DIRECTOR'S REPORT TO THE MEMBERS, DEAR SHAREHOLDERS, Your Directors have pleasure in presenting the 27th Annual Report on the business and operations of the Company and operations of the Comapny and the accounts for the Financial Year ended 31st March 2015 Dividend Your Directors doesn't recommend any Dividend on Equity Share Capital of your Company for the financial year ending 31st March, 2015. Transfer to Reserves The Company has during the period under review, has not transferred any amount to its General Reserves. Deposits: The Company has not invited/ accepted any deposits from the public during the year ended March 31, 2015. There were no unclaimed or unpaid deposits as on March 31, 2015. Change in the Nature of Business, if any There is no change in the nature of business of the Company. Changes in Share Capital During the period under review, your Company has allotted 7,44,62,070 Preferential Convertible Share Warrants of Rs. 3/- each (i.e Face Value of Rs. 2/- at a premium of Rs.1/-) to the Promoters/Investors. Out of which, the Board of Directors has converted and allotted 1,64,25,000 Preferential Convertible Share Warrants into equity shares on 19th March, 2015. Management Discussion and Analysis Report Management's discussion and analysis report for the year under review, as stipulated under Clause 49 of the Listing agreement with Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. EMPLOYEES STOCK OPTIONS PLAN 2006 (MIC ESOP 2006) The Company had established MIC Electronics Limited Employees Welfare Trust in 2005 to create Employee Stock Option Plan. On 12th August 2006, the Shareholders approved that ESOP to issue 4500000 (Face Value Rs.2/-) stock options of the Company to its employees through the trust. Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 30th November 2010 under the MIC Electronics Ltd Employees Stock Options Plan, 2006 are as under: ESOP 2006 scheme was ended on 24-10-2009, however 7,49,100 shares were lying in the trust because of Non-exercise of the options due to heavy Fringe Benefit Tax disproportion to price of the scrip and few options because of resignation of employees in general Particulars of Employees The details 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 enclosed as Annexure - I. Further during the year under review, none of the employees are receiving remuneration as set out in Rule (5) (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Subsidiaries and Associates At the beginning of the year we had 4 subsidiaries. As on 31st March, 2015 we have only 3 subsidiaries. During the year, the Board has reviewed the affairs of the Subsidiaries. In accordance with Section 129(3) of the Companies Act 2013 we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC-1 is appended as Annexure II to the Board's Report. The statement also provides the details of performance, financial positions of each of the subsidiaries. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www. mic.co.in. These documents will also be available for inspection during business hours at our registered office in Hyderabad During the year, disinvestment was made in the following subsidiary: On 1st January, 2015, the entire shareholding in Maave Electronics Private Limited. The Company has taken Valuation Certificate from Independent Valuer and accordingly the business has been transferred for a consideration of Rs. 2.5 Crores/-. As on 31st March, 2015, the following are the subsidiaries: 1. MIC Electronics Inc.,USA 2. MIC Green Solutions Private Limited 3. MIC Candilux Private Limited Consolidated Financial Statements The audited standalone and Consolidated Financial Statements of the Company which form part of the Annual Report have been prepared in accordance with the provisions of the Companies Act, 2013, the Listing Agreement, the Accounting Standards (AS-21) on consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investment in Associates. Directors' Responsibility Statement Pursuant to the requirement under Section 134 of the Companies Act; 2013, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms: (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 devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Statement on Declaration given by independent directors The Company has received necessary declaration from each independent director under Section 149 (7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Particulars of Contracts or Arrangements with related parties: Company has transactions with related parties, which were continuing from previous financial years. However all those are entered under ordinary course of business and are at arm's length transactions. Therefore, consent of the shareholders under Section 188 does not require. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 is prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure - III to this Report. Corporate Social Responsibility (CSR) The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on corporate social responsibility. Risk Management Policy The Company has policy for identifying risk and established controls to effectively manage the risk. Further the Company has laid down various steps to mitigate the identified risk. 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 was observed. Corporate Governance The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Practicing Chartered Accountant confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. Number of Meetings of the Board of Directors The Board met nine times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. Directors The Board of the Company has an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on 31st March, 2015, the Board consists of 6 members, two of whom are executive directors, one non-executive director and three are independent directors. The Board periodically evaluates the need for change in its composition and size. As per the provisions of the Companies Act 2013, Mr. Atluri Venkata Ram retires at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends his re-appointment. Details of Directors or Key Managerial Personnel who were appointed or have resigned during the year. Mr. J. Prasanna Kumar, Director of the Company has resigned during the year and Dr. Venkata Ramani Vedula has appointed as Additional Director through circular resolution passed on 31st March, 2015. During the year Mr. Vijay Kumar Ch., was resigned as Company Secretary of the Company. Mr. Malleswara Durga Prasad has been appointed as CFO and Company Secretary. Committees of the Board Currently, the Board has three Committees: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Stakeholders Grievance Committee A detailed note on the Board and its committees is provided under the corporate governance report section in this Annual Report. Statutory Auditors The Statutory Auditors of the Company, M/s. Pavuluri & Co., were appointed at the 2 6th Annual General Meeting till the conclusion of the 29th Annual General Meeting (AGM) of the Company. In terms of Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, M/s. Pavuluri & Co., Chartered Accountants, as the Auditors of the Company is placed for ratification by the shareholders. In this regard the Company has received a certificate from the auditors to the effect if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. Secretarial Auditor The Board has appointed Mr. D V M Gopal, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure IV to this Report. Extract of the Annual Return The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure V to this Report. Material changes and commitments, if any, affecting the financial position of the company There are no Material changes and commitments in the business operations of the Company from the Financial Year ended 31st March 2015 to the date of signing of the Director's 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 No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - VI to this Report. Particulars of loans, guarantees or investments under section 186 Loans, Guarantees, Investments given during the Financial Year ended on 31st March 2015, which attracts the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, form part of the notes to the financial statements provided in this Annual Report. Declaration with the compliance with the code of conduct by Members of the board and Senior Management personnel The Company has complied with the requirements about code of conduct for Board members and Senior Management Personnel The said policy is available on the website of the Company. Vigil Mechanism/Whistle Blower Policy The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line 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 website. Mechanism for Board Evaluation Clause 49 of the Listing Agreement states that the board shall monitor and review the board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Directors evaluation was broadly based on the parameters such as understanding of the Company's vision and objective, skills, knowledge and experience, participation and attendance in Board/Committee meetings; governance and contribution to strategy; interpersonal skills etc. The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance. A meeting of the Independent Directors was also held which reviewed the performance of Non-Independent Directors, Chairman and the quality, quantity and timelines of flow of information between the Company management and Board. Disclosure pertaining to sexual harassment of women at workplace During the Financial year ended 31st March, 2015 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment. Acknowledgements The Directors would also like to place on record their appreciation for the support & services of various Government & quasi Government organizations like Department of Information technology & Communications, STPI, Department of Commercial Taxes, Customs & Central Excise, Income Tax, etc. The Directors also thank the officials of the Bankers. The Directors would also like to thank the esteemed shareholders for their constant support, guidance & advice. By the Order of the Board For MIC Electronics Limited Sd/- (Dr. M V Ramana Rao) Managing Director Date : 05.09.2015 Place : Hyderabad |