The Members of
APOLLO MICRO SYSTEMS LIMITED
Your Directors have pleasure in presenting their 21st Annual Report on the business andoperations of the Company together with the Audited Financial Statements for the financialyear ended March 312018.
FINANCIAL RESULTS AND OPERATIONS
The summary of financial performance for the Financial Year ended March 312018 and thecorresponding figures for the Financial Year ended March 312017 are as under:
| || ||(Amount in Rs) |
|Particulars || |
For the financial year ended
| ||March 31 2018 ||March 312017 |
|Revenue from Operations ||2204613913 ||2008670952 |
|Other Income ||15279316 ||5331845 |
|Total Revenue ||2219893229 ||2014002797 |
|Cost of materials consumed ||2038579062 ||1941969377 |
|Changes in inventories of finished goods WIP stock- in -trade ||(436178739) ||(429141144) |
|Employee Benefit Expenses ||63975210 ||60781756 |
|Profit Before Interest Depreciation & Tax ||553517696 ||440392808 |
|Financial charges ||121658491 ||114375551 |
|Depreciation ||64984582 ||39259661 |
|Other Expenses ||45101582 ||28934667 |
|Profit or Loss Before exceptional and extraordinary items and tax ||321773041 ||257822929 |
|Exceptional Items ||(12192105) ||13409440 |
|Profit or Loss Before Tax ||309580936 ||271232369 |
|Tax Expenses (including prior period taxes) ||117915736 ||96697406 |
|Net Profit or Loss After Tax ||191665200 ||174534963 |
|Earnings Per Share (Basic) ||12.46 ||12.73 |
|Earnings Per Share (Diluted) ||12.08 ||12.73 |
(Previous year figures have been regrouped wherever necessary to confirm to the currentyear's presentation)
The financial statements for the year ended March 312018 have been prepared under IndAS (Indian Accounting Standards). The financial statements for the year ended March 312017 have been restated in accordance with Ind AS for comparative information.
PERFORMANCE REVIEW & THE STATE OF COMPANY'S AFFAIRS
During the year under review your company sales have gone up by 9.8% to Rs2204613913 from Rs 2008670952 during previous year.
Profit Before Interest Depreciation & Tax increased by 25.68% to Rs 553517696from Rs 440392808.
Profit before tax increased by 14.1% to Rs 309580936 from Rs 271232369.
Net Profit After Tax increased by 10% to Rs 191665200 from Rs 174534963.
During the year under review the Earning per Share of the company is Rs 12.46(Basic)and Rs 12.08 (Diluted)
The changing global security paradigm requires new ways of thinking: new threatstherefore new weapon systems new technologies and new organizational structures andpartnerships for cooperation and risk-mitigation. This new security environment is drivingIndia's need for cutting-edge technology weapons and equipment. Encouragement of PrivateIndustry in Defense Production by Government and G2G contracts for Weapon and otherDefense System exports is a boost for Defense Electronics companies.
Your company has been working on cutting edge technologies in Electronics and Electro-Mechanical systems which are custom built specific to client needs. These systems areintegrated as On-Board equipment and Ground Support Equipment for Aerospace Defense andSpace markets. There is a constant requirement for growth in the Programs which we havebeen working and we expect the existing facility to meet these requirements.
We are also contemplating to bid for turnkey projects which significantly consolidateour market position aiming to enter niche league of business not only in Defence but alsoin emerging markets like Smart City projects by leveraging the existing technologiesdeveloped by the company. We are looking forward to steer in these areas by strategicpartnerships Joint Ventures and MOU's with domestic and international companies. Ourcompany is looking forward for selective acquisitions to consolidate its presence in theexisting sectors
In April 2018 ICRA Limited after due consideration has assigned the long-term ratingof "[ICRA] BBB" (pronounced ICRA triple B) and the short-term rating of[ICRA] A3+' (pronounced ICRA A three plus) to the Rs 142 Crores Line of Credit ofthe Company. The outlook on the long term rating is Stable'.
INITIAL PUBLIC OFFER
The Directors are pleased to inform that the Company's Initial Public Offering (IPO) of5763886 Equity Shares of face value of Rs 10/- (Rupees Ten only) by way of Book BuildingProcess received an overwhelming response from the investors. The Issue was opened on 10thJanuary 2018 and closed on 12th January 2018. The issue was oversubscribed by 248.51times with QIB portion getting oversubscribed by 101.93 times noninstitutional portionby 958.04 times and the retail portion by 40.19 times and Employees portion 16.04 times.The allotment of 57 63886 Equity Shares of Rs 10/- each for cash at a premium of Rs265/- per share (Discount of Rs 12/- per share to Retail Individual Investors("Retail Discount") and to Eligible Employees Bidding in the EmployeeReservation Portion ("Employee Discount") aggregating to Rs 15600 Lakhs underthe said IPO. Subsequent to the completion of IPO the paid up equity share capital of theCompany got increased from Rs 1500 Lakhs to Rs 2076.38 Lakhs.
The trading of Equity Shares of the Company commenced on National Stock Exchange ofIndia Limited and BSE Limited from 22nd January 2018. The success of IPO reflects thetrust faith and confidence that customers business partners and markets have reposed inyour Company.
UTILISATION OF IPO PROCEEDS
The proceeds realized by the Company from the Issue shall be utilized as per theObjects of the Issue i.e. Working Capital Requirement and General Corporate Purpose. Theproceeds of the issue are being utilized to meet additional working capital requirementsof the company and General Corporate Purposes.
There has been no deviation in the utilisation of the IPO proceeds of the Company.
During the period under review the Authorised Share capital of the Company increasedfrom Rs 140000000 (Rupees Fourteen Crores only) divided into 14000000 (One CroreForty Lakhs) Equity shares of Rs 10/- (Rupees Ten Only ) each to Rs 270000000/- (RupeesTwenty Seven Crore only) divided into 2.70.00. 000 (Two Crore Seventy Lakh) Equity sharesof Rs 10/- (Rupees Ten Only) each in two trenches and Capital Clause of Memorandum ofAssociation is altered accordingly.
During the year the company issued and allotted 1000000 (Ten Lakh) unratedunsecured compulsory convertible Debentures on private placement basis to OHM CommodityBroker Private Limited and OHM Equity Solution India Private Limited at a face value of Rs200/- each aggregating to Rs 200000000 (Rupees Twenty Crore only)on May 31 2017further the same were converted in to Equity on November 24 2017 by issuing 10.00. 000Equity shares of face value of Rs 10/- per share at a price of Rs 200/- per share at apremium of Rs 190/- per share aggregating to Rs 200000000/- (Rupees Twenty Croresonly).
In addition to the above Company has also offered 288300 (Two Lakhs Eighty EightThousand and Three hundred) Equity Shares of the Company of face value of Rs 10/- each ata price of Rs 200/- (including a premium of Rs 190/- per share) aggregating to Rs57660000/- (Rupees Five Crores Seventy Six Lakhs Sixty Thousands only) on PrivatePlacement basis to 12 investors on June 13 2017.
During the year the company made an allotment of 5763886 Equity Shares of Rs 10/-each for cash at a premium of Rs 265/- per share (Discount of Rs 12/- per share to RetailIndividual Investors ("Retail Discount") and to Eligible Employees Bidding inthe Employee Reservation Portion ("Employee Discount")through Initial PublicOffering (IPO). Post IPO the paid up Equity Share Capital of the Company as on March 312018 amounted to Rs 2076.38 Lakhs.
The Company has not issued any shares with differential rights as to dividend votingor otherwise.
EXTRACT OF THE ANNUAL RETURN [SECTION 134 (3) (a) & SECTION 92(3)]:
The details forming part of the extract of the Annual Return in Form MGT-9 is enclosedas Annexure - 1
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS [SECTION 134 (3) (b)]:
During the financial year 2017-18 the Board of Directors has met 21times viz.03.04.2017 20.04.2017 16.05.2017 20.05.2017 29.05.2017 31.05.2017 01.06.201713.06.2017 11.08.2017 21.08.2017 26.08.2017 01.09.2017 23.09.2017 24.11.201719.12.2017 22.12.2017 09.01.2018 13.01.2018 16.01.2018 18.01.2018 and 13.02.2018.Details of attendance of directors more clearly explained in Corporate Governance Report
In terms of requirements of Schedule IV of the Act a separate meeting of IndependentDirectors was also held on 13th February 2018 to review the performance of NonIndependent Directors (including the Chairpersons) the entire Board and its Committeesthereof quality quantity and timelines of the flow of information between the Managementand the Board.
DIRECTORS' RESPONSIBILITY STATEMENT [SECTION 134 (3) (c) & 134(5)]:
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:
(a) in the preparation of the annual accounts for the period ended March 312018 theapplicable accounting standards had been followed along with proper explanation relatingto 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 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 annual accounts 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 provisionsof all applicable laws and that such systems were adequate and operating effectively.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS [SECTION 134 (3) (c) &134(5)]:
The Company has received and taken on record the declarations received from theIndependent Directors of the Company in accordance with the Section 149(6) of theCompanies Act 2013 confirming their independence.
In compliance with the requirements of the Listing Regulations the Company has put inplace a familiarisation programme for the Independent Directors to familiarise them withtheir roles rights and responsibilities as Independent Directors the working of theCompany nature of the industry in which the Company operates business model and so on.The same is also available on the Company website at www.apollo-micro.com
AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE & STAKEHOLDERS RELATIONSHIPCOMMITTEE [SECTION 134(3) (e) & 178]:
Please refer to Corporate Governance Report as annexed to this report.
EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION RESERVATION OR ADVERSEREMARK OR DISCLAIMER MADE [SECTION 134 (3) (f)]:
a) by the Auditor in their report : has no qualification or adverse remarks
b) by Company Secretary in Practice in Secretarial Audit Report : has no qualificationor adverse remarks
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 [SECTION 134 (3)(g)]:
During the period under review the Company has not given any loans or guarantees toany person or other bodies corporate or acquired securities of any other body corporate asreferred to in Section 186 of the Companies Act 2013 and the Companies (Meetings of Boardand its Powers) Rules 2014.Further the company has not made any investment during theperiod under review.
SUBSIDIARIES AND ASSOCIATES [RULE 8(5)(iv) OF COMPANIES (ACCOUNTS) RULES 2014]
Our Company does not have subsidiaries/joint ventures/ Associate Companies during theperiod under review.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES [SECTION 134 (3) (h)]:
All related party transactions entered into by the Company during the financial yearwere in the ordinary course of business and on arm's length basis and in compliance withthe applicable provisions of the Companies Act 2013 and the Listing Regulations. Duringthe financial year under review none of the transactions entered into with relatedparties were material as defined under the Act and Listing Regulations.
The particulars of contract or arrangements entered into by the Company during thefinancial year 2017-18 with related parties referred to in sub-section (1) of section 188of the Companies Act 2013 including certain arms length transactions under third provisothereto has been disclosed in Form No. AOC -2 attached to the Board's report as Annexure- 2. The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website at www.apollo-micro.com
RESERVES [SECTION 134 (3) (j)]:
During the Financial Year under review The Board of Directors has not recommendedtransfer of any amount of profit to any reserves. Hence the amount of profit for thefinancial year under review has been carried forward to the Statement of Profit and Loss.
DIVIDEND [SECTION 134 (3) (k)]:
With a view to conserve resources and expansion of business your Directors havethought it prudent not to recommend any dividend for the financial year under review.
DIVIDEND DISTRIBUTION POLICY
Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") mandates top 500 Listed Companiesbased on their market capitalization to formulate Dividend Distribution Policy. As perRegulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 your company has voluntarily adopted Dividend Distribution policy.
Accordingly the policy was adopted to set out parameters and circumstances that willbe taken into account by the Board in determining the distribution of dividend to theshareholders. The Policy is also available on the Company's website under the available onthe Company's Website www.apollo-micro.com .
MATERIAL CHANGES AND COMMITMENTS IF ANY [SECTION 134 (3) (l)]:
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of this report.
CONSERVATION OF ENERGY TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO[SECTION 134 (3) (m)]:
A. Conservation of Energy
The operations of the company are not energy intensive. Adequate measures are taken toconserve and reduce the energy consumption like usage of LED Lights and power savingcentralized air conditioners.
Research & Development
During the year our R&D team has worked on fresh development activity forfuturistic requirements along with re-engineering of legacy designs to addressobsolescence. We focus our R&D efforts in areas where we believe there is significantgrowth potential. Our R&D team has focused to leverage the existing technologies todevelop products for Non Defence verticals. By developing new solutions and by offering awide range of systems across segments which enables us to increase customer portfolio andposition ourselves across all sectors in ESDM. In Fiscal 2018 we have spent '1578.37 Lakhstowards our R&D activities.
B. Technical Absorption
The Company works on in house Technology.
C. Foreign Exchange Earnings and Outgo:
Foreign Exchange outgo and earnings
(Amount in '
|Particulars ||Year ended 31-03-2018 ||Year ended 31-03-2017 |
|Value of imported raw- materials on CIF basis ||146128193 ||25069030 |
|Earnings in foreign currency: || || |
|FOB Value of Exports ||- ||696211 |
|For Services Rendered ||- ||- |
RISK MANAGEMENT POLICY [SECTION 134 (3) (n)]:
Our Risk Management Committee was constituted pursuant to resolution of our Board datedFebruary 24 2017 and was reconstituted on August 26 2017 which has been entrusted withthe responsibility to assist the Board in overseeing and approving the Company'senterprise wide risk management framework.
|Name of Member ||Designation |
|1. Venkata Siva Prasad Chandrapati ||Chairman |
|2. Karunakar Reddy Baddam ||Member |
|3. Srinivas Pagadala ||Member |
(Note: The Risk Management Committee was reconstituted w.e.f. August 09 2018 due toresignation of Mr. Srinivas Pagadala (DIN: 02669528) and in his place Mrs. KarunasreeSamudrala (DIN: 06960974) was inducted.)
The Company Secretary shall act as the secretary of the "Risk ManagementCommittee". The terms of reference and role of the Risk Management Committee of ourCompany include the following:
1. To recommend risk management plan to the Board for implementation;
2. To monitor and review the risk management plan;
3. To lay down procedures to inform Board members about the risk assessment andminimization procedures;
4. To develop and implement the risk management policy for the company identificationtherein of elements of risk if any which in the opinion of the Board may threaten theexistence of the company; and
5. To perform such other functions which are appropriate and necessary to manage therisk.
CORPORATE SOCIAL RESPONSIBILITY (CSR) [SECTION 134(3) (o)]:
Our Corporate Social Responsibility Committee was constituted pursuant to resolution ofour Board dated February 24 2017 and was reconstituted on August 26 2017. The CorporateSocial Responsibility Committee comprises of the following:
|Name of Member ||Designation |
|1. Karunakar Reddy Baddam ||Chairman |
|2. Raghupathy Goud Theegala ||Member |
|3. Sri Lakshmi Reddy Vangeti ||Member |
The Company Secretary shall act as the secretary of the Corporate Social ResponsibilityCommittee.
The terms of reference powers and scope of the Corporate Social ResponsibilityCommittee of our Company is in accordance with Section 135 of the Companies Act 2013. TheCommittee is entrusted with the responsibility of:
- Formulating and recommending to the Board Corporate Social Responsibility Policy(CSR Policy) indicating the activities to be undertaken
- monitoring the implementation of the framework of the CSR Policy and
- recommending the CSR amount to be spend on the CSR activities.
The Committee formulated and recommended to the Board the CSR Policy. On therecommendations of the CSR Committee the Board approved and adopted the CSR Policy of theCompany. The Corporate Social Responsibility Policy is posted under the Investors sectionof the Company's website "www.apollo-micro.com".
The Company believes in undertaking business in such a way that it leads to overalldevelopment of all stake holders and society.
As per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules 2014annual report on CSR is prepared and the same is enclosed as Annexure - 3 to this Report.
Apollo considers social responsibility as an integral part of its business activitiesand endeavors to utilize allocable CSR budget for the benefit of society.
During the year under review the company has spent an amount of Rs 325000/-towardsCSR Expenditure by contributing to Prime Minister's National Relief Fund (PMNRF).TheCompany is searching for the new owned avenues or projects in the direction of Company'sCSR Policy so that the benefits of such an initiative can reach to the downtrodden peoplehence could not spent full amount.
ANNUAL EVALUATION ON PERFORMANCE [SECTION 134(3) (p)]:
Pursuant to the captioned requirements an annual evaluation had been carried out andthe Board is pleased to report that the result thereof show that the Company iswell-equipped in the management as well as the governance aspects.
In a separate meeting of Independent Directors held on February 13 2018 performance ofNon-Independent Directors and performance of the Board as a whole was evaluated. TheIndependent Directors were satisfied with the overall functioning of the Board itsvarious committees and performance of other Non-Executive and Executive Directors.
OTHER MATTERS [SECTION 134(3) (q)]:
Listing approval on Recognised Stock Exchanges:
The Company which went for IPO during the year under review received Listing approvalfrom BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on January 192018 and admitted to deal on Exchanges with effect from January 22 2018.
EMPLOYEE STOK OPTIONS SCHEME [RULE 12(9) OF COMPANIES (SHARE CAPITAL AND DEBENTURES)RULES 2014]:
There were no such instances during the financial year under review.
CHANGE IN THE NATURE OF BUSINESS [RULE 8(5)(ii) OF COMPANIES (ACCOUNTS) RULES 2014]
There is no change in the nature of the business of the Company during the financialyear under review.
CHANGE IN THE DIRECTORS OR KEY MANAGERIAL PERSONNEL [RULE 8(5)(iii) OF COMPANIES(ACCOUNTS) RULES 2014]
The constitution of the Board of Directors is in accordance with Section 149 of theCompanies Act and Listing Regulations.
Mr. Raghupathy Goud Theegala (DIN: 07785738) and Mr. Srinivas Pagadala (DIN: 02669528)were appointed as Independent Director under Section 161 of the Companies Act 2013 w. e.f August 21 2017. The Shareholders of the Company at their Adjourned 20th Annual GeneralMeeting (AGM) held on August 26 2017 approved the appointment of Mr. Raghupathy GoudTheegala and Mr. Srinivas Pagadala as Independent Director of the Company for a term offive years as per the provisions of Section 149 of the Companies Act 2013 read with rulesmade thereunder.
Mr. Karunakar Reddy Baddam (DIN: 00790139) was reappointed as a Managing Director andKey Managerial Person of the company. The Shareholders of the Company at their Adjourned20th Annual General Meeting (AGM) held on August 26 2017 approved the re-appointment ofMr. Karunakar Reddy Baddam (DIN: 00790139)as a Managing Director and Key Managerial Personof the company for a term of five years as per the provisions of the Companies Act 2013read with rules made thereunder and revision in remuneration pursuant to the Provisions ofSection 196 197 read with Part-I and Section I of Part II of schedule V and otherapplicable provisions if any of the Companies Act 2013.
Mr. Addepalli Krishna Sai Kumar (DIN: 03601692) and Mr. Chandrapati Venkata Siva Prasad(DIN:03601703) were re-appointed as Whole Time Director (Operations) and Whole TimeDirector (Technical) respectively. The Shareholders of the Company at their Adjourned 20thAnnual General Meeting (AGM) held on August 26 2017 approved the re-appointment of Mr.Addepalli Krishna Sai Kumar (DIN: 03601692) and Mr. Chandrapati Venkata Siva Prasad(DIN:03601703) as Whole Time Director (Operations) and Whole Time Director (Technical)respectively for a term of five years as per the provisions of the Companies Act 2013read with rules made thereunder and revision in remuneration pursuant to the Provisions ofSection 196 197 read with Part-I and Section I of Part II of schedule V and otherapplicable provisions if any of the Companies Act 2013.
Retire by rotation
Further Mrs. Sri Lakshmi Reddy Vangeti (DIN:02757567) retires by rotation at theensuing Annual General Meeting and being eligible offers herself for reappointment.
Key Managerial Persons (KMP)
During the year under review the Company has appointed Mr. Sudarshan Chiluveru asChief Financial Officer (CFO) in compliance with the provisions of Section 203 ofCompanies Act 2013 and Rule 8 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 with effect from April 01 2017.
DEPOSITS [RULE 8(5) (v) OF COMPANIES (ACCOUNTS) RULES 2014]
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014. Thereare no unpaid or unclaimed deposits as the Company has never accepted deposits within themeaning of the Act and the rules made thereunder.
SIGNIFICANT AND MATERIAL ORDERS [RULE 8(5) (vii) OF COMPANIES (ACCOUNTS) RULES 2014]
The Company hasn't received any significant and material orders that impact the goingconcern status and company's operations in future
INTERNAL FINANCIAL CONTROLS [RULE 8(5)(viii) OF COMPANIES (ACCOUNTS) RULES 2014]
The Company has kept in place adequate financial controls to check and control anydefects and frauds in the Company. Adequate internal control systems commensurate with thenature of the Company's business its size and complexity of its operations are in placeand have been operating satisfactorily. Internal control systems comprising policies andprocedures are designed to ensure reliability of financial reporting timely feedback onachievement of operational and strategic goals compliance with policies procedureapplicable laws and regulations and that all assets and resources are acquiredeconomically used efficiently and adequately protected.
PARTICULARS OF EMPLOYEES
Disclosure with respect to remuneration of Directors and employees as required underSection 197 of the Companies Act 2013 read with Rule 5 (1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 forms part of the Board's ReportAnnexure - 4.
The statutory auditors' report is forming the part of this report. The notes onfinancial statements referred to in the Auditors' Report are self-explanatory and do notcall for any further comments. There are no specifications reservations adverse remarkson disclosure by the statutory auditors in their report. They have not reported anyincident of fraud to the Board of the Company during the year under review.
M/s. S T Mohite & Co. (FRN 011410S) were appointed as Statutory Auditors of theCompany in the adjourned Annual General Meeting held on August 26 2017 for a period of 5Years and holds office until the conclusion of the 25th Annual General Meeting to be heldin the calendar year 2022 (subject to ratification by the shareholders at each AnnualGeneral Meeting).The Members year on year will be requested to ratify their appointment asStatutory Auditors and to authorise the Board of Directors to fix their remuneration.
Accordingly the appointment of M/s. S T Mohite & Co. Statutory Auditors of theCompany is placed for ratification by the shareholders at the ensuing Annual GeneralMeeting. The Members are requested to ratify their appointment as Statutory Auditors andto authorise the Board of Directors to fix their remuneration.
Further M/s. S T Mohite & Co. has confirmed their eligibility to the effect thattheir re-appointment if made would be within the prescribed limits under the Act andthat they are not disqualified for re-appointment.
The Auditors' Report does not contain any qualifications reservations or adverseremarks. Notes to Accounts and Auditors remarks in their Report are self-explanatory anddo not call for any further comments.
INTERNAL AUDITORS COST AUDITORS SECRETARIAL AUDIT:
M/s. Surya Pavan & Co. Chartered Accountants were the Internal Auditors for theYear 2017-18 and they being eligible the Board has re-appointed them for the FinancialYear 2018-19.
As per Cost Audit applicability cost compliance is not applicable for FY 2017-18 asthe Company is small scale industry under The Micro Small and Medium EnterprisesDevelopment Act 2006.
Secretarial Audit Report pursuant to the provisions of Section 204 read with Section134(3) of the Companies Act 2013 was obtained from Datla Venkatesh Practicing CompanySecretary in Form MR-3 for the period under review. The said Report is attached and formspart to this report as Annexure - 5.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on management discussion and analysis is placed as a separate section in theannual report.
REPORT ON CORPORATE GOVERNANCE
The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated under the Listing Regulations. A separate section titledCorporate Governance Report' Annexure - 6 under the Listing Regulations along with acertificate from the Practicing Company Secretary in the Annexure - 7 and CFO Certificatein the Annexure - 8 forms the part of this report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit Functions reports to the Board. Based on the report of internal audit functionprocess owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and recommendations along withcorrective actions thereon are presented to the Board.
The Company's Board of Directors pursuant to the provisions of Section 177(9) of theCompanies Act 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers)Rules 2014 has framed Whistle Blower Policy' for Directors and employees of theCompany. The policy is to provide a mechanism which ensures adequate safeguards toemployees and Directors from any victimisation on raising of concerns of any violations oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports and so on. The employees of the Company have the right/option toreport their concern/ grievance to the Chairman of the Audit Committee. The Company iscommitted to adhere to the highest standards of ethical moral and legal conduct ofbusiness operations. The Whistle Blower Policy is hosted on the Company's websitewww.apollo-micro.com
The Company continues to have cordial and harmonious relationship with its employeesand thank all employees for their cooperation and the contribution towards harmoniousrelationship and progress of the company.
POLICY ON SEXUAL HARASSMENT:
The Company has in place a policy for prevention of sexual harassment in accordancewith the requirements of the Sexual Harassment of women at workplace (preventionProhibition & Redressal) Act 2013. Internal complaints committee has been set up toredress complaints received regarding sexual harassment. All employees (permanentcontractual trainees temporary) are covered under this policy. The Company did notreceive any complaint during the period under review.
Your Directors gratefully acknowledge the continued support co-operation and wisecounsel extended by the Government Authorities Banks and Financial Institutions.
Your Directors place on record their sincere appreciation for the significantcontribution made by the employees through their dedication hard work and commitment.
Your Directors sincerely acknowledge the confidence and faith reposed in the Company bythe Shareholders Creditors and other stake holders.
For and on behalf of the Board
APOLLO MICRO SYSTEMS LIMITED
| ||Sd/- ||Sd/- |
|Place: Hyderabad ||Karunakar Reddy Baddam ||Krishna Sai Kumar Addepalli |
|Date: August 09 2018 ||Managing Director (DIN 00790139) ||Whole Time Director (Operations) |
| || ||(DIN 03601692) |