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Creative Newtech Ltd.

BSE: 538414 Sector: Others
NSE: CREATIVE ISIN Code: INE985W01018
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Creative Newtech Ltd. (CREATIVE) - Director Report

Company director report

To

The Members

Creative Peripherals and Distribution Limited

Your Directors have pleasure in presenting the Sixteenth Annual Report on business andoperations along with the Audited Financial Statements for the year ended March 31 2020.

WHO WE ARE AND WHERE WE WILL BE:

Founded in 1992 Creative Peripherals was originally incorporated on September 22 2004as a Private Limited Company. We are now into the 29th year of our journey andnow have emerged as market entry and penetration specialists in a wide range of segmentscovering a variety of IT Imaging Lifestyle and Security products. Information Technologylies at the core of the Company's business. The sector has grown and evolved over the last27 years since it emerged after the Government liberalized the Indian economy. It promptedand shaped industrial growth and transformed the lifestyle of the average Indian bysuccessfully changing the notion of a luxury item to one of necessity.

We have carved a niche for ourselves through our value-added service offerings. Inaddition to distribution we handhold new and niche brands in their market entry byconducting extensive market research pre-sales and marketing activities for the successof the brand as well as to enable the channel partners to leverage their expertise andbottom line. Creative Peripherals works closely with partners across all channelsincluding Large Format Retail (LFR) e-commerce/online and specialized retailers. TheCompany is one of the few large distributors who conduct specialized training modulesevents and promotional activities at the ground level with channel partners along withworkshops and demos for resellers. This is possible due to a good mix of young dynamicdedicated and experienced corporate and sales teams which constantly track latest marketdevelopments to build a closer market connect.

The objective of the Company is to grow sustainably while staying connected to itsroots. Currently the Company is operating nationwide through its 20+ branches warehousesand service centres. Our strategy is to optimize our core technology solutions businesswhile expanding and investing in higher-margin high-growth-potential product segments.Over the recent past we have been further optimizing our operating model and intend tocontinue doing so with the objective of cementing our reputation as a one-stop shop. Ourbouquet of 20+ brands covers multiple verticals and aims to capture a considerable marketshare in each of the product categories which will help our channel partners as well asthin out any market risks arising out of fluctuations in the market share of variousbrands. As we expand we expect to benefit from higher economies of scale.

Another noteworthy pillar of our Company is the brand licensing business. ForHoneywell our relationship runs deeper than traditional distribution. We undertakecontract manufacturing for several Honeywell products and have recently starteddistribution in the Middle East. Potentially expanding the licensing business willcontinue to be one of our focus areas.

During this financial year the Company migrated from the NSE-SME platform to the NSEMain board after fulfilling all required criteria. This migration is symbolic of ourcommitment to sustainable growth and expansion.

Our industry is at a crossroads where we are witnessing a paradigm shift towards onlinetechnologies from traditional means of doing business. A rising number of businesses areconducting activities online due to various reasons including cost and time savingsconvenience and a wider reachability. We believe that more and more services will goonline and become platform-based in the near future.

In line with this we have developed a digital platform for all our customers. Thisonline B2B platform will host our entire 5000-strong customer-base and allow them toview share and transact their products amongst each other. It will even allow customersto deal in products which are not on Creative Peripherals' portfolio thereby expandingour product domain. The platform is feature-rich with options for invoicingdrop-shipments and hosting a client's micro-site on the platform. We expect this platformto not only improve working capital and profitability but also increase our customer-base with minimal increase in manpower.

FINANCIAL HIGHLIGHTS

The highlights of the Standalone Financial Results are:

(Amount in Rs. Lakhs except EPS)

Particulars March 31 2020 March 31 2019
Total Income 45248.37 37071.60
Less: Expenses (44005.09) (36244.18)
Profit Before Tax 1243.29 827.42
Less: Exceptional Items 0 0
Less: Extraordinary Items 0 0
Less: Tax Expenses (338.84) (242.65)
Profit after Tax 904.45 584.77
Other Comprehensive Income (1.68) (3.54)
Total Comprehensive Income for the year 902.77 581.23
Balance brought forward 1581.34 1010.96
Amount available for Appropriation 2484.10 1592.19
Add: Share Premium Account 1170.00 1170.00
Less: Allotment of Bonus Equity Shares (580.00) 0
Less: Dividend Paid (18.01) (9.00)
Less: Dividend Distribution Tax Paid (3.70) (1.85)
Balance carried to Balance Sheet 3052.40 2751.34
Earnings per Share (Basic) 7.78 5.01
Earnings per Share (Diluted) 7.78 5.01

BUSINESS PERFORMANCE

The year gone by has been really profitable. The Company's revenue increased toRs.45248.37 Lakhs as compared to Rs.37071.60 Lakhs in the previous year marking anincrease by Rs. 8176.77 Lakhs.

The Company's Net Profit after Tax stood at Rs. 904.44 Lakhs as compared to Rs. 584.77Lakhs in the previous year registering an increase of by Rs. 319.67 Lakhs.

DIVIDEND

Considering financial growth and future prospects of your Company Board of Directorsin their Board Meeting held on 25th June 2020 has recommended a FinalDividend of 5% on face value per share for the financial year ending at 31st March2020 subject to approval of shareholders in Annual general meeting to be held forFinancial Year 2019-20.

Further with also keeping in mind for plough back of profit your promoter directorsholding 68.95% of overall paid up equity share capital of the Company have opted out fromtheir rights to have dividend. So the above said dividend will be distributed to PublicShareholders only who hold 31.05% of total paid up equity share capital.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno dividend which were unclaimed or unpaid since last seven years.

TRANSFER TO RESERVES

The whole profit after tax has been transferred to Surplus in the Statement of Profit& Loss.

SHARE CAPITAL

At the beginning of the year the Authorised Share Capital of the Company wasRs.80000000/- divided into 8000000 Equity Shares of Rs. 10/- . During the year on 12thJune 2019 the Company increased its Authorised Share capital to Rs.140000000/-divided into 14000000 Equity Shares of Rs. 10/- each by approval of members of theCompany through Postal Ballot.

At the beginning of the year the Issued Subscribed and Paid Up Equity Share Capitalof the Company was Rs. 58000000/- divided into 5800000 Equity Shares of Rs. 10/-.During the year on 12th June 2019 the Company has issued and allotted BonusEquity Shares in ratio of 1:1 by approval of members of the Company through Postal Ballot.After the said Bonus Allotment the Issued Subscribed and Paid Up Equity Share Capital ofthe Company is Rs.116000000 divided into 11600000 of Rs. 10/- each.

DEPOSITORY SYSTEM

The Company has entered into an agreement with the National Securities DepositoryLimited (NSDL) as well as the Central Depository Services (India) Limited (CDSL) to enableshareholders to hold shares in dematerialized form. The Company also offers simultaneousdematerialisation of the physical shares lodged for transfer.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board consists of Executive and Non-executive Directors including IndependentDirectors along with Key Managerial Personnel who have vast experience in the corebusiness activity of the Company. The composition of the Board is in consonance withCorporate Governance norm specified in the SEBI Regulations with the Stock Exchange.

During the year under review:

1. Mr. Mandar Joshi Independent Director resigned as on 10th October 2019

2. Mr. Suresh Bhagavatula appointed as Additional Independent Director as on 10thOctober 2019

3. Mr. Piyush Shah Independent Director resigned as on 25th December 2019

4. Mr. Chandy Kurian appointed as Additional Independent Director as on 01stFebruary 2020.

Remuneration paid to Executive Directors Independent Directors & KMPs arementioned in Corporate Governance Report annexed with this Directors' Report.

BOARD MEETINGS

During the year Ten Meetings of Board of Directors were convened and held and detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in accordancewith the provisions of Section 134 (3) (c) and 134(5) of the Companies Act 2013:

1. That in preparation of the Annual Accounts for the year ended March 31 2020 theapplicable accounting standards had been followed along with proper explanation relatingto material departures if any;

2. That the directors had selected such accounting policies and applied consistentlyand made judgments and estimates that were reasonable and prudent so as to give true andfair view of the state of affairs of the Company at the end of the financial year endedMarch 31 2020 and the profits of the Company for the year under review;

3. That proper and sufficient care has been taken for the maintenance of adequateaccounting records for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

4. That the annual accounts for the year ended March 31 2020 have been prepared on a'going concern basis.'

5. That proper internal financial controls were in place and that such internalfinancial controls are adequate and were operating effectively.

6. That proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

STATUTORY AUDITORS

As per Section 139 of the Act read with the Companies (Audit and Auditors) Rule 2014the members of the Company in its 15th Annual General Meeting held on 23rdSeptember 2019 approved the appointment of M/s Gupta Raj & Co. CharteredAccountants (ICAI Registration No.001687N) as the Statutory Auditors of the Company for aperiod of 5 years from the conclusion of 15th Annual General Meeting till the conclusionof 20th Annual General Meeting of the Company.

As per amendment of Companies Act 2013 read with Notification no. G.S.R. 432(E) dated7th May 2018 of Ministry of Corporate Affairs the ratification of appointment ofAuditors in every Annual General meeting during term of five years have been dispensedwith.

INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS

The Company has in place well defined and adequate internal controls commensurate withthe size of the Company and the same were operating effectively throughout the year. TheCompany has an Internal Control System commensurate with the size scale and complexityof its operations. Apart from in-house Internal Audit function to strengthen and maintaintransparency the Company has also appointed M/s Somaiya & Co. Chartered AccountantsMumbai as Internal Auditors of the Company in accordance with Section 138 of theCompanies Act 2013 to examine the effectiveness of internal control system.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013 and SEBI Listing Regulations2015. Further The Independent Directors are not liable to retire by rotation.

AUDIT COMMITTEE

During the year Four Meetings of Audit Committee were convened and held and details ofwhich are given in the Corporate Governance Report. Your Directors ensures that AuditCommittee meets regularly to review reports including significant audit observations andfollow-up actions thereon. The Audit Committee also meets the Company's Statutory Auditorsto ascertain their views on financial statements including the financial reportingsystem related parties transactions compliance to accounting policies and procedures.

NOMINATION AND REMUNERATION COMMITTEE

During the year Three Meetings of Nomination and Remuneration Committee was convenedand held and details of which are given in the Corporate Governance Report. Your Directorsensures that the Company follows a Policy on Remuneration of Directors and SeniorManagement Employees. The policy shall be approved by the Nomination & RemunerationCommittee and the Board. The main objective of the said policy is to ensure that the leveland composition of remuneration is reasonable and sufficient to attract retain andmotivate the Directors KMP and Senior Management employees.

The policy of the Company on Director's appointment and remuneration is uploaded on tothe Company's website and the same is available at http://ecreativeindia.com/

STAKEHOLDERS' RELATIONSHIP COMMITTEE

During the year One Meeting of Stakeholders' Relationship Committee was convened andheld and details of which are given in the Corporate Governance Report. The role of theCommittee is explained in detail in the Corporate Governance Report enclosed herewith.During the year under review Company has complied with all compliances as mandated byvarious government authorities and Company has not received any complaint from itsInvestor or shareholders or any individuals.

PREVENTION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE

During the year Four Meeting of Internal Compliant Committee (under Sexual HarassmentPolicy) were convened and held and details of which are given in the Corporate GovernanceReport. The Company has a Policy on "Prevention of Sexual Harassment of Women at WorkPlace" and matters connected therewith or incidental thereto covering all the aspectsas contained under the 'The Sexual Harassment of Women at Work Place (ProhibitionPrevention and Redressal) Act 2013'. Your Directors state that during the year underreview no cases were filed pursuant to the Sexual Harassment of Women at Work Place(Prevention Prohibition and Redressal) Act 2013.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or other policies. The policy provides for adequate safeguards againstvictimization of employees who avail of mechanism and also provides for direct access tothe Chairman of the Audit Committee. It is affirmed that no personnel of the Company hasbeen denied access to the Audit Committee. The policy of vigil mechanism is available onthe Company's website.

The policy of the Company on Vigil Mechanism / Whistle Blower is uploaded on to theCompany's website at http:// ecreativeindia.com/

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) ofSecurities of Exchange Board of India (Listing Obligations & Disclosure Requirements)Regulation 2015 the Board has carried out the annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of the working of itsAudit Nomination and Remuneration and other Committees of the Board which covers variousaspects of the Board's functioning such as adequacy of the composition of the Board andits Committees Board Culture execution and performance of specific dutiesresponsibilities obligations and governance.

The performance evaluation of the Directors was carried out by the entire Board.

FAMILIARIZATION PROGRAMME

The familiarization programme aims to provide Independent Directors with the industryscenario the socio-economic environment in which the Company operates the businessmodel the operational and financial performance of the Company significant developmentsso as to enable them to take well informed decisions in a timely manner. This programmealso seeks to update the Directors on the roles responsibilities rights and duties undervarious Acts and other statutes.

CRITERIA OF MAKING PAYMENTS TO NON-EXECUTIVE DIRECTORS

The policy of the Company on Criteria of making payments to Non-executive Directors isuploaded on to the Company's website and the same is available athttp://ecreativeindia.com/

BOARD EVALUATION

In compliance with the provisions of Section 134(3)(p) of the Act read with Rule 8(4)of the Companies (Accounts) Rules 2014 the Board carried out annual evaluation of itsown performance that of its Committees and individual directors.

The performance of the Board and its committees and individual directors were evaluatedby the Board after seeking inputs from all the Directors on the basis of criteria such ascomposition and structure of the Board quality of deliberations effectiveness of theprocedures adopted by the Board participation of the Board and committee meetings andgovernance reviews etc.

DEPOSITS

Your Company has not accepted any deposit and as such no amount of principal andinterest were outstanding as at the Balance Sheet date.

HUMAN RESOURCES

A. Employee Relations

We believe that success of Company depends on the talent and dedication of ouremployees and we strive to attract hire develop and retain outstanding employees. Inview of this we have laid down a comprehensive set of policies aiming at attractingretaining and motivating employees. We believe significant benefits are realized fromhaving a strong and seasoned management team with many years of experience in technologydistribution and related industries. We consider relations with our employees to be good.

B. Trade Relations

The Company maintained healthy cordial and harmonious industrial relations at alllevels. Despite severe competition the enthusiasm and unstinting efforts of the employeeshave enabled the Company to remain at the forefront of the Industry.

This accord incorporates novel elements such as introducing wide range of productsnurturing healthy competition giving pocket friendly credit cycles timely clearance ofdues easy accessibility to product heads etc. Your Company will continue in itsendeavour to build and nurture strong links with trade allies based on mutuality respectand co-operation with each other and with consistent consumer interest.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 is given hereunder:

A. Conservation of energy

Your Company is primarily engaged in Marketing and Trading activities and has notconsumed energy of any significant level and hence no additional investment is required tobe made for reduction of energy consumption. However the Company will continue with itsefforts to conserve the energy.

B. Technology absorption

The Company's operations do not require significant absorption of technology.

C. Foreign Exchange Earnings and Outgo

(Amount in Rs. Crores)

Particulars For the Year ended on March 31 2020 For the Year ended on March 31 2019 For the Year ended on March 31 2018
Foreign Exchange Earnings 105.54 79.60 40.39
Foreign Exchange Outgo 311.53 198.84 108.68

EXTRACT OF THE ANNUAL RETURN

In accordance with Section 134 (3) (a) and as provided under subsection (3) of Section92 of the Companies Act 2013 an extract of the Annual Return in prescribed form MGT - 9is appended as Annexure - A to the Board's Report.

RELATED PARTY TRANSACTIONS

During the year Company has made several related party transactions which were in theordinary course of business and on an "arm's length" basis. The particulars ofcontracts or arrangements entered into by the Company with related parties as referred insub-section (1) of section 188 of the Companies Act 2013 in prescribed Form No. AOC-2is appended as Annexure - B to the Board's Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis as required under the Regulation 34(2)(e) of SEBI(Listing Obligations and Disclosure Requirements) Regulation is annexed herewith as Annexure- Cand forms part of the Boards' Report.

SECRETARIAL AUDIT

The Board of Directors have appointed M/s. Satyajit Mishra & Co. PractisingCompany Secretary Mumbai to conduct Secretarial Audit for the financial year 2019-20under Section 204 of the Companies Act 2013 as part of good corporate governance andtransparency. The Secretarial Audit Report in form MR-3 for the financial year 2019-20forms part of the Directors' Report as Annexure - D.

Further the Secretarial Audit Report doesn't contain any adverse remark or comments.

CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements as stipulated underthe Listing Regulations. A separate section on corporate governance along with acertificate from the Secretarial Auditor confirming the compliance is annexed as Annexure- E and forms part of this Annual Report.

SUBSIDIARY COMPANIES

Your Company has 2 Subsidiary Companies both are based at Hong Kong namely CreativePeripherals and Distribution Limited (100% wholly owned Subsidiary) and Secure ConnectionLimited (70% Investment).

A statement containing salient features of the subsidiary in the prescribed format of(Form AOC-1) is annexed and marked as Annexure - F.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has the policy of giving back to the society and has carried a host of CSRactivities this year. In line with the requirement of Section 135 of the Companies Act2013 your Company having a Corporate Social Responsibility Committee. The details ofCommittee is provided in Corporate Governance Report. The CSR Policy of the Company isavailable on its website at www.ecreativeindia.com.

During the year the Company has spent Rs. 13.5 Lacs on CSR activities as annexedherewith Annexure - G to this report. A detailed discussion on CSR Projectsand initiatives are included as a separate section in the Annual Report.

HUMAN RESOURCES

Your Company continues to be assured by competence and commitment of the people.

The working climate of your Company continues to remain harmonious with focus onimproving Productivity Quality and Safety. Health and Safety of the employees and ourassociates we work with remains as our paramount importance. Your Company ensures thatoperations are carried out as per the safety guidelines and procedures in place which areregularly updated. The Company has 155 employees as on March 31 2020.

Efforts are continuously made to strengthen organizational culture in order to attractand retain best talent in the Industry. The Board appreciates the commitment and supportof the employees and look forward to their continued support.

INTERNAL FINANCIAL CONTROLS

The Company has an internal controls system commensurate with size scale andcomplexity of its operations. In order to enhance controls and governance standards theCompany has adopted Standard Operating Procedures which ensures that robust internalfinancial controls exist in relation to operations financial reporting and compliance.

In addition the internal audit functions monitors and evaluates the efficiency andadequacy of the internal control system in the Company its compliance with operatingsystems accounting procedures and policies. Periodical reports on the same are alsopresented to the Audit Committee. Compliance is in place as regards to statutory andregulatory requirements.

The internal control systems of the Company are monitored and evaluated by Auditors andreviewed by Management and Audit Committee of the Board of Directors.

OTHER POLICIES UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)REGULATIONS 2015

In accordance with the provisions of Regulations 30 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has formed policy fordetermination of materiality for disclosures of events or information. The same has beenhosted on the website of the Company at the www.ecreativeindia.com.

LOANS GUARANTEES & INVESTMENTS

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

MATERIAL CHANGES AND COMMITMENTS

No material changes have took Place affecting the financial position of the Companyfrom the date of closure of financial year till the date of signing of this report.

CHANGE IN NATURE OF BUSINESS

There has been no change in nature of business of the Company during the period underreview.

CHANGE IN ACCOUNTING TREATMENT

During the year your Company has adopted IND-AS Accounting Standards accountingtreatments since Company has been migrated from NSE SME Exchange to NSE Main BoardExchange.

APPRECIATION

Your Directors are thankful to the Vendors Customers Bankers National StockExchange Registrar and Transfer Agent Merchant Bankers Depositories Central and Stategovernments together with their departments the local authorities for their continuedguidance support and co-operation. Your Company has been able to operate efficientlybecause of the culture of professionalism creativity integrity and continuousimprovement in all functions and areas as well as the efficient utilisation of theCompany's resources for sustainable and profitable growth. To them goes the credit for allof the Company's achievements.

And to you our Shareholders we are deeply grateful for the confidence and faith thatyou have always reposed in us.

For and on behalf of the Board of Directors

Creative Peripherals and Distribution Limited

Ketan Patel

Chairman & Managing Director

DIN 00127633

Date: 25th June 2020

Place: Mumbai

Registered Office:

Creative Peripherals and Distribution Limited

Registered Office:

3rd & 4th Floor Plot No. 137AB

Kandivali Co Op Industrial Estate Limited

Charkop Kandivali West Mumbai – 400 067

Website: www.ecreativeindia.com

Email ID: cs@ecreativeindia.com.

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