Your Directors have pleasure in presenting the 31st Annual Report and Audited FinancialStatements for the year ended 31st March 2017 together with the Independent Auditor'sReport.
1. FINANCIAL RESULTS
| || ||(Rs. in Lakhs) |
|Particulars ||2016-17 ||2015-16 |
|Net revenue from operations ||5027 ||6212 |
|Other income ||7 ||48 |
|Profit/(Loss) before provision for doubtful receivables and diminution in value of investment ||(282) ||(225) |
|Provision for doubtful receivables and diminution in value of investment ||10 ||515 |
|Profit (Loss) before Depreciation ||(292) ||(740) |
|Depreciation ||32 ||33 |
|Profit (Loss) before Taxation ||(324) ||(773) |
|Provision for Taxation (Deferred Tax Adjustments) ||Nil ||Nil |
|Profit (Loss) after Taxation ||(324) ||(773) |
|Adjustments towards extra ordinary items ||Nil ||Nil |
|Loss for the period ||(324) ||(773) |
2. PERFORMANCE OF THE COMPANY:
During the financial year 2016-17 world-wide thin client sales have dipped. Decline inexports was significant. This has affected the performance of your Company too. The dip isattributable to economic factors rather than loss of interest in thin clients or desktopvirtualization. The Company's losses increased due to lower sales.
Your Company can take solace from IDC's predictions of a future thin client uptick.Greatly reduced electricity cost and IT management and maintenance cost are key factorsfavouring thin clients. Thin clients continue to be attractive due to very low powerconsumption heat generation and noise. Thin clients offer longer meantime betweenfailures than PCs. Thin clients enjoy a high level of system security and stability. YourCompany is optimistic about the prospect of thin client market as enterprises adapt theirinfrastructure to meet future needs. Export market continues to be a cause for concern.Increased demand in the domestic market sustained economic expansion virtualizationtechnology etc are expected to push the demand for thin clients in the domestic marketduring financial year 2017-18.
Merger of VXL Instruments Limited with Priya Limited was called off due to the lack ofsynergies between the two Companies.
In view of the losses the question of transferring any amount to Reserves does notarise.
4. SHARE CAPITAL:
There were no changes in the Share Capital of the Company during the year.
5. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:
There were no material changes and commitments which occurred between the end of thefinancial year and the Date of the Report which affect the financial position of theCompany.
6. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no material changes after 31st March 2017 till the signing of this Report.
7. CHANGE IN NATURE OF BUSINESS:
There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014.
Whilst your Directors understand the sentiments of the Investors the financials in theyear that has passed the Board regrets its inability to recommend any dividend.
However the Directors will strive hard to bring the Company back to dividend trackbefore long and the improving performance of the Company is hoped to continue tofacilitate consideration of dividend in the days to come.
9. CORPORATE GOVERNANCE AND SHAREHOLDERS' INFORMATION:
A separate Report on Corporate Governance in terms of Regulation 34 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred as"Listing regulations") along with a Certificate from Practising CharteredAccountant regarding compliance to the Conditions stipulated under Chapter IV ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed as "Annexure B".
10. BOARD MEETINGS:
The Meetings of the Board are held at regular intervals with a time gap of not morethan 120 days between two consecutive Meetings. Additional Meetings of the Board ofDirectors are held when necessary.
The Agenda of the Meeting is circulated to the Directors in advance. Minutes of theMeetings of the Board of Directors are circulated amongst the Members of the Board fortheir perusal.
The Board of Directors duly met 7 (Seven) times from 1st April 2016 to 31st March 2017on 30th May 2016 21st July 2016 8th September 2016 29th October 2016 16th November2016 8th December 2016 and 31st January 2017.
11. . DIRECTORS AND KEY MANAGERIAL PERSONNEL:
|SI. No. ||Name ||Designation ||DIN |
|1. ||Mr. Arun Kumar Bhuwania ||Chairman and Independent Director ||00387445 |
|2. ||Mr. Madireddy V. Nagaraj ||Managing Director ||00515419 |
|3. ||Mr. M. V. Shetty ||Whole Time Director ||00515711 |
|4. ||Mr. K. Prakash ||Director ||00542262 |
|5. ||Mr. N. V. Maslekar ||Independent Director ||00904842 |
|6. ||Mrs. Kumkum Bhuwania ||Independent Director ||07160610 |
|7. ||Mr. Prakash H Rao ||Independent Director ||00492187 |
|8. ||Mr. Narayana Bhat ||CFO and Company Secretary ||N.A |
Mr. Madireddy V Nagaraj Managing Director retires by rotation as per the CompaniesAct 2013 and being eligible offers himself for re-appointment.
12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
13. COMPOSITION OF AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE ANDSTAKEHOLDERS' RELATIONSHIP COMMITTEE:
Following are the composition of various Committees:
|i) Composition of Audit Committee: || |
|a) Mr. N. V. Maslekar ||- Chairman |
|b) Mr. K. Prakash ||- Member |
|c) Mr. Prakash H Rao ||- Member |
|d) Ms.Kumkum Bhuwania ||- Member |
|ii) Nomination and Remuneration Committee: || |
|a) Mr. N. V. Maslekar ||- Chairman |
|b) Mr. A K Bhuwania ||- Member |
|c) Mr. Prakash H Rao ||- Member |
|d) Mr. K Prakash ||- Member |
|iii) Composition of Stakeholders' Relationship Committee: || |
|a) Mr. K Prakash ||- Chairman |
|b) Mr. N V Maslekar ||- Member |
|c) Mr. Prakash H Rao ||- Member |
14. RISK MANAGEMENT POLICY:
The Company has not yet formulated a Risk Management Policy and has in place amechanism to inform the Board Members about risk assessment and minimization proceduresand undertakes periodical review to ensure that executive management controls risk bymeans of a properly designed framework.
15. VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Company has established an effective Vigil Mechanism pursuant to the provisions ofSections 177(9) and (10) of the Companies Act 2013 and as per Regulation 4(2)(d)(iv) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which isavailable on website of the Company at url http://www.vxl.net/percheditor/resources/vxlwhistleblowerpolicy and there were no cases reportedduring the last period.
16. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY:
The Directors have laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies safeguardingof its assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records and the timely preparation of reliable financial information.
17. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDEDBY THE COMPANY:
The Company has not given any loan or guarantees covered under the provisions ofsection 186 of the Companies Act 2013.
18. DIRECTORS' RESPONSIBILITY STATEMENT:
In pursuance of Section 134(3)(c) of the Companies Act 2013 the Directors herebyconfirm that:
a) In the preparation of the Financial Statements the applicable Accounting Standardshad been followed along with proper explanation relating to material departures;
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 at the end of the financial year and ofthe profit and loss of the Company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors had prepared the Financial Statements on a going concern basis;
e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively 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.
19. EXTRACT OF ANNUAL RETURN:
As required pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of Annual return inMGT-9 is attached as a part of this Annual Report as Annexure - I.
The Auditors Messrs Ishwar & Gopal Chartered Accountants Bangalore registeredwith Institute of Chartered Accountants of India (ICAI) under the firm registration number001154S who were appointed Statutory Auditors of the Company for the period of 2 (Two)years from the conclusion of 29th Annual General Meeting (AGM) till the conclusion of 31stAGM. Further Messrs Ishwar & Gopal Chartered Accountants Bangalore will becompleting the maximum number of transitional period (two years) at the ensuing 31st AGMof the Company. To align with the above it is proposed to appoint Messrs YCRJ &Associates Chartered Accountants (ICAI Firm Registration No. 006927S) as the StatutoryAuditors of the Company for a period of 5 (Five) years subject to the approval of themembers of the Company at this Annual General Meeting.
21. 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 Company hasappointed Mr. J V Shivaprakash Bengaluru a Company Secretary in Practice toundertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor inthe form of MR-3 is annexed to this Report as Annexure - II.
Explanations by the Board on the comments of Secretarial Auditors:
During the year under review there were no qualifications reservations or adverseremarks made by the Statutory Auditors/Secretarial Auditors in their respective Reports.
22. EMPLOYEES' STOCK OPTION DETAILS:
The Company does not have any Employee Stock Option Scheme.
23. CONSERVATION OF ENERGY:
Your Company gives high priority for conservation of energy through better supervisionand training of employees to economize the usage of electricity.
24. TECHNOLOGY ABSORPTION:
The Company's products are manufactured by using in-house know how and Researchfacilities and no outside technology is being used for manufacturing activities. Thereforeno technology absorption is required. The Company constantly strives for maintenance andimprovement in quality of its products and entire Research and Development activities aredirected to achieve the aforesaid goal.
25. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Company earned Rs. 378710487/- in foreign exchange and expendedRs.267245530/- in foreign exchange during the period under review.
Your Company has not invited/accepted/renewed any deposits from public as defined underthe provisions of Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014and accordingly there were no deposits which were due for repayment on or before 31stMarch 2017.
27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company continued to maintain high standards of internal control designed toprovide adequate assurance on the efficiency of operations and security of its assets. Theadequacy and effectiveness of the internal control across various activities as well ascompliance with laid-down systems and policies are comprehensively and frequentlymonitored by your Company's management at all levels of the organization. The AuditCommittee which meets at-least four times a year actively reviews internal controlsystems as well as financial disclosures with adequate participation inputs from theStatutory Internal and Corporate Secretarial Auditors.
28. MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBUNAL IMPACTING GOING CONCERNSTATUS OF COMPANY:
No order was passed by any court or regulator or tribunal during the period underreview which impacts going concern status of the Company.
29. RELATED PARTY TRANSACTIONS (RPTs):
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval.
The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. Web link for the same is www.vxl.net.in/Investors/vxl-disclosures.aspx.Particulars of Contracts or Arrangements with Related parties referred to in Section188(1) of the Companies Act 2013 in Form AOC- 2 annexed to this Report as Annexure -III.
30. HUMAN RESOURCES AND INDUSTRIAL RELATIONS:
Your Company recognizes the critical significance of competent and experiencedemployees. The team VXL Instruments continued to stand by the Company during tiring andtough times and your Board places its appreciation for these relentless efforts untiringdedication and sense of belongingness exhibited by the employees at all levels. YourCompany focuses on long term Human Resources planning aimed at managing change moreefficiently grooming internal talent for future roles and also driving efficiency withinthe Organization.
Industrial relations have been cordial and constructive which have helped your Companyto meet customers' demands.
31. DETAILS OF HOLDING COMPANY/SUBSIDIARIES/JV:
VXL Instruments Limited (UK) ceased to be a Subsidiary Company pursuant to the windingup petition filed by one of the Creditors and upon the winding up Order passed by theHon'ble High Court of Justice Chancery Division Companies Court (Court) UK under theprovisions of the Insolvency Act 1986 on 7th November 2016. Further the Hon'ble HighCourt has appointed Mr. Alan Simon as the Liquidator of VXL Instruments Limited (UK).
32. ANNUAL 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 and theDirectors individually. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.
33. CORPORATE SOCIAL RESPONSIBILITY:
Since the Company does not meet the criteria for the applicability of Section 135 ofthe Companies Act read with the Companies (Accounts) Rules 2015 this clause is notapplicable.
34. NOMINATION AND REMUNERATION COMMITTEE POLICY:
On the recommendation of the Nomination and Remuneration Committee the Board hasframed a Policy for selection and appointment of Directors Senior Management and forother employees and their remuneration. The same has been disclosed on the website of theCompany at www.vxl.net.
35. RATIO OF REMUNERATION TO EACH DIRECTOR:
Pursuant to Section 197(12) of the Companies Act 2013 and Rule 5(1)(2)(3) of theCompanies (Appointment and Remuneration) Rules 2014 details/disclosures of Ratio ofRemuneration to each Director to the median employee's remuneration is annexed to thisreport as Annexure-IV.
36. LISTING WITH STOCK EXCHANGE:
The Company confirms that it has paid the Annual Listing Fees for the financial year2017-18 to BSE Limited where the Company's Shares are listed.
37. CORPORATE GOVERNANCE AND SHAREHOLDERS' INFORMATION:
In compliance with the Listing Agreement with the Stock Exchange your Board hasadhered to the Corporate Governance Code. All the requisite Committees are functioning inline with the guidelines.
As reported earlier a reputed firm of independent Chartered Accountants has beencarrying out the responsibilities of Internal Auditors and periodically they have beenreporting their findings of systems procedures and management practices.
As required under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a report on Corporate Governance and a Certificate fromMessrs Ishwar and Gopal Chartered Accountants confirming compliance with therequirements of Corporate Governance forms integral part of this Report as Annexure V.
38. CAPITAL EXPENDITURE:
As on 31st March 2017 the gross tangible and intangible assets stood at Rs.189134430/- and the net tangible and intangible assets at Rs. 169422668/-.Additions during the year amounted to Rs. 2706616/-. The Company has not purchased anyassets under lease.
39. 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 the workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed offduring the financial year 2016-17:
No of complaints received: NIL No of complaints disposed off: NIL
40. MANAGEMENT DISCUSSION AND ANALYSIS:
As requisite and appropriate Management Discussion and Analysis is covered under thisReport itself a separate note on the same is not being furnished.
The Directors place on record their appreciation for valuable contribution made byemployees at all levels active support and encouragement received from the Government ofIndia Government of Karnataka Company's Bankers Customers Principals BusinessAssociates and other Acquaintances.
Your Directors recognize the continued support extended by all the Shareholders andgratefully acknowledge with a firm belief that the support and trust will continue infuture also.
| || |
For and on behalf of the Board of Directors
|Date: 10th August 2017 ||Madireddy V. Nagaraj ||M V Shetty |
|Place: Bengaluru ||Managing Director ||Whole Time Director |
| ||DIN:00515419 ||DIN: 00515711 |