Your Directors are pleased to present the Thirty First Annual Report onthe Business and Operations of HOV Services Limited (the "Company" or"HOVS") together with the Audited Financial Statements for the financial yearended March 31 2019.
FINANICAL RESULTS AND OPERATIONS:
| || |
Rs In Lakhs
|Particulars || |
| ||For the year ended on ||For the year ended on ||For the year ended on ||For the year ended on |
| ||March 31 ||March 31 ||March 31 ||March 31 |
| ||2019 ||2018 ||2019 ||2018 |
|INCOME || || || || |
|Income from Operation ||1054.43 ||1359.95 ||1054.43 ||1254.55 |
|Other Income ||95.77 ||420.32 ||93.17 ||106.31 |
|Total Income ||1150.20 ||1780.27 ||1147.60 ||1360.86 |
|EXPENDITURE || || || || |
|Staff Cost ||732.36 ||911.96 ||713.92 ||884.89 |
|General and Administrative Expenses ||296.28 ||428.02 ||245.23 ||269.12 |
|Total Expenditure ||1028.64 ||1339.98 ||959.15 ||1154.01 |
|Profit / (Loss) before Interest ||121.56 ||440.29 ||188.45 ||206.85 |
|Depreciation and Tax || || || || |
|Less:Interest ||- ||25.42 ||- ||- |
|Less: Depreciation ||52.52 ||106.62 ||8.54 ||9.76 |
|Profit / (Loss) before Exceptional Items ||69.04 ||308.25 ||179.91 ||197.09 |
|Less: Exceptional Items ||- ||0.38 ||- ||1022.72 |
|Profit / (Loss) Before Tax ||69.04 ||307.87 ||179.91 ||(825.63) |
|Less: Provisions for Taxes || || || || |
|Current Tax ||(50.90) ||(57.10) ||(50.90) ||(57.10) |
|Deferred Tax ||(0.58) ||(12.95) ||(0.58) ||(0.97) |
|Profit / (Loss) for the year ||17.56 ||237.82 ||128.43 ||(883.70) |
|Other Comprehensive Income || || || || |
|Items that will not be reclassified subsequently to Profit or Loss ||(27265.18) ||61011.50 ||4.02 ||1.23 |
|Total Comprehensive Income for the year ||(27247.62) ||61249.32 ||132.45 ||(882.47) |
1. Results of Operations
For the financial year ended March 31 2019 as follows:- ConsolidatedFinancial Performance:
Consolidated total Income for the current year was '1150.20Lakhs.
EBIDT for the current year was '121.56 Lakhs.
Net Profit for the current year was '17.56 Lakhs.
Total Comprehensive Income for the current year was '(27247.62)Lakhs.
The basic and diluted Earnings per Share (EPS) for the currentyear was '0.14.
Standalone Financial Performance:
Total Income for the current year was '1147.60 Lakhs.
EBIDT for the current year was '188.45 Lakhs.
Net Profit/ (Loss) for the current year was '128.43 Lakhs.
Total Comprehensive Income for the current year was '132.45Lakhs.
The basic and diluted Earnings per Share (EPS) for the currentyear was '1.02.
For more information refer to section of Management Discussion andAnalysis part of the Report.
The Board of Directors did not recommend any dividend for the year toconserve available resources to pursue strategic growth opportunities for the growth ofbusiness of the Company.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended onMarch 31 2019.
3. Subsidiary Companies
i) HOVS LLC incorporated in Delaware under the laws of Unites States ofAmerica;
ii) HOV Environment LLC incorporated in Nevada State under the laws ofUnited States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinanceof Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated inMaharashtra under Indian Company Laws.
A report on the performance and financial position of Subsidiaries asper the Companies Act 2013 is annexed in the financial statements.
4. Policy on Material Subsidiaries
The Company had the policy for determining material subsidiary and itwas updated effective April 1 2019 pursuant to the SEBI (Listing Obligation andDisclosure Requirements) (Amendment) Regulations 2018. The said policy has been displayedon the website of the Company at http://hovsltd.com/ Policies Disclosures.html
The Company's wholly owned subsidiary HOVS LLC is a material subsidiaryin accordance with the thresholds laid down under the (SEBI Listing Obligation andDisclosure Requirements) Regulation 2015 as amended from time to time.
The Company's wholly owned subsidiary HOVS LLC holds investment inExela Technologies Inc. through Ex-Sigma LLC a special purpose vehicle.The percentage ofinvestment held by HOVS LLC in Exela Technologies Inc. as of March 31 2019 is 18.686%and therefore as per IND-AS the investment has been accounted as Financial Instrumenti.e. FVOCI Equity Instruments. For details refer Note No. 5.1 of Consolidated Financialstatements.
The shareholder's in their Annual General Meeting dated July 21 2007granted approval for proposed 15000000 of ADR/GDR issue. However so far none of theunderlying equity shares were issued by the Company.
7. Share Capital of the Company
During the financial year the Company had allotted 53250 equityshares under ESOP Plans 2007. Consequently after the allotment the paid up share capitalof the Company has gone up from 12535722 equity shares of '10 aggregating to'125357220/- to 12588972 equity shares of '10 aggregating to '125889720/-.
8. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" for itsemployees and for employees of its subsidiary companies as detailed below:
|Plan ||Shareholder's Approval Date ||No. of Options for employees of the Company ||No. of Options for employees of subsidiary companies ||Total |
|"HOVS Stock Option Plan 2007" ||July 21 2007 ||400000 ||700000 ||1100000 |
The information to be disclosed as per SEBI (Employees Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines 1999 is provided herewith as "ANNEXURE-A" to this report.
9. Conservation of Energy Technology Absorption and Foreign Exchange
The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 13 (3) (m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 is provided herewithas "ANNEXURE- B" to this report.
10. Human Resources
The Company follows the philosophy to maintain cordial relations withall its employees and value its human resources and takes utmost care of its employeesdeployed. It encourages all employees to strike a perfect work life balance.
The Company adopted a Policy on prevention prohibition and redressalof sexual harassment at workplace in line with the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal Act 2013) and the Rules madethereunder for prevention and redressal of complaints of sexual harassment at workplace.
During the year there was no complaint received to the Committeeconstituted under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
11. Particular of Employees and Related Disclosures
The Company has no employees who received remuneration in excess oflimits prescribed Under Section 197 of the Companies Act 2013 read with the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014.
Disclosure as per Section 197 (12) of the Companies Act 2013 and Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isprovided herewith as "ANNEXURE- C" to this report.
12. Directors Responsibility Statement
The Directors Responsibility Statement in terms of Section 134(5) ofthe Companies Act 2013 is provided herewith as "ANNEXURE- D" to thisreport.
13. Financial Summary and Highlights
The financial summary and highlights are presented under the ManagementDiscussion and Analysis Report part of the Annual Report.
14. Board Meetings
During the financial year 4 (Four) Board Meetings were held. Thedetails of meetings of Board of Directors are provided in the Report on CorporateGovernance that forms a part of this Annual Report. The maximum interval between any twomeetings did not exceed 120 days as prescribed under the Companies Act 2013.
15. Directors and Key Managerial Personnel
The Board in its meeting held on May 30 2019 accepted the willingnessof Mr. Sunil Rajadhyaksha to relinquish his office of Chairmanship. The Board of Directorsplaced on record its deep sense of appreciation for Mr. Sunil Rajadhyaksha as Chairmanand for his strong leadership valuable contribution and support extended to the Companyat all times during his tenure as the Chairman. He will be however continue as awholetime director of the Company.
The Board in its meeting held on May 30 2019 appointed Mr. Vikram Negias the Chairman of the Board of Directors & of the Company w.e.f May 30 2019.
During the year Mr. Harish Bhasin resigned from his office ofIndependent Director effective September 10 2018 and Mr. Rohit Jain resigned from hisoffice of Independent Director effective August 13 2018. Mr. Harjit Singh Anand wasappointed as Independent Director effective July 5 2018.
Mr. Surinder Rametra Executive Director is liable to retire by rotationat the 31st Annual General Meeting. Mr. Rametra has confirmed his eligibilityand willingness for re-appointment. Mr. Rametra has requisite qualifications andexperience and therefore your Directors recommend that the proposed resolution relatingto the re-appointment of Mr. Rametra be passed.
There is no change in Company Secretary and Chief Financial Officer ofthe Company.
None of the directors of the Company have been debarred or disqualifiedfrom being appointed or continuing as directors of companies by the SEBI Board/MCA or anysuch statutory authority. The Company has complied with the requirement in terms ofSchedule V Part C of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 as amended of taking a certificate to thateffect from the Secretarial Auditor of the Company.
16. Declarations from Independent Directors
The Board confirms that it has received declarations from all theIndependent Directors that they meet the criteria of independence as prescribed underSection 149(7) of the Companies Act 2013.
17. Meeting of Independent Directors
The meeting of Independent Directors was held on February 13 2019 toreview the performance of the Board as a whole its committees non-independent directorsindependent directors and the Chairman of the Company and assessed the quality quantityand timeliness of flow of information between the Company Management and the Board that isnecessary for the Board to effectively and reasonably perform their duties. Theindependent directors expressed satisfaction on the quality quantity and timeliness offlow of information between the management and the Board.
18. Familiarisation Programme
The Board members are provided with necessary documents/ brochuresreports and internal policies to enable them to familiarise with the Company's proceduresand practices. The management of the Company as and when required keeps updating to theentire Board including Independent Directors on the Company's operations and were alsobriefed regularly and or quarterly basis the changes in applicable statutes andregulations.
During the year the familiarisation program was arranged by the Companyon February 13 2019 for Independent Directors. The details of the familiarisation programwas disclosed under Investor Relations section of the Company's website www.hovsltd.com.
19. Internal Financial Controls
The Company has adequate procedures for ensuring the internal financialcontrols and the same are in place with reference to financial statements. The internalcontrol system is reviewed by the Audit Committee with the Management and tested byInternal Auditors of the Company and no reportable material weaknesses in the design oroperation were observed.
20. Related Party Transactions
All transaction entered into by the Company with Related Parties are atarm's length and are in the ordinary course of business and are intended to further yourCompany's interest. The particulars of transactions with related parties are providedherewith as "ANNEXURE- E" to this report.
The disclosure of Related Party Transactions as per Ind AS 24 withrelated parties have been provided in Note No. 34 & 37 of the Standalone &Consolidated Financial Statements respectively forming part of this Annual Report.
The policy on Related Party Transactions as updated by the Boardkeeping in view of SEBI (Listing Obligations and Disclosure Requirement) Regulations2015 as amended to be effective April 1 2019 has been displayed on the Company's websiteat: http://www.hovsltd.com/docs/Policies/2019/ HQVS%20RPTs%20PolicyApril%201%202019.pdf
21. Corporate Governance Report
The report on Corporate Governance is annexed as the part of theDirector's report.
22. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review asstipulated under Securities Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is presented as a separate section forming part of theDirector's report.
23. Code of Conduct for Board and Senior Management
The Company has adopted Code of Conduct for the Directors and SeniorManagement and is available on the Company's website http://hovsltd.com/code ofconduct.html. All Directors and Senior Management personnel have affirmed their compliancewith the said Code. A declaration signed by the Whole-time Director to this effect isannexed as part of the Director's Report.
24. Auditors and Auditors' Report Statutory Auditors:
M/s BAGARIA & Co. Chartered Accountants were appointed asStatutory Auditors for a period of 5 years in 29th Annual General Meeting heldon September 1 2017 till the conclusion of the 34th AGM to be held in year2022.
The Statutory Auditors' Report for FY 2018-19 does not contain anyqualification reservation or adverse remark.
Secretarial Audit Report:
M/s. J B Bhave & Co. Practicing Company Secretaries Pune wereappointed for conducting secretarial audit. The Secretarial Audit Report for FY 2018-19 isprovided herewith as "ANNEXURE- F" to this report. The SecretarialAuditors' Report does not contain any qualification reservation or adverse remark.
During the year under review there were no instances of fraudscommitted in the Company by its officers or employees which requires reporting by theStatutory Auditors and the Secretarial Auditor.
Annual Secretarial Compliance Report:
Pursuant to requirements of Regulation 24A of SEBI (Listing Obligationsand Disclosure Requirements) (Amendment) Regulations 2018 the Secretarial Auditors of theCompany were engaged to issue the Annual Secretarial Compliance Report for year endedMarch 31 2019.
25. Extract of Annual Return
Extract of Annual Return is provided herewith as "ANNEXURE-G" to this report.
26. Board Evaluation
The Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("the Listing Regulations") stipulatethe evaluation of the performance of the Board its Committees Individual Directors andthe Chairperson. The performance evaluation has been carried out on directorsindividually working of the Committees and Board's performance. The manner of evaluationis explained in the Corporate Governance Report. Independent Directors met separately toevaluate the Non-Independent Directors and Chairman of the Board. The performanceevaluation of Board its Committees Independent Directors Non-independent directors andincluding Chairman of the Board was carried out during the year considering parameters asset by the members of the Board.
The evaluation of the Board and its Committees was carried out througha structured evaluation process covering various aspects of the Boards functioning andhaving well defined Committees and each Committee having co-operative working environmentwith the Board.
The evaluation of Chairperson was carried out by independent directorson criteria of leadership promotes participation among all members and ability to manageconflicting situations positively.
The evaluation of the independent directors by all board members wascarried out based on the criteria of efforts undertaken by them brings independent viewpoint in discussion and awareness of their roles and responsibilities.
The Board has on the recommendation of the Nomination &Remuneration Committee framed a policy for selection and appointment of Directors seniormanagement and their remuneration. The nomination and remuneration policy is providedherewith as "Annexure- H" to this report. The said policy has beendisplayed on the Company's website at:http://www.hovsltd.com/docs/Policies/2019/Nomination%20&%20Remuneration%20Policy.pdf
27. Risk Management
The implementation of risk management has been covered in theManagement Discussion and Analysis (MDA) which forms part of this report.
28. Committees of the Board
The Company has constituted the Audit Committee; Nomination andRemuneration Committee; Stakeholders Relationship Committee. The details of all thecommittee are disclosed in the Corporate Governance Report. The Board accepts all therecommendations of the Audit Committee.
29. Particulars of Loans Advances and Investments
The particulars as required pursuant to Section 186 (4) of theCompanies Act 2013 read with Companies (Meetings of Board and its Powers) Rules 2014and pursuant to Regulation 34(3) and Schedule V Part A of SEBI LODR 2015 are mentionedin the Notes to Account to the Financial Statements of the Annual Report.
The particulars of loans are mentioned in Note No. 6 respectively ofStandalone and Consolidated Notes to Accounts; the particulars of Guarantees are mentionedin Note No. 33 & 36 respectively of Standalone and Consolidated Notes to Accounts;and the particulars of Investment are mentioned in Note No. 5 of Consolidated Notes toAccounts.
30. Compliance with Secretarial Standards
The Secretarial Standards issued by the Institute of CompanySecretaries of India as applicable to the Company have been complied with.
31. Whistle Blower Policy
The Company has adopted a Vigil Mechanism/Whistle Blower Policy inorder to establish a mechanism for directors and employees to report genuine concerns orgrievances about unethical behaviour actual or suspected frauds or violation of theCompany's Code of Conduct.
The Policy provides for commitment to the highest possible standards ofethical moral and legal business conduct and its commitment to open communication. ThePolicy provides for a mechanism to report such concerns to the Audit Committee throughspecified channels. This mechanism provides safeguards against victimisation of employeeswho report under the said mechanism.
During the year under review the Company has not received anycomplaints under the said mechanism. The Whistle Blower Policy of the Company has beendisplayed on the Company's website.
32. Reconciliation of Share Capital Audit
As required by the Securities & Exchange Board of India (SEBI)quarterly audit of the Company's share capital is being carried out by an independentexternal auditor with a view to reconcile the total share capital admitted with NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL) and held in physical form with the issued and listed capital. The Auditor'sCertificate in regard to the same is submitted to BSE Limited and National Stock Exchangeof India Limited and is also placed before Stakeholders' Relationship Committee and theBoard of Directors of the Company.
a) The statement relating to risk management policy and identificationof risk elements are covered under Management Discussion Analysis Report as annexed withthis Report.
b) There are no adverse material changes or commitments occurred afterMarch 31 2019 which may affect the financial position of the Company or may requiredisclosure.
c) On following points no reporting or disclosure is required as therewere no transactions on these items during the financial year under review:
(i) There were no loans guarantees and investments made;
(ii) Details relating to deposits covered under Chapter V of theCompanies Act 2013;
(iii) No significant and material orders passed by the regulators orcourts or tribunals which impacted the going concern status and operation of the Company;
(iv) Issue of equity shares with differential rights as to dividendvoting or otherwise;
(v) Issue of sweat equity shares; and
(vi) None of the whole-time directors of the Company received anyremuneration or commission from the subsidiaries of the Company.
(vii) Requirement under Section 148 of the Companies Act 2013 is notapplicable in the respect of business activities carried out hence cost records are notmaintained by the Company.
Your Directors would like to place on record their sincere appreciationfor co-operation and support received from the Government of India Government ofMaharashtra Reserve Bank of India Software Technology Parks of India Registrar ofCompanies Pune other local governmental bodies NASSCOM the National Stock Exchangethe Bombay Stock Exchange Bankers of the Company and Shareholders during the financialyear.
Your Directors would also like to place on record their appreciationfor the commitment and contribution made by all executives officers workers and staff ofthe Company for their hard work co-operation and support.
Your Directors takes this opportunity to express its deep gratitude forthe continued co-operation and support received from each one of valued shareholders ofthe Company.
For and on behalf of the Board of Directors
|Sunil Rajadhyaksha ||Baldev Raj Gupta ||Harjit S Anand |
|Chairman & Executive Director ||Independent Director ||Independent Director |
|(DIN:00011683) ||(DIN:00020066) ||(DIN:01549385) |
|Date: May 30 2019 || || |