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BSE: 504112 Sector: Telecom
NSE: NELCO ISIN Code: INE045B01015
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OPEN 107.05
VOLUME 15905
52-Week high 145.80
52-Week low 68.40
P/E 29.94
Mkt Cap.(Rs cr) 246
Buy Price 109.40
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00
OPEN 107.05
CLOSE 108.00
VOLUME 15905
52-Week high 145.80
52-Week low 68.40
P/E 29.94
Mkt Cap.(Rs cr) 246
Buy Price 109.40
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00

NELCO Ltd. (NELCO) - Director Report

Company director report


The Members

Your directors have pleasure in presenting their Seventy Third Annual Report on thebusiness and operations of the Company together with the Audited Statement of Accounts forthe year ended 31st March 2016.

1. Financial Results

(Rs. in lakhs)



Particulars FY 14-16 FY 13-14 FY 14-16 FY 13-14
18 months 12 months 18 months 12 months
I Continuing Operations
a Net Sales / Income from Other Operations 13370.32 9172.45 20043.98 12326.73
b Operating Expenditure 11930.74 8718.28 17788.67 11210.34
c Operating Profit 1439.58 454.17 2255.31 1116.39
d Add:- Other Income 482.49 320.67 297.44 158.39
e Less:- Finance Cost 1142.66 619.36 1293.51 682.23
f Profit before Depreciation and Tax 779.41 155.48 1259.24 592.55
g Less :- Depreciation / Amortization/ Impairment 781.10 512.74 1409.32 861.28
h Profit before Tax (169) (357.26) (150.08) (268.73)
I Exceptional items - 1240.90 - 1240.90
j Current / Deferred Tax Expenses 46.68 - 46.68 52.00
k Net Profit / (Loss) after tax from Continuing operations (48.37) 883.64 (196.76) 920.17
II Discontinuing Operations
l (Loss) from Discontinuing operations (before exceptional item and tax) (625.63) (755.02) (625.63) (755.02)
m Add:- Exceptional Profit 162.00 - 162.00 -
n Tax Expenses - - - -
o (Loss) after Tax from Discontinuing operation (463.63) (755.02) (463.63) (755.02)
m (Loss) / Profit after tax from total operations (512.00) 128.62 (660.39) 165.15
p Less :- Minority Interest - - - -
q Add:- Share of profit of Associates - - 42.61 27.81
r Net Profit after Tax Minority interest and Share of Profit of Associates (512.00) 128.62 (617.78) 192.96

As required under the Companies Act 2013 the Company has extended its financial yearby 6 months till 31st March 2016. Accordingly the financial year 2014-16 is of 18 monthsfrom 1st October 2014 to 31st March 2016.

2. Dividend

Due to loss the Board of Directors has not recommended dividend for the year ended31st March 2016.

3. Financial Performance and the state of the Company's affairs

3.1 Standalone

On a Standalone basis your Company achieved revenue of Rs 13370.32 lakhs in FY 14-16(18 months) from Continuing Operations as against Rs. 9172.45 Lakhs in FY13-14 (12Months). On an annualized basis revenue was lower by Rs 258.00 lakhs mainly due to reducedrevenue from Automation and control segment by Rs 1038.00 lakhs which was partly offsetby increase in revenue from Network Management segment by Rs 780.00 lakhs.

Loss before Tax from continuing operation has reduced from Rs 357.26 lakhs in FY 13-14(12 months) to Rs 1.69 lakhs in FY 14-16 (18 months).This was mainly due to increase inhigh margin service income of VSAT division.

The segment wise performance (Standalone) for the year was as follows :

Automation & Control earned total revenue of Rs 1300 lakhs in FY 14-16 (18 months)[Rs 1906 lakhs in previous year (12 months)] and incurred a segment loss of Rs. 593 lakhsin FY 14-16 (18 months) [loss of Rs. 740 lakhs in previous year(12 months)].

Network Systems earned a total revenue of Rs.12024 lakhs in FY14-16(18 months) [Rs.7241 lakhs in previous year (12 months)] and reported a segment profit of Rs. 3204 lakhsin FY 14-16 (18 months) [profit of Rs. 2029 lakhs in previous year (12 months)]

Interest amounted to Rs.1142 lakhs in FY 14-16 (18 months) [Rs. 619 lakhs in previousyear (12 months)]. Other unallocable expenses (net of income) were Rs. 1471 lakhs in FY14-16 (18 months) as against un-allocable income (net of expenses) of Rs. 214 lakhs in theprevious year (12 months).

3.2 Consolidated

On a consolidated basis revenue from Continuing Operations stood at Rs 20043.98 lakhsin FY 16 (18 months) as against Rs.12326.73 Lakhs in FY14 (12 Months). On an annualizedbasis revenue of the Company increased by Rs 1036 Lakhs mainly on account of increased inrevenue from Network Management segment by Rs 2074 Lakhs and revenue from Automation andControl segment reduced by Rs 1038 Lakhs.

Loss before Tax from Continuing Operations reduced from Rs 268.73 Lakhs in FY 14 (12months) to Rs 150.08 Lakhs in FY 16 (18 months).

There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the period under review and the date of thisReport.

3.3 Operations

Network System consisting of VSAT and SATCOM contributed to 93.49% of the consolidatedcontinuing operations revenue during the 18 months period ended 31st March 2016 as against84.50 % during 12 months period in FY 13-14.

Automation Control consisting of Integrated Security & surveillance Solutions(ISSS) currently being operated on a restricted mode contributed to 6.51% of thecontinued operations during this 18 months period ended 31st March 2016 as against 15.50%during FY 13-14 (12 months)

These are discussed in detail in the Management Discussion & analysis which forms apart of this report.

During the period under review the Members as a part of restructuring processapproved (subject to other requisite approvals) the transfer of following businesses as a"going concern" on a "slump sale" basis:

• Managed Services business ("MS Business") which was forming part ofNetwork System segment to Securens Systems Pvt. Ltd. at a consideration of Rs. 210 lakhswith effect from 1st April 2015. The transaction was concluded on 31st August 2015.

• Unattended Ground Sensors business ("UGS Business") which was formingpart of Automation & Control segment to The Tata Power Co. Ltd. (The Parent Company)at a consideration of Rs. 831 lakhs with effect from 1st October 2014. The conclusion ofthe transaction is pending for approval (which has already been applied and pursued) ofMinistry of Defense (the Customer).

4. Reserves

The Board of Directors has not proposed any amount for transfer to reserves for theperiod ended 31st March 2016.

5. Subsidiary and Associate Company

As on 31st March 2016 the Company had one Wholly Owned Subsidiary viz. TatanetServices Ltd. and one Associate Company viz. Nelito Systems Ltd. There has been no majorchange in the nature of business of these Companies. Also none of the then existingSubsidiary or Associate ceased to be Subsidiary/ Associate of the Company during theperiod under review.

During the period under review the Company has infused Rs. 484 lakhs in its WhollyOwned Subsidiary by subscribing to the equity shares at par offered by it.

The Policy for determining material subsidiaries of the Company has been provided inthe following link:

6. Directors and Key Managerial Personnel

In terms of Section 149 of the Companies Act 2013 ("Act") the Members atthe 72nd Annual General Meeting (AGM) held on 28th January 2015 appointed the followingIndependent Directors of the Company till 27th January 2020:

• Mr. R.R.Bhinge

• Mr. P.K.Ghose

• Mr. R.Savoor

• Mr. K.Raghuraman

• Mr. K.Ramachandran

• Ms. Hema Hattangady

Due to pre-occupation and other commitments Mr.P.K.Ghose and Mr. R. SavoorIndependent Directors and Mr. V.K.Deshpande and Mr. Sanjay Dube Non-Independent Directorsstepped down from the Directorship with effect from 18th March 2015. The Board places onrecord its sincere appreciation for their valuable guidance and contribution during theirtenure as Directors of the Company.

Pursuant to the "Governance Guidelines for Tata Companies on BoardEffectiveness" adopted by the Board of Directors of the Company at its meeting heldon 18th March 2015 Mr. R.R.Bhinge did not fall under the category of IndependentDirector. Hence effective from 18th March 2015 his category/status of Directorship hasbeen changed from Independent Director to Non-Independent Director liable to retire byrotation. Hence in accordance with the requirements of the Act and the Articles ofAssociation of the Company Mr. R.R. Bhinge retires by rotation at the ensuing AGM and iseligible for re-appointment. Additional information and brief profile as stipulated underSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 with respectto Director seeking re-appointment is annexed to the Notice of AGM.

In terms of Section 203 of the Act the Board has designated the following persons asKey Managerial Personnel of your Company:

• Mr. PJ. Nath Executive Director & CEO

• Mr. Uday Banerjee Chief Financial Officer

• Mr. Girish Kirkinde Company Secretary

During the period under review twelve Board Meetings were held. For further detailsplease refer Report on Corporate Governance.

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the Act and SEBI (ListingObligations & Disclosure Requirements) Regulations 2015.

Governance Guidelines:

The Company has adopted Governance Guidelines on Board Effectiveness. The saidGuidelines covers aspects related to composition and role of the Board Chairman andDirectors Board diversity definition of independence Director's term retirement ageand Committees of the Board. It also includes aspects relating to nomination appointmentinduction and development of Directors Director Remuneration subsidiary oversight Codeof Conduct Board Effectiveness Review and mandates of Board Committees.

7. Annual Evaluation of Board Performance and Performance of its Committees andIndividual Directors.

As required under the Act and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 the Board has carried out an annual evaluation of its own performanceperformance of the Directors individually as well as the evaluation of the working of itsCommittees.

The following process was adopted for Board Evaluation:

Feedback was sought from each Director about their views on the performance of theBoard covering various criteria such as degree of fulfillment of key responsibilitiesBoard structure and composition establishment and delineation of responsibilities tovarious Committees effectiveness of Board processes information and functioning Boardculture and dynamics quality of relationship between the Board and the Management andefficacy of communication with external stakeholders. Feedback was also taken from everyDirector on his assessment of the performance of each of the other Directors.

The Nomination and Remuneration Committee (NRC) then discussed the above feedbackreceived from all the Directors.

Based on the inputs received the Chairman of the NRC also made a presentation to theIndependent Directors at their meeting summarizing the inputs received from the Directorsas regards Board performance as a whole and of the Chairman. The performance of thenon-independent non-executive Directors and Board Chairman was also reviewed by them.

Post the meeting of the Independent Directors their collective feedback on theperformance of the Board (as a whole) was discussed by the Chairman of the NRC with theChairman of the Board. It was also presented to the Board and a plan for improvements wasagreed upon.

Every statutorily mandated committee of the Board conducted a self-assessment of itsperformance and these assessments were presented to the Board for consideration. Areas onwhich the Committees of the Board were assessed included degree of fulfillment of keyresponsibilities adequacy of Committee composition and effectiveness of meetings.

Feedback was provided to the Directors as appropriate. Significant highlightslearning and action points arising out of the evaluation were presented to the Board.

7.1 Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisionsin line with the delegated authority. The following substantive Committees constituted bythe Board function according to their respective roles and defined scope:

• Audit Committee of Directors

• Nominations HR and Remuneration Committee (NRC)

• Stakeholders Relationship Committee

• Executive Committee of the Board

Details of composition terms of reference and number of meetings held for respectiveCommittees are given in the Report on Corporate Governance which forms part of the AnnualReport.

The details of the familiarization programs for Independent Directors are disclosed onthe Company's website and the web link for the same is:

The Board has laid down separate Codes of Conduct for Non-Executive Directors andSenior Management personnel of the Company and the same are posted on the Company'swebsite. All Board Members and Senior Management personnel have affirmed compliance withthe Code of Conduct. The Executive Director & CEO has also confirmed and certified thesame. The certification is enclosed at the end of the Report on Corporate Governance.

7.2 Remuneration Policy for the Directors Key Managerial Personnel and otherEmployees.

In terms of Section 178(3) of the Act and Part D of Schedule II of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the NRC is responsible forformulating the criteria for determining qualification positive attributes andindependence of a Director. The NRC is also responsible for recommending to the Board apolicy relating to the remuneration of the Directors Key Managerial Personnel and otheremployees. In line with this requirement the Board has adopted the Policy on BoardDiversity which is reproduced in Annexure-I and Remuneration Policy for DirectorsKey Managerial Personnel and other employees of the Company which is reproduced in Annexure-IIforming part of this report.

Except the Performance Linked Payment (PLP) which is a part of his Cost to the Company(CTC) the Executive Director & CEO has not received any commission from the Companyand also not received any commission / remuneration from its Holding or SubsidiaryCompany.

7.3 Particulars of Employees and Remuneration

The information required under Section 197 (12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is providedin Annexure - III (A) forming part of this Report.

The information required under Rule 5 (2) and (3) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure - III (B)forming part of this Report. In terms of the first proviso to Section 136 of the Act theReport and Accounts are being sent to the members excluding the aforesaid Annexure III(B). Any member interested in obtaining the same may write to the Company Secretary at theRegistered Office of the Company. None of the employees listed in the said Annexure III(B) is related to any Director of the Company.

8. Significant and material Orders passed by the Regulators or Courts or Tribunal

There were no significant and material orders passed by the Regulators / Courts orTribunal which would impact the going concern status of the Company and its futureoperations. Further no penalties have been levied by Regulators during the period underreview.

Sales Tax matters of Tatanet Services Ltd. (TNSL) Wholly Owned Subsidiary.

Maharashtra Sales Tax Department has issued orders against TNSL demanding payment ofMVAT on the entire satellite communication services provided by TNSL on the ground that"The facility to use the transponders is property is commercial in nature and goodsand therefore transaction of lease of facility to use the transponders is a deemed saleand accordingly MVAT is applicable". The orders issued for financial year 2006-07 to2010-11 and aggregate amount under dispute is Rs 38.36 crs. The Company has filed writpetition in Bombay High Court and outcome of judgment is being awaited.

As per legal opinion sought by Company it has very strong case. Since TNSL provideonly services to its customers and pays service tax there are no goods or right to use ofgoods are involved in it.

Income Tax matters of Nelco Ltd:-

Income Tax Department has reduced certain liabilities of Rs.1893.00 lakhs whilecomputing long term Capital Gain which was not related to business sold under slump salefor Assessment Year 2011-12 due to which a Tax demand of Rs 631 lakhs has been raised onthe Company. As per legal opinion sought by Company it has a very strong case. Matterpresently lying with Commission of Appeal.

8.1 Corporate Governance

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015and relevant provisions of the Act a Management Discussion and Analysis Statement Reporton Corporate Governance and Auditors' Certificate are included in the Annual Report.

8.2 Vigil Mechanism

The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour. In line with the Tata Code of Conduct (TCOC) any actual orpotential violation howsoever insignificant or perceived as such would be a matter ofserious concern for the Company. The role of the employees in pointing out such violationsof the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act a vigil mechanism has been established forDirectors and employees to report to the management the instances of unethical behaviouractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The Vigil Mechanism provides a mechanism for employees of the Company to approach theChief Ethics Counselor (CEC)/ Chairman of the Audit Committee of the Company.

9. Risks and Concerns

The Company is faced with risks of different types all of which need differentapproaches for mitigation. Details of various risks faced by the Company are provided inManagement Discussion & Analysis.

9.1 Risk Management Framework and Internal Financial Controls

Risk Management framework: The Company and its Subsidiary have Risk Managementframework to inform the Audit Committee and Board members about risk assessment andminimization procedures and periodical review to ensure that Executive Management controlsrisks by means of properly designed framework.

The Company has also established a risk management policy based on which risks areidentified and assessed across its businesses. The Risk Management Committee whichcomprises of the CEO CFO and key business and operations heads ensures that existing andfuture risk exposures of the Company are identified assessed quantified appropriatelymitigated minimized and managed. The Company's framework of risk management processprovides clear basis for informed decision making at all levels of the organization on anongoing basis having duly evaluated likely risks and their mitigation plans beingcontrollable and within risk appetite. There are no elements of risk which in the opinionof the Board may threaten the existence of the Company.

Internal Financial Control and Systems: The Company has an internal control systemcommensurate with size scale and complexity of its operations. Testing of such controlsystems form a part of internal audit schedule. The Company has appointed independentInternal Auditors who oversee governance risks management and internal controls. Thescope and authority of internal audit is defined in Audit Committee Charter adopted by theCompany. Internal control has been discussed in detail in Management Discussion &Analysis in this report.

10. Sustainability

10.1 Corporate Social responsibility

As per Section 135 of the Act every Company having a net worth of Rs. 500 crore ormore or turnover of Rs.1000 crore or more or net profit of Rs. 5 crore or more duringany financial year shall be required to constitute Corporate Social ResponsibilityCommittee (CSRC). As your Company presently does not fall under any of the criterionmentioned above the CSRC has not been constituted.

10.2 Safety Health and Environment:

The Company accords high priority to health safety and environment treating these asintegral part of all its activities. The operations of the Company are not of a hazardousnature. However the Company emphasizes on maintaining a healthy and safe environment inand around its facilities as well as contract sites where projects are under execution. Toensure success of safety initiatives the Company involves the line management along withcontract workforce in all initiatives rolled out from time to time. Safety Awareness isinculcated through regular Safety Awareness Programs basic fire safety training mockdrills regular Safety Committee meetings and capturing employees' voices through safetyobservation and near miss reporting. The employees working at project sites are givenrequisite training for ensuring safety during work. Periodic Safety Audit is carried outand action taken to eliminate unsafe conditions.

11. Human Resources

Some of the major human resource initiatives undertaken by the Company during theperiod under review to supplement efforts towards organizational growth include:

• Manpower: As on March 31st 2016 the Company had employee strength of 160.During the period under review 21 employees were recruited and 42 employees wereseparated (including those transferred as part of divestment of Managed Servicesbusiness). None of the employees related to the business were retrenched due to thedivestment of business but were transferred with full benefit of service continuity andservice conditions not less favorable than the existing employment conditions.

• Employee Engagement: Company's employee engagement platforms are inclusive andempowering. It connects employees with leaders their peers and Human Resource function.Forums such as Open house Employee Connect meetings Skip level meetings Manager connectmeetings weekly review meetings like AHM (All Hands Meet) provide interactive platformsfor sharing information and feedback and also conferring rewards and recognitions. Variousinitiatives in the field of Employee Recreation have also been instrumental in takingengagement levels to the next level. The incessant efforts towards empowering people hasresulted in overall participation being 96% and overall satisfaction score being 87% for2016 as compared to 48% last year in the Employee engagement survey conducted by Aon.

• Capability Development: In order to build organizational capability that willenable the Company to sustain competitiveness in the market a comprehensive exercise wasundertaken to map the attributes required to develop Competency Framework for keyfunctions. The training programs for the learning growth of employees have been developedbased on the set of these identified competencies.

• Talent Management: As part of efforts for capability building of employees atall levels a personalized coaching on Interpersonal skills for 7 Senior managementemployees was conducted. Similarly 8 Hi-potential employees have undergone OnlineDevelopment Centre (ODC) which was conducted by Tata Power in collaboration with theirtalent partners CEB-SHL

• Industrial Relations: In the Industrial Relations front the Company maintainedcordial relations with its employees during the period.

• Policy for Prevention Prohibition and Redressal of Sexual Harassment at workplace: The Company has in place a Policy for Prevention Prohibition and Redressal ofSexual Harassment at Work Place. Appropriate reporting mechanisms are in place forensuring protection against Sexual Harassment and the right to work with dignity. Duringthe year under review the Company has not received any complaints in this regard.

12. Credit Rating

During the year rating agency CRISIL has downgraded its rating on Company's bankfacilities and debt programme to CRISIL BBB+/Stable/CRISIL A2 form CRISIL A-/negative/CRISILA2+.

Revised rating done by CRISIL based on their criteria on notching up rating for parentsupport. The downgrade reflects reassessment of the strategic importance of Nelco to theparent The Tata Power Company Ltd. (TPCL) while continuing to factor the support thatNelco receives from TPCL and other Tata group companies.

13. Loans Guarantees Securities and Investments (LGSI)

Details of LGSI covered under Sec 186 of the Act are given in Annexure - IV formingpart of this report.

14. Foreign Exchange - Earnings and Outgo Rs. In lakhs

Particulars - Standalone Period ended 31st March 2016 (18 Months) Year ended 30th September 2014 (12 Months)
Foreign Exchange Earnings 174.40 190.36
Foreign Exchange Outflow 3178.44 1903.12

15. Auditors

M/s. Deloitte Haskins & Sells LLP (DHS LLP) who are the statutory auditors of yourCompany hold office until the conclusion of the Seventy Fifth AGM to be held in the year2018 subject to ratification of their appointment at every AGM. The Members year onyear will be requested to ratify their appointment as Auditors and to authorize theBoard of Directors to fix their remuneration. In this connection the attention of theMembers is invited to Item No.4 of the Notice.

16. Auditors' Report

The consolidated financial statements of the Company have been prepared in accordancewith Accounting Standard 21 on Consolidated Financial Statements and Accounting Standard23 on Accounting of Investments in Associates issued by the Council of The Institute ofChartered Accountants of India. The Notes to the Accounts referred to in the Auditors'report are self-explanatory and therefore do not call for any further clarification undersection 134(3)(f) of the Act.

17. Cost Auditors and Cost Audit Report

M/s. PD. Dani & Co. Cost Accountants was appointed Cost Auditors of your Companyfor the period ended 31st March 2016. In accordance with the requirement of the CentralGovernment and pursuant to Section 148 of the Act your Company carries out every year anaudit of cost accounts relating to Telecommunication (ISP) activities and ElectronicsProducts. The Cost Audit Report and the Compliance Report of your Company for theFinancial Year ended 30th September 2014 which was due for filing by 31st March 2015 wasfiled on 25th March 2015 with the Ministry of Corporate Affairs through Extensive BusinessReporting Language (XBRL) by M/s PD. Dani & Co. Cost Accountants.

18. Secretarial Audit Report

M/s. Bhandari & Associates Practicing Company Secretaries were appointed asSecretarial Auditors to conduct Secretarial Audit of records and documents of the Companyfor the period ended 31st March 2016. The Secretarial Audit Report confirms that theCompany has generally complied with the provisions of the Act Rules Regulations andGuidelines etc. The Secretarial Audit Report is given in Annexure -V forming part of thisreport. There are no remarks qualifications or reservations in the Secretarial AuditReport.

19. Conservation of Energy and Technology Absorption

The information on conservation of energy and technology absorption stipulated underSection 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules 2014is attached as Annexure - VI forming part of this report.

20. Related Party Transactions

The transaction of sale and transfer of Company's Defense business consisting mainly ofthe UGSs to the Parent/Promoter Company The Tata Power Co. Ltd. (being a related party)was entered on an arm's length basis based on the valuation arrived at by an independentvaluer. However since this transaction could be construed as being outside the ordinarycourse of business the approval of the Members of the Company under section 188 of theAct was sought by way of a Special Resolution. The details of the said transaction aregiven in Form AOC-2 (Annexure - VII forming part of this report) as required under Section134 (3)(h) of the Act.

All related party transactions entered into during the period under review were on anarm's length basis and were in the ordinary course of business. There were no othermaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel and Body Corporate(s) which had a potential conflictwith the interest of the Company at large. Accordingly the disclosure of these RelatedParty Transactions as required under Section 134 (3) (h) of the Act in Form AOC 2 is notapplicable for the period under review. The Directors draw attention of the Members toNote no. 32 to the Financial Statements which sets out related party disclosures.

In line with the requirements of the Act and the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the Company has formulated a Policy on RelatedParty Transactions and the same is uploaded on the Company's website:

21. Deposits

The Company has not accepted any deposits from the public during the period underreview.

22. Extract of Annual Return

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in Form MGT-9 is provided inAnnexure-VIII forming part of this report.

23. Directors' Responsibility Statement

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costauditors secretarial auditors and external consultants and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the period under review.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:

a) in the preparation of the annual accounts for the period ended 31st March 2016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

b) they have in the selection of the accounting policies consulted the StatutoryAuditors and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany for the period ended 31st March 2016 and of the loss of the Company for thatperiod;

c) they have 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) they have prepared the accounts for the period under review on a going concernbasis;

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

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

24. Acknowledgement

On behalf of the Directors of the Company I would like to place on record our deepappreciation to our Shareholders Customers Business Partners Vendors Bankers andFinancial Institutions. The Directors are thankful to the Government of India and thevarious Ministries and Regulatory Authorities. We appreciate and value the contributionsmade by all our employees.

On behalf of the Board of Directors
Mumbai 31st May 2016