To the Members
The Board of Directors have pleasure in presenting the 32nd Annual Report on thebusiness and operations of your Company along with the audited financial statements forthe financial year ended March 31 2020.
Key highlights of the financial results of your Company prepared as per the IndianAccounting Standards ("Ind AS") for the financial year ended March 31 2020 areprovided below:
(Rs. in lakhs)
|Particulars ||Year ended 31st March 2020 ||Year ended 31st March 2019 |
|Revenue from operations ||7812.99 ||8562.21 |
|Other Income ||139.08 ||305.76 |
|Total Revenue ||7952.07 ||8867.97 |
|Profit before depreciation and Tax ||618.75 ||900.40 |
|Depreciation ||97.33 ||32.58 |
|Profit before Tax ||521.42 ||867.82 |
|Tax Expense ||141.69 ||281.49 |
|Profit after Tax ||379.73 ||586.33 |
|Other Comprehensive Income ||(7.28) ||3.24 |
|Total Comprehensive Income ||372.45 ||589.57 |
With the announcement of countrywide Lockdown by Government from March 24 2020 tocontain the spread of Covid-19 the office & factory remained closed from March 242020 until March 31 2020.
Consequently the revenue and profits of the fourth quarter of the financial year2019-20 was impacted. In the financial year 2019-20 the overall revenue from operationsdeclined by 8.75% over that of previous year. Revenue from the Telecommunication businessdeclined by 34% and the revenue from IT-Networking (Enterprise network) business declinedby 5% over that of previous year. Profit before tax for the year declined by 40% over thatof previous year mainly on account of decreased turnover and reduction in interest andrental income.
Your Directors have recommended a dividend of Rs. 2.00 per equity share of the facevalue of Rs. 10/- each to be appropriated from the profits of the financial year endedMarch 31 2020 subject to the approval by the Members at the ensuing Annual GeneralMeeting.
TRANSFER TO RESERVES
The Company has not transferred any amount to the Reserves for the financialyear ended March 31 2020.
The Company's paid up Share Capital continues to stand at Rs. 460 lakhs as on March 312020 and there has been no change in the capital structure of the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loan or guarantees or made investments covered under theprovisions of section 186 of the Companies Act 2013 during the year ended March 31 2020.
SUBSIDIARY / ASSOCIATES / JOINT VENTURE COMPANIES
The Company does not have any Subsidiary/ Associate/Joint Venture Company.
BUSINESS AND OPERATIONS
As we emerge from the Covid-19 pandemic health emergency with this "newnormal" your company was fully prepared towards return to work with primary focus onthe health & safety of employees first. This will be a new normal and difficultchallenge which would be resolvable in the near term. In many ways trickier your companyis constantly determining what the mid to long term implications of the crisis are and howyour company should respond strategically. Regardless of the shape of recovery & timeyour company firmly believe that we will emerge from the crisis stronger than before byrealigning cost structure and sharpen overall productivity. Your company Board and RiskManagement Committee has always looked at worst case scenario of times like these &built a portion of the strong financials by making right decision which is sustainable andconsistent over years.
With Economic activities on downturn we do see challenge in short term in bothEnterprise and Telecom market growth which would continue to grapple with fewer orders asthe markets have shrunk due to Covid-19 which in-turn put pressure on margins in themarket place for every single opportunity. With this new normal we do expect the marketto take longer time to bounce back even though we could see some surge in businessimmediately after the lockdown is lifted.
Your company would see an impact in the Enterprise Network copper business as wecontinue to see work from home adoption growing with office space expansion requirementscoming down and going slow in short term. However we do see continues growth in FiberBusiness over copper due to multifold increase in Bandwidth requirements with denserwireless & deeper fiber deployments across the upcoming infrastructure projects.
With stable Government in place policy decision-making being quick and recent stimuluspackage announcement due to Covid-19 towards Infrastructure growth would improve theoverall business sentiment and investments in next few Quarters. Market are expected toimprove driven by investments in Infrastructure projects Defense sector BFSI PharmaHealthcare E-commerce Manufacturing Digital India and Smart city initiatives where yourCompany will be able to favorably participate in the areas of its strength within eachopportunity as the market activities picks up. During the year your company will continueits focus on sustaining revenues and profitability by realigning cost structure by lookingat ways of cost reduction to be competitive in the market place.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 of SEBI (LODR) Regulations 2015 the Management Discussionand Analysis Report for the year under review is presented in a separate section formingpart of the Annual Report.
Pursuant to the provisions of section 152 of the Companies Act 2013 and the Articlesof Association of the Company Mr. Ravi Bosco Rebello retires by rotation at the ensuingAnnual General Meeting of the Company and being eligible offers himself forre-appointment.
The Company has received declarations from the Independent Directors of the companyunder Section 149(7) of the Companies Act 2013 confirming that they meet the criteria ofindependence as provided in section 149(6) of the Companies Act 2013 and Regulation 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Company hasalso received declarations from the Independent Directors of the company under Rule 6(3)of the Companies (Appointment and Qualification of Directors) Rules 2014 confirming thatthey have registered themselves with the Indian
Institute of Corporate Affairs Manesar (IICA) for inclusion of their name in the databank maintained by IICA in compliance of Rule section 6(1) of the Companies (Appointmentand Qualification of Directors) Rules 2014.
KEY MANAGERIAL PERSONNEL
There were no changes in the Key Managerial Personnel of the Company during the year.
Six Board meetings were held during the financial year 2019-20 on May 28 2019; July16 2019; August 05 2019; November 05 2019; January 30 2020 and March 02 2020. Thedetails of meetings held by various Committees of the Board are given in the CorporateGovernance Report.
The composition and terms of reference of the Audit Committee is given in the CorporateGovernance Report. The Board has accepted all the recommendations made by the AuditCommittee.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3) (C) of the Companies Act 2013 theDirectors based on the information and representations received from the CompanyManagement confirm that:
a. In the preparation of Annual Accounts the applicable Accounting Standards have beenfollowed with no material departures;
b. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
c. They have 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. They have prepared the Annual Accounts on a going concern basis;
e. They have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and have effectively; been operatingand
f. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systemsare adequate and operating effectively.
DIRECTORS' APPOINTMENT AND REMUNERATION
Considering the requirements of the skill-sets on the Board persons havingprofessional expertise in their individual capacity as independent professionals and whocan effectively contribute to the Company's business and policy decisions are consideredby the Nomination and Remuneration Committee for appointment of new Directors on theBoard. The Non-Executive Independent Directors appointed on the Board are paid sittingfees for attending the Board and Audit Committee Meetings. No other remuneration orcommission is paid to the Non-Executive Independent Directors. Non-ExecutiveNon-Independent Directors are neither paid any sitting fees nor paid any commission. Theremuneration paid to the Managing Director is governed by the relevant provisions of theCompanies Act 2013 rules of the Company and Members approval. Executive CompensationPolicy Guidelines has been placed on the Company's websitewww.adckcl.com/AboutADC/Policies.
The Company's Policy and Process for Board evaluation lays down a structuredquestionnaire to be used in the evaluation of the entire Board of the Company BoardCommittees and Individual Directors. This Policy has been displayed in the Company'swebsite www.adckcl.com.
Using the structured questionnaire the Board of Directors has carried out an annualevaluation of its own performance Board Committees and individual Board members pursuantto the provisions of the Companies Act 2013 and SEBI Listing Regulations. The Directorshave expressed their full satisfaction with the performance of the Board Board Committeesand the members of the Board.
Further the Independent Directors at their meeting held during the year reviewed theperformance of the Board Non-Independent Directors and other matters as stipulated underthe SEBI Listing Regulations.
Your Company has always practiced sound corporate governance and has complied withvarious provisions of Corporate Governance.
As required under Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") Corporate Governance Report together with the certificate fromStatutory Auditors of the Company on compliance with the conditions of corporategovernance stipulated in the SEBI Listing Regulations during the year ended March 31 2020is provided in a separate section of the Annual Report.
CODE FOR PREVENTION OF INSIDER TRADING
Your Company has adopted a Code of Conduct to regulate monitor and report trading bydesignated persons and their immediate relatives as per the requirements under theSecurities and Exchange Board of India (Prohibition of Insider Trading) Regulations 2015.This Code of Conduct also includes code of practices and procedures for fair disclosure ofunpublished price sensitive information which has been displayed on the Company's websiteat www.adckcl.com.
WHISTLE BLOWER MECHANISM
The Company has established a mechanism called "Vigil Mechanism Policy" foremployees directors and others who are associated with the Company to report tomanagement instances of unethical behavior actual or suspected fraud or violation of theCompany's code of conduct. The Policy provides adequate safeguards against victimizationof employees/directors who avail the mechanism. The Vigil Mechanism also cover the WhistleBlower mechanism aspect as stipulated under the Companies Act 2013 and the SEBI ListingRegulations.
The Company affirms that no person has been denied access to the Audit Committee inthis respect. The policy has been communicated to all employees by displaying the same onthe Company's website.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has implemented a policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace. The Company is committed to creating a safe and healthyworking environment. The Company believes that all individuals have the right to betreated with dignity and strives to create a workplace which is free of gender bias andSexual Harassment. The Company has a zero tolerance approach to any form of SexualHarassment. The policy has been displayed in the Company's website.
The Company has not received any complaint of sexual harassment during the year underreview.
The Company has formed a Risk Management Committee and the constitution and terms ofreference of this Committee are set out in detail in the Corporate Governance Report. TheRisk Management Committee at its meeting held on March 02 2020 discussed the variousrisks encountered by the Company and the processes adopted by the Company to mitigatethese risks. The same was also reviewed by the Board of Directors at its meeting held onthe same day.
RELATED PARTY TRANSACTIONS
The Related Party Transaction Policy for determining the materiality of related partytransactions and on the dealings with related parties has been displayed in the Company'swebsite www.adckcl.com.
All transactions with related parties are placed on a quarterly basis before the AuditCommittee for approval. Prior omnibus approval of the Audit Committee is obtained for theTransactions which are foreseeable and of a repetitive nature.
All transactions with related parties during the year were in the ordinary course ofbusiness and at arm's length. There are no related party transactions during the yearhaving potential conflict with the interest of the Company at large. The details ofrelated party transactions are disclosed in Note No. 32 to the Financial statements.Information pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 on
Material Related Party Transactions for the financial year ended March 31 2020 in theprescribed Form AOC-2 is annexed to this report as Annexure A.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Directors to the best of their ability have laid down internal financial controlsto be followed by the
Company which they believe are adequate keeping in view the size and nature ofCompany's business.
Adequate financial procedures are in place to ensure that all the assets aresafeguarded protected against loss and all transactions are authorized recorded andreported correctly. This ensures the quality and reliability of financial data financialstatements and financial reporting.
Your Company's internal financial controls are deployed through an internally evolvedframework that address material risks in your Company's operations and financial reportingobjectives through a combination of entity level controls and process controls (bothmanual and automated) information technology based controls period end financialreporting and closing controls and through internal audit. The Audit Committee of theBoard reviews the adequacy of internal financial controls on an ongoing basis to identifyopportunities for improvement in the existing systems to further strengthen the internalcontrol environment in your Company.
AUDITORS AND AUDITORS' REPORT
At the 31st Annual General Meeting of the Company held on July 29 2019 M/s. DeloitteHaskins & Sells were appointed as the Statutory Auditors of the
Company for a term of three years to hold office from the conclusion of the 31stAnnual General Meeting until the conclusion of the 34th Annual General Meeting to be heldin the year 2022.
The Auditors report for the financial year ended March 31 2020 does not contain anyqualification reservation or adverse remark.
SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
Pursuant to the provisions of section 204 of the Companies 2013 and the Rules madethereunder M/s.V.Sreedharan and Associates Practicing Company Secretaries were appointedas the Secretarial Auditors to conduct a secretarial audit of the Company's Secretarialand related records for the financial year 2019-20. The Secretarial Auditors' Report inForm MR-3 for the financial year ended March 31 2020 is annexed to this Report as AnnexureB. The secretarial audit report does not contain any qualification reservation oradversere mark.
REPORTING OF FRAUDS
During the year there was no instance of fraud which required the Statutory Auditors toreport under section 143(12) of the Companies Act 2013 and the Rules framed thereunder.
The Company has complied with all applicable secretarial standards issued by theInstitute of Company Secretaries of India.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has spent an amount ofRs.14 lakhs towards various CSR Programs undertaken by the Company during the year.Education and Health were the focal areas during the year. The Annual Report on CSRactivities is in accordance with the Companies (Corporate Social Responsibility) Rules2014 is annexed to this Report as Annexure C.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION A. Conservation of Energy
During the year under review the company continued its focus at every area on theenergy conservation measures including highly effective preventive maintenance of variousequipment.
B. Research and Development
5S+1implementation-Operationalexcellence initiative at plant which contributedto 2500 Square feet of free space in warehouse.
Introduced products that would cater to Telecom and Enterprise market such asHigh-density Fiber optic Equipment Panels to meet today's high-density environments.
Armored Fiber Optic cords to meet specific requirement in Data centers to protect fromrodents and continued focus on a Standard-compliant product portfolio to increase reach inSMB segment and tier-2 cities across the country.
MANAGERIAL REMUNERATION AND RELATED DISCLOSURES
The details of the remuneration paid to the Directors of the Company is mentioned inthe Report of Corporate Governance. The disclosure pursuant to the provisions of section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this report as Annexure D.
PARTICULARS OF EMPLOYEES
The information pursuant to Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 ("Rules") in respect of employees of theCompany forms part of this report. However in terms of Section 136 of the Companies Act2013 the Board's Report and Financial Statements are being sent to the Members of theCompany and others entitled there to excluding the statement of particulars of employeesunder Rule 5(2) of the Rules. The statement of particulars of employees is available forinspection by the Members of the Company at the Registered
Office of the Company during business hours on working days of the Company up to thedate of the 32nd Annual General Meeting. Any Member interested in obtaining a copy of thesaid statement may write to the Company Secretary at the address of the Registered Officeof the Company.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules') allunpaid or unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Government of India after the completion of seven years. Furtheraccording to the Rules the shares on which dividend has not been paid or claimed by theshareholders for seven consecutive years shall also be transferred to the demat account ofthe IEPF Authority Accordingly during the financial year 2019-20 unclaimed dividendamount of Rs. 0.77 lakhs pertaining to dividend declared for the financial year2010-11 was transferred to the Investor Education and Protection Fund on April 15 2019and Rs.0.32 lakhs pertaining to dividend declared for the financial year 2011-12 wastransferred to the Investor Education and Protection Fund on September 30 2019. Furtherin terms of the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 as amended the Company transferred the correspondingshares where the dividends for the last seven consecutive years have not been claimed bythe concerned shareholders to the demat account of the IEPF Authority on April 10 2019& April 30 2019 and September 05 2019 respectively.
FOREIGN EXCHANGE EARNINGS AND OUTFLOW
During the year there was no Foreign Exchange earnings and the Foreign Exchange outflowwas Rs.0.89 lakhs.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of section 92(3) and section 134(3)(a) of the Companies Act2013 an extract of the annual return for the year ended March 31 2020 in Form MGT-9 isannexed to this report as Annexure E. Additionally a copy of the annual return for thefinancial year 2018-
19 has been placed on the Company's website www.adckcl.com/investorrelations/Annual Reports.
MATERIAL CHANGES AND COMMITMENTS BETWEEN END OF FINANCIAL YEAR AND DATE OF THE REPORT
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of financial year of the Company to which thefinancial statements relate and the date of this report.
WEBSITE OF THE COMPANY
The Company has a website www.adckcl.com where information related to the Company areprovided.
During the year under review the Company has not accepted any deposits falling underthe ambit of section 73 of the Companies Act 2013 and as such no amount on account ofprincipal or interest on deposits was outstanding as on the date of the Balance Sheet.
The equity shares of the Company are listed with BSE Limited. There are no arrears onaccount of payment of listing fees to them.
COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable to the businessactivities carried out by the Company.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant material orders passed by the regulators or courts ortribunals impacting the going concern status and the Company's future operations.
Your Directors place on record its appreciation for the contributions made by theemployees of the Company during the year under review. Your Directors also thank thecustomers channel partners distributors vendors and bankers for their support andco-operation during the year. Your Directors also thank the Promoters of the Company fortheir advice and assistance during the year.
|For and on behalf of the Board of Directors || |
|S.Devarajan ||J.N.Mylaraiah |
|Chairman ||Managing Director |
|Place: Bangalore || |
|Date: May 20 2020 || |