Your Directors have pleasure in presenting the Seventeenth Annual Report together withthe Audited Accounts (including consolidated accounts) of the Company for the year ended31 March 2016.
(Rs. In Lakhs)
| ||Year ended 31 March 2016 ||Year ended 31March 2015 |
| ||Standalone ||Consolidated ||Standalone ||Consolidated |
|Total Income ||524.44 ||551.27 ||587.98 ||620.81 |
|Operating Profit before Depreciation & Tax ||(1053.22) ||(1128.80) ||(414.17) ||(423.78) |
|Less: Depreciation ||17.65 ||17.82 ||40.00 ||40.16 |
|Profit before Tax ||(1070.87) ||(1146.62) ||(454.17) ||(463.94) |
|Less: provision for FBT ||0 ||0 ||0 ||0 |
|Profit after Tax before extraordinary and Prior period item ||(1070.87) ||(1146.62) ||(454.17) ||(463.94) |
|Less: Extraordinary and prior period item ||47.23 ||47.24 ||0 ||0 |
|Profit after tax after extraordinary and Prior period item ||(1118.10) ||(1193.86) ||(454.17) ||(463.94) |
|Earnings per Share (EPS) || || || || |
|Before extraordinary and prior period item || || || || |
|Basic ||(2.33) ||(2.49) ||(0.99) ||(1.01) |
|Diluted ||(2.33) ||(2.49) ||(0.99) ||(1.01) |
|After extraordinary and prior period item || || || || |
|Basic ||(2.43) ||(2.59) ||(0.99) ||(1.01) |
|Diluted ||(2.43) ||(2.59) ||(0.99) ||(1.01) |
On consolidated basis revenue from operations for FY 2015-16 at Rs.551.27 lakhs asagainst Rs.620.81 lakhs for the FY 2014-15. Consolidated Net Loss for the FY 2015-16 wasRs.1193.86 lakhs as against Rs.463.94 laks for the FY 2014-15.
On standalone basis revenue from operations for FY 2015-16 at Rs.524.44 lakhs asagainst Rs.587.98 lakhs for the FY 2014-15. Standalone Net Loss for the FY 2015-16 wasRs.1118.10 lakhs as against Rs.454.17 laks for the FY 2014-15.
MosChip Semiconductor Technology Limited (MosChip India) is a fabless modelsemiconductor and Internet of Things/Everything (IOT/E) focused company specializes inproviding value added services in VLSI design Software development & development SOC(System On a Chip) for Aerospace & Defense Consumer and Industrial applications andIOT/E Products and Services across various industries.
Subsidiaries Joint Ventures and Associate Companies
MosChip Semiconductor Technology USA is the only subsidiary as on March 31 2016.There are no associate companies or joint venture companies within the meaning of section2(6) of the Companies Act 2013. There has been no material change in the nature of thebusiness of the subsidiary.
In accordance with Section 129(3) of the Companies Act 2013 a statement containingsalient features of the financial statements of the subsidiary companies in Form AOC-1 isenclosed as Annexure A of the Boards Report.
Further pursuant to the provisions of section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited accounts in respect of subsidiary are available on the website of theCompany.
In view of losses for the financial year 20152016 your directors have notrecommended any dividend on for the year under review.
Increase/Decrease in Share Capital
The Company has only one class of shares the Company has not allotted any sharesduring the year under review. However during the year the Company has proposed apreferential issue of 67757000 Equity shares to the promoters and non-promoters of thecompany. The preferential issue process is not completed before end of the financial yearand the allotment of 67757000 Equity shares is completed on 12th April 2016. So thepaid up share capital stands at Rs. 92071034.
Equity Shares with differential voting rights
The Company has not issued any Sweat Equity Shares during the year under review.
Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
The Company has not issued any Sweat Equity Shares during the year under review.
The Company has not issued any bonus shares during the year under review.
Material changes and commitments if any affecting the financial position of the Companyoccurred between the end of the financial year to which this Financial Statements relateand the date of the report
There have been no material changes and commitments affecting the financial positionof the Company which occurred during between the end of the financial year to which thefinancial statements relate and the date of this report.
Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and the Companys operations in future
There are no significant material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations
Transfers to Reserves
In view of the loss your Board of Directors does not appropriate any amount to betransferred to General Reserves during the year under review.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fee for the year 2016-17 toBSE where the Company Shares are listed.
Dematerialization of Shares
90.95% of the companys paid up Equity Share Capital is in dematerialized form ason 31stMarch 2016 and balance9.05 % isin physical form. The Companys Registrars areKarvy Computershare Pvt. Ltd. Karvy Selenium Tower B Plot No. 31 & 32 FinancialDistrict Gachibowli Hyderabad - 500 032 Telangana.
Number of Board Meetings held
The Board of Directors duly met 6 times during the financial year from 1st April 2015to 31st March 2016. The dates on which the meetings were held are as follows:
22 May 2015 12 August 2015 31 August 2015 12 November 2015 11 February 2016 18February 2016
Details of number of Meetings attended by each Director have been given in thecorporate governance report which forms part of the Annual Report.
Directors and Key Managerial Personnel
Directors retire by rotation:
Pursuant to the requirements of the Companies Act 2013 and Articles of Association ofthe Company Mr. K.Ramachandra Reddy Director retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers them self for re-appointment.
Changes & Cessations in Directorships
In the Board Meeting held on 31.08.2015 Mr. C.Dayakar Reddy (DIN: 00042663) wasre-appointed as Managing Director of the Company for a period of five years with effectfrom 31.08.2015 and approval members was taken in the AGM held on 30.09.2015. Mr.C.Dayakar Reddy was re-designated as Whole-time Director in the Board Meeting held on12.11.2015 and continued in the position of KMP. On 12.04.2016 he resigned from alloffices held by him in the company. The Board places on record its sincere appreciationfor the valuable contribution and guidance rendered by Mr. C. Dayakar Reddy during histenure with the Company.
In the Board Meeting held on 31.08.2015 Mr. K.Ramachandra Reddy (DIN: 00042172) wasre-appointed as Whole-time Director of the Company for a period of five years with effectfrom 31.08.2015 and approval members was taken in the AGM held on 30.09.2015.
The board placed on record its appreciation for the Services assistance and guidanceprovided by Mr. C. Dayakar Reddy since incorporation of the Company as a Director.
On recommendation of the nominations and Remuneration Committee The Board hasappointed Mr. G.Damodar Rao (DIN: 07027779) and Mr. V.Seetha Ramam (DIN: 07332440) asAdditional Directors with effect from 12.04.2016. Mr. G.Damodar Rao has rich experience invarious capacities in several companies and he is the CEO of Techwave Consulting Inc USA.Mr. V.Seetha Ramam has a rich experience in various capacities in Banking & Financeindustry.
Approval of members by way of ordinary resolution is required for regularization ofappointment of Mr. G.Damodar Rao and Mr. V.Seetha Ramam in the AGM to be held on September30 2016.
Key Managerial Personnel
Pursuant to the provisions of section 203 of the Companies Act 2013 the keymanagerial personnel of the Company as on 01.04.2015 are
Mr. C. Dayakar Reddy - Managing Director
Mr. K. Ramachandra Reddy - Chief Financial Officer
Mr. B. Damodar Company Secretary
Changes in the key managerial personnel during the year are as below:
Mr. B.Damoder resigned from the office of Company Secretary on August 31 2015. And theBoard has appointed Mr. Suresh Bachalakura as Company Secretary of the company with effectfrom August 31 2015.
On April 12 2016 Mr. C. Dayakar Reddy resigned from the office of KMP. And the Boardhas considered Mr. K.Ramachandra Reddy Whole-time Director as KMP.
On April 12 2016 Mr. K.Ramachandra Reddy resigned from the office of Chief FinancialOfficer. And the Board has appointed Mr. Kasinath Tumuluru appointed as Chief FinancialOfficer with effect from November 12 2015.
The Board adopted a formal mechanism for evaluating its performance as well as that ofits Committees and individual Directors including the Chairman of the Board. The exercisewas carried out through a structured evaluation process covering various aspects of theBoard functioning such as composition of the Board & committees experience &competencies performance of specific duties & obligations contribution at themeetings and otherwise independent judgment governance issues etc.
Familiarization programme for Independent Directors
The Company proactively keeps its Directors informed of the activities of the Companyits management and operations and provides an overall industry perspective as well asissues being faced by the industry.
Independent Directors' Meeting
The Independent Directors met on 23rd March 2016 without the attendance ofNonIndependent Directors and members of the Management. The Independent Directorsreviewed the performance of NonIndependent Directors and the Board as a whole; theperformance of the Chairman of the Company taking into account the views of ExecutiveDirectors and NonExecutive Directors and assessed the quality quantity andtimeliness of flow of information between the Company Management and the Board that isnecessary for the Board to effectively and reasonably perform their duties.
Declaration by Independent Directors
The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that they meet the criteria of independence laiddown in Section 149(6) of the Companies Act 2013 and SEBI (LODR) Regulations 2015.
Policy on directors appointment and remuneration and other details
The Companys policy on directors appointment and remuneration and othermatters provided in section 178(3) of the Act has been disclosed in the corporategovernance report which forms part of this report.
Sub Committees of the Board
The Board has Audit Committee Nomination and Remuneration Committee andStakeholders Relationship Committee. The composition and other details of thesecommittees have been given in the Report on the Corporate Governance forming part of theAnnual Report.
Internal control systems and their adequacy:
The Company maintains appropriate systems of internal control including monitoringprocedures to ensure that all assets are safeguarded against loss from unauthorized useor disposition. Company policies guidelines and procedures provide for adequate checksand balances and are meant to ensure that all transactions are authorized recorded andreported correctly.
The Head of Internal Audit together with external audit consultants review theeffectiveness and efficiency of these systems and procedures to ensure that all assets areprotected against loss and that the financial and operational information is accurate andcomplete in all respects. The Audit Committee of the Board of Directors approves andreviews audit plans for the year based on internal risk assessment. Audits are conductedon anon-going basis and significant deviations are brought to the notice of the AuditCommittee.
Employee Stock Option Plan
During the year under report the company has eight schemes in operation as mentionedbelow for granting stock options to the employees and directors of the company and itswholly owned subsidiary in accordance with SEBI (Share Based Employee Benefits)Regulations 2014.
(a) MosChip Stock Option Plan 2001
(b) MosChip Stock Option Plan 2002
(c) MosChip Stock Option Plan 2004
(d) MosChip Stock Option Plan 2005(MI)
(e) MosChip Stock Option Plan 2005(WOS)
(f) MosChip Stock Option Plan 2008
(g) MosChip Stock Option Plan 2008(ALR)
(h) MosChip Stock Option Plan 2008(Director)
During the year the company issued 2546000 stock options to the eligible employees.No employee has been issued share options during the year equal to or exceeding 1% of theissued capital of the Company at the time of grant.The details of the employee stockoptions plan form part of the Notes to accounts of the financial statements in this AnnualReport.
Vigil Mechanism / Whistle Blower Policy
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism Whistle Blower Policy in line with listing agreement for directors andemployees to report genuine concerns has been established. The Vigil Mechanism Policy hasbeen uploaded on the website of the Company athttp://moschip.com/wp-content/uploads/2016/07/WhistleBlowerPolicy-1.pdf
During the year under review your Company has not accepted any fixed deposits withinthe meaning of Section 73 of the Companies Act 2013 read with rules made there under.
Statutory Auditors and Auditors Report
M/s. Gokhale & Co. Chartered Accountants (Firm Registration No. 000942S) werere-appointed as the Statutory Auditors of the Company in the 15th Annual General Meeting(AGM) held on September 11 2014 to hold office from the conclusion of the 15th AGM untilthe conclusion of the third consecutive AGM of the Company to be held in the year 2017(subject to ratification of their appointment by the Members at every AGM).
As required under the provisions of section 139(1) of the Companies Act 2013 theCompany has received a written consent from M/s. Gokhale & Co. Chartered Accountantsto their appointment and a Certificate to the effect that their appointment if madewould be in accordance with the Companies Act 2013 and the Rules framed thereunder andthat they satisfy the criteria provided in section 141 of the Companies Act 2013.
The appointment of the said Statutory Auditors is required to be ratified by theMembers of the Company at the ensuing Annual General Meeting.
The Notes on Financial Statements referred to in the Auditors Report areself-explanatory and do not call for any further comments.
The Auditors Report does not contain any qualification reservation or adverseremark. The Statutory Auditors have not reported any incident of fraud to the AuditCommittee of the Company in the year under review.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors has appointedM/s. BSS & Associates Company Secretaries for conducting Secretarial Audit of theCompany for the financial year 2015-2016. The Secretarial Audit Report is annexed herewithas Annexure B.
The Secretarial Audit report does not contain any qualification reservation or adverseremark
Conservation of energy research and development technology absorption foreignexchange earnings and outgo
Information required under Section 134(3)(m) of the Act read with Rule 8(3) of theCompanies (Accounts) Rules 2014 with respect to conservation of energy technologyabsorption and foreign exchange earnings/outgo is included in Annexure - C.
Management Discussion & Analysis
Pursuant to the provisions SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a report on Management Discussion & Analysis is set out asAnnexure D to this report.
RELATED PARTY TRANSACTIONS:
Related party transactions that were entered during the financial year were on anarms length basis and were in the ordinary course of business. There were nomaterially significant related party transactions with the Companys PromotersDirectors Management or their relatives which could have had a potential conflict withthe interests of the Company. Transactions with related parties entered by the Company inthe normal course of business are periodically placed before the Audit Committee for itsomnibus approval and the particulars of contracts entered during the year as per FormAOC-2 is enclosed as Annexure - E.
The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the Rulesthereunder and the Listing Agreement. This Policy was considered and approved by the Boardhas been uploaded on the website of the Company athttp://moschip.com/wp-content/uploads/2016/07/PolicyOnRelatedPartyTransactions-1.pdf
Extract of Annual Return:
The details forming part of the extract of the Annual Return in form MGT 9 isannexed herewith as Annexure - F
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished hereunder
|S.No Name ||Designation ||Remuneration Paid For the year 2015 -16 ||Remuneration Paid For the year 2014 -15 ||Increase in Remuneration of From Previous Year ||Ratio / times for median Employee Remuneration |
|1 Mr. K. Ramachandra Reddy ||Chairman & CEO ||2400000 ||2400000 ||NIL ||3.28 |
|2. Mr. C. Dayakar Reddy ||Director ||1500000 ||2400000 ||(900000) ||2.05 |
|3. Mr. G. Prasad ||Director ||NIL ||NIL ||NIL ||NIL |
|4 Mr. K. V. Ramana ||Director ||NIL ||NIL ||NIL ||NIL |
|5 Mrs. Poornima Shenoy ||Director ||NIL ||NIL ||NIL ||NIL |
|6 Mr. Kasinath Tumuluru ||CFO* ||632285 ||NA ||NA ||0.87 |
|7 Mr. Damoder Bethamalla ||Company Secretary** ||50000 ||NA ||NA ||NA |
|8 Mr. Suresh Bachalakura ||Company Secretary** ||400000 ||150000 ||250000 ||0.55 |
* with effect from 12.11.2015
***with effect from 31.08.2015
The Board of Directors of MosChip states that:
Pursuant to section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that:
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 2015-16and of the loss 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 the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d) The directors had prepared the annual accounts on a going concern basis;
e) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively:
f) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were 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 Companys internal financial controls were adequate andeffective during FY 2015-2016.
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
The Company is committed to good corporate governance in line with the provisionsofSEBI (LODR) Regulations 2015 and Provisions Rules and Regulations of The CompaniesAct 2013. The Company is in compliance with the provisions on corporate governancespecified in the Listing Agreement with BSE. A certificate of compliance from Mr. SompallySrikanth a practicing Company Secretary and the report on Corporate Governance form partof this Directors Report as Annexure G
Companys Policy on Prohibition Prevention and Redressal of Sexual Harassment ofWomen at Workplace
The Company prohibits any form of sexual harassment and any such incidence isimmediately investigated and appropriate action taken in the matter against the offendingemployee(s) based on the nature and the seriousness of the offence. The Company has apolicy on Prohibition Prevention and Redressal of Sexual Harassment of Women at Workplace(the Policy) and matters connected therewith or incidental thereto covering all theaspects as contained under the "The Sexual Harassment of Women at Workplace(Prohibition Prevention and Redressal) Act 2013" notified by the Government ofIndia vide Gazette Notification dated 23rd April 2013.
There was no case of sexual harassment reported during the year under review
DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY:
The Company has been addressing various risks impacting the Company and the policy ofthe Company on risk managementis provided elsewhere in this Annual Report in ManagementDiscussion and Analysis.
Your Directors thank the companys bankers investors and vendors for theirunstinted support during the year. Your Directors also appreciate the contribution made bythe employees at all levels who through their hard work perseverance and competence aretaking the company in the right direction.
Your directors also thank the Government of India particularly the Customs and ExciseDepartments Software Technology Park Hyderabad Department of Industrial Policy& Promotion under the Ministry of Commerce & Industry Department of CompanyAffairs Reserve Bank of India Department of Telecommunications and all other agenciesfor their support and wish their continued support in future.
| ||For and on behalf of the Board of Directors |
|Hyderabad ||K. Ramachandra Reddy |
|31 August 2016 ||Chairman & CEO |