Your Directors present the Thirtieth Annual Report of your Company together with theAudited Financial Statements for the year ended March 31 2018.
Financial Results Standalone and Consolidated
The financial statements for the year ended 31st March 2018 has been prepared inaccordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of theCompanies Act 2013 ("the 2013 Act") read with the Companies (Indian AccountingStandards) Rules 2015 and the relevant provisions of the 2013 Act as applicable.
(Rs in lakhs except per share data)
| ||Standalone ||Consolidated |
| ||Current Year ||Previous Year ||Current Year ||Previous Year |
|Particulars ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Total Income ||42838.62 ||42270.20 ||52837.78 ||49262.63 |
|Total Operating expenditure ||24768.82 ||25735.04 ||39642.43 ||37627.62 |
|EBITDA ||18069.80 ||16535.16 ||13195.35 ||11635.01 |
|Finance costs ||722.55 ||2113.03 ||969.88 ||2302.12 |
|Depreciation/amortization ||2216.30 ||2707.07 ||2995.35 ||3273.88 |
|Profit / (Loss) before exceptional item and tax ||15130.95 ||11715.06 ||9230.12 ||6059.01 |
|Exceptional Item ||(8157.58) ||(3075.00) ||(2686.43) ||0.00 |
|Profit / (Loss) before tax ||6973.37 ||8640.06 ||6543.69 ||6059.01 |
|Provision for taxation ||5335.61 ||3732.14 ||5356.90 ||3763.64 |
|Profit after Tax/Net Profit for the year ||1637.76 ||4907.92 ||1186.79 ||2295.37 |
|Add: Net minority interest in profit of subsidiaries ||0.00 ||0.00 ||(20.42) ||(16.07) |
|Profit after Tax/Net Profit for the year ||1637.76 ||4907.92 ||1207.21 ||2311.44 |
|Earnings per share || || || || |
|Basic ||3.55 ||10.65 ||2.62 ||5.02 |
|Diluted ||3.55 ||10.65 ||2.62 ||5.02 |
RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS
The total revenue from operations for the year ended March 31 2018 was at Rs22671.54 lakhs as compared to Rs 15006.16 lakhs for the year ended March 31 2017.
For the year under review your Company has reported profit before finance costdepreciation exceptional items and tax of Rs 18069.80 lakhs compared to profit of Rs16535.16 lakhs in the previous year. Profit before tax was Rs 6973.37 lakhs compared toProfit of Rs 8640.06 lakhs in the previous year.
The net profit after tax (PAT) during the year of Rs 1637.76 lakhs as comparedto profit of Rs 4907.92 lakhs in the previous year.
Pursuant to the provisions of the Section 136 of the Act the financial statements ofthe Company consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
The consolidated Net Profit for the year ended March 31 2018 was at Rs 1207.21 lakhsagainst Rs 2311.44 lakhs in the previous year ended March 31 2017. Shareholders' fundsas at the year ended March 31 2018 was at Rs 320536.19 lakhs as against Rs 316886.15lakhs as at March 31 2017. Shareholders' fund includes non controlling interest of Rs207.21 lakhs as compared to Rs 227.62 lakhs in previous year.
The Company continues to carry out activities as stated in the main object clause ofits Memorandum of Association as there has been no change in the nature of its business.
BUSINESS OVERVIEW: FISCAL YEAR 2017-18
As you are aware your Company has been facing legal challenges due to a paymentdefault at one of its subsidiaries the National Spot Exchange Limited (NSEL). Since thenyour Company is fighting legal battles to protect its reputation identity and uniquenessin the fin tech sphere and at the same time countering all kinds of baseless and falseallegations thrust upon it by vested interests. Your Company has always extended completecooperation to all investigative agencies with the sole purpose of unravelling the truthof the NSEL payment default and supported the subsidiary in taking all necessary steps torecover the default amount from the 24 defaulters. It was way back in 1998 that yourCompany launched the path-breaking brokerage trading solution ODIN a multi-exchangemulti-segment front-ofice trading and risk management system that enables seamless tradingon multiple markets. ODIN soon emerged as the single largest player with a market share ofover 80% pan-India and providing job-opportunities to over a million.
Your Company has a proven track record of generating jobs and enormous growthopportunities something it had done by creating 10 world-class multi-asset exchangecompanies across continents. Your Company is confident of creating a million more jobs andbuilding shareholder value by using innovative technology as its mainstay. Your Company isaspiring to build synergies with the new next-gen advancements in technology such asartificial intelligence (AI) to enrich its suite of solutions in trading and riskmanagement. During the year under review your Company has incorporated a number offeatures into its suite of solutions ranging from brokerage trading solutions risksolutions and other mid ofice and back ofice solutions that provide ease of operations.
Technology Business & Outlook
1. Exchange Technology
The exchange technology business continues to support India's largest commodityexchange - MCX and Equity / Derivatives / Currency Derivatives / Debt exchange MSEI. Yourcompany is provider of mission critical technology solution to these exchanges. As one ofthe revenue stream is linked to turnover at the exchange the growth of the exchangetechnology business is a function of growth of turnover value of these exchanges. Theexchange technology team successfully implemented first phase of it's low latency solutionat MCX in September 2017. The second and final phase of the same is expected to go intoproduction shortly.
2. Brokerage Technology Solutions
Business has witnessed a challenging year in 2017-18 largely due to unfair environmentfrom a legal perspective. We are seeing a positive response to some of our new productofierings. We are also in the process of launching new products and services in mobilityonline solutions & artificial intelligence. We believe these will be significantrevenue drivers in the next fiscal.
The Brokerage Technology Solutions business has firmly re-established itself as theleader in this space with the success of its new and improved products & services. TheCompany expects business environment to improve further in the coming years. With thecommercial successes achieved in creating newer products and services your Company iswell positioned to take advantage of the growth in the capital markets and further cementits leadership position in this space.
63 moons is sprinting towards its mission Digital India @2025'. New VenturesHeroes of the FT 3.0 wing are applying various new age technologies for building robustand fiexible technology framework with Human-centered innovation to create new quantumleap in technology.
New Ventures is Crafting an avant-garde technology framework with agile blocks foraccelerating new possibilities with Technology transformation. It is enabling idea &digitisation to speed up realising value vision FT 3.0; "Technology partner of choiceacross industry segments".
Risk Solutions' division broadly has two products:
DataCollector' caters to leading regulatory clients in India and abroad.During the year under review Risk Solutions' was awarded a project from theGovernment of Rajasthan for implementing Integrated Management Information System'(iMIS). The division also successfully implemented Foreign Accounting Tax CompliantAct' (FATCA) system for a regulator abroad. This is a comprehensive solution enablingusers to report United States tax information from its entities. Riskalculator' catersto the Enterprise Risk Management of banks and comprises of the following modules:
1. Credit Risk
2. Market Risk
3. Operational Risk
4. Asset Liability Management
5. Compliance reporting / ADF.
This application computes Regulatory Capital as per Basel norms prescribed by theRegulator. Riskalculator operates on a web platform with a single underlying datamodel insulated from client's information architecture. Riskalculator' has beensuccessfully implemented in seven Multi-National Banks. During the year under review RiskSolutions' won Best Solution provider of the year 2017' and our clientbank won the Best Risk Technology Implementation of the year' in the CROLeadership Summit 2017'. surveymoons.in: surveymoons.in is a web-based / onlinesoftware as a service' (SaaS) provider that specializes in online form building andsurvey. The product shall be launched for public access soon.
As one of the best shareholder-rewarding corporate your Company has been continuouslylooking forward to new initiatives and innovations to maximise its shareholders value.
With your Company's philosophy of entrepreneurial innovation and next-gentechnology' as its strong foundation it is expanding its horizons by using its corestrength of innovation and technological expertise to build new businesses to remain aheadin business. Your Company believes that with the right opportunity it can set newermilestones with its strength in innovation and technology in the emerging space of DigitalIndia. In the years to come your Company has a vision to become a technology partner of108 digital disruptors spread across 12 industries. Your Company foresees itself to becomethe leader of the evolving digital ecology that will eventually govern the future andthat day is not far ofi.
In the wake of the crisis at NSEL your Company has been made a party to severallitigations over the last five years. Further the Ministry of Corporate Afiairs Govt. ofIndia ("MCA") issued a final order dated February 12 2016 ("FinalOrder") for amalgamation of your Company with NSEL under section 396 of CompaniesAct 1956. Your Company opposed the order for merger and challenged the said order foramalgamation before the Hon'ble Bombay High Court. The Hon'ble High Court has dismissedthe writ petition challenging the final order of merger vide its order dated December 42017. The Company has preferred the Special Leave Petition (SLP) before the Hon'bleSupreme Court of India against the said order dated December 4 2017. The Hon'ble SupremeCourt was pleased to continue the relief of stay order of the High Court and the SLP ispending for admission. Further in a civil suit filed by L.J. Tanna Private Limited &Ors. your Company has been restrained from distributing any dividend amongst itsShareholders and/or pay any remuneration at the increased rate to its ManagingDirector/Directors/Senior Employees.
The Ministry of Corporate afiairs (MCA) had filed the Petition inter alia under theprovisions of Sections 388B 397 398 and 401 of the Companies Act 1956 for removal andsupersession of the Board before the erstwhile Company Law Board ("CLB") beingCompany Petition No. 1 of 2015 ("Company Petition"). The NCLT vide its orderdated June 4 2018 rejected the prayer of the Union of India for removal and supersessionof the Board of the Company however Hon'ble Tribunal was pleased to order that theGovernment may nominate not more than 3 directors to the Board of your Company. YourCompany has preferred appeal against the said order of the NCLT before the NCLAT. TheNCLAT was pleased to stay the order of the NCLT.
Your Company continues to defend itself in various other litigations filed against it.
The Economic Ofiences Wing of the Mumbai Police ("EOW") had issued a Noticedated February 28 2015 to your Company inter alia restraining / restricting your Companyfrom dealing with its assets. The Hon'ble Bombay High Court vide its order dated June 122015 has granted a stay on the operation of the said letter. Further EOW vide its noticedated July 18 2016 secured the assets of your Company. The same was challenged by yourCompany before the Hon'ble Bombay High Court. The EOW in its afidavit has stated that ithas no objection; if your Company utilizes the funds secured by its above said notice forincurring expenses necessary towards the running of its ordinary course of day-todaybusiness payment of salaries to its employees and payment of statutory dues. The saidafidavit has been recorded in the Order dated August 01 2016 of the Hon'ble Bombay HighCourt.
The Government of Maharashtra vide its Notification dated September 21 2016 hasattached certain properties of your Company. The Government of Maharashtra in the monthof April / May 2018 vide its various Notifications attached the various bank accountsproperties investments and ODIN software its Intellectual Property rights and itsreceivables. The said notifications have been challenged before the Hon'ble Bombay HighCourt which is pending for hearing. Modulus USA has filed a case against the Company foralleged infringement of its trademark. The Notice of Motion filed in the said suit wasdisposed ofi by a consent order dated October 7 2016. The Company has filed its writtenstatement. The Directorate of Enforcement has attached properties to the tune of Rs 1350Crores (approx.) vide provisional attachment orders dated 14th September 2016 30thSeptember 2016 and 31st January 2017 issued under the Prevention of Money Laundering Act2002 ("PMLA"). The adjudication proceedings before the AdjudicatingAuthority under PMLA have been completed in respect of the provisional attachment ordersdated 14th September 2016 and 30th September 2016 where in the attachments have beenconfirmed. The Company has filed appeals against these orders before the AppellateTribunal established under PMLA. Vide interim orders dated 09.05.2017 and 12.05.2017 theparties have been directed by the Appellate Tribunal to maintain status quo in respect ofthe attached properties till the next date of hearing. The adjudication proceedings inrespect of provisional attachment order dated 31st January 2017 has been concluded and theLd. Adjudicating Authority was pleased to confirm attachments vide its order dated14.07.2017. The Company has filed an appeal before the Appellate Tribunal establishedunder the PMLA the parties have been directed by the Appellate Tribunal to maintainstatus quo till the next date of hearing. Serious Fraud Investigation Ofice (SFIO)Regional Ofice Mumbai has sought certain information from the Company in respect ofinvestigation into the afiairs of NSEL and the Company has provided the requisiteinformation as required by SFIO.
Except as stated above and explanation to the qualifications in auditor report asstated below no material changes and commitments have occurred after the close of thefinancial year till the date of this Report which significantly afiects the financialposition of the Company.
Explanation to the Qualifications in Auditor Report
A. Audit Report on Standalone Financial Statements
The Management explanation for qualifications made by the Statutory Auditors in theirIndependent
Auditors Report dated May 21 2018 on the Standalone Financial Statements for the yearended March 31 2018 is as under: a) During the previous years civil suits have beenfiled against the Company in relation to the event that occurred on the exchange platformof NSEL wherein the Company has been made a party. In these proceedings certain reliefshave been claimed against the Company inter-alia on the ground that the Company is theholding company of NSEL. These matters are pending before the Hon'ble Bombay High Courtfor adjudication. The Company has denied all the claims and contentions in its reply.There is no privity of contract between the Company and the Plaintifis therein. Themanagement is of the view that the parties who have filed the Civil Suits would not beable to sustain any claim against the Company. The matters are pending for hearing beforethe Hon'ble Bombay High Court. First Information Reports (FIRs) have been registeredagainst various parties including the Company with the Economic Ofiences Wing of theMumbai Police (EOW) and Central Bureau of Investigation (CBI) in connection with theevents occurred on NSEL's trading platform. After investigation EOW Mumbai has presentlyfiled 3 charge-sheets. It is pertinent to note that till date no charge sheet has beenfiled against the Company by EOW. All investigations are presently pending. CBI has filedcharge-sheets against the Company for alleged loss caused to PSUs PEC Ltd. &MMTC Ltd. on NSEL platform and the case is pending for trial before the CBI court.
The CBI - EOW has also registered an FIR which pertains to alleged conspiracy betweenthe accused private persons and the named oficials of Securities & Exchange Board ofIndia (SEBI) in granting renewal of stock exchange license to Metropolitan Stock Exchangeof India Limited (MSEI) by SEBI in August 2010 by suppression of facts. There is nodirect allegation against the Company in the FIR. Therefore the Company has filed apetition before the Hon'ble Court for quashing of the said FIR against itself.
CBI EOW has registered complaint against the Company along with certain oficials ofFMC SEBI and other for giving illegal benefits to MCX and allowing MCX trading as privatecommodity exchange. The investigation in the matter is still in progress.
b) The Company has challenged EOW letter dated February 28 2015 before Hon'ble BombayHigh Court wherein Hon'ble Bombay High Court by its order dated June 12 2015 granted astay to EOW letter dated February 28 2015 on the condition that the Company shall depositRs 84 crs from the sale proceeds of IEX within four weeks from completion of sale of IEX.Accordingly the Company has deposited Rs 84 crs with the Registrar Criminal AppellateSide High Court Bombay. The matter is pending for hearing before Hon'ble Bombay HighCourt. c) On July 18 2016 the Company received a notice from the EOW Mumbai inter aliadirecting the Company not to dispose of alienate encumber part with possession of orcreate any third party right title and / or interest in to upon or in respect of anyof the assets of the Company without permission of Hon'ble Designated Court under MPIDAct Mumbai. This letter has been challenged by the Company in a Writ Petition before theBombay High Court and the same is pending for hearing. By virtue of an Afidavit filed bythe EOW in the matter the Company is not prohibited from incurring day to day expenses.The Government of Maharashtra vide its Notification dated 21st September 2016 notifiedthe attachments of certain assets of the Company. The Company has filed on 16th January2017 a Writ Petition before the Bombay High Court challenging inter alia the notificationattaching the assets of the Company under the provisions of the Maharashtra Protection ofInterest of Depositors Act. The matter is pending for hearing. EOW issued a letter dated31st January 2017 to NSDL directing it not to dispose of alienate encumber part withpossession of or create any third party right title and / or interest in to upon or inrespect of any assets mentioned in the letter dated 31st January 2017 of the Companywithout the permission of the Hon'ble Designated Court under the MPID Act Mumbai. TheCompany challenged the letter dated 31st January 2017 before the Hon'ble Bombay HighCourt inter alia on the ground that the EOW did not have the power to do so. The Hon'bleCourt has been pleased to stay the same. The matter is pending for hearing. The StateGovernment under the MPID Act has attached several Bonds bank accounts investmentsFixed Deposits and ODIN software and its receivables of the Company vide gazettenotifications dated April 4 2018 April 7 2018 April 11 2018 April 19 2018 and May15 2018 respectively. The Competent Authority has filed Misc. Applications before theMPID Court to make absolute the attached properties mentioned in aforesaid gazettenotifications. The said Misc. Applications are pending for hearing before Hon'ble MPIDCourt Mumbai. The Company has
filed a writ petition before the Bombay High Court challenging the aforesaidnotifications attaching the various assets of the Company under the provisions of the MPIDAct. The Hon'ble High Court has granted partial relief to the Company. The said WritPetition will come up for hearing in June 2018 d) Certain assets of the Company have beenattached by the Enforcement Directorate under the provisions of the Prevention of MoneyLaundering Act 2002. The three Provisional Attachments Orders have been confirmed by theAdjudicating Authority. The Company has filed Appeals challenging the confirmation orderspassed by the Adjudicating Authority before the Hon'ble Appellate Tribunal. The Hon'bleAppellate Tribunal has granted status quo on orders passed by the Adjudicating Authorityconfirming three attachments. The matter is pending for hearing before Hon'ble AppellateTribunal.
e) The Serious Frauds Investigation Ofice (SFIO) published a Public Notice duringDecember 2016 in a newspaper wherein it has been mentioned that the Central Governmenthad directed the SFIO to investigate into the afiairs of the Company and also inviting themembers of the public to lodge their alleged grievances against the Company with them. TheCompany is exploring its options in relation to the SFIO orders in consultation with itsattorneys and Counsel.
B. Audit Report on Consolidated Financial Statements
The Management explanation for qualifications made by the Statutory Auditors in theirIndependent Auditors Reports dated May 21 2018 on the Consolidated Financial Statementsfor the year ended March 31 2018 are as under:
1. With respect to item no. 1 which pertains to the Company refer paragraph (A) above.
2. With respect to item no. 2 which are pertaining to the qualifications made by theStatutory Auditors of a subsidiary viz National Spot Exchange Limited (NSEL) in theirIndependent Auditors Report on NSEL's Consolidated Financial Statements for the year endedMarch 31 2018 which has been reproduced by the Statutory Auditors of the Company(63moons) in their Independent Auditors Report (Auditors Report) dated May 21 2018 on theConsolidated Financial Statements for the year ended March 31 2018 the explanation givenby the management of NSEL and its subsidiary "Indian Bullion Market AssociationLimited" (IBMA) are as under: ("Company" in the qualifications below referto NSEL or IBMA as the case may be) i) With respect to qualification 2(a) in AuditorsReport explanation of NSEL's Management is as under:
Investigating agencies are investigating genuineness of the warehouse receipts issuedby the Exchange as well as the frauds apparently perpetrated by the then senior oficialsof the Exchange. The Government of India by the Gazette Notification SO 2529(E) datedSeptember 19 2014 has withdrawn its earlier Gazette Notification SO 906(E) dated June 052007 (by which the Company was granted exemption under Section 27 of the FCR Act 1952 fortrading of forward contracts of one day duration) with immediate efiect and consequentlythe notification SO 228(E) dated February 06 2012 and notification SO 2406(E) datedAugust 06 2013 ceased to be in force w.e.f. September 19 2014 as informed to theCompany by the FMC vide letter dated November 05 2014.
As the reply to the said SCN has been given and actions if any required due to SCNhave been taken including withdrawal of the exemption itself the Company does notforesee any further consequences on the SCN. Further neither FMC nor MCrA has held theCompany guilty of having violated any of the conditions of the exemption notificationdated June 05 2007 - which was the subject matter of the SCN. The company maintains thatall contracts traded on the Exchange platform were proper and in conformity withapplicable laws and exemption notifications. As per the records there were no violationsin this regard. The Company had obtained a legal opinion on the legality of the contractstraded by the members on the exchange platform. The Company is taking all steps to defendits position however since all matters are sub-judice the Company is unable to quantifythe impact if any of such legal proceedings on the financial statements of the Company.
ii) With respect to qualification 2(b) in Auditors Report explanation of NSEL'sManagement is as under:
Majority in value of the trade and other receivables loans and advances etc. areconfirmed and such confirmations are available on record. Some confirmations were receivedfrom debtors which were not in agreement with the balances shown in the books ofaccounts. Reconciliation process has been undertaken for such accounts and completed. Thedifierences between account balances were communicated to debtors but the disagreementremains. The company has decided to litigate for recovering money where amounts are aboveRs 5 lakhs. Management is still contemplating legal action for the cases where amounts arebelow Rs 5 lakhs.
iii) With respect to qualification 2(c) in Auditors Report explanation of NSEL'sManagement is as under:
As per records the Board came to know about the relationship between Mr. Anjani Sinhaand MD of M/s SNP Design Pvt. Ltd. (SNP) as his wife only after the forensic audit wascompleted by Grant Thornton India LLP. IBMA has already initiated suitable legal actiontowards recovery. Although a provision of 75% of the outstanding amount is made in theprevious years the management is hopeful of recovery and no further provision is made inthe current financial year.
iv) With respect to qualification 2(d) in Auditors Report explanation of NSEL'sManagement is as under:
The Subsidiary Company [IBMA] has taken steps towards recovery of the unrealisedoutstanding debtors and receivables. During current financial year 2016-17 IBMA has madethe provision for doubtful debts (Excluding Other Receivable) of Rs 45.96 lakhs of debtorsother than SNP and Harley Carmbel Pvt. Ltd. (Harley). With regard to the SNP Company hasinitiated legal action as stated in note no (iii). For Harley IBMA has initiatedarbitration process towards recovery and the matter is currently sub-judice.
Further Management is hopeful of recovering the amounts due from SNP and Harleyhence in the current year no provision in respect of amount due from them is made.
Your Directors have recommended a dividend of Rs 2/- per share i.e. 100% on the facevalue of Rs 2/- per share for the FY 2017-18. The distribution of said dividend shall besubject to the approval of shareholders at the forthcoming Annual General Meeting andappropriate judicial orders. As the Shareholders are aware the following dividends arepending for distribution due to the Hon'ble Bombay High Court order: a. The final dividendof Rs 5/- per share for the FY 2014-15 approved by the shareholders at the Annual GeneralMeeting held on September 30 2015 could not be paid as the Hon'ble Bombay High Courtvide its order dated September 30 2015 in Notice of Motion no. 1490 of 2015 in Suit no.121 of 2014
Tanna Shares & Securities Pvt. Ltd. and Ors. Vs. Financial Technologies (India)Limited inter-alia directed that pending hearing and final disposal of Notice of Motion"FTIL shall not distribute any dividend amongst its shareholders and shall also notdeposit any amount in compliance with Section 123 sub-clause (iv) of the Companies Act1956" (to be read as Companies Act 2013). b. Payment of Rs 2/- per share for F.Y2016-17 approved by the shareholders at the 29th AGM held on September 27 2017 is pendingsubject to appropriate judicial orders.
Prior to the above mentioned High Court order your Company has paid consecutivedividends for the past 38 quarters which is in accordance with the sustainable dividendpayout policy of the Company and linked to its long term growth objectives.
TRANSFER TO RESERVES
Your Company does not propose to transfer any sum to General Reserve for the year underreview.
There was no change in the Share Capital of the Company during the year under review.As on March 31 2018 the paid-up equity Share Capital of your Company stood at Rs 921.57lakhs comprising of 46078537 equity shares of Rs 2/- each. During the year under reviewthe Company has not issued any shares with diffierential voting rights nor has it grantedany Stock Option or Sweat Equity.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulations') is presented in a separate section forming part of thisAnnual Report.
DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES AND THEIR PERFORMANCEHIGHLIGHTS
Pursuant to the provisions of Section 129(3) of the Companies Act 2013("Act") a statement containing salient features of the financial statements ofCompany's subsidiaries associate companies and joint ventures is given in Form AOC-1 as Annexure- I and the same forms part of this report. The statement also provides the details ofhighlights of performance of subsidiaries associates and joint venture company and theircontribution to the overall performance of the Company. The financial statements of eachof the subsidiaries may also be accessed on the website of the Company www.63moons.com.These documents will also be available for inspection on all working days i.e. exceptSaturdays Sundays and Public Holidays at the Registered Ofice of the Company till thedate of AGM. The Policy for determining material subsidiaries as approved by the Board maybe accessed on the Company's website at the link: www.63moons.com/investors/corporate-governance/policies/Material-subsidiary-policy.pdf
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The report on CorporateGovernance as stipulated by Regulation 34(3) read with Schedule V of the ListingRegulations 2015 is annexed hereto and forms part of this Annual Report. A Certificatefrom the Auditors of the Company confirming compliance with Corporate Governance norms isannexed to the report on Corporate Governance.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Reporting as required under Regulation 34 of ListingRegulations is not applicable to your Company for the financial year ended March 31 2018.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is available onCompany's website at www.63moons.com/investors/corporate-governance/policies/Related-Party-Transactions-Policy.pdf ThePolicy is to ensure that proper reporting approval and disclosure processes are in placefor all transactions between the Company and Related Parties.
All arrangements / transactions entered by your Company with its related parties duringthe year were in ordinary course of business and on an arm's length basis. During theyear the Company has made investments in one of its subsidiary i.e. NSEL amounting to Rs3081.66 lakhs in terms of shareholders' approval obtained on March 08 2017. Except forthe transaction with NSEL the Company did not enter into any arrangement / transactionwith related parties which could be considered material in accordance with Companies Actand Listing Regulations. All transactions with related parties were reviewed and approvedby the Audit Committee. Prior omnibus approvals are granted by the Audit Committee forrelated party transactions which are of repetitive nature entered in the ordinary courseof business and are on arm's length basis in accordance with the provisions of the Actread with the Rules issued thereunder and the Listing Regulations.
The details of the transactions with related parties are provided in the accompanyingfinancial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board.
The Company has identified the areas for CSR activities which are in accordance withSchedule VII of the Act some of which are highlighted as under:
Health and social welfare
Promotion of education
Employment enhancing vocational skills
Employee engagement activities
The Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure - II and the same formspart of this report. The policy is available on the website of the company at the link:www.63moons.com/investors/ corporate-governance/policies/CSR-policy.pdf
The Board of the Company has formed a Risk Management Committee to monitor the riskmanagement policy for the Company. The risk management system identifies and monitorsrisks which are related to the business and overall internal control systems of theCompany. The Audit Committee has oversight responsibility in the areas of financial risksand controls. The risk management committee is responsible for reviewing the riskmanagement policy and ensuring its efiectiveness.
The Audit Committee and the Board has also noted the risk prevailing in respect of whatis stated in the para relating to legal matters above efiecting the business of theCompany.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has internal financial control systems which are commensurate with itssize and the nature of its operations. The Internal control system is improved andmodified on an on-going basis to meet the changes in business conditions accounting andstatutory requirements. Internal Audit plays a key role to ensure that all assets aresafeguarded and protected and that the transactions are authorized recorded and reportedproperly. The Internal Auditors independently evaluate the adequacy of internal controls.The findings and recommendations of the Internal Auditors are reviewed by the AuditCommittee and followed up till implementation wherever feasible. Further as perrequirement of clause (i) of sub-section (3) of section 143 of the Companies Act 2013('the Act') the statutory auditors have reported on the internal financial controls andopined that the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating efiectively as at March 31 2018.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Suresh Salvi (Retd. IAS) (DIN: 07636298) and Mr.Kanekal Chandrasekhar (DIN: 06861358) were appointed as Directors (Non-Executive) at theAnnual General Meeting of the Company held on September 27 2017.
Further Mr. S. Rajendran (DIN: 02686150) was appointed as Managing Director and CEO ofthe Company not liable to retire by rotation for a period of 3 years w.e.f. February 102017. Mr. Devendra Agrawal (DIN: 03579332) Chief Financial Oficer of the Company wasappointed as Whole-time Director & CFO of the Company liable to retire by rotationw.e.f May 27 2017 for a period of three years. The aforesaid two appointments wereapproved by the Members through postal ballot on August 23 2017.
The following Directors ceased to be member of the Board:
1. Mr. Berjis Desai (DIN: 00153675) Non-Executive Director w.e.f. May 26 2017
2. Mr. Jigish Sonagara (DIN: 07024688) Non-Executive Director w.e.f. August 10 2017Your Directors place on record their appreciation for the valuable advice and guidanceprovided by the above Directors during their tenure with the Company. The Board ofDirectors at its meeting held on November 09 2017 on the recommendation of theNomination and Remuneration Committee (NRC) re-appointed Mr. Rajendra Mehta (DIN:00390504) as a Whole-time Director of the Company for a period of one year commencing fromNovember 21 2017 subject to the approval of shareholders. Since the tenure of the saidre-appointment shall be expiring on November 20 2018 the Board of Directors at itsmeeting held on August 09 2018 on the recommendation of the NRC further extended thetenure of re-appointment of Mr. Rajendra Mehta by one more year commencing from November21 2018 subject to the approval of shareholders at the ensuing AGM.
In view of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2018 dated 9th May 2018 which will come into force with efiect from 1stApril 2019 no listed entity can continue the directorship of any person as anon-executive director who has attained the age of 75 (seventy five) years unless aspecial resolution is passed to that efiect. Accordingly three existing Directors of theCompany who have already attained the age of 75 years i.e. Mr. Venkat Chary (DIN:00273036) Chairman Non-Executive and Independent Director (aged 78 years) Justice(Retd.) Rajan J. Kochar (DIN: 06710558) Non-Executive & Independent Director (aged 76years) and Mr. Suresh Salvi (DIN: 07636298) Non-Executive Director (aged 76 years) arerecommended for their continuance as Directors of the Company after March 31 2019 at thisAGM as Special Business by way of Special Resolution in compliance of Section 102 of theAct read with the amended Regulation 17 (1A) of the SEBI (LODR) Regulations 2015. TheCompany has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under Section 149(6)of the Act and Regulation 16(1)(b) of the Listing Regulations.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. Devendra Agrawal (DIN: 03579332) and Mr. SureshSalvi (DIN: 07636298) Directors retires by rotation at the forthcoming Annual GeneralMeeting and being eligible ofiers themselves for re-appointment. The Board recommendtheir re-appointment for the consideration of the Members of the Company at the ensuingAnnual General Meeting. The other Directors continue to be on the Board of your Company.
Pursuant to the provisions of section 203 of the Act the Key Managerial Personnel ofthe Company are
1. Mr. S. Rajendran Managing Director and Chief Executive Oficer
2. Mr. Rajendra Mehta Whole-time Director
3. Mr. Devendra Agrawal Whole-time Director and Chief Financial Oficer (appointed asWhole-time Director w.e.f. May 27 2017)
4. Mr. Hariraj Chouhan Company Secretary.
Pursuant to the provisions of the Companies Act 2013 SEBI Listing Regulations and theGuidance Note on Board Evaluation issued by the SEBI on January
5 2017 a process has been devised for evaluation of Board Committees and Directorstaking into consideration the various aspects of the Board's functioning execution andperformance of specific duties obligations and governance. The performance of the Boardand Independent Directors was evaluated by the Board after seeking inputs from all theDirectors. The criteria for performance evaluation of the Board included aspects such asBoard composition and structure effectiveness of Board processes contribution intreasury and risk management legal challenges faced by the Company general corporategovernance strategic planning etc. The performance of the Committees was evaluated by theBoard after seeking inputs from the committee members. The criteria for performanceevaluation of the Committees included aspects such as composition of committeeseffectiveness of committee meetings etc.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking inputs from Executive Directors and Non-Executive Directors. On reviewof Board as a whole members expressed satisfaction on the diversity of experience agegroup and induction process of new members and competency of directors. The membersexpressed appreciation on functioning of Audit committee NRC CSR Stake holders RiskManagement and Investment Committee as observed from the minutes of those meeting placedfor noting in the Board.
MEETINGS OF THE BOARD
The Board of Directors of the Company met 7 (seven) times during the financial year.The details of Board Meetings are provided in the Corporate Governance Report which formspart of this Annual Report.
The Audit Committee comprises of 5 (five) members three of whom are IndependentDirectors namely Mr. Venkat Chary Justice (Retd.) R. J. Kochar Mr. A. Nagarajan and twoare Non-Executive Directors namely Mr. Suresh Salvi and Mr. K. Chandrasekhar. During theyear 6 (six) Audit Committee meetings were held and the details of which are provided inthe Corporate Governance Report which forms part of this Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY COMPANY
Details of loans guarantees and investments have been disclosed in the FinancialStatements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided in Annexure- III and the same forms part of this Report.
EXTRACT OF ANNUAL RETURN
Extract of Annual return of the Company in form MGT-9 has been posted on thewebsite of the Company at www.63moons.com/investors/shareholders/annual-reports.html
PARTICULAR OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under Section 197 (12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure- IV to this Report.
Details of employee remuneration as required under provisions of Section 197(12) of theCompanies Act 2013 read with Rule 5(2) & 5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are available at theRegistered Ofice of the Company during working hours 21 days before the AnnualGeneral Meeting and shall be made available to any shareholder on written request. Suchdetails are also available on your company's website atwww.63moons.com/investors/shareholders/annual-reports.html
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has a whistle blower policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company at the link:www.63moons.com/investors/corporate-governance/policies/Whistle-Blower-Policy.pdf
NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy for selection and appointment of Directorsincluding determining qualifications independence of a Director Key ManagerialPersonnel Senior Management Personnel and their remuneration as part of its charter andother matters provided under Section 178 (3) of the Act. The details of the policy areprovided in the Corporate Governance Report which forms part of this Annual Report. TheNomination and Remuneration Policy has been placed on the website of the Company at thelink: www.63moons.com/investors/corporate-governance/policies/Nomination-and-Remuneration-Policy.pdf
MAINTENANCE OF COST RECORDS
The Company is not required to maintain cost records as specified by the CentralGovernment under sub-section (1) of section 148 of the Companies Act 2013.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
During the FY 2017-18 the Company has not received any complaints on sexual harassmentand hence no complaints remain pending as of March 31 2018. Further the company hascomplied with the provisions relating to the constitution of Internal Complaints Committeeunder the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Except as stated in the para relating to legal matters mentioned above there are noother significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Company's operations in future. The details oflitigation including tax matters are disclosed in the notes to the Financial Statementswhich forms part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to the best of theirknowledge and ability confirm that: a. in the preparation of the annual accounts theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures; b. the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of afiairs of the Company at the end ofthe financial year and of the profit of the Company for that period; c. the Directors havetaken proper and suficient care to maintain adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities; d. the Directors have prepared the annualaccounts on a going concern basis.
e. the Directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and are operating efiectively;and f. the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating efiectively.
EMPLOYEES STOCK OPTION PLAN (ESOP)
The Nomination & Remuneration Committee of the Board of Directors of the Companyinter-alia administers and monitors the Employees Stock Option Plan of the Company inaccordance with the applicable SEBI Guidelines.
The applicable disclosures as required under SEBI Guidelines as on March 31 2018 withregards to the Employees Stock Option Plan and as per the Act are given in Annexure V and the same forms part of this report.
The Company has received a certificate from the Auditors of the Company that the ESOPSchemes have been implemented in accordance with the SEBI Guidelines and the resolutionpassed by the members. The certificate would be available at the Annual General Meetingfor inspection by members.
The Company is in compliance with applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. Sharp & Tannan Associates Chartered Accountants Mumbai (Regn. No. 109983W) wereappointed as the Statutory Auditors of the Company at the Annual General Meeting (AGM)held on September 23 2014 for a period of five years subject to ratification of theirappointment at every AGM. In accordance with the Companies Amendment Act 2017 enforcedon May 07 2018 by the Ministry of Corporate Afiairs the appointment of StatutoryAuditors is no longer required to be ratified at every Annual General Meeting.
M/s. Sharp & Tannan Associates have confirmed their eligibility and qualificationfor continuing as Auditors of the Company.
DETAILS OF FRAUD IF ANY REPORTED BY THE AUDITORS
There have been no instances of fraud reported by Auditors pursuant to Section 143(12)of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Act the Board has appointed M/s BNP& Associates Practising Company Secretaries to conduct Secretarial Audit for thefinancial year 2017-18. The Secretarial Audit Report for the financial year ended March31 2018 is annexed herewith marked as Annexure - VI and the same forms part ofthis report. The Secretarial Auditors' report does not contain any qualificationsreservations or adverse remarks except one observation as under: During the year SEBIhas imposed penalty of Rs 1 lakh stating that the Company did not seek prior approval fromStock Exchanges i.e. BSE & NSE in terms of Regulation 45(3) of LODR Regulationsbefore obtaining certificate for efiecting change in its name from ROC. The penalty waspaid by the Company on 04.01.2018.
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:
Details relating to deposits covered under Chapter V of the Act.
Issue of equity shares with diffierential voting rights as to dividend votingor otherwise.
Neither the Managing Director nor the Whole-time Directors of the Companyreceive any remuneration or commission from any of its subsidiaries.
63 moons technologies Limited (formerly known as FTIL) provides an equalopportunity which ensures non-discrimination at the workplace. The Company remainscommitted to its employees and values each one's contribution in the collective growth. Asof 31 March 2018 the Company had employee strength of 847. The HR Team is conditioned ina way to be always alert and available for any help sought by the employees. All HRsystems and processes are fully automated to ensure that required information is availableanytime. A number of employee beneficial programs (Insurance health care etc.) have beeninitiated and also employee engagement initiatives conducted which makes 63 moons as oneof the best companies to work. Company is equally concerned about the health of theemployees. 63 moons have round the year free health check-up camps for the employees which(includes sub-stafi) through Doctor-on-Site services of specialists like PhysicianGynaecologist Nutritionist Surgeon Dietician Dentist Medical Counsellor etc.
In addition to the Privilege and Other leaves the Company has also recently introducedFamily Bliss' leaves one for the anniversary and the other for birthday so thatemployees can spend time with their near and dear ones on their special day. Areligion-specific holiday has also been introduced this year so that employees can takeleave for their respective religious festival. There are many training (Inbound andOutbound) program conducted to groom our employees in behaviour and domain aspects. A twoday special training program was organized for female employees on Stress Management whichwas well appreciated by all our female stafi. 63 moons has also launched an e-module onPrevention of Sexual Harassment (POSH) Information Security Awareness (ISA) andInnovative Thinking for the employees.
The Company has been awarded by World HRD Congress in employer Branding Awards as"Maharashtra Best Employer Brand Awards in 2018" in providing next generationtechnology ventures innovations platforms and solutions for creating digital markets andmarket places that enable price discovery and transaction eficiencies across industrysegments.
During the year under review cordial relationship has been maintained with all theemployees.
Your Directors place on record their gratitude to the Central Government StateGovernment clients vendors financial institutions bankers and business associates forthe assistance and co-operation extended to your Company. Your Directors also wish toplace on record their appreciation for the continued support of investors businessassociates and the contribution made by the employees at all levels.
| ||For and on behalf of the Board of Directors |
| ||Venkat Chary ||S. Rajendran |
|Place : Mumbai ||Chairman ||Managing Director & CEO |
|Date : August 09 2018 ||DIN: 00273036 ||DIN: 02686150 |
f) Manner in which the amount spent during the financial year ending March 2018 isdetailed below