the provisions of the section 23 of the Insolvency Bankruptcy Code, 2016.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As your Company has been incurring losses the conditions contained in Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, are no longer applicable. Hence, there is no requirement with respect to compliance of the said section 135.
CORPORATE GOVERNANCE:
Your Directors reaffirm their continued commitment to good corporate governance practices. A separate report on Corporate Governance is incorporated as Annexure IV as a part of the Directors' Report. Further as a part of the report, "Management Discussion and Analysis" has also been furnished.
DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: -
That in the preparation of the annual Accounts, the applicable accounting standards had been followed, with proper explanation, and that there were no materials departures.
i. That the Directors had selected such accounting policies applied consistently and made judgment 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 loss of the Company for the year.
ii. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company, and for preventing and detecting fraud and other irregularities.
iii. That the annual financial statements have been on a going concern basis.
iv. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
v. That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition, and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Company has no such cases of sexual harassment at workplace.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO:
Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts)Rules,2014 are set out in the Annexure I and forms part of the report.
LISTING AGREEMENT:
The Securities and Exchange Board of India (SEBI), on September 2, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforce ability. The said regulations were effective December 1st,2015. Accordingly, all listed entities were required to enter into the Listing Agreement within 6 months from the effective date. The Company entered into Listing Agreement with BSE Limited on 29th February 2016 wherein the Equity Shares and NonConvertible Bonds issued by the Company are listed.
The Equity shares/Non-Convertible Debentures of the Company are listed on the BSE Limited and the annual listing fee was not paid. Consequently, the trading of shares on BSE was suspended.
RISK MANAGEMENT
A Special Team with Senior Executives has been formed which has been entrusted with the responsibility to assist the Managing Director in (a) Over seeking and approving the Company's enterprise risk management frame work, and (b) Overseeing that all the risks that the operation faces such as strategic, financial, credit market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Company manages monitors and reports on the principal risks and uncertainties that can impact Its ability to achieve its strategic objectives. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Management and business the Company.
The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal controls, Management and Assurance frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across country wide Risk Management, Internal Control and Internal Auditor methodologies and processes.
CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and at an arm's length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. Please refer to Form No. AOC-2 in Annexure III for the details of related party contracts or arrangements.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
Except S.P.Y Agro Industries Limited, an Associate Company, the Company is not having any Subsidiaries and Joint Ventures.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES.
The Nomination and Remuneration Committee has been constituted by the Board in its meeting held on 30th March, 2015 to ensure the appointment of persons having vide exposure in their fields, having independence as defined in the Act to be available for appointment as Director (The Committee always keeps a list of eminent persons having independence available for the Company's requirement depending upon vacancy on the Board). As regards remuneration payable to Whole time Directors including Chairman and Managing Director, the Board will take collective decision within the parameter of various statutes including the Companies Act, 2013 and Listing Agreement. The Committee will follow the Company's policy to discharge its duties whenever necessity arises. It will not be out of place to mention that the set policy being followed since inception of the Company to ensure transparency.
INTERNAL FINANCIAL CONTROLS:
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 were observed.
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
There were no 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.
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
There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
ANNUAL RETURN IN FORM MGT-9 FORMAT:
Pursuant to the amendments to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return (Form MGT-7) for the financial year ended March 31, 2021, is available on the Company's website and can be accessed at www.panyamcements.com.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis Report describing the Company's objectives, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Company's operations include demand supply conditions, finished goods prices, cyclical demand and pricing in your Company's principal markets, change in Government regulations, tax regimes, economic developments within India in which your company conducts business and other factors such as litigation and labour negotiations. Your company is not obliged to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events or otherwise.
ACKNOWLEDGMENTS:
The Management of the Company would like to express their sincere appreciation for the cooperation and assistance received from shareholders, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. The Management of the Company also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff of the Company during the financial year.