Your Directors are pleased to present their Third Report together with the AuditedFinancial Statements (Standalone & Consolidated) for the financial year ended on March31 2020.
FINANCIAL RESULTS (STANDALONE)
Your Company's performance during the financial year ended on March 31 2020 alongwith previous year's figures is summarized below: ((Rs. in Lacs))
|Particulars ||2019-20 ||2018-19* |
|Total Income ||1771 ||2022 |
|Earnings before interest tax depreciation and amortization (EBITDA) from continuing operations ||85 ||447 |
|Add: Exceptional Item ||- ||- |
|Less: Depreciation ||20 ||30 |
|Less: Finance cost ||1006 ||904 |
|Profit/(Loss) before tax from continuing operations ||(941) ||(487) |
|Less: Tax Expense || || |
| Current tax ||- ||- |
| Deferred tax charge/(credit) ||133 ||(127) |
|Total tax expense ||133 ||(127) |
|Profit for the year from continuing operations ||(1074) ||(360) |
|Profit/(Loss) for the period ||(1074) ||(360) |
|Add: Other Comprehensive Income (net of tax) || || |
|a) Items that will not to be reclassified to profit or loss ||(3) ||(16) |
|b) Items that will be reclassified to profit or loss ||- ||- |
|Total Comprehensive Income for the year (net of tax) ||(1077) ||(376) |
|Opening balance in Retained Earnings ||(594) ||(218) |
|Add: Profit/ (Loss) for the year ||(1074) ||(360) |
|Less: Items of other Comprehensive Income recognized directly in Retained || || |
|Earnings || || |
| Re-measurements of post-employment benefit obligation (net of tax) ||(3) ||(16) |
|Total Retained Earnings ||(1671) ||(594) |
* Comparative figures for FY-19 have been taken from the financial statements preparedafter taking into effect the Scheme of Arrangement between HT Media Limited and theCompany w.e.f. the Appointed Date i.e. March 31 2018 (closing business hours).
Due to inadequacy of profits no dividend is recommended by the Directors for the yearended March 31 2020.
COMPANY PERFORMANCE AND FUTURE OUTLOOK
A detailed analysis and insight into the financial performance & operations of yourCompany for the year under review and future outlook is appearing in Management Discussionand Analysis Report which forms part of the Annual Report.
Your Company has a robust risk management framework to identify evaluate and mitigatebusiness risks. A detailed statement indicating development and implementation of a riskmanagement policy for the Company including identification of various elements of riskis appearing in the Management Discussion and Analysis Report.
SCHEME OF ARRANGEMENT
The Board of Directors approved a Scheme of Arrangement u/s 230 to 232 read withSection 66 and other applicable provisions of the Companies Act 2013 (hereinafterreferred to as "the Act") between the Company and HT Media Limited (HTML) andtheir respective shareholders and creditors (hereinafter referred to as "HTML-DCLScheme") which inter-alia envisaged demerger of Entertainment & DigitalInnovation Business' (Demerged Undertaking) of HTML and transfer and vesting thereof toand in the Company on a going concern' basis.
HTML-DCL Scheme was sanctioned by Hon'ble National Company Law Tribunal (NCLT')New Delhi Bench on March 7 2019 (certified copy received on March 27 2019).Consequent upon filing of the NCLT order with the Registrar of Companies on April 5 2019HTML-DCL Scheme became effective from the Appointed Date i.e. March 31 2018 (close ofbusiness hours). Accordingly in terms of the HTML-DCL Scheme the eligible shareholdersof HTML have been allotted equity shares of the Company in the ratio of 4:1 on April 122019. The said equity shares have been admitted for trading on National Stock Exchange ofIndia Limited (NSE) and BSE Limited (BSE) w.e.f. June 18 2019.
Consequent upon allotment of shares to the eligible shareholders of HTML pursuant toHTML-DCL Scheme The Hindustan Times Ltd. Go4i.com (Mauritius) Ltd. Mrs. ShobhanaBhartia Mr. Priyavrat Bhartia and Mr. Shamit Bhartia have become promoters of theCompany.
Consequent upon effectiveness of HTML-DCL Scheme HT Digital Streams Limited (HTDSL)became a material wholly-owned subsidiary of the Company. Your Company does not have anyassociate or joint venture company within the meaning of Section 2(6) of the Act duringthe year under review.
In terms of the applicable provisions of Section 136 of the Act Financial Statementsof HTDSL for the financial year ended on March 31 2020 are available for inspection atCompany's website viz. www.digicontent.co.in.
A report on the performance and financial position of HTDSL in the prescribed FormAOC-1 is annexed to the Consolidated Financial Statements of the Company and hence notreproduced here. The Policy for determining Material Subsidiary(ies)' is availableon the Company's website viz. www.digicontent.co.in.
The contribution of HTDSL to the overall performance of your Company is outlined inNote no. 34 of the Consolidated Financial Statements of the Company for the financial yearended March 31 2020.
Authorized share capital
During the year under review in terms of HTML-DCL Scheme and upon effectivenessthereof the Authorized share capital of your Company has been increased from H 100000/-divided into 50000 equity shares of H 2/- each to H 120000000/- divided into60000000 equity shares of H 2/- each.
As on March 31 2020 the Authorized share capital of the Company stood at H120000000/- divided into 60000000 equity shares of H 2/- each.
Paid up equity share capital
During the year under review the Board of Directors of the Company at its meeting heldon April 12 2019 issued and allotted 58187078 equity shares of face value of H2/- each aggregating to H 116374156/- to the eligible equity shareholders of HTMLpursuant to HTML-DCL Scheme.
Further in accordance with HTML-DCL Scheme the entire pre-scheme paid-upequity share capital of the Company amounting to H 100000/- divided into 50000 equityshares of H 2/- each held by HTML & its nominees was cancelled upon allotment of newequity shares to the eligible shareholders of HTML.
As on March 31 2020 the paid-up equity share capital of your Company stood at H116374156/- divided into 58187078 equity shares of face value of H 2/- each.
The Company's equity shares are compulsorily tradeable in electronic form. As of March31 2020 99.99% of the Company's total paid-up capital representing 58186129 equityshares is in dematerialized form. In view of the benefits offered by the depositorysystem members holding shares in physical mode are advised in their own interest toavail demat facility.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review the members at the 2nd Annual General Meeting(AGM) of the Company held on April 04 2019 approved appointment of Mr. Praveen Someshwaras Director. Further the Board of Directors of your Company at its meeting held on April18 2019 accorded approval to the appointment of Mr. Ajay Relan Mr. Vivek Mehra and Ms.Suchitra Rajendra as Additional Directors w.e.f. April 18 2019 to hold office as suchtill the date of ensuing AGM and as Independent Directors for a term of 5 (five) yearsuntil March 31 2024 subject to approval of Members.
Mr. Sharad Saxena Director of your Company since incorporation passed away on January27 2020 after a brief illness. The Board places on record its deep appreciation of thevaluable services rendered by Late Mr. Sharad Saxena during his tenure as Director of theCompany. To fill the casual vacancy caused due to demise of Late Mr. Sharad Saxena theBoard of Directors on the recommendation of Nomination
& Remuneration Committee appointed Mr. Dinesh Mittal (DIN: 00105769) asNon-Executive Director w.e.f. March 12 2020 subject to approval of Members.
Your Directors commend appointment of Mr. Ajay Relan Mr. Vivek Mehra and Ms.Suchitra Rajendra as Independent Directors and Mr. Dinesh Mittal as Non-executiveDirector for approval of members at the ensuing AGM.
In accordance with the applicable provisions of the Act Mr. Praveen Someshwarretires by rotation at the ensuing AGM and being eligible has offered himself forre-appointment. Your Directors commend re-appointment of Mr. Praveen Someshwar forapproval of the Members at the ensuing AGM.
All the Independent Directors of the Company have confirmed that they meet the criteriaof independence as prescribed under both the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI Listing Regulations'') alongwith declaration of compliance with Rules 6(1) and 6(2) of the Companies (Appointment andQualification of Directors) Rules 2014 with respect to their registration on the databank of Independent Directors maintained by Indian Institute of Corporate Affairs. TheIndependent Directors have also confirmed that they have complied with the Code ofConduct' of the Company.
Brief resume nature of expertise details of directorship held in other companies etc.of the Directors proposed to be appointed/re-appointed at the ensuing AGM along withtheir shareholding in the Company as stipulated under Secretarial Standard-2 andRegulation 36 of SEBI Listing Regulations is provided in the Notice of the ensuing AGM.
Key Managerial Personnel
During the year under review the Board of Directors approved the appointment offollowing Key Managerial Personnel (KMPs) :-
|Name ||Designation ||Date of appointment |
|Mr. Abhesh Verma ||Chief Executive Officer ||July 31 2019 |
|Mr. Anup Sharma ||Chief Financial Officer ||April 12 2019 |
|Mr. Vikas Prakash ||Company Secretary ||April 12 2019 |
In line with the requirements under the Act and SEBI Listing Regulations the Board ofDirectors undertook a formal annual evaluation of its own performance and that of itsCommittees Chairperson & Directors.
Nomination & Remuneration Committee framed questionnaires for evaluation ofperformance of the Board as a whole Board Committees (viz. Audit Committee Stakeholders'Relationship Committee and Nomination & Remuneration Committee) Directors and theChairperson on various criteria outlined in the Guidance Note on Board Evaluation'issued by SEBI on January 5 2017.
The Directors were evaluated on parameters such as value addition to discussionslevel of preparedness willingness to appreciate the views of fellow directors commitmentto processes which include risk management compliance and control commitment to allstakeholders (shareholders employees vendors customers etc.) familiarization withrelevant aspects of company's business / activities amongst other matters. Similarly theBoard as a whole was evaluated on parameters which included its composition strategicdirection focus on governance risk management and financial controls.
A summary report of the feedback of Directors on the questionnaire(s) was considered bythe Nomination & Remuneration Committee and the Board of Directors. The Board wouldendeavour to use the outcome of the evaluation process constructively to improve its owneffectiveness and deliver superior performance.
AUDIT & AUDITORS
During the year under review the Shareholders of the Company at their Extra-ordinaryGeneral Meeting held on April 1 2019 approved the appointment of M/s.MRKS andAssociates Chartered Accountants(MRKS)[Firm Registration No. 023711N] as StatutoryAuditor to fill the casual vacancy caused due to resignation of M/s. Price Waterhouse& Co. (PWC) Chartered Accountants LLP [Firm Registration No. 304026/E-300009] videtheir letter dated March 29 2019. Thereafter MRKS was appointed as Statutory Auditor bythe Members at their Second AGM held on April 4 2019 to hold office for a term of 5(five) consecutive years from the conclusion of Second AGM till the conclusion of SeventhAGM of the Company to be held in the calendar year 2024.
MRKS resigned as Statutory Auditor vide letter dated July 5 2019. To fill thecasual vacancy caused due to resignation of MRKS the Board of Directors on therecommendation of Audit Committee on July 11 2019 accorded approval to the appointmentof B S R and Associates Chartered Accountants ("BSR") [Firm Registration No.128901W] as Statutory Auditor to hold office as such upto the conclusion of the ensuingAGM. The appointment of BSR was approved by the Members of the Company on September 222019 by way of passing resolution by postal ballot.
Since the aforesaid appointment of BSR as Statutory Auditor of the Company is validupto the date of the ensuing AGM on the recommendation of Audit Committee the Board ofDirectors recommends to the Members appointment of BSR as Statutory Auditor of theCompany to hold office for a period of 5 (five) consecutive years from the conclusion ofensuing AGM till the conclusion of Eighth AGM of the Company to be held in the calendaryear 2025.
The report of BSR on Annual Financial Statements (Standalone and Consolidated) for thefinancial year ended on March 31 2020 is an unmodified opinion i.e. does notcontain any qualification reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Act and rules made thereunder theBoard of Directors appointed M/s. RMG & Associates Company Secretaries("RMG") (Firm Reg. No. P2001DE16100) as Secretarial Auditor to conduct theSecretarial Audit for the financial year ended March 31 2020 and their report is annexedherewith as "Annexure - A". The Secretarial Audit Report does not containany qualification reservation or adverse remark.
Further the Secretarial Audit of material unlisted subsidiary viz. HT Digital StreamsLimited as required under Regulation 24A of SEBI LODR has been conducted for the FY-20and there were no qualification reservation or adverse remark in the said report.
During the year under review the Statutory Auditor and the Secretarial Auditor havenot reported any instance of fraud to the Audit Committee pursuant to Section 143(12) ofthe Act and rules made thereunder. Therefore no detail is required to be disclosed underSection 134(3)(ca) of the Act.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into by the Company with relatedparties during the year under review were in ordinary course of business of the Companyand on arms' length terms. The related party transactions were placed before the AuditCommittee for review and/or approval. During the year the Company did not enter into anycontract/ arrangement/transaction with related party which could be consideredmaterial' in accordance with the Company's Policy on Materiality of anddealing with Related Party Transactions' (available on Company's website viz.www.digicontent.co.in) and therefore the disclosure of related party transactions in FormAOC-2 is not applicable.
Reference of Members is invited to Note nos. 30 and 30A of the Annual FinancialStatements which set out the related party disclosures as per Ind AS-24.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act your Directors state that:
(i) in the preparation of the annual accounts for the financial year ended on March 312020 the applicable accounting standards have been followed and there are no materialdepartures;
(ii) such accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2020 and of the loss of theCompany for the year ended on March 31 2020;
(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern' basis;
(v) proper internal financial controls were in place and that such internal financialcontrols were adequate and operating effectively; and
(vi) systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
DISCLOSURES UNDER THE COMPANIES ACT 2013
Borrowings and Debt Servicing: During the year under review your Company has metall its obligations towards repayment of principal and interest on loans availed if any.
Particulars of loans given investments made guarantees / securities given: Thedetails of investments made and loans/ guarantees/securities given as applicable aregiven in note no. 36 to the Standalone Financial Statements.
Board Meetings: A yearly calendar of board meetings is prepared and circulated inadvance to the Directors. During the financial year ended March 31 2020 the Board meteight times on April 04 2019 April 12 2019 April 16 2019 April 18 2019 July31 2019 October 24 2019 January 21 2020 and March 12 2020. For furtherdetails of these meetings Members may please refer the Report on Corporate Governancewhich forms part of the Annual Report.
Committees of the Board: At present four standing committees of the Board ofDirectors are in place viz. Audit Committee Nomination & Remuneration CommitteeBanking & Finance Committee and Stakeholders' Relationship Committee which have beenconstituted in accordance with the applicable provisions of the Act and SEBI ListingRegulations. During the year under review recommendations of these committees wereaccepted by the Board of Directors.
Remuneration Policy: The Remuneration Policy of the Company on appointment andremuneration of Directors Key Managerial Personnel & Senior Management as prescribedunder Section 178(3) of the Act and the SEBI Listing Regulations is available on theCompany's website viz. www.digicontent.co.in. The Remuneration Policy includesinter-alia the criteria for appointment of Directors KMPs Senior Management Personneland other employees their remuneration structure recommendation to the Board allremuneration in whatever form payable to Senior Management and disclosures in relationthereto.
Vigil Mechanism: The Vigil Mechanism as envisaged in the Act & rules madethereunder and the SEBI Listing Regulations is addressed in the Company's "WhistleBlower Policy". In terms of the Policy directors/employees/stakeholders of theCompany may report concerns about unethical behaviour actual or suspected fraud or anyviolation of the Company's Code of Conduct. The Policy provides for adequate safeguardsagainst victimization of the Whistle Blower. The Policy is available on the Company'swebsite viz. www.digicontent.co.in.
Particulars of employees and related disclosures: In accordance with the provisionsof Section 197(12) of the Act read with Rule 5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 details of employees remunerationare set out in the "Annexure - B" to this Report. In terms of theprovisions of Section 136(1) of the Act the Board's Report is being sent to the Memberswithout this annexure. Member interested in obtaining such information may write to theCompany Secretary at the Registered Office of the Company.
Disclosures under Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith as"Annexure - C".
Extract of Annual Return: Extract of the Annual Return for the financial year endedon March 31 2020 in Form MGT-9 is annexed herewith as "Annexure - D"and the same is also placed on the website of the Company viz. www.digicontent.co.in.The Annual Return will be hosted on Company's website after certification by CompanySecretary in practice and filing thereof with Registrar of Companies.
Corporate Governance: The report on Corporate Governance in terms of SEBI ListingRegulations forms part of this Annual Report. The certificate issued by CompanySecretary-in-Practice is annexed herewith as "Annexure E".
Conservation of energy & technology absorption: NIL
Foreign exchange earnings and outgo
- Foreign Exchange earned in terms of actual inflows during the year: NIL
- Foreign Exchange outgo in terms of actual outflows during the year: H 11.58 Lac
INFORMATION ON MATERIAL CHANGES AND COMMITMENTS
No material changes/commitments have occurred after the end of financial year 2019-20and till the date of this report which affect the financial position of your Company.
Your Directors state that the Secretarial Standards (i.e. SS-1 and SS-2) relating toMeetings of the Board of Directors' and General Meetings' have been followedby the Company.
Your Directors state that during the year under review no disclosure is required inrespect of following matters as there were no transactions/events in relation thereto:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme of the Company.
During the year under review the provisions relating to Corporate SocialResponsibility (CSR) enshrined under Section 135 of the Act were not applicable onthe Company.
The Company does not have any Employee Stock Option Scheme.
The Company has not transferred any amount to the General Reserve during the year underreview.
No significant or material order was passed by any Regulator Court or Tribunal whichimpact the going concern' status and Company's operations in future.
Your Company has in place adequate internal financial controls with reference to thefinancial statements. The internal control system is supplemented by an extensive programof internal audits and their review by the management. The in-house internal auditfunction supported by professional external audit firms conduct comprehensive riskfocused audits and evaluates the effectiveness of the internal control structure acrosslocations and functions on a regular basis. In addition to internal audit activitiesCompany has also developed an internal financial control framework to periodically reviewthe effectiveness of controls laid down across all critical processes. The Company hasinstituted an online compliance management tool with a centralized repository to cater toits statutory compliance requirements.
PREVENTION OF SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE
Your Company adheres to a strict policy to ensure safety of women employees atworkplace. The Company is fully compliant with the provisions of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and has constitutedan Internal Committee (IC) to redress complaints received regarding sexual harassment. TheCompany's policy in this regard is available on the employee's intranet. The Companyconducts regular classroom training sessions for employees and members of IC and has alsorolled-out an online module for employees to increase awareness. No instance or complaintwas reported to IC during the year under review.
Your Directors place on record their sincere appreciation for the co-operation extendedby all stakeholders including government authorities shareholders investors customersbanks vendors and suppliers. Your Directors also place on record their deep appreciationof the committed services of the executives and employees of the Company.