Your Directors have pleasure in submitting the 32nd Annual Report togetherwith the Statement of Accounts for the year ended 31st March 2020.
The summarized results of the Company are given in the table below :
(Amount in Rs.)
|PARTICULARS ||31.03.2020 ||31.03.2019 |
|Total Income (Other Income) ||50166757 ||828025 |
|Profit/(loss) before Interest Depreciation & Tax (EBITDA) ||39682742 ||(9216480) |
|Finance Charges ||5365061 ||5478014 |
|Depreciation ||3618 ||20846 |
|Net Profit/(Loss) After Tax ||39682742 ||(9216480) |
|Profit/(Loss) brought forward from previous year ||(236535908) ||(227319428) |
|Profit/(Loss) carried to Balance Sheet ||(196853165) ||(236535908) |
Summary of Operations
During the year under review the only earnings for the Company was through otherincome which stood at Rs.50166757/- as compared to that of Rs. 828025/- during theprevious year. The Company earned a profit of Rs.396.82 lacs during the year under reviewas compared to a loss of Rs.92.16 lacs during the previous year.
The Novel Coronavirus disease (COVID-19) was declared a global pandemic by the WorldHealth Organization on March 11 2020. The Government of India took various actions tocontain the COVID-19 pandemic such as closing of borders and lockdown restrictions whichresulted in significant disruption to people and businesses all over the country.
In response to COVID-19 pandemic situation the Company quickly instituted measures totrace all employees and be assured of their safety health and well-being. Keeping in viewthe safety of our employees and in line with the guidelines issued by the Government theoffices were closed and the employees were shifted to an entirely new 'work-from-home'model.
The business will take some time to reach the pre-COVID 19 level. The Company which isalready in losses since last many years is taking all necessary measures in terms ofmitigating the impact of the challenges being faced due to the pandemic and is workingtowards being resilient in order to sail through the current situation smoothly.
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.
In view of the losses incurred during the year as well as in the previous years yourDirectors do not recommend any dividend.
The Company does not have any subsidiary. However the Company continues to be thesubsidiary of Smart Bharat Private Limited (erstwhile Smart Entertainment Pvt. Ltd.) withSmart Global Corporate Holdings Private Limited as the Ultimate Holding 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 standardshave been followed along with explanation relating to material departures;
that the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as on March 31 2020 andof the profit / loss of the Company for that period; that proper and sufficient care hasbeen taken for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; that the annual accounts havebeen prepared on a going concern basis; that internal financial controls have been laiddown to be followed by the company and that such internal financial controls are adequateand were operating effectively; that proper systems have been devised to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
During the year under review there was no enhancement or reduction in capital of theCompany. As on 31st March 2020 the capital break-up of the Company is asunder :
i) Authorised Capital: Rs. 250000000/- divided into 20000000 Equity Sharesof Rs.10/- each and 500000 Preference Shares of Rs.100/- each.
ii) Issued subscribed and fully paid up share capital: Rs. 169000000/- dividedinto 16900000 Equity shares of Rs.10/- each.
Directors and Key Managerial Personnel
Mr. Ramesh Chandra Agarwal (DIN : 00037477) independent Director of the Companyresigned with effect from 30th June 2019 and Mr. Satish Kumar Gupta (DIN:00030841) independent Director of the Company resigned with effect from 28thSeptember 2019. Ms. Seema Salwan was appointed as an Additional Director Non-executive(Independent) of the Company with effect from 14th August 2019 and herappointment was confirmed by the shareholders at the last (31st) Annual Generalmeeting of the Company. Also Mr. Siddheshwar Kumar Upadhyay (DIN: 07871728) was appointedas an Additional Director Non-executive (Independent) of the Company with effect from 28thSeptember 2019. In terms of Section 149 and other applicable provisions of the Actand Rules made thereunder the approval of shareholders is sought for the appointment ofMr. Siddheshwar Kumar Upadhyay as an Independent Director for a term of 5 (five)consecutive years with effect from 28th September 2019 not liable to retireby rotation. The Company has received consent from Mr. Siddheshwar Kumar Upadhyay to actas a Director and declaration to the effect that he meets the criteria of independence asprovided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulationsand also a declaration under Section 164 of the Act that he is not disqualified from beingappointed as a Director. In the opinion of the Board and on the basis of therecommendation of Nomination and Remuneration Committee the Board believes that he is aperson of integrity and possesses the relevant expertise and experience and fulfills theconditions specified in the Act and the Rules made thereunder and he is independent of themanagement and his appointment as an Independent Director would be beneficial to theCompany and this will enable the Board to discharge its functions and duties effectively.Ms. Preeti Malhotra was appointed as Additional Director of the Company w.e.f 21stJuly 2019 and she later resigned from the Board w.e.f 29.08.2019. Ms. Rashi Adlakharesigned from the Board with effect from 21st July 2019. At present the Boardof Directors of the Company comprise inter-alia of two independent Directors viz.Ms. Seema Salwan and Mr. Siddheshwar Kumar Upadhyay both of whom 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. Kamalapati Kashyap Director (DIN: 02359002) retires at the ensuing Annual GeneralMeeting of the Company and being eligible offers himself for reappointment. Pursuant tothe provisions of Section 203 of the Companies Act 2013 Mr. Rakesh Kumar Bhatnagarcontinues to be the Chief Financial Officer (CFO) of the Company with effect from 1stMarch 2015. Mr. Dinkar Sharma acts as the Company Secretary of the Company. Mr. PankajKumar Singh continues to be the CEO of the Company w.e.f 30th May 2018. There has notbeen any other change in the Directorship or appointment / resignation of Key ManagerialPersonnel.
Number of Meetings of the Board
Six meetings of the Board were held during the year Financial Year 2019-20. For detailsof the meetings of the Board please refer to the corporate governance report which formspart of this report.
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"). Theperformance of the Board was evaluated by the Board after seeking inputs from all thedirectors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc. The performance of thecommittees was evaluated by the board after seeking inputs from the committee members onthe basis of the criteria such as the composition of committees effectiveness ofcommittee 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 14thFebruary 2020 performance of non-independent directors and the performance ofBoard as a whole was evaluated. The same was discussed in the board meeting that followedthe meeting of the independent Directors.
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.
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 of 34th 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 32nd Annual General Meeting.
The Company had appointed M/s RBAS & Associates Chartered Accountants Delhi asInternal Auditors of the Company for the financial year 2019-20.
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 2019-20.The Secretarial Audit Report forms part of 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 do not require further comments.
The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report.
There is/are no material change(s) or commitment(s) after the closure of the financialyear.
Compliance Certificate on Corporate Governance
A compliance Certificate on Corporate Governance as per Chapter IV of SEBI (LODR)Regulations 2015 issued by S K Batra & Associates Company Secretaries forms a partof this Report.
Certificate of Non-disqualification of Directors
A Certificate of non-disqualification of Directors pursuant to Regulation 34(3) andSchedule V Para C Clause (10)(i) of SEBI (LODR) 2015 obtained from M/s S K Batra &Associates Company Secretaries forms a part of this report
The Board of the Company has formed a risk management policy. 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 (LODR) Regulations 2015 during the Financial Year were in the ordinary courseof business and on arms' length basis and do not attract provisions of Section 188 of theCompanies Act 2013. However since Company from time to time takes loan from its
Holding Company viz. Smart Bharat Pvt. Ltd. (erstwhile 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 employed fora part of the year) or Rs.1.02 Crores per annum (if employed throughout the year) during2019-20 and hence there 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 part thereofwas in receipt of remuneration during the financial year 2019-20 which in the aggregateor as the case may be at a rate which in the aggregate is in excess of that drawn bythe managing director or whole-time director or manager and holds by himself or along withhis spouse and dependent children not less than two percent of the equity shares of thecompany.
b) Details as per Rule 5(1) of the Companies (Appointment & Remuneration ofManagerial 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 during the Financial year. ||Not comparable as at present 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 (CFO). Executive Officer Company Secretary or Manager if any in the financial year. ||Dinkar Sharma (CS) 15.17% ; Rakesh Kumar Bhatnagar (CFO) 4.02% ; Pankaj Kumar Singh (CEO) 27.7% |
|3. ||The percentage increase in median remuneration of the employees in the financial year. ||There are no other employees in the Company except KMP's mentioned above. |
|4. ||The number of permanent employees on rolls of the Company. ||Three |
|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 managerial remuneration. ||Since there are no employees other than the KMPs of the Company such comparison is not possible and there has been no increase in their salaries. |
|6. ||Affirmation that the remuneration is as per the remuneration policy of the Company. ||Yes. |
|7 ||The explanation on the relationship between average increase in remuneration and company performance ||Not comparable as the Company did not carry any business activity during the year. |
|8 ||Comparison of the remuneration of the key managerial personnel against the performance of the Company: ||Not comparable as the Company did not carry any business activity during the year. However the increase in salaries was made considering the inflation and other indices prevalent. |
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.
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.
Other Disclosure requirements
- The corporate governance report with auditors' certificate thereon and managementdiscussion and analysis are attached which form part of this report.
- Details of the familiarization programme of the independent directors are availableon the website of the Company.
- Policy on dealing with related party transactions is available on the website of theCompany.
Deposits from public
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance 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. || |
|4. 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 ||NL |
Disclosure under Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013
The Company has in place Sexual Harassment Policy and an Internal Complaints Committeein line with the requirements of the Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013. This policy provides for protectionagainst sexual harassment of women at work place and for prevention and redressal of suchcomplaints. During the year under review the number of complaint(s) received were NIL.
Your Company expresses its appreciation for the continued co-operation of the StatutoryAuthorities Banks and employees of the Company. Your Company also wishes to thank all itsstakeholders for their contribution and support throughout the year.