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Quick Heal Technologies Ltd.

BSE: 539678 Sector: IT
NSE: QUICKHEAL ISIN Code: INE306L01010
BSE LIVE 15:40 | 22 Sep 185.00 -4.20
(-2.22%)
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188.65

HIGH

188.95

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184.00

NSE 15:43 | 22 Sep 184.60 -5.20
(-2.74%)
OPEN

186.60

HIGH

189.25

LOW

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OPEN 188.65
PREVIOUS CLOSE 189.20
VOLUME 14740
52-Week high 295.85
52-Week low 172.75
P/E 25.03
Mkt Cap.(Rs cr) 1,299
Buy Price 0.00
Buy Qty 0.00
Sell Price 184.30
Sell Qty 1.00
OPEN 188.65
CLOSE 189.20
VOLUME 14740
52-Week high 295.85
52-Week low 172.75
P/E 25.03
Mkt Cap.(Rs cr) 1,299
Buy Price 0.00
Buy Qty 0.00
Sell Price 184.30
Sell Qty 1.00

Quick Heal Technologies Ltd. (QUICKHEAL) - Director Report

Company director report

Dear Members

The Directors of Quick Heal Technologies Limited are pleased to present the 21stAnnual Report and the audited accounts for the financial year ended 31st March2016.

1. Business Operations and Prospects

Your Company continues to be among the leading Software Security Solution Company andcontinues to retain its leadership position in the Indian Security Software SolutionIndustry. The Company has been growing at a substantial pace.

Your Company has recorded total income of '347.87 Cr in the current year as against'294.34 Cr in the previous financial year. The Company's exports have also showncommendable growth.

Your Company's continued investments in innovation and technology has enabled it toundertake a number of diverse projects and adapt to the ever changing needs of consumers.

2. New Branches

During the period under report your Company has expanded its operations in Punethrough its office at Marvel Edge and also at its branch at Bangalore as Support Office.

3. Awards Recognitions and Certifications during the Financial Year 2015-2016

Award/Recognition/Certification Company/Management/ Solutions/ Features Date of Award/Recognition/ Certification
CERTICATIONS
1 PCSL Certification-Android Security Recommended 2015 QH Mobile Security App December 2015
2 AV-TEST Corporate Endpoint Protection Certification Segrite EPS v16 February 2015. April & August 2015
3 AV-TEST Certification forWindows QH Total Security for Windows v15 February 2015. April & August 2015
4 AV-TEST Certification forAndroid QH Total Security for Android v2.01 March 2015. May July September & November 2015
5 VB100 Certification QH Antivirus for Server March 2016
6 VB100 Certification Segrite Antivirus for Server March 2016

AWARDS

Award/Recognition/ Certification Company/Management/Solutions/ Features Date of Award/ Recognition/Certification
1 12th Annual Info Security PG's 2016 Global 1. Sanjay Katkar Gold Winner- Product Development/ Management Executive of the Year. February 2016
Excellence Awards 2. Quick Heal Technologies Limited Silver Winner- Security Products and Solution for Small Businesses and SOHO
2 ICSA Labs-Excellence in Information Security Testing Award Quick Heal Technologies Limited February 2016

4. Financial Results

Particulars 2015-2016 2014-2015
Revenue from operations(Net) 3380696142 2861155041
Other Income 98042769 82216138
Total Income 3478738911 2943371179
Total expenditure excluding Depreciation and Tax 2356055882 1943111507
Depreciation and Amortization 237111239 202003527
Profit/ (Loss) before Tax 885571790 798256145
Less: Tax Expense
Current Tax 324712208 269444239
Deferred Tax charge (23137421) (9231885)
Profit/ (Loss) After Tax 583997003 538043791

5. Transfer of Profits to Reserves

Your Company has transferred NIL amounts to General Reserve and the balance is proposedto be retained in the Profit & Loss Account.

6. Dividend

Board of Directors of the Company at their meeting held on 11th May 2016have recommended Final Dividend @ 25% i.e.2.50/- per equity share for the financial year2015-2016 after considering the profits of the Company

The payment of final dividend is subject to the confirmation bythe shareholders.

7. Institutional Holding

As on 31st March 2016 the total institutional holding in your Company stoodat 13.77% of the total paid up share capital.

8. Particulars required as per Section 134 of the Companies Act 2013

As per Section 134 of the Companies Act 2013 your Company has provided theConsolidated Financial Statements as on 31st March 2016. Your Directors believethat the consolidated financial statements presents more comprehensive picture as comparedto standalone financial statements. These documents will also be available for inspectionduring the business hours at the Registered Office of your Company and the respectivesubsidiary companies. A statement showing financial highlights of the subsidiary companiesis attached to the consolidated financial statements.

The Annual Report of your Company though does not contain full financial statements ofthe subsidiary companies your Company will make available the audited annual accounts andrelated information of the subsidiary companies upon request by any Member of yourCompany.

9. Consolidated financial statements

Consolidated financial statements of your Company and its subsidiaries as at 31stMarch 2016 are prepared in accordance with the Accounting Standard 21 (AS - 21) on‘Consolidated Financial Statements' issued by the Institute of Chartered Accountantsof India and form part of this Annual Report.

10. Particulars of Employees Remuneration

In terms of the Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules areprovided in the Annexure A of the Directors' Report.

11. Employee Stock Option Scheme

Your Company has two stock option plans for its employees i.e. Employees Stock OptionScheme 2010 and Employees Stock Option Scheme 2014 for granting Term based and performancebased Stock Options to Employees.

During the year under report no employee has been granted stock options equal to orexceeding 1% of the issued capital (excluding outstanding warrants and conversions) ofyourCompany.

The details of activities under the scheme have been summarized in the Notes formingpart of Financial Statements and annexed as Annexure B.

12. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review.

13. Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013 the Board of Directors hadappointed M/s. J B Bhave & Co. Practising Company Secretaries as the SecretarialAuditors of the Company for the financial year 2015-16.

Accordingly the Secretarial Auditors have given their report which is annexed heretoas Annexure C. The comments of the Board on the observations of the Secretarial Auditorsare given after Annexure C above.

The Board has re-appointed M/s. J B Bhave & Co. Practising Company Secretaries asthe Secretarial Auditors of the Company for the financial year 2016-17.

14. Board Meetings

During the financial year 2015-16 9 (Nine) Board meetings were held on 08thApril 2015 24th April 2015 27th July 2015 17thAugust 2015 21st August 2015 4th September 2015 24thSeptember 2015

3rd November 2015 & 4th January 2016. The maximum time gapbetween any two meetings did not exceed one hundred twenty days.

15. Directors

• Mr. Shailesh Lakhani (DIN: 03567739) who retires by rotation and beingeligible offers himself for re-appointment.

• Mr. Sanjay Katkar (DIN: 00397277) who retires by rotation and being eligibleoffers himself for reappointment.

ln terms of the LODR 2015 the Company 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:http://www.guickheal.com/ investors

16. Committees of the Board

During the year under report the Board of Directors of your Company reconstituted theCommittees of the Board. The details of the powers functions composition and meetings ofthe Committees of the Board held during the year are given in the Report on CorporateGovernance section forming part of this Annual Report. Your Company has constitutedfollowing committees of the Board as under:

Committee Chairperson Member Member
1 *Audit Committee Sunil Sethy Kailash Katkar Apurva Joshi
2 Nomination and Remuneration Committee Mehul Savla Sunil Sethy Apurva Joshi
3 Stakeholders Relationship Committee PVBhide Mehul Savla Kailash Katkar
4 CSR Committee Apurva Joshi Kailash Katkar Sanjay Katkar

* Audit Committee performs the functions of Risk Management Committee.

17. Declaration of Independence by Independent Director

The Board confirms that all Independent Directors of the Company have given adeclaration to the Board that they meet the criterion of independence as prescribed underSection 149 of the Companies Act 2013.

18. Statutory Auditors

The Members of the Company at the Annual General Meeting of the Company held on 24thSeptember 2015 have ratified the appointment of M/s SRBC & CO LLP (Firm RegistrationNo. 324982E) Chartered Accountants as the Statutory Auditors of the Company to hold suchoffice till the conclusion of the 24th Annual General Meeting to beheld in thecalendar year 2019.

M/s SRBC & CO LLP have confirmed their eligibility and willingness to acceptoffice if appointment is ratified by the Members of the Company.

The ratification of appointment of Statutory Auditors is subject to the approval of theMembers of the Company.

Your Directors propose ratification of appointment of M/s SRBC & CO LLP as theStatutory Auditors of your Company.

19. Cost Auditors

As per the Companies (Cost Records and Audit) Rules 2014 the Cost Records to bemaintained by the Company for applicable products manufactured by the Company.

As per the Captioned Rules Mr. Bhavesh Marolia Practitioner Cost accountantproprietor of M/s Bhavesh Marolia & Associates was appointed as the Cost Auditors forthe Financial Year 2016-2017 in the Board Meeting held on 11th May 2016 at theremuneration of '45000/-. Subject to approval of members.

20. Internal Auditor

Your Company has received an eligibility and willingness letter from M/s PipaliaSinghal & Associates Chartered Accountants (Firm Registration No.H4665W) to conductinternal audit of the Company. Your Directors in their meeting held on 11th May2016 have appointed M/s Pipalia Singhal & Associates Chartered Accountants (FirmRegistration No.H4665W) as an Internal Auditor for the period of two financial years i.e.2016-17 & 201718.

21. Corporate governance

A separate section on Corporate Governance with a detailed compliance report asstipulated under the LODR 2015 and any other applicable law for the time being in forceforms an integral part of this Report.

22. Management discussion and analysis

Report on Management Discussion and Analysis as stipulated under the Listing Agreementand any other applicable law for the time being in force based on audited consolidatedfinancial statements for the financial year 2015-16 forms part of this Annual Report.

23. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

Particulars reguired to be furnished under the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules 1988 are as under:

• Energy Conservation

The operations of the Company involve low energy consumption. Adeguate measures havebeen taken to conserve energy.

• Technology Absorption Adaptation and Innovation

The Company continues to use the latest technologies for improving the productivity andquality of its products and services. The Company aims to inspire consumers around theworld with innovation through its unigue technology. The Company continues to give utmostimportance to R & D. The Company focuses on developing existing technologies andproduct engineering innovation. With Solution Architecture choices available through suchnew innovative approaches we continue to address current as well as future business needsof our customers and potential markets. R & D activities includes studying/analyzingend users demands and changing needs and designing/ developing products suitable forIndian customers as well as same for Export market. In the coming years the Company willinvest in R & D in several software technologies and systems.

• Benefits derived from the R&D Activities:

Development of highly innovative product providing software security solutions and alsofulfilling various added demands of consumers. The expenditure incurred in the same isdetailed in the notes to Accounts annexed herewith.

• Foreign Exchange earnings and outgo

Total foreign exchange earnings and outgo for the financial year are as follows:

Particulars For the year ended 31st March 2016 For the year ended 31st March 2015
Total Foreign Exchange Expenditure 87355410 69742515
Total Foreign Exchange Earnings 58983286 49093058

24. Subsidiaries

The details of the subsidiaries ofyour Company as on 31st March 2016 are asunder:

Name of the Subsidiary Date of Registration

Investment in Equity Capital

As on 31st March 2016 As on 31st March 2015
Quick Heal Technologies Africa Limited 2nd December 2011 KES 17800000 KES 17800000
Quick Heal Technologies America Inc 2nd January 2012 USD 130000 USD 30000
Quick Heal Technologies Japan KK 2nd April 2012 JPY 90350000 JPY 42600000
Quick Heal Technologies (MENA) FZE 25th December 2013 AED 2800000 AED 2800000

Financial Results

Name of the Subsidiary

Total Income

Profit / Loss Before Tax

Profit / Loss After Tax

Mar 16 Mar 15 Mar 16 Mar 15 Mar 16 Mar 15
Quick Heal Technologies Africa Limited Amt in KES 33780282 19227545 (4060881) (9309948) (2855319) (6624841)
Quick Heal Technologies America Inc Amt in USD 48428 29582 (409279) (55483) (411173) (56381)
Quick Heal Technologies Japan KK Amt in Yen 67294793 36114904 (25481631) (21033096) (25661631) (21213096)
Quick Heal Technologies (MENA) FZE AmtinAED 619504 524101 (108539) (91799) (108539) (91799)

25. Particulars of Loans given Guarantees given and Investments made

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.

26. Related Party Transactions

Related party transactions that were entered during the financial year were on an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany.

Transactions with related parties entered by the Company in the normal course ofbusiness are approved by the Board of Directors held on 11th May 2016. Theparticulars of contracts entered during the year as per Form AOC-2 is enclosed asAnnexure-D.

27. Corporate Social Responsibility (CSR)

• CSR activities undertaken by the company reflect the core values andachievements of how Quick Heal does business as an employer a software provider and acorporate citizen a necessity that demands that Quick Heal be trustworthy an ethicalbusiness partner that customers can count on.

• To institutionalise the CSR initiative of your Company your Company formed aPublic Charitable Trust by the name 'Quick Heal Foundation' on 20th August2014.

• Your Company will select one or more of the CSR activities as per Schedule VIIof the Companies Act 2013 for implementation in the area of its operation.

• The Board of Directors of your Company has constituted the CSR Committee to helpthe Company to frame monitor and execute the CSR activities of the Company under its CSRscope. The Committee defines the parameters and observes them for effective discharge ofthe social responsibility of your Company. The Board of Directors of your Company hasfurther approved the CSR Policy of the Company to provide a guideline for CSR activitiesof the Company.

• During the year under review the Company has donated '10640000/- on CSRactivities out of the total amount of '19996326/- mandated as per law.

• Your Company was in the process of further identifying worthwhile avenues forCSR expenditure during the year and in its absence there was unspent of'9356326/-. TheCompany is committed to CSR activities and shall strive to spend the amount as provided inlaw.

• Report on CSR activities of your Company under the provisions of the CompaniesAct 2013 during the financial year 2015-16 is given as Annexure E.

28. Adequacy of Internal Financial Controls

The Board is responsible for establishing and maintaining adeguate internal financialcontrol as per section 134 of the Companies Act 2013.

The Board has laid down policies and processes in respect of internal financialcontrols and such internal financial controls were adeguate and were operatingeffectively. The internal financial controls covered the policies and procedures adoptedby the Company for ensuring orderly and efficient conduct of business including adherenceto the Company's policies safeguarding of the assets of the Company prevention anddetection offraud and errors accuracy and completeness of accounting records and thetimely preparation of reliable financial information

29. Vigil Mechanism (Whistle Blower Policy)

The details of the vigil mechanism (whistle blower policy) are given in the Report onCorporate Governance forming part of this Annual Report. The Company has uploaded thepolicy on its website at http://www.guickheal.com/investors/ whistle-blower-policy

30. Risk Management Policy

Report on Risk Management based on the risk management policy developed and implementedat the Company for the financial year 2015-16 forms part of this Annual Report.

31. Performance Evaluation of the Board its Committees and Directors

Your Company conducted the annual performance evaluation of the Board its variousCommittees and the Directors individually. This was conducted as per the PerformanceEvaluation Policy of Board and KMP.

32. Listing with the stock exchanges

The Equity Shares of the Company are listed on BSE Limited (BSE) and the National StockExchange of India Limited (NSE) since 18th February 2016.

Listing fees for 2015-16 have been paid to both BSE and NSE.

33. Other matters

Your Directors state that no disclosure or reporting is reguired in respect of thefollowing items as there were no transactions on these items during the year under report:

i. Neither the Managing Director nor the Wholetime Director of the Company receive anyremuneration or commission from any of its subsidiaries.

ii. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company's operations in future.

34. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:

a) in the preparation of the annual accounts for the year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for the same period;

c) the directors have taken proper and sufficient care for the maintenance of adeguateaccounting 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 annual accounts on a going concern basis;

e) they have laid down internal financial controls in the company that are adeguate andwere operating effectively.

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adeguate and are operating effectively.

35. Audit Observations:

Auditors' observations are suitably explained in notes to the Accounts and areself-explanatory.

37 Extract of Annual Return :

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure-F.

38 Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Company has in place an Anti Sexual Harassment Policy in line with reguirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. All employees (permanent contractual temporary trainees) are covered under thispolicy. Internal Complaints Committee(s) (ICC) has been set up across all its location inIndia to redress complaints received regarding sexual harassment.

During the year under review there were no cases reported to such Committee(s).

39 Material Events occurred after balance sheet date

There were no material changes and commitments affecting the financial position betweenthe end of the financial year and the date of this report.

40 Acknowledgments

Your Board places on record the help and the sincere cooperation received from the fromthe shareholders end users dealers distributors business partners bankers regulatorybodies and other business constituents during the year under review. The Directors alsowish to place on record their deep sense of appreciation for the commitment displayed byall executives officers and staff resulting in the successful performance of the Companyduring the year.

For and on the behalf of the Board of Directors

Kailash Katkar Sanjay Katkar
(DIN: 00397191) (DIN: 00397277)
Managing Director & CTO Managing Director & CTO
PuneHthMay 2016