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AGC Networks Ltd.

BSE: 500463 Sector: Telecom
NSE: AGCNET ISIN Code: INE676A01019
BSE 00:00 | 25 May 109.70 -0.25
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108.00

NSE 00:00 | 25 May 108.80 1.60
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OPEN 110.00
PREVIOUS CLOSE 109.95
VOLUME 225
52-Week high 170.70
52-Week low 98.00
P/E 92.18
Mkt Cap.(Rs cr) 312
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 110.00
CLOSE 109.95
VOLUME 225
52-Week high 170.70
52-Week low 98.00
P/E 92.18
Mkt Cap.(Rs cr) 312
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

AGC Networks Ltd. (AGCNET) - Director Report

Company director report

The Directors hereby present the 31st Annual Report and the audited financialstatements of the Company for the year ended March 31 2017.

1. Financial Results

The results of the Company on a standalone and Consolidated basis are as given below:

Standalone Consolidated
Year ended Year ended Year ended Year ended
31/03/2017 31/03/2016 31/03/2017 31/03/2016
Revenue from Operations (Gross) 245.96 314.57 780.22 882.76
Total Income (Net) 250.15 320.04 782.48 886.89
Profit before interest depreciation & tax (EBIDTA) 8.21 -7.38 45.91 12.83
Less : Interest and finance charges (Net) 20.34 24.10 24.94 26.68
Less : Depreciation 2.39 5.23 6.56 8.50
Profit/(Loss) before tax from continuing operations -14.52 -36.71 14.41 -22.35
Less : Provision for tax (including Deferred tax) - - 2.32 12.24
Profit/ ( Loss) after tax from continuing operations -14.52 -36.71 12.09 -34.59
Profit after tax from discontinuing operations - - - -
Profit/( Loss) after tax -14.52 -36.71 12.09 -34.59
Balance brought forward from previous year -126.99 -90.28 -168.71 -134.12
Amount available for appropriation Appropriations : -141.51 -126.99 -156.62 -168.71
Profit on Demerger/Additional Depreciation - - - -
Transfer to General Reserve - - - -
Balance carried to Balance Sheet -141.51 -126.99 -156.62 -168.71

2. Dividend

In view of the losses your Directors have not recommended any dividend for thefinancial year ended March 31 2017.

3. Financial Performance

The Company for the year ended March 31 2017 recorded a gross turnover of ` 245.96Crores as against ` 314.57 Crores for the period ended March 31 2016. The net loss hasreduced to ` 14.52 Crores for the financial year ended March 31 2017 from

` 36.71 Crores for the financial year ended March 31 2016. On Consolidated basis yourCompany has made a net profit of

` 12.09 Crores for the financial year ended March 31 2017 as against loss of ` 34.59Cores for the financial year ended March 31 2016.

4. Organizational Initiatives

Building a Global Connect through Culture & Engagement:

AGC aims to create a positive work environment through Camaraderie Collaboration &Communication and thus position AGC as a

"Great Place to work".

To create a culture where employees are committed to their organization's goals andvalues motivated to contribute to organizational success and are able at the same timeto enhance their own sense of well-being.

I. Corporate Social Responsibilities - As a responsible corporate organization AGChas been consistently working towards adding value to the society through some of itscommunity initiatives such as Back to school with an objective to go beyondbusiness to enrich the quality of life of the community that we operate in. The Keepit green! Keep it clean initiative to plant a life is an annual contribution acrossAGC geographies and locations on World Environment Day.

II. Employee Connect Programs - with an intent to create happy planet at AGC.

a. International Women's Day celebrations - At AGC the 8th of March every yearis celebrated as the International Women's day as a series of engagement initiatives. Thisyear was celebrated with the ‘Inspiring Women' contest – appreciating awoman's strengths and sacrifices and acknowledging her contribution in the lives ofothers. At AGC we believe that diversity and inclusion is a strong business imperativeand through this initiative we connect our diverse women workforce across globallocations.

b. Health Camps - In alignment to the "Employee Health and Wellnessinitiative at AGC" preventive health checks imbibing correct nutrition in ourlifestyle have been implemented. Free counseling sessions by medical experts and an EyeCheck-up Camp was organized to encourage the value of adopting a healthier lifestyle.

c. My Expressions - Hobby Initiative - ‘My Expressions' contest is a greatopportunity for all employees to showcase their talent and express their passion andbelief through imagery. Painting and Photography enthusiasts across the globe participatedwith vibrant enthusiasm and connect.

III. Employee Communications

a. CEO Konnect - An All Hands Communication is an important Employee Connectplatform where the Whole Time Director shares organization-wide update directions andoverall imperatives with the employees.

b. CEO Performance Plus awards - AGC's Global Reward & Recognitionframework is aligned to recognize exceptional talent and reward top performance. The CEOPerformance Plus Awards are given to recognize exemplary performances which have notonly exceeded expectations but also set new performance benchmarks. The awards recognizeperformances across various criterion.

c. Focus Group Meetings - Is an ideation meeting with Management team to discussideas and brainstorm suggestions communicate strategic views and future plans for thebusiness and discuss ways to accelerate business. This platform is to gather marketintelligence ignite creative thinking brainstorm and ideate strategies to build newroadways into the market and understand the need of customers and vendors.

IV. Learning Programs - Learning and development offerings are customized foremployees across career levels skill and domains. Learning expertise has been cultivatedin-house in the form of dedicated internal trainers and lab set ups. New learning anddevelopment methodologies were launched to maximize individual capability and performance.Key OEM (Original Equipment Manufacturers) certifications achieved to enable partnershipswith core and strategic OEMs.

5. Management's Discussion and Analysis report

Management's Discussion and Analysis Report for the year under review as stipulatedunder SEBI (LODR) Regulations 2015 is presented in a separate section forming anintegral part of the Annual Report.

6. Internal Financial Controls

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested. For details with regardto reportable material weaknesses if any please refer Statutory Auditors' report formingpart of the report.

7. Deposits

The Company has not accepted any Deposits during the year.

8. Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate AffairsGovernment of India the Balance Sheet Profit and Loss Account and other documents of thesubsidiary companies are not being attached with the Balance Sheet of the Company.However the financial information of the subsidiary companies is disclosed in the AnnualReport in compliance with the said circular. The Company will make available the AnnualAccounts of the subsidiary companies and the related detailed information to any member ofthe Company who may be interested in obtaining the same. The annual accounts of thesubsidiary companies will also be kept open for inspection at the Registered Office of theCompany and that of the respective subsidiary companies. The Consolidated FinancialStatements presented by the Company include the financial results of its subsidiarycompanies.

A statement containing salient features of the financial statements of each of thesubsidiaries of the Company in Form No. AOC-1 is presented on page No. 105 of this AnnualReport.

9. Particulars of Loans given investments made Guarantees given and securitiesprovided

Particulars of Loans given investments made Guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the notes to financial statements.

10. Statutory Auditors and their report

M/s. Walker Chandiok & Co LLP Chartered Accountants Mumbai Statutory Auditors ofthe Company shall hold office till the conclusion of the ensuing Annual General Meetingand are eligible for re-appointment. They have confirmed their eligibility to the effectthat their re-appointment if made would be within the prescribed limits under the Actand that they are not disqualified for re-appointment.

The Notes to financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. Following were thereservation/qualifications mentioned in their Audit Report for the financial year endedMarch 31 2017 along with view of the Management for the same.

A. Standalone Audit report

I. As stated in Note 5 to the Statement during the year ended March 31 2015 theCompany had recognised sale of two properties having carrying value of ` 0.74 crores and `0.35 crores respectively and profit on such sale amounting to ` 40.85 crores and ` 5.19crores (net of incidental selling expenses amounting to ` 3.04 crores and ` 0.35 crores)respectively under ‘exceptional items'. In our opinion since the significant risksand rewards for the said properties were not transferred recognition of such sale and theaccounting treatment followed by the Company is not in accordance with the principles laidunder Accounting Standard (AS) 9 ‘Revenue Recognition' and AS 5 ‘Net Profit orLoss for the Period Prior Period Items and Changes in Accounting Policies' as notifiedunder the Companies (Accounting Standards) Rules 2006 (as amended) and should have beenreversed. Our audit/review reports on the financial statements/financial results of allthe corresponding period upto March 2016 were qualified in respect of this matter.Further during the month of April 2016 significant risks and rewards in respect of oneof the said property having a carrying value of ` 0.35 crores was transferred.Accordingly in our opinion sale of this property should have been recognised during theyear ended March 31 2017. Hence our audit opinion on the standalone financial statementsfor the year ended March 31 2017 is qualified to this extent. With respect to the otherproperty having carrying value of ` 0.74 crores our audit opinion on the standalonefinancial statements for the year ended March 31 2017 continues to be qualified.

Had the Company followed the principles of AS 9 and AS 5 during the year ended March31 2017 the prior period expenses would have been higher by ` 46.04 crores (March 312016: ` 46.04 crores) and profit on sale of property would have been higher by ` 5.19crores for the year ended on that date (March 31 2016: Nil); loss before tax would havebeen higher by ` 40.85 crores for the year ended on that date (March 2016: ` 46.04crores); tax expenses for the year ended March 31 2017 would have been lower by ` 3.27crores (March 31 2016 : ` 3.27 crores); long term loans advances carrying value oftangible assets and other current liabilities as at March 31 2017 would have been higherby ` 3.27 crores (March 31 2016: ` 3.27 crores) ` 0.74 crores (March 31 2016: 1.09crores) and ` 0.16 crores (March 31 2016: lower by ` 0.19 crores) respectively; reservesand surplus and other current assets as at that date would have been lower by ` 37.58crores (March 31 2016: ` 42.77 crores) and ` 47.32 crores (net of ` 3.20 crores receivedduring previous year) (March 31 2016: ` 47.32 crores) respectively.

II. In our opinion according to the information and explanations given to us and basedon our audit the following material weakness has have been identified in the operatingeffectiveness of the Company's IFCoFR as at March 31 2017:

The Company's internal financial control over evaluation of accounting of non-routinetransactions was not operating effectively. This has during the year resulted innon-reversal of transaction for sale of one property for which risks and rewards nottransferred till the reporting date and non-recognition of sale of the other property forwhich risks and rewards were transferred during the current year due to inappropriateevaluation of timing of transfer of risk and reward during an earlier year. This has ledto misstatements of long-term loans and advances tangible assets other current assetsother current liabilities prior period items profit on sale of property tax expense andresultant impact on the loss before tax and the reserves and surplus as at and for theyear ended March 31 2017.

A ‘material weakness' is a deficiency or a combination of deficiencies inIFCoFR such that there is a reasonable possibility that a material misstatement of theCompany's annual or interim financial statements will not be prevented or detected on atimely basis.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company as at and for the year ended March 31 2017 and thematerial weakness has affected our opinion on the standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements.

Management's views for I & II above:

During the year ended March 31 2015 the Company entered into deeds of assignment totransfer all the rights title and obligations of its land and building situated atGandhinagar to another company for a consideration of ` 50.52 Crores. During April 2015the lender to whom these assets were provided as security provided its in-principalapproval for the said transfer subject to fulfilment of conditions stated therein. Thesaid transfer was pending approval from the relevant government authority and transfer oflegal title that were considered to be procedural in nature. Accordingly the Company hadrecognized profit on sale of Fixed Assets of ` 46.04 Crores (net of incidental expenses `3.39 Crores) during the year ended March 31 2015. During the previous year ended March31 2016 the Company received approval from the lender for sale of one of the propertysold for consideration of ` 5.89 crores and also realized part consideration of ` 3.20crores from the buyer. During April 2016 approval from the requisite authorities havealso been received and sale deed has been executed between the Company and the buyer fortransfer of legal title for one of the property. The Company has also obtained therequisite approvals for the other property and subsequent to year ended March 31 2017has realized further consideration of ` 13.50 Crores. The sale deed for the other propertywill be executed on simultaneous settlement of balance consideration by the buyer.Accordingly management believes that the Internal Financial Controls are operatingeffectively.

B. Consolidated Audit report

I. As stated in Note 9 to the Statement during the year ended March 31 2015 theCompany had recognised sale of two properties having carrying value of ` 0.74 crores and `0.35 crores respectively and profit on such sale amounting to ` 40.85 crores and ` 5.19crores (net of incidental selling expenses amounting to ` 3.04 crores and ` 0.35 crores)respectively under ‘exceptional items'. In our opinion since the significant risksand rewards for the said properties were not transferred recognition of such sale and theaccounting treatment followed by the Company is not in accordance with the principles laidunder Accounting Standard (AS) 9 ‘Revenue Recognition' and AS 5 ‘Net Profit orLoss for the Period Prior Period Items and Changes in Accounting Policies' as notifiedunder the Companies (Accounting Standards) Rules 2006 (as amended) and should have beenreversed. Our audit opinion on the consolidated financial statements for the year endedMarch 31 2016 was qualified in respect of this matter. During the month of April 2016significant risks and rewards in respect of one of the said property having a carryingvalue of ` 0.35 crores was transferred. Accordingly in our opinion sale of this propertyshould have been recognised during the year ended March 31 2017. Hence our audit opinionon the consolidated financial statements for the year ended March 31 2017 is qualifiedto this extent. With respect to the other property having carrying value of ` 0.74 croresour audit opinion on the consolidated financial statements for the year ended March 312017 continues to be qualified.

Had the Company followed the principles of AS 9 and AS 5 during the year ended March31 2017 the prior period expenses would have been higher by ` 46.04 crores (March 312016: ` 46.04 crores) and profit on sale of property would have been higher by ` 5.19crores for the year ended on that date (March 31 2016: Nil); profit before tax would havebeen lower by ` 40.85 crores for the year ended on that date (March 31 2016: ` 46.04crores); tax expenses for the year ended March 31 2017 would have been lower by ` 3.27crores (March 31 2016: ` 3.27 crores); long term loans advances carrying value oftangible assets and other current liabilities as at March 31 2017 would have been higherby ` 3.27 crores (March 31 2016: ` 3.27 crores) ` 0.74 crores (March 31 2016: 1.09crores) and ` 0.16 crores (March 31 2016: lower by ` 0.19 crores) respectively; reservesand surplus and other current assets as at that date would have been lower by ` 37.58crores (March 31 2016: ` 42.77 crores) and ` 47.32 crores (net of ` 3.20 crores receivedduring previous year) (March 31 2016: ` 47.32 crores) respectively.

II. In opinion according to the information and explanations given to us and based onour audit the following material weakness has been identified in the operatingeffectiveness of the Holding Company's IFCoFR as at March 31 2017: The Holding Company'sinternal financial control over evaluation of accounting of non-routine transactions wasnot operating effectively. This has during the year resulted in non-reversal oftransaction for sale of one property for risk and rewards not transferred till thereporting date and non-recognition of sale of the other property for which risks andrewards were transferred during the current year due to inappropriate evaluation oftiming of transfer of risk and reward during an earlier year. This has led tomisstatements of long-term loans and advances tangible assets other current assetsother current liabilities prior period items profit on sale of property tax expense andresultant impact on the profit before tax and the reserves and surplus as at and for theyear ended March 31 2017.

A ‘material weakness' is a deficiency or a combination of deficiencies inIFCoFR such that there is a reasonable possibility that a material misstatement of theCompany's annual or interim financial statements will not be prevented or detected on atimely basis.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the consolidatedfinancial statements of the Group as at and for the year ended March 31 2017 and thematerial weakness has affected our opinion on the consolidated financial statements of theGroup and we have issued a qualified opinion on the consolidated financial statements.

Management's views for I & II above:

During the year ended March 31 2015 the Company entered into deeds of assignment totransfer all the rights title and obligations of its land and building situated atGandhinagar to another company for a consideration of

` 50.52 Crores. During April 2015 the lender to whom these assets were provided assecurity provided its in-principal approval for the said transfer subject to fulfilment ofconditions stated therein. The said transfer was pending approval from the relevantgovernment authority and transfer of legal title that were considered to be procedural innature. Accordingly the Company had recognized profit on sale of Fixed Assets of ` 46.04Crores (net of incidental expenses ` 3.39 Crores) during the year ended March 31 2015.During the previous year ended March 31 2016 the Company received approval from thelender for sale of one of the property sold for consideration of ` 5.89 crores and alsorealized part consideration of ` 3.20 crores from the buyer. During April 2016 approvalfrom the requisite authorities have also been received and sale deed has been executedbetween the Company and the buyer for transfer of legal title for one of the property. TheCompany has also obtained the requisite approvals for the other property and subsequent toyear ended March 31 2017 has realized further consideration of ` 13.50 Crores. The saledeed for the other property will be executed on simultaneous settlement of balanceconsideration by the buyer. Accordingly management believes that the Internal FinancialControls are operating effectively.

11. Secretarial Auditors and their report

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Director had appointedM/s. S. K. Jain and Co. Company Secretaries in Practice to undertake the SecretarialAudit for the financial year 2016-17. There is no qualification reservation or adverseremark made in their Secretarial Audit Report to the Company. The Audit Report of theSecretarial Auditor is attached herewith as Annexure I

12. Corporate Governance

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The Company has alsoimplemented several best corporate governance practices as prevalent globally. The reporton Corporate Governance as stipulated under the SEBI (LODR) Regulations 2015 forms anintegral part of this Report. The certificate required under SEBI (LODR) Regulations 2015from Practicing Company Secretaries confirming compliance with the conditions of corporategovernance is annexed herewith marked as Annexure II.

13. Number of Board meetings

During the F.Y. 2016-17 Seven (7) Board meetings were held. Further detail on the sameis available in Corporate Governance Report which forms part of this Annual Report.

14. Employees' Stock Option Scheme

Pursuant to the shareholders' approval dated April 21 2015 the Nomination andRemuneration Committee of the board of directors of the Company granted stock options asper the terms of ESOP Scheme 2015 approved on April 21 2015 to employees and directorsof the Company and its subsidiaries. Following is the table giving detailed informationwith regard to the same.

Total options granting eligibility of the Company (A) 1423323
Options granted as on 31.3.2016 (B) 1004866
Options lapsed as on 31.3.2016 (C) 512397
Options available for grant as on 31.3.2016 (D) = (A-B+C) 930854
Options granted during the FY 2016-17 (E) 320248
Options lapsed during the FY 2016-17 (F) 256197
Options available for grant as on 31.3.2017 (G) = (D-E+F) 866803

Vesting has not started for any of the above grants.

15. Familiarization Programme For Independent Directors

The Board members are provided with necessary documents/brochures reports andinternal policies to enable them to familiarize with the Company's procedures andpractices. Periodic presentations are made at the Board and Board Committee Meetings onbusiness and performance updates of the Company global business environment businessstrategy and risks involved.

Quarterly updates on relevant statutory changes and landmark judicial pronouncementsencompassing important laws are regularly circulated to the Directors.

16. Vigil Mechanism

The Vigil Mechanism of the Company in terms of the SEBI (LODR) Regulations 2015 isincorporated under whistle blower policy. Protected disclosures can be made by a whistleblower through an e-mail or a letter to the Ethics Officer or to the Chairman of theAudit Committee. The Policy on vigil mechanism and whistle blower policy may be accessedon the Company's website at the link http://www.agcnetworks.com/home/policies.

17. Performance evaluation

In terms of the requirement of the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 annual performance evaluationof the Board the Chairman Board of Directors and the Committees was undertaken. Duringthe year the process of performance evaluation of the Board the Chairman Board ofDirectors and the Committees was undertaken through a questionnaire based ratingassessment mechanism where the evaluators were requested to give rating for each criteriaset for evaluating the performance of the Director or the Committee of which theperformance was being evaluated.

The Board Evaluation process was focused around how to make the Board more effective asa collective body in the context of the business and the external environment in which theCompany functions. From time to time during the year the Board was appraised of thebusiness issues and the related opportunities and risks. The Board discussed variousaspects of the functioning of the Board and its Committees such as structure compositionmeetings functions and interaction with Management. Additionally during the evaluationprocess the Board also focused on the contribution being made by the Board as a wholethrough Committees. The overall assessment of the Board was that it was functioning as acohesive body including the Committees of the Board that were functioning effectively.

18. Extract of Annual Return

Extract off the Annual Return of the Company in Form No. MGT-9 is annexed herewith asAnnexure III of this report.

19. Directors and Key Managerial Personnel

In accordance with the provisions of the Companies Act 2013 Mr. Sanjeev Verma WholeTime Director of the Company retire by rotation at the ensuing Annual General Meeting andbeing eligible has offered himself for re-appointment.

During the year following appointment/resignation took place in Directors and KeyManagerial Personnel of the Company.

Name Event Designation Date of Event
Dr. (Mrs.) Sujaya Banerjee Resignation Non-Executive Non- March 16 2017
Independent Director
Mrs. Suparna Singh Appointment Non-Executive Non- March 16 2017
Independent Director
Mr. Amal Thakore Retirement CFO July 11 2016
Mr. Angshu Sengupta Appointment CFO July 11 2016

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand SEBI (LODR) Regulations 2015. For detailed composition of Board of Directors andvarious Committees kindly refer ‘the report on Corporate Governance forming part ofthis report.

The Company has devised a Policy for performance evaluation of Directors Board andsenior management which include various criteria for performance evaluation of the same.The Company has also devised remuneration policy. These policies are annexed to thisreport as Annexure IV and V respectively.

20. Personnel

The Board places on record its appreciation for the hard work and dedicated efforts putin by all the employees. The relations between the management and employees Continue toremain cordial on all fronts.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report.Disclosures pertaining to remuneration and other details as required under Section 197(12)of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report. Kindly refer AnnexureVI of this report. Having regard to the provisions of the first proviso to Section 136(1)of the Act and as advised the Annual Report excluding the aforesaid information is beingsent to the members of the Company. The said information is available for inspection atthe registered office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished on request.

21. Particulars required to be furnished by the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules 1988

(i) Part A pertaining to conservation of energy is not applicable to the Company.

(ii) Part B pertaining to particulars relating to technology absorption is as perAnnexure VII to this report.

(iii) Part C pertaining to foreign exchange earnings and outgoings is as mentionedbelow.

Expenditure in foreign currency (accrual basis) FY 2016-17 FY 2015-16
` in Crores ` in Crores
Service charges 3.38 14.07
Travelling and conveyance 1.03 1.29
Expenses reimbursement paid 1.70 0.73
Other items 0.83 0.18
6.94 16.27
Earnings in foreign currency (accrual basis) FY 2016-17 FY 2015-16
` in Crores ` in Crores
Sale of goods and services (Including sale from overseas branch and to Export Oriented Units) 7.85 7.37
Commission income 2.11 2.06
Interest income - 1.21
Expenses reimbursement received 13.98 17.18
23.94 27.82

22. Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee (CSR Committee) has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.

The CSR Policy may be accessed on the Company's website at the linkhttp://www.agcnetworks.com/in/en/corporate-governance. The Report on CSR activities isannexed herewith marked as Annexure VIII.

23. Risk Management Policy

Your Directors have constituted a Risk Management Committee which has been entrustedwith the responsibility to assist the Board in (a) Overseeing and approving the Company'senterprise wide risk management framework; and (b) Overseeing that all the risks that theorganization faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks. A Risk Management Policy was reviewed and approved by theCommittee.

24. Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. Most of these arepurchase/sales transactions except Loans and Advances transactions which are repayable ondemand and maintenance services transactions which are of the duration of 3 months to 12months. Your Directors draw attention of the members to Note 33 (Consolidated) and 33(stand-alone) to the financial statement which sets out related party disclosures.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://www.agcnetworks.com/home/policies.

25. Directors' Responsibility Statement

Your Directors state that: a) in the preparation of the annual accounts for the yearended March 31 2017 the applicable accounting standards read with requirements set outunder Schedule III to the Act have been followed and there are no material departuresfrom the same; b) the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2017 andof the profit/(loss) of the Company for the year ended on that date; c) the Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) the Directors haveprepared the annual accounts on a ‘going concern' basis; e) the Directors have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and are operating effectively; and f) the Directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring FY 2016-17.

26. Committees of the Company

The details relating to all the Committees constituted by the Company are mentioned inthe ‘Report on Corporate Governance' which forms a part of the Annual Report.

27. Acknowledgements

The Board is thankful to the Shareholders and the Bankers of the Company for theircontinued support. It also takes this opportunity to express gratitude to its varioussuppliers and its partners for their continued co-operation support and assistance. Aboveall the Board expresses its appreciation to each and every employee for his / hercontribution dedication and sense of commitment to the Company's objectives.

For and on behalf of the Board of Directors

Sanjeev Verma Suparna Singh
Whole Time Director Director
Mumbai
August 10 2017