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Smartlink Holdings Ltd.

BSE: 532419 Sector: Consumer
NSE: SMARTLINK ISIN Code: INE178C01020
BSE 00:00 | 25 May 91.95 -0.20
(-0.22%)
OPEN

90.85

HIGH

93.35

LOW

90.85

NSE 00:00 | 25 May 92.90 1.20
(1.31%)
OPEN

95.00

HIGH

95.00

LOW

91.05

OPEN 90.85
PREVIOUS CLOSE 92.15
VOLUME 1405
52-Week high 137.00
52-Week low 79.10
P/E 18.84
Mkt Cap.(Rs cr) 207
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 90.85
CLOSE 92.15
VOLUME 1405
52-Week high 137.00
52-Week low 79.10
P/E 18.84
Mkt Cap.(Rs cr) 207
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Smartlink Holdings Ltd. (SMARTLINK) - Director Report

Company director report

TO THE MEMBERS OF SMARTLINK NETWORK SYSTEMS LIMITED

The Directors of your Company take pleasure in presenting their 24th annual reporttogether with audited Standalone and Consolidated balance sheet and statement of profit& loss for the financial year ended 31st March 2017.

1. FINANCIAL RESULTS
(` in million)
Particulars Standalone Consolidated
2016 -17 2015 -16 2016 -17
Income from operations 216.42 319.74 1037.38
Other income 25.23 2.84 15.54
Profit / (loss) before depreciation exceptional items and tax 130.24 209.62 (31.37)
Less: Depreciation for the year 11.99 13.78 16.52
Add: Exceptional items 31.30 - -
Profit / (loss) before tax 149.55 195.84 (47.88)
Less: Provision for tax
a) Current tax 38.14 68.77 19.72
b) Deferred tax 44.59 27.60 29.52
Profit / (loss) after tax from continuing operations 66.81 99.47 (97.13)
Loss before tax from discontinued operations (48.58) (128.19) -
Less: a) Current tax (18.43) (48.67) -
b) Deferred tax (15.07) (23.89) -
Loss after tax from discontinued operations (15.09) (55.64) -
Profit / (loss) for the year 51.73 43.83 (97.13)
Earnings Per Share (`) 2.12 1.46 (3.98)

2. REVIEW OF OPERATIONS & SIGNIFICANT DEVELOPMENT

2.1 Review of standalone financials

a) Continued Operation

In the financial year 2016-17 the Company achieved an Income from operations of `216.42 million as compared to ` 319.74 million in the previous year.

Profit before tax from continued operation was ` 149.55 million for the year ending31st March 2017 as compared to Profit of ` 195.84 million in the previous year.

Profit after tax from continued operation was ` 66.81 million for the year ended 31stMarch 2017 as compared to a profit of ` 99.47 million in the previous year.

b) Discontinued Operation

In the financial year 2016-17 loss before tax from discontinued operation was ` 48.58million for the year ending 31st March 2017 as compared to Loss of ` 128.19 million inthe previous year.

Loss after tax from discontinued operation was ` 15.09 million for the year ended 31stMarch 2017 as compared to a Loss of ` 55.64 million in the previous year.

2.2 Review of consolidated financial

Revenue from operation on a consolidated basis for financial year 2016-17 was `1037.38 million.

Loss before tax from operation on a consolidated basis was ` 47.88 million and Lossafter tax from the operation on a consolidated basis was ` 97.13 million for the yearending 31st March 2017.

2.3 Significant development a. Slump sale of business

The Board of Directors of the Company ("Board of Directors") at its meetingheld on 04th August 2016 had subject to approval of members of the Company by way ofspecial resolution and other statutory regulatory or governmental authorities as may berequired under applicable laws approved the sale and transfer of the Digisol Business andEMS Business by way of a slump sale (as defined under Section 2(42C) of the Income TaxAct 1961) to wholly owned subsidiaries namely Digisol Systems Limited and Synegra EMSLimited respectively for a cash consideration of ` 19.00 crores and ` 3.30 croresrespectively adjusted for networking capital changes as on the closing date. Theshareholders approved the above slump sale on 16th September 2016 and the business wastransferred to its respective subsidiaries with effect from 10th October 2016.

The Board of Directors considers that both the subsidiaries will be able to focus ontheir core businesses and being separate independent companies will help them to pursueopportunities in their respective businesses.

b. Application made for Registration as a Non-Banking Financial Institution(Non-Deposit taking)

The Board of Directors at the meeting held on 17th March 2017 have approved the finalapplication to be made to Reserve Bank of India in terms of sub-section (2) of section45-IA of Reserve Bank of India Act 1934 for issue of Certificate of Registration as aNon-Banking Financial Institution (Non-Deposit taking). Accordingly Company has made anapplication for the said registration on 17th April 2017.

3. BUYBACK

In terms of decision of the Board of Directors (Board) dated 29th February 2016 and inaccordance with the provisions of the Companies Act 2013 (hereinafter as the"Act") and the Securities and Exchange Board of India (Buy-back of Securities)Regulations 1998 and with the approval of shareholders by Postal Ballot on 14th April2016 the Company had offered to buy-back 7454850 fully paid up equity shares of ` 2/-each at a price of ` 110/- per share for an aggregate amount of up to ` 820033500/-from the existing shareholders of the Company under Tender Offer mechanism.

The offer was kept open from 6th June 2016 to 17th June 2016. Your Company has boughtback 7454850 equity shares and extinguished all the shares bought under buy-back on 30thJune 2016.

4. DIVIDEND

Your Directors have recommended for your consideration a dividend of ` 2/- per Share(i.e. 100%) for the year 2016-17.

5. SHARE CAPITAL

The Paid-up Equity Capital of the Company as on 31st March 2017 stood at `45100000/- consisting of 22550000 Equity Shares of

` 2/- each. During Financial Year ended 31st March 2017 the Company has completed thebuyback of 7454850 equity shares of

` 2/- each. Therefore the Paid-up Equity Share Capital decreased from ` 60009700/-to ` 45100000/-.

6. RISK MANAGEMENT

The Company has a Risk Management (RM) framework to identify evaluate Business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. The riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The framework helps in identifying risk trendexposure and potential impact analysis at a Company level.

The Risk Management policy formulated by the Company has identified the key businessrisks and also the plans to mitigate the risks.

7. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Financial Control Systems commensurate with the sizescale and complexity of its operations. The Management evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies of the Company.

8. VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and employees to reportgenuine concerns about unethical behaviour actual or suspected fraud or violation of codeof conduct which provides for adequate safeguards against victimization of director (s)/employee (s) and also provides for direct access to the Chairman of the Audit committee inexceptional cases. The Audit Committee and the Board of Directors have approved theWhistle Blower Policy and the details are available on the website of the Company underthe weblinkhttp://smartlink.co.in/wp-content/uploads/2014/10/Smartlink-Whistle-Blower-Policy.pdf.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to Section 135 of the Companies Act 2013 read with rules made thereunderyour Company has constituted a Corporate Social Responsibility Committee (CSR Committee).The constitution of the committee is given in the Corporate Governance Report.

The Corporate Social Responsibility Committee (‘CSR Committee') has formulated andrecommended to the Board a Corporate Social Responsibility Policy (‘CSR Policy')indicating the activities to be undertaken by the Company which has been approved by theBoard. The CSR Policy is displayed on the website of the Company athttp://smartlink.co.in/wp-content/uploads/2014/10/Corporate-Social-Responsibility-Policy-Smartlink.pdf.

The requisite details (in a matrix form) on CSR activities pursuant to Section 135 ofthe Act and as per Annexure attached to the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 are annexed as Annexure - H to this Report.

10. SUBSIDIARY COMPANIES

During the year ended 31st March 2017 the Company incorporated 3 new wholly ownedsubsidiary companies namely:

Name of the Company

% Shareholding

Status

Digisol Systems Limited 100 Subsidiary
Synegra EMS Limited 100 Subsidiary
Telesmart SCS Limited 100 Subsidiary

Detailed information on the performance and financial position of subsidiaries of theCompany is covered in the Management Discussion and Analysis Report.

In accordance with Section 129(3) of the Companies Act 2013 we have preparedfinancial statements of the Company. Further a statement containing salient features ofthe financial statement of our subsidiaries in prescribed format AOC-1 is appended asAnnexure - I to the Boards Report. The statement also provides the details of performanceand financial position of each subsidiaries.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including consolidated financial statements will be available on our websitewww.smartlink.co.in.

The Company has formulated a Policy on Material Subsidiary as required under ListiingRegulations and the policy is uploaded on the website of the Company athttp://smartlink.co.in/investor-relation/?slug=smartlink-policies-corporate-governance.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year Ms. Arati Naik resigned from the post of Wholetime Director w.e.f. 26thOctober 2016 and continued to be a Non-Executive Director of the Company.

There was no change in Key Managerial Personnel during the year under review.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence prescribed under section 149(6) ofthe Companies Act 2013 and the SEBI Listing Regulations.

The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent directors) which includes criteriafor performance evaluation of Non-Executive Directors and Executive Directors. Theevaluation process inter-alia considers attendance of the Directors at Board and Committeemeetings effective participation domain knowledge compliance with code of conductvision and strategy etc.

Mr. Kamalaksha Naik Executive Chairman Mr. K. G. Prabhu Chief Financial Officer andMs. Urjita Damle Company Secretary have been designated as Key Managerial Personnel inaccordance with provisions of Section 203 of the Companies Act 2013.

11.1 Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration and other Committees. The manner in which the evaluation has beencarried out has been given in the Corporate Governance Report.

11.2 Remuneration Policy

The Board has on recommendation of the Nomination & Remuneration Committee frameda policy for selection and appointment of Directors Senior Management and theirremuneration. The details of Remuneration Policy is stated in the Corporate GovernanceReport.

11.3 Meetings

During the year 5 Board Meetings and 4 Audit Committee Meetings were convened and held.The details of the same are given in the Corporate Governance Report. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013.

12. AUDIT COMMITTEE

The composition of the Audit Committee is in line with the provisions of Section 177 ofthe Act read with Regulation 18 of Listing Regulations. The Chairman of the AuditCommittee is an Independent Director. The details of the composition of the AuditCommittee are given in the Corporate Governance Report. During the year all therecommendation of the Audit Committee were accepted by the Board.

13. STAKEHOLDERS RELATIONSHIP COMMITTEE

The composition of the Stakeholders Relationship Committee (SRC) is in line with theSection 178 of the Act read with Regulation 20 of Listing Regulations.

14. NOMINATION AND REMUNERATION COMMITTEE

The composition of the Nomination and Remuneration Committee (NRC) is in line with theSection 178 of the Act read with Regulation 19 of Listing Regulations. The details ofmeetings and their attendance are included in the Corporate Governance Report.

15. DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and ability your Directors in terms of Section 134(5)of the Companies Act 2013 hereby state and confirm that: a) in the preparation of annualaccounts the applicable accounting standards have been followed and that no materialdepartures have been made from the same.

b) appropriate accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March 2017 and theprofit and loss of the Company for that period.

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

d) the annual accounts have been prepared on a ‘going concern' basis. e) properinternal financial controls were in place and that the financial controls were adequateand were operating effectively. f) that systems to ensure compliance with the provisionsof all applicable laws were in place and were adequate and operating effectively.

16. RELATED PARTY TRANSACTIONS

None of the transactions with related parties fall under the scope of Section 188(1) ofthe Act.

All Related Party Transactions are placed before the Audit Committee and also the Boardfor approval. The Company has developed a Related Party Transactions Policy for thepurpose of identification and monitoring such transactions.

The information on transaction with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(3) of the Companies (Accounts) Rules 2014 are given in Annexure- J in Form AOC-2 and the same form a part of this report.

17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

18. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYIF ANY DURING

THE PERIOD FROM 31ST MARCH 2017 TO THE DATE OF THE REPORT

There were no material change/ commitment which is mentioned below affecting thefinancial position of the Company during the period from the end of the financial year on31st March 2017 to the date of the Report.

19. EMPLOYEE STOCK OPTION SCHEME

The Company has not issued any ESOPS to its employees during the year.

20. REPORTING OF FRAUDS

There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Act and Rules framed thereunder either to the Company or to the Central Government.

21. AUDITORS

21.1 Statutory Auditors

The auditors Deloitte Haskins and Sells LLP Chartered Accountants retire at theensuing Annual General Meeting. Pursuant to Section 139 of the Act read with the Companies(Audit and Auditors) Rules 2014 and in line with recommendation made by Audit Committeethe Board of Directors has recommended appointment of Sharp and Tannan CharteredAccountants having Registration No. 127145W as Auditors of the Company to the members inforthcoming Annual General Meeting.

There were no adverse comments by the statutory auditors of the Company in their Reportfor the year 2016-17 and notes thereto are self-explanatory in nature.

21.2 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Shivaram Bhat a Company Secretary in Practice (CP No. 7853) to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as"Annexure - B". The report does not contain any qualification.

22. PREVENTION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

As per provisions of Section 4 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 your Company has constituted anInternal Complaints Committee for redressal of complaints against sexual harassment andthere were no complaints received during the financial year.

23. PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading incompliance with SEBI (Prohibition & Insider Trading) Regulation 2015 with a view toregulating trading in securities by the Directors and designated employees of the Company.

24. DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations Management Discussion and Analysis is annexed as"Annexure - A" to the report. Secretarial Audit Report is annexed as"Annexure - B" .A separate section on the corporate governance is annexed as"Annexure - C" together with a certificate from the Mr. Shivaram Bhatconfirming compliance is annexed as "Annexure - D". Declaration by the ExecutiveChairman is annexed as "Annexure - E".

25. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE

EARNINGS AND OUTGO

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

A. Conservation of Energy

The steps taken or impact on conservation/ utilising alternate sources of energy; i.Factory re-layout and consolidation of service activities was done in order to utilizecommon resources and decrease Energy consumption.

B. Research & Development & Technology Absorption

Equipments and Instruments had been procured to develop local infrastructure requiredfor manufacture of wireless LAN products in view of MAKE IN INDIA campaign announced byGovernment of India.

C. Foreign Exchange Earnings and Outgo

Total foreign exchange earnings and outgo is stated in Note 31 and 32 forming part ofthe Accounts.

26. EXTRACT OF ANNUAL RETURN

As provided under section 92 (3) of the Act the extract of the Annual Return in formMGT- 9 is annexed herewith as "Annexure – F" which forms part of thisreport.

27. STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

The information required under section 197 of the Act read with Rule 5(i) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company and Directors is enclosed as "Annexure – G" tothis report.

28. DEPOSITS

The Company has not accepted any deposits during the year under review and as such noamount of principal or interest was outstanding as on the date of Balance Sheet.

29. PARTICULARS OF LOANS / ADVANCES / GAURANTEE / INVESTMENTS OUTSTANDING DURING THEFINANCIAL YEAR

Details of Loans Gaurantee and Investment covered under the provision of Section 186of the Act read with the Companies (Meeting of Board and its Powers) Rules 2014 are givenin Notes to the financial statements.

30. ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the continuing support andco-operation from the customers vendors dealers distributors resellers bankersshareholders Goa Industrial Development Corporation State Industries Electricity andother Government departments.

The Directors also take this opportunity to thank the employees for their dedicatedservice throughout the year.

For and on behalf of the Board

Pankaj Baliga K. R. Naik
Director Executive Chairman
DIN: 00002864 DIN: 00002013

 

Place : Mumbai
Date : 17th May 2017