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Infibeam Incorporation Ltd.

BSE: 539807 Sector: IT
NSE: INFIBEAM ISIN Code: INE483S01020
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Infibeam Incorporation Ltd. (INFIBEAM) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their 7th Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended March31 2017.

1. FINANCIAL RESULTS

The financial performance of your Company for the year ended March 31 2017 issummarised below:

(Rupees in Million)

Particulars Standalone Consolidated
FY 2016-17 FY 2015-16 FY 2016-17 FY 2015-16
Revenue from Operations (Net) 531.45 431.13 4413.41 3369.50
Other Income 361.15 181.49 163.61 54.95
Operating Profit before Finance Cost Depreciation and Tax 557.26 268.39 830.27 274.08
Less: Finance Cost 32.82 2.07 42.64 11.48
Profit before Depreciation and Tax 524.44 266.32 787.63 262.6
Less: Depreciation and amortisation expenses 63.27 42.35 224.78 175.38
Profit before Tax 461.17 223.97 562.85 87.22
Less: Tax 459.39 (194.74) 127.51 (0.63)
Profit from ordinary activities 1.78 418.71 435.34 87.85
Share of profit / (Loss) of non-controlling interest - - (5.74) (5.86)
Profit for the period 1.78 418.71 441.08 93.71
Other comprehensive income/(Expenses)
Items that will not be reclassified to Profit or loss net of tax 2.67 (0.29) 6.82 (0.81)
Total comprehensive income/(Expenses) for the period 4.45 418.42 447.90 92.90
Add: Balance brought forward from previous year (150.09) (563.51) (809.07) (896.97)
Less: Other adjustment - - (3.62) -
Profit available for appropriation (145.64) (145.09) (364.79) (804.07)
Transfer to General Reserve - - - -
Transfer to Debenture Redemption Reserve - 5.00 - 5.00
Excess Losses pertaining to minority - - - -
Adjustment on account of depreciation - - - -
Balance carried over to Balance Sheet (145.64) (150.09) (364.79) (809.07)

2. OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE

Vide notification dated February 16 2015 the Ministry of Corporate Affairs notifiedthe Indian Accounting Standards (“Ind AS”) to be applicable to certainclass of companies including listed companies for the accounting periods beginning on orafter April 1 2016 with comparatives to be provided for the period ending on March 312016. Ind AS has replaced the existing Indian GAAP prescribed under section 133 of theCompanies Act 2013. The standalone and consolidated financial statements for thefinancial year ended March 31 2017 forming part of this Annual Report have beenprepared in accordance with Ind AS with a transition date of April 1 2015. Explanationscapturing areas of differences and reconciliations from Indian GAAP to Ind AS have beenprovided in the notes to accounts to the standalone and consolidated financial statements.

Net revenue from operations on standalone basis increased to Rs 531.45 million asagainst Rs 431.13 million in the previous year a growth of 23.27%. The Company has earnedProfit before Finance Cost and Depreciation of Rs 557.26 million during the year underreview compared to profit of Rs 268.39 million during FY 2015-16 grew by 107.63%. Theabove results have been achieved by service led sales resulted in more comprehensivecustomer engagement. After providing for Depreciation Prior period adjustments andTaxation the Net Profit for the year under review stood at Rs 1.78 million compared toprofit of Rs

418.71 million during FY 2015-16. Current year's net profit remained lesser in view oftax impact under IND AS transition.

Net revenue from operations on consolidated basis increased to Rs 4413.41 million asagainst Rs 3369.50 million in the previous year a growth of 30.98%. The Company hasearned Profit before Finance Cost and Depreciation of Rs 830.27 million during the yearunder review compared to Rs 274.08 million during FY 2015-16 grew by 202.93%. The aboveresults have been achieved by service led sales resulted in more comprehensive customerengagement. After providing for Depreciation Prior period adjustments and Taxation theNet profit after minority interest for the group for the current year stood at Rs 441.08million as against profit of Rs 93.71 million in the previous year a growth of 370.69 %.

3. CONSOLIDATED ACCOUNTS

The Consolidated Financial Statements of your Company for the Financial Year 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules made thereunder applicable Accounting Standards and the provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as the “Listing Regulations”). The Consolidated Financial Statements havebeen prepared on the basis of audited financial statements of your Company itssubsidiaries (including step down subsidiaries) and associate companies as approved bythe respective Board of Directors.

4. SUBSIDIARIES

During the year the Board of directors reviewed the affairs of the subsidiaries. Inaccordance with Section 129(3) of the Companies Act 2013 the Consolidated FinancialStatements include the Financial Statements of its Subsidiaries. Further a separatestatement containing the salient features of the financial statements of subsidiaries ofthe Company in the prescribed Form AOC-1 has been disclosed in the Consolidated FinancialStatements given in this Report as Annexure - A.

Any member desirous of obtaining a copy of the said financial statements may write tothe Company at the Registered Office of your Company. The financial statements includingthe consolidated financial statements financial statements of subsidiaries and all otherdocuments required to be attached to this report have been uploaded on the website of yourCompany www.infibeam.ooo. These documents shall also be available for inspection at theregistered office of the Company during business hours up to the date of ensuing AGM asrequired under Section 136 of the Companies Act 2013.

During the year under review your Company has formed a Wholly Owned Subsidiary Companywith Registration No. 93697 as a Free Zone Limited Liability Company namely “InfibeamGlobal EMEA FZ - LLC” (Incorporation Date 17.07.2016) at Dubai Internet CityDubai to develop the business activities of the Company in Asia Middle East and Africa.

5. MERGER OF AVENUES (INDIA) PRIVATE LIMITED (“CC AVENUE”) WITH THECOMPANY

In order to improve operational efficiency the Board of Directors of the Company inits meeting held on July 13 2017 after considering the recommendations of the AuditCommittee approved the amalgamation of Avenues (India) Private Limited with the Companythrough a Scheme of Amalgamation (“Scheme”) under Section 230 to 234 of theCompanies Act 2013 subject to necessary approvals of Shareholders Creditors theRegistrar of Companies the Stock Exchanges Hon'ble National Company Law TribunalSecurities and Exchange Board of India and/or other competent statutory/regulatoryauthorities and other third party approvals as may be applicable. The Company has appliedfor observation letters on July 17 2017 to BSE Limited and the National Stock Exchange ofIndia Limited in terms of Regulation 37 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

6. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report highlighting the important aspects ofthe business of the Company and its Subsidiaries is given in this Report appearingseparately on page 24.

7. BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report as per Regulation 34 of the Listing Regulationsdetailing the various initiatives taken by your Company on the environmental social andgovernance front is given in this Report as Annexure - B.

8. TRANSFER TO RESERVES

The Company does not propose to transfer any amount to general reserve.

9. DIVIDEND

In order to conserve resources for business expansion your directors do not recommendany dividend for the Financial Year 2016-17.

The Dividend Distribution policy is available on your Company's website www.infibeam.and annexed with this Annual Report as Annexure - C.

10. MATERIAL CHANGES AND COMMITMENTS AFFECTING

THE FINANCIAL POSITION

No material changes and commitments other than disclosed as part of this reportaffecting the financial position of the Company have accrued between March 31 2017 andthe date of the report.

11. PUBLIC DEPOSITS

During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).

12. CHANGE IN SHARE CAPITAL

During the Financial Year 2016-17 the Paid up Share Capital of the Company has beenincreased from Rs 530.91 million to Rs 538.94 million pursuant to allotment of 802599Equity Shares of the face value of Rs 10/- each.

The paid up Equity Share Capital as on March 31 2017 was Rs 538939200.

13. ALLOTMENT

The Company during the Financial Year 2016-17 after obtaining necessary approvalshas allotted 1. 270900 Equity Shares of Rs 10/- each on September 26 2016 to theEmployees under both ESOP Schemes. After the issue the Equity Share Capital of theCompany stood at Rs 533.62 million.

2. 23532 Equity Shares of Rs 10/- each on December 8 2016 to the Employees underboth ESOP Schemes. After the issue the Equity Share Capital of the Company stood at Rs533.86 million.

3. 66986 Equity Shares of Rs 10/- each on February 6 2017 to the Employees underboth ESOP Schemes. After the issue the Equity Share Capital of the Company stood at Rs534.53 million.

4. 4818 Equity Shares of Rs 10/- each on March 24 2017 to the Employees under bothESOP Schemes. After the issue the Equity Share Capital of the Company stood at Rs 534.58million.

5. 436363 Equity Shares of Rs 10/- each and at premium of Rs 1365/- on March 242017 to the Bennett Coleman and Company Limited (“BCCL”) Non-promoter BodyCorporate on preferential issue basis upon conversion of one Convertible Warrant of Rs 600million (Rupees Six Hundred Million Only) after complying provisions and guidelines underthe Companies Act 2013 SEBI (Issue of Capital & Disclosure Requirement) Regulations2009 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Afterthe issue the Equity Share Capital of the Company stood at Rs 538.94 million.

14. ALLOTMENT OF ONE CONVERTIBLE WARRANT TO NON-PROMOTER ON PREFERENTIAL BASIS:

The Company after obtaining necessary approvals has issued and allotted oneconvertible warrant of Rs 600 million on March 6 2017 to Non-Promoter(s) on PreferentialIssue basis after complying relevant provisions and guidelines under the Companies Act2013 SEBI & Listing Regulations. The said warrant was converted in to 436363 EquityShares of Face Value of Rs 10/- each and Premium of Rs 1365/- per Equity Share on March24 2017.

There are no material variations between the projections and actual utilisation of thefunds raised through Preferential Issue by the Company during the year 2016-17.

15. SPLIT OF EQUITY SHARES

The Board of Directors of the Company at its meeting held on July 13 2017 hasapproved the split of Equity Shares of the Company from Face Value of Rs 10/- each into 10Equity Shares of Face Value of Rs 1/- each subject to approval of members of the Company.The said split of Equity Shares was approved by the members in the Extra Ordinary GeneralMeeting held on August 11 2017 and our Company is in the process of implementing the saiddecision of split of Equity Shares.

16. DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTEDOR HAVE RESIGNED DURING THE YEAR

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. VishalMehta Managing Director is due to retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment. The details of Directorbeing recommended for re-appointment as required under the Listing Regulations arecontained in the accompanying Notice convening the ensuing Annual General Meeting of theCompany.

The Independent Directors of your Company are not liable to retire by rotation.

Mr. Vishal Mehta Managing Director Mr. Hiren Padhya Chief Financial Officer and Mr.Shyamal Trivedi Vice President & Company Secretary are the Key Managerial Personnelof your Company in accordance with the provisions of Sections 2(51) 203 of the CompaniesAct 2013 read with Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any statutory modification(s) or re-enactment(s) for the time beingin force).

17. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2016-17 6 (Six) Board meetings were held. For details ofthe meetings of the board please refer to the Corporate Governance Report which formspart of this report.

18. DIRECTOR'S RESPONSIBILITIES STATEMENT

Pursuant to the requirement of Section 134 of the Companies Act 2013 it is herebyconfirmed:

(i) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments 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 2017being end of the Financial Year 2016-17 and of the profit of the Company for the year;

(iii) that the Directors had taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) That the Directors had prepared the annual accounts on a going concern basis.

(v) The Directors in the case of a Listed Company had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively.

(vi) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

19. DECLARATION BY INDEPENDENT DIRECTOR(S) AND REAPPOINTMENT IF ANY

Your Company has received declaration from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of theCompanies Act 2013 read with the Schedules and Rules issued there under as well as SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

20. NOMINATION AND REMUNERATION POLICY OF THE COMPANY

The Company's Policy relating to appointment of Directors payment of managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 isavailable on the Company's website www.infibeam. ooo.

There has been no change in the policy since last fiscal. We affirm that theremuneration paid to the directors if any is as per the terms laid out in the Nominationand Remuneration Policy of the Company.

21. ANNUAL EVALUATION OF BOARD PERFORMANCE

The Board of Directors have carried out an annual evaluation of its own performanceits Committees and individual Directors pursuant to the requirements of the Act andListing Regulations.

Further the Independent Directors at their exclusive meeting held during the yearreviewed the performance of the Board its Chairman and Non-Executive Directors and otheritems as stipulated under the Listing regulations.

22. AUDITORS

I. Statutory Auditors

A. At the Annual General Meeting held on September 30 2014 M/s. B S R &Associates LLP Chartered Accountants were appointed as statutory auditors of the Companyto hold office till the conclusion of the Annual General Meeting to be held in theFinancial Year 2018-19. In terms of the first proviso to Section 139 of the Companies Act2013 the appointment of the auditors shall be placed for ratification at every AnnualGeneral Meeting. Accordingly the appointment of M/s. B S R & Associates LLPChartered Accountants as Statutory auditors of the Company is placed for ratification bythe shareholders.

B. At the Annual General Meeting held on September 15 2016 M/s. S R B C & Co.LLP Chartered Accountants were appointed as statutory auditors of the Company to holdoffice till the conclusion of the Annual General Meeting to be held in the Financial Year2020-21. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of M/s. S R B C & Co. LLP Chartered Accountantsas Statutory auditors of the Company is placed for ratification by the shareholders.

Your Company has received written consent(s) and certificate(s) of eligibility inaccordance with Sections 139 141 and other applicable provisions of the Companies Act2013 and Rule issued thereunder (including any statutory modification (s) orre-enactment(s) for the time being in force) from both M/s. S R B C & Co. LLP andM/s. B S R & Associates LLP. Further both have confirmed that they hold a validcertificate issued by the Peer Review Board of The Institute of Chartered Accountants ofIndia (ICAI) as required under the Listing Regulations.

STATUTORY AUDITORS' REPORT

During the period under review no incident of frauds was reported by the StatutoryAuditors pursuant to Section 143 (12) of the Companies Act 2013.

I . Secretarial Auditor

In terms of Section 204 of the Companies Act 2013 the Board of Directors of yourCompany at its meeting held on May 30 2017 has appointed M/s. SPANJ & AssociatesCompany Secretaries as the Secretarial Auditor to conduct an audit of the secretarialrecords for the Financial Year 2017-18.

SECRETARIAL AUDIT REPORT

Your Company has obtained Secretarial Audit Report as required under Section 204(1) ofthe Companies Act 2013 from M/s. SPANJ & Associates Company Secretaries. The saidReport is attached with this Report as Annexure D.

There are no remarks / qualification in the Secretarial Audit Report hence noexplanation has been offered.

23. EXTRACT OF ANNUAL RETURN

The extract of Annual return in Form MGT - 9 has been attached herewith as Annexure E.

24. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of loans guarantees and investments under the provisions of Section 186 ofthe Companies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules2014 as on March 31 2017 are set out in Note [26] to the Standalone FinancialStatements forming part of this report.

25. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 your Company has formulated a Policy onRelated Party Transactions which is also available on Company's website atwww.infibeam.ooo. The Policy intends to ensure that proper reporting approval anddisclosure processes are in place for all transactions between the Company and RelatedParties. All Related Party Transactions are placed before the Audit Committee for reviewand approval. Prior omnibus approval is obtained for Related Party Transactions on aquarterly basis for transactions which are of repetitive nature and / or entered in theOrdinary Course of Business and are at Arm's Length.

All Related Party Transactions entered during the year were in Ordinary Course of theBusiness and on Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements were entered during the year by your Company. Accordinglythe disclosure of Related Party Transactions as required under Section 134(3) (h) of theCompanies Act 2013 in Form AOC-2 is not applicable.

26. PARTICULARS OF EMPLOYEES

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 is attached as Annexure - F which forms part of thisreport.

The statement containing particulars of employees as required under Section 197 (12) ofthe Act read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided in a separate annexure forming part of thisreport. Further the Report and the accounts are being sent to the members excluding theaforesaid annexure. In terms of Section 136 of the Act the said annexure is open forinspection at the Registered Office of the Company till the date of the ensuing AnnualGeneral Meeting. Any shareholder interested in obtaining a copy of the same may write tothe Company Secretary.

27. COMMITTEES OF THE BOARD

As on March 31 2017 the Board had Four (4) Committees: the audit committee thenomination and remuneration committee the stakeholder's relationship committee and thecorporate social responsibility committee in term of the requirement of the Act andListing Regulations. For detailed note on the composition of the Committees is provided inthe Corporate Governance Report which forms part of this report.

28. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has incurred losses in two Financial Years out of three immediatelypreceding Financial Years. Hence the Company is not required to spend any amount for CSRactivities in Financial Year 2016-17.

The CSR policy is available on your Company's website www. infibeam.ooo.

29. VIGIL MECHANISM

Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177(10) of the Companies Act 2013 andRegulation 22 of the Listing Regulations. The employees can raise concerns regarding anydiscrimination harassment victimisation any other unfair practice being adopted againstthem or any instances of fraud by or against your Company.

Any incidents that are reported are investigated and suitable action taken in line withthe whistle blower policy. The Whistle Blower Policy is also available on your Company'swebsite www. infibeam.ooo.

30. INTERNAL FINANCIAL CONTROLS

The Board of Directors of your Company is satisfied with the Internal Financial Controlprocess. These are reviewed periodically and made part of work instructions or processesin the Company. The Company continuously tries to automate these controls to increase itsreliability. The Directors have in the Directors Responsibility Statement under paragraph(e) confirmed the same to this effect.

31. RISK MANAGEMENT

The Company has a Risk Management Policy which from time to time is reviewed bythe Audit Committee of Directors as well as by the Board of Directors. The Policy isreviewed by assessing the threats and opportunities that will impact the objectives setfor the Company as a whole. The Policy is designed to provide the categorisation of riskinto threat and its cause impact treatment and control measures. As part of the RiskManagement policy the relevant parameters for protection of environment safety ofoperations and health of people at work and monitored regularly with reference tostatutory regulations and guidelines defined by the Company.

32. DETAILS OF EMPLOYEE STOCK OPTION PLANS

During the Financial Year 2016-17 358223 options were granted to eligible employeesof the Company and 366236 options were exercised by the employees after vesting in boththe ESOP Schemes. Accordingly the Company has made the allotment of 270900 equityshares on September 26 2016 23532 equity shares on December 8 2016 66986 equityshares on February 6 2017 and 4818 equity shares on March 24 2017 against the optionsexercised by the employees.

The applicable disclosures as stipulated under Regulation 14 of SEBI (Share BasedEmployee Benefits) Regulations 2014 with regard to Employees Stock Option Plan of theCompany are available on the website of the Company at www.infibeam. ooo and web link forthe same is http://www.infibeam.ooo/ investordesk/ESOP details.

33. EMPLOYEE SAR SCHEME

The Board of Directors of the Company at its meeting held on July 13 2017 has approvedthe Infibeam Stock Appreciation Rights Scheme 2017 (‘Scheme') as per SEBI (ShareBased Employee Benefits) Regulation 2014 for employees of the Company as well as forSubsidiary Companies and also to set up Infibeam Employees Welfare Trust(“Trust”) for the implementation of Scheme to acquire the Equity Shares fromsecondary market by the Trust. The said Scheme was approved by the members in the ExtraOrdinary General Meeting held on August 11 2017.

34. CORPORATE GOVERNANCE REPORT

In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a certificate from the Auditors on its compliance formsan integral part of this report is attached herewith as Annexure G.

35. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION

AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required in respect of conservation of energy and technologyabsorption has not been furnished considering the nature of activities undertaken by theCompany during the year under review.

Further during the year under review details of foreign exchange earnings and outgoare as given below:

(Rupees in Million)
Particulars Financial Financial
Year Year
2016-17 2015-16
Earning in Foreign Currencies 249.78 129.34
Expenditure in Foreign Currencies 40.23 17.85

36. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has in place a Policy on Prevention of Sexual Harassment in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. Internal Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment. All employees are covered under the policy. Nocomplaint has been received by the Company under this Policy during the year 2016-17.

37. CODE OF CONDUCT

The Board of Directors has laid down a Code of Conduct applicable to the Board ofDirectors and Senior Management. All the Board Members and Senior Management personnelhave affirmed compliance with the code of conduct. The Code of Conduct of Board ofDirectors is also available on your Company's website www.infibeam.ooo.

38. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.

39. ACKNOWLEDGEMENTS

The Board places on record its appreciation for the continued co-operation and supportextended to the Company by customers vendors regulators banks financial institutionsrating agencies stock exchanges and depositories auditors legal advisors consultantsbusiness associates and all the employees with whose help cooperation and hard work theCompany is able to achieve the results.

The Board deeply acknowledges the trust and confidence placed by the consumers of theCompany and all its shareholders.

For and on behalf of Board of Directors of
Infibeam Incorporation
Ajit Mehta
Place : Ahmedabad Chairman
Date : August 14 2017 [DIN: 01234707]