Quick Heal Technologies Ltd.
|BSE: 539678||Sector: IT|
|NSE: QUICKHEAL||ISIN Code: INE306L01010|
|BSE LIVE 15:42 | 24 Nov||225.40||
|NSE 15:59 | 24 Nov||225.50||
|Mkt Cap.(Rs cr)||1,583|
|Mkt Cap.(Rs cr)||1583.21|
Quick Heal Technologies Ltd. (QUICKHEAL) - Director Report
Company director report
The Board of Directors of your Company are pleased to present the 22ndAnnual Report along with the audited financial statements for the financial year ended 31stMarch 2017.
1. Financial Highlights
2. Business Operations and Outlook
Your Company recorded a total income of Rs 3284.24 million for thefinancial year 2016-17 as against Rs 3119.93 million in 2015-16 resulting in marginalincrease in revenue during the year under review. The Company continued to position itselfas one of the leading players in market.
Indian cyber security market is currently valued at $4 billion and isexpected to grow to $35 billion by 2025 which is a nine fold increase while the globalsecurity market is expected to reach US$ 190 Billion by year 2025 from the approximatelyUS$ 85 billion today. Your Company's continued investments in innovation and technologyhas enabled it to undertake a number of diverse projects and adapt to the ever changingneeds of consumers.
Your Company also partnered with an ambitious initiative launched bythe Government of India Cyber Swachhta Kendra (CSK) which is a botnet cleaning andmalware analysis center. It aims to bring in enhanced security measures to Indian usersand secure the cyber ecosystem. This is a huge leap of Government of India partnered byyour Company in the Digital India Mission. Botnets can cause a wreck in the internetespecially so for India as it is one of the highly botnet infected countries in theworld.
Business Outlook of the business has been discussed in detail in the"Management Discussion and Analysis" which forms a part of this Annual Report.It is the endeavor of the Company to enhance stakeholder value.
3. Transfer of Profits to Reserves
Your Directors have decided not to transfer any amount to GeneralReserve and to carry forward the entire surplus under the Statement of Profit & Loss.
The Board of Directors has recommended a Dividend @ 25 % i.e. Rs 2.5/-per equity share for the financial year 2016-17.
The payment of aforesaid dividend is subject to the confirmation by theMembers at the Annual General Meeting.
5. Public Deposits
During the year under review your Company did not accept any depositswithin the meaning of Chapter V of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 as amended from time to time.
6. Report on performance of Subsidiaries
A statement containing salient features of the financial statements ofSubsidiary Companies in Form AOC-1 as required under section 129 (3) of the CompaniesAct 2013 forms a part of this Annual Report and is annexed as
Annexure A. The audited financial statements in respect of each of thesubsidiaries shall be kept open for inspection at the Registered Office of the Company onall working days between 11.00 a.m. to 1:00 p.m. upto the date of the forthcoming Annualgeneral Meeting. Further the Company will make available the audited annual accounts andrelated information of the subsidiary companies upon request by any Member of theCompany.
7. Consolidated Financial Statements
Consolidated Financial Statements ("CFS") of your Company andits subsidiaries as at 31st March 2017 are prepared in accordance with theIndian Accounting Standard on 'Consolidated Financial Statements' issued by the Instituteof Chartered Accountants of India and the provisions of the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 ("theSEBI (LODR) Regulations") form a part of this Annual Report. The Auditors' Report onthe CFS is also attached which is unqualified.
8. Management Discussion and Analysis
A detailed review by the Management of the business operations of theCompany future outlook of its business pursuant to the Schedule V of the SEBI (LODR)Regulations is presented under separate section "Management Discussion andAnalysis" which forms a part of this Annual Report.
9. Corporate Governance
Your Company firmly believes that Corporate Governance practicesconstitute strong foundation on which successful organizations last. The Company followsthe principles of Corporate Governance in letter and spirit. The Company has fullycomplied with the Requirements as prescribed under Schedule V of the SEBI (LODR)Regulations. The quarterly Corporate Governance Report confirming that the Company hascomplied with statutory provisions has been filed with the Stock Exchanges where theshares of the Company are listed. A detailed Report on Corporate Governance and acertificate from M/s J. B. Bhave & Co. Practicing Company Secretary confirmingcompliance of conditions of the Corporate Governance forms a part of this Annual Report.
10. Compliance with the Code of Conduct
A declaration signed by the Managing Director & CEO affirmingcompliance with the Company's Code of Conduct by the Directors and Senior ManagementPersonnel for the financial year 2016 - 17 as required under Schedule V of the SEBI(LODR) Regulations forms a part of this Annual Report.
11. Directors & Key Managerial Personnel
Mr. Kailash Sahebrao Katkar (DIN: 00397191) Managing Director &CEO retires by rotation at the ensuing Annual General Meeting and being eligible offershimself for reappointment. A Profile of Mr. Kailash S. Katkar as required by Regulation36(3) of the SEBI (LODR) Regulations are given in the Notice convening the forthcomingAnnual General Meeting.
The Company regularly conducts the Familiarisation Program forIndependent Directors about their roles rights responsibilities in the Company natureof the industry in which the Company operates business model of the Company etc.through various initiatives. The details of the same can be found at:
Mr. Kailash S. Katkar Managing Director & CEO Mr. Sanjay S.Katkar Managing Director & CTO Mr. Rajesh Ghonasgi Chief Financial Officer and Mr.Vijay Shirode Company Secretary are the Key Managerial Personnel of the Company withinthe meaning of sections 2(51) and 203 of the Companies Act 2013 read together with theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014.
12. Board Meetings
During the financial year 2016-17 6 (Six) Board meetings were held on22nd April 2016 11th May 2016 5th August 2016 11thNovember 2016 & 3rd February 2017 and 24th March 2017 Themaximum time gap between any two meetings did not exceed prescribed period of one hundredtwenty days.
13. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 Directors ofyour Company hereby state and confirm that:
a) in the preparation of the annual accounts for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures;
b) they 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 at the end of thefinancial year and of the profit of the company for the same period;
c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls in the company thatare adequate and were operating effectively;
f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and these are adequate and are operating effectively.
14. Declaration of Independence by Independent Directors
The Board confirms that all Independent Directors of the Company havegiven a declaration to the Board that they continue to meet the criterion of independenceas prescribed under Section 149 of the Companies Act 2013.
15. Performance Evaluation of the Board its Committees and Directors
The Board has established a comprehensive process to evaluate theperformance of the Directors Committee and the Board. The performance evaluation matrixdefining the criteria of evaluation for each of the above has been put in place. Theperformance evaluation of the Independent Directors was carried out by the Board(excluding the Director being evaluated). A meeting of the Independent Directors was alsoheld to review the performance of Non-Independent Directors and the Board as a whole. TheDirectors were updated by the Chairman about the outcome of the process.
17. Secretarial Audit Report
Pursuant to Section 204 of the Companies Act 2013 the Board ofDirectors had appointed M/s. J B Bhave & Co. Practising Company Secretaries Pune asthe Secretarial Auditors of the Company for the financial year 2016-17 annexed asAnnexure B.
The Secretarial Auditors have provided an unqualified Secretarial AuditReport which forms part of this Annual Report.
The Board has re-appointed M/s. J B Bhave & Co. Practising CompanySecretaries Pune as the Secretarial Auditors of the Company for the financial year(s)2017-18 and 201819.
18. Statutory Auditors
The Members of the Company at the Annual General Meeting of the Companyheld on 5th August 2016 had ratified the appointment of M/s SRBC & CO LLP(Firm Registration No. 324982E) Chartered Accountants as the Statutory Auditors of theCompany to hold such office till the conclusion of the ensuing the Annual General Meeting.
M/s SRBC & CO LLP have confirmed their eligibility and willingnessto accept office if appointment is ratified by the Members of the Company.
Your Directors recommend ratification of appointment of StatutoryAuditors to hold office from the conclusion of the ensuing Annual General Meeting till theconclusion of the Annual General Meeting to be held in the calendar year 2018.
16. Committees of the Board
During the year under report the Board of Directors of your Companyre-constituted the Committees of the Board. The present composition of differentCommittees is given hereunder:
* Audit Committee performs the functions of Risk Management Committee.
19. Audit Observations
Auditors' observations are suitably explained in notes to the Accountsand are self-explanatory.
20. Cost Auditors
Pursuant to the provisions of Section 148(3) of the Companies Act2013 the Board has appointed M/s. Bhavesh Marolia & Associates as the Cost Auditorsof the Company to conduct an audit of cost records maintained by the Company for thefinancial year(s) 2017-18 201819 at the remuneration of Rs 47250/- plus applicablegovernment taxes and out of pocket expenses. The remuneration payable to the Cost Auditorsis subject to the approval of the Members at the ensuing Annual General Meeting.
21. Internal Auditors
The Board of Directors of your Company has appointed M/s. PipaliaSinghal & Associates Chartered Accountants (Firm Registration No.114665W) as InternalAuditors of the Company for the period of two financial years i.e. 2016-17 and 2017-18.
22. Particulars of Employees Remuneration
Pursuant to the provisions of Rule 5 of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 a statement showing details ofpersonnel drawing remuneration in excess of the prescribed limit under the said rules areannexed as 'Annexure C' to the Directors' Report.
During the year under review the Company continued to focus on talentconservation and talent development.
23. Employee Stock Option Scheme
Your Company has two Employee Stock Option Plans namely EmployeesStock Option Scheme 2010 and Employees Stock Option Scheme 2014 for granting Term basedand performance based Stock Options to Employees.
During the year under report no employee has been granted stockoptions equal to or exceeding 1% of the issued capital (excluding outstanding warrantsand conversions) of your Company.
The details of activities under the scheme have been summarized in theNotes forming part of Financial Statements and annexed as Annexure D.
During the year under review the Company has not accepted anydeposits.
25. Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
Particulars required to be furnished under the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules 1988 are as under:
The operations of the Company involve low energy consumption. Adequatemeasures have been taken to conserve energy.
Technology Absorption Adaptation and Innovation
The Company continues to use the latest technologies for improving theproductivity and quality of its products and services. The company continues to focus oninnovation and protect consumers around the world with latest technology. With itscontinued focus on R&D the company aims at releasing newer features as well as newerproducts in retail as well as enterprise segment.
The company has intensified its efforts on unique opportunity the smalland mid-size businesses are projecting with the digitization of India. Understanding thecyber security challenges the small and medium size business will be going through whenadopting to new digitization. Developing products that will address the cyber threats tothese businesses and protecting their valuable data. In coming years more investment willgo into R&D of several technologies targeted towards products for enterprise segment.
Benefits derived from the R & D Activities:
Development of highly innovative product providing software securitysolutions and also fulfilling various added demands of consumers. The expenditure incurredin the same is detailed in the notes to Accounts annexed herewith.
Foreign Exchange earnings and outgo
Total foreign exchange earnings and outgo for the financial year wereas follows:
26. Particulars of Loans Guarantees and Investments
Particulars of Loans Guarantees and Investments as on 31st March2017 are given under Notes to the financial statements.
27. Related Party Transactions
All the related party transactions carried out during the year werecarried out at Arm's Length basis and in ordinary course of business. There were nomaterially significant related party transactions with the Company's Promoters DirectorsManagement or their relatives which could have had a potential conflict with theinterests of the Company.
The above transactions with related parties were approved by the Boardof Directors. The particulars of contracts entered during the year are given in Form AOC-2enclosed as Annexure E.
28. Corporate Social Responsibility (CSR)
The Company believes that the society at large is the primeenabler for the Company's growth and success and that the Company is committed to returnit's due to the society as a Corporate Citizen. This idea inspires your Company to be atrustworthy partner in building our nation and an ethical business player with thisinspiration your Company had formed a public charitable trust 'Quick Heal Foundation'
Your Company selects one or more CSR activities as specifiedunder Schedule VII of the Companies Act 2013 for implementation in the area of itsoperation. The Company strives to promote cyber awareness and internet security and isdedicated towards promoting environment sustainability
The Board of Directors of your Company has constituted a CSRCommittee to help the Company to frame monitor and execute the CSR activities of theCompany under its CSR scope. The Committee defines the parameters and observes them foreffective discharge of the social responsibility of your Company. The Directors havefurther approved the CSR Policy of the Company to provide a guideline for CSR activitiesof the Company
During the year under review the Company has spent14000000/- on CSR activities out of the total amount of 18789594/- mandated as perlaw.
Your Company was in the process of further identifyingworthwhile avenues for CSR expenditure during the year and in its absence there wasunspent of 1789594/-. The Company continues to commit undertaking CSR activities for thewelfare of the society.
A Report on CSR activities of your Company under the provisionsof the Companies Act 2013 during the financial year 2016-17 is given as Annexure 'F'.
29. Adequacy of Internal Financial Controls
The Board has laid down policies and procedures for strengthening itsInternal Financial Controls which are commensurate to the nature and size of the Company'soperations and they are operating effectively. The Internal Financial Controls covered thepolicies and procedures adopted by the Company for ensuring orderly and efficient conductof business including adherence to the Company's policies safeguarding of the assets ofthe Company prevention and detection of fraud and errors accuracy and completeness ofaccounting records and the timely preparation of reliable financial information.
30. Vigil Mechanism (Whistle Blower Policy)
The Company has a well laid down Vigil Mechanism (Whistle BlowerPolicy) details of which are given in the Report on Corporate Governance forming a partof this Annual Report. The Company has also uploaded the said Whistle Blower Policy on itswebsite at http://www. quickheal.com/investors/whistle-blower-policy.
31. Risk Management Policy
The Audit Committee also functions as the Risk Management Committee.The Company has put in place a robust Risk Management Policy which facilitatesidentification of risks and also mitigation thereof. There are no risks which in theopinion of your Directors threaten the existence of the Company. However risks that maypose a concern are explained under Management Discussion and Analysis which forms part ofthis Annual Report.
32. Other matters
Your Directors state that during the financial year under review -
i. Neither the Managing Director nor the Whole-time Director of theCompany received any remuneration or commission from any of its subsidiaries.
ii. No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and the Company's operations infuture.
37. Extract of Annual Return
The details forming part of the extract of the Annual Return in FormMGT-9 is annexed herewith as Annexure G.
38. 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 withrequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees (permanent contractual temporary trainees) arecovered under this policy. Internal Complaints Committee(s) (ICC) has been set up acrossall its locations in India to address complaints received regarding sexual harassment.
There were no complaints reported during the financial year 2016-17.
39 Material Changes/Events after balance sheet date
There were no material changes and commitments affecting the financialposition during the period since the end of the financial year till the date of thisreport.
Your Board places on record the help and the sincere cooperationreceived from the from the shareholders end users employees dealers distributorsbusiness partners bankers regulatory bodies and other business constituents during theyear under review. The Directors also wish to place on record their deep sense ofappreciation for the commitment displayed by all executives officers and staff resultingin the successful performance of the Company during the year.
For and on the behalf of the Board of Directors