To the Members
The Board of Directors and the Resolution professional have pleasure in presenting theTwenty Seventh Annual Report and the Audited Financial Statements of the Company for thefinancial year ended 31st March 2019.
I. FINANCIAL PERFORMANCE:
Your Company has achieved a turnover of Rs. 7199.33 lakhs for the financial year ended31st March 2019 against the turnover of Rs. 7096.65 lakhs for the previous year ended31st March 2018. Key highlights of financial performance of your Company for thefinancial year 2018-19 are provided below:
| || |
(Rupees in Lakhs)
|Particulars ||2018-2019 ||2017-2018 |
| ||(12 months) ||(12 months) |
|Profit Before Depreciation & Interest ||(1586.06) ||1483.33 |
|Financial Costs ||5242.50 ||5238.89 |
|Depreciation ||540.18 ||589.82 |
|Profit Before Tax ||(7368.73) ||(4345.38) |
|Provision for Tax || || |
|- Current Tax ||- ||- |
|- Deferred Tax ||774.35 ||(39.12) |
|Profit After Tax ||(6594.39) ||(4306.26) |
|Balance of profit brought forward from earlier years ||(21783.39) ||(17521.47) |
|Add: Excess Provision for IT written off ||- ||- |
|Less : OCI ||2369.57 ||44.35 |
|Profit available for appropriation ||(26008.21) ||(21783.38) |
|Appropriations: || || |
|Proposed Dividend: || || |
|- Equity ||- ||- |
|- Preference ||- ||- |
|- Dividend Tax ||- ||- |
|Balance of Profit ||(26008.21) ||(21783.38) |
Your company started with proving solutions based on barcode and has emerged as leadingplayer in the country to provide solutions using umbrella of AIDC technologies. Yourcompany also has state of the art manufacturing facility with the capacity to manufacture80mn smart cards per annum. Using these two synergies the company could successfullyventure into Financial Inclusion projects driven by Reserve Bank of India popularly knownas "Jan Dhan Yojana". The exposure to government driven projects give yourcompany revenue visibility and we expect this momentum to continue given the un-deterredGovernment's focus.
Foreign Currency Convertible Bonds (FCCB):
Bartronics India Ltd. had issued Foreign Currency Convertible Bonds (FCCB) for anaggregate sum of USD 50mn in January 2008. These bonds got matured in February 2013. Inthis regard the company had filed a request for an extension of the maturity of the bondsto May 4 2014 with Reserve Bank of India which was granted by them vide their letterdated February 21 2014. The Company has applied for further extension of the maturitywith Reserve Bank of India and is waiting to hear from RBI to move forward.
However lately your company had been facing headwinds viz a financial creditor filinga Corporate Insolvency Resolution Process (CIRP) in National Company Law Tribunal (NCLT)against the company. Although the case was amicably settled with the help from theInvestor identified by the company another financial creditor had initiated similarprocess subsequently. On December 2 2019 your company did get admitted under CIRP and theNCLT appointed Shri. Chinnam Poorna Chandra Rao as Resolution Professional' for thecomp any. Some Bondholders who accessed company disclosures and public announcements madeby the Resolution Professional have submitted their claim. As laid by the law this matterwill now be addressed under Resolution Process as per IBC 2016.
Changes to Share Capital:
At present the Authorized Share Capital of the Company stands at Rs. 110 crores and thepaid up capital stand at Rs. 34.04 crores there has been no change in the share capitalduring the period ended 31st March 2019.
Consolidated Financial Statements:
As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and as per provisions of Companies Act 2013 a consolidated financialstatement of the Company and all its subsidiaries is attached. The consolidated financialstatement has been prepared in accordance with the relevant accounting standards asprescribed under Section 129 133 of the Companies Act 2013 and as per Schedule III ofthe Companies Act 2013. The consolidated financial statement discloses the assetsliabilities income expenses and other details of the Company and its subsidiaries.
The annual accounts of the subsidiary companies will also be kept for inspection by anyinvestor at its Head Office in Hyderabad and that of the subsidiary companies concerned. Agist of the financial performance of the subsidiary Companies is contained in the report.
In the absence of profit your directors are unable to declare any dividend for thefinancial year 2018-2019.
Your Company has three subsidiary companies viz. Bartronics Global Solutions LimitedBartronics Asia Pte. Limited and Bartronics Middle East FZE and Three step down subsidiarycompanies viz. Bartronics Hongkong Ltd Veneta Holdings Ltd and Burbank Holdings Ltd.
Bartronics Asia Pte Limited:
The Company was incorporated as a wholly owned subsidiary of Bartronics India Limitedon 14th June 2007 in the Republic of Singapore with a Share Capital of US$ 769500.Bartronics Asia Pte Limited (BAPL) acquired the only issued share of Cason Limited onDecember 21 2007; subsequently the name of the Company was change to Bartronics Hong KongLimited with effect from 15th October 2008. In the month of April 2011 BAPL acquired theonly share of Veneta Holdings Limited Mauritius making it its wholly owned subsidiary.BAPL had incorporated another subsidiary in Mauritius named Burbank Holdings Limited.
Bartron ics Middle East Fze:
Bartronics Middle East FZE Sharjah UAE was incorporated on June 22 2010 as a whollyowned subsidiary of Bartronics India Limited with a share capital of AED 150000 Shares.
Bartronics Global Solutions Limited:
Bartronics Global Solutions Limited is a Indian Company having its Registered Office instate of Telanagana it is a Wholly owned subsidiary of the company.
A separate statement containing the salient features of the Financial Statement for thefinancial year ended 31st March 2019 of the aforesaid Subsidiary Companies are includedin the Annual Report as Form AOC-1 as an Annexure -I.
Changing the place for keeping the Books of Accounts of the Company along with theShifting of Corporate office:
The corporate office of the Company shifted from #8-2-120/77/4B Besides NTR BhavanRoad No. 2 Banjara Hills Hyderabad Telangana- 500 034 to Plot No 193 Block-B KavuriHill GB Pet Madhapur Hyderabad Telangana-500033 w.e.f August 05 2019.
Particulars of Loans Guarantees and Investments:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
Contracts and Arrangements with Related Parties:
Details of Contracts and arrangements with related parties under section 188 of theCompanies Act 2013 are given in the notes to the Financial Statements.
II. Business Outlook:
Your company started with proving solutions based on barcode has emerged as leadingplayer in the country to provide solutions using umbrella of AIDC technologies. Yourcompany also has state of the art manufacturing facility with the capacity to manufacture80mn smart cards per annum. Using these two synergies the company could successfullyventure into Financial Inclusion projects driven by Reserve Bank of India popularly knownas "Jan Dhan Yojana". The exposure to government driven projects give yourcompany revenue visibility and we expect this momentum to continue in the domestic marketsgiven the un-deterred Government's focus.
Management Discussion and Analysis Report:
In terms of regulation 34 of the Listing Regulations the Management Discussion andAnalysis report on your Company's performance industry trends and other material changeswith respect to your Company and its subsidiaries wherever applicable forms a part ofthis Report. The MD&A report provides a consolidated perspective of economic socialand environmental aspects material to our strategy and our ability to create and sustainvalue to our key stakeholders and includes aspects of reporting as required by Regulation34 of the Listing Regulations with Stock Exchange on Business Responsibility Report.
III. Governance and Ethics:
Your Company believes in adopting best practices of corporate governance. A soundCorporate Governance is critical to enhance and retain stakeholders' trust. CorporateGovernance principles forms core values of the Company. These guiding principles are alsoarticulated through the Company's code of conduct corporate governance guidelinescommittees and disclosure policy. As per regulation 34 of the Listing Regulations aseparate section on corporate governance practices followed by your Company together witha certificate from Mr. Y. Ravi Prasada Reddy Company Secretary on compliance withcorporate governance norms under the Listing Regulations forms part of the report oncorporate governance.
Board of Directors and Key Managerial Personnel:
The Board comprises of one Executive Director and four Non-Executive Directors of whichthree are Independent Directors.
Definition of Independence' of Directors is derived from regulation 16 of theListing Regulations and Section 149(6) of the Companies Act 2013. The Company hasreceived necessary declarations from the Independent Directors stating that they meet theprescribed criteria for independence.
In accordance with the Articles of Association of the Company Mr. Avula BalliahgariSatyavas Reddy is liable to retire by rotation and being eligible offer himself forreappointment.
Mr. Krishna Kishore Madicharla Independent Director of the Company resigned from theBoard of Directors with effect from November 20 th 2018. The Board placed on record itsappreciation for the outstanding contribution made by Mr.Krishna Kishore Madicharla Mr.Shareq Jamil Ayaaz Mowla Independent Director of the Company resigned from the Board ofDirectors with effect from November 14th 2019. The Board placed on record itsappreciation for the outstanding contribution made by Mr. Shareq Jamil Ayaaz Mowla.
Ms. Gaddam Varshitha is Director (In depen dent-Non Executive).
None of the Directors of your Company is disqualified under Section 164 (2) of theCompanies Act 2013. As required by law this position is also reflected in the Auditors'Report.
The Company had appointed Mrs. Isharath Unnisa Begum as the Company Secretary of theCompany w.e.f March 03rd 2019. Further Mr Isharath Unnisa Begum has resigned from thepost of Company Secretary and Key Managerial Personal w.e.f November 14th 2019.
Committees of the Board
The Company's Board has the following committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders' Relationship Committee
4. Risk Management Committee
Details of terms of reference of the Committees Committee membership and attendance atmeetings of the Committees are provided in the Corporate Governance report.
Number of Meetings of the Board:
The Board met 6 (Six) times during the financial year 2018-19 on 25th May 2018 14thAugust 2018 29th August 2018 14th November 2018 14th February 2019 and 8th March2019. The maximum time gap between any consecutive meetings did not exceed 120 days.
The Board of Directors evaluated the annual performance of the Board as a whole itscommittee's and the directors individually in accordance with the provisions of theCompanies Act 2013 and Listing Regulations in the following manner:
Structured evaluation forms after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance for evaluation of theperformance of the Board its Committee's and each director were circulated to all themembers of the Board along with the Agenda Papers.
The members of the Board were requested to evaluate by filling the evaluationforms and the duly filled in evaluation forms were required to be sent to the CompanySecretary in a sealed envelope or personally submitted to the Chairman at the concernedmeeting.
The Board also provided an individual feedback to the concerned director onareas of improvement if any.
A separate meeting of Independent Directors was held on 31st March 2019 to evaluatethe performance evaluation of the Chairman the Non Independent Directors the Board andflow of information from management.
Related Party Transactions
As a part of its philosophy of adhering to highest ethical standards transparency andaccountability your Company has historically adopted the practice of undertaking relatedparty transactions only in the ordinary and normal course of business and at arm's length.In line with the provisions of the Companies Act 2013 and the Listing Regulations theBoard has approved a policy on related party transactions.
All Related Party Transactions are placed on a quarterly basis before the AuditCommittee and also before the Board for approval. Prior omnibus approval of the AuditRisk Committee is obtained for the transactions which are of a foreseeable and repetitivenature.
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large. The requisite details ofthe related party transactions entered into during the financial year are provided inAnnexure-II included in this report.
In line with the requirements under Section 177(9) and (10) of the Companies Act 2013and regulation 22 of the Listing Regulations your Company has established vigil mechanismby framing a Whistle Blower Policy to deal with instance of fraud and mismanagement ifany. The Vigil Mechanism framework ensures that strict confidentiality is maintainedwhilst dealing with concerns and also that no discrimination shall be meted out to anyperson for a genuinely raised concern. The designated officer/ Audit Committee Chairmancan be directly contacted to report any suspected or confirmed incident of fraud/misconduct.
Directors' Responsibility Statement:
Directors' Responsibility Statement as required under the provisions of Section 134(5)of the Companies Act 2013 is given in the Annexure -III attached hereto and forms partof this Report.
Particulars of Employees
Information required pursuant to Section 197 (12) of the Companies Act 2013 read withRule 5 of The Companies (Appointment and Remuneration ofManagerial Personnel)
Rules 2014 is provided along with a statement containing inter alia names ofemployees employed throughout the financial year and in receipt of remuneration of Rs. 102lakhs or more employees employed for part of the year and in receipt of Rs. 80.50 lakhsor more per month pursuant to Rule 5(2) the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided as Annexure IV to this report.
VI. Internal Financial Controls and Audit:
Internal Financial Controls and their Adequacy:
The Board of your Company has laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and operatingeffectively. Your Company has adopted policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
The Risk Management policy of your Company is focused on ensuring that risks are knownand addressed. The Board of Directors on recommendation of the Audit Committeeestablished a robust Risk Management framework by framing a Risk Management Policy to dealwith all risks including possible instances of fraud and mismanagement if any. The RiskManagement Policy details the Company's objectives and principles of Risk Management alongwith an overview of the Risk Management process procedures and related roles andresponsibilities.
The Board is of the opinion that there are no elements of risks that may threaten theexistence of the Company. The board periodically tracks the progress of implementation ofthe Risk Management policy.
M/s N. G. Rao & Associates (Membership No. 207300) Chartered AccountantsHyderabad (FRN: 009399S) were appointed as Statutory Auditors of the Company for a term of5 years in the last AGM.
There are no qualifications reservations or adverse remarks made by M/s. N. G. Rao& Associates Chartered Accountants Statutory Auditors in their report for thefinancial year ended 31st March 2019.
Pursuant to provisions of section 143(12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the Audit Risk and ComplianceCommittee during the year under review.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Y. Ravi Prasada Reddy Practicing Company Secretary to conduct SecretarialAudit of the Company.
The Report of the Secretarial Audit in Form MR-3 for the financial year ended 31stMarch 2019 is enclosed at Annexure-V to the Report.
V. Other Disclosures:
Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo:
Particulars with respect to Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as required under Section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 are given in the Annexure -VI attached heretoand forms part of this Report.
Extract of Annual Return:
Pursuant to section 92(3) and section 134(3)(a) extract of the Annual Return as on31st March 2019 in form MGT- 9 is enclosed as Annexure VII to this report.
Material Changes and Commitments Affecting the Financial Position of the Company:
There have been no material changes and commitments affecting the financial positionof the Company which occurred during the end of the financial year to which the financialstatements relate and the date of this report.
All the properties and insurable assets of the Company including Building Plant andMachinery stocks etc. wherever necessary and to the extent required have beenadequately the covered.
Details of Significant and Material Orders Passed by the regulators/Courts/TribunalsImpacting the Going Concern Status and the Company's Operations in Future:
There are no significant material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations.
Sexual Harassment Policy:
The Company as required under the provisions of "The Sexual Harassment of Women atWorkplace (Prohibition Prevention and Redressal) Act 2013" has framed a Policy onProhibition Prevention and Redressal of Sexual Harassment of Women at Workplace andmatters connected therewith or incidental thereto.
In the year under review the Company has not received any complaint under the saidPolicy.
Environment and Social Obligation:
The Company's plants comply with all norms set up for clean and better environment bythe competent authorities. The Company undertakes regular checks / inspections includingcertification for the maintenance of the environment. The Company values environmentalprotection and safety as the major considerations in its functioning. The Company hasadequate effluent Treatment Plants to prevent pollution. The Company is continuouslyendeavoring to improve the health and quality of life in the communities surrounding itsindustrial complexes.
Human Resource Management:
The Company believes that Human Resource is its most valuable resource which has to benurtured well and equipped to meet the challenges posed by the dynamics of BusinessDevelopments. The Company has a policy of continuous training of its employees bothin-house. The staff is highly motivated due to good work culture training remunerationpackages and the values which the company maintains. Your Directors would like to placeon record their deep appreciation of all employees for rendering quality services and toevery constituent of the Company be its customers shareholders regulatory agencies orcreditors. Industrial relations have remained harmonious throughout the year.
Acknowledgements and Appreciation:
Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners/associates financial institutions and Central and StateGovernments for their consistent support cooperation and encouragement to the Company.
The Board of Directors wishes to express its appreciation to all the employees of theCompany for their outstanding contribution to the successful operations of the Company.
| ||BY ORDER OF THE BOARD |
| ||Mr. Ch. Poorna Chandra Rao |
| ||Resolution Professional |
|(A Company under Corporate Insolvency |
|Resolution Process by NCLT order No. |
|Place: Hyderabad ||CP (IB) No. 375/7/HDB/2019) |
|Date: 20.02.2020 || |
Annexure - III to the Directors' Report
Directors' Responsibility Statement:
Members may kindly note that Corporate Insolvency Resolution Process (CIRP') hasbeen initiated for the Company under the provisions of Section 7 of the Insolvency andBankruptcy Code 2016 (IBC') by the National Company Law Tribunal vide Order no.CP(IB)No. 375/7/HDB/2019 (order') with effect from 02.12.2019. Further vide theaforesaid NCLT order and pursuant to Section 17 of the IBC the powers of the Board ofDirectors of the Company stood suspended and such powers are vested with the InterimResolution Professional Mr. Chinnam Poorna Chandra Rao (IP RegistrationNo.IBBI/IPA-003/IPA-000119-18/2017- 2018/11298). His appointment was subsequentlyconfirmed by the Committee of Creditors (COC') as the Resolution Professional (theRP'). Accordingly Mr. Chinnam Poorna Chandra Rao in his capacity as RP took controland custody of the management and operations of the Company from 5th December 2019.
In light of the aforesaid and pursuant to the requirements under sub section (3)(c) and(5) of Section 134 of the Companies Act 2013 with respect to Directors' ResponsibilityStatement it is hereby confirmed by the RP that:
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(5) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the period ended 31stMarch 2019 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policies as mentioned in Note: 2 of the Notes to the FinancialStatements have been selected and applied consistently and judgment and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2019 and of the profit of the Company for theperiod ended on that date;
c. that proper and sufficient care has been taken 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. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
f. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
| ||BY ORDER OF THE BOARD |
| ||Mr. Ch. Poorna Chandra Rao |
| ||Resolution Professional |
| ||(A Company under Corporate Insolvency |
| ||Resolution Process by NCLT order |
| ||No. CP (IB) No. 375/7/HDB/2019) |
|Place: Hyderabad || |
|Date: 20.02.2020 || |