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Hathway Bhawani Cabletel & Datacom Ltd.

BSE: 509073 Sector: Services
NSE: N.A. ISIN Code: INE525B01016
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OPEN 3.65
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VOLUME 500
52-Week high 5.07
52-Week low 3.16
P/E
Mkt Cap.(Rs cr) 3
Buy Price 3.65
Buy Qty 4500.00
Sell Price 0.00
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Hathway Bhawani Cabletel & Datacom Ltd. (HATHWAYBHAWANI) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Thirty Third Annual Report of theCompany together with the Audited Statement of Accounts for the financial year ended 31stMarch2017.

1. FINANCIAL & OPERATION OVERVIEW:

a. Financial Highlights

The Company's performance during the year ended 31stMarch 2017 as comparedto the previous financial year is summarized below:

Standalone

Consolidated

Particulars 2016-17 2015-16 2016-17 2015-16
Operating & Other Income 1281.88 1736.97 1281.88 1736.97
Earnings before interest depreciation amortization & taxes (33.45) (54.98) (33.45) (54.98)
Interest 2.66 19.52 2.66 19.52
Depreciation & Amortization 64.97 69.60 64.97 69.60
Exceptional Items - 14.53 - -
Provision for Taxation - Current Tax & Deferred Tax - (10.15) - (10.15)
Share of profit / (loss) of Joint Ventures - - 11.50 (1.74)
Other Comprehensive lncome/(Loss) (5.51) 7.94 (5.51) 7.94
Total Comprehensive Income / (Loss) (95.57) (156.43) (84.07) (143.63)

During the year under review the total income of your Company was Rs. 1281.88 Lakhs ascompared to last year's income of Rs. 1736.97 Lakhs on standalone basis. This was due todiscontinuance of Broadband Operations of the Company and fierce competition. During theyear under review the Company incurred a net loss of Rs. 95.57 Lakhs on standalone basis.The loss during the year under review has been reduced due to cost reduction measures andconservative approach adopted by the Company. The Company is adhering to its policy offocused growth and as a result of which the total subscription income vis-a-vis the grossoperating profit of the Company has increased during the year under review.

b. Operational Highlights:

(i) Cable TV Business:

During the year under review your Company has seeded 3000 Set Top Boxes (STB)cumulatively totaling to approximate 75000 STB seeded. Your Company will continue to seedboxes at a rapid pace in near future as well.

The strategy of your Company is to seed more High Definition (HD) STB's in order toincrease the average rate per unit ("ARPU"). We anticipate that with smarterpackaging the Company will be able to drive higher ARPU.

Your Company has received a good feedback on HD product proposition. The proposition ispriced at152/- per month in which the customer can view 55 high quality HD channels.

With effect from April 012017 your Company was appointed as a distributor of HathwayDigital Private Limited (HDPL) the wholly owned subsidiary company of Hathway Cable andDatacom Limited (HCDL) in which the entire Cable TV business of HCDL was transferred byway of slump sale with effect from the close of the business hours on March 31 2017. TheCompany was appointed as distributor for handling its secondary points business. Theprimary points business was retained in the Company. Becoming Distributor helped theCompany to achieve following benefits:

• Getting fixed commission income.

• No expenses and losses attracted to the Company as the same are borne by HDPL.

• Expenses if any incurred by the Company are reimbursed by HDPL.

• The content cost which comprises of 50% of the total cost is borne by HDPL.

• Achieving higher revenues and thereby converting into positive net worth.

(ii) Broadband Business:

During the year under review your Company has closed the broadband business due tomigration of the broadband customers to other service providers. The Department ofTelecommunications Ministry of Information and Broadcasting was informed accordingly.

c. Change in the nature of business:

During the year under review there has been no change in the nature of business.

d. Consolidated Accounts:

The consolidated financial statements of your Company for the financial year 2016-2017 are prepared in compliance with applicable provisions of the Companies Act 2013Indian Accounting Standards (IND-AS) and Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.

e. Management Discussion and Analysis

The Management Discussion and Analysis forms an integral part of this Report and givesdetail of the overall industry overview business overview and performance review andstate of affairs of the Company in Cable Television business and Broadband business duringthe year under review.

f. Report on performance of subsidiaries associates and joint venture Companies:

A statement containing the performance and financial position of the subsidiarycompany associates and joint venture companies for the year ended 31st March2017 is given pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 and8 of the Companies (Accounts) Rules 2014 inAOC-1 in Annexure-1 to this report.

The details of the subsidiary are as follows:

PARTICULARS OF SUBSIDIARY COMPANY

SI. No Name and address of the Company CIN/GLN Holding / subsidiary / associate %of Share- holding Applicable section
1 Hathway Bhawani NDS Network Pvt. Ltd. Rahejas 4th Floor Corner of Main Avenue & V.P. Road Santacruz West Mumbai 400054 U74990MH20 10PTC208960 Subsidiary 51% 2(87)(ii)

The financial statements of the subsidiary company and related information areavailable for inspection by the members at the Registered Office of your Company duringbusiness hours on all days except Saturdays Sundays and public holidays up to the date ofthe Annual General Meeting (AGM) as required under Section 136 of the Companies Act 2013.Any member desirous of obtaining a copy of the said financial statements may write to theCompany Secretary at the Registered Office of your Company.

g. Dividend:

Considering the loss incurred in the current financial year your Directors have notrecommended any dividend for the financial year under review.

h. Transfer to reserves:

In view of losses incurred during the year under review the Board of Directors has notrecommended transfer of any amount to reserves.

i. Revision of financial statement:

There was no revision of the financial statements during the year under review.

j. Deposits:

The Company has not accepted any public deposits during the year under review.

k. Disclosures undersection 134(3)(i) of the Companies Act2013:

Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Company's financial position have occurred between the end of thefinancial year of the Company and date of this report.

l. Disclosure of Internal Financial Controls

The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observations have been received from the Internal Auditors of the Company forinefficiency or inadequacy of such controls.

m. Particulars of loans guarantees investments and securities:

There are no loans given investments made guarantees given and securities providedduring the year under review.

2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) CHANGE IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Samson Jesudas Managing Director & CEO (DIN: 02539442) of the Companyresigned from the Board with effect from September 21 2016. Mr. Sameer Joseph (DIN:07653870) was appointed as Managing Director & CEO with effect from December022016.

In accordance with the provisions of the Companies Act 2013 none of the IndependentDirectors is liable to retire by rotation.

As per the provisions of Section 152 of the Companies Act 2013 Mr. Vineet Garg (DIN:06935347) shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. Your Directors recommend the same foryourapproval.

Mr. Manoj Dere Company Secretary & Compliance Officer a Key ManagerialPersonnel (KMP) of the Company resigned with effect from March 162017 and was re-appointed as Company Secretary & Compliance Officer Key Managerial Personnel (KMP)with effect from May 232017.

b. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declaration from all the Independent Directors under Section149(6) of the Companies Act 2013 confirming their independence vis-a-vis the Company.

3. DISCLOSURES RELATED TO BOARD COMMITTEESAND POLICIES

a. BOARDMEETINGS:

The Board of Directors met 4 times during the financial year ended 31stMarch 2017 in accordance with the provisions of the Companies Act 2013 and rules madethereunder.

The dates on which the Board of Directors met during the financial year under revieware as under:

Sr. No. Date of the Board Meeting
1 24th May 2016
2 23rdAugust 2016
3 02nd December 2016
4 10th February 2017

b. AUDITCOMMITTEE:

The Audit Committee of Directors was constituted pursuant to the provisions of Section177 of the Companies Act 2013. The composition of the Audit Committee is in conformitywith the provisions of the said section. The Audit Committee as on the date of this reportcomprises of:

Sr. No. Name of the Member Designation
1 Mr. Dilip Worah Chairman
2 Mr. Vineet Garg Member
3 Mr. L K Kannan Member

The scope and terms of reference of the Audit Committee have been amended in accordancewith the Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.

During the year under review the Board of Directors of the Company had accepted allthe recommendations of the Committee.

c. NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of Directors as constituted by the Board ofDirectors of the Company in accordance with the requirements of Section 178 of the Act.

The composition of the committee as on the date of this report is as under:

Sr. No. Name of the Member Designation
1 Mr. L K Kannan Chairman
2 Mr. Vineet Garg Member
3 Mr. Dilip Worah Member

The Board of Directors has in accordance with the provisions of sub-section (3) ofSection 178 of the CompaniesAct 2013 formulated the policy setting out the criteriafordetermining credentials positive attributes independence of a Director and policyrelating to remuneration for Directors Key Managerial Personnel and other employees. Thesame is available on the website of the Company in the web linkhttp://hathwavbhawani.com/wp-content/uploads/2017/08/nomination-remuneration- policy.pdf .

d. STAKEHOLDERS' RELATIONSHIP COMMITTEE:

Pursuant to Section 178 of the Companies Act 2013 the Board of Directors of theCompany has constituted the Stakeholder's Relationship Committee comprising of:

Sr. No. Name of the Member Designation
1 Mr.Vineet Garg Chairman
2 Mr. Sameer Joseph Member
3 Mr. Dilip Worah Member

e. MEETING OF INDEPENDENT DIRECTORS:

The Company's Independent Directors meet at least once in every financial year withoutthe presence of Executive Director or management personnel and is conducted informally. Ameeting of Independent Director was held on 10thFebruary 2017 during the yearunder review.

f. VIGILMECHANISM POLICYFORTHE DIRECTORSAND EMPLOYEES:

The Board of Directors of the Company has pursuant to the provisions of Section 177(9)of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board and itsPowers) Rules 2014 framed "Vigil Mechanism Policy" for Directors and employeesof the Company to provide a mechanism which ensures adequate safeguards to employees andDirectors from any victimization on raising of concerns of anyviolations of legal orregulatory requirements incorrect or misrepresentation of any financial statements andreports etc.

The employees of the Company have the right/option to report their concern/grievance tothe Chairman of theAudit Committee.

The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations.

g. RISKMANAGEMENTPOLICY:

The Board of Directors of the Company has designed Risk Management Policy andGuidelines to avoid events situations or circumstances which may lead to negativeconsequences on the Company's businesses and define a structured approach to manageuncertainty and to make use of these in their decision making pertaining to all businessdivisions and corporate functions. Key business risks and their mitigation are consideredin the annual/strategic business plans and in periodic management reviews.

h. CORPORATE SOCIAL RESPONSIBILITY POLICY:

As per the provisions of Section 135 of the Act read with Companies (Corporate SocialResponsibility Policy) Rules 2014 the Board of Directors has constituted a CorporateSocial Responsibility (CSR) Committee as under:

Sr. No. Name of the Member Designation
1 Mr. Dilip Worah Chairman
2 Mr. Sameer Joseph Member
3 Mr. L. K Kannan Member
4 Mr. Vineet Garg Member

The Board of Directors of the Company has approved CSR Policy based on therecommendation of the CSR Committee. Since the Company has no profits in preceding 3financial years the Company was not required to spend any amount for corporate socialresponsibility activities. In view of the same no meeting of CSR Committee was held in thefinancial year under review.

i. ANNUAL EVALUATION OF DIRECTORS COMMITTEEAND BOARD:

In accordance with the Companies Act 2013 and Schedule V of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 theCompany has framed a Policy for evaluation of performance of Independent Directors BoardCommittees and other Individual Directors which includes criteria for performanceevaluation of Non-Executive Directors and Executive Directors. A questionnaire wasformulated for evaluation of performance of Board after taking into consideration thefollowing aspects:

• Board Composition;

• Strategic Orientation;

• Board functioning and Team Dynamics.

Performance evaluation of Independent Directors was conducted by the Board ofDirectors excluding the Director being evaluated. The criteria for performance evaluationof Independent Directors laid down by the Nomination Remuneration and CompensationCommittee is as below:

• Ethics and values

• Knowledge and proficiency

• Diligence

• Behavioral traits and

• Efforts for personal development

Similarly performance evaluation of the Chairman and Non - Independent Directors wascarried out by the Independent Directors at the meeting of the Board of Directors held on10th February 2017.

j. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURES ASPER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014:

The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial year under review has been marked as AnnexureII.

k. POLICYON DIRECTOR'SAPPOINTMENTAND REMUNERATION:

The Board has in accordance with the provisions of sub-section (3) of Section 178 ofthe Companies Act 2013 formulated the policy setting out the criteria for determiningqualifications positive attributes independence of a Director and policy relating toremuneration for Directors Key Managerial Personnel and other employees.

4. DIRECTORS' RESPONSIBILITYSTATEMENT:

In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended 31st March 2017 theBoard of Directors hereby confirm that:

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2017 and of the loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

5. AUDITORSANDREPORTS

The matters related to Auditors and their Reports are as under:

a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31stMARCH 2017:

The observations made by the Statutory Auditors in their report for the financial yearended 31st March 2017 read with the explanatory notes therein areself-explanatory and therefore do not call for any further explanation or comments fromthe Board under Section 134(3) of the Companies Act 2013.

b. FRAUDREPORTING:

During the year under review there were no instances of material or serious fraudfalling under Rule 13(1) of the Companies (Audit and Auditors) Rules 2013 by officers oremployees reported by the Statutory Auditors of the Company during the course of theaudit.

c. SECRETARIALAUDIT REPORT FOR THEYEAR ENDED 31st MARCH 2017:

Provisions of Section 204 read with Section 134(3) of the Companies Act 2013 mandatesto obtain Secretarial Audit Report from Practicing Company Secretary. M/s. Rathi andAssociates Company Secretaries was appointed to issue Secretarial Audit Report for thefinancial year2016-2017.

Secretarial Audit Report issued by M/s. Rathi and Associates Company Secretaries forthe financial year 2016-2017 in Form MR-3 has been marked as Annexure III andforms part to this report. The Secretarial Auditors in their report have commented thatprovisions of Section 149 of the Companies Act 2013 read with Rule 3 of the Companies(Appointment and Qualification of Directors) Rules 2014 for appointment of womandirector have not been complied with. Your Directors state that the Company is in searchof suitable candidate who can be appointed as woman director and that said violationoccurred purely without any malafide intention.

d. APPOINTMENTOFAUDITORS:

Pursuant to section 139 of the Companies Act 2013 (the Act) the Company has appointedM/s. G. M. Kapadia &Co. Chartered Accountants as the Statutory Auditorof the Companyfor a term of 3 (three) years which began from the conclusion of the Thirtieth AnnualGeneral Meeting of the Company till the conclusion of Thirty Third Annual General Meetingof the Company. Their term is expiring at the conclusion of the ensuing Thirty ThirdAnnual General Meeting. M/s. Nayan Parikh & Co Chartered Accountants are proposed tobe appointed as the statutory auditors of the Company for a period of 5 (five) years fromthe conclusion of the Thirty Third Annual General Meeting till the conclusion of ThirtyEighth Annual General Meeting. M/s. Nayan Parikh & Co Chartered Accountants haveissued the eligibility certificate confirming that they are eligible to act as theStatutory Auditors of the Company pursuant to Section 139 read with Section 141 of the Actand rules made therein. Pursuant to the provisions of Section 139 the Board of Directorspropose their appointment as Statutory Auditors of the Company to the shareholders of theCompany.

Necessary resolution for appointment of M/s. Nayan Parikh & Co CharteredAccountants is included in the Notice ofAGM for seeking approval of members.

e. RELATED PARTY TRANSACTIONS:

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.

6. OTHER DISCLOSURES

Other disclosures as per provisions of Section 134 of theAct read with Companies(Accounts) Rules 2014 are furnished as under:

a. EXTRACTOFANNUALRETURN:

Pursuant to the provisions of Section 134(3) (a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2017 made under theprovisions of Section 92(3) of the Act is attached as Annexure IV which forms partof this Report.

b. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSANDOUTGO:

The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.have been furnished in Annexure V which forms part of this Report.

c. DISCLOSURE RELATING TO EQUITYSHARES WITH DIFFERENTIAL RIGHTS:

The Company has not issued any equity shares with differential rights during the yearunder review and hence no information as per provisions of Section 43(a)(ii) of theCompanies Act 2013 read with Rule 4(4) of the Companies (Share Capital and Debenture)Rules 2014 is furnished.

d. DISCLOSURE RELATING TO SWEAT EQUITYSHARE:

The Company has not issued any sweat equity shares during the year under review andhence no information as per provisions of Section 54(1)(d) of the Companies Act 2013 readwith Rule 8(13) of the Companies (Share Capital and Debenture) Rules 2014 is furnished.

e. DISCLOSURE RELATING TO EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASESCHEME:

The Company does not have any Employee Stock Option Scheme or Employee Stock PurchaseScheme. Hence no information as per the provisions of Section 62(1)(b) of the CompaniesAct 2013 read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules 2014has been furnished

e. SHARE CAPITAL:

During the year under review the Company has not issued any shares and hencedisclosures under Section 43(a)(ii) Section 54(1)(d) and Section 62(1)(b) of theCompanies Act 2013 read with relevant rules are not required to be furnished. The Companydoes not have a scheme of ESOP and hence disclosures pursuant to Section 67(3) of theCompanies Act 2013 are also not required to be furnished.

f. CORPORATE GOVERNANCE: (Applicable to Companies giving remuneration as per Section IIof Schedule V):

7. GENERAL:

All elements of remuneration package such as salary benefits bonuses stock options pension etc. of all the directors Not Applicable
Details of fixed component and performance linked incentives along with the performance criteria Not Applicable
Service contracts notice period severance fees Not Applicable
Stock option details if any and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable Not Applicable

Your Directors state that no disclosure or reporting is required in respect ofthefollowing items as there were no transactions on these items during the year underreview:

1. Acceptance of deposits covered under Chapter V of theAct.

2. Payment of remuneration or commission from any of its Holding or subsidiaryCompanies to the Managing Director of the Company.

3. Significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Company's operations in future.

4. Cases filed pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

8. ACKNOWLEDGEMENTS ANDAPPRECIATION:

Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners/associates financial institutions and Central and StateGovernments for their consistent support and encouragement to the Company.

For and on behalf of the Board
Sameer Joseph Vineet Garg
Managing Director& CEO Director
(DIN:07653870) (DIN:06935347)
Date : August 03 2017
Place : Mumbai