DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS
TO THE MEMBERS OF
Your Directors have pleasure in presenting their 27th Annual Report of the Companytogether with the Audited Accounts of the Company for the Financial Year ended 31st March2016.
The highlights of Financial Results for the Financial Year ended 31st March 2016 incomparison to the Financial Year ended 31st March 2015 are as follows:
| || ||(Rs in Lacs) |
|PARTICULARS ||31st Mar. 16 ||31st Mar. 15 |
|Revenue from Operations ||870.85 ||1096.05 |
|Total Income ||870.85 ||1099.20 |
|Total Expenditure ||899.33 ||1132.34 |
|Profit/(Loss) before depreciation ||(28.48) ||(33.14) |
|Depreciation ||2.11 ||1.87 |
|Profit/(Loss) before Tax ||(30.59) ||(35.01) |
|Exceptional Items ||(2997.50) ||- |
|Total Profit / (Loss) ||(3028.09) ||(35.01) |
There has been no respite from the global economic downturn. Your Company's line ofbusiness reeled under heavy stress. In comparison the Indian economy has certainperformed creditably compared to most developed market of the globe showing a positiveyear of Macro Economic Stability. The Economy has made progress but yet to showproportionate impact on your Company's line of business.
During the financial year under review the company incurred operational loss after taxRs. 30.59 Lacs against loss of Rs. 35.01 Lacs in the previous year. The management of yourcompany expects improvement in the current year with the stabilization in the businesssentiments.
The Performance of long-term investments are being monitored by the Company and basedon review undertaken of adjustments necessary to the carrying value of these investmentsthe company has recognised a diminution of Rs. 2997.50 Lacs as on 31.03.2016.The net worthof two investee companies has been eroded due to losses in operations and permanentdiminution than temporary in the valuation of investee companies. Presently due to lack ofimprovement in operations in those investee companies there is uncertainty in the nearfuture of recouping the erosion in value of investments made by the Company. Based onreview as mentioned above the Company during the quarter ended March 31 2016 hasrecognised diminution other than temporary of Rs.2997.50 Lacs and same have been shown asan exceptional item for the year ended 31st March 2016 in financial statements of theCompany which over a period only strengthen the balance sheet hereinafter.
The world economy showed a weakening trend with weak aggregate demand fallingcommodity prices and increasing volatility in the financial markets. Most emergingeconomies have been showing slower economic growth. India has fortunately been able tobuck this trend thanks largely to the country's domestic demand and comparatively limitedreliance on the external sector for growth. The world economy's revised growth rate was at2.4% as compared to 3.6% in the previous year and is projected to grow by 2.9% in 2016.TheAsian region is expected to grow at a steady 5.4 percent in 2015 16 and will continue toremain the global growth leader. Asia's growth should benefit from relatively stronglabour markets and growth in disposable income along with the ongoing recovery in majordeveloped economies. Low inflation increased public investment revival of privateinvestment and increased consumption (both urban and rural) were the major factorsinfluencing India's GDP growth which was at 7.4%. The continuing tightening measures bythe Reserve Bank of India to combatination led to higher cost of funds which adverselyaffected India's industrial growth. The value of the rupee stabilized vis-a-vis otherinternational currencies during the later half of the fiscal year as a result of variousmeasures taken by the Government and Reserve Bank of India.
Your Company is seeking great opportunities in its business segment considering theexpected economic development & growths initiatives taken by the government.
OPPORTUNITIES AND THREATS
Positive strides have been made since the new government has taken over. The Company islooking forward to grasp the available opportunities. The Company thrust is on trading andinvestment in commodities forex and derivative products. This will be supplementedthrough more research and qualitative techniques for decision making. The company iscontinuing with task to build businesses with long term goals through intrinsic strengthin corporate and investment research. To accelerate further value creation your companycontinues to work on new fields through collaboration association and strategicinvestments. The uncertain state of the global economy however remains a cause of concern.
OUTLOOK RISKS AND CONCERNS
Your Company has been making use of available opportunities in the capital and thecommodities markets for its operations keeping in view its business objectives.
The underlying strength of Indian consumption and demand continues to remain robust.The country's equity markets remain a favourite of global investors. The performance ofyour Company is closely linked to those of the stock and commodities markets and moreparticularly to stock markets. The growth tendencies for 2016-17 are expected to be mostlyreflective of the developments in these areas. Your Company is cautiously optimistic inthe current scenario and will focus on a well adjusted portfolio mix resourceful costmanagement and risk containment measures in order to sustain profitability.
In view of net loss incurred by the Company your directors do not recommend anydividend for the Financial Year ended 31st March 2016.
The present issued subscribed and paid-up share capital of the Company is Rs.491484980/- divided into 49148498 Equity Shares of Rs. 10 each. As on 31st March2016 the Company has accumulated losses (debit balance of Profit & Loss Account) tothe tune of Rs. 373277301/-.
In order to re-align the relation between capital & assets and to accurately &fairly reflect the liabilities & assets of the company in its books of accounts andfor better presentation of the financial position of the Company; the Board of Directorshas decided to write off the accumulated losses against reduction in the share capital ofthe Company in accordance with section 100 to 104 of the Companies Act 1956 and otherapplicable provisions. Paid up value of each Equity Share of the Company will be reducedfrom Rs. 10 per share to Rs.2 per share and the total paid up Share Capital of the Companyshall be reduced from Rs. 491484980/- divided into 49148498 Equity Shares of Rs.10/- each fully paid-up to Rs. 98296996/- divided into 49148498 Equity Shares ofRs. 2/- each fully paid-up. The Reduction of Capital shall be on proportionate basis andall the pre-Scheme shareholders will remain as the shareholders of the Company even afterthe Scheme in the same proportion.
The company has already received the No Objection from the BSE/SEBI in terms ofRegulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 on the proposed Reduction of Capital.
The Company has not accepted any deposits from the public in terms of Section 73 of theCompanies Act 2013 during the year under review.
PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The Company has not granted any loans secured or unsecured guarantee to companiesfirm or other parties covered under section 186. Particulars of Investments has beendisclosed in financial statement of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Aman Sawhney and Mr. Pankaj Shrimali Directors retire by rotation at theforthcoming Annual General Meeting and being eligible offer themselves for reappointment.The Board recommends their reappointments at the ensuing Annual General Meeting of theCompany.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met 4 (Four) times in the FY2015-16. The detailspertaining to the Board Meetings and attendance are provided in the Corporate GovernanceReport. The intervening gap between two Board Meetings was within the period prescribedunder Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED U/S 134 (5) OF THE COMPANY ACT 2013
Pursuant to the requirements under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed:
a. that in the preparation of the Annual Accounts the applicable accounting standardshave been followed;
b. that the Directors have 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 as at March 31 2016 andof Profit and Loss Account of the Company for that period;
c. that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
d. that the Directors have prepared the Annual Accounts for the Financial Year endedMarch 31 2016 on a going concern basis;
e. that the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
f. that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
DECLARATION BY INDEPENDENT DIRECTORS
The company has received necessary declaration from each independent director undersection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in section 149(6) of the Companies Act 2013 and regulation 25 of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.
In terms of the provisions of the Companies Act 2013 and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 theBoard has carried out the evaluation of its own performance the Directors individuallyincluding the Chairman of the Board and that of its Committees. The evaluation of theIndependent Directors was carried out by the entire Board and that of the Chairman andNon-Independent Directors were carried out by Independent Directors.
The Directors were satisfied with the evaluation results which reflected the overallengagement of the Board and its Committees.
The process of evaluation is explained in the Corporate Governance Report.
COMMITTEES OF BOARD
Currently the Board has three committees: the audit committee stakeholders' grievancecommittee and nomination and remuneration committee. The details of the committee's alongwith the meetings held during the year are covered in corporate governance report.
AUDITORS & AUDITORS OBSERVATIONS
The Shareholders of the Company at the Annual General Meeting held on September 282015 have appointed M/s. S.Kapoor & Associates Chartered Accountants as StatutoryAuditors of the Company. The term of M/s. S.Kapoor & Associates CharteredAccountants Statutory Auditors will expire on the date of 27th Annual General Meeting tobe held on September 28 2016.
It is proposed to re-appoint them as Statutory Auditors of the Company till theconclusion of next Annual General Meeting of the Company. The members are requested toconsider their re-appointment and authorize the Board of Directors to fix theirremuneration.M/s. S.Kapoor & Associates Chartered Accountants (Firm Regn. No.003528M)have confirmed that their appointment if made shall be in accordance with the provisionsof Section 139 of the Companies Act 2013.
The Auditors report to the shareholders are self-explanatory and does not contain anyqualification reservation or adverse remarks. The report given by the statutory auditor'sforms part of the Annual report.
Mrs. Anchal Mittal of AM & Associates. Practicing Company Secretary was appointedto conduct the secretarial audit of the Company for the financial year 2015-16 asrequired under Section 204 of the Companies Act 2013 and Rules made thereunder. TheSecretarial Audit report for FY. 2015-16 in form MR-3 part of the Annual Report as Annexure1 of the Board' Report. The report does not contain any qualification.
EXTRACTS OF ANNUAL RETURN
The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of theCompanies Act 2013 and Rule 12 of Companies (Management and Administration) Rules 2014and the same is enclosed as Annexure - 2 to this Report.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The board has adopted the policies and procedures for ensuring the orderly andefficient conduct of the business including adherence to the company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
The Company does not have any subsidiary Company.
PARTICULARS OF EMPLOYEES
During the year under review none of employees are covered under the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.
The Securities & Exchange Board of India (SEBI) on September 02 2015 issuedListing Obligations & Disclosure Requirements Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said Regulations were effectivefrom December 01 2015. Accordingly the Company entered into the fresh Listing Agreementwith BSE Limited.
LISTING OF COMPANY'S SHARES ON STOCK EXCHANGES
The Company's shares are listed on "The Bombay Stock Exchange Limited". Thelisting fee up to the year 2016-2017 has already been paid to the Stock Exchange.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Your Company is not involved in any manufacturing or processing activities and did notcarry out any activity relating to Research & Development Technology Absorptionduring the year under review. Hence particulars in this regard in accordance withprovisions of the Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 are not required.
There are no foreign exchange earnings or outgo during the current financial period.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year no significant and material orders were passed by the regulators orcourts or tribunals impacting the going concern status and company's operations in future.
RELATED PARTY TRANSACTIONS
During the year ended March 31 2016 there were no materially significant relatedparty transactions which had potential conflict with the interests of the Company atlarge. The transactions with related parties has been disclosed in the financialstatements of the Company.
In terms of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors of the Company haveadopted a policy to determine Related Party Transactions. The same is uploaded on thewebsite of the Company and the URL ofsame is:http://www.networklimited.net/files/POLICY_ON_ MATERIALITY_OF_RELATED_PARTY_TRANSECTIO N.pdf .
VIGIL MACHANISM / WHISTLE BLOWER POLICY
The Board of Directors has adopted Whistle Blower Policy. The Whistle Blower Policyaims for conducting the affairs in a fair and transparent manner by adopting higheststandards of professionalism honesty integrity and ethical behavior. All permanentemployees of the Company are covered under the Whistle Blower Policy. A mechanism has beenestablished for employees to report concerns about unethical behavior actual or suspectedfraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguardsagainst the victimization of employees who avail of the mechanism and allows direct accessto the Chairperson of the audit committee in exceptional cases.The same isuploaded on thewebsite of the Company and the URL ofsameis:http://www.networklimited.net/files/WhistleBlowerPolic y.pdf .
CODE OF CONDUCT
The Company has a well defined policy which lays down procedures to be followed by theemployees for ethical professional conduct. The code of conduct has been laid down for allthe Board Members and Senior Management of the Company. The Board members and SeniorManagement personnel have affirmed compliance with the Company's code of conduct for theyear 2015-16. This code has been displayed on the Company's website.The same isuploaded onthe website of the Company and the URL ofsameis:http://www.networklimited.net/files/code-of-conduct1.pdf .
HUMAN RESOURCE AND INDUSTRY RELATIONS
The Company recognizes the importance and contribution of its human resources for itsgrowth and development and is committed to the development of its people.
The Company has cordial relations with employees and staff.
There are no industry relation problems during the year and company does not anticipateany material problems on this count in the current year.
Corporate Governance is an ethically driven business process that is committed to valueaimed at enhancing an organization's brand and reputation. This is ensured by ethicalbusiness decisions and conduction business with a firm commitment to value while meetingstakeholders' expectations. At Network it is imperative that our company affairs aremanaged in a fair and transparent manner. This is vital to gain and retain the trust ofour stakeholders.
In terms of the listing agreement with Stock Exchange we comply with the corporategovernance provisions. As a listed company necessary measures have been taken to complywith the listing agreements with the stock exchange. Several aspects of the Act such asvigil mechanism and code of conduct have been incorporated into our policies.
The annexed report on Corporate Governance along with a certificate of compliance fromthe practicing Company Secretary forms part of this report.
Your Directors acknowledge the support of the shareholders and also wish to place onrecord their appreciation of employees for their commendable efforts teamwork andprofessionalism. The Directors also express their grateful thanks to the Banks GovernmentAuthorities Customers Suppliers Employees and other Business Associates for theircontinued cooperation and patronage.
| ||For and on behalf of the Board of Directors |
|SD/- ||SD/- |
|ASHOK SAWHNEY ||AMAN SAWHNEY |
|CHAIRMAN ||DIRECTOR & MANAGER |
|Place: New Delhi || |
|Date: 11.08.2016 || |