Your Board of Directors has pleasure in presenting the 34th Annual Report onthe business and operations of your Company together with the Audited Financial Statementsfor the financial year ended March 31 2021.
Your Company's financial performance (standalone and consolidated) for the financialyear ended March 31 2021 is summarized below:
| || || || ||( Rs in Crores) |
|Particulars || |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Revenue from Operations (Net) ||4105.87 ||3547.30 ||4422.96 ||3838.91 |
|Other Income ||33.22 ||20.94 ||36.13 ||22.08 |
|Total Income ||4139.09 ||3568.24 ||4459.09 ||3860.99 |
|Operating Expenses ||3450.75 ||2961.77 ||3656.77 ||3158.60 |
|Other Expenditure ||186.50 ||158.31 ||216.61 ||186.22 |
|Depreciation and Amortization expenses ||53.59 ||30.13 ||68.63 ||41.95 |
|Total Expenses ||3690.84 ||3150.21 ||3942.01 ||3386.77 |
|Profit before Finance Cost and Tax ||448.25 ||418.03 ||517.08 ||474.22 |
|Finance Cost ||148.25 ||90.10 ||176.09 ||114.82 |
|Share of net profits of joint ventures accounted for using equity method ||- ||- ||- ||(1.05) |
|Exceptional Item ||4.13 ||- ||4.13 ||- |
|Profit before Tax (PBT) ||295.87 ||327.93 ||336.86 ||358.35 |
|Tax Expense Net of MAT Credit Entitlement ||73.01 ||124.10 ||90.62 ||121.01 |
|Profit after Tax (PAT) ||222.86 ||203.83 ||246.24 ||237.34 |
|Attributable to: || || || || |
|Shareholders of the Company ||- ||- ||239.00 ||227.25 |
|Non-Controlling Interests ||- ||- ||7.24 ||10.09 |
|Opening Balance of Retained Earnings ||1062.12 ||872.09 ||1082.00 ||868.55 |
|Impact on account of Change in Accounting Policy - Adoption of Ind AS-115 ||- ||(1.13) ||- ||(1.13) |
|Total Comprehensive Income for the year ||222.87 ||203.83 ||239.00 ||- |
|Transfer to Retained Earnings (out of DRR) ||124.75 ||2.81 ||124.72 ||2.81 |
|Amount available for appropriation ||1160.24 ||1077.60 ||1196.28 ||1097.48 |
|Appropriations : || || || || |
|Dividend on Equity Shares (Previous Year) ||- ||15.48 ||- ||15.48 |
|Closing Balance of Retained Earnings ||1160.24 ||1062.12 ||1196.28 ||1082.00 |
During the FY21 total Consolidated Income of your Company is
Rs4459.09 Crores as compared to Rs3860.99 Crores during the previous year showing anincrease of 15.49%.
Your Company has achieved Consolidated EBIDTA of Rs585.71 Crores in FY21 from Rs516.17Crores in the previous year recording a growth of 13.47%. Profitability i.e.Consolidated PBT has declined by 5.9% to Rs336.86 Crores in FY21 from Rs358.35 Croresduring the previous year.
In FY21 your Company has a Consolidated PAT of Rs246.24 Crores from
Rs 237.34 Crores in the previous year recording a growth of 3.75%.
The net worth of your Company has increased during the year under review to Rs1916.21Crores from Rs1668.44 Crores in the previous year.
The consolidated Debt in FY21 stood at Rs920 Crores as against Rs712 Crores inFY20.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 read with Schedule III to theCompanies Act 2013 (hereinafter referred to as the "Act") and theCompanies (Accounts) Rules 2014 Regulation 33 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as the "SEBI Listing Regulations") and applicable IndianAccounting Standards the Audited Consolidated Financial Statements of theCompanyfortheFY21togetherwiththeAuditors'Reportformpartofthis Annual Report.
TRANSFER TO RESERVES
The Board of Directors has decided to retain the entire amount of profits for the FY21under Retained Earnings and has not transferred any amount to the General Reserves duringthe year under review.
In the wake of COVID_19 pandemic each of the business sectors in the economy has beenaffected however despite this your Board of Directors at its meeting held on May 102021 has recommended a Dividend @15% i.e. Rs0.15/- (Fifteen Paisa) per equity share ofRs1/- each aggregating to Rs19.26 Crores for the financial year ended March 31 2021subject to approval of shareholders at the ensuing annual general meeting (AGM) ofthe Company. The above decision is in accordance with the Company's Dividend DistributionPolicy.
The dividend shall be subject to deduction of TDS before payment to shareholders asper applicable provisions of Income Tax Act 1961.
Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) (Second Amendment) Regulations 2021 top 1000listed companies based on the market capitalization shall formulate a DividendDistribution Policy.
Accordingly the Policy has been adopted by the Board of Directors of the Companysetting out the parameters and circumstances that will be taken into account by the Boardin determining the distribution of dividend to its shareholders and/ or retaining profitsearned by the Company.
The Dividend Distribution Policy is available on the Company's website athttp://www.hfcl.com/wp-content/uploads/2017/05/Dividend_ Distribution_Policy.pdf.
Investor Education and Protection Fund (IEPF)
In accordance with the applicable provisions of the Companies Act 2013 read with theInvestor Education and Protection Fund (Accounting Audit Transfer and Refund) Rules2016 ("IEPF Rules") all unclaimed dividends are required to betransferred by the Company to the IEPF which remain unpaid or unclaimed for a period ofseven years from the date of transfer to Unpaid Dividend Account.
Further according to IEPF Rules the shares on which dividend has not been claimed bythe shareholders for seven consecutive years or more shall be transferred to the demataccount of the Investor Education and Protection Fund Authority ("IEPFAuthority").
During the year under review no amount of the unclaimed/unpaid dividend and any suchshare in the Company was due to be transferred to the IEPF Authority.
The following table provides a list of years for which unclaimed dividends and theircorresponding shares would become eligible to be transferred to the IEPF on the datesmentioned below:
|Financial Year ||Dividend per Share (Rs) ||Date of Declaration ||Due Date for Transfer ||Amount (Rs ) (Unpaid as on March 31 2021) |
|2017-18 ||0.06 ||September 29 2018 ||December 04 2025 ||1036599.60 |
|2018-19 ||0.10 ||September 28 2019 ||December 03 2026 ||1640858.90 |
Details of unpaid dividend for the financial year 2017-18 and 2018-19 can be accessedfrom the website of the Company at www.hfcl.com and claim can be made by makingrequest to the Company.
Details of Nodal Officer
The Company has designated Mr. Manoj Baid Senior Vice-President (Corporate) &Company Secretary of the Company as a Nodal Officer for the purpose of IEPF.
INDIAN ACCOUNTING STANDARDS (IND-AS)
Financial Statements of your Company and its subsidiaries for the financial year endedMarch 31 2021 are prepared in accordance with Indian Accounting Standards (Ind-AS) asnotified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended from time to time.
During the FY21 your Company has not accepted any deposit within the meaning ofSection 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules 2014.
SHARE CAPITAL AND CHANGES IN CAPITAL STRUCTURE Authorized Share Capital
As on March 31 2021 the Authorized Share Capital of your Company stood at Rs760Crores (Rupees Seven Hundred Sixty Crores only) divided into 510 Crores (FiveHundred Ten Crores) equity shares of face value of
Rs1/- (Rupee One) each aggregating to Rs510 Crores (Rupees Five Hundred Ten Croresonly) and 2.50 Crores (Two Crore Fifty Lakhs) Cumulative Redeemable Preference Shares(CRPS) of Rs100/- (Rupees Hundred) each aggregating to Rs250 Crores (Rupees Two HundredFifty Crores only).
Paid-up Share Capital
As on March 31 2021 the Paid-up Equity Share Capital of your Company stood atRs128.44 Crores comprising of 1284377194 equity shares of face value of Rs1/- each.
Further your Company had allotted 4934300 equity shares of face value of Rs1/- eachto HFCL Employees' Trust for implementing the benefits of HFCL Employees' Long TermIncentive Plan 2017 in lieu of the vested Employee Stock Options (ESOPs) grantedto eligible employees of the Company pursuant to the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014.
Consequent to the above the paid up equity share capital stood increased from Rs128.44Crores to Rs128.93 Crores comprising of 1289311494 equity shares of face value of Rs1/-each as on the reporting date.
There are no convertible warrants in the Company as on the date of this Report.
Your Company has not issued equity shares with differential rights as to dividendvoting or otherwise.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) REPORT
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(2)(e) of the SEBI Listing Regulations is presented in a separatesection forming part of this Annual Report.
Your Company is committed to benchmark itself with global standards for providing goodcorporate governance. Your Board constantly endeavors to take the business forward in sucha way that it maximizes long term value for the stakeholders. The Company has put in placean effective corporate governance system which ensures that the provisions of the SEBIListing Regulations are duly complied with.
A detailed report on the Corporate Governance pursuant to the requirements ofthe SEBI Listing Regulations forms part of this Annual Report.
A Certificate from the Secretarial Auditor of the Company confirming compliance ofconditions of corporate governance as stipulated in the SEBI Listing Regulations isprovided in the Report on Corporate Governance which forms part of the CorporateGovernance Report.
BUSINESS RESPONSIBILITY REPORT
As stipulated under Regulation 34(2)(f ) of the SEBI Listing Regulations the BusinessResponsibility Report describing the initiatives taken by the Company from environmentalsocial and governance perspective forms part of this Annual Report.
EMPLOYEES' LONG TERM INCENTIVE PLAN
In terms of the SEBI (Share Based Employee Benefits) Regulations 2014 ("SEBISBEB Regulations") as amended from time to time and with the objective topromote entrepreneurial behaviour among employees of the Company motivate them withincentives and reward their performance with ownership in proportion to the contributionmade by them as well as align the interest of the employees with that of the Company"Himachal Futuristic Communications Limited Employees' Long Term IncentivePlan2017" ("HFCL Plan 2017") was approved by the Board ofDirectors of your Company on August 26 2017 which was further approved by the members ofthe Company in their 30th Annual General Meeting held on September 25 2017.
The HFCL Plan 2017 comprises of the following three subsets:
1. Employee Stock Option Plan (ESOP) under which Options would be granted;
2. Restricted Stock Units Plan (RSUP) under which Units would be granted;
3. Employee Stock Purchase Scheme (ESPS) under which shares would be issued.
During the financial year ended March 31 2021 your Company has not granted any ESOPsand RSUs in terms of the HFCL Plan 2017.
Further the Company had allotted 4934300 equity shares of face value of Rs1/- eachto HFCL Employees' Trust for implementing the benefits of HFCL Employees' Long TermIncentive Plan 2017 in lieu of the vested Employee Stock Options (ESOPs) grantedto eligible employees of the Company pursuant to the SEBI SBEB Regulations on July 152021 and the same have also been listed on the stock exchanges viz. NSE and BSE.
Applicable disclosures as stipulated under the SEBI SBEB Regulations with regard to theHFCL Plan 2017 are provided as Annexure A to this Report.
Your Company has received a Certificate from M/s Oswal Sunil & Company StatutoryAuditors (Firm Registration No. 016520N) that the HFCL Plan 2017 for grant of stockoptions has been implemented in accordance with the SEBI SBEB Regulations and theresolution passed by the members in their 30th Annual General Meeting held onSeptember 25 2017.
The said Certificate would be placed at the ensuing annual general meeting forinspection by the members.
The Nomination Remuneration and Compensation Committee of the Board of Directorsinter-alia administers and monitors the HFCL Plan 2017 of your Company.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As on March 31 2021 your Company had six subsidiaries viz.
1. HTL Limited
2. Polixel Security Systems Private Limited
3. Moneta Finance Private Limited
4. HFCL Advance Systems Private Limited
5. Raddef Private Limited and
6. DragonWave HFCL India Private Limited.
The Company regularly monitors the performance of these companies.
Further the Company has incorporated a new wholly-owned subsidiary company namelyHFCL Technologies Private Limited on June 26 2021.
The Company also has an associate company namely Nimpaa Telecommunications PrivateLimited w.e.f. June 14 2021.
There has been no material change in the nature of the business of thesubsidiaries.
A statement containing the salient features of the financial statements of subsidiarycompanies of the Company in the prescribed Form AOC1 forms a part of theConsolidated Financial Statements (CFS) in compliance with Section 129(3) and otherapplicable provisions if any of the Act read with Rule 5 of the Companies (Accounts)Rules 2014 as amended.
The said Form also highlights the financial performance of each of the subsidiariesincluded in the CFS of the Company pursuant to Rule 8(1) of the Companies (Accounts)Rules 2014.
In accordance with the provisions of Section 136 of the Act the financial statementsof the subsidiaries are available for inspection by the members at the Registered Officeof the Company during business hours on all days except Saturdays Sundays and publicholidays up to the date of the ensuing AGM. Any member desirous of obtaining a copy of thesaid financial statements may write to the Company Secretary at HFCL Limited 8Commercial Complex Masjid Moth Greater Kailash II New Delhi 110048and the same shall be sent by post.
The financial statements including the CFS and all other documents required to beattached to this Report have been uploaded on the website of the Company at www.hfcl.com.
The Company has adopted a Policy for determining Material Subsidiaries' as perrequirements stipulated in Explanation to Regulation 16(1)(c) of the SEBI ListingRegulations.
During the year under review there was no change in the Policy for DeterminingMaterial Subsidiaries.
The Company has amended the Policy for Determining Material Subsidiaries in itsmeeting held on July 12 2021 in line with the amendments to the SEBI ListingRegulations notified on May 05 2021.
The said policy may be accessed on the website of the Company athttp://www.hfcl.com/wp-content/uploads/2019/06/Policy-on-Determining-Material-Subsidiaries.pdf.
The Company has one material subsidiary company viz. HTL Limited as on March 31 2021.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs)
Re-Appointments / Appointments
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Mr. Ranjeet Mal Kastia (DIN: 00053059) Director(Non-Executive) is liable to retire by rotation at the ensuing AGM and being eligibleoffers himself for re-appointment. The brief resume of him and other related informationare being given in the Notice convening the 34th AGM of your Company.
Your Directors recommend his re-appointment as a Non-Executive Director of yourCompany.
During the FY21 the Board of Directors appointed Mr. Ramakrishna Eda (DIN: 07677647)as a Nominee Director of IDBI Bank Limited w.e.f. February 22 2021 in place of Mr.Ranjeet Anandkumar Soni. Mr. Ramakrishna Eda is proposed to be appointed as aNominee Director (Non-Executive) liable to retire by rotation at the ensuing AGM.
The Board of Directors at its meeting held on July 12 2021 and on the recommendationof the Nomination Remuneration and Compensation Committee has re-appointed Mr. MahendraNahata as the Managing Director of the Company for a further period of 3 (three)years with effect from October 01 2021 subject to approval of shareholders at the ensuingAGM as his current term of office is expiring on September 30 2021.
The Nomination Remuneration and Compensation Committee on the basis of performanceevaluation of Independent Directors and taking into account the external businessenvironment the business knowledge acumen experience and the substantial contributionmade by Mr. Surendra Singh Sirohi (DIN: 07595264) and Dr. (Ms.) Tamali Sengupta(DIN: 00358658) during their tenure has recommended to the Board that continuedassociation of Mr. Surendra Singh Sirohi and Dr. (Ms.) Tamali Sengupta asIndependent Directors would be beneficial to the Company. Based on the above and theperformance evaluation of Independent Directors the Board recommends re-appointment of:
(i) Mr. Surendra Singh Sirohi for a second term of consecutive three years commencingfrom August 27 2021 to August 26 2024; and
(ii) Dr. (Ms.) Tamali Sengupta for a second term of consecutive three years commencingfrom December 24 2021 to December 23 2024;
to hold office as Independent Directors of the Company not liable to retire byrotation on the Board of the Company. The Company has received the requisite Notices inwriting under Section 160 of the Act from Members of the Company proposing theirappointment as Directors.
Mr. Surendra Singh Sirohi and Dr. (Ms.) Tamali Sengupta have given their consent inprescribed form DIR-2 to act as Directors and also declared that they are notdisqualified to be appointed as Directors in prescribed form DIR-8.
Mr. Surendra Singh Sirohi and Dr. (Ms.) Tamali Sengupta have registered their names inthe data bank for Independent Directors maintained by the Indian Institute of CorporateAffairs (IICA) Manesar (notified under Section 150(1) of the Companies Act 2013 as theinstitute for the creation and maintenance of data bank of Independent Directors) and paidrequisite fee therefor.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Brief resume nature of expertise disclosure of relationships between directorsinter-se details of directorships and Committee membership held in other companies of theDirectors proposed to be appointed/ re-appointed along with their shareholding inthe Company as stipulated under Regulation 36 of the SEBI Listing Regulations andSecretarial Standard on General Meetings (SS-2) issued by the Institute of CompanySecretaries of India is appended as an Annexure to the Notice of the ensuing AGM.
Appropriate resolutions for re-appointment / appointment of Directors are being placedfor your approval at the ensuing AGM.
During the FY21 IDBI Bank Limited ("IDBI") vide its letter no.LCG-SSCB.53/35/ Nom.8 dated February 01 2021 has withdrawn the nomination of Mr.Ranjeet Anandkumar Soni (DIN: 07977478) from the Board of Directors of the Company andaccordingly Mr. Ranjeet Anandkumar Soni has ceased as a Nominee Director of the Companyw.e.f. February 22 2021.
Further Board of Directors places on record its sincere appreciation for the supportand valuable guidance given by Mr. Ranjeet Anandkumar Soni during his tenure asNon-Executive Director of the Company.
Mr. Mahendra Pratap Shukla Non-Executive Chairman of the Company succumbed toCOVID-19 and ceased to be Non-Executive Chairman of the Company w.e.f. May 04 2021.
Your Board of Directors places on record active and sel_ess role of Mr. MahendraPratap Shukla in the establishment of the Company and contribution in the growth of theCompany. The Company benefitted immensely from his vision and guidance during hisassociation with the Company. The demise of Mr. Mahendra Pratap Shukla has left a voidthat will be impossible to fill in.
Key Managerial Personnel
During the year under review Mr. Mahendra Nahata Managing Director Mr. Vijay RajJain Chief Financial Officer and Mr. Manoj Baid Senior Vice-President (Corporate) &Company Secretary continue to be the Key Managerial Personnel of your Company inaccordance with the provisions of Section 2(51) and 203 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.
Declaration by the Company
The Company has issued confirmation to its Directors confirming that it has not madeany default under Section 164(2) of the Act as on March 31 2021.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of the Actread with the Schedules and Rules issued thereunder as well as clause (b) ofsub-regulation (1) of Regulation 16 of the SEBI Listing Regulations (including anystatutory modification(s) or re-enactment(s) thereof for the time being in force) and thatthey are independent of management.
In terms of Regulation 25(8) of the SEBI Listing Regulations the Independent Directorshave confirmed that they are not aware of any circumstance or situation which exist ormay be reasonably anticipated that could impair or impact their ability to discharge theirduties.
The Independent Directors have also confirmed that they have complied with theCompany's Code of Conduct.
In the opinion of the Board Independent Directors fulfil the conditions specified inthe Act Rules made thereunder and SEBI Listing Regulations and are independent of themanagement.
Familiarisation Programme for Independent Directors
The details of programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company and related matters are putup on the website of the Company at the web-link:http://www.hfcl.com/wp-content/uploads/2017/04/HFCL-Familiarisation-Prog.-Idependent-Director.pdf.
Separate Meeting of Independent Directors
In terms of requirements of Schedule IV to the Act and Regulation 25 of the SEBIListing Regulations a separate meeting of the Independent Directors was held on March 302021 for the FY21.
The meeting of the Independent Directors was attended by all the three independentdirectors namely Mr. Bharat Pal Singh Mr. Surendra Singh Sirohi and Dr. (Ms.)Tamali Sengupta.
REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Act read with Rules 5(1) 5(2)& 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 (including any statutory modification(s) or re-enactment(s) thereof for the timebeing in force) in respect of Directors/Employees of the Company is set out in AnnexureBto this Report.
The remuneration paid to the Directors is in accordance with the Remuneration Policyformulated in accordance with Section 178 of the Act and Regulation 19 of the SEBI ListingRegulations (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force).
Disclosure under Section 197(14) of the Companies Act 2013
The Managing Director of your Company does not receive remuneration or commission fromany of the subsidiaries of the Company.
Pursuant to provisions of Section 178 of the Act and the SEBI Listing Regulations theNomination Remuneration and Compensation Committee (NRC Committee') of yourBoard has formulated a Remuneration Policy for the appointment and determination ofremuneration of the Directors including criteria for determining qualifications positiveattributes independence of a director Key Managerial Personnel Senior ManagementPersonnel and other employees of your Company.
The NRC Committee has also developed the criteria for determining the qualificationspositive attributes and independence of Directors and for making payments to Executive andNon-Executive Directors and Senior Management Personnel of the Company.
The detailed Policy is available on the Company's website athttp://www.hfcl.com/wp-content/uploads/2019/06/Remuneration-Policy.pdf and the salientaspects covered in the Remuneration Policy have been outlined in the Corporate GovernanceReport which forms part of this Report.
BOARD AND COMMITTEE MEETINGS
Four meetings of the Board of Directors were held during the FY21.
The intervening gap between any two consecutive meetings of the Board was within thestipulated time frame prescribed under the Act and the SEBI Listing Regulations.
Details of meetings held and attendance of directors are mentioned in CorporateGovernance Report which forms part of this Report.
Your Company has constituted several Committees of the Board which have beenestablished as part of the best corporate governance practices and are in compliance withthe requirements of the relevant provisions of applicable laws and statutes.
As on March 31 2021 your Board has 05 (five) mandatory Committees namely
1) Audit Committee
2) Nomination Remuneration & Compensation (NRC) Committee;
3) Stakeholders' Relationship Committee (SRC)
4) Corporate Social Responsibility (CSR) Committee; and
5) Risk Management Committee (RMC).
The details with respect to the composition powers roles terms of reference numberof meetings etc. of the Committees held during the FY21 and attendance of the Members ateach Committee Meeting are provided in the Corporate Governance Report which forms partof this Report.
All the recommendations made by the Committees of the Board including the AuditCommittee were accepted by the Board.
As on March 31 2021 the Audit Committee comprises of 04 (four) members namely Mr.Bharat Pal Singh Mr. Surendra Singh Sirohi Dr. (Ms.) Tamali Sengupta IndependentDirectors and Mr. Arvind Kharabanda Non-Executive Director.
Mr. Bharat Pal Singh Independent Director is the Chairman of the AuditCommittee.
All members of the Audit Committee are financially literate and have experience infinancial management.
The Companies Act 2013 mandates formal annual evaluation by the Board of its ownperformance and that of its Committees and individual Directors. Schedule IV to the Actprovides that the performance evaluation of Independent Directors shall be done by theentire Board of Directors excluding the Directors being evaluated.
Pursuant to the provisions of the Act read with relevant rules issued thereunderRegulation 17(10) of the SEBI Listing Regulations and the Circular issued by SEBI onJanuary 05 2017 with respect to Guidance Note on Board Evaluation the evaluation of theannual performance of the Directors/ Board/ Committees was carried out for the FY21.
The parameters for the performance evaluation of the Board inter-alia includeperformance of the Board on deciding long term strategy rating the composition and mix ofBoard members discharging of governance and fiduciary duties handling critical anddissenting suggestions etc.
The performance of the Board was evaluated after seeking inputs from all the Directorson the basis of above parameters. The performance of the Committees was evaluated afterseeking inputs from the Committee members on the basis of criteria such as the compositionof Committees effectiveness of Committee meetings etc.
The Nomination Remuneration and Compensation Committee reviewed the performance of theIndividual Directors the Committees of the Board and the Board as a whole. Aquestionnaire for the evolution of the Board its Committees and the individual members ofthe Board (including the Chairperson) covering various aspects of the performance of theBoard and its Committees including composition and quality roles and responsibilitiesprocesses and functioning adherence to Code of Conduct and Ethics and best practices incorporate governance was sent to the Directors.
The Board of Directors reviewed the performance of the Independent Directors.Performance Evaluation was done on the basis of criteria such as the contribution of theindividual director to the Board and Committee meetings like preparedness on the agendaitems technical knowledge on the subject matter meaningful and constructive contributionand inputs in meetings etc.
In a separate meeting of the Independent Directors performance of Non-IndependentDirectors the Board as a whole and the Chairman of the Company was evaluated taking intoaccount the views of Executive Directors and Non-Executive Directors.
The Directors expressed their satisfaction with the evaluation process.
The details of the evaluation process are set out in the Corporate Governance Reportwhich forms part of this Annual Report.
AUDITORS AND AUDITORS' REPORT Statutory Auditors & their Report
M/s S. Bhandari & Co. Chartered Accountants (FRN: 000560C) and M/s OswalSunil & Company Chartered Accountants (FRN: 016520N) were appointed as StatutoryAuditors for one term of 05 (five) consecutive years at the 30th AnnualGeneral Meeting of the Company held on September 25 2017 for auditing theaccounts of the Company from the financial year 2017-18 to 2021-22.
The requirement to place the matter relating to appointment of auditors for rati_cationby members at every AGM has been done away by the Companies (Amendment) Act 2017 witheffect from May 07 2018. Accordingly no resolution is being proposed forrati_cation of appointment of Statutory Auditors at the ensuing AGM and a note in respectof the same has been included in the Notice convening ensuing AGM.
The Statutory Auditors have confirmed that they are not disqualified from continuing asStatutory Auditors of the Company.
The Auditors' Report does not contain any qualification reservation or adverse remark.
Further there were no frauds reported by the Statutory Auditors to the Audit Committeeor the Board under Section 143(12) of the Act.
Secretarial Auditors & their Report
Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (as amended orre-enacted from time to time) your Company had appointed Mr. Baldev Singh KashtwalCompany Secretary in whole-time practice having COP No. 3169 and Membership No.F-3616 for conducting the Secretarial Audit of your Company for the FY21.
The Secretarial Audit Report in prescribed form MR-3 issued by the Secretarial Auditoris annexed herewith as AnnexureC to this Report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
Cost Records and Cost Audit
Your Company has maintained cost accounts and records as specified by the CentralGovernment under sub-section (1) of Section 148 of the Act and the relevant rules madethereunder.
Requirement of Cost Audit as stipulated under the provisions of Section 148 of the Actare not applicable for the business activities carried out by the Company.
INSOLVENCY AND BANKRUPTCY CODE 2016
There is no application made or any proceeding pending under the Insolvency andBankruptcy Code 2016 (31 of 2016) during the FY21.
VIGIL MECHANISM/ WHISTLE-BLOWER POLICY
The Board of Directors of your Company has formulated a Whistle-Blower Policy which isin compliance with the provisions of Section 177(9) & (10) of the Act and Regulation22 of the SEBI Listing Regulations.
The Company through this Policy envisages to encourage the Directors and employees ofthe Company to report to the appropriate authorities any unethical behaviour improperillegal or questionable acts deeds actual or suspected frauds or violation of theCompany's Codes of Conduct for the Directors and the Senior Management Personnel.
During FY21 no complaint was received and no individual was denied access to the AuditCommittee for reporting concerns if any.
The Policy on Vigil Mechanism / Whistle-Blower Policy may be accessed on the Company'swebsite at the link: http://www.hfcl.com/wp-content/uploads/2017/05/Whistle-Blower-Policy.pdf.
Brief details of establishment of Vigil Mechanism in the Company is also provided inthe Corporate Governance Report which forms part of this Report.
CARE Ratings Limited vide its letter dated December 07 2020 has re-afirmedthe credit rating for the Long Term Bank facilities of the Company to CARE A Minus;(Single A Minus) with Outlook "Negative".
The credit rating for the short term bank facilities were revised to CARE A2 (A Two)from CARE A2+ (A Two Plus).
The Annual Return of the Company as on March 31 2020 in prescribed e-form MGT-7 inaccordance with Section 92(3) of the Act read with Section 134(3)(a) of the Act isavailable on the Company's website at https://www.hfcl.com/wp-content/uploads/2021/08/Annual-Retrun-2019-20.pdf.
Further the Annual Return (i.e. e-form MGT-7) for the FY21 shall be filed by theCompany with the Registrar of Companies Himachal Pradesh within the stipulated periodand the same can also be accessed thereafter on the Company's website at:http://www.hfcl.com.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Details of loans guarantees and investments as on March 31 2021 as stipulated underSection 186 of the Act read with the Companies (Meetings of Board and its Powers)Rules 2014 are as follows:-
|Particulars ||Amount (_ in Crores) |
|Loans given ||29.50 |
|Guarantees given ||154.16 |
|Investments made ||65.19 |
Loans given Guarantees provided and Investments made during the FY21:
|Name of the entity ||Relation ||Amount (_ in Crores) ||Particulars of Loans Guarantees & Investments ||Purpose for which the Loans Guarantees and Investments are proposed to be utilized by the recipient |
|Nimpaa Tele-communications Private Limited ||Unrelated ||3.00 ||Loan with interest @ 10% p.a. ||For Capex & Opex Requirements. |
|HTL Limited ||Subsidiary ||14.00 ||Corporate Guarantee ||Collateral Security for various credit facilities sanctioned by Yes Bank Limited to HTL Limited. |
|Nivetti Systems Private Limited ||Unrelated ||11.96 ||Investment in Equity Shares ||Product R&D and Business Development |
For more details please refer Note No. 8.1 18 47(c) and 51 to the StandaloneFinancial Statements for FY21 of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Your Company has adopted a "Policy on Dealing with and Materiality of RelatedParty Transactions" in accordance with the provisions of the Companies Act 2013 andRegulation 23 of the SEBI Listing Regulations inter-alia providing a framework forgovernance and reporting of Related Party Transactions including material transactions andthreshold limits for determining materiality.
The said Policy is also available on the website of the Company at the web-link: http://www.hfcl.com/wp-content/uploads/2019/06/Policy-on-Related-Party-Transactions-RPTs.pdf.
During the year under review all contracts/ arrangements/ transactions entered into bythe Company with related parties were in ordinary course of business and on arm's lengthbasis.
The Company has not entered into any contracts/ arrangements/ transactions with relatedparties which qualify as material in accordance with the Policy of the Company onmateriality of related party transactions.
Thus there are no transaction required to be reported in prescribed Form AOC-2pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014.
All transactions with related parties were reviewed and approved by the Audit Committeeand are in accordance with the Policy on Related Party Transactions formulated by theCompany.
There are no materially significant related party transactions that may have potentialconflict with interest of the Company at large.
There are no transactions with the person(s) or entities forming part of thePromoter(s) / Promoter(s) Group which individually hold 10% or more shareholding in theCompany.
The details of the related party transactions as per Indian Accounting Standards(IND-AS) - 24 are set out in Note 51 to the Standalone Financial Statements of theCompany.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of energy conservation technology absorption and foreign exchange earningsand outgo as required under Section 134(3)(m) of the Act read with the Rule 8 of theCompanies (Accounts) Rules 2014 are annexed herewith as Annexure - D to thisReport.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has been proactively carrying out CSR activities since more than twodecades.
The Company is undertaking CSR activities through its Registered Society i.e. HFCLSocial Services Society ("HSSS") established in the year 1996.
In compliance with requirements of Section 135 of the Act the Company has laid down aCorporate Social Responsibility (CSR) Policy. The CSR Policy is available on the websiteof the Company and may be accessed at the web-link: http://www.hfcl.com/wp-content/uploads/2016/01/CSR-Policy.pdf.
The composition of the CSR Committee brief contents of CSR Policy unspent amount andreason thereof if any and report on CSR activities carried out during the FY21 in theformat prescribed under Rule 9 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed herewith as Annexure - E.
For other details regarding the CSR Committee please refer to the Corporate GovernanceReport which forms part of this Report.
MATERIAL CHANGES AFFECTING THE COMPANY
A. Change in nature of business
The Company has not undergone any change in the nature of the business during the FY21.
B. Material changes and commitments if any affecting the financial position of theCompany
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the FY21 and the date of this Report.
Further as we are aware that the outbreak of COVID_19 Pandemic has impacted businessesnot only in India but to all economics in the world.
Pursuant to directives of SEBI vide Circular No. SEBI/HO/CFD/CMDI/ CIR/P/2020/84 datedMay 20 2020 the Company vide its Corporate Announcement made to stock exchanges on June05 2020 has already disclosed the impact of COVID-19 on business performance andfinance of the Company.
The Company has evaluated the impact of COVID-19 resulting from (i) the possibility ofconstraints to render supply & services which may require revision of estimations ofcosts to complete the contracts because of additional efforts; (ii) onerous obligations;(iii) penalties relating to breaches of service level agreements and (iv)termination or deferment of contracts by customers. The Company has concluded that theimpact of COVID-19 is not material based on these estimates. Due to the nature of thepandemic the Company will continue to monitor developments to identify significantuncertainties relating to revenue in future periods. The Company has considered thepossible effects that may result from the pandemic of COVID-19 in the preparation of thefinancial statements including their coverability of carrying amounts of financial andnon-financial assets. Further the impact assessment does not indicate any adverse impacton the ability of the Company to continue as a going concern. In developing theassumptions relating to the possible future uncertainties in the global economicconditions because of this pandemic the Company has at the date of approval of thefinancial statements used internal and external sources of information including creditreports and related information and economic forecasts and expects that the carryingamount of the assets will be recovered. The impact of COVID-19 on the Company's financialstatements may differ from that estimated as at the date of approval of these financialstatements.
The impact of COVID-19 is also mentioned at Note No. 41 to the Standalone FinancialStatements for FY21.
SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS COURTS TRIBUNALS AFFECTING THEGOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There is no significant / material order passed by the Regulators Courts Tribunalsaffecting the going concern status and the Company's operations in future.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has in place a Policy on Prevention of Sexual Harassment at Workplace inline with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and the rules made thereunder.
Internal Complaints Committee(s) (ICCs) at each workplace of the Company havebeen set up to redress complaints if any received regarding sexual harassment. Allemployees (permanent contractual temporary trainees) are covered under this Policy.
ICC of each workplace of the Company has also filed Annual Return for the calendar year2020 at their respective jurisdictional office as required under Section 21(1) of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013read with Rule 14 of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Rules 2013.
There was no complaint received from any employee of the Company during the FY21.
The Company has achieved various milestones which have already been set out in theManagement Discussion and Analysis (MDA) Report forming part of the Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3)(c) of the Act the Directors confirmthat:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the Directors had 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 at the end of the financial year March31 2021 and of the profits of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis; and
(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
(f ) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The equity shares of your Company are presently listed on the BSE Limited (BSE')and the National Stock Exchange of India Limited (NSE'). The Company has paidannual listing fee for the FY22 to the BSE and the NSE.
Your Company's Scrip has come under compulsory dematerialization w.e.f. November 291999 for Institutional Investors and w.e.f. January 17 2000 for all Investors. Sofar 99.96% of the equity shares have been dematerialized.
The ISIN allotted to the equity shares of the Company is INE548A01028.
IMPLEMENTATION OF CORPORATE ACTION
During the year under review the Company has not failed to implement any CorporateAction within the specified time limit.
COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the provisions of Section 118(10) of the Act the Company has complied withthe applicable provisions of the applicable Secretarial Standards issued by the Instituteof Company Secretaries of India (ICSI).
The Financial and Statutory Data presented in this Report is in line with therequirements of the Companies Act 2013 (including the rules made thereunder) IndianAccounting Standards and the Secretarial Standards.
The Financial Information is reported for the period April 01 2020 to March 31 2021.Some parts of the Non-Financial Information included in this Board's Report are providedas on the date of this Report.
Statements in the Management Discussions & Analysis Report describing the Company'sprojections estimates expectations or predictions may be forward lookingstatements' within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatwould make a difference to the Company's operations include demand supply conditions rawmaterial prices changes in government regulations tax regimes and economic developmentswithin the Country and abroad and such other factors.
Your Directors wish to place on record their sincere appreciation for the devotedservices of all the employees and workers at all levels and for their dedication andloyalty which has been critical for the Company's success.
Your Company's organizational culture upholds professionalism integrity andcontinuous improvement across all functions as well as efficient utilization of theCompany's resources for sustainable and profitable growth.
Your Directors wish to place on record their appreciation for the valuable co-operationand support received from the Government of
India various State Governments the Banks and other stakeholders such asshareholders customers and suppliers among others.
The Directors look forward to their continued support in future.
The Directors thank the Central Government Government of Goa Government of TelanganaGovernment of Himachal Pradesh IDBI Bank Limited State Bank of India Punjab NationalBank erstwhile Oriental Bank of Commerce & United Bank of India Bank of BarodaUnion Bank of India Yes Bank Limited ICICI Bank Limited Indian Bank and other Banks forall co-operations facilities and encouragement they have extended to the Company.
Your Directors acknowledge the continued trust and confidence you have reposed in theCompany.
For and on behalf of the Board
| ||Mahendra Nahata ||Arvind Kharabanda |
|Place: New Delhi ||Managing Director ||Non-Executive Director |
|Date: September 3 2021 ||DIN: 00052892 ||DIN: 00052270 |