Your Directors have pleasure in presenting the Thirty Second Annual Report togetherwith the Audited Financial Statements of the Company for the financial year ended on 31stMarch 2020.
The consolidated and standalone financial performance of the Company for the financialyear ended 31st March 2020 is summarized below:-
' (Amount in Rs. Lakhs)
|PARTICULARS || |
For the Financial year ended 31.03.2020
For the Financial Year ended 31.03.2019
| ||consolidated ||Standalone ||Consolidated ||Standalone |
|Total revenue from continuing operations ||41884.39 ||13197.18 ||39505.04 ||17226.37 |
|Earnings before finance costs tax depreciation & amortization and exceptional items from continuing operation ||1858.70 ||(108.67) ||3379.73 ||1128.82 |
|Share of (profit)/loss of associates and a joint venture ||(88.87) ||- ||(116.55) ||- |
|Depreciation and amortization expense ||2061.67 ||918.30 ||1797.07 ||894.13 |
|Finance costs ||422.81 ||249.27 ||262.15 ||186.08 |
|Exceptional items ||(4619.30) ||(6786.69) ||0.09 ||170.82 |
|profit/(Loss) before tax from continuing operations ||(5333.95) ||(8062.93) ||1204.05 ||219.43 |
|Tax expenses || || || || |
|Current Income Tax ||532.20 ||189.35 ||1128.34 ||235.90 |
|Income Tax adjustment for earlier years (net) ||143.10 ||- ||5.68 ||(53.25) |
|Deferred tax charge/ (credit) ||(477.57) ||(373.36) ||(847.26) ||(760.11) |
|profit/(Loss) for the year from continuing operation ||(5531.68) ||(7878.92) ||917.29 ||796.89 |
|Profit/(Loss) for the Year from discontinued operation ||(39.34) ||- ||(9.15) ||- |
|Total Profit/ (Loss) for the year ||(5571.02) ||(7878.92) ||908.14 ||796.89 |
|Other comprehensive income for the year ||3.42 ||(27.80) ||83.33 ||(3.39) |
|Total comprehensive income for the year ||(5567.60) ||(7906.72) ||991.47 ||793.50 |
|Share of Minority in profits / (losses) ||(608.07) ||- ||308.12 ||- |
|profit / (Loss) for the year attributable to equity shareholders ||(4959.53) ||(7906.72) ||683.35 ||793.50 |
PERFORMANCE REViEW AND STATE OF THE COMPANY AFFAiRS
The Company is engaged in the business of digital transformation of private &public enterprises and Governments. While building a strong ecosystem over the last twodecades the Company has emerged as a technology solutions and communications platformprovider globally. The Company through its direct and step down subsidiaries isoperating in India and South Asia and Africa.
The Company through its wholly owned subsidiary "Spice Money Limited" isengaged in providing Digital Financial Services (Fintech Business).
The Company at the consolidated level achieved a total income of Rs. 41884.39 lakhsfor the year ended 31st March 2020 as against Rs. 39505.04 lakhs for theprevious year ended 31st March 2019. The loss after tax at the consolidatedlevel for the year ended on 31st March 2020 is Rs. 5531.68 lakhs as againstprofit of Rs. 917.29 lakhs in the previous year ended 31st March 2019.
The current year loss includes exceptional items of Rs. 4619.30 lakhs as one timecharges which comprises of:
a) Rs. 182.34 lakhs for settlement of old liabilities pertaining to central excise andservice tax matter under Sabka Vishwas Legacy Dispute Resolution Scheme 2019 and
b) The Company and its subsidiaries reviewed the entire portfolio of its receivablesand its investments and on a conservative basis have made a provision of Rs 4447.61lakhs including Rs 3607.79 lakhs of receivable due from a customer under a long termcontract the payment of which was linked to certain milestones and fund raise of thecustomer impairment of Rs. 1333.23 lakhs of investment (net of FCTR income of Rs 24.66lakhs) and derecongnition of loan liability of Rs. 1343.88 lakhs (net of FCTR loss of Rs.24.85 lakhs) during the year. Since this provision has mainly arisen due to inordinatedelays business uncertainties and stress over cash-flows of our customers accelerated bythe spread of Covid-19 pandemic all over the word this has been shown as Exceptionalitem.
The Company at the standalone level has earned a total income of Rs. 13197.18 lakhsfor the year ended 31st March 2020 (Previous year Rs. 17226.37 lakhs). TheCompany has incurred a loss of Rs. 7878.92 lakhs for the year ended 31stMarch 2020 as against a profit of Rs. 796.89 lakhs in the previous year ended 31stMarch 2019.
The current year loss includes exceptional item of Rs. 6786.69 lakhs as one timecharges which comprises of:
a) Rs. 182.34 lakhs for settlement of old liabilities pertaining to central excise andservice tax matter under Sabka Vishwas Legacy Dispute Resolution Scheme 2019
b) Impairment provision of Rs 5000.64 lakhs related to Investments in S GlobalServices Pte. Ltd (Rs 5000 lakhs) and S Mobility (HK) Limited (Rs. 0.64 lakhs) being thedifference in carrying amount and recoverable value and
c) Provision of Rs 1603.71 lakhs out of which Rs 690.09 lakhs relate to otherreceivables and Rs. 913.62 lakhs for receivables and loans from subsidiary companies.Since this provision has mainly arisen due to inordinate delays business uncertaintiesand stress over cash-flows of our customers/subsidiaries accelerated by the spread ofCovid-19 pandemic all over the world this has been shown as Exceptional item.
IMPACT OF COViD-19 VIRUS PANDEMIC ON THE COMPANY
The outbreak of Coronavirus (COVID-19) pandemic globally and in India has causedsignificant disruption and slowdown of economic activities. There have been delays incollection from customers and possible delinquencies in receivables from customers due tothe impact of Covid. Keeping the employees' safety at the top the Company has put inplace the Policy of work from home in March 2020 even before the announcement of lockdown by the Government of India to prevent the spread of the pandemic. Further consequentto the relaxations granted by the Governments the Company has put in place the mandatoryprotocols and Standard Operating Procedures (SOPs) for all its employees such assubmission of Self Declaration FormsThermal Screening Sanitization Maintaining socialdistancing among others as per the Guidelines stipulated by the Ministry of Home Affairsof the Government of India and applicable State Guidelines.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURES
The Company as of March 31 2020 has 23 subsidiaries and 3 associates (including oneassociate of its subsidiary company). The performance highlights of the direct/materialsubsidiaries are given below:
(a) Spice money Ltd. (formerly Spice Digital Limited)
Spice Money is a part of the Fintech industry and is solving the problems of paymentsmaking banking easy for all servicing to those areas and people where the basic bankinginfrastructure is not accessible or difficult to access. Fintech industry is helping thefinancial inclusion for the people of Rural and Semi-urban India riding on the Indiapayment Stack "JAM" Jan Dhan Accounts Aadhaar and Mobile (technology andinfrastructure) developed by the Government.
In its endeavour to participate in the financial inclusion and serving the underservedjourney Spice Money is providing various Banking and Non-Banking Services through variouslicenses and Banking correspondents arrangement with the banks. The company is enablingthese services through a technology platform which is being used by the CSP i.e. CustomerService Points appointed by the company to provide the services to the end customer.
It achieved consolidated revenue of Rs. 25543 lakhs for the year ended 31stMarch 2020 (31st March 2019 : Rs. 14373 lakhs). It reported a consolidatedprofit of Rs. 401 lakhs vis-a-vis loss of Rs. 433 lakhs in the previous year ended 31stMarch 2019.
(b) S Global Services Pte. Ltd. (Formerly SGiC Pte. Ltd.)
This company is incorporated in Singapore and is in the business of Value AddedServices and Digital Technology & Solutions and has a global presence operatingthrough its subsidiaries both direct & step down subsidiaries.
It achieved consolidated revenue of Rs. 4510.67 lakhs for the year ended 31stMarch 2020 (31st March 2019 : Rs. 9673.11 lakhs). The Consolidated lossafter Tax for the year ended 31st March 2020 is Rs. 3748.10 lakhs (31stMarch 2019 : profit of Rs.1280.85 lakhs).
The current year loss includes exceptional items of Rs. 3563.30 lakhs pertaining toprovision made on trade receivables out of which provision of Rs. 3607.79 lakhs is duefrom a customer under a long term contract the payment of which was linked to certainmilestones and fund raise of the customer.
(c) spice Digital Bangladesh Limited
This company is incorporated in Bangladesh and is in the business of Value AddedServices and Digital Technology & Solutions. It achieved revenue of Rs. 88.34 lakhsfor the year ended 31st March 2020 (31st March 2019 : Rs. 299.34lakhs). Loss after Tax for the year ended 31st March 2020 is Rs 139.11 lakhs(31st March 2019 : Profit of Rs. 49.09 lakhs).
(d) Digispice Nepal Limited
This company is incorporated in Nepal and is in the business of Value Added Servicesand Digital Technology & Solutions. It achieved revenue of Rs. 169.02 lakhs for theyear ended 31st March 2020. Profit after Tax for the year ended 31stMarch 2020 is Rs. 5.42 lakhs.
(e) spice VAs (Africa) pte. Limited
Spice VAS Group is in the business of providing of Digital Services ("VAS")in Africa and Indonesia. Currently the operations of Spice VAS covers countries likeGhana Kenya Indonesia Zambia Nigeria and Singapore.
It achieved consolidated revenue of Rs. 4101.90 lakhs for the year ended 31stMarch 2020 (31st March 2019: Rs. 9373.56 lakhs). The consolidated loss afterTax for the year ended 31st March 2020 is Rs. 3135.57 lakhs (31stMarch 2019: profit of Rs. 1637.91 lakhs).
The detailed performance and financial position of each of the subsidiaries andassociate companies are given in Form AOC-1 attached to the Consolidated FinancialStatements for the year ended 31st March 2020 and forms an integral part ofthe Annual Report.
transfer of amount to reserves
The Company has not transferred any amount to the Reserve during the Financial Yearended 31st March 2020.
In view of losses during the year under review your directors do not recommend anydividend to the shareholders.
TRANSFER OF UNCLAIMED DIVIDEND AND SHARES To INVESTOR EDUCATION AND PROTECTIIN FUND
In terms of Section 124 of the Companies Act 2013 dividend which remainsunpaid/unclaimed for a period of seven years from the date of its transfer to the unpaiddividend account is required to be transferred to the Investor Education and ProtectionFund (IEPF) established by the Government of India. Accordingly the Company hastransferred the unpaid/unclaimed dividend pertaining to the dividend of financial year2011-12 amounting to approx. Rs. 15.31 lakhs to the IEPF Account. The unclaimed/unpaiddividend relating to the financial year 2012-13 and financial year 2013-14 is due fortransfer to the IEPF Account in the month of March 2021 and December 2020 respectively.
Further pursuant to the provisions of the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 as amended from time totime all shares in respect of which dividend has not been claimed by the shareholders forseven consecutive years or more are liable to be transferred to the IEPF established bythe Central Government. Accordingly during the year the Company has transferred 95367equity shares of Rs. 3/- each to the IEPF for the unpaid/unclaimed dividend pertaining tothe financial year 2011-12. The details of the shares transferred to IEPF are available onthe website of the Company.
Once the aforesaid unclaimed dividend/ shares are transferred to IEPF the concernedshareholders can claim both the unclaimed dividend as well as the shares transferred toIEPF from the IEPF Authority by making an application in the prescribed Form and mannerunder the applicable Rules.
LISTING OF SECURITIES
The Equity Shares of the Company are presently listed on BSE Limited (BSE) and theNational Stock Exchange of India Limited (NSE). The Annual Listing Fee for the financialyear 2020-21 has been paid to both the Stock Exchanges.
As on 31st March 2020 Spice Connect Private Limited the holding companyholds 74.35% of the issued share capital of the Company.
SUBSIDIARY COMPANIES JOINT VENTURES OR ASSOCIATE COMPANIES
During the year Spice VAS (Africa) Pte. Limited (SVA) a step-down subsidiary of theCompany has divested its entire equity stake of 100% in its wholly-owned subsidiary SVA(Mauritius) Private Limited (SVAM). Consequently SVAM has ceased to be a subsidiary ofSVA and step-down subsidiary of the Company. After closure of the Financial Year SVA hasdivested its entire 49% stake in its associate Ziiki Media SA (Pty) Limited (Ziiki).Consequently Ziiki has ceased to be an associate of SVA.
Pursuant to Section 129 (3) of the Companies Act 2013 and Indian Accounting Standard -110 issued by The Institute of Chartered Accountants of India Consolidated FinancialStatement presented by the Company include the Financial Statements of its Subsidiariesand Associate Companies.
Upon receipt of request the Annual Accounts of the Subsidiary Companies and therelated information will be made available to the members of the Company. In view of theWork from home Policy of the Company due to Covid-19 pandemic these documents will not beavailable for physical inspection. The Financial Statements of Subsidiary Companies willbe uploaded on the website of the Company www.digispice.com.
auditors and auditors' report
Pursuant to the provisions of Section 139 of the Companies Act 2013 read with rulesmade there under M/s. Singhi & Co. Chartered Accountants (Firm Registration No.302049E) were appointed as Statutory Auditors of the Company to hold office for a periodof five years from the conclusion of the thirtieth Annual General Meeting till theconclusion of thirty fifth Annual General Meeting of the Company to be held in the year2023.
The Auditors' Reports for the financial year 2019-20 do not contain any qualificationor reservation or adverse remark. The Notes on Financial Statement referred to in theAuditors' Report are self-explanatory and do not call for any further comments.
During the year no incidence of fraud as defined under Section 143(12) of theCompanies Act 2013 which is required to be disclosed under Section 134(3) (ca) of theCompanies Act 2013 has been reported by the Auditors to the Board of directors of theCompany.
CASH FLOW STATEMENT
In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Cash Flow Statement for the year ended on31st March 2020 as prepared under the provisions of Indian Accounting Standard- 7 as notified under Section 133 of the Companies Act 2013 is attached as a part of theFinancial Statement of the Company.
NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR
During the financial year ended on 31st March 2020 Six (6) meetings of theBoard of Directors were held on 21st May 2019 14th June 2019 30thJuly 2019 26th September 2019 8th November 2019 and 4thFebruary 2020. The details of number of meetings of the Board and its various committeesattended by the directors are given in Corporate Governance Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. Dilip Modi (DIN: 00029062) who was Executive Chairman of theCompany till 30th September 2019 has been appointed as Non-Executive Directorand designated as Non-Executive Chairman of the Company w.e.f. 1st October2019. Mr. Modi retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.
Mr. Mayank Jain (DIN: 00251609) on the recommendation of the Nomination andRemuneration Committee was appointed as an Additional Director in the category ofNon-Executive Independent Director of the Company w.e.f. 1st October 2019. Mr.Mayank Jain holds office upto the date of the ensuing Annual General Meeting of theCompany and is eligible for appointment as an independent 0 director. The resolution forhis appointment as an Independent Director of the Company for a period of 5 years w.e.f. 1stOctober 2019 is being placed for approval of the members.
Subsequent to the end of financial year on the recommendation of the Nomination andRemuneration Committee of the Company
Mr. Rohit Ahuja (DIN: 00065417) is appointed as an Additional Director in the categoryof Executive Director w.e.f. 5th May 2020 and holds office up to the date ofensuing Annual General Meeting of the Company. He has been appointed as an ExecutiveDirector of the Company w.e.f. 5th May 2020 for a period of three years. Theresolution for his appointment as an Executive Director of the Company for a period of 3years w.e.f. 5th May 2020 is being placed for approval of the members.
Mr. Suman Ghose Hazra (DIN: 00012223) Independent Director of the Company on therecommendation of the Nomination and Remuneration Committee has been re-appointed as anIndependent Director of the Company for the second term of 5 consecutive years w.e.f. 7thMay 2020 subject to the approval of the shareholders. The resolution for hisre-appointment as an Independent Director of the Company for the second term of 5consecutive years w.e.f. 7th May 2020 is being placed for approval of themembers.
Ms. Preeti Das (DIN: 05271289) Chief Executive Officer of the Company on therecommendation of the Nomination and Remuneration Committee of the Company was appointedas an Additional Director in the category of Executive Director w.e.f. 1stOctober 2019 and designated as ED and CEO of the Company. However subsequent to thefinancial year end Ms. Preeti Das has stepped-down from the Board of the Company and alsoresigned from the post of Chief Executive Officer of the Company from the close ofbusiness hours of 4th May 2020. The Board of Directors places on record itssincere appreciation for guidance provided by her during her tenure as Executive Directorand Chief Executive Officer of the Company.
As required under Regulation 36 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the relevant provisions of the Companies Act 2013 andthe Secretarial Standard on General Meetings a brief resume details of experience andother Directorships/ Committee memberships/ Chairmanships held by the Directors in otherCompanies etc. whose appointment/ re-appointment is due in the forthcoming Annual GeneralMeeting (AGM) of the Company forms part of the Notice convening the 32nd AGM.
Pursuant to the provisions of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has obtained a certificate from a companysecretary in practice that none of the directors on the board of the Company have beendebarred or disqualified from being appointed or continuing as directors of companies bythe Board/Ministry of Corporate Affairs or any such statutory authority and forms a partof this annual report.
In view of the Internal Restructuring within the organisation Mr. Rajneesh AroraChief Financial Officer of the Company was moved to head Strategy & Alliance of theCompany and Mr. Deepak Mehta VP-Finance and Accounts of the Company was appointed asChief Financial Officer of the Company w.e.f. 4th February 2020. Howeversubsequent to the end of financial year Mr. Deepak Mehta resigned as Chief FinancialOfficer of the Company w.e.f. 30th May 2020. The Board of Directors on therecommendation of Nomination and Remuneration Committee has appointed Mr. Ravindra KumarSarawagi as Chief Financial Officer of the Company w.e.f. 26th June 2020.
As per the provisions of Companies Act 2013 Mr. Rohit Ahuja Executive Director Mr.Ravindra Kumar Sarawagi Chief Financial Officer and Mr. M. R. Bothra Company Secretaryare the Key Managerial Personnel of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 as well as Regulation 16 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
As required under Regulation 25 of the Listing Regulations the Independent Directorshave also confirmed that they meet the criteria of independence and are not aware of anycircumstance or situation which exist or may be reasonably anticipated that could impairor impact their ability to discharge their duties with an objective independent judgmentand without any external influence.
The Board is of the opinion that the independent directors have the necessaryexperience expertise and integrity and are independent of the Management of the Company.
INDEPENDENT DIRECTORS DATABANK REGISTRATION
Pursuant to the provisions of the Companies (Appointment and Qualification ofDirectors) Fifth Amendment Rules 2019 all the Independent Directors of the Company havebeen empanelled with the Independent Directors Databank as maintained by the IndianInstitute of Corporate Affairs.
MEETING OF INDEPENDENT DIRECTORS
The Ministry of Corporate Affairs (MCA) vide its General Circular No. 11 dated 24thMarch 2020 has provided certain exemption/ relief from the provisions of the CompaniesAct 2013 inter alia providing that for the financial year 2019-20 if the independentdirectors of a company have not been able to hold such a meeting the same shall not beviewed as a violation. However as a good corporate governance practice the IndependentDirectors decided to have a separate meeting and met on 9th October 2020without the presence of Non-Independent Directors and the members of management anddiscussed inter-alia the performance of Non - Independent Directors and the Board as awhole and the performance of the Chairman of the Company after taking into considerationthe views of Executive and Non-Executive Directors. The Independent Directors gave theirdetailed feedback on the Board evaluation and performance of the directors evaluated bythem and made suggestions for further improvement. The same was communicated to theconcerned directors and the Board.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
In terms of Regulation 25(7) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company familirises its directors about their rolesand responsibilities at the time of their appointment through a formal letter ofappointment. Presentations are regularly made at the meetings of the Board and its variousCommittees on the relevant subjects. All efforts are made to keep Independent Directorsaware of major developments taking place in the industry business the Company operates inand relevant changes in the law governing the subject matter. The detail offamiliarization programme as required under Listing Regulations is available athttps://www.digispice.com/Familiarization programme 2020.pdf.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Directorshereby confirm that:
|(i) ||in the preparation of annual accounts for the financial year ended 31st March 2020 the applicable Accounting Standards have been followed along with proper explanation relating to material departures; |
|(ii) ||the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as at 31st March 2020 and of the profit of the Company for the period ended on that date; |
|(iii) ||the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; |
|(iv) ||the Directors have prepared the annual accounts on a going concern basis; |
|(v) ||the Directors have laid down proper internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively; and |
|(vi) ||the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. |
MANAGEMENT DiSCUSSiON AND ANALYSiS REPORT
As required under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Management Discussion and Analysis (MDA) Report forms anintegral part of this Report.
CORPORATE GOVERNANCE REPORT
A separate report on Corporate Governance is enclosed as a part of this Annual Report.The Company has appointed M/s. Sanjay Grover & Associates Practising CompanySecretaries to conduct the Corporate Governance Audit of the Company. A Certificate fromthem regarding compliance with Corporate Governance conditions as stipulated under therelevant provisions of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed to the Report on Corporate Governance.
As required under Section 204(1) of the Companies Act 2013 read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andRegulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has appointed M/s. Sanjay Grover & Associates Practising CompanySecretaries to conduct the Secretarial Audit for the financial year 2019-20. TheSecretarial Audit Report received from them forms part of this Annual Report. TheSecretarial Audit Report does not contain any qualification reservation and adverseremark.
Pursuant to Regulation 24A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 every listed company shall annex with its annual reportthe Secretarial Audit Report of its material subsidiaries incorporated in India. Incompliance with the said requirement the Secretarial Audit Report of Spice Money Limited(formerly Spice Digital Limited) a material subsidiary of the Company for the financialyear 2019-20 is annexed herewith and forms part of the Annual Report.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has in place an established internal financial control system designed toensure proper recording of financial and operational information and compliance of variousinternal controls and other regulatory and statutory compliances. Self-certificationexercise is also conducted by which senior management certifies effectiveness of theinternal control system of the Company. Findings of the Internal Audit Report are reviewedby the top management and by the Audit Committee invariably and proper follow up actionsare ensured wherever required. c
In view of the Work from home Policy of the Company a few changes have been made inthe internal financial control system primarily in relation to physical evidencing ofdocuments and remote access working for various functions. However at overall level theongoing operations of internal financial control system are substantially unaffected byCovid-19 pandemic.
The Company has designed and implemented Risk And Control Matrix (RACMs) includingtherein the process wise controls. It appointed an external agency to evaluate theprevalent internal control and risk management system. The Audit Committee ensures thatthe Company maintains effective risk management and internal control systems andprocesses. It provides its feedback and recommendation on the relevant matters to theBoard.
The Statutory Auditors and Internal Auditors also evaluate the system of InternalControls of the Company and report to the Audit Committee. Appropriate steps are taken tobridge the gaps observed by them. The Auditors have reported that the present systems andprocesses of internal controls are adequate and commensurate with the size of the Companyand nature of its business.
The Board on the recommendation of Audit Committee in its meeting held on 26thJune 2020 has re-appointed M/s. GSA & Associates Chartered Accountants to act asInternal Auditors of the Company for the Financial Year 2020-21. The Internal Auditorsdirectly report to the Audit Committee.
In compliance with the provisions of Section 177 of the Companies Act 2013 andRegulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has a duly constituted Audit Committee. The Audit Committee comprises ofthe following Directors:
|1. ||Mr. Suman Ghose Hazra ||- ||Chairman |
|2. ||Dr. (Ms.) Rashmi Aggarwal ||- ||Member |
|3. ||Mr. Subramanian Murali || |
The details of the terms of reference meetings held during the year attendance ofdirectors at such meetings etc. are provided in Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
The Board had constituted a Corporate Social Responsibility (CSR) Committee and on therecommendation of CSR Committee the Board approved the CSR Policy. The CSR Committee hasalso been entrusted with the responsibility of monitoring the implementation of theframework of the CSR Policy recommending to the Board the amount of expenditure to beincurred on CSR activities and ensuring that the implementation of the projects andprograms is in compliance with the CSR Policy of the Company.
The Corporate Social Responsibility Committee comprises of the following members:
|1. Mr. Dilip Modi ||Chairman |
|2. Mr. Subramanian Murali ||Member |
|3. Mr. Suman Ghose Hazra ||Member |
During the year the CSR Committee met once i.e. on 29th July 2019. Allthree members attended the meeting.
The Annual Report on the CSR activities is attached herewith as Annexure - 1.
BOARD FINANCE COMMITTEE
The Board had constituted a Board Finance Committee and entrusted the said Committeewith the functions to approve the borrowings making of loans creation of charge on theassets of the Company etc. The said Committee is also authorised to open close and makechanges in signatories for the operation of the bank accounts. The said Committee consistsof Mr. Dilip Modi as Chairman and Mr. Subramanian Murali Non-Executive Director and Mr.Suman Ghose Hazra Independent Director as members. During the year the said Committeemet three times on 2nd May 2019 16th October 2019 and 9thMarch 2020 and all the members of the Committee were present in the meetings except inone meeting which was not attended by Mr. Dilip Modi.
EXTRACT OF THE ANNUAL RETURN
In compliance with Section 92(3) of the Companies Act 2013 read with Rule 12 of theCompanies (Management and Administration) Rules 2014 the extract of the Annual Return inForm MGT-9 is attached (Annexure - 2) as a part of this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of Loans Guarantees or Investments made under Section 186 of the CompaniesAct 2013 are provided in the Notes forming part of the financial statements.
MAINTENANCE OF COST RECORDS
The Company is not required to maintain cost records as specified by the CentralGovernment under sub-section (1) of Section 148 of the Companies Act 2013.
During the year under review the Company has neither accepted nor renewed any depositsin terms of Chapter V of the Companies Act 2013.
PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the financial year the Company has entered into various transactions withrelated parties. All related party transactions are undertaken in compliance with theapplicable provisions of the Companies Act 2013 and the Listing Regulations.
All related party transactions are placed before the Audit Committee for its approval.The quarterly disclosures of transactions with related parties are made to the AuditCommittee for its review. As required under the Companies Act 2013 and the provisions ofListing Regulations the Audit Committee has granted Omnibus approval for related partytransactions which are repetitive in nature and fall within the criteria laid down for thepurpose.
During the year the Board has on the recommendation of the Audit Committee amendedthe Policy on Related Party Transactions to include therein the variouschanges/modifications as notified by the SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018.
The Policy on Related Party Transactions' dealing with such transactions andPolicy on Material Subsidiaries' as recommended by the Audit Committee and approvedby the Board of Directors are uploaded on the website of the Company viz.www.digispice.com.
All related party transactions entered during the financial year were in the ordinarycourse of business. There were no material related party transactions entered by theCompany with Directors KMPs or other persons which may have a potential conflict with theinterest of the Company.
Since all the related party transactions entered into by the Company during thefinancial year were at arm's length basis and in the ordinary course of business and therewas no material related party transaction (i.e. a transaction exceeding 10% of the annualconsolidated turnover as per the last audited financial statements) no detail is requiredto be given in Form AOC-2.
In pursuance to the Comprehensive Scheme of Arrangement the DTS Business of SpiceMoney Limited (SML) (formerly known as Spice Digital Limited) a wholly owned subsidiaryof the Company has been demerged into the Company and the transactions done by SML inrelation to this business are the transactions done on behalf of the Company andtherefore back to back transactions for transitional period have not been considered forreporting purpose here.
The details of the transactions with related parties are provided in Note 36 ofstandalone financial statements and Note 41 of the consolidated financial statements. 9
The Company as required under Section 177 of the Companies Act 2013 Regulation 22 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and SEBI(Prohibition of Insider Trading) Regulations 2015 has established "Vigil Mechanism /Whistle Blower Policy" for Directors and Employees of the Company.
This Policy has been established with a view to provide a tool to directors andemployees of the Company to report to the management genuine concerns including unethicalbehavior actual or suspected fraud or violation of the Code of Conduct of the Company.This Policy outlines the procedures for reporting handling investigating and deciding onthe course of action to be taken in case inappropriate conduct is noticed or suspected.
This Policy also provides for adequate safeguards against victimization ofdirector(s)/employee(s) who avail of the mechanism and also provides for direct access tothe Chairman of the Audit Committee in exceptional cases.The Audit Committee is authorizedto oversee the Vigil Mechanism/ Whistle Blower Policy in the Company. The Company has notreceived any reference under the said policy during the year. c
The Whistle Blower Policy is available on the Company's website at the linkhttps://www.digispice.com/Vigil Mechanism Whistle Blower Policy.pdf.
RISK MANAGEMENT POLICY
The Company is not mandatorily required to constitute a Risk Management Committee.TheBoard of Directors on the recommendation of Audit Committee had adopted a RiskManagement Policy for the Company to lay down the procedure to inform the Board membersabout the risk assessment and minimization. As a good practice the Company regularlyreviews the existing risk management system and major risks associated with differentbusinesses of the Company. The Audit Committee oversees the Risk Management function andreviews the prevailing risk management framework in the Company periodically. The Board ofDirectors of the Company on the recommendation of the Audit Committee takes appropriatemeasures reviews the major risks associated with the Company and takes all requisitemeasures to minimize them.
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee of the Company had framed a Policy for Nomination and Appointment of Directors.As required under Section 178 of the Companies Act 2013 read with the Rules madethereunder and the Listing Regulations the Nomination and Remuneration Committee alsorecommended to the Board a Remuneration Policy for remuneration including ESOP toDirectors Key Managerial Personnel and Senior Management Personnel and other employees ofthe Company which was duly approved by the Board. The Board on the recommendation of theCommittee appoints the Senior Management Personnel from time to time.
The Remuneration Policy of the Company is available at https://www.digispice.com/RemPolicy.pdf.
EMPLOYEES STOCK OPTIONS
During the year all the ESOPs granted by the Nomination and Remuneration Committee inits meetings held on September 18 2018 and February 5 2019 held by the employees on thedate of vesting have been vested in favour of respective employees. No further ESOP hasbeen granted to any employee during the financial year. None of the employees haveexercised any vested ESOP till date.
The Certificate from the Auditors of the Company stating that the ESOP Scheme has beenimplemented in accordance with the SEBI (Share Based Employee Benefits) Regulations 2014(the "SBEB Regulations") and the resolutions passed by the members would beavailable at the Annual General Meeting for inspection by members.
During the year there has been no change in the SML Employee Stock Option Plan - 2018of the Company. The applicable disclosures as stipulated under the SBEB Regulations as onMarch 312020 with regard to the SML Employee Stock Option Plan - 2018 of the Company areavailable on the website of the Company at https://www.digispice.com/ESOP disclosure2020.pdf.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to applicable provisions of the Companies Act 2013 as amended from time totime the Nomination and Remuneration Committee (NRC) has specified the manner foreffective evaluation of performance of Board its Committees and individual Directors anddecided that it will be done by the Board itself internally. The Board of Directors hascarried out evaluation of performance of each of them. The Committee reviews itsimplementation and ensures the compliances thereof. As per the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the NRC has also formulated a frameworkcontaining inter-alia the criteria for performance evaluation of the entire Board of theCompany its Committees and individual Directors including Independent Directors. TheCommittee has selected certain additional criteria for evaluation of the Board Committeesand Directors.
A structured questionnaire including the new criteria has been prepared coveringvarious aspects of the functioning of the Board and its Committees such as adequacy ofthe constitution and composition of the Board and its Committees discharge of roles andresponsibilities by the Board and its Committees succession plan for Board Members andSenior Management frequency of the meetings regulatory compliances and CorporateGovernance etc. Similarly for evaluation of individual director's performance includingfor independent directors the questionnaire covers various aspects like his/ herattendance at the meetings of Board and its Committees contribution in Board andCommittee meetings execution and performance of specific duties obligations regulatorycompliances and governance adequate and timely disclosures etc. The said questionnairesare reviewed by the NRC.
Board members had submitted their response on a scale of 1 (outstanding) to 5 (poor)for evaluating the entire Board Committees of the Board and of their peer Board membersincluding Chairman of the Board.
The Board of Directors has carried out evaluation of every Director's performanceincluding the Executive Director. The performance evaluation of the Independent Directorshave been done by the entire Board excluding the Director being evaluated on the basis ofperformance and fulfilment of the independence criteria as specified under the CompaniesAct 2013 and the Listing Regulations.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
As required under the Sexual Harassment of Women at Workplace (Prohibition Preventionand Redressal) Act 2013 (POSH Act) the Company has a Policy on Prevention of SexualHarassment of Women at Workplace and matters connected therewith. The Company has compliedwith the provisions relating to the constitution of Internal Committee.
No case of Sexual Harassment was filed or registered during the year under the POSHAct. Further the Company ensures that there is a healthy and safe environment for everywomen employee at the workplace and made the necessary policies for safe and secureenvironment.
ORDERS PASSED BY THE REGULATORS OR COURTS IF ANY
No significant and material orders were passed by the Regulators Courts or Tribunalsimpacting the going concern status and Company's operations in future.
conservation of energy technology absorption and foreign exchange earnings and
Pursuant to provisions of Section 134 of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 the details of Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are attached (Annexure- 3) which formspart of this report.
particulars of employees
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014including any statutory modification(s) thereof for the time being in force the detailsof remuneration etc. of Directors Key Managerial Personnel and employees covered underthe said Rules is attached (Annexure- 4) which forms part of this report.
compliance WITH secretarial STANDARDS
The Company has complied with the provisions of Secretarial Standard - 1 (SecretarialStandard on meetings of Board of Directors) and Secretarial Standard - 2 (SecretarialStandard on General Meetings) issued by the Institute of Company Secretaries of India.
acknowledgements * *
Yours Directors would like to express their grateful appreciation for assistance andcooperation received from the Banks Government Authorities CustomersVendors and Membersduring the year under review. Your Directors also wish to place on record their deep senseof appreciation for the committed services of the Executives Staff and Workers of theCompany at all levels.
| ||For and on behalf of the Board of Directors of |
| ||DiGiSpicE Technologies Limited |
| ||(Formerly Spice Mobility Limited) |
|Date: 13th November 2020 ||Dilip Modi |
|place: Noida ||chairman |