Your Directors take pleasure in presenting their Twenty Fourth Annual Report and theaudited Statement of Accounts highlighting the business operations and financial resultsfor the financial year ended March 31 2017. Consolidated performance of the Company andits subsidiaries has been referred to wherever required.
1. FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY :
The summarized standalone and consolidated results of your Company and its subsidiariesare given in the table below: On the basis of standalone financial statements theperformance of the Company appears as follows: (Amount Rs. in Lakhs)
|Particulars ||2016-2017 ||2015-2016 |
|Revenue from Operations ||934.49 ||682.25 |
|Other Income ||131.71 ||84.32 |
|Total Income ||1066.21 ||766.57 |
|Expenditure before Interest and Depreciation ||614.68 ||588.23 |
|Finance Cost ||42.19 ||20.39 |
|Depreciation ||37.14 ||34.91 |
|Total expenditure ||694.02 ||643.54 |
|Profit before exceptional items and Tax ||372.18 ||123.03 |
|Exceptional Item ||0.00 ||0.00 |
|Profit/(Loss) Before Tax ||372.18 ||123.03 |
|Deferred Tax Asset ||2.45 ||1.61 |
|Current Tax ||88.09 ||25.09 |
|Less: Provision of MAT ||0 ||(22.90) |
|Net Profit/ (loss) after Tax ||286.54 ||122.45 |
On the basis of consolidated financial statements the performance of the Companyappears as follows: (Amount Rs. in Lakhs)
|Particulars ||2016-2017 ||2015-2016 |
|Revenue from Operations ||1899.99 ||2138.79 |
|Other Income ||132.07 ||86.85 |
|Total Income ||2032.07 ||2225.64 |
|Expenditure before Interest and Depreciation ||1527.32 ||1939.73 |
|Depreciation ||42.99 ||42.00 |
|Finance Cost ||128.02 ||77.92 |
|Total Expenditure ||1698.33 ||2059.64 |
|Profit before exceptional items and Tax ||333.73 ||165.99 |
|Exceptional Item ||0.00 ||0.00 |
|Profit/(Loss) Before Tax ||333.73 ||165.99 |
|Deferred Tax Asset ||3.09 ||2.42 |
|Current Tax ||88.09 ||25.09 |
|Less: Provision of MAT ||0 ||(22.90) |
|Net Profit/ (loss) after Tax ||248.73 ||166.24 |
2. BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR/STATE OF COMPANY'SAFFAIR
During the year under review the gross revenue of the Company increased to Rs. 1066.21Lakhs as compared to Rs. 766.57 Lakhs in the previous year. The Profit after tax for theyear was Rs. 286.54 Lakhs as compared to Rs. 122.45 Lakhs in the previous year.
3. CHANGE IN THE NATURE OF BUSINESS IF ANY:
Consolidation of Clients rationalization of market segments & expansion of Salesforce will be the Focused approach in Financial Year 2017 2018 to achieve thetargeted numbers. During the Financial Year 20172018 the plan is to profitablybalance out and integrate Top line growth with reasonable bottom lines.
4. Material Changes and Commitments if any affecting the Financial Position ofthe Company which have occurred between the end of the financial year of the company towhich the financial statements relate and the date of the report
There are no Material changes and commitments affecting the financial position of thecompany.
5. FUTURE OUTLOOK
Renewed thrust with a larger Sales force to tap the growing market during Q 2 Q 3& Q 4 will take up the Top line under stand alone to a level of Rs. 1100.00 lakhs upfrom the previous year's Rs. 934.49 Lakhs an estimated growth of around 18 % YoY .
In the ISP segment there is immense competition in both the twin states of TelanganaState & Andhra Pradesh State. On one hand Home grown and dominant localized Statelevel A & B category ISPs are fighting for larger market shares with bigger brandpresence & reach. On the other side National TELCOs are also directly marketing alltheir Voice Data & Video service offerings in the same markets. Margins are shrinkingwith incremental fixed costs. Fall in Internet Bandwidth buying prices is getting negatedwith higher demand from end consumers from the point of view of both quality &quantity of bandwidth which poses a challenge in optimizing usage of Internet bandwidth.State Governments on both sides are exploring the possibility of providing Free Wi-Fi inselect Cities & principal towns. This may add to the existing fierce competition.Additionally Reliance Jio
Communications is expected to play havoc in the market with their aggressive comboofferings and marketing campaigns. Against the above backdrop Nettlinx has strategicallypositioned itself in a niche market segment comprising of larger reliance on SMEsEducational Institutions & Business Broadband than relying on third party CableOperators network as opposed to only the home broadband segment & whole sale bandwidthby most others. Under these circumstances Nettlinx will be able to overcome competitionand scale over all the hurdles and achieve the desired and budgeted financial numbers.
Nettlinx Realty Private Limited
With an objective of profitable diversification under the Nettlinx Holding CompanyNettlinx Realty Private Limited has chalked out ambitious plans as the real estate sectoris booming across the principal cities in India and is poised to grow rapidly in the nextfew years. As a first step towards achieving this objective The Company several yearsback has acquired a land at Gachibowli at Hyderabad. Additionally it has bought anotherland at Nagpur identifying its potential and to take advantage of Nagpur becoming a majormulti modal cargo hub and this land is very close to the SEZ. The Company has initiatedthe process of considering possible tie up with leading Companies to jointly leverage thisland bank for possible conversion into residential / commercial property developmentprojects.
The initial investments on these two lands got appreciated manifold owing to hugedemand and land rates going up north. In Both these specific locations where the land issituated exponential residential apartments are coming up from multiple developers. Weshould be able to monetize over a period of 1-2 years as we are going to enter developmentagreements with leading Companies.
Nettlinx Aqua Culture Private Limited
In the current millennium intensification of aquaculture is the need of the hour tomeet the ever growing demand in the country & overseas markets. The Government isfocusing in meeting the domestic requirement and helping marine exports throughaquaculture in the coming 10 years and aquaculture has a major role as well asresponsibility to achieve this objective. Intensification of aquaculture necessitatessystem and species diversification proper feed and feeding strategies diseasesmonitoring and surveillance application of modern biotechnological tools maintenance ofoptimum soil and water health efficient use of water resources and efficiently andproductively relying on successful technologies and taking advantage of robust Logisticmanagement systems . Its expected and proposed that all these action points and measureswill culminate into better yield and maximizing profits for the Organization in the mediumterm. In view of this and take part in the growth story for future The Company has boughtland at Gogullanka Village H/o Guttinadevi I Polavaram Mandal East Godavari DistrictAndhra Pradesh State.
Salion SE is a subsidiary of Nettlinx Aquaculture Private Limited. It has acquired 95%of Salion SE of Germany. Salion SE is an Management consultant company based out ofBerlin Germany. The Corporation manages more than Euro 1.70 Million investments. It has aspecialized team which advises on M&A and financing of M&A transactions.
This strategic investment will help Nettlinx build a war chest for future acquisitionsof High tech companies in the industrial space in Germany.
Nettlinx Inc. is a 16-year-old US (registered office in NJ) corporation. We are intosoftware consulting network services application development outsourcing and managedcloud services. Clients include big companies like IBM Microsoft Vanguard HCL to name afew.
Currently we are developing a micro ERP application framework. It is aimed at smallbusinesses which do not need the complex structure that a full-fledged ERP provides. Thetarget market small businesses which do not have the need or utilize their own ITdepartment. Currently it is in production with two pharmaceutical distributors.
Company has Four wholly owned subsidiaries namely Nettlinx Inc. Nettlinx RealtyPrivate Limited Nettlinx Aquaculture Private Limited (formerly known as Nettlinx ChannelPrivate Limited) and Salion SE(Subsidiary of Nettlinx Aquaculture Private Limited). Thereare no associate companies within the meaning of Section 2(6) of the Companies Act 2013("Act").
On 14th February 2017 The Board of Directors of the company has passed theresolution for amalgamation of Nettlinx Aquaculture Private Limited into Nettlinx Limited.
The details of financial performance of Subsidiary/ Joint Venture/Associate Company isfurnished in Annexure-A.
The Directors do not propose to transfer any amount to the General Reserves. Rs.28654191/-has been transferred to the Reserves during the financial year 2016-17 beingthe surplus for the year end 31st March 2017.
8. SHARE CAPITAL
During the year under review The Authorized Share Capital of the company has increasedfrom
Rs. 200000000 divided into 20000000 equity shares of Rs.10 (Rupees Ten Only) eachto
Rs. 300000000 divided into 30000000 equity shares of Rs.10 (Rupees Ten Only) eachon the 23rd Annual general Meeting of the company held on 28.09.2016.
The Issued Subscribed and Paid up Capital of the Company as on March 31 2017 is Rs.114633120 divided into 11463312 equity shares of Rs.10 (Rupees Ten Only) each.
The company has issued and allotted 1795127 convertible share warrants during the yearunder review.
A. BUY BACK OF SECURITIES
The Company has not bought back any of its securities during the year under review.
B. SWEAT EQUITY
The Company has not issued any Sweat Equity Shares during the year under review.
C. BONUS SHARES
No Bonus Shares were issued during the year under review.
D. EMPLOYEES STOCK OPTION PLAN
The Company has not provided any Stock Option Scheme to the employees.
Due to conservation of Profits your Board could not recommend any dividend for thefinancial year 2016-17.
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
11. DIRECTORS AND KEY MANAGERIAL
PERSONNEL DIRECTORS : INDUCTIONS :
During the year:
- Mr. Rohith Loka Reddy was appointed as Managing Director of the company with effectfrom 11.08.2016.
- Mr. Subramanyeswara Rao Kakarala and Mr. Kakarla Kiranvenkatasiva were appointed asIndependent Directors of the company with effect from 11.08.2016.
The Board has made following appointments/ reappointments based on the recommendationsof Nomination and remuneration Committee:
1. Reappointed Mr.Chandra Sekhar Pogula as WTD & CEO of the company at the Meetingof Board of Directors held on 09.11.2016.
2. Dr.Erwin Leopold Dieck was appointed as Additional Director on 29.09.2016 andcategorized as independent director of the company on 09.11.2016.
3. Mr.Abraham Joy was appointed as Additional Director on 29.09.2016 and holds the saidoffice till the date of the Annual General Meeting. A notice has been received from amember proposing his candidature for his reappointment.
4. Regularization of appointment of Dr. Erwin Leopold Dieck and Mr. Joy Abraham asIndependent Non-Executive Director and Non-Executive Non-Independent Director of theCompany respectively with effect from 29th September 2016.
The Board recommends the resolution as set forth in item No. 5 6 and 7 of the noticefor approval of the members. For the perusal of the shareholders a brief resume of theDirector being re-appointed along with necessary particulars are given in the Explanatorystatement of the notice.
In accordance with the provisions of Companies Act 2013 Ms. Radhika KundurNon-Executive Director of the Company and Mr. Rohith Loka Reddy Managing Director of thecompany would retire by rotation and being eligible offer themselves for re-appointment.The Board recommends their reappointment at the ensuing Annual general Meeting of thecompany.
Statement on the declaration given by the
Independent Directors as per Section 149(6) of Companies Act 2013
The company has received necessary declarations from the Independent Directors undersection 149(7) of Companies Act 2013 that they meet the criteria of independence aslaid down under section 149 (6) of the Companies Act 2013 and Regulation 25 of Securitiesand Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations2015.
Details of Key Managerial Personnel(KMP):
Pursuant to the provisions of section 203 of the Act the key managerial personnel ofthe Company are: Mr.Rohith Loka Reddy Managing DirectorMr. Chandra Sekhar Pogula ChiefExecutive Officer and Whole Time Director Mr. S. Mahaganesh Chief Financial Officer andMr. Sai Ram Gandikota Company Secretary.
Number of meetings of the Board:
Six meetings of the board were held during the year. For details of the meetings of theboard please refer to the corporate governance report which forms part of this report.
Two Extraordinary General Meetings of the company were held on 18.04.2016 and28.10.2016.
The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013.
The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations"). The performance of the board was evaluated by the board after seekinginputs from all the directors on the basis of the criteria such as the board compositionand structure effectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The board and the nomination and remuneration committee reviewed the performance of theindividual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent directors performance of non-independentdirectors performance of the board as a whole and performance of the chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company's policy on directors' appointment and remuneration and other mattersprovided in section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of this report.
12. DIRECTORS' RESPONSIBILITY STATEMENT
In pursuance of Section 134(5) of the Companies Act 2013 your directors confirm: (a)That the directors in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures. (b) That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the Company for that period.
(c) That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and deleting fraud and otherirregularities.
(d) That the directors had prepared the annual accounts on the going concern basis.
(e) That 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) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
13.AUDITORS Statutory Auditors
M/s. Deva & Co. Chartered Accountants having registration No.000722S allotted byThe Institute of Chartered Accountants of India (ICAI) retires as Auditor of your Companyand therefore they are not eligible for re-appointment as their tenure is expired as perthe provisions of Companies Act 2013.
Pursuant to the recommendations of the Audit Committee of the Board of Directors theCompany hereby appoints M/s. C.Ramachandram & Co Chartered Accountants (FirmRegistration No. 002864S) allotted by The Institute of Chartered Accountants of India(ICAI) who have expressed their eligibility for the appointment to hold the office ofStatutory auditor of the company who shall hold office from the conclusion of this 24thAnnual General Meeting for term of consecutive five years till conclusion of the 29thAnnual General Meeting (subject to ratification of the appointment by the members at everyAnnual General Meeting held after this Annual General Meeting) to examine and audit theaccounts of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s VCSR & Associates Company Secretaries to carry out Secretarial Auditfor the financial year 2016-2017.
AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT
The auditors' report and secretarial auditors' report does not contain anyqualifications reservations or adverse remarks. The Secretarial Audit report is annexedherewith as "(Annexure B)" & "(Annexure B1)". The report isself-explanatory and do not call for any further comments.
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
As required by Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") theAuditor's Certificate on Corporate
Governance is enclosed as Annexure-C to the Board's Report. The Auditors certificatefor Financial Year 2016-2017 does not contain any qualifications reservations or adverseremarks.
14. EXTRACT OF ANNUAL RETURN
As provided under section 92(3) of the Act the extract of annual return is given inAnnexure- D in the prescribed Form MGT-9 which forms part of this report.
15. PARTICULARS OF EMPLOYEES a) The information required under section 197 of theCompanies Act 2013 read with rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure-E to this report. b)Pursuant to Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 during the Year under review None of the employees of the company employedthroughout the financial year was in receipt of remuneration for that year which in theaggregate was not less than sixty lakh rupees; None of the employees of the companyemployed for a part of the financial year was in receipt of remuneration for any part ofthat year at a rate which in the aggregate was not less than five lakh rupees permonth; None of the employees of the company employed throughout the financial year or partthereof was in receipt of remuneration in that year which in the aggregate or as thecase may be at a rate which in the aggregate is in excess of that drawn by the managingdirector or whole-time director or manager and holds by himself or along with his spouseand dependent children not less than two percent of the equity shares of the company.
16. CORPORATE GOVERNANCE AND MANAGEMENT
DISCUSSION & ANALYSIS REPORTS
The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are set out as Annexure-F and Annexure-G respectivelytogether with the Certificate from the auditors of the Company regarding compliance withthe requirements of Corporate Governance as per SEBI Listing Regulations.
17. TRANSACTIONS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis.
There are no materially significant related party transactions made by the Company withPromoters Directors or Key Managerial Personnel etc which may have potential conflictwith the interest of the Company at large. Hence no disclosure in Form AOC-2 is required.All related party transactions are presented to the Audit Committee and the Board for itsapproval.
The Related Party Transaction Policy has been devised by your company for determiningthe materiality of transactions with related parties and dealings with them.
18. INTERNAL CONTROL SYSTEMS AND THEIR
The details in respect of internal financial control and their adequacy are included inthe management discussion & analysis which forms part of this report.
19. AUDIT COMMITTEE
The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report.
20. VIGIL MECHANISM
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.nettlinx.com
The board of directors of the Company has formed a risk management committee to frameimplement and monitor the risk management plan for the Company. The committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. Theaudit committee has additional oversight in the area of financial risks and controls.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis.
The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report.
22. DETAILS OF SIGNIFICANT AND MATERIAL
ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERNSTATUS AND COMPANY'S OPERATIONS IN FUTURE
No significant and material order has been passed by the regulators courts tribunalsimpacting the going concern status and Company's operations in future
23. PARTICULARS OF LOANS GUARANTEES OR
INVESTMENTS UNDER SECTION 186
The particulars of loans guarantees or investments made under section 186 of theCompanies Act 2013 are covered in the notes of the Financial Statement for the year ended31st March 2017.
24. DISCLOSURE UNDER THE SEXUAL
HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaint Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees are covered under this policy.
The following is the summary of sexual harassment complaints received and disposedduring the calendar year.
No. of complaints received: Nil
No. of complaints disposed off: Nil
25. CONSERVATION OF ENERGY TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
(A) Conservation of Energy
The operations of the company involve low energy consumption. However adequate measureshave been taken to conserve energy wherever practicable.
(B) Technology absorption adaptation and innovation
The company continues to use the latest technologies for improving the quality of itsoperations. Provision of state of the Art communication facilities to all softwaredevelopment centers and total technology solutions to its clients contribute to technologyabsorption and innovation.
(C) Foreign exchange earnings and Outgo
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows is as follows: Foreign ExchangeInflows : Rs. 54867240 /-Foreign Exchange Outflows : Rs. 2132890/-
26. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Even though the provisions of Companies Act 2013 regarding Corporate SocialResponsibility are not attracted to the company yet the Company has been over the yearspursuing as part of its corporate philosophy an unwritten CSR policy voluntarily whichgoes much beyond mere philanthropic gestures and integrates interest welfare andaspirations of the community with those of the Company itself in an environment ofpartnership for inclusive development.
27. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS
The company continues to accord high priority to health and safety of employees atmanufacturing locations. During the year under review the company conducted safetytraining programmes for increasing disaster preparedness and awareness among all employeesat the plants. Training programmes and mock drills for safety awareness were alsoconducted for all employees at the plants. Safety Day was observed with safety competitionprogrammes with aim to imbibe safety awareness among the employees at the plant.
During the year under review your Company enjoyed cordial relationship with workersand employees at all levels.
28. LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 toBSE and MSEI where the Company's Shares are listed.
29. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The
Code prohibits the purchase or sale of Company shares by the Directors and thedesignated employees while in possession of unpublished price sensitive information inrelation to the Company during the period (the Trading Window is closed). The Board isresponsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with theCode.
Your Directors wish to place on record their appreciation of the contribution made bythe employees at all levels to the continued growth and prosperity of your Company. YourDirectors also wish to place on record their appreciation of business constituents banksand other financial institutions and shareholders of the Company for their continuedsupport.
|By ||order of the Board of Directors |
| ||For Nettlinx Limited |
| ||Sd/- |
|Date : 08.08.2017 ||Dr. Manohar Loka Reddy |
|Place: Hyderabad ||Chairman |
| ||DIN: 00140229 |