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IO System Ltd.

BSE: 523752 Sector: Others
NSE: N.A. ISIN Code: INE502D01011
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NSE 05:30 | 01 Jan IO System Ltd
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VOLUME 12000
52-Week high
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Mkt Cap.(Rs cr) 4
Buy Price 0.00
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IO System Ltd. (IOSYSTEM) - Director Report

Company director report

Dear Members

Your Directors have pleasure in submitting the 30th Annual Report togetherwith the Statement of Accounts of your Company for the year ended 31st March 2018.

Financial Performance

The summarized results of your Company are given in the table below :

(Amount in Rs.)

PARTICULARS 31.03.2018 31.03.2017
Total Income (Other Income) 7637 2009
Profit/(loss) before Interest Depreciation & Tax (EBITDA) (4594066) (4506609)
Finance Charges 4916171 4072531
Depreciation 36426 27096
Net Profit/(Loss) After Tax (9546663) (8606236)
Profit/(Loss) brought forward from previous year (217772765) (209166529)
Profit/(Loss) carried to Balance Sheet (227319428) (217772765)

Summary of Operations

During the year under review the only earnings for the Company was through otherincome which stood at Rs.7637/- as compared to that of Rs. 2009/- during the previousyear. The Company incurred a loss of Rs.95.46 lacs during the year under review ascompared to a loss of Rs.86.06 lacs during the previous year.

Transfer to Reserves

The Company has not transferred any amount to General Reserve in the current year.

Business Review/State of the company's affairs

During the year under review the Company did not carry any business activity. TheCompany has been incurring losses for the past many years and is yet to overcome the same.The Company has stopped its commercial production owing to huge losses over the past manyyears.

Dividend

In view of the losses incurred during the year as well as in the previous years yourDirectors do not recommend any dividend.

Subsidiary Company

The Company does not have any subsidiary. However the Company continues to be thesubsidiary of Smart Entertainment

Private Limited with Smart Global Corporate Holdings Private Limited as the UltimateHolding Company.

Directors' Responsibility Statement

Pursuant to the provisions of sub-section (5) of Section 134 of the Companies Act2013 the Directors of your Company to the best of their knowledge and ability confirm:that in the preparation of annual accounts the applicable accounting standards have beenfollowed alongwith explanation relating to material departures; that the directors hadselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as on March 31 2018 and of the profit / loss of the Company forthat period.

that proper and sufficient care has been taken for the maintenance with the provisionsof the Companies Act 2013 for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities; that the annual accounts have been preparedon a going concern basis.

that internal financial controls have been laid down to be followed by the company andthat such internal financial controls are adequate and were operating effectively.

that proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Capital/ Finance

During the year under review there was no enhancement or reduction in capital of theCompany. As on 31st March 2018 the capital break-up of the Company is as under : i)Authorised Capital: Rs. 250000000/- divided into 20000000 Equity Shares ofRs.10/- each and 500000

Preference Shares of Rs.100/- each. ii) Issued subscribed and fully paid up sharecapital: Rs. 169000000/- divided into 16900000 Equity shares of

Rs.10/- each.

Directors and Key Managerial Personnel

Pursuant to the provisions of Section 149 of the Act which came into effect from April1 2014 Mr. Ramesh Chandra Agarwal and Mr. Satish Kumar Gupta were appointed asindependent directors at the annual general meeting of the Company held on September 292014 to hold office upto 28th September 2019. The terms and conditions of appointment ofindependent directors are as per Schedule IV of the Act. Both the independent Directors ofthe Company viz. Mr. Ramesh Chandra Agarwal and Mr. Satish Kumar Gupta have submitted adeclaration that each of them meets the criteria of independence as provided in Section149(6) of the Act and there has been no change in the circumstances which may affect theirstatus as independent director during the year.

Mr. Arun Seth retires at the ensuing Annual General Meeting of the Company and beingeligible offers himself for reappointment. Also pursuant to the provisions of Section149(1) of the Act Ms. Gunjan Arora Wholetime Director resigned during the year underreview w.e.f. 30th November 2017 and Ms. Rashi Adlakha was appointed as anAdditional Director on the Board toholdofficeupto the conclusion of the ensuing AnnualGeneral meeting w.e.f 8 th February 2018. The Company has received a noticefrom the member of the Company proposing her candidature as a Director of the Company.

Pursuant to the provisions of Section 203 of the Companies Act 2013 Mr. Rakesh KumarBhatnagar continues to be the

Chief Financial Officer (CFO) of the Company with effect from 1st March 2015. Mr.Dinkar Sharma acts as the Company

Secretary of the Company. Mr. Pankaj Kumar Singh was appointed as CEO of the Companyw.e.f 1st June 2018. There has not been any other change in the Direcorship orappointment / resignation of Key Managerial Personnel.

Number of Meetings of the Board

Four meetings of the Board were held during the year. For details of the meetings ofthe Board please refer to the corporate governance report which forms part of thisreport.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Rules made thereunderSchedule IV of the Act and SEBI (LODR) Regulations 2015 the Board of Directors hascarried out an annual evaluation of its own performance Board committees and individualdirectors pursuant to the provisions of the Act and the corporate governance requirementsas prescribed by

Securities and Exchange Board of India ("SEBI"). The performance of the Boardwas evaluated by the Board after seeking inputs from all the directors on the basis of thecriteria such as the Board composition and structure effectiveness of board processesinformation and functioning etc. The performance of the committees was evaluated by theboard after seeking inputs from the committee members on the basis of the criteria such asthe composition of committees effectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc.

In a separate meeting of independent Directors held on 31st March 2018 performanceof non-independent directors and the performance of Board as a whole was evaluated. Thesame was discussed in the board meeting that followed the meeting of the independentDirectors.

Policy on Directors' appointment and remuneration and other details

The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the directors' report.

Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included inthe Management Discussion and

Analysis which forms part of this report.

Statutory Auditors

M/s H S Gupta & Co. (Firm Registration No. 000326C) Chartered Accountants theStatutory Auditors of the Company were appointed at the 29th Annual General Meeting of theCompany held on 29th September 2017 to hold office for a period of five years i.e. uptothe conclusion of34 th Annual General meeting of the Company subject to ratification bythe members of the Company at every Annual General Meeting. However Vide notificationdated May 7 2018 the Ministry of Corporate Affairs has done away with the requirement ofseeking ratification of members for appointment of auditors at every Annual GeneralMeeting. Accordingly no resolution is being proposed for ratification of appointment ofstatutory auditors at the 30th Annual General Meeting.

Internal Auditors

The Company had appointed M/s RBAS & Associates Chartered Accountants Delhi asInternal Auditors of the Company for the financial year 2017-18.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed M/s S K Batra & Associates Company SecretariesNew Delhi to conduct the Secretarial Audit of the Company for the financial year 2017-18.The Secretarial Audit Report is annexed to this report.

Auditors' Report and Secretarial Auditors' Report - Explanation and Comments

The reports of Statutory auditors and that of the Secretarial Auditors areself-explanatory and have no adverse comments and form part of this annual report thoughthe satutory auditor in their report have mentioned that the entire capital of the companyhas been eroded and this has adversily effected the going concern concept of IND-AS.However they have mentioned that since Smart Entertainment Private Limited theholdingcompanyhasgivenassuranceforfinancialassistant as and when any obligation arises orfall due on the company the going concern concept has been duly taken care of andfinancial have been prepared on going concept basis. Similar views has been observed bysecretarial auditor also in their report.

Audit Committee

The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report.

Material Change

There is/are no material change(s) or commitment(s) after the closure of the financialyear.

Risk Management

The Board of the Company has formed a risk management committee to frame implement andmonitor the risk management plan for the Company. The committee is responsible forreviewing the risk management plan and ensuring its effectiveness. The audit committee hasadditional oversight in the area of financial risks and controls. Major risks identifiedby the businesses and functions are systematically addressed through mitigating actions ona continuing basis. The development and implementation of risk management policy has beencovered in the management discussion and analysis which forms part of this report.

Particulars of loans guarantees and investments

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

Transactions with related parties

All transactions entered into with Related parties as defined under Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 during theFinancial Year were in the ordinary course of business and on arms' length basis and donot attract provisions of Section 188 of the Companies Act 2013. However since Companyfrom time to time takes loan from its Holding Company viz. Smart Entertainment Pvt.Ltd. the approval of shareholders was obtained through Special Resolution at the AnnualGeneral Meeting of the Company held on 30th September 2016 to approve for suchtransactions upto a limit of Rs.50 Crores. Information on transactions with relatedparties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules 2014 are given in Annexure I in Form AOC-2 and the same forms part ofthis report.

Corporate Social Responsibility (CSR) Policy

The provisions regarding formation / constitution of CSR Committee prescribed underSection 135 of the Companies Act

2013 are presently not applicable to the Company.

Extract of Annual Return

As provided under Section 92(3) of the Act the extract of annual return is given inAnnexure II in the prescribed Form MGT- 9 which forms part of this report.

Particulars of Employees a) Details as per Rule 5(2) of the Companies (Appointment& Remuneration of Managerial Personnel) Rules 2014.

- No employee was paid remuneration in excess of Rs.8.50 Lacs per month (if employedfor a part of the year) or

Rs.1.02 Crores per annum (if employed throughout the year) during 2017-18 and hencethere is no disclosure requirement as per Rule 5(2) of the Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014.

- No employee of the Company if employed throughout the financial year or partthereof was in receipt of remuneration during the financial year 2017-18 which in theaggregate is in excess of that drawn by the managing director or whole-time director ormanager and holds by himself or along with his spouse and dependent children not lessthan two percent of the equity shares of the company. b) Details as per Rule 5(1) of theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014.

S.No. Particulars Remarks
1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the Financial Year. Not comparable as at present there is no director who is drawing any remuneration from the Company except the sitting fee paid to Directors.
2. The percentage increase in remuneration of each Director Chief Financial Officer Chief CFO Wholetime Director Company Secretary Other Directors
(Resigned w.e.f 30/11/2017)
Executive Officer Company Secretary or Manager if any in the financial year. NIL NIL NIL No remuneration
3. The percentage increase in median remuneration of employees in the financial year. Not applicable as the Company does not have any employee drawing remuneration at present other than the Key Managerial Personnel (KMPs).
4. The number of permanent employees on rolls of the Company. Only 2 KMPs are appointed on the rolls of the Company as on 31st March 2018.
5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Since there are no employees other than the KMP and Wholetime Director of the Company such comparison is not possible. However the percentage increase in remuneration during the financial year under review is 10% considering the qualifications experiences and responsibilities shouldered and individual performances.
6. Affirmation that the remuneration is as per the remuneration policy of the Company. The remuneration is as per the remuneration policy of the Company.

The Company has implemented a Vigil Mechanism (Whistle Blower Policy) and is posted onthe Company's website i.e. www.iosystem.co.in and no person is denied access to the AuditCommittee.

Cost Records

The maintenance of cost records has not been specified by the Central Government underSection 148(1) of the Companies Act 2013 for the business activities carried out by theCompany. Thus reporting under Clause 3(vi) of the order is not applicable to the Company.

Disclosure under Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013

The Company has in place Sexual Harassment Policy in line with the requirements of theSexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal) Act2013. This policy provides for protection against sexual harassment of women at work placeand for prevention and redressal of such complaints. During the year under review therewas no complaint received from any employee

Other Disclosure requirements thereon and management discussion and analysis areattached Thecorporategovernancereportwithauditors'certificate

Details of the familiarization programme of the independent directors are available onthe website of the Company. Policy on dealing with related party transactions is availableon the website of the Company. Deposits from public The Company has not acceptedany deposits from public and as such no amount on account of principal or interest ondeposits from public was outstanding as on the date of the balance sheet.

Conservation of energy technology absorption foreign exchange earnings and outgo (a)Conservation of energy

1 Energy conservation measures taken Since there is no manufacturing activity in the Company therefore there is no scope for energy consumption and its conservation.
2 Additional investments & proposals if any being implemented for reduction of consumption of energy.
3 Impact of above measures for reduction of energy consumption and consequent impact on production of goods Total energy consumption and energy consumption per unit of Production

(b) Technology Absorption

1 Specific areas in which R&D is carried out NIL
2 Benefits derived as a result N/a
3 Future plan of action Not required as of now
4 Expenditure on R&D NIL

Appreciation

Your Company expresses its appreciation for the continued co-operation of the StatutoryAuthorities Banks & Financial Institutions. Your Company also wishes to thank all itsstakeholders for their contribution and support throughout the year.

On behalf of the board of directors
For IO System Limited
Place : NOIDA Rashi Adlakha Arun Seth
Dated : 14th August 2018 Addl. Director Director
DIN:07742051 DIN:00007895