We are pleased to present the 17th Annual Report of your Company on business andoperations along with the Audited Financial Statements and the Auditors Report forthe Financial Year ended March 31 2016.
1. Financial Highlights
| ||Consolidated ||Consolidated ||Standalone ||Standalone |
|Particulars ||FY 2015-16 ||FY 2014-15 ||FY 2015-16 ||FY 2014 -15 |
|Total Revenue ||226078.56 ||197117.32 ||46433.61 ||50282.72 |
|Gross Profit before Interest Depreciation & Tax ||67966.93 ||58588.99 ||1841.04 ||2994.66 |
| || || || || |
|Less: Interest ||1589.69 ||2252.30 ||1588.72 ||1929.78 |
|Depreciation ||6364.72 ||4137.70 ||217.84 ||1052.58 |
|Profit before Tax ||60012.52 ||52198.99 ||34.48 ||12.30 |
|Less: Provision for Tax ||19518.80 ||18038.60 ||11.19 ||3.99 |
|Less: Deferred Tax Liability ||(11.02) ||(61.38) ||(11.02) ||(166.13) |
|Profit after Tax ||40504.74 ||34221.77 ||34.31 ||174.44 |
|Balance Brought forward from the previous year ||91675.27 ||59512.92 ||12872.47 ||13034.53 |
|Profit available for appropriations ||132180.01 ||93734.69 ||12906.79 ||13208.98 |
|Less: Amount transferred to retained earnings as per Schedule II of Companies Act 2013 ||- ||2054.18 ||- ||331.27 |
|Less: Transferred to General Reserve ||1.03 ||5.23 ||1.03 ||5.23 |
|Profit Carried to Balance Sheet ||131605.78 ||91675.27 ||12332.55 ||12872.47 |
During the year under review your Company achieved a consolidated turnover of Rs.226078.56 lakhs as against Rs. 197117.32 lakhs in the previous fiscal. Your Company hasearned a consolidated gross profit of Rs. 67966.93 lakhs before interest tax anddepreciation as against Rs. 58588.99 lakhs in the previous year. After deducting financialcharges of Rs. 1589.69 lakhs providing for depreciation of Rs. 6364.72 lakhs andprovision for tax of Rs. 19518.80 lakhs the operations resulted in a net profit of Rs.40504.74 lakhs as against Rs. 34221.77 lakhs in the previous year.
The digital segment revenues grew by 21.8% and overall revenue growth is 15.3% comparedto last year. There is no change in the nature of business carried on by the Companyduring the year under review. Further information on the Business Overview and Outlook andthe state of the affairs of the Company and the Industry in which it operates isdiscussed 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.
Your Directors have recommended a dividend of Rs.0.10 (i.e. 5%) per equity share ofRs.2 each for the financial year ended March 31 2016 amounting to Rs.57320678/-(inclusive of tax of Rs.9695528). The dividend payout is subject to approval of membersat the ensuing Annual General Meeting.
Transfer to General Reserve
The Company proposes to transfer an amount of Rs.102945/- lakhs to the GeneralReserve out of the amount available for appropriations.
The Company has not accepted any fixed deposits from public.
Loans Guarantees or Investments
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial 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 Provision to Section 129 (3) of the Act a statement containing the briefdetails of performance and financials of the Subsidiary Companies for the financial yearended March 31 2016 is attached to Financial Statements of the Company.
During the year under review the Company and Apollo International Limited formed aJoint Venture Company "Apollo Lycos Netcommerce 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 2016 which formspart of the Annual Report.
Managements discussion and analysis
Managements discussion and analysis forms part of this annual report and isannexed to the Boards report.
Pursuant to the provisions of Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Corporate Governance has beenincorporated in the Annual Report for the information of the shareholders. A certificatefrom the Practicing Company Secretary regarding compliance with the conditions ofCorporate Governance as stipulated under the said Schedule V of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 also forms part of this Report.
Directors and key Managerial Personnel
In pursuance of Section 152 of the Companies Act 2013 and the rules framed thereunder Mr. Vijay Kancharla Executive Director is liable to retire by rotation at theensuing Annual General Meeting and being eligible has offered himself for reappointment.
At the 16th Annual General Meeting of the Company held on 28th September 2015 theCompany has appointed Mr. Michael Loren Mauldin and Mr. Subrato Saha as IndependentDirectors under the Companies Act 2013 for 5 years term which ends at conclusion of the21st Annual General Meeting.
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.
During the year under review Mr. Raghunath Allamsetty and Mr.Vijaya Bhasker ReddyMaddi ceased to be the Directors of the Company on completion of their tenure onSeptember 29 2015. The Board of Directors records its sincere appreciation andrecognition of the valuable contribution and services rendered by both during theirassociation with 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 Board of Directors appointed Mr. Y. Ramesh Reddy as an Additional Director andExecutive Director (Finance) & Group CFO w.e.f. 09th May 2016 and Dr. K. JayalakshmiKumari as an Independent Director of the Company w.e.f.17th May 2016.
The resolutions seeking approval of the Members for the appointment of Mr. Y. RameshReddy as Executive Director (Finance) & Group CFO and Dr. K. Jayalakshmi Kumari asIndependent Director for a term of five years have been incorporated in the notice of theannual general meeting of the Company.
The Company has received notices under Section 160 of the Act along with the requisitedeposit proposing the appointment of Mr. Y. Ramesh Reddy as Director and Dr. K.Jayalakshmi Kumari as Independent Director.
During financial year under review Mrs. K Anusha has resigned from the position ofCompany Secretary w.e.f. September 08 2015 60 Annual Report 2015-2016 and Mrs. V. SriLakshmi was appointed as Company Secretary w.e.f. September 09 2015.
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
The Board during the financial year 2015-16 met five times. Detailed informationregarding the meetings of the Board are included in the report on Corporate Governancewhich forms part of the Boards 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. Y. Ramesh Reddy Mr. Subrato Saha and Mr. VijayKancharla as Members. There have not been any instances during the year whenrecommendations of the Audit Committee were not accepted by the Board.
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 transactions entered into with Related Parties as defined under Companies Act 2013during the year were in the ordinary course of business and on an arms length basis.There were no materially significant related party transactions entered by the Companyduring year under review.
The Company has formulated a policy on "materiality of related partytransactions" and the process of dealing with such transaction which are in linewith the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The same is also available on the website ofthe Company www.lycos.com. Prior omnibus approval from the Audit Committee are obtainedfor transactions which are repetitive and also normal in nature. Further disclosures aremade to the Committee and the Board on a quarterly basis.
Since all the related party transactions were in ordinary course of business and wereon Arms length basis disclosure in form AOC-2 as required under Section 134(3) (h)of the Act is not applicable.
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 Companysbusiness is Digital Marketing and Software Development. The change in the industryparadigm is dynamic. The Company is continuously updating these changes and constantlyevaluating these developments to improve its capabilities towards the industry.Accordingly research and development of new services display advertising platforms andmethodologies continue to be of importance to us. This allows us to enhance qualityproductivity and customer satisfaction through continuous improvements and innovations. Aspart of the continuous thrust on R&D the company is also focused on SolutionsResearch and Vertical Focus Research. These would identify new ideas which would enablebusiness process improvement for customers and would be aligned with the business strategyand growth opportunities of the organization. Our R & D activities are not capitalintensive and we do not specifically 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.
The Companys Statutory auditors M/s. P. Murali & Co. (Registration Number007257S) Chartered Accountants Hyderabad who retire at the ensuing Annual GeneralMeeting may continue as statutory auditors for the financial year ending March 31 2017.M/s. P. Murali & Co. have confirmed their eligibility and willingness to acceptoffice if re-appointed.
Based on the recommendation of Audit Committee the Board has approved the proposal forplacing the matter of re-appointment of M/s. P. Murali & Co. as statutory auditorsfor the financial year ending March 31 2017 at the 17th Annual General Meeting. Aresolution to that effect forms part of notice of the 17th Annual General Meeting sentalong with this Annual Report.
Mr. A. Sridhar was appointed to conduct the secretarial audit of the Company for FY2015-16 as required under section 204 of the Companies Act 2013 and rules there under.The Secretarial Audit Report for FY 2015-16 forms the part of the annual report asAnnexure A to the Boards report.
The Auditors Report and the Secretarial Audit Report for the financial year ended31st March 2016 do not contain any qualification reservation adverse remark ordisclaimer.
Significant and material orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Companys operations in the future.
Extract of Annual Return
An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of theCompanies Act 2013 read with applicable Rules made there under is annexed to this Reportas 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 behaviour actual or suspected fraud orviolation of the Companys 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 Companys 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 brief outline of the Corporate Social Responsibility (CSR) policy of the Companyand the initiatives undertaken by the company on CSR activities during the year asrequired to be disclosed under the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed as Annexure C to this Report.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules there under.
Directors Responsibility Statement:
In compliance with Section 134(5) of the Companies Act 2013 the Board of Directorshereby confirm the following:
(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.
The Board greatly appreciates the commitment and dedication of its employees across alllevels who have contributed to the growth and sustained success of the Company. We wouldlike to thank all our clients partners vendors investors bankers and other businessassociates for their continued support and encouragement during the year look forward tothe same in the future.
| ||For and on behalf of the Board of Directors |
|Place: Hyderabad ||(M. Suresh Kumar Reddy) |
|Date: 21-11-2016 ||Chairman and Managing Director |