Your Directors have pleasure in presenting the Thirty First Annual Report together withthe Audited Financial Statements of the Company for the financial year ended on 31stMarch 2019.
The consolidated and standalone financial performance of the Company for the financialyear ended 31st March 2019 is summarized below:
| || || |
(Amount in Rs. Lakhs)
|PARTICULARS || |
For the Financial Year ended 31.03.2019
For the Financial Year ended 31.03.2018
| ||Consolidated ||Standalone ||Consolidated ||Standalone |
|Total revenue from continuing operations ||39505.04 ||17226.37 ||29373.98 ||15569.98 |
|Earnings before finance costs tax depreciation & amortization and exceptional items from continuing operation ||3379.73 ||1128.82 ||1887.55 ||(906.82) |
|Share of (profit)/loss of associates and a joint venture ||(116.55) ||- ||(78.60) ||- |
|Depreciation and amortization expense ||1797.07 ||894.13 ||1697.16 ||934.10 |
|Finance costs ||262.15 ||186.08 ||205.37 ||169.27 |
|Exceptional items ||0.09 ||170.82 ||(6746.23) ||(4871.58) |
|Profit/(Loss) before tax from continuing operations ||1204.05 ||219.43 ||(6839.81) ||(6881.77) |
|Tax expenses || || || || |
|Current Income Tax ||1128.34 ||235.90 ||816.40 ||174.11 |
|Income Tax adjustment for earlier years (net) ||5.68 ||(53.25) ||116.31 ||19.83 |
|Deferred tax charge/ (credit) ||(847.26) ||(760.11) ||(126.77) ||(142.14) |
|Profit/(Loss) for the Year from continuing operation ||917.29 ||796.89 ||(7645.75) ||(6933.57) |
|Profit/(Loss) for the Year from discontinued operation ||(9.15) ||- ||3176.04 ||- |
|Total profit/ (Loss) for the year ||908.14 ||796.89 ||(4469.71) ||(6933.57) |
|Other comprehensive income for the year ||83.33 ||(3.39) ||131.38 ||6.32 |
|Total comprehensive income for the year ||991.47 ||793.50 ||(4338.33) ||(6927.25) |
|Share of Minority in profits / (losses) ||308.12 ||- ||(915.00) ||- |
|Profit / (Loss) for the year attributable to equity shareholders ||683.35 ||793.50 ||(3423.33) ||(6927.25) |
Pursuant to the Comprehensive Scheme of Arrangement between Spice Mobility Limited(SML) Spice Digital Limited (SDL) Spice IOT Solutions Private Limited MobisocTechnology Private Limited and Spice Labs Private Limited and their respectiveShareholders and Creditors as approved by the Hon'ble National Company Law Tribunal NewDelhi Principal Bench the assets and liabilities of Digital Technology Services (DTS)Business of SDL and the amalgamating companies (Spice IOT Solutions Private LimitedMobisoc Technology Private Limited and Spice Labs Private Limited) were transferred to andvested with the Company with effect from the appointed date viz. April 01 2017.Accordingly the previous year figures have been regrouped and/or rearranged whereverrequired to align with disclosure parameters of the Amalgamated Company.
PERFORMANCE REVIEW AND STATE OFTHE COMPANY AFFAIRS
After the implementation of the Comprehensive Scheme of Arrangement the Company is nowin the business of Digital Technology Services (DTS Business) and is engaged in EnterpriseSolutions encompassing Telco Support Solutions Government Centric Solutions EnterpriseMessaging Mobility Software Solutions Traditional VAS etc. with "data" beingthe core of service delivery and is also providing managed services to mobile operators inIndia. The Company is also engaged in similar Service business through its subsidiaries inAfrica Bangladesh Indonesia etc.
The Company through its wholly owned subsidiary `Spice Money Ltd' is also engaged inFinancial Technology Services (Fintech Business). The Company at the standalone levelhas earned a total Income of Rs. 17226.37 lakhs for the year ended 31st March 2019(Previous year Rs. 15569.98 lakhs). The Company has earned a profit of approx. Rs.796.89lakhs for the year ended 31st March 2019 as against a loss of Rs. 6933.57 lakhs in theprevious year ended 31st March 2018. The Company at the consolidated level achieved atotal income of Rs. 39505.04 lakhs for the year ended 31st March 2019 as against Rs.29373.98 lakhs for the previous year ended 31st March 2018. The profit after tax at theconsolidated level for the year ended on 31st March 2019 is Rs. 917.29 lakhs (PreviousYear loss of Rs. 7645.75 lakhs). In the previous year the loss includes Rs. 6746.23 lakhson account of exceptional items pertaining to "Discontinued Operations" andother one-time charges.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINTVENTURES
The Company as of March 31 2019 has 24 subsidiaries and 3 associates (including oneassociate of its subsidiary company). The highlights of the principal subsidiariesare given below:
(a) Spice Money Ltd. (Formerly known as spice Digital Ltd.) - This Company is inthe fintech business conducted through retail network enabling domestic Money transferBill payments Ticketing etc. operating under licenses from RBI UIADI IRCTC like PPI(Pre-paid instruments) Bharat Bill Payment System (BBPS) AUA/KUA Ticketing etc. Itachieved consolidated revenue of Rs. 14373 lakhs for the year ended 31st March 2019 (31stMarch 2018- Rs. 6057 lakhs) and reported a consolidated loss of Rs. 433 lakhs vis-a-visprofit of Rs. 6 lakhs in the previous year ended 31st March 2018.
(b) S Global services pte. Ltd. (Formerly sgic pte. Ltd.) - This Company isincorporated in Singapore and is in the business of Value Added Services and DigitalTechnology & Solutions and has a global presence operating through its subsidiariesboth direct and step down subsidiaries. It achieved consolidated revenue of Rs. 9673.11lakhs for the year ended 31st March 2019 (31st March 2018 Rs. 9467.95 lakhs). Itreported a consolidated Profit after Tax for the year ended 31st March 2019 of Rs.1280.85 lakhs (31st March 2018 Rs. 400.51 lakhs).
(c) Spice Digital Bangladesh- This Company is incorporated in Bangladesh and isin the business of Value Added Services and Digital Technology & Solutions. Itachieved revenue of Rs. 299.34 lakhs for the year ended 31st March 2019 (31st March 2018Rs. 208.13 lakhs) and Profit after Tax for the year ended 31st March 2019 of Rs.49.09 lakhs (31st March 2018 Rs. 26.63 lakhs). The detailed performance and financialposition of each of the subsidiaries and associate companies are given in Form AOC-1attached to the Consolidated Financial Statements for the year ended 31st March 2019 andforms an integral part of the Annual Report.
COMPREHENSIVE SCHEMEOFARRANGEMENT BETWEEN THE COMPANYAND ITS SUBSIDIARY COMPANIES
The Hon'ble National Company Law Tribunal (NCLT) Principal Bench New Delhi vide itsOrder dated 20th May 2019 sanctioned the Comprehensive Scheme of Arrangement("Comprehensive Scheme" or "Scheme") between Spice Mobility Limited(SML) Spice Digital Limited (SDL) Spice IOT Solutions Private Limited MobisocTechnology Private Limited and Spice Labs Private Limited and their respectiveShareholders and Creditors.
The said Scheme has been made effective from 1st June 2019 with appointmentdate as 1st April 2017. As per the terms of the aforesaid Scheme DTSBusiness Undertaking of SDL has been demerged into the Company and Spice IOT SolutionsPrivate Limited Mobisoc Technology Private Limited and Spice Labs Private Limited thesubsidiary companies have got amalgamated with the Company. The implementation of thesaid Scheme has resulted into consolidation of similar businesses into SML making it aDigital Technology Service Business Company.
Consequently the two step down subsidiary companies S Global Services Pte. LimitedSingapore (SGS) and Spice Digital Bangladesh Limited which were earlier subsidiaries ofSDL and associates of SDL have become direct subsidiaries/associates of Spice MobilityLimited.
INCREASE IN AUTHORISED SHARE CAPITAL
Pursuant to the sanction of Comprehensive Scheme of Arrangement the Authorised SharesCapital of the Company has been increased from Rs. 990000000 (Rupees Ninety Nine Croresonly) divided into 330000000 (Thirty Three Crores) Equity Shares of Rs. 3/- each to Rs.1240500000/- (Rupees One Hundred Twenty Four Crores and Five Lakhs only) divided into413500000 (Forty One Crores and Thirty Five Lakhs) Equity Shares of Rs. 3/- each andaccordingly the Clause V of the Memorandum of Association of the Company stands altered.
INCREASE IN ISSUED SHARE CAPITAL AND ALLOTMENT OF SHARES
As per the Comprehensive Scheme of Arrangement the Board of Directors of the Companyin its meeting held on 14th June 2019 has issued and allotted 38083 (ThirtyEight Thousand Eighty Three) Equity Shares of Rs.3/- each to the shareholders of SpiceDigital Ltd and Spice Labs Private Limited towards consideration as provided in the saidScheme as detailed hereunder: i. 25090 fully paid up equity shares of the face value ofRs. 3/- each to the shareholder of Spice Digital Limited as a consideration for demeger ofDTS Business into Spice Mobility Limited and for remaining business of Spice DigitalLimited and ii. 12993 fully paid up equity shares of the face value of Rs. 3/- each tothe shareholder of Spice Labs Private Limited as a consideration towards amalgamation ofSpice Labs Private Limited into Spice Mobility Limited.
Consequent to the issue and allotment of the said 38083 Equity Shares of Rs. 3/- eachthe paid-up and issued equity share capital of the Company has increased from Rs.683591946 (Rupees Sixty Eight Crores Thirty Five Lakhs Ninety One Thousand Nine Hundredand Forty Six only) divided into 227863982 (Twenty Two Crores Seventy Eight Lakhs SixtyThree Thousand Nine Hundred and Eighty Two) Equity Shares of Rs. 3/- each to Rs.683706195/- (Rupees Sixty Eight Crores Thirty Seven Lakhs Six Thousand One Hundred andNinety Five only) divided into 227902065 (Twenty Two Crores Seventy Nine Lakhs TwoThousand and Sixty Five) Equity Shares of Rs. 3/- each.
CHANGE IN OBJECT CLAUSE
Pursuant to the Comprehensive Scheme of Arrangement the main Object Clause III (A) ofthe Memorandum of Association of the Company has been altered and amended to include theobjects as required to carry on the business activities of DTS Business Undertaking andother related businesses.
CHANGE IN NAME OFTHE COMPANY
After the implementation of the Scheme of Arrangement the DTS Business of SDL has beendemerged into the Company and is now being carried out directly by the Company. TheCompany has launched its digital initiatives in the last 12 months under the"DiGiSPICE" brand and moving towards making it a leading Next GEN digitalservices and product Company. Accordingly to reflect properly the new business of theCompany in its name the Board of Directors of the Company decided to change the name ofthe Company from Spice Mobility Limited to DiGiSPICE Technologies Limited. As requiredunder the applicable laws the Company obtained the requisite approval of the shareholdersby way of a Special Resolution passed through Postal Ballot. The Registrar of CompaniesDelhi has approved the change in name of the Company and issued a new Certificate ofIncorporation on 8th August 2019 effecting the change of name of the Company from SpiceMobility Limited to DigispiceTechnologies Limited.
TRANSFER OF AMOUNT TO RESERVES
The Company has not transferred any amount to the Reserve during the Financial Yearended 31st March 2019.
The Board of Directors has recommended a dividend of 15% (Rs. 0.45/- per Equity Shareof Rs.3/- each) on the Equity Shares for the financial year 2018-19. The IndependentNon-Promoter Trust has waived-off its rights to receive dividend on its entire holding inthe Company. The said dividend if approved by the shareholders would involve a cashoutflow of Rs. 953.78 lakhs (excluding tax).
TRANSFER OF UNCLAIMED DIVIDEND AND SHARESTO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of the Investors Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 notified by the Ministry of CorporateAffairs (MCA) as amended from time to time all shares in respect of which dividend hasnot been paid or claimed by the Shareholders for seven consecutive years or more areliable to be transferred to the Investors Education and Protection Fund (IEPF) establishedby the Central Government.
Accordingly during the year the Company has transferred 68471 equity sharespertaining to the Financial Year ended 2010-11 to the IEPF. The details of the sharestransferred to IEPF is available on the website of the Company. The unclaimed and unpaiddividend relating to the financial year 2011-12 is due for transfer to the IEPF in themonth of January 2020.
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 2019-20 has been paid to both the Stock Exchanges. The 38083 equity shares of Rs.3/-each issued and allotted pursuant to the Scheme of Arrangement have also been listed andadmitted for dealing on both the Stock Exchanges.
As on 31.03.2019 Spice Connect Private Limited the holding Company holds 74.36% ofthe issued share capital of the Company which subsequent to the allotment of 38083equity shares of Rs.3/- each in pursuance to the Scheme of Arrangement has gone down to74.35%.
SUBSIDIARY COMPANIES JOINTVENTURES OR ASSOCIATE COMPANIES
In pursuance to the Scheme of Arrangement Spice IOT Solutions Private Limited thewholly owned subsidiary company of the Company & Mobisoc Technology Private Limitedand Spice Labs Private Limited the step down subsidiaries of the Company through SpiceDigital Limited (SDL) had been amalgamated with the Company. After allotment of theshares to the shareholders of SDL as provided in the said Scheme SDL has become a whollyowned subsidiary of the Company w.e.f. June 14 2019.
For carrying on the telecom related operations in Nepal the Company has incorporatedDigispice Nepal Private Limited' a wholly owned subsidiary company in Nepal onJanuary 21 2019.
During the year Spice Digital Limited a subsidiary of the Company has divested itsentire equity stake of 49% in Adgyde Solutions Private Limited (Adgyde). ConsequentlyAdgyde has ceased to be a joint venture and associate of Spice Digital Limited. S GlobalServices Pte. Ltd. a step down subsidiary of the Company has acquired 70% stake in FastTrack IT Solutions Ltd. a Company incorporated under the laws of Bangladesh.
Consequent to issue of shares by Ziiki Media SA (Pty) Ltd (formerly known as SpiceDigital South Africa (Pty) Limited) (Ziiki) the stake of Spice VAS (Africa) Pte. Limited(SVA) the step down subsidiary of the Company in Ziiki has gone down to 49% andaccordingly Ziiki has ceased to be a subsidiary of SVA and has become an associate.
After closure of the Financial Year Spice VAS (Africa) Pte. Ltd. (SVA) a step downsubsidiary of the Company has transferred its 100% stake in SVA (Mauritius) Pvt. Limited(SVAM). Accordingly SVAM has ceased to be a subsidiary of the Company.
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 Associates 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. These documentsshall also be available for inspection at the registered office of the Company during thebusiness hours up to the date of ensuing Annual General Meeting. The Financial Statementsof Subsidiary Companies will be uploaded on the website of the Company www.digispice.com.
AUDITOR S AND AUDITORS' REPORT
Pursuant to the provisions of Section 139 of the Companies Act 2013 read with rulesmade thereunder 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 2018-19 do not contain any qualificationor reservation or adverse remark. The Notes on Financial Statement referred to inthe Auditors' Report are self-explanatory and do not call for any further comments. Duringthe year no incidence of fraud as defined under Section 143(12) of the Companies Act2013 which is required to be disclosed under Section 134(3) (ca) of the Companies Act2013 has been reported by the Auditors to the Board of directors of the Company.
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 2019 as prepared under the provisions of Indian Accounting Standard -7 asnotified under Section 133 of the Companies Act 2013 is attached as a part of theFinancial Statement of the Company.
NUMBER OF BOARD MEETINGS HELD DURINGTHE FINANCIALYEAR
During the financial year ended on 31st March 2019 Six (6) meetings of the Board ofDirectors were held on 17th May 2018 13th August 2018 5th October 2018 2ndNovember 2018 7th December 2018 and 5th February 2019. The details of number of meetingsof the Board and its various committees attended by the directors are given inCorporate Governance Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. (Ms.) Rashmi Aggarwal (DIN: 07181938) was appointed as an Additional Director inthe category of Non-Executive Independent Director w.e.f. 2nd November 2018. Dr. Rashmiholds office upto the date of the ensuing Annual General Meeting of the Company and iseligible for appointment as an independent director. The resolution for her appointment asIndependent Director of the Company for a period of 5 years w.e.f. 2nd November 2018 isbeing placed for approval of the members.
Mr. Subramanian Murali (DIN: 00041261) Director retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-appointment.
As required under Regulation 36 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a brief resume details of experience and otherDirectorships/ Committee memberships/ Chairmanships held by the Directors in otherCompanies whose appointment/ re-appointment is due in the forthcoming Annual GeneralMeeting (AGM) of the Company forms part of the Notice convening the 31st AGM.Pursuant to the provisions of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has obtained a certificate from a company secretary inpractice that none of the directors on the board of the Company have been debarred ordisqualified from being appointed or continuing as directors of companies by theBoard/Ministry of Corporate Affairs or any such statutory authority and forms a part ofthis annual report.
During the year Mr. Hanif Mohamed Dahya resigned as Independent Director of theCompany w.e.f. 7th February 2019 due to lack of time to attend any Board Meeting as perthe regulatory requirement since he is based out of USA. Subsequent to the year end Mr.Umang Das resigned as Independent Director of the Company w.e.f. 7th August2019 due to personal reasons and other commitments. Mr. Shrenik Mahendra Khasgiwalaresigned as Non-Executive Director of the Company w.e.f. 7th August 2019 due tohis new professional commitments. The Board of Directors places on record its sincereappreciation for guidance provided by them during their tenure as Directors of theCompany.
In order to bring the expertise necessary to run the digital technology servicebusiness which the Company is focusing on the Board of Directors on the recommendationof Nomination and Remuneration Committee has appointed Ms. Preeti Das as a ChiefExecutive Officer of the Company w.e.f. 2nd November 2018.
Mr. Madhusudan Venkatachary resigned as Chief Financial Officer of the Company w.e.f.4th December 2018. The Board of Directors in its meeting held on 7thDecember 2018 on the recommendation of Nomination and Remuneration Committee hasappointed Mr. Rajneesh Arora as Chief Financial Officer of the Company with effectfrom that date. As per the provisions of Companies Act 2013 Mr. Dilip Modi ExecutiveChariman Ms. Preeti Das Chief Executive Officer Mr. Rajneesh Arora ChiefFinancial Officer and Mr. M. R. Bothra Company Secretary are the Key Managerial Personnelof the Company.
DECLARATION OF INDEPENDENCE
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.
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 roleand 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.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 March2019 the applicable Accounting Standards have been followed along with proper explanationrelating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the State of Affairs of the Company as at 31st March 2019 and of the profitof the Company for the period ended on that date; (iii) the Directors have taken properand sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Companies Act 2013 for safeguarding the assets of the Company andfor 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 bythe Company and such internal financial control are adequate and were operatingeffectively; (vi) the Directors had devised proper system to ensure compliance with theprovisions 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 2018-19. TheSecretarial Audit Report received from them forms part of this Annual Report. TheSecretarial Audit Report does not contain any qualification reservation and adverseremark.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL 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. The Company has designed and implemented Risk And ControlMatrix (RACMs) including therein the process wise controls. It appointed an externalagency to evaluate the prevalent internal control and risk management system. The AuditCommittee ensures that the Company maintains effective risk management and internalcontrol systems and processes. It provides its feedback and recommendation on the relevantmatters to the Board. The Statutory Auditors and Internal Auditors also evaluate thesystem of Internal Controls of the Company and report to the Audit Committee. Appropriatesteps are taken to bridge the gaps observed by them. The Auditors have reported that thepresent systems and processes of internal controls are adequate and commensuratewith the size of the Company and nature of its business.
The Board on the recommendation of Audit Committee in its meeting held on 30th July2019 has re-appointed M/s. GSA & Associates Chartered Accountants to act as InternalAuditors of the Company for the Financial Year 2019-20. The Internal Auditors directlyreport 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 Board of Directors of theCompany has re-constituted the Audit Committee w.e.f. 16th August 2019. The re-constitutedAudit Committee comprises of the following Directors:
|1. Mr. Suman Ghose Hazra ||- Chairman |
|2. Dr. Rashmi Aggarwal ||- Member |
|3. Mr. Subramanian Murali ||- Member |
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 Corporate Social Responsibility Policy of the Company.The Board w.e.f. 16th August 2019 has re-constituted the CSR Committee. There-constituted Corporate Social Responsibility Committee comprises of the followingmembers:
|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 13th August 2018. Allthree members attended the meeting.
The Company was not required to spend any amount on CSR activities during the year2018-19 under Companies (Corporate Social Responsibility Policy) Rule 2014. Howeverpursuant to demerger of DTS Business Undertaking of Spice Digital Limited into theCompany the CSR expenditure amounting to Rs.36.00 lakhs as spent by Spice DigitalLimited during the financial year 2018-19 has been included in the financials of theCompany. Accordingly Annual Report on the CSR activities undertaken by SDL during theyear 2018-19 is attached (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 and Mr. Suman Ghose Hazraas members of the Committee. During the year the said Committee met once on 8thJune 2018 and all the members of the Committee were present in the meeting.
EXTRACT OFTHE 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. In line with the requirements of SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 the Related Party Transaction Policy and thePolicy on Material Subsidiaries were amended. The amended Policy on Related PartyTransactions' dealing with such transactions and Policy on Material Subsidiaries' asrecommended by the Audit Committee and approved by the Board of Directors are uploaded onthe 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.
The details of the transactions with related parties are provided in the Notes tofinancial statements.
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.
The Whistleblower policy was amended in line with SEBI (Prohibition of Insider Trading)(Amendment) Regulations 2018 enabling employees to report instances of leak or suspectedleak of Unpublished Price Sensitive Information.
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 isauthorized to oversee the Vigil Mechanism/ Whistle Blower Policy in the Company. TheCompany has not received any reference under the said policy during the year.
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 Board 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. The Company is not mandatorily required toconstitute a Risk Management Committee. As a good practice the Company regularly reviewsthe existing risk management system and major risks associated with different businessesof the Company. The Audit Committee oversees the Risk Management function and reviews theprevailing risk management framework in the Company periodically. The Board of Directorsof the Company on the recommendation of the Audit Committee takes appropriate measuresreviews the major risks associated with the Company and takes all requisite measures tominimize 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 Nomination and Remuneration Policy was amended in line with the requirements ofSEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018. Thekey changes include inter alia addition of the definition of senior management alongwith recommendations about their remuneration. The Policy is directed towards a structurethat provides adequate rewards and compensation to the employees at all level. TheRemuneration Policy of the Company is available athttps://www.digispice.com/Rem_Policy.pdf.
EMPLOYEES STOCK OPTIONS
During the year the Nomination & Remuneration Committee in its meetings held onSeptember 18 2018 and February 5 2019 has granted 21381000 and 3439000 stockoptions respectively at an exercise price of Rs. 13.25 per option to the eligibleemployees as covered under the SML Employee Stock Option Plan 2018 (the "Esop plan").The vesting of options granted will be in the ratio of 40:30:30 at the end of 1st2nd and 3rd year from the date of respective grant and exercise period forvested options would be 3 years from the date of respective vesting. Each option entitlesthe holder to apply for one equity share of Rs. 3 /- each as per the terms of the ESOPPlan.
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 wouldbe placed at the Annual General Meeting for inspection by members.
During the year there has been no change in the SML Employee Stock Option Plan 2018 ofthe Company.
The applicable disclosures as stipulated under the SBEB Regulations as on March 312019 with regard to the SML Employee Stock Option Plan 2018 of the Company are availableon the website of the Company at https://www.digispice.com/ESOP_disclosure.pdf.
PERFORMANCE EVALUATION OFTHE 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 has specified the manner for effectiveevaluation of performance of Board its Committees and individual Directors. The Board ofDirectors has carried out evaluation of performance of each of them. The Committee reviewsits implementation and ensure the compliances thereof. As per the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Nomination andRemuneration Committee has also formulated a framework containing inter alia thecriteria for performance evaluation of the entire Board of the Company its Committees andindividual Directors including Independent Directors. The Committee has selected certainadditional criteria for evaluation of Executive Director.
A structured questionnaire has been prepared covering various aspects of thefunctioning of the Board and its Committees such as adequacy of the constitution andcomposition of the Board and its Committees discharge of role and responsibility by theBoard and its Committees frequency of the meetings regulatory compliances and CorporateGovernance etc. Similarly for evaluation of individual Director's performance thequestionnaire covers various aspects like his/her attendance at the meeting of Board andits Committees contribution in Board and Committee meetings execution and performance ofspecific duties obligations regulatory compliances and governance etc.
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 Independent Directors had met separately without the presence of Non-IndependentDirectors and the members of management and discussed inter-alia the performance of Non- Independent Directors and the Board as a whole and the performance of the Chairman ofthe Company after taking into consideration the views of Executive and Non-ExecutiveDirectors.
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 the Company had a Policy on Prevention of sexual harassment ofwomen at workplace and matters connected therewith. With a view to include certain changesin the existing policy the Board in its meeting held on 5th February 2019 has approvedthe revised Policy on Prevention of Sexual Harassment of women at workplace. TheCompany has complied with the provisions relating to the Constitution of InternalCommittee.
No case of Sexual Harassment was filed or registered during the year under the SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013. Further 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 BYTHE 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 OUTGO
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 thedetails of remuneration etc. of Directors Key Managerial Personnel and employees coveredunder the 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.
Yours Directors would like to express their grateful appreciation for assistance andcooperation received from the Banks Government Authorities Customers Vendors andMembers during the year under review. Your Directors also wish to place on record theirdeep sense of appreciation for the committed services of the Executives Staff and Workersof the Company at all levels.
| ||For and on behalf of the Board of Directors of |
| ||Digispice Technologies Limited |
| ||(Formerly spice Mobility Limited) |
|Date: August 24 2019 ||Dilip Modi |
|Place: Noida ||Executive chairman |