Starcom Information Technology Ltd.
|BSE: 531616||Sector: IT|
|NSE: N.A.||ISIN Code: INE347I01010|
|BSE LIVE 14:21 | 17 Oct||205.00||
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
|Mkt Cap.(Rs cr)||103|
|Mkt Cap.(Rs cr)||102.50|
Starcom Information Technology Ltd. (STARCOMINFO) - Director Report
Company director report
STARCOM INFORMATION TECHNOLOGY LIMITED
The Directors have pleasure in presenting the Twenty First Annual Report of the Companyand the Audited Financial Statements for the financial year ended 31st March2016.
1. Financial summary or highlights/performance of the Company:
The financial highlights of the Company are given below. Kindly refer the financialstatements forming part of this report for detailed financial information:
(Amt. in Rs.)
2. Brief description of the Company's working during the year/ State of Company'saffair:
During the year under review your Company has achieved a turnover of Rs.114850396/-as compared to turnover of Rs. 102943725/- of previous year registering increase inturnover by 11.57%. The total expenses of the Company during the reporting period havedecreased to Rs.143877263/- from Rs.192042898/- of the previous year. During theyear under review there was net profit after tax of Rs.9250351/- as compared to lossafter tax of Rs.40368094/- during the previous financial year.
Your Directors assure to keep the growth momentum in coming years and strive for brightfuture of your Company.
Your Board of Directors expresses its inability to recommend any dividend for thefinancial year 2015-16.
The Company's total reserve are Rs. -28514091/- for the year under review ascompared to Rs. -37764443/- for the previous year.
5. Change in the nature of business if any:
There was no change in nature of business.
6. 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 whichthe financial statements relate and the date of the report:
No material changes took place which had effect on the financial position of theCompany subsequent to the close of the financial year of the Company i.e. 31stMarch 2016 and the date of this report.
7. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Companys operations in future:
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.
8. Details of Subsidiary/Joint Ventures/Associate Companies:
The Company did not have any Subsidiary Company/Joint Venture/Associate Company duringthe year under review.
9. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements:
The Company has devised appropriate systems and framework for adequate internalfinancial controls with reference to financial statements commensurate with the sizescale and complexity of its operations including proper delegation of authority policies
and procedures effective IT systems aligned to business requirements risk basedinternal audit framework risk management framework and whistle blower mechanism.
The Audit Committee regularly reviews the internal control system to ensure that itremains effective and aligned with the business requirements. In case weaknesses areidentified as a result of the reviews new procedures are put in place to strengthencontrols.
During the year controls were tested and no reportable material weakness in design andoperation were observed. The Auditors also report in their report on adequacy of internalfinancial control.
During the year the Company has not accepted any Deposits falling within the purviewof Chapter V of the Companies Act 2013 and Rules made there under. Therefore the Companyis not required to furnish information in respect of outstanding deposits under theCompanies Act 2013.
11. Directors and Key Managerial Personnel:
A. Changes in Directors and Key Managerial Personnel:
Mr. Laxminarayan Purohit (DIN: 03599758) Non-Executive Director of the Companytendered his resignation from the Board of the Company. The Board accepted his resignationwith effect from 19th May 2016. The Board expresses its gratitude for thecontributions made by Mr. Purohit towards the progress of the Company.
In accordance with the requirements of the Companies Act 2013 and Articles ofAssociation of the Company Ms. Sayeeda Hina (DIN: 03642269) Non- Executive Director ofthe Company retires at the ensuing Annual General Meeting and being eligible offersherself for re-appointment pursuant to provisions of Section 152 of the Act.
Further in accordance with the requirements of the Companies Act 2013 and Articles ofAssociation of the Company the term of Mr. Ziaulla Sheriff (DIN: 00002098) as theChairman and Managing Director of the Company ended on 11th August 2016. TheBoard of Directors on the recommendation of Nomination and Remuneration Committee in theirmeeting held on 12th August 2016 approved the re-appointment of Mr. ZiaullaSheriff as the Chairman and Managing Director of the Company with effect from 12thAugust 2016 for a period of three (3) years i.e. till 11th August 2019 subjectto the approval of the Members of the Company in the ensuing Annual General meeting.
The Board recommends the re-appointment of Mr. Ziaulla Sheriff (DIN: 00002098) as theChairman and Managing Director of the Company and of Ms. Sayeeda Hina (DIN: 03642269) asa Non-Executive (Woman) Director of the Company to the Members.
The Board of Directors on recommendation of Nomination and Remuneration Committee intheir meeting held on 1st September 2015 had appointed Ms. Preeti Verma(Membership number- A39128) as the Whole-time Company Secretary (CS) designated asCompliance officer of the Company under the Listing Agreement and termed as the Whole-timeKey Managerial Personnel (KMP) of the Company within the meaning of Section 203 of theCompanies Act 2013 with effect from 1st September 2015. However she tenderedher resignation from the post of Company Secretary and Compliance Officer of the Companywith effect from 19th August 2016. The Board expresses its gratitude for thecontributions made by Ms. Preeti Verma towards the Company. Further the Board ofDirectors on recommendation of Nomination and Remuneration Committee in their meetingheld on 12th August 2016 have appointed Ms. Nidhi Sharma (Membership NumberA46079) as the Whole-time Company Secretary (CS) designated as Compliance officer of theCompany under the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 and termed as the Whole-time Key ManagerialPersonnel (KMP) of the Company within the meaning of Section 203 of the Companies Act2013 with effect from 20th August 2016.
B. Board Evaluation:
The Company has a Policy for performance evaluation of Independent Directors BoardCommittees and other individual Directors which include criteria for performanceevaluation of the Non-Executive Directors and Executive Directors.
The Board and its Committee evaluations involved questionnaire-driven discussions thatcovered a number of key areas / evaluation criteria inter alia the roles andresponsibilities size and composition of the Board and its Committees dynamics of theBoard and its Committees and the relationship between the Board and management. Theresults of the reviews were discussed by the Board as a whole. Feedback was also sought onthe contributions of individual Directors. Formal Annual Evaluation was made in compliancewith all the applicable provisions of the Act. The Directors were satisfied with theevaluation results which reflected the overall engagement of the Board and its Committeeswith the Company.
The Company believes that the Board be continuously empowered with the knowledge of thelatest developments in the Company's business and the external forces affecting theindustry in which Company operates.
The following policies of the Company are attached herewith marked as Annexure 1:
1. Policy for selection of Directors and senior management and determining Directorsindependence and
2. Remuneration policy for Directors Key Managerial Personnel and other employees.
Further brief resume of the Directors proposed to be re-appointed relevantinformation nature of their expertise in specific functional areas names of thecompanies in which they hold directorships and the memberships/ chairmanships ofCommittees of the Board and their shareholding in the Company as stipulated underRegulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Secretarial Standards -2 has been furnished separately in the noticeconvening the 21st Annual General Meeting read with the Annexure theretoforming part of this Report.
C. Declaration by an Independent Director(s) and re-appointment if any:
The Company has received declaration u/s 149(7) of the Companies Act 2013 from Mr.Maddur Gundurao Mohankumar (DIN: 00020029) Independent Director of the Company confirmingthat he meets the criteria of independence as prescribed under the Companies Act 2013.
The Company has also received disclosure of interest by all the Directors as per theprovisions of Section 184 of Companies Act 2013.
12. Number of meetings of the Board of Directors:
The Board of Directors met Five (5) times during the Financial Year on 30thMay 2015 8th August 2015 1st September 2015 9thNovember 2015 and 12th February 2016. The intervening gap between any twomeetings was not more than 120 days as prescribed by the Companies Act 2013.
13. Details of Committees of the Board:
Currently the Board has 3 Committees; the Audit Committee Stakeholders' RelationshipCommittee and Nomination and Remuneration Committee. The composition of various committeesand compliances as per the applicable provisions of the Companies Act 2013 along withthe Rules made there under brief details of various Committees are provided as follows:
i) Audit Committee:
The Board has an Audit Committee which comprises of three Directors. After theappointment of Ms. Preeti Verma as the Company Secretary & Compliance Officer of theCompany she was appointed as the secretary of the committee. Mr. Laxminarayan Purohit(DIN: 03599758) ceased to be a member of the committee with effect from 19thMay 2016 pursuant to his resignation as a Non-Executive Director of the Company. Ms.Sayeeda Hina was appointed as the member of the Audit committee in his place with effectfrom 30th May 2016. The composition of the Audit Committee is as follows:
All the members of the Audit Committee are financially literate and have accounting orrelated financial management expertise as required under the Companies Act 2013.
The Company currently has only one Independent Director. The management is in theprocess of inducting the Independent Directors on the Board. On their appointment theCompany shall reconstitute the Committee.
All the major steps impacting the financials of the Company are undertaken only afterthe consultation of the Audit Committee.
During the year under review the Board of Directors of the Company had accepted allthe recommendations of the Committee.
ii) Nomination and Remuneration Committee:
The Board has Nomination and Remuneration Committee which comprises of three directors.Mr. Laxminarayan Purohit (DIN: 03599758) ceased to be a member of the committee witheffect from 19th May 2016 pursuant to his resignation as a Non-ExecutiveDirector of the Company. Ms. Sayeeda Hina (DIN: 03642269) was appointed as the member ofthe Nomination and Remuneration Committee with effect from 30th May 2016. Thecomposition of the Nomination and Remuneration Committee is as follows:
As per Section 178 of the Companies Act 2013 Nomination and Remuneration Committeeshall consist of 3 or more Non-Executive Directors out of which not less than one halfshall be independent directors. After the resignation of Mr. Laxminarayan Purohit as theNon-Executive Director of the Company there are only two Non-Executive Directors in theCompany i.e. Mr. Maddur Gundurao Mohankumar (DIN: 00020029) Independent Director and Ms.Sayeeda Hina (DIN: 03642269) Non-Executive Director. The composition of Nomination andRemuneration Committee is not in conformity with Section 178 of the Companies Act 2013.The management is in the process of inducting Independent Directors on the Board. On theirappointment the Company shall reconstitute the Committee.
The Company has framed a policy to determine the qualification and attributes forappointment and basis of determination of remuneration of all the Directors KeyManagerial Personnel and other employees. A copy of the policy is appended as Annexure1 to the Board's Report.
iii) Stakeholders' Relationship Committee:
The Board has Stakeholders' Relationship Committee comprising of three Directors. Mr.Laxminarayan Purohit (DIN: 03599758) ceased to be a member of the committee with effectfrom 19th May 2016 pursuant to his resignation as the NonExecutive Director ofthe Company. Ms. Sayeeda Hina (DIN: 03642269) was appointed as the member of theStakeholders' Relationship Committee. The composition of the Stakeholders' RelationshipCommittee is as follows:
The role of the Committee is to consider and resolve securities holders' complaint andto approve/ratify transfer of securities. The meetings of the Committee are held once in aquarter and the complaints if any are responded and transfers are executed within thetime frame provided.
iv) Corporate Social Responsibility Committee:
During the year under review the Company did not fall within the purview of theSection 135 of the Companies Act 2013 and it was not mandatory for the Company toconstitute committee on Corporate Social Responsibility or incur any expenditure towardsCorporate Social Responsibility. Hence the Company has not constituted the CorporateSocial Responsibility Committee.
14. Corporate Governance:
The Company constantly strives to implement and comply with the requirements anddisclosures of the Code of Corporate Governance as required under clause 49 of the ListingAgreement and corporate governance provisions as specified in SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 even though Clause 49 and the saidcorporate governance provisions are not mandatory to the Company.
At the Annual General Meeting held on 23rd December 2014 M/s. S G C O &Co. Chartered Accountants (Firm Registration No. 112081W) were appointed as theStatutory Auditors of the Company for 3 consecutive financial years i.e. till thefinancial year 2016-17. In terms of the first proviso to Section 139 of the Companies Act2013 the appointment of the auditors shall be placed for ratification at every AnnualGeneral Meeting. Accordingly the appointment of M/s. S G C O & Co. CharteredAccountants as the Statutory Auditors of the Company for the financial year 2016-17 isto be placed for ratification by the shareholders. In this regard the Company hasreceived a certificate from the Auditors to the effect that if their appointment isratified at the ensuing Annual General Meeting it would be in accordance with theprovisions of Section 141 of the Companies Act 2013.
The Members are requested to ratify the appointment of the Statutory Auditors asaforesaid and fix their remuneration.
16. Auditors' Report:
The observations in the Auditors' Report are dealt in the notes forming Part of theaccounts at appropriate places. The management's reply to the observations in the Annexureto the Auditors' Report is given under:
17. Secretarial Audit Report:
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 M/s. Hemanshu Kapadia & Associates Practicing Company Secretaries toundertake the Secretarial Audit of the Company for the financial year 2015-16 and issueSecretarial Audit Report. The Secretarial Audit Report issued by M/s. Hemanshu Kapadia& Associates for the financial year 2015-16 in Form MR-3 forms part of this report andmarked as Annexure 3. The reply from the Board on the remarks/ qualifications ofthe Secretarial Auditors is as under:
18. Extract of the Annual Return:
In accordance with Section 134(3)(a) of the Companies Act 2013 read with Rule 12(1)of the Companies (Management and Administration) Rules 2014 an extract of the AnnualReturn in Form MGT - 9 is annexed to the Directors' Report as Annexure
19. Details of establishment of vigil mechanism for Directors and employees:
The Vigil Mechanism of the Company provides Directors and Employees to report theirconcerns and has also taken steps to safeguard any person using this mechanism fromvictimization and in appropriate and exceptional cases there is direct access to approachMr. Maddur Gundurao Mohankumar (DIN: 00020029) Chairman of the Audit Committee. Protecteddisclosures can be made by a whistle blower through an e-mail or dedicated telephone lineor a letter to the Chairman of the Audit Committee. The policy on vigil mechanism/ whistleblower policy may be accessed on the Company's website at http://www.google.com/url?q=http%3A%2F%2Fwww.starcominfotech.com%2Fimages%2Fstarcom%2Fpdfs%2FVigilMechanism.pdf&sa=D&sntz=1&usg=AFQiCNGhtMcQJniIHHCG87 pR4Eka-OuEw.
20. 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 the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been setup to redress the complaintsreceived regarding sexual harassment. All employees are covered under this Policy. Thepolicy is gender neutral.
During the year under review there were no cases filed/pending with respect to sexualharassment.
21. Conservation of energy technology absorption and foreign exchange earnings andoutgo:
The particulars as prescribed under Sub-Section (3)(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are as follows:
A) Conservation of energy:
i) The steps taken or impact on conservation of energy;
Your Company is in service industry and not having manufacturing activity. The Companyis not covered under the list of specified industries. However the Company on continuousbasis takes measures for conservation of power.
ii) The steps taken by the Company for utilising alternate sources of energy:
The Company is using electricity as main source of its energy requirement and does nothave any alternate source of energy.
iii) The capital investment on energy conservation equipment:
B) Technology absorption:
i) The efforts made towards technology absorption:
The Company evaluates the best available technology for improving its performance andquality of its service operations.
ii) The benefits derived like product improvement cost reduction productdevelopment or import substitution:
The Company has not absorbed/made any new technology during the year.
iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year):
No technology has been imported by the Company.
iv) The expenditure incurred on Research and Development: Nil
C) Foreign exchange earnings and Outgo:
The information relating to the total foreign exchange used and earned by the Companyis given below:
22. Particulars of loans guarantees or investments under Section 186:
During the year under review the Company has not provided any loans made investmentsgave guarantees or subscribed/
purchased securities under Section 186 of the Companies Act 2013.
23. Particulars of contracts or arrangements with related parties:
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-Section
(1) of Section 188 of the Companies Act 2013 including transactions entered at arm'slength under third proviso in prescribed
Form No. AOC -2 is appended as Annexure 2 to the Board's Report.
24. Directors' Responsibility Statement:
As stipulated under clause (c) of sub-Section (3) of Section 134 of the Companies Act2013 your Directors subscribe to the
Directors' Responsibility Statement and state that:
a) In preparation of the annual accounts for the financial year ended 31stMarch 2016 the applicable accounting standards had been followed and there are nomaterial departures from them;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and ofthe profit and loss of the Company for the year ended on that date;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting 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) the Directors had prepared the annual accounts on a going concern basis;
e) the proper internal financial controls are in place and that the financial controlsare adequate and are operating effectively during the financial year ended 31stMarch 2016; and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively duringthe financial year ended 31st March 2016.
25. Managerial Remuneration:
A) The information required to be disclosed with respect to the remuneration ofDirectors and KMPs in the Directors' Report pursuant to Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is attached as Annexure 5.
B) There was no employee drawing remuneration more than the limit mentioned under Rule5(2)(i) to (iii) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
C) The names of top ten employees of the Company in terms of remuneration drawn asrequired pursuant to Section 197 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 isset out as Annexure 6.
D) The Company does not have any Holding Company or Fellow Subsidiary Company and thusprovision w.r.t. receipt of commission from them is not applicable.
26. Risk management policy:
The Company's robust risk management framework identifies and evaluates all the risksthat the organization faces such as strategic financial credit market liquiditysecurity property legal regulatory reputational and other risks. The Companyrecognizes that these risks need to be managed and mitigated to protect its shareholdersand other stakeholders to achieve its business objectives and enable sustainable growth.The risk framework is aimed at effectively mitigating the Company's various business andoperational risks through strategic actions.
Risk management is an integral part of our critical business activities functions andprocesses. The risks are reviewed for the change in the nature and extent of the majorrisks identified since the last assessment. It also provides control measures for risksand future action plans.
The Board periodically discussed and reviewed the Risk Management Policy to strengthenthe optimal risk mitigation responses reporting of risk and efficient management ofinternal control. The Company believes that the overall risk exposure of present andfuture risks remains within risk capacity.
27. Management Discussion and Analysis:
As required under Regulation 34 read with Schedule V(B) of SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 report on "Management Discussion andAnalysis" is attached as Annexure - 7 and forms a part of this Report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
a) Issue of equity shares with differential rights as to dividend voting or otherwise.
b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
c) Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/ purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged underSection 67(3)(c ) of the Companies Act 2013).
d) Explanation for deviation in use proceeds of public issue rights issuepreferential issue etc.
The Directors express their deep gratitude for the co-operation and support extended toyour Company by its customers suppliers bankers and various government agencies. YourDirectors also place on record the commitment and involvement of the employees at alllevels and looks forward to their continued co-operation. The Directors are also thankfulto the Shareholders for their continued support to the Company.
For and on behalf of the Board of Directors
Chairman and Managing Director
Address: Al-Barka Golden Enclave
Airport Road Bangalore-560017
Date: 31st August 2016
NOMINATION & REMUNERATION POLICY
In pursuance of the Company's policy to consider human resources as its invaluableassets to pay equitable remuneration to all Directors Key Managerial Personnel (KMP) andSenior Management Level of the Company to harmonize the aspirations of human resourcesconsistent with the goals of the Company and in terms of the provisions of the Section 178of the Companies Act 2013 this policy on nomination and remuneration of Directors KeyManagerial Personnel and Senior Management has been formulated by the Committee andapproved by the Board of Directors.
Terms of Reference:
Following is the terms of reference of the Nomination and Remuneration Committee:
To lay down criteria and terms and conditions with regard to identifying personswho are qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.
To determine remuneration based on the Company's size and financial position andtrends and practices on remuneration prevailing in peer companies.
To carry out evaluation of the performance of Directors as well as KeyManagerial and Senior Management Personnel.
To provide them reward linked directly to their effort performance dedicationand achievement relating to the Company's operations.
To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
The Board has the authority to reconstitute the Committee from time to time.
1. Board means Board of Directors of the Company.
2. Directors mean Directors of the Company.
3. Committee means Nomination and Remuneration Committee of the Company as constitutedor reconstituted by the Board.
4. Company means Starcom Information Technology Limited.
5. Independent Director means a director referred to in Section 149 (6) of theCompanies Act 2013.
6. Key Managerial Personnel (KMP) means
i. Executive Chairman and / or Managing Director
ii. Whole-time Director
iii. Chief Financial Officer
iv. Company Secretary
v. Such other officer as may be prescribed under the applicable statutory provisions /regulations
vi. Senior Management means personnel of the Company occupying the position of ChiefExecutive Officer (CEO) of any unit / division or Vice President including Vice Presidentof any unit / division of the Company. Unless the context otherwise requires words andexpressions used in this policy and not defined herein but defined in the Companies Act2013 as may be amended from time to time shall have the meaning respectively assigned tothem therein.
Applicability: The Policy is applicable to
Directors (Executive and Non-Executive)
Key Managerial Personnel
Senior Management Personnel General: This Policy is divided in threeparts:
Part - A covers the matters to be dealt with and recommended by the Committee to theBoard
Part - B covers the appointment and nomination and Part - C covers remuneration andperquisites etc.
PART A: MATTERS TO BE DEALT WITH PERUSED AND RECOMMENDED TO THE BOARD BY THENOMINATION AND
The Committee shall:
Formulate the criteria for determining qualifications positive attributes andindependence of a director.
Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior
Management positions in accordance with the criteria laid down in this policy.
Recommend to the Board appointment and removal of Director KMP and SeniorManagement Personnel.
PART - B: POLICY FOR APPOINTMENT AND REMOVAL OF DIRECTOR KMP AND SENIOR MANAGEMENT:
Appointment criteria and qualifications:
1. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or at Senior Managementlevel and recommend to the Board his / her appointment.
2. A person should possess adequate qualification expertise and experience for theposition he/she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person is sufficient/satisfactory for the concerned position.
3. The Company shall not appoint or continue the employment of any person as Whole timeDirector who has attained the age of
seventy years. Provided that the term of the person holding this position may beextended beyond the age of seventy years with the approval of shareholders by passing aspecial resolution based on the explanatory statement annexed to the notice for suchmotion indicating the justification for extension of appointment beyond seventy years.
4. Term / Tenure:
1. Managing Director/ Whole-time Director: - The Company shall appoint or reappoint anyperson as its Executive Chairman Managing Director or Executive Director for a term notexceeding five years at a time. No re-appointment shall be made earlier than one yearbefore the expiry of term.
2. Independent Director: - An Independent Director shall hold office for a term up tofive consecutive years on the Board of
the Company and will be eligible for reappointment on passing of a special resolutionby the Company and disclosure of
such appointment in the Board's report. No Independent Director shall hold office formore than two consecutive terms but such Independent Director shall be eligible forappointment after expiry of three years of ceasing to become an Independent Director.Provided that an Independent Director shall not during the said period of three years beappointed in or be associated with the Company in any other capacity either directly orindirectly. At the time of appointment of Independent Director it should be ensured thatnumber of Boards on which such Independent Director serves is restricted to seven listedcompanies as an Independent Director and three listed companies as an Independent Directorin case such person is serving as a Whole-time Director of a listed Company.
5. Evaluation: The Committee shall carry out evaluation of performance of everyDirector KMP and Senior Management Personnel at regular interval (yearly).
6. Removal: Due to reasons for any disqualification mentioned in the Companies Act2013 rules made there under or under
any other applicable Act rules and regulations the Committee may recommend to theBoard with reasons recorded in writing removal of a Director KMP or Senior ManagementPersonnel subject to the provisions and compliance of the said Act rules and regulations.
7. Retirement: The Director KMP and Senior Management Personnel shall retire as perthe applicable provisions of the Companies Act 2013 and the prevailing policy of theCompany. The Board will have the discretion to retain the Director KMP Senior ManagementPersonnel in the same position / remuneration or otherwise even after attaining theretirement age for the benefit of the Company.
PART - C POLICY RELATING TO THE REMUNERATION FOR THE WHOLE-TIME DIRECTOR KMP ANDSENIOR MANAGEMENT
1. The remuneration / compensation / commission etc. to the Managing DirectorWhole-time Director KMP and Senior Management Personnel will be determined by theCommittee and recommended to the Board for approval. The remuneration / compensation /commission etc. shall be subject to the prior/post approval of the shareholders of theCompany & Central Government as required.
2. The remuneration and commission to be paid to the Managing Director and theWhole-time Director shall be in accordance with the percentage / slabs / conditions laiddown in the Articles of Association of the Company and as per the provisions of theCompanies Act 2013 and the rules made there under.
3. Where any insurance is taken by the Company on behalf of its Managing DirectorWhole-time Director Chief Executive Officer Chief Financial Officer the CompanySecretary and any other employees for indemnifying them against any liability the premiumpaid on such insurance shall not be treated as part of the remuneration payable to anysuch personnel. Provided that if such person is proved to be guilty the premium paid onsuch insurance shall be treated as part of the remuneration.
Remuneration to Whole-time/ Executive/ Managing Director KMP and SeniorManagement Personnel:
1. Fixed pay: The Whole-time Director / KMP and Senior Management Personnelshall be eligible for a monthly remuneration as may be approved by the Board on therecommendation of the Committee. The breakup of the pay scale and quantum of perquisitesincluding employer's contribution to P.F. pension scheme medical expenses club feesetc. shall be decided and approved by the Board on the recommendation of the Committee andapproved by the shareholders and Central Government wherever required.
2. Minimum Remuneration: If in any financial year the Company has no profitsor its profits are inadequate the Company shall pay remuneration to its Managing Directorand Whole-time Director in accordance with the provisions of Schedule V of the CompaniesAct 2013 and if it is not able to comply with such provisions with the previous approvalof the Central Government.
3. Provisions for excess remuneration: If the Managing Director or theWhole-time Director draws or receives directly or indirectly by way of remuneration anysuch sums in excess of the limits prescribed under the Companies Act 2013 or without theprior sanction of the Central Government where required he/ she shall refund such sumsto the Company and until such sum is refunded hold it in trust for the Company. TheCompany shall not waive recovery of such sum refundable to it unless permitted by theCentral Government.
Remuneration to Non- Executive / Independent Director:
1. Remuneration / Commission: The remuneration / commission shall be fixed asper the slabs and conditions mentioned in the Articles of Association of the Company andthe Companies Act 2013 and the rules made there under.
2. Sitting Fees: The Non- Executive / Independent Director may receiveremuneration by way of fees for attending meetings of Board or Committee thereof providedthat the amount of such fees shall not exceed Rs.20000/- per meeting of the Board orCommittee or such amount as may be prescribed by the Central Government from time to time.
3. Commission: Commission may be paid within the monetary limit approved byshareholders subject to the limit not exceeding 1% of the profits of the Company computedas per the applicable provisions of the Companies Act 2013.
4. Stock Options: An Independent Director shall not be entitled to any stockoption of the Company.
This policy is framed based on the provisions of the Companies Act 2013 and rulesthereunder. In case of any subsequent changes in the provisions of the Companies Act 2013or any other regulation which makes any provision of the policy inconsistent with the Actor Regulations the provisions of the Act or regulations would prevail over the policy andthe provisions in the policy would be modified in due course to make it consistent withthe law.
The policy shall be reviewed by the Nomination and Remuneration Committee as and whenchanges need to be incorporated in the policy due to changes in regulations or as may befelt appropriate by the Committee. Any change or modification in the policy as recommendedby the Committee would be given for approval to the Board.
For and on behalf of the Board of Directors
Chairman and Managing Director
Address: Al-Barka Golden Enclave
Airport Road Bangalore-560017
Date: 31st August 2016
Form No. AOC-2
(Pursuant to clause (h) of sub-Section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in subSection (1) of Section 188 of the CompaniesAct 2013 including certain arm's length transactions under third proviso thereto.
1. Details of material contracts or arrangement or transactions not at arm's lengthbasis: NIL
2. Details of material contracts or arrangements or transactions at arm's length basis:
(a) Name(s) of the related party and nature of relationship: Mr. Ziaulla Sheriffand Ms. Sayeeda Hina. Mr. Ziaulla Sheriff is a partner in the firm namely Sheriff andBhatia Associates. Ms. Sayeeda Hina is daughter of Mr. Ziaulla Sheriff.
(b) Nature of contracts/arrangements/transactions: Payment of rent by StarcomInformation Technology Limited for using the premises located at Times Square No. 88 MGRoad Bangalore - 560001.
(c) Duration of the contracts / arrangements/ transactions: The lease commencedfrom 1st June 2012 to 31st May 2017 and can be extended for suchperiod on such terms and conditions as the parties may mutually agree in writing.
(d) Salient terms of the contracts or arrangements or transactions including the valueif any: Starcom Information Technology Limited has agreed to deposit with the lessorRs.10000000/- as Security Deposit. The rent to be paid by the Company every month isRs.1650000/-.
(e) Date(s) of approval by the Board: 26th December 2014
(f) Amount paid as advances if any: Security Deposit of Rs.10000000/- is paidby Starcom Information Technology Limited to M/s. Sheriff and Bhatia Associates.
For and on behalf of the Board of Directors
Chairman and Managing Director
Address: Al-Barka Golden Enclave
Airport Road Bangalore-560017
Date: 31st August 2016
HEMANSHU KAPADIA & ASSOCIATES
Office No. 12 14th Floor Navjivan Society Building No.3
Lamington Road Mumbai-400 008
Tel 6631 0888/6631 4830
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the Financial year ended 31st March 2016
[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules 2014]
Starcom Information Technology Limited
73/1 Sheriff Centre 5th Floor
St. Marks Road
Bangalore - 560001
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Starcom Information TechnologyLimited (hereinafter called "the Company"). Secretarial Audit was conducted in amanner that provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.
Based on our verification of the Company's books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on 31st March 2016complied with the statutory provisions listed hereunder and also that the Company hasproper Board processes and compliance - mechanism in place to the extent in the mannerand subject to the reporting made hereinafter:
We have examined the books papers minute books forms and returns filed and otherrecords maintained by Starcom Information Technology Limited ("the Company") forthe financial year ended on 31st March 2016 according to the provisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 ('SCRA') and the rules madethereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings (Not Applicable to the Company during the Audit periodas there were no Foreign Direct Investments Overseas Direct Investments in the Companyand no External Commercial Borrowings were made by the Company);
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ('SEBI Act'):-
a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;
c) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015 (with effect from 15th May 2015)
d) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 (Not Applicable to the Company during the Audit periodas the Company has not issued any new securities);
e) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999; (Not Applicable to the Company duringthe Audit period as the Company has not issued any ESOP/ESPS);
f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not Applicable to the Company during the Audit period as the Companyhas not issued any Debt instruments/ Securities);
g) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
h) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009 (Not Applicable to the Company during the Audit period as delisting of securitiesdid not take place); and
i) The Securities and Exchange Board of India (Buyback of Securities) Regulations 1998(Not Applicable to the Company during the Audit period as the Company has not Boughtback its securities);
j) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (with effect from 1st December 2015);
(vi) Other laws applicable specifically to the Company namely:
i. Information Technology Act 2000 and the rules made thereunder We have also examinedcompliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with the Stock Exchanges (up to30th November 2015).
Note: Clause 49 of the Listing Agreement (upto 30th November 2015) andClause 17 18 19 20 21 22 23 24 25 26 27 and clauses (b) to (i) of sub-regulation(2) of regulation 46 and para C D and E of Schedule V of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (witheffect from 1st December 2015) are not mandatory to the Company as the paid upequity share capital of the Company does not exceed Rs.10 crore and net worth does notexceed Rs.25 crore as on the last day of the previous financial year.
During the period under review the Company has complied with the provisions of theAct Rules Regulations Guidelines Standards etc. mentioned above except to the extentas mentioned below:
1. The minimum public shareholding in the Company is not inconformity with Rule 19(2)and Rule 19A of the Securities Contracts (Regulation) Rules 1957 and Clause 38 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The publicshareholding of the Company is less than 25% of the total paid-up share capital of theCompany.
2. The Company has not appointed a whole time Chief Financial officer as requiredpursuant to Section 203 of the Companies Act 2013.
3. The Company had not appointed a whole time Company Secretary pursuant to Section 203of the Companies Act 2013 and Clause 47(a) of the Listing Agreement upto 31stAugust 2015. However the Company Secretary was appointed with effect from 1stSeptember 2015.
4. The Board of Directors of the Company is not duly constituted as required under theprovisions of Section 149 (4) of the Companies Act 2013. The Company had 4 Directors outof which only one is an Independent Director. Due to this the Composition of AuditCommittee and Nomination and Remuneration Committee is not in conformity with Section 177and Section 178 of the Companies Act 2013 respectively.
Majority decision is carried through while the dissenting members' views are capturedand recorded as part of the minutes.
We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.
We further report that during the audit period there were no instances of:
(i) Public/Rights/Bonus/Preferential issue of shares/debentures/sweat equity.
(ii) Redemption/buy-back of securities.
(iii) Merger/amalgamation/reconstruction etc.
(iv) Foreign technical collaborations.
This report is to be read with our letter of even date which is annexed as AnnexureA and forms an integral part of this report.
Our report of even date is to be read along with the letter.
1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.
4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happenings of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.