The Shareholders IntraSoft Technologies Limited
We are pleased to present the Twenty Fifth Annual Report of IntraSoft TechnologiesLimited ("the Company") together with the Audited Financial Statements of theCompany for the financial year ended 31 March 2020.
Financial Statements & Results
a. Financial Results:
The consolidated and standalone performance during the financial year ended 31 March2020 as compared to the previous financial year is summarized below:
|Particulars ||Amount (Rs. in Lacs) |
| ||2019-20 ||2018-19 |
|Total Income ||59552.96 ||84151.60 |
|Profit before Interest and Depreciation ||1176.53 ||986.07 |
|Less: Finance Cost ||553.87 ||497.95 |
|Less: Depreciation ||409.43 ||176.19 |
|Profit before Tax ||213.23 ||311.93 |
|Less : Provision for Income Tax ||2.36 ||(254.52) |
|Profit after Tax ||210.87 ||566.45 |
On Standalone basis Total Income of the Company recorded at Rs.194.82 Lacs in FY2019-20 against Rs. 311.36 Lacs in FY 2018-19. EBITDA is recorded at Rs. 256.15 Lacs inFY 2019-20 against H272.89 Lacs in FY 2018-19. Profit before Tax for the financial yearunder review is recorded at Rs.138.38 Lacs against Rs.149.62 Lacs in FY 2018-19. The netprofit for the financial year under review is Rs.118.88 Lacs as compared to Rs.142.95 Lacsof the previous financial year.
During the financial year under review the Company reported a Consolidated Turnover ofRs.59067.54 Lacs as compared to Rs.83655.42 Lacs in the previous financial year. TheConsolidated Net Profit stood at Rs.210.87 Lacs as compared to Rs.566.45 in the previousfinancial year.
The revenue reduction was the result of a conscious evaluation and optimization of thebrand portfolio in our E-Commerce division. This was done to align the brands to ouroperational benchmarks. As a result we saw an increase in Accounts Payable Days from 15.3to 20.0 a trend which continues from the previous financial year.
With the brand optimization complete and the technological foundation and operationalmatrices in place we believe we are ready to scale the to pline. The COVID-19 pandemichas increased the dependence on e-commerce and will have long-term implications onshopping behavior. Our role as an e-commerce retailer is crucial now more than ever.
There was no change in the nature of the business of the Company during the year underreview.
c. COVID 19 update:
While the COVID-19 pandemic has subdued commerce globally the e-commerce industry hasseen an acceleration in the online shift of purchase habits. With lockdown orders in manyUS states we have seen strong acceleration in customer orders across all productcategories. This in turn has highlighted the differentiated advantages that we have builtas an e-commerce company in the last few years.
Our investments in technology during the last two financial years have allowed us toscale during these unprecedented times despite facing supply-chain bottlenecks.Supporting our brand-partners in these times with our technology and marketplaceexpertise spells reliability for the brands and strengthens our long term relationship.
As we execute the plans that we have set in motion we will be making significantstrides towards increasing brand outreach and gaining leverage on operating expenses. Weremain confident in the success of our business as the shift of Home (one of our keycategories) accelerates online and we continue to aggressively invest in our future.
In line with various advisories directives and orders issued by Local authoritiesMunicipal Corporations State Governments and the Central Government of India as well asthe local authorities and the Government of the United States our employees have adaptedquickly and seamlessly to new processes and protocols to work remotely and continue toserve strong demand while keeping our customers and the community safe. With a focus onsafety and well-being our teams both in India and the US will continue to work remotelyfor the foreseeable future and are well equipped to do so as our technology scales on thecloud.
We believe that we have taken into account all possible impacts of known events arisingfrom the COVID-19 pandemic. However the impact assessment of this pandemic is acontinuous process given the uncertainties associated with its duration. We will continueto monitor any material changes to future economic conditions and will revisit ourstrategy once life returns to normal and based on the impact this crisis leaves onshopping behaviour. We look ahead with a mix of caution and optimism.
d. Performance of Subsidiaries Associates and Joint Venture Companies
The Company has as on 31 March 2020 three wholly owned subsidiaries and two step downsubsidiaries viz. 123Greetings.com Inc. (USA) IntraSoft Ventures Pte. Ltd (Singapore)& One Two Three Greetings (India) Private Limited (India) wholly owned subsidiaries123Stores Inc. (USA) wholly owned subsidiary of IntraSoft Ventures Pte. Ltd (Singapore)and 123Stores E Commerce Private Limited (India) wholly owned subsidiary of 123 StoresInc. The entire group focuses on the E-Commerce business by consolidating all operationsrelated to E-Commerce and online greeting activities to achieve financial and operationalefficiencies.
Apart from the information provided in the foregoing paragraph there was no Companieswhich have become or ceased to be subsidiaries associates and joint venture companyduring the financial year under review.
In accordance with Section 129 of the Companies Act 2013 consolidated financialstatements of the Company along with its subsidiaries have been prepared which forms partof this Annual Report. Further the performance and financial position of each of thesubsidiaries for the year ended 31 March 2020 is attached and marked as Annexure I (FormAOC-1) and forms part of this Report.
The Board of Directors of the Company has recommended a final dividend of Rs.1/- (10%)(Previous year Rs.2/- per equity share) per equity share of face value of Rs.10/- for thefinancial year 2019-20 which if approved would absorb Rs.147.32 Lacs (Previous yearRs.355.20 Lacs including dividend distribution tax of Rs.60.56 Lacs).
TDS will be deducted pursuant to the rates as per Income Tax Act 1961 as amended byFinance Act 2020 and further amendments thereto while paying the dividend as applicableto Resident and Non-Resident Shareholders. Please refer the notes to the Notice of theAnnual General Meeting for a detailed explanation.
There was no Interim Dividend declared by the Company during the financial year.
Dividend Distribution policy is not applicable to the Company.
b. Amount and shares transferred to IEPF with details of Nodal officer
In terms of the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Second Amendment Rules 2017 the Company has transferred 895 sharesto the designated account of the IEPF Authority during the financial year 2019-20 on whichthe dividend was unclaimed/ unpaid for a period of seven (7) consecutive years from theyear of its declaration in financial year 2011-12. Company had already transferred 4961shares of different shareholders to IEPF Authority up to financial year 2018-19 on whoseshares the Dividend was unpaid/ unclaimed for a period of seven (7) consecutive years ofthe financial year 2010-112009-10 and also of the earlier years.
Details of the Nodal Officer:
Company Secretary and Compliance Officer
Email ID- email@example.com
Phone Nos. - 022 4004-0008.
During the Financial year 2019-20 Unpaid / Unclaimed Dividend of Rs.31032 wastransferred to IEPF Authority Account which was declared in the financial year 201112 andremained unpaid/unclaimed for 7 years.
c. Transfer to Reserves
The Board of Directors has not recommended transfer of any amount of profit to reservesduring the year under review. Hence the entire amount of profit for the year under reviewhas been carried forward to Profit and Loss account.
Financial Statements as per IND-AS.
Financial Statements for the year ended 31 March 2020 are in accordance with the IndianAccounting Standards (IND-AS) notified by the Ministry of Corporate Affairs Government ofIndia which have already become applicable to the Company from the accounting periodbeginning on 01 April 2017.
Standalone financial statements as at 31 March 2019 have been restated in accordancewith the requirements of Ind AS 8 "Accounting Policies Changes in AccountingEstimates and Errors" due to change in the assumptions with respect to accounting forfair valuation of corporate guarantee given on behalf of a subsidiary company. The detailsare provided in Note no. 25 of the standalone financial statements. The said restatementhas no impact on the consolidated financial statements of the Company.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposits) Rules 2014. Hence the requirement for furnishing ofdetails of deposits which are not in compliance with the Chapter V of the Act is notapplicable.
Disclosures under Section 134(3)(l) of the Companies Act 2013
Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Company's financial position have occurred between the end of thefinancial year of the Company and the date of this report.
Disclosure of Internal Financial Controls
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are found adequate. During the year under review no materialor serious observation has been received on inefficiency or inadequacy of such controlsfrom the Internal Auditors of the Company.
Disclosure of Orders passed by Regulators or Courts or Tribunal
Your Directors would like to inform that no orders have been passed by any Regulator orCourt or Tribunal which can have impact on the going concern status and on the Company'soperations in future.
Particular of Contracts or Arrangement with Related Parties
All contracts / arrangements / transactions entered into by the Company during thefinancial year with its wholly owned subsidiaries were in the ordinary course of businessand at an arm's length basis. During the year the Company had not entered into anycontract/arrangement/ transaction with related parties which could be considered asmaterial related party transaction in accordance with the policy of the Company on relatedparty transactions read with SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015. The Policy on related party transactions as approved by the Board maybe accessed on the Company's website www.itlindia.com.
Your Directors draw attention of the members to Note no. 27 of Standalone financialstatements which sets out disclosures on related parties and transactions entered intowith the said parties.
Particulars of Loans Guarantees Investments and Securities
Full particulars of loans given investments made guarantees given and securitiesprovided along with the purposes for which the loans or guarantees or securities areproposed to be utilized by the recipient(s) thereof are provided in Note nos. 6 7 and 26of standalone financial statements.
During the year under review the Company has not issued any shares with differentialvoting rights and sweat equity shares and hence disclosures under Section 43(a)(ii) andSection 54(1)(d) of the Companies Act 2013 read with relevant rules are not required tobe furnished. The Company does not have a scheme of ESOP and hence disclosures pursuant toSection 67(3) of the Companies Act 2013 are also not required to be furnished.
Matters Related to Directors and Key Managerial Personnel:
a. Board of Directors & Key Managerial Personnel
The tenure of Mr. Arvind Kajaria as Managing Director and Mr. Sharad Kajaria asWhole-time Director of the Company has come to an end on 31 March 2020. The Board ofDirectors of the Company at its Meeting held on 30 June 2020 upon recommendation of theNomination and Remuneration Committee and subject to the approval of the shareholdersre-appointed Mr. Arvind Kajaria as Managing Director and Mr. Sharad Kajaria as Whole-timeDirector of the Company for a further term of 3 (three) years with effect from 01 April2020.
The Board has recommended re-appointment of Mr. Arvind Kajaria as Managing Director andMr. Sharad Kajaria as Whole-time Director for the approval of the Shareholders andnecessary agenda for their reappointment have been included in the notice convening theAnnual General Meeting of the Company.
Brief profile and the information as required under the relevant provisions of theCompanies Act 2013 Regulation 36 of the SEBI Listing Regulations and SecretarialStandards SS-2 are disclosed in the notice of the ensuing Annual General Meeting and formspart of the Annual Report.
In accordance with the provisions of the Act none of the Independent Directors areliable to retire by rotation. Pursuant to the provisions of Section 152 of the CompaniesAct 2013 Mr. Arvind Kajaria shall retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment. The Board recommends hisre-appointment for the approval of the Shareholders of the Company.
b. Declaration by Independent Directors
The Independent Directors of the Company have given a declaration confirming that theycontinue to meet with the criteria of the independence as provided in sub-section (6) ofSection 149 of the Companies Act 2013 as further amended by the Companies Amendment Act2017 and Regulation 16(1) (b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and they have also confirmed that they are independent ofthe Management.
The Independent Directors also confirmed that they are not aware of any circumstancesor situation which exist or may be reasonably anticipated that could impair or impacttheir ability to discharge their duties with an objective independent judgment and withoutany external influence.
In the opinion of the Board each of the Independent Director possess requisiteintegrity expertise and experience for acting as an Independent Director of the Company.
The Independent Directors have confirmed that they have registered their details interms of Sub-rule (1) and (2) of Rule 6 of the Companies (Appointment and Qualification ofDirectors) Fifth Amendment Rules 2019 in the Data Bank maintained by Indian Institute ofCorporate Affairs (IICA).
There has been no change in the circumstances which may affect their status asIndependent director during the year under review.
c. Company's Policy on Director's appointment and remuneration
The Board has as per the recommendation of the Nomination and Remuneration Committeeframed a policy on selection and appointment of Directors and Senior Managerial personneland their remuneration which was further amended by the Board in their Meeting held on 30March 2019 in terms of the Amendments in SEBI (Listing Obligations and DisclosureRequirements) Regulations 2018. The details of said policy are given in the CorporateGovernance Report which forms part of this Annual Report.
Disclosures Related to Board Committees and Policies:
a. Board Meetings
The Board of Directors met 4(Four) times during the financial year 2019-20 inaccordance with the provisions of the Companies Act 2013 and rules made there under.Detailed information on the Board Meetings is provided in the Corporate Governance Reportwhich forms part of this Annual Report.
b. Director's Responsibility Statement
In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended 31 March 2020 the Board ofDirectors hereby confirms that:
i. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any;
ii. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31 March 2020 and of theprofit of the Company for that year;
iii. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
iv. the annual accounts of the Company have been prepared on a going concern basis;
v. internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
vi. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
c. Committees of the Board
There are five Committees of the Board of Directors of the Company viz. AuditCommittee Nomination and Remuneration Committee Stakeholders' Relationship CommitteeCorporate Social Responsibility Committee and Business Advisory Committee. Detailedinformation on all the Committees is provided in the Corporate Governance Report alongwith the details of extract from Nomination and Remuneration Policy of the Company withrespect to remuneration of Executive Directors Key Managerial Personnel and other senioremployees of the Company. Policies framed by the Committees / Board pursuant to theapplicable provisions of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are available on the Company's Websitewww.itlindia.com.
Disclosure in respect of composition of Committees Committee Meetings held attendanceof members Reference of the Committee and other related matters are made in the CorporateGovernance Report attached and forms part of this Annual Report.
a. Vigil Mechanism Policy for the Directors and Employees
The Board of Directors of the Company have pursuant to the provisions of Section 178(9)of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board and itsPowers) Rules 2014 framed a "Vigil Mechanism Policy" for Directors andemployees of the Company to provide a mechanism which ensures adequate safeguards toemployees and Directors from any victimization on raising of concerns of any violations oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports etc.
The employees of the Company have the right to report their concern/grievance to theChairman of the Audit Committee.
The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations.
b. Risk Management Policy
The Board of Directors of the Company has designed Risk Management Policy andGuidelines to avoid events situations or circumstances which may lead to negativeconsequences on the Company's businesses and define a structured approach to manageuncertainty and to make use of these in their decision making pertaining to all businessdivisions and corporate functions. Key business risks and their mitigation are consideredin the annual/ strategic business plans and in periodic management reviews.
c. Policies and Procedures (Mechanism)
The Board of Directors of the Company has laid down policies and procedures in case ofLeak of Unpublished price sensitive information or suspected leak of Unpublished pricesensitive information in their Meeting held on 30 March 2019 in terms of the SEBI(Prohibition of Insider Trading) (Amendment) Regulations 2018.
Annual Evaluation of Directors Committee and Board
The Board of Directors has carried out annual evaluation of its own performanceCommittees of the Board and individual directors pursuant to the provisions of theCompanies Act 2013 and the Corporate Governance requirements as prescribed underSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirement)Regulation 2015.
A statement indicating the manner for evaluation of performance of the Board itscommittees and individual Directors is stated in the Corporate Governance Report formingpart of this Annual Report.
Internal Control Systems
Adequate internal control systems commensurate with the nature of the Company'sbusiness size and complexity of its operations are in place and have been operatingsatisfactorily. Internal control systems comprising of policies and procedures aredesigned to ensure reliability of financial reporting timely feedback on achievement ofoperational and strategic goals compliance with policies procedure applicable laws andregulations and that all assets and resources are acquired economically used efficientlyand adequately protected.
Payment of Remuneration / Commission to Directors from Holding or Subsidiary Companies
None of the managerial personnel i.e. Managing Director and Whole-time Director of theCompany are in receipt of remuneration/commission from the Subsidiary Companies of theCompany.
Auditors and Reports
The matters related to Auditors and their Reports for the year ended 31 March 2020 areas under:-
a. Report of Statutory Auditors on Accounts for the Year ended 31 March 2020:
The auditor's report does not contain any qualification reservation or adverse remarkor disclaimer or modified opinion.
b. Secretarial Audit Report:
Provisions of Section 204 read with Section 134(3) of the Companies Act 2013mandates the Company to obtain a Secretarial Audit Report in Form MR-3 from a PracticingCompany Secretary. M/s. Rathi and Associates Company Secretaries had been appointed asSecretarial Auditors to issue Secretarial Audit Report for the financial year 201920.
Secretarial Auditor Report includes an observation that the Company has not appointedan Independent Director on the Board of its Material Subsidiary i.e. 123Stores Inc. TheBoard of Directors hereby clarifies that as 123Stores Inc. is a US subsidiary the Boardis looking for a suitable candidate to be appointed as an Independent Director of theCompany and who shall be recommended to be appointed on the Board of 123Stores Inc.
Secretarial Audit Report issued by M/s. Rathi and Associates Company Secretaries inForm MR-3 for the financial year 2019-20 forms part of this report as Annexure V.
c. Statutory Auditors:
Walker Chandiok & Co. LLP Chartered Accountants (Firm Registration No.001076N/N500013) were appointed as Statutory Auditors of the Company at the 21st AnnualGeneral Meeting held on 08 September 2016 for consecutive term of 5 (five) years to holdoffice up to the conclusion of the 26th Annual General Meeting of the Company. CompaniesAmendment Act 2017 omitted the provisions relating to ratification of the appointment ofAuditors and accordingly no ratification of appointment of Statutory Auditors by memberswould be necessary.
Auditors have given their consent/ eligibility certificate for their appointment asStatutory Auditors for financial year 2020-21.
d. Cost Audit:
The Cost Audit in terms of the provisions of the Companies Act 2013 and The Companies(Cost Records and Audit Rules) 2014 are not applicable to the Company.
e. Fraud Reporting:
During the year under review no instances of fraud were reported by the StatutoryAuditors of the Company.
Copy of Annual Return 2019 and Extract of Annual Return 2020
Pursuant to the provisions of Section 134(3) (a) of the Companies Act 2013 Extract ofAnnual Return in the prescribed format for the financial year ended 31 March 2020 isuploaded on the website of the Company and the link for the same ishttp://www.itlindia.com/statutory.html. The Annual Return for the year ended 31 March 2019in Schedule-V which was filed with the Registrar of the Companies is also uploaded on theWebsite of the Company and the link for the same ishttp://www.itlindia.com/statutory.html.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in Annexure II which forms part of this Report.
Annual Report on Corporate Social Responsibility
Pursuant to Section 135 of the Companies Act 2013 and Companies (Corporate SocialResponsibility Policy) Rules 2014 during the financial year under review the Companywas not required to spend any amount towards Corporate Social Responsibility activities.
Further Annual Report on CSR as required to be disclosed under the above mentionedrules for the Financial Year 201920 is attached to this report as Annexure III.
Particulars of Employees as per Section 197 read with Rule 5 of the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014
The information required pursuant to Section 197 read with Rule 5 (1) and 5 (2) of theCompanies (Appointment& Remuneration of Managerial Personnel) Rules 2014 is attachedto this report as Annexure IV.
The Managing Directors and Whole-time Director of the Company had not received anycommission from the Company and also not received any remuneration or commission from itssubsidiary company.
Compliance with Secretarial Standards
During the Financial year under review in terms of Section 118 (1) of the CompaniesAct 2013 the Company has observed and complied with the Secretarial Standards SS-1 andSS-2 on Board Meetings and Annual General Meeting specified by the Institute of CompanySecretaries of India (ICSI).
Disclosures under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has taken sufficient measures and adopted a policy in terms of The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 andrules thereunder. During the year under review no complaints in relation to sexualharassment at workplace have been reported.
Management's Discussion and Analysis
A detailed review of the operations performance and future outlook of the Company andits business is given in the Management's Discussion and Analysis is attached and formspart of this Report.
Corporate Governance Report
The Company is committed to uphold the values of transparency integrityaccountability and ethical corporate citizenship across all its business activities. Thiscommitment lays down the foundation of its governance practices which focus on creatingsustainable value for the stakeholders.
The Company has laid down Code of Conduct to which the board and senior management haveaffirmed compliance. The Code is displayed on the official website of the Company atwww.itlindia.com.
The Company has complied with the provisions of Corporate Governance requirements asstipulated under Regulation 27 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015. A separate section onCorporate Governance forming part of the Directors' Report and the certificate from aPracticing Company Secretary pursuant to the said Regulation is attached with theCorporate Governance Report.
Business Responsibility Reporting
Business Responsibility Reporting is not applicable to the Company hence thedisclosure is not made.
Acknowledgements and Appreciation
Your Directors take this opportunity to place on its gratitude to customersshareholders suppliers bankers business partners/associates and financial institutionsfor their consistent support and encouragement to the Company.