Your Directors present the Twenty Eighth Annual Report of your Company together withthe Audited Statement of Accounts for the year ended March 31 2016.
Financial Results standalone and Consolidated
| || || |
( Rs. in lacs except per share data)
| ||Standalone ||Consolidated |
|Particulars ||Current Year 2015-16 ||Previous Year 2014-15 ||Current Year 2015-16 ||Previous Year 2014-15 |
|Total Income ||23278.43 ||60368.01 ||29948.26 ||38246.07 |
|Total Operating expenditure ||27895.17 ||27471.95 ||45777.31 ||47466.15 |
|EBITDA ||(4616.74) ||32896.06 ||(15829.05) ||(9220.08) |
|Finance costs ||2222.33 ||2266.12 ||4492.55 ||2634.17 |
|Depreciation/amortization ||4006.34 ||3905.73 ||4113.82 ||4496.14 |
|(Loss)/ Profit before exceptional items and tax ||(10845.41) ||26724.21 ||(24435.42) ||(16350.39) |
|Exceptional Items ||17518.89 ||24282.09 ||56879.89 ||65631.14 |
|Profit/(Loss) before tax ||6673.48 ||51006.30 ||32444.47 ||49280.75 |
|Provision for taxation ||8014.56 ||6492.42 ||8049.41 ||6648.20 |
|Profit/(Loss) after Tax/Net Profit/(Loss) for the ||(1341.08) ||44513.88 ||24395.06 ||42632.55 |
|year || || || || |
|Add: Net share of Profit in associates ||- ||- ||- ||(0.12) |
|Add: Net minority interest in Profit of subsidiaries ||- ||- ||(11.24) ||39.25 |
|Profit/(Loss) after Tax/Net Profit/(Loss) for the ||(1341.08) ||44513.88 ||24383.82 ||42671.68 |
|year || || || || |
|Add: Balance brought forward from previous year ||213301.04 ||177089.54 ||230590.94 ||181799.93 |
|Balance available for appropriation ||211959.96 ||221603.42 ||254974.75 ||224471.61 |
|Less: Appropriations || || || || |
|Final dividend (proposed) ||- ||2303.93 ||- ||2303.93 |
|Interim dividend ||2303.93 ||5529.42 ||2303.93 ||5529.42 |
|Tax on dividend ||469.03 ||469.03 ||469.03 ||469.03 |
|Transfer to Statutory reserve ||- ||- ||12.75 ||- |
|Add: Transfer from General Reserve ||- ||- ||- ||14421.70 |
|Balance carried forward to Balance Sheet ||209187.00 ||213301.04 ||252189.04 ||230590.94 |
|Earnings per share || || || || |
|Basic ||(2.91) ||96.60 ||52.92 ||92.61 |
|Diluted ||(2.91) ||96.30 ||52.92 ||92.31 |
RESULTS OF OPERATIONS AND THE STATE OF COMPANYS AFFAIRS
The total revenue from operations for the year ended March 31 2016 was at Rs.14133.03 lacs as compared to Rs. 16103.11 lacs for the year ended March 31 2015.
During the year Profit under exceptional items reported Rs. 17518.89 lacscompared to Rs. 24282.09 lacs in previous year. It includes (a) gain of
Rs. 53708.88 lacs on sale of investments in shares (net of expenses) of IEX and DGCX(b) provision for / write off of other than temporary diminution in the value ofinvestments in / loans and advances to subsidiaries at Rs. 36189.99 lacs.
Your Company has reported loss before finance cost depreciation exceptionalitems and tax of Rs. 4616.74 lacs compared to Profit of Rs. 32896.06 lacs in theprevious year. Profit before tax was Rs. 6673.48 lacs compared to Rs. 51006.30 lacs inthe previous year.
Your Company has reported a net Loss during the year of Rs. 1341.08 lacs ascompared to Profit of Rs. 44513.88 lacs in the previous year.
Your Companys operational income remained stable in 2015-16.
The fluctuation in Profit after tax compared to previous year was mainly onaccount of exceptional items and one time items.
Your Company expects challenges to continue in the current financial year2016-17 as well.
The consolidated financial statements of the Company and its subsidiaries prepared inaccordance with Accounting Standard 21 23 & 27 issued by the Institute of CharteredAccountants of India form part of the Annual Report and are reffected in the consolidatedfinancial statements of the Company.
Pursuant to the provisions of the Section 136 of the Act the financial statements ofthe Company consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
The consolidated Net Profit for the year ended March 31 2016 was at Rs. 24383.82lacs against Rs. 42671.68 lacs for the previous year ended March 31 2015. Shareholders'funds as at the year ended March 31 2016 was at Rs. 311829.03 lacs as against Rs.292827.18 lacs as at March 31 2015.
BUSINESS OVERVIEW: FISCAL YEAR 2015-16
63 moons technologies limited (63 moonsTM) (Formerly Financial Technologies (India)Limited (FTIL)) has been facing a lot of challenges in the aftermath of the 2013
National Spot Exchange Limited (NSEL) crisis. Your Company has the highest respect forIndian Judiciary and will use every resource available to counter allegations against it.Your Company believes that the truth will ultimately prevail. In the meantime yourCompany continues to provide all assistance to every investigative agency in the country.In the last three years your Company has made every e_ort to negate the impact of theNSEL payment default in its business and will continue to endeavour to grow and createshareholder value.
Technology Business & Outlook
1. Exchange Technology
During the year under review your Company was successful in maintaining a healthyrelationship as a vendor and providing services as per the technology contract with MultiCommodity Exchange of India Ltd. (MCX) Metropolitan Stock Exchange of India Ltd. (MSEI -formerly popular as MCX-SX) and Indian Energy Exchange Ltd (IEX). During the year underreview in the exchange technology business your Company had a mixed year with volumes onMCX remaining _at and IEX growing which had a positive impact on its exchange technologyrevenues. However MSEI saw decline in volumes that had a minor negative impact. Theoutlook for 2016-17 is neutral to positive for the exchange technology business. With themerger of Forward Market Commission (FMC) with Securities and Exchange Board of India(SEBI) and the expectations of clearance for MCX to launch Options MCX may witness bettervolumes. However this is subject to clearance and subsequent launch. We expect IEXvolumes to remain stable and may grow depending on the macro generation and surplus ofpower for the day-ahead market.
2. Brokerage Technology Solutions
Business witnessed a challenging year in 2015-16 due to the volatility of the marketand decreasing margins for the brokerages. However there are new opportunities of growththat are now visible in the area of premium mobility and online products. The outlook forthe Member Technology business is improving and the Company expects the businessenvironment to improve in the ensuing years. With the upturn in the economy and favorablepolicy environment Indian Capital markets are positioned for strong growth in theforthcoming years. Your Company is now working on creating newer products and services andbelieves is well positioned to take advantage of the anticipated growth in the capitalmarkets through its Brokerage Technology Solutions Business.
Without prejudice to its legal rights and remedies your Company has successfullycompleted the divestments of its balance holdings in Indian Energy Exchange Limited (IEX)and Dubai Gold and Commodities Exchange (DGCX).
Your Company is in the process of implementing vision for Digital India@2025 as a part of FT 3.0. The New Ventures division has closely worked on variousnew age technologies during the year to build a robust and fiexible technology framework.Digitalization of an idea is the demand of the times and New Ventures division is creatingstate-of-art technology framework with in-built fiexible blocks for enabling ideadigitalization. It will help the vision FT 3.0 to become technology partner ofchoice for new digital giants in different sectors.
A New Name and a New Vision
With due approval from the Registrar of Companies Chennai dated May 27 2016 the nameof your Company has been changed from "Financial Technologies (India) Limited"to "63 moons technologies limited". The new name reffects the Companyscore philosophy "to be a global digital ecology" through technology innovation.We are now transitioning from being just a financial technologies company to a companythat can leverage its core strengths of technologies and innovations into building newbusiness leveraging existing IPRs.
In line with our Founders vision of "Digital India @2025" the company willnow empower itself with a new genesis of business and growth. 63 moonsTM will endeavor topartner with several emerging new-tech companies in sectors like e-commerce digitalmedia education sports life sciences to name a few. We aim to be leaders in thedigital ecology that will govern the future. Needless to add 63 moonsTM will do so inaccordance with law and in compliance with all judicial decisions.
In the wake of the crisis at NSEL your Company has been made a party to severallitigations over the last three years. Further the Ministry of Corporate Affairs("MCA") issued a draft order dated October 21 2014 for amalgamation of yourCompany with NSEL under section 396 of Companies Act 1956 and filed a petition interalia under Section 397 of the Act with the Company Law Board for removal andsupersession of the Board . Your Company has opposed the draft order for merger and haschallenged the petition for removal and supersession of the Board in the Company LawBoard. The MCA passed a final order of amalgamation on February 12 2016 ("FinalOrder"). Your Company has challenged the Final Order as well in the HonbleBombay High Court and the same has been stayed by the Honble Bombay High Court.
Further in a suit filed by L.J. Tanna Private Limited & Ors. your Company hasbeen restrained from distrbuting any dividend amongst its Shareholders and/or pay anyremuneration at the increased rate to its Managing Director/Directors/Senior Employees.
The MCA has filed a Petition inter alia under the provisions of Sections 388B 397 398and 401 of the Companies Act 1956 before the Company Law Board seeking replacement of thecurrent board of directors of the Company. Your Company has opposed the same. On June 302015 the Company Law Board passed an order restraining the Company from sellingalienating or creating third party rights in its assets or investments. This order wasappealed against by your Company before the Madras High Court and vide Order dated August10 2015 the order of June 30 2015 was modiffed and the restraints on the Company wererestricted only in respect of its immovable assets. The order of the Madras High Court wasset aside by the Honble Supreme Court of India vide its order of April 18 2016 inan appeal filed by the MCA. The order of the Supreme Court restored the order passed bythe Company Law Board of June 30 2015. However the Supreme Court permitted your Companyto incur expenses for its day to day business and granted liberty to your Company to seekmodiffcation of the order dated June 30 2015 from the Company Law Board. Since theCompany Law Board was dissolved the National Company Law Tribunal (NCLT) (earlier CLB)vide its Order dated June 25 2016 has constituted a Committee comprising five membersi.e. two Independent Directors and Managing Director of the Company Retired Judge of theHonble Supreme Court and a nominee of Union Of India both of whom having veto powerindividually to consider viz. Sale of investments held by the Company in compliance withany order/direction passed by any Regulatory or Staturoty Authority in India or Abroad asan when such sale is proposed by the Company treasury operations of available surplusfunds and funding of the working capital requirements of the subsidiaries of the Companyby the Company. This Committee is formed pending hearing and final disposal of theabovesaid Company Petition.
Your Company continues to defend itself in various other litigations filed against it.The Economic OFFences Wing ("EOW") had issued a Notice dated February 28 2015to your Company inter alia restraining / restricting your Company from dealing with itsassets. The Honble Bombay High Court has granted a stay vide its order dated June12 2015 in respect of the direction given in EOWs abovementioned letter restraining/ restricting on the dealing of assets. Further Economic OFFence Wing (EOW) MumbaiPolice Mumbai vide its notice dated July 18 2016 secured the assets of the Company.The same was challenged by the Company before the Honble Bombay High Court. By anOrder dated August 01 2016 the Honble Bombay High
Court directed EOW to fille an Affidavit which interalia states that it has noobjection if the Company utilizes the funds secured by its above said notice forincurring expenses necessary towards the running of its ordinary course of day-to-daybusiness payment of salaries to its employees and payment of statutory dues. EOW obligedto the same by submitting the Affidavit before the Honble Bombay High Court.
Modulus USA has filed a case against the Company for alleged infringement of itstrademark. The Notice of Motion filed in the said suit is listed for hearing and finaldisposal on August 24 2016. The Company has strongly opposed these allegations. Except asstated above no material changes and commitments have occurred after the close of thefinancial year till the date of this Report which significantly afiects the financialposition of the Company.
Explanation to the Qualifications in Auditor Report
(A) Audit Report on standalone financial statements:
The Management explanation for qualification made by the Statutory Auditors in theirIndependent Auditors Report dated May 30 2016 on the Standalone Financial Statements forthe year ended March 31 2016 is as under: With respect to qualification regarding WritPetitions (WP) Public Interest Litigation (PIL) and Civil Suits which have been filedagainst the Company in relation to event occurred on NSELs trading platform whereinthe Company has been made a party in the WP and Civil Suits these matters are pending atvarious stages of adjudication. The Company has denied all the claims and contentions inits reply. There is no privity of contract between FTIL and the Petitioners. Themanagement of the Company is of the view that the parties who have filed the WP PILCivil Suits would not be able to sustain any claim against the Company. With respect tomention of First Information Reports/complaints/ notice registered/received againstvarious parties including the Company with the Economic OFFences Wing of the Mumbai Police(EOW) Central Bureau of Investigation (CBI) and MIDC Police Station Mumbai District.EOW Mumbai has presently filed 3 charge-sheets - on January 06 2014 June 2014 andAugust 04 2014. It is pertinent to note that till date no charge sheet has been filedagainst the Company. The matters are pending at various stages ofadjudication/investigation.
(B) Audit Report on consolidated financial statements:
The Management explanation for qualifications made by the Statutory Auditors in theirIndependent Auditors Reports dated May 30 2016 on the Consolidated Financial Statementsfor the year ended March 31 2016 are as under:
1. With respect to item no. 1 which pertains to the Company regarding Writ Petitions(WP) Public Interest Litigation (PIL) and Civil Suits which have been filed against theCompany in relation to event occurred on NSELs trading platform wherein the Companyhas been made a party in the WP and Civil Suits. These matters are pending at variousstages of adjudication. The Company has denied all the claims and contentions in itsreply. There is no privity of contract between the Company and the Petitioners. Themanagement of the Company does not foresee that the parties who have filed the WP PILCivil Suits would not be able to sustain any claim against the Company. With respect tomention of First Information Reports/ complaints / notice registered/received againstvarious parties including the Company with the Economic OFFences Wing of the Mumbai Police(EOW) Central Bureau of Investigation (CBI) and MIDC Police Station Mumbai DistrictEOW Mumbai has presently filed 3 charge-sheets - on January 06 2014 June 2014 andAugust 04 2014. It is pertinent to note that till date no charge sheet has been filedagainst the Parent Company. The matters are pending at various stages ofadjudication/investigation.
2. With respect to item no. 2 which are pertaining to the qualifications made by theStatutory Auditors of a subsidiary viz National Spot Exchange Limited (NSEL) in theirIndependent Auditors Report on its Consolidated Financial Statements for the year endedMarch 31 2016 which has been reproduced by the Statutory Auditors of the Company(63moons) in their Independent Auditors Report (Auditors Report) dated May 30 2016 on theConsolidated Financial Statements for the year ended March 31 2016 the explanation givenby the directors of NSEL and its subsidiary "Indian Bullion Market AssociationLimited" (IBMA) are as under: ("Company" in the qualifications below referto NSEL or IBMA as the case may be)
(i) Qualification 2(a) in Auditors Report:
As stated in note nos. 51 56 58 59 60 61 and 63 to the Financial Statement theCompany has been served with notices/letters/summons from various statutoryauthorities/regulators/ government departments and some purported aggrieved partiespertaining to the period prior to suspension of the exchange related operations from July31 2013. There are some writ petitions public interest litigations civil suitsincluding in representative capacity filed by and against the Company. Such mattersagainst the Company are either in progress or sub-judice before different forums. TheCompany may have civil / criminal liability arising out of one or more of the proceedingsinitiated against the Company. We are unable to comment on the consequential impact ifany in respect of the same in the Financial Statement." [Refer note 68 69 72 7375 76 and 78 of the consolidated financial statements of the Group]
Investigating agencies are investigating genuineness of the warehouse receipts issuedby the Exchange as well as the frauds perpetrated by the erstwhile senior offcials of theExchange. Impact on financials if any can be ascertained only after investigations areconcluded and orders are obtained from Court. The Government by Gazette Notification SO2529(E) dated September 19 2014 has withdrawn the Gazette Notification SO 906(E) datedJune 5 2007 (by which NSEL was granted exemption u/s. 27 of the FCR Act 1952 for tradingof forward contracts of one day duration) with immediate effect and consequently thenotification SO 228(E) dated February 6 2012 and notification SO 2406(E) dated August 62013 ceased to be in force w.e.f. September 19 2014 as informed to the Company by theForward Markets Commission (FMC) vide letter dated November 5 2014. As the reply to thesaid SCN has been given and actions if any required due to SCN has been taken includingwithdrawal of the exemption itself company do not foresee any further consequences on theSCN. Further neither FMC nor Department of Consumer Affairs (DCA) has held NSEL guilty ofhaving violated any of the conditions of the exemption notification dated June 5 2007which was the subject matter of the SCN.
All contracts traded on the Exchange platform were proper and in consonance withapplicable laws exemption notifications and there were no violations in this regard. NSELhad obtained a legal opinion on the legality of the contracts traded by the members on theExchange platform.
Since the matters mentioned are under investigation/ sub-judice impact on financialstatement if any cannot be ascertained at this stage. Company is taking all steps todefend its position and currently unable to quantify the impact if any.
(ii) Qualification 2(b) in Auditors Report:
"The trade receivables other receivables loans and advances and deposits aresubject to confirmation and reconciliation. The management however does not expect anymaterial changes on account of such reconciliation / confirmation from parties. In manycases legal notices have been sent to the parties; however we are unable to form anyopinion on the recoverability of the outstanding balances of such parties.
The Company may be exposed to liabilities in case of any adverse outcome of theseinvestigations / enquiries or legal cases or any other investigations as referred aboveenquires or suits which may arise at a later date. In the light of the above the outcomeof which is not presently known and is uncertain at this stage we are not able to commenton the impact in respect of the same on these Financial Statements. Also the mattersstated above could also have a consequential impact on the measurement and disclosure ofinformation provided but not limited to Profit
/ (loss) before tax provision for tax cash flow statement segment information andearnings per share for the year ended March 31 2016 in these Financial Statements."
NSEL and IBMA are following up with the parties who have outstanding receivables andhave sent legal notices in all suitable cases. Further legal steps are being explored bythe NSEL and IBMA looking at the materiality aspect of the outstanding amounts. Theconsequential impacts of the aforesaid qualifications are dependent on the outcomes of thevarious investigations/ hearings pending in various fora and hence presently not knownand is uncertain at this stage.
(iii) Qualification 2(c) in Auditors Report:
"As stated in note no. 42 (a) and (b) of Notes to Accounts the Company hadrendered services to one M/s SNP Designs Pvt. Ltd (SNP) relating to trade in futurecommodity contracts in earlier financial years. At the end of the year a sum of Rs.774718046/- was due and receivable from SNP. The Managing Director and majorityshareholder of SNP is Mrs. Shalini Sinha wife of Mr. Anjani Sinha (Director and KMP atIBMA). This related party relationship was not informed by Mr.Anjani Sinha to the Company.No money has been received from SNP despite substantial amounts dues and outstanding. SNPdenied having any liability to pay to the Company and the matter is under dispute. It hasbeen informed by management that such transactions were carried out on the instructionissued by erstwhile- director of the Company Mr. Anjani Sinha who was managing the Affairsof the Company." [Refer note 67(b) of the consolidated financial statements of theGroup]
Post the crisis that ensued at NSEL NSEL appointed an Internal Enquiry Committee (IIC)to investigate and report on matters in relation to the crisis. IIC also covered tradesundertaken by IBMA on future commodity exchanges on behalf of SNP Designs Pvt Ltd (SNP) interms of an agreement signed between IBMA and SNP. IIC observed that such trades wereexecuted on the directions of erstwhile Director and Key Managerial Personnel Mr. AnjaniSinha and as per the available records Mr. Anjani Sinha was exclusively dealing with SNPand no e_orts were made by him to recover the outstanding from SNP. No funds were receivedby IBMA during the course of the trades. Board of IBMA did not approve of such tradesexecuted on behalf of SNP. The trades for SNP were executed by Mr. Anjani Sinha withoutinforming the board.
Pursuant to the forensic audit report of Grant Thornton India LLP the IBMA came toknow that Mrs. Shalini Sinha wife of erstwhile director and KMP Mr. Anjani Sinhawas the Managing Director and major shareholder of SNP Designs Pvt. Ltd. The details ofsuch relationship were not disclosed by Mr. Anjani Sinha to the board of directors. SNPhad confirmed the balance outstanding to IBMA as on March 31 2013 and continuedtransacting with IBMA until July 2013. Later when demand was raised by IBMA SNP deniedowing any liability to IBMA. IBMA sent a legal notice rebutting their contention inresponse to their reply. In the wake of such irregularities and on directions receivedfrom the holding Company NSEL Mr. Anjani Sinha was removed from the Board of Directors ofIBMA on October 23 2013. IBMA has filed a civil suit in the Honble Bombay Highcourt under Civil jurisdiction praying for directions to SNP to pay the outstanding sumwith interest.
(iv) Qualification 2(d) in Auditors Report:
"As stated in note no. 42 (c) of Notes to Accounts the company has made provisionfor bad and doubtful debts in case of receivables for sale and services entered by thecompany to the extent of Rs. 204318363/-. In our opinion the Company should haveprovided 100% of all its bad and doubtful debts and other receivables. In our viewincluding the above other receivables and debtors as stated in paragraph 4(b) and 4(c)above the unrealized outstanding debtors and receivables should also have been providedfully in the books of accounts. Accordingly had the Company provided for the entireamount as provision for Bad and Doubtful Debts (including other receivables) the amount ofprovision should have been higher by Rs. 205471918/-.
The matters stated above could also have a consequential impact on the measurement anddisclosure of information provided under but not limited to statement of Profit and lossprovision for tax cash flow statement and earnings per share for the year ended March 312016 in these Financial Statements." [Refer note 67(f) of the consolidated financialstatements of the Group]
IBMA has taken steps towards recovery of the overdue receivables. IBMA on prudent basishas provided for doubtful debts of Rs. 2043.18 lacs in total during FY 2015-16 being 25%of the outstanding receivables of debtors and believes that such provision is currentlyreasonable.
3. With respect to item no. 3 which is pertaining to the qualifications made by theStatutory Auditors of a subsidiary FT Group Investments Private Limited(FTGIPL) vide their audit report on the consolidated financial statement ofFTGIPL for the year ended March 31 2016 which has been reproduced by the StatutoryAuditors of the Company in their Independent Auditors Report (Auditors Report) dated May30 2016 on the Consolidated Financial Statements for the year ended March 31 2016.
Qualification 3 in Auditors Report:
"The Companys subsidiary Bourse Africa Limited (BAL) holds a SecuritiesExchange Licence issued by the Financial Services Commission (FSC) to operate as aCommodity Exchange. Further to issues afiecting the ultimate holding company during thefinancial year 2014/2015 the FSC has requested the latter to dispose of its stake in BAL.As at date of this report the disposal has not yet taken place due to legal issuespresently being debated at the level of the Supreme Court in India and which afiect theability of the ultimate holding company to dispose of its assets.
The FSC has on March 30 2016 given a deadline of May 31 2016 for the change inshareholding to take place failing which the Securities Exchange Licence will be revoked.The ultimate holding company has on May 11 2016 made a request to the FSC for anextension of the deadline of May 31 2016 because of the ongoing legal cases in India.However as at the date of this report the FSC has not responded to this request.
Because of the significance of the licence for BAL we believe that if the revocationtakes place as stipulated in the letter of March 30 2016 this will deeply afiect thevery reason for existence of BAL in its capacity to act as a Multi-Asset Class Exchange.Such revocation will also afiect the carrying value of the investment." [Refer note49 of the consolidated financial statements of the Group]
The Company has on May 11 2016 made a request to the FSC for an extension of thedeadline of May 31 2016 because of the ongoing legal cases in India. As on at the date ofthis Audit report the FSC has not responded to this request.
Though FSC had granted time till June 30 2016 in view of NCLT referred to in the legalmatter para above based on our further representation to FSC as on date of this ReportFSC has granted time upto September 18 2016 to complete the stake sale in BAL.
During the year under review your Company paid one interim dividend totalling Rs.2303.93 Lacs ( Rs. 5/- per share on par value of Rs. 2/- per share). The final dividendof Rs. 5/- per share for the FY 2014-15 declared by the shareholders at the last AnnualGeneral Meeting held on September 30 2015 could not be paid as the Honble BombayHigh Court vide its order dated September 30 2015 in Notice of Motion no. 1490 of 2015 inSuit no. 121 of 2014 L.J. Tanna Shares & Securities Pvt. Ltd and Ors. Vs.Financial Technologies (India) Limited inter-alia directed that pending hearing andfinal disposal of Notice of Motion "FTIL shall not distribute any dividend amongstits shareholders and shall also not deposit any amount in compliance with Section 123sub-clause (iv) of the Companies Act 1956" (to be read as Companies Act 2013).Prior to the above mentioned High Court order your Company has paid consecutive dividendsfor the past 38 quarters which is in accordance with the sustainable dividend payoutpolicy of the Company and linked to its long term growth objectives.
TRANSFER TO RESERVES
During the year under review Rs. 41.98 lacs has been transferred to General Reservefrom Share Options Outstanding Account as per requirements of accounting standards.
There was no change in the Share Capital of the Company during the year under review.As on March 31 2016 the paid-up equity Share Capital of your Company stood at Rs. 921.57Lacs comprising of 46078537 equity shares of Rs. 2/- each. During the year under reviewthe Company has not issued any shares with differential voting rights nor has it grantedany Stock Option or Sweat Equity.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulations) is presented in a separate section forming part of thisAnnual Report.
DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES AND THEIR PERFORMANCEHIGHLIGHTS
During the year under review the following Companies have ceased to be theCompanys subsidiary step-down subsidiary and joint venture Company:
|Name of the Company ||Date of cessation |
|Financial Technologies Projects Private Limited ||June 18 2015 |
|(Mauritius) (Subsidiary Company) || |
|Capricorn Fin-Tech (Private) Limited (Subsidiary ||June 15 2015 |
|of Financial Technologies Middle East DMCC) || |
|(Step-Down Subsidiary) || |
|Dubai Gold and Commodities Exchange DMCC ||March 16 2016 |
|(Joint Venture) || |
Pursuant to the provisions of Section 129(3) of the Companies Act 2013("Act") a statement containing salient features of the financial statements ofCompanys subsidiaries associate companies and joint ventures is given in Form AOC-1as Annexure - I and the same forms part of this report. The statement also providesthe details of highlights of performance of subsidiaries associates and joint venturecompany and their contribution to the overall performance of the Company. The financialstatements of each of the subsidiary may also be accessed on the website of the Companywww.63moons.com. These documents will also be available for inspection on all working daysi.e. except Saturdays Sundays and Public Holidays at the Registered Office of the Companytill the date of AGM. The Policy for determining material subsidiaries as approved by theBoard may be accessed on the Companys website at the link: www.63moons.com/investors/corporate-governance/policies/Material-subsidiary-policy.pdf
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The report on CorporateGovernance as stipulated by Regulation 34 (3) read with Schedule V of the ListingRegulations 2015 is annexed hereto and forms part of this Annual Report. A Certificatefrom the Auditors of the Company confirming compliance with Corporate Governance norms isannexed to the report on Corporate Governance.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Reporting as required under Regulation 34 of ListingRegulations is not applicable to your Company for the financial year ended March 31 2016.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is available onCompanys website at www.63moons.com/investors/corporate-governance/policies/Related-Party-Transactions-Policy.pdf. ThePolicy is to ensure that proper reporting approval and disclosure processes are in placefor all transactions between the Company and Related Parties.
All arrangements / transactions entered by your Company with its related parties duringthe year were in ordinary course of business and on an arms length basis. During theyear your Company did not enter into any arrangement / transaction with related partieswhich could be considered material in accordance with Companies Act and ListingRegulations. All transactions with related parties were reviewed and approved by the AuditCommittee. Prior omnibus approvals are granted by the Audit Committee for related partytransactions which are of repetitive nature entered in the ordinary course of businessand are on arms length basis in accordance with the provisions of the Act read withthe Rules issued thereunder and the Listing Regulations. The details of the transactionswith related parties are provided in the accompanying financial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board.
The Company has identified the areas for CSR activities which are in accordance withSchedule VII of the Act some of which are highlighted as under:
Health and social welfare
The Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure - II and the same formspart of this report. The policy is available on the website of the company at the link:www.63moons.com/ investors/corporate-governance/policies/CSR-policy.pdf
The Board of the Company has formed a Risk Management Committee to monitor the riskmanagement policy for the Company. The risk management system monitors and identifiesrisks which are related to the business and overall internal control systems of theCompany. The Audit Committee has oversight responsibility in the areas of financial risksand controls. The risk management committee is responsible for reviewing the riskmanagement policy and ensuring its effectiveness.
The Audit Committee and the Board has also noted the risk prevailing in respect of whatis stated in the para relating to legal matters above effecting the business of theCompany.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has internal financial control systems which are commensurate with itssize and the nature of its operations. The Internal control system is improved andmodiffed on an on-going basis to meet the changes in business conditions accounting andstatutory requirements. Internal Audit plays a key role to ensure that all assets aresafeguarded and protected and that the transactions are authorized recorded and reportedproperly. The Internal Auditors independently evaluate the adequacy of internal controls.The findings and recommendations of the Internal Auditors are reviewed by the AuditCommittee and followed up till implementation wherever feasible. Further as perrequirement of clause (i) of sub-section (3) of section 143 of the Companies Act 2013('the Act') the statutory auditors have reported on the internal financial controls andopined that the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2016.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Anil Singhvi Mr. Berjis Desai Mr. Sunil Shahand Mr. Miten Mehta were appointed as Directors (Non-Executive Non-Independent) atthe Annual General Meeting of the Company held on September 30 2015. Further Ms. NishaDutt was appointed as Independent Director not liable to retire by rotation for a periodof five years at the annual general meeting of the Company held on September 30 2015.
Mr. Prashant Desai was appointed as a Director of the Company not liable to retire byrotation and as Managing Director and CEO of the Company for a period of 3 years w.e.fNovember 21 2014. Mr. Jigish Sonagara and Mr. Rajendra Mehta were appointed asDirectors liable to retire by rotation and as Whole-time Directors of the Company for aperiod of three years w.e.f November 21 2014. All the said appointments were approved bythe Members through postal ballot on August 30 2015. The Company has receiveddeclarations from all the Independent Directors of the Company confirming that they meetthe criteria of independence as laid down under Section 149(6) of the Act and Regulation16(1)(b) of the Listing Regulations.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompanys Articles of Association Mr. Rajendra Mehta (DIN: 00390504) Mr. JigishSonagara (DIN: 07024688) and Mr. Miten Mehta (DIN: 06749055) Directors retires byrotation at the forthcoming Annual General Meeting and being eligible offer themselvesfor re-appointment. The Board recommends their re-appointment for the consideration of theMembers of the Company at the ensuing Annual General Meeting.
The other Directors continue to be on the Board of your Company.
Pursuant to the provisions of section 203 of the Act the Key Managerial Personnel ofthe Company are - Mr. Prashant Desai Managing Director and Chief ExecutiveOfficer Mr. Jigish Sonagara Whole-time Director Mr. Rajendra Mehta Whole-timeDirector Mr. Devendra Agrawal Chief Financial Officer and Mr. Hariraj ChouhanCompany Secretary. There has been no change in Directors and Key Managerial Personnelduring the year.
The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the non-executive directors and executive directors. Pursuant to theprovisions of the Companies Act 2013 and the Listing Regulations a structured format hasbeen devised taking into consideration the various aspects of the Boardsfunctioning execution and performance of specific duties obligations and governance. Theperformance of the Board and individual Directors was evaluated by the Board after seekinginputs from all the Directors. The criteria for performance evaluation of the Boardincluded aspects such as Board composition and structure effectiveness of Boardprocesses contribution in the long term strategic planning etc. The performance of thecommittees was evaluated by the Board after seeking inputs from the committee members. Thecriteria for performance evaluation of the committees included aspects such as compositionof committees effectiveness of committee meetings etc.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors. The same was discussed in the Board Meeting that followed the meeting of theIndependent Directors at which the feedback received from the Directors on theperformance of the Board its Committees and Individual Directors was also discussed.
MEETINGS OF THE BOARD
The Board of Directors of the Company met eleven times during the financial year. Thedetails of Board Meetings are provided in the Corporate Governance Report which formspart of this Annual Report.
The Audit Committee comprises of 4 (four) members all of whom are Independent Directorsnamely Mr. Venkat Chary Justice R. J. Kochar (Retd.) Mr. A. Nagarajan and Mr. S.Rajendran. During the year 8 (eight) Audit Committee meetings were held and the detailsof which are provided in the Corporate Governance Report which forms part of this AnnualReport.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY COMPANY
Details of loans guarantees and investments have been disclosed in the FinancialStatements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in Annexure- III and the same forms part of this Report.
EXTRACT OF ANNUAL RETURN
Extract of Annual return of the Company in form MGT-9 is annexed herewith as Annexure- IV and the same forms part of this Report.
PARTICULAR OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197 (12) of the Act read with Rules 5(1) 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 and the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016 disclosures pertaining to remuneration and other details and a statementshowing the names and other particulars of the top ten employees in terms of remunerationdrawn and employees drawing remuneration in excess of the limits set out in the said Rulesare given in Annexure - V and the same forms part of this report.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has a whistle blower policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company at the link:www.63moons.com/investors/corporate-governance/policies/Whistle-Blower-Policy.pdf
NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy for selection and appointment of Directorsincluding determining qualifications independence of a Director Key ManagerialPersonnel Senior Management Personnel and their remuneration as part of its charter andother matters provided under Section 178 (3) of the Act. The details of the policy areprovided in the Corporate Governance Report which forms part of this Annual Report.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
During the financial year 2015-16 the Company has not received any complaints onsexual harassment and hence no complaints remain pending as of March 31 2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Except as stated in the para relating to legal matters mentioned above there are noother significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Companys operations in future. The details oflitigation including tax matters are disclosed in the notes to the Financial Statementswhich forms part of this Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to the best of theirknowledge and ability confirm that: a. in the preparation of the annual accounts theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures; b. the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of Affairs of the Company at the end ofthe financial year and of the loss of the Company for that period; c. the Directors havetaken proper and sufficient care to maintain adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d. the Directors have preparedthe annual accounts on a going concern basis. e. the Directors have laid down internalfinancial controls to be followed by the Company and such internal financial controls areadequate and are operating effectively; and f. the Directors have devised proper systemsto ensure compliance with the provisions of all applicable laws and such systems areadequate and operating effectively.
EMPLOYEES STOCK OPTION PLAN (ESOP)
The Nomination & Remuneration Committee of the Board of Directors of the Companyinter-alia administers and monitors the Employees Stock Option Plan of the Company inaccordance with the applicable SEBI Guidelines. The applicable disclosures as requiredunder SEBI Guidelines as on March 31 2016 with regards to the Employees Stock OptionPlan and as per the Act are given in Annexure VI and the same forms part ofthis report.
The Company has received a certificate from the Auditors of the Company that the ESOPSchemes have been implemented in accordance with the SEBI Guidelines and the resolutionpassed by the members. The certificate would be placed at the Annual General Meeting forinspection by members.
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. Sharp & Tannan Associates Chartered Accountants Mumbai (Regn. No. 109983W) wereappointed as the Statutory Auditors of the Company at the Annual General Meeting (AGM)held on September 23 2014 for a period of five years subject to ratification of theirappointment at every AGM. The Company has received a confirmation from M/s. Sharp &Tannan Associates to the effect that their appointment if ratified at the ensuing AGMwould be in terms of Sections 139 and 141 of the Act and rules made thereunder. The Boardrecommends ratification of appointment of M/s. Sharp & Tannan Associates.
DETAILS OF FRAUD IF ANY REPORTED BY THE AUDITORS
There have been no instances of fraud reported by Auditors pursuant to Section 143(12)of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Act the Board has appointed M/s BNP& Associates Practising Company Secretaries to conduct Secretarial Audit for thefinancial year 2015-16. The Secretarial Audit Report for the financial year ended March31 2016 is annexed herewith marked as Annexure - VII and the same forms part ofthis report. The Secretarial Auditors report does not contain any qualificationsreservations or adverse remarks.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
Details relating to deposits covered under Chapter V of the Act.
Issue of equity shares with differential voting rights as to dividend voting orotherwise.
Neither the Managing Director nor the Whole-time Directors of the Companyreceive any remuneration or commission from any of its subsidiaries.
At 63 moons technologies limited (Formerly FTIL) we strongly believe in communicationat all times and across levels. HR has an open door system and employees can walk-in to HRat any time during office hours. We have various communication channels in place such asDepartmental meets HOD meets HR Zone (e-HR) on the intranet. 63 moonsTM HR communicateswith daily news updates. We also have a con_dential email facility which redressesspecific issues of the employees. This ensures that the HR team is alert and available tolisten to and help employees. All our systems and processes are fully automated thusensuring that required information is available at _ngertips for employees for speedyredressal.
As of March 31 2016 your Company had an employee strength of 873. Your Company isgoing through a major crisis since 3 years now. It is the HR oriented culture in theCompany that has helped us to tide over this crisis. The bonding and belongingness alongwith con_dence of the employees have strengthened the business verticals and kept ourfocus on customers and development remained constant. One of the cornerstones of ourcrisis management strategy has been to communicate constantly with our employees. Many HRConnect sessions were also held to address the employee concerns and strengthen thebonding across levels.Your Companys con_dence in its ability to innovate and grow inchallenging times was reiterated in open houses/connect sessions. Even during the times ofcrisis your Companys HR department has ensured that their well-establishedprocesses are always followed i.e. induction training performance management etc.
Employees connect and engagement can be spotted in many initiatives like Women'sDay Celebration Yoga Shivir Stepathlon Diwali celebrations Christmas and Juniors Day.Employee Talent Shows are also held. Your Company is proud to inform that 63 moonsTM Teamstood _rst (among 5000 + teams) at the global level in the Stepathlon event. Stepathlon isa pedometer-based 100 day race around a virtual world across continents andcountries. 63 moonsTM continues to believe strongly in the ability and quality of its HRand has started working on the next phase of your Companys growth. Your Companytreats its employees as an integral part of the organization and its growth. Your Companyis charting new horizons and has revised its business strategies. Employees are beinggroomed to meet the changing requirements / business landscapes. A Catalyst program hasbeen launched and over 600 employees upto Manager level have been trained.
Your Directors place on record their gratitude to the Central Government StateGovernment clients vendors financial institutions bankers and business associates forthe assistance and co-operation extended to your Company. Your Directors also wish toplace on record their appreciation for the continued support of investors businessassociates and the contribution made by the employees at all levels.
| ||For and on behalf of the Board of Directors || |
| ||Venkat Chary ||Prashant Desai |
|Place: Mumbai ||Chairman ||Managing Director & CEO |
|Date : August 09 2016 ||DIN: 00273036 ||DIN: 01578418 |