Your Board of Directors have pleasure in presenting the 32nd Annual Report on thebusiness and operations of your Company together with the Audited Financial Statementsfor the financial year ended 31st March 2019.
Your Company's financial performance (Standalone & Consolidated) for the financialyear ended 31st March 2019 is summarized below:
( Rs in Crores)
|Particulars ||Standalone || ||Consolidated || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from Operations (Net) ||4366.20 ||3080.18 ||4737.79 ||3248.53 |
|Other Income ||48.01 ||18.33 ||46.96 ||24.49 |
|Total Income ||4414.21 ||3098.51 ||4784.75 ||3273.02 |
|Operating Expenses ||3859.61 ||2690.09 ||4137.72 ||2821.06 |
|Other Expenditure ||168.40 ||125.82 ||188.91 ||142.92 |
|Depreciation and amortization ||17.52 ||16.26 ||26.97 ||23.22 |
|Exceptional Items ||- ||1.79 ||- ||1.79 |
|Total Expenses ||4045.53 ||2833.96 ||4353.60 ||2988.99 |
|Profit before finance cost and tax ||368.68 ||264.55 ||431.15 ||284.03 |
|Finance cost* ||77.94 ||60.91 ||91.86 ||63.63 |
|Profit before Tax (PBT) ||290.74 ||203.64 ||339.29 ||220.40 |
|Tax Expense net of MAT credit entitlement ||106.71 ||48.61 ||107.03 ||48.70 |
|Profit after Tax ||184.03 ||155.03 ||232.26 ||171.70 |
|Attributable to: || || || || |
|Shareholders of the Company ||- ||- ||219.91 ||167.87 |
|Non-controlling interests ||- ||- ||12.35 ||3.83 |
|Opening balance of retained earnings ||763.37 ||629.52 ||723.94 ||549.74 |
|Adjustment with other equity ||(5.97) ||- ||(5.97) ||27.51 |
|Amount available for appropriation ||941.43 ||784.55 ||937.88 ||745.12 |
|Appropriations || || || || |
|Debenture Redemption Reserve ||- ||1.06 ||- ||1.06 |
|Capital Redemption Reserve ||60.38 ||20.12 ||60.38 ||20.12 |
|Dividend on Equity Shares ||8.96 ||- ||8.96 ||- |
|Closing Balance of retained earnings ||872.09 ||763.37 ||868.54 ||723.94 |
* Interim Dividend paid amounting to `3.30 Crores (excluding tax) on 6.50% CumulativeRedeemable Preference Shares (CRPS) during the FY19 is part of Finance cost.
During the FY19 total Consolidated Income of your Company has reached `4785 Croresfrom `3273 Crores as compared to the previous year recording a growth of 46%.
Your Company has achieved highest ever Consolidated EBIDTA of `458 Crores in FY19 from`307 Crores in the previous year recording a growth of 49%. Profitability i.e.Consolidated PBT has grown by 54% to `339 Crores in FY19 from Rs 220 Crores during theprevious year.
In FY19 your Company has a highest ever Consolidated PAT of Rs 232 Crores from Rs 172Crores in the previous year recording a growth of 35%.
The net worth of your Company has increased during the year under review to Rs 1442Crores from Rs 1179 Crores in the previous year.
The total Debt in FY19 stood at Rs 590 Crores as against Rs 408 Crores in FY18.
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 the Companies(Accounts) Rules 2014 Regulation 33 of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as "Listing Regulations") and applicable Accounting Standards the AuditedConsolidated Financial Statements of the Company for the FY19 together with the Auditors'Report form part of this Annual Report.
TRANSFER TO RESERVES
The Board of Directors have decided to retain the entire amount of profits for theFY19 under Retained Earnings and has not transferred any amount to the General Reservesduring the year under review.
During the year under review the Board of Directors at its meeting held on 31stOctober 2018 has declared and paid first Interim Dividend of Rs 3.25/- per shareon 6037500 6.50% Cumulative Redeemable Preference Shares (CRPS) of Rs 100/- each andon 7th January 2019 also declared and paid second Interim Dividend of `3.25/- per shareon the aforesaid CRPS for the financial year ended 31st March 2019.
The Company has made payment aggregating to Rs 3.30 Crores towards Interim Dividends(excluding tax) on CRPS for the FY19.
Based on the Company's performance the Board of Directors at its meeting held on 15thMay 2019 has recommended a Dividend @ 10% i.e. Rs 0.10/- (Ten Paisa) per equity shareof Rs 1/- aggregating to Rs 12.84 Crores (excluding tax) for the financial year ended 31stMarch 2019 subject to the approval of shareholders at the ensuing Annual General Meeting(AGM) of the Company.
The Dividend payout is in accordance with the Company's Dividend Distribution Policy.
Dividend Distribution Policy
As per Regulation 43A of the Listing Regulations top 500 listed companies based on themarket capitalization shall formulate a Dividend Distribution Policy.
Accordingly the Policy has been adopted by the Board of Directors of the Company toset out the parameters and circumstances that will be taken into account by the Board indetermining 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 and isalso provided as Annexure A to this Report.
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 ("IEPF Authority").
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.
Details of Nodal Officer
The Company has designated Mr. Manoj Baid Vice-President (Corporate) & CompanySecretary of the Company as a Nodal Officer for the purpose of IEPF.
INDIAN ACCOUNTING STANDARDS (IND-AS)
Financial Statements of your Company its subsidiaries and joint venture for thefinancial year ended 31st March 2019 are prepared in accordance with Indian AccountingStandards (Ind-AS) as notified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended from time to time.
During the FY19 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 31st March 2019 the Authorized Share Capital of your Company stood at `760Crores (Rupees Seven Hundred Sixty Crores only) divided into 510 Crores (Five Hundred TenCrores) equity shares of face value of Rs 1/- (Rupee One) each aggregating to `510 Crores(Rupees Five Hundred Ten Crores only) and 2.50 Crores (Two Crore Fifty Lakhs) CumulativeRedeemable Preference Shares (CRPS) of Rs 100/- (Rupees Hundred) each aggregating to Rs250 Crores (Rupees Two Hundres Fifty Crores only).
Paid-up Share Capital
As on 1st April 2018 the Paid-up Equity Share Capital of your Company stood at Rs184.31 Crores comprising of 1239377194 equity shares of Rs 1/- each amountingto Rs 123.94 Crores and 6037500 6.50% Cumulative Redeemable Preference Shares (CRPS) ofRs 100/- each amounting to `60.38 Crores.
During the year under review the Company has redeemed entire 6037500 CRPS of Rs100/- each amounting to `60.38 Crores.
Further during the year under review the Warrants holders have exercised their rightof conversion and pursuant to exercise of conversion of such Warrants the Company hasallotted equal nos. of 35000000 equity shares at a price of Rs 16/- per equity share(including a premium of Rs 15/- per share) upon receipt of balance 75% money from theWarrant holders against such nos. of Warrants on preferential basis.
Consequent to the above the revised Paid-up Equity Share Capital of your Companystood at Rs 127.44 Crores comprising of 1274377194 equity shares of face value of Rs1/- each as on 31st March 2019.
The Company had 10000000 Warrants outstanding as on 31st March 2019 which havealso been converted into equal nos. of 10000000 equity shares and the Paid-up EquityShare Capital of your Company stands at Rs 128.44 Crores comprising of 1284377194equity shares of face value of Rs 1/- each as on the date of this Report.
There are no outstanding Warrants due for conversion as on the date of this Report.
Your Company has not issued equity shares with differential rights as to dividendvoting or otherwise.
MANAGEMENT DISCUSSIONAND ANALYSIS _MD&A_ REPORT
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(2)(e) of the Listing Regulations is presented in a separate sectionforming 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 ListingRegulations are duly complied with.
A detailed report on the Corporate Governance pursuant to the requirements of theListing Regulations forms part of this Annual Report.
A certificate from the Secretarial Auditors of the Company confirming compliance ofconditions of corporate governance as stipulated in Listing Regulations is provided inthe Report on Corporate Governance which forms part to the Corporate Governance Report.
BUSINESS RESPONSIBILITY REPORT
As stipulated under Regulation 34(2)(f ) of the 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 ("SEBIRegulations") as amended from time to time and with the objective to promoteentrepreneurial behaviour among employees of the Company motivate them with incentivesand reward their performance with ownership in proportion to the contribution made by themas well as align the interest of the employees with that of the Company "HimachalFuturistic Communications Limited Employees' Long Term Incentive Plan
2017" ("HFCL Plan 2017") was approved by the Board of Directorsof your Company on 26th August 2017 which was further approved by the members of theCompany in their 30th Annual General Meeting held on 25th September 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 31st March 2019 your Company has granted 7049000ESOs and 7049000 RSUs in terms of the HFCL Plan 2017.
Applicable disclosures as stipulated under the SEBI Regulations with regard to the HFCLPlan 2017 are provided asAnnexure B to this Report.
Your Company has received a certificate from M/s Oswal Sunil & Co. StatutoryAuditors (Firm Registration No. 016520N) that the HFCL Plan 2017 for grant of stockoptions has been implemented in accordance with the SEBI Regulations and the resolutionpassed by the members in their 30th Annual General Meeting held on 25th September 2017.
The said Certificate would be placed at the ensuing Annual General Meeting forinspection by the members.
The Nomination Remuneration and Compensation Committee of Board inter-aliaadministers and monitors the HFCL Plan 2017 of your Company.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As at 31st March 2019 your Company had four subsidiaries viz. HTL Limited PolixelSecurity Systems Private Limited Moneta Finance Private Limited and HFCL Advance SystemsPrivate Limited and one joint venture company viz. DragonWave HFCL India Private Limiteda Joint Venture Company of your Company and DragonWave Inc. Canada now known asDragonWave - X Canada Inc. a subsidiary of Transform - X Inc.
The Company regularly monitors the performance of these companies.
There has been no material change in the nature of the business of the subsidiaries/joint venture.
A statement containing the salient features of the financial statements ofsubsidiaries/ joint venture company of the Company in the prescribed Form AOC1forms a part of the Consolidated Financial Statements (CFS) in compliance with Section129(3) and other applicable provisions if any of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014 as amended.
The said Form also highlights the financial performance of each of the subsidiaries andjoint venture company included in the CFS of the Company pursuant to Rule 8(1) of theCompanies (Accounts) Rules 2014.
In accordance with the provisions of Section 136 of the Act the financial statementsof the subsidiaries and joint venture company are available for inspection by the membersat the Registered Office of the Company during business hours on all days exceptSaturdays Sundays and public holidays up to the date of the ensuing AGM. Any memberdesirous of obtaining a copy of the said financial statements may write to the CompanySecretary at Himachal Futuristic Communications Limited 8 Commercial Complex MasjidMoth Greater Kailash II New Delhi 110048 and the same shall be sent bypost.
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.
Further your Company has acquired controlling stake of 90% in Raddef Private Limited[CIN: U74999KA2017PTC105873] ("RADDEF") thereby making it a subsidiary of theCompany w.e.f. 15th May 2019.
RADDEF aims to provide Common Of The Shelf (COTS) Radio Frequency (RF) & Microwaveproducts to Indian and worldwide customers covering Navy Military Aerospace ProcessControl & Automation Communication Test and Measurement Industry. RADDEF hasexpertise in the field of RADAR RF and Microwave. It also undertakes development ofproducts involving embedded and control systems.
RADDEF had been acquired to serve as an extended arm for undertaking development of newproducts in the fields of Defence Surveillance and Telecom Industry.
The Company has in accordance with the amendments to the Listing Regulations revisedthe Policy for determining Material Subsidiaries. The key change is the revised definitionof material subsidiary. 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 no material subsidiary company as on 31st March 2019.
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. Arvind Kharabanda (DIN: 00052270) Director(Non-Executive) is liable to retire by rotation at the ensuing Annual General Meeting(AGM) and being eligible offers himself for re-appointment.
The Board of Directors of the Company on the recommendations of the NominationRemuneration and Compensation Committee had appointed Dr. (Ms.) Tamali Sengupta (DIN:00358658) as an Additional Director in the category of Independent Director w.e.f.December 24 2018 in terms of provisions of Section 149 and 161 of the Act and Regulation17 of the Listing Regulations and the Articles of Association of the Company.
In terms of the provisions of Section 161(1) of the Act Dr. (Ms.) Tamali Senguptaholds office up to the date of ensuing AGM of your Company.
The Company has received a requisite Notice from a member under Section 160 of theCompanies Act 2013 proposing the appointment of Dr. (Ms.) Tamali Sengupta as a Directorof the Company.
Your Board recommends the appointment of Dr. (Ms.) Tamali Sengupta as a Non-ExecutiveIndependent Director of the Company for one term of 3 (three) consecutive years witheffect from December 24 2018 to December 23 2021 pursuant to Section 149 and otherapplicable provisions of the Act and the rules made thereunder. She will not be liable toretire by rotation.
Brief resumes 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/ reappointed along with their shareholding in theCompany as stipulated under Regulation 36 of the Listing Regulations and SecretarialStandard on General Meetings issued by the Institute of Company Secretaries of India isappended 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 FY19 Ms. Bela Banerjee (DIN: 07047271) has resigned as an IndependentDirector of the Company w.e.f. 26th September 2018.
Key Managerial Personnel
During the year under review Mr. Mahendra Nahata Managing Director Mr. Vijay RajJain Chief Financial Officer and Mr. Manoj Baid Vice-President (Corporate) & CompanySecretary continue to be Key Managerial Personnel of your Company in accordance with theprovisions of Section 2(51) and 203 of the Companies Act 2013 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 31st March 2019.
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 Listing Regulations (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force) and that they areindependent of management.
In terms of Regulation 25(8) of the Listing Regulations the Independent Directors haveconfirmed that they are not aware of any circumstance or situation which exist or may bereasonably 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 Listing Regulations and are independent of themanagement.
Familiarisation Programme for Independent Directors
The details of programmes for familiarisation 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.
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)and 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 Annexure C to 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 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 Listing Regulations theNomination Remuneration and Compensation Committee (NRC Committee') of your Boardhas formulated a Remuneration Policy for the appointment and determination of remunerationof the Directors Key Managerial Personnel Senior Management Personnel and otheremployees 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 Company has in accordance with the amendments to the Listing Regulations revisedthe Remuneration Policy. The key changes include inter-alia revised definition ofSenior Management Personnel along with recommendation of their appointment andremuneration.
The detailed Policy is available on the Company's website at http://www.hfcl.com/wp-content/uploads/2019/06/Remuneration-Policy.pdf and the salient aspectscovered in the Remuneration Policy have been outlined in the Corporate Governance Reportwhich forms part of this Report.
BOARD AND COMMITTEE MEETINGS
Seven meetings of the Board of Directors were held during the FY19. The intervening gapbetween any two consecutive meetings of the Board was within the stipulated time frameprescribed under the Act and the Listing Regulations.
Separate Meeting of Independent Directors
In terms of requirements of Schedule IV to the Act and Regulation 25 of the ListingRegulations a separate meeting of the Independent Directors was held on 28th March 2019for the FY19.
All the Independent Directors attended the meeting held on 28th March 2019.
Your Company has constituted several Committees which have been established as part ofthe best corporate governance practices and are in compliance with the requirements of therelevant provisions of applicable laws and statutes.
As on 31st March 2019 your Board has 05 (five) mandatory Committees namely AuditCommittee Nomination Remuneration & Compensation (NRC) Committee; Corporate SocialResponsibility (CSR) Committee; Stakeholders' Relationship Committee (SRC) and RiskManagement Committee (RMC).
The details with respect to the composition powers roles terms of reference numberof meetings etc. of the Committees held during the FY19 and attendance of the members ateach Committee meeting are provided in the Report on Corporate Governance which formspart of this Report.
All the recommendations made by the Committees of the Board including the AuditCommittee were accepted by the Board.
As on 31st March 2019 the Audit Committee comprises of 04 (four) members namely Mr.Ved Kumar Jain Mr. Surendra Singh Sirohi Dr. (Ms.) Tamali Sengupta IndependentDirectors and Mr. Arvind Kharabanda a Non-Executive Director.
Mr. Ved Kumar Jain Independent Director is the Chairman of the Audit Committee.
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 Listing Regulations and the Circular issued by SEBI on 5thJanuary 2017 with respect to Guidance Note on Board Evaluation the evaluation of theannual performance of the Directors/ Board/ Committees was carried out for the FY19.
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 Board and the Nomination Remuneration & Compensation Committee reviewed theperformance of individual Directors on the basis of criteria such as the contribution ofthe individual Director to the Board and Committee meetings like preparedness on theissues to be discussed meaningful and constructive contribution and inputs in meetingsetc.
Performance evaluation of the Independent Directors was done by the entire Boardexcluding the Independent Director being evaluated.
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) (SBC') and M/sOswal Sunil & Company Chartered Accountants (FRN: 016520N) (Oswal') wereappointed as Statutory Auditors for one term of 05 (five) consecutive years at the 30thAnnual General Meeting of the Company held on 25th September 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 7th May 2018. Accordingly no resolution is being proposed for rati_cation ofappointment of Statutory Auditors at the ensuing AGM and a note in respect of the same hasbeen 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.The Statutory Auditors in the Annexure to the Standalone Auditor's Report have mentionedabout delay in deposit of statutory dues in few cases. In future the management will makeall efforts to deposit the same within time.
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-3616for conducting the Secretarial Audit of your Company for the FY19.
The Secretarial Audit Report in prescribed form MR-3 issued by the Secretarial Auditoris annexed herewith as Annexure D 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 records as prescribed under Section 148 of the Act andthe relevant rules made thereunder.
Requirement of Cost Audit as prescribed under the provisions of Section 148 of the Actare not applicable for the business activities carried out by the Company.
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 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 Code of Conduct for Directors and Senior Management Personnel.
|Name of the entity ||Relation ||Amount (Rs in Crores) ||Particulars of Loans Guarantees & Investments |
|Corning Finolex Optical ||Supplier ||45.00 ||Guarantee |
|Fiber Private Limited || || || |
|Punjab National Bank ||Consortium ||6.50 ||Guarantee |
| ||Banker || || |
|Owens-Corning (India) ||Supplier ||6.00 ||Guarantee |
|Private Limited || || || |
|Yes Bank Limited ||Banker ||120.00 ||Guarantee |
During FY19 no complaint was received and no individual was denied access to the AuditCommittee for reporting concerns if any.
The Whistle-Blower Policy was amended in line with the SEBI (Prohibition of InsiderTrading) Amendment Regulations 2018 enabling employees to report instances of leak ofUnpublished Price Sensitive Information (UPSI).
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 Report on Corporate Governance which forms part of this Report.
As a result of significant improvements in the key rating drivers of your Company CARERatings Limited vide its letter dated July 09 2019 has re-afirmed the credit rating forthe Long Term Bank facilities of the Company to CARE A Minus; Stable (Single A Minus;Outlook: Stable) and Short Term Bank facilities to CARE A2+ (A Two Plus).
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT9 as stipulated under Section 92(3)and Section 134(3)(a) of the Act read with the Rule 12 of the Companies (Management andAdministration) Rules 2014 is annexed herewith as Annexure-E to this Report.
Annual Return i.e. Form MGT-7 for the FY19 shall be filed by the Company with theRegistrar of Companies Himachal Pradesh within the stipulated period and the same canalso 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 31st March 2019 as stipulatedunder Section 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 ||31.25 |
|Guarantees given ||191.16 |
|Investments made ||70.91 |
Purpose for which the Loans Guarantees and Investments are proposed to be utilized
Corporate Guarantee given to Corning Finolex Optical Private Ltd. on behalf of HTLLtd. a Subsidiary of the Company for the supply of material. Corporate Guarantee given toPunjab National Bank on behalf of Exicom Tele System Ltd. for Working Capital.
Corporate Guarantee given to Owens Corning India Private Ltd. on behalf of HTL Ltd. aSubsidiary of the Company for the supply of material. Corporate Guarantee given to YesBank Ltd on behalf of HTL Ltd. a Subsidiary of the Company for various credit facilitiessanctioned to HTL Ltd.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review your Company has revised its Policy on Dealing with andMateriality of Related Party Transactions in accordance with the amendments to theapplicable provisions of the Listing Regulations. The key changes include inter-aliathreshold 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 except the following transaction which was not in ordinary course of business:-
|Names of the Related Party & Nature of relationship ||Nature of transactions ||Cost of acquisition ||Amount of consideration |
|1 HTL Limited (A subsidiary under Section 2(87) of the Act) ||High Sea Sale of Plant & Machineries ||Rs 8361570/- ||`8361570/- |
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 bereported in Form AOC-2 pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of theCompanies (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 except as mentioned below:-
| || |
Amount (Rs in Crores)
|Particulars ||Year ended March 31 2019 ||Year ended March 31 2018 |
|Contribution towards Warrant: || || |
|MN Ventures Private Limited ||9.0 ||3.0 |
|Nextwave Communication Private Limited ||9.0 ||3.0 |
The details of the related party transactions as per Indian Accounting Standards(IND-AS) - 24 are set out in Note 52 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 - F 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 and report on CSRactivities carried out during the financial year ended 31st March 2019 in the formatprescribed under Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules2014 is annexed herewith as Annexure - G.
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 FY19.
B. Material changes and commitments affecting the financial position of the Company
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the FY19 and the date of this Report.
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.
An Internal Complaints Committee (ICC) has been set up to redress complaints if anyreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this Policy.
There was no complaint received from any employee of the Company during the FY19.
The Company is well known with its abbreviated name "HFCL" which stands forthe full name viz. "Himachal Futuristic Communications Limited."
The present name of the Company gives impression that the activities of the Company arelimited to the state of Himachal Pradesh only. However this is far from truth. Today theCompany's presence is not only on PAN India level but also beyond the territory of theNation.
In view of building new brand image the name of the Company is proposed to be changedfrom "Himachal Futuristic Communications Limited" to "HFCL Limited"which is a blend of its present full name. The proposed name of the Company contains wordHFCL' as the Company is well known by this abbreviated name.
Your Board of Directors at its meeting held on 15th May 2019 had approved the changein name of the Company. As per the provision of the Act approval of the members is beingsought for changing the name of the Company by way of passing a Special Resolution at theensuing Annual General Meeting.
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 standardshad been followed along with proper explanation relating to material departures; (b) theDirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year 31st March 2019and of the profits of the Company for that period; (c) the Directors had taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; (d) the Directors had prepared the annualaccounts on a going concern basis; and (e) the Directors had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively.
(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 paid annual listing fee for the FY20 to the BSE Limited and theNational Stock Exchange of India Limited.
Your Company's Scrip has come under compulsory dematerialization w.e.f. 29th November1999 for Institutional Investors and w.e.f. 17th January 2000 for all Investors. So far99.96% 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 1st April 2018 to 31st March2019. Some parts of the Non-Financial Information included in this Board's Report areprovided as 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 and continuousimprovement across all functions as well as efficient utilization of the Company'sresources 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 Banksand other stakeholders such as shareholders customers and suppliers among others. TheDirectors look forward to their continued support in future. The Directors thank theCentral Government Govt. of Himachal Pradesh Govt. of Goa Govt. of Telangana IDBI BankLimited State Bank of India Oriental Bank of Commerce Punjab National Bank Bank ofBaroda Union Bank of India United Bank of India Yes Bank Limited ICICI Bank Limitedand other Banks for all co-operations facilities and encouragement they have extended tothe Company. Your Directors acknowledge the continued trust and confidence you havereposed in the Company.
| ||For and on behalf of the Board |
| ||M P Shukla |
|Place: New Delhi ||Chairman |
|Date: August 28 2019 ||DIN: 00052977 |