To, the Members of Cals Refineries Limited Your Directors hereby presents the Thirty
Third Annual Report, together with the Company's Audited Financial Statements for the
financial year 2016-17.
1. Financial Summary/highlights on Performance of the Company (Standalone)
|
|
(Rs. in million) |
| Description |
Year Ended March 31, 2017 |
Year Ended March 31, 2016 |
| Revenue from Operations |
- |
- |
| Other Income |
0.40 |
3.02 |
| Total Revenue |
0.40 |
3.02 |
| Operational Expenses |
- |
- |
| Employee Benefit Expenses |
2.72 |
3.63 |
| Interest and Finance Charges |
0.00 |
0.00 |
| Depreciation and Amortizations |
0.09 |
0.21 |
| Other Expenses |
8.28 |
11.82 |
| Total Expenses |
11.09 |
15.66 |
| Profit/(Loss) before exceptional items |
(10.69) |
(12.64) |
| Exceptional Items |
7.71 |
- |
| Profit/(Loss) for the year |
(18.40) |
(12.64) |
2. Dividend
As there is no operating income and consequently, no profit is available for
distribution as dividend.
3. Reserves
The Company is not having any surplus available to be carried forward to Reserves.
4. Brief description of the Company's working during the year/ State of Company's
affair
(i) Company's operation during the year
The Company has no business operations. The financial situation has been grim and in
prevailing circumstances of no funding available, coupled with various litigations against
the company, chances of starting business operations seem nearly impossible.
The reasons for such status of the Company and present scenario of the Company could be
articulated in the below points:
a. Sebi's Investigation against the Company for Market Manipulation using GDRs issue.
Your Directors have been reporting continuously about the investigation against the
Company by the Securities and Exchange board of India (SEBI) and the restriction imposed
on the Company vide Sebi's order in September and December 2011, which was finally
confirmed on 23rd October, 2013 via its final order upon the completion of the
Investigation against the Company. The SEBI vide this order has restricted the Company
from entering into the securities market and altering its capital structure, in any manner
effectively for a period of eight years from the date of the final order. Your Company has
challenged the order in the Securities Appellate Tribunal (SAT), which proceedings are
ongoing, your Company is expecting the order of the SAT in near future.
The sanctions imposed by the order of the SEBI against the Company has had a
significant adverse impact on the activities of the Company relating to the establishment
and start of the project.
b. Failure to achieve the financial closure
The aforesaid restriction on the Company has led to the situation where your Company
has failed to achieve the required financial closure. The said failure of the Company had
a severe impact on its abilities to perform its part of the contract with vendors,
suppliers for various components of the projects including the Refinery. The Company had
grossly failed to make the balance payments to the suppliers in view of lack of the funds
into the Company. This has the further impact of writing off of various advances,
preoperative expenses, consultancy fee and capital work in progress as the relevant
contracts and arrangements had expired long back and the Capital advances which were made
at the time of project implementation stage are either not recoverable or specific
performance against the said advances cannot be enforced. The Board of Directors based on
the aforesaid difficult situation took a legal opinion in this matter to reflect a true
and fair view of the financial statement and decided to write off the various advances,
land and pre-operative expenses etc. from the balance sheet of the Company.
Such writing off of aforesaid advances, land and preoperative expenses had resulted in
substantial change in the profit and loss of the Company, which has completely eroded the
net worth of the Company. This situation indicates the existence of a material uncertainty
that may cast a significant doubt on the Company's ability to continue as a going concern.
The Auditor have taken cognizance of this fact in their Report of the previous year and in
this year too and have qualified their opinion. The board has given their comments on the
said qualification of Auditor's in the later part of this Report.
c. Huge Litigation and Compliance cost, Financial Support & Arrangements
Your Board would like to submit that, despite adverse situation in the Company, your
Company has always diligently complied with all the requirements of the various laws and
regulations in true spirit and manner. Various litigations, appeals and court proceedings,
for and against the Company had a severe impact on the financial conditions of the
Company. Having noted the present financial conditions and status of the business
operations of the Company as against the expenses incurred to comply with the various
compliances under different laws and regulations and also meeting the huge litigation
expenses, the company is currently in a shattered state.
Considering the prohibition imposed by the SEBI, no equity infusion was allowed in the
Company, hence the only option left with the Company was to borrow from related parties.
During the period under review, your Company had a single source of funding through one of
the related party and promoter group Company Nyra Holdings Private Limited. Your Company
has been receiving the Inter-Corporate Loan as aforsaid, to manage its day to day
operation, compliances and litigation expenses. The said loan from the body corporate have
an impact of interest as per the prevailing provisions of the Companies Act, 2013, which
your Company needs to bear with.
Further Nyra Holdings Pvt. Ltd. on 28th March, 2017, has assigned the
aforesaid Loan arrangements to its parent/ holding Company, i.e., M/s Spice Energy Private
Limited under the process of restructuring of investment within the group. In the said
process of restructuring the Nyra Holdings Private Limited has arranged to set-off its
loan taken from Spice Energy Pvt. Ltd. with the loan amount extended to our Company, worth
Rs. 9,26,27,000/-.
A tri-partite agreement was executed between our Company (as borrower), Nyra Holdings
Pvt. Ltd. (as assignor) and Spice Energy Pvt. Ltd. (as assignee) to effect the aforesaid
transaction, i.e., assignment of loan from Nyra Holdings to Spice Energy Pvt. Ltd. and for
Spice Energy Private Limited to continue with the loan arrangements with your Company in
future.
The aforesaid agreement, arrangement and matter is also proposed to be ratified by the
shareholders of the Company in this Annual General Meeting i.e. for the FY 2016-17. The
factual points in relation to above, have been duly explained in the explanatory statement
of the Notice of the Annual General Meeting.
d. Change in Promoter of the Company
In the aforesaid arrangements/restructuring within the group Company, the Nyra Holdings
Pvt. Ltd. has also transferred
its equity holdings bearing 233196000 equity shares constituting 2.81% of the entire
paid-up capital of the Company, to its Parent cum Holding Company, i.e., Spice Energy Pvt.
Ltd. The said transfer was made at the prevailing market price through off market mode.
This transaction/transfer of shares to the Spice Energy Pvt. Ltd. by Nyra Holdings Pvt.
Ltd. has resulted in change in the promoters of the Company, i.e., Spice Energy replaces
Nyra Holdings as promoter in the shareholding list of the Company. The Spice Energy and
Nyra Holdings has given the requisite disclosures under Regulation 29 and 30 of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and Insider Trading
Regulations, which is duly reported to the Stock Exchange and the necessary e-form has
been filed with the Registrar of Companies in relation to the above.
e. Contingent Liabilities
During the period under review, the contingent liabilities which are required to be
reported are as under:
• The Claim against the Company to the extent of Rs. 9.19 Million pertains to M/s
Thakurdas Khinvraj Rathi & Ors, who has issued a notice to the Company demanding the
aforesaid amount under a litigation relating to taking a premises (along with a garage),
situated at 95A Marine Drive, Mumbai-400002, on lease and license basis, in the year
2007-08. The dispute is ongoing and no finality has yet taken place.
• The amount of Rs. 5,862.11 million under Disputed Duties/ Tax Demands pertains
to the Income Tax orders issued for the A.Y. 2008-09 and 2014-15 for Rs. 5860.28 million
and Rs. 1.83 million respectively. The assessment order for the A.Y. 2008-09 is related to
the assessment u/s 148 w.r.t. the issuance of GDRs, however assessment proceedings for
A.Y. 2014-15 pertains to the regular assessment, i.e. assessment u/s 143(3) of the Income
Tax Act, 1961. The Company has filed appeals before the CIT (A) in the aforementioned
matters which is yet to finalise.
• Karan Nirman Udyog Private Limited have filed winding up petition in the Hon'ble
High Court of Delhi at New Delhi, for the recovery of Rs. 5.00 million. The Company is
contesting, however the matter is still pending.
f. Investigation of Serious Fraud Investigation Office (SFIO):
The Company has reported in the previous year that the Serious Fraud Investigation
Office (SFIO) had initiated an investigation into the affairs of the Company under section
212 of the Companies Act, 2013, the investigation is relating to the issuance of GDRs by
the Company in the year 2007 and the proposed GDR issue in the year 2011.
The members be apprised that the Company has not received any official communication on
the development in the aforesaid investigation process. The Company has provided adequate
information and all essential support in the investigation process and have also provided
all the documents as enquired from time to time. As on the date of this report the company
has not received any intimation from SFIO regarding closure of matter.
g. Updates on Notices u/s 148 of the Income Tax for the A.Y. 2008-09 and 2009-10 for
the Income Escaping Assessment U/s 147 of the Income Tax Act, 1961.
Your Company had received Notices u/s 148 of the Income Tax for the A.Y. 2008-09 and
2009-10 for the Income Escaping Assessment U/s 147 of the Income Tax Act, 1961. The Notice
was in respect of assessment/re-assessment, re-computing the Loss/Depreciation of the
Company for the said Assessment Years. As per the requirement of the Section 147 and
Section 148 of the Income Tax Act, 1961, the authority has provided the reasons for
re-opening the case for both of the Assessment years.
As reported earlier w.r.t the A.Y. 2009-10 the A.O. had passed an order dated
28/03/2016 without making any addition and stating that the advances in subject matter
given by the Company is not made for the business purpose of the Company and therefore the
Capital Work In Progress must be reduced by Rs. 464.97 crores. This Order has been
challenged by the Company at the appropriate forum, under Section 246A(1)(b) of the Income
Tax Act, 1961, which proceedings are undergoing.
The assessment proceedings for A.Y. 2008-09, was referred by the A.O. to the Transfer
Pricing officer for his due assessment. The Transfer pricing officer after dealing with
the matter and after detailed deliberations, have passed his order on 28th
October, 2016, stating that "the transaction done by assesse are with Associate
Enterprise, i.e., Honor Finance for reasons already stated in the Show cause and in the
AO's letter, the aforesaid transaction is an international transaction u/s 92B(1)".
It was also mentioned that "no inference is drawn in respect of arm's length price of
the international transaction, i.e. issuance of GDR and A.O. may take necessary action as
deemed fit on the issue of imposition of penalty u/s 271AA and 271 BA on protective basis
till disposal of appeal of the assessee by Securities Appellate Tribunal."
Taking note of the aforesaid assessment made by the TPO and also after giving due
opportunity to the Company, the A.O. has issued a final order on 28.12.2016, which was
obtained from the department on 02.02.2017, raising a demand of Rs. 5,86,02,81,490/-.
Your Company have denied and disputed the order and the demand as raised by the A.O.
and have filed an appeal before Hon'ble CIT (A) under the relevant provisions of the
Income Tax Act, 1961. Further, your Company has also appealed to the department to take a
lenient view on the deposit of the aforesaid demand, till the matter is heard before CIT
(A), however, the Department has attached one of the Company's Bank Account against the
order of demand.
h. Suspension in the trading of equity shares of the Company at Bombay Stock Exchange
(BSE) website and Putting the Company into the list of Shell Company:
The trading of the equity shares of the Company at BSE website has been suspended w.e.f
08th August, 2017. The SEBI vide its letter bearing No. SEBI/HO/ISD/OW/P/2017/
18183 dated 07th August, 2017 has provided a list of shell Companies as
identified by Ministry of Corporate Affairs (MCA) to the Exchange, with a direction to
take necessary measures. The BSE, based on the above, has taken a measure against the
Company which inter-alia includes moving the securities to GSM Framework under stage VI
w.e.f August 08, 2017. "As per the GSM framework, trading in the securities of the
Company shall be permitted only once a month under trade to trade category and any upward
price movement in the securities shall not permitted beyond the last traded price and
additional surveillance deposit of 200% of trade value shall be collected from the buyers
which shall be retained with the exchanges for a period of five months".
Earlier the equity of the Company was placed under stage 1 of GSM framework vide the
notice dated 13th June, 2017 and now it has been directly moved to stage VI of
the GSM framework, which have led to the aforesaid restrictions in the trading.
The Company had no idea or any information, on what ground and basis, it has been moved
to the list of shell Company by Ministry of Corporate Affairs and such restrictions on the
trading is being imposed on the Company. Your Company, has written to SEBI and BSE, asking
for the basis/ground of such treatment or terming the Company as shell Company, resulting
into such stringent restrictions on trading of its equity at the Exchange.
(ii) Status of project and Future Outlook:
As your Directors have been reporting since long, that your Company had plans to set up
a Crude Oil Petroleum Refinery (the project). The Company has raised Rs. 7,880 million
through Global Depository Receipts (GDR) in December 2007, for part funding the project.
The proceeds of the GDR issue were fully utilized to pay capital advances related to
purchase of equipment of two used oil refineries and other corporate expenses incurred
during construction period. Due to non-availability of funds, restrictive orders of SEBI,
pending litigations, and unrecoverable advances paid to suppliers on account of
non-fulfilment of financial obligations by company in time, the implementation of the
project has been stalled. Since considerable time has elapsed the prospect of the project
revival and its implementation has become bleak.
Further your Company is going through the appeal proceedings in the Hon'ble Securities
Appellate Tribunal (SAT) against the final order of the Securities and Exchange Board of
India (SEBI), the order for which is expected in near future. We have apprised you above,
how the restrictive orders and litigations have affected the project implementation of the
Company. The restriction on the Company has prohibited the Company to enter into the
securities market and explore any capital generation. It has been limited and confined to
the loan arrangements from one of the promoter group Company. In the present scenario,
your Company has no operational project as no operational revenues accrue to the Company,
hence it is evident, that the Company will only be able to survive if the SAT considers
our appeal favorably and issues an appropriate final order. Presently no discussion in
detail on the project implementation is possible or relevant.
5. Change in the nature of business, if any
During the period under review, there was no change in the nature of business of the
Company.
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 There are no changes and
commitments, which are affecting the financial position of the Company from the end of the
financial year, i.e., 31st March, 2017 till the date of this Report, i.e., 14th
August, 2017.
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
• Order dated 23rd October, 2013 passed by Securities and Exchange
Board of India:
As reported earlier, The Securities and Exchange Board of India has issued an Order
against the Company in the matter of "Market Manipulation using GDR Issues." The
Order dated October 23, 2013 mainly states that:
• Cals shall not issue equity shares or any other instrument convertible into
equity shares or any other security, for a period of ten years.
• Vide the Interim Order dated September 21, 2011 (later confirmed through the
Confirmatory Order on December 30, 2011), Cals was directed not to issue equity
shares or any ^ other instrument convertible into equity shares or alter their capital
structure in any manner till further directions. In this context, Cals has already
undergone the prohibition imposed vide the Interim Order for a period of approximately two
years. In view of this factual situation, it is clarified that the prohibition already
undergone by Cals pursuant to the aforementioned SEBI Order shall be reduced while
computing the period in respect of the prohibition imposed vide this order.
However, the Company has filed an appeal to the Hon'ble Securities and Appellate
Tribunal (SAT), against the abovementioned order of the SEBI, which is ongoing. From the
above Order it is clear that the Company is restrained from issuing any further equity
shares or any other instruments, convertible into equity shares or any other security,
effectively for a period of eight years (approx) from the date of the order, however the
Company has survived the order for approx. 4 years from its date and approx. 6 years in
total from the date of the first order.
At this moment the Company has no operational project and hence no operational revenues
accrue to the Company. The Company has been funding its day to day operations and
statutory requirements through the funding received by way of unsecured loans from one of
the promoter group company. It has now become difficult to continue receive funding
support from any other sources including by way of unsecured loans. In view of the complex
statutory requirements and financial position of the Company, no lender other than the
promoter group Company, is ready to lend money to the Company. The aforesaid restrictive
order has built such adverse circumstances, wherein the Company was not able to move ahead
with its project and various contracts and agreements which were entered into and for
which advances were paid have expired long back. The management, in the previous
financials has written off such advances, pre-operative expenses, consultancy fee and
capital work in progress to give true and fair picture of the financials, though such
writing off completely eroded the net worth of the Company.
The Auditors of the Company has taken note of the same and qualified their Report
raising their apprehension on the going concern status of the Company. The management has
given their detailed comments on such qualification of the Auditor's at the later part of
this Report. Though it is pertinent to note that the ability of the Company to continue as
a going concern is significantly dependent on getting a favourable order from SAT and the
management is confident for such favourable order.
8. Details in respect of adequacy of internal financial controls with reference to the
Financial Statements.
The Company has adequately adopted the procedures, criteria and mechanism to ensure the
proper internal control, suitable policies and guidelines as required under various
provisions of the Companies Act, 2013 and the Listing Agreement are in place. The
following policies adopted by the Company, which focuses on comprehensive management,
control and compliance with different rules and regulations as prescribed under various
laws applicable to the Companies.
1. Vigil Mechanism Policies/Whistle Blower Policies,
2. Risk Management Policy
The said policies ensure reduction of possible threats of fraud, the orderly and
efficient conduct of the business of the Company. These policies and guidelines are
adequately monitored by the designated Committees of the Board.
The Company in addition to the above has in place a proper system of internal audit
that is adequate in respect to the size and operations of the Company. M/s Amar Jeet Singh
& Associates, Chartered accountants had been appointed as the Internal Auditor of the
Company for the financial year 2016-17. They had adequately conducted the Quarterly
internal audit exercise within the terms of regulatory requirements. During the Audit
Process, no material discrepancies were reported by him. The Company prepares the
financial information/reporting as per the requisite requirements of the Companies Act,
2013 and the Listing Regulations, and place it to the Audit Committee and Board for the
approval, once approved the said financial results are submitted to the stock exchange and
also placed on the website of the Company. The Internal Auditors are empowered with the
facility to directly report to the Audit Committee of the Board of Directors of the
Company.
9. Subsidiary/ Joint Ventures/ Associate Companies During the period under review, the
Company neither has any Subsidiary nor any Joint Venture or Associate Company. Since, the
Company is not having any Subsidiary accordingly no policy has been formulated for
determining Material Subsidiaries.
10. Performance and financial position of each of the subsidiaries, associates and
joint venture companies included in the consolidated financial statement.
The Company is not having any Subsidiary, Joint Venture or Associate Company.
11. Deposits
During financial year 2016-17 the Company has not accepted any deposits under the
provisions of Chapter V of Companies Act, 2013.
12. Statutory Auditors & Auditor's Report
M/s VATSS & Associates, Chartered Accountants, (ICAI Firm Registration No.-
017573N) were appointed as Statutory Auditors of the Company for a period of 5 years in
the Annual General Meeting (AGM) of the Company held on 25th September, 2015
subject to ratification of their appointment by the members in every subsequent AGM. They
have completed the audit of the Company for the financial year 2016-17. The Board hereby
recommends appointment of M/s VATSS & Associates, Chartered Accountants as the
statutory auditors of the Company for the financial year 2017-18 for ratification of the
members. Members are requested to consider and ratify the same.
13. Auditor's Report
The Auditors have qualified their Audit Report issued to the Company, by stating the
following qualification:
"A ttention of the matters is invited to note no. 28(d) of the notes to accounts
regarding the financial statements of the company having been prepared on a Going Concern
basis, not withstanding that due to continuous losses incurred by the company during the
past years and current year, the accumulated losses of the Company have far exceeded its
Net Worth resulting in negative net worth on Balance Sheet date. The company has
written-off a substantial part of its Fixed Asset during^ earlier years. This situation
indicates the existence of a material uncertainty that may cast a significant doubt on the
company's ability to continue as going concern."
The Board considered the aforesaid qualification and recorded its comment as below:
The board noted qualified opinion of the Auditors raising the concern on the ability of
the Company to continue as going concern.
It has been informed continuously, and it is a matter of record also that the losses
suffered during the previous years were on account of expenses incurred as pre-operational
expenses relating to the project implementation. In the year 2011 the Company had
undergone an investigation by the Securities and Exchange Board of India (SEBI) relating
to the market manipulations using GDRs. SEBI in the aforesaid matter had forthwith issued
its interim orders prohibiting the Company from entering into the capital market, or
issuing any kind of securities and altering its capital structure. This prohibition had a
considerable impact on the capacity of the Company to raise funds and thus the project
implementation process got slowed. The SEBI in the investigation process has issued their
final order on 23rd October, 2013 confirming the aforesaid restrictions on the
Company effectively for a period of 8 years approx., from the date of final order. The
Company has challenged the final order at Securities Appellate Tribunal, where the
proceeding is ongoing and still not got finality, your Company is expecting the order of
the SAT in near future.
This restrictive order has brought this Company to a position where no project could be
implemented and no source of income could be generated till date, which has in turn
resulted into the accumulated losses for the Company over the years. This has further
impacted the Company that it could not carry its business further and all the project
implementation was stalled. Gradually, all the contract entered into by the Company and
advances paid in this behalf expired and become obsolete, due to nonpayment of balance
funds, which also resulted into not arranging the necessary machineries for the project
and management in this respect and with an intention to give true and fair picture of the
financials, was bound to take a call for the writing off of all such advances/fixed assets
made to the parties.
Before taking decision of such writing off of substantial part of the advances/fixed
assets during the earlier years, the Board also took note of the auditor's observation,
which was made by them in the meeting held on 10th February, 2015. The Board
recorded the fact that the writing off of such assets were required and mandated to
give a true and fair picture of the financial statement.
The Board further took legal opinion on this matter from one of the leading law houses
in Delhi, and after considering the various aspects of the legal opinion and also after
considering the possibilities of recovery of the Capital advances or the enforceability of
such Contracts (including novation), consented to write off these advances.
The Board, based on the aforesaid decision further decided to write off other Fixed
Assets and Advances, which is having similar nature as aforesaid and accordingly various
advances, fixed assets and pre-operative expenses were written off.
The management is hoping to receive a favourable order from the SAT proceedings, which
Company has initiated against the restrictive orders of the SEBI, which will positively
impact the future of the Company. In view of the willingness to start the project once the
favourable business conditions are in, the Management has taken stand to continue the
accounting of the business as a Going Concern.
14. Share Capital
During Financial Year 2016-17, the Company's Capital Structure remains unchanged.
15. Extract of the annual return
The extract of the annual return in Form No. MGT - 9 is annexed as Annexure -01.
16. Conservation of energy, technology absorption and foreign exchange earnings and
outgo
The details of conservation of energy, technology absorption, foreign exchange earnings
and outgo are as follows:
(A) Conservation of energy and Technology absorption The Company has not initiated its
operations till date, no particulars in respect of conservation of energy and technology
absorption have been furnished as per Section 134(3)(m) of the Companies Act, 2013.
(B) Foreign exchange earnings and outgo
There were no foreign exchange earnings and outgo during the year under review.
17. Corporate Social Responsibility (CSR)
The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy)
Rules, 2014 is enclosed as Annexure-
02. The members be apprised that the said policy is now not effective as the CSR
Committee of the Company has been dissolved w.e.f 26th May 2017.
Please note that the said committee was established by the Board in compliance with the
provisions of Section 135 of the Companies Act, 2013 and rules made thereunder on 29th
May, 2014. The said Committee was comprising Mr. Pranav Kumar, Mr. Sameer Rajpal and Mr.
Deep Kumar Rastogi as its members. Further, on 26th May, 2017, your board after
considering the provisions of Rule 3(2) of the Companies (Corporate Social Responsibility
Policy) Rules, 2014, and also after taking into consideration of the factual threshold
limits to constitute the Committee as mentioned in section 135 (1) of the Companies Act,
2013, noted that the requirement to constitute the Committee is no more required for the
Company and accordingly the board decided to dissolve the same with immediate effect.
18. Directors
(A) Changes in Directors and Key Managerial Personnel (KMP):
• Cessation of Directors/KMP:
No cessation of Director or KMP of the Company had taken place during the financial
year under reporting.
• Appointment of New Directors/KMP:
Ms. Monika Moorjani who had resigned from the office of Director of the Company on 23rd
March, 2016 was again appointed as director of the Company under I ndependent- Non
Executive Category w.e.f. 27th May, 2016. She has further resigned from the
Board w.e.f. 14th August, 2017.
• Reappointment of Directors:
In terms of the provisions of Section 152(6) of Companies Act, 2013, Mr. Deep Kumar
Rastogi, Director of the Company is liable to retire by rotation at the ensuing Annual
General Meeting and being eligible, has offered himself for re-appointment. Brief resume
of director seeking reappointment along with other details as stipulated under regulation
36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are
provided in the AGM Notice for convening the Annual General Meeting.
(B) Declaration by an Independent Director(s) & reappointment, if any:
All Independent Directors have submitted declarations that they meet the criteria of
independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation
16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
(C) Details of training imparted to Independent Directors: Your Company has the policy
that every new Independent Director inducted on the Board attends an orientation program
in which he/she is familiarized with the strategy, operations and status of the Company.
They are further briefed with history of the Company and also handed over a Copy of the
bunch of Company's Annual Reports, its Memorandum and Articles of Association, various
policies and the Code of Conduct of the Company.
On November 14, 2016, a familiarization program was held for Independent Directors. In
that session, a detailed discussion was held on the applicability and various aspects of
GST (Goods and Services Act) and its impact on the Company, if any. All the Independent
Directors i.e. Mr. Pranav Kumar, Mr. Sameer Rajpal and Ms. Monika Moorjani were physically
present in the aforementioned programme. The said familiarization programme for Directors
is available on the Company's website with below link:
http://www.cals.in/Data/Familiarisation_Program.pdf Further, at the time of appointment of
an Independent Director, the Company issues a formal letter of appointment outlining
his/her role, functions and duties/responsibilities as a Director. The Format of the
letter of appointment is provided on our website, a web link thereto is given below:
http://www.cals.in/Data/Documents/Cals%20Refineries%
20-%20OD%20-%20Model%20LOI%20-%20Independent %20Directors.pdf
(D) Formal Annual Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 the performance evaluation of every Director
has been carried out by the Company. The Board has adopted and implemented the criteria
for performance evaluation of every Director, which focuses on various aspects of the
functioning of members of Board and Committees, such as attendance at meeting,
contribution, awareness towards Company's development etc. The result of aforesaid
evaluations was noted by the Nomination and Remuneration Committee in their meeting held
on 26th May, 2017.
19. Number of meetings of the Board of Directors
The Board met 5 times during the year, the details of which are given in Corporate
Governance report forming part of this annual report. The intervening gap between any two
meetings was within the prescribed time limit under Companies Act, 2013.
20. Audit Committee
During the year, the Audit Committee was constituted with Mr. Sameer Rajpal, Chairman
of the Committee, Mr. Pranav Kumar and Mr. Deep Kumar Rastogi.
A detailed description about the audit Committee is given in the Corporate Governance
Report, forming part of the Director's Report.
Further all recommendations made by Audit Committee during the year were accepted by
the Board.
21. Details of establishment of vigil mechanism for directors and employees
The Company has in place a Vigil Mechanism/ Whistle Blower Policy framed as per the
requirements of Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism
policy has also been displayed on Company's website at
http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20%20Vigil%20Mechanism.pdf
22. Nomination and Remuneration Committee
In terms of Compliance of Section 178 of the Companies Act, 2013 and Regulation 19 of
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company
has a duly constituted Nomination and Remuneration Committee. The detailed description
about the Committee is given in the Corporate Governance Report, forming part of the
Director's Report. Remuneration Policy has been framed, adopted and implemented by the
Nomination and Remuneration Committee. During the year under review, the Nomination and
Remuneration Committee reviewed the Remuneration Policy for Directors, KMPs and other
employees and recommended no changes to be made in the Policy to the Board of Directors of
the Company. The said policy forms part of the Board's Report as Annexure- 03.
23. Particulars of loans, guarantees or investments under section 186
The Company has neither granted any Loans, extended any Guarantees nor made Investments
during the Financial year 2016-17, pursuant the provisions of Section 186 of Companies
Act, 2013.
24. Particulars of contracts or arrangements with related parties
The Company has not made any contracts with related parties pursuant to Section 188 of
Companies Act, 2013.
However, your Company has been obtaining loan from Nyra Holdings Pvt. Ltd. a related
party as per Section 2 (76) of the Companies Act, 2013, to meet its day to day financial
needs and also to meet the statutory dues, necessary compliances and the legal expenses.
Such arrangements of obtaining loan from related party falls into the category of material
related party transaction as per Regulation 23 of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
As submitted in the previous year report that your Company had obtained your approval
for the said material related party transaction with Nyra Holdings Private Limited an
entity belonging to the promoters' group. Further to apprise you that the Nyra Holdings
Private Limited during the year, i.e., on 28th March, 2017 had assigned the
entire loan facility extended to the Company, i.e. Rs. 9,26,70,000/- to its parent/holding
Company Spice Energy Pvt. Ltd. (another promoter group Company) under an internal
restructuring of investments.
Your Company in this context, are moving a special resolution for your approval in the
Notice of the ensuing Annual General Meeting and have also explained the detailed
transaction in the concern explanatory statement of the said Notice. Moreover, the Company
has formulated a policy on materiality of related party transactions and also on dealing
with Related Party Transactions which can be downloaded from the link mentioned below:
http://www.cals.in/Data/Documents/Cals%20Refineries%20-%20OD%20-%20RPT%20Policy.pdf
25. Managerial Remuneration
Disclosure pursuant to Section 197(12) of Companies Act, 2013 and Rule 5 of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided below:
(i) The Ratio of the remuneration of each Director to the Median remuneration of the
employees of the Company for the year 2016-17:
| Directors |
Nature of Directorship |
Ratio |
| Mr. Deep Kumar Rastogi |
Whole time Director & Executive Chairman |
N.A.* |
| Mr. Pranav Kumar |
Non-Executive Independent Director |
1:16.937 |
| Mr. Sameer Rajpal |
Non-Executive Independent Director |
1:16.937 |
| Mrs. Monika Moorjani |
Non-Executive Independent Director |
1:38.108 |
*Mr. Deep Kumar Rastogi had opted not to withdraw any remuneration while he was
appointed as Whole Time Director.
(ii) The percentage increase in remuneration of each Director, CFO, CEO, CS or Manager
in the financial year:
The remuneration of any Director of the Company was not increased/changed during the
financial year 2016-17.
The remuneration as per Section 17 (1) of Income Tax Act, 1961 of Company Secretary of
the Company and Chief Financial Officer of the Company has been increased by 7.43% and
8.88% respectively from Financial Year 2015-16.
(iii) the percentage increase in the median remuneration of employees in the financial
year:
The median remuneration of employees has been increased from the previous year due to
the increase in remuneration paid to them.
(iv) the number of permanent employees on the rolls of Company:
During the year 2016-17, there were 3 employees on the rolls of the Company.
(v) average percentile increase already made in the salaries of employees other than
managerial personnel in the last financial year and its comparison with the percentile
increase in the managerial remuneration and justification thereof and point out if there
are any exceptional circumstances for increase in the managerial remuneration: As reported
above total 3 employees are on the rolls of the Company, out of which two being the KMP'S
(CS & CFO) and one other employee in the operations department. There has been
increase in the remuneration of all three employees including the Company Secretary and
CFO of the Company during the reporting period. The average percentage increase in the
remuneration of the Managerial Personnel is 8.15% as against the percentage increase of
the other employee is 6.02%. The said increase in the remuneration of the managerial
personnel vis-a-vis another employees is nominal and almost parallel. However, the Company
Secretary and Chief Financial Officer are responsible for ensuring various Compliances,
maintenance of books of accounts, and handling other litigations of the Company, though
the work relating to the operation department (where another employee is working) is very
limited and confined, as the project could not take off. Further the increase in the
remuneration to the employee is to mitigate the inflation effect.
(vi) The Remuneration is as per the remuneration policy of the Company.
(vii) The names of top 10 employees in terms of remuneration are:
| S. No. |
Name of employee |
Designation |
| 1 |
Mr. Raman Kumar Mallick |
Chief Financial Officer |
| 2 |
Mr. Suvindra Kumar |
Company Secretary |
| 3 |
Mr. Debashish Bera |
Officer Commercial |
(viii) There were no employees in the Company during the year who were in receipt of
remuneration in excess of Rs. 1,02,00,000/- per annum or Rs. 8,50,000/- per month.
26. Secretarial Audit Report
In terms of the provisions of Section 204 of the Companies Act, 2013 and rules made
there under, Mr. Kumar Bhavesh Kishore, Proprietor (CP No. 11598), M/s KBK & CO,
Company Secretaries, Delhi was appointed as the Secretarial Auditor of the Company during
the Financial Year 2016-17.
A Secretarial Audit Report in Form No. MR-3 for the financial year 2016-17 given by the
Secretarial Auditors of the Company is annexed as Annexure-04 with this report.
The following disclosures has been made by the Secretarial Auditor in his report,
requiring explanation:
"Share application money for an amount of Rs 1,57,57,463/- remains pending for
allotment."
Explanations given:
Since the situation w.r.t the circumstances in this matter has not been changed, hence
the explanation to the Secretarial Auditor was the same as given earlier, which state as
below:
It has been explained to the Secretarial Auditor that the above- mentioned amount of
Rs. 1,57,57,463/- is part of FDI, which was received from M/s Abboro Limited, a foreign
Body Corporate. This amount is pending for allotment due to the restrictive order of SEBI
dated 23rd October 2013 which has restricted the Company from accessing the
capital markets and/or issuing shares and/or any other instruments convertible into equity
or altering its capital structure. Though the Company through its letter dated 12th
May, 2015 and reminder letter dated 29th May and 7th December, 2015
had asked for a special permission from SEBI, under intimation of Registrar of Companies,
NCT of Delhi and Haryana, for the relaxation in its order, so that the equity shares could
be allotted to M/s Abboro Limited.
The same fact has been suitably recorded by the Secretarial Auditor in his Report.
27. Risk Management Policy
The Company has formulated its Risk Management Policy in accordance with the legal
requirements, which majorly includes procedure and criteria for identification and
mitigation of risk. Also, it enumerates comprehensive system for risk management. Audit
Committee of the Board of Directors is entrusted with the responsibility to manage
Company's risk in the best possible manner.
The Company had also constituted a Risk Management Committee, which was later dissolved
by the Company w.e.f. 09.02.2016 in terms of Regulation 21 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015. However, it was ensured that
the Risk Management System/ policy of the Company would now to be looked after by the
Audit Committee of the Company.
28. Management Discussion and Analysis Report
The Management Discussion and Analysis Report as required under Regulation 21(1) of the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of
this Report.
29. Corporate Governance Report
Your Company believes in good Corporate Governance with a view to perform various
compliances, as prescribed under various laws and regulations which are applicable to the
Company for the time being in force. A separate section on Corporate Governance forming
part of the Director's Report and a certificate from the Practicing Company Secretary
confirming compliance of the Corporate Governance Norms as stipulated in Regulation 34 (3)
read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirement)
Regulations, 2015 is included with this Annual Report.
30. Listing of Securities
The Securities of your Company are currently listed on Bombay Stock Exchange Limited
(BSE Limited) with ISIN- INE40C01022 and scrip code 526652. The Company has partly paid
listing fee to the Bombay Stock Exchange for the financial year 2016-17. All compliances
under the listing regulations are being made in regular course and in prescribed time
period.
31. Directors' Responsibility Statement
Your Directors make the following statement/confirmations in terms of the provisions of
Section 134(5) of the Companies Act, 2013 that-
(a) in the preparation of the annual accounts for the financial year ended on 31st
March, 2017, the applicable accounting standards have been followed along with proper
explanation relating to material departures;
(b) the appropriate accounting policies have been selected and applied 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 2016-17 and
of the profit and loss of the company for that period;
c) the proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the company and for preventing and detecting fraud and other
irregularities;
(d) the annual accounts for the financial year ended on 31st March, 2017
have been prepared on a going concern basis; and
(e) the directors, have 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.
32. Acknowledgements and Appreciations
Your Directors would like to express their sincere thanks to various stakeholders of
the Company i.e., Regulatory Bodies, Government, Bankers, Shareholders/Investors, business
associates etc. for the Cooperation and assistance received from them. The Board of
Directors would also like to appreciate them for extending their trust, reliance,
sustained support and encouragement during the year under review.
The Directors would also like to place their deep appreciation to the management and
the employees of the Company, who have been supporting the Company with their dedication,
hard work and commitment at all levels and in the adverse circumstances.
For and on behalf of the Board of Directors
| (Deep Kumar Rastogi) |
(Sameer Rajpal) |
| Executive Chairman |
Director |
| DIN :01229644 |
DIN :05184612 |
| Place : New Delhi |
|
| Date : 14.08.2017 |
|