Your Company s Directors are pleased to present the 30th Annual Report ofthe Company along with the Audited Financial Statements of the Company for the financialyear ended March 31 2017.
1. FINANCIAL RESULTS:
| || ||(Rs. in Lakhs) |
| ||March 312017 ||March 312016 |
|Total Revenues ||3487.91 ||1862.09 |
|Total Expenditure ||3832.60 ||2135.90 |
|Earning before interest tax depreciation and amortization || || |
|(EBITDA) ||(344.69) ||(273.81) |
|Other Income (Net) ||- ||- |
|Finance Cost ||4.51 ||- |
|Depreciation and amortization expense ||16.55 ||15.79 |
|Profit/(Loss) before exceptional item and tax ||(365.75) ||(289. 60) |
|Exceptional Item ||- ||- |
|Profit /(Loss) before tax ||(365.75) ||(289.60) |
|Tax Expense ||- ||- |
|Net Profit /(Loss) for the year after tax ||(365.75) ||(289.60) |
Balance carried forward to Balance Sheet
|(1042.48) ||(676.73) |
2. THE STATE OF COMPANY S AFFAIRS:
The company launched Internet Retail Store concept in January 2014 and named it asiStreet Bazaar
The Company has set up 13242 such iStreet Bazaar Stores till March 31 2017. Moredetails about the concept and spread have been provided in this report in the sectionManagement Discussion and Analysis
Report. The Company s total revenues increased from Rs 1862.09 Lakhs in FY 2015-16 toRs. 3487.91 Lakhs during FY 2016-17 registering a growth of 87 %. However the Net Lossfrom operations has increased from Rs. 289.60 Lakhs in FY 2015-16 to Rs. 365.75 Lakhsduring FY 2016-17.
The Company has been registering impressive growth consistently since the time ofincubation of the project until 2016 September Quarter. Performance of 2016 DecemberQuarter was weak due to demonetization. As a major chunk of orders placed on the websiteand generally in retail by the common people is paid through cash the announcement ofdemonetization has had temporary adverse effect on the number of orders placed. TheCompany s business due to this transition has dropped steeply as compared to previousquarter. The company has taken steps and re-defined its strategy to grow faster in thechanged environment with focus on incorporating digital wallets along with cash. TheCompany continues to believe that this effect is a temporary one.
The company has invested huge resources to build its business. The present accountingstandards does not recognize such spending as 'value of intangibles assets' like networkof retailers technology last mile delivery infrastructure supply chain branding etc.During the last three years (FY 2014-15 2015-16 and
2016-17) the total spending on account of building its new age business is Rs. 712.43Lacs charged to Profit & Loss account as per the Accounting Standards which hasresulted in mounting of losses to the tune of Rs. 1042.48 lacs as on 31st March2017.Recently in the new age of technology driven businesses there are few examples ofbusinesses across the world which are 'asset light' businesses and operate by managingthird party assets like - the world s largest taxi firm owns no cars the world s largestaccommodation provider owns no property. In the new age of businesses companies thatcontrol the interface between the consumer and the provider of the goods or services arein an incredibly valuable position. The financials of the company should be analysedkeeping in mind new age business.
In view of the losses your Directors do not recommend any dividend during the year.
4. INCREASE IN SHARE CAPITAL:
During the year your Company has increased the Authorised Share Capital from Rs. 10crore to 20 crore. Further your Company has issued 370500 Equity Warrants of Rs.20.18/- per share that can be exchanged into equal number of equity shares. Out of which200000 Equity Warrants have been converted into equal number of equity shares on receiptof full payment of Rs 20.18/- per share from the warrant holders. Consequently theissued subscribed and paid up capital has increased from Rs. 84400000 shares to Rs.85200000 as on March 31 2017. The money has been utilized for the purpose of which itwas raised.
5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year under review as stipulatedunder the Securities Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulation") is presented in aseparate section forming part of this Annual Report.
6. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the year based on the recommendation of the Nomination and RemunerationCommittee Ms. Meenu Malu Woman director (Non Executive Non Independent Director)(DIN:00444932) was appointed as an Additional Director on February 8 2017 in place of Ms.Meethu Malu (DIN: 07074018) Woman Director (Non Executive Non-Independent category) whotendered her resignation w.e.f February 6 2017. The appointment of Ms. Meenu is proposedto be regularized in this Annual General Meeting. The Board places on record itsappreciation towards the valuable contribution made by Ms. Meethu Malu during her tenureas a Director of the Company.
In accordance with the provisions of Section 152 of the Companies Act2013 Mr. PradeepMalu Managing Director retires by rotation at the forthcoming Annual General Meeting andbeing eligible offers himself for re-appointment. The Board recommends his re-appointmentfor the consideration of the Members of the Company at the ensuing Annual General Meeting.
The brief resume of the Directors seeking appointment/reappointment in the forthcomingAnnual General Meeting in Pursuance of Regulation 36(3) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is annexed to the Annual General MeetingNotice. During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than the sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany. The Company has received declarations from all Independent Directors of theCompany that they meet the criteria of Independence prescribed under the Act and theListing Regulations.
Board Evaluation: Pursuant to the provisions of the Companies Act 2013 andSEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 the formal annualevaluation was carried out for the
Board s own performance its committee & Individual directors. The manner anddetail in which evaluation was carried out is explained in the Corporate GovernanceReport.
Nomination and Remuneration Policy: The Board of Directors has framed a policywhich lays down a framework in relation to remuneration of Directors Key ManagerialPersonnel and Senior Management of the Company. This policy also lays down criteria forselection and appointment of Board Members. The details of this policy are explained inthe Corporate Governance Report.
Meetings of the Board: During the year eleven Board Meetings (other thanMeeting of Independent Directors) were convened and held details of which are given inthe Corporate Governance Report which is annexed to this report and forms a part of thisreport. The intervening gap between the Meetings was within the period prescribed underthe Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Independent Directors affirmation: The Independent Directors of your Companyhave given the certificate of independence to your Company stating that they meet thecriteria of independence as mentioned under Section 149(6) of the Companies Act 2013 andthere has been no change in the circumstances which may affect their status as independentdirector during the year.
Familiarisation Programmes for Independent Directors:
The Company has put in place a system to familiarise its Independent Directors with theCompany their roles rights & responsibilities in the Company nature of the industryin which the Company operates business model of the Company etc. The details of suchfamiliarization programmes are put up on the website of the Company athttp://istreetnetwork.com/wp-content/uploads/2015/04/Familarisation-prog.pdf
Key Managerial Personnel:
During the year Ms. Ruchi Seksaria resigned as Company Secretary of the Company w.e.fApril 302016. The Directors place on record their appreciation for the contribution madeby her during her tenure. The Board at its Meeting held on April 302016 has appointed Mr.Dipankar Basu as Company Secretary. Pursuant to the provisions of section 203 of the Actthe key managerial personnel of the Company are -Mr. Pradeep Malu Managing Director Mr.Mayur Vora Chief Financial Officer and Mr. Dipankar Basu Company Secretary.
7. DIRECTORS RESPONSIBILITY STATEMENT:
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors and the reviews performed by the relevant Board Committeesincluding the Audit Committee of the Board the Board is of the opinion that the Companys internal financial controls were adequate and effective during the year ended March 312017. Accordingly pursuant to Section 134 (5) of the Companies Act 2013 based on theabove the Board of Directors to the best of their knowledge and ability confirms that:(i) in the preparation of the Annual Accounts the applicable accounting standards havebeen followed and that no material departures have been made from the same; (ii) they haveselected 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 at the end of the financial year and of the loss of the Companyfor that period;
(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;(iv) they have prepared the annual accounts on a going concern basis; (v) they have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and are operating effectively during the year ended March31 2017; and (vi) there is a proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively duringthe year ended March 31 2017.
8. WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy with a view to provide vigil mechanism toDirectors employees and other stakeholders to disclose instances of wrongdoing in theworkplace and report instances of unethical behavior actual or suspected fraud orviolation of the Company s code of conduct policy. The Whistle Blower Policy also statesthat this mechanism should also provide for adequate safeguards against victimization ofDirector(s)/ Employees who avail of the mechanism and also provide for direct access tothe Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy hasbeen posted on the website of the Company and the details of the same are explained in theReport on Corporate Governance forming part of this Annual Report. The Whistle blowerPolicy is available at the website of the Companyhttp://istreetnetwork.com/wp-content/uploads/2013/08/Whistleblower-Policy.pdf
9. SUBSIDIARY JOINT VENTURE AND ASSOCIATES:
The Company had acquired 100% Equity Shares of iStreet Bazaar Private Limited (iSBPL)thus making it a subsidiary Company with the intent to expand its business faster andraise resources/funds. However on rejection of the proposal of transfer of its businessby you (members) the Board of Director in the meeting held on May 28 2016 had decided todispose off its investment in wholly owned subsidiary - iSBPL. Accordingly entireinvestment was disposed off on June 22 2016 and ISBPL is no longer subsidiary of thecompany with effect from June 22 2016. Thus as on March 31 2017 the Company does nothave any subsidiary joint venture or associates.
10. MATERIAL CHANGES AND COMMITMENTS AFTER THE DATE OF FINANCIAL
There are no material changes and commitments affecting the financial position of yourCompany between the end of the financial year and the date of this report. There has beenno change in the nature of business of the Company.
11. INTERNAL FINANCIAL CONTROLS:
The Companies Act 2013 has mandated the Company to have a formal framework of InternalFinancial Controls (IFC) and has also laid down specific responsibilities on the BoardAudit Committee Independent Directors and Statutory Auditors with regard to IFC.
The financial control system and framework is required to ensure: - The orderly andefficient conduct of its business - Safeguarding of its assets - The prevention anddetection of frauds and errors - The accuracy and completeness of the accounting recordsand - The timely preparation of reliable financial information.
The Board reviews the effectiveness of controls documented as part of IFC frameworkand take necessary corrective actions where weaknesses are identified as a result of suchreviews. This review covers entity level controls process level controls fraud riskcontrols and Information Technology environment. Based on this evaluation no significantevents had come to notice during the year that have materially affected or are reasonablylikely to materially affect our IFC. The Management has also come to a conclusion thatthe IFC and other financial reporting was effective during the year and is adequateconsidering the business operations of the Company. The Statutory Auditors of the Companyhas audited the IFC over Financial Reporting and their Audit Report is annexed to thisreport.
12. RISK MANAGEMENT:
Risk management is embedded in your Company s operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company s approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. Some of theidentified risks are related to adoption of the new and innovative business concept by theconsumers and retailers capabilities of our network partners to deliver the desiredexperience to the customers not able to raise resources and funds for reaching to asustainable level of business high technology obsolesce competition with deep pocketslogistic infrastructure etc. In order to give risk perception of our business to theinvestors the Company has attempted to provide "Investor Guidance" on thewebsite which can be accessed from the linkhttp://istreetnetwork.com/investors/investor-guidance/. This section contains the riskfactors as identified by the Company which shall be updated on a timely basis.
13. DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
The Company has a Prevention of Sexual Harassment Policy in force in terms of SexualHarassment of
Women at Workplace (Prevention Prohibition and Redressal) Act 2013. The objective ofthis Policy is to ensure a safe secure and congenial work environment where employeeswill deliver their best without any inhibition threat or fear. The Company has ZeroTolerance to any form of harassment especially if it is sexual in nature. There were nocomplaints pending for the redressal at the beginning of the year and no complaintsreceived during the financial year.
14. CONTRACT OR ARRANGEMENTS WITH RELATED PARTIES:
In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is also available onthe Company s website athttp://istreetnetwork.com/wp-content/uploads/2013/08/Related-party-transcation-policy.pdf.ThePolicy intends to ensure that proper reporting approval and disclosure processes are inplace for all transactions between the Company and Related Parties. All Related PartyTransactions are placed before the Audit Committee for review and approval. Prior omnibusapproval is obtained for Related Party Transactions on a quarterly basis for transactionswhich are of repetitive nature and / or entered in the Ordinary Course of Business and areat Arm s Length. All Related Party Transactions entered during the year were in OrdinaryCourse of the Business and at Arm s Length basis. No Material Related Party Transactionsi.e. transactions exceeding 10% of the annual consolidated turnover as per the lastaudited financial statements were entered during the year by your Company. Accordinglythe disclosure of Related Party Transactions as required under Section 134(3)(h) of theCompanies Act 2013in Form AOC-2 is not applicable. There are no materially significantrelated party transaction s that may have potential conflict of interest with the Companyat large. The details of related party disclosure form a part of the notes to thefinancial statements provided in the annual report.
15. PUBLIC DEPOSITS:
During the year your Company has not accepted any deposits under Section 73 of theAct and as such no amount on account of principal or interest on public deposits wasoutstanding as of March 31 2017.
16. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Particulars of loans guarantees and investments have been disclosed in the financialstatements.
17. COMMITTEES OF THE BOARD:
The Board of Directors has the following Committees: (i) Audit Committee (ii)Remuneration and Nomination Committee
(iii) Stakeholders Relationship Committee (iv) Securities Allotment Committee (v)Business Review Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
18. EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92(3) of the Companies Act 2013 is annexed under "Annexure1" and form an integral part of this Report.
19. AUDIT COMMITTEE:
Audit Committee currently comprises of Mr. Naval Choudhary Mr. Neeraj Gupta and Mr.Sanjeev Chhajed. Further details relating to the Audit Committee are provided in theCorporate Governance Report which forms a part of this report.
The Shares of the Company will continue to be listed on the Bombay Stock Exchange (theBSE Ltd.) which is situated at Phiroze Jeejeebhoy Towers 25th Floor DalalStreet Mumbai 400 001. The Company has paid the listing fees up to the financial year2017-18.
21. CORPORATE GOVERNANCE:
The Company is committed to observe good corporate governance practices. The report onCorporate Governance for the financial year ended March 31 2017 as per regulation 34(3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms a part of this Annual Report. The requisite Certificate from theStatutory Auditors of the Company confirming compliance with the conditions of CorporateGovernance annexed herewith as "Annexure 2"
The Managing Director and CFO certification on the financial statement is annexedhereto as
23. SECRETARIAL AUDIT:
Section 204 of the Companies Act 2013 read with rules made thereunder inter-aliarequires every listed company to annex with its Board s report a Secretarial Audit Reportgiven by a Company Secretary in
Practice in the Form MR-3. The Board of Directors has appointed M/s Dilip Bharadiya& Associates Practicing Company Secretaries as Secretarial Auditor to conduct theSecretarial Audit of the Company for the Financial Year 2016-17. The report did notcontain any qualification reservation or adverse remark The Secretarial Audit report isannexed herewith as "Annexure 4" and forms an integral part ofthis Report.
24.CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
|(a) Consumption of Energy ||: ||Not Applicable |
| || ||We consume only Electricity for maintaining office and our systems. |
|(b) Technology Absorption Research & Development (R&D) |
|(i) Technology imported and absorbed. ||: ||NIL (Previous year Nil) |
|(ii) Expenditure on R&D ||: ||NIL (Previous year Nil) |
|(c) Foreign exchange earnings and outgo || || |
|(i) Foreign exchange earnings ||: ||Nil (Previous year Nil) |
|(ii) Foreign exchange outgo ||: ||Rs. 601192 (Previous year Rs. 460628) |
Electronic copies of the Annual Report 2016-17 and Notice of the 30th AnnualGeneral Meeting are sent to all members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddress physical copies are sent in the permitted mode.
26. STATUTORY AUDITORS:
In terms of the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 an audit firm can hold office as statutory auditor for two terms offive consecutive years i.e. for a maximum period of ten years. Further as per theprovisions of the Act Company is required to comply with these provisions within threeyears from the commencement of the Act. M/s. Jhawar Mantri & Associates CharteredAccountants were appointed as the Statutory Auditors of the Company since 2003 and werere-appointed at every Annual General Meeting (AGM) thereafter. As they have been in officefor more than 10 years in compliance with the provisions of the Act the Company had toappoint a new auditor in their place by March 31 2017 thus their term as StatutoryAuditors of the Company has expired from the conclusion of 30th Annual GeneralMeeting. The Board of Directors has at its Meeting held on August 11 2017 recommendedappointment of M/s. K U Kothari & Co. Chartered Accountants(Firm Registration No.105310W) as the new statutory auditors of the Company to hold office for one term of 5years commencing from conclusion of the ensuing 30th Annual General Meetingupto the Annual General Meeting of the Company to be held in calendar year 2022. TheCompany has received a certificate from the Statutory Auditors to the effect that theirappointment if made shall be in compliance with the provisions of Section 139 and 141 ofthe Companies Act 2013.
Accordingly the Board proposes appointment of M/s. K U Kothari & Co. CharteredAccountants Chartered Accountants as the statutory auditors of the Company in place ofM/s. Jhawar Mantri & Associates Chartered Accountants to hold office from theconclusion of this AGM until the conclusion of the 35th AGM of your Company.Necessary resolution seeking approval of the members for appointment of new statutoryauditors has been incorporated in the Notice convening the Annual General Meeting formingpart of this Annual Report.
27.EXPLANATION OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION RESERVATION OR ADVERSEREMARK OR DISCLAIMER MADE:
The reports of Statutory Auditor and Secretarial Auditor are free from anyqualification reservation or adverse remark or disclaimer.
28.PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as required under section197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed herewith as "Annexure 5" to this report. Inaccordance with the provisions of Section 197(12) of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the names and otherparticulars of employees drawing remuneration in excess of the limits set out in theaforesaid Rules forms part of this Report. However in line with the provisions ofSection 136(1) of the Act the Report and Accounts as set out therein are being sent toall Members of your Company excluding the aforesaid information about the employees. AnyMember who is interested in obtaining these particulars about employees may write to theCompany Secretary at the Registered Office of your Company.
29. EMPLOYEE STOCK OPTIONS:
With a view to provide an opportunity to the employees of the Company to share thegrowth of the Company and to create long-term wealth the Company has an Employee StockOption Scheme namely the iSNL Employee Stock Option Scheme 2016 ("iSNL ESOP2016"). The Scheme is applicable to the eligible employees that include employees andDirectors of the Company. The Nomination and Remuneration Committee of the Board ofDirectors of the Company administers and monitors the Scheme. The Scheme is in compliancewith the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 ("SEBI ESOP Regulations") as amended. There has not been anymaterial change in the Scheme during the financial year. The disclosure pursuant to SEBIESOP Regulations read with Circular No CIB/CFD/Policy/CELL/2 2015 dated June 16 2015are given on the website of the Company athttp://istreetnetwork.com/wp-content/uploads/2017/07/ESOP-disclosure-pursuant-to-Regulation-14-of-SEBI.pdf.
During the year under review in terms of iSNL ESOP 2016 the Nomination andRemuneration Committee has granted 761627 Options out of which 738462 Options lapsedduring the Financial year due to cessation of employees. Each Option is convertible intoone Equity Share of the Company upon vesting and would vest in 3 annual instalments afterone year of the grant and shall be exercisable within a period of 3 years from the date ofvesting.
In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations2014 the details of the Stock Options under the above mentioned Scheme is given in "Annexure-6"to this Report. The Company has received a a certificate from M/s. Jhawar Mantri&Associates Statutory Auditors of the Company that the Scheme has been implemented inaccordance with the SEBI (Share based Employee Benefits) Regulations 2014 and theresolution passed by the members. The certificate will be placed at the Annual GeneralMeeting for inspection by members.
30. HUMAN RESOURCES AND INDUSTRIAL RELATIONS:
The Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of business. Objective appraisal systems based on Key Result Areas(KRAs) are in place for senior management staff. The Company is committed to nurturingenhancing and retaining top talent through superior Learning &OrganizationalDevelopment. This is a part of Corporate HR function and is a critical pillar to supportthe organization s growth and its sustainability in the long run.
Your Directors state that no disclosure or reporting is required in respect of thefollowing matters as there were no transactions on these matters during the financial year2016-17:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except Employees Stock Option Scheme as referred to in this Report.
3. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company s operations in future.
4. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees for the benefit of employees.
5. No fraud has been reported by the Auditors to the Audit Committee or the Board.
We thank our network partners customers vendors service providers investors andbankers for their continued support during the year. We place on record our appreciationof the contribution made by our employees at all levels but for whose hard work andsupport your Company s achievements would not have been possible. Our growth was madepossible by their solidarity cooperation and believing in us and in themselves that theywere game changers .
Statement in this report particularly those which relate to Management Discussion andAnalysis describing company s objectives projections future outlook estimates andexpectations may constitute forward looking statement within the meaning of applicablelaws and regulations and actual results might differ.
| || |
For and on Behalf of Board of Directors
| ||Pradeep Malu ||Neeraj Gupta |
|Date :August 11 2017 ||Managing Director ||Director |
|Place : Mumbai ||DIN: 0000001959 ||DIN:0005327106 |