| Dear Members:
The Directors have pleasure in presenting before you the Annual Report
of the Company together with the Audited Statements of Accounts for the
23rd year ended 31st March 2015.
1. FINANCIAL SUMMARY/HIGHLIGHTS, OPERATIONS, STATE OF AFFARIS [INSERT
AS PER INFORMATION FROM THE COMPANY]
(Rs. in Rupees)
Particulars 2014-2015 2013-2014
Gross Income 23,488 2,35,202
Profit Before Interest and (35,13,870) (51,71,086)
Depreciation
Finance Charges 2,18,14,787 2,01,19,052
Gross Profit (2,53,28,657) (2,52,90,138)
Provision for Depreciation - 62,647
Net Profit Before Tax (2,53,28,657) (2,53,52,785)
Provision for Tax - -
Net Profit After Tax (2,53,28,657) (2,53,52,785)
Balance of Profit brought forward (38,40,17,844) (35,86,65,059)
Balance available for appropriatio (40,93,46,501) (38,40,17,844)
While the Company has been striving to get orders for the SATHI as well
as trying to make progress in the Brazil project, it has also been
working on finding new avenues of business, especially in applying
information technology in the domains of Business Intelligence and
Human Resources Development, and mobile-based applications for services
provision, etc., in keeping with the changing trends. Accordingly,
considerable progress has been made in the three areas identified
above, and projects/services in these three areas are expected to be
launched in the new financial year. These new activities will need
further investments to be made in the Company, and the Company is in
advanced stages of negotiation with financial institutions and
prospective investors for some innovative solutions/schemes for
funding. The activities so chosen/planned have relatively low
competition.
FUTURE PROSPECTS
The new activities, when launched, have been so chosen for their
potential for generating revenues quickly, and the Company is confident
of being able to start rebuilding itself during the new financial year,
as well as generating significant revenues and operating profit.
Additionally, efforts to revive the SATHI manufacturing activity and
the Brazil project will continue despite the seeming lack of success so
far, which should add to the revenue and profit of the Company in the
coming year.
2. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There were no material changes and commitments which occurred affecting
the financial position of the Company between 31st March, 2015 and the
date on which this report has been signed.
3. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY
The Company did not carry out any commercial sales activities: However,
in line with the applicable regulations/Statutes, revenue of the
Subsidiaries was captured in the consolidated financial Statement of
the Company.
4. CHANGE IN THE NATURE OF BUSINESS
The Company expects to add new activities as mentioned above, in the
areas of application of Information Technology in the domains of
Business Intelligence and Human Resources Development, and mobile-based
applications for services provision, will expand the nature of business
of the Company from manufacturing and sales of products developed
in-house, to also software applications for specific chosen domains, by
developing such applications in-house and/or partnering with
organizations specializing in those activities/domains.
5. DIVIDEND
In view of the losses incurred, your Directors express inability to
recommend any dividend.
6. AMOUNTS TRANSFERRED TO RESERVES
In view of the losses, the question of transferring any amount to
Reserves does not arise.
7. CHANGES IN SHARE CAPITAL
There were no changes in the Share Capital of the Company during the
year.
Disclosure regarding Issue of Equity Shares with Differential Rights
During the year under review the Company has not issued Shares with
Differential Rights.
Disclosure regarding issue of Employee Stock Options
During the year under review the Company has not issued Shares Employee
Stock Options.
Disclosure regarding issue of Sweat Equity Shares
During the year under review the Company has not issued Sweat Equity
Shares.
8. CAPITAL INVESTMENTS
There were no capital Investments during the year 2014-2015.
9. BOARD MEETINGS
The Meetings of the Board are held at regular intervals with a time gap
of not more than 120 days between two consecutive Meetings. Additional
Meetings of the Board of Directors are held when necessary. During the
year under review 4 (Four) Meetings were held on 29th May 2014, 14th
August 2014, 14th November 2014 and 14th February 2015.
The Agenda of the Meeting is circulated to the Directors in advance.
Minutes of the Meetings of the Board of Directors are circulated
amongst the Members of the Board for their perusal.
The details of other Committee Meetings during the year 2014-2015 are
given in the Corporate Governance Report.
10. DIRECTORS AND KEY MANANGERIAL PERSONNEL
Ms. Chhanda Deshpande, Director (DIN: 00225546), retires by rotation,
as per the Companies Act, 2013 and being eligible, offers herself for
re-appointment.
11. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent
Director of the Company under Section 149(7) of the Companies Act, 2013
that the Independent Directors of the Company meet with the criteria of
their Independence laid down in Section 149(6).
12. COMPOSITION OF AUDIT COMMITTEE
As on 31st March 2015, the Audit Committee of the Company consists of
three (3) Non-Executive Independent Directors and all of them have
financial and accounting knowledge.
The Board has accepted the recommendations of the Audit Committee
during the year under review.
The Audit Committee consists of the following:
a) Mr. U Divakaran Chairman
b) Mr. S P Satish Member
c) Mr. Vinay L Deshpande Member
13. NOMINATION AND REMUNERATION COMMITTEE POLICY
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and for other employees and their remuneration. The
Composition, criteria for selection of Directors and the Terms of
Reference of the Nomination and Remuneration Committee is stated in the
Corporate Governance Report.
The Nomination and Remuneration Committee consists of the following:
a) Mr. U Divakaran Chairman
b) Mr. S P Satish Member
c) Mr. Vinay L Deshpande Member
14. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established an effective vigil mechanism (for directors
and employees to report genuine concerns) pursuant to the provisions of
Section 177(9) & (10) of the Companies Act, 2013 and as per Clause 49
of the Listing Agreement which is available on website of the Company
and there were no cases reported during the last period.
15. DIRECTORS' RESPONSIBILITY STATEMENT
In pursuance of section 134 (5) of the Companies Act, 2013, the
Directors hereby confirm 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 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 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.
16. EXTRACT OF ANNUAL RETURN
As required pursuant to Section 92(3) of the Companies Act, 2013 and
rule 12(1) of the Companies (Management and Administration) Rules,
2014, an extract of annual return in MGT 9 as a part of this Annual
Report is attached as Annexure I.
17. INFORMATION ABOUT THE FINANCIAL PERFORMANCE/FINANCIAL POSITION OF
THE SUBSIDIARIES/ASSOCIATES/JV
Financial performance of the Subsidiary/Associates referred to in
Section 129 of the Companies Act, 2013 in Form AOC-1 is annexed to this
Report as Annexure II.
18. AUDITORS
The Auditors, Messrs Ishwar & Gopal, Chartered Accountants, Bangalore
(registered with ICAI membership number 021748), retire at the ensuing
Annual General Meeting and, being eligible, offer themselves for
reappointment for a period of 3 years from the conclusion of this
Annual General Meeting till the conclusion of 26th Annual General
Meeting.
The Company has received a Certificate under Section 141 of the
Companies Act, 2013 from them that their appointment would be within
the limits specified therein.
QUALIFICATIONS IN THE AUDIT REPORT AND EXPLANATIONS BY THE BOARD
Sl. Qualifications made by Explanations by the Board
No. Statutory Auditor
a. The entire net worth of the The Company is continuously
Company has been eroded. However making efforts to ramp up
the Company is continuing to its scale of operations to
prepare accounts under going generate profit and
concern concept. regain positive net worth.
b. Provision for retirement In view of the few employees,
benefits in the form of the Company followed the policy
gratuity and leave encashment of accounting gratuity and
has been made on estimated leave salary liability on
basis instead of on an actuarial estimated basis instead of
valuation as on the balance actuarial valuation.
sheet date in accordance
with Accounting Standard (AS)-15
(revised) on 'Employee Benefits
(refer note no. 24.60) in
respect of the Holding Company.
The impact of the above on the
'loss' for the year is
unascertained.
c. Gratuity and leave salary which In view of the few employees,
have been provided on estimated the Company followed the
basis instead of actuarial basis; policy of accounting gratuity
and leave salary liability
on estimated basis instead
of actuarial valuation.
19. SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Mr. Parameshwar G
Bhat, Bangalore, Company Secretary in Practice to undertake the
Secretarial Audit of the Company. The Report of the Secretarial Auditor
in the form of MR-3 is annexed to this Report as Annexure III.
QUALIFICATIONS IN THE SECREATARIAL AUDIT REPORT AND EXPLANATIONS BY THE
BOARD
Sl. Qualifications made by Explanations by the Board
No. Secretarial Auditor
a. Acknowledgements for sending the The notice and agenda for the
notices of the Meetings of the Board and Committee meetings
Board and the Committees are not are sent by email. The Company
maintained by the Company. will ensure to maintain the
acknowledgements for sending
the notices of the Meetings
of the Board and the
Committees.
b. Updating of website with regard The Company will take
to various policies are pending. necessary steps to update
Website with regard to various
policies which are pending.
c. Copy of newspaper clippings of The Company will take
advertisements informing the necessary steps to comply
Board Meeting and AGM and the with the same.
quarterly results are not
available for review.
d. The Company has not appointed The Company initiated the
Company Secretary (CS) during process of finding suitable
the year under scrutiny. candidates, but due to the
Company's financial position
the Company is not in a
position to afford the
remuneration expected by the
Company Secretary. However,
Company will take necessary
steps for comply with the
requirements of law.
e. The Company has not appointed The Company initiated the
Chief Financial Officer (CFO) process of finding suitable
during the year under scrutiny. candidates but due to the
Company's financial position
the Company is not in a
position to afford the
remuneration expected by the
CFO. However, Company will
take necessary steps for
comply with the requirements
of law.
f. The Company has not maintained The Company will take necessary
the attendance register for steps to maintain the
Board and Committee meetings. attendance register for Board
and Committee meetings.
g. Statutory Register as per The Company will take necessary
Companies Act, 2013 is yet steps to update Statutory
to be updated. Register as per Companies Act,
2013.
h. The Company has not appointed Since there is no business and
Internal Auditor during the revenue in the last financial
year under scrutiny. year, the Company is not in a
position to appoint the
Internal Auditor. However,
Company will take necessary
steps for comply with the
requirements of law.
i. The terms of appointment of Since the Company does not have
Mr. Vinay L Deshpande as the revenue, it was decided not
Managing Director and Mrs. to appoint the Managing
Chhanda Deshpande as Whole Time Director or Whole Time Director
Director expired on June 2014. for the Company to save any
The re-appointment of Mr. Vinay additional cost to the Company.
L Deshpande as Managing However, Company will take
Director and Mrs. Chhanda necessary steps to comply with
Deshpande as Whole Time Director the requirements of law.
were not taken up by the Company.
j. Constitution of Nomination and The Company does not have
Remuneration Committee is not in sufficient number of non
compliance with Section 178 of executive Directors to comply
the Companies Act, 2013. with Section 178 of the
Companies Act. Since Mr. Vinay
L Deshpande and Mrs. Chhanda
Deshpande are not drawing any
remuneration from the Company
and are not re-appointed as
Managing Director or Whole Time
Director respectively, they
may be treated as non
Executive Directors.
20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
OUTGO
(A) Conservation of Energy
Steps taken / impact on The Company's operations are not
conservation of energy. power intensive. Nevertheless, your
Company has introduced various
measures to conserve and minimize
the use of energy wherever it is
possible.
(i) Steps taken by the company Nil
for utilizing alternate sources
of energy including waste
generated.
(ii) Capital investment on Not Applicable
energy conservation equipment.
Total energy consumption and Not Applicable
energy consumption per
unit of production as per
Form A.
(B) Technology Absorption
Efforts in brief, made towards Nil
technology absorption,
adaptation and innovation
Benefits derived as a result Not Applicable
of the above efforts, e.g.
product improvement, cost
reduction, product development,
import substitution, etc.
In case of imported technology
(imported during the last 5
years reckoned from the beginning
of the financial year),
following information may be
furnished:
Technology imported Not Applicable
Year of Import Not Applicable
Has technology been fully Not Applicable
absorbed
If not fully absorbed, areas Not Applicable
where this has not taken place,
reasons therefore and future
plan of action
(C) Research and Development (R & D)
Specific areas in which R & D The Company has not carried out
carried out by the company any research and development work
during the course of the year.
Benefits derived as a result Not Applicable
of the above R & D
Future plan of action Not Applicable
Expenditure on R & D
(a) Capital Nil
(b) Recurring Nil
(c) Total Nil
(d) Total R & D expenditure as Nil
a percentage of total
turnover
(D) Foreign Exchange Earnings and Outgo
Activities relating to exports Not Applicable
Initiatives taken to increase exports Not Applicable
Development of new export
markets for products and Not Applicable
services
Export plans Not Applicable
Total Exchange used (Cash basis) As on 31st March 2014: Nil
Total Foreign Exchange Earned As on 31st March 2014: Nil
(Accrual Basis)
21. RATIO OF REMUNERATION TO EACH DIRECTOR
The Company had 5 employees as of 31st March 2015. Pursuant to Section
197(12) of the Companies Act, 2013 and Rule 5 (1) (2) (3) of the
Companies (Appointment and Remuneration) Rules, 2014,
details/disclosures of Ratio of Remuneration to each Director to the
median employee's remuneration is annexed to this report as Annexure
IV.
There are no employees posted and working in a country outside India,
not being Directors or relatives, drawing more than sixty lakhs rupees
per financial year or five lakh rupees per month as the case may be.
Therefore statement/disclosure pursuant to Sub Rule 5(3) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is not required to be circulated to the members and is not
attached to the Annual Report.
22. DEPOSITS
Your Company has not invited/accepted/renewed any deposits from public
as defined under the provisions of Companies Act, 2013 and Companies
(Acceptance of Deposits) Rules, 2014 and accordingly, there were no
deposits which were due for repayment on or before 31st March 2015.
23. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
No order was passed by any court or regulator or tribunal during the
period under review which impacts going concern status of the Company.
24. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company continued to maintain, high standards of internal control
designed to provide adequate assurance on the efficiency of operations
and security of its assets. The adequacy and effectiveness of the
internal control across various activities, as well as compliance with
laid-down systems and policies are comprehensively and frequently
monitored by your Company's management at all levels of the
organization. The Audit Committee, which meets at-least four times a
year, actively reviews internal control systems as well as financial
disclosures with adequate participation, inputs from the Statutory,
Internal and Corporate Secretarial Auditors.
25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has not given any Loan,
Guarantees or made Investments within the meaning of Section 186 of the
Companies Act, 2013.
26. RISK MANAGEMENT POLICY
The Company has not yet formulated a Risk Management Policy and has in
place a mechanism to inform the Board Members about risk assessment and
minimization procedures and undertakes periodical review to ensure that
executive management controls risk by means of a properly designed
framework.
27. CORPORATE SOCIAL RESPONSIBILTY POLICY
Since the Company does not meet the criteria for the applicability of
Section 135 of the Companies Act read with the Companies (Accounts)
Rules, 2015, this clause is not applicable.
28. RELATED PARTY TRANSACTIONS
There were no related party transactions during the year 2014-2015.
29. FORMAL ANNUAL EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the Directors individually as well
as the evaluation of the working of its Audit, Nomination &
Remuneration and Compliance Committees.
30. MANAGEMENT DISCUSSION AND ANALYSIS
As requisite and appropriate Management Discussion & Analysis is
covered under this Report itself, a separate note on the same is not
being furnished.
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration.
31. LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing Fees for the
year 2015-2016 to NSE and BSE where the Company's Shares are listed.
32. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
Your Company has taken adequate steps to adhere to all the stipulations
laid down in Clause 49 of the Listing Agreement. A report on Corporate
Governance is attached to this report as Annexure V.
Certificate from the Statutory Auditors of the Company confirming the
compliance with the conditions of Corporate Governance as stipulated
under Clause 49 of the Listing Agreement is attached to this report.
33. EVENT BASED DISCLOSURES
Due to certain alleged Income Tax claim, despite receiving an order
from the Appellate Tribunal in favour of the Company, the Tax
Authorities issued a demand notice and stopped the Company from
operating the Bank Account which is now being followed up.
34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company did not engage any women employee during the tear under
review.
35. ACKNOWLEDGEMENTS
The Directors wishes to place on record their appreciation for the
sincere and dedicated efforts of all employees. Your Directors would
also like to thank the Shareholders, Bankers and other Business
associates for their sustained support, patronage and cooperation.
For and on behalf of Encore Software Limited
Place: Bangalore Vinay L Deshpande Chhanda Deshpande
Date: 14th August 2015 Director Director
DIN:00225502 DIN:00225546 |