The directors submit 23rd annual report of Nettlinx Limited (the"Company" or "Nettlinx") along with the audited financial statementsfor the financial year (FY) ended March 31 2016. Consolidated performance of the Companyand its subsidiaries has been referred to wherever required.
1. FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY :
(Amount Rs. in Lakhs)
|Particulars ||2015-2016 ||2014-2015 |
|Revenue from Operations ||682.25 ||563.71 |
|Other Income ||84.32 ||86.07 |
|Total Income ||766.57 ||649.78 |
|Expenditure ||608.63 ||582.90 |
|Depreciation ||34.91 ||37.83 |
|Profit before exceptional items and Tax ||123.03 ||29.04 |
|Exceptional Item ||0.00 ||0.00 |
|Profit/(Loss) Before Tax ||123.03 ||29.04 |
|Deferred Tax Asset ||1.60 ||2.56 |
|Current Tax ||25.08 ||5.53 |
|Less: Provision of MAT ||(22.90) ||(5.53) |
|Net Profit/ (loss) after Tax ||122.45 ||31.60 |
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.766.57Lakhs as compared to Rs.649.78 in the previous year. The Profit after tax for the year wasRs.122.45 Lakhs as compared to Rs.31.60 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 2016 - 2017 to achieve the targetednumbers. During the Financial Year 2016 - 2017 the plan is to profitably balance out andintegrate Top line growth with reasonable bottom lines.
4. Material Changes and Commitments if any affecting the Financial Position of theCompany which have occurred between the end of the financial year of the company to
which 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 standalone to a level of Rs.900 lakhs up fromthe previous year's Rs.766.63 lakhs an estimated growth of around 24 % YoY .
Aggressive Sales efforts on the domestic hosting business to boost the bottom lines as the objective is to put the existing blade servers to optimal utilization. With aproductive and efficient management of both ISP business & Domestic hosting theCompany is targeting a bottom line of Rs.2.00 Crores by the end of March 2017.
In the ISP segment There is immense competition in both the twin states of TelanganaState & AP State .
On one hand Home grown and dominant localized State level A & B category ISPs arefighting for larger market shares with bigger brand presence & reach. On the otherside National TELCOs are also directly marketing all their Voice Data & Videoservice offerings in the same markets. Margins are shrinking with incremental fixed costs.Fall in Internet Bandwith buying prices is getting negated with higher demand from endconsumers from the point of view of both quality & quantity of bandwidth which posesa challenge in optimizing usage of Internet bandwidth. State Govts on both sides areexploring the possibility of providing Free Wi-Fi in select Cities & principal towns.This may add to the existing fierce competition. Additionally Reliance JioCommunications 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 of these specific locations where the landis situated exponential residential apartments are coming up from multiple developers.
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 atke part in the growth story for future The Company has boughtland at Gogullanka Village H/o Guttinadevi I Polavaram Mandal East Godavari DistrictAP State.
Company has three wholly owned subsidiaries namely Nettlinx Inc. Nettlinx RealtyPrivate Limited and Nettlinx Aquaculture Private Limited (formerly known as NettlinxChannel Private Limited). There are no associate companies within the meaning of Section2(6) of the Companies Act 2013 ("Act"). Further there has been no materialchange in the nature of business of the subsidiaries.
Rs.12245616 has been transferred to the Reserves during the financial year 2015-16being the surplus for the year ended 31st March 2016.
8. SHARE CAPITAL:
During the year under review there is no change in the Share Capital of theCompany.However the board of Directors of the company has passed the resolution forincrease of authorized capital from Rs.200000000 to Rs.300000000 in view of furtherrequirement of funds for the company. The Authorized Share Capital of the company isRs.200000000 divided into 20000000 equity shares of Rs.10 (Rupees Ten Only) each.The Issued Subscribed and Paid up Capital of the Company as on March 312016 isRs.114633120 divided into 11463312 equity shares of Rs.10 (Rupees Ten Only) each.
In view of inadequate profits your Board could not recommend any dividend for thefinancial year 2015-16.
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:
The Board has made following appointments/ reappointments based on the recommendationsof Nomination and remuneration Committee:
1. Apponitment of Mr.Rohith Loka Reddy as managing Director of the company witheffective from 11.08.2016.
2. Appointment of Mr. Subramanyeswara rao Kakarala and Mr. Kakarla Kiran Venkatasiva asAdditional and Independent Non-Executive Director of the company with effective from11.08.2016.
The Board recommends the resolution as set forth in item No.456 of the notice forapproval 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.
The Board based on the recommendations of Nomination and remuneration Committee alsoappointed:
Mr.S.Mahaganesh as Chief Financial Officer of the company with effective from 27thMay 2015.
Mr.Emani Venkat Reddy as Company Secretary with effective from 01stAugust 2015.
Mr.Sai Ram Gandikota as Company Secretary with effective from 07thNovember 2015 in place of Mr.Emani Venkat Reddy who has resigned from the office ofCompany secretary with effective from 06.11.2015.
Further The Board had appointed Mr.Sai Ram Gandikota as compliance Officer for theSEBI Listing Regulations.
In accordance with the provisions of Companies Act 2013 Dr. Manohar Loka ReddyChairman Non-Executive Director of the Company would retire by rotation and beingeligible offer himself for re-appointment. The Board recommends his reappointment.
Mr.Emani Venkat Reddy has resigned from the office of Company secretary with effectivefrom 06.11.2015. The Board places on record its appreciation for the services rendered byhim during his tenure with the company.
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 as laiddown under section 149(6) of the Companies Act 2013 and Regulation 25 of Securities AndExchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations2015.
DETAILS OF KEY MANAGERIAL PERSONAL (KMP):
Pursuant to the provisions of section 203 of the Act the key managerial personnel ofthe Company are: Mr.Chandra Sekhar Pogula Chief Executive Officer & Whole TimeDirector Mr. S.Mahaganesh Chief Financial Officer and Mr. Sai Ram Gandikota CompanySecretary.
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.
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 seeking inputs from allthe directors on the basis of the criteria such as the board composition and structureeffectiveness 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 applicableaccounting standards have been followed along with proper explanations relating tomaterial departures.
(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.
At the Annual General Meeting held on 29th September 2014 M/s Deva & Co CharteredAccountants Hyderabad were appointed as Statutory Auditors of the Company for a periodof three (3) years from the conclusion of the 21st AGM to the conclusion of 24th AGM tobe held in the calendar year 2017. In terms of First proviso to section 139(1) of theCompanies Act 2013 the appointment of Auditors shall be placed for ratification at everyAGM . Accordingly the appointment of M/s. Deva & Co as Statutory Auditors placed forratification by the shareholders.
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 Mr. Ch. Veeranjaneyulu as Secreterial Auditor who is a partner of M/s VCSR &Associates Company Secretaries in Whole-time Practice to carry out Secretarial Audit forthe financial year 2015-2016.
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 A)" & "(Annexure A1)". 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-B to the Board'sReport. The Auditors certificate for Financial Year 2015-2016 does not contain anyqualifications reservatios or adverse remark.
14. EXTRACT OF ANNUAL RETURN:
As provided under section 92(3) of the Act the extract of annual return is given inAnnexure- C in the prescribed Form MGT-9 which forms part of this report.
15. PARTICULARS OF EMPLOYEES:
a) The information required under section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed as Annexure-D to this report.
b) Pursuant to Rule 5(2) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 during the Year under review None of the employees of the companyemployed throughout the financial year was in receipt of remuneration for that yearwhich in the aggregate was not less than sixty lakh rupees; None of the employees of thecompany employed for a part of the financial year was in receipt of remuneration for anypart of that year at a rate which in the aggregate was not less than five lakh rupeesper month; None of the employees of the company employed throughout the financial year orpart thereof was in receipt of remuneration in that year which in the aggregate or asthe case may be at a rate which in the aggregate is in excess of that drawn by themanaging director or whole-time director or manager and holds by himself or along with hisspouse and dependent children not less than two percent of the equity shares of thecompany.
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-E and Annexure-F 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 Related party transactions done by the company during the Financial Year were atArm's Length and in ordinary course of business. All related party transactions wereplaced in the meetings of Audit committee and or the Board of Directors for Approvals.During the Financial year your company has not entered into any material transaction withany of its related parties except with its subsidiaries / associates which might be deemedto have had a potential material conflict with the interest of the company. Disclosures onrelated party transactions have been made in the notes to the Financial Statements. As allthe transactions with related parties are on arm's length basis and in the ordinary courseof Business the particulars of contracts or arrangements with related parties undersection 188 in form AOC_2 is not enclosed herewith.
18. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
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
21. RISK MANAGEMENT:
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 ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS 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 and investments have been disclosed in thefinancial statements.
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 ANDOUTGO:
(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 al 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 Exchange Inflows ||: Nil |
|Foreign Exchange Outflows ||: Nil |
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. ADDITIONAL INFORMATION:
Information pursuant to Section 134 (3) (l) & (m) of the Companies Act 2013 whichis included as a part of corporate Governance report.
29 LISTING WITH STOCK EXCHANGES:
The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 toBSE and MSEI where the Company's Shares are listed.
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.
Your Directors also wish to place on record their appreciation of businessconstituents banks and other financial institutions and shareholders of the Company fortheir continued support.
By the order of the Board of Directors
For Nettlinx Limited
| ||Sd/- |
|Date : 11.08.2016 ||Dr. Manohar Loka Reddy |
|Place : Hyderabad ||Chairman |
| ||DIN:00140229 |