Your Directors have pleasure in presenting the 18th Annual Report of the Companytogether with the Audited Financial Statements for the financial year ended March 312017.
|Financial Highlights || || |
(Rs. in Lakhs)
| ||Consolidated ||Consolidated ||Standalone ||Standalone |
|Particulars || || || || |
| ||FY 2016-17 ||FY 2015-16 ||FY 2016-17 ||FY 2015-16 |
|Total Revenue ||245200.48 ||225585.58 ||46623.05 ||45940.62 |
|Gross Profit before Interest || || || || |
| ||72999.90 ||67361.55 ||1342.82 ||1057.98 |
|Depreciation & Tax || || || || |
|Less: Interest ||1524.13 ||1589.69 ||1523.27 ||1588.72 |
|Depreciation ||9574.25 ||6364.72 ||142.71 ||217.84 |
|Profit before Tax ||61901.53 ||59407.14 ||(323.17) ||(748.58) |
|Less: Provision for Tax ||19025.31 ||19518.80 ||11.02 ||11.19 |
|Less: Deferred Tax ||(48.41) ||(62.81) ||(53.39) ||(106.23) |
|Profit after Tax ||42924.62 ||39951.14 ||(280.79) ||(653.54) |
|Add: Other comprehensive income ||(60.54) ||(62.31) ||(7.59) ||(12.46) |
|Total comprehensive income for the || || || ||(666.00) |
| ||42864.09 ||39888.84 ||(288.38) || |
|period || || || || |
|Balance Brought forward from the || || || ||8453.24 |
| ||135244.21 ||95356.40 ||7786.21 || |
|previous year || || || || |
|Profit available for appropriations ||178108.29 ||135245.23 ||7497.83 ||7787.24 |
|Less: Dividend ||476.25 ||- ||476.25 ||- |
|Less: Tax on Dividends ||96.96 ||- ||96.95 ||- |
|Less: Amount transferred to retained earnings as per || || || || |
| ||- ||- ||- ||- |
|Schedule II of Companies Act 2013 || || || || |
|Less: Transferred to General Reserve ||- ||1.03 ||- ||1.03 |
|Profit Carried to Balance Sheet ||177535.08 ||135244.21 ||6924.63 ||7786.21 |
During the year under review your Company achieved a consolidated turnover of Rs.245200.48 lakhs as against Rs. 225585.58 lakhs in the previous year. Your Company hasearned a consolidated gross profit of Rs. 72999.90 lakhs before interest depreciationand tax as against Rs.67361.55 lakhs in the previous year. After deducting financialcharges of Rs.1524.13 lakhs depreciation of Rs.9574.25 lakhs and provision for tax ofRs.19025.31 lakhs the operations resulted in a net profit of Rs.42924.62 lakhs asagainst Rs. 39951.14lakhs in the previous year.
The digital segment revenues grew by 9.78 % and overall revenue growth is 8.66 %compared to previous year. There is no change in the nature of business carried on by theCompany during the year under review. Further information on the Business Overview andOutlook and the state of the affairs of the Company and the Industry in which it operatesis discussed in detail in the Management Discussion & Analysis segment annexed to thisreport.
There are no Material Changes and Commitments affecting the financial position of theCompany which occurred between the end of the financial year to which the financialstatements relate and the date of this Report.
During the year the Company has not accepted any public deposits..
Loans Guarantees or Investments
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
The Company has formulated a policy for determining material' subsidiariespursuant to the provisions of the Listing Agreement. The said policy is available at theCompany website www.lycos.com.
Pursuant to Proviso to Section129(3) of the Act a statement containing the briefdetails of performance and financials of the Subsidiary Companies for the financial yearended March 312017 is attached to Financial Statements of the Company.
During the year under review the Company formed a wholly owned subsidiary "LILProjects Private Limited".
Consolidated financial statements
In compliance with Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and in compliance with the provisions of Section 129(3) andother applicable provisions of the Companies Act 2013 and the Accounting Standards onconsolidated financial statements your Directors have pleasure in attaching theconsolidated financial statements for the financial year ended March 31 2017 which formspart of the Annual Report.
Management's discussion and analysis
Management's discussion and analysis forms part of this annual report and is annexed tothe Board's report.
Pursuant to the provisions of Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Corporate
Governance has been incorporated in the Annual Report for the information of theshareholders. A certificate from the Practicing Company Secretary regarding compliancewith the conditions of Corporate Governance as stipulated under the said Schedule V ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 also forms partof this Annual Report.
Transfer of Un-Claimed Dividend to the Investor Education and Protection Fund.
Your Company during the year under review transferred the Unclaimed Dividend pertainingto the Financial Year 2008-09 to the Investor Education and Protection Fund in compliancewith the provisions of Section 125 of the Companies Act 2013.
Directors and key Managerial Personnel
In pursuance of Section 152 of the Companies Act 2013 and the Rules framed thereunder Mr. M. Suresh Kumar Reddy CMD is liable to retire by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for reappointment.
At the 17th Annual General Meeting of the Company held on 27th December 2016 theCompany has appointed Dr. K. Jayalakshmi Kumari as Independent Director under theCompanies Act 2013 for 5 years term which ends on 16th May 2021 and Mr. Y. Ramesh Reddyas Executive Director (Finance) & Group CFO for a period of 5 years w.e.f. 09.05.2016.
A declaration of Independence in compliance with Section 149(6) of the Companies Act2013 has been taken on record from all the independent directors of the Company.
Mr. Y. Ramesh Reddy resigned as Independent Director w.e.f. 09th May 2016. Mrs. S. V.Rajyalaxmi Reddy has resigned as Director of the Company w.e.f. 18th May 2016. The Boardof Directors records its sincere appreciation and recognition of the valuable contributionand services rendered by both during their association with the Company.
The Board of Directors appointed Mr. Raghunath Allamsetty as an Independent Director ofthe Company w.e.f.27th December 2016.
The resolution seeking approval of the Members for the appointment of Mr. RaghunathAllamsetty as an Independent Director for a term of five years have been incorporated inthe notice of the annual general meeting of the Company.
The Company has received notice under Section 160 of the Act along with the requisitedeposit proposing the appointment of Mr. Raghunath Allamsetty as an Independent Director.
The Policy on appointment and remuneration for Directors Key Managerial Personnel andother employees as specified under Section 178(3) of the Act has been disclosed inCorporate Governance Report.
As required under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 an evaluation of all the directors the Board as a wholeand its committees was conducted based on the criteria and framework adopted by the Board.
The details of the said evaluation have been enumerated in the Corporate GovernanceReport which is annexed to the Boards' Report.
Nomination and Remuneration Policy
The Company has adopted the Nomination and Remuneration Policy for the Directors KeyManagerial Personnel and other employees pursuant to the provisions of the Companies Act2013 and SEBI(LODR) Regulations 2015.
The Nomination and Remuneration Committee has considered the following factors whileformulating the Policy: (i) The level and composition of remuneration is reasonable andsufficient to attract retain and motivate Directors of the quality required to run theCompany successfully; (ii) Relationship of remuneration to performance is clear and meetsappropriate performance benchmarks; and (iii) Remuneration to Directors Key ManagerialPersonnel and Senior Management involves a balance between fixed and incentive payreflecting short and long-term performance objectives appropriate to the working of theCompany and its goals.
It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company. Details of theRemuneration Policy are given in the Corporate Governance Report.
Board and Committee Meetings
Nine meetings of the Board were held during the year. Detailed information regardingthe meetings of the Board are included in the report on Corporate
Governance which forms part of the Board's Report.
The details of Boards Committees the Audit Committee the Nomination and RemunerationCommittee Stakeholders Relationship Committee and the Corporate Social ResponsibilityCommittee have been disclosed separately in the Corporate Governance Report which isannexed to and forms part of this annual report.
The Audit Committee comprises Mr. Raghunath Allamsetty Mr. Subrato Saha Mr. VijayKancharla and Dr. K. Jayalakshmi Kumari as Members. There have not been any instancesduring the year when recommendations of the Audit Committee were not accepted by theBoard.
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Act and the SEBI (LODR) Regulations 2015.
Related Party Transactions
All related party transactions that were entered into during the financial year were inthe ordinary course of the business of the Company and were on an arm's length basis.There were no materially significant related party transactions entered by the Companyduring the year with the Promoters Directors Key Managerial Personnel or other personswhich may have a potential conflict with the interest of the Company.
The policy on related party transactions as approved by the Audit Committee and theBoard of Directors is hosted on the website of the Company www.lycos.com. Prior omnibusapprovals from the Audit Committee are obtained for transactions which are repetitive andalso normal in nature. Further disclosures are made to the Committee and the Board on aquarterly basis.
Since all related party transactions entered into by the Company were in the ordinarycourse of business and were on an arm's length basis the requirement of furnishing therequisite details in Form AOC-2 is not applicable to the Company.
Details of the transactions with Related Parties are provided in the accompanyingfinancial statements.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are as follows:
A. Details of Conservation of Energy
The operations of your company do not consume high levels of energy. The Company useselectric energy for its equipment such as computer terminals air conditioners lightingand utilities in the work premises. Adequate measures have been taken to conserve energyby using energy-efficient computers and equipment with the latest technologies.
However the requirement of disclosure of particulars with respect to conservation ofenergy as prescribed in the Section 134(m) of the Companies Act 2013 read with Rule 8(3)of Companies (Accounts) Rules 2014 are not applicable to the Company and hence notprovided.
B. Technology Absorption
The Information Technology (IT) and Information Technology Enabled Services (ITES)Industry are subject to high rate of technological obsolescence.
The Company's business is Digital Marketing and
Software Development. The change in the industry paradigm is dynamic. The Company iscontinuously updating these changes and constantly evaluating these developments toimprove its capabilities towards the industry. Accordingly research and development ofnew services display advertising platforms and methodologies continue to be ofimportance to us. This allows us to enhance quality productivity and customersatisfaction through continuous improvements and innovations. As part of the continuousthrust on R&D the company is also focused on Solutions Research and Vertical FocusResearch. These would identify new ideas which would enable business process improvementfor customers and would be aligned with the business strategy and growth opportunities ofthe organization. Our R & D activities are not capital intensive and we do notspecifically provide for the same in our books.
C. Foreign Exchange Earnings and outgo
The particulars of earnings and expenditure in foreign exchange during the year aregiven in notes to Standalone financial statements.
M/s. P. Murali & Co. the statutory auditors of the Company hold office till theconclusion of the 18th Annual General Meeting of the Company. The Board has recommendedthe appointment of M/s. Chandra Babu Naidu & Co. as the statutory auditors of theCompany in their place for a term of five consecutive years from the conclusion of the18th Annual General Meeting of the Company scheduled to be held in the year 2017 till theconclusion of the 23rd Annual General Meeting to be held in the year 2022 for approval ofshareholders of the Company based on the recommendation of the Audit Committee.
The Independent Auditors' Report to the Members of the Company on the FinancialStatements for the Financial Year ended March 31 2017 does not contain anyqualification(s) or adverse observations.
The Board places on record its sincere appreciation of the services rendered by M/s. P.Murali & Co.
Chartered Accountants during their tenure as the Statutory Auditors of the Company.
In compliance with the provisions of Section 204(1) of the Companies Act 2013 theCompany has appointed Mr. A. Sridhar Practicing Company Secretary to conduct SecretarialAudit of the records and documents of the Company for the Financial Year 2016-17. TheSecretarial Audit Report for the Financial Year ended 31st March 2017 in Form MR-3 isannexed to the Board's Report - Annexure -A and forms part of this Report. TheSecretarial
Auditors' Report to the Members of the Company for the Financial Year ended March 312017 does not contain any qualification(s) or adverse observations
Significant and material orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in the future.
Extract of Annual Return
The extract of the Annual Return of the Company in Form MGT-9 in compliance withSection 92 of the Companies Act 2013 read with applicable Rules made there under isannexed to this Report as Annexure- B.
Internal Financial Controls and Risk Management
The details relating to internal financial controls and their adequacy and RiskManagement are included in the Management Discussion and Analysis Report.
Vigil Mechanism/ Whistle Blower Policy
The Company had implemented a vigil mechanism whereby employees directors and otherstakeholders can report matters such as unethical behavior actual or suspected fraud orviolation of the Company's Code of Conduct or ethics policy. The Policy provides foradequate safeguards against victimization of employees who avail of the mechanism and alsoprovides for direct access to the Chairman of the Audit Committee. It is affirmed that nopersonnel of the Company has been denied access to the Audit Committee. The VigilMechanism
Policy is available on the Company's website www.lycos.com.
Particulars of Employees and related disclosures:
No Salary is being paid to Directors of the Company including Managing Director otherthan sitting fee to Independent Directors and hence the details as required to bedisclosed under Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration to Key Managerial Personnel) Rules 2014 is not applicable.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in a separate annexure forming part of this report.Further the report and the accounts are being sent to the members excluding the aforesaidannexure. In terms of Section 136 of the Act the said annexure is open for inspection atthe Registered Office of the Company. Any shareholder interested in obtaining a copy ofthe same may write to the Company Secretary.
There was no employee employed throughout the year who was in receipt of remunerationin aggregate more than One Crore Two Lakh Rupees. There was no employee employedthroughout the year or any part thereof who was in receipt of remuneration at a rate inaggregate more than Eight Lakh Fifty thousand Rupees per month.
Corporate Social Responsibility
The provisions of Section 135 of the Companies Act 2013 are not applicable to theCompany as it ceased to be a Company covered under subsection (1) of Section 135 of theCompanies Act 2013 in the reporting financial year; hence disclosure in this regard isnot provided.
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. During the financial year ended 31st March 2017 the Companyhas not received any complaints pertaining to Sexual Harassment.
Directors' Responsibility Statement:
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 your Directorsto the best of their knowledge and ability confirm as under:
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the Company for that period;
(c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) The directors had prepared the annual accounts on a going concern basis;
(e) The directors have laid down internal financial controls based on internal controlsframework established by the Company which in all material respects were adequate andoperating effectively.
(f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors place on record their sincere appreciation and thanks for the valuablecooperation and support received from the employees of the Company at all levelsCompany's Bankers Associates partners clients vendors and Members of the Company andlook forward for the same in equal measure in the coming years.
For and on behalf of the Board of Directors
(M. Suresh Kumar Reddy)
Chairman and Managing Director
Place: Hyderabad Date: August 21 2017