TO THE SHAREHOLDERS To the Members
The Reconstituted Board of the Company (as defined elsewhere in this Report) havepleasure in presenting the Sixth (6th) Directors' Report together with the auditedfinancial statements of the Company for the financial year ended March 31 2021(Period under Review').
In accordance with the application made by Oman Inc. HUF the Hon'ble National CompanyLaw Tribunal Ahmedabad bench ("Adjudicating Authority") vide its order datedApril 26 2019 ("Insolvency Commencement Order") had ordered the commencement ofthe corporate insolvency resolution ("CIR") process in respect of the corporatedebtor i.e. Digjam Limited ("Company") under the provisions of the Insolvencyand Bankruptcy Code 2016 (the "Code"). Sri Parag Sheth (IP Registration No.IBBI/IPA-002/IP-N00142/2017-18/10381) was appointed as an Interim Resolution Professional("IRP") to manage affairs of the Company in accordance with the provisions ofthe Code. Subsequently Hon'ble NCLT vide its Order dated January 1 2020 had appointedSri Sunil Kumar Agarwal (IP Registration No. IBBI/IPA-001/IP-01390/2018-19/12178) asResolution Professional (RP') of the Company. Upon appointment of the IRP / RP thepowers of the Board of Directors were suspended.
Pursuant to its order dated May 27 2020 ("NCLT Order") the AdjudicatingAuthority approved the resolution plan ("Approved Resolution Plan") submitted byFinquest Financial Solutions Private Limited ("FFSPL") ("ResolutionApplicants") for the Company under Section 31 of the Code. In accordance with theprovisions of the Code and the NCLT order the Approved Resolution Plan is binding on thecorporate debtor and its employees members creditors guarantors and other stakeholdersinvolved in the resolution plan.
As per the Approved Resolution Plan during the period between the NCLT Approval Date(as defined in the
Approved Resolution Plan) and the Closing Date (as defined in the Approved ResolutionPlan) ("Interim Period") i.e. 180 days from the NCLT Approval Date a monitoringcommittee was constituted ("Monitoring Committee") which during the periodfollowing the date of approval from Hon'ble NCLT and until the Closing Date comprising of1 (One) representative of the Financial Creditors 2 (Two) representatives of theResolution Applicants and the Erstwhile Resolution Professional managed the affairs of theCompany as a going concern and supervised the implementation of the Resolution Plan. Thepowers of the Board of Directors continued to remain suspended for the part of the periodto which this report pertain to as per the terms of the Approved Resolution Plan.Accordingly the Monitoring Committee was in office for the part of the period to whichthis report primarily pertains. During the CIR Process (i.e. between April 26 2019 andMay 27 2020) the IRP / RP was entrusted with the management of the affairs of theCompany. The mandate of the Monitoring Committee was to manage the affairs of the Companyas a going concern and supervise the implementation of the Resolution Plan. The MonitoringCommittee stood dissolved on completion of the Interim Period the Reconstituted
Board of the Company took over control over the operation w.e.f. November 22 2020 andnew management was put in place.
The Reconstituted Board of Directors of the Company is submitting this Report incompliance with the provisions of the Companies Act 2013 the rules and regulationsframed thereunder ("Act") and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI LODRRegulations"). The Reconstituted Board is not to be considered responsible todischarge fiduciary duties with respect to the oversight on financial and operationalhealth of the Company and performance of the management for the period prior to itsreconstitution and same was under supervision of the Monitoring Agent.
This Report was discussed in a meeting held with the Key Management Persons andthereafter taken on record by the Reconstituted Board.
IMPLEMENTATION OF RESOLUTION PLAN
The Hon'ble National Company Law Tribunal Ahmedabad Bench ("NCLT") vide itsorder dated May 27 2020 approved the Resolution Plan submitted by Finquest FinancialSolutions Private Limited under Section 31 of the Insolvency and Bankruptcy Code 2016.
Pursuant to the Approved Resolution Plan the following key changes have taken placeduring the Year under review: a. Reduction and cancellation / extinguishment of ShareCapital of the Company detailed in note no. 11 to financial statements; b. Increase inauthorised share capital and allotment of securities; c. Reconstitution of the Board ofDirectors of the Company and its Committees; and d. Revocation of powers of existingPromoters and Promoters Group
| || ||(Rs. Lakhs) |
| ||March 31 2021 ||March 31 2020 |
|Operations for the year resulted in (Loss)/Profit before Interest and Depreciation of ||(1246.42) ||(1391.11) |
|less: Finance Costs ||23.66 ||112.79 |
|less: Depreciation ||242.47 ||254.65 |
|(Loss)/Profit for the year before Exceptional Items and Tax ||(1512.55) ||(1758.55) |
|less: Exceptional Items ||2406.42 ||- |
|(Loss)/Profit Before Tax ||893.87 ||(1758.55) |
|less: Taxation ||- ||- |
|(Loss)/Profit After Tax ||893.87 ||(1758.55) |
|Other Comprehensive Income ||- ||13.87 |
|Balance brought forward ||893.87 ||(1744.68) |
|leaving a Balance of which is carried forward ||1845.72 ||(12506.28) |
REVIEW OF KEY BUSINESS MATTERS
After the Approval of the Resolution Plan and implementation of the same by theMonitoring Committee (till closing date) and thereafter by the reconstituted Board themanufacturing of woollen and worsted fabrics at the Company's mill located at Jamnagar hadbeen recommenced from the month of November 2020 which was suspended from October 222018 due to extremely tight liquidity working capital position and due to on-going CIRPProcess. During the Period under Review the Company has achieved a total income of Rs.611.47 Lakh as against Rs. 88.84 Lakhs in previous financial year. The net profit aftertax (after exceptional item) of the Company for the year under review is Rs. 893.87 Lakhas against Loss of Rs. 1744.68 Lakh for the previous year. The net profit for the yearunder review includes an exceptional item of Rs. 2406.42 Lakh on account of write off/Impairment / Extinguishment of Current and Non-Current Assets and due to Extinguishment /Write Back of Non-Current Liabilities provided in earlier years more particularlydescribed in Note No. 27. of the Financial Statements.
The total sales of the Company for the year under review amounted to Rs. 611.47 lakh.The loss before tax and exceptional item was Rs. 1512.55 Lakh mainly due to sub-optimumlevel of manufacturing operations lower profitability provision for doubtful debts andadvances interest burden and depreciation. The Profit after tax of Rs.
893.87 lakh is due to exceptional item of Rs. 2406.42 lakh as mentioned above.
A detailed analysis of financial results is given in the
"Management Discussion and Analysis Report" which forms part of this Report.
There is no recommendation of dividend on preference shares and equity shares of theCompany for the financial year under review.
TRANSFER TO RESERVES:
No amount has been transferred to Reserves for the financial year under review.
IMPACT OF COVID-19
The outbreak of Coronavirus (COVID-19) pandemic globally and in India is causingsignificant disturbance and slowdown of economic activity. In many countries businessesare being forced to cease or limit their operations for long or indefinite periods oftime. Measures taken to contain the spread of the virus including travel bansquarantines social distancing and closures of non-essential services have triggeredsignificant disruptions to businesses worldwide resulting in an economic slowdown.
COVID-19 is significantly impacting business operation of the companies by way ofinterruption in production supply chain disruption unavailability of personnel closure/ lockdown of production facilities etc. In assessing the recoverability of Company'sassets such as Investments Loans Trade receivable etc. the Company has consideredinternal and external information. The company has performed sensitivity analysis on theassumptions used basis the internal and external information / indicators of futureeconomic conditions the Company expects to recover the carrying amount of the assets.
NATURE OF BUSINESS:
There has been no change in the nature of the business of the Company during the yearunder review.
During the year under review your Company has not accepted/ renewed any publicdeposits within the meaning of Sections 73 to 76A of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Particulars of loans guarantees or investments pursuant to Section 186 of theCompanies Act 2013 are provided in the notes to the financial statements.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company has no subsidiary joint venture or associate company.
DIRECTORS & KEY MANAGERIAL PERSONNEL Demise of Sri Bharat Patel Chairman
Sri Bharat Patel Chairman of the Company from 2020 to 2021 breathed his last on May29 2021 at Mumbai. Sri Bharat Patel was appointed on the Board of the company in 2020 andwas a visionary and a major guiding force in reviving the company which was in severedistress due to on-going CIRP process. Under his Mentorship and Visionary leadership heaccepted challenge to revive many well-known Textile Brands during his long career with avision to build one of the most trusted Textile Brands in the Country. The Companyimmensely benefitted from his vision and leadership during his tenure. The Board and themanagement are committed in carrying forward the vision of Sri Bharat Patel in elevatingthe company to new heights.
The Board and all the employees pay their homage from their heart for his contributionsto the company.
Composition of the Board
During the year under review Sri Sidharth Birla (DIN: 00004213) Sri S. Ragothaman(DIN: 00042395) Sri A.R. Sreekanth (DIN: 05324789) and Sri G. Ramanathan (DIN: 08321952)have tendered their resignation as Directors of the Company w.e.f. June 25 2020 in termsof the approved Resolution Plan. The Company places on record its sincere and deepappreciation of the valuable guidance and services rendered by Sri Sidharth Birla Sri S.Ragothaman Sri A. R. Sreekanth and Sri G. Ramanathan.
Pursuant to commencement of the CIR Process the powers of the board of directors weresuspended and were exercised by the Resolution Professional / the Monitoring Committee forthe part of the year under review in accordance with the provisions of the Code /Approved Resolution Plan.
As a part of the implementation of the Resolution Plan the erstwhile board ofdirectors of the Company were replaced with new board of directors and MonitoringCommittee had appointed Sri Bharat Patel (DIN: 01100361) Sri Hardik B. Patel (DIN:00590663) Sri D. G. Rajan (DIN: 00303060) and Ms. Sudha Bhushan (DIN: 01749008) w.e.fJuly 13 2020 in the casual vacancies caused due to resignations of Sri Sidharth BirlaSri S. Ragothaman Sri A.R. Sreekanth and Sri G. Ramanathan respectively. The MonitoringCommittee had also appointed Sri Ajay Kumar Agarwal (DIN: 03508224) as the AdditionalDirector of the Company effective from August 8 2020 and the appointment of Sri AjayKumar Agarwal as Director of the Company was approved by the Shareholders of the Companyat their 5th Annual General Meeting held on September 26 2020. Thereafter The Board ofDirectors on November 25 2020 appointed Sri Ajay Agarwal (DIN: 00649182) as anAdditional Director (Whole-time Directors) of the Company not liable to retire byrotation for a term of three (3) consecutive years with effect from November 25 2020 toNovember 24 2023 subject to approval of members in the ensuing annual general meeting.
The Board of Directors on June 24 2021 appointed Sri Panchapakesan Swaminathan (DIN:00901560) as Additional Director (Independent Director) of the Company not liable toretire by rotation for a term of five (5) consecutive years with effect from June 242021 to June 23 2026 subject to approval of members in the ensuing annual generalmeeting. Upon the demise of Sri Bharat Patel the Board of Directors at their meeting heldon May 24 2021 designated Sri Hardik B. Patel as Chairman of the Company.
The Board of Directors of the company comprises of 6 directors as on the date of reportdetails as under: a. Sri Hardik B. Patel (DIN: 00590663) Chairman b. Sri Ajay KumarAgarwal (DIN: 03508224) Non-executive Non-Independent Director c. Sri D. G. Rajan (DIN:00303060) Independent Director d. Ms. Sudha Bhushan (DIN: 01749008) Independent Directore. Sri Panchapakesan Swaminathan (DIN: 00901560) Additional Director (IndependentDirectors) f. Sri Ajay Agarwal (DIN: 00649182) Additional Director (Whole-time Directors)In the opinion of the Board of your Company Sri Ajay Agarwal and Sri PanchapakesanSwaminathan are persons of integrity and possesses relevant expertise and experience andthey fulfil the conditions specified in the
Companies Act 2013 and the Listing Regulations for such an appointment.
The board of directors has recommended the appointment of Sri Ajay Agarwal and SriPanchapakesan Swaminathan in ensuing annual general meeting to members for their approval.Sri Hardik B. Patel retires by rotation at the 6th
Annual General Meeting and being eligible offers himself for re-appointment pursuantto Section 152 and other applicable provisions of the Companies Act 2013.
Key Managerial Personnel
During year under review Sri Ajay Agarwal (DIN: 00649182) was appointed as Whole TimeDirector of the Company for a term of three (3) consecutive years with effect fromNovember 25 2020 to November 24 2023. Thereafter the Board of Directors also designated/ Appointed Sri Ajay
Agarwal (DIN: 00649182) as the Chief Financial Officer of the Company with effect fromJune 24 2021.
Sri Satish Shah has resigned as Chief Financial Officer with effect from April 102020 due to health-related problems. Sri Jatin Jain has resigned as Company Secretary and
Compliance Officer with effect from November 30 2020 due to his pre-occupation. SriSatish Shah and Sri Jatin Jain both have provided the detailed reason of their resignationand that there was no other material reason for their resignation other than the reasonprovided as above.
Sri Punit Bajaj has been appointed as Company Secretary and Compliance Officer andappointed as key managerial personnel of the Company with effect from June 24 2021. YourCompany has following key managerial personnel as on date of this report: Sri AjayAgarwal Whole Time Director and Chief Financial
Sri Punit Bajaj Company Secretary and Compliance
STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director whoare part of reconstituted
Board confirming that he/she meets the criteria of independence as laid out in Section149(6) of the Companies Act 2013 read with the schedules rules made thereunder andRegulation 16(1) (b) of the Listing Regulations.
POLICY ON DIRECTORS' APPOINTMENT AND POLICY ON REMUNERATION
Pursuant to Section 134(3)(e) and Section 178(3) of the Companies Act 2013 the Policyon appointment of Board
Members including criteria for determining qualifications positive attributesindependence of a Director and the Policy on remuneration of Directors KMP and otheremployees is annexed to this Report as Annexure A and is also available on the weblinkhttp://digjam.co.in/files/ policy/Policy%20on%20Remuneration%20to%20Exec%20Director%20%26%20Sr%20Management.pdf
PARTICULARS OF REMUNERATION OF DIRECTORS / KMP / EMPLOYEES
Disclosures pertaining to remuneration and other details as required pursuant toSection 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed to thisReport as Annexure B.
NUMBER OF MEETINGS OF THE BOARD
Members may kindly note that the directors of the reconstituted board were not inoffice for the part of the period to which this report primarily pertains. ResolutionProfessional during the CIRP and Monitoring Committee from completion of CIRP untilimplementation of Resolution Plan were entrusted with and responsible for the managementof the affairs of the Company.
After the re-constitution of Board as a part of the implementation of Resolution Planof the Company with effect from November 22 2020 three (3) board meetings were heldduring the year under review. For attendance and other details please refer the CorporateGovernance Report which forms part of the Annual Report 2020-21.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
As per section 17 of the Insolvency and Bankruptcy Code 2016 the powers of the Boardof Directors of the Company were suspended during the CIRP with effect from April 26 2019and such powers were vested with the Resolution Professional. As a part of theimplementation of the Resolution Plan approved by the Hon'ble NCLT vide its order datedMay 27 2020 the Reconstituted Board of the Company took over control over the operationw.e.f. November 22 2020 after completion of interim period. Therefore being very shortperiod it was not feasible for the new board of directors to carry out the performanceevaluation of board its committees and individual directors during the remaining periodof year under review after reconstitution.
The Company has put in place a policy containing inter-alia the criteria forperformance evaluation of the Board its committees and individual Directors (includingindependent directors) is annexed to this Report as Annexure C.
DIRECTORS' RESPONSIBILITY STATEMENT
Members may kindly note that the directors of the reconstituted board were not inoffice for the part of the period to which this report primarily pertains. ResolutionProfessional during the CIRP and Monitoring Committee from completion of CIRP untilcompletion of interim period were entrusted with and responsible for the management ofthe affairs of the Company.
As pointed out above the reconstituted Board of Directors have been in office onlysince November 22 2020. The reconstituted Board is submitting this report in compliancewith the Act and Listing Regulations and the Directors as on date are not to beconsidered responsible for the fiduciary duties discharged with respect to the oversighton financial and operational health of the Company and performance of the management forthe period prior to November 22 2020. Accordingly as required under section 134(3) (c)read with section 134 (5) of the Act the board of directors based on the knowledge/information gained by them about the actions of the resolution professional/ MonitoringCommittee (i.e. who were entrusted with and responsible for the management of the affairsof the Company prior to the November 22 2020) and the affairs of the Company in a limitedperiod of time from the records of the Company state that: a. in the preparation of theannual accounts for the financial year ended March 31 2021 the applicable accountingstandards had been followed and no material departures have been made from the same; b.such accounting policies have been selected and applied consistently and judgments andestimates 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 at March 31 2021 and of the profit of theCompany for the year ended on that date; c. the proper and sufficient care has been takenfor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d. the annual accounts of the Company have beenprepared on a going concern basis; e. the internal financial controls were in place andthat such internal financial controls were adequate and were operating effectively; and f.the reconstituted board has devised the proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
AUDITORS AND THEIR REPORTS Statutory Auditor
The terms and conditions of the Resolution Plan approved by the Hon'ble NCLT vide itsOrder dated May 27 2020 provides that the existing Statutory Auditors shall be deemed tovacated their office on the closing date of the interim period (i.e. 180 days from theapproval of the Resolution Plan) which is November 22 2020. Thereafter the Board ofDirectors in their meeting held on November 25 2020 decided that pursuant to theprovisions of Section 139(8) of the Companies Act 2013 and rules made thereunder M/sS.K. Bajpai & Co. Chartered Accountants (Firm Registration no. 004330C) wereappointed as
Statutory Auditor of the Company to hold office for their second term w.e.f. November23 2020 to the casual vacancy as per aforesaid terms and conditions of the
Resolution Plan to hold office till the conclusion of the 6th
Annual General Meeting (AGM') to be held in the year 2021 on such remunerationas may be mutually agreed between the Board of Directors and the Auditors plus out ofpocket expenses as may be incurred.
Accordingly the term of existing statutory auditors gets completed on conclusion of6th AGM of the Company in terms of the said approval and Section 139 of the Companies Act2013 read with the Companies (Audit and Auditors) Rule 2014. As their term will expire onconclusion of 6th AGM the Board of Directors of the Company proposes to change theStatutory Auditors as part of good corporate governance. The Audit Committee and the Boardof Directors at their meetings held on June 24 2021 after considering various parametersand subject to approval of the shareholders recommended the appointment of M/s. NayanParikh & Co. Chartered Accountants (Firm
Registration No. 107023W) as Statutory Auditors in place of retiring StatutoryAuditors for a term of 1 (one) year commencing from conclusion of this 6th AGM till theconclusion of 7th AGM.
The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditor' Report does notcontain any qualification or reservation. There is also no fraud has been reported by theAuditors in their Audit Report for the year ended March 31 2021.
The Company had appointed M/s N.D. Birla & Co. Cost Accountants Ahmedabad toaudit the cost accounts of the Company for the year ended March 31 2021 and theremunerationpayabletothemwasapprovedbytheMembers at their 5th Annual General Meeting.Further the Board of Directors on the recommendation of Audit Committee has re-appointedM/s N.D. Birla & Co. Cost Accountants (Firm Registration No. 000027) as Cost Auditorto conduct audit of the cost accounting records of the Company for the financial yearending on March 31 2022. As required under Section 148 of the Companies Act 2013 aresolution regarding
of the remuneration payable to M/s N.D. Birla
& Co. Cost Accountants forms part of the Notice convening the 6th Annual GeneralMeeting of the Company.
Pursuant to provisions of Section 134 of the Companies Act 2013 read with Rule 8(5) ofthe Companies (Accounts)
Rules 2014 it is confirmed that the Company has made and maintained the cost recordsas specified by the Central
Government under sub-Section (1) of Section 148 of the Companies Act 2013.
CS Viral Sanghavi (Proprietor: Viral Sanghavi & Associates) Practicing CompanySecretary (FCS: 10331 CP: 9035) was appointed as Secretarial Auditor to conduct theaudit of secretarial records of the Company for the financial year ended on March 31 2021pursuant to Section
204 of the Companies Act 2013. The Secretarial Audit Report submitted by him in theprescribed form MR- 3 is annexed to this Report as Annexure D.
Secretarial Audit Report:
The directors of the reconstituted Board were not in office for the part of the periodto which this report primarily pertains. Resolution Professional during the CIRP andMonitoring Committee/Agent from completion of CIRP until completion of interim period i.e.Closing date(November 22 2020) were entrusted with and responsible for the management ofthe affairs of the Company. The reconstituted Board of
Directors have been in office only since November 22 2020 and reconstituted Board issubmitting these explanations in compliance with the Act. Explanations to the observationsmade by the secretarial auditor in his report for the year under review are as follows: a)The Company had received letter no. NSE/LIST/ SOP/0584 dated September 1 2020 fromNational Stock Exchange of India Ltd. ("NSE") in relation to levy of fine forvarious Non-compliance/delay in filings under Regulations 13 31 33 and 34 of SEBI (LODR)Regulations 2015 during CIRP period details as follows: a. As required under Regulation33 of SEBI (LODR) Regulations 2015; the submission of Audited Financial Results for theyear ended March 31 2019 should have to be disclosed before May 30 2019 but the same wassubmitted on February 4 2020 and the unaudited Financial Results for the quarter endedJune 30 2019 September 30 2019 and December 31 2019 should have to be disclosed beforeAugust 14 2019 November 14 2019 and February 14 2020 respectively but the same weresubmitted on April 9 2020.
In this regard the NSE has levied fine 1250000/- Rs. 1190000/- 735000/- and265000/- (exclusive of GST @ 18%) for Non-Compliance of the Regulation. The Company hasmade application/ Representation for waiver of fine before the fine waiver Committee ofNSE for waiving of the fine. b. As required under Regulation 31 of SEBI (LODR)Regulations 2015; the submission of the Shareholding Pattern for the Quarter ended
September 2019 and December 2019 has to be filed with Stock Exchanges within 21 daysfrom the end of the quarter i.e. October 21 2019 and January 21 2020 respectively butthe same were submitted on March 22 2020.
In this regard The NSE levied fine of Rs. 304000/- and Rs. 122000/- (exclusive ofGST @ 18%) respectively for Non-Compliance of the Regulation. The Company has madeapplication/
Representation for waiver of fine before the fine waiver Committee of NSE for waivingof the fine. c. As required under Regulation 13 of SEBI (LODR) Regulations 2015; thedelayed submission of the Statement of investor grievances for the Quarter endedSeptember 2019 December 2019 and March 2020 has to be filed with Stock Exchanges byOctober 21 2019 January 21 2019 and May 15 2020 (extension granted due to COVID-19)respectively but the statement for QE September & December 2019 were submitted onMarch 3 2020 while statement for QE March 2020 submitted on May 19 2020.
In this regard The NSE levied fine of Rs. 133000/- and Rs. 42000/- (exclusive ofGST @ 18%) respectively for Non-Compliance of the Regulation. The Company has madeapplication/ Representation for waiver of fine before the fine waiver Committee of NSE forwaiving of the fine. d. As required under Regulation 34 of SEBI (LODR) Regulations 2015;the delayed submission of Annual Report for year ended March 31 2019 with the StockExchanges.
In this regard The NSE levied fine of 140000/- (exclusive of GST @ 18%) respectivelyfor Non-Compliance of the Regulation. The Company has made application/ Representation forwaiver of fine before the fine waiver Committee of NSE for waiving of the fine.
The observations and comments given by the Secretarial Auditors in his report areself-explanatory and hence the same to be treated as explanation provided under Section134 of the Act.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLETO THE CENTRAL GOVERNMENT
The Statutory Auditor Cost Auditor and Secretarial Auditor of your Company have notreported any frauds to the Audit Committee or to the Board of Directors under Section143(12) of the Companies Act 2013 including rules made thereunder.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
The internal control systems include documented policies checks and balancesguidelines and procedures that are supplemented by robust internal audit processes andmonitored continuously through periodical reviews by management to provide reasonableassurance that all assets are safeguarded; and all transactions entered into by Companyare authorized recorded and reported properly. Internal control systems are integral tothe Company's corporate governance. The internal control systems and procedures aredesigned to assist in the identification and management of risks the procedure-ledverification of all compliances as well as an enhanced control consciousness. Thereconstituted board / management are of the opinion that based on the knowledge/information gained by them about affairs of the Company in a limited period of time fromrecords of the Company the Company has effective internal financial control systems andpolicies and such controls are operating effectively. The reconstituted management istaking steps for further strengthening of internal financial controls.
Post-acquisition the reconstituted Board/management has reviewed the internal controlsframework of the Company with an objective to have a robust internal control frameworkcommensurate with the size scale and nature of business of the Company. The reconstitutedmanagement has initiated steps to implement the robust internal control framework. Thisframework includes entity-level policies processes and Standard Operating Procedures(SOP).
The details relating to internal financial controls and their adequacy are included inthe Management Discussion and Analysis Report which forms part of the Annual Report2020-21.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments affecting the financial position ofyour Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and date of this Report.
BUSINESS RISK MANAGEMENT
The main identified risks at the Company are Commercial risks financial risksoperational risks and legal & regulatory risks. Your Company has established acomprehensive risk management system to ensure that risk to the Company's continuedexistence as a going concern and to its development are identified and addressed on timelybasis. Risk Management strategy as approved by the board of Directors is implemented bythe Company management.
CORPORATE SOCIAL RESPONSIBILITY:
The profit of the Company is less than the amount specified under section 135 of theCompanies act 2013 and thereby provision of Corporate social responsibilities andobligation thereof are not applicable to the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under section 134(3)(m) of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 is annexed to this Report as Annexure E.
CHANGE IN SHARE CAPITAL
As a part of the implementation of the Resolution Plan approved by the Hon'ble NCLTunder Section 31 of the Insolvency and Bankruptcy Code 2016 vide its order dated May 272020 the following changes have taken place in the share capital of your Company duringthe year under review:
Authorised Share Capital
Pursuant to the Resolution Plan the authorised share capital of your Companywas increased from Rs. 1250500000 (Rupees One Hundred Twenty-Five Crore and Five Lakhonly) divided into 100050000 (Ten Crore and Fifty Thousand) Equity Shares of Rs. 10(Rupees Ten only) each aggregating to Rs. 1000500000 (Rupees One Hundred Crore andFive Lakh only) and 2500000 (Twenty-Five Lakh) Preference Shares of Rs. 100 (Rupees OneHundred only) each aggregating to Rs. 250000000 (Rupees Twenty-Five Crore only) to Rs.1270500000 (Rupees One Hundred Twenty-Seven Crore and Five Lakh only) divided into100050000 (Ten Crore and Fifty Thousand) equity Shares of Rs. 10 (Rupees Ten only) eachaggregating to Rs. 1000500000 (Rupees One Hundred Crore and Five Lakhs only) and2700000 (Twenty-Seven Lakh) Preference Shares of Rs. 100 (Rupees One Hundred only) eachaggregating to Rs. 270000000 (Rupees Twenty-Seven Crore only) by creation of additional200000 (Two Lakh) Preference Shares of Rs. 100 (Rupees Hundred Only) each aggregating toRs. 20000000 (Rupees Two Crore Only).
Issued Subscribed and Paid-up Share Capital
Pursuant to the implementation of Resolution Plan as approved by Hon'ble NCLT:
a. Reduction and Cancellation / extinguishment of Share Capital of the Company:
The existing issued subscribed and Paid-up share capital of the Company was reducedfrom Rs. 926416210 (Rupees Ninety-two Crore Sixty-four Lakh Sixteen Thousand TwoHundred and Ten only) consisting of 87641621 (Eight Crore Seventy-six Lakh Forty-oneThousand Six Hundred and Twenty-one) equity shares of Rs. 10 (Rupees Ten only) each and500000 (Five Lakh) preference shares of Rs. 100 (Rupees One Hundred only) each to Rs.20000000 (Rupees Two Core only) consisting of 2000000 (Twenty Lakh) equity shares ofRs. 10 (Rupees Ten only) each accordingly the value of issued subscribed and paid-upshare capital of the Company was reduced by Rs. 906416210 (Rupees Ninety CroreSixty-four Lakh Sixteen Thousand Two Hundred and Ten only) consisting of 85641621(Eight crore Fifty-six Lakh Forty-one Thousand Six hundred and twenty-one) equity sharesof Rs. 10 (Rupees Ten only) each and 500000 (Five Lakh) Preference Shares of Rs. 100(Rupees One Hundred only) each.
b. Allotment of Equity Shares and Preference Shares to FFSPL
Pursuant to Resolution Plan during the year the Company allotted 18000000 (OneCrore and Eighty Lakhs only) Equity Shares of Rs. 10 (Rupees Ten only) each aggregating toRs. 180000000 (Rupees Eighteen Crores only) and 2700000 (Twenty-Seven Lakhs) 7% Non-convertible Cumulative Redeemable Preference Shares of Rs. 100 (Rupees One Hundredonly) each aggregating to Rs. 270000000 (Rupees Twenty-Seven Crores only) to FinquestFinancial Solutions Private Limited. As on March 31 2021 the total equity paid-up sharecapital of your Company was 2000 Lakhs divided into 20000000 equity shares of Rs. 10each fully paid-up and total preference paid-up share capital of your Company was 2700Lakh divided into 2700000 preference shares of Rs. 100 each fully paid up.
EXTRACT OF ANNUAL RETURN OF THE COMPANY
The copy of the Annual Return of the Company as provided under sub-section (3) ofsection 92 of the Companies Act 2013 is available on the web link www.digjam.co.in.
Your Company has followed applicable Secretarial Standards i.e. SS-1 and SS-2relating to Meetings of the Board of Directors and General Meetings respectively.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Your Company is committed to maintain the highest standards of Corporate Governance andadheres to the Corporate Governance requirements as set out by the Securities and ExchangeBoard of India ("SEBI"). Your Company has also implemented several bestgovernance practices.
Separate reports on Corporate Governance Compliance and Management Discussion andAnalysis as stipulated under Regulation 34 read with Schedule V of the Listing Regulationsforms part of the Annual Report 2020-21 along with the requisite certificate issued byStatutory Auditors of your Company regarding compliance of the conditions of CorporateGovernance.
PARTICULARSOFCONTRACTSORARRANGEMENTS WITH RELATED PARTIES
With reference to Section 134(3) (h) of the Companies Act 2013 all contracts andarrangements with related parties under Section 188(1) of the Companies Act 2013 enteredby your Company during the year under review were in the ordinary course of business andon an arm's length basis. During the year under review your Company had not entered intoany contract or arrangement with a related party which could be considered material'(i.e. transactions exceeding ten percent of the annual turnover as per the last auditedfinancial statements entered into individually or taken together with previoustransactions during the financial year) according to the policy of your Company onmateriality of Related Party Transactions. There are no transactions that are required tobe reported in form AOC-2. However all the transactions with related parties which werein the ordinary course of business and on an arm's length basis have been disclosed inNote No. 37 of the Financial Statements.
COMMITTEES OF THE BOARD:
The Board of Directors has the following Committees: (1) Audit Committee; (2)Nomination and Remuneration Committee; (3) Stakeholders' Relationship Committee.
As the powers of the Board of Directors stood suspended post commencement of the CIRprocess and continued to remain suspended in terms of the Approved Resolution Plan tillclosing date ie. November 22 2020.
Post implementation of Approved Resolution Plan the Audit Committee Nomination andRemuneration has been reconstituted in accordance with the provisions of Companies Act2013 and SEBI LODR Regulations with effect from November 25 2020 the details withrespect to the compositions powers terms of reference number and dates of meetings ofsuch committees held during the year are given in details in the report on CorporateGovernance which forms part of this Annual Report.
During the year the reconstituted Board has accepted all the recommendations made byvarious committees including Audit Committee.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company has adopted a Vigil Mechanism/Whistle Blower Policy in terms of theprovisions of Companies Act 2013 and the Listing Regulations to provide a formalmechanism to the Directors and employees of the Company to report their genuine concernsand grievances about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or Ethics. The policy provides adequate safeguards againstvictimization of Directors and employees who avail such mechanism and also provides fordirect access to the Vigilance Officer and the Chairman of Audit Committee. The AuditCommittee of the Board is entrusted with the responsibility to oversee the vigilmechanism. During the year no personnel was denied access to the Chairman of the AuditCommittee. The Vigil Mechanism/Whistle Blower Policy is annexed to this Report as AnnexureF and is available on the website of the Company at http://digjam.co.in/files/Whistle%20
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION &REDRESSAL) ACT 2013
The Company has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder.The aim of the policy is to provide protection to women employees at the workplace andprevent and redress complaints of sexual harassment and for matters connected orincidental thereto with the objective of providing a safe working environment wherewomen employees feel secure. All women employees (permanent contractual temporarytrainees) are covered under the said policy.
Your Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 to redress complaints received on sexual harassment.
No complaint was pending at the beginning of the year and none was received during theyear.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERNS STATUS AND COMPANY'S OPERATIONS IN FUTURE
The Hon'ble NCLT under Section 31 of the Insolvency and Bankruptcy Code 2016 vide itsorder dated May 27 2020 approved the Resolution Plan submitted by Finquest FinancialSolutions Private Limited.
Except above no other significant or material orders were passed by the Regulators orCourts or Tribunals impacting the going concern status and Company's operations in future.
Your directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions or events occurred on these items during theyear under review: a. Receipt of any remuneration or commission from any of its subsidiarycompanies by the Whole-time Directors of the Company. b. During the year under review theCompany has not bought back any of its securities/ not issued any sweat equity shares /not provided any Stock Option Scheme to its employees / not issued any equity shares withdifferential rights. c. There was no revision of the previous year's financial statementsduring the financial year under review.
We place on record our sincere appreciation of the valuable cooperation and supportreceived at all times by the Company from its bankers other stakeholders concernedGovernment Departments other authorities its channel partners employees andshareholders.
| ||For and on behalf of the Board |
| ||Hardik B. Patel |
| ||Chairman |
| ||DIN: 00590663 |
|Mumbai || |
|August 13 2021 || |