The Board of Directors present the Thirty-Second Annual Report of HOV Services Limited(the "Company" or "HOVS") along with audited Financial Statements forthe financial year ended March 31 2020.
FINANICAL RESULTS AND OPERATIONS:
|Particulars || |
Consolidated Year Ended
Standalone Year Ended
| ||March 31 2020 ||March 31 2019 ||March 31 2020 ||March 31 2019 |
|INCOME || || || || |
|Revenue from operations ||1097.16 ||1054.43 ||1097.16 ||1054.43 |
|Other income ||124.11 ||95.77 ||121.99 ||93.17 |
|Total Income ||1221.27 ||1150.20 ||1219.15 ||1147.60 |
|Expenses || || || || |
|Employee Benefits Expense ||678.29 ||732.36 ||678.29 ||713.92 |
|Finance Costs ||71.75 ||- ||16.39 ||- |
|Depreciation and Amortisation Expense ||55.43 ||52.52 ||55.43 ||8.54 |
|Other Expenses ||189.39 ||296.28 ||189.37 ||245.23 |
|Total Expenses ||994.86 ||1081.16 ||939.48 ||967.69 |
|Profit before exceptional items from continuing operations ||226.41 ||69.04 ||279.67 ||179.91 |
|Exceptional items: Provision for Diminution in Value of Investment in subsidiary ||- ||- ||(6068.66) ||- |
|Profit/(Loss) after exceptional items from continuing operations ||226.41 ||69.04 ||(5788.99) ||179.91 |
|Tax Expense : || || || || |
|Current Tax ||(80.70) ||(50.90) ||(80.70) ||(50.90) |
|Deferred Tax ||(0.74) ||(0.58) ||(0.74) ||(0.58) |
|Profit/(Loss) for the period from continuing operations ||144.97 ||17.56 ||(5870.43) ||128.43 |
|Discontinued Operations || || || || |
|Profit/(Loss) from discontinued operations before tax ||(77.93) ||- ||- ||- |
|Tax expense of discontinued operations ||- ||- ||- ||- |
|Profit/(Loss) after tax from continuing & discontinued operations ||67.04 ||17.56 ||(5870.43) ||128.43 |
|Other Comprehensive Income / (Loss) Items that will not be reclassified subsequently to Profit or loss : || || || || |
|Remeasurement of net defined benefit plans ||(6.52) ||5.57 ||(6.52) ||5.57 |
|Changes in fair value of FVOCI equity instruments ||(56975.04) ||(40101.76) ||- ||- |
|Tax impact of Items that will not be reclassified subsequently to Profit or loss ||15879.96 ||12831.01 ||1.81 ||(1.55) |
|Total Other Comprehensive Income / (Loss) ||(41101.60) ||(27265.18) ||(4.71) ||4.02 |
|Total Comprehensive Income / (Loss) For The Period ||(41034.56) ||(27247.62) ||(5875.14) ||132.45 |
On account of nationwide lockdown imposed by Government of India from March 25 2020there was interruption in logistics and ability to maintain normal operation of theCompany. Uncertainties due to wide spread of pandemic during last month of FY 2019-20forcing government to enforce lock down on all fronts of economic activities on globalfoot prints basis.The business operations impacted on account of lockdown measuresimplemented by local and central government authorities to implement social distancingnorms and to prevent spread of Covid-19 Pandemic.The overall impact of COVID-19 on thebusinesses of the Company may vary depending on future conditions and socio-economicfactors and measures taken at the Government levels.
1. Results of Operations
For the financial year ended March 31 2020 are as follows:-
Consolidated Financial Performance:
Consolidated total Income for the current year was Rs. 1221.27 Lakhs.
Profit/(Loss) from continuing operations was Rs. 144.97 Lakhs.
Profit/(Loss) from discontinued operations was Rs. (77.93) Lakhs.
Profit/(Loss) from continuing & discontinued operations was Rs. 67.04 Lakhs.
Total Comprehensive Income/(Loss) for the current year was Rs. (41034.56) Lakhs.
The basic and diluted Earnings Per Share (EPS) for the current year from :
Continued Operations was Rs. 1.15
Discontinued Operations was Rs. 0.62
Continued and Discontinued Operations was Rs. 0.53
Standalone Financial Performance:
Total Income for the current year was Rs. 1219.15 Lakhs.
Provision for Diminution in Value of Investment in subsidiary provided underexceptional items was Rs. (6068.66) Lakhs.
Net Profit/ (Loss) for the current year was Rs. (5870.43) Lakhs.
Total Comprehensive Income/(Loss) for the current year was Rs. (5875.14) Lakhs.
The basic and diluted Earnings Per Share (EPS) for the current year from :
Before exceptional item was Rs. 1.57
After exceptional item was Rs. (46.63)
The Board of Directors did not recommend any dividend for the year to conserveavailable
resources to pursue and sustain the operations and business of the Company and to lookfor growth opportunities for the business.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended on March 31 2020.
3. Subsidiary companies
The Company has below subsidiaries as on March 31 2020 and there has been no materialchange in
these subsidiaries with respect to the nature and structure. A report on theperformance and financial
position of Subsidiaries as per the Companies Act 2013 is annexed in the financialstatements.
i) HOVS LLC incorporated in Delaware under the laws of Unites States of America;
ii) HOV Environment LLC incorporated in Nevada State under the laws of United States ofAmerica;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in Maharashtra under IndianCompany Laws.
4. Policy on Material Subsidiaries
The Company's wholly owned subsidiary HOVS LLC is a material subsidiary in accordancewith the thresholds laid down under the SEBI Listing Regulations 2015 as amended from timeto time. The Company had adopted the policy for determining material subsidiary and it wasupdated effective April 1 2019 pursuant to the SEBI (Listing Obligation and DisclosureRequirements) (Amendment) Regulations 2018. The said policy has been displayed on thewebsite of the Company at http:// hovsltd.com/Policies_Disclosures.html
The Company's wholly owned subsidiary HOVS LLC holds 17203471 shares (representing11.35% of Exela Technologies Inc. NASDAQ listed) free from any encumbrances/lien andhaving fair value of Rs 2658.64 lakhs as on March 31 2020. During the quarter and yearended March 31 2020 fair value of investment has fallen below the carrying cost ofinvestment in standalone financial results and accordingly provision for diminution inits value is recognised. The investment is a long term and strategic in nature and in theopinion of the Board the fall in value is temporary and expects better futureperformance from the investee.
The shareholder's in their Annual General Meeting dated July 21 2007 granted approvalfor proposed 15000000 of ADR/GDR issue. However so far none of the underlying equityshares were issued by the Company.
7. Share Capital of the Company
The paid up share capital of the Company as on March 31 2020 has 12588972 equityshares of Rs.10 aggregating to Rs. 125889720/-.
8. Employee Stock Option Plan (ESOP)
Your Company instituted HOVS Stock Option Plan 2007 for its employees andfor 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 Option Scheme and EmployeeStock 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 and foreign exchangeearnings and outgo stipulated under Section 13 (3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is provided herewith as "ANNEXURE-B" to this report.
10. Human Resources
The Company has well defined Human Resource policies excellent training facilities anda well-established healthy working environment. The Human Resource department of theCompany maintains connect with employees on continual basis through various programs ofemployee engagements. It follows the philosophy to maintain cordial relations with all itsemployees and the Company value its human resources and takes utmost care of its employeesdeployed. It encourages all employees to strike a perfect work life balance. The Companyorganizes regular health check-up through recognized medical centres.
The Company adopted a Policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal Act 2013) and the Rules made thereunderfor prevention and redressal of complaints of sexual harassment at workplace. During theyear there was no complaint received to the Committee constituted under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
11. Particular of Employees and Related Disclosures
The information required in terms of provisions of Section 197 (12) of the CompaniesAct 2013 and Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided herewith as "ANNEXURE- C" to thisreport.
The Company has no employees who received remuneration in excess of limits prescribedUnder Section 197 of the Companies Act 2013 read with the Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014.
12. Directors Responsibility Statement
The Directors Responsibility Statement in terms of Section 134(5) of the Companies Act2013 is provided herewith as "ANNEXURE- D" to this report.
13. Financial Summary and Highlights
The financial summary and highlights are presented under the Management Discussion andAnalysis Report part of the Annual Report.
14. Number of Board Meetings
During the financial year 4 (Four) Board Meetings were held. The details of meetings ofBoard of Directors are provided in the Report on Corporate Governance that forms a part ofthis Annual Report. The maximum interval between any two meetings did not exceed 120 daysas prescribed under the Companies Act 2013.
15. Directors and Key Managerial Personnel
Mr. Sunil Rajadhyaksha Executive Director is liable to retire by rotation at the 32ndAnnual General Meeting. Mr. Sunil has confirmed his eligibility and willingness forre-appointment. Mr. Sunil has requisite qualifications and experience and therefore yourDirectors recommend that the proposed resolution relating to the re-appointment of Mr.Sunil be passed.
Mrs. Lakshmi Kumar's first term as a woman independent director got over on July 212020. With recommendation from Nomination & Remuneration Committee the Board ofDirectors in its meeting held on July 21 2020 appointed her as an Additional Directoreffective July 22 2020 which will be effective until the ensuing 32nd AnnualGeneral Meeting. Mrs. Lakshmi Kumar in her previous tenure is accustomed with theprocesses of the Company and had supported the Board governance and therefore in theopinion of the Board of Directors her continuation with the Company for 2nd term will behelpful to the Company.
Mr. Surinder Rametra Executive Director and Mr. Sunil Rajadhyaksha ExecutiveDirector term of five years for both being Whole time Directors will complete on March31 2021. The Board considered to re-appoint both the Whole time Directors for a furtherterm of five years and recommends for shareholders' approval in ensuing 32ndAnnual General Meeting.
None of the directors of the Company had been debarred or disqualified from beingappointed or continuing as directors of the Company by the SEBI Board/MCA or any suchstatutory authority. The Company has complied with the requirement in terms of Schedule VPart C of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended of taking a certificate to that effect fromthe Secretarial Auditor of the Company.
In accordance with the provisions of Section 203 of the Act the Key ManagerialPersonnel of the Company as on March 31 2020 are: Vikram Negi Whole-time Director;Surinder Rametra Whole-time Director; Sunil Rajadhyaksha Whole-time Director; NileshBafna Chief Financial Officer; and Bhuvanesh Sharma Company Secretary. There is nochange in Company Secretary and Chief Financial Officer of the Company.
16. Declarations from Independent Directors
The independent directors have submitted declarations that each of them meet thecriteria of independence as provided in Section 149(6) of the Act along with Rules framedthereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been nochange in the circumstances affecting their status as independent directors of theCompany.
The independent directors play a crucial role in the independent functioning of theBoard. They bring external perspective for decision making and keeps checks on corporategovernance of the Company. In the opinion of the Board the independent directors soappointed/re-appointed are of integrity and possess the requisite expertise and experience(including the proficiency to be complied with as applicable).
17. Meeting of Independent Directors
A separate meeting of Independent Directors was held on February 13 2019 to reviewtheperformance of non-independent directors the Board as a whole and the Chairman of theCompany was evaluated taking into account the views of executive directors andnon-executive directors.
18. Familiarisation Programme
During the year the familiarisation program was arranged by the Company on February 132019 for Independent Directors. The details of the familiarisation program was disclosedunder Investor Relations section of the Company's website www.hovsltd.com.
The Board members are provided with necessary documents/ brochures reports andinternal policies to enable them to familiarise with the Company's procedures andpractices. 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.
19. Internal Financial Controls
The Company has adequate procedures for ensuring the internal financial controls andthe same are in place with reference to financial statements.
The Management of the Company reviews the internal control systems with periodicoverview of the Audit Committee. The internal financial controls are tested by InternalAuditors of the Company and no reportable material weaknesses in the design or operationwere observed for the reportable year.
20. Related Party Transactions
The information on transactions with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are provided herewithas "ANNEXURE- E" to this report. All transactions entered into by theCompany with related parties are at arm's length and are in the ordinary course ofbusiness. The disclosure of Related Party Transactions as per Ind AS 24 with relatedparties have been provided in Note No. 37 & 39 of the Standalone & ConsolidatedFinancial Statements respectively forming part of this Annual Report.
The policy on Related Party Transactions as updated by the Board keeping in view ofSEBI (Listing Obligations and Disclosure) Regulations 2015 as amended to be effectiveApril 1 2019 has been displayed on the Company's website at:http://www.hovsltd.com/docs/Policies/2019/ HOVS%20RPTs%20PolicyApril%201%202019.pdf
21. Corporate Governance Report
The report on Corporate Governance is annexed as the part of the Director's report.
22. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulatedunder Securities Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is presented as a separate section forming part of the Director'sreport.
23. Code of Conduct for Board and Senior Management
The Company has adopted Code of Conduct for the Directors and Senior Management and isavailable on the Company's website http://hovsltd.com/code_of_conduct.html. All Directorsand Senior Management personnel have affirmed their compliance with the said Code. Adeclaration signed by the Whole-time Director to this effect is annexed as part of theDirector's Report.
24. Auditors and Auditors' Report
M/s BAGARIA & Co. Chartered Accountants were appointed as Statutory Auditors for aperiod of 5 years in 29th Annual General Meeting held on September 1 2017till the conclusion of the 34th AGM to be held in year 2022 subject toratification of their appointment by Members at every AGM. The requirement to place thematter relating to appointment of auditors for ratification by Members at every AGM hasbeen done away by the Companies (Amendment) Act 2017 with effect from May 7 2018.Accordingly no resolution is being proposed for ratification of appointment of statutoryauditors at the ensuing AGM.
The Statutory Auditors' Report for FY 2019-20 does not contain any qualificationreservation or adverse remark.
Secretarial Audit Report:
M/s. J B Bhave & Co. Practicing Company Secretaries Pune were appointed forconducting secretarial audit. The Secretarial Audit Report for FY 2019-20 is providedherewith as "ANNEXURE- F" to this report. The Secretarial Auditors'Report for FY 2019-20 does not contain any qualification reservation or adverse remark.
During the year under review there were no instances of frauds committed in theCompany by its officers or employees which requires reporting by the Statutory Auditorsand the Secretarial Auditor.
Annual Secretarial Compliance Report:
Pursuant to requirements of Regulation 24A of SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 the Secretarial Auditors of the Company wereengaged to issue the Annual Secretarial Compliance Report for year ended March 31 2020.
25. Cost Accounts and Records
The maintenance of cost records under section 148 of the Companies Act 2013 is notapplicable hence cost accounts and records are not made and maintained by the Company.
26. Extract of Annual Return
As per the requirements of Section 92(3) of the Actand Rules framed thereunder theextract of the annual return in the prescribed Form No. MGT-9 for FY 2020is providedherewith as "ANNEXURE- G" to this report.
27. Board Evaluation
The Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("the Listing Regulations") stipulate the evaluation of theperformance of the Board its Committees Individual Directors and the Chairperson. Theperformance evaluation has been carried out on directors individually working of theCommittees and Board's performance. Independent Directors met separately to evaluate theNon-Independent Directors and Chairman of the Board. The performance evaluation of Boardits Committees Independent Directors Non-independent directors and including Chairman ofthe Board was carried out during the year considering parameters as set by the members ofthe Board.
The evaluation of the Board and its Committees was carried out through a structuredevaluation process covering various aspects of the Boards functioning and having welldefined Committees and each Committee having co-operative working environment with theBoard.
The evaluation of Chairperson was carried out by independent directors on criteria ofleadership promotes participation among all members and ability to manage conflictingsituations positively.
The evaluation of the independent directors by all board members was carried out basedon the criteria of efforts undertaken by them brings independent view point in discussionand awareness of their roles and responsibilities.
28. Policy on directors and senior management appointment and remuneration
The Board has on the recommendation of the Nomination & Remuneration Committeeframed policy for selection and appointment of Directors senior management and theirremuneration. The nomination and remuneration policy is provided herewith as "Annexure-H" to this report. The said policy is also available on the Company's websitehttp://www.hovsltd.com/docs/Policies/2019/ Nomination%20&%20Remuneration%20Policy.pdf
29. Risk Management
The Board of Directors of the Company overview the implementation and monitor the riskmanagement for the Company with Audit Committee having additional oversight in the area offinancial risks and controls. The major risks identified by the businesses and functionsare addressed through mitigating actions on a continuing basis. The details of riskmanagement have been covered in the Management Discussion and Analysis which forms partof this report.
30. Committees of the Board
The details pertaining to all the committees of the Board are disclosed in section ofthe Corporate Governance Report which is part of this Board Report.
31. Particulars of Loans Advances and Investments
The particulars of loans guarantees and investments as per Section 186 of the Act bythe Company have been disclosed in the financial statements.
The particulars as required pursuant to Section 186 (4) of the Companies Act 2013read with Companies (Meetings of Board and its Powers) Rules 2014 and pursuant toRegulation 34(3) and Schedule V Part A of SEBI LODR 2015 are mentioned in the Notes toAccount to the Financial Statements in the Annual Report.
32. Secretarial Standards
The proper systems are in place to ensure compliance with applicable SecretarialStandards issued by the Institute of Company Secretaries of India and that such systemsare adequate and operating effectively.
33. Whistle Blower Policy
The Company has a Vigil Mechanism/Whistle Blower Policy in order to establish amechanism for directors and employees to report genuine concerns or grievances aboutunethical behaviour actual or suspected frauds or violation of the Company's Code ofConduct. During the year under review the Company has not received any complaints underthe said mechanism. The Whistle Blower Policy of the Company is available on the Company'swebsite.
The Policy provides for a mechanism to report such concerns to the Audit Committeethrough specified channels. This mechanism provides safeguards against victimisation ofemployees who report under the said mechanism. The details of the policy have beendisclosed in the Corporate Governance Report which is a part of this report.
34. Reconciliation of Share Capital Audit
The reconciliation of equity share capital is carried out on quarterly basis by anindependent external auditor with a view to reconcile the total share capital admittedwith National Securities Depository Limited (NSDL) and Central Depository Services (India)Limited (CDSL) and held in physical form with the issued and listed capital. The externalAuditor's Certificate in regard to the same is submitted to BSE Limited and National StockExchange of India Limited and is also placed before Stakeholders' Relationship Committeeand the Board of Directors of the Company.
a) The statement relating to risk management policy and identification of risk elementsare covered
under Management Discussion Analysis Report as annexed with this Report.
b) There are no adverse material changes or commitments occurred after March 31 2020which
may affect the financial position of the Company or may require disclosure.
c) On following points no reporting or disclosure is required as there were notransactions 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 the Companies Act 2013;
(iii) No significant and material orders passed by the regulators or courts ortribunals which
impacted the going concern status and operation of the Company;
(iv) Issue of equity shares with differential rights as to dividend voting orotherwise;
(v) Issue of sweat equity shares; and
(vi) None of the whole-time directors of the Company received any remuneration orcommission from the subsidiaries of the Company.
Your Directors would like to place on record their thanks to the Government of IndiaGovernment of Maharashtra Reserve Bank of India Software Technology Parks of IndiaRegistrar of Companies Pune other local governmental bodies NASSCOM the National StockExchange the Bombay Stock Exchange Bankers of the Company and Shareholders during thefinancial year.
Your Directors would like to convey thanks to executives officers and staff of theCompany for their hard work co-operationand support and also have sincere respect foreveryone who risked their life and safety to fight COVID-19 pandemic.
For and on behalf of the Board of Directors
Chairman & Executive Director
Date: July 21 2020
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
TO THE MEMBERS OF
HOV SERVICES LIMITED
We have examined the compliance of conditions of corporate governance by HOVServices Limited ('the Company') for the year ended March 31 2020 as stipulated inRegulations 17-27 clauses (b) to (i) of sub regulation (2) of Regulation 46 andparagraphs C D and E of Schedule V of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ('Listing Regulations').
Management's Responsibility for compliance with the conditions of Listing Regulations
The compliance of the conditions contained in the corporate governance is theresponsibility of the Management.This responsibility includes the designing implementingand maintaining operating effectiveness of internal control to ensure compliance with theconditions of corporate governance as stipulated in the Listing Regulations of the Companyincluding the preparation and maintenance of all relevant supporting records anddocuments.
Our examination was limited to procedures and implementation thereof adopted by theCompany for ensuring the compliance of the conditions of Corporate Governance. It isneither an audit nor an expression of opinion on the financial statements of the Company.
We have examined the books of account and other relevant records and documentsmaintained by the Company for the purposes of providing reasonable assurance on thecompliance with Corporate Governance requirements by the Company in accordance with theGuidance Note on Certification of Corporate Governance issued by the Institute ofChartered Accountants of India ('ICAI') Standards on auditing specified under section143(10) of the Companies Act 2013 and Guidance Note on Reports or Certificates forSpecial Purposes issued by the ICAI which requires that we comply with the ethicalrequirements of the Code of Ethics issued by the ICAI.
We have complied with the relevant applicable requirements of the Standard on QualityControl (SQC) 1 Quality Control for Firms that Perform Audits and Reviews of HistoricalFinancial Information and Other Assurance and Related Services Engagements.
Based on the procedures performed by us and to the best of our information andaccording to explanations given to us and representation made by the Management in ouropinion we certify that the Company has complied in all material respects with theconditions of Corporate Governance as stipulated in the above-mentioned ListingRegulations.
We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.
Restriction on Use
The certificate is addressed to and provided to the Members of the Company solely forthe purpose to enable the Company to comply with requirement of aforesaid Regulations andshould not be used by any other person or for any other purpose. Accordingly we do notaccept or assume any liability or any duty of care for any other purpose or to any otherperson to whom this certificate is shown or into whose hands it may come without our priorconsent in writing.
| ||For Bagaria & Co. LLP |
| ||FRN. 113447W/W-100019 |
| ||Chartered Accountants |
| ||Vinay Somani |
|Place: Mumbai ||Partner |
|Date: July 21 2020 ||Mem. No. : 143503 |